Sime Darby Pilipinas Inc.

, vs NLRC (1998) 289 SCRA 86

Facts:
Prior to the present controversy, all company factory workers in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid “on call” lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts, a
change in work schedule effective 14 September 1992 thus –
7:45 A.M. – 4:45 P.M. (Mon to Fri) 7:45 A.M. – 11:45 P.M. (Sat).
Coffee break time will be ten minutes only anytime between:
9:30 A.M. –10:30 A.M. and 2:30 P.M. –3:30 P.M.
Lunch break will be between: 12:00 NN –1:00 P.M. (Mon to Fri).

Excluded from the above schedule are the Warehouse and QA employees who are on shifting. Their work and break
time schedules will be maintained as it is now.
Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-minute
paid “on call” lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for unfair labor practice,
discrimination and evasion of liability pursuant to the resolution of this Court the Labor Arbiter dismissed the complaint on the
ground that the change in the work schedule and the elimination of the 30-minute paid lunch break of the factory workers
constituted a valid exercise of management prerogative and that the new work schedule, break time and one-hour lunch
break did not have the effect of diminishing the benefits granted to factory workers as the working time did not exceed eight
(8) hours.
Issue: WON the act of management in revising the work schedule of its employees and discarding their paid lunch break
constitutive of unfair labor practice.
Held: The revision of work schedule is a management prerogative and does not amount to unfair labor practice in discarding
the paid lunch break.
The right to fix the work schedules of the employees rests principally on their employer. In the instant case petitioner, as the
employer, cites as reason for the adjustment the efficient conduct of its business operations and its improved production. It
rationalizes that while the old work schedule included a 30-minute paid lunch break, the employees could be called upon to
do jobs during that period as they were “on call.” Even if denominated as lunch break, this period could very well be
considered as working time because the factory employees were required to work if necessary and were paid accordingly for
working.
With the new work schedule, the employees are now given a one-hour lunch break without any interruption from their
employer. For a full one-hour undisturbed lunch break, the employees can freely and effectively use this hour not only for
eating but also for their rest and comfort which are conducive to more efficiency and better performance in their work. Since
the employees are no longer required to work during this one-hour lunch break, there is no more need for them to be
compensated for this period. The Court agrees with the Labor Arbiter that the new work schedule fully complies with the
daily work period of eight (8) hours without violating the Labor Code. Besides, the new schedule applies to all employees in
the factory similarly situated whether they are union members or not.

San Juan de Dios Hospital vs NLRC (1997) G.R. 126383

Facts:
Petitioners, rank-and-file employees and members of San Juan de Dios Hospital Employees Association sent a 4 page letter
requesting and pleading for the expeditious implementation and payment by the respondent Hospital of the ’40 HOURS/5-
DAY WORKWEEK’ with compensable weekly two (2) days off provided for by Republic Act 5901 as clarified for enforcement
by the Secretary of Labor’s Policy Instructions No. 54 dated April 12, 1988.” Respondent hospital failed to give a favourable
response; thus, petitioners filed a complaint regarding their “claims for statutory benefits under the above-cited law and policy
issuance”. The Labor Arbiter dismissed the complaint which was also confirmed by NLRC, hence the petition under Rule 65
of the Rules of Court.
Issue: WON Policy Instructions No. 54 issued by then Labor Secretary Franklin Drilon is valid?
Held: It is invalid.
The Policy Instruction No. 54 relies and purports to implement Republic Act No. 5901, otherwise known as “An Act
Prescribing Forty Hours A Week Of Labor For Government and Private Hospitals Or Clinic Personnel”, but reliance to this RA
is misplaced since it has long been repealed with the passage of the Labor Code. Accordingly, only Article 83 of the Labor
Code which appears to have substantially incorporated or reproduced the basic provisions of Republic Act No. 5901 may
support Policy Instructions No. 54 on which the latter’s validity may be gauged.
What Article 83 merely provides are:  (1) the regular office hour of eight hours a day, five days per week for health personnel,
and (2) where the exigencies of service require that health personnel work for six days or forty-eight hours then such health
personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage for work on the sixth
day.  There is nothing in the law that supports then Secretary of Labor’s assertion that “personnel in subject hospitals and
clinics are entitled to a full weekly wage for seven (7) days if they have completed the 40-hour/5-day workweek in any given
workweek”.
Further, petitioners' position is also negated by the very rules and regulations promulgated by the Bureau of Labor Standards
which implement Republic Act No. 5901.  Pertinent portions of the implementing rules provided in Sections 1,7, and 15 of the
said Act.
If petitioners are entitled to two days off with pay, then there appears to be no sense at all why Section 15 of the
implementing rules grants additional compensation equivalent to the regular rate plus at least twenty-five percent thereof for
work performed on Sunday to health personnel, or an “additional straight-time pay which must be equivalent at least to the
regular rate” “[f]or work performed in excess of forty hours a week xxx.  Policy Instructions No. 54 to our mind unduly
extended the statute.  The Secretary of Labor moreover erred in invoking the “spirit and intent” of Republic Act No. 5901 and
Article 83 of the Labor Code for it is an elementary rule of statutory construction that when the language of the law is clear
and unequivocal, the law must be taken to mean exactly what it says.

Linton Commercial Co., vs Hellera (2007) G.R. 163147

Facts:
On 17 December 1997, Linton issued a memorandum addressed to its employees informing them of the company's decision
to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected its business
operations. Linton submitted an establishment termination report to the Department of Labor and Employment (DOLE)
regarding the temporary closure of the establishment covering the said period. The company's operation was to resume on 6
January 1998. On 7 January 1997, Linton issued another memorandum informing them that effective 12 January 1998, it
would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be
working on a rotation basis for three working days only instead for six days a week. On the same day, Linton submitted an
establishment termination report concerning the rotation of its workers. Linton proceeded with the implementation of the new
policy without waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal
reduction of workdays.
Issue: WON there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six
to three the number of working days with the employees working on a rotation basis.
Held: The compressed workweek arrangement was unjustified and illegal.
The Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when an employer
can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular
working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond
his control, such as when there is a substantial slump in the demand for his goods or services or when there is lack of raw
materials. Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it has
one main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of
working hours — that the company was suffering from losses.
Certainly, management has the prerogative to come up with measures to ensure profitability or loss minimization. However,
such privilege is not absolute. Management prerogative must be exercised in good faith and with due regard to the rights of
labor. As previously stated, financial losses must be shown before a company can validly opt to reduce the work hours of its
employees. However, to date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient
to justify the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article 283
(i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered, petitioners would end
up failing to meet the standards. On the one hand, Article 286 applies only when there is a bona fide suspension of the
employer's operation of a business or undertaking for a period not exceeding six (6) months. Records show that Linton
continued its business operations during the effectivity of the compressed workweek, which spanned more than the
maximum period. On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must
satisfy the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing the expected
losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to be forestalled, are proven
by sufficient and convincing evidence. Linton failed to comply with these standards.
 UNION OF FILIPRO EMPLOYEES vs. VICAR

Facts

On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the NLRC a petition for
declaratory relief seeking a ruling on its rights and obligations respecting claims of its monthly paid employees for holiday
pay.
Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for voluntary arbitration with
respondent Vivar as the voluntary arbitrator. Vivar rendered a decision directing Filipro to pay its monthly paid employees
holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such
other legal restrictions as are provided for in the Code.
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of
salesmen, sales representatives, truck drivers, merchandisers and medical representatives (hereinafter referred to as sales
personnel) from the award of the holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime,
night differential, vacation and sick leave benefits due to the use of 251 divisor.
Petitioner UFE answered that the award should be made effective from the date of effectivity of the Labor Code, that
their sales personnel are not field personnel and are therefore entitled to holiday pay, and that the use of 251 as divisor is an
established employee benefit which cannot be diminished.
Respondent Vivar issued an order declaring that:

1. the effectivity of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the
Labor Code
2. the company’s sales personnel are field personnel and, as such, are not entitled to holiday pay
3. with the grant of 10 days’ holiday pay, the divisor should be changed from 251 to 261 and ordered the
reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor

Both parties filed motions for partial reconsideration but Vivar forwarded the case to the NLRC which issued a
resolution remanding the case to the respondent arbitrator on the ground that it has no jurisdiction to review decisions in
voluntary arbitration. However, Vivar refused to take cognizance of the case reasoning that he had resigned from service.

