Clientlogic (SITEL) vs.
Castro and/or to hire, transfer, suspend, lay-off, recall, discharge, assign or discipline
GR 186070 April 11, 2011
Facts:
Respondent was employed by petitioner ClientLogic Philippines, Inc. (now known
and shall hereafter be referred to as SITEL) on February 14, 2005 as a call center
agent for its Bell South Account. After six (6) months, he was promoted to the
“Mentor” position, and thereafter to the “Coach” position. A “Coach” is a team
supervisor who is in charge of dealing with customer complaints which cannot be
resolved by call center agents. In June 2006, he was transferred to the Dot Green
Account.
           During respondent’s stint at the Dot Green Account, respondent noticed that
some of the call center agents under him would often make excuses to leave their
work stations. Their most common excuse was that they would visit the company’s
medical clinic. To verify that they were not using the clinic as an alibi to cut their
work hours, respondent sent an e-mail to the clinic’s personnel requesting for the
details of the agents’ alleged medical consultation. His request was denied on the
ground that medical records of employees are highly confidential and can only be
disclosed in cases involving health issues, and not to be used to build any
disciplinary case against them.
 On October 11, 2006, respondent received a notice requiring him to explain why he
should not be penalized for: (1) violating Green Dot Company’s Policy and
Procedure for Direct Deposit Bank Info Request when he accessed a customer’s
online account and then gave the latter’s routing and reference numbers for direct
deposit; and (2) gravely abusing his discretion when he requested for the medical
records of his team members. Respondent did not deny the infractions imputed
against him. He, however, justified his actuations by explaining that the customer
begged him to access the account because she did not have a computer or an
internet access and that he merely requested for a patient tracker, not medical
records
          On January 22, 2007, SITEL posted a notice of vacancy for respondent’s
position, and on February 12, 2007, he received a Notice of Termination. These
events prompted him to file a complaint for illegal dismissal; non-payment of
overtime pay, rest day pay, holiday pay, service incentive leave pay; full backwages;
damages; and attorney’s fees before the Labor Arbiter against herein petitioners
SITEL and its officers, Joseph Velasquez, Irene Roa, and Rodney Spires.
Issue: WON respondent is a member of the managerial staff of petitioner.
Held:
Article 82 of the Labor Code states that the provisions of the Labor Code on working
conditions and rest periods shall not apply to managerial employees. Generally,
managerial employees are not entitled to overtime pay for services rendered in
excess of eight hours a day.
 Article 212 (m) of the Labor Code defines a managerial employee as “one who is
vested with powers or prerogatives to lay down and execute management policies
employees, or to effectively recommend such managerial actions.
              Employees are considered occupying managerial positions if they meet all of
the following conditions, namely:
             1) Their primary duty consists of management of the establishment in which
they are employed or of a department or subdivision thereof;
             2) They customarily and regularly direct the work of two or more employees
therein;
             3) They have the authority to hire or fire other employees of lower rank; or
their suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are given particular
weight.
             They are considered as 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 of policies of their employer;
             2) Customarily and regularly exercise discretion and independent judgment;
             3) (a) Regularly and directly assist a proprietor or a managerial employee
whose primary duty consists of management of the establishment in which he is
employed or subdivision thereof; or (b) execute under general supervision work
along specialized or technical lines requiring special training, experience, or
knowledge; or (c) execute, under general supervision, special assignment and tasks
xxx.
The test of “supervisory” or “managerial status” depends on whether a person
possesses authority to act in the interest of his employer and whether such
authority is not merely routinary or clerical in nature, but requires the use of
independent judgment. The position held by respondent and its concomitant duties
failed to hurdle this test.
 As a coach or team supervisor, respondent’s main duty was to deal with customer
complaints which could not be handled or solved by call center agents. If the
members of his team could not meet the needs of a customer, they passed the
customer’s call to respondent.
This job description does not indicate that respondent can exercise the powers and
prerogatives equivalent to managerial actions which require the customary use of
independent judgment. There is no showing that he was actually conferred or was
actually exercising the following duties attributable to a “member of the managerial
staff,”
From the foregoing, respondent is entitled to holiday pay, service incentive leave
pay, overtime pay, and rest day.
Petition denied
Cruz v. BPI
GR No. 173357; Feb. 13, 2013; J. Peralta
Facts:
Rowena De Leon Cruz
- petitioner; hired by Far East Bank and Trust Co. (FEBTC) in 1989.
- automatically became employee of respondent BPI upon merger of BPI and FEBTC
in April 2000.
- held position as Assistant Branch Manager of BPI Ayala Ave., Makati and was in
charge of the Trading Section.
BPI
- respondent; terminated petitioner's employment on July 12, 2002 on grounds of
gross negligence and breach of trust. This was brought about by the fraud
perpetuated against three depositors in the Ayala Ave. Branch: there were
unauthorized pre-terminations/withdrawals of US dollar deposits at that branch
and petitioner was made to explain.
- issued a notice of termination on July 10, 2002 upon petitioner informing her of
her dismissal on July 12, 2002 on grounds of gross negligence and breach of trust.
Labor Arbiter - the dismissal was illegal.
NLRC - reversed LA: legal - was for a valid cause.
CA - affirmed NLRC: legal; M/R denied.
Issue/s: WON the dismissal was legal.
Held:
Yes.
After a review of the records of this case, the Court agrees with the findings of the
CA and the NLRC that the petitioner's dismissal was for a valid cause: it was
grounded on the gross negligence and breach of trust reposed upon her under Art.
282 (B) and (C) of the Labor Code.
The basic premise for dismissal on the ground of loss of confidence is that the
employees concerned hold a position of trust and confidence.
It is this breach that results in the employer's loss of confidence in the employee.
Petitioner holds a managerial status since she is tasked to act in the interest of her
employer as she exercises independent judgment when she approves pre-
terminations or withdrawals: she was remiss in her duties when she did not call the
depositors to appear before her, etc.
Case Title    :    ECHO 2000 COMMERCIAL CORPORATION, EDWARD N. ENRIQUEZ,
LEONORA K. BENEDICTO and ATTY. GINA WENCESLAO v. OBRERO FILIPINO – ECHO
2000 CHAPTER – CLO, ARLO C. CORTES and DAVE SOMIDO
G.R. No.    :    G.R. No. 214092
Date    :    11 January 2016
Ponente    :    Associate Justice Bienvenido L. Reyes
Facts
Arlo C. Cortes (Cortes) and Dave Somido (Somido) were employees of Echo 2000
Commercial Corporation (Echo) as Forklift Operator and Warehouse Checker,
respectively.
The respondents and their co-owners formed Obrero Filipino – Echo 2000
Commercial Chapter (Union). Cortes was elected Vice President while Somido
became an active member. The respondents claimed that the Union’s President,
Secretary and one of the board members were subsequently harassed,
discriminated and eventually terminated from employment by Echo.
Enriquez issued a memorandum informing the respondents of their transfer to the
Delivery Section, which was within the premises of Echo's warehouse. The transfer
would entail no change in ranks, status and salaries.
Somido wrote Echo a letter indicating his refusal to be promoted as a "Delivery
Supervisor". He explained that he was already happy as a Warehouse Checker.
Further, he was not ready to be a Delivery Supervisor since the position was
sensitive and required more expertise and training, which he did not have. Cortes
similarly declined Echo's offer of promotion claiming that he was contented in his
post then as a Forklift Operator. He also alleged that he would be more productive
as an employee if he remained in his post. He also lacked prior supervisory
experience.
Enward N. Enriquez (Enriquez), sans consent of the respondents, informed the
latter of their assignments/designations as Delivery Supervisors. Echo alleged that
the respondents did not perform the new duties assigned to them. Hence, they
were each issued a memorandum requiring them to explain in writing their failure
to abide with the new assignments. Echo clarified through a memo that the
respondents were designated as "Delivery Coordinators" and not "Supervisors."
Thereafter, successive memoranda were issued by Echo to the respondents, who
refused to acknowledge receipt and comply with the directives therein. The
Memoranda dated July 20, 2009 suspended them without pay for five days for their
alleged insubordination. The Memoranda dated August 8, 2009 informed them of
their termination from employment, effective August 15, 2009, by reason of their
repeated refusal to acknowledge receipt of Echo's memoranda and flagrant
defiance to assume the duties of Delivery Coordinators.
The respondents filed before the National Labor Relations Commission (NLRC) a
complaint against Echo for unfair labor practice, illegal dismissal, illegal suspension,
illegal deductions and payment of money claims, damages and attorney's fees. The
respondents claimed that they were offered promotions, which were mere ploys to
remove them as rank-and-file employees, and oust them as Union members.

The petitioners insisted that the respondents were merely transferred, and not
promoted. Further, the respondents arrogantly refused to comply with Enriquez's
directives. Their insubordination constituted just cause to terminate them from
employment.
Issues
Whether the respondents were illegally suspended and terminated, hence, entitled
to payment of their money claims, damages and attorney's fees. Yes, the
respondents were illegally suspended and terminated but not entitled to payment
of damages.
Whether Echo and its officers are guilty of unfair labor practice. No!
Whether Echo's officers, who are sued as nominal parties, should be held liable to
pay the respondents their money claims. No!
Held
The offer of transfer is, in legal contemplation, a promotion, which the respondents
validly refused. Such refusal cannot be the basis for the respondents' dismissal from
service. The finding of unfair labor practice and the award of moral and exemplary
damages do not however follow solely by reason of the dismissal.
Article 212 (13) of the Labor Code distinguishes from each other as follows the
concepts of managerial, supervisory and rank-and-file employees:
"Managerial employee" is one who is vested with the powers or prerogatives to lay
down and execute management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, 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 the above definitions are considered rank-and-file employees for purposes of this
Book.
As to the extent of management prerogative to transfer/promote employees, and
the differences between transfer on one hand, and promotion, on the other, Coca-
Cola Bottlers Philippines, Inc. v. Del Villar is instructive, viz:
[L]abor laws discourage interference in employers' judgment concerning the
conduct of their business.
In the pursuit of its legitimate business interest, management has the prerogative
to transfer or assign employees from one office or area of operation to another –
provided there is no demotion in rank or diminution of salary, benefits, and other
privileges; and the action is not motivated by discrimination, made in bad faith, or
effected as a form of punishment or demotion without sufficient cause. x x x.
x x x In the case of Blue Dairy Corporation v. National Labor Relations Commission,
we described in more detail the limitations on the right of management to transfer
employees:
x  x  x [I]t cannot be used as a subterfuge by the employer to rid himself of an
undesirable worker. In particular, the employer must be able to show that the
transfer is not unreasonable, inconvenient or prejudicial to the employee; nor does
it involve a demotion in rank or a diminution of his salaries, privileges and other
benefits. x x x.
x x x x A transfer is a movement from one position to another which is of equivalent
rank, level or salary, without break in service. Promotion, on the other hand, is the
advancement from one position to another with an increase in duties and
responsibilities as authorized by law, and usually accompanied by an increase in
salary. x x x.
Promotion to occur, there must be an advancement from one position to another
or an upward vertical movement of the employee's rank or position. Any increase in
salary should only be considered incidental but never determinative of whether or
not a promotion is bestowed upon an employee. An employee is not bound to
accept a promotion, which is in the nature of a gift or reward. Refusal to be
promoted is a valid exercise of a right. Such exercise cannot be considered in law as
insubordination, or willful disobedience of a lawful order of the employer, hence, it
cannot be the basis of an employee's dismissal from service.
In the case at bench, a Warehouse Checker and a Forklift Operator are rank-and-file
employees. On the other hand, the job of a Delivery Supervisor/Coordinator
requires the exercise of discretion and judgment from time to time. Specifically, a
Delivery Supervisor/Coordinator assigns teams to man the trucks, oversees the
loading of goods, checks the conditions of the trucks, coordinates with account
specialists in the outlets regarding their delivery concerns, and supervises other
about their performance in the warehouse. A Delivery Supervisor/Coordinator's
duties and responsibilities are apparently not of the same weight as those of a
Warehouse Checker or Forklift Operator. Hence, despite the fact that no salary
increases were effected, the assumption of the post of a Delivery
Supervisor/Coordinator should be considered a promotion. The respondents'
refusal to accept the same was therefore valid.
Notwithstanding the illegality of the respondents' dismissal, the Court finds no
sufficient basis to award moral and exemplary damages.

