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Manila Terminal Company, Inc. vs.

Court Of Industrial Relations


Facts: On September 1, 1945, Herein petitioner undertook the arrastre
service in some of the piers in Manilas Port Area at the request and under
the control of the U.S. Army. Petitioner hired some 30 men as watchmen on
12 hour shifts at a compensation of P3.00 per day for the day shift and P6.00
per day for the night shift. On February 1, 1946, the petitioner began the
postwar operation of the arrastre service at the present at the request and
under the control of the Bureau of Customs, by virtue of a contract entered
into with Philippine Government. The watchmen of the petitioner continued in
the service with a number of substitution and additions, their salaries having
been raised during the month of February to P4.00 per day for the dayshift
and P6.25 per day for the nightshift.
Later, some of the members of the Manila Terminal Relief and Mutual Aid
Association, sent a letter to the Department of Labor, requesting that the
overtime pay be investigated, but nothing was done by the Department. On
May 27, 1947 the petitioner instituted the system of strict 8 hour shifts. On
July 28, 1947 Manila Aid Association filed an amended petition with the Court
of Industrial Relations praying, among others, that petitioner be ordered to
pay its watchmen or police force overtime pay from the commencement of
their employment.
The case thereafter alleviated in which Judge Lanting ruled;
1.) The decision under review should be affirmed in so far it grants
compensation for overtime on regular days during the period from the date of
entrance to duty to May 24, 1947, such compensation to consist of the
amount that corresponds to the four hours overtime at the regular rate and
an additional amount of 25 per cent thereof.
2.) As the compensation for work done on Sundays and legal holidays, the
petitioner should pay its watchmen the compensation that corresponds to the
overtime (in excess of 8 hours) at the regular rate only.
3.) The watchmen are not entitled to night differential pay for past service,
and therefore the decision should be reversed.
Hence, this petition, contending that the agreement under which its police
force were paid certain specific wages for 12 hour shifts, included overtime
compensation.
Issue: Whether or not the agreement under which its police force were paid
certain specific wages for 12 hour shifts, includes the overtime
compensation?
Held: No. The Court ruled that in times of acute employment, regardless of
its terms and conditions, their main concern in the first place being admission

to some work. The petitioners watchmen must have railroaded themselves


into their employment for their subsistence, although they found themselves
required to work for 12 hours a day. True, there was agreement to work, but it
cannot fairly be supposed that they had the freedom to bargain in any way,
much less to insist in the observance of the 8 hour labor law.
Also, there was no reduction was made in the salaries which its watchmen
received under the 12 hour arrangement. Although, it may be argued that the
salary for the night shift was lessened, the fact that the rate for the day shift
was increased in a sense tends to militate against the contention that the
salaries given during the 12 hour shifts included overtime compensation.
The law gives the Association the right to extra compensation. And they
could not be held to have impliedly waived such extra compensation, for the
obvious reason that could not have expressly waived it.
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 8 hour each.
The appealed decision, in the form voted by Judge Lanting, is affirmed, it
being understood that the petitioners watchmen will be entitled to extra
compensation only from the dates they respectively entered the service of
the petitioner.
International Pharmaceuticals, Inc. v. NLRC
March 9, 1998, Mendoza, J.
Nature: Petition for certiorari
FACTS:
International Pharmaceuticals, Inc. (IPI) employed private respondent
Virginia Quintia as Medical Director of its R&D dept. replacing one Diana
Villaraza.
Because that year, the government launched a program encouraging
development of herbal medicine, IPI decided to venture into that and
hired private respondent as pharmacologist only for this purpose. Hence,
the contention that private respondent was a project employee.
The contract of employment provided for a term of one year subject to
renewal by mutual consent at least 30 days before expiration. It was also
agreed that Quintia can continue teaching as a full-time faculty member
at Cebu Doctors Hospital.

Quintia claimed that when her contract was about to expire, she was
invited by Xavier University to be chairperson of its pharmacology dept.
But Castillo, present and gen mgr of IPI asked her to stay and assured
her of security of tenure. Hence, she declined the offer of Xavier and
remained an employ and as company physician of IPI after her contract
expired. This continued until her termination on July 12, 1986.
She alleges that her reason for her termination was because she led the
rank and file employees in the demand for a full disclosure of the Savings
and Loan Associations financial status. Her participation was resented
by association officers.
On July 10, 1986, Quintia was replaced as head of the R&D dept by Paz
Wong. Two days later, she received a memorandum officially terminating
her services.
Quintia filed a complaint for illegal dismissal praying for reinstatement
and payment of full backwages and moral damages.
LA found private respondent to have been illegally dismissed. He held
that private respondent was a regular employee and not a project
employee and could not be dismissed without just causes. NLRC
affirmed ruling and asked LA to determine whether reinstatement is
possible.

ISSUE: WON reinstatement is feasible


HELD: Petition DISMISSED.
RATIO:
Art. 280. Regular and casual employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the employer
except where the employment has been fixed for a specific project or
undertaking, the completion or termination of which has been determined at
the time of the engagement of the employee or where the work or service to
be performed is seasonal in nature and the employment is for the duration of
the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or broken, shall
be considered a regular employee with respect to the activity in which he is
employed and his employment shall continue while such activity exists.
In Brent School, Inc. v. Zamora, it was held that although work done under a
contract is necessary and desirable in relation to the usual business of the
employer, a contract for a fixed period may nonetheless be made so long as
it is entered into freely, voluntarily and knowingly by the parties.

When complainant was allowed to continue working without the benefit of a


contract after the expiration of the one year period provided in their written
contract, that act completely changed the complexion of the relationship
between the parties.
Quintias status as an employee is not disputed in this case. Therefore, in
determining whether she was a project employee or a regular employee, the
question is whether her work was necessary and desirable to the main
business of the employer. It is true that, as held in Singer, parties can
enter into an agreement for the rendering of services by one to the other and
that however necessary such services may be to the latters business the
contract will not necessarily give rise to an employer-employee relationship if
the elements of such relationship are not present. But that is not the
question in this case. Quintia was an employee. The question is whether,
given the fact that she was an employee, she was a regular or a project
employee, considering that she had been continued in the service of
petitioner for more than two years following the expiration of her written
contract.
Petitioners allegations are contrary to the factual findings of both the NLRC
and the Labor Arbiter, particularly their findings that she was the head of
petitioners Research and Development department; that in addition, she
performed the function of company physician; and that she undertook various
civic activities in behalf of petitioner and that this engagement lasted for more
than three years (1983 - 1986). Certainly, as the NLRC observed, these facts
show complainant working not as consultant but as a regular employee
albeit a managerial one. It should be added that Quintia was
hired to replace one Diana Villaraza, which suggests that the position to
which she was appointed by petitioner was an existing one, so much so
that after the termination of Quintias employment, somebody else (Paz
Wong) was appointed in her place. If private respondents employment was
for a particular project which had allegedly been terminated, why would there
be a need to replace her?
There is no mention whatsoever of any project or of any consultancy in the
contract. As aptly observed by the Solicitor General, the duties of Quintia as
provided for in the contract reject any notion of consultancy. Clearly, she was
hired as Medical Director of the Research and Development department of
petitioner company and not as consultant nor for any particular project. The
work she performed was manifestly necessary and desirable to the usual
business of petitioner, considering that it is engaged in the manufacture and
production of medicinal preparations.
We agree with the Labor Arbiter that the fact that she was not required to
report at a fixed hour or to keep fixed hours of work does not detract from her
status as a regular employee. As petitioner itself admits, Quintia was a