Issue

Whether or not Nestle’s sales personnel are entitled to holiday pay.

Ruling

The Court ruled that the company’s sales personnel are not entitled to holiday pay. Under Article 82, field personnel
are not entitled to holiday pay. Said article defines field personnel as “non-agritultural 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.”
The controversy centers on the interpretation of the clause “whose actual hours of work in the field cannot be
determined with reasonable certainty.” 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.
As disposed by the respondent arbitrator, the period between 8:00 a.m. and 4:00 or 4:30 p.m. comprises their hours
of work in the field, the extent or scope and result of which are subject to their individual capacity and industry and which
“cannot be determined with reasonable certainty.” This is the reason why effective supervision over field work of salesmen
and medical representatives, truck drivers and merchandisers is practically a physical impossibility. Consequently, they are
excluded from the ten holidays with pay award.
Moreover, the requirement that “actual hours of work in the field cannot be determined with reasonable certainty” must be
read in conjunction with Rule IV, Book III of the Implementing Rules which provides:

Sec. 1. Coverage — This rule shall apply to all employees except:

xxx xxx xxx
(e) Field personnel and other employees whose time and performance is unsupervised by the employer . . .

Contrary to the contention of the petitioner that the rule added another element not found in the law, the Court finds that
the aforementioned rule did not add another element to the Labor Code definition of field personnel. The clause “whose time
and performance is unsupervised by the employer” did not amplify but merely interpreted and expounded the clause “whose
actual hours of work in the field cannot be determined with reasonable certainty.” Hence, in deciding whether or not an
employee’s actual working hours in the field can be determined with reasonable certainty, query must be made as to whether
or not such employee’s time and performance is constantly supervised by the employer.
 MERCIDAR FISHING CORP. vs. NATIONAL LABOR RELATIONS COMMISSION

Facts
This case originated from a complaint filed on September 20, 1990 by private respondent Fermin Agao, Jr. against
petitioner for illegal dismissal, violatiion 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, 1998. He complained that
he had been constructively dismissed by the petitioner when the latter refused him assignments aboard its 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 enf 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 certificateon 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.

Ruling

Art. 82 of the Labor Code provides: “The provisions of this title[Working Conditions and Rest Periods] shall apply to all
eployees in all establishments and undertakings whether to profit or not, but not to govenrment employees, field personnel,
members of the family of the employer who are dependent on him for support, domestic helpers, persons in personal service
of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations.”
“Field personnel” Shall refer to non-agricultural employees who regularly perform their duties away from the principal
place of business or branch ofiice of the employer and whose actual hours of workin the field cannot be determined with
reasonable certatinty.
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 businessoffices,
the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner
through the vessel’s patron or master.
 NATIONAL SUGAR REFINERY CORP. vs. NATIONAL LABOR RELATIONS COMMISSION

Facts

Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully owned and controlled
by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was
privatized on April 11, 1992 pursuant to Proclamation No. 50.
Private respondent union represents the former supervisors of the NASUREFCO Batangas Sugar Refinery, namely, the
Technical Assistant to the Refinery Operations Manager, Shift Sugar Warehouse Supervisor, Senior Financial/Budget
Analyst, General Accountant, Cost Accountant, Sugar Accountant, Junior Financial/Budget Analyst, Shift Boiler Supervisor,,
Shift Operations Chemist, Shift Electrical Supervisor, General Services Supervisor, Instrumentation Supervisor, Community
Development Officer, Employment and Training Supervisor, Assistant Safety and Security Officer, Head and Personnel
Services, Head Nurse, Property Warehouse Supervisor, Head of Inventory Control Section, Shift Process Supervisor, Day
Maintenance Supervisor and Motorpool Supervisor.
On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from rank-and-file
to department heads which was designed to rationalized the duties and functions of all positions, reestablish levels of
responsibility, and recognize both wage and operational structures. Jobs were ranked according to effort, responsibility,
training and working conditions and relative worth of the job. As a result, all positions were re-evaluated, and all employees
including the members of respondent union were granted salary adjustments and increases in benefits commensurate to
their actual duties and functions.
The Courts glean from the records that for about ten years prior to the JE Program, the members of respondent
union were treated in the same manner as rank-and file employees. As such, they used to be paid overtime, rest day and
holiday pay pursuant to the provisions of Articles 87, 93 and 94 of the Labor Code as amended. On May 11, 1990, petitioner
NASUREFCO recognized herein respondent union, which was organized pursuant to Republic Act NO. 6715 allowing
supervisory employees to form their own unions, as the bargaining representative of all the supervisory employees at the
NASUREFCO Batangas Sugar Refinery. Two years after the implementation of the JE Program, specifically on June 20,
1990, the members of herein respondent union filed a complainant with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100 of the Labor Code.

Issue

Whether or not the members of respondent union are entitled to overtime, rest day and holiday pay.

Ruling

The members of the union are not entitled to overtime, rest and holiday pay since they fall within the classification of
managerial employees which makes them a part of the exempted employees.
It must of necessity be ascertained first whether or not the union members, as supervisory employees, are to be considered
as officers or members of the managerial staff who are exempt from the coverage of Article 82 of the Labor Code.
It is not disputed that the members of respondent union are supervisory employees, as defined employees, as
defined under Article 212(m), Book V of the Labor Code on Labor Relations, which reads: “’Managerial employee’ is one who
is vested with powers or prerogatives to lay down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharged, assign or discipline employees. Supervisory employees are those who, in the interest of the employer
effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature
but requires the use of independent judgment. All employees not falling within any of those above definitions are considered
rank-and-file employees of this Book.”
Article 82 of the Labor Code states: “The provisions of this title shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, managerial employees, field personnel, members of
the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary of Labor in Appropriate regulations.”
As used herein, ‘managerial employees’ refer to those whose primary duty consists of the management of the establishment
in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial
staff.
They are clearly officers or members of the managerial staff because they meet all the conditions prescribed by law
and, hence, they are not entitled to overtime, rest day and supervisory employees under Article 212 (m) should be made to
apply only to the provisions on Labor Relations, while the right of said employees to the questioned benefits should be
considered in the light of the meaning of a managerial employee and of the officers or members of the managerial staff, as
contemplated under Article 82 of the Code and Section 2, Rule I Book III of the implementing rules.
In other words, for purposes of forming and joining unions, certification elections, collective bargaining, and so forth,
the union members are supervisory employees. In terms of working conditions and rest periods and entitlement to the
questioned benefits, however, they are officers or members of the managerial staff, hence they are not entitled thereto.
The union members will readily show that these supervisory employees are under the direct supervision of their
respective department superintendents and that generally they assist the latter in planning, organizing, staffing, directing,
controlling communicating and in making decisions in attaining the company’s set goals and objectives. These supervisory
employees are likewise responsible for the effective and efficient operation of their respective departments.
It is apparent that the members of respondent union discharge duties and responsibilities which ineluctably qualify them as
officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the aforestated Rules to Implement the
Labor Code
Under the facts obtaining in this case, The Court is constrained to agree with petitioner that the union members
should be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of
Article 82. Perforce, they are not entitled to overtime, rest day and holiday.
 SALAZAR vs. NATIONAL LABOR RELATIONS COMMISSION

Facts

On April 1990, private respondent employed petitioner as construction/project engineer for the construction of the
Monte de Piedad building in Cubao, Quezon City. Allegedly, by virtue of an oral contract, petitioner would also receive a
share in the profits after completion of the project and that petitioner's services in excess of eight (8) hours on regular days
and services rendered on weekends and legal holidays shall be compensable overtime at the rate of P27.85 per hour.
On 16 April 1991, petitioner received a memorandum issued by private respondent's project manager, Engr. Nestor
A. Delantar informing him of the termination of his services effective on 30 April 1991.
On 13 September 1991, petitioner filed a complaint against private respondent for illegal dismissal, unfair labor
practice, illegal deduction, non-payment of wages, overtime rendered, service incentive leave pay, commission, allowances,
profit-sharing and separation pay with the NLRC-NCR Arbitration Branch, Manila.