A dismissal may be contrary to law but by itself alone, it does not establish bad faith
to entitle the dismissed employee to moral damages. The award of moral and
exemplary damages cannot be justified solely upon the premise that the employer
dismissed his employee without just or authorized cause.
In the instant case, the right not to accept an offered promotion pertained to each
of the respondents. However, they exhibited disrespectful behavior by their
repeated refusal to receive the memoranda issued by Echo and by their continued
presence in their respective areas without any work output. The Court thus finds
that although the respondents' dismissal from service for just cause was
unwarranted, there is likewise no basis for the award of moral and exemplary
damages in their favor. Echo expectedly imposed disciplinary penalties upon the
respondents for the latter's intransigence.
Albeit the Court is not convinced of the character and extent of the measures taken
by Echo, bad faith cannot be inferred solely from the said impositions. Anent the
National Labor Relations Commission (NLRC) and Court of Appeals’ (CA) conclusion
that Echo committed unfair labor practice, the Court disagrees.
Unfair labor practices violate the constitutional right of workers and employees to
self-organization, are inimical to the legitimate interests of both labor and
management, including their right to bargain collectively and otherwise deal with
each other in an atmosphere of freedom and mutual respect, disrupt industrial
peace and hinder the promotion of healthy and stable labor-management relations.
The respondents allege that their transfer/promotion was intended to deprive the
Union of leadership and membership. They claim that other officers were already
dismissed. The foregoing, however, lacks substantiation. Unfair labor practice is a
serious charge, and the respondents failed to show that the petitioners conclusively
interfered with, restrained, or coerced employees in the exercise of their right to
self-organization.
Enriquez, Benedicto and Atty. Wenceslao cannot be held personally liable for the
respondents’ money claims.
Lambert Pawnbrokers and Jewelry Corporation, expounds   on the liabilities of
corporate officers to employees. The Court declared:
As a general rule, only the employer-corporation, partnership or association or any
other entity, and not its officers, which may be held liable for illegal dismissal of
employees or for other wrongful acts. This is as it should be because a corporation
is a juridical entity with legal personality separate and distinct from those acting for
and in its behalf and, in general, from the people comprising it. A corporation, as a
juridical entity, may act only through its directors, officers and employees.
Obligations incurred as a result of the directors' and officers' acts as corporate
agents, are not their personal liability but the direct responsibility of the
corporation they represent. It is settled that in the absence of malice and bad faith,
a stockholder or an officer of a corporation cannot be made personally liable for
corporate liabilities. They are only solidarily liable with the corporation for the
illegal termination of services of employees if they acted with malice or bad faith. In
Philippine American Life and General Insurance v. Gramaje, bad faith is defined as a
state of mind affirmatively operating with furtive design or with some motive of
self-interest or ill will or for ulterior purpose. It implies a conscious and intentional
design to do a wrongful act for a dishonest purpose or moral obliquity.
In the instant   petition, the respondents failed to specify and sufficiently prove the
alleged acts of Enriquez, Benedicto and Atty. Wenceslao from which malice or bad
faith can be concluded.
MERCIDAR FISHING CORPORATION represented by its President DOMINGO B.
NAVAL, petitioner, 
vs.
NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO,
JR., respondents/1998
FACTS:
Fermin Agao, a “bodegero” (or para sosy, “ship’s quartermaster”) at Mercidar
Fishing Corp., filed complaint for illegal dismissal, violation of PD 851 and non-
payment of 5-days service incentive leave; he started work there in 1988 and claims
to have been constructively dismissed in 1990 when his employer refused to give
him assignments aboard the company’s boats
LA ordered Agao’s reinstatement with backwages and payment of 13 th month pay
and service incentive leave pay; NLRC dismissed the appeal of Mercidar Fishing
which claimed that Agao, as a “field personnel” was not entitled under the LC to
such service incentive leave pay
Petitioner contends that Agao abandoned his work, while the latter alleges that
after having been on one-month leave following a sickness, his employer refused to
give him further assignments after he reported for work
ISSUE:
WON fishing crew members are deemed “field personnel”, as defined under Art. 82
of LC (NO)
WON Agao had been constructively dismissed (YES)
HELD/RATIO:
Art. 82 - "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. (The provisions of the Title on Working Conditions & Rest
Period – according to par.1 of Art. 82 – do not apply, among others, to field
personnel.)
Citing Union of Pilipro Employees (UFE) v. Vicar, which sought to explain the
meaning of "whose actual hours of work in the field cannot be determined with
reasonable certainty", the Court said that, 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.
Here, the nature of the work necessarily means that the fishing crew stays on board
the vessel in the course of the fishing voyage. Although they perform non-
agricultural work away from petitioner's business offices, the fact remains that
throughout the duration of their work they are under the effective control and
supervision of petitioner through the vessel's patron or master as the NLRC
correctly held.
The Court also ruled that there was constructive dismissal of Agao. Medical
certificate shows his fitness to work when he presented the same to his employer.
Beside, as already established in jurisprudence, to constitute abandonment of
position, there must be concurrence of the intention to abandon and some overt
acts from which it may be inferred that the employee concerned has no more
interest in working. Here, the filing of the complaint which asked for reinstatement
plus backwages renders inconsistent the respondents' defense of abandonment.  because they are under the control and constant supervision of the bus companies
Dasco et al., vs. Philtranco Service Enterprise
GR No. 211141, June 29, 2016
RESPONDENT Philtranco Service Enterprises Inc. (PSEI) is a domestic corporation
engaged in providing public utility transportation. On various dates from 2006 to
2010, it employed the services of the petitioners, Hilario Dasco and seven others, as
bus drivers and/or conductors with travel routes of Manila (Pasay) to Bicol, Visayas
and Mindanao, and vice versa.
The petitioners filed a complaint against respondents PSEI and its manager,
Centurion Solano, for regularization, underpayment of wages, non-payment of
service incentive leave (SIL) and overtime pay and attorney’s fees. The Court of
Appeals (CA) overturned the decision of the National Labor Relations Commission
(NLRC). It considered the petitioners as field workers and, on that basis, denied
their claim for benefits, such as SIL and overtime pay. It ruled that there was no way
for the respondents to supervise the petitioners on their job. The petitioners are
practically on their own in plying the routes in the field, as in fact, they can deviate
from the fixed routes, take short cuts, make detours, and take breaks, among
others.
Did the CA err?
Ruling: Yes.
Guided by the foregoing norms, the NLRC properly concluded that the petitioners
are not field personnel but regular employees who perform tasks usually necessary
and desirable to the respondents’ business. Evidently, the petitioners are not field
personnel as defined above and the NLRC’s finding in this regard is supported by
the established facts of this case: (1) the petitioners, as bus drivers and/or
conductors, are directed to transport their passengers at a specified time and place;
(2) they are not given the discretion to select and contract with prospective
passengers; (3) their actual work hours could be determined with reasonable
certainty, as well as their average trips per month; and ( 4) the respondents
supervised their time and performance of duties.
In order to monitor their drivers and/or conductors, as well as the passengers and
the bus itself, the bus companies put checkers, who are assigned at tactical places
along the travel routes that are plied by their buses. The drivers and/or conductors
are required to be at the specific bus terminals at a specified time. In addition, there
are always dispatchers in each and every bus terminal, who supervise and ensure
prompt departure at specified times and arrival at the estimated proper time.
Obviously, these drivers and/or conductors cannot be considered as field personnel
while in the performance of their work.
xxx
The Court agrees with the above-quoted findings of the NLRC. Clearly, the
petitioners, as bus drivers and/or conductors, are left alone in the field with the
duty to comply with the conditions of the respondents’ franchise, as well as to take
proper care and custody of the bus they are using. Since the respondents are
engaged in the public utility business, the petitioners, as bus drivers and/or
conductors, should be considered as regular employees of the respondents because
they perform tasks which are directly and necessarily connected with the
respondents’ business. Thus, they are consequently entitled to the benefits
accorded to regular employees of the respondents, including overtime pay and SIL
pay (Reyes, J., SC Third Division,
REMINGTON CORP. VS. CASTANEDA
November 20, 2006
G.R. Nos. 169295-96
FACTS: Erlinda Castaneda instituted a complaint for illegal dismissal, underpayment
of wages, non-payment of overtime services, non-payment of SIL pay and non-
payment of 13th month pay against Remington Industrial Sales Corp. before the
NLRC-NCR.  
Erlinda alleged that she started working in 1983 as  company cook for Remington, a
corporation engaged in the trading business and that she continuously worked with
Remington until she was unceremoniously prevented from reporting for work when
Remington transferred to a new site.
Remington denied that it dismissed Erlinda illegally.  It posited that Erlinda was a
domestic helper, not a regular employee; Erlinda worked as a cook and this job
had nothing to do with Remington’s business of trading in construction or hardware
materials, steel plates and wire rope products.
In a Decision, the LA dismissed the complaint and ruled that the respondent was a
domestic helper under the personal service of Antonio Tan (the Managing Director),
finding that her work as a cook was not usually necessary and desirable in the
ordinary course of trade and business of the petitioner corporation, and that the
latter did not exercise control over her functions.  On the issue of illegal dismissal,
the labor arbiter found that it was the respondent who refused to go with the
family of Antonio Tan when the corporation transferred office and that, therefore,
respondent could not have been illegally dismissed.
ISSUE:  is Castaneda a regular employee or a domestic servant?
HELD: The petition is DENIED for lack of merit.  The assailed Decisions of the CA are
AFFIRMED
She is a REGULAR EMPLOYEE
In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the
staff houses of an industrial company was a regular employee of the said firm.  We
ratiocinated that:
Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms
“househelper” or “domestic servant” are defined as follows:
“The term ‘househelper’ as used herein is synonymous to the term ‘domestic
servant’ and shall refer to any person, whether male or female, who renders
services in and about the employer’s home and which services are usually necessary
or desirable for the maintenance and enjoyment thereof, and ministers exclusively
to the personal comfort and enjoyment of the employer’s family.”
The foregoing definition clearly contemplates such househelper or domestic servant
who is employed in the employer’s home to minister exclusively to the personal
comfort and enjoyment of the employer’s family.  Such definition covers family
drivers, domestic servants, laundry women, yayas, gardeners, houseboys and
similar househelps.
xxx                                          xxx                                                 xxx
The criteria is the personal comfort and enjoyment of the family of the employer in
the home of said employer.  While it may be true that the nature of the work of a
househelper, domestic servant or laundrywoman in a home or in a company
staffhouse may be similar in nature, the difference in their circumstances is that in
the former instance they are actually serving the family while in the latter case,
whether it is a corporation or a single proprietorship engaged in business or
industry or any other agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the employer.  In such
instance, they are employees of the company or employer in the business
concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic servant is
assigned to certain aspects of the business of the employer that such househelper
or domestic servant may be considered as such an employee.  The Court finds no
merit in making any such distinction.  The mere fact that the househelper or
domestic servant is working within the premises of the business of the employer
and in relation to or in connection with its business, as in its staffhouses for its guest
or even for its officers and employees, warrants the conclusion that such
househelper or domestic servant is and should be considered as a regular employee
of the employer and NOT as a mere family househelper or domestic servant as
contemplated in Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended.
In the case at bar, the petitioner itself admits in its position paper that respondent
worked at the company premises and her duty was to cook and prepare its
employees’ lunch and merienda.  Clearly, the situs, as well as the nature of
respondent’s work as a cook, who caters not only to the needs of Mr. Tan and his
family but also to that of the petitioner’s employees, makes her fall squarely within
the definition of a regular employee under the doctrine enunciated in the Apex
Mining case.  That she works within company premises, and that she does not cater
exclusively to the personal comfort of Mr. Tan and his family, is reflective of
the existence of the petitioner’s right of CONTROL over her functions, which is the
PRIMARY indicator of the existence of an employer-employee relationship.
NOTES:
THE OTHER ISSUE:
Was there illegal dismissal? NO
Petitioner contends that there was abandonment on respondent’s part when she
refused to report for work when the corporation transferred to a new location in
Caloocan City, claiming that her poor eyesight would make long distance travel a
problem. Thus, it cannot be held guilty of illegal dismissal.
On the other hand, the respondent claims that when the petitioner relocated, she
was no longer called for duty and that when she tried to report for work, she was
told that her services were no longer needed.  She contends that the petitioner
dismissed her without a just or authorized cause and that she was not given prior
notice, hence rendering the dismissal illegal.
We rule for the respondent.
As a regular employee, respondent enjoys the right to security of tenure under
Article 279 of the Labor Code and may only be dismissed for a just or authorized
cause, otherwise the dismissal becomes illegal and the employee becomes entitled
to reinstatement and full backwages computed from the time compensation was
withheld up to the time of actual reinstatement.
Abandonment is the deliberate and unjustified refusal of an employee to resume
his employment.  It is a form of neglect of duty; hence, a just cause for termination
of employment by the employer under Article 282 of the Labor Code, which
enumerates the just causes for termination by the employer.
For a valid finding of abandonment, these two factors should be present:
(1) the failure to report for work or absence without valid or justifiable reason; and
(2) a clear intention to sever employer-employee relationship, with the second as
the more determinative factor which is manifested by overt acts from which it may
be deduced that the employee has no more intention to work. The intent to
discontinue the employment must be shown by clear proof that it was deliberate
and unjustified.  This, the petitioner failed to do in the case at bar.
Alongside the petitioner’s contention that it was the respondent who quit her
employment and refused to return to work, greater stock may be taken of
the respondent’s immediate filing of her complaint with the NLRC.   Indeed, an
employee who loses no time in protesting her layoff cannot by any reasoning be
said to have abandoned her work, for it is well-settled that the filing of an employee
of a complaint for illegal dismissal with a prayer for reinstatement is proof enough
of her desire to return to work, thus, negating the employer’s charge of
abandonment.
In termination cases, the burden of proof rests upon the employer to show that the
dismissal is for a just and valid cause; failure to do so would necessarily mean that
the dismissal was illegal.  The employer’s case succeeds or fails on the strength of
its evidence and not on the weakness of the employee’s defense.  If doubt exists
between the evidence presented by the employer and the employee, the scales of
justice must be tilted in favor of the latter
It is well-settled that the application of technical rules of procedure may be relaxed
to serve the demands of substantial justice, particularly in labor cases. Labor cases
must be decided according to justice and equity and the substantial merits of the
controversy.  Rules of procedure are but mere tools designed to facilitate the
attainment of justice.  Their strict and rigid application, which would result in
technicalities that tend to frustrate rather than promote substantial justice, must
always be avoided
Atienza vs. Saluta
RESPONDENT Noel Sacramento Saluta filed a complaint against CRV Corp. and
petitioner Celia Atienza for illegal dismissal and money claims. He alleged that he
was hired as a company driver by CRV Corp. He was assigned to drive for the
petitioner Celia Atienza, one of the company’s top officials and received P9,000
monthly salary.
On the other hand, petitioner claimed that respondent was not an employee of CRV
Corp. but was hired as her personal/family driver. His duty was simply to drive for
her and her family to anywhere they wish to go. Aside from his monthly salary, he
enjoyed free board and lodging.
The Supreme Court ruled that respondent is a family driver of the petitioner.
The question that cropped up is as to which law governs his rights as such: the
Labor Code or the Civil Code?
Ruling: The Civil Code.
Article 141, Chapter 3, Book III on Employment of Househelpers of the Labor Code
provides that family drivers are covered in the term domestic or household service.
Thus, under the Labor Code, the rules for indemnity in case a family driver is
terminated from the service shall be governed by Article 149 thereof.
However, Section 44 of Republic Act 10361, otherwise known as the “Domestic
Workers Act” or “Batas Kasambahay” (Kasambahay Law), expressly repealed
Chapter III (Employment of Househelpers) of the Labor Code, which includes
Articles 141 and 149 mentioned above.
The Kasambahay Law, on the other hand, made no mention of family drivers in the
enumeration of those workers who are covered by the law. This is unlike Article 141
of the Labor Code.
Thus, Section 4(d) of the Kasambahay Law pertaining to who are included in the
enumeration of domestic or household help cannot also be interpreted to include
family drivers because the latter category of worker is clearly not included. It is a
settled rule of statutory construction that the express mention of one person, thing,
or consequence implies the exclusion of all others—this is expressed in the familiar
maxim, expressio unius est exclusio alterius. Moreover, Section 2 of the
Implementing Rules and Regulations (IRR) of the Kasambahay Law provides:
Section 2. Coverage—This IRR shall apply to all parties to an employment contract
for the services of the following Kasambahay, whether on a live-in or live-out
arrangement, such as but not limited to:
The following are not covered:
(a) Service providers;
(b) Family drivers;
The aforecited administrative rule clarified the status of family drivers as among
those not covered by the definition of domestic or household help as contemplated
in Section 4(d) of the Kasambahay Law. Such provision should be respected by the
courts, as the interpretation of an administrative government agency, which is
tasked to implement the statute, is accorded great respect and ordinarily controls
the construction of the courts. Moreover, the statutory validity of the same
administrative rule was never challenged. This Court has ruled time and again that
the constitutionality or validity of laws, orders, or such other rules with the force of
law cannot be attacked collaterally. There is a legal presumption of validity of these
laws and rules. Unless a law or rule is annulled in a direct proceeding, the legal
presumption of its validity stands. And while it is true that constitutional provisions
on social justice demand that doubts be resolved in favor of labor, it is only
applicable when there is doubt. Social justice principles cannot be used to expand
the coverage of the law to subjects not intended by the Congress to be included.
Due to the express repeal of the Labor Code provisions pertaining to househelpers,
which includes family drivers, by the Kasambahay Law; and the non-applicability of
the Kasambahay Law to family drivers, there is a need to revert back to the Civil
Code provisions, particularly Articles 1689, 1697 and 1699, Section 1, Chapter 3,
Title VIII, Book IV thereof. (Celia R. Atienza vs. Noel Sacramento Saluta, G.R. 233413,
June 17, 2019).
LAMBO and BELOCURA vs. NLRC and J.C. TAILOR SHOP and/or CO
G.R. No. 111042
October 26, 1999
FACTS: Lambo and Belocura were employed as tailors by J.C. Tailor Shop and/or
Johnny Co in 1985. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of
suits they made.
In 1989, petitioners filed a complaint against private respondents for illegal
dismissal and sought recovery of overtime pay, holiday pay, premium pay on
holiday and rest day, SIL pay, separation pay, 13th month pay, and attorney’s fees.
After hearing, LA Gutierrez found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners’ claims.
On appeal, the NLRC reversed the decision of the LA. It found that petitioners had
not been dismissed from employment but merely threatened with a closure of the
business if they insisted on their demand for a “straight payment of their minimum
wage,” after petitioners, in 1989, walked out of a meeting with private respondents
and other employees. According to the NLRC, during that meeting, the employees
voted to maintain the company policy of paying them according to the volume of
work finished. Only petitioners allegedly insisted that they be paid the minimum
wage and other benefits. The NLRC held petitioners guilty of abandonment of
work and accordingly dismissed their claims except that for 13th month pay.
Petitioners deny that they abandoned their work.
ISSUE: Are Lambo and Belocura regular employees?
HELD: WHEREFORE, the decision of the nlrcis SET ASIDE and another one is
RENDERED ordering private respondents to pay petitioners the total amount of
P181,102.40, as computed [by the LA]
YES
There is no dispute that petitioners were employees of private respondents
although they were paid not on the basis of time spent on the job but according to
the quantity and the quality of work produced by them. There are two categories of
employees paid by results:
(A) those whose time and performance are supervised by the employer.
(Here, there is an element of control and supervision over the manner as to how
the work is to be performed. A piece-rate worker belongs to this category especially
if he performs his work in the company premises.); and
(B) those whose time and performance are unsupervised.
(Here, the employer’s control is over the RESULT of the work. Workers on pakyao
and takay basis belong to this group.)
Both classes of workers are paid per unit accomplished. Piece-rate payment is
generally practiced in garment factories where work is done in the company
premises, while payment on pakyao and takay basis is commonly observed in the
agricultural industry, such as in sugar plantations where the work is performed in
