Professional Documents
Culture Documents
Case Digests
Case Digests
March 7, 2007
Facts: Maribel S. Santos has been working for St. Luke's Medical Center
for almost eight years. On 1992, Republic Act No. 7431 known as the
Radiologic Technology Act of 1992 was passed. R.A. 7431 requires
individuals who work as radiologists or x-ray technologists in the
Philippines to acquire a legal certificate of registration from the Board of
Radiologic Technology. Upon the law’s passage, St. Luke's Medical Center
notified all its employees practicing Radiologic Technology to comply with
the law’s requirements. Its notice also warned employees that their failure
to comply with the requirements would result to their transfer to an area
which doesn’t require a license, that is if there are still available slots.
Santos, despite receiving several notices failed to comply and was notified
by St. Luke's Medical Center that she will be compelled to retire if they are
left with no other available positions for her in the hospital. Not only did
Santos refuse the offer to retire, but she also was unqualified for any other
vacant positions in the hospital. She also failed the board examination,
afterwards. The events that transpired caused St. Luke's Medical Center to
issue Santos with a notice of separation. Santos, who found her
employer’s action unfair, filed a case against her employer for illegal
dismissal, non-payment of salaries, allowances, and other monetary
benefits.
Held: No. Section 2 of R.A. 7431 states: “It is the policy of the State to
upgrade the practice of radiologic technology in the Philippines for the
purpose of protecting the public from the hazards posed by radiation as
well as to ensure safe and proper diagnosis, treatment and research
through the application of machines and/or equipment using radiation.”
One of the state’s inherent powers is police power. Through the state’s
police power, it can lay down some regulations in order to improve the
health, morals, educations, good order, safety or general welfare of the
people. The state is justified in prescribing the specific requirements for x-
ray technicians and/or any other professions connected with the health
and safety of its citizens. Santos, being a practitioner in the medical field,
must follow the law and cannot come above the law and override public
interest.
Facts: Dole Philippines Inc. and Pawis ng Makabayang Obrero entered into
a collective bargaining agreement which was supposed to last for five
years. The collective bargaining agreement provides that Dole will give its
employees a meal allowance of 10.00 pesos who will render actual
overtime work for at least 2 hours, not exceeding 25.00 pesos after 3
hours of actual overtime work.
Facts: On June 27, 1960 the petitioner, Rosalina Perez Abella leased a
farm land known as Hacienda Danao-Ramona, for a period of ten (10)
years. She opted to extend the leased contract for another ten (10) years.
During the existence of the lease, she employed the private respondents
Ricardo Dionele, Sr., and Romeo Quitco. Upon the expiration of her
leasehold rights, petitioner dismissed private respondents and turned over
the hacienda to the owners thereof on October 5, 1981, who continued
the management, cultivation and operation of the farm.
Held: Yes. Article 284 of the Labor Code, as amended by B.P. Blg. 130, is
the law applicable in this case. The purpose of Article 284, as amended, is
obvious – the protection of the workers whose employment is terminated
because of the closure of establishment and reduction of personnel.
Without said law, employees like private respondents in the case at bar
will lose the benefits to which they are entitled – for the thirty three years
of service in the case of Dionele, and fourteen years in the case of Quitco.
Although they were absorbed by the new management of the hacienda, in
the absence of any showing that the latter has assumed the
responsibilities of the former employer, they will be considered as new
employees and the years of service behind them would amount to
nothing.
Respondent filed a Motion for Reconsideration, which the NLRC denied the
same. Respondent filed a Petition for Certiorari under Rule 65 of the Rules
of Court before the Court of Appeals. In a Decision, the Court of Appeals
granted the petition and ordered the NLRC to give due course to
respondent’s appeal of the Labor Arbiter’s Decision. Petitioner filed a
Motion for Reconsideration which was denied by the Court of Appeals in a
Resolution dated 21 July 2005. Not to be dissuaded, petitioner filed the
instant petition before this Court.
This Court has repeatedly ruled that delay in the settlement of labor cases
cannot be countenanced. Not only does it involve the survival of an
employee and his loved ones who are dependent on him for food, shelter,
clothing, medicine and education; it also wears down the meager
resources of the workers to the point that, not infrequently, they either
give up or compromise for less than what is due them. Without doubt, to
allow the appeal of the respondent as what the Court of Appeals had done
and remand the case to the NLRC would only result in delay to the
detriment of the petitioner.
Facts: Petitioner’s husband, Pedro Clemente, was for ten (10) years a
janitor in the Department of Health (Dagupan City), assigned at the Ilocos
Norte Skin Clinic, Laoag City. On November 14, 1976, Pedro Clemente died
of uremia due to nephritis. GSIS denied the claim of benefits because they
found the cause of death not an occupational disease. Petitioner
requested for reconsideration of the GSIS’ decision, contending that the
ailments of her husband were contracted in the course of his employment
and were aggravated by the nature of his work, as he was exposed to
persons suffering with different skin diseases. The Employee’s
Compensation Commission affirmed the GSIS’ decision stating that
Pedro’s ailments were not listed as an occupational disease. The GSIS
concurs with the views of the respondent Commission. However, it argues
that it should be dropped as a party respondent in this case.
Issue: Whether or not the petitioner can claim death benefits from GSIS.
Held: Yes. Carolina Clemente may claim benefits from the GSIS. The GSIS
maintains that Pedro had the diseases even before his employment with
the Department of Health. The fallacy in this theory lies in the failure to
explain how a sick person was able to enter the government service more
than ten years before he became too ill to work and at a time when
aggravation of a disease was compensable. There is no evidence that Mr.
Clemente was hired inspite of having and existing disease liable to
become worse. When there are two or more possible explanations
regarding an issue of compensability that which forms the claimant must
be chosen.
Facts: The respondent union filed a notice of strike with the Bureau of
Labor Relations on ground of unfair labor practice consisting of alleged
refusal to bargain, dismissal of union officers/members, and coercing
employees to retract their membership with the union and restraining
non-union members from joining the union. The petitioner pointed out that
Mejia, Sayson and Reynante’s suspension and eventual dismissal from the
company were due to violation of company rules and are therefore carried
out pursuant to the inherent right and prerogative of the management. In
addition, petitioner contends that the union is not the certified agent of
the company salesmen. In fact, according to petitioner, majority of
salesmen not in favor of the notice of strike.
Held: Yes. The Minister committed grave abuse of discretion in both cases
contended in the petitioner’s motion for reconsideration. The procedure of
a representation case is outlined in the Labor Code. When the Minister
directly certified the Union, he in fact disregarded this procedure and its
legal requirements. There was therefore failure to determine with legal
certainty whether the union indeed enjoyed majority representation.
10 | L a b o r S t a n d a r d s - C a s e D i g e s t s
G.R. No. 125340
On July 25, 1989, Labor Arbiter Amado M. Solamo dismissed the complaint
for lack of merit. Petitioner appealed to the National Labor Relations
Commission (NLRC), Fifth Division, Cagayan de Oro City. In a resolution
dated July 25, 1989, the NLRC set aside the labor arbiters decision for lack
of due process. It ruled that since petitioner assailed her supposed
signatures appearing on the payrolls presented by the company as a
forgery, the labor arbiter should not have merely depended on the xerox
copies of the payrolls, as submitted in evidence by the private respondent
but ordered a formal hearing on the issue. Thus, the Commission ordered
the case remanded to the arbitration branch for appropriate proceedings.
11 | L a b o r S t a n d a r d s - C a s e D i g e s t s
human experience. It is impossible for an employee to arrive at the
workplace and leave at exactly the same time, day in day out. The
uniformity and regularity of the entries are badges of untruthfulness and
as such indices of dubiety. The observations made by the Solicitor General
regarding the unreliability of the daily time records would therefore seem
more convincing. On the other hand, respondent company failed to
present substantial evidence, other than the disputed DTRs, to prove that
petitioner indeed worked for only eight hours a day.
12 | L a b o r S t a n d a r d s - C a s e D i g e s t s
out that her table, chair, and other belongings were moved to a corner of
their office, and she was replaced by Annie Roxas, daughter of petitioner
Adoracion Roxas. She tried to contact her employer but the latter could
not be found within the school premises.
Held: Yes. Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period provided the same is entered
into by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstance
vitiating consent. It does not necessarily follow that where the duties of
the employee consist of activities usually necessary or desirable in the
usual business of the employer, the parties are forbidden from agreeing
on a period of time for the performance of such activities. There is thus
nothing essentially contradictory between a definite period of employment
and the nature of the employees’ duties. It goes without saying that
contracts of employment govern the relationship of the parties. In this
case, private respondents contract provided for a fixed term of nine (9)
months, from June 1, 1991 to March 31, 1992. Such stipulation, not being
contrary to law, morals, good customs, public order and public policy, is
valid, binding and must be respected.
13 | L a b o r S t a n d a r d s - C a s e D i g e s t s
MANALASTAS vs.
COCA-COLA BOTTLERS PHILS., INC.
On appeal, the NLRC sustained the finding of the Labor Arbiter that there
was indeed an employer-employee relationship between the complainants
and respondent company when it affirmed in toto the latter’s decision.
Respondent Coca-Cola Bottlers appealed to the Court of Appeals which,
although affirming the finding of the NLRC that an employer-employee
relationship existed between the contending parties, nonetheless agreed
with respondent that the affidavits of some of the complainants, namely,
Prudencio Bantolino, Nestor Romero, Nilo Espina, Ricardo Bartolome,
Eluver Garcia, Eduardo Garcia and Nelson Manalastas, should not have
been given probative value for their failure to affirm the contents thereof
and to undergo cross-examination. As a consequence, the appellate court
dismissed their complaints for lack of sufficient evidence. In the same
Decision however, complainants Eddie Ladica, Arman Queling and Rolando
Nieto were declared regular employees since they were the only ones
subjected to cross-examination.
Held: Yes. Administrative bodies like the NLRC are not bound by the
technical niceties of law and procedure and the rules obtaining in courts of
law. Indeed, the Revised Rules of Court and prevailing jurisprudence may
14 | L a b o r S t a n d a r d s - C a s e D i g e s t s
be given only stringent application, i.e., by analogy or in a suppletory
character and effect. The submission by respondent, citing People v.
Sorrel, that an affidavit not testified to in a trial, is mere hearsay evidence
and has no real evidentiary value, cannot find relevance in the present
case considering that a criminal prosecution requires a quantum of
evidence different from that of an administrative proceeding. Under the
Rules of the Commission, the Labor Arbiter is given the discretion to
determine the necessity of a formal trial or hearing. Hence, trial-type
hearings are not even required as the cases may be decided based on
verified position papers, with supporting documents and their affidavits.
15 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Labor Arbiter Rhett Julius Plagata declared that respondent was illegally
dismissed and ordered Pfizer, Inc., to pay him back wages, separation pay,
thirteenth month pay, incentives and bonuses, reimbursement of
expenses and attorneys fees. Respondents monetary award
totalled P2,052,013.50. Petitioners appealed from the decision to the
NLRC in Cagayan de Oro City where it affirmed the decision of the Labor
Arbiter. Petitioners also filed with the Court of Appeals but was their
motion for reconsideration was denied. Hence, the petition.
Issue: Whether or not the Court of Appeals erred in dismissing the appeal
for being filed beyond the reglementary period.
Held: In Systems Factors Corporation v. NLRC, the Court declared that the
amendment introduced under A.M. No. 00-2-03-SC is procedural or
remedial in character, as it does not create new or remove vested rights,
but only operates in furtherance of the remedy or confirmation of rights
already existing. It is settled that procedural laws may be given
retroactive effect to actions pending and undetermined at the time of their
passage, there being no vested rights in the rules of procedure. Thus, the
said amendment may be given a retroactive effect.
Limitations
16 | L a b o r S t a n d a r d s - C a s e D i g e s t s
represented by its corporate officers while MJMDC was represented by
SONZA, as President and General Manager, and Carmela Tiangco
(TIANGCO), as EVP and Treasurer. On 30 April 1996, SONZA filed a
complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained
that ABS-CBN did not pay his salaries, separation pay, service incentive
leave pay, 13th month pay, signing bonus, travel allowance and amounts
due under the Employees Stock Option Plan (ESOP). ABS-CBN filed a
Motion to Dismiss on the ground that no employer-employee relationship
existed between the parties. SONZA filed an Opposition to the motion
on 19 July 1996.
On 6 October 1998, SONZA filed a special civil action for certiorari before
the Court of Appeals assailing the decision and resolution of the
NLRC. On 26 March 1999, the Court of Appeals rendered a Decision
dismissing the case. Hence, this petition.
Issues:
1. Whether or not an employer-employee relationship exists between
the parties.
2. Whether or not Sonza can be considered as a regular employee.
Held:
1. No. Case law has consistently held that the elements of an employer-
employee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer’s power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called control
test, is the most important element.
17 | L a b o r S t a n d a r d s - C a s e D i g e s t s
into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.
Payment of Wages
ABS-CBN agreed to pay SONZA such huge talent fees precisely because of
SONZAs unique skills, talent and celebrity status not possessed by
ordinary employees. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for his
services. The power to bargain talent fees way above the salary scales of
ordinary employees is a circumstance indicative, but not conclusive, of an
independent contractual relationship.
Power of Dismissal
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent
fees as long as AGENT and Jay Sonza shall faithfully and completely
perform each condition of this Agreement. Even if it suffered severe
business losses, ABS-CBN could not retrench SONZA because ABS-CBN
remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN.
Power of Control
The hiring of exclusive talents is a widespread and accepted practice in
the entertainment industry This practice is not designed to control the
means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally
spends substantial amounts of money, time and effort in building up its
talents as well as the programs they appear in and thus expects that said
talents remain exclusive with the station for a commensurate period of
time.Normally, a much higher fee is paid to talents who agree to work
exclusively for a particular radio or television station. In short, the huge
talent fees partially compensates for exclusivity, as in the present case.
2. Applying the control test to the present case, the Court held that SONZA is
not an employee but an independent contractor. The control test is
the most important test our courts apply in distinguishing an employee
from an independent contractor. This test is based on the extent of control
the hirer exercises over a worker. The greater the supervision and control
the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well the less control the hirer exercises, the
more likely the worker is considered an independent contractor. In any
event, not all rules imposed by the hiring party on the hired party indicate
that the latter is an employee of the former. In this case, SONZA failed to
show that these rules controlled his performance. The Court finds that
these general rules are merely guidelines towards the achievement of
the mutually desired result, which are top-rating television and radio
programs that comply with standards of the industry.
18 | L a b o r S t a n d a r d s - C a s e D i g e s t s
National Service Corp. vs. NLRC
19 | L a b o r S t a n d a r d s - C a s e D i g e s t s
date, Credo was placed on "Forced Leave" status for 1 5 days. Before the
expiration of said 15-day leave, Credo filed a complaint for placing her on
forced leave, without due process. She also filed a supplemental
complaint for illegal dismissal in alleging absence of just or authorized
cause for her dismissal and lack of opportunity to be heard.
Held: Under the 1973 Constitution, it was provided that: The civil service
embraces every branch, agency, subdivision, and instrumentality of the
Government, including every government-owned or controlled
corporation. On the other hand, the 1987 Constitution provides that: The
civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled
corporations with original charter. Thus, the situations sought to be
avoided by the 1973 Constitution and expressed by the Court in the
National Housing appear relegated to relative insignificance by the 1987
Constitutional provision that the Civil Service embraces government-
owned or controlled corporations with original charter; and, therefore, by
clear implication, the Civil Service does not include government-owned or
controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general
corporation law.
On the premise that it is the 1987 Constitution that governs the instant
case because it is the Constitution in place at the time of decision thereof,
the NLRC has jurisdiction to accord relief to the parties. As an admitted
subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a
government-owned or controlled corporation without original charter.
Facts: Juco was an employee of the NHA. He filed a complaint for illegal
dismissal w/ MOLE but his case was dismissed by the labor arbiter on the
20 | L a b o r S t a n d a r d s - C a s e D i g e s t s
ground that the NHA is a govt-owned corp. and jurisdiction over its
employees is vested in the CSC. On appeal, the NLRC reversed the
decision and remanded the case to the labor arbiter for further
proceedings. NHA in turn appealed to the SC.
Held: Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil
Service embraces every branch, agency, subdivision and instrumentality
of the Government, including every government owned and controlled
corporation. The inclusion of government-owned and/or controlled
corporation within the embrace of the civil service shows a deliberate
effort at the framers to plug an earlier loophole which allowed
government-owned and/or controlled corporation to avoid the full
consequences of the civil service system. All offices and firms of the
government are covered. This constitutional provision has been
implemented by statute PD 807 is unequivocal that personnel of
government-owned and/or controlled corporation belong to the civil
service and subject to civil service requirements. "Every" means each one
of a group, without exception. This case refers to a government-owned
and/or controlled corporation. It does not cover cases involving private
firms taken over by the government in foreclosure or similar proceedings.
21 | L a b o r S t a n d a r d s - C a s e D i g e s t s
in the embrace of the civil service would cease to have application.
Certainly, such a situation cannot be allowed.
Facts: Pastor Dionisio Austria has been serving as a pastor for Seventh
Day Adventist, a religious corporation under Philippine Law, for 28 years.
His services was later terminated and was asked by the religious
corporations’ treasurer to take responsibility for the 15,078.10 worth of
church tithe’s offerings which was collected by his wife, Thelma Austria.
Austria claimed that he should not be made accountable for the loss since
the authorization for his wife to collect the tithes came from Pastor Gideon
Buhat and Mr. Eufronio Ibesate since the petitioner was indisposed during
that time.
22 | L a b o r S t a n d a r d s - C a s e D i g e s t s
case is an ecclesiastical affair. The National Labor Relations Commission
reversed its decision again, pushing Austria to file this petition before the
Supreme Court.
Under the Labor Code, the provision which governs the dismissal of
employees, is comprehensive enough to include religious corporations,
such as the SDA, in its coverage. Article 278 of the Labor Code on post-
employment states that “the provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not. Obviously, the
cited article does not make any exception in favor of a religious
corporation. This is made more evident by the fact that the Rules
Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on
the Termination of Employment and Retirement, categorically includes
religious institutions in the coverage of the law.
23 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Chapter II – Concept of Employer-Employee Relationship
24 | L a b o r S t a n d a r d s - C a s e D i g e s t s
members of the vessel 7/B Sandyman II, owned and operated by De
Guzman Fishing Enterprises. Ruga and his colleagues were paid on
percentage commission basis in cash by the company’s cashier in which
an agreed rate wherein petitioners will receive an amount based on the
success of the fishing trip.
One day, Ruga and his colleagues were surprised when their employer,
Jorge De Guzman, instructed them to participate in an investigation after
there were reports that Ruga and his colleagues sold part of their catch to
someone else. De Guzman’s claims were denied by the petitioners. The
petitioners argue that De Guzman’s act was due to their forming of a labor
union and their membership in the Defenders of Industrial Agricultural
Labor Organizations and General Workers Union.
No charges were filed against Ruga and his colleagues as the investigation
resulted with no conclusive findings. Despite this, the petitioners were
disallowed by their employer to resume work. This pushed the petitioners
to file a complaint before the Ministry of Labor and Employment on the
grounds of illegal dismissal and non-payment of their 13th month pay and
emergency cost of living and service incentive pay. The Labor Arbiter
dismissed the complaints, stating that there exists no employer-employee
relationship. The National Labor Relations Commission affirmed the Labor
Arbiters’ decision, causing the petitioners to file a petition before the
Supreme Court.
Issue: Whether or not Ruga and his colleagues fall under the category of
employer-employee relationship.
25 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda
Tamayo and Harold Catipay, private respondents, filed a complaint against
the Perpetual Help Credit Cooperative, Inc. (PHCCI), petitioner, with the
Arbitration Branch, Department of Labor and Employment (DOLE),
Dumaguete City, for illegal dismissal, premium pay on holidays and rest
days, separation pay, wage differential, moral damages, and attorney's
fees.
On appeal, the NLRC affirmed the Labor Arbiter's decision. Hence, this
petition by the PHCCI.
26 | L a b o r S t a n d a r d s - C a s e D i g e s t s
(3) the payment of wages by whatever means; and (4) the power to
control the worker's conduct, with the latter assuming primacy in the
overall consideration. No particular form of proof is required to prove the
existence of an employer-employee relationship. Any competent and
relevant evidence may show the relationship.2
The above elements are present here. Petitioner PHCCI, through Mr.
Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it.
They worked regularly on regular working hours, were assigned specific
duties, were paid regular wages and made to accomplish daily time
records just like any other regular employee. They worked under the
supervision of the cooperative manager. But unfortunately, they were
dismissed.
After the parties had filed their respective pleadings, the Labor Arbiter
rendered the Decision dated February 3, 1997, finding the respondents
guilty of illegal dismissal. The Labor Arbiter declared that the petitioner
was a regular employee of the respondent company as he was performing
27 | L a b o r S t a n d a r d s - C a s e D i g e s t s
a service that was necessary and desirable to the latter’s business.
Moreover, it was noted that the petitioner had discharged his duties as
truck driver for the respondent company for a continuous and
uninterrupted period of more than ten years.
First. Undeniably, it was the respondents who engaged the services of the
petitioner without the intervention of a third party.
28 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Fourth. As earlier opined, of the four elements of the employer-employee
relationship, the "control test" is the most important. Compared to an
employee, an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service
on its own account and under its own responsibility according to its own
manner and method, free from the control and direction of the principal in
all matters connected with the performance of the work except as to the
results thereof. Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his
principal, an employee is subject to the employer’s power to control the
means and methods by which the employee’s work is to be performed and
accomplished.
Although the respondents denied that they exercised control over the
manner and methods by which the petitioner accomplished his work, a
careful review of the records shows that the latter performed his work as
truck driver under the respondents’ supervision and control. Their right of
control was manifested by the following attendant circumstances:
29 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Francisco vs. NLRC, 500 SCRA 690 (2006)
The Labor Arbiter found that petitioner was illegally dismissed. On April
15, 2003, the NLRC affirmed with modification the Decision of the Labor
Arbiter. On appeal, the Court of Appeals reversed the NLRC decision.
Held: Yes, there is. In certain cases the control test is not sufficient to give
a com
plete picture of the relationship between the parties, owing to the
complexity of such a relationship where several positions have been held
by the worker. The better approach would therefore be to adopt a two-
tiered test involving: (1) the putative employer’s power to control the
employee with respect to the means and methods by which the work is to
be accomplished; and (2) the underlying economic realities of the activity
or relationship.
30 | L a b o r S t a n d a r d s - C a s e D i g e s t s
permanency and duration of the relationship between the worker and the
employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. 23
Under the broader economic reality test, the petitioner can likewise be
said to be an employee of respondent corporation because she had
served the company for six years before her dismissal, receiving check
vouchers indicating her salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as deductions and Social Security
contributions from August 1, 1999 to December 18, 2000. 26 When
petitioner was designated General Manager, respondent corporation made
a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in
the SSS as manifested by a copy of the SSS specimen signature card
which was signed by the President of Kasei Corporation and the inclusion
of her name in the on-line inquiry system of the SSS evinces the existence
of an employer-employee relationship between petitioner and respondent
corporation. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in
the latter’s line of business.
31 | L a b o r S t a n d a r d s - C a s e D i g e s t s
tasked to assist TAPE during its live productions, specifically, to control the
crowd; (3) that when RPN-9 severed its relationship with the security
agency, TAPE engaged respondent’s services, as part of the support group
and thus a talent, to provide security service to production staff, stars and
guests of "Eat Bulaga!" as well as to control the audience during the one-
and-a-half hour noontime program; (4) that it was agreed that
complainant would render his services until such time that respondent
company shall have engaged the services of a professional security
agency; (5) that in 1995, when his contract with RPN-9 expired,
respondent was retained as a talent and a member of the support group,
until such time that TAPE shall have engaged the services of a
professional security agency; (6) that respondent was not prevented from
seeking other employment, whether or not related to security services,
before or after attending to his "Eat Bulaga!" functions; (7) that sometime
in late 1999, TAPE started negotiations for the engagement of a
professional security agency, the Sun Shield Security Agency; and (8) that
on 2 March 2000, TAPE issued memoranda to all talents, whose functions
would be rendered redundant by the engagement of the security agency,
informing them of the management’s decision to terminate their services.
Held: Yes, there is. Jurisprudence is abound with cases that recite the
factors to be considered in determining the existence of employer-
employee relationship, namely: (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 method by which the work is to be accomplished. The most important
factor involves the control test. Under the control test, there is an
employer-employee relationship when the person for whom the services
are performed reserves the right to control not only the end achieved but
also the manner and means used to achieve that end.
In concluding that respondent was an employee of TAPE, the Court of
Appeals applied the "four-fold test" in this wise:
32 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the newly hired security agency begins, private respondents in
effect acknowledged petitioner to be their employee. For the right to
hire and fire is another important element of the employer-employee
relationship.
TAPE failed to adduce any evidence to prove that it complied with the
requirements laid down in the policy instruction. It did not even present its
contract with respondent. Neither did it comply with the contract-
registration requirement.
33 | L a b o r S t a n d a r d s - C a s e D i g e s t s
San Miguel Corp. vs. NLRC
Held: We DENY. The Court takes judicial notice of the fact that Lipercon
and Skillpower were declared to be labor-only contractors, providing as
they do manpower services to the public for a fee. The existence of an
employer-employee relationship is factual and we give due deference to
the factual findings of both the NLRC and the CA that an employer-
employee relationship existed between SMC (or its subsidiaries) and
34 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Maliksi. Indeed, having served SMC for an aggregate period of more than
three (3) years through employment contracts with these two labor
contractors, Maliksi should be considered as SMC’s regular employee. The
hard fact is that he was hired and re-hired by SMC to perform
administrative and clerical work that was necessary to SMC’s business on
a daily basis. In Bustamante v. National Labor Relations Commission, we
ruled:
35 | L a b o r S t a n d a r d s - C a s e D i g e s t s
As to the petitioner’s second assigned error, we hold that there is no need
to resolve the present case under the principle that all doubts should be
resolved in favor of the workingman. The perceived doubt does not obtain
in the first place.
Renato Panungo, the med-ariter, dismissed the petition, stating that there
lacks an employee-employer relationship. The decision forced LIKHA-PMPB
to file a appeal before the Secretary of Labor and Employment. The
Secretary decided in favour of the petitioner. The company appealed to
36 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the Court of Appeals which reversed the Secretary’s decision. The
petitioner filed a motion of reconsideration before the same court, but was
denied. Thus, this petition before the Supreme Court.
Aliviado, et al. vs. Procter & Gamble Philippines and PROMM-GEM, Inc.
June 6, 2011
37 | L a b o r S t a n d a r d s - C a s e D i g e s t s
which it sells on a wholesale basis to various supermarkets and
distributors. Procter and Gamble entered into a contract with Promm-Gem
and SAPS for the promotion and merchandising of its products.
Desirable – Unnecessary
38 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: Coca-Cola entered into a contract of janitorial services with
Bacolod Janitorial Services (BJS) stipulating that Coca-Cola desires to
engage the services of BJS, as an independent contractor, to perform and
provide for the maintenance, sanitation, and cleaning services. Every year
thereafter a service contract was entered into between the parties under
similar terms and conditions. Canonicato was hired by Coca Cola as a
casual employee and assigned him to the bottling crew as a substitute for
absent employees. A year after, Coca-Cola terminated Canonicato’s casual
employment. Later that year, the latter was re-hired, but this time as a
painter in contractual projects which lasted from 15-30 days. Thereafter,
Canonicato was hired by BJS as a janitor and assigned him to Coca-Cola
considering his familiarity with its premises but his services were again
terminated a year later.
Held: It was held that at the outset of the disposition of the NLRC that
janitorial services are necessary and desirable to the trade or business of
Coca-Cola. However, it is inconsistent in the court’s ruling in Kimberly
Independent Labor Union v. Drilon where it took judicial notice of the
practice adopted in several government and private institutions and
industries of hiring janitorial services on an independent contractor basis.
Hence, court ruled that although janitorial services may be considered
39 | L a b o r S t a n d a r d s - C a s e D i g e s t s
directly related to the principal business of an employer, as with every
business, we deemed them unnecessary in the conduct of the employer’s
principal business.
July 8, 2004
40 | L a b o r S t a n d a r d s - C a s e D i g e s t s
of ACGI, an independent contractor. It maintained that it had no control
and supervision over private respondents manner of performing their work
except as to the results. Thus, it did not have an employer-employee
relationship with the private respondents, but only a service contractor-
client relationship with ACGI.
Effect of Finding
41 | L a b o r S t a n d a r d s - C a s e D i g e s t s
SAN MIGUEL CORPORATION vs.
PROSPERO A. ABALLA, BONNY J. ABARING, EDWIN M. ADLA-ON,
ALVIN C. ALCALDE, CELANIO D. ARROLLADO, EDDIE A.
ARROLLADO, et al., and the COURT OF APPEALS
42 | L a b o r S t a n d a r d s - C a s e D i g e s t s
subcontractor merely recruits, supplies or places workers to perform a job,
work or service for a principal, and any of the following elements are
present: i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or service to be
performed 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 ii) The contractor does not
exercise the right to control over the performance of the work of the
contractual employee. What appears is that Sunflower does not have
substantial capitalization or investment in the form of tools, equipment,
machineries, work premises and other materials to qualify it as an
independent contractor. Sunflower, during the existence of its service
contract with respondent SMC, did not own a single machinery,
equipment, or working tool used in the processing plant. Everything was
owned and provided by respondent SMC. The lot, the building, and
working facilities are owned by respondent SMC. The machineries and
equipments like washer machine, oven or cooking machine, sizer
machine, freezer, storage, and chilling tanks, push carts, hydraulic jack,
tables, and chairs were all owned by respondent SMC. All the boxes, trays,
molding pan used in the processing are also owned by respondent SMC.
The gloves and boots used by the complainants were also owned by
respondent SMC. Even the mops, electric floor cleaners, brush, hose,
soaps, floor waxes, chlorine, liquid stain removers, Lysol and the like used
by the complainants assigned as cleaners were all owned and provided by
respondent SMC. Furthermore, Sunflower did not carry on an independent
business or undertake the performance of its service contract according to
its own manner and method, free from the control and supervision of its
principal, SMC, its apparent role having been merely to recruit persons to
work for SMC.
With regard to finding of facts, the general rule, no doubt, is that findings
of facts of an administrative agency which has acquired expertise in the
particular field of its endeavor are accorded great weight on appeal. The
rule is not absolute and admits of certain well-recognized exceptions,
however. Thus, when the findings of fact of the labor arbiter and the NLRC
are not supported by substantial evidence or their judgment was based on
a misapprehension of facts, the appellate court may make an independent
evaluation of the facts of the case.
43 | L a b o r S t a n d a r d s - C a s e D i g e s t s
avail himself of all reasonable means to ascertain the facts of the
controversy speedily, including ocular inspection and examination of well-
informed persons.
In its decision, the Labor Arbiter found that the security guards are
entitled to wage differentials and premium for holiday and rest day work.
The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to
Article 109 of the Labor Code. Eparwa filed an appeal before the NLRC. For
its part, Eparwa questioned its liability for the security guards’ claims and
the awarded cross-claim amounts. In a Resolution, the NLRC declared that
although Eparwa and LDCU are solidarily liable to the security guards for
the monetary award, LDCU alone is ultimately liable. LDCU filed a petition
for certiorari before the appellate where LDCU’s petition was granted and
the Labor Arbiter’s decision was reinstated. The appellate court also
allowed LDCU to claim reimbursement from Eparwa. Eparwa filed a motion
for reconsideration of the appellate court’s decision. Eparwa stressed that
jurisprudence is consistent in ruling that the ultimate liability for the
payment of the monetary award rests with LDCU alone. The appellate
court denied Eparwa’s motion for reconsideration for lack of merit. Hence,
this petition.
Held: Articles 106, 107 and 109 of the Labor Code read:
44 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Art. 106. Contractor or subcontractor. Whenever an employer enters into a
contract with another person for the performance of the formers 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.
This Court’s ruling in Eagle Security Agency, Inc. v. NLRC, squarely applies
to the present case. In Eagle, we ruled that:
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage [Article 99, Labor Code].
The contractor is made liable by virtue of his status as direct employer.
45 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The principal, on the other hand, is made the indirect employer of the
contractors 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
In the case at bar, it is beyond dispute that the security guards are the
employees of EAGLE. That they were assigned to guard the premises of
PTSI pursuant to the latter’s contract with EAGLE and that neither of these
two entities paid their wage and allowance increases under the subject
wage orders are also admitted. Thus, the application of
the aforecited provisions of the Labor Code on joint and several liability of
the principal and contractor is appropriate.
In view of the foregoing, the security guards should claim the amount of
the increases from EAGLE. Under the Labor Code, in case the agency fails
to pay them the amounts claimed, PTSI should be held solidarily liable
with EAGLE (Articles 106,107 and 109). Should EAGLE pay, it can claim an
adjustment from PTSI for an increase in consideration to cover the
increases payable to the security guards.