Issue

Whether or not petitioner is entitled to separation pay.

Ruling

The petitioner is not entitled to separation pay. Petitioner admitted that his job was to supervise the laborers in the
construction project. Hence, although petitioner cannot strictly be classified as a managerial employee under Art. 82 of the
Labor Code, and sec. 2(b), Rule 1, Book III of the Omnibus Rules Implementing the Labor Code, nonetheless he is still not
entitled to payment of the aforestated benefits because he falls squarely under another exempt category — "officers or
members of a managerial staff" as defined under sec. 2(c) of the abovementioned implementing rules:
SECTION 2. Exemption. — The provisions of this Rule shall not apply to the following persons if they qualify for
exemption under the condition set forth herein:
(c) Officers or members of a managerial staff if they perform the following duties and responsibilities:
(1) The primary duty consists of the performance of work directly related to management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) [i] Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or
[ii] execute under general supervision work along specialized or technical lines requiring special training,
experience, or knowledge; or
[iii] execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a work-week to activities which are not directly
and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.
The petitioner was paid overtime benefits does not automatically and necessarily denote that petitioner is entitled to
such benefits. Art. 82 of the Labor Code specifically delineates who are entitled to the overtime premiums and service
incentive leave pay provided under Art. 87, 93, 94 and 95 of the Labor Code and the exemptions thereto. As previously
determined petitioner falls under the exemptions and therefore has no legal claim to the said benefits. It is well and good that
petitioner was compensated for his overtime services. However, this does not translate into a right on the part of petitioner to
demand additional payment when, under the law, petitioner is clearly exempted there from.
 PENARANDA vs. BAGANGA PLYWOOD CORP.

Facts

Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation
(BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001, Peñaranda filed a Complaint
for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC.
After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit
supporting documents.
Peñaranda alleges that he was employed by respondent Banganga on March 15, 1999 with a monthly salary of
P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. he alleges that
his services were terminated without the benefit of due process and valid 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 claimed
for payment of damages and attorney’s fees having been forced to litigate the present complaint.
Respondent BPC is a domestic corporation duly organized and existing under Philippine laws and is represented
herein by its General Manager HUDSON CHUA, the individual respondent. Respondents allege that complainant’s
separation from service was done pursuant to Art. 283 of the Labor Code. The respondent BPC was on temporary closure
due to repair and general maintenance and it applied for clearance with the Department of Labor and Employment, Regional
Office No. XI, to shut down and to dismiss employees. And due to the insistence of herein complainant he was paid his
separation benefits.
Consequently, when respondent BPC partially reopened in January 2001, Peñaranda failed to reapply. The labor
arbiter ruled that there was no illegal dismissal and that petitioner’s Complaint was premature because he was still employed
by BPC. Petitioner’s money claims for illegal dismissal was also weakened by his quitclaim and admission during the
clarificatory conference that he accepted separation benefits, sick and vacation leave conversions and thirteenth month pay.

Issue

Whether or not Peñaranda is a regular, common employee entitled to monetary benefits under Art. 82 of the Labor
Code and is entitled to the payment of overtime pay and other monetary benefits.

Ruling

The petitioner is not entitled to overtime pay and other monetary benefits. 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 member of the managerial staff
are not entitled to the provisions of law on labor standards.
The Implementing Rules of the Labor Code define members of a managerial staff as those with the following duties
and responsibilities:

(1) The primary duty consists of the performance of work directly related to management policies of the
employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to activities which are not
directly and closely related to the performance of the work described in paragraphs (1), (2), and (3) above.”

The petitioner’s work involves:

1. To supply the required and continuous steam to all consuming units at minimum cost.
2. To supervise, check and monitor manpower workmanship as well as operation of boiler and accessories.
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel.
5. To train new employees for effective and safety white working.
6. Recommend parts and suppliers purchases. acEHSI
7. To recommend personnel actions such as: promotion, or disciplinary action.
8. To check water from the boiler, feedwater and softener, regenerate softener if beyond hardness limit.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to time.” 34
 The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that petitioner was a member of the
managerial staff. His duties and responsibilities conform to the definition of a member of a managerial staff under the
Implementing Rules.
Petitioner supervised the engineering section of the steam plant boiler. His work involved overseeing the operation
of the machines and the performance of the workers in the engineering section. This work necessarily required the use of
discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As supervisor, petitioner is
deemed a member of the managerial staff.
Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper, he stated that he was the
foreman responsible for the operation of the boiler. The term foreman implies that he was the representative of management
over the workers and the operation of the department. Petitioner’s evidence also showed that he was the supervisor of the
steam plant. His classification as supervisors is further evident from the manner his salary was paid. He belonged to the
10% of respondent’s 354 employees who were paid on a monthly basis; the others were paid only on a daily basis.
 AUTOBUS TRANSPORT SYSTEM vs. BAUTISTA

Facts

Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May 1995,
as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via
Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross income per travel, on a twice a
month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was
driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve
without giving any warning. Respondent averred that the accident happened because he was compelled by the management
to go back to Roxas, Isabela, although he had not slept for almost twenty-four (24) hours, as he had just arrived in Manila
from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent’s pleas for
reconsideration, the same was ignored by management. After a month, management sent him a letter of termination. Thus,
on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13 th
month pay and service incentive leave pay against Autobus.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter
decided that the complaint be dismissed where the respondent must pay to the complainant

Issue

Whether or not respondent is entitled to service incentive leave.

