CONDITIONS OF EMPLOYMENT

San Juan De Dios Hospital vs. NLRC

Facts: Petitioners sent a written request for the expeditious implementation and payment by respondent, San Juan de Dios Hospital,
of the "40-Hours/5-Day workweek" with compensable weekly two days off as 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
favorable response; thus, petitioners filed a complaint regarding their "claims for statutory benefits under the above-cited law and
policy issuance." The Labor Arbiter, however, dismissed the complaint. Petitioners appealed before public respondent National Labor
Relations Commission (NLRC), which affirmed the Labor Arbiter's decision. Hence, this petition, ascribing grave abuse of discretion
on the part of NLRC in concluding that Policy Instructions No. 54 "proceeds from a wrong interpretation of RA 5901" and Article 83 of
the Labor Code.

Issue: WON Policy Instructions No. 54 is valid or not.

Ruling: No. There is nothing in the law (Article 83 of the Labor Code) 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". Needless to say, the Secretary of Labor exceeded his authority by including two days off with pay
in contravention of the clear mandate of the statute. A perusal of Republic Act No. 5901 reveals nothing therein that gives two days
off with pay for health personnel who complete a 40-hour work or 5-day workweek. The Explanatory Note of House Bill No. 16630
(later passed into law as Republic Act No. 5901) explicitly states that the bill's sole purpose is to shorten the working hours of health
personnel and not to dole out a two days off with pay.

Simedarby vs. NLRC

Facts: Sime Darby Salaried Employees Association, an association of monthly salaried employees, filed a complaint against Sime
Darby Pilipinas. It alleged that the change in work schedule as well as the removal of the 30-minute paid on call lunch break of the
monthly salaried employees constitute unfair labor practice and is discriminatory. The LA and the NLRC dismissed the complaint as
this was a valid exercise of management prerogative. Upon Motion for Reconsideration, the NLRC reversed its decision because it
deprived the workers of benefits resulting in an unjust diminution of company privileges.

Issue: WON there was an unjust diminution of company privileges

Ruling: No. The SC held that the change in work schedule is a valid exercise of management prerogative. It complies with the 8-hour
work period provided for in the Code and even gave the employees 1 full hour of break without interruption by the employer. Further,
it applied to all employees similarly situated. The SC also stated that so long as such prerogative is exercised in good faith by the
employer, the same will be upheld by the Courts.

E.R.D.DIMAUNAHAN – EH409 1
 CONDITIONS OF EMPLOYMENT

Phil. Airlines vs. NLRC

Facts: Private respondent Dr. Herminio A. Fabros (Fabros) was employed as flight surgeon at Philippine Airlines (PAL). He was
assigned at PAL Medical Clinic at Nichols and whose work schedule is from 4:00 in the afternoon until 12:00 midnight. Around 7
o’clock pm of February 17, 1994, Fabros left the clinic to have his dinner at his residence, a five-minute drive from the clinic. A few
minutes later, the clinic received an emergency call from the PAL Cargo Services. That One of its employees had suffered a heart
attack. Upon receiving the call the nurse on duty, Merlino Eusebio (Eugenio), called private respondent at home to inform him of the
emergency. The patient arrived at the clinic at 7:50 in the evening and was rushed by Eusebio to the hospital. Private respondent
reached the clinic at around 7:51 in the evening however, Eusebio had already left with the patient. On the following day the patient
died.

Upon learning about the incident, PAL Medical Director Dr. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The
Chief Flight Surgeon, in turn, required private Fabros to explain why no disciplinary sanction should be taken against him.

In his explanation, Fabros averred that he was entitled to a thirty-minute meal break and that he immediately left his residence upon
being informed by. Eusebio about the emergency and he arrived at the clinic a few minutes later and that Eusebio panicked and
brought the patient to the hospital without waiting for him.

The management charged Fabros with abandonment of post while on duty because according to them his explanation was
unacceptable.

Fabros argues that being a full-time employee, private respondent is obliged to stay in the company premises for not less than eight
hours. Therefore, he may not leave the company premises during such time, even to take his meals.

Issue:

1.) Whether or not full-time employees are obliged to stay in the company premises for not less than eight (8) hours and may not
leave the company’s premises during meals.

2.) Whether or not all employees illegally dismissed are entitled for moral damages.