managerial employee and therefore not covered by the Labor Code


provisions on hours of work. What this Court said in once case is apropos:
The primary standard, ... of determining a regular employment is the
reasonable connection between the particular activity performed by
the employee 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. The
connection can be determined by considering the nature of the 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 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
2. WON after petitioner discontinued its herbal medicine project after it had
been shown not to be viable, private respondents employment had to be
terminated, too
As this Court has held in Western Shipping Agency, Inc. v. NLRC:
Loss of confidence is a valid ground for the dismissal of managerial
employees . . . But even managerial employees enjoy security of
tenure, . . . and, . . . can only be dismissed after cause is shown in
an appropriate proceeding. The loss of confidence must be
substantiated by evidence. The burden of proof is on the employer to
show grounds justifying the loss of confidence.
3. WON reinstatement of private respondent is not feasible because the
position which she held was abolished on account of its decision to
discontinue its herbal medicine development project and that, in any
event, because the position is a sensitive one which needs an employee in
whom the petitioner has full faith and confidence.
As regards the claim that the position has already been abolished and,
therefore, reinstatement is impossible, suffice it to state that the factual
findings of the Labor Arbiter belie this. A replacement for private respondent
was appointed two (2) days prior to her termination. If the position had been
abolished, there would have been no necessity for a replacement.
But we agree that because of antagonism generated by this case and the
private respondents own preference for separation pay, reinstatement
would no longer be feasible.

San Miguel Brewer, Inc. vs. Democratic Labor Organization, et al.


GR No. L-18353 | July 31. 1963 | Bautista, J.
FACTS
1. The Democratic Labor Association filed a complaint against the San
Miguel Brewery,Inc., embodying 12 demands for the betterment of the
conditions of employment ofits members.
2. The company filed its answer to the complaint specifically denying its
materialaverments and answering the demands point by point. The
company asked for thedismissal of the complaint.
3. During the hearing, the union manifested its desire to confine its claim to
its demandsfor overtime, night-shift differential pay, and attorney's fees,
although it was allowedto present evidence on service rendered during
Sundays and holidays, or on itsclaim for additional separation pay and
sick and vacation leave compensation.
4. After the case had been submitted for decision, Presiding Judge Jose S.
Bautista,who wascommissioned to receive the evidence, rendered
decision expressing hisdisposition with regard to the points embodied in
the complaint on which evidencewas presented.
5. The demands for the application of the Minimum Wage Law to workers
paid on"pakiao" basis, payment of accumulated vacation and sick leave
and attorney's fees,as well as the award of additional separation pay,
were either dismissed, denied, orset aside.
6. Its motion for reconsideration having been denied by the industrial court
en bane,which affirmed the decision of the court a quo with few
exceptions, the San MiguelBrewery, Inc. interposed the present petition
for review.
ISSUE
Whether or not outside or field sales personnel are entitled to the benefits of
the Eight-Hour Labor Law.
HELD
NO. After the morning roll call, the employees leave the plant of the company
to go on their respective sales routes and they do not have a daily time
record but the sales routes are so planned that they can be completed within
8 hours at most, and they receive monthly salaries and sales commission in
variable amounts, so that they are made to work beyond the required eight
hours similar to piecework, "pakiao", or commission basis regardless of the
time employed, and the employees' participation depends on their industry, it
is held that the Eight-Hour Labor Law has no application to said outside or
field sales personnel and that they are not entitled to overtime pay.

The Court is in the opinion that the Eight-Hour Labor Law only has
application where an employee or laborer is paid in a monthly or daily basis,
or is paid a monthly or daily compensation, in which case, if he is made to
work beyond the requisite period of 8 hours, he should be paid the additional
compensation prescribed by law. This law has no application when the
employee or laborer is paid on a piece-work, "pakiao", or commission basis,
regardless of the time employed. The philosophy behind this exemption is
that his earnings are in the form of commission based on the gross receipts
of the day. His participation depends upon his industry so that the more
hours he employs in the work the greater are his gross returns and the higher
his commission. This philosophy is better explained in Jewel Tea Co. vs.
Willams
, C.C.A. Okl., 118 F. 2d 202, as follows:"The reasons for excluding an outside
salesman are fairly apparent. Such salesman, to a great extent, works
individually. There are no restrictions respecting the time he shall work and
he can earn as much or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime he ordinarily receives commissions as extra
compensation. He works away from his employer's place of business, is not
subject to the personal supervision of his employer, and his employer has no
way of knowing the number of hours he works per day

Far East Agricultural Supply, Inc. vs Jimmy Lebatique

ISSUE: Whether or not Lebatique is a field personnel.


HELD: No. Lebatique is a regular employee.

GR No. 162813 Feb 12, 2007


515 SCRA 491 Labor Law Labor Standards Abandonment Service
Incentive Leave Field Personnel
FACTS
In March 1996, Lebatique was hired as a driver by FAR EAST
AGRICULTURAL SUPPLY, INC. with a daily wage of P223.50. His job as
a driver includes the delivery of animal feeds to the clients of the
company. He must report either in the morning or in the afternoon to
make the deliveries.
On January 24, 2000, Lebatique was suspended by Manuel Uy (brother
of FEASIs General Manager Alexander Uy) for allegedly using the
company vehicle illegally.
On the same day, Lebatique filed a complaint for nonpayment of
overtime pay against Alexander Uy.
Uy summoned Lebatique and asked why he was claiming overtime pay.
Lebatique said since he started working with the company he has never
been paid OT pay. Uy consulted with his brother. On January 29, 2000,
Uy told Lebatique to look for another job.
Lebatique then filed an Illegal Dismissal case against the company.

The Labor Arbiter ruled in favor of Lebatique. Uy was ordered to reinstate


Lebatique and at the same time to pay Lebatique his 13th month pay,
back wages (time when case was pending), service incentive leave pay
and OT pay all amounting to P196,659.72.
Uy argued that Lebatique was not dismissed and that he was merely
suspended; that he abandoned his job; and that Lebatique was a field
personnel not entitled to overtime pay and service incentive leave.

Uy illegally dismissed Lebatique when he told him to look for another job.
Judging at the sequence of event, Lebatique earned the ire of Uy when
he filed a complaint for nonpayment of OT pay on the day Lebatique was
suspended by Manuel Uy. Such is not a valid reason for dismissing
Lebatique.
Uy cannot therefore claim that he merely suspended Lebatique.
Further, Lebatique did not abandon his job. His filing of this case is proof
enough that he had no intention to abandon his job.
To constitute abandonment as a just cause for dismissal, there must be:
(a) absence without justifiable reason; and
(b) a clear intention, as manifested by some overt act, to sever the
employer-employee relationship.
None of the above was proven by Uy.
Also, Lebatique is not a field personnel as defined above for the following
reasons:
(1) company drivers, including Lebatique, are directed to deliver the
goods at a specified time and place;
(2) they are not given the discretion to solicit, select and contact
prospective clients; and
(3) Far East issued a directive that company drivers should stay at the
clients premises during truck-ban hours which is from 5:00 to 9:00
a.m. and 5:00 to 9:00 p.m.
As a regular employee, Lebatique is entitled to service incentive leave
and OT pay.
The Supreme Court affirmed the Labor Arbiters decision but remanded
the case for properly computing Lebatiques OT pay taking in to
consideration the companys time keeping records.

Field Personnel Defined


Field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work
in the field cannot be determined with reasonable certainty.