However, in the instant case, the contract for security services had
already expired without being amended consonant with the Wage Orders.
It is also apparent from a reading of a record that EAGLE does not now
demand from PTSI any adjustment in the contract price and its main
concern is freeing itself from liability. Given these peculiar
circumstances, if PTSI pays the security guards, it cannot claim
reimbursement from EAGLE. But in case it is EAGLE that pays them, the
latter can claim reimbursement from PTSI in lieu of an adjustment,
considering that the contract, had expired and had not been renewed.
For the security guards, the actual source of the payment of their wage
differentials and premium for holiday and rest day work does not matter
as long as they are paid. This is the import
of Eparwa and LDCUs solidary liability. Creditors, such as the security
guards, may collect from anyone of the solidary debtors. Solidary liability
does not mean that, as between themselves, two solidary debtors are
liable for only half of the payment.
LDCUs ultimate liability comes into play because of the expiration of the
Contract for Security Services. There is no privity of contract between the
security guards and LDCU, but LDCUs liability to the security guards
remains because of Articles 106, 107 and 109 of the Labor
Code. Eparwa is already precluded from asking LDCU for an adjustment in
the contract price because of the expiration of the contract,
but Eparwa’s liability to the security guards remains because of their
employer-employee relationship. In lieu of an adjustment in the contract
price, Eparwa may claim reimbursement from LDCU for any payment it
may make to the security guards. However, LDCU cannot claim any
46 | L a b o r S t a n d a r d s - C a s e D i g e s t s
reimbursement from Eparwa for any payment it may make to the security
guards.
47 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the seasonal employees have become regular
employees.
The fact that respondents do not work continuously for one whole year but
only for the duration of the season does not detract from considering
them in regular employment since in a litany of cases this Court has
already settled that seasonal workers who are called to work from time to
time and are temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until re-employed.
48 | L a b o r S t a n d a r d s - C a s e D i g e s t s
joined petitioner union as members. When the union filed a petition for
certification election with the Labor Department, the company opposed
the petition. The company claims that the workers were project
employees and therefore not qualified to form part of the rank and file
collective bargaining unit. The petition for certification election was then
dismissed. After making an appeal, the Secretary of Labor and
Employment ruled in favour of the union and reversed the earlier decision
and ordered the immediate holding of a certification election.
Both the Labor Arbiter and National Labor Relations Commission ruled that
the union’s strike was illegal and their termination was valid. The aggrived
workers filed with the Regional Arbitration Branch of the National Labor
Relations Commission their individual complaints against private
respondent. The Labor Arbiter decided that there was indeed an illegal
dismissal, but was not entitled to the awards prayed for. Both parties
sought appeal to the National Labor Relations Commission which modified
the earlier decision. It held that the labor arbiter erred in not resolving the
issue of underpayment of wages because not all of the original
complainants filed the same money claims with the labor department.
Thus, it awarded monetary benefits to qualified workers
Held: No. Regular employees are those who have been engaged to
perform activities which are usually necessary or desirable in the usual
business or trade of the employer even if the parties enter into an
agreement stating otherwise. In contrast, project employees are those
whose 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.
The contracts of employment of the petitioners attest to the fact that they
had been hired for specific projects, and their employment was
coterminous with the completion of the project for which they had been
hired. Said contracts expressly provide that the workers' tenure of
employment would depend on the duration of any phase of the project or
the completion of the awarded government construction projects in any of
49 | L a b o r S t a n d a r d s - C a s e D i g e s t s
their planned phases. Further, petitioners were informed in advance that
said project or undertaking for which they were hired would end on a
stated or determinable date. Besides, public respondent noted that
respondent company regularly submitted reports of termination of
services of project workers to the regional office of the labor department
as required under Policy Instruction No. 20. This compliance with the
reportorial requirement confirms that petitioners were project employees.
Considering that petitioners were project employees, whose nature of
employment they were fully informed about, at the time of their
engagement, related to a specific project, work or undertaking, their
employment legally ended upon completion of said project. The
termination of their employment could not be regarded as illegal
dismissal.
For its part, ABS-CBN alleged in its position paper that the respondents
were Pas who basically assists in the conduct of a particular program ran
by an anchor or talent. They are considered in the industry as “program
employees” in that, as distinguished from regular or station employees,
they are basically engaged by the station for a particular or specific
program broadcasted by the radio station. The Labor Arbiter ruled that the
respondents were regular employees. The NLRC ruled that respondents
were entitled to the benefits under the CBA because they were regular
employees who contributed to the profits of ABS-CBN through their labor.
The Court of Appeals ruled that respondents are not mere project
employees, but regular employees who perform tasks necessary and
50 | L a b o r S t a n d a r d s - C a s e D i g e s t s
desirable in the usual trade of petitioner and not just its project
employees.
Held: The respondents are regular employees of ABS-CBN. The fact that
respondents received pre-agreed “talent fees” instead of salaries, that
they did not observe the required office hours, and that they were
permitted to join other productions during their free time are not
conclusive of the nature of employment. Respondents cannot be
considered talents because they are not actors or actresses or radio
specialists or mere clerks or utility employees. They are regular
employees who perform several different duties under the control and
direction of ABS-CBN executives and supervisors.
February 5, 1990
51 | L a b o r S t a n d a r d s - C a s e D i g e s t s
effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment."
A month or so later, Alegre accepted the amount of P3,177.71, and signed
a receipt therefor containing the phrase, "in full payment of services for
the period 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 Brent in terminating the services of Alegre . . . (as) not
sanctioned by P.D. 442," as prohibited by Circular No. 8, series of 1969, of
the Bureau of Private Schools. Brent School filed a motion for
reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. The latter sustained the
ruling of the Regional Director. Brent appealed to the Office of the
President but it was rebuffed. That Office dismissed its appeal for lack of
merit and affirmed the Labor Secretary's decision, ruling 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 in the Labor Code for termination of services. Hence this petition
by Brent.
52 | L a b o r S t a n d a r d s - C a s e D i g e s t s
is that petitioners (teachers) were well aware all the time that their tenure
was for a limited duration. Upon its termination, both parties to the
employment relationship were free to renew it or to let it lapse."
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, i.e., before
the advent of the Labor Code, there was no doubt whatever about the
validity of term employment. It was impliedly but nonetheless clearly
recognized by the Termination Pay Law, R.A. 1052, as amended by R.A.
1787. Basically, this statute provided that— 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.
53 | L a b o r S t a n d a r d s - C a s e D i g e s t s
There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy, morals, etc. But where
no such intent to circumvent the law is shown, or stated otherwise, where
the reason for the law does not exist. 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.
September 7, 2001
54 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the creation of a union. In their affidavits, the Spouses Domasig recalled
not being allowed to board their buses and being illegally dismissed after
having known of their signature campaign and for refusing to take back
their signatures to start a union. Respondents then filed a case for unfair
labor practice, illegal dismissal, illegal deductions from salary, and non-
payment of service incentive leave pay and 13th month pay. Labor Arbiter
found for the respondents and ordered petitioner to reinstate them to
their former positions as driver and bus conductress without loss of
seniority rights and with back pay. Petitioner appealed to NLRC which
affirmed the decision of the Labor Arbiter. CPBC challenged both Decisions
on the ground that private respondents were not regular employees as
they were compensated purely on a commission basis, their services were
rendered on a first-come-first-served basis, and they only worked for only
about 10-15 days and only when they felt to do so.
Held: The court held that they were regular employees and affirmed the
Decision of the NLRC. In determining whether an employee is regular or
not, the activities he performed must be in relation to the usual business
or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer.
Considering the work of the respondents, they were regular employees.
Without their services, the petitioner risked the operation and
management of its business of providing transportation services.
Facts: The respondent union filed a petition for direct certification as the
sole and exclusive bargaining agent of all collectors of the Singer Sewing
Machine Company, Baguio City branch. Petitioner opposed the petition on
the ground that the union members were not employees of their company.
Both the Med-Arbiter and the Secretary of Labor found for the respondents
and granted the petition for certification election. Petitioner then filed the
current action.
55 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not there existed an employer-employee relationship
between the petitioner company and the respondents.
The Agreement confirms the status of the collecting agent in this case as
an independent contractor not only because he is explicitly described as
such but also because the provisions permit him to perform collection
services for the company without being subject to the control of the latter
except only as to the result of his work. After a careful analysis of the
contents of the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and
report forms issued by the Company and that reports shall be submitted
at least once a week is not necessarily an indication of control over the
means by which the job of collection is to be performed. The agreement
itself specifically explains that receipt forms shall be used for the purpose
of avoiding a co-mingling of personal funds of the agent with the money
collected on behalf of the Company. Likewise, the use of standard report
forms as well as the regular time within which to submit a report of
collection are intended to facilitate order in office procedures. Even if the
report requirements are to be called control measures, any control is only
with respect to the end result of the collection since the requirements
regulate the things to be done after the performance of the collection job
or the rendition of the service.
The Court finds the contention of the respondents that the union members
are employees under Article 280 of the Labor Code to have no basis. The
definition that regular employees are those who perform activities which
are desirable and necessary for the business of the employer is not
determinative in this case. Any agreement may provide that one party
56 | L a b o r S t a n d a r d s - C a s e D i g e s t s
shall render services for and in behalf of another for a consideration (no
matter how necessary for the latter's business) even without being hired
as an employee. This is precisely true in the case of an independent
contractorship as well as in an agency agreement. The Court agrees with
the petitioner's argument that 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.
Sonza vs. ABS-CBN Broadcasting Corp., G. R. No. 1380051 (June 10, 2004)
as against Dumpit Murillo vs. C.A., G.R. No. 164652 (June 8, 2007)
June 8, 2007
On appeal the NLRC reversed the Labor Arbiter’s decision holding that an
employer-employee relationship existed between petitioners and ABC;
that the talent contract was void; that the petitioner was a regular
employee illegally dismissed. ABC filed a Motion for reconsideration but
was denied. ABC elevated the case to CA. CA ruled that NLRC committed
grave abuse of discretion, and reversed the decision of the NLRC, saying
57 | L a b o r S t a n d a r d s - C a s e D i g e s t s
that the petitioner was a fixed term employee and not a regular
employee.
58 | L a b o r S t a n d a r d s - C a s e D i g e s t s
relation to the scheme of the particular business or trade in its
entirety. If the employee has been performing the job for at
least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but
only with respect to such activity and while such activity
exists.
In our view, the requisites for regularity of employment have been met in
the instant case. Gleaned from the description of the scope of services
aforementioned, petitioners work was necessary or desirable in the usual
business or trade of the employer.
Respondents filed with the Regional Arbitration Branch (RAB) at Region VII
of the Department of Labor and Employment their consolidated complaint
for illegal dismissal; illegal deduction; non-payment of overtime and
holiday pay; premium pay for holiday, rest day and night shift differential;
non-payment of 13th month pay, service incentive leave, separation pay,
backwages; and attorney's fees. Subsequently, the Executive Labor
Arbiter of RAB VII rendered a decision in favor of respondents and ordered
petitioner to pay to them their money claims. However, on petitioner's
appeal, the NLRC'S reversed the decision of the Labor Arbiter.
59 | L a b o r S t a n d a r d s - C a s e D i g e s t s
contractual or project employees, i.e. as "talents" engaged for specific
projects, under the special work arrangements with the petitioner, and in
upholding the legality of their dismissal. Respondents asserted that they
are petitioner's regular employees and emphasized the fact of their
continuous work after each tele-series program and the very nature of
their work, which is "necessary and desirable" to the business or trade of
their employer. They also averred that the application of the "four-fold
test" in labor laws clearly shows the existence of an employer-employee
relationship between the parties.
60 | L a b o r S t a n d a r d s - C a s e D i g e s t s
control the whole production. All these, taken together, unmistakably
show petitioner's power of control over respondents' work.
This Court has held that the primary standard in determining regular
employment is the reasonable connection between the particular activity
performed by the employee in relation to the business or trade of his
employer. Here, the activity performed by respondents is, without doubt,
vital to petitioner's trade or business.
June 8, 2007
61 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: Respondents alleged that they were employed as drama talents by
DYWB-Bombo Radyo, a radio station owned and operated by petitioner
Consolidated Broadcasting System, Inc. They reported for work daily for
six days in a week and were required to record their drama production in
advance. Some of them were employed by petitioner since 1974, while
the latest one was hired in 1997. Sometime in August 1998, petitioner
reduced the number of its drama productions from 14 to 11, but was
opposed by respondents.
After the negotiations failed, the latter sought the intervention of the
Department of Labor and Employment (DOLE), which on November 12,
1998, conducted through its Regional Office, an inspection of DWYB
station. The results thereof revealed that petitioner is guilty of violation of
labor standard laws, such as underpayment of wages, 13th month pay,
non-payment of service incentive leave pay, and non-coverage of
respondents under the Social Security System. Vexed by the respondents’
complaint, petitioner allegedly pressured and intimidated respondents.
Oberio and Delta were suspended for minor lapses and the payment of
their salaries were purportedly delayed. Eventually, on February 3, 1999,
pending the outcome of the inspection case with the Regional Director,
respondents were barred by petitioner from reporting for work; thus, the
former claimed constructive dismissal. On October 12, 1999, respondents
filed a case for illegal dismissal, underpayment/non-payment of wages
and benefits plus damages against petitioner. On April 10, 2000, the Labor
Arbiter dismissed the case without prejudice while waiting for the decision
of the Secretary of Labor on the same issue of the existence of an
employer-employee relationship between petitioner and respondents. On
appeal to the NLRC, respondents raised the issue of employer-employee
relationship and submitted the following to prove the existence of such
relationship. On December 5, 2001, the NLRC rendered a decision holding
that respondents were regular employees of petitioner who were illegally
dismissed by the latter. Hence, petitioner filed the instant recourse.
62 | L a b o r S t a n d a r d s - C a s e D i g e s t s
employees who were paid per drama or per project/contract, the
engagement of their services for 2 to 25 years justify their classification as
regular employees, their services being deemed indispensable to the
business of petitioner.
In ABS-CBN v. Marquez, the Court held that the failure of the employer to
produce the contract mandated by Policy Instruction No. 40 is indicative
that the so called talents or project workers are in reality, regular
employees. Thus
63 | L a b o r S t a n d a r d s - C a s e D i g e s t s
WILHELMINA S. OROZCO vs.
THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS,
PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ MAGSANOC
The newspaper said that the action aims to improve the Lifestyle section.
After a perusal of Orozco’s articles, they found that her column failed to
improve, continued to be superficially and poorly written, and failed to
meet the high standards of the newspaper. Orozco, then, filed a complaint
for illegal dismissal. The Labor Arbiter favored. Orozco in its ruling. On
appeal, the National Labor Relations Commission dismissed the appeal
and affirmed the Labor Arbiter’s decision. The Court of Appeals, on the
other hand, set aside the National Labor Relations Commission’s decision
and dismissed Orozco’s complaint.
Held: No. Though PDI issued guidelines for the petitioner to follow in the
course of writing her columns, careful examination reveals that the factors
enumerated by the petitioner are inherent conditions in running a
newspaper. In other words, the so-called control as to time, space, and
discipline are dictated by the very nature of the newspaper business itself.
Aside from the constraints presented by the space allocation of her
column, there were no restraints on her creativity. Petitioner was free to
write her column in the manner and style she was accustomed to and to
use whatever research method she deemed suitable for her purpose. The
apparent limitation that she had to write only on subjects that befitted the
Lifestyle section did not translate to control, but was simply a logical
consequence of the fact that her column appeared in that section and
therefore had to cater to the preference of the readers of that section.
Although petitioner had a weekly deadline to meet, she was not precluded
from submitting her column ahead of time or from submitting columns to
be published at a later time. More importantly, respondents did not dictate
upon petitioner the subject matter of her columns, but only imposed the
64 | L a b o r S t a n d a r d s - C a s e D i g e s t s
general guideline that the article should conform to the standards of the
newspaper and the general tone of the particular section. Where a person
who works for another performs his job more or less at his own pleasure,
in the manner he sees fit, not subject to definite hours or conditions of
work, and is compensated according to the result of his efforts and not the
amount thereof, no employer-employee relationship exists.
Audion moved for the dismissal of the case on the ground that there was
no illegal dismissal, since the employment contract signed by complainant
with respondent is co-terminus with the project. The Labor Arbiter ruled in
favor of Madolid and ordered Audion to 1) reinstate Madolid to his former
position with full back wages from the date of his dismissal up to the
signing of the decision without loss of seniority rights; and 2) to pay
Madolid’s overtime, project allowances, minimum wage increase
adjustment, proportionate 13th month pay, moral and exemplary
damages, and attorney's fees equivalent to 10% of the total award of
complainant. Audion appealed to the NLRC, which dismissed the same.
The motion for reconsideration was also denied.
65 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the parties have an employer-employee
relationship, and, if so, whether or not the respondent is legally
terminated.
66 | L a b o r S t a n d a r d s - C a s e D i g e s t s
30, 1999, after due proceedings, the Labor Arbiter declared that they have
been illegally dismissed. On November 22, 2000, the NLRC affirmed the
decision of the Labor Arbiter with the modification that the award of
attorney’s fees was reduced to 10% of the total monetary award. On
August 21, 2003, the CA denied the petition for lack of merit. The CA held
that after rendering more than one year of continuous service, the
respondents became regular employees of the petitioners by operation of
law.
Issue: Whether or not the respondents were regularized by the lapse one
year from the date of their employment.
Held: Yes, they are. In any case, we find that the CA, the NLRC and the
Labor Arbiter correctly categorized the respondents as regular employees
of the petitioner company. In Abasolo v. National Labor Relations
Commission, the Court reiterated the test in determining whether one is a
regular employee:
The primary standard, therefore, of determining regular employment is
the reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be
determined by considering the nature of work performed and its relation
to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity and while such activity exists
67 | L a b o r S t a n d a r d s - C a s e D i g e s t s
ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and
MR. OSCAR BANZON, General Manager vs.
ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA,
REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA
and GARY DISON
April 10, 2006
68 | L a b o r S t a n d a r d s - C a s e D i g e s t s
pool" can either be project employees or regular employees.The principal
test for determining whether employees are "project employees" or
"regular employees" is whether they are assigned to carry out a specific
project or undertaking, the duration and scope of which are specified at
the time they are engaged for that project. Such duration, as well as the
particular work/service to be performed, is defined in an employment
agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latter's work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, we are
constrained to declare them as regular employees.
Furthermore, petitioners cannot belatedly argue that respondents
continue to be their employees (so as to escape liability for illegal
dismissal). Before the LA, petitioners staunchly postured that respondents
were only "project employees" whose employment tenure was
coterminous with the projects they were assigned to. However, before the
CA, they took a different stance by insisting that respondents continued to
be their employees. Petitioners' inconsistent and conflicting positions on
their true relation with respondents make it all the more evident that the
latter were indeed their regular employees.
69 | L a b o r S t a n d a r d s - C a s e D i g e s t s
March 10, 1993 dismissing the same for lack of merit but ordered PFCCI to
reimburse her. On appeal, however, the said decision was reversed by the
National Labor Relations Commission (NLRC), which directs petitioner to
reinstate complainant to her position last held, or to an equivalent position
if such is no longer feasible, with full backwages.
70 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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; and (c) casual employees or those who are neither regular nor
project employees. After a careful scrutiny of the subject contract, we
arrive at the conclusion that there was no grave abuse of discretion on the
part of the NLRC and, thus, affirm the finding that respondent has become
a regular employee entitled to security of tenure guaranteed under the
Constitution and labor laws.
Facts: On March 15, 1984, CALS hired Alfredo Roco as its driver. On May
16, 1995, it hired Candelaria Roco, another sister, as helper,3 also at its
chicken dressing plant on a probationary basis. On March 5, 1996, Alfredo
Roco and Candelaria Roco filed a complaint for illegal dismissal against
CALS and Danilo Yap alleging that Alfredo and Candelaria were illegally
dismissed on January 20, 1996 and November 5, 1996, respectively.
According to Alfredo Roco, he was dismissed on January 20, 1996 when he
refused to accept P30,000.00 being offered to him by CALS' lawyer, Atty.
Myra Cristela A. Yngcong, in exchange for his executing a letter of
voluntary resignation. On the part of Candelaria Roco, she averred that
she was terminated without cause from her job as helper after serving
more than six (6) months as probationary employee.
The Labor Arbiter on April 16, 1998, issued a decision dismissing the
complaints.The National Labor Relations Commission (NLRC), in a decision
promulgated on January 17, 2000, affirmed the judgment of the Labor
Arbiter.
On appeal,the appellate court set aside the NLRC's decision and ordered
reinstatement of Alfredo and Candelaria Roco to their former positions
without loss of seniority of rights and benefits. In holding that Alfredo Roco
71 | L a b o r S t a n d a r d s - C a s e D i g e s t s
did not abandon his employment, but was illegally dismissed, the Court of
Appeals ratiocinated:
In ruling in favor of Candelaria Roco, the appellate court held that when
her employment was terminated on November 15, 1995 (she was hired on
May 16, 1995), it was four (4) days after she ceased to be a probationary
employee and became a regular employee within the ambit of Article 281
of the Labor Code, which provides:
72 | L a b o r S t a n d a r d s - C a s e D i g e s t s
ART. 281. Probationary employment. - Probationary employment
shall not exceed six 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.
Held: From the facts established, we are of the view that Alfredo Roco has
not established convincingly that he was dismissed. No notice of
termination was given to him by CALS. There is no proof at all, except his
self-serving assertion, that he was prevented from working after the end
of his leave of absence on January 18, 1996. In fact, CALS notified him in a
letter dated March 12, 1996 to resume his work. Both the Labor Arbiter
and the NLRC found that Alfredo, as well as Candelaria Roco, was not
dismissed. Their findings of fact are entitled to great weight.
The Court of Appeals did not disagree with the NLRC's finding that
Candelaria was dismissed because she did not qualify as a regular
employee in accordance with the reasonable standards made known by
the company to her at the time of her employment
CALS argues that the Court of Appeals' computation of the 6-month
probationary period is erroneous as the termination of Candelaria's
services on November 15, 1995 was exactly on the last day of the 6-
month period.
We agree with CALS' contention as upheld by both the Labor Arbiter and
the NLRC that Candelaria's services was terminated within and not beyond
the 6-month probationary period. In Cebu Royal v. Deputy Minister of
Labor,13 our computation of the 6-month probationary period is reckoned
from the date of appointment up to the same calendar date of the
6th month following. Thus, we held:
73 | L a b o r S t a n d a r d s - C a s e D i g e s t s
medical examination for qualification as regular employee but the
results showed that he is suffering from PTB minimal. Consequently,
he was informed of the termination of his employment by
respondent.' The order then concluded that the termination was
'justified.'
As there is no mention of the basis of the above order, we may
assume it was the temporary payroll authority submitted by the
petitioner showing that the private respondent was employed on
probation on February 16, 1978. Even supposing that it is not self-
serving, we find nevertheless that it is self-defeating. The six-month
period of probation started from the said date of appointment and
so ended on August 17, 1978, but it is not shown that the private
respondent's employment also ended then; on the contrary, he
continued working as usual. Under Article 282 of the Labor Code, 'an
employee who is allowed to work after a probationary period shall
be considered a regular employee.'' Hence, Pilones was already on
permanent status when he was dismissed on August 21, 1978, or
four days after he ceased to be a probationer.
Facts: Nelson Paras was first employed by MMPC as a shuttle bus driver
on March 19, 1976. He resigned on June 16, 1982. He applied for and was
hired as a diesel mechanic and heavy equipment operator in Saudi Arabia
from 1982 to 1993. When he returned to the Philippines, he was re-hired
as a welder-fabricator at the MMPC tooling shop from October 3, 1994 to
October 31, 1994.2 On October 29, 1994, his contract was renewed from
November 1, 1994 up to March 3, 1995.
74 | L a b o r S t a n d a r d s - C a s e D i g e s t s
valid for his failure to pass the probationary standards of MMPC. In a
Decision promulgated on September 13, 2000, the CA reversed the ruling
of the Voluntary Arbitrator.
Applying Article 13 of the Civil Code, the probationary period of six (6)
months consists of one hundred eighty (180) days. This is in conformity
with paragraph one, Article 13 of the Civil Code, which provides that the
months which are not designated by their names shall be understood as
consisting of thirty (30) days each. The number of months in the
probationary period, six (6), should then be multiplied by the number of
days within a month, thirty (30); hence, the period of one hundred eighty
(180) days.
75 | L a b o r S t a n d a r d s - C a s e D i g e s t s
MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister
of Ministry of Labor and Employment judgment, and JOAQUIN A.
DEQUILA
January 26, 1989
Dequila thereupon filed with the Ministry of Labor against Mariwasa and
its Vice-President for Administration, Angel T. Dazo, a complaint for illegal
dismissal and violation of Presidential Decrees Nos. 928 and 1389. His
complaint was dismissed after hearing by Director Francisco L. Estrella,
Director of the Ministry's National Capital Region. On appeal to the Office
of the Minister, however, said disposition was reversed. Respondent
Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a
regular employee at the time of his dismissal.
76 | L a b o r S t a n d a r d s - C a s e D i g e s t s
which, by reasonably extending the period of probation, actually improve
and further a probationary employee's prospects of demonstrating his
fitness for regular employment.
77 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not petitioner is regular employee despite his fixed
period contract with respondent.
Held: We resolve the issue in the affirmative. We agree with the OSG that
the contract cannot be strictly construed as one for a fixed term. For one,
while the first paragraph of Section 2 spoke of the contract's duration to
be "one" year, it was in fact, for one year and six months because it was
to commence on 21 February 1994 and terminate on 21 August I995. For
another, while the second paragraph specified the first six-month period
of employment, 21 February to 21 August 1994, as "contractual," the third
sentence of that paragraph granted the petitioner regular employment
status should he "continue his employment beyond August 21, 1994, . . .
upon demonstration of sufficient skill in terms of his ability to meet the
standards" set by the respondent company. It is clear that the first six
months was in reality the "probation period" under Article 281 of the
Labor Code, since petitioner would become a regular employee if the
employment would continue beyond that period upon demonstration of
sufficient skill in accord with the standards set by the respondent
corporation.
The Labor Arbiter found that as an abstractor, the petitioner was engaged
in "processing, encoding of data, precoding, editing, proofreading and
scoring, all of which activities are deemed necessary and desirable in the
usual business of respondent company." The employment then was
"regular" under the first paragraph of Article 280 of the Labor Code, which
reads:
78 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Notably, the respondent company prepared the contract of employment. It
was a contract of adhesion, and petitioner had only to adhere to it by
signing it. Its terms should be construed strictly against the party who
prepared it. Any ambiguity therein must be resolved against the
respondent company, especially because under Article 1702 of the Civil
Code, in case of doubt, all labor contracts shall be construed in favor of
the laborer. We cannot allow the respondent company to construe
otherwise what appears to be clear from the wordings of the contract. The
interpretation which the respondent company seeks to wiggle out is
wholly unacceptable, as it would result in a violation of petitioner's right to
security of tenure guaranteed in Section 3 of Article XIII of the Constitution
and in Articles 279 and 281 of the Labor Code.
79 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not Innodata’s fixed period contracts are valid.
Facts: Iluminada Ver Buiser, Ma. Cecilia Rilloacuña, and Ma. Mercedes P.
Intengan were employed by General Telephone Directory Company as
sales representatives and charged with the duty of soliciting
advertisements for inclusion in a telephone directory. Records show that
Buiser and Intengan entered into an employment contract on probationary
status with General Telephone Directory Company, a corporation engaged
in the business of publication and circulation of the directory of the
Philippine Long Distance Telephone Company. Their contract stipulated
that they will work on a probationary status for a period of eighteen (18)
months. It is understood that darung the probationary period of
employment, the Employee may be terminated at the pleasure of the
company without the necessity of giving notice of termination or the
payment of termination pay. They were also given prescribed sales quotas
to be accomplished or met by the petitioners. Because of their failure to
achieve the required quota, the petitioners were dismissed from the
service by the private respondent.
This motivated the petitioners to file with the Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages,
earned commissions and other benefits. The Regional Director dismissed
the complaints of the petitioners. The petitioners sought for a
80 | L a b o r S t a n d a r d s - C a s e D i g e s t s
reconsideration of the decision, but was treated as an appeal to the
Minister of Labor. Leogardo, the Deputy Minister of Ministry of Labor,
affirmed the Regional Director's Order wherein it ruled that the petitioners
have not attained permanent status since private respondent was justified
in requiring a longer period of probation, and that the termination of
petitioners' services was valid since the latter failed to meet their sales
quotas. Thus, this petition before the Supreme Court.
Issue: Whether or not there was an error in ruling that the probationary
employment of petitioners herein is eighteen (18) months instead of the
mandated six (6) months under the Labor Code, and in consequently
further ruling that petitioners are not entitled to security of tenure while
under said probation for 18 months.
81 | L a b o r S t a n d a r d s - C a s e D i g e s t s
NITTO ENTERPRISES vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI
The following day, Roberto Capili was asked to resign in a letter . On August
3, 1990 private respondent executed a Quitclaim and Release in favor of
petitioner for and in consideration of the sum of P1,912.79. Three days
after, private respondent formally filed before the NLRC Arbitration
Branch, National Capital Region a complaint for illegal dismissal and
payment of other monetary benefits.
The Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit upon
which was reversed by the NLRC. Petitioner filed a motion for
reconsideration but the same was denied. Hence, the instant petition.
82 | L a b o r S t a n d a r d s - C a s e D i g e s t s
In the case at bench, the apprenticeship agreement between petitioner
and private respondent was executed on May 28, 1990 allegedly
employing the latter as an apprentice in the trade of "care maker/molder."
On the same date, an apprenticeship program was prepared by petitioner
and submitted to the Department of Labor and Employment. However, the
apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding
the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.
Based on the evidence, petitioner did not comply with the requirements of
the law. It is mandated that apprenticeship agreements entered into by
the employer and apprentice shall be entered only in accordance with the
apprenticeship program duly approved by the Minister of Labor and
Employment. Prior approval by the Department of Labor and Employment
of the proposed apprenticeship program is, therefore, a condition sine quo
non before an apprenticeship agreement can be validly entered into. The
act of filing the proposed apprenticeship program with the Department of
Labor and Employment is a preliminary step towards its final approval and
does not instantaneously give rise to an employer-apprentice relationship.
83 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the other defendants. The motion for reconsideration having been
denied, the school then came to this Court in this petition for review
on certiorari.
Held: The petitioner says the private respondent had not been illegally
dismissed because her teaching contract was on a yearly basis and the
school was not required to rehire her in 1968. The argument is that her
services were terminable at the end of each year at the discretion of the
school. Significantly, no explanation was given by the petitioner, and no
advance notice either, of her relief after teaching year in and year out for
all of thirty-two years, the private respondent was simply told she could
not teach any more. The Court holds, after considering the particular
circumstance of Oh's employment that she had become a permanent
employee of the school and entitled to security of tenure at the time of
her dismissal. Since no cause was shown and established at an
appropriate hearing, and the notice then required by law had not been
given, such dismissal was invalid.
Facts: The said seven individual private respondents were hired by the
petitioner-school on a probationary basis on June 1, 1984, whereupon,
sometime between April 1 and 15, 1985 their services were terminated.
On May 8, 1985, they charged the petitioner-school with unfair labor
practice and illegal dismissal. They likewise asked for damages. The labor
arbiter ruled in favor of the respondents.
The school appealed to the National Labor Relations Commission, but the
decision of the labor arbiter was affirmed on February 29, 1988 except for
the charge of unfair labor practice which was dismissed for insufficiency of
evidence.
84 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the individual complainants were lawfully
dismissed when respondents failed to hire them.
85 | L a b o r S t a n d a r d s - C a s e D i g e s t s
HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK
KON KIM and/or JHUNIE ADAJAR vs.
FELICITO IBAÑEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE
DAGOTDOT AND RUEL CALDA
The Labor Arbiter found merit in the respondents' complaint and declared
that they were regular employees who had been dismissed without just
and valid causes and without due process. Petitioners filed an appeal
before the NLRC. The NLRC reversed the Labor Arbiter's Decision dated 30
April 2003, and pronounced that the respondents were project employees
who were legally terminated from employment. On appeal, the Court of
Appeals reversed the NLRC Decision.
86 | L a b o r S t a n d a r d s - C a s e D i g e s t s
"regular employees" is whether or not the project employees were
assigned to carry out a "specific project or undertaking," the duration and
scope of which were specified at the time the employees were engaged
for that project. In a number of cases, the Court has held that the length
of service or the re-hiring of construction workers on a project-to-project
basis does not confer upon them regular employment status, since their
re-hiring is only a natural consequence of the fact that experienced
construction workers are preferred. Employees who are hired for carrying
out a separate job, distinct from the other undertakings of the
company, the scope and duration of which has been determined and
made known to the employees at the time of the employment, are
properly treated as project employees and their services may be lawfully
terminated upon the completion of a project. Should the terms of their
employment fail to comply with this standard, they cannot be considered
project employees.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latters' work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, the
Court were constrained to declare them as regular employees.