bulk or in volumes difficult to quantify.  Petitioners belong to the first category, i.e.,
supervised employees.
In this case, private respondents exercised control over the work of petitioners. As
tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m.
daily, including Sundays and holidays. The mere fact that they were paid on a piece-
rate basis does not negate their status as regular employees of private respondents.
Payment by the piece is just a method of compensation and does not define the
essence of the relations.  Nor does the fact that petitioners are not covered by the
SSS affect the employer-employee relationship.
Indeed, the following factors show that petitioners, although piece-rate workers,
were regular employees of private respondents:
(1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was
necessary or desirable in the usual business of private respondents, which is
engaged in the tailoring business;
(2) petitioners worked for private respondents throughout the year, their
employment not being dependent on a specific project or season; and,
(3) petitioners worked for private respondents for more than one year
NOTES:
The term “wage” is broadly defined in Art. 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed or
ascertained on a time, task, piece or commission basis.
In determining the existence of an employer-employee relationship, the following
elements must be considered:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the power to control the employee’s conduct.
Of these elements, the most important criterion is whether the employer controls
or has reserved the right to control the employee not only as to the result of the
work but also as to the means and methods by which the result is to be
accomplished
G.R. No. L-9265             April 29, 1957
LUZON STEVEDORING CO., INC., petitioner,  which the laborer is not working AND CAN LEAVE HIS WORKING PLACE and can rest
vs.
LUZON MARINE DEPARTMENT UNION and THE HON. MODESTO CASTILLO, THE
HON. JOSE S. BAUTISTA, THE HON. V. JIMENEZ YANSON and THE HON. JUAN L.
LANTING, Judges of the Court of Industrial Relations,  respondents.
FACTS: Luzon Marine Department Union filed a petition with the Court of Industrial
Relations against petitioner Luzon Stevedoring Co., Inc for full recognition of the
right of COLLECTIVE bargaining, close shop and check off. However, on July 18,
1948, while the case was still pending with the CIR, said labor union declared a
strike which was ruled down as illegal by the SC. In view of said ruling, the Union
filed a “Constancia” with the Court of Industrial Relations praying that the
remaining unresolved demands of the Union presented in their original petition, be
granted.
One of those claims was that the work performed in excess of eight (8) hours he
paid an overtime pay of 50 per cent the regular rate of pay, and that work
performed on Sundays and legal holidays be paid double the regular rate of pay.
TRIAL COURT: Petitioner gave said employees 3 free meals every day and about 20
minutes rest after each mealtime; that they worked from 6:00 am. to 6:00 p.m.
every day including Sundays and holidays, and for work performed in excess of 8
hours, the officers, patrons and radio operators were given overtime pay in the
amount of P4 each and P2 each for the rest of the crew up to March, 1947, and
after said date, these payments were increased to P5 and P2.50, respectively, until
the time of their separation or the strike of July 19, 1948; that when the tugboats
underwent repairs, their personnel worked only 8 hours a day excluding Sundays
and holidays; that although there was an effort on the part of claimants to show
that some had worked beyond 6:00 p.m., the evidence was uncertain and indefinite
and that demand was, therefore, denied; that respondent Company, by the nature
of its business and as defined by law is considered a public service operator by the
Public Service Commission, and, therefore, exempt from paying additional
remuneration or compensation for work performed on Sundays and legal holidays.
CIR: Ruled that the 20 minutes’ rest given the claimants after mealtime should not
be deducted from the 4 hours of overtime worked performed by said claimants
The company though insists that the rules on the 8 hours work of land based jobs
should be different from their seamen counterparts.
ISSUE: WON the rest periods given to the claimants (after each meal) should be
deducted from their overtime pay.
HELD: NO.
The SC finds no reason to set for seamen a criterion different from that applied to
laborers on land.
Section 1 of Commonwealth Act No. 444, known as the Eight-Hour Labor Law,
provides:
SEC. 1. The legal working day for any person employed by another shall be of not
more than eight hours daily. When the work is not continuous, the time during
completely, shall not be counted.
The only thing to be done is to determine the meaning and scope of the term
“working place” used therein. As We understand this term, a laborer need not leave
the  premises of the factory, shop or boat in order that his period of rest shall not be
counted, it being enough that he “cease to work”, may rest completely and leave or
may leave at his will the spot where he actually stays while working, to go
somewhere else, whether within or outside the premises of said factory, shop or
boat. If these requisites are complied with, the period of such rest shall not be
counted.
In the case at bar We do not need to look into the nature of the work of claimant
mariners to ascertain the truth of petitioners allegation that this kind of seamen
have had enough “free time”, a task of which we are relieved, for although after an
ocular inspection of the working premises of the seamen affected in this case,
the TRIAL COURT declared in his decision that the Company gave the complaining
laborers 3 free meals a day with a recess of 20 minutes after each meal, this
decision was specifically amended by the CIR, wherein it held that the claimants
herein rendered services to the Company from 6:00 a.m. to 6:00 p.m. including
Sundays and holidays, which implies either that said laborers were not given any
recess at all, or that they were not allowed to leave the spot of their working
place, or that they could not rest completely. And such resolution being on a
question essentially of fact, this Court is now precluded to review the same. 
NATIONAL DEVELOPMENT COMPANY, petitioner, 
vs.
COURT OF INDUSTRIAL RELATIONS and NATIONAL TEXTILE WORKERS
UNION, respondents.
FACTS: At the National Development Co., a government-owned and controlled
corporation, there were four shifts of work. One shift was from 8 a.m. to 4 p.m.,
while the three other shifts were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 p.m.
and, finally, from 10 p.m. to 6 a.m. In each shift, there was a one-hour mealtime
period, to wit: From (1) 11 a.m. to 12 noon for those working between 6 a.m. and 2
p.m. and from (2) 7 p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.
(Petitioner does not want to pay for the 1 hour lunch time) The records disclose that
although there was a one-hour mealtime, petitioner nevertheless credited the
workers with eight hours of work for each shift and paid them for the same number
of hours. However, since 1953, whenever workers in one shift were required to
continue working until the next shift, petitioner instead of crediting them with eight
hours of overtime work, has been paying them for six hours only, petitioner that the
two hours corresponding to the mealtime periods should not be included in
computing compensation.
CIR: Mealtime should be counted in the determination of overtime work
ISSUE: WON mealtime breaks should be considered working time
HELD: YES
The legal working day for any person employed by another shall be of not more
than eight hours daily.When the work is not continuous, the time during which the
laborer is not working and can leave his working place and can rest completely shall
not be counted. (Sec. 1, Com. Act No. 444)
It will be noted that, under the law, the idle time that an employee may spend for
resting and during which he may leave the spot or place of work though not the
premises of his employer, is not counted as working time only where the work is
broken or is not continuous.
In this case, the CIR’s finding that work in the petitioner company was continuous
and did not permit employees and laborers to rest completely is not without basis
in evidence and following our earlier rulings, shall not disturb the same.
The time cards show that the work was continuous and without interruption. There
is also the evidence adduced by the petitioner that the pertinent employees can
freely leave their working place nor rest completely. There is furthermore the
aspect that during the period covered the computation the work was on a 24-hour
basis and previously stated divided into shifts. (ang labo bakit “can freely leave their
working place  nor rest completely” feeling ko typo yan sa scra or ganun talaga?)
From these facts, the CIR correctly concluded that work in petitioner company was
continuous and therefore the mealtime breaks should be counted as working time
for purposes of overtime compensation.
SIME DARBY PILIPINAS, INC. petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION (2ND DIVISION) and SIME DARBY
SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP), respondents.
BELLOSILLO, J.:
FACTS:
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive
tires, tubes and other rubber products. Sime Darby Salaried Employees Association
(ALU-TUCP), private respondent, is an association of monthly salaried employees of
petitioner at its Marikina factory. 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.
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 —
TO: ALL FACTORY-BASED EMPLOYEES
RE: NEW WORK SCHEDULE
Effective Monday, September 14, 1992, the new work schedule of the factory office
will be as follows:
7:45 A.M. — 4:45 P.M. (Monday to Friday)
7:45 A.M. — 11:45 A.M. (Saturday).
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. (Monday to Friday).
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
in Sime Darby International Tire Co., Inc. v. NLRC. 2 However, 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.
Private respondent appealed to respondent National Labor Relations Commission
(NLRC) which sustained the Labor Arbiter and dismissed the appeal. 4 However,
upon motion for reconsideration by private respondent, the NLRC, this time with
two (2) new commissioners replacing those who earlier retired, reversed its earlier
decision as well as the decision of the Labor Arbiter. 5 The NLRC considered the
decision of this Court in the Sime Darby case of 1990 as the law of the case wherein
petitioner was ordered to pay “the money value of these covered employees
deprived of lunch and/or working time breaks.” The public respondent declared
that the new work schedule deprived the employees of the benefits of a time-
honored company practice of providing its employees a 30-minute paid lunch break
resulting in an unjust diminution of company privileges prohibited by Art. 100 of the
Labor Code, as amended.
Hence, this petition alleging that public respondent committed grave abuse of
discretion amounting to lack or excess of jurisdiction.
The Office of the Solicitor General filed in a lieu of comment a manifestation and
motion recommending that the petitioner be granted, alleging that the
memorandum which contained the new work schedule was not discriminatory of
the union members nor did it constitute unfair labor practice on the part of
petitioner.
ISSUE:
Whether or Not the act of management in revising the work schedule of its
employees and discarding their paid lunch break constitutes unfair labor practice.
RULING:
We agree, hence, we sustain petitioner. 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. 6 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. 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. We
agree 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.
It was grave abuse of discretion for public respondent to equate the earlier Sime
Darby case 9 with the facts obtaining in this case. That ruling in the former case is
not applicable here. The issue in that case involved the matter of granting lunch
breaks to certain employees while depriving the other employees of such breaks.
This Court affirmed in that case the NLRC’s finding that such act of management
was discriminatory and constituted unfair labor practice.
Further, management retains the prerogative, whenever exigencies of the service
so require, to change the working hours of its employees. So long as such
prerogative is exercised in good faith for the advancement of the employer’s
interest and not for the purpose of defeating or circumventing the rights of the
employees under special laws or under valid agreements, this Court will uphold
such exercise. 12
WHEREFORE, the Petition is GRANTED. The Resolution of the National Labor
Relations Commission is SET ASIDE and the decision of the Labor Arbiter
dated dismissing the complaint against petitioner for unfair labor practice
is AFFIRMED.
ARICA ET AL VS. NLRC ET AL DIGEST
GRN 78210  February 28, 1989
FACTS:
This case stemmed from a complaint filed against private respondent Stanfilco for
assembly time, moral damages and attorney’s fees, with the Regional Arbitration-
Davao City. The Labor Arbiter rendered a decision in favor of private respondent
STANFILCO, holding that:
“We cannot but agree with respondent that the pronouncement in that earlier case,
i.e.  the thirty-minute assembly time long practiced cannot be considered waiting
time or  work time and, therefore, not compensable, has become the law of the case
which can no  longer be disturbed without doing violence to the time-honored
principle of resjudicata.”
NLRC uphold the Labor Arbiters’ decision and declared that:
“Surely, the customary functions referred to in the above-quoted provision of
the agreement includes the long-standing practice and institutionalized non-
compensable  assembly time. This, in effect, estopped complainants from pursuing
this case.
MR was denied hence this petition for review on certiorari. Petitioners contend that
the preliminary activities as workers of respondents STANFILCO in the assembly
area is compensable as working time (from 5:30am to 6:00 am) since these
preliminary activities are necessarily and primarily for private respondent’s benefit.
These preliminary activities of the workers are as follows-.
(a) First there is the roll call. Followed by getting their individual work assignments
from the foreman.
(b) Then, they are individually required to accomplish the Laborer’s Daily
Accomplishment Report during which they are often made to explain about their
reported accomplishment the following day.
(c) Then they go to the stockroom to get the working materials, tools and
equipment.
(d) Lastly, they travel to the field bringing with them their tools, equipment and
materials.
All these activities take 30 minutes to accomplish.
.Respondent avers that the instant complaint is not new because it is the very same
claim they brought against respondent by the same group of rank and file
employees in the case of Arica vs. National Labor Relations Commission which was
filed before in a different case. The said case involved a claim for “waiting time”, as
the complainants purportedly were required to assemble.
In the previous case, the 30-minute assembly time long practiced and
institutionalized by mutual consent of the parties under their CBA cannot be
considered as ‘waiting time’ within the purview of Section 5, Rule 1, Book III of the
Rules and Regulations Implementing the Labor.
ISSUE:
WON the “assembly time” is compensable.
RULING:
The 30-minute assembly is a deeply-rooted, routinary practice of the employees,
and the proceedings attendant thereto are not infected with complexities as to
deprive the workers the time to attend to other personal pursuits. They are not new
employees as to require the company to deliver long briefings regarding their
respective work assignments. Their houses are situated right on the area where the
farms are located, such that after the roll call, which does not necessarily require
the personal presence, they can go back to their houses to attend to some chores.
In short, they are not subject to the absolute control of the company during this
period, otherwise, their failure to report in the assembly time would justify the
company to impose disciplinary measures. The evidence of the case demonstrates
that the 30-minute assembly time was not primarily intended for the interests of
the employer, but ultimately for the employees to indicate their availability or non-
availability for work during every working day.
Herein petitioners are merely reiterating the very same claim which they filed in
Arica vs NLRC and which records show had already long been considered
terminated and closed by this Court. Therefore, the NLRC can not be faulted for
ruling that petitioners’ claim is already barred by res judicata.
Petition is DISMISSED for lack of merit and the decision of the National Labor
Relations Commission is AFFIRMED.
UNIVERSITY OF PANGASINAN FACULTY UNION, petitioner, vs. UNIVERSITY OF
PANGASINAN And NATIONAL LABOR RELATIONS COMMISSION, respondents.
GRN L-63122  February 20, 1984
FACTS:
Petitioner is a labor union composed of faculty members of the respondent
University of Pangasinan, an educational institution duly organized and existing by
virtue of the laws of the Philippines.
Th petitioner filed a complaint against the private respondent with the Arbitration
Branch of the NLRC- Dagupan City seeking: (a) the payment of Emergency Cost of
Living Allowances (ECOLA) for November 7 to December 5, 1981, a semestral break;
(b) salary increases from the 60% of the incremental proceeds of increased tuition
fees; and (c) payment of salaries for suspended extra loads.
The petitioner’s members are full-time professors, instructors, and teachers of
respondent University. The teachers in the college level teach for a normal duration
of 10 months a school year, divided into 2 semesters of 5 months each, excluding
the 2 months summer vacation. These teachers are paid their salaries on a regular
monthly basis.
During the semestral break (Nov. 7- Dec. 5, 1981), they were not paid their ECOLA.
The private respondent claims that the teachers are not entitled thereto because
the semestral break is not an integral part of the school year and there being no
actual services rendered by the teachers during said period, the principle of “No
work, no pay” applies.
During the same school year (1981-1982), the private respondent was authorized
by the Ministry of Education and Culture to collect, from its students a 15% increase
of tuition fees. Petitioner’s members demanded a salary increase effective the first
semester of said schoolyear to be taken from the 60% percent incremental
proceeds of the said increased tuition fees as mandated by the PD 451. Private
respondent refused.
ISSUES:
WON PETITIONER’S MEMBERS ARE ENTITLED TO ECOLA DURING THE SEMESTRAL
BREAK FROM NOV. 7 – DEC. 5, 1981 OF THE 1981-82 SCHOOL YEAR.
WON 60% OF THE INCREMENTAL PROCEEDS OF INCREASED TUITION FEES SHALL BE
DEVOTED EXCLUSIVELY TO SALARY INCREASE,
RULING:
Yes. According to various Presidential Decrees on ECOLAs  “Allowances of Fulltime
Employees . . .” that “Employees shall be paid in full the required monthly allowance
regardless of the number of their regular working days if they incur no absences
during the month. If they incur absences without pay, the amounts corresponding to
the absences may be deducted from the monthly allowance . . .”; and on “Leave of
Absence Without Pay”, that “All covered employees shall be entitled to the
allowance provided herein when they are on leave of absence with pay.”
The petitioner’s members are full-time employees receiving their monthly salaries
irrespective of the number of working days or teaching hours in a month. However,
they find themselves in a situation where they are forced to go on leave during
semestral breaks. These semestral breaks are in the nature of work interruptions
beyond the employees’ control. As such, these breaks cannot be considered as
absences within the meaning of the law for which deductions may be made from
monthly allowances. The “No work, no pay” principle does not apply in the instant
case. The petitioner’s members received their regular salaries during this period. It
is clear from the provision of law that it contemplates a “no work” situation where
the employees voluntarily absent themselves. Petitioners, in the case at bar, do not
voluntarily absent themselves during semestral breaks. Rather, they are constrained
to take mandatory leave from work. For this they cannot be faulted nor can they be
begrudged that which is due them under the law.
The intention of the law is to grant ECOLA upon the payment of basic wages. Hence,
we have the principle of “No pay, no ECOLA” the converse of which finds
application in the case at bar. Petitioners cannot be considered to be on leave
without pay so as not to be entitled to ECOLA, for, as earlier stated, the petitioners
were paid their wages in full for the months of November and December of 1981,
notwithstanding the intervening semestral break.
Although said to be on forced leave, professors and teachers are, nevertheless,
burdened with the task of working during a period of time supposedly available for
rest and private matters. There are papers to correct, students to evaluate,
deadlines to meet, and periods within which to submit grading reports. Although
they may be considered by the respondent to be on leave, the semestal break could
not be used effectively for the teacher’s own purposes for the nature of a teacher’s
job imposes upon him further duties which must be done during the said period of
time. Arduous preparation is necessary for the delicate task of educating our
children. Teaching involves not only an application of skill and an imparting of
knowledge, but a responsibility which entails self dedication and sacrifice. It would
be unfair for the private respondent to consider these teachers as employees on
leave without pay to suit its purposes and, yet, in the meantime, continue availing
of their services as they prepare for the next semester or complete all of the last
semester’s requirements.
Thus, the semestral break may also be considered as “hours worked.” For this, the
teachers are paid regular salaries and, for this, they should be entitled to ECOLA.
The purpose of the law is to augment the income of employees to enable them to
cope with the harsh living conditions brought about by inflation; and to protect
employees and their wages against the ravages brought by these conditions
With regard to the second issue, under Section 3 of Presidential Decree 451, “no
increase in tuition or other school fees or charges shall be approved 60% of the
proceeds is allocated for increase in salaries or wages of the members of the faculty
and all other employees of the school concerned, and the balance for institutional
development, student assistance and extension services, and return to investments:
Provided, That in no case shall the return to investments exceed twelve (12%) per
centum of the incremental proceeds; . . .”
Such allowances must be taken in resources of the school not derived from tuition
fees.
If the school happen to have no other resources to grant allowances and benefits,
either mandated by law or secured by collective bargaining, such allowances and
benefits should be charged against the return to investments referred.
The law is clear. The 60% incremental proceeds from the tuition increase are to be
devoted entirely to wage or salary increases which means increases in basic salary.
The law cannot be construed to include allowances which are benefits over and
above the basic salaries of the employees. To charge such benefits to the 60%
incremental proceeds would be to reduce the increase in basic salary provided by
law.
Law provides that 60% of tuition fee increase should go to wage increases and 40%
to institutional developments, student assistance, extension services, and return on
investments. Framers of the law intended this portion (return on investments) of
the increases in tuition fees to be a general fund to cover up for the university’s
miscellaneous expenses.
G.R. No. 122240/ November 18, 1999
CRISTONICO B. LEGAHI v. NATIONAL LABOR RELATIONS COMMISSION and UNITED
PHILIPPINE LINES, INC., NORTHSOUTH SHIP MGT., (PTE), LTD., SINGAPORE,
GREGORIO V. DE LIMA, JR., TOR KARLSEN and PIONEER INSURANCE & SURETY
CORP.
KAPUNAN, J.:
FACTS: Petitioner entered in a contract of employment which stipulated that his
term of employment as Chief Cook was for ten months beginning October 9, 1992
with a basic monthly salary of US$450.00 with 44 hours weekly as minimum
number of hours worked with a fixed overtime pay (OT) of $185.00 and three (3)
days leave with pay every month.
 