Ruling:

1.) NO. Employees are not prohibited from going out of the premises as long as they return to their post on time. Articles 83 and 85 of
the Labor Code read:

Art. 83. Normal hours of work.—the normal hours of work of any employee shall not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed
capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of
time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours,
in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this Article, “health personnel” shall include: resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.

Art. 85. Meal periods.—Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to
give his employees not less than sixty (60) minutes time-off for their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states:

Sec. 7. Meal and Rest Periods.—Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for
regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer
provided that such shorter meal period is credited as compensable hours worked of the employee;

Where the work is non-manual work in nature or does not involve strenuous physical exertion;

E.R.D.DIMAUNAHAN – EH409 2
 CONDITIONS OF EMPLOYMENT

Where the establishment regularly operates not less than sixteen hours a day;

In cases of actual or impending emergencies or there is urgent work to be performed on machineries, equipment or installations to
avoid serious loss which the employer would otherwise suffer; and

Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

Therefore, the eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must
take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to
their posts on time. Private Fabros’ act, therefore, of going home to take his dinner does not constitute abandonment.

2.) NO. Not every employee who is illegally dismissed or suspended is entitled to damages.

The Court held that as a rule moral damages are recoverable only where the dismissal or suspension of the employee was attended
by bad faith or fraud, or constituted an act oppressive to labor, or was done in a manner contrary to morals, good customs or public
policy. Bad faith does not simply mean negligence or bad judgment. It involves a state of mind dominated by ill will or motive. It
implies a conscious and intentional design to do a wrongful act for a dishonest purpose or some moral obliquity.

The person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always
presumes good faith. In the case at bar, there is no showing that the management of Petitioner Company was moved by some evil
motive in suspending private respondent. It suspended private respondent on an honest, albeit erroneous, belief that private
respondent's act of leaving the company premises to take his meal at home constituted abandonment of post which warrants the
penalty of suspension. Also, it is evident from the facts that PAL gave Fabros all the opportunity to refute the charge against him and
to defend himself. These negate the existence of bad faith on the part of PAL.

E.R.D.DIMAUNAHAN – EH409 3
 CONDITIONS OF EMPLOYMENT

Linton Commercial Co., Inc., vs. Hellera et al.

Facts: Linton, on December 17, 1997, issued a memorandum; informing its employees about the company's decision to suspend its
operations from December 18, 1997 to January 5, 1998 due to the currency crisis that affected its business operations. Linton then
submitted an establishment termination report to the Department of Labor and Employment (DOLE) regarding the temporary closure
of the establishment. The company's operation was to resume on January 6, 1998. Linton issued another memorandum on January
7, 1997 informing the workers that effective January 12, 1998, it would implement a new compressed workweek of three (3) days on
a rotation basis. This means that each worker would be working on a rotation basis for three working days only instead of 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 the approval by DOLE. Aggrieved, sixty-eight 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.

Ruling: YES. The compressed workweek arrangement was unjustified and illegal. Citing the case of Philippine Graphic Arts, Inc. v.
NLRC, where the Court upheld for the validity of the reduction of working hours, taking into consideration the following: 1. the
arrangement was temporary, 2. it was a more humane solution instead of a retrenchment of personnel, 3. there was notice and
consultations with the workers and supervisors, 4. a consensus were reached on how to deal with deteriorating economic conditions
and 5. It was sufficiently proven that the company was suffering from losses.

Further the Bureau of Working Conditions of the DOLE, released a bulletin in determining when an employer can validly reduce the
regular number of working days. The 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.

However upon close examination of petitioners' financial reports for 1997-1998 shows that, while the company suffered a loss of
P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income.

And while Linton had suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. A year
of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced
workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at
the slightest indication of losses would be contrary to the State's policy to afford protection to labor and provide full employment.

The court has ruled that while it is true that the 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;

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.

E.R.D.DIMAUNAHAN – EH409 4
 CONDITIONS OF EMPLOYMENT

Bisig Manggagawa sa Tryco vs. NLRC

Doctrine: A regular employee is entitled for overtime pay for rendering work after 8 hours as a general rule, as an EXCEPTION, a
regular employee may validly waive his right of overtime pay after rendering work beyond 8 hours if he has entered into a
Compressed Work Week (CWW).