87 | L a b o r S t a n d a r d s - C a s e D i g e s t s
On June 30, 2000, the Labor Arbiter rendered a Decision[ dismissing the
complaint, holding that respondent Visca was an independent contractor and
the other respondents were hired by him to help him with his contracted works
at the resort; that there was no illegal dismissal but completion of projects; that
respondents were project workers, not regular employees. Respondents filed an
appeal with the NLRC.
The NLRC rendered a Decision in favor of the respondents. Petitioners then filed
a Motion for Reconsideration, arguing that respondents were project employees.
The NLRC made a complete turnabout from its original decision and issued a
Resolution dismissing the complaint, holding that respondents were not regular
employees but project employees, hired for a short period of time to do some
repair jobs in petitioners' resort business.
Respondents then filed a Petition for Certiorari with the CA. The CA rendered its
assailed Decision where it that held respondents were regular employees, not
project workers, since in the years that petitioners repeatedly hired respondents'
services, the former failed to set, even once, specific periods when the
employment relationship would be terminated; that the repeated hiring of
respondents established that the services rendered by them were necessary and
desirable to petitioners' resort business; at the least, respondents were regular
seasonal employees, hired depending on the tourist season and when the need
arose in maintaining petitioners' resort for the benefit of guests.
Held: A project employee is one whose "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." Before an employee hired
on a per-project basis can be dismissed, a report must be made to the
nearest employment office, of the termination of the services of the
workers every time completes a project, pursuant to Policy Instruction No.
20.
88 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Department Order No. 19, as well as the old Policy Instructions No. 20,
requires employers to submit a report of an employee’s termination to the
nearest public employment office every time his employment is
terminated due to a completion of a project. Petitioners' failure to file
termination reports is an indication that the respondents were
not project employees but regular employees.
Held: The Court ruled that respondents were regular employees. The
principal test for determining whether employees are project employees
89 | L a b o r S t a n d a r d s - C a s e D i g e s t s
or regular employees is whether they are assigned to carry out a specific
project or undertaking, the duration and scope of which are specified at
the time they are engaged for that project. Such duration, as well as the
particular work/service to be performed is defined in an employment
agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latter’s work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, the
Court is constrained to declare them as regular employees.
September 9, 1996
Private respondents then averred that had been given their walking
papers after they refused to sign a "Contract Employment" providing for,
among others, a fixed period of employment which "automatically
terminates without necessity of further notice" or even earlier at
petitioner's sole discretion. Hence, they filed a case of illegal dismissal.
The Labor Arbiter dismissed the complaints for lack of merit citing that
90 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the complainants were project employees assigned to work on specific
projects involving the installation of air-conditioning units as covered by
contracts between their employer and the latter's clients.
The NLRC reversed the Labor Arbiter's decision and found private
respondents had been regular employees illegally dismissed, and stated
that they belonged to a work pool from which the respondent company
drew its manpower requirements.
Held: The Court held that there was no solid evidence to decide the case
either way. Therefore, considering that in illegal dismissal cases, the
employer always has the burden of proof, and considering that the law
mandates that all doubts, uncertainties, ambiguities and insufficiencies be
resolved in favor of labor, it ruled against petitioner and in favor of private
respondents.
Facts: Rogelio Caramol was hired by respondent Atlantic Gulf and Pacific
Co. of Manila, Inc., (ATLANTIC GULF), on a "project-to-project" basis but
whose employment was renewed forty-four (44) times by the latter filed a
complaint against the Labor Arbiter for unfair labor practice which the
Labor Arbiter decided favourably. However, the decision was reversed and
set aside by the National Labor Relations Commission (NLRC). The NLRC
found that Caramol is a project employee falling under the exception of
Art. 280 of the Labor Code. Caramol now assails NLRC’s decision through
this petition before the Supreme Court.
91 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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. However, where from the circumstances it is apparent that
periods have been imposed to preclude the acquisition of tenurial security
by the employee, they should be struck down as contrary to public policy,
morals, good custom or public order.
February 5, 1990
92 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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. Brent School filed a motion for
reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. The latter sustained the
Regional Director. Brent appealed to the Office of the President. Again it
was rebuffed. That Office dismissed its appeal for lack of merit and
affirmed the Labor Secretary's decision, ruling 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 in the Labor Code for termination of services.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include in
it a stipulation fixing the duration thereof Stipulations for a term were
explicitly recognized as valid by this Court.
The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (PD 442), which went into
effect on November 1, 1974. The Code contained explicit references to
fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment
began to take place at about this time.
Article 320 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."
93 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Article 320, dealing with "Probationary and fixed period employment," was
altered by eliminating the reference to persons "employed with a fixed
period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and
literal interpretation, 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 employer's 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. Such interpretation puts the seal on Bibiso upon the effect of
the expiry of an agreed period of employment as still good rule—a rule
reaffirmed in the recent case of Escudero vs. Office of the President (G.R.
No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher
being served by her school a notice of termination following the expiration
of the last of three successive fixed-term employment contracts.
Paraphrasing Escudero, respondent Alegre's employment was terminated
upon the
expiration of his last contract with Brent School on July 16, 1976 without
the necessity of any notice. The advance written advice given the
Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor
an application for clearance to terminate which needed the approval of
the Department of Labor to make the termination of his services effective.
In any case, such clearance should properly have been given, not denied.
94 | L a b o r S t a n d a r d s - C a s e D i g e s t s
INNODATA PHILS. INC.,/INNODATA CORPORATION, LEO RABANG,
AND JANE NAVARETTE
September 30, 2008
The Labor Arbiter held that as formatters, petitioners occupied jobs that
were necessary, desirable and indispensable to the data processing and
encoding business and should be considered regular employees who were
entitled to security of tenure. NLRC, on appeal, reversed finding that
petitioners were not regular employees but fixed-term employees as
stipulated in their contracts. CA affirmed the NLRC ruling.
Held: No. Thus, they were illegally dismissed. The Court found that there
were no valid fixed-term employment contracts, and petitioners were
regular employees of Innodata who could not dismiss them except for just
or authorized cause. The employment status of a person is defined and
95 | L a b o r S t a n d a r d s - C a s e D i g e s t s
prescribed by law and not by what the parties say it should be. Based on
Art. 280, the following employees are accorded regular status: (1) those
who are engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer, regardless of the length of
their employment; and (2) those who were initially hired as casual
employees, but have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are
employed. Petitioners belong to the first type. The applicable test to
determine whether an employment should be considered regular or non-
regular is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of
the employee.
Petitioners alleged and the contracts themselves state that the petitioners
were employed on February 17, 1999. However, respondents asserted
before the Labor Arbiter that the contracts were effective only on
September 6, 1999. While they submitted employment contracts with
September 6, 1999 as beginning of date of effectivity, in one of them, the
original date, February 16, 1999,was merely crossed out and replaced with
September 6. The alterations were very obvious and have not initialed by
the petitioners to indicate their assent to the same. If the contracts were
truly fixed-term contracts, then a change in the term or period agreed
upon is material and would already constitute a novation of the original
contract.
96 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Innodata further contends that petitioners were project employees whose
employment ceased at the end of the specific project or undertaking. This
is devoid of merit. In Philex Mining Corp v. NLRC, “project employees” are
those hired: (1) for a specific project or undertaking, and wherein (2) the
completion or termination of such project has been determined at the
time of the engagement of the employee. The employment contracts did
not mention what specific project or undertaking petitioners were hired
for. The conclusion by the Court of Appeals that petitioners were hired for
the Earthweb project is not supported by any evidence on record. More
importantly, there is also a dearth of evidence that such project or
undertaking had already been completed or terminated to justify the
dismissal of petitioners. In fact, petitioners did not work on just one
project, but continuously worked for a series of projects for various clients.
Petitioners, being regular employees, are entitled to security of tenure.
97 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: Yes. The private respondents were petitioner’s regular employees.
Such relationship can be easily determined by the application of the
“control test” and such will hold true that they were petitioner’s regular
employees since the petitioner having control over the results of the work
done, as well as the means and methods by which the same were
accomplished.
The petitioner cannot claim that the respondents were merely project
employees. It is not enough that an employee is hired for a specific project
or phase of work, there must also be a determination of, or a clear
agreement on, the completion or termination of the project at the time the
employee was engaged if the objectives of Article 280 of the Labor Code
are to be achieved. Petitioner was unable to show that private
respondents were appraised of the nature of their employment, the
specific projects themselves or any phase thereof undertaken by
petitioner and for which private respondents were hired, thus petitioner
failed to substantially give evidence that the private respondents were his
projects employee only.
Facts: Maraguinot and Enero were separately hired by Vic Del Rosario
under Viva Films as part of the filming crew. Sometime in May 1992,
sought the assistance of their supervisor to facilitate their request that
their salary be adjusted in accordance with the minimum wage law. On
June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del
Rosario would agree to their request only if they sign a blank employment
contract. Petitioners refused to sign such document. After which, the Mr.
Enero was forced to go on leave on the same month and refused to take
him back when he reported for work. Mr. Maraguinot on the other hand
was dropped from the payroll but was returned days after. He was again
asked to sign a blank employment contract but when he refused, he was
terminated. Consequently, the petitioners sued for illegal dismissal before
the Labor Arbiter. The private respondents claim the following: (a) that
VIVA FILMS is the trade name of VIVA PRODUCTIONS, INC. and that it was
primarily engaged in the distribution & exhibition of movies- but not then
making of movies; (b) That they hire contractors called “producers” who
98 | L a b o r S t a n d a r d s - C a s e D i g e s t s
act as independent contractors as that of Vic Del Rosario; and (c) As such,
there is no employee-employer relation between petitioners and private
respondents.
The Labor Arbiter held that the complainants are employees of the private
respondents. That the producers are not independent contractor but
should be considered as labor-only contractors and as such act as mere
agent of the real employer. Thus, the said employees are illegally
dismissed. The private respondents appealed to the NLRC which reversed
the decision of the Labor Arbiter declaring that the complainants were
project employees due to the ff. reasons: (a) Complainants were hired for
specific movie projects and their employment was co-terminus with each
movie project; (b) the work is dependent on the availability of projects. As
a result, the total working hours logged extremely varied; (c) The
extremely irregular working days and hours of complainants work explains
the lump sum payment for their service; and (d) the respondents alleged
that the complainants are not prohibited from working with other movie
companies whenever they are not working for the independent movie
producers engaged by the respondents. A motion for reconsideration was
filed by the complainants but was denied by NLRC. In effect, they filed an
instant petition claiming that NLRC committed a grave abuse of discretion
in: (a) Finding that petitioners were project employees; (b) Ruling that
petitioners were not illegally dismissed; and (c) Reversing the decision of
the Labor Arbiter. In the instant case, the petitioners allege that the NLRC
acted in total disregard of evidence material or decisive of the
controversy.
Issues: Whether or not the petitioners were illegally dismissed.
However, the length of time during which the employee was continuously
re-hired is not controlling, but merely serves as a badge of regular
employment.
99 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Work Pool Employment, Policy Instruction No. 20
Facts: The respondents were alleging that they were hired for various
periods as construction workers in different capacities. Within the periods
of their respective employments, they alternatively worked for petitioners
Tomas Lao Corporation (TLC), Thomas and James Developers (T&J), and
LVM Construction Corporation (LVM), the three entities comprising a
business conglomerate exclusively controlled and managed by members
of the Lao family. TLC, T&J and LVM are engaged in the construction of
public roads and bridges. Under joint venture agreements they shared not
only tools and equipment but they each one would allow the utilization of
their employees by the other two. With this arrangement, workers were
transferred whenever necessary to on-going projects of the same
company or of the others, or were hired after the completion of the project
or project phase to which they were assigned.
100 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The Labor Arbiter dismissed the complaints finding that private
respondents were project employees whose employments could be
terminated upon completion of the projects or project phase for which
they were hired. The NLRC reversed on appeal the Labor Arbiter’s decision
and found the private respondents were regular employees who were
dismissed without just cause and denied due process.
101 | L a b o r S t a n d a r d s - C a s e D i g e s t s
beneficial to both the employer and employee for it prevents the unjust
situation of “coddling labor at the expense of capital” and at the same
time enables the workers to attain the status of regular employee.
In her position paper dated August 3, 1992 and filed before Labor Arbiter
Raul T. Aquino, petitioner alleged that her employment was terminated
not due to the alleged low volume of work but because she "signed a
petition for certification election among the rank and file employees of
respondents," thus charging private respondent with committing unfair
labor practices. Petitioner further complained of non-payment of service
incentive leave benefits and underpayment of 13th month pay.
On the other hand, private respondent, in its position paper filed on July
16, 1992, maintained that it had valid reasons to terminate petitioner’s
102 | L a b o r S t a n d a r d s - C a s e D i g e s t s
employment and disclaimed any knowledge of the existence or formation
of a union among its rank-and-file employees at the time petitioner’s
services were terminated. Private respondent stressed that its business
"relies heavily on companies availing of its services. Its retention by client
companies with particular emphasis on data encoding is on a project to
project basis," usually lasting for a period of "two (2) to five (5) months."
Private respondent further argued that petitioner’s employment was for a
"specific project with a specified period of engagement." According to
private respondent, "the certainty of the expiration of complainant’s
engagement has been determined at the time of their (sic) engagement
(until 27 November 1991) or when the project is earlier completed or
when the client withdraws," as provided in the contract. "The happening
of the second event (completion of the project) has materialized, thus, her
contract of employment is deemed terminated per the Brent School
ruling." Finally, private respondent averred that petitioner’s "claims for
non-payment of overtime time (sic) and service incentive leave (pay) are
without factual and legal basis."
In the recent case of Maraguinot, Jr. vs. NLRC, we held that "(a) project
employee or a member of a work pool may acquire the status of a regular
employee when the following concur: 1) There is a continuous rehiring of
project employees even after [the] cessation of a project; and 2) The tasks
performed by the alleged "project employee" are vital, necessary and
indispensable to the usual business or trade of the employer." The
evidence on record reveals that petitioner was employed by private
respondent as a data encoder, performing activities which are usually
necessary or desirable in the usual business or trade of her employer,
continuously for a period of more than three (3) years, from August 26,
1988 to October 18, 1991 and contracted for a total of thirteen (13)
successive projects. We have previously ruled that "(h)owever, the length
of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment." Based
103 | L a b o r S t a n d a r d s - C a s e D i g e s t s
on the foregoing, we conclude that petitioner has attained the status of a
regular employee of private respondent.
Facts: The petitioners alleged that they were all regular employees of the
respondent company Koppel, Inc., since they rendered continuous
services in various capacities, ranging from leadman, tinsmith,
tradeshelper to general clerk. Moreover, they also averred that they were
dismissed without prior notice and investigation, and that their dismissals
were effected for no other cause than their persistent demands for
payment of money claims as mandated by law. On the other hand, the
respondents interposed the defense of contract/project employment, i.e.,
the complainants herein were among the contract employees hired by the
respondent to install the air-conditioning equipment at the Asian
Development Bank and Interbank projects. Hence, with the completion of
their task in their respective installation projects, the employment of the
complainants expired as they had no more work to do. The labor arbiter
held that such termination constituted illegal dismissal, thus the
petitioners were entitled to reinstatement, backwages, and attorney’s
fees. Public respondent NLRC, however, reversed the decision of the labor
arbiter.
Issue: Whether or not (a) the petitioners were regular employees, and (b)
their termination and/or cessation of their employments were justified
Held: The Court ruled in the affirmative for both issues, and reversed and
set aside the decision of the NLRC. The Court found that the public
respondent did not sufficiently indicate the evidentiary basis for its
reversal of the labor arbiter's decision. After citing provisions in the
collective bargaining agreement (CBA) concerning contract workers and
Policy Instruction No. 20, public respondent correctly stated that
petitioners were performing work necessary or desirable in the usual
104 | L a b o r S t a n d a r d s - C a s e D i g e s t s
business of private respondent. From this undisputed fact, the NLRC
jumped to strange and strained inferences. First, it held that the
employment of the petitioners was subject to fixed terms. It then leapt to
the non-sequitur conclusion that petitioners were project employees.
Going further, it held that they were entitled to separation pay,
overlooking that under the very law it invoked, "project employees are not
entitled to termination pay." This convolution of facts and law cannot
reverse the decision of the labor arbiter which is grounded on
documentary evidence submitted by the parties. In addition, private
respondent did not even allege, much less did it seek to prove, that
petitioners had been hired on a project-to-project basis during the entire
length of their employment. Rather, it merely sought to establish that
petitioners had been hired to install the air-conditioning equipment at
Asian Development Bank and Interbank and that they were legally
dismissed upon the conclusion of these projects. Private respondent did
not even traverse, and public respondent did not controvert, the labor
arbiter's finding that petitioners were continuously employed without
interruption, from the date of their hiring up to the date of their dismissal,
in spite of the alleged completion of the so-called projects in which they
had been hired.
105 | L a b o r S t a n d a r d s - C a s e D i g e s t s
January 14, 1998
Facts: One of the major projects of the private respondent National Steel
Corporation (NSC) was the billet steelmaking plant. To produce the billets,
the plant would initially use 100% scrap as its raw materials. Eventually,
NSC would "build a Direct Reduced Iron (DRI) plant in line with its
expansion program and integration program." Upon the availability of DRI,
"the raw materials feed mix will eventually be 20 per cent scrap and 80
per cent DRI." In line with its program to use 100% scrap, the NSC
ventured into a shipbreaking operation. Under this operation,
ships/vessels at sea would be cut up into large chunks and brought to land
to be cut further into smaller sizes. However, due to scarcity of
vessels/ships for salvaging, the higher costs of operation and the
unsuitability of raw materials, this experimental project was stopped after
four or five ships had been chopped. When the project was completely
phased out, the laborers hired for said project were terminated. Prior to
the phasing out of the project, the National Steel Corporation Employees
Association Southern Philippines Federation of Labor (NSCEA-SPFL) filed a
notice of strike, and charged the NSC with unfair labor practices consisting
of (a) wage discrimination, (b) interference with the employees' right to
self-organization, (c) nonregularization of contractual employees, (d)
illegal termination of employees, (e) nonpayment of wage/benefit
differentials, and (f) nonrecognition of NSCEA-SPFL as the sole bargaining
representative of the company.
The NLRC ruled that the greater majority of the individual complainants
were 'contractual' or 'casual employees.' By the very nature of their
employment or job, they cannot be considered as regular employees of
respondent company by virtue of Article 280 of the Labor Code, as
amended, excepting the few who are either made to work or perform
functions along or side by side with the regular employees, such as those
assigned at the Billeting Mill or production line departments, or made to
perform ground maintenance jobs as well as those performing
106 | L a b o r S t a n d a r d s - C a s e D i g e s t s
administrative and finance support services who may seemingly deserve
to be regularized.
Held: No. The petition was denied. The Court upheld its reliance on the
factual findings the NLRC. Contracts for project employment are valid
under the law. By entering into such a contract, an employee is deemed to
understand that his employment is coterminous with the project. He may
not expect to be employed continuously beyond the completion of the
project. However, the law requires that, upon completion of the project,
the employer must present proof of termination of the services of the
project employees at the nearest public employment office. However, if
the employees' services are extended long after the supposed project had
been completed, the employees are removed from the scope of project
employees and they shall be considered regular employees.
The Court reiterated its ruling in Palomares v. NLRC, wherein the Court
stated that, "The fact that petitioners were required to render services
necessary or desirable in the operation of NSC's business for a specified
duration did not in any way impair the validity of their contracts of
employment which stipulated a fixed duration therefor." Thus, the fact
that petitioners worked for NSC under different project employment
contracts for several years cannot be made a basis to consider them as
regular employees, for they remain project employees regardless of the
number of projects in which they have worked. Length of service is not the
controlling determinant of the employment tenure of a project employee.
107 | L a b o r S t a n d a r d s - C a s e D i g e s t s
United States military facilities in the Philippines. On various dates herein
private respondents were hired as packers, drivers and
utilitymen/carpenters. They signed uniform company-prepared master
employment contracts. In a memorandum-letter, the Chief of Traffic
Management of Clark Air Base reminded all agents, including petitioner of
the base policy that "(E)mployees who already have passes in their
possession and who fail the polygraph . . ." administered by an
acknowledged security company will be required to return their passes.
On the same day petitioner terminated the employment of private
respondents by sending them separate identical notices of termination
informing the respondents that after an intensive and extensive
investigation conducted as a result of numerous reports of missing items
from shipments, their Base Pass was not cleared by the American
Authorities and for this reason, the Company could no longer avail of their
services. It must be noted that all of private respondents had continuously
been employed by petitioner for more than a year before the services
were terminated.
Issue: Whether or not the respondents were regular employees and were
illegally dismissed.
Held: Yes. Article 280 of the Labor Code, as amended, provides as follows:
Art. 280. Regular and casual employment.—The provisions of a written
agreement 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 service to be performed is seasonal in nature and the employment
is for the duration of the season.
108 | L a b o r S t a n d a r d s - C a s e D i g e s t s
term "specific project or undertaking" under Article 280 of the Labor Code
contemplates an activity which was commonly or habitually performed or
such type of work which is not done on a daily basis but only for a specific
duration of time or until the completion of the project. The services
employed are thus necessary or desirable in the employer's usual
business only for the period of time it takes to complete the project.
Without the performance of such services on a regular basis, the
employer's main business is not expected to grind to a halt.
109 | L a b o r S t a n d a r d s - C a s e D i g e s t s
contracts, which, however, were renewed and extended on their
respective expiry dates. On May 29, 1998, petitioner submitted reports to
the Department of Labor and Employment (DOLE) Regional Sub-Branch
No. VII in Dumaguete City, stating that six of its employees were being
terminated. Petitioner thereafter furnished the employees uniformly
worded notices of termination, stating that they were being terminated
from employment effective June 30, 1998 due to the substantial
completion of the civil works phase of PAL II.
On October 29, 1998, the six employees, herein respondents, filed before
the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal against petitioner. Aside from reinstatement, respondents
sought the payment of backwages, salary differential, collective
bargaining agreement benefits, damages and attorney’s fees.
Respondents averred that they had rendered continuous and satisfactory
services from the dates of their respective employment until illegally
dismissed on June 30, 1998. Respondents further contended that their
dismissal from employment was a clear case of union busting for they had
previously sought union membership and actually filed a notice of strike.
110 | L a b o r S t a n d a r d s - C a s e D i g e s t s
dismissed the petition. The CA ruled that respondents were performing
activities necessary and desirable in the normal operations of the business
of petitioner. The appellate court explained that the repeated re-hiring and
the continuing need for the services of the project employees over a span
of time had made them regular employees. The motion for
reconsideration filed by petitioner was denied by the CA.
Held: No. Article 280 of the Labor Code of the Philippines states that 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. The principal test for determining
whether particular employees are properly characterized as "project
employees," as distinguished from "regular employees," is whether or not
the project employees were assigned to carry out a "specific project or
undertaking," the duration and scope of which were specified at the time
the employees were engaged for that project. However, petitioner failed
to substantiate its claim that respondents were hired merely as project
employees. A perusal of the records of the case reveals that the supposed
specific project or undertaking of petitioner was not satisfactorily
identified in the contracts of respondents.
111 | L a b o r S t a n d a r d s - C a s e D i g e s t s
degreasers, and assigned them at the Ninoy Aquino International Airport
(NAIA). On January 14, 1999, OMSI terminated respondents' employment.
For its part, OMSI denied the allegations in the complaint. It averred that
when Manila International Airport Authority (MIAA) awarded to OMSI the
service contracts for the airport, OMSI hired respondents as janitors,
cleaners, and degreasers to do the services under the contracts. OMSI
informed the respondents that they were hired for the MIAA project and
their employments were coterminous with the contracts. As project
employees, they were not dismissed from work but their employments
ceased when the MIAA contracts were not renewed upon their expiration.
The termination of respondents’ employment cannot, thus, be considered
illegal. The Labor Arbiter dismissed the complaints. On the other hand, the
NLRC, upon appeal, modified the ruling, holding that the respondents were
regular and not project employees. OMSI sought reconsideration of the
ruling, but the NLRC denied the motion.
112 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: Yes. The principal test in determining whether an employee is a
project employee is whether he/she is assigned to carry out a "specific
project or undertaking," the duration and scope of which are specified at
the time the employee is engaged in the project, or where the work or
service to be performed is seasonal in nature and the employment is for
the duration of the season. A true project employee should be assigned to
a project which begins and ends at determined or determinable times, and
be informed thereof at the time of hiring.
In the instant case, the record is bereft of proof that the respondents’
engagement as project employees has been predetermined, as required
by law. We agree with the Court of Appeals that OMSI did not provide
convincing evidence that respondents were informed that they were to be
assigned to a "specific project or undertaking" when OMSI hired them.
Notably, the employment contracts for the specific project signed by the
respondents were never presented. All that OMSI submitted in the
proceedings a quo are the service contracts between OMSI and the MIAA.
Clearly, OMSI utterly failed to establish by substantial evidence that,
indeed, respondents were project employees and their employment was
coterminous with the MIAA contract.
113 | L a b o r S t a n d a r d s - C a s e D i g e s t s
February 1995 until September 1997. Respondent Lirasan alleged that he
was dismissed without cause and due process. He was merely informed by
petitioner that his services were no longer needed without any
explanation why he was terminated. Both respondents claimed that they
received compensation below the minimum wage. They were given a fixed
rate of P110.00 while the mandated minimum wage was P135.00, per
Wage Order No. 5 issued by the Regional Tripartite and Productivity Board
of Region XI. They also alleged that they did not receive 13th month pay
for the entire period of their employment. Both likewise claimed payment
of overtime and service incentive leave.
The Labor Arbiter rendered a Decision dismissing the complaint for lack of
merit, ruling that respondents were project employees and were not
entitled to their monetary claims. On appeal, the National Labor Relations
Commission (NLRC) affirmed with modification the findings of the Labor
Arbiter. It maintained that respondents were project employees of
petitioner. However, it declared that respondent Suarez was illegally
dismissed from employment. It also awarded the monetary claims of
respondents. Petitioner filed a motion for reconsideration which was
denied. Petitioner filed a petition for certiorari under Rule 65 of the Rules
of Court before the CA but was later denied.
114 | L a b o r S t a n d a r d s - C a s e D i g e s t s
comply with the due process requirements mandated by law. In Archbuild
Masters and Construction, Inc. v. NLRC, we held that the employment of a
project worker hired for a specific phase of a construction project is
understood to be coterminous with the completion of such phase and not
upon the accomplishment of the whole project. Nonetheless, when a
project employee is dismissed, such dismissal must still comply with the
substantive and procedural requirements of due process.
Facts: Sandoval Shipyards, Inc. has been engaged in the building and
repair of vessels. It contends that each vessel is a separate project and
that the employment of the workers is terminated with the completion of
each project. The workers contend otherwise. They claim to be regular
115 | L a b o r S t a n d a r d s - C a s e D i g e s t s
workers and that the termination of one project does not mean the end of
their employment since they can be assigned to unfinished projects.
116 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Policy Instructions No. 20 of the Secretary of Labor, which was issued to
stabilize employer-employee relations in the construction industry,
provides that project employees are those employed in connection with a
particular construction project. Non-project (regular) employees are those
employed by a construction company without reference to any particular
project. Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of projects
in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the
Secretary of Labor in connection with such termination.
On July 28, 1986, complainants filed the instant case for illegal dismissal
but before the respondent could receive a copy of the complaint and the
notification and summons issued by the NLRC National Capital Region
(actually received only on August 22, 1986, page 4, records) individual
complainants re-applied with the respondent and were assigned to work
with its project at Robinson-EDSA. In hiring the herein complainants to be
assigned to a particular project they have to fill up an employment
application form and are subjected to a pre-hiring examination. If
evaluated to be qualified they sign at the end portion of their employment
application form that their employment is for a fixed period of time only.
117 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The NLRC held that the complainants were project employees. The fact
that the complainants worked for the respondent under different project
employment contracts for so many years could not be made a basis to
consider them as regular employees for they remain project employees
regardless of the number of projects in which they have worked.
February 1, 1996
118 | L a b o r S t a n d a r d s - C a s e D i g e s t s
basis of his considerable and continuous length of service with AG & P. he
should already be considered a regular employee and, therefore, entitled
to the benefits and privileges appurtenant thereto.
119 | L a b o r S t a n d a r d s - C a s e D i g e s t s
December 18, 2000
120 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the estimated one month period and that their services were still
necessary.
G. R. No. 156748
September 8, 2004
September 8, 2004
On April 17, 2000, the Labor Arbiter rendered judgment in favor of the
COMPANY. The NLRC affirmed the Labor Arbiter’s decision on appeal.
121 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the WORKERS were regular or project employees.
Held: The Court held that the fact that the WORKERS have been
employed with the COMPANY for several years on various projects, the
longest being nine (9) years, did not automatically make them regular
employees considering that the definition of regular employment in Article
280 of the Labor Code, makes specific exception with respect to project
employment. The re-hiring of petitioners on a project-to-project basis did
not confer upon them regular employment status. The practice was
dictated by the practical consideration that experienced construction
workers are more preferred. It did not change their status as project
employees.
G.R.No. 159343
In a Decision dated August 24, 1999, the Labor Arbiter dismissed the
complaint for not being substantiated with clear and convincing evidence.
The National Labor Relations Commission affirmed the LA's dismissal, and
the Court of Appeals dismissed the petition filed before it.
Held: The fact that petitioners were constantly re-hired does not ipso
facto establish that they became regular employees. Their respective
122 | L a b o r S t a n d a r d s - C a s e D i g e s t s
contracts with respondent show that there were intervals in their
employment. In petitioner Caseres' case, while his employment lasted
from August 1989 to May 1999, the duration of his employment ranged
from one day to several months at a time, and such successive
employments were not continuous. With regard to petitioner Pael, his
employment never lasted for more than a month at a time. These support
the conclusion that they were indeed project employees, and since their
work depended on the availability of such contracts or projects,
necessarily the employment of respondents work force was not
permanent but co-terminous with the projects to which they were
assigned and from whose payrolls they were paid.
September 5, 1997
123 | L a b o r S t a n d a r d s - C a s e D i g e s t s
employments, they alternately worked for petitioners Tomas Lao
Corporation (TLC), Thomas and James Developers (T&J) and LVM
Construction Corporation (LVM), altogether informally referred to as
the Lao Group of Companies, the three (3) entities comprising a business
conglomerate exclusively controlled and managed by members of the Lao
family.
TLC, T&J and LVM are engaged in the construction of public roads and
bridges. Under joint venture agreements they entered into among each
other, they would undertake their projects either simultaneously or
successively so that, whenever necessary, they would lease tools and
equipment to one another. Each one would also allow the utilization of
their employees by the other two (2). With this arrangement, workers
were transferred whenever necessary to on-going projects of the same
company or of the others, or were rehired after the completion of the
project or project phase to which they were assigned. Soon after,
however, TLC ceased its operations while T&J and LVM stayed on.
NLRC RAB VIII dismissed the complaints lodged before it. The decision of
Labor Arbiter was reversed on appeal by the Fourth Division of the
National Labor Relations Commission of Cebu City which found that
private respondents were regular employees who were dismissed without
just cause and denied due process.
124 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: While it may be allowed that in the instant case the workers were
initially hired for specific projects or undertakings of the company and
hence can be classified as project employees, the repeated re-hiring and
the continuing need for their services over a long span of time (the
shortest, at seven [7] years) have undeniably made them regular
employees. Thus, we held that where the employment of project
employees is extended long after the supposed project has been finished,
the employees are removed from the scope of project employees and
considered regular employees.
While length of time may not be a controlling test for project employment,
it can be a strong factor in determining whether the employee was hired
for a specific undertaking or in fact tasked to perform functions which are
vital, necessary and indispensable to the usual business or trade of the
employer. In the case at bar, private respondents had already gone
through the status of project employees. But their employments became
non-coterminous with specific projects when they started to be
continuously re-hired due to the demands of petitioners business and
were re-engaged for many more projects without interruption.
September 5, 1991
125 | L a b o r S t a n d a r d s - C a s e D i g e s t s
owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan
worked in the farm of private respondents since 1949, Fortunato Mercado,
Jr. and Antonio Mercado since 1972 and the rest of the petitioners since
1960 up to April 1979, when they were all allegedly dismissed from their
employment. Private respondent Aurora Cruz in her answer to petitioners'
complaint denied that said petitioners were her regular employees and
instead averred that she engaged their services, through Spouses
Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is,
persons who take charge in supplying the number of workers needed by
owners of various farms, but only to do a particular phase of agricultural
work necessary in rice production and/or sugar cane production, after
which they would be free to render services to other farm owners who
need their services. The other private respondents denied having any
relationship whatsoever with the petitioners and state that they were
merely registered owners of the land in question included as
correspondents in this case.