For several months in 1992 and January 1993, petitioner was asked by the
Shipmaster to prepare victualling cost statement for months of October, November,
and December 1992. Petitioner, after learning that such preparation involves
mathematical skills, as it would require estimation of food cost, value of stocks,
intimated that he did not know how to do such work as it was not part of the duties
of a chief cook. He was told that it was not a difficult job and that he only needed to
copy the previous forms. After much reluctance, petitioner nonetheless prepared
the statements in deference to the Shipmaster.
 
When petitioner finally deferred from performing said tasks, a committee was
formed headed by the Shipmaster himself with the Chief Officer, Chief Engineer and
Bosun as members and informed petitioner, in meeting held for that purpose, that
he was dismissed.
 
The next day, petitioner was repatriated to the Philippines through the assistance of
the Philippine Consulate.
 
Upon arrival or on February 16, 1993, petitioner filed with the POEA a complaint for
illegal dismissal against private respondents. He sought the payment of his salary
corresponding to the unexpired portion of his contract, unpaid overtime pay, leave
pay, salary differential and damages.
 
POEA promulgated a decision finding that there was just cause for petitioner’s
dismissal.
 
On appeal to the National Labor Relations Commission (NLRC), the Commission
affirmed in toto the POEA decision.
 
ISSUE: Whether or not the payment of the overtime pay should be allowed.
 
RULING: NO.
 