Ruling

The respondent is entitled to service incentive leave. The disposition of the issue revolves around the proper
interpretation of Article 95 of the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE, (a) Every employee who has
rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall apply to all employees
except: (d) 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;
A careful examination of said provisions of law will result in the conclusion that the grant of service incentive leave
has been delimited by the Implementing Rules and Regulations of the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the Implementing Rules, Service Incentive Leave shall not apply to
employees classified as “field personnel.”
The phrase “other employees whose performance is unsupervised by the employer” must not be understood as a separate
classification of employees to which service incentive leave shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor Code as those “whose actual hours of work in the field
cannot be determined with reasonable certainty.”
The same is true with respect to the phrase “those who are engaged on task or contract basis, purely commission
basis.” Said phrase should be related with “field personnel,” applying the rule on ejusdem generis that general and unlimited
terms are restrained and limited by the particular terms that they follow. Hence, employees engaged on task or contract basis
or paid on purely commission basis are not automatically exempted from the grant of service incentive leave, unless, they fall
under the classification of field personnel.
What must be ascertained in order to resolve the issue of propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel. 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. This definition is
further elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to Philippine Technical-Clerical Commercial
Employees Association 10 which states that:
As a general rule, field personnel are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days of work cannot
be determined with reasonable certainty; hence, they are paid specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away from the principal office of the employee.
At this point, it is necessary to stress that the definition of a “field personnel” is not merely concerned with the
location where the employee regularly performs his duties but also with the fact that the employee’s performance is
unsupervised by the employer. As discussed above, 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. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if
actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be
made as to whether or not the employee’s time and performance are constantly supervised by the employer. Respondent is
not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of
petitioner’s business. Accordingly, respondent is entitled to the grant of service incentive leave.
The clear policy of the Labor Code is to grant service incentive leave pay to workers in all establishments, subject to
a few exceptions. Section 2, Rule V, Book III of the Implementing Rules and Regulations provides that “every employee who
has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay.”
Service incentive leave is a right which accrues to every employee who has served “within 12 months, whether
continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular
holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment
contracts, is less than 12 months, in which case said period shall be considered as one year.” It is also “commutable to its
money equivalent if not used or exhausted at the end of the year.” In other words, an employee who has served for one year
is entitled to it. He may use it as leave days or he may collect its monetary value. To limit the award to three years, as the
solicitor general recommends, is to unduly restrict such right.

ROQUE S. DUTERTE versus KINGSWOOD TRADING CO., INC., FILEMON LIM and NATIONAL LABOR RELATIONS
COMMISSION
Facts:
Petitioner was hired as truck/trailer driver by respondent Kingswood Trading Company, Inc. (KTC) of which co-
respondent Filemon Lim is the President. On November 8, 1998, petitioner had his first heart attack and was confined for two
weeks at the Philippine Heart Center (PHC). This was confirmed by respondent KTC which admitted that petitioner was
declared on sick leave with corresponding notification. A month later, petitioner returned to work armed with a medical
certificate signed by his attending physician at the PHC, attesting to petitioner’s fitness to work. However, said certificate was
not honored by the respondents who refused to allow petitioner to work. In February 1999, petitioner suffered a second heart
attack and was again confined at the PHC. Upon release, he stayed home and spent time to recuperate.
In June 1999, petitioner attempted to report back to work but was told to look for another job because he was unfit.
Respondents refused to declare petitioner fit to work unless physically examined by the company physician. On November
11, 1999, petitioner filed against his employer a complaint for illegal dismissal and damages. The labor arbiter found for the
petitioner. However, while categorically declaring that petitioner’s dismissal was illegal, the labor arbiter, instead of applying
Article 279 [5] of the Labor Code on illegal dismissals, applied Article 284 on Disease as ground for termination on the
rationale that since the respondents admitted that petitioner could not be allowed back to work because of the latter’s
disease, the case fell within the ambit of Article 284. On respondents’ appeal, the NLRC, in its Resolution of April 24, 2002,
set aside the labor arbiter’s decision, ruling that Article 284 of the Labor Code has no application to this case, there being
“no illegal dismissal to speak of.” The CA upheld the NLRC Resolution, saying that the Commission committed no grave
abuse of discretion in holding that petitioner was not illegally dismissed and could not be granted any relief.
Issue:
Would the dismissal of an employee on the ground of disease under the said Article 284 still require the employer to
present a certification from a competent public health authority that the disease is of such a nature that it could not be cured
within a period of six months even with proper medical treatment?
Held:

The Court disagrees with the NLRC and CA. The law is unequivocal: the employer, before it can legally dismiss its employee
on the ground of disease, must adduce a certification from a competent public authority that the disease of which its
employee is suffering is of such nature or at such a stage that it cannot be cured within a period of six months even with
proper treatment. Here, the record does not contain the required certification. And when the respondents asked the
petitioner to look for another job because he was unfit to work, such unilateral declaration, even if backed up by the findings
of its company doctors, did not meet the quantum requirement mandated by the law, i.e., there must be a certification by a
competent public authority. All told, we rule and so hold that petitioner’s dismissal did not comply with both the substantive
and procedural aspects of due process. Clearly, his dismissal is tainted with invalidity.
ULIO N. CAGAMPAN ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION AND ACE MARITIME AGENCIES,
INC. G.R. No.: G.R. No. 85122 - 24 Date: March 22, 1991 Petitioner: Julio N. Cagampan Respondent: NLRC And
Ace Maritime Agencies, Inc. Ponente: J. Paras
Facts:
Petitioners, all seamen, entered into separate contracts of employment with the Golden Light Ocean Transport, Ltd; through
its local agency, the Ace Maritime Agencies, Inc. Petitioners worked from May 7, 1985 until July 12, 1986. Later, petitioners
collectively and / or individually filed complaints for non – payment of overtime pay, vacation pay and terminal pay against
private respondents. They also claimed that they signed a blank contract. Also, although they agreed to work on board the
vessel Rio Colorado managed by Golden Light Ocean Transport, Ltd., the vessel they really boarded was MV ‘SOIC I’
managed by Columbus Navigation. Two (2) petitioners argued that although they were employed as Ordinary Seaman, they
actually performed the work and duties of Able Seaman. Hence, this petition.
Issue: Whether or not petitioners should be entitled to overtime pay?
Held:
No. The Court ruled that entitlement to overtime pay must first be established by proof that said overtime work was actually
performed, before an employee way avail of said benefit. The contract provision means that the fixed overtime pay 30%
would be the basis for computing the overtime pay if and when overtime work would be rendered. For the employer to give
him overtime pay for extra bonus hours when he might be sleeping or attending to his personal chores or even just lulling
away his time would be extremely unfair and unreasonable. The criterion is determining whether or not seamen are entitled
to overtime pay is not, whether they were on board and cannot leave the ship beyond the regular 8 – working hours a day,
but whether they actually rendered service in excess of said number of hours. The decision of the NLRC is affirmed with the
modification that petitioners Cagampan and Vicera are awarded their leave pay according to the terms of contract.