Mercidar Fishing Corporation vs. NLRC & Fermin Agao, Jr.,


G.R. No. 112574. October 8, 1998; 297 SCRA 440
Labor Standards Fishermen are not field personnel, Article 82

they are under the effective control and supervision of petitioner through the
vessel's patron or master.
Labor Congress of the Philippines vs. NLRC
G.R. No. 123938 | May 21, 1998 | J. Davide, Jr.

FACTS:
This case originated from a complaint filed on September 20, 1990 by private
respondent FerminAgao, Jr. against petitioner for illegal dismissal, violation
of P.D. No. 851, and non-payment of five days service incentive leave for
1990. Private respondent had been employed as a "bodegero" or ship's
quartermaster on February 12, 1988. He complained that he had been
constructively dismissed by petitioner when the latter refused him
assignments aboard its boats after he had reported to work on May 28, 1990.
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.
ISSUE:
Whether or not the fishing crew members are considered field personnel as
classified in Art. 82 of the Labor Code.
HELD:
Art. 82 of the Labor Code provides: The provisions of this title [Working
Conditions and Rest Periods] shall apply to employees in all establishments
and undertakings whether for profit or not, but not to government employees,
field personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary
of Labor in appropriate regulations. "Field personnel" shall refer to nonagricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. In
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 petitioner's
business offices, the fact remains that throughout the duration of their work

Doctrine:
Application of LC Article 286(n) in determination of status of piece workers as
regular workers versus LC Article 86 definition
Facts:
The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private petitioners
in the proceeding (represented by the Labor Congress of the Phils.) were
rank-and-file employees of private respondent Empire Food Products (a food
and fruit processing company), hired on various dates.
Ocampo et al filed against Empire an NLRC complaint for payment of money
claims and for violation of labor standards laws. Alongside this they also filed
a petition for direct certification for the Labor Congress to be their bargaining
representative. On Oct. 23, 1990, petitioners represented by LCP, and
private respondents Gonzalo and Evelyn Kehyeng (Kehyeng spouses)
entered into a Memorandum of Agreement, recognizing the following:

Status of 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";
With regard to the NLRC complaint, all parties agree to resolve the
issues during the Collective Bargaining Agreement;
Proper adjustment of wages, withdrawal of case from the Calendar
of NLRC, non-interference or any ULP act, etc.

On Oct. 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 Oct. 23, 1990 memorandum
Underpayment of wages
Actual, moral and exemplary damages

Labor Arbiter (Part 1):


Absolved Empire for ULP, union busting, violation of the memorandum of
agreement, underpayment of wages and denied petitioners' prayer for
actual, moral and exemplary damages.
Denied prayer for actual, moral and exemplary damages
Directed reinstatement of complainants, due to the fact that Empire did
not keep its payroll records as per requirement of the DOLE. Admonition
to Empire given as well re: further harassment and intimidation.
NLRC (Part 1):
Remanded case to Labor Arbiter for further proceedings due to
overlooking the testimonies of some of the individual complainants
which are now on record.
Labor Arbiter (Part 2):
Complainants failed to present with definiteness and clarity the particular
act or acts constitutive of unfair labor practice.
Declaration of ULP connotes a finding of prima facie evidence of
probability that a criminal offense may have been committed so as to
warrant the filing of a criminal information before the regular court.
As regards the issue of harassment, threats and interference with the
rights of employees to self-organization which is actually an ingredient of
unfair labor practice, complainants failed to specify what type of threats
or intimidation was committed and who committed the same.
NLRC (Part 2):
Affirmed LA decision Part 2.
Petitioners:
The fact that they are piece workers does not imply that they are not
regular employees entitled for reinstatement.
LA and NLRC decisions were not supported by substantial evidence;
Abandonment of work was not proved by substantial evidence;
Much credit given to the Kehyeng spouses self-serving arguments.
Respondents:
Ana Marie, et al were piece workers hence they are exempt from labor
standards benefits
Issues:
1. [RELEVANT] WON the petitioners are entitled to labor standard benefits,
considering their status as piece rate workers.
2. WON the actions of Ana Marie, et al constituted abandonment of work.
Held:
1. YES, petitioners are entitled to labor standards benefits, namely,
holiday pay, premium pay, 13th month pay and service incentive
leave.

2. NO, failure to appear to work did not constitute abandonment,


Ratio:
Supreme Court decision cites that Ana Marie, et al, despite being pakyao or
piece workers does not imply that they are not regular employees entitled to
reinstatement. Applying the two-fold test from LC Article 286(n) [Art. 280
(old)], the SC found that the supposedly piece workers had three factors in
their favor:
a) The nature of the tasks of Ana Marie, et al of repacking snack food
items was NECESSARY and DESIRABLE in the usual business of
Empire Foods, which is a food and fruit processing company.
According to Tabas vs California Manufacturing, merchandisers of
processed food who coordinates for sales of processed food was a
necessity and was desirable for the day-to-day operations of a food
processing company. With more reason would the job of food packers
be necessary for the day-to-day operations of a food processing plant.
b) Ana Marie et al worked throughout the year, with their employment
being independent from a specific project or season.
c) The length of time that petitioners fulfilled the requirement of Article
286(n).
Therefore, the SC considered the employees as regular employees despite
their status as piece workers, according them benefits such as holiday pay,
premium pay, 13th month pay and service incentive leave.
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." However, petitioners as piece-rate
workers do not fall within this group. Not only did the employees labor under
the control of Empire, the employees also worked throughout the year to fulfil
their quota as basis for compensation.
Further, in Section 8 (b), Rule IV, Book III, piece workers are specifically
mentioned as being entitled to holiday pay.
Sec. 8.
Holiday pay of certain employees.
(b) Where a covered employee is paid by results or output, such as
payment on piece work, his holiday pay shall not be less than his
average daily earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however, that in no case shall
the holiday pay be less than the applicable statutory minimum wage rate.

In addition, the Revised Guidelines on the Implementation of the 13th Month


Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum
Order No. 28, clearly exclude the employer of piece rate workers from those
exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS - The following employers are still not
covered by P.D. No. 851:
d.
Employers of those who are paid on purely commission,
boundary or task basis, and those who are paid a fixed amount for
performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piecerate basis in which case the employer shall grant the required 13th
month pay to such workers.
However, 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.
They should also be paid for overtime pay, even though Sec. 2(e), Rule I,
Book III of the Implementing Rules states that:
workers who are paid by results including those who are paid on
piece-work, takay, pakiao, or task basis, if their output rates are in
accordance with the standards prescribed under Sec. 8, Rule VII,
Book III, of these regulations, or where such rates have been fixed
by the Secretary of Labor in accordance with the aforesaid section,
are not entitled to receive overtime pay.
In this case, Empire Foods did not allege that they adheredtothestandardsset
forthin Sec. 8, Rule VII, Book III, norwiththeratesprescribedbytheSecretaryof
Labor. Therefore, even though they are piece workers, they are entitled to
overtime pay
With regard to the issue of abandonment of work, the SC cited the Office of
Solicitor Generals observations:
In finding that petitioner employees abandoned their work, the Labor
Arbiter and the NLRC relied on the testimony of Security Guard
Rolando Cairo that on January 21, 1991, petitioners refused to work.
As a result of their failure to work, the cheese curls ready for
repacking on said date were spoiled
The failure to work for one day, which resulted in the spoilage of
cheese curls does not amount to abandonment of work. In fact two
(2) days after the reported abandonment of work or on January 23,

1991, petitioners filed a complaint for, among others, unfair labor


practice, illegal lockout and/or illegal dismissal.
Furthermore, the SC stressed that the burden of proving the existence of just
cause for dismissing an employee, such as abandonment, rests on the
employer. According to the SC, Empire Foods failed to discharge this burden
as basis for dismissing the employees.
Also, the SC considered that, in terminating the employees for abandonment
of work, Empire failed to serve to the employees a written notice of
termination (as required by the Two-Notice rule and Section 2, Rule XIV,
Book V of the Omnibus Rules), violating the employees right to security of
tenure and the constitutional right to due process.
UNIVERSITY OF PANGASINAN FACULTY UNION, Petitioner, v.
UNIVERSITY OF PANGASINAN And NATIONAL LABOR RELATIONS
COMMISSION, Respondents.
G.R. No. L-63122,February 20, 1984

FACTS:
University of Pangasinan did not entitle its faculty to ECOLA during the
semestral break and when it increased its tuition fee, it refused its faculty the
salary increase 60% of the incremental proceeds of increased tuition fees.