Seamen are required to stay on board their vessels by the very nature of their
duties, and it is for this reason that, in addition to their regular compensation, they
are given free living quarters and subsistence allowances when required to be on
board. It could not have been the purpose of our law to require their employers to
pay them overtime even when they are not actually working; otherwise, every
sailor on board a vessel would be entitled to overtime for sixteen hours each a day,
even if he spent all those hours resting or sleeping in his bunk, after his regular tour
of duty. The correct criterion in determining whether or not sailors are entitled to
overtime pay is not, therefore, whether they were on board and can not leave ship
beyond the regular eight working hours a day, but whether they actually rendered
service in excess of said number of hours.
Lepanto Consolidated Mining v. Mamaril
ON Nov. 21, 2006, respondents Maximo C. Mamaril and 15 others filed a complaint
against petitioner Lepanto Consolidated Mining Company (Lepanto) with a claim for
payment of overtime pay, among others.
The Court of Appeals (CA) sustained the decision of the National Labor Relations
Commission (NLRC) awarding respondents overtime pay. The CA noted that both
lawyer Weldy Manlong, the administrative service group manager of petitioner, and
Edgar K. Langeg, the assistant security superintendent of the security and
communications services department, hinted in their respective affidavits that
respondents were ordered to render overtime work and work during the holiday
and their rest day. They pointed out that some of these security guards remained at
their post beyond the regular eight working hours to keep an eye on the strikers.
Edgar Langeg specifically stated that the overtime work that the security guards
rendered during the duration of the strike was approved by the administrative
group manager and resident manager of petitioner.
Petitioner Lepanto contested with the Supreme Court the award of overtime pay.
Can the CA decision be sustained?
Ruling: Yes.
In Damasco v. NLRC, 400 Phil. 568, 586 (2000), we held that an employer’s formal
admission that an employee worked beyond eight hours should entitle the
employee to overtime compensation.
In this case, such admissions, that respondents rendered overtime work and work
during their holiday and rest days on the period specified therein, can be gleaned
from the affidavits executed by Lepanto’s managers, Weldy Manlong, and Edgar
Langeg. Thus, respondents are clearly entitled to these benefits.
This Court has repeatedly ruled that any doubt arising from the evaluation of
evidence as between the employer and the employee must be resolved in favor of
the latter. As an employer, it is incumbent upon Lepanto to prove payment.
In G & M (Phils.) Inc. v. Cruz, 496 Phil. 119, 124-125 (2005), we held that the burden
of proving payment of monetary claims rests on the employer since the pertinent
personnel files, payrolls, records, remittances and other similar documents—which
will show that overtime, differentials, service incentive leave, and other claims of
workers have been paid—are not in the possession of the worker but in the custody
and absolute control of the employer. Thus, the burden of showing with legal
certainty that the obligation has been discharged with payment falls on the debtor,
in accordance with the rule that one who pleads payment has the burden of proving
it.
In this case, Lepanto failed to discharge such burden of proof. Lepanto submitted
daily time sheets showing that respondents rendered eight-hour work days, signed
by respondents and countersigned by a Col. Doromal as the department head.
However, as found by the CA in its decision dated 21 October 2015:
Then again the daily time sheets presented by petitioner are not substantial proof
that private respondents did not render overtime work. It can be plainly observed
from these daily time sheets that the number of hours worked by private
respondents were uniform and were written by the same hand. For this reason,
these daily time sheets should be taken with a grain of salt xx x.
Petitioner, nonetheless, insists that it paid private respondents’ overtime pay and
holiday pay. Hence, petitioner should have at least presented copies of its payroll or
copies of the pay slips of respondents to show payment of these benefits.
However, it failed to do so. Due to such failure of the petitioner, there arises a
presumption that such evidence, if presented, would be prejudicial to it. Likewise,
petitioner could be deemed to have waived its defense and admitted the
allegations of the private respondents. (Lepanto Consolidated Mining Company vs.
Maximo C. Mamaril, et.al., G.R. No. 225725, January 16, 2019).
ASSOCIATION OF INTERNATIONAL SHIPPING LINES, INC., in its own behalf and in
representation of its members: AMERICAN TRANSPORT LINES, INC., AUSTRALIAN
NATIONAL LINE, xxxx  petitioners, 
vs.
UNITED HARBOR PILOTS’ ASSOCIATION OF THE PHILIPPINES, INC.,  respondent.
FACTS: On March 1, 1985, the Philippine Ports Authority (PPA) issued PPA
Administrative Order (AO) No. 03-85 [herein referred to PPA AO 03-85] substantially
adopting the provisions of Customs Administrative Order (CAO) No. 15-654 on the
payment of additional charges for pilotage service5 rendered “between 1800H to
1600H,” or on “Sundays or Holidays,” practically referring to “nighttime and
overtime pay.”
On February 3, 1986, responding to the clamor of harbor pilots for the increase and
rationalization of pilotage service charges, then President Ferdinand E. Marcos
issued Executive Order (EO) No. 1088 providing for uniform and modified rates for
pilotage services rendered in all Philippine ports. It fixed the rate of pilotage fees on
the basis of the “vessel’s tonnage” and provided that the “rate for docking and
undocking anchorage, conduction and shifting and other related special services is
equal to 100%.” EO No. 1088 also contained a repealing clause stating that all
orders, letters of instruction, rules, regulations, and issuances inconsistent with it
are repealed or amended accordingly.
Subsequently, pursuant to EO No. 1088, the PPA issued several resolutions [Res. No.
1486, 1541, and 1554 ] disallowing overtime premium or charge and recalling its
recommendation for a reasonable night premium pay or night differential pay.
On the strength of PPA Resolution No. 1486, petitioners Association of International
Shipping Lines (AISL) and its members refused to pay respondent United Harbor
Pilots’ Association of the Philippines, Inc. (UHPAP)’s claims for nighttime and
overtime pay.10 In response, UHPAP threatened to discontinue pilotage services
should their claims be continually ignored.
Petitioners then filed a petition for declaratory relief with the RTC. The issues raised
there were: (1) whether EO No. 1088 authorized the payment of nighttime and
overtime pay xxx
RTC granted the petition and declared that respondent UHPAP is not authorized to
collect any overtime or night shift differential for pilotage services rendered;
respondent UHPAP filed directly before this Court a petition for review on certiorari,
decision was reversed in favor of respondents. Decision became final and
executory. Respondent UHPAP filed a motion for the issuance of a writ of execution
with the RTC.14Petitioners opposed15 the motion alleging that,
x x x [W]hen the Supreme Court ruled and declared that Executive Order 1088 does
not deprive the PPA of its power and authority to promulgate rules and rates for
payment of fees including additional charges, it had effectively ruled on the validity
of PPA resolutions 1486, 1541, and 1554.
Opposition denied. Hence, filed a petition for certiorari under Rule 65 with CA,
partly granted rendering PPA Resolution Nos. 1486, 1541, and 1554 are valid and
effective thereby disallowing the collection of overtime pay BUT did not discuss the
logical consequence of the resolution of the issue on PPA Resolution. Therefore,
filed a motion for partial reconsideration, DENIED. Hence, the present recourse.
ISSUES: (1) whether EO No. 1088 repealed the provisions of CAO No. 15-65 and PPA
AO No. 03-85, as amended, on payment of additional pay for holidays work and
premium pay for nighttime service; (2) WON PPA Resolutions remain valid.
HELD: In both issues NO
as this Court pronounced in G.R. No. 133763, there is nothing in EO No. 1088 that
reveals any intention on the part of Former President Marcos to amend or
supersede the provisions of PPA AO No. 03-85 on nighttime and overtime pay.
While Section 3 of EO No. 1088 provides a general repealing clause, the same is
made dependent upon its actual inconsistency with other previous orders, rules,
regulations or other issuance.
There is no inconsistency between EO No. 1088 and the provisions of PPA AO No.
03-85. These two orders dwell on entirely different subject matters.
EO No. 1088 provides for uniform and modified rates for pilotage services rendered
to foreign and coastwise vessels in all Philippine ports, public or private. On the
other hand, the subject matter of the provisions of PPA AO No. 03-85 is the
payment of the additional charges of nighttime and overtime pay. Plainly, EO No.
1088 involves the basic compensation for pilotage service while PPA AO No. 03-85
provides for the additional charges where pilotage service is rendered under certain
circumstances.
Members of respondent UHPAP are entitled to nighttime and overtime pay.
Undoubtedly, pursuant to PPA AO No. 03-85, members of respondent UHPAP are
legally entitled to nighttime and overtime pay.
It bears pointing out that additional compensation for nighttime work is founded on
public policy.32 Working at night is violative of the law of nature for it is the period
for rest and sleep. An employee who works at night has less stamina and vigor.
Thus, he can easily contract disease. The lack of sunlight tends to produce anemia
and tuberculosis and predispose him to other ills. Night work brings increased
liability to eyestrain and accident. Serious moral dangers also are likely to result
from the necessity of traveling the street alone at night, and from the interference
with normal home life.33 Hygienic, medical, moral, cultural and socio-biological
reasons are in accord that night work has many inconveniences and when there is
no alternative but to perform it, it is but just that the laborer should earn greater
salary than ordinary work so as to compensate the laborer to some extent for the
said inconveniences.34
**Respondent’s motion for execution is procedurally infirm. In such civil actions for
declaratory relief under Rule 63 of the Rules of Court, the judgment does not entail
an executory process, as the primary objective of petitioner is to determine any
question of construction or validity and for a declaration of concomitant rights and
duties.39 The proper remedy would have been for members of respondent UHPAP
to claim for overnight and nighttime pay before petitioners AISLI and its members.
Dacut v. CA
Facts: Petitioners Lazaro V. Dacut, Cesario G. Cajote, Romerlo F. Tungala, Lowel Z.
Zubista, and Orlando P. Taboy were crew members of the LCT "BASILISA", an inter-
island cargo vessel owned by private respondent Sta. Clara International Transport
and Equipment Corporation. On November 29, 1998, Dacut discovered a hole in the
vessel's engine room. The company had the hole patched up with a piece of iron
and cement. Despite the repair, Dacut and Tungala resigned in July1999 due to the
vessel's alleged unseaworthiness. On the other hand, Cajote went on leave from
April 12-28, 1999 to undergo eye treatment. Since then, he has incurred several
unauthorized absences. Fearing that he will be charged as Absent Without Leave
(AWOL), Cajote resigned in June 1999.On September 22, 1999, petitioners filed a
complaint for constructive dismissal amounting to illegal dismissal (except for
Zubista and Taboy); underpayment of wages, special and regular holidays; non-
payment of rest days, sick and vacation leaves, night shift differentials, subsistence
allowance, and fixed overtime pay; actual, moral and exemplary damages; and
litigation costs and attorney's fees. Dacut and Tungala claimed that they resigned
after Reynalyn G. Orlina, the secretary of the Personnel Manager, told them that
they will be paid their separation pay if they voluntarily resigned. They also resigned
because the vessel has become unseaworthy after the company refused to have it
repaired properly. Meanwhile, Cajote alleged that he resigned because the
company hired a replacement while he was still on leave. When he returned, the
Operations Manager told him that he will be paid his separation pay if he voluntarily
resigned; otherwise, he would be charged for being AWOL. On the other hand,
Zubista claimed that his wage was below the minimum set by the Regional
Tripartite Wages and Productivity Board. Finally, petitioners alleged that they were
not paid their rest days, sick and vacation leaves, night shift differentials,
subsistence allowance, and fixed overtime pay. After the Labor Arbiter declared the
case submitted for decision, the company filed its reply to petitioners' position
paper. It countered that Dacut and Tungala voluntarily resigned due to the vessel's
alleged unseaworthiness while Cajote resigned to avoid being charged as AWOL. It
also claimed that petitioners' monetary claims had no basis. On August 2, 2000, the
Labor Arbiter dismissed petitioners' complaint. The Labor Arbiter ruled that there
was sufficient evidence to prove that the vessel was seaworthy. The Labor Arbiter
noted that except for the holiday pay, accrued sick and vacation leaves, and wage
differential, petitioners failed to substantiate their monetary claims.
Petitioners appealed to the NLRC alleging that the Labor Arbiter erred: (1) in
entertaining the company’s reply after the case had been submitted for decision; (2)
in not finding that Dacut, Cajote and Tungala were constructively dismissed; (3) in
not finding that petitioners were entitled to their monetary claims; and (4) in not
finding that petitioners were entitled to actual, moral and exemplary damages as
well as litigation costs and attorney's fees. At this point, Dacut and Tungala further
contended that they resigned because they were being harassed by the company
due to a complaint for violation of labor standards they had filed earlier against it.
On May 20, 2002, the NLRC affirmed the Labor Arbiter's decision.
Issues: WON petitioners voluntarily resigned from employment and WON they are
entitled to money claims
Held: The fact that the Labor Arbiter admitted the company's reply after the case
had been submitted for decision did not make the proceedings before him irregular.
Petitioners were given adequate opportunity in the NLRC and the Court of Appeals
to rebut the company's evidence against them. A petition for review on certiorari
shall only raise questions of law considering that the findings of fact of
Court of Appeals are, as a general rule, conclusive upon and binding on this Court.
This doctrine applies with greater force in labor cases where the factual findings of
the labor tribunals are affirmed byte Court of Appeals. The reason is that labor
officials are deemed to have acquired expertise in matters within their jurisdiction
and therefore, their factual findings are generally accorded not only respect but
also finality. Here, the Labor Arbiter, the NLRC, and the Court of Appeals were
unanimous in finding that the primary reason why Dacut and Tungala resigned was
the vessel's alleged unseaworthiness as borne by their pleadings before the Labor
Arbiter. Dacut and Tungala never mentioned that they resigned because they were
being harassed by the company due to a complaint for violation of labor standards
they had filed against it. This ground was alleged only before the NLRC and not a
single act or incident was cited to prove this point. Even the alleged assurance by
Orlina, that they would be given separation pay, served merely as a secondary
reason why they resigned. In fact, we doubt that such assurance was even made
considering that as secretary of the Personnel Manager, it was not shown under
what authority Orlina acted when she told Dacut and Tungala to resign. Likewise
deserving scant consideration is Cajote's claim that the Operations Manager told
him that he will be paid separation pay if he resigned voluntarily; otherwise, he
would be charged as AWOL. Although the company already hired a replacement,
Cajote admitted that he was still employed at the time he resigned. In fact, the
company tried to give him another assignment but he refused it. Thus, the only
reason why Cajote resigned was his long unauthorized absences which would have
warranted his dismissal in any case. We find no reason to disturb all these factual
findings because they are amply supported by substantial evidence. Apropos the