126 | L a b o r S t a n d a r d s - C a s e D i g e s t s
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION,
SECOND DIVISION, THE HONORABLE EXECUTIVE LABOR ARBITER,
REGIONAL ARBITRATION BRANCH NO. VIII, NATIONAL LABOR
RELATIONS COMMISSION, TACLOBAN CITY, and, CARLITO CODILAN,
MAXIMO DOCENA, TEOFILO TRANGRIA, EUGENIO GO, and,
REYNALDO TULIN
127 | L a b o r S t a n d a r d s - C a s e D i g e s t s
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
actually exists.
Finally, considering the number of years that they have worked for
petitioners (the lowest is 6 years), private respondents have long attained
the status of regular employees as defined under Art. 280 of the Labor
Code.
128 | L a b o r S t a n d a r d s - C a s e D i g e s t s
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND
GENERAL TRADE
Moreover, starting September 1991, respondents did not any more give
work assignments to the complainants forcing the union to stage a strike
on January 2, 1992. But due to the conciliation efforts by the DOLE,
another Memorandum of Agreement was signed by the complainants and
respondents. When respondents again reneged on its commitment,
complainants filed the present complaint.
129 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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 exist.
Where there is no showing of clear, valid and legal cause for the
termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination
was for a valid and authorized cause. In the case at bar, petitioners failed
to prove any such cause for the dismissal of respondents who, as
discussed above, are regular employees.
130 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Abasolo vs. NLRC
131 | L a b o r S t a n d a r d s - C a s e D i g e s t s
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity, and while such activity exists. Thus, the nature of one’s
employment does not depend solely on the will or word of the employer.
Nor on the procedure for hiring and the manner of designating the
employee, but on the nature of the activities to be performed by the
employee, considering the employer’s nature of business and the duration
and scope of work to be done.
In the case at bar, while it may appear that the work of petitioners is
seasonal, inasmuch as petitioners have served the company for many
years, some for over 20 years, performing services necessary and
indispensable to LUTORCO’s business, serve as badges of regular
employment. Moreover, the fact that petitioners do not work continuously
for one whole year but only for the duration of the tobacco season does
not detract from considering them in regular employment since in a litany
of cases this Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid off during off-
season are not separated from service in said period, but are merely
considered on leave until re-employed.
132 | L a b o r S t a n d a r d s - C a s e D i g e s t s
incumbency of UKCEO-PTGWO, by filing a petition for certification election
with the Department of Labor and Employment. A certification election
was subsequently conducted with UKCEO-PTGWO winning over KILUSAN-
OLALIA. The then Ministry of Labor and Employment issued an order that
the casual workers not performing janitorial and yard maintenance
services had attained regular status on even date. UKCEO-PTGWO was
then declared as the exclusive bargaining representative of Kimberly’s
employees, having garnered the highest number of votes in the
certification election.
Eventually, the pending case was decided ordering the opening and
counting of the 64 challenged votes, and that the union with the highest
number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY. It also
ordered KIMBERLY to pay the workers who have been regularized. The
KILUSAN-OLALIA and 76 individual complainants filed a motion for
execution with the DOLE (formerly MOLE). The DOLE considered as
physically impossible, and moot and academic the opening and counting
of the 64 challenged ballots because they could no longer be located
despite diligent efforts, and KILUSAN-OLALIA no longer actively
participated when the company went through another CBA cycle.
The Bureau of Working Conditions then submitted its report finding 47 out
of the 76 complainants as entitled to be regularized. Kimberly filed a
motion for reconsideration of the DOLE Order as well as the BWC Report,
but it was denied. Kimberly filed a petition before the appellate court, but
it was again dismissed. Hence, Kimberly filed a petition before the
Supreme Court.
Held: 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. While the actual regularization of
these employees entails the mechanical act of issuing regular
appointment papers and compliance with such other operating procedures
as may be adopted by the employer, it is more in keeping with the intent
and spirit of the law to rule that the status of regular employment
attaches to the casual worker on the day immediately after the end of his
first year of service. To rule otherwise, and to instead make their
133 | L a b o r S t a n d a r d s - C a s e D i g e s t s
regularization dependent on the happening of some contingency or the
fulfillment of certain requirements, is to impose a burden on the employee
which is not sanctioned by law.
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, pipefitters 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.
134 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not an employer-employee relationship existed
between petitioner and private respondent.
First. The existence in this case of the first element is undisputed. It was
petitioner who engaged the services of Lagrama without the intervention
of a third party. It is the existence of the second element, the power of
control, that requires discussion here.
In the case at bar, albeit petitioner Tan claims that private respondent
Lagrama was an independent contractor and never his employee, the
evidence shows that the latter performed his work as painter under the
supervision and control of petitioner. Lagrama worked in a designated
work area inside the Crown Theater of petitioner, for the use of which
petitioner prescribed rules. The rules included the observance of
cleanliness and hygiene and a prohibition against urinating in the work
area and any place other than the toilet or the rest rooms.9 Petitioner's
control over Lagrama's work extended not only to the use of the work
area, but also to the result of Lagrama's work, and the manner and means
by which the work was to be accomplished.
Second. That petitioner had the right to hire and fire was admitted by him
in his position paper submitted to the NLRC, the pertinent portions of
which stated:
Complainant did not know how to use the available comfort rooms
or toilets in and about his work premises. He was urinating right at
the place where he was working when it was so easy for him, as
everybody else did and had he only wanted to, to go to the comfort
rooms. But no, the complainant had to make a virtual urinal out of
his work place! The place then stunk to high heavens, naturally, to
the consternation of respondents and everyone who could smell the
malodor.
Given such circumstances, the respondents had every right, nay all
the compelling reason, to fire him from his painting job upon
discovery and his admission of such acts. Nonetheless, though
thoroughly scolded, he was not fired. It was he who stopped to paint
for respondents.
135 | L a b o r S t a n d a r d s - C a s e D i g e s t s
By stating that he had the right to fire Lagrama, petitioner in effect
acknowledged Lagrama to be his employee. For the right to hire and fire is
another important element of the employer-employee
relationship.13 Indeed, the fact that, as petitioner himself said, he waited
for Lagrama to report for work but the latter simply stopped reporting for
work reinforces the conviction that Lagrama was indeed an employee of
petitioner. For only an employee can nurture such an expectancy, the
frustration of which, unless satisfactorily explained, can bring about some
disciplinary action on the part of the employer.
Lagrama had been employed by petitioner since 1988. Under the law,
therefore, he is deemed a regular employee and is thus entitled to
security of tenure, as provided in Art. 279 of Labor Code:
This Court has held that if the employee has been performing the job for
at least one year, even if not continuously but intermittently, the repeated
136 | L a b o r S t a n d a r d s - C a s e D i g e s t s
and continuing need for its performance is sufficient evidence of the
necessity, if not indispensability, of that activity to the business of his
employer. Hence, the employment is also considered regular, although
with respect only to such activity, and while such activity exists.
Some three months before the expiration of the stipulated period, or more
precisely on April 20,1976, Alegre was given a copy of the report filed by
Brent School with the Department of Labor advising of the termination of
his services effective on July 16, 1976. The Director pronounced "the
ground relied upon by the respondent (Brent) in terminating the services
of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and,
quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau
of Private Schools.
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. The validity of term
employment was impliedly but nonetheless clearly recognized by the
Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto,
137 | L a b o r S t a n d a r d s - C a s e D i g e s t s
it was the Code of Commerce which governed employment without a fixed
period. Now, the Civil Code of the Philippines, which was approved on June
18, 1949 and became effective on August 30,1950, itself deals with
obligations with a period. No prohibition against term-or fixed-period
employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include in
it a stipulation fixing the duration explicitly recognized as valid by this
Court.
There is, on the other hand, the Civil Code, which has always recognized,
and continues to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no restraints on
the freedom of the parties to fix the duration of a contract, whatever its
object, be it specie, goods or services, except the general admonition
against stipulations contrary to law, morals, good customs, public order or
public policy. Under the Civil Code, therefore, and as a general proposition,
fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects
with pre-determined dates of completion; they also include those to which
the parties by free choice have assigned a specific date of termination.
As it is evident from even only the three examples already given that
Article 280 of the Labor Code, under a narrow and literal interpretation,
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 employer's using it
138 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of
an agreed period of employment as still good rule—a rule reaffirmed in
the recent case of Escudero vs. Office of the President (G.R. No. 57822,
April 26, 1989) where, in the fairly analogous case of a teacher being
served by her school a notice of termination following the expiration of the
last of three successive fixed-term employment contracts, the Court held:
PNOC vs NLRC
139 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the PNOC-EDA Bacon-Manito Geothermal Project in Bonga, Sorsogon,
Sorsogon, he worked there until September 1, 1985. On this day, his
employment was terminated through a letter advice dated September 1,
1985, signed by his supervisor, B.B. Balista, allegedly for "contract
expiration" (Exh "A", p. 10, Records), even when the project was still a
continuing one. On November 8, 1985, private respondent complained of
illegal dismissal, and accused petitioners of withholding his backwages,
overtime pay, and separation pay (p. 1, Records). A dismissal of the
complaint was sought on jurisdictional ground, petitioner company
asserting that it is a government-owned and controlled corporation,
hence, its employees must be governed by the Civil Service Law and not
by the Labor Code, and citing National Housing Corporation v. Benjamin
Juco and the NLRC (134 SCRA 176). On February 26, 1987, Labor Arbiter
Voltaire A. Balitaan dismissed the complaint for lack of jurisdiction. On
appeal to public respondent, however, the First Division, on September 16,
1988, set aside the Labor Arbiter's decision, assumed jurisdiction over the
case, and directed the Arbitration Branch to conduct further proceedings.
Petitioners maintained that private respondent was a project employee
whose employment was for a definite period and coterminous with the
project for which he was hired. It was for this reason that his employment
was terminated. Finding for private respondent, Executive Labor Arbiter
Vito C. Bose's Decision of August 23, 1990, held finding respondent
company guilty of illegal dismissal and ordering the same to pay
complainant.
Held: No, they are not. Petitioners claim that the fixed contract of
employment which private respondent entered into was read, translated
to, comprehended and voluntarily accepted by him. No evidence was
presented to prove improper pressure or undue influence when he
entered, perfected and consummated said contract. And even if private
respondent's services were necessary and desirable in petitioner's
business, nevertheless private respondent's term was limited, citing as
authority Brent School v. Zamora. Much can be learned from the leading
case of Brent School v. Zamora, supra. In this case, the Court analyzed the
development of Article 280 from its first version as Article 319 and its
amendments under PD 850 and BP 130 and made the following
observation:
140 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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.
As can be gleaned from the said case, the two guidelines, by which fixed
contracts of employments can be said NOT to circumvent security of
tenure, are either:
141 | L a b o r S t a n d a r d s - C a s e D i g e s t s
shows that he indeed signed the same. 5 In fact petitioners claim that all
the previous employment contracts were also translated for the benefit of
private respondent, and it was only when he understood the same that he
signed said contracts. As per Guideline No. 1, given the circumstances
behind private respondent Mata's employment, private respondent is a
project employee. As explained by petitioners in their memorandum:
142 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: Petitioner AMA Computer College, Parañaque (AMA) is an
educational institution duly organized under the laws of the Philippines.
The rest of the petitioners are principal officers of AMA. Respondent
Rolando A. Austria4(respondent) was hired by AMA on probationary
employment as a college dean on April 24, 2000.5 On August 22, 2000,
respondent’s appointment as dean was confirmed by AMA’s Officer-in-
Charge (OIC), Academic Affairs. In the event that Mr. Austria gives up the
Dean position or fails to meet the standards of the (sic) based on the
evaluation of his immediate superior, he shall be considered for a faculty
position and the appointee agrees that he shall lose the transportation
allowance he enjoys as Dean and be entitled to his faculty rate. Sometime
in August 2000, respondent was charged with violating AMA’s Employees’
Conduct and Discipline provided in its Orientation Handbook (Handbook).
This resulted to the loss of trust and confidence in your credibility as a
company officer holding a highly sensitive position. In view of this, your
services as Dean of AMA Parañaque is hereby terminated effective
immediately. You are hereby instructed to report to the branch HR
Personnel for further instructions.1avvphi1 Please bear in mind that as a
company policy you are required to accomplish your clearance and turn
over all documents and responsibilities to the appropriate officers. You are
barred from entering the company premises unless with clearance from
the HRD.
Held: We agree. We held that Article 280 of the Labor Code does not
proscribe or prohibit an employment contract with a fixed period. Even if
the duties of the employee consist of activities necessary or desirable in
the usual business of the employer, the parties are free to agree on a
fixed period of time for the performance of such activities. There is
nothing essentially contradictory between a definite period of employment
and the nature of the employee’s duties.
143 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Thus, this Court's ruling in Brent School, Inc. v. Zamora is instructive:
The instant case involves respondent's position as dean, and comes within
the purview of the Brent School doctrine.
Second. The fact that respondent did not sign the letter of appointment is
of no moment. We held in Brent School, to wit:
144 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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.
145 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Cagayan, affirmed the dismissal made by petitioner. Fifteen years after
such termination of his employment, Peronila was then again hired as a
driver, but on a contractual basis for a fixed period of one month.
Labor Arbiter Patricio P. Libo-on dismissed the case on February 12, 1991,
ruling that "(a)lthough as a driver, his services (are) usual and necessary
to the business of the respondent, yet it is also true that complainant's
case falls within one of the exceptions. When he was rehired, it was clear
to him that he would be working only for one (1) month. . . . Apparently,
the reason for this is to fill or to stop-gap the requirements of the
employe(r)/respondent during the period (when) he was rehired, and
which it foresees to ease up in May 1988." On appeal, public respondent
NLRC declared that the dismissal was illegal.
The petitioner had validly dismissed Peronila long before he entered into
the contested employment contract. It was Peronila who earnestly
pleaded with petitioner to give him a second chance. The re-hiring of
private respondent was out of compassion and not because the petitioner
was impressed with the credentials of Peronila. Peronila's previous
violations of company rules explains the reluctant attitude to the
petitioner in re-hiring him. When the bus driven by Peronila figured in a
road mishap, that incident finally prompted petitioner to sever any further
relationship with said private respondent.
146 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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. . . . This ruling is
only in consonance with Article 280 of the Labor Code."
Fixed term employment for less than six months same with
probationary employment.
The Labor Arbiter ruled that the petitioners are regular employees of
respondents. It was ruled that by the very nature of respondents’ business
and the nature of petitioners’ services, there is no doubt as to the
employment status of petitioners. Composite appealed to the National
Labor Relations Commission which set aside the Labor Arbiter’s Decision
and dismissed the petitioners’ complaint for illegal dismissal. The NLRC
ruled that the mere fact that the employees’ duties are necessary or
desirable in the business or trade of the employer does not mean that
they are forbidden from stipulating the period of employment. The NLRC
held that petitioners’ contracts of employment are valid and binding
between the contracting parties and shall be considered as the law
between them. The NLRC ruled that petitioners are bound by their
employment contracts.
147 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Commission’s resolution. This prompted the petitioners to file a motion for
reconsideration, but it was again denied. Thus, a petition before the
Supreme Court was filed.
Held: Under Article 280 of the Labor Code, a regular employee is (1) one
who is engaged to perform activities that are necessary or desirable in the
usual trade or business of the employer, or (2) a casual employee who has
rendered at least one year of service, whether continuous or broken, with
respect to the activity in which he is employed. However, even if an
employee is engaged to perform activities that are necessary or desirable
in the usual trade or business of the employer, it does not preclude the
fixing of employment for a definite period.
The Court thus laid down the criteria under which fixed-term employment
could not be said to be in circumvention of the law on security of tenure,
thus: 1. The fixed period of employment was knowingly and voluntarily
agreed upon 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 2. It satisfactorily appears that the
employer and the employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former or the latter.
The labor arbiter dismissed the complaint on the ground that the private
respondents were mere contractual workers, and not regular employees;
hence, they could not avail of the law on security of tenure. This prompted
Cordova and Crusis to appeal the decision to the National Labor Relations
Commission. The NLRC affirmed the labor arbiter's decision. But, upon
148 | L a b o r S t a n d a r d s - C a s e D i g e s t s
their filing of motion for reconsideration, the NLRC rendered another
decision vacating and setting aside its earlier decision and holding that
the private respondent and their co-complainants were regular
employees. It declared that the contract of employment for five months
was a "clandestine scheme employed by the petitioner to stifle private
respondents' right to security of tenure" and should therefore be struck
down and disregarded for being contrary to law, public policy, and morals.
Hence, their dismissal on account of the expiration of their respective
contracts was illegal. Having been denied, the petitioner came to the
Supreme Court.
Issue: Whether or not the contracts entered into by the parties were
intended to circumvent the constitutional guarantee on security of tenure.
149 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: Universal Robina Corporation is a corporation duly organized and
existing under the Philippine laws, while petitioner Randy Gregorio is the
manager of the URC’S duck farm in Laguna. The individual respondents
were hired by URC on various dates from 1991 to 1993 to work at its duck
farm. The respondents were hired under an employment contract which
provided for a five-month period. After the expiration of the said
employment contracts, URC would renew them and re-employ the
respondents. This practice continued until sometime in 1996, when URC
informed the respondents that they were no longer renewing their
employment contracts.
Aggrieved, URC filed a petition for certiorari with the Court of Appeals
(CA). The CA denied the petition for lack of merit. The CA held that after
rendering more than one year of continuous service, the respondents
became regular employees of the petitioners by operation of law.
Moreover, URC’S used the five-month contract of employment as a
convenient subterfuge to prevent the respondents from becoming regular
employees and such contractual arrangement should be struck down or
disregarded as contrary to public policy or morals. URC’s act of repeatedly
and continuously hiring the respondents in a span of three to five years to
do the same kind of work negates their assertion that the respondents
were hired for a specific project or undertaking only.
URC submit that the respondents are not regular employees. They aver
that it is of no moment that the respondents have rendered service for
more than a year since they were covered by the five-month individual
contracts to which they duly acquiesced. URC contend that they were free
to terminate the services of the respondents at the expiration of their
individual contracts. URC asserts that the respondents’ contracts of
employment were not intended to circumvent security of tenure. They
point out that the respondents knowingly and voluntarily agreed to sign
the contracts without the petitioners having exercised any undue
advantage over them. Moreover, there is no evidence showing that the
petitioners exerted moral dominance on the respondents.
The respondents aver that they acquired the status as regular employees
after rendering one year of service to the petitioner company. They
contend that the contracts providing for a fixed period of employment
should be struck down as contrary to public policy, morals, good customs
150 | L a b o r S t a n d a r d s - C a s e D i g e s t s
or public order as it was designed to preclude the acquisition of tenurial
security.
Issue: Whether or not the CA erred when it ruled that the respondents
attained the status of regular employment after the lapse of one year
from the date of their employment.
Held: In any case, we find that the CA, the NLRC and the Labor Arbiter
correctly categorized the respondents as regular employees of the
petitioner company. In Abasolo v. National Labor Relations Commission,
the Court reiterated the test in determining whether one is a regular
employee:
Thus, we quote with approval the following excerpt from the decision of
the CA: It is obvious that the said five-month contract of employment was
used by petitioners as a convenient subterfuge to prevent private
respondents from becoming regular employees. Such contractual
arrangement should be struck down or disregarded as contrary to public
policy or morals. To uphold the same would, in effect, permit petitioners to
avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees’ security of
tenure in their jobs.
151 | L a b o r S t a n d a r d s - C a s e D i g e s t s
JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO,
DANILO C. BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA,
ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA,
ARTHUR M. ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT
A. ORDOÑO, BERNARD V. JULARBAL, IGNACIO C. ALINGBAS and
LEODEL N. SORIANO vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), and
BENGUET ELECTRIC COOPERATIVE, INC. (BENECO)
April 4, 2003
It is the contention of the complainants that they were not apprentices but
regular employees whose services were illegally and unjustly terminated
in a manner that was whimsical and capricious. On the other hand, the
respondent invokes Article 283 of the Labor Code in defense of the
questioned dismissal.
The Labor Arbiter rendered its decision dismissing the complaints filed by
the complainants for lack of merit. However, in view of the offer of the
respondent to enter into another temporary employment contract with the
complainants, the respondent is directed to so extend such contract to
each complainant, with the exception of Jaime Viernes. BENECO is also
ordered to pay complainants the amount representing underpayment of
their wages and to extend to Viernes an appointment as regular employee
for the position of meter reader, the job he held prior to his termination,
and to pay him indemnity.
The case was appealed to the CA which modified the decision of the LA by
declaring complainants dismissal illegal, thus ordering their reinstatement
to their former position as meter readers or to any equivalent position
with payment of backwages limited to one year and deleting the award of
indemnity and attorneys fees. The case was elevated to the SC. Hence,
this petition.
152 | L a b o r S t a n d a r d s - C a s e D i g e s t s
position as meter readers on probationary status in spite of its finding that
they are regular employees under Article 280 of the Labor Code.
Held: The court sustained petitioners claim that they should be reinstated
to their former position as meter readers, not on a probationary status,
but as regular employees. Reinstatement means restoration to a state or
condition from which one had been removed or separated. In case of
probationary employment, Article 281 of the Labor Code requires the
employer to make known to his employee at the time of the latters
engagement of the reasonable standards under which he may qualify as a
regular employee.
The fact that the petitioners were allowed to continue working after the
expiration of their employment contract is evidence of the necessity and
desirability of their service to private respondents business.
153 | L a b o r S t a n d a r d s - C a s e D i g e s t s
ADELA R. BAUTISTA, GEMENA D. CANTA, VICTORINA S. COLLENA,
ELISA H. DE GUZMAN, YOLANDA J. GOB, JULING R. GOB,
FRANCISCO N. GUMARO, LOURDES P. MANALO, ROSALINA O.
RAMIREZ, RODRIGO O. RAMIREZ, VENTURA RAMOS, REYNALDO
MAGTANONG, AURELIA M. SAN JOSE, NESTOR SERIL, LUIS TUTOL
and GENER J. DEL ROSARIO
MGS and David countered that private respondents were hired for a
definite period of employment, the commencement and termination of
which were already known to them; that the two-year period stipulated in
the private respondents' contract with NPC had expired; that it was
the NPC which requested MGS and David for an extension on a monthly
basis of the employment of some of the private respondents; and that the
reason for the termination of private respondents' employment was the
termination itself of MGS’s contract with NPC.
154 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Labor Arbiter Ariel C. Santos promulgated his decision finding that, by the
nature of their employment, private respondents were "usually
contractual employees." Nonetheless, he opined, in view of the length of
their service, that private respondents had attained the status of "regular
contractual employees" who, pursuant to Policy Instruction No. 20 issued
by then Labor Secretary Blas Ople, "cannot just be terminated after the
expiration of a contract in an area to where they are assigned without
paying them the corresponding separation pay from the time they have
served respondent's company. MGS and David appealed to the NLRC
which affirmed the LA’s decision.
Issue: Whether or not employees allowed to work for more than 1 year
are considered regular employee.
Held: It’s a well-settled rule that the yardstick in the determination of the
existence of an employer-employee relationship consists of these four (4)
elements: (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 employee's conduct. All these elements are present in this
case.
Private respondents were selected and hired by MGS which assigned them
to the NPC housing village in Bagac and Bataan. They drew their salaries
from MGS which eventually dismissed them. MGS's control over private
respondents was manifest in its power to assign and pull them out of
clients at its own discretion. It is enough that the former has the right to
wield the power.
155 | L a b o r S t a n d a r d s - C a s e D i g e s t s
business as supplier of such services to clients. Thus, even if there were a
contrary agreement between the parties, if the worker has worked for
more than a year and there is a reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer, an employer-employee relationship is
deemed to exist between the parties.
Thus, in Baguio Country Club Corporation v. NLRC, the Court said: “if the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is also considered regular but only with respect to such
activity and while such activity exists.
Agusan del Norte Electric Coop., Inc. vs. Cagampang and Garzon
They were both allegedly required to work eight hours a day and
sometimes on Sundays, getting a daily salary of P122.00. When the
contract expired, the two were laid-off for one to five days and then
ordered to report back to work but on the basis of job orders. After several
renewals of their job contracts in the form of job orders for similar
employment periods of about three months each, the said contracts
eventually expired on April 31, 1998 and July 30, 1999. Respondents'
156 | L a b o r S t a n d a r d s - C a s e D i g e s t s
contracts were no longer renewed, resulting in their loss of employment.
Thus, on January 11, 2001, respondents filed an illegal dismissal case
against petitioners before the LA. They prayed for payment of backwages,
salary differential, allowances, premium for alleged work during holidays
and rest days, service incentive leave, and separation pay. LA ruled that
there was illegal dismissal. However, NLRC reversed the LA’s decision. CA
however set aside NLRC’s decision.
Issue: Whether or not Cagampang and Garzon are regular
employees/workers of the petitioner.
While length of time may not be the controlling test for project
employment, it is vital in determining if the employee was hired for a
specific undertaking or tasked to perform functions vital, necessary and
indispensable to the usual business or trade of the employer. Here, private
respondent had been a project employee several times over. His
employment ceased to be coterminous with specific projects when he was
repeatedly re-hired due to the demands of petitioners business. Where
from the circumstances it is apparent that periods have been imposed to
preclude the acquisition of tenurial security by the employee, they should
be struck down as contrary to public policy, morals, good customs or public
order. Respondents in the present case being regular employees, ANECO as
the employer had the burden of proof to show that the respondents’
termination was for a just cause.
157 | L a b o r S t a n d a r d s - C a s e D i g e s t s
dismissing them from their employment. Their dismissals were patently
illegal. Thus court considered respondents as regular employees.
158 | L a b o r S t a n d a r d s - C a s e D i g e s t s
absenteeism, in accordance with the Company Rules and Regulations.
Thus, the respondent’s contract of employment was no longer renewed.
Held: The two kinds of regular employees under the law are (1) those
engaged to perform activities which are necessary or desirable in the
usual business or trade of the employer; and (2) those casual employees
who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed. The
primary standard to determine a regular employment is the reasonable
connection between the particular activity performed by the employee in
relation to the business or trade of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of
the employer. If the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability of that activity
to the business of the employer. Hence, the employment is also
considered regular, but only with respect to such activity and while such
activity exists. The law does not provide the qualification that the
employee must first be issued a regular appointment or must be declared
as such before he can acquire a regular employee status.
159 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Chapter IV – Special Group of Workers/ Employees
Prohibited Business Agencies and Entities, Articles 16, 18, 25, 26;
2002 POEA Rules and Regulations, Part I, Rule II, Section 2
160 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Singapore. True enough, they were welcomed by Victor Lim, the owner of
Step-Up Employment Agency. He informed them that they would be
working as fishermen with a monthly salary of US $200.00
each. Thereafter, they boarded Ruey Horn #3, a vessel owned by Min Fu
Fishery Co. Ltd. of Taiwan.
Cayanan filed an answer claiming that, Hornales and Victor Lim and Min
Fee Fishery Co. Ltd are all total strangers to them. They even offered in
evidence the Joint Affidavit of 2 of Hornales’ co-workers in Singapore,
stating that while they were in Singapore, Hornales admitted to them that
he did not apply in any agency in the Philippines; that he came to
Singapore merely as a tourist; and that, he applied directly and personally
with Step-Up Agency to which such statements were corroborated through
a certification issued by Step-Up Agency.
Hornales’ filed a petition for certiorari on the ground that the NLRC
committed a grave abuse of discretion in vacating the decision of the
POEA. He avers that Cayanan was the one who deployed him to Singapore
to work as fisherman and that, NLRCs conclusion that respondent JEAC
was a mere travel agency and petitioner, a mere tourist, has no basis in
fact and in law. JEAC maintained their position that the NLRC did not
commit grave abuse of discretion when it set aside the decision of the
POEA, since Hornales failed to show any POEA record or document to
prove that they deployed him to work in Singapore. Neither did he present
a Special Power of Attorney to prove that Step-Up Agency authorized JEAC
to recruit and deploy contract workers in its behalf. The Solicitor
General joins Hornales in assailing the decision of the NLRC as baseless
and erroneous.
161 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not JEAC violates the POEA Rules and can be held liable
against Hornales.
162 | L a b o r S t a n d a r d s - C a s e D i g e s t s
But of course, such violations should be threshed out in a proper
administrative proceeding for suspension or cancellation of license. The
court uphold POEAs Decision holding Cayanan and Travelers Insurance
Corporation jointly and severally liable to petitioner. Section 2 (e), Rule V,
Book I of the Omnibus Rules Implementing the Labor Code requires a
private employment agency to assume all responsibilities for the
implementation of the contract of employment of an overseas worker.This
provision is substantially reiterated in Section 1 (f) (3) of Rule II, Book II of
the POEA Rules and Regulations which provides:
(3) Shall assume joint and solidary liability with the employer which may
arise in connection with the implementation of the contract, including but
not limited to payment of wages, health and disability compensation and
repatriation.
The court reinstated the decision of the POEA subject to the modification.
Illegal Recruitment – Labor Code Articles 34, 38; R.A. No. 8042,
Sections 6-12 as amended
February 5, 2004
Facts: Ramon Dujua, his mother Rose, his aunt, Editha Singh, and his
uncle, Guillermo Samson were charged with Illegal Recruitment in large
scale. Only Ramon was arrested. Four testified against Ramon Dujua. They
were also charged with separate counts of Estafa. In the alleged
information filed by the complainants against Dujua, et al, all of them said
that they were promised employment abroad upon payment of fees but
they were not actually deployed. Apparently, all of the complainants were
able to give Dujua money for placement fees and other fee asked from
them in exchange for the possibility to work abroad. Of the four accused,
163 | L a b o r S t a n d a r d s - C a s e D i g e s t s
only Ramon Dujua was arrested and arraigned. His mother, aunt and uncle
remain at large. Ramon entered a plea of not guilty to each of the
charges, whereupon trial commenced. While the Information for illegal
recruitment named several persons as having been promised jobs by the
accused, only four of them testified.
Second, appellant did not have any license or authority to recruit persons
for overseas work, as shown by the Certification issued by the
POEA. Neither did his employer, the World Pack Travel and Tours, possess
such license or authority.
164 | L a b o r S t a n d a r d s - C a s e D i g e s t s
withdrew his application in lieu of which his wife Melodea Villanueva
applied for placement with appellant. Villanueva, however, is not named
as one of appellants victims.
Nevertheless, it has been alleged and proven that appellant undertook the
recruitment of not less than three persons, namely, Cabus, Caluten and
Perlas.
Facts: Lauro Domingo was charged with the crime of illegal recruitment
pursuant to Article 38 in relation to Articles 34 and 39 of the Labor Code.
In the information filed against Domingo it was alleged that on or about
November 1999 to January 2000, Domingo, being a non-licensee or non-
holder of authority from the DOLE to recruit and/ or place workers under
local or overseas employment, undertake illegal recruitment, placement
or deployment of the 23 complainants. In the informations for 23 counts of
Estafa, it was alleged that Domingo falsely represented himself that he
has power and capacity to recruit and employ workers in Saipan and could
facilitate necessary papers in connection therewith if given the necessary
amount, and by means of deceit inveigled Manzo to give P14, 000 (which
the latter gave and delivered to Domingo) which Domingo
misappropriated himself to the damage and prejudice of Manzo. It was
verified with the DOLE that Domingo wasn’t a licensed recruiter. Out of
the 23 complainants, only 5 (Cambay, Ondra, Aguilar, Vivas, and Cabigao)
of them testified. Thereafter, Cabigao recanted his testimony averring that
the one who actually recruited him was Gimeno and not Domingo and that
they only agreed among themselves to file a case against Domingo
because Gimeno was nowhere to be found.
Domingo denied all accusations against him claiming that he was a driver
hired by Gimeno whom he met at a bus bound for Manila. It was Gimeno
who undertook the recruitment activities. Domingo likewise presented
complainants Espiritu and Castillo who corroborated his claim that it was
Gimeno who actually recruited them.
The trial court found Domingo guilty beyond reasonable doubt of Illegal
Recruitment (Large Scale) and of 2 counts of Estafa. On appeal to the CA,
Domingo maintained that the trial court erred in finding him guilty beyond
reasonable doubt on the basis that there were no receipts shown to prove
165 | L a b o r S t a n d a r d s - C a s e D i g e s t s
payment and he faulted trial court for failing to give credit to Cabigao’s
retraction.
Held: The court affirmed the decision of the CA in finding Domingo guilty
of Illegal recruitment and Estafa. With respect to the receipts questioned
by Domingo, the court held that the non-presentation of the receipts had
no bearing on his culpability in light of the assertions of the witnesses that
it was Domingo who recruited them. As for Cabigao’s recantation, the
court held that mere retraction by a prosecution witness doesn’t
necessarily vitiate his original testimony and that, in any event, the
prosecution had proven beyond reasonable doubt that at least 3 were
illegally recruited by the accused.