ISSUE: WON faculty members of a university are entitled to ECOLA during


semestral breaks. YES

HELD:
Per various PDs on ECOLA, ECOLA pay includes LOA without
pay.The contention that the fact of receiving a salary should not be the basis
of receiving ECOLA is without merit as per IRR of Wage Order No. 1:
Allowance for Unworked 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.

ISSUE: Whether or not Rada is entitled to separation pay and OT pay.


HELD: Separation pay NO. Overtime pay Yes.
The intention of the law is to grant ECOLA upon the payment of basic wages.
Hence the principle, No pay, no ECOLA.

Also applied by analogy is the principle enunciated in the ORI-LCP: Sec. 4.


Principles in Determining Hours Worked d) The time during which an
employee is inactive by reason of interruptions in his work beyond his control
shall be considered time either if the imminence of the resumption of work
requires the employees presence at the place of work or if the interval is too
brief to be utilized effectively and gainfully in the employees own interest.

Separation Pay
The SC ruled that Rada was a project employee whose work was
coterminous with the project for which he was hired. Project employees, as
distinguished from regular or non-project employees, are mentioned in
Section 281 of the Labor Code as those 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.
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.
OT Pay

Hilario Rada vs National Labor Relations Commission


August 16, 2011
205 SCRA 69 Labor Law Labor Standards Hours of Work OT Pay of
a Project Based Employee
In 1977, Hilario 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 10
months. After 10 months the project was not yet completed. Several
contracts thereafter were made until the project was finished in 1985.
At the completion of the project, Rada was terminated as his employment
was co-terminous with the project. He later sued Philnor for non payment of
separation pay and overtime pay. He said he is entitled to be paid OT pay
because he uses extra time to get to the project site from his home and from
the project site to his home everyday in total, he spends an average of 3
hours OT every day.

Rada is entitled to OT 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 Radas 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 Philnors 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 fair.
PIGCAULAN v SECURITY & CREDIT INVESTIGATION

IS THE EMPLOYEE REQUIRED TO DISPROVE PAYMENT OF BENEFITS


DUE HIM?
It is not for an employee to prove non-payment of benefits to which he is
entitled by law. Rather, it is on the employer that the burden of proving
payment of these claims rests.
SCII (employer) presented payroll listings and transmittal letters to the bank
to show that Canoy and Pigcaulan (employees) received their salaries as
well as benefits which it claimed are already integrated in the employees

monthly salaries. However, the documents presented do not prove SCIIs


allegation. SCII failed to show any other concrete proof by means of records,
pertinent files or similar documents reflecting that the specific claims have
been paid. With respect to 13th month pay, SCII presented proof that this
benefit was paid but only for the years 1998 and 1999. To repeat, the burden
of proving payment of these monetary claims rests on SCII, being the
employer. It is a rule that one who pleads payment has the burden of proving
it. Even when the plaintiff alleges non-payment, still the general rule is that
the burden rests on the defendant to prove payment, rather than on the
plaintiff to prove non-payment. Since SCII failed to provide convincing proof
that it has already settled the claims, Pigcaulan should be paid his holiday
pay, service incentive leave benefits and proportionate 13th month pay for
the year 2000. (ABDULJUAHID R. PIGCAULAN vs. SECURITY and
CREDIT INVESTIGATION,INC., G.R. No. 173648, January 16, 2012)

SHELL OIL WORKERS UNION vs. SHELL COMPANY OF THE


PHILIPPINES, LTD., and THE COURT OF INDUSTRIAL RELATIONS
RULING:
G.R. No. L-28607, May 31, 1971.

FACTS:
Respondent Shell Company of the Philippines (COMPANY) dissolved its
security guard section stationed at its Pandacan Installation, notwithstanding
its (guard section) continuance and that such is assured by an existing
collective bargaining contract. The respondent company transferred 18
security guards to its other department and consequently hired a private
security agency to undertake the work of said security guards. This resulted
in a strike called by petitioner Shell Oil Workers Union (UNION), The
President certified it to respondent Court of Industrial Relations (CIR). CIR
declared the strike illegal on the ground that such dissolution was a valid
exercise of a management prerogative. Thus this appeal is taken.
Petitioner argued that the 18 security guards affected are part of the
bargaining unit and covered by the existing collective bargaining contract, as
such, their transfers and eventual dismissals are illegal being done in
violation of the existing contract. The Company maintained that in contracting
out the security service and redeploying the 18 security guards affected, it
was merely performing its legitimate prerogative to adopt the most efficient
and economical method of operation, that said action was motivated by
business consideration in line with past established practice and made after
notice to and discussion with the Union, that the 18 guards concerned were
dismissed for wilfully refusing to obey the transfer order, and that the strike
staged by the Union is illegal.

YES. The strike was legal because there was a violation of the collective
bargaining agreement by Company. It was part of the CBA that the Security
Guard Section will remain. Yet, the Company did not comply with the
stipulation in CBA. It was thus an assurance of security of tenure, at least,
during the lifetime of the agreement. For what is involved is the integrity of
the agreement reached, the terms of which should be binding on both parties
The stand of Shell Company as to the scope of management prerogative is
not devoid of plausibility, management prerogative of the Company would
have been valid if it were not bound by what was stipulated in CBA. The
freedom to manage the business remains with management. It cannot be
denied the faculty of promoting efficiency and attaining economy by a study
of what units are essential for its operation. To it belongs the ultimate
determination of whether services should be performed by its personnel or
contracted to outside agencies. However, while management has the final
say on such matter, the labor union is not to be completely left out.
An unfair labor practice is committed by a labor union or its agent by its
refusal to bargain collectively with the employer. Collective bargaining does
not end with the execution of an agreement, being a continuous process, the
duty to bargain necessarily imposing on the parties the obligation to live up to
the terms of such a collective bargaining agreement if entered into, it is
undeniable that non-compliance therewith constitutes an unfair labor
practice.

ISSUE:

The right to self-organization guarded by the Industrial Peace Act explicitly


includes the right to engage in concerted activities for the purpose of
collective bargaining and to the mutual aid or protection. The employee,
tenant or laborer is inhibited from striking or walking out of his employment
only when so enjoined by the CIR and after a dispute has been submitted
thereto and pending award or decision by the court of such dispute.

Whether the existing collective bargaining contract on maintaining security


guard section, among others, constitute a bar to the decision of the
management to contract out security guards.