Stolt-Nielsen Marine Services v. NLRC

STOLT-NIELSEN MARINE SERVICES V. NLRC

258 SCRA 643
ROMERO, J.
FACTS
1. Respondent Meynardo J. Hernandez was hired by Stolt-Nielsen Marine Services
(Phils.) Inc. as radio officer on board M/T Stolt Condor for a period of ten months. He
boarded the vessel on January 20, 1990.
2. On April 26, 1990, the ship captain ordered private respondent to carry the baggage
of crew member Lito Loveria who was being repatriated. He refused to obey the
order out of fear in view of the utterance of said crew member "makakasaksak ako"
and also because he did not perceive such task as one of his duties as radio officer.
3. As a result of such refusal, private respondent was ordered to disembark on April 30,
1990 and was himself repatriated on May 15, 1990. He was paid his salaries and
wages only up to May 16, 1990.
4. Private respondent filed before public respondent POEA a complaint for illegal
dismissal and breach of contract paying for, among other things, payment of salaries,
wages, overtime and other benefits due him for the unexpired portion of the contract
which was six (6) months and three (3) days.
5. Petitioner in its answer alleged that private respondent refused to follow the "request"
of the master of the vessel to explain to Lolito Loveria, the reason for the latter's
repatriation and to assist him in carrying his baggage, all in violation of Article XXIV,
Section I of the Collective Bargaining Agreement (CBA) and the POEA Standard
Contract. Hence, private respondent, after being afforded the opportunity to explain
his side, was dismissed for gross insubordination and serious misconduct.
6. Respondent denied that the master of the vessel requested him to explain to Loveria
the reason for the latter's repatriation.
7. Thereafter, POEA Administrator rendered an award in favor of private respondent.
8. Aggrieved, petitioner Stolt-Nielsen appealed to the National Labor Relations
Commission (NLRC). The NLRC concurred with the POEA Administrator in ruling
that private respondent, having been illegally dismissed, was, therefore, entitled to
the monetary award.
9. It further stated that private respondent's duty as a radio officer or radio operator
does not include the carrying of the luggage of any seaman or explaining to said
seaman the reason for his repatriation. Thus, concluded the NLRC, his termination
on this ground was not proper and, therefore, he had every right to the monetary
award. The NLRC likewise granted private respondent's claim for fixed overtime pay
and attorney's fees.
ISSUES
1. Whether or not private respondent was legally dismissed on the ground of gross
insubordination and serious misconduct.
2. Whether or not private respondent was entitled to the award of over-time pay.
HELD
1. YES. Willful disobedience of the employer's lawful orders, as a just cause for the
dismissal of an employee, envisages the concurrence of at least two (2) requisites.
The employee's assailed conduct must have been willful or intentional, the
willfulness being characterized by a "wrongful and perverse attitude", and the order
violated must have been reasonable, lawful, made known to the employee and must
pertain to the duties which he had been engaged to discharge. The Court agrees
that by virtue of the aforementioned CBA and POEA Standard Contract provisions
cited by petitioner, private respondent is indeed bound to obey the lawful commands
of the captain of the ship, but only as long as these pertain to his duties. The order to
carry the luggage of a crew member, while being lawful, is not part of the duties of a
radio officer. Assuming arguendo that lawful commands of a ship captain are
supposed to be obeyed by the complement of a ship, private respondent's so-called
CSB DIGESTS
LABOR STANDARDS LAW
- 18 -That in all things, God may be glorified.
"act of disobedience" does not warrant the supreme penalty of dismissal. In instant
case, the POEA found that private respondent's actuation which led to his dismissal
was the first and only act of disobedience during his service with the petitioner,
Furthermore, examination of the circumstances surrounding private respondent's
disobedience shows that the repatriated seaman's utterance of "makakasaksak ako"
so instilled fear in private respondent that he was deterred from carrying out the
order of the captain. Hence, his act could not be rightfully characterized as one
motivated by a "wrongful and perverse attitude." Besides, said incident posed no
serious or substantial danger to the well-being of his other co-employees or of the
general public doing business with petitioner employer, neither did such behavior
threaten substantial prejudice to the business of his employer.
2. NO. The Court reiterated that the rendition of overtime work and the submission of
sufficient proof that said work was actually performed are conditions to be satisfied
before a seaman could be entitled to overtime pay which should be computed on the
basis of 30% of the basic monthly salary. In short, the contract provision guarantees
the right to overtime pay but the entitlement to such benefit must first be established.
Realistically speaking, a seaman, by the very nature of his job, stays on board a ship
or vessel beyond the regular eight-hour work schedule. For the employer to give him
overtime pay for the extra hours when he might be sleeping or attending to his
personal chores or even just lulling away his time would be extremely unfair and
unreasonable.
 LAGATIC VS. NLRC ET AL
G.R. No. 121004
JAN. 28, 1998

FACTS: Petitioner Lagatic was employed by Cityland, first as a probationary sales agent, and later on as a marketing
specialist. He was tasked with soliciting sales for the company, with the corresponding duties of accepting call-ins, referrals,
and making client calls and cold calls. Cold calls refer to the practice of prospecting for clients through the telephone
directory. Cityland, believing that the same is an effective and cost-efficient method of finding clients, requires all its
marketing specialists to make cold calls. Likewise, in order to assess cold calls made by the sales staff, as well as to
determine the results thereof, Cityland requires the submission of daily progress reports on the same.

Cityland issued a written reprimand to petitioner for his failure to submit cold call reports for some time. This notwithstanding,
petitioner again failed to submit cold call reports. Petitioner was required to explain his inaction, with a warning that further
non-compliance would result in his termination from the company. In a reply, petitioner claimed that the same was an honest
omission brought about by his concentration on other aspects of his job. Cityland found said excuse inadequate and
suspended him for three days, with a similar warning.

Notwithstanding the aforesaid suspension and warning, petitioner again failed to submit cold call reports. He was verbally
reminded to submit the same and was even given up a due date to do so. Instead of complying with said directive, petitioner
wrote a note, "TO HELL WITH COLD CALLS! WHO CARES?" and exhibited the same to his co-employees.

Petitioner received a memorandum requiring him to explain why Cityland should not make good its previous warning for his
failure to submit cold call reports, as well as for issuing the written statement aforementioned. He sent a letter-reply alleging
that his failure to submit cold call reports should trot be deemed as gross insubordination. He denied any knowledge of the
damaging statement allegedly made by him.

Finding petitioner guilty of gross insubordination, Cityland served a notice of dismissal upon him on February 26, 1993.

Aggrieved by such dismissal, petitioner filed a complaint against Cityland for illegal dismissal, illegal deduction,
underpayment, overtime and rest day pay, damages and attorney's fees. The labor arbiter dismissed the petition for lack of
merit. On appeal, the same was affirmed by the NLRC; hence the present recourse.

ISSUE: Petitioner raises the following issues:

1. WON RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN NOT FINDING THAT PETITIONER WAS
ILLEGALLY DISMISSED;

2. WON RESPONDENT NLRC GRAVELY ABUSED ITS DISCRETION IN RULING THAT PETITIONER IS NOT ENTITLED
TO SALARY DIFFERENTIALS, BACKWAGES, SEPARATION PAY, OVERTIME PAY, REST DAY PAY, UNPAID
COMMISSIONS, MORAL AND EXEMPLARY DAMAGES AND ATTORNEY'S FEES.

HELD:

1. To constitute a valid dismissal from employment, two requisites must be met, namely:
(1) the employee must be afforded due process, and
(2) the dismissal must be for a valid cause

Petitioner loses sight of the fact that "(e)xcept as provided for, or limited by, special laws, an employer is free to regulate,
according to his discretion and judgment, all aspects of employment." Employers may, thus, make reasonable rules and
regulations for the government of their employees, and when employees, with knowledge of an established rule, enter the
service, the rule becomes a part of the contract of employment. It is also generally recognized that company policies and
regulations, unless shown to be grossly oppressive or contrary to law, are generally valid and binding on the parties and must
be complied with. "Corollarily, an employee may be validly dismissed for violation of a reasonable company rule or regulation
adopted for the conduct of the company business. An employer cannot rationally be expected to retain the employment of a
person whose . . . lack of regard for his employer's rules . . . has so plainly and completely been bared." Petitioner's
continued infraction of company policy requiring cold call reports, as evidenced by the 28 instances of non-submission of
aforesaid reports, justifies his dismissal.

Moreover, petitioner made it worse for himself when he wrote the statement, "TO HELL WITH COLD CALLS! WHO
CARES?" When required to explain, he merely denied ally knowledge of the same. Cityland, on the other hand, submitted
the affidavits of his co-employees attesting to his authorship of the same. Petitioner's only defense is denial. The rule,
however, is that denial, if unsubstantiated by clear and convincing evidence, is negative and self-serving evidence which has
no weight in law.
Based on the foregoing, we find petitioner guilty of willful disobedience. Willful disobedience requires the concurrence of at
least two requisites:

a. the employee's assailed conduct must have been willful or intentional, the willfulness being characterized by a wrongful
and perverse attitude; and
b. the order violated must have been reasonable, lawful, made known to the employee and must pertain to the duties which
he had been engaged to discharge

2. With the finding that petitioner's dismissal was for a just and valid cause, his claims for moral and exemplary damages,
as well as attorney's fees, must fail.