The term recruitment is defined under Article 13 (b) of the Labor Code, it
refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring worker, 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 fir a fee employment to 2 or more persons
shall be deemed engage in recruitment and placement. On the other
hand, Article 38, paragraph (a) of the labor code provides:
166 | L a b o r S t a n d a r d s - C a s e D i g e s t s
G.R. No. 187730
Facts: Gallo, et al. were charged with syndicated illegal recruitment and
18 counts of estafa committed against 18 complainants. However, records
reveal that cases filed against Gallo, Pacardo, Manta for syndicated illegal
recruitment and estafa proceeded to trial due to the fact that the said
accused remained at large. Further, other cases filed against said accused
were provisionally dismissed upon their motion for failure to appear and
testify during trial. After trial, Pacardo and Manta were acquitted for
insufficiency of evidence. Likewise, Gallo was acquitted for cases file
against him by Guantero and Sare. However, he was found guilty beyond
reasonable doubt in the criminal case filed by Dela Caza for syndicated
illegal recruitment and estafa. Thus, appeal concerns solely on Gallo’s
conviction for syndicated illegal recruitment and estafa.
When arraigned, Gallo pleaded not guilty to all charges. The pre-trial was
terminated and trial ensued. The trial court found Gallo guilty beyond
reasonable doubt of the crime of Illegal Recruitment committed a
syndicate. On appeal to the CA, it held that the totality of the
prosecution’s evidence showed that Gallo, et al. engaged in the
recruitment of Dela Caza.
Held: The court disagree with Gallo’s averment that he cannot be held
criminally liable for illegal recruitment because he was neither an officer
nor an employee of MPM Agency. Further, the court stated that to commit
syndicated illegal recruitment, 3 elements must be established: (1) the
offender undertakes either any activity within the meaning of recruitment
and placement under Art. 13 (b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code; (2) he has no valid license or
authority required by law to enable one to lawfully engage in recruitment
167 | L a b o r S t a n d a r d s - C a s e D i g e s t s
and placement of workers; and (3) the illegal recruitment is committed by
a group of 3 or more persons conspiring or confederating with one
another. When illegal recruitment is committed by a syndicate or in a
large scale if it is committed against 3 or more persons individually or as a
group, it’s considered an offense involving economic sabotage.
Under Art. 13(b) of the Labor Code, recruitment and placement refers to
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising
or advertising for employment, locally or abroad, whether for profit or not.
Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers and includes referring, contract services, promising
or advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated
under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such non-
licensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged.
It shall, likewise, include the following act, whether committed by any
person, whether a non-licensee, non-holder, licensee or holder of
authority:
168 | L a b o r S t a n d a r d s - C a s e D i g e s t s
(3) or more persons individually or as a group. The persons criminally
liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control,
management or direction of their business shall be liable.
In the instant case, Gallo committed the acts enumerated in Sec. 6 of R.A.
8042. Testimonial evidence presented by the prosecution clearly shows
that, in consideration of a promise of foreign employment, Gallo received
the amount of Php 45,000.00 from Dela Caza. When Gallo made
misrepresentations concerning the agency’s purported power and
authority to recruit for overseas employment, and in the process,
collected money in the guise of placement fees, the former clearly
committed acts constitutive of illegal recruitment.
The Court finds the existence of a conspiracy between Gallo and the other
persons in the agency who are currently at large, resulting in the
commission of the crime of syndicated illegal recruitment.
In this case, it cannot be denied that Gallo together with Mardeolyn and
the rest of the officers and employees of MPM Agency participated in a
network of deception. Verily, the active involvement of each in the
recruitment scam was directed at one single purpose to divest
complainants with their money on the pretext of guaranteed employment
abroad. Without a doubt, the nature and extent of the actions of Gallo, as
well as with the other persons in MPM Agency clearly show unity of action
towards a common undertaking. Hence, conspiracy is evidently present.
G.R. 81510
HORTENCIA SALAZAR vs.
HON. TOMAS D. ACHACOSO, ADMINISTRATOR OF THE PHILIPPINE
OVERSEAS EMPLOYMENT ADMINISTRATION, AND FERDIE
MARQUEZ
March 14, 1990
169 | L a b o r S t a n d a r d s - C a s e D i g e s t s
and mediamen, proceeded to the residence of Hortencia to implement the
Closure and Seizure Order. There it was found that petitioner was
operating Hannalie Dance Studio. Inside the studio, the team chanced
upon 12 talent performers – practicing a dance number and saw about 20
more waiting outside, The team confiscated assorted costumes, which
were duly receipted for by Mrs. Asuncio Maguelan and witnessed by Mrs.
Flora Salazar. Because of this event, Hortencia filed a letter with the POEA
requesting that the personal properties seized at her residence be
immediately returned. The petitioner contends that she has not been
given any prior notice or hearing, hence the Closure and Seizure Order
violated “due process of law” guaranteed under Section 1, Article III, of
the Philippine Constitution. She also avers that POEA’s actions violate
Section 2, Article III of the Philippine Constitution which guarantees right
of the people “to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for
any purpose.”
Held: No. Under the new Constitution, “No search warrant or warrant of
arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be
seized”. The Closure and Seizure Order was based on Article 38 of the
Labor Code. The Supreme Court held, “We reiterate that the Secretary of
Labor, not being a judge, may no longer issue search or arrest warrants.
Hence, the authorities must go through the judicial process. To that
extent, we declare Article 38, paragraph (c), of the Labor Code,
unconstitutional and of no force and effect… The power of the President to
order the arrest of aliens for deportation is, obviously, exceptional. It (the
power to order arrests) cannot be made to extend to other cases, like the
one at bar. Under the Constitution, it is the sole domain of the courts.”
Furthermore, the search and seizure order was in the nature of a general
warrant. The court held that the warrant is null and void, because it must
identify specifically the things to be seized. Therefore, Article 38,
paragraph (c) of the Labor Code is declared unconstitutional and null and
void. The respondents are ordered to return all materials seized as a result
of the implementation of Search and Seizure Order No. 1205.
Labor Arbiter over Money Claims – R.A. No. 8042, Section 10, as
amended
Flourish Maritime Shipping vs. Almanzor, 568 SCRA 713 (2008) (NOTE:
Serrano vs. Gallant Maritime Services, Inc., 582 SCRA 254 (2009) – The
clause “or for three months for every year of the unexpired term,
170 | L a b o r S t a n d a r d s - C a s e D i g e s t s
whichever is less” is unconstitutional for being violative of the equal
protection clause.)
Almanzor filed a complaint for illegal dismissal and for payment of the
unexpired term of his employment contract as well as damages and
attorneys fees. This was opposed by Uy saying that it was Almanzor who
voluntarily resigned. Further, Uy sought the dismissal of the complaint for
failure to comply with the grievance machinery and arbitration clause in
the contract.
The Labor Arbiter ruled in favor of Almanzor which was affirmed by the
NLRC, it ordered that FMS and Wang Yung Chin be jointly and solidarily
liable to pay Almanzor the amount of NT15,840 times 6 months or a total
of NT95,040. The case was appealed to the Court of Appeals which
affirmed the decisions of both the Labor Arbiter and the NLRC but with
modification that the monetary award be increased in accordance to
Section 10 of RA 8042. Both the LA and the NLRC Board of Commissioners
awarded such amount equivalent to Almanzor’s salary for 6 months (3
months for every year of the unexpired term) considering the latter’s
employment contract covered a 2-year period and was dismissed from
employment after only 26 days of actual work.
According to the CA, since Almanzor actually worked for 26 days and was
thereafter dismissed. The unexpired portion of the contract is 1 year, 11
171 | L a b o r S t a n d a r d s - C a s e D i g e s t s
months and 4 days. For the unexpired 2nd year, the court awarded 3
months of salary. With regard to the 11 months, and 4 days of the 1 st year,
the CA refused to apply the 3-month rule.
The Court affirmed the decision of the CA with the modification that the
monetary award to be paid to Almanzor shall be the amount set forth by
the Labor Arbiter which was affirmed by the NLRC. It added that the
correct interpretation of the above-mentioned provision was settled in the
case of Marsaman Manning Agency Inc. v. NLRC where the court held that
the choice of which amount to award an illegally dismissed overseas
contract worker, i.e., whether his salaries for the unexpired portion of his
employment contract, or 3 months salary for every year of the unexpired
term, whichever is less, comes into play when the employment contract
concerned has a term of at least 1 year or more. The employment
contract involved in the case covers a 2-year period but the overseas
contract worker actually worked for only 26 days prior to his illegal
dismissal. Thus, the 3-month rule applies. The SC didn’t agree with the
CA’s ruling that Almanzor should be paid his salaries for 14 months and 4
days. Record show that his actual employment lasted only for 26 days.
Considering the aforementioned provision, the contract covers a 2-year
period. Hence, Almanzor is entitled to 6 months salary.
Facts: Farle Almodiel is a CPA who was hired by Raytheon Philippines, Inc.
as Cost Accounting Manager through John Clements Consultants, Inc. with
172 | L a b o r S t a n d a r d s - C a s e D i g e s t s
a starting salary of P18,000. Before his employment with Raytheon, he
worked as accounts executive of Integrated Microelectronics, Inc. He
started as a probationary or temporary employee of Raytheon. As Cost
Accounting Manager, his major duties were: 1.) Plan, coordinate, carry out
year and physical inventory; 2.) Formulate and issue out hard copies of
Standard Product costing and other cost/pricing analysis if needed and
required and 3.) Set up written Cost Accounting System for the whole
company. After a few months, he was given a regularization increase of
P1,600 a month. Not long thereafter, his salary was increased to P21,600
a month.
When the standard cost accounting system was installed and used at the
Raytheon plants and subsidiaries worldwide which was adopted and
installed in the Philippine operations, the services of a Cost Accounting
Manager allegedly entailed only the submission of periodic reports that
would use computerized forms prescribed and designed by the
international head office of the Raytheon Company.
The Labor Arbiter ruled in favor of Almodiel declaring that his termination
on the ground of redundancy was without legal and factual basis, thus,
ordering Raytheon to reinstate Almodiel former position without loss of
seniority rights and other benefits plus damages.
Raytheon appealed the LA’s decision to the NLRC which reversed the
former’s decision and directed that they (Raytheon) pay Almodiel
P100,000 as separation pay/ financial assistance.
Almodiel claimed that the functions of his position were absorbed by the
Payroll/Mis/Finance Department under the management of Ang Tan Chai, a
resident alien without any working permit from the DOLE as required by
law. Granting that his department has to be declared redundant, he claims
that he should have been the Manager of the Payroll/Mis/Finance
Department since he has the qualities for the said position. He claims that
he’s better qualified than Ang Tan Chai. However, Raytheon insists that
173 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Almodiel’s functions as Cost Accounting Manager had not been absorbed
by Ang Tan Chai, a permanent resident born in this country. It claims to
have established that Ang Tan Chai didn’t displace Almodiel or absorb his
functions and duties as they were occupying different and distinct
positions requiring different sets of expertise. The case was elevated to
the SC.
Issue: 1.) Whether or not Almodiel was validly dismissed on the ground of
redundancy.
2.) Whether or not a resident alien without a working permit
authorized by DOLE is allowed to occupy a position in a Philippine
Corporation.
Held:
1.) The court ruled that the governing provision on the termination of an
employee’s services because of redundancy is Art. 283 of the Labor Code.
In the case at bar, there was no dispute that Almodiel was duly advised a
month before his termination on the ground of redundancy in a written
notice by his immediate superior. He was issued a check of P54, 863
representing separation pay but because of his refusal to accept said pay,
it was sent to him through registered mail. The DOLE was served a copy of
the notice of termination of Almodiel.
Further, it’s a well-settled rule that labor laws don’t authorize interference
with the employer’s judgment in the conduct of business. The
determination of the qualification and fitness of workers for hiring, firing,
promotion or reassignment are exclusive prerogatives of management.
The Labor Code and its IRR do not vest in the Labor Arbiters nor in the
different divisions of the NLRC managerial authority. The employer is free
to determine, using his own sound discretion and business judgment, all
elements of employment, “from hiring to firing” except in cases of
unlawful discrimination or those by which may be provided by law. There’s
none in the instant case. Hence, the court found no abuse of grave
discretion on the part of the NLRC in reversing and annulling LA’s decision
and that on the contrary, the termination of Almodiel was anchored on a
valid and authorized cause under Art. 283.
174 | L a b o r S t a n d a r d s - C a s e D i g e s t s
General Milling Corporation vs. Torres
A month after, GMC requested for the renewal of Cone's alien employment
permit. GMC also requested that it be allowed to employ Cone as full-
fledged coach. DOLE Regional Director Piezas granted the request. An
Alien Employment Permit was issued valid until December 25, 1990.
Issue: 1.) Whether or not the Secretary of Labor gravely abused his
discretion when he revoked petitioner Cone's alien employment permit;
and
2.) Whether or not Section 6 (c), Rule XIV, Book I of the Omnibus
Rules Implementing the Labor Code is null and void as it is in violation of
the enabling law as the Labor Code does not empower respondent
Secretary to determine if the employment of an alien would redound to
national interest.
175 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: With regard to the first issue, the Court considers that petitioners
have failed to show any grave abuse of discretion or any act without or in
excess of jurisdiction on the part of respondent Secretary of Labor in
rendering his decision, revoking petitioner Cone's Alien Employment
Permit. Petitioner GMC's claim that hiring of a foreign coach is an
employer's prerogative has no legal basis at all. Under Article 40 of the
Labor Code, an employer seeking employment of an alien must first
obtain an employment permit from the Department of Labor. Petitioner
GMC's right to choose whom to employ is, of course, limited by the
statutory requirement of an alien employment permit.
The provisions of the Labor Code and its Implementing Rules and
Regulations requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It is firmly
settled that provisions of applicable laws, especially provisions relating to
matters affected with public policy, are deemed written into contracts.
Private parties cannot constitutionally contract away the otherwise
applicable provisions of law.
176 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Art. 40. Employment per unit of non-resident aliens. –– Any alien seeking
admission to the Philippines for employment purposes and any domestic
or foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the Department of
Labor.
177 | L a b o r S t a n d a r d s - C a s e D i g e s t s
sum of P1,912.79. Three days after, private respondent formally filed
before the NLRC NCR a complaint for illegal dismissal and payment of
other monetary benefits.
The Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit.
Labor Arbiter gave two reasons for ruling that the dismissal of Roberto
Capilian was valid. First, private respondent who was hired as an
apprentice violated the terms of their agreement when he acted with
gross negligence resulting in the injury not only to himself but also to his
fellow worker. Second, private respondent had shown that "he does not
have the proper attitude in employment particularly the handling of
machines without authority and proper training.
On appeal, the NLRC issued an order reversing the decision of the Labor
Arbiter and directed to reinstate complainant to his work last performed
and pay backwages computed from the time his wages were withheld up
to the time he is actually reinstated. The NLRC declared that private
respondent was a regular employee of petitioner by ruling that the
complainant was correct since the apprenticeship agreement was filed
with the Department of Labor only on June 7, 1990 could be validly used
by the Labor Arbiter as basis to conclude that the complainant was hired
by respondent as a plain "apprentice" on May 28, 1990.
Held: The law is clear on this matter. Article 61 of the Labor Code
provides:
178 | L a b o r S t a n d a r d s - C a s e D i g e s t s
conform to the rules issued by the Minister of Labor and
Employment. The period of apprenticeship shall not exceed six
months. Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case shall start
below 75% per cent of the applicable minimum wage, may be
entered into only in accordance with apprenticeship program
duly approved by the Minister of Labor and Employment. The
Ministry shall develop standard model programs of
apprenticeship.
Based on the evidence before us, petitioner did not comply with the
requirements of the law. It is mandated that apprenticeship agreements
entered into by the employer and apprentice shall be entered only in
accordance with the apprenticeship program duly approved by the
Minister of Labor and Employment. Prior approval by the Department of
Labor and Employment of the proposed apprenticeship program is,
therefore, a condition sine quo non before an apprenticeship agreement
can be validly entered into. The act of filing the proposed apprenticeship
program with the Department of Labor and Employment is a preliminary
step towards its final approval and does not instantaneously give rise to
an employer-apprentice relationship. Article 57 of the Labor Code provides
that the State aims to "establish a national apprenticeship program
through the participation of employers, workers and government and non-
government agencies" and "to establish apprenticeship standards for the
protection of apprentices." To translate such objectives into existence,
prior approval of the DOLE to any apprenticeship program has to be
secured as a condition sine qua non before any such apprenticeship
agreement can be fully enforced. The role of the DOLE in apprenticeship
programs and agreements cannot be debased. Hence, since the
apprenticeship agreement between petitioner and private respondent has
no force and effect in the absence of a valid apprenticeship program duly
approved by the DOLE, private respondent's assertion that he was hired
not as an apprentice but as a delivery boy ("kargador" or "pahinante")
deserves credence.
179 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Rights and Privileges – R.A. No. 7277, Sections 5, 6, 7
180 | L a b o r S t a n d a r d s - C a s e D i g e s t s
respondent or in any other bank in the Philippines which deals with purely
counting and sorting of bills in banking operations.
The Labor Arbiter and, on appeal, the NLRC ruled against herein
petitioners. In affirming the ruling of the Labor Arbiter that herein
petitioners could not be deemed regular employees under Article 280 of
the Labor Code, as amended, Respondent Commission ratiocinated as
follows:
We agree that Art. 280 is not controlling herein. We give due credence to
the conclusion that complainants were hired as an accommodation to the
recommendation of civic oriented personalities whose employments were
covered by xxx Employment Contracts with special provisions on duration
of contract as specified under Art. 80. Hence, as correctly held by the
Labor Arbiter a quo, the terms of the contract shall be the law between
the parties.
Petitioners maintain that they should be considered regular employees,
because their task as money sorters and counters was necessary and
desirable to the business of respondent bank. They further allege that
their contracts served merely to preclude the application of Article 280
and to bar them from becoming regular employees. Private respondent,
on the other hand, submits that petitioners were hired only as special
workers and should not in any way be considered as part of the regular
complement of the Bank. Rather, they were special workers under Article
80 of the Labor Code. Private respondent contends that it never solicited
the services of petitioners, whose employment was merely an
accommodation in response to the requests of government officials and
civic-minded citizens. They were told from the start, with the assistance of
government representatives that they could not become regular
employees because there were no plantilla positions for money sorters,
whose task used to be performed by tellers. Their contracts were renewed
several times, not because of need but merely for humanitarian
reasons. Respondent submits that as of the present, the special position
that was created for the petitioners no longer exists in private respondent
bank, after the latter had decided not to renew anymore their special
employment contracts.
The NLRC also declared that the Magna Carta for Disabled Persons was
not applicable, considering the prevailing circumstances/milieu of the
case.
Issue: 1.) Whether or not the NLRC committed grave abuse of discretion
in holding that the petitioners - money sorters and counters working in a
bank - were not regular employees.
2.) Whether or not the NLRC committed grave abuse of discretion in
not applying the provisions of the Magna Carta for the Disabled (Republic
Act No. 7277), on proscription against discrimination against disabled
persons.
181 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: The petition is meritorious. However, only the employees, who
worked for more than six months and whose contracts were renewed are
deemed regular. Hence, their dismissal from employment was illegal.
The facts, viewed in light of the Labor Code and the Magna Carta for
Disabled Persons, indubitably show that the petitioners, except sixteen of
them, should be deemed regular employees. As such, they have acquired
legal rights that this Court is duty-bound to protect and uphold, not as a
matter of compassion but as a consequence of law and justice.
In this light, the Magna Carta for Disabled Persons mandates that
a qualified disabled employee should be given the same terms and
conditions of employment as a qualified able-bodied person. Section 5 of
the Magna Carta provides:
182 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Section 5. Equal Opportunity for Employment. No disabled person shall be
denied access to opportunities for suitable employment. A qualified
disabled employee shall be subject to the same terms and conditions of
employment and the same compensation, privileges, benefits, fringe
benefits, incentives or allowances as a qualified able bodied person.
The fact that the employees were qualified disabled persons necessarily
removes the employment contracts from the ambit of Article 80. Since the
Magna Carta accords them the rights of qualified able-bodied persons,
they are thus covered by Article 280 of the Labor Code, which provides:
183 | L a b o r S t a n d a r d s - C a s e D i g e s t s
GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO
DOMESTIC AND HOUSEHOLD WORKERS." Specifically, the measure is
assailed for "discrimination against males or females;" that it "does not
apply to all Filipino workers but only to domestic helpers and females with
similar skills," and that it is violative of the right to travel. In its
supplement to the petition, PASEI invokes Section 3, of Article XIII, of the
Constitution, providing for worker participation "in policy and decision-
making processes affecting their rights and benefits as may be provided
by law."
184 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The same, however, cannot be said of our male workers. In the first place,
there is no evidence that, except perhaps for isolated instances, our men
abroad have been afflicted with an Identical predicament. The petitioner
has proffered no argument that the Government should act similarly with
respect to male workers. The Court, of course, is not impressing some
male chauvinistic notion that men are superior to women. What the Court
is saying is that it was largely a matter of evidence (that women domestic
workers are being ill-treated abroad in massive instances) and not upon
some fanciful or arbitrary yardstick that the Government acted in this
case. It is evidence capable indeed of unquestionable demonstration and
evidence this Court accepts. The Court cannot, however, say the same
thing as far as men are concerned. There is simply no evidence to justify
such an inference. Suffice it to state, then, that insofar as classifications
are concerned, this Court is content that distinctions are borne by the
evidence. Discrimination in this case is justified.
Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
185 | L a b o r S t a n d a r d s - C a s e D i g e s t s
"Protection to labor" does not signify the promotion of employment alone.
What concerns the Constitution more paramountly is that such an
employment be above all, decent, just, and humane. It is bad enough that
the country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-bound to insure that our toiling
expatriates have adequate protection, personally and economically, while
away from home. In this case, the Government has evidence, an evidence
the petitioner cannot seriously dispute, of the lack or inadequacy of such
protection, and as part of its duty, it has precisely ordered an indefinite
ban on deployment.
The Court finds furthermore that the Government has not indiscriminately
made use of its authority. It is not contested that it has in fact removed
the prohibition with respect to certain countries as manifested by the
Solicitor General.
186 | L a b o r S t a n d a r d s - C a s e D i g e s t s
In her reply letter dated January 17, 1992, private respondent stated that
she was not aware of PT&T's policy regarding married women at the time.
Private respondent was dismissed from the company effective January 29,
1992, which she readily contested by initiating a complaint for illegal
dismissal, coupled with a claim for non-payment of cost of living
allowances (COLA), before the Regional Arbitration Branch of the National
Labor Relations Commission in Baguio City.
That it was so can easily be seen from the memorandum sent to private
respondent by Delia M. Oficial, the branch supervisor of the company, with
the reminder, in the words of the latter, that "you're fully aware that the
company is not accepting married women employee (sic), as it was
verbally instructed to you." Again, in the termination notice sent to her by
the same branch supervisor, private respondent was made to understand
187 | L a b o r S t a n d a r d s - C a s e D i g e s t s
that her severance from the service was not only by reason of her
concealment of her married status but, over and on top of that, was her
violation of the company's policy against marriage ("and even told you
that married women employees are not applicable [sic] or accepted in our
company.") Parenthetically, this seems to be the curious reason why it was
made to appear in the initiatory pleadings that petitioner was represented
in this case only by its said supervisor and not by its highest ranking
officers who would otherwise be solidarily liable with the corporation.
The government, to repeat, abhors any stipulation or policy in the nature
of that adopted by petitioner PT & T. The Labor Code state, in no uncertain
terms, as follows:
Further, it is not relevant that the rule is not directed against all women
but just against married women. And, where the employer discriminates
against married women, but not against married men, the variable is sex
and the discrimination is unlawful. Upon the other hand, a requirement
that a woman employee must remain unmarried could be justified as a
"bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects
an inherent quality reasonably necessary for satisfactory job performance.
Thus, in one case, a no-marriage rule applicable to both male and female
flight attendants, was regarded as unlawful since the restriction was not
related to the job performance of the flight attendants.
Petitioner's policy is not only in derogation of the provisions of Article 136
of the Labor Code on the right of a woman to be free from any kind of
stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by
all accounts inheres in the individual as an intangible and inalienable
right. Hence, while it is true that the parties to a contract may establish
any agreements, terms, and conditions that they may deem convenient,
the same should not be contrary to law, morals, good customs, public
order, or public policy. Carried to its logical consequences, it may even be
said that petitioner's policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of
marriage.
188 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Philippine Telegraph and Telephone Company vs. NLRC
In her reply letter dated January 17, 1992, private respondent stated that
she was not aware of PT&T's policy regarding married women at the time.
Private respondent was dismissed from the company effective January 29,
1992, which she readily contested by initiating a complaint for illegal
dismissal, coupled with a claim for non-payment of cost of living
allowances (COLA), before the Regional Arbitration Branch of the National
Labor Relations Commission in Baguio City.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
decision declaring that private respondent, who had already gained the
status of a regular employee, was illegally dismissed by petitioner. On
appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiter’s decision dated April 29, 1994.
189 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: No, it is not valid. The government, to repeat, abhors any
stipulation or policy in the nature of that adopted by petitioner PT & T. The
Labor Code state, in no uncertain terms, as follows:
Further, it is not relevant that the rule is not directed against all women
but just against married women. And, where the employer discriminates
against married women, but not against married men, the variable is sex
and the discrimination is unlawful. Upon the other hand, a requirement
that a woman employee must remain unmarried could be justified as a
"bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects
an inherent quality reasonably necessary for satisfactory job performance.
Thus, in one case, a no-marriage rule applicable to both male and female
flight attendants, was regarded as unlawful since the restriction was not
related to the job performance of the flight attendants.
190 | L a b o r S t a n d a r d s - C a s e D i g e s t s
G.R. No. 162994
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON vs.
GLAXO WELLCOME PHILIPPINES, INC
September 17, 2004
Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship
with Bettsy might engender. In January 1999, Tecson’s superiors informed
him that his marriage to Bettsy gave rise to a conflict of interest. Tecson’s
superiors reminded him that he and Bettsy should decide which one of
them would resign from their jobs, although they told him that they
wanted to retain him as much as possible because he was performing his
job well. In November 1999, Glaxo transferred Tecson to the Butuan City-
Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider
its decision, but his request was denied.
Because the parties failed to resolve the issue at the grievance machinery
level, they submitted the matter for voluntary arbitration. Glaxo offered
Tecson a separation pay of one-half (½) month pay for every year of
service, or a total of P50,000.00 but he declined the offer. On November
15, 2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxo’s policy on relationships between its
employees and persons employed with competitor companies, and
affirming Glaxo’s right to transfer Tecson to another sales territory.
191 | L a b o r S t a n d a r d s - C a s e D i g e s t s
On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review.
The Court of Appeals also correctly noted that the assailed company
policy which forms part of respondent’s Employee Code of Conduct and of
192 | L a b o r S t a n d a r d s - C a s e D i g e s t s
its contracts with its employees, such as that signed by Tescon, was made
known to him prior to his employment. Tecson, therefore, was aware of
that restriction when he signed his employment contract and when he
entered into a relationship with Bettsy. Since Tecson knowingly and
voluntarily entered into a contract of employment with Glaxo, the
stipulations therein have the force of law between them and, thus, should
be complied with in good faith." He is therefore estopped from questioning
said policy.
193 | L a b o r S t a n d a r d s - C a s e D i g e s t s
memorandum was also sent by the Personnel Manager to private
respondent at her last known address by registered mail.
Held: No, she should not be. On the issue of moral and exemplary
damages, the NLRC ruled that private respondent was not entitled to
recover such damages for her failure to prove that petitioner corporation
had been motivated by malice or bad faith or that it acted in a wanton,
oppressive or malevolent manner in terminating her services.
194 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Private respondent admittedly allowed four (4) years to pass before finally
coming out with her employer's sexual impositions. Not many women,
especially in this country, are made of the stuff that can endure the agony
and trauma of a public, even corporate, scandal. If petitioner corporation
had not issued the third memorandum that terminated the services of
private respondent, we could only speculate how much longer she would
keep her silence. Moreover, few persons are privileged indeed to transfer
from one employer to another. The dearth of quality employment has
become a daily "monster" roaming the streets that one may not be
expected to give up one's employment easily but to hang on to it, so to
speak, by all tolerable means. Perhaps, to private respondent's mind, for
as long as she could outwit her employer's ploys she would continue on
her job and consider them as mere occupational hazards. This uneasiness
in her place of work thrived in an atmosphere of tolerance for four (4)
years, and one could only imagine the prevailing anxiety and resentment,
if not bitterness, that beset her all that time. But William Chua faced
reality soon enough. Since he had no place in private respondent's heart,
so must she have no place in his office. So, he provoked her, harassed
her, and finally dislodged her; and for finally venting her pent-up anger for
years, he "found" the perfect reason to terminate her.
In determining entitlement to moral and exemplary damages, we restate
the bases therefor. In moral damages, it suffices to prove that the
claimant has suffered anxiety, sleepless nights, besmirched reputation
and social humiliation by reason of the act complained of. Exemplary
damages, on the other hand, are granted in addition to, inter alia, moral
damages "by way of example or correction for the public good" if the
employer ''acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner."
195 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then
Stenographic Reporter III at the NLRC, filed a Complaint for sexual
harassment against Rayala before Secretary Bienvenido Laguesma of the
Department of Labor and Employment (DOLE). She filed the Complaint for
sexual harassment on the basis of Administrative Order No. 250, the Rules
and Regulations Implementing RA 7877 in the Department of Labor and
Employment.
The Committee heard the parties and received their respective evidence.
On March 2, 2000, the Committee submitted its report and
recommendation to Secretary Laguesma. It found Rayala guilty of the
offense charged and recommended the imposition of the minimum
penalty provided under AO 250, which it erroneously stated as suspension
for six (6) months.
In its Resolution dated September 4, 2000, the Court recalled its June 26
Resolution and referred the petition to the Court of Appeals (CA) for
appropriate action.
The CA rendered its Decision13 on December 14, 2001. It held that there
was sufficient evidence on record to create moral certainty that Rayala
committed the acts he was charged with. It also held that Rayala’s
dismissal was proper. The CA pointed out that Rayala was dismissed for
disgraceful and immoral conduct in violation of RA 6713, the Code of
Conduct and Ethical Standards for Public Officials and Employees. Rayala
timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino
voted to affirm the December 14 Decision.
Domingo filed a Petition for Review before this Court, which we denied in
our February 19, 2003 Resolution for having a defective verification. She
filed a Motion for Reconsideration, which the Court granted; hence, the
petition was reinstated.
Rayala likewise filed a Petition for Review with this Court essentially
arguing that he is not guilty of any act of sexual harassment.
196 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: Yes, Rayala committed the acts complained of – and was guilty of
sexual harassment – is, therefore, the common factual finding of not just
one, but three independent bodies: the Committee, the OP and the CA. It
should be remembered that when supported by substantial evidence,
factual findings made by quasi-judicial and administrative bodies are
accorded great respect and even finality by the courts. The principle,
therefore, dictates that such findings should bind us.
197 | L a b o r S t a n d a r d s - C a s e D i g e s t s
This section, in relation to Section 7 on penalties, defines the criminal
aspect of the unlawful act of sexual harassment. The same section, in
relation to Section 6, authorizes the institution of an independent civil
action for damages and other affirmative relief. Section 4, also in relation
to Section 3, governs the procedure for administrative cases, viz.:
198 | L a b o r S t a n d a r d s - C a s e D i g e s t s
charged with the administrative offense, not the criminal infraction, of
sexual harassment. It should be enough that the CA, along with the
Investigating Committee and the Office of the President, found substantial
evidence to support the administrative charge.
Yet, even if we were to test Rayala’s acts strictly by the standards set in
Section 3, RA 7877, he would still be administratively liable. It is true
that this provision calls for a "demand, request or requirement of
a sexual favor." But it is not necessary that the demand, request
or requirement of a sexual favor be articulated in a categorical
oral or written statement. It may be discerned, with equal certitude,
from the acts of the offender. Holding and squeezing Domingo’s shoulders,
running his fingers across her neck and tickling her ear, having
inappropriate conversations with her, giving her money allegedly for
school expenses with a promise of future privileges, and making
statements with unmistakable sexual overtones – all these acts of Rayala
resound with deafening clarity the unspoken request for a sexual favor.
19. Minors – Labor Code 139-140; Omnibus Rules, Book III, Rule
XII, Sections 2-3; Special Protection of Children Act of 2003
(R.A. No. 7610, as amended by R.A. No. 9231); D.O. 65-04; ILO
Convention Nos. 130 and 182 (1999); ILO Recommendation No.
190
Non-Household Work
Apex Mining Co. vs. NLRC
199 | L a b o r S t a n d a r d s - C a s e D i g e s t s
at its staff house located at Masara, Maco, Davao del Norte. In the
beginning, she was paid on a piece rate basis. However, on January 17,
1982, she was paid on a monthly basis at P250.00 a month which was
ultimately increased to P575.00 a month.