In the present case, the employees or laborers may strike before being
ordered not to do so and before an industrial dispute is submitted to the CIR,
subject to the power of the latter, after hearing when public interest so

requires or when the dispute cannot, in its opinion, be promptly decided or


settled, to order them to return to work, with the consequence that if the
strikers fail to return to work, when so ordered, the court may authorize the
employer to accept other employees or laborers. Thus a strike may not be
staged only when, during the pendency of an industrial dispute, the CIR has
issued the proper injunction against the laborers (section 19, Commonwealth
Act No. 103, as amended).
WHEREFORE, the decision of respondent Court of Industrial Relations of
August 5, 1967 is reversed.
**NOTE:
BELIEF IN GOOD FAITH THAT EMPLOYER COMMITTED UNFAIR LABOR
PRACTICE RENDERS STRIKE LEGAL:
It is not even required that there be in fact an unfair labor practice committed
by the employer. It suffices, if such a belief in good faith is entertained by
labor, as the inducing factor for staging a strike. So it was declared: As a
consequence, we hold that the strike in question had been called to offset
what petitioners were wanted in believing in good faith to be unfair labor
practices on the part of Management, that petitioners were not bound,
therefore, to wait for the expiration of thirty (30) days from notice of strike
before staging the same, that said strike was not, accordingly, illegal and that
the strikers had not thereby lost their status as employees of respondents
herein.

[G.R. No. L-48437. September 30, 1986.]


MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION
(represented by PHILIPPINE SOCIAL SECURITY LABOR UNION
PSSLU Fed. TUCP), v. ARBITRATOR FROILAN M. BACUNGAN and
MANTRADE DEVELOPMENT CORPORATION.
Facts:
1. Petitoner Mantrade Union files a petition for certiorari and mandamus
against the respondent Voluntary Arbitrator Bancungan and Mantrade
Development.
2. The voluntary arbitrator ruled that Mantrade Development Corporation is
not under legal obligation to pay 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.
3. The respondent raised its objection that the petitioner is barred from
pursuing the present action in view of Article 263 of the Labor Code,
which provides in part that "voluntary arbitration awards or decisions
shall be final, inappealable, and executory," as well as the rules
implementing the same; the pertinent provision of the Collective
Bargaining Agreement between petitioner and respondent corporation;
and Article 2044 of the Civil Code which provides that "any stipulation
that the arbitrators award or decision shall be final, is valid, without
prejudice to Articles 2038, 2039, and 2040. ." (Respondent corporation
further contends that the special civil action of certiorari does not lie
because respondent arbitrator is not an "officer exercising judicial
functions" within the contemplation of Rule 65, Section 1, of the Rules of
Court; that the instant petition raises an error of judgment on the part of
respondent arbitrator and not an error of jurisdiction; that it prays for the
annulment of certain rules and regulations issued by the Department of
Labor, not for the annulment of the voluntary arbitration proceedings; and
that appeal by certiorari under Section 29 of the Arbitration Law, Republic
Act No. 876, is not applicable to the case at bar because arbitration in
labor disputes is expressly excluded by Section 3 of said law.)
Issue:
1. WON the decision of the Voluntary Arbitrator is Final.
2. WON A CERTIORARI is applicable to the instant case.
Held:
1. NO. "We agree with the petitioner that the decisions of voluntary
arbitrators must be given the highest respect and as a general rule must be
accorded a certain measure of finality.

It is not correct, however, that this respect precludes the exercise of


judicial review over their decisions. Article 262 of the Labor Code making
voluntary arbitration awards final, inappealable and executory, except
where the money claims exceed P100,000.00 or 40% of the paid-up
capital of the employer or where there is abuse of discretion or gross
incompetence refers to appeals to the National Labor Relations
Commission and not to judicial review.
In spite of statutory provisions making final the decisions of
certain administrative agencies, we have taken cognizance of petitions
questioning these decisions where want of jurisdiction, grave abuse of
discretion, violation of due process, denial of substantial justice, or
erroneous interpretation of the Law were brought to our attention. . . .
2. YES. A voluntary arbitrator by the nature of her functions acts in a quasijudicial capacity. There is no reason why her decisions involving
interpretation of law should be beyond this Courts review. Administrative
officials are presumed to act in accordance with law and yet we do not
hesitate to pass upon their work where a question of law is involved or where
a showing of abuse of discretion in their official acts is properly raised in
petitions for certiorari."
JOSE RIZAL COLLEGE vs NLRC
156 SCRA 27 Labor Law Labor Standards Working Conditions and
Rest Periods Holiday Pay
The National Alliance of Teachers sued Jose Rizal College for alleged nonpayment of unworked holidays from 1975 to 1977. The members of the
Alliance concerned are faculty members who are paid on the basis of student
contract hour.
ISSUE: Whether or not the school faculty are entitled to unworked holiday
pay.
HELD: As far as unworked regular holidays are concerned, the teachers are
not entitled to holiday pay. Regular holidays specified as such by law are
known to both school and faculty members as no class days; certainly the
latter do not expect payment for said unworked days, and this was clearly in
their minds when they entered into the teaching contracts.
On the other hand, the teachers are entitled to be paid for unworked special
holidays. Otherwise stated, the faculty member, although forced to take a
rest, does not earn what he should earn on that day. Be it noted that when a
special public holiday is declared, the faculty member paid by the hour is

deprived of expected income, and it does not matter that the school calendar
is extended in view of the days or hours lost, for their income that could be
earned from other sources is lost during the extended days. Similarly, when
classes are called off or shortened on account of typhoons, floods, rallies,
and the like, these faculty members must likewise be paid, whether or not
extensions are ordered.
SAN MIGUEL CORPORATION v. THE HONORABLE COURT OF
APPEALS-FORMER THIRTEENTH DIVISION, HON. UNDERSECRETARY
JOSE M. ESPAOL, JR., Hon. CRESENCIANO B. TRAJANO, and HON.
REGIONAL DIRECTOR ALLAN M. MACARAYA, respondents.
G.R. No. 146775. January 30, 2002
Facts:
The Department of Labor and Employment conducted a routine inspection in
San Miguel Corporation, Iligan City and it was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees.
DOLE sent a copy of inspection result to SMC which the latter contested the
findings. SMC failed to submit proof and hence the Director of DOLE of Iligan
District Office issued a compliance order to pay both its Muslim and nonMuslim employees the Muslim Holidays. SMC appealed to DOLE main office
but dismissed for having been filed late but later on reconsidered because it
is within reglementary period but still dismissed for lack of merit. Hence, this
present petition for certiorari.
Issue: Whether or not non-Muslim employees working in Muslim areas is
entitled to Muslim Holiday Pay.

It was said also that the The Court of Appeals did not err in sustaining
Undersecretary Espaol who stated: Assuming arguendo that the
respondents position is correct, then by the same token, Muslims throughout
the Philippines are also not entitled to holiday pays on Christian holidays
declared by law as regular holidays. We must remind the respondentappellant that wages and other emoluments granted by law to the working
man are determined on the basis of the criteria laid down by laws and
certainly not on the basis of the workers faith or religion.
PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION
WORKERS ORGANIZATION (PSTMSDWO), represented by its President,
RENE SORIANO vs. PNCC SKYWAY CORPORATION
G.R. No. 171231 (February 17, 2010)
FACTS:
Petitioner PNCC Skyway Corporation Traffic Management and Security
Division Workers' Organization (PSTMSDWO) is a labor union duly
registered with the Department of Labor and Employment (DOLE).
Respondent PNCC Skyway Corporation is a corporation duly organized and
operating under and by virtue of the laws of the Philippines. [They entered
into CBA. Pertinent provisions are as follows:]
ARTICLE VIII
VACATION LEAVE AND SICK LEAVE
Section 1. Vacation Leave.
[b] The company shall schedule the vacation leave of
employees during
the year taking into consideration
the request of preference of the employees.