monetary claims, there is insufficient evidence to prove petitioners' entitlement
thereto. As crew members, petitioners were required to stay on board the vessel by
the very nature of their duties, and it is for this reason that, in addition to their
regular compensation, they are given free living quarters and subsistence
allowances when required to be on board. It could not have been the purpose of
our law to require their employers to give them overtime pay or night shift
differential, even when they are not actually working. Thus, the correct criterion in
determining whether they are entitled to overtime payor night shift differential is
not whether they were on board and cannot leave ship beyond the regular eight
working hours a day, but whether they actually rendered service in excess of said
number of hours. In this case, petitioners failed to submit sufficient proof that
overtime and night shift work were actually performed to entitle them to the
corresponding pay. Petition is denied.
Bisig Manggagawa sa Tryco  and/or Francisco Siquig, as Union President, Joselito
Lario, Vivencio B. Barte, Saturnino Egeria and Simplicio Aya-ay vs Natinal Labor
Relations Commission, Tryco Pharma Corporation, and/or Wilfredo C. Rivera
GR No. 151309. October 15, 2008
FACTS:
Tryco Pharma Corporation (Tryco) is a manufacturer of veterinary medicines and its
principal office is located in Caloocan City. Petitioners Joselito Lario, Vivencio Barte,
Saturnino Egera and Simplicio Aya-ay are its regular employees, occupying the
positions of helper, shipment helper and factory workers, respectively, assigned to
the Production Department. They are members of Bisig Manggagawa sa Tryco
(BMT), the exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed separate MOA providing for a compressed
workweek schedule to be implemented in the company with 8:00 a.m. to 6:12 p.m.,
from Monday to Friday, as the regular working hours.
After the Department of Agriculture directed Trycos to transfer its production
activities to San Rafael, Bulacan, it ordered petitioner Aya-ay, Egera, Lario and Barte
to report to the company’s plant site in Bulacan. They refused to obey and BMT
opposed the transfer of its members to San Rafael, Bulacan.
The Labor Arbiter, the NLRC,and the CA uniformly agreed that the petitioners were
not constructively dismissed and that the transfer orders did not amount to an
unfair labor practice.
ISSUES:
1. Whether or not the transfer of Trycos personnel from Caloocan City to its plant
site in Bulacan constitutes constructive dismissal.
2. Whether or not the petitioner-employees were entitled to payment of wages,
overtime pay and service incentive leave.
3. Whether or not the MOA is not enforceable as it is contrary to law.
RULING:
1. The transfer of Trycos personnel, assigned to the Production Department was
within the scope of its management prerogative. This prerogative extends to the
managements right to regulate, according to its own discretion and judgment, all
aspects of employment, including the freedom to transfer and reassign employees
according to the requirements of its business. When the transfer is not
unreasonable, or inconvenient, or prejudicial to the employee, and it does not
involve a demotion in rank or diminution of salaries, benefits, and other privileges,
the employee may not complain that it amounts to a constructive dismissal. A mere
incidental inconvenience is not sufficient to warrant a claim of constructive
dismissal.
2. The nonpayment of wages was justified because the petitioners did not render
work from May 26 to 31, 1997; overtime pay is not due because of the compressed
workweek agreement between the union and management; and service incentive
leave pay cannot be claimed by the complainants because they are already enjoying
vacation leave with pay for at least five days.
3. The MOA on compressed workweek scheme is enforceable and binding against
the petitioners. 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. MOA clearly states that the employee waives the
payment of overtime pay in exchange of a five-day workweek.
Asian Transmission v. CA
FACTS:  private respondent National Alliance of Teachers and Office Workers (NATOW) in
DOLE issued an Explanatory bulletin entitling workers to be paid 200% of the bASIC
pay on April 9, 1998, whether unworked, as the date falls on 2 holidays Maundy
Thursday and araw ng kagitingan, Petitioner, notwithstanding the Explanatory
bulletin paid their workers only 100% of their basic pay. They assailed the
constitutionality of the Explanatory bulletin.
RULING:
“Holiday pay is a statutory benefit demandable under the law. Since a worker is
entitled to the enjoyment of ten paid regular holidays, the fact that two holidays fall
on the same date should not operate to reduce to nine the ten holiday pay benefits
a worker is entitled to receive.
It is elementary, under the rules 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. In the case at bar, there is nothing in the law which provides or indicates that
the entitlement to ten days of holiday pay shall be reduced to nine when two
holidays fall on the same day.”
G.R. No. L-65482 December 1, 1987
JOSE RIZAL COLLEGE, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION AND NATIONAL ALLIANCE OF
TEACHERS/OFFICE WORKERS, respondents.
This is a petition for certiorari with prayer for the issuance of a writ of preliminary
injunction, seeking the annulment of the decision of the National Labor Relations
Commission modifying the decision of the Labor Arbiter, “ that teaching personnel
paid by the hour are hereby declared to be entitled to holiday pay”
FACTS:
The factual background of this case which is undisputed is as follows:
Petitioner is a non-stock, non-profit educational institution duly organized and
existing under the laws of the Philippines. It has three groups of employees
categorized as follows: (a) personnel on monthly basis, who receive their monthly
salary uniformly throughout the year, irrespective of the actual number of working
days in a month without deduction for holidays; (b) personnel on daily basis who
are paid on actual days worked and they receive unworked holiday pay and (c)
collegiate faculty who are paid on the basis of student contract hour. Before the
start of the semester they sign contracts with the college undertaking to meet their
classes as per schedule.
Unable to receive their corresponding holiday pay, as claimed, from 1975 to 1977,
behalf of the faculty and personnel of Jose Rizal College filed with the Ministry of
Labor a complaint against the college for said alleged non-payment of holiday pay.
Due to the failure of the parties to settle their differences on conciliation, the case
was certified for compulsory arbitration.
After the parties had submitted their respective position papers, the Labor
Arbiter ** rendered a decision: “that Collegiate faculty of the respondent Jose Rizal
College who by contract are paid compensation per student contract hour are not
entitled to unworked regular holiday pay considering that these regular holidays
have been excluded in the programming of the student contact hours”.
On appeal, respondent National Labor Relations Commission in a decision ,
modified the decision appealed from, in the sense that teaching personnel paid by
the hour are declared to be entitled to holiday pay.
Hence, this petition.
ISSUE:
Whether the school faculty who according to their contracts are paid per lecture
hour are entitled to unworked holiday pay.
HELD:
Subject holiday pay is provided for in the Labor Code (Presidential Decree No. 442,
as amended), which reads:
Art. 94. Right to holiday pay — (a) Every worker shall be paid his regular daily wage
during regular holidays, except in retail and service establishments regularly
employing less than ten (10) workers;
(b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate; … ”
and in the Implementing Rules and Regulations, Rule IV, Book III, which reads:
SEC. 8. Holiday pay of certain employees. — (a) Private school teachers, including
faculty members of colleges and universities, may not be paid for the regular
holidays during semestral vacations. They shall, however, be paid for the regular
holidays during Christmas vacations. …
Under the foregoing provisions, apparently, the petitioner, although a non-profit
institution is under obligation to give pay even on unworked regular holidays to
hourly paid faculty members subject to the terms and conditions provided for
therein.
We believe that the aforementioned implementing rule is not justified by the
provisions of the law which after all is silent with respect to faculty members paid
by the hour who because of their teaching contracts are obliged to work and
consent to be paid only for work actually done (except when an emergency or a
fortuitous event or a national need calls for the declaration of special
holidays). Regular holidays specified as such by law are known to both school and
faculty members as no class days;” certainly the latter do not expect payment for
said unworked days, and this was clearly in their minds when they entered into the
teaching contracts.
On the other hand, both the law and the Implementing Rules governing holiday pay
are silent as to payment on Special Public Holidays.
Wherefore, the decision of respondent National Labor Relations Commission is
hereby set aside, and a new one is hereby RENDERED:
(a) exempting petitioner from paying hourly paid faculty members their pay for
regular holidays, whether the same be during the regular semesters of the school
year or during semestral, Christmas, or Holy Week vacations;
(b) but ordering petitioner to pay said faculty members their regular hourly rate
on days declared as special holidays or for some reason classes are called off or
shortened for the hours they are supposed to have taught, whether extensions of
class days be ordered or not; in case of extensions said faculty members shall
likewise be paid their hourly rates should they teach during said extensions.
LEIDEN FERNANDEZ, et. al., petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, et. al., respondents.
G.R. No. 105892
January 28, 1998
FACTS:
Petitioners, who are employees of private respondent Agencia Cebuana-H. Lhuillier
and/or Margueritte Lhuillier, filed a complaint before Dept. of Labor for illegal
dismissal and payment of backwages when the latter denied them their demand to
increase their salaries and subsequently terminated their employment.
Labor Arbiter favored petitioners but NLRC vacated the labor arbiter’s order. MR
denied. Hence, this petition.
In her opinion, SG recommended that the labor arbiter’s decision be reinstated
substantially, that the award of service incentive leave be limited to three years.
This is based on Article 291 of the Labor Code which provides:
“ART. 291. Money Claims. — All money claims arising from employer-employee
relations accruing during the effectivity of this Code shall be filed within three (3)
years from the time the cause of action accrued; otherwise they shall be forever
barred.
SC ruled that the petitioners, except Lim and Canonigo,were illegally dismissed so it
had to rule now on the money claims.
ISSUE:
WON the claim for service incentive leaves may be limited to a certain number of
years.
HELD:
No.
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.”
To limit the award to three years is to unduly restrict such right. The law does not
prohibit its commutation.
SG’s recommendation is contrary to the ruling of the Court in Bustamante et al. vs.
NLRC et al. lifting the three-year restriction on the amount of backwages and other
allowances that may be awarded an illegally dismissed employee, thus: “Therefore,
in accordance with R.A. No. 6715, petitioners are entitled to their full backwages,
inclusive of allowances and other benefits or their monetary equivalent, from the
time their actual compensation was withheld from them up to the time of their
actual reinstatement.”
Notes:
*** Implementing Rules clearly state that entitlement to “benefit provided under
this Rule shall start December 16, 1975, the date the amendatory provision of the
[Labor] Code took effect.”Hence, petitioners, except Lim and Canonigo, should be
entitled to service incentive leave pay from December 16, 1975 up to their actual
reinstatement.
***Full backwages, including the accrued thirteenth month pay, are also awarded
to the nine petitioners from the date of their illegal dismissal to the time of their
actual reinstatement.
HSY Marketing Ltd. Co., v. Villastique
VIRGILIO O. Villastique was hired by HSY Marketing Ltd. Co. as field driver tasked to
deliver ready-to-wear items and/or general merchandise.
He filed a complaint for illegal dismissal with money claims against HSY Marketing,
for allegedly withholding his salary for his refusal to resign.
Petitioner invoked the defense that 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 dismissed from
the service.
The Labor Arbiter (LA) dismissed the charge of illegal dismissal, finding no evidence
to substantiate respondent’s claim that he was dismissed from his job. There was
likewise no evidence submitted by petitioner that respondent had indeed
voluntarily resigned. He ruled that the employer-employee relationship between
the parties should be maintained. Finding however, strained relations between the
parties, he did not order the reinstatement of respondent, and instead directed
petitioner to pay him the amount of P86,580.00 as separation pay.
The National Labor Relations Commission (NLRC) affirmed the finding of the LA. The
Court of Appeals (CA) in turn affirmed in toto the resolution of the NLRC. Petitioner
imputes error, in among others, the award of separation pay. Does the contention
find merit?
Ruling: Yes.
The Court likewise upholds the unanimous conclusion of the lower tribunals that
respondent had not been dismissed at all. Other than the latter’s unsubstantiated
allegation of having been verbally terminated from his work, no substantial
evidence was presented to show that he was indeed dismissed or was prevented
from returning to his work. In the absence of any showing of an overt or positive act
proving that petitioner had dismissed respondent, the latter’s claim of illegal
dismissal cannot be sustained, as such supposition would be self-serving,
conjectural, and of no probative value.
Similarly, petitioner’s claims of respondent’s voluntary resignation and/or
abandonment deserve scant consideration, considering petitioner’s failure to
discharge the burden of proving the deliberate and unjustified refusal of
respondent to resume his employment without any intention of returning. It was
incumbent upon petitioner to ascertain respondent’s interest or non-interest in the
continuance of his employment, but to no avail.
Since there is no dismissal or abandonment to speak of, the appropriate course of
action is to reinstate the employee (in this case, herein respondent) without,
however, the payment of backwages.
Notably, the reinstatement ordered here should not be construed as a relief
proceeding from illegal dismissal; instead, it should be considered as a declaration
or affirmation that the employee may return to work because he was not dismissed
in the first place. For this reason, the Court agrees with petitioner that the LA, the
NLRC, and the CA erred in awarding separation pay in spite of the finding that
respondent had not been dismissed.
Properly speaking, liability for the payment of separation pay is but a legal
consequence of illegal dismissal where reinstatement is no longer viable or feasible.
As a relief granted in lieu of reinstatement, it goes without saying that an award of
separation pay is inconsistent with a finding that there was no illegal dismissal. 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. x x x.
In fine, petitioner is ordered to reinstate respondent to his former position without
the payment of backwages. If respondent voluntarily chooses not to return to work,
he must then be considered as having resigned from employment. This is without
prejudice, however, to the willingness of both parties to continue with their former
contract of employment or enter into a new one whenever they so desire. (Perlas-
Bernabe, J.; SC 1st Division, HSY Marketing Ltd., Co. vs. Virgilio O. Villastique, G.R.
No. 219569, Aug 17, 2016).
LOURDES C. RODRIGUEZ, Petitioner vs PARK N RIDE INC.NICEST (PHILS)
INC./GRAND LEISURE CORP./SPS. VICENTE & ESTELITA B. JAVIER, Respondents
G.R. No. 222980
January 18, 2017 
Facts:
Rodriguez alleged that she was employed at Sps. Javier’s numerous companies, the
last being Park N Ride. Aside from that, she also attends to incidental tasks not
related to her official position, like buying household necessities for one of her
bosses Estelita Javier (Estelita).  She also allegedly worked strenuous hours. She was
deducted an equivalent of two (2) days' wage for every day of absence.