On December 18, 1987, while she was attending to her assigned task and
she was hanging her laundry, she accidentally slipped and hit her back on
a stone. She reported the accident to her immediate supervisor Mila de la
Rosa and to the personnel officer, Florendo D. Asirit. As a result of the
accident she was not able to continue with her work. She was permitted to
go on leave for medication. De la Rosa offered her the amount of P
2,000.00 which was eventually increased to 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 to direct petitioner to
pay total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND
42/100 (P55,161.42).
200 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The definition cannot be interpreted to include househelp or
laundrywomen 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
then 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 criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the
nature of the work of a househelper, domestic servant or laundrywoman
in a home or in a company staffhouse may be similar in nature, the
difference in their circumstances is that in the former instance they are
actually serving the family while in the latter case, whether it is a
corporation or a single proprietorship engaged in business or industry or
any other agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the employer. In
such instance, they are employees of the company or employer in the
business concerned entitled to the privileges of a regular employee.
201 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Chapter V – Conditions of Employment
Regulations/ Rationale
202 | L a b o r S t a n d a r d s - C a s e D i g e s t s
substitutions and additions, their salaries having been raised during the
month of February to P4 per day for the day shift and P6.25 per day for
the nightshift. On March 28, 1947, Dominador Jimenez, a member of the
Manila Terminal Relief and Mutual Aid Association, sent a letter to the
Department of Labor, requesting that the matter of overtime pay be
investigated, but nothing was done by the Department. On April 29, 1947,
Victorino Magno Cruz and five other employees, also member of the
Manila Transit Mutual Aid Association, filed a 5-point demand with the
Department of Labor, including overtime pay, but the Department again
filed to do anything about the matter. On May 27, 1947, the petitioner
instituted the system of strict eight-hour shifts. On June 19, 1947, the
Manila Port Terminal Police Association, not registered in accordance with
the provisions of Commonwealth Act No. 213, filed a petition with the
Court of Industrial Relations. On July 16, 1947, the Manila Terminal Relief
and Mutual Aid Association was organized for the first time, having been
granted certificate No. 375 by the Department of Labor. On July 28, 1947,
Manila Terminal Relief and Mutual Aid Association filed an amended
petition with the Court of Industrial Relations praying, among others, that
the petitioner be ordered to pay its watchmen or police force overtime pay
from the commencement of their employment. On May 9, 1949, by virtue
of Customs Administrative Order No. 81 and Executive Order No. 228 of
the President of the Philippines, the entire police force of the petitioner
was consolidated with the Manila Harvor Police of the Customs Patrol
Service, a Government agency under the exclusive control of the
Commissioner of Customs and the Secretary of Finance The Manila
Terminal Relief and Mutual Aid Association will hereafter be referred to as
the Association.
Issue: Whether or not the agreement under which its police force were
paid certain specific wages for twelve-hour shifts, included overtime
compensation.
The point is stressed that the payment of the claim of the Association for
overtime pay covering a period of almost two years may lead to the
financial ruin of the petitioner, to the detriment of its employees
themselves. It is significant, however, that not all the petitioner's
watchmen would receive back overtime pay for the whole period specified
203 | L a b o r S t a n d a r d s - C a s e D i g e s t s
in the appealed decision, since the record shows that the great majority of
the watchmen were admitted in 1946 and 1947, and even 1948 and 1949.
At any rate, we are constrained to sustain the claim of the Association as
a matter of simple justice, consistent with the spirit and purpose of the
Eight-Hour Labor Law. The petitioner, in the first place, was required to
comply with the law and should therefore be made liable for the
consequences of its violation.
It is high time that all employers were warned that the public is interested
in the strict enforcement of the Eight-Hour Labor Law. This was designed
not only to safeguard the health and welfare of the laborer or employee,
but in a way to minimize unemployment by forcing employers, in cases
where more than 8-hour operation is necessary, to utilize different shifts of
laborers or employees working only for eight hours each.
G.R. No.151370
December 4, 2002
Facts: Petitioner Asia Pacific Chartering (Phils.) Inc. is tasked with the
selling of passenger and cargo spaces for Scandinavian Airlines System.
Petitioner Asia, through its Vice President Catalino Bondoc, offered
Respondent Maria Linda R. Farolan the sales manager position to which
Farolan accepted. Upon Vice President Bondoc’s request, Farolan
submitted a detailed report attributing the drop of sales revenue to
market forces beyond her control. Consequently, Asia directed Roberto
Zozobrado to implement solutions. Zozobrado informally took over
Farolan’s marketing and sales responsibilities but she continued to receive
her salary. Asia claims that the increase in sales revenue was due to
Zozobrado’s management. Asia then sent a letter of termination to
Farolan on the ground of loss of confidence, forcing Farolan to file a
complaint for illegal dismissal. The Labor Arbiter found that the dismissal
was illegal for lack of just cause, however, such decision was reversed by
the National Labor Relations Commission stating that the termination of
employment due to loss of confidence is within management prerogative.
On appeal, the Court of Appeals upheld the labor arbiter’s decision.
Hence, the filing of this petition.
204 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not an employer has the management prerogative to
replace sales manager whom it has reasonable grounds to believe cannot
effectively discharge the duties demanded by such position.
It is not disputed that Farolan’s job description, and the terms and
conditions of her employment with the exception of her salary and
allowances were never reduced to writing. The absence of a written job
description or prescribed work standards, however leaves the Court in the
dark. Even assuming, however, that respondent was a managerial
employee, the stated ground for her dismissal must be based on a wilful
breach and founded on clearly established facts.
May 3, 2006
After the parties failed to settle amicably, the labor arbiter directed the
parties to file their position papers and submit supporting documents.
Their respective allegations are summarized by the labor arbiter as
follows:
205 | L a b o r S t a n d a r d s - C a s e D i g e s t s
grounds in accordance with law. Furthermore, he was not paid his
overtime pay, premium pay for working during holidays/rest days, night
shift differentials and finally claims for payment of damages and
attorney’s fees having been forced to litigate the present complaint.
The labor arbiter ruled that there was no illegal dismissal and that
petitioner’s Complaint was premature because he was still employed by
BPC Respondents filed an appeal to the NLRC, which deleted the award of
overtime pay and premium pay for working on rest days. According to the
Commission, petitioner was not entitled to these awards because he was a
managerial employee. The CA dismissed Peñaranda’s Petition for
Certiorari and denied reconsideration on the ground that petitioner still
failed to submit the pleadings filed before the NLRC. Hence this Petition.
Held: The Implementing Rules of the Labor Code state that managerial
employees are those who meet the following conditions: "(1) Their
primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision thereof; (2) They
customarily and regularly direct the work of two or more employees
therein; (3) They have the authority to hire or fire other employees of
lower rank; or their suggestions and recommendations as to the hiring
and firing and as to the promotion or any other change of status of other
employees are given particular weight."
The Court disagrees with the NLRC’s finding that petitioner was a
managerial employee. However, petitioner was a member of the
managerial staff, which also takes him out of the coverage of labor
standards. Like managerial employees, officers and members of the
managerial staff are not entitled to the provisions of law on labor
standards.
Field Personnel – Labor Code Article 82; Book III, Rule I, Section
2(l)
October 8, 1998
206 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: Private respondent 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 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.
Issue: Whether or not the fishing crew members, like Fermin Agao, Jr.,
cannot be classified as field personnel under Article 82 of the Labor Code.
Held: As provided by Art. 82 of the Labor Code, 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.
207 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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.
In contrast, 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 petitioners business offices, the fact remains that throughout the
duration of their work they are under the effective control and supervision
of petitioner through the vessels patron or master as the NLRC correctly
held.
The Labor Arbiter dismissed the complaint. Not satisfied with the decision,
petitioner appealed the decision to the NLRC which affirmed the Labor
Arbiter’s decision. Hence, the instant petition.
208 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not respondent is a field personnel.
Held: According to Article 82 of the Labor Code, 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.
209 | L a b o r S t a n d a r d s - C a s e D i g e s t s
and certified LCP as the sole and exclusive bargaining agent among the
rank-and-file employees of Empire Food Products for purposes of collective
bargaining with respect to wages, hours of work and other terms and
conditions of employment.
Held: No. Three (3) factors lead the Court 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. 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.
210 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The Revised Guidelines as well as the Rules and Regulations identify those
workers who fall under the piece-rate category as those who are paid a
standard amount for every piece or unit of work produced that is more or
less regularly replicated, without regard to the time spent in producing the
same.
Regular Meal Period (One Hour) – Labor Code Article 85; Book III,
Rule I, Section 7, Paragraph 1
February 2, 1999
211 | L a b o r S t a n d a r d s - C a s e D i g e s t s
On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a
decision declaring the suspension of private respondent illegal. Petitioner
appealed to the NLRC. The NLRC, however, dismissed the appeal after
finding that the decision of the Labor Arbiter is supported by the facts on
record and the law on the matter. The NLRC likewise denied petitioners
motion for reconsideration.
Articles 83 and 85 of the Labor Code provides that the eight-hour work
period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as
long as they return to their posts on time. Private respondents act,
therefore, of going home to take his dinner does not constitute
abandonment.
212 | L a b o r S t a n d a r d s - C a s e D i g e s t s
– 6:00 in the evening) since these preliminary activities are necessarily
and primarily for private respondents benefit. The preliminary activities
include:
1. Roll call and getting their individual work assignments from the
foreman
2. Laborer’s Daily Accomplishment Report of the day
3. They go to the stock room to get their working materials, tools and
equipments
4. They travel to the field with their tools and materials.
The Labor Arbiter held in favor of Stanfilco that in an earlier case, the 30-
minute assembly time long practiced cannot be considered waiting time
or working time, and, therefore, not compensable, has become the law of
the case which can no longer be distributed without doing violence to the
time honored principle of res judicata. The NLRC upheld the decision of
the Labor Arbiter’s decision.
Issue: Whether or not the 30-minute activity of the petitioners before the
scheduled working time is compensable under the Labor Code.
Held: No. As has been decided in the previous case charged by the
associated Labor Union vs. Stanfilco, the Minister of Labor held, “The 30-
minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3 of the CBA cannot be
considered as waiting time within the purview of Section 5, Rule I, Book III
of the Rules and Regulations Implementing the Labor Code.
213 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: Petitioner is a labor union composed of faculty members of the
respondent University of Pangasinan, an educational institution duly
organized and existing by virtue of the laws of the Philippines.
214 | L a b o r S t a n d a r d s - C a s e D i g e s t s
cannot be considered as absences within the meaning of the law for which
deductions may be made from monthly allowances. The "No work, no pay"
principle does not apply in the instant case. The petitioner’s members
received their regular salaries during this period. It is clear from the
aforequoted provision of law that it contemplates a "no work" situation
where the employees voluntarily absent themselves. Petitioners, in the
case at bar, certainly do not, ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained to take mandatory leave
from work. For this they cannot be faulted nor can they be begrudged that
which is due them under the law. To a certain extent, the private
respondent can specify dates when no classes would be held. Surely, it
was not the intention of the framers of the law to allow employers to
withhold employee benefits by the simple expedient of unilaterally
imposing "no work" days and consequently avoiding compliance with the
mandate of the law for those days.
"a) All covered employees whether paid on a monthly or daily basis shall
be entitled to their daily living allowance when they are paid their basic
wage."
This provision, at once refutes the above contention. It is evident that the
intention of the law is to grant ECOLA upon the payment of basic wages.
Hence, we have the principle of "No pay, no ECOLA" the converse of which
finds application in the case at bar. Petitioners cannot be considered to be
on leave without pay so as not to be entitled to ECOLA, for, as earlier
stated, the petitioners were paid their wages in full for the months of
November and December of 1981, notwithstanding the intervening
semestral break. This, in itself, is a tacit recognition of the rather unusual
state of affairs in which teachers find themselves. Although said to be on
forced leave, professors and teachers are, nevertheless, burdened with
the task of working during a period of time supposedly available for rest
and private matters. There are papers to correct, students to evaluate,
deadlines to meet, and periods within which to submit grading reports.
Although they may be considered by the respondent to be on leave, the
semestral break could not be used effectively for the teacher’s own
purposes for the nature of a teacher’s job imposes upon him further duties
which must be done during the said period of time. Learning is a never
ending process. Teachers and professors must keep abreast of
developments all the time. Teachers cannot also wait for the opening of
the next semester to begin their work. Arduous preparation is necessary
for the delicate task of educating our children. Teaching involves not only
an application of skill and an imparting of knowledge, but a responsibility
215 | L a b o r S t a n d a r d s - C a s e D i g e s t s
which entails self-dedication and sacrifice. The task of teaching ends not
with the perceptible efforts of the petitioner’s members but goes beyond
the classroom: a continuum where only the visible labor is relieved by
academic intermissions. It would be most unfair for the private respondent
to consider these teachers as employees on leave without pay to suit its
purposes and, yet, in the meantime, continue availing of their services as
they prepare for the next semester or complete all of the last semester’s
requirements. Furthermore, we may also by analogy apply the principle
enunciated in the Omnibus Rules Implementing the Labor Code to wit:
1aw library
Travel Time
216 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: In 1977, Rada was contracted by Philnor Consultants and Planners,
Inc as a driver. He was assigned to a specific project in Manila. The
contract he signed was for 2.3 years. His task was to drive employees to
the project from 7am to 4pm. He was allowed to bring home the company
vehicle in order to provide a timely transportation service to the other
project workers. The project he was assigned to was not completed as
scheduled hence, since he has a satisfactory record, he was re-contracted
for an additional 10months. After 10 months the project was not yet
completed. Several contracts thereafter were made until the project was
finished in1985.At the completion of the project, Rada was terminated as
his employment was co-terminous with the project. He later sued
Philnorfor for non-payment of separation pay and overtime pay. He said he
is entitled to be paid overtime pay because he uses extra time to get to
the project site from his home and from the project site to his home every
day – in total, he spends an average of 3 hours overtime everyday.
Held: Yes. Rada is entitled to overtime pay. The fact that he picks up
employees of Philnor at certain specified points along EDSA in going to the
project site and drops them off at the same points on his way back from
the field office going home to Marikina, Metro Manila is not merely
incidental to Rada's job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the
employees, but primarily for the benefit of Philnor. As embodied in
Philnor’s memorandum, they allowed their drivers to bring home their
transport vehicles in order for them to provide a timely transport service
and to avoid delay – not really so that the drivers could enjoy the benefits
of the company vehicles nor for them to save on fare.
Private respondent does not hesitate to admit that it is usually the project
driver who is tasked with picking up or dropping off his fellow employees.
Proof thereof is the undisputed fact that when petitioner is absent,
another driver is supposed to replace him and drive the vehicle and
likewise pick up and/or drop off the other employees at the designated
points on EDSA. If driving these employees to and from the project site is
not really part of petitioner's job, then there would have been no need to
find a replacement driver to fetch these employees. But since the
assigned task of fetching and delivering employees is indispensable and
consequently mandatory, then the time required of and used by petitioner
in going from his residence to the field office and back, that is, from 5:30
a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00 p.m., which the labor
arbiter rounded off as averaging three hours each working day, should be
paid as overtime work. Quintessentially, petitioner should be given
overtime pay for the three excess hours of work performed during working
days from January, 1983 to December, 1985.
217 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Social Security System vs. Court of Appeals
For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr.
was her employee, admitting only that he was hired intermittently as an
independent contractor to plow, harrow, or burrow Hda. No. Audit B-15-M.
Tana used his own carabao and other implements, and he followed his
own schedule of work hours. Ayalde further alleged that she never
exercised control over the manner by which Tana performed his work as
an independent contractor.
The Social Security Commission finds that the late Ignacio Tana was
employed by respondent Conchita Ayalde from January 1961 to March
1979 with a salary based on the Minimum Wage prevailing during his
employment. Not having reported the petitioner’s husband for coverage
with the SSS, respondent Conchita Ayalde is, therefore, liable for the
218 | L a b o r S t a n d a r d s - C a s e D i g e s t s
payment of damages equivalent to the death benefits in the amount of
P7,067.40 plus the amount of P750.00 representing funeral benefit or a
total of P7,817.40. Further, the SSS is ordered to pay to the petitioner her
accrued pension covering the period after the 5-year guaranteed period
corresponding to the employer’s liability.
Held: The mandatory coverage under the SSS Law (Republic Act No.
1161, as amended by PD 1202 and PD 1636) is premised on the existence
of an employer-employee relationship, and Section 8(d) defines an
"employee" as "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." Claimant Margarita Tana and her corroborating
witnesses testified that her husband was paid daily wages "per quincena"
as well as on "pakyaw" basis. Ayalde, on the other hand, insists that Tana
was paid solely on "pakyaw" basis. To support her claim, she presented
payrolls covering the period January of 1974 to January of 1976; and
November of 1978 to May of 1979. A careful perusal of the records readily
show that the exhibits offered are not complete, and are but a mere
sampling of payrolls. While the names of the supposed laborers appear
therein, their signatures are nowhere to be found. In light of her
incomplete documentary evidence, Ayalde’s denial that Tana was her
employee in Hda. B-70 or Hda. B-15-M must fail. The witnesses did not
waver in their assertion that while Tana was hired by Ayalde as an
"arador" on "pakyaw" basis, he was also paid a daily wage which Ayalde’s
overseer disbursed every fifteen (15) days. It is also undisputed that they
were made to acknowledge receipt of their wages by signing on sheets of
ruled paper, which are different from those presented by Ayalde as
documentary evidence. In fine, we find that the testimonies of Margarita
219 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Tana, Agaton Libawas and Aurelio Tana prevail over the incomplete and
inconsistent documentary evidence of Ayalde. The testimonial evidence of
the claimant and her witnesses constitute positive and credible evidence
of the existence of an employer-employee relationship between Tana and
Ayalde. As the employer, the latter is duty-bound to keep faithful and
complete records of her business affairs, not the least of which would be
the salaries of the workers. And yet, the documents presented have been
selective, few and incomplete in substance and content. Consequently,
Ayalde has failed to convince us that, indeed, Tana was not her employee.
Additional Compensation – Labor Code Article 86; Book III, Rule II,
Sections 2-5
Facts: National Labor Union instituted this action to ask for 50%
additional compensation for the employees of Shell Company who work at
night to attend to the foreign planes landing and taking off (at night), to
supply petrol and lubricants, and perform other duties. Court of Industrial
Relations held that The Shell Company pay its workers working at night an
additional compensation of 50% over their salaries by working during
daytime.
220 | L a b o r S t a n d a r d s - C a s e D i g e s t s
compensation) pay for work rendered beyond 8 hours, and such cases do
not include the work at night.
NLU argues decision of the CIR is part of its broad and effective powers as
granted by Commonwealth Act No. 103 – the charter of the Industrial
Relations Court, and the Act No. 444 has no Application to this case
because it is referring only to particular and maximum working day
permitted I industrial establishments – the 8-hour day.
Issue: Whether or not those who work at night are entitled to 50%
additional compensation.
Held: Yes. The Court discussed a lot of issues about the pernicious effect
of working at night justifying the award of additional 50% to the
compensation of affected workers, affirming the decision of CIR. The case
against nightwork, then, may be said to rest upon several grounds. In the
first place, there are the remotely injurious effects of permanent
nightwork manifested in the later years of the worker’s life. Of more
immediate importance to the average worker is the disarrangement of his
social life, including the recreational activities of his leisure hours and the
ordinary associations of normal family relations. From and economic point
of view, nightwork is to be discouraged because of its adverse effect upon
efficiency and output. A moral argument against nightwork in the case of
women is that the night shift forces the workers to go to and from the
factory in darkness. Recent experiences of industrial nations have added
much to the evidence against the continuation of nightwork, except in
extraordinary circumstances and avoidable emergencies. The immediate
prohibition of nightwork for all laborers is hardly practicable; its
discontinuance in the case of women employees is unquestionably
desirable. “The night was made for rest and sleep and not for work” is a
common saying among wage-earning people, and many of them dream of
an industrial order in which there will be no night shift.
221 | L a b o r S t a n d a r d s - C a s e D i g e s t s
holiday pay (as provided for in Article 94 of the Labor Code in the third
official Department of Labor edition) to its monthly paid employees who
are uniformly paid by the month, irrespective of the number of working
days therein, with a salary of not less than the statutory or established
minimum wage, and this rule is applicable not only as of March 2, 1976
but as of November 1, 1974. Petitioner questions the validity of the
pertinent section of the Rules and Regulations Implementing the Labor
Code as amended on which respondent arbitrator based his decision.
Held: No. Section 2, Rule IV, Book III of the implementing rules and Policy
Instruction No. 9, issued by the then Secretary of Labor are null and void
since in the guise of clarifying the Labor Code’s provisions on holiday pay,
they in effect amended them by enlarging the scope of their exclusion.
The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the
Secretary’s Policy Instruction No. 9 add another excluded group, namely
‘employees who are uniformly paid by the month.’ While the additional
exclusion is only in the form of a presumption that all monthly paid
employees have already been paid holiday pay, it constitutes a taking
away or a deprivation which must be in the law if it is to be valid. An
administrative interpretation which diminishes the benefits of labor more
than what the statute delimits or withholds is obviously ultra vires.
Therefore, respondent corporation is ordered to grant holiday pay to its
monthly salaried employees.
Divisor as Factor
222 | L a b o r S t a n d a r d s - C a s e D i g e s t s
NATIONAL LABOR RELATIONS COMMISSION, TRANS-ASIA
(PHILIPPINES) AND ERNESTO S. DE CASTRO
December 13, 1999
In their Position Paper, petitioners contended that their claim for holiday
pay in arrears is based on the non-inclusion of the same in their monthly
pay. With regard to the pre-condition for the payment of holiday pay
stated in the Employees' Manual and the absence of a stipulation on
holiday pay in the employees' appointment papers, Trans-Asia asserted
that the above circumstances are not indicative of its non-payment of
holiday pay since it has always honored the labor law provisions on
holiday pay by incorporating the same in the payment of the monthly
salaries of its employees. In support of this claim, Trans-Asia pointed out
that it has long been the standing practice of the company to use the
divisor of "286" days in computing for its employees' overtime pay and
daily rate deductions for absences.
Trans-Asia further clarified that the "286" days divisor already takes into
account the ten (10) regular holidays in a year since it only subtracts from
the 365 calendar days the unworked and unpaid 52 Sundays and 26
Saturdays (employees are required to work half-day during Saturdays).
223 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The Labor Arbiter held a decision against the petitioners, finding that in
the absence of such agreement, the Supreme Court in said Chartered
Bank Case took into consideration existing practices in the bank in
resolving the issue, such as employment by the bank of a divisor of 251
days which is the result of subtracting all Saturdays, Sundays and the ten
(10) legal holidays from the total number of calendar days in a year.
Further, the Court took note of the fact that the bank used conflicting or
different divisors in computing salary-related benefits as well as the
employees' absence from work. In the case at bar, not only did the CBA
between the complainants and respondents herein provides (sic) that the
ten (10) legal holidays are recognized by the Company as full holiday with
pay. What is more, there can be no doubt that since 1977 up to the
execution of the CBA, the Trans-Asia, unlike that obtaining in the
Chartered Bank Case, never used conflicting or different divisors but
consistently employed the divisor of 286 days, which as earlier pointed
out, was arrived at by subtracting only the unworked 52 Sundays and the
26 half-day-worked Saturdays from the total number of days in a year. The
consistency in the established practice of the Trans-Asia, which
incidentally is not disputed by complainants, did not give rise to any doubt
which could have been resolved in favor of complainants. The NLRC
dismissed the petitioners’ appeal as well as the motion for
reconsideration, affirming the decision of the Labor Arbiter.
Issue: Whether or not the NLRC erred in ruling for Trans-Asia in using the
286 days divisor.
224 | L a b o r S t a n d a r d s - C a s e D i g e s t s
pre-condition stated in the Employees' Manual for entitlement to holiday
pay, the absence of a stipulation in the employees' appointment papers
for the inclusion of holiday pay in their monthly salary, the stipulation in
the CBA recognizing the entitlement of the petitioners to holiday pay with
a concomitant provision for the granting of an "allegedly" very generous
holiday pay rate, would appear to be merely inferences and suppositions
which, in the apropos words of the labor arbiter, "paled in the face of the
prevailing company practices and circumstances abovestated."
Nevertheless, petitioners' cause is not entirely lost. The Court notes that
there is a need to adjust the divisor used by Trans-Asia to 287 days,
instead of only 286 days, in order to properly account for the entirety of
regular holidays and special days in a year as prescribed by Executive
Order No. 203 in relation to Section 6 of the Rules Implementing Republic
Act 6727. According to these, the proper divisor that should be used for a
situation wherein the employees do not work and are not considered paid
on Saturdays and Sundays or rest days is 262 days. In the present case,
since the employees of Trans-Asia are required to work half-day on
Saturdays, 26 days should be added to the divisor of 262 days, thus,
resulting to 288 days. However, due to the fact that the rest days of
petitioners fall on a Sunday, the number of unworked but paid legal
holidays should be reduced to nine (9), instead of ten (10), since one legal
holiday under E.O. No. 203 always falls on the last Sunday of August,
National Heroes Day. Thus, the divisor that should be used in the present
case should be 287 days. Trans-Asia is hereby ordered to adjust its divisor
to 287 days and pay the resulting holiday pay in arrears brought about by
this adjustment starting from 30 June 1987, the date of effectivity of E.O.
No. 203.
Sunday – Labor Code Article 93(a), 2 nd sentence; Book III, Rule III,
Section 2
225 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Wellington sought reconsideration, arguing that the monthly salary of the
company’s monthly-paid employees already includes holiday pay for all
regular holidays and hence, there is no legal basis for the finding of
alleged non-payment of regular holidays falling on a Sunday. It asserts
that it pays its monthly-paid employees a fixed monthly compensation
using the 314 factor. It simply deducted 51 Sundays from the 365 days
normally comprising a year and used the difference, 314, as the 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.
Muslim Holiday – Labor Code Articles 169-172; P.D. No. 1083; R.A.
No. 9492
226 | L a b o r S t a n d a r d s - C a s e D i g e s t s
THE HONORABLE COURT OF APPEALS, HON. UNDERSECRETARY
JOSE M. ESPAÑOL, JR., HON. CRESENCIANO B. TRAJANO, HON.
REGIONAL DIRECTOR ALLAN M. MACARAYA
January 30, 2002
SMC appealed to the DOLE main office in Manila but its appeal was
dismissed for having been filed late. The dismissal of the appeal for late
filing was later on reconsidered in the order of 17 July 1998 after it was
found that the appeal was filed within the reglementary period. However,
the appeal was still dismissed for lack of merit and the order of Director
Macaraya was affirmed.
SMC went to this Court for relief via a petition for certiorari, which this
Court referred to the Court of Appeals. The CA modified the payment of
Muslim holiday pay from 200% to 150% of the employer’s salary. Hence,
this petition.
Held: No. Art. 170. Provinces and cities where officially observed. - (1)
Muslim holidays shall be officially observed in the Provinces of Basilan,
Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan,
227 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Marawi, Pagadian, and Zamboanga and in such other Muslim provinces
and cities as may hereafter be created;
(a) Every worker shall be paid his regular daily wage during regular
holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that
"x x x nothing herein shall be construed to operate to the prejudice of a
non-Muslim." In addition, the 1999 Handbook on Workers’ Statutory
Benefits, approved by then DOLE Secretary Bienvenido E. Laguesma on 14
December 1999 categorically stated:
228 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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.
229 | L a b o r S t a n d a r d s - C a s e D i g e s t s
The Labor Arbiter found the Haberdashery to have violated the decrees on
the cost of living allowance, service incentive leave pay and the 13th
Month Pay. In view thereof, the economic analyst of the Commission is
directed to compute the monetary awards due each complainant based on
the available records of the respondents retroactive as of three years prior
to the filing of the instant case. The NLRC affirmed the Labor Arbiter’s
decision.
G. R. No. 123938
LABOR CONGRESS OF THE PHILIPPINES (LCP) FOR AND IN BEHALF
OF ITS MEMBERS vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD
PRODUCTS, ITS PROPRIETOR/PRESIDENT & MANAGER, MR.
GONZALO KEHYENG AND MRS. EVELYN KEHYENG
May 21, 1998
230 | L a b o r S t a n d a r d s - C a s e D i g e s t s
On October 23, 1990, petitioners, represented by LCP, and private
respondents Gonzalo and Evelyn Kehyeng enetered into a Memorandum
of Agreement (1) recognizing LCP as sole and exclusive bargaining agent
and representative for all rank-and-file employees of the Empire Food
Products regarding “wages, hours of work, and other terms and conditions
of employment”, (2) agreeing to resolve the issues in the NLRC complaint
during the Collective Bargaining Agreement and (3) agreeing for the
proper adjustment of wages, withdrawal of case from the Calendar of the
NLRC, and non-interference or any ULP act. On October 24, 1990, the
Mediator Arbiter approved the memorandum and certified LCP as the sole
and exclusive bargaining agent for the rank-and-file employees of Empire.
On November 1990, LCP President Navarro submitted to Empire a
proposal for collective bargaining. However, on January 1991, the private
petitioners Ana Marie, et al, filed a complaint for unfair labor practices via
illegal lockout and dismissal, union-busting through harassment, threats
and interference to the right for self-organization, violation of the October
23, 1990 memorandum, underpayment of wages, and actual, moral and
exemplary damages.
The Labor Arbiter absolved Empire for ULP, union busting, violation of the
memorandum of agreement, underpayment of wages and denied the
petitioners’ prayer for damages. But it ordered reinstatement of
complainants, due to the fact that Empire did not keep its payroll records
as per requirement of the DOLE. The decision was appealed to the NLRC.
It remanded the case to the Labor Arbiter for further proceedings due to
overlooking “the testimonies of some of the individual complainants”. The
Labor Arbiter then found that the complainants failed to present with
definiteness and clarity the particular act or acts constitutive of unfair
labor practice. Upon appeal, the NLRC affirmed the Labor Arbiter’s
decision.
231 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Sentinel Security Agency, Inc. vs. NLRC
Issue: Whether or not the Client should pay back wages, separation pay
and service incentive leave pay.
Held: For back wages and separation pay, no. For service incentive leave
pay, yes. The Client was not responsible for the illegal dismissal of the
complainants and, thus, not liable for the payment of back wages and
separation pay. However, the Decision did not completely exonerate the
Client which, as an indirect employer, is solidarily liable with Petitioner
Agency for the complainants' unpaid service incentive leave, pursuant to
Articles 106, 107 and 109 of the Code. As clarified by the Court in
Rosewood: “Under these cited provisions of the Labor Code should the
232 | L a b o r S t a n d a r d s - C a s e D i g e s t s
contractor fail to pay the wages of its employees in accordance with law,
the indirect employer (the petitioner in this case), is jointly and severally
liable with the contractor, but such responsibility should be understood to
be limited to the extent of the work performed under the contract, in the
same manner and extent that he is liable to the employees directly
employed by him. This liability of petitioner covers the payment of the
workers' performance of any work, task, job or project. So long as the
work, task, job or project has been performed for petitioner's benefit or on
its behalf, the liability accrues for such period even if, later on, the
employees are eventually transferred or reassigned elsewhere.”
Auto Bus terminated Bautista after due hearing as part of Auto Bus’
management prerogative. Bautista sued Auto Bus for illegal dismissal. The
Labor Arbiter Monroe Tabingan dismissed Bautista’s petition but ruled that
Bautista is entitled to P78,1117.87 13th month pay payments and
P13,788.05 for his unpaid service incentive leave pay. The case was
appealed before the National Labor Relations Commission. NLRC modified
the LA’s ruling. It deleted the award for 13th Month pay. The Court of
Appeals affirmed the NLRC. Auto Bus averred that Bautista is a
commissioned employee and if that is not reason enough that Bautista is
also a field personnel, hence, he is not entitled to a service incentive
leave. They invoke Booki III, Rule V of the Implementing Rules which
provides for the coverage of service incentive leave pay and which
excludes “Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the
performance thereof.”
233 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not Bautista is entitled to Service Incentive Leave. If he
is, up to what amount of service incentive leave pay is he entitled to?
Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the three (3)-year
prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service incentive
leave, but from the time when the employer refuses to pay its monetary
equivalent after demand of commutation or upon termination of the
employee’s services, as the case may be.
234 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Coverage – Labor Code Article 97 (b,c,e), 98; Book III, Rule VII,
Section 3
Thus on June 7, 1988, the private respondent filed with the Office of the
Sub-Regional Arbitrator in Region VI, Iloilo City a complaint for unpaid
amount of re-adjustment rate under Wage Order No. 6 together with wage
salary differentials arising from the integration of the cost of living
allowance under Wage Order No. 1, 2, 3 and 5 pursuant to Executive
Order No. 178 plus the amount of P25,000.00 as attorney’s fees and cost
of litigation.
The Labor Arbiter dismissed the complaint stating that the petitioner’s
being a government-owned or controlled corporation would place it under
the scope and jurisdiction of the Civil Service Commission and not within
the ambit of the NLRC. Upon appeal, the NLRC set aside the order and
granted reliefs to private respondent. A motion for reconsideration was
filed but was denied.