Held:
The Supreme Court dismissed the petition and ordered the petitioner to pay
its non-Muslim employees. The basis for this decision were Articles 169 and
170 of P.D. No. 1083 Code of Muslim Personal Laws which listed all official
Muslim holidays and provincies and cities where officially observed. In this
case, SMC is located in Iligan which is covered in the those provisions. Also
Article 169 and 170 of PD No. 1083 should be read in conjunction with Article
94 of Labor Code which provides for the right of every worker to be paid of
holiday pay.

[PNCC then created a schedule of leaves for their employees.] Petitioner


objected to the implementation of the said memorandum. It insisted that the
individual members of the union have the right to schedule their vacation
leave. It opined that the unilateral scheduling of the employees' vacation
leave was done to avoid the monetization of their vacation leave in
December 2004.

Petitioner asserts Art.3(3) of PD No. 1083 provides that it shall be applicable


only to Muslims. However, the Court said that said article declares that
nothing herein shall be construed to operate to the prejudice of a nonMuslim. There should be no distinction between Muslims and non-Muslims
as regards payment of benefits for Muslim holidays.

YES. Petitioner insisted that their union members have the preference in
scheduling their vacation leave. On the other hand, respondent argued that
Article VIII, Section 1 (b) gives the management the final say regarding the
vacation leave schedule of its employees. Respondent may take into
consideration the employees' preferred schedule, but the same is not
controlling.

WON the PNCC has the sole discretion to schedule the vacation leaves of its
employees.

The rule is that where the language of a contract is plain and unambiguous,
its meaning should be determined without reference to extrinsic facts or aids.
The intention of the parties must be gathered from that language, and from
that language alone. Stated differently, where the language of a written
contract is clear and unambiguous, the contract must be taken to mean that
which, on its face, it purports to mean, unless some good reason can be
assigned to show that the words used should be understood in a different
sense.
In the case at bar, the contested provision of the CBA is clear and
unequivocal. Article VIII, Section 1 (b) of the CBA categorically provides that
the scheduling of vacation leave shall be under the option of the employer.
Thus, if the terms of a CBA are clear and leave no doubt upon the intention
of the contracting parties, the literal meaning of its stipulation shall prevail. In
fine, the CBA must be strictly adhered to and respected if its ends have to be
achieved, being the law between the parties. In Faculty Association of
Mapua Institute of Technology (FAMIT) v. Court of Appeals, this Court held
that the CBA during its lifetime binds all the parties. The provisions of the
CBA must be respected since its terms and conditions constitute the law
between the parties. The parties cannot be allowed to change the terms they
agreed upon on the ground that the same are not favorable to them.
[T]he purpose of a vacation leave is to afford a laborer a chance to get a
much-needed rest to replenish his worn-out energy and acquire a new vitality
to enable him to efficiently perform his duties, and not merely to give him
additional salary and bounty. Accordingly, the vacation leave privilege was
not intended to serve as additional salary, but as a non-monetary benefit. To
give the employees the option not to consume it with the aim of converting it
to cash at the end of the year would defeat the very purpose of vacation
leave.
Indeed, the multitude or scarcity of personnel manning the tollways should
not rest upon the option of the employees, as the public using the skyway
system should be assured of its safety, security and convenience. Petitioner's
contention that labor contracts should be construed in favor of the laborer is
without basis and, therefore, inapplicable to the present case. This rule of
construction does not benefit petitioners because, as stated, there is here no
room for interpretation. Since the CBA is clear and unambiguous, its terms
should be implemented as they are written.
PHILIPPINE HOTELIERS, INC., DUSIT HOTEL NIKKO-MANILA v
NATIONAL UNION OF WORKERS IN HOTEL, RESTAURANT, AND

ALLIED INDUSTRIES (NUWHRAIN-APL-IUF)- DUSIT HOTEL NIKKO


CHAPTER
G.R. No. 181972 | August 25, 2009 | CHICO-NAZARIO, J.:
FACTS:
WO No. 9, approved by the Regional Tripartite Wages and Productivity
Board (RTWPB) of NCR took effect on 5 November 2001. It grants
P30.00 ECOLA to particular employees and workers of all private
sectors:
Section 1. Upon the effectivity of this Wage Order, all private
sector workers and employees in the National Capital Region
receiving daily wage rates of TWO HUNDRED FIFTY PESOS
(P250.00) up to TWO HUNDRED NINETY PESOS (P290.00) shall
receive an emergency cost of living allowance in the amount of
THIRTY PESOS (P30.00) per day payable in two tranches as
follows:
Amount of ECOLA
Effectivity
P15.00
5 November 2001
P15.00
1 February 2002
NUWHRAIN-APL-IUF-Dusit Hotel Nikko Chapter (Union), through
President, Reynaldo C. Rasing, sent a letter to DOLE-NCR Director Alex
Maraan, reporting the non-compliance of Dusit Hotel with WO No. 9,
while there was an on-going compulsory arbitration before the NLRC due
to a bargaining deadlock between the Union and Dusit Hotel.
Acting on Rasings letters, the DOLE-NCR sent Labor Standards Officer
Estrellita Natividad to conduct inspection of Dusit Hotel premises, results
as stated:
o Based on interviews/affidavits of employees, they are receiving
more than P290.00 average daily rate which is exempted in the
compliance of Wage Order NCR-09;
o Remarks: There is an ongoing negotiation under Case # NCMBNCR-NS-12-369-01
&
NCMB-NCR-NS-01-019-02
now
forwarded to the NLRC office for the compulsory arbitration.
o NOTE: Payrolls to follow later upon request including position
paper of [Dusit Hotel].
By virtue of Rasings request for another inspection, LSO Natividad
conducted a second inspection of Dusit Hotel premises , results are as
stated:
o *Non-presentation of records/payrolls
o *Based on submitted payrolls & list of union members by
NUWHRAIN-DUSIT HOTEL NIKKO Chapter, there are one
hundred forty-four (144) affected in the implementation of Wage
Order No. NCR-09-> ECOLA covering the periods from Nov.5/01
to present.

DOLE-NCR issued a Notice of Inspection Result directing Dusit Hotel to


effect restitution and/or correction of the noted violations and to submit
any question on the findings of the labor inspector within the same
period, otherwise, an order of compliance would be issued. The Notice of
Inspection Result was duly received.
In the meantime, the NLRC rendered a Decision in the compulsory
arbitration involving the CBA deadlock between Dusit Hotel and the
Union granting the hotel employees the following wage increases, in
accord with the CBA:
Effective January 1, 2001- P500.00/month
Effective January 1, 2002- P550.00/month
Effective January 1, 2003- P600.00/month
Based on the results of the second inspection of Dusit Hotel, DOLE-NCR
directed Dusit Hotel to pay 144 of its employees the total amount of
P1,218,240.00, corresponding to their unpaid ECOLA under WO No. 9;
plus, the penalty of double indemnity, pursuant to Section 12 of RA 6727,
as amended by RA 8188, which provides:
Sec. 12. Any person, corporation, trust, firm, partnership,
association or entity which refuses or fails to pay any of the
prescribed increases or adjustments in wage rates made in
accordance with this Act shall be punished by a fine not less than
Twenty-five thousand pesos (P25,000) nor more than One hundred
thousand pesos (P100,000) or imprisonment of not less than two (2)
years nor more than four (4) years or both such find and
imprisonment at the discretion of the court: Provided, That any
person convicted under this Act shall not be entitled to the benefits
provided for under the Probation Law.
The employer concerned shall be ordered to pay an amount
equivalent to double the unpaid benefits owing to the employees:
Provided, That payment of indemnity shall not absolve the employer
from the criminal liability under this Act.
If the violation is committed by a corporation, trust or firm,
partnership, association or any other entity, the penalty of
imprisonment shall be imposed upon the entitys responsible officers
including but not limited to the president, vice president, chief
executive officer, general manager, managing director or partner.
Dusit Hotel filed an MR arguing that the NLRC Decision resolving the
bargaining deadlock between Dusit and the Union, and awarding salary
increases under the CBA to hotel employees retroactive to 1 January
2001, rendered the DOLE-NCR Order moot and academic. With salary
increase of the hotel employeesand their share in the service charges,
the 144 hotel employees, would already be receiving salaries beyond the
coverage of WO No. 9. DOLE-NCR set aside its earlier order for being
moot and academic, in consideration of the NLRC and dismissing the
complaint of the Union against Dusit Hotel, for non-compliance with WO
No. 9, for lack of merit.