Facts: Petitioners are employers of TrycoPharma in which they were employed as helpers, and factory workers. Subsequently, they
entered into a memorandum of agreement with their employer in which they entered into a Compressed Work Week schedule in
which it provided that their regular working hours will be 8:00 am to 6:12 pm from Monday to Friday and that they expressly waive
their right to overtime pay . Subsequently, petitioners filed for non-payment of overtime pay representing the work they’ve rendered
from 5:00 to 6:12 pm.

Issue: WON petitioners are entitled for overtime payment in lieu of the agreement

Ruling: NO. Petitioners are not entitled for the overtime payment. Under D.O. No. 21, waiver of overtime pay shall be valid provided
that the agreement has been entered into by the parties voluntarily. Further, the Memorandum of Agreement was validly entered
since there was no diminution of benefits as they were entitled to the same wage as if they had a regular work week schedule.

Dasco et al., vs. Phiktranco Service Enterprise

Doctrine: Field personnel as a GENERAL RULE are not entitled for Overtime Pay and Service Incentive Leave (SIL), as an
EXCEPTION, Field personnel maybe considered as A Regular Employee if they are subjected to the supervision of the employer and
such hours of work they have rendered maybe determined and thus they may be entitled of Overtime Pay and Service Incentive
Leave.

Facts: Petitioners are DRIVERS of respondent who drive buses 2-3 days per round trip. However, they were only paid 404.00 pesos
per round trip without overtime pay and below minimum wage. This prompted petitioner to file a complaint against respondent to
claim for their overtime pay. Respondent contended that petitioners are not entitled for overtime pay since they were bus drivers and
thus can be considered field personnel.

E.R.D.DIMAUNAHAN – EH409 5
 CONDITIONS OF EMPLOYMENT

Issue: WON Petitioners are entiled for overtime pay being bus drivers

Ruling: Yes. Petitioners are entitled for overtime pay notwithstanding that they are bus driver who perform work outside of the office
or workplace of their employer. They are not considered as field personnel since they were under control of the employer in which
they are tasked to be at a specific place in a specific time. They were also monitored by checkers and dispatchers. Further their
actual work could be determined with reasonable certainty. Thus they should be considered as regular employees and therefore
entitled for Overtime Pay and Service Incentive Leave.

E.R.D.DIMAUNAHAN – EH409 6
 CONDITIONS OF EMPLOYMENT

HSY Marketing Ltd. Co v Virgilio O. Villastique

Doctrine: The liability for the payment of separation pay is but a legal consequence of illegal dismissal where reinstatement is no
longer feasible. Moreover, as there is no reinstatement to speak of, respondent cannot invoke the doctrine of strained relations to
support his prayer for the award of separation pay.

Facts: In 2003, petitioner hired respondent as a field driver for Fabulous Jeans & Shirt & General Merchandise. In 2011, respondent,
while driving, bumped into a pedestrian, Ryan Dorataryo. Fabulous Jeans shouldered the hospitalization and medical expenses of
Dorataryo, which respondent was asked to reimburse, but to no avail. On February 24, 2011, when respondent was allegedly
required to sign a resignation letter, which he refused to do, his salary was withheld, as a result. Convinced that he was already
terminated, he filed a complaint for illegal dismissal with money claims against Fabulous Jeans, and its owner, Alexander G.
Arquezaet al. before the NLRC. In their defense, petitioner, et al. contended that after they paid for Dorataryo's hospitalization and
medical expenses, respondent went on absence without leave, presumably to evade liability for his recklessness. Since respondent
was the one who refused to report for work, he should be considered as having voluntarily severed his own employment. Thus, his
money claims cannot prosper as he was not terminated.

LA, NLRC and CA Ruling: dismissed the charge of illegal dismissal, but found petitioner to be respondent’s employer; directed
petitioner to pay separation pay and the equivalent of the service incentive leave pay

Issues:

WON employer-employee relationship exists between the parties

WON respondent has been illegally dismissed

WON respondent is entitled to separation pay and service incentive leave pay

Ruling:

YES. Respondent was shown to have been hired by petitioner and required to report for work at its store. The Court had already
exposed the practice of setting up "distributors" or "dealers" which are, in reality, dummy companies that allow the mother company to
avoid employer-employee relations and, consequently, shield the latter from liability from employee claims in case of illegal dismissal,
closure, unfair labor practices, and the like. In this case it was shown in respondent’s unrebutted Affidavit that HSY Marketing was the
mother-company.