Issue: Whether or not the NLRC erred in setting aside the decision of the
Labor Arbiter which states that the case is not within NLRC’s jurisdiction.
235 | L a b o r S t a n d a r d s - C a s e D i g e s t s
jurisdiction of the Civil Service Commission may not be invoked in this
case. The contract entered into by the petitioner which is merely job
contracting makes the petitioner an indirect employer. The issue,
therefore, is whether or not an indirect employer is bound by the rulings of
the NLRC.
236 | L a b o r S t a n d a r d s - C a s e D i g e s t s
25, 1995, the petitioner filed an amended complaint against the
respondents for illegal dismissal, unfair labor practice and non-payment of
overtime pay, nightshift differential pay, 13th month pay, among others.
The respondents, for their part, denied the existence of an employer-
employee relationship between the respondent company and the
petitioner. They averred that the petitioner was an independent
contractor. The respondents insisted that the petitioner had the sole
control over the means and methods by which his work was
accomplished. He paid the wages of his helpers and exercised control over
them.
The Labor Arbiter found the respondents guilty of illegal dismissal because
the petitioner was a regular employee of the respondent company as he
was performing a service that was necessary and desirable to the latter’s
business. Moreover, it was noted that the petitioner had discharged his
duties as truck driver for the respondent company for a continuous and
uninterrupted period of more than ten years. The respondents were
ordered to pay backwages, separation pay, 13 th month pay and service
incentive leave pay. The respondents appealed to NLRC but it was
dismissed as the Commission affirmed the decision of the Labor Arbiter.
However, upon motion for reconsideration, the NLRC reversed its earlier
decision holding that no employer-employee relationship existed between
the respondent and petitioner. Upon appeal, the CA upheld the Labor
Arbiter’s decision. But on motion for reconsideration by the respondents,
the CA made a compelete turn-around, upholding the contract of service
between the petitioner and the respondent company. The fact that the
petitioner had been with the respondent company for more than ten years
was, according to the CA, of no moment because his status was
determined not by the length of service but by the contract of service.
237 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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 service rendered or to be rendered." That the
petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the
existence or absence of employer-employee relationship. Third. The
respondents’ power to dismiss the petitioner was inherent in the fact that
they engaged the services of the petitioner as truck driver. Fourth, the
element of control has been proven by evidence.
No Work, No Pay
238 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Labor Arbiter dismissed the complaints. NLRC reversed and set aside the
Labor Arbiter’s decision and ruling that private respondents are entitled to
unpaid wages.
Held: Yes. We hold that public respondent erred in merely relying on the
computations of compensable services submitted by private respondents.
There must be competent proof such as time cards or office records to
show that they actually rendered compensable service during the stated
period to entitle them to wages. It has been established that the
petitioner's business office was transferred to Kalibo and all its
equipments, records and facilities were transferred thereat and that it
conducted its official business in Kalibo during the period in question. It
was incumbent upon private respondents to prove that they indeed
rendered services for petitioner, which they failed to do.
The age-old rule governing the relation between labor and capital, or
management and employee of a "fair day's wage for a fair day's labor"
remains as the basic factor in determining employees' wages. If there is
no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally
locked out, suspended or dismissed, or otherwise illegally prevented from
working, a situation which we find is not present in the instant case. It
would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they
did not render services at the Kalibo office during the stated period.
239 | L a b o r S t a n d a r d s - C a s e D i g e s t s
G.R. No. 164784
TRIUMPH INTERNATIONAL (PHILS.), INC. vs.
VIRGINIA A. SUGUE AND THE HEIRS OF RENATO S. VALDERRAMA
January 30, 2009
Facts: Triumph hired Sugue in May 1990 as its Assistant Manager for
Marketing and was subsequently promoted to Marketing Services Manager
with a monthly salary of P82,500.00. On the other hand, Valderrama was
hired in April 1993 as Direct Sales Manager with a monthly salary of
P121,000.00. On June 1, 2000, Sugue and Valderrama filed a complaint
with the NLRC against Triumph for payment of money claims arising from
allegedly unpaid vacation and sick leave credits, birthday leave and 14th
month pay for the period 1999-2000.
240 | L a b o r S t a n d a r d s - C a s e D i g e s t s
constructively dismissed. Triumph was ordered to pay separation pay,
backwages and damages.
Aggrieved, Triumph filed an appeal with the NLRC, which granted the
appeal and reversed the ruling of Labor Arbiter Nambi. Not satisfied with
the NLRC decision, Sugue and Valderrama elevated the matter to the CA
by way of a petition for certiorari. While the matter was pending with the
CA, Valderrama passed away and notice of his death was filed by his
counsel. The CA set aside the decision of the NLRC and reinstated the
Labor Arbiter’s decision. Triumph’s subsequent motion for reconsideration
as well as the motion for partial reconsideration filed by Sugue and the
heirs of Valderrama were both denied by the appellate court. Hence, the
parties filed the present consolidated petitions.
241 | L a b o r S t a n d a r d s - C a s e D i g e s t s
In a case where a laborer absents himself from work because of a strike or
to attend a conference or hearing in a case or incident between him and
his employer, he might seek reimbursement of his wages from his union
which had declared the strike or filed the case in the industrial court. Or,
in the present case, he might have his absence from his work charged
against his vacation leave.”
Equal Pay for Work of Equal Value – ILO Convention 100 (1951)
The local-hires union of the ISM were crying foul over the disparity in
wages that they got compared to that of their foreign teaching
counterparts. The School grants foreign-hires certain benefits to the
foreign hires such as housing, transportation, and 25% more pay than
locals under the theory of (a) the "dislocation factor" and (b) limited
tenure. The first was grounded on leaving his home country, the second
was on the lack of tenure when he returns home. The negotiations
between the school and the union caused a deadlock between the parties.
The DOLE resolved in favor of the school, while DOLE Secretary
Quisumbing denied the union’s motion for reconsideration He said, “The
Union cannot also invoke the equal protection clause to justify its claim of
parity. It is an established principle of constitutional law that the
guarantee of equal protection of the laws is not violated by legislation or
private covenants based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply to all
members of the same class. Verily, there is a substantial distinction
242 | L a b o r S t a n d a r d s - C a s e D i g e s t s
between foreign hires and local hires, the former enjoying only a limited
tenure, having no amenities of their own in the Philippines and have to be
given a good compensation package in order to attract them to join the
teaching faculty of the School.” The union appealed to the Supreme Court.
The petitioner called the hiring system discriminatory and racist. The
school alleged that some local hires were in fact of foreign origin. They
were paid local salaries.
Held: Yes. The Constitution also directs the State to promote "equality of
employment opportunities for all." Similarly, the Labor Code provides that
the State shall "ensure equal work opportunities regardless of sex, race or
creed. Article 248 declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or discourage
membership in any labor organization. In this jurisdiction, there is the
term “equal pay for equal work”, pertaining to persons being paid with
equal salaries and have similar skills and similar conditions. There was no
evidence here that foreign-hires perform 25% more efficiently or
effectively than the local-hires. For the same reason, the "dislocation
factor" and the foreign-hires' limited tenure also cannot serve as valid
bases for the distinction in salary rates. The dislocation factor and limited
tenure affecting foreign-hires are adequately compensated by certain
benefits accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave travel
allowances.
Persons who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should paid similar salaries. If an
employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the employer has
discriminated against an employee, it is for the employer to explain why
the employee is treated unfairly. This rule applies to the School,
notwithstanding its international character.
243 | L a b o r S t a n d a r d s - C a s e D i g e s t s
G.R. No. 104526
LUDIVICO CULLA vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER,
SPOUSES NORBERTO TANONGON AND DOROTHEA TANONGON
AND/OR ARMS TAXI, AND AIDA DELA CRUZ
Facts: The spouses Tanongon own and operate taxicabs under the names
of “Arms Taxi” and “Lin-lin Taxi”. However, the taxicabs are registered
under the “kabit system”in the name of Aida dela Cruz who holds a
certificate of public convenience to operate a taxicab service. In the early
1980, Culla was hired by the Tanongon spouses to work as mechanic, shop
manager, garage caretaker, dispatches and liaison man in their taxi
business, at a monthly salary of P5,000 plus commission on the daily or
monthly gross income of the business in addition to the payment of his
Social Security System (SSS) premium. On June 11, 1986, without Culla’s
consent, the Tanongon spouses asked one of their taxi drivers to force
open his quarters in the Tanongon compound in Cainta, Rizal. They
removed his personal belongings and brought them to his residence in
Sta. Ana, Manila.
Culla filed with the arbitration branch of the then Ministry of Labor and
Employment, a complaint alleging that his ejectment from his living
quarters and dismissal from employment were illegal because there was
no prior investigation or written notice of the charges against him. His
dismissal was allegedly due to his demands “for payment of the benefits,
percentage and privileges, and premium to the SSS”. He prayed for
reinstatement with backwages, plus his commission of 15% of the gross
income of the taxi business with legal interest plus damages.
In their position paper, the Tanongon spouses denied that they were the
operators of the Arms Taxi and Lin-lin Taxi. They denied the existence of
employer-employee relationship between them and Culla as they averred
that Arms Taxi is owned and operated by Aida dela Cruz and the
ownership of Lin-Lin Taxi has not been transferred to them. On the other
hand, dela Cruz denied that she hired Culla and averred at the most, Culla
could be considered as an independent contractor paid on a piece-work
basis and therefore, he was not entitled to regular benefits, much less to
the alleged 15% commission.
The Labor Arbiter found for Culla, declaring that Culla was and employee
of the Tanongon spouses, that Culla was illegally dismissed and that Aida
dela Cruz should be considered an indirect employer of Culla. However, he
denied Culla’s claim for 15% commission on the gross earnings of the taxi
business as Culla failed “to substantially prove the same by precise,
concrete and convincing evidence”. The agreement on the commission
“should have been in writing, note or memorandum, and subscribed by
the parties, to be enforceable”. Furthermore, Culla was not entitled to the
13th month pay under P.D. No. 851 and to overtime pay, for time was not
of the essence in his kind of employment. The parties appealed to the
NLRC.
244 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the payment to him of P5,000 a month for his
service was in partial fulfillment of Tanongon’s promise to pay him a 15%
commission, removing said requirement from coverage of the Statue of
Frauds.
Held: No. Culla’s reference to the Statute of Frauds under Article 1403,
paragraph 2 of the Civil Code is misplaced. An agreement for
compensation of service rendered is not one of the contracts mentioned in
1403 which must be in writing to be enforceable by action. The payment
of a P5,000 monthly salary to the petitioner for his services may not be
considered as partial compliance by his employers with the alleged
agreement to pay him a commission or percentage of the daily earnings of
their taxi business because, as correctly pointed out by the Solicitor
General, a salary is different from a commission. While a salary is a fixed
compensation for regular work or for continuous service rendered over a
period of time, a commission is a percentage or allowance made to a
factor or agent for transacting business for another. Thus, before invoking
the exception to the Statute of Frauds, petitioner should have proven that
he had received a commission, or a part of it, in the past.
Furthermore, as aptly noted by the NLRC, if it were true that there had
been an agreement regarding the payment of a 15% commission to him,
the petitioner would not have waited almost 6 years to claim it.
Considerable delay in asserting one’s right is strongly persuasive of the
lack of merit of one’s own claim.
245 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Cadalso, Celso Labiaga and Fernando Colina as drivers/salesmen while
private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao,
Edwin Martin and Diosdado Gonzalgo were hired as truck helpers.
Drivers/salesmen drove petitioners delivery trucks and promoted, sold and
delivered softdrinks to various outlets in Mandaue City. The truck helpers
assisted in the delivery of softdrinks to the different outlets covered by the
driver/salesmen.
The labor arbiter found that petitioner had validly terminated private
respondents, there being just cause for the latters
dismissal. Nevertheless, he also ruled that petitioner had not complied
with minimum wage requirements in compensating private respondents,
and had failed to pay private respondents their 13 th month pay. NLRC
affirmed private respondent’s dismissal. Hence, the petition.
Held: Art. 97(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, of board, lodging, or other facilities customarily
furnished by the employer to the employee.
246 | L a b o r S t a n d a r d s - C a s e D i g e s t s
them, still these commissions are direct remunerations for services
rendered. In fact, commissions have been defined as the recompense,
compensation or reward of an agent, salesman, executor, trustee,
receiver, factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit to the
principal. The nature of the work of a salesman and the reason for such
type of remuneration for services rendered demonstrate clearly that
commissions are part of a salesman’s wage or salary. Thus, the
commissions earned by private respondents in selling softdrinks constitute
part of the compensation or remuneration paid to drivers/salesmen and
truck helpers for serving as such, and hence, must be considered part of
the wages paid them.
247 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Applying Art.,97, par. (f), of the Labor Code which defines if wage," the
Executive Labor Arbiter opined that the subject allowances, being
customarily furnished by respondent PICOP and regularly received by
petitioners, formed part of the latter's wages. Resolving the controversy
from another angle, on the strength of the ruling in Santos v. NLRC and
Soriano v. NLRC that in the computation of separation pay account should
be taken not just of the basic salary but also of the regular allowances
that the employee had been receiving, he concluded that the allowances
should be included in petitioners' base pay. Thus respondent PICOP was
ordered on 28 April 1994 to pay petitioners Four Million Four Hundred
Eighty-One Thousand Pesos (P4,481,000.00) representing separation pay
differentials plus ten per cent (10%) thereof as attorney's fees.
The National Labor Relations did not share the view of the Executive Labor
Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing
that the allowances did not form part of the salary base used in computing
separation pay.
248 | L a b o r S t a n d a r d s - C a s e D i g e s t s
PICOP's benefit and convenience, i.e., to insure that petitioners render
quality performance. In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose.
249 | L a b o r S t a n d a r d s - C a s e D i g e s t s
petitioner but also of her transportation and emergency living
allowances."
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the
implementing rules in conjunction with Articles 273 and 274 (sic) of the
Code specifically states that the basis of the termination pay due to one
who is sought to be legally separated from the service is 'his latest salary
rates. Even Articles 273 and 274 (sic) invariably use 'monthly pay or
monthly salary'.
The above terms found in those Articles and the particular Rules were
intentionally used to express the intent of the framers of the law that for
purposes of separation pay they mean to be specifically referring to salary
only. Each particular benefit provided in the Code and other Decrees on
Labor has its own pecularities and nuances and should be interpreted in
that light. Thus, for a specific provision, a specific meaning is attached to
simplify matters that may arise there from. The general guidelines in (sic)
the formation of specific rules for particular purpose. Thus, that what
should be controlling in matters concerning termination pay should be the
specific provisions of both Book VI of the Code and the Rules. At any rate,
settled is the rule that in matters of conflict between the general provision
of law and that of a particular- or specific provision, the latter should
prevail.
250 | L a b o r S t a n d a r d s - C a s e D i g e s t s
G.R. No. L-102552
251 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Respondents would do well to distinguish this case from Songco
vs. National Labor Relations Commission, supra, upon which they rely so
heavily. What was involved therein was the term "salary" without the
restrictive adjective "basic". Thus, in said case, the Court construed the
term in its generic sense to refer to all types of "direct remunerations for
services rendered," including commissions. In the same case, the Court
also took judicial notice of the fact "that some salesmen do not receive
any basic salary but depend on commissions and allowances or
commissions alone, although an employer-employee relationship exists,"
which statement is quite significant in that it speaks of a "basic salary"
apart and distinct from "commissions" and "allowances". Instead of
supporting respondents' stand, it would appear that Songco itself
recognizes that commissions are not part of "basic salary."
252 | L a b o r S t a n d a r d s - C a s e D i g e s t s
abandoned or reversed by the Boie-Takeda decision, considering that the
latter went "directly opposite and contrary to" the conclusion reached in
the former. Petitioner prays that the decision rendered in Duplicators be
set aside and another be entered directing the dismissal of the money
claims of private respondent Philippine Duplicators' Employees' Union.
The Court observed that the third item excluded from the term "basic
salary" is cast in open ended and apparently circular terms: "other
remunerations which are not part of the basic salary." However, what
particular types of earnings and remuneration are or are not properly
included or integrated in the basic salary are questions to be resolved on
a case to case basis, in the light of the specific and detailed facts of each
case. In principle, where these earnings and remuneration are closely akin
to fringe benefits, overtime pay or profit-sharing payments, they are
properly excluded in computing the 13th month pay. However, sales
commissions which are effectively an integral portion of the basic salary
structure of an employee, shall be included in determining his 13th month
pay.
253 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the nature of profit-sharing payments or bonuses. If and to the extent that
such second paragraph is so interpreted and applied, it must be regarded
as invalid as having been issued in excess of the statutory authority of the
Secretary of Labor. That same second paragraph however, correctly
recognizes that commissions, like those paid in Duplicators, may
constitute part of the basic salary structure of salesmen and hence should
be included in determining the 13th month pay; to this extent, the second
paragraph is and remains valid.
On August 30, 1987, the respondent labor union appealed to the National
Labor Relations Commission. The NLRC reversed the questioned decision
and ordered the respondent to grant Pl.00 increase for July 1, 1984 and
the equivalent of thirty days salary in gratuity pay, as required by its CBA
with the complainants. The motion for reconsideration of said decision was
denied on December 7, 1987. Hence, this petition.
Issue: Whether or not the one month salary for daily paid workers should
be computed on the basis of twenty-six (26) days and not thirty (30) days
since daily wage workers do not work every day of the month including
Sundays and holidays.
Held: No. The Court finds no abuse of discretion on the part of the NLRC
in granting gratuity pay equivalent to one month or 30 days salary. From
the foregoing, gratuity pay is therefore, not intended to pay a worker for
actual services rendered. It is a money benefit given to the workers whose
purpose is "to reward employees or laborers, who have rendered
satisfactory and efficient service to the company." (Sec. 2, CBA) While it
may be enforced once it forms part of a contractual undertaking, the grant
of such benefit is not mandatory so as to be considered a part of labor
standard law unlike the salary, cost of living allowances, holiday pay,
254 | L a b o r S t a n d a r d s - C a s e D i g e s t s
leave benefits, etc., which are covered by the Labor Code. Nowhere has it
ever been stated that gratuity pay should be based on the actual number
of days worked over the period of years forming its basis. We see no point
in counting the number of days worked over a ten-year period to
determine the meaning of "two and one- half months' gratuity."
The Civil Code also provides that when months are not designated by
name, a month is understood to be thirty (30) days. The provision applies
under the circumstances of this case.
Effect on Benefits
255 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: Clearly, the term "basic salary" includes renumerations or earnings
paid by the employer to employee, but excludes cost-of-living allowances,
profit-sharing payments, and all allowances and monetary benefits which
have not been considered as part of the basic salary of the employee as of
December 16, 1975. The exclusion of cost-of-living allowances and profit
sharing payments shows the intention to strip "basic salary" of payments
which are otherwise considered as "fringe" benefits. This intention is
emphasized in the catch all phrase "all allowances and monetary benefits
which are not considered or integrated as part of the basic salary." Basic
salary, therefore does not merely exclude the benefits expressly
mentioned but all payments which may be in the form of "fringe" benefits
or allowances. In fact, the Supplementary Rules and Regulations
Implementing P.D. No. 851 are very emphatic in declaring that overtime
pay, earnings and other remunerations shall be excluded in computing the
thirteenth month pay.
256 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine
Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO),
claiming to be separate and distinct from each other but for expediency
and practical purposes, jointly filed an application for exemption from the
above-mentioned Wage Orders as distressed establishments under
Guidelines No. 3, issued by the herein Board on November 26, 1990,
specifically Sec. 3(2); Applicants/appellees aver that they are engaged in
logging and integrated wood processing industry but are distressed due to
conditions beyond their control.
Held: To allow RTWPB Guideline No. 3 to take effect without the approval
of the NWPC is to arrogate unto RTWPB a power vested in the NWPC by
Article 121 of the Labor Code, as amended by RA 6727. The Court will not
countenance this naked usurpation of authority. It is a hornbook doctrine
that the issuance of an administrative rule or regulation must be in
harmony with the enabling law. If a discrepancy occurs between the basic
law and an implementing rule or regulation, it is the former that
prevails. This is so because the law cannot be broadened by a mere
administrative issuance. It is axiomatic that [a]n administrative agency
cannot amend an act of Congress. Article 122 (e) of the Labor Code
cannot be construed to enable the RTWPB to decide applications for
exemption on the basis of its own guidelines which were not reviewed and
approved by the NWPC, for the simple reason that a statutory grant of
powers should not be extended by implication beyond what may be
necessary for their just and reasonable execution. Official powers cannot
be merely assumed by administrative officers, nor can they be created by
the courts in the exercise of their judicial functions.
There is no basis for petitioners claim that their vested rights were
prejudiced by the NWPCs alleged retroactive application of its own rules
which were issued on February 25, 1991 and took effect on March 18,
1991. Such claim cannot stand because Guideline No. 3, as previously
discussed and as correctly concluded by the NWPC, was not valid and,
thus, cannot be a source of a right; much less, a vested one.
Salary-Ceiling Method
257 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Employers Confederation of the Philippines vs. Secretary of Labor and
Employment
Facts: On October 15, 1990, the Regional Board of the National Capital
Region issued Wage Order No. NCR-01, increasing the minimum wage by
P17.00 daily in the National Capital Region. The Trade Union Congress of
the Philippines (TUCP) moved for reconsideration; so did the Personnel
Management Association of the Philippines (PMAP). 5ECOP opposed.
On October 23, 1990, the Board issued Wage Order No. NCR-01-A
amending Wage Order No. NCR-01; ECOP appealed to the National Wages
and Productivity Commission. On November 6, 1990, the Commission
promulgated an Order, dismissing the appeal for lack of merit. On
November 14, 1990, the Commission denied reconsideration.
Issue: Whether or not Wage Order No. NCR-01-A providing for new wage
rates, as well as authorizing various Regional Tripartite Wages and
Productivity Boards to prescribe minimum wage rates for all workers in the
various regions, and for a National Wages and Productivity Commission to
review, among other functions, wage levels determined by the boards is
valid.
Held: The Supreme Court held that Republic Act No. 6727 was intended to
rationalize wages, first, by providing for full-time boards to police wages
round-the-clock, and second, by giving the boards enough powers to
achieve this objective. The Court is of the opinion that Congress meant
the boards to be creative in resolving the annual question of wages
without labor and management knocking on the legislature's door at every
turn.
The Court's opinion is that if Republic No. 6727 intended the boards alone
to set floor wages, the Act would have no need for a board but an
accountant to keep track of the latest consumer price index, or better,
would have Congress done it as the need arises, as the legislature, prior to
the Act, has done so for years. The fact of the matter is that the Act
sought a "thinking" group of men and women bound by statutory
standards. The Court is not convinced that the Regional Board of the
National Capital Region, in decreeing an across-the-board hike, performed
an unlawful act of legislation. It is true that wage-firing, like rate-fixing,
258 | L a b o r S t a n d a r d s - C a s e D i g e s t s
constitutes an act Congress; it is also true, however, that Congress may
delegate the power to fix rates provided that, as in all delegations cases,
Congress leaves sufficient standards. As this Court has indicated, it is
impressed that the above-quoted standards are sufficient, and in the light
of the floor-wage method's failure, the Court believes that the Commission
correctly upheld the Regional Board of the National Capital Region.
Validity
Held: No. The Court held that Wage Order No. RO20-02-A is indeed null
and void since it did not undergo the correct procedure of how a wage
order is to be issued. Any Wage Order shall only take effect after 15 days
from its complete publication in at least one general circulation on the
region and undergo public hearings and consultations and giving notice to
any party that has interest or will be affected by such wage order. And,
CSMC was found to have complied with Wage RO2-02.
Wage Distortion
259 | L a b o r S t a n d a r d s - C a s e D i g e s t s
PRUBANKERS ASSOCIATION vs.
PRUDENTIAL BANK & TRUST COMPANY
The petitioner then granted a COLA of P17.50 to its employees at its Naga
Branch, the only branch covered by Wage Order No. RB 5-03, and
integrated the P150.00 per month COLA into the basic pay of its rank-and-
file employees at its Cebu, Mabolo and P. del Rosario branches, the
branches covered by Wage Order No. RB VII-03.
260 | L a b o r S t a n d a r d s - C a s e D i g e s t s
nationwide. The Arbitration Committee on June 18, 1996 rendered the
questioned decision.
261 | L a b o r S t a n d a r d s - C a s e D i g e s t s
BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS
vs.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC.
The NLRC dismissed the case for lack of merit. Petitioners motion for
reconsideration of the dismissal of the case was also denied. Petitioner
thereupon filed a petition for certiorari.
Held: The Court held that wage distortion does not exist in this case as all
the elements were not met. There are four elements of wage distortion
namely: (1) An existing hierarchy of positions with corresponding salary
262 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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 and (4) the existence
of the distortion in the same region of the country.
Form of Payment – Labor Code Article 102; Civil Code Article 1705;
Book III, Rule VIII, Sections 1,2
April 5, 1995
263 | L a b o r S t a n d a r d s - C a s e D i g e s t s
them again at petitioner's cold storage plant for filing, storing, cleaning,
and maintenance; and finally loading the processed tuna for shipment.
They worked seven (7) days a week.
During the first week of June 1990, petitioner notified his workers of his
proposal to reduce the rate-per-tuna movement due to the scarcity of
tuna. Private respondents resisted petitioner's proposed rate reduction.
When they reported for work the next day, they were informed that they
had been replaced by a new set of workers, When they requested for a
dialogue with the management, they were instructed to wait for further
notice. They waited for the notice of dialogue for a full week but in vain.
Held: Article 102 of the Labor Code provides that: 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 as
specified in appropriate regulations to be issued by the Secretary of Labor
or as stipulated in a collective bargaining agreement.
264 | L a b o r S t a n d a r d s - C a s e D i g e s t s
EUFROCIO BERMISO, ET AL. vs.
HIJOS DE F. ESCAÑO, INC., ET AL.
February 28, 1959
The court held that insofar as the stevedores loading and unloading its
vessels are concerned, the Hijos de F. Escaño is an employer of the
petitioners. With respect, however, to the arrastre service, it held that the
question is beyond the scope of the relationship between it and the
petitioners.
After a review of the testimonies given by the petitioners and those given
on behalf of the respondents, the court below also found that the
claimants failed to establish any reasonable basis for all their claims
except that for their reinstatement and, therefore, denied them for lack of
merit. As to the reinstatement of the 5 petitioners, namely, of Eufrocio
Bermiso, Fotunato Geteso, Constancio Olaco, Laureano Amistoso and
Vicente Tuyogan, to their former work and positions in the Sabay group;
their claim for back wages were denied. With respect to the direct
payment of wages to the laborers, the court found that there was no
reason for changing the practice of apportioning the wages for their joint
labor and sharing therein, because of the 150 members only 5 were
dissatisfied.
Issue: Whether or not the decision violates the law ondirect payment of
wages.
Held: The law relied upon by them is Section 10, par. (b) of Republic Act
No. 602, which provides as follows:
265 | L a b o r S t a n d a r d s - C a s e D i g e s t s
(2) In cases of force majeure rendering such payments impossible;
and
(3) In cases where the right of the employee or his union to check-
off has been recognized by the employer or authorized in writing by
the individual employees concerned.
Lastly, the respondent Hijos de F. Escaño did not pay for the stevedoring
charges. These were collected by the group from the shippers themselves,
without the intervention of the respondent Escaño. How can the court
order the latter to pay the charges to the group or its members, when the
charges were collected by the latter from the shippers, in accordance with
the practice of the group itself?
266 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Wage Deduction – Labor Code Article 113; Book III, Rule VIII,
Section 10
In a decision dated April 28, 1987, the labor arbiter sustained the claim of
petitioner for P17,060.07 on the ground that the employer has no right to
withhold payment of wages already earned under Article 103 of the Labor
Code. Upon the appeal of the private respondents to public respondent
NLRC, the decision of the labor arbiter was reversed in a decision dated
September 18, 1987. The NLRC held that a stockholder who fails to pay
his unpaid subscription on call becomes a debtor of the corporation and
that the set-off of said obligation against the wages and others due to
petitioner is not contrary to law, morals and public policy.
267 | L a b o r S t a n d a r d s - C a s e D i g e s t s
subscriptions. It does not even appear that a notice of such call has been
sent to petitioner by the respondent corporation.
What the records show is that the respondent corporation deducted the
amount due to petitioner from the amount receivable from him for the
unpaid subscriptions. 3 No doubt such set-off was without lawful basis, if
not premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable.
Lastly, assuming further that there was a call for payment of the unpaid
subscription, the NLRC cannot validly set it off against the wages and
other benefits due petitioner. Article 113 of the Labor Code allows such a
deduction from the wages of the employees by the employer, only in
three instances, to wit:
Taroy thus filed on June 7, 2002 a complaint 1 for illegal dismissal and
payment of service incentive leave pay, claiming that he was singled out
for termination because of his union activities, other drivers who had met
accidents not having been dismissed from employment.
268 | L a b o r S t a n d a r d s - C a s e D i g e s t s
complainant and add as grounds of his cause of action unfair labor
practice (ULP), reimbursement of illegal deductions on tollgate fees, and
payment of service incentive leave pay.
Respecting the claim for refund of illegal deductions, Taroy alleged that in
1997, petitioner started deducting from his weekly earnings an amount
ranging from P160 to P900 representing toll fees, without his consent and
written authorization as required under Article 113 of the Labor Code and
contrary to company practice; and that deductions were also taken from
the bus conductor’s earnings to thus result to double deduction.
By Decision9 of June 30, 2004, the Labor Arbiter found that Genesis
Transport discharged the burden of proof that Taroy’s dismissal was on a
valid cause. As to the charge of ULP, the Labor Arbiter ruled that the
respondent union failed to prove that Taroy’s dismissal was due to his
union membership and/or activities.
With respect to Taroy’s claim for refund, however, the Labor Arbiter ruled
in his favor for if, as contended by Genesis Transport, tollgate fees form
part of overhead expense, why were not expenses for fuel and
maintenance also charged to overhead expense. The Labor Arbiter thus
concluded that "it would appear that the tollgate fees are deducted from
the gross revenues and not from the salaries of drivers and conductors,
but certainly the deduction thereof diminishes the take home pay of the
employees." Thus, the Labor Arbiter ordered petitioner to refund to
complainant the underpayment/differential due him as a result of the
deduction of the tollgate fees from the gross receipts.
Held: No, it is not.Absent proof that the NLRC cases cited by petitioners
have attained finality, the Court may not consider them to constitute res
judicata on petitioners’ claim for refund of the "underpayment" due Taroy.
Neither may the Court take judicial notice of petitioners’ claim that the
deduction of tollgate fees from the gross earnings of drivers is an
accepted and long-standing practice in the transportation industry.
Expertravel & Tours, Inc. v. Court of Appeals10 instructs:
269 | L a b o r S t a n d a r d s - C a s e D i g e s t s
be assumed to be judicially known is that of notoriety. Hence, it can be
said that judicial notice is limited to facts evidenced by public records and
facts of general notoriety. Moreover, a judicially noticed fact must be one
not subject to a reasonable dispute in that it is either: (1) generally known
within the territorial jurisdiction of the trial court; or (2) capable of
accurate and ready determination by resorting to sources whose accuracy
cannot reasonably be questionable.
None of the material requisites for the Court to take judicial notice of a
particular matter was established by petitioners.
Albeit the amounts representing tollgate fees were deducted from gross
revenues and not directly from Taroy’s commissions, the labor tribunal and
the appellate court correctly held that the withholding of those amounts
reduced the amount from which Taroy’s 9% commission would be
computed. Such a computation not only marks a change in the method of
payment of wages, resulting in a diminution of Taroy’s wages in violation
of Article 113 vis-à-vis Article 100 of the Labor Code, as amended. It need
not be underlined that without Taroy’s written consent or authorization,
the deduction is considered illegal.
270 | L a b o r S t a n d a r d s - C a s e D i g e s t s
April 19, 1989
At first, they only sought the payment of their 13th month pay under
Presidential Decree No. 851 as well as their separation pay, and the
refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the
payment of their 13th month pay and service incentive leave pay, and
separation pay in the event that they are not reinstated. It is alleged in
the Complaint and Position Paper accompanying the same that they were
dismissed from the firm for pursuing union activities.
The petitioners also argued that the private respondents are not entitled
to a 13th month pay. They maintained that each of the private
respondents receive a total monthly compensation of more that Pl,000.00
and that under Section 1 of Presidential Decree No. 851, such employees
are not entitled to receive a 13th month pay. The petitioners likewise
alleged that the company is in bad financial shape and that pursuant to
Section 3 of the Decree, the firm is exempted from complying with the
provisions of the Decree.
Issue: Whether or not the private respondents are entitled to the refund
of the cash bond.
271 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: Yes, they are. The refund of the cash bond filed by the private
respondents is in order. Article 114 of the Labor Code prohibits an
employer from requiting his employees to file a cash bond or to make
deposits, subject to certain exceptions, to wit-
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 in appropriate rules and regulations.