The Union appealed before the DOLE Secretary maintaining that the
wage increases granted by the NLRC Decision should not be deemed as
compliance by with WO No. 9. The DOLE, through Acting Secretary
Manuel G. Imson, granted the appeal. The DOLE Secretary reasoned
that the NLRC Decision categorically declared that the wage increase
under the CBA finalized between Dusit Hotel and the Union shall not be
credited as compliance with WOs No. 8 and No. 9. Furthermore, Section
1 of Rule IV of the Rules Implementing WO No. 9, which provides that
wage increases granted by an employer in an organized establishment
within three months prior to the effectivity of said Wage Order shall be
credited as compliance with the ECOLA prescribed therein, applies only
when an agreement to this effect has been forged between the parties or
a provision in the CBA allowing such crediting exists.
Dusit Hotel sought reconsideration, the DOLE Secretary granted the
Dusit Hotels MR. The said wage increase, plus share in the service
charges, already constituted compliance with the WO No. 9
Union filed an MR but was denied by the DOLE Secretary The DOLE
Secretary found that it would be unjust on the part of Dusit Hotel if the
hotel employees were to enjoy salary increases retroactive to 1 January
2001, pursuant to the NLRC Decision dated 9 October 2002, and yet
said salary increases would be disregarded in determining compliance by
the hotel with WO No. 9.
The Union appealed via Petition for Review, CA ruled in favor of the
Union. Referring to Section 13 of WO No. 9, the CA declared that wage
increases/allowances granted by the employer shall not be credited as
compliance with the prescribed increase in the same Wage Order, unless
provided in the law or the CBA itself; and there was no such provision.
CA also found that Dusit Hotel failed to substantiate its position that
receipt by its employees of shares in the service charges was to be
deemed substantial compliance by said hotel with the payment of
ECOLA required by WO No. 9. CA adjudged that Dusit Hotel should be
liable for double indemnity for its failure to comply with WO No. 9. CA
stressed that ECOLA is among the laborers financial gratifications under
the law, and is distinct and separate from benefits derived from
negotiation or agreement with their employer. CA disposed: MR of Dusit
Hotel was denied for lack of merit.
Dusit Hotel sought recourse from this Court by filing the instant Petition

ISSUE: WON the 144 hotel employees were still entitled to ECOLA granted
by WO No. 9 despite the increases in their salaries, retroactive to 1 January
2001. NOT ALL.
HELD:
Section 1 of WO No. 9 very plainly stated that only private sector workers
and employees in the NCR receiving daily wage rates of P250.00 to
P290.00 shall be entitled to ECOLA. Private sector workers and

employees receiving daily wages of more than P290.00 were no longer


entitled to ECOLA. The ECOLA was to be implemented in two tranches:
P15.00/day beginning 5 November 2001; and the full amount of
P30.00/day beginning 1 February 2002.
WO No. 9 took effect on 5 November 2001. The Decision rendered by
the NLRC on 9 October 2002 ordered Dusit Hotel to grant its employees
salary increases retroactive to 1 January 2001 and 1 January 2002. In
determining which of its employees were entitled to ECOLA, Dusit Hotel
used as bases the daily salaries of its employees, inclusive of the
retroactive salary increases. The Union protested and insisted that the
bases for the determination of entitlement to ECOLA should be the hotel
employees daily salaries, exclusive of the retroactive salary increases.
According to the Union, Dusit Hotel cannot credit the salary increases as
compliance with WO No. 9.
Much of the confusion in this case arises from the insistence of the Union
to apply Section 13 of WO No. 9, which states:
Section 13. Wage increases/allowances granted by an employer in
an organized establishment with three (3) months prior to the
effectivity of this Order shall be credited as compliance with the
prescribed increase set forth herein, provided the corresponding
bargaining agreement provision allowing creditability exists. In
the absence of such an agreement or provision in the CBA, any
increase granted by the employer shall not be credited as
compliance with the increase prescribed in this Order.

In unorganized establishments, wage increases/allowances granted


by the employer within three (3) months prior to the effectivity of this
Order shall be credited as compliance therewith.

In case the increases given are less than the prescribed adjustment,
the employer shall pay the difference. Such increases shall not
include anniversary increases, merit wage increases and those
resulting from the regularization or promotion of employees.
The Union harps on the fact that its CBA with Dusit Hotel does not
contain any provision on creditability, thus, Dusit Hotel cannot credit the
salary increases as compliance with the ECOLA required to be paid
under WO No. 9.
The reliance of the Union on Section 13 is misplaced. Dusit Hotel is not
contending creditability of the hotel employees salary increases as
compliance with the ECOLA mandated by WO No. 9. Creditability means
that Dusit Hotel would have been allowed to pay its employees the salary
increases in place of the ECOLA required by WO No. 9. This, however, is
not what Dusit Hotel is after. The position of Dusit Hotel is that the salary
increases should be taken into account in determining entitlement to
ECOLA. The retroactive increases could raise the daily salary rates

above P290.00, placing said employees beyond the coverage of WO No.


9. Section 13 of WO No. 9 on creditability is irrelevant and inapplicable
herein.
The Court agrees with Dusit Hotel that the increased salaries of the
employees should be used as bases for determining whether they were
entitled to ECOLA under WO No. 9. The very fact that the NLRC decreed
that the salary increases of the Dusit Hotel employees shall be
retroactive to 1 January 2001 and 1 January 2002, means that said
employees were already supposed to receive the said salary increases
beginning on these dates. The increased salaries were the rightful
salaries of the hotel employees by 1 January 2001, then again by 1
January 2002. Although belatedly paid, the hotel employees still received
their salary increases.
It is only fair and just, therefore, that in determining entitlement of the
hotel employees to ECOLA, their increased salaries by 1 January 2001
and 1 January 2002 shall be made the bases. There is no logic in
recognizing the salary increases for one purpose (i.e., to recover the
unpaid amounts thereof) but not for the other (i.e., to determine
entitlement to ECOLA). For the Court to rule otherwise would be to
sanction unjust enrichment on the part of the hotel employees, who
would be receiving increases in their salaries, which would place them
beyond the coverage of Section 1 of WO No. 9, yet still be paid ECOLA
under the very same provision.
NLRC directed Dusit Hotel to increase the salaries of its employees by
P500.00 per month, retroactive to 1 January 2001. After applying the said
salary increase, only 82 hotel employees would have had daily salary
rates falling within the range of P250.00 to P290.00. Thus, upon the
effectivity of WO No. 9 on 5 November 2001, only the said 82 employees
were entitled to receive the first tranch of ECOLA, equivalent to P15.00
per day.
NLRC Decision also ordered Dusit Hotel to effect a second round of
increase in its employees salaries, equivalent to P550.00 per month,
retroactive to 1 January 2002. As a result of this increase, the daily salary
rates of all hotel employees were already above P290.00. Consequently,
by 1 January 2002, no more hotel employee was qualified to receive
ECOLA.
Given that 82 hotel employees were entitled to receive the first tranch of
ECOLA from 5 November 2001 to 31 December 2001, the Court must
address the assertion of Dusit Hotel that the receipt by said hotel
employees of their shares in the service charges already constituted
substantial compliance with the prescribed payment of ECOLA under
WO No. 9. The Court rules in the negative.
It must be noted
that the hotel employees have a right to their share in the service
charges collected by Dusit Hotel, pursuant to Article 96 of the Labor
Code of 1991, to wit:

Article 96. Service charges. All service charges


collected by hotels, restaurants and similar establishments
shall be distributed at the rate of eighty-five percent (85%)
for all covered employees and fifteen percent (15%) for
management. The share of employees shall be equally
distributed among them. In case the service charge is
abolished, the share of the covered employees shall be
considered integrated in their wages.