NO. The Court upholds the unanimous conclusion that respondent had not been dismissed at all nor is he considered to have
voluntarily resigned from work. No substantial evidence was presented to show that he was indeed dismissed or was prevented from
returning to his work or that there was a deliberate refusal of respondent to resume his employment without any intention of returning.
The appropriate course of action is to reinstate employee without payment of backwages. If respondent voluntarily chooses not to
return to work, then he must be considered to have resigned.

NO (to separation pay) YES (to service incentive leave pay). The liability for the payment of separation pay is but a legal
consequence of illegal dismissal where reinstatement is no longer feasible. This is because an employee who had not been
dismissed, much less illegally dismissed, cannot be reinstated. Moreover, as there is no reinstatement to speak of, respondent cannot
invoke the doctrine of strained relations to support his prayer for the award of separation pay. However, respondent is entitled to
service incentive leave pay as the respondent was a regular employee of the petitioner. Company drivers who are under the control
and supervision of management officers are regular employees entitled to such benefits.
A. Nate Casket Maker et al v Arango et al. Facts: Petitioners Armando and Anely Nate are the owners of
A. Nate Casket Maker. They employed respondents in their
Doctrine: As regular employees, respondents were entitled to casket-making business from 1998 until their alleged
security of tenure and could be dismissed only for just or termination in March 2007.In 2007, they met with respondents
authorized causes and after the observance of due process. in order to present a proposed employment agreement which
Under Article 279 of the Labor Code as aforestated, an would change the existing pakyaw system to "contractual basis"
employee unjustly dismissed from work is entitled to and would provide for vacation leave and sick leave pay and
reinstatement and backwages, among others. other benefits given to regular employees. However,
respondents allege that they were made to sign a “Contract of

E.R.D.DIMAUNAHAN – EH409 7
 CONDITIONS OF EMPLOYMENT
Employment” dated February 3, 2007, which stated that during
the period of employment, respondents would not be eligible to
earn or receive any sick leave pay, vacation leave pay, or any
other benefits given to refular employees such as 13th month
pay and bonuses. When they refused to sign, petitioners told
them to go home because their employment had been
terminated. Respondents then filed a Complaint for illegal
dismissal, non-payment of separation pay, claims of
underpayment, and non-payment of overtime pay, holiday pay,
service incentive leave and 13th month pay against petitioners.
LA and NLRC Ruling: dismissed complaint
CA Ruling: reversed LA and NLRC; declared respondents’
illegal dismissal and entitlement to monetary benefits required
by law
Issues:
WON respondents were illegally dismissed
WON respondents who are pakyaw workers are entitled to
overtime pay, holiday pay, service incentive leave pay and 13th
month pay
Ruling:
YES. Petitioners agreed that respondents are regular
employees. Pakyaw workers are considered regular employees
for as long as their employers exercise control over them. Thus,
E.R.D.DIMAUNAHAN – EH409
while respondents’ mode of compensation was on a per-piece
basis, the status and nature of their employment was that of
regular employees. As regular employees, respondents were
entitled to security of tenure and could be dismissed only for
just or authorized causes and after the observance of due
process. Petitioners are found to have violated the respondents’
rights to security of tenure and constitutional right to due
process in not even serving them with a written notice of
termination which would recite any valid or just cause for their
dismissal, as required in Sec. 2, Rule XIV, Book V of the
Omnibus Rules Implementing the Labor Code. Under Article
279 of the Labor Code as aforestated, an employee unjustly
dismissed from work is entitled to reinstatement and
backwages, among others. Reinstatement restores the
employee who was unjustly dismissed to the position from
which he was removed, while the grant of backwages allows
the same employee to recover from the employer that which he
had lost by way of wages as a result of his dismissal.
Respondents are entitled to reinstatement, but they could
receive instead separation pay in lieu of reinstatement if such is
no longer practicable.
YES (except to 13th month pay). Since respondents cannot be
considered as "field personnel," then they are not exempted
from the grant of holiday and SIL pay even as they were
engaged on pakyaw or task basis. However, they are not
entitled to 13th month pay. PD 851, the governing law on 13th
month pay provides in Sec 3(e) that employees paid on a task
basis and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the
performance thereof, are exempted.
8