The allegation of the petitioners to the effect that the proceeds of the cash
bond had already been given to a certain carinderia to pay for the
accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no evidence
or receipt has been shown to prove such payment.
Accordingly, the Court is not convinced that the respondent National Labor
Relations Commission committed a grave abuse of discretion amounting
to loss of jurisdiction in affirming the Decision of the labor arbiter.
In less than 4 months after Maldigan was hired as an extra driver by the
petitioners, he already failed to report for work for unknown reasons.
Later, petitioners learned that he was working for "Mine of Gold" Taxi
272 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Company. With respect to Sabsalon, while driving a taxicab of petitioners
on September 6, 1983, he was held up by his armed passenger who took
all his money and thereafter stabbed him. He was hospitalized and after
his discharge, he went to his home province to recuperate.
Held: Yes, they can. Respondent NLRC held that the P15.00 daily deposits
made by respondents to defray any shortage in their "boundary" is
covered by the general prohibition in Article 114 of the Labor Code against
requiring employees to make deposits, and that there is no showing that
the Secretary of Labor has recognized the same as a "practice" in the taxi
industry. Consequently, the deposits made were illegal and the
respondents must be refunded therefor.
273 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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 deposits
is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and
regulations.
It can be deduced therefrom that the said article provides the rule on
deposits for loss or damage to tools, materials or equipments supplied by
the employer. Clearly, the same does not apply to or permit deposits to
defray any deficiency which the taxi driver may incur in the remittance of
his "boundary." Also, when private respondents stopped working for
petitioners, the alleged purpose for which petitioners required such
unauthorized deposits no longer existed. In other case, any balance due to
private respondents after proper accounting must be returned to them
with legal interest.
With respect to Maldigan's deposits, nothing was mentioned questioning
the same even in the present petition. We accordingly agree with the
recommendation of the Solicitor General that since the evidence shows
that he had not withdrawn the same, he should be reimbursed the amount
of his accumulated cash deposits.
274 | L a b o r S t a n d a r d s - C a s e D i g e s t s
the alleged voluminous records it had to locate and its desire to submit a
memorandum regarding complainants' claims.
Held: No, he did not err. We see no reason for SOUTH MOTORISTS to
complain as it was afforded ample opportunity to present its side. It failed
to present employment records giving as an excuse that they were sent to
the main office in Manila, in violation of Section 11 of Rule X, Book II of the
Omnibus Rules Implementing the Labor Code providing that:
275 | L a b o r S t a n d a r d s - C a s e D i g e s t s
petitioner "for having perpetrated certain acts that Europhil Industries
considered a trespass upon its rights, namely, cutting of its electricity, and
removing its name from the building directory and gate passes of its
officials and employees" (p. 87 Rollo). On June 28, 1974, said court
rendered judgment in favor of respondent Europhil Industries, ordering
petitioner to pay the former the sum of P10,000.00 as actual damages,
P5,000.00 as moral damages, P5,000.00 as exemplary damages and to
pay the costs.
On March 30, 1976, the Court of Appeals dismissed the petition for
certiorari. In dismissing the petition, the Court of Appeals held that
petitioner is not a mere laborer as contemplated under Article 1708 as the
term laborer does not apply to one who holds a managerial or supervisory
position like that of petitioner, but only to those "laborers occupying the
lower strata." It also held that the term "wages" means the pay given" as
hire or reward to artisans, mechanics, domestics or menial servants, and
laborers employed in manufactories, agriculture, mines, and other manual
occupation and usually employed to distinguish the sums paid to persons
hired to perform manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season," citing 67 C.J. 285,
which is the ordinary acceptation of the said term, and that "wages" in
Spanish is "jornal" and one who receives a wage is a "jornalero."
Held: No, he is not. Article 1708 of the New Civil Code which reads as
follows:
ART. 1708. The laborer's wage shall not be subject to
execution or attachment, except for debts incurred for food,
shelter, clothing and medical attendance.
276 | L a b o r S t a n d a r d s - C a s e D i g e s t s
cleanliness, maintenance and orderliness of all guest rooms, function
rooms, public areas, and the surroundings of the hotel. Considering the
importance of petitioner's function in El Grande Hotel, it is undeniable that
petitioner is occupying a position equivalent to that of a managerial or
supervisory position.
In its broadest sense, the word "laborer" includes everyone who performs
any kind of mental or physical labor, but as commonly and customarily
used and understood, it only applies to one engaged in some form of
manual or physical labor. That is the sense in which the courts generally
apply the term as applied in exemption acts, since persons of that class
usually look to the reward of a day's labor for immediate or present
support and so are more in need of the exemption than are other.
Article 1708 used the word "wages" and not "salary" in relation to
"laborer" when it declared what are to be exempted from attachment and
execution. The term "wages" as distinguished from "salary", applies to the
compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes
a higher degree of employment, or a superior grade of services, and
implies a position of office: by contrast, the term wages " indicates
considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important
service (35 Am. Jur. 496).
We find, therefore, and so hold that the Trial Court did not err in denying in
its order of November 7, 1975 the motion of petitioner to lift the notice of
garnishment against her salaries, commission and other remuneration
from El Grande Hotel since said salaries, Commission and other
remuneration due her from the El Grande Hotel do not constitute wages
due a laborer which, under Article 1708 of the Civil Code, are not subject
to execution or attachment.
277 | L a b o r S t a n d a r d s - C a s e D i g e s t s
REPUBLIC OF THE PHILIPPINES, represented by the Bureau of
Customs and the Bureau of Internal Revenue vs.
HONORABLE E.L. PERALTA, PRESIDING JUDGE OF THE COURT OF
FIRST INSTANCE OF MANILA, BRANCH XVII, QUALITY TABACCO
CORPORATION, FRANCISCO, FEDERACION OBRERO DE LA
INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS
(FOITAF) USTC EMPLOYEES ASSOCIATION WORKERS UNION-
PTGWO
May 20, 1987
Issue: Whether or not Article 110 would affect the complete scheme of
classification, concurrence and preference of credits in insolvency set out
in the Civil Code.
Held: Yes, it does. We come to the question of what impact Article 110 of
the Labor Code has had upon the complete scheme of classification,
concurrence and preference of credits in insolvency set out in the Civil
Code. We believe and so hold that Article 110 of the Labor Code did not
sweep away the overriding preference accorded under the scheme of the
Civil Code to tax claims of the government or any subdivision thereof
which constitute a lien upon properties of the Insolvent. It is frequently
278 | L a b o r S t a n d a r d s - C a s e D i g e s t s
said that taxes are the very lifeblood of government. The effective
collection of taxes is a task of highest importance for the sovereign. It is
critical indeed for its own survival. It follows that language of a much
higher degree of specificity than that exhibited in Article 110 of the Labor
Code is necessary to set aside the intent and purpose of the legislator that
shines through the precisely crafted provisions of the Civil Code. It cannot
be assumed simpliciter that the legislative authority, by using in Article
110 the words "first preference" and "any provision of law to the contrary
notwithstanding" intended to disrupt the elaborate and symmetrical
structure set up in the Civil Code. Neither can it be assumed casually that
Article 110 intended to subsume the sovereign itself within the term
"other creditors" in stating that "unpaid wages shall be paid in full before
other creditors may establish any claim to a share in the assets of
employer." Insistent considerations of public policy prevent us from giving
to "other creditors" a linguistically unlimited scope that would embrace
the universe of creditors save only unpaid employees.
We, however, do not believe that Article 110 has had no impact at all
upon the provisions of the Civil Code. Bearing in mind the overriding
precedence given to taxes, duties and fees by the Civil Code and the fact
that the Labor Code does not impress any lien on the property of an
employer, the use of the phrase "first preference" in Article 110 indicates
that what Article 110 intended to modify is the order of preference found
in Article 2244, which order relates, as we have seen, to property of the
Insolvent that is not burdened with the liens or encumbrances created or
recognized by Articles 2241 and 2242. We have noted that Article 2244,
number 2, establishes second priority for claims for wages for services
rendered by employees or laborers of the Insolvent "for one year
preceding the commencement of the proceedings in insolvency." Article
110 of the Labor Code establishes "first preference" for services rendered
"during the period prior to the bankruptcy or liquidation, " a period not
limited to the year immediately prior to the bankruptcy or liquidation.
Thus, very substantial effect may be given to the provisions of Article 110
without grievously distorting the framework established in the Civil Code
by holding, as we so hold, that Article 110 of the Labor Code has modified
Article 2244 of the Civil Code in two respects: (a) firstly, by removing the
one year limitation found in Article 2244, number 2; and (b) secondly, by
moving up claims for unpaid wages of laborers or workers of the Insolvent
from second priority to first priority in the order of preference established I
by Article 2244.
Manila Banking Corporation vs. NLRC
279 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Facts: The antecedents show that on June 5, 1984, petitioner Manila
Banking Corporation (Manilabank) was placed under comptrollership by
then Central Bank Governor Jose B. Fernandez in view of the bank's
financial distress. The decision of the Monetary Board of the Central Bank
was based on the findings that the bank was experiencing liquidity
problems and had incurred chronic reserve deficiencies against deposit
liabilities. In fact, on May 23, 1984, a month before it was placed under
comptrollership, Manilabank was prohibited by the Monetary Board from
granting new loans and making new investments except investments in
government securities with Central Bank support, and from declaring cash
or stock dividends.
Manilabank, on its part, alleged that the additional benefits sought are
without basis in fact and in law. It argued that the same are conferred by
management only when it deems necessary to do so. The award of the
said benefits is in the nature of a "management prerogative" which, it
contended, can be withheld by management upon a clear showing that
the company is not in a position to grant them either because of financial
difficulties or circumstances which do not warrant conferment of such
benefits. And since it was experiencing financial distress, it claimed that it
was in no position to give the benefits sought.
On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision
ordering Manilabank and its statutory receiver to pay in full all the claims
of private respondents amounting to P193,338,212.33, plus 12% interest
annually and 10% of the total award as attorney's fees.
On November 25, 1989, petitioners Manilabank and the CB statutory
receiver appealed to the NLRC and posted an appeal bond in the form of a
certification from the Central Bank to the effect that a portion of
Manilabank's funds in an amount equal to that of the total award of the
labor arbiter, has been reserved and set aside by the Central Bank to
answer for the private respondents' claims should they finally be adjudged
to be entitled thereto. On September 9, 1992, the NLRC issued a
resolution on the merits of the case and, as above-stated, affirmed with
slight modifications.
280 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the employees enjoy the first preference in the
event of bankruptcy.
Held: Yes, they do. With respect to G.R No. 107487, the same is
dismissed, the issues raised therein having been rendered moot and
academic by the foregoing disquisitions and disposition. Besides, it is
beyond dispute that employees indeed enjoy first preference in the event
of bankruptcy or liquidation of an employer's business.
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.
281 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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.
5. 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 of 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.
282 | L a b o r S t a n d a r d s - C a s e D i g e s t s
January 14, 2005
On September 12, 1996, DOLE issued its Order stating among others:
On October 21, 1996, DOLE Regional Director Maximo B. Lim issued a writ
of execution. However, on March 30, 1999, DOLE Undersecretary Jose
283 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Espaol dismissed the appeal and affirmed the order dated February 7,
1997 of the DOLE Regional Director.
Petitioner filed a petition for certiorari with prayer for the issuance of
temporary restraining order with the CA.
On August 31, 2000, the CA dismissed the petition for failure of petitioner
to (1) attach a copy of the letter complaint filed by petitioners employees
and the Order dated February 7, 1997 of the DOLE Regional Director and
(2) state the material date when the assailed Orders/Resolutions were
received pursuant to Section 1 of Rule 65 and Section 3 of Rule 46 of the
1997 Rules of Civil Procedure. Petitioner filed a motion for reconsideration
which was also denied by the CA on November 10, 2000, copy of which
was received by petitioner on November 24, 2000.
Issue: Whether or not the instant case falls within the jurisdiction of the
Regional Director.
While it is true that under Articles 129 and 217 of the Labor Code, the
Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claims of each employee exceeds P5,000.00, said
provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article
128 of the Labor Code (as amended by R.A. No. 7730) thus:
284 | L a b o r S t a n d a r d s - C a s e D i g e s t s
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 where the relationship of employer-employee
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 finding of the labor
employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.
285 | L a b o r S t a n d a r d s - C a s e D i g e s t s
bases of the aforesaid findings (which petitioner did not contest), that
respondent Regional Director issued the assailed Order for petitioner to
pay private respondents the respective wage differentials due them.
In the Order dated July 21, 1999, Regional Director Maximo Baguyot Lim
rendered judgment in favor of petitioners and ruled that the contractor
was jointly and severally liable with the principal, pursuant to the law and
jurisprudence on the matter. Respondent Peak Ventures filed a Motion for
Reconsideration which was denied for lack of merit. Respondent appealed
the Order to the Office of the Secretary of Labor positing that the Regional
Director committed serious errors in awarding the amount of
P1,106,298.00 to petitioners, which it alleged to be quite excessive. On
December 7, 2000, respondents appeal was dismissed. A subsequent
motion for reconsideration was, likewise, denied by the Secretary of Labor
in a Resolution dated September 11, 2001.
286 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not the instant case falls within the jurisdiction of the
Regional Director.
287 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Meteoro, et al. vs. Creative Creatures, Inc.
288 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Issue: Whether or not said case is within the jurisdiction of the Regional
Director.
Held: We sustain the appellate courts conclusion that the instant case
falls within the exclusive jurisdiction of the NLRC. As it is now worded, and
as consistently held in a number of cases, the visitorial and enforcement
powers of the Secretary, exercised through his representatives,
encompass compliance with all labor standards laws and other labor
legislation, regardless of the amount of the claims filed by workers.
(c) that such matters are not verifiable in the normal course of
inspection.
In the present case, the CA aptly applied the exception clause. At the
earliest opportunity, respondent registered its objection to the findings of
the labor inspector. The labor inspector, in fact, noted in its report that
respondent alleged that petitioners were contractual workers and/or
independent and talent workers without control or supervision and also
supplied with tools and apparatus pertaining to their job. In its position
paper, respondent again insisted that petitioners were not its employees.
It then questioned the Regional Directors jurisdiction to entertain the
matter before it, primarily because of the absence of an employer-
employee relationship.
289 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Dentech Manufacturing Corporation vs. NLRC
290 | L a b o r S t a n d a r d s - C a s e D i g e s t s
implementing said Presidential Decree financially distressed employers, i.,
e., those currently incurring substantial losses, are not covered by the
Decree. Section 7 thereof requires, however, that such distressed
employers must obtain the prior authorization of the Secretary of Labor
and Employment before they may qualify for such exemption. The
petitioners have no basis to claim that the company is exempted from
complying with the pertinent provisions of the law relating to the payment
of 13th month compensation. The refund of the cash bond filed by the
private respondents is in order. Article 114 of the Labor Code prohibits an
employer from requiting his employees to file a cash bond or to make
deposits, subject to certain exceptions, to wit- 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 in appropriate rules and regulations. The petitioners
have not satisfactorily disputed the applicability of this provision of the
Labor Code to the case at bar. Considering further that the petitioners
failed to show that the company is authorized by law to require the private
respondents to file the cash bond in question, the refund thereof is in
order.
Coverage
June 2, 1995
Facts: Archilles Manufacturing Corporation, Alberto Yu and Adrian Yu are
the petitioners, the latter two (2) being the Chairman and the Vice-
President of ARCHILLES, respectively. Private respondents Geronimo
Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin Rindon were
employed by ARCHILLES as laborers in its steel factory located in
Barangay Pandayan, Meycauayan, Bulacan, each receiving a daily wage of
P96.00. ARCHILLES was maintaining a bunkhouse in the work area which
served as resting place for its workers including private respondents. In
1988 a mauling incident nearly took place involving a relative of an
employee. As a result ARCHILLES prohibited its workers from bringing any
member of their family to the bunkhouse. But despite this prohibition,
291 | L a b o r S t a n d a r d s - C a s e D i g e s t s
private respondents continued to bring their respective families to the
bunkhouse, causing annoyance and discomfort to the other workers. This
was brought to the attention of ARCHILLES. On 11 May 1990 the
management ordered private respondent to remove their families from
the bunkhouse and to explain their violation of the company rule. Private
respondents remove their families from the premises but failed to report
to the management as required; instead, they absented themselves from
14 to 18 May 1990. Consequently, on 18 May 1990, ARCHILLES terminated
their employment for abandonment and for violation of the company rule
regarding the use of the bunkhouse. Private respondents filed a complaint
for illegal dismissal and with public respondent National Labor Relations
Commission a motion for the issuance of a writ of execution for their
immediate reinstatement, pending appeal, either physically or in the
company payroll. On 19 September 1991 ARCHILLES opposed the motion.
NLRC reordered ARCHILLES to pay private respondents their "withheld"
salaries from 19 September 1991 on the ground that the order of
reinstatement of the Labor Arbiter was immediately executory, even
pending appeal. Since ARCHILLES in its opposition alleged that actual
reinstatement was no longer possible as it would affect the peace and
order situation in the steel factory, clearly, ARCHILLES had opted for
payroll reinstatement of private respondents.
292 | L a b o r S t a n d a r d s - C a s e D i g e s t s
only. If the employer does not exercise this option, it must forthwith admit
the employee back to work, otherwise it may be punished for contempt.
Facts: Geniston alleged that he was employed as a “do it all guy” acting
as waiter, driver and maintenance man in Ultra Villa Food Haus. His
employment spanned from March 1, 1989 until he was dismissed on May
13, 1992. During the elections of May 11, 1992, Geniston acted as a poll
watcher for the National Union of Christian Democrats. The counting of
votes lasted until 3 p.m. the next day, May 12. He did not report from
work on both days on account of his poll-watching. Upon arriving home,
Geniston discovered that Tio had phoned his mother that morning and
informed the latter that he was dismissed from work.
Geniston prayed that the Labor Arbiter order petitioner Tio to pay him
overtime pay, premium pay, holiday pay, service incentive leave pay,
salary differential, and 13th month pay, as well as damages, and to
reinstate him plus backwages. Tio maintained that Geniston was her
personal driver, not an employee of the Ultra Villa Food Haus. He was
likewise given free meals as well as 13th month pay at the end of the year.
The Labor Arbiter found that Genistoon was indeed Tio’s personal driver
for if it were true that he was made to perform these functions as a waiter,
it would be incongruous with the position of a driver. Therefore, he was
not entitled to overtime pay, premium pay, service incentive leave pay
and 13th month pay. Upon appeal, the NLRC reversed the decision and
ordered petitioner to reinstate Geniston and to pay him backwages,
overtime pay, premium pay for holiday and rest days, 13 th month pay, and
service incentive leave pay. The NLRC also denied petitioner’s motion,
reiterating its earlier ruling that private respondent was an employee of
the Ultra Villa Food Haus.
293 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Code. Clearly then, petitioner is not obliged by law to grant private
respondent any of these benefits. Employing the same line of analysis, it
would seem that private respondents is not entitled to 13 th month pay.
Nevertheless, we deem it just to award Geniston 13 th month pay in view of
Tio’s practice of according Gensiton such benefit. Indeed, petitioner
admitted that she gave respondent 13th month pay every December.
Basic Wage/Commissions
294 | L a b o r S t a n d a r d s - C a s e D i g e s t s
REGULAR salary." It pointed out that, "If no sales is (sic) made under the
effort of a particular representative, there is no commission during the
period when no sale was transacted, so that commissions are not and
cannot be legally defined as regular in nature." A similar Routine
Inspection was conducted in the premises of Philippine Fuji Xerox Corp. on
September 7, 1989 pursuant to Routine Inspection Authority No. NCR-
LSED-RI-494-89. In his Notice of Inspection Results, 6 addressed to the
Manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment Officer
Nicanor M. Torres noted the following violation committed by Philippine
Fuji Xerox Corp., to wit: "Underpayment of 13th month pay of 62
employees, more or less — pursuant to Revised Guidelines on the
Implementation of the 13th month pay law for the period covering 1986,
1987 and 1988”. Philippine Fuji Xerox was requested to effect rectification
and/or restitution of the noted violation within five (5) working days from
notice. In their almost identically-worded petitions, petitioners, through
common counsel, attribute grave abuse of discretion to respondent labor
officials Hon. Dionisiodela Serna and Undersecretary Cresenciano B.
Trajano in issuing the questioned Orders of January 17, 1990 and October
10, 1991, respectively. They maintain that under P. D. 851, the 13th
month pay is based solely on basic salary. As defined by the law itself and
clarified by the Implementing and Supplementary Rules as well as by the
Supreme Court in a long line of decisions, remunerations which do not
form part of the basic or regular salary of an employee, such as
commissions, should not be considered in the computation of the 13th
month pay.
Issue: Whether or not commissions form part of basic salary used in the
computation of 13th month pay.
295 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Iran vs. NLRC
296 | L a b o r S t a n d a r d s - C a s e D i g e s t s
Held: Commissions are included. The definition in Art 97(f) of the Labor
Code explicitly includes commissions as part of wages. While commissions
are, indeed, incentives or forms of encouragement to inspire employees to
put a little more industry on the jobs particularly assigned to them, still
these commissions are direct remunerations for services rendered. In fact,
commissions have been defined as the recompense, compensation or
reward of an agent, salesman, executor, trustee, receiver, factor, broker or
bailee, when the same is calculated as a percentage on the amount of his
transactions or on the profit to the principal. The nature of the work of a
salesman and the reason for such type of remuneration for services
rendered demonstrate clearly that commissions are part of a salesman's
wage or salary. Likewise, there is no law mandating that commissions be
paid only after the minimum wage has been paid to the employee. Verily,
the establishment of a minimum wage only sets a floor below which an
employee's remuneration cannot fall, not that commissions are excluded
from wages in determining compliance with the minimum wage law.
297 | L a b o r S t a n d a r d s - C a s e D i g e s t s
for voluntary arbitration. The Voluntary Arbitrator Herminigildo C. Javen
invalidated Honda’s computation. A petition was filed with the Court of
Appeals, however, the petition was dismissed for lack of merit.
Issue: Whether or not the pro-rated computation of the 13th month pay
and the other bonuses in question is valid and lawful.
Substitute Payment
Framanlis Farms, Inc. vs. NLRC
298 | L a b o r S t a n d a r d s - C a s e D i g e s t s
March 8, 1989
Held: No, the petitioner is not exempted from the payment of 13th month
pay as yearly bonus and other nonmonetary benefits are not valid
substitute for the payment of 13th month pay. Under Section 3 of PD No.
851, such benefits in the form of food or free electricity, assuming they
were given, were not a proper substitute for the 13th month pay required
by law. PD 851 provides: Section 3. Employees covered - The Decree shall
apply to all employees except to: x xx. x xxxxx 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 1/12 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 1/12 of the employee's basic salary, the
employer shall pay the difference." Neither may year-end rewards for
loyalty and service be considered in lieu of 13th month pay. Section 10 of
the Rules and Regulations Implementing Presidential Decree No. 851
299 | L a b o r S t a n d a r d s - C a s e D i g e s t s
provides: Section 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."
Facts: Respondent Memia Quiambao with thirty others who are members
of private respondent Federation of Free Workers (FFW) were employed by
petitioner as hotel crew. On the basis of the profitability of the company's
business operations, management granted a 14th month pay to its
employees starting in 1979. In January 1982, operations ceased to give
way to the hotel's conversion into a training center for Libyan scholars.
However, due to technical and financing problems, the Libyans pre-
terminated the program on July 7, 1982, and petitioner allegedly suffered
losses amounting to P2 million and in the end totally closed its business.
Private respondent Federation of Free Workers (FFW), filed with the
Ministry of Labor and Employment a complaint against petitioner for
illegal suspension, violation of the CBA and non-payment of the 14th
month pay. Records however show that the case was submitted for
submission on the sole issue of alleged non-payment of the 14th month
pay in the year 1982. Labor Arbiter ordered petitioner to pay the 14th
month pay to respondents for the year 1982. NLRC affirmed the decision.
Issue: Whether or not the 14th Month Pay can be withdrawn without
violating article 100 of the Labor Code.
300 | L a b o r S t a n d a r d s - C a s e D i g e s t s
mandated. Verily, a 14th month pay is a misnomer because it is basically
a bonus and, therefore, gratuitous in nature. The granting of the 14th
month pay is a management prerogative which cannot be forced upon the
employer. It is something given in addition to what is ordinarily received
by or strictly due the recipient. It is a gratuity to which the recipient has
no right to make a demand.
Diminution
Davao Fruits Corporation vs. Associated Labor Unions
Facts: Respondent Associated Labor Unions (ALU), for and in behalf of all
the rank-and-file workers and employees of petitioner, filed a complaint
before the Ministry of Labor and Employment, against petitioner, for
"Payment of the Thirteenth-Month Pay Differentials." Respondent ALU
sought to recover from petitioner the thirteenth month pay differential for
1982 of its rank-and-file employees, equivalent to their sick, vacation and
maternity leaves, premium for work done on rest days and special
holidays, and pay for regular holidays which petitioner, allegedly in
disregard of company practice since 1975, excluded from the computation
of the thirteenth month pay for 1982. In its answer, petitioner claimed
that it erroneously included items subject of the complaint in the
computation of the thirteenth month pay for the years prior to 1982, upon
a doubtful and difficult question of law namely P.D. 851 and the
Supplementary Rules and Regulations issued by DOLE. A decision was
rendered in favor of respondent ALU ordering petitioner to pay the 13th
month pay differential of their rank and file employees for the year 1982.
Issue: Whether or not the inclusion of payments for sick, vacation and
maternity leaves, premiums for work done on rest days and special
holidays, and pay for regular holidays for the computation of the
thirteenth month pay given by employers to their employees under P.D.
No. 851 can be excluded after discovery of the contrary practice.
301 | L a b o r S t a n d a r d s - C a s e D i g e s t s
basic salary of an employee within a calendar year. (b) "Basic Salary" shall
include all renumerations or earnings paid by an employer to an employee
for services rendered but may not include cost of living allowances, 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. It follows therefore, that payments for sick, vacation and maternity
leaves, premium for work done on rest days special holidays, as well as
pay for regular holidays, are likewise excluded in computing the basic
salary for the purpose of determining the thirteen month pay. However
petitioner computed and paid the thirteenth month pay, without excluding
the subject items therein until 1981. From 1975 to 1981, petitioner had
freely, voluntarily and continuously included in the computation of its
employees' thirteenth month pay, the payments for sick, vacation and
maternity leaves, premiums for work done on rest days and special
holidays, and pay for regular holidays. The considerable length of time the
questioned items had been included by petitioner indicates a unilateral
and voluntary act on its part, sufficient in itself to negate any claim of
mistake. Company practice favorable to the employees had indeed been
established and the payments made pursuant thereto, ripened into
benefits enjoyed by them. And any benefit and supplement being enjoyed
by the employees cannot be reduced, diminished, discontinued or
eliminated by the employer, by virtue of Section 10 of the Rules and
Regulations Implementing P.D. No. 851, and Article 100 of the labor of the
Philippines, which prohibit the diminution or elimination by the employer
of the employees' existing benefits.
24. Bonus
Nature
302 | L a b o r S t a n d a r d s - C a s e D i g e s t s
petitioners, the decision in the latter directly opposes the decision in the
former. Because of this, Philippine Duplicators filed for another motion for
reconsideration, this time anchoring their assertions to the recently
concluded case of Boie-Takeda Chemicals.
Held: The sales commission earned by the salesmen who make or close a
sale of duplicating machines distributed by petitioner corporation,
constitute part of the compensation or remuneration paid to salesmen for
serving as salesmen, and hence as part of the "wage" or salary of
petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen
a small fixed or guaranteed wage; the greater part of the salesmen's
wages or salaries being composed of the sales or incentive commissions
earned on actual sales closed by them. No doubt this particular galary
structure was intended for the benefit of the petitioner corporation, on the
apparent assumption that thereby its salesmen would be moved to
greater enterprise and diligence and close more sales in the expectation
of increasing their sales commissions. This, however, does not detract
from the character of such commissions as part of the salary or wage paid
to each of its salesmen for rendering services to petitioner corporation. In
other words, the sales commissions received for every duplicating
machine sold constituted part of the basic compensation or remuneration
of the salesmen of Philippine Duplicators for doing their job. The portion of
the salary structure representing commissions simply comprised an
automatic increment to the monetary value initially assigned to each unit
of work rendered by a salesman. Especially significant here also is the fact
that the fixed or guaranteed portion of the wages paid to the Philippine
Duplicators' salesmen represented only 15%-30% of an employee's total
earnings in a year. Sales commissions, such as those paid in Duplicators,
are intimately related to or directly proportional to the extent or energy of
an employee's endeavors. Commissions are paid upon the specific results
achieved by a salesman-employee. It is a percentage of the sales closed
by a salesman and operates as an integral part of such salesman's basic
pay.
303 | L a b o r S t a n d a r d s - C a s e D i g e s t s
September 8, 1995
Facts: Petitioners were under the employ of insular life assurance co for
more than 20 years, but were dismissed because their positions were
declared redundant. They were given benefits upon dismissal, all were
either provided by the company or required by the law. Petitioners are
claiming that they are entitled to receive their service awards. In the same
year of the petitioners’ dismissal, private respondent celebrated its 80th
anniversary and granted anniversary bonus equivalent to one (1) month
salary only to permanent and probationary employees as of November 15,
1990. On March 26, 1991, respondent company announced the grant of
performance bonus to both rank and file employees and supervisory
specialist grade and managerial staff equivalent to two (2) months’ salary
and 2.75 basic salary, respectively, as of December 30, 1990. The
performance bonus, however, would be given only to permanent
employees as of March 30, 1991. Petitioners contended that they are
likewise entitled to the performance and anniversary bonuses because, at
the time the performance bonus was announced to be given, they were
only short of two (2) months service to be entitled to the full amount
thereof as they had already served the company for ten (10) months prior
to the declaration of the grant of said benefit. Also, they lacked only
fifteen (15) days to be entitled to the full amount of the anniversary bonus
when it was announced to be given to employees as of November 15,
1990. In a decision dated October 8, 1992, the Labor Arbiter ordered
respondent company to pay petitioners their service awards, anniversary
bonuses and prorated performance bonuses, including ten percent (10%)
thereof as attorney's fees. Respondent company appealed to public
respondent NLRC claiming grave abuse of discretion committed by the
labor arbiter in holding it liable to pay said service award, performance
and anniversary bonuses, and in not finding that petitioners were
estopped from claiming the same as said benefits had already been given
to them and the petitioners have already signed a quitclaim.
Issue: Whether or not the petitioners are entitled to the bonuses that
they are claiming
304 | L a b o r S t a n d a r d s - C a s e D i g e s t s
contract of employment under an agreement that he shall be paid a
certain salary by the week or some other stated period and, in addition, a
bonus, in case he serves for a specified length of time, there is no reason
for refusing to enforce the promise to pay the bonus, if the employee has
served during the stipulated time, on the ground that it was a promise of a
mere gratuity. This is true if the contract contemplates a continuance of
the employment for a definite term, and the promise of the bonus is made
at the time the contract is entered into. If no time is fixed for the duration
of the contract of employment, but the employee enters upon or
continues in service under an offer of a bonus if he remains therein for a
certain time, his service, in case he remains for the required time,
constitutes an acceptance of the offer of the employer to pay the bonus
and, after that acceptance, the offer cannot be withdrawn, but can be
enforced by the employee.
April 5, 1993
Facts: BSSI was engaged in the manufacture and sale of computer forms.
Due to financial reverses, its creditors, the Development Bank of the
Philippines (DBP) and the Asset Privatization Trust (APT), took possession
of its assets, including a manufacturing plant in Marilao, Bulacan. As a
retrenchment measure, some plant employees, including the private
respondents, were laid off and were paid separation pay equivalent to
one-half (1/2) month pay for every year of service. Upon receipt of their
separation pay, the private respondents signed individual releases and
quitclaims in favor of BSSI. BSSI retained some employees but after two
months discharged them as well but their separation pay is equivalent to
a full month's salary for every year of service plus mid-year bonus.
Protesting against the discrimination in the payment of their separation
benefits, the twenty-seven (27) private respondents filed three (3)
separate complaints against the BSSI and Raul Locsin. Petitioner of course
denied the unlawful discrimination in the payment of separation benefits.
They argued that the first batch of employees was paid "retrenchment"
benefits mandated by law, while the remaining employees were granted
higher "separation" benefits because their termination was on account of
the closure of the business. LaborArbirter ruled in favor of private
respondents ordering the petitioner to pay the respondents their
305 | L a b o r S t a n d a r d s - C a s e D i g e s t s
separation pay differentials and their mid-year bonus. NLRC, upon appeal
by petitioner affirmed the Labor Arbiter’s decision.
Issue: Whether or not petitioner should also give the mid-year bonuses to
their employees.
306 | L a b o r S t a n d a r d s - C a s e D i g e s t s