In one instance, Estelita was mad at her for opening the office late and told her that
if she did not want to continue with her work, the company could manage without
her. Thus, Rodriguez eventually submitted a letter expressing her gripes at the Sps.
Javier to which the latter construed and accepted as the former’s resignation.
In their Position Paper, Sps. Javier stated that they hired and trusted Rodriguez with
both their businesses and personal affairs, and this made her more senior than any
of her colleagues at work.  However, Rodriguez was allegedly emotionally sensitive
and prone to occasional "tampo"  when she would be reprimanded or cited for tasks
unaccomplished. She would then be absent after such reprimands and would
eventually return after a few days.
Rodriguez filed a complaint for constructive illegal dismissal, non-payment of
service incentive leave pay and 13th month pay, including claims for moral and
exemplary damages and attorney's fees against Park N Ride, Vicest Phils., Grand
Leisure, and the Javier Spouses.
Issue:
WON the petitioner is constructively dismissed and is entitled to full sevice
incentive, leave pay and damages.
Held:
The petition is partially granted.
Respondents are ordered to pay Rodriguez the following:
1) Service incentive leave pay for the years 1984 to 2009;
2) 13th month pay differential for the years 2006 to 2008;
3) Proportionate 13th month pay for the year 2009; and
4) Attorney's fees equivalent to ten percent (10%) of the wages awarded.
All amounts awarded shall be subject to interest of six percent (6%) per annum,
from the date of finality of this Decision, until fully paid.
However, the Court finds that there is constructive dismissal only when an
employer's act of clear discrimination, insensibility or disdain becomes so
unbearable on the part of the employee so as to foreclose any choice on his part
except to resign from such employment. It exists where there is involuntary
resignation because of the harsh, hostile and unfavorable conditions set by the
employer.
The affidavits of petitioner's former co-workers were mere narrations of petitioner's
various duties. Far from showing the alleged harsh treatment that petitioner
suffered, the affidavits rather reveal the full trust and confidence reposed by
respondents on petitioner. Petitioner was entrusted with respondents' assets, the
care and safeguarding of their house during their trips abroad, custody of company
files and papers, and delicate matters such as the release, deposit, and withdrawals
of checks from their personal accounts as well as accounts of their companies.
Indeed, it was alleged that petitioner was treated by the respondents as part of the
family.
Petitioner's unequivocal intent to relinquish her position was manifest when she
submitted her letters of resignation. The resignation letters dated May 1, 2008 and
March 25, 2009 contained words of gratitude, which could hardly come from an
employee forced to resign. These letters were reinforced by petitioner's very own
act of not reporting for work despite respondents' directive. 
David v. Macasio (2014)
Facts:
Macasio filed before the Labor Arbiter a complaint against petitioner Ariel L. David,
doing business under the name and style “Yiels Hog Dealer,” for nonpayment of
overtime pay, holiday pay, and 13th month pay.
He also claimed payment for moral and exemplary damages and attorney’s fees;
and for payment of service incentive leave (SIL).
Macasio alleged before the Labor Arbiter that he had been working as a butcher for
David since January 6, 1995.
Macasio claimed that David exercised effective control and supervision over his
work, pointing out that David:
(1) set the work day, reporting time and hogs to be chopped, as well as the manner
by which he was to perform his work;
(2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and
(3) approved and disapproved his leaves.
Macasio added that David owned the hogs delivered for chopping, as well as the
work tools and implements; David also rented the workplace.
Macasio further claimed that David employs about twenty-five (25) butchers and
delivery drivers.
David claimed that he started his hog dealer business in 2005, and that he only has
ten employees.
He alleged that he hired Macasio as a butcher or chopper on “pakyaw” or task basis
who is, therefore, not entitled to overtime pay, holiday pay and 13th month pay.
David pointed out that Macasio:
(1) usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day
or earlier, depending on the volume of the delivered hogs;
(2) received the fixed amount of P700.00 per engagement, regardless of the actual
number of hours that he spent chopping the delivered hogs; and
(3) was not engaged to report for work and, accordingly, did not receive any fee
when no hogs were delivered.
Macasio disputed David’s allegations.
He argued that, first, David did not start his business only in 2005. He pointed to the
Certificate of Employment that David issued in his favor which placed the date of his
employment, albeit erroneously, in January 2000.
Second, he reported for work every day which the payroll or time record could have
easily proved had David submitted them in evidence.
David claimed that he issued the Certificate of Employment, upon Macasio’s
request, only for overseas employment purposes.
The Labor Arbiter dismissed Macasio’s complaint for lack of merit. The Labor Arbiter
gave credence to David’s claim that he engaged Macasio on “pakyaw” or task basis.
The LA concluded that since Macasio was engaged on “pakyaw” or task basis, he is
not entitled to overtime, holiday, SIL and 13 th month pay.
The NLRC affirmed the Labor arbiter’s ruling.
The CA partly granted Macasio’s certiorari petition and reversed the NLRC’s ruling
for having been rendered with grave abuse of discretion.
While the CA agreed with the LA and the NLRC that Macasio was a task basis
employee, it nevertheless found Macasio entitled to his monetary claims.
The CA explained that as a task basis employee, Macasio is excluded from the
coverage of holiday, SIL and 13th month pay only if he is likewise a “field
personnel.”
As defined by the Labor Code, a “field personnel” is one who performs the work
away from the office or place of work, and whose regular work hours cannot be
determined with reasonable certainty.
In Macasio’s case, the elements that characterize a “field personnel” are evidently
lacking as he had been working as a butcher at David’s “Yiels Hog Dealer” business
in Sta. Mesa, Manila under David’s supervision and control, and for a fixed working
schedule that starts at 10:00 p.m.
Accordingly, the CA awarded Macasio’s claim for holiday, SIL and 13th month pay
for three years, with 10% attorney’s fees on the total monetary award.
Hence, David filed the present petition.
Issue:
whether or not Macasio is entitled of overtime pay, holiday pay, 13th month pay
and payment for service incentive leave
Held:
David confuses engagement on “pakyaw” or task basis with the lack of employment
relationship. Impliedly, David asserts that their “pakyawan” or task basis
arrangement negates the existence of employment relationship.
The Supreme Court reject this assertion of the petitioner.
Engagement on “pakyaw” or task basis does not characterize the relationship that
may exist between the parties, i.e., whether one of employment or independent
contractorship.
To determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employee’s conduct.
These elements or indicators comprise the so-called “four-fold” test of employment
relationship.
Macasio’s relationship with David satisfies this test.
A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed
to straight-hour wage payment, is the non-consideration of the time spent in
working.
The payment of an employee on task or pakyaw basis alone is insufficient to exclude
one from the coverage of Service Incentive Leave (SIL) and holiday pay.
In determining whether workers engaged on “pakyaw” or task basis is entitled to
holiday and Service Incentive Leave (SIL) pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key.
The Supreme Court agree with the CA that Macasio does not fall under the
definition of “field personnel.”
The CA’s finding in this regard is supported by the established facts of this case:
first, Macasio regularly performed his duties at David’s principal place of business;
second, his actual hours of work could be determined with reasonable certainty;
and
third, David supervised his time and performance of duties.
Since Macasio cannot be considered a “field personnel,” then he is not exempted
from the grant of holiday, SIL pay even as he was engaged on “pakyaw” or task
basis.
With respect to the payment of 13th month pay however, the Supreme Court find
that the CA legally erred in finding that the NLRC gravely abused its discretion in
denying this benefit to Macasio.
The governing law on 13th month pay is PD 8 5 1. As with holiday and SIL pay, 13th
month pay benefits generally cover all employees; an employee must be one of
those expressly enumerated to be exempted.
Section 3 of the Rules and Regulations Implementing P.D. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under said law,
“employers of those who are paid on 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.
Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of
the Rules and Regulations Implementing PD 851 exempts employees “paid on task
basis” without any reference to “field personnel.” This could only mean that insofar
as payment of the 13th month pay is concerned, the law did not intend to qualify
the exemption from its coverage with the requirement that the task worker be a
“field personnel” at the same time.
JPL MARKETING PROMOTIONS v. NATIONAL LABOR RELATIONS COMMISSION,
NOEL GONZALES, RAMON ABESA III and FAUSTINO ANINIPOT,
G.R. No. 151966/July 8, 2005/Tinga, J.:
FACTS: JPL Marketing and Promotions (hereinafter referred to as “JPL”) is a
domestic corporation engaged in the business of recruitment and placement of
workers.  On the other hand, private respondents Noel Gonzales, Ramon Abesa III
and Faustino Aninipot were employed by JPL as merchandisers on separate dates
and assigned at different establishments in Naga City and Daet, Camarines Norte as
attendants to the display of California Marketing Corporation (CMC), one of
petitioner’s clients.
       On 13 August 1996, JPL notified private respondents that CMC would stop its
direct merchandising activity in the Bicol Region, Isabela, and Cagayan Valley
effective 15 August 1996.  They were advised to wait for further notice as they
would be transferred to other clients.  However, on 17 October 1996, private
respondents Abesa and Gonzales filed before the NLRC complaints for illegal
dismissal, praying for separation pay, 13th month pay, service incentive leave pay
and payment for moral damages.  Aninipot filed a similar case thereafter.
 