Since Dusit Hotel is explicitly mandated by the afore-quoted statutory


provision to pay its employees and management their respective shares
in the service charges collected, the hotel cannot claim that payment
thereof to its 82 employees constitute substantial compliance with the
payment of ECOLA under WO No. 9. Undoubtedly, the hotel employees
right to their shares in the service charges collected by Dusit Hotel is
distinct and separate from their right to ECOLA; gratification by the hotel
of one does not result in the satisfaction of the other.

The Court, finds no basis to hold Dusit Hotel liable for double
indemnity. Notice of Inspection Result shall specify the violations
discovered, if any, together with the officers recommendation and
computation of the unpaid benefits due each worker with an advice that
the employer shall be liable for double indemnity in case of refusal or
failure to correct the violation within five calendar days from receipt of
notice. A careful review of the Notice of Inspection Result dated 29 May
2002, issued herein by the DOLE-NCR to Dusit Hotel, reveals that the
said Notice did not contain such an advice.

METROPOLITAN BANK and TRUST COMPANY vs. NATIONAL LABOR


RELATIONS COMMISSION, FELIPE A. PATAG and BIENVENIDO C.
FLORA, G.R. No. 152928, June 18, 2009
LEONARDO-DE CASTRO, J.:

FACTS:
Respondents Felipe Patag (Patag) and Bienvenido Flora (Flora) were
former employees of petitioner Metropolitan Bank and Trust Company
(Metrobank). Both respondents availed of the banks compulsory retirement
plan in accordance with the 1995 Officers Benefits Memorandum. At the
time of his retirement on February 1, 1998, Patag was an Assistant

Manager. Flora was a Senior Manager when he retired on April 1, 1998.


Both of them received their respective retirement benefits computed at 185%
of their gross monthly salary for every year of service as provided under the
said 1995 Memorandum.
Early in 1998, Collective Bargaining Agreement (CBA) negotiations
were on-going between Metrobank and its rank and file employees for the
period 1998-2000. Patag wrote a letter dated February 2, 1998 to the bank
requesting that his retirement benefits be computed at the new rate should
there be an increase thereof in anticipation of possible changes in officers
benefits after the signing of the new CBA with the rank and file. Flora
likewise wrote Metrobank in March 25, 1998, requesting the bank to use as
basis in the computation of their retirement benefits the increased rate of
200% as embodied in the just concluded CBA between the bank and its rank
and file employees. Metrobank did not reply to their requests.
The records show that since the 1986-1988 CBA, and continuing with
each CBA concluded thereafter with its rank and file employees, Metrobank
would issue a Memorandum granting similar or better benefits to its
managerial employees or officers, retroactive to January 1 st of the first year of
effectivity of the CBA. When the 1998-2000 CBA was approved, Metrobank,
in line with its past practice, issued on June 10, 1998, a Memorandum on
Officers Benefits, which provided for improved benefits to its officers (the
1998 Officers Benefits Memorandum). This Memorandum was signed by
then Metrobank President Antonio S. Abacan, Jr. Pertinently, the compulsory
retirement benefit for officers was increased from 185% to 200% effective
January 1, 1998, but with the condition that the benefits shall only be
extended to those who remain in service as of June 15, 1998.
Consequently on August 31, 1998, Patag and Flora, through their
counsel, wrote a letter to Metrobank demanding the payment of their unpaid
retirement benefits, representing the increased benefits they should have
received under the 1998 Officers Benefits Memorandum.
On September 25, 1998, Patag and Flora filed with the Labor Arbiter
their consolidated complaint against Metrobank for underpayment of
retirement benefits and damages, asserting that pursuant to the 1998
Officers Benefits Memorandum, they were entitled to additional retirement
benefits. Patag, for his part, also claimed he was entitled to payment of his
1997 profit share and 1998 structural adjustment.

The Labor Arbiter rendered a decision, dismissing the complaint of


Patag and Flora. Patag and Flora filed an appeal with the NLRC. The Third
Division of the NLRC partially granted the appeal and directed Metrobank to
pay Patag and Flora their unpaid beneficial improvements under the 1998
Officers Benefits Memorandum. Aggrieved with the ruling of the NLRC,
Metrobank elevated the matter to the CA by way of a petition for certiorari.
The CA promulgated its assailed decision dismissing Metrobanks petition
and affirming the resolution of the NLRC. Petitioners subsequent motion for
reconsideration was denied by the CA.
Hence, the instant petition for review on certiorari under Rule 45 of the 1997
Rules of Civil Procedure.

ISSUE:
Whether respondents can still recover higher benefits under the 1998
Officers Benefits Memorandum despite the fact that they have compulsorily
retired prior to the issuance of said memorandum and did not meet the
condition therein requiring them to be employed as of June 15, 1998.

HELD:
Yes.
To be considered a company practice, the giving of the benefits should have
been done over a long period of time, and must be shown to have been
consistent and deliberate. The test or rationale of this rule on long practice
requires an indubitable showing that the employer agreed to continue giving

the benefits knowing fully well that said employees are not covered by the
law requiring payment thereof.
In other words, for over a decade, Metrobank has consistently, deliberately
and voluntarily granted improved benefits to its officers, after the signing of
each CBA with its rank and file employees, retroactive to January 1 st of the
same year as the grant of improved benefits and without the condition that
the officers should remain employees as of a certain date. This undeniably
indicates a unilateral and voluntary act on Metrobanks part, to give said
benefits to its officers, knowing that such act was not required by law or the
company retirement plan.
With regard to the length of time the company practice should have been
exercised to constitute voluntary employer practice which cannot be
unilaterally withdrawn by the employer, jurisprudence has not laid down any
hard and fast rule. In the case ofDavao Fruits Corporation v. Associated
Labor Unions, the company practice of including in the computation of the
13th-month pay the maternity leave pay and cash equivalent of unused
vacation and sick leave lasted for six (6) years. In another case,Tiangco v.
Leogardo, Jr., the employer carried on the practice of giving a fixed monthly
emergency allowance from November 1976 to February 1980, or three (3)
years and four (4) months. While in Sevilla Trading v. Semana, the employer
kept the practice of including non-basic benefits such as paid leaves for
unused sick leave and vacation leave in the computation of their 13th-month
pay for at least two (2) years. In all these cases, this Court held that the
grant of these benefits has ripened into company practice or policy which
cannot be peremptorily withdrawn. The common denominator in these cases
appears to be the regularity and deliberateness of the grant of benefits over a
significant period of time.