Also, petitioner failed to show his entitlement to overtime and rest day pay due, to the lack of sufficient evidence as to the
number of days and hours when he rendered overtime and rest day work. Entitlement to overtime pay must first be
established by proof that said overtime work was actually performed, before an employee may avail of said benefit.

NOTES:

1. There is no law which requires employers to pay commissions, and when they do so, as stated in the letter-opinion of the
DOLE dated February 19, 1993, "there is no law which prescribes a method for computing commissions. The determination
of the amount of commissions is the result of collective bargaining negotiations, individual employment contracts or
established employer practice." Since the formula for the computation of commissions was presented to and accepted by
petitioner, such prescribed formula is in order. As to the allegation that said formula diminishes the benefits being received by
petitioner whenever there is a wage increase, it must be noted that his commissions are not meant to be in a fixed amount. In
fact, there was no assurance that he would receive any commission at all. Non-diminution of benefits, as applied here,
merely means that the company may not remove the privilege of sales personnel to earn a commission, not that they are
entitled to a fixed amount thereof.

2. In addition to the above, the labor arbiter and the NLRC sanctioned Cityland’s practice of offsetting rest day or holiday
work with equivalent time on regular workdays on the ground that the same is authorized by Department Order 21, Series of
1990. As correctly pointed out by petitioner, said D.O. was misapplied in this case. The D.O. involves the shortening of the
workweek from six days to five days but with prolonged hours on those five days. Under this scheme, non-payment of
overtime premiums was allowed in exchange for longer weekends for employees. In the instant case, petitioner's workweek
was never compressed. Instead, he claims payment for work over and above his normal 5 1/2 days of work in a week.
Applying by analogy the principle that overtime cannot be offset by undertime, to allow off-setting would prejudice the worker.
He would be deprived of the additional pay for the rest day work he has rendered and which is utilized to offset his equivalent
time off on regular workdays. To allow Cityland to do so would be to circumvent the law on payment of premiums for rest day
and holiday work.

Bisig Manggagawa sa Tryco vs NLRC (2008) G.R. 151309

Facts:
Tryco and the petitioners signed separate Memoranda of Agreement (MOA), providing for a compressed workweek schedule
to be implemented in the company effective May 20, 1996. The MOA was entered into pursuant to Department of Labor and
Employment Department Order (D.O.) No. 21, Series of 1990, Guidelines on the Implementation of Compressed Workweek.
As provided in the MOA, 8:00a.m. to 6:12p.m., from Monday to Friday, shall be considered as the regular working hours, and
no overtime pay shall be due and payable to the employee for work rendered during those hours. The MOA specifically
stated that the employee waives the right to overtime pay for work rendered after 5p.m. until 6:12p.m. from Monday to Friday
considering that the compressed workweek schedule is adopted in lieu of the regular workweek schedule which also consists
of 46 hours. However, should an employee be permitted or required to work beyond 6:12p.m., such employee shall be
entitled to overtime pay.
Tryco informed the Bureau of Working Conditions of the Department of Labor and Employment of the implementation of a
compressed workweek in the company. In January 1997, BMT and Tryco negotiated for the renewal of their collective
bargaining agreement (CBA) but failed to arrive at a new agreement.
Issue: WON the MOA providing for compressed workweek is unenforceable as it is contrary to law.
Held: The MOA is enforceable and binding against the petitioner.
Where it is shown that the person making the waiver did so voluntarily, with full understanding of what he was doing, and the
consideration for the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding
undertaking. Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the
interest of the employees in the implementation of a compressed workweek scheme:
1. The employees voluntarily agree to work more than eight (8) hours a day the total in a week of which shall not
exceed their normal weekly hours of work prior to adoption of the compressed workweek arrangement.
 2. There will not be any diminution whatsoever in the weekly or monthly take-home pay and fringe benefits of the
employees.
3. If an employee is permitted or required to work in excess of his normal weekly hours of work prior to the adoption of
the compressed workweek scheme, all such excess hours shall be considered overtime work and shall be
compensated in accordance with the provisions of the Labor Code or applicable CBA.
4. Appropriate waivers with respect to overtime premium pay for work performed in excess of eight (8) hours a day
may be devised by the parties to the agreement.
5. The effectivity and implementation of the new working time arrangement shall be by agreement of the parties.

Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of a five-day
workweek, there is no room for interpretation and its terms should be implemented as they are written.

R&E Transport vs Latag (2004) G.R. 155214

Facts:
Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961. When La Mallorca ceased from business
operations, Latag transferred to R & E Transport, Inc. He was receiving an average daily salary of five hundred pesos
(P500.00) as a taxi driver. Latag got sick in January 1995 and was forced to apply for partial disability with the SSS, which
was granted. When he recovered, he reported for work in September 1998 but was no longer allowed to continue working on
account of his old age. Latag thus asked Felix Fabros, the administrative officer of [petitioners], for his retirement pay
pursuant to Republic Act 7641 but he was ignored.
On December 21, 1998, Latagfiled a case for payment of his retirement pay before the NLRC. Latag however died on April
30, 1999. Subsequently, his wife, Avelina Latag, substituted him. On January 10, 2000, the Labor Arbiter rendered a decision
in favor of Latag.
Issue: WON Latag is entitled to retirement benefits considering she signed a waiver of quitclaim.
Held: The respondent is entitled to retirement benefits despite of the waiver of quitclaims.
The Quitclaim and Waiver signed by Respondent Latag, the CA committed no error when it ruled that the document was
invalid and could not bar her from demanding the benefits legally due her husband. This is not say that all quitclaims are
invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and benefits, and look with disfavor upon
quitclaims and waivers that bargain these away.
Undisputably, Pedro M. Latag was credited with 14 years of service with R & E Transport, Inc. Article 287 of the Labor Code,
as amended by Republic Act No. 7641, 30 provides: Retirement. — In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or
more, but not beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has served at least
five (5) years in said establishment, may retire and shall be entitled to retirement pay equivalent to at least one-half (1/2)
month salary for every year of service, a fraction of at least six (6) months being considered as one whole year. Unless the
parties provide for broader inclusions, the term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of
the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves
The rules implementing the New Retirement Law similarly provide the above-mentioned formula for computing the one-half
month salary. Since Pedro was paid according to the "boundary" system, he is not entitled to the 13th month 32 and the
service incentive pay; hence, his retirement pay should be computed on the sole basis of his salary.
It is accepted that taxi drivers do not receive fixed wages, but retain only those sums in excess of the "boundary" or fee they
pay to the owners or operators of their vehicles. Thus, the basis for computing their benefits should be the average daily
income.

Reyes vs NLRC (2007) G.R. 160233

Facts:
Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12, 1977. He was
eventually appointed as unit manager of Sales Department-South Mindanao District, a position he held until his retirement on
November 30, 1997. Thereafter, he received a letter regarding the computation of his separation pay. Insisting that his
retirement benefits and 13th month pay must be based on the average monthly salary of P42,766.19, which consists of
P10,919.22 basic salary and P31,846.97 average monthly commission, petitioner refused to accept the check issued by
private respondent in the amount of P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC for
retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves, financial assistance, service incentive leave
pay, damages and attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators, Inc. v.
National Labor Relations Commission, wherein the Court held that commissions earned by salesmen form part of their basic
salary. Private respondent counters that petitioner knew that the overriding commission is not included in the basic salary
because it had not been considered as such for a long time in the computation of the 13th month pay, leave commissions,
absences and tardiness.
Issue: WON the average monthly sales commission should be included in the computation of his retirement benefits and 13 th
month pay.
Held: Average monthly sales commission should not be included in the computation of his retirement benefits and 13 th month
pay.
This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-determined percentage of
the selling price of the goods sold by each salesman, were properly included in the term basic salary for purposes of
computing the 13th month pay. The salesmen's commission are not overtime payments, nor profit-sharing payments nor any
other fringe benefit but a portion of the salary structure which represents an automatic increment to the monetary value
initially assigned to each unit of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-Takeda
Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term basic salary because
these were paid to the medical representatives and rank-and-file employees as productivity bonuses, which are generally tied
to the productivity, or capacity for revenue production, of a corporation and such bonuses closely resemble profit-sharing
payments and have no clear direct or necessary relation to the amount of work actually done by each individual employee.
Further, commissions paid by the Boie-Takeda Company to its medical representatives could not have been sales
commissions in the same sense that Philippine Duplicators paid the salesmen their sales commissions. Medical
representatives are not salesmen; they do not effect any sale of any article at all.
In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or conditions for its
payment, which indubitably are factual in nature for they will require a re-examination and calibration of the evidence on
record.
As to the main issue whether petitioner's commissions be considered in the computation of his retirement benefits and 13th
month pay, we rule in the negative. Article 287 of the Labor Code, as amended by Republic Act No. 7641, otherwise known
as The New Retirement Law, 22 provides: Retirement. — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract… In the absence of a retirement
plan or agreement providing for retirement benefits of employees in the establishment, an employee upon reaching the age
of sixty (60) years or more, but not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who
has served at least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at
least one half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as one whole
year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean fifteen (15) days plus
one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than five (5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his retirement benefits is
his latest salary rate of P10,919.22 as the commissions he received are in the form of profit-sharing payments specifically
excluded by the foregoing rules. Case law has it that when these earnings and remuneration are closely akin to fringe
benefits, overtime pay or profit-sharing statements, they are properly excluded in computing retirement pay. However, sales
commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in
determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his position as
Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions" paid to him by Universal
Robina Corp. could not have been 'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales
commissions. Unit Managers are not salesmen; they do not effect any sale of article at all. Therefore, any commission which
they receive is certainly not the basic salary which measures the standard or amount of work of complainant as Unit
Manager. Accordingly, the additional payments made to petitioner were not in fact sales commissions but rather partook of
the nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji
Xerox Corporation, which pronounced that commissions are additional pay that does not form part of the basic salary, applies
to the present case. Aside from the fact that as unit manager petitioner did not enter into actual sale transactions, but merely
supervised the salesmen under his control, the disputed commissions were not regularly received by him. Only when the
salesmen were able to collect from the sale transactions can petitioner receive the commissions. Conversely, if no collections
were made by the salesmen, then petitioner would receive no commissions at all. In fine, the commissions which petitioner
received were not part of his salary structure but were profit-sharing payments and had no clear, direct or necessary relation
to the amount of work he actually performed. The collection made by the salesmen from the sale transactions was the profit
of private respondent from which petitioner had a share in the form of a commission.

Letran Calamba Faculty and Employees Association vs NLRC (1997) G.R. 156225

Facts:

The Letran Calamba Faculty and Employees Association (petitioner) filed a complaint against Colegio de San Juan de
Letran, Calamba, Inc. (respondent) for collection of various monetary claims due its members. The Labor Arbiter (LA)
handling the consolidated cases, denied and dismissed the respective complaints.

Issue: WON the pay of the faculty members for teaching overloads should be included as basis in the computation of their
13th month pay?
Held: Teaching overload may not be considered part of basic salary.

Under the Rules and Regulations Implementing PD 851, the following compensations are deemed not part of the basic
salary: a) cost-of-living allowances granted pursuant to PD 525 and Letter of Instruction No. 174; b) profit sharing payments;
c) all allowances and monetary benefits which are not considered or integrated as part of the regular basic salary of the
employee at the time of the promulgation of the Decree on Dec 16, 1975.

Under a later set of Supplementary Rules and Regulations Implementing PD 851 issued by the then Labor Secretary Blas
Ople, overtime pay, earnings and other remunerations are excluded as part of the basic salary and in the computation of the
13th-month pay.

The all-embracing phrase "earnings and other remunerations" which are deemed not part of the basic salary includes within
its meaning payments for sick, vacation, or maternity leaves, premium for works performed on rest days and special holidays,
pay for regular holidays and night differentials. As such they are deemed not part of the basic salary and shall not be
considered in the computation of the 13th-month pay.

As provided for by Art 87 of the Labor Code, it is clear that overtime pay is an additional compensation other than and added
to the regular wage or basic salary, for reason of which such is categorically excluded from the definition of basic salary
under the Supplementary Rules and Regulations Implementing PD 851.

In the same manner that payment for overtime work and work performed during special holidays is considered as
additional compensation apart and distinct from an employee's regular wage or basic salary, an overload pay, owing
to its very nature and definition, may not be considered as part of a teacher's regular or basic salary, because it is
being paid for additional work performed in excess of the regular teaching load.
Sy vs. Metro Bank, G.R. No. 160618, November 2, 2006

Facts:

Petitioner Dennis Sy was the branch manager in Bajada, Davao City of respondent Metropolitan Bank and Trust Company.
Sy would have rendered 30 years of service by August 18, 1999 under the bank’s retirement plan, which provides that an
employee must retire upon reaching 55 years of age or after rendering 30 years of service, whichever comes earlier.
However, on February 5, 1999, a few months before he was supposed to retire, the bank reappointed him as branch
manager for a term of one year from August 18, 1999 until August 18, 2000, with a corresponding salary increase effective
August 16, 1999. In November 1999, the bank released the results of the audit conducted. Sy, on November 15, 1999,
tendered an irrevocable letter of retirement, wherein he requested the timely release of his retirement pay and other benefits.
His request was denied. The bank averred that Sy has allowed client-Spouses Ong to conduct “kiting” activities in their
account. The bank placed Sy on preventive suspension. Sy responded that he only made a wrong credit judgment. The
bank, not satisfied with his answer, notified Sy of other violations of company policies. Unconvinced of Sy explanation, the
bank dismissed Sy. Sy then filed a case for illegal dismissal, which was dismissed by the labor arbiter for lack of merit. On
appeal, the NLRC deemed Sy compulsorily retired. When brought up to the Court of Appeals, the labor arbiter’s decision
was reinstated.

Issues:

Was Sy illegally terminated?

If his dismissal was valid, would he still be entitled to retirement benefits?

Ruling:

No. Sy was validly dismissed on the ground of fraud and willful breach of trust under Article 282 of the Labor Code. Records
show that as bank manager, he authorized “kiting” or drawing of checks against uncollected funds in wanton violation of the
bank’s policies. It was sufficient basis for the bank to lose trust in him. Unlike a rank-and-file worker, where breach of trust as
a ground for valid dismissal requires proof of involvement in the alleged anomaly and where mere uncorroborated accusation
by the employer will not suffice, the sheer existence of a basis for believing that the employer’s trust has been breach is
enough for the dismissal of a managerial employee. Petitioner, however, theorizes that having been compulsorily retired, he
could no longer be dismissed by the bank. His premise is absurd. Indeed, he would have qualified for compulsory retirement
under the bank’s Retirement Plan. However, he opted to accept the bank’s offer of extending his employment for another
year with a corresponding salary increase. Thus, in effect, he had never retired. Unfortunately for him, while serving such
extended term, the bank discovered his unauthorized grant of accommodation to accounts engaged in “kiting” activity. Such
act is a clear breach of the trust in him by the bank. He cannot now elude dismissal for a just cause by claiming he was
already retired compulsorily.

No. Under the Labor Code, only unjustly dismissed employees are entitled to retirement benefits and other privileges
including reinstatement and backwages. Since petitioner’s dismissal was for a just cause, he is not entitled to any retirement
benefit.

aculbe vs. Silliman University, G.R. No. 156934, March 16, 2007

Facts:

Respondent, through its Human Resources Development Office, informed petitioner that she was approaching her 35th year
of service with the university and was due for automatic retirement on November 18, 1993, at which time she would be 57
years old. This was pursuant to respondent’s retirement plan for its employees which provided that its members could be
automatically retired "upon reaching the age of 65 or after 35 years of uninterrupted service to the university." Respondent
required certain documents in connection with petitioner’s impending retirement.

Petitioner emphatically insisted that the compulsory retirement under the plan was tantamount to a dismissal and pleaded
with respondent to be allowed to work until the age of 60 because this was the minimum age at which she could qualify for
SSS pension. But respondent stood pat on its decision to retire her, citing "company policy."

On November 15, 1993, petitioner filed a complaint in the National Labor Relations Commission (NLRC) for "termination of
service with preliminary injunction and/or restraining order."

On November 18, 1993, respondent compulsorily retired petitioner.

Issue:S
1) did respondent’s retirement plan imposing automatic retirement after 35 years of service contravene the security of tenure
clause in the 1987 Constitution and the Labor Code?
2) did respondent commit illegal dismissal by retiring petitioner solely by reason of such provision in its retirement plan?

Labor Arbiter: found respondent guilty of illegal dismissal and ordered that petitioner be reinstated and paid full backwages.
NLRC: reversed the labor arbiter’s decision and dismissed the complaint for lack of merit and likewise denied petitioner’s
motion for reconsideration.
CA: affirmed the NLRC.

Hence this petition.

Ruling:

AFFIRMATIVE.

Retirement plans allowing employers to retire employees who are less than the compulsory retirement age of 65 are not per
se repugnant to the constitutional guaranty of security of tenure. Article 287 of the Labor Code provides:

ART. 287. Retirement - Any employee may be retired upon reaching the retirement age established in the collective
bargaining agreement or other applicable employment contract. Xxx

By its express language, the Labor Code permits employers and employees to fix the applicable retirement age at below 60
years. However, after reviewing the assailed decision together with the rules and regulations of respondent’s retirement plan,
we find that the plan runs afoul of the constitutional guaranty of security of tenure contained in Article XIII, also known as the
provision on Social Justice and Human Rights.

The CA, in ruling against petitioner, premised its decision to uphold the retirement plan on her voluntary participation therein:

The petitioner in this case may, however, argue that the Pantranco case is not applicable in the case at bar as the
controversy in the said case involves a compulsory retirement on the basis of the length of service rendered by the employee
as agreed in an existing CBA, whereas in the present case, the private respondent compulsorily retired the petitioner not
based on a CBA but on the retirement scheme provided for in the private respondent’s retirement plan. Nonetheless, this
argument must fail. The contract fixing for retirement age as allowed under Article 287 of the Labor Code does not
exclusively refer to CBA which provides for an agreed retirement age. The said provision explicitly allows, as well, other
applicable employment contract to fix retirement age.

The records disclose that the private respondent’s Retirement Plan has been in effect for more than 30 years. The said plan
is deemed integrated into the employment contract between private respondent and its employees as evidenced by the
latter’s voluntary contribution through monthly salary deductions. Previous retirees have already enjoyed the benefits of the
retirement plan, and ever since the said plan was effected, no questions or disagreement have been raised, until the same
was made to apply to the petitioner. The problem with this line of reasoning is that a perusal of the rules and regulations of
the plan shows that participation therein was not voluntary at all.
Rule III of the plan, on membership, stated:
SECTION 1 – MEMBERSHIP

All full-time Filipino employees of the University will automatically become members of the Plan, provided, however, that
those who have retired from the University, even if rehired, are no longer eligible for membership in the Plan. A member who
continues to serve the University cannot withdraw from the Plan.
xxx xxx xxx
SECTION 2 – EFFECTIVITY OF MEMBERSHIP
Membership in the Plan starts on the day a person is hired on a full-time basis by the University.

SECTION 3 – TERMINATION OF MEMBERSHIP

Termination of membership in the Plan shall be upon the death of the member, resignation or termination of employee’s
contract by the University, or retirement from the University.

Rule IV, on contributions, stated:

The Plan is contributory. The University shall set aside an amount equivalent to 3½% of the basic salaries of the faculty and
staff. To this shall be added a 5% deduction from the basic salaries of the faculty and staff.

A member on leave with the University approval shall continue paying, based on his pay while on leave, his leave without pay
should pay his contributions to the Plan. However, a member, who has been on leave without pay should pay his
contributions based on his salary plus the University’s contributions while on leave or the full amount within one month
immediately after the date of his reinstatement. Provided[,] further that if a member has no sufficient source of income while
on leave may pay within six months after his reinstatement.

From the language of the foregoing retirement plan rules, the compulsory nature of both membership in and contribution to
the plan debunked the CA’s theory that petitioner’s "voluntary contributions" were evidence of her willing participation therein.
It was through no voluntary act of her own that petitioner became a member of the plan. In fact, the only way she could have
ceased to be a member thereof was if she stopped working for respondent altogether. Furthermore, in the rule on
contributions, the repeated use of the word "shall" ineluctably pointed to the conclusion that employees had no choice but to
contribute to the plan (even when they were on leave).

According to the assailed decision, respondent’s retirement plan "ha(d) been in effect for more than 30 years." What was not
pointed out, however, was that the retirement plan came into being in 1970 or 12 years after petitioner started working for
respondent. In short, it was not part of the terms of employment to which petitioner agreed when she started working for
respondent. Neither did it become part of those terms shortly thereafter, as the CA would have us believe.

Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the employee
whereby the latter, after reaching a certain age agrees to sever his or her employment with the former. In Pantranco North
Express, Inc. v. NLRC, to which both the CA and respondent refer, the imposition of a retirement age below the compulsory
age of 65 was deemed acceptable because this was part of the CBA between the employer and the employees. The consent
of the employees, as represented by their bargaining unit, to be retired even before the statutory retirement age of 65 was
laid out clearly in black and white and was therefore in accord with Article 287.

In this case, neither the CA nor the respondent cited any agreement, collective or otherwise, to justify the latter’s imposition
of the early retirement age in its retirement plan, opting instead to harp on petitioner’s alleged "voluntary" contributions to the
plan, which was simply untrue. The truth was that petitioner had no choice but to participate in the plan, given that the only
way she could refrain from doing so was to resign or lose her job. It is axiomatic that employer and employee do not stand on
equal footing, a situation which often causes an employee to act out of need instead of any genuine acquiescence to the
employer. This was clearly just such an instance.

Not only was petitioner still a good eight years away from the compulsory retirement age but she was also still fully capable
of discharging her duties as shown by the fact that respondent’s board of trustees seriously considered rehiring her after the
effectivity of her "compulsory retirement."

As already stated, an employer is free to impose a retirement age less than 65 for as long as it has the employees’ consent.
Stated conversely, employees are free to accept the employer’s offer to lower the retirement age if they feel they can get a
better deal with the retirement plan presented by the employer. Thus, having terminated petitioner solely on the basis of a
provision of a retirement plan which was not freely assented to by her, respondent was guilty of illegal dismissal.

At this point, reinstatement is out of the question. Petitioner is now 71 years old and therefore well over the statutory
compulsory retirement age. For this reason, we grant her separation pay in lieu of reinstatement. It is also for this reason that
we modify the award of backwages in her favor, to be computed from the time of her illegal dismissal on November 18, 1993
up to her compulsory retirement age.

WHEREFORE, the petition is hereby GRANTED.