It must be noted that private respondents were not given their 13th month pay and
service incentive leave pay while they were under the employ of JPL.  Instead, JPL
provided salaries which were over and above the minimum wage.
 
ISSUE: Whether or not the 13th month pay and service incentive leave pay should
be computed from the start of employment up to the finality of the NLRC
resolution.
 
RULING: Service incentive leave, as provided in Art. 95 of the Labor Code, is a yearly
leave benefit of five (5) days with pay, enjoyed by an employee who has rendered
at least one year of service.  Unless specifically excepted, all establishments are
required to grant service incentive leave to their employees.  The term “at least one
year of service” shall mean service within twelve (12) months, whether continuous
or broken reckoned from the date the employee started working.  The Court has
held in several instances that “service incentive leave is clearly demandable after
one year of service.”
 
While computation for the 13th month pay should properly begin from the first day
of employment, the service incentive leave pay should start a year after
commencement of service, for it is only then that the employee is entitled to said
benefit.  On the other hand, the computation for both benefits should only be up to
15 August 1996, or the last day that private respondents worked for JPL.  To extend
the period to the date of finality of the NLRC resolution would negate the absence
of illegal dismissal, or to be more precise, the want of dismissal in this case.
Besides, it would be unfair to require JPL to pay private respondents the said
benefits beyond 15 August 1996 when they did not render any service to JPL
beyond that date. These benefits are given by law on the basis of the service
actually rendered by the employee, and in the particular case of the service
incentive leave, is granted as a motivation for the employee to stay longer with the
employer.  There is no cause for granting said incentive to one who has already
terminated his relationship with the employer.
Ace Navigation Co., Inc. vs CA, 338 SCRA 70
(Labor Standards – Tips)
Facts: Under the POEA approved contract of employment, private respondent, who
works as a bartender on board the vessel MV Orient Express, shall receive a
monthly basic salary of US S450.00, flat rate, including overtime pay for 12 hours of
work daily plus tips of  US S2.00 per passenger per day. He was also entitled to 2.5
days of vacation leave with pay each month.
Private respondent filed a complaint before the labor arbiter for vacation leave pay
and unpaid tips amounting to US S36,000.00. The Labor Arbiter ordered the
recruitment agency and the principal to pay jointly and severally private respondent
his vacation leave pay. The claim for tips was dismissed for lack of merit.
On appeal, NLRC ordered the payment of unpaid tips.
Issue: WON employers are liable to pay tips.
Held: No. Payment for overtime was included in the monthly salary, the supposed
tips mentioned in the contract should be deemed included thereat. It is presumed
that the parties were aware of the plain, ordinary and common meaning of the
word “tip”. A bartender cannot feign ignorance on the practice of tipping and that
tips are normally paid by customers and not by the employer.
It has been said that a tip denotes a voluntary act, but whether considered from the
standpoint of the giver or the recipient, a tip lacked the essential element of a gift,
namely, the free bestowing of a gratuity without a consideration, and that despite
its apparent voluntariness, there is an element of compulsion in tipping.
National Union of Workers in Hotels V. NLRC
Facts: Petitioner NUWHRAIN is a legitimate labor organization composed of rank-
and-file
employees of the Hotel,3 while respondent Acesite Philippines Hotel Corporation is
the owner and operator of said Hotel.4
The Hotel entered into a Collective Bargaining Agreement with HI-MANILA
PAVILION HOTEL LABOR UNION (HIMPHLU), the exclusive bargaining agent of the
rank-and-file employees of the Hotel. Both parties consented that the
representation aspect and other non-economic provisions of the Collective
Bargaining Agreement were to be effective for five years or until 30 June 2005; and
the economic provisions of the same were to be effective for three years or until 30
June 2003. The parties subsequently re-negotiated the economic provisions of the
Collective Bargaining Agreement and extended the term of their effectivity for
another two years or until 30 June 2005.
During the 60-day freedom period which preceded the expiration of the Collective
Bargaining Agreement, starting on 1 May 2005 and ending on 30 June 2005, the
Hotel and HIMPHLU negotiated the extension of the provisions of the existing
Collective Bargaining Agreement for two years, effective 1 July 2005 to 30 June
2007. The parties signed the Memorandum of Agreement on 20 May 2005 and the
employees ratified it on 27 May 2005.
On 21 June 2005, NUWHRAIN was accorded by the Labor Relations Division of
the Department of Labor and Employment (DOLE) the status of a legitimate labor
organization.7 Thereafter, NUWHRAIN exercised the right to challenge the majority
status of the incumbent union, HIMPHLU, by filing a Petition for Certification
Election on 28 June 2005.
On 5 July 2007, the Industrial Relations Division of the DOLE allowed the
registration of the Memorandum of Agreement executed between HIMPHLU and
the Hotel, extending the effectivity of the existing Collective Bargaining Agreement
for another two years.
After the lapse of the 60-day freedom period, but pending the disposition of the
Petition for Certification Election filed by NUWHRAIN, HIMPHLU served the Hotel
with a written demand dated 28 July 200510 for the dismissal of 36 employees
following their expulsion from HIMPHLU for alleged acts of disloyalty and violation
of its Constitution and by-laws. An Investigation Report11 was attached to the said
written demand, stating that the 36 employees, who were members of HIMPHLU,
joined NUWHRAIN, in violation of Section 2, Article IV of the Collective Bargaining
Agreement, which provided for a union security clause.12
On 1 August 2005, the Hotel issued Disciplinary Action Notices13 (Notices) to the 36
employees identified in the written demand of HIMPHLU. The Notices directed the
36 employees to submit a written explanation for their alleged acts of disloyalty and
violation of the union security clause for which HIMPHLU sought their dismissal.
NLRC decided that there was no unfair labor practice. NUWHRAIN filed a Motion for
Reconsideration of the foregoing NLRC Resolution. It was denied by the NLRC in
another Resolution dated 30 June 2006.20 Thus, NUWHRAIN filed a Petition for
Certiorari before the Court of Appeals, docketed as C.A. G.R. SP No. 96171.
In the meantime, on 16 June 2006, the Certification Election for regular rank and file
employees of the Hotel was held, which HIMPHLU won. It was accordingly certified
as the exclusive bargaining agent for rank and file employees of the Hotel.21
On 30 May 2007, the Court of Appeals promulgated its Decision2 upholding the
Resolution of the NLRC. It declared that the Hotel had acted prudently when it
issued the Notices to the 36 employees after HIMPHLU demanded their dismissal. It
clarified that these Notices did not amount to the termination of the employees
concerned but merely sought their explanation on why the union security clause
should not be applied to them. The appellate court also gave credence to the denial
by the officers of the respondent and the Hotel that they made statements favoring
HIMPHLU over NUWHRAIN during the reconciliatory conferences. The Court of
Appeals further noted that the unhampered organization and registration of
NUWHRAIN negated its allegation that the Hotel required its employees not
to join a labor organization as a condition for their employment.
NUWHRAIN’s Motion for Reconsideration of the aforementioned Decision of the
Court of Appeals was denied by the same court in a Resolution.23
Hence, the present Petition, in which NUWHRAIN makes the following assignment
of errors:
ISSUE: Whether the dismissal of the subject employees in accordance with CBA’s
Union Security Clause deemed unfair labor practice.
The instant Petition lacks merit.
NUWHRAIN maintains that the respondent committed unfair labor practice when
(1) the Hotel issued the Notices to the 36 employees, former members of HIMPHLU,
who switched
allegiance to NUWHRAIN; and (2) the officers of the respondent and the Hotel
allegedly uttered statements during the reconciliatory conferences indicating their
preference for HIMPHLU and their disapproval of NUWHRAIN. This argument is
specious.
“Union security” is a generic term which is applied to and comprehends “closed
shop,” “union shop,” “maintenance of membership” or any other form of \
agreement which imposes upon employees the obligation to acquire or retain union
membership as a condition affecting employment.25 Article 248(e) of the Labor
Code recognizes the effectivity of a union shop clause:
The law allows stipulations for “union shop” and “closed shop” as a means of
encouraging workers to join and support the union of their choice in the protection
of their rights and interests vis-à-vis the employer. By thus promoting unionism,
workers are able to negotiate with management on an even playing field and with
more persuasiveness than if they were to individually and separately bargain with
the employer. In Villar v. Inciong,27 this Court held that employees have the right to
disaffiliate from their union and form a new organization of their own; however,
they must suffer the consequences of their separation from the union under the
security clause of the Collective Bargaining Agreement.
In the present case, the Collective Bargaining Agreement includes a union security
provision. To avoid the clear possibility of liability for breaching the union security
clause of the Collective Bargaining Agreement and to protect its own interests, the
only sensible option left to the Hotel, upon its receipt of the demand of HIMPHLU
for the dismissal of the 36 employees, was to conduct its own inquiry so as to make
its own findings on whether there was sufficient ground to dismiss the said
employees who defected from HIMPHLU.
The issuance by the respondent of the Notices requiring the 36 employees to
submit their explanations to the charges against them was the reasonable and
logical first step in a fair investigation. It is important to note that the Hotel did not
take further steps to terminate the 36 employees. Instead, it arranged for
reconciliatory conferences between the contending unions in order to avert the
possibility of dismissing the 36 employees for violation of the union security clause
of the Collective Bargaining Agreement.
This Court, in Malayang Samahan ng Manggagawa sa M. Greenfield v. Ramos29
clearly stated the general rule: the dismissal of an employee by the company
pursuant to a labor union’s demand in accordance with a union security agreement
does not constitute unfair labor practice. An employer is not considered guilty of
unfair labor practice if it merely complied in good faith with the request of the
certified union for the dismissal of employees expelled from the union pursuant to
the union security clause in the Collective Bargaining Agreement.30 In the case at
bar, there is even less possibility of sustaining a finding of guilt for unfair labor
practice where respondent did not dismiss the 36 employees, despite the insistence
of HIMPHLU, the sole bargaining agent for the rank and file employees of the
Hotel, on the basis of the union security clause of the Collective Bargaining
Agreement. The only act attributed to the respondent is its issuance of the Notices
which, contrary to being an unfair labor practice, even afforded the employees
involved a chance to be heard.
SLL and LAGON vs. NLRC ET AL
G.R. No. 172161
March 2, 2011
FACTS:  Private respondents Lopez, Canete and Zuniga were hired by petitioner
Lagon as apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees, they did not
report for work regularly but came in as substitutes to the regular workers or in
undertakings that needed extra workers to expedite completion of work. Their
employment is terminated upon completion of each project.
For 4 separate projects from May 1997-December 1999, they received the wage of
P145.00, the minimum prescribed daily wage for Region VII when they first started
work in March 1997
[In July 1997, the amount of P145 was increased to P150.00 by the Regional Wage
Board (RWB) and in October of the same year, the latter was increased to P155.00.
In 1999, the minimum prescribed rate for Manila was P198.00.]
In January to February 2000, the 3 received the wage of P165.00. The existing rate
at that time was P213.00.
In March 2000, private respondents filed a complaint for illegal dismissal, non-
payment of wages, holiday pay, 13th month pay for 1997 and 1998 and SIL pay as
well as damages and AF.
In their answers, petitioners alleged that the food allowance of P63.00 per day as
well as private respondents allowance for lodging house, transportation,
electricity, water and snacks allowance should be added to their basic pay. With
these, petitioners claimed that private respondents received higher wage rate than
that prescribed in Rizal and Manila. They argued that the rulings in Agabon v.
NLRC and Glaxo Wellcome Philippines, Inc. v. Nagkakaisang Empleyado Ng
Wellcome-DFA should be applied by analogy, in the sense that the lack of written
acceptance of the employees of the facilities enjoyed by them should not mean that
the value of the facilities could not be included in the computation of the private
respondents’ “wages.”
ISSUE: Should the value of the facilities be included in the computation of the
“wages” received by private respondents.
HELD: NO
On whether the value of the facilities should be included in the computation of the
“wages” received by private respondents, Section 1 of DOLE Memorandum Circular
No. 2 provides that an employer may provide subsidized meals and snacks to his
employees provided that the subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the employer may deduct from the
wages of the employees not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is with the written
authorization of the employees concerned.
Moreover, before the value of facilities can be deducted from the employees’
wages, the following requisites must all be attendant:
1.  proof must be shown that such facilities are customarily furnished by the
trade;
2.  the provision of deductible facilities must be voluntarily accepted in
writing by the employee; and
3. facilities must be charged at reasonable value.
Mere availment is not sufficient to allow deductions from employees’ wages.
These requirements, however, have not been met in this case. SLL failed to present
any company policy or guideline showing that provisions for meals and lodging
were part of the employee’s salaries. It also failed to provide proof of the
employees’ written authorization, much less show how they arrived at their
valuations. At any rate, it is not even clear whether private respondents actually
enjoyed said facilities.
**
The Court, at this point, makes a distinction between “facilities” and “supplements.”
It is of the view that the food and lodging, or the electricity and water allegedly
consumed by private respondents in this case were not facilities but supplements.
In the case of Atok-Big Wedge Assn. v. Atok-Big Wedge Co., the two terms were
distinguished from one another in this wise:
“Supplements,” therefore, constitute extra remuneration or special privileges or
benefits given to or received by the laborers over and above their ordinary earnings
or wages. “Facilities,” on the other hand, are items of expense necessary for the
laborer’s and his family’s existence and subsistence so that by express provision of
law (Sec. 2[g]), they form part of the wage and when furnished by the employer
are deductible therefrom, since if they are not so furnished, the laborer would
spend and pay for them just the same.
In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement;
and when said benefit or privilege is part of the laborers’ basic wages, it is a facility.
The distinction lies not so much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is given. In the case at bench,
the items provided were given freely by SLL for the purpose of maintaining the
efficiency and health of its workers while they were working at their respective
projects.
For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any
rate, these were cases of dismissal with just and authorized causes. The present
case involves the matter of the failure of the petitioners to comply with the
payment of the prescribed minimum wage.
NOTES: Private respondents are entitled to be paid the minimum wage, whether
they are regular or non-regular employees. Section 3, Rule VII of the Rules to
Implement the Labor Code specifically enumerates those who are not covered by
the payment of minimum wage. Project employees are not among them.
OUR HAUS REALTY DEVELOPMENT CORPORATION vs. ALEXANDER PARIAN, JAY C.
ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO and JERRY SABULAO
G.R. No. 204651 August 6, 2014
FACTS:
This is a petition for review on certiorari to challenge the CA rulings and the
NLRC resolution who reversed the LA’s decision to favor the herein respondents.
Respondents Alexander Parian, Jay C. Erinco, Alexander Canlas, Bernard
Tenedero and Jerry Sabulao were all laborers working for petitioner Our Haus Realty
Development Corporation, a company engaged in the construction business.
On May 2010, the petitioner company experienced financial distress and had to
suspend some of its construction projects to alleviate its condition. The respondents
were among those who were affected who were asked to take vacation leaves.
Eventually, these laborers were asked to report back to work but instead of
doing so, they filed with the LA a complaint for underpayment of their daily wages
claiming that except for Tenedero, their wages were below the minimum rates
prescribed in the following wage orders from 2007 to 2010. They also claimed that Our
Haus failed to pay them their holiday, Service Incentive Leave (SIL), 13th month and
overtime pays.
The LA ruled in favor of Our Haus who claimed that the respondents’ wages
complied with the law’s minimum requirement because aside from paying the monetary
amount of the respondents’ wages, Our Haus also subsidized their meals (3 times a day),
and gave them free lodging near the construction project they were assigned to. In
determining the total amount of the respondents’ daily wages, the value of these benefits
should be considered, in line with Article 97(f) of the Labor Code. LA did not give merit
on the laborers’ contention that that the value of their meals should not be considered in
determining their wages’ total amount since the requirements set under Section 413 of
DOLE Memorandum Circular No. 215 were not complied with. Besides, Our Haus failed
to present any proof that they agreed in writing to the inclusion of their meals’ value in
their wages.
The laborers appealed LA’s decision to NLRC who reversed it in favor of
them. It ruled that that the laborers did not authorize Our Haus in writing to charge the
values of their board and lodging to their wages. Thus, the same cannot be credited and
further ruled that they are entitled to their respective proportionate 13th month
payments for the year 2010 and SIL payments for at least three years, immediately
preceding May 31, 2010, the date when the respondents left Our Haus. However, it
maintains LA’s decision that they are not entitled to overtime pay since the exact dates
and times when they rendered overtime work had not been proven.
Our Haus moved for the reconsideration of the NLRC’s decision and submitted
new evidence (the five kasunduans) to show that the respondents authorized Our Haus
in writing to charge the values of their meals and lodging to their wages. However, NLRC
denied this motion, thus, Our Haus filed a Rule 65 petition with the CA propounding a
new theory that there is a distinction between deduction and charging; that a written
authorization is only necessary if the facility’s value will be deducted and will not be
needed if it will merely be charged or included in the computation of wages. The CA
dismissed Our Haus’ certiorari petition and affirmed the NLRC rulings in toto
finding that there is no distinction between deduction and charging and that the legal
requirements before any deduction or charging can be made, apply to both. Our Haus
filed a motion for reconsideration but the CA denied its motion, prompting it to file the
present petition for review on certiorari under Rule 45.
ISSUE:
Whether or not the NLRC committed grave abuse of discretion in its decision
favoring the herein respondents.
HELD:
 The Court ruled that there is no substantial distinction between deducting and
charging a facility’s value from the employee’s wage; the legal requirements for
creditability apply to both. Herein petitioner’s argument is a vain attempt to circumvent
the minimum wage law by trying to create a distinction where none exists because in
reality, deduction and charging both operate to lessen the actual take-home pay of an
employee. Thus, the Court held that NLRC did not commit grave abuse of discretion
in its rulings. It DENY this petition and AFFIRMED CA’s decision.
House of Sara Lee v. Rey, G.R. No. 149013, August 31, 2006
FACTS: Respondent, at the time of her dismissal from employment, or on June 25, 1996,
held the position of Credit Administration Supervisor or CAS at the Cagayan de Oro City
branch of the petitioner.
While respondent was still working in Butuan City, she allegedly instructed the Accounts
Receivable Clerk of the Cagayan de Oro outlet, a certain Ms. Magi Caroline Mendoza, to
change the credit term of one of the IBMs of the petitioner, a certain Ms. Mariam Rey-
Petilla, who happens to be respondent’s sister-in-law, from the 52-day limit to an
“unauthorized” term of 60 days.
As a consequence of the discovery of the foregoing alleged “anomalous practice” of
extending the credit terms of certain Independent Business Managers (IBM),
management undertook an audit of the Cagayan de Oro City and Butuan City branches.
During the process, the petitioner alleges, respondent was interviewed by the auditors
before whom she again openly admitted her infractions.
On the basis of the hearing, the alleged voluntary admissions of respondent, and the
findings of the auditor’s report, the petitioner, on June 25, 1996, formally dismissed the
respondent for breach of trust and confidence.
ISSUE: Whether or not respondent was validly dismissed and whether or not he is
entitled to 13th month pay.
RULING: Respondent was validly dismissed.
Court cannot accept respondent’s assertion that she was never apprised of the company
policies with respect to the allowable credit terms. As Credit Administration Supervisor,
the respondent cannot feign ignorance of the irregularity as she was sufficiently aware
that the credit extensions she made were beyond acceptable limits. In other words,
respondent was aware of the financial implications of her extension of the credit terms,
especially the outcome where the consideration of late remittances, after the extension,
would unduly inflate the sales commissions.
Villagracia even reprimanded Ms. Mendoza for carrying out respondent’s instructions. As
a consequence, higher management immediately undertook an audit of the Cagayan de
Oro and Butuan City branches where the respondent had been assigned. And, as a
consequence, an Auditor’s Report was issued, expressly finding the respondent guilty of
violating company policy. Respondent was again directed by the higher authorities to
explain, in more detail, the anomalies uncovered by the audit. The foregoing activities
negate the suggestion that management tolerated respondent’s unauthorized extension
of credit terms.
The award of 13th month pay must be deleted. Respondent is not a rank-and-file
employee and is, therefore, not entitled to thirteenth-month pay.
However, the NLRC and the CA are correct in refusing to award 14th and 15th month pay
as well as the “monthly salary increase of 10 percent per year for two years based on her
latest salary rate.” The respondent must show that these benefits are due to her as a
matter of right. The rule in these cases is, she who alleges, not she who denies, must
prove. Mere allegations by the respondent do not suffice in the absence of proof
supporting the same.
Petroleum Shipping Limited v. NLRC, G.R. No. 148130, June 16, 2006
FACTS: On 6 March 1978, Esso International Shipping (Bahamas) Co., Ltd., (“Esso”)
through Trans-Global Maritime Agency, Inc. (“Trans-Global”) hired Florello W. Tanchico
(“Tanchico”) as First Assistant Engineer. In 1981, Tanchico became Chief Engineer. On 13
October 1992, Tanchico returned to the Philippines for a two-month vacation after
completing his eight-month deployment.
Tanchico underwent the required standard medical examination prior to boarding the
vessel. The medical examination revealed that Tanchico was suffering from “Ischemic
Heart Disease, Hypertensive Cardio-Muscular Disease and Diabetes Mellitus.” Tanchico
took medications for two months and a subsequent stress test showed a negative result.
However, Esso no longer deployed Tanchico. Instead, Esso offered to pay him benefits
under the Career Employment Incentive Plan. Tanchico accepted the offer.
On 26 April 1993, Tanchico filed a complaint against Esso, Trans-Global and Malayan
Insurance Co., Inc. (“Malayan”) before the Philippine Overseas Employment
Administration (POEA) for illegal dismissal with claims for backwages, separation pay,
disability and medical benefits and 13th month pay. In view of the enactment of Republic
Act No. 8042 (“RA 8042”)4 transferring to the National Labor Relations Commission
(NLRC) the jurisdiction over money claims of overseas workers, the case was indorsed to
the Arbitration Branch of the National Capital Region.
DEVELOPMENT OF THE CASE: Labor arbiter dismissed the complaint for lack of merit;
NLRC affirmed, on the ground that complainant had been declared as one with partial
permanent disability. Thus, he should be entitled to disability benefit xxx
On the claim of 13th month pay, the respondent Agency not falling under the
enumerated exempted employers under P.D. 851 and in the absence of any proof that
respondent is already paying its employees a 13th month pay or more in a calendar year,
perforce, respondent agency should pay complainant his monthly pay computed at [sic]
the actual month [sic] worked, which is 8 months.
Esso, now using the name Petroleum Shipping Limited (“Petroleum Shipping”), and
Trans-Global (collectively referred to as “petitioners”) filed a petition for certiorari
before the Court of Appeals. The Court of Appeals ruled that Tanchico was a regular
employee of Petroleum Shipping. The Court of Appeals held that petitioners are not
exempt from the coverage of Presidential Decree No. 851, as amended (“PD
851”)11which mandates the payment of 13th month pay to all employees. MR Denied.
Hence, this petition for certiorari.

ISSUES: (1) Whether Tanchico is a regular employee of petitioners; and (2) Whether
Tanchico is entitled to 13th month pay, disability benefits and attorney’s fees.
HELD: The petition is partly meritorious.
Seafarers are Contractual Employees [sinama ko na to, looks important eh]
The issue on whether seafarers are regular employees is already a settled matter.
In Ravago v. Esso Eastern Marine, Ltd.,14 the Court traced its ruling in a number of cases
that seafarers are contractual, not regular, employees. Thus, in Brent School, Inc. v.
Zamora,15 the Court cited overseas employment contract as an example of contracts
where the concept of regular employment does not apply, whatever the nature of the
engagement and despite the provisions of Article 280 of the Labor Code. In Coyoca v.
NLRC,16 the Court held that the agency is liable for payment of a seaman’s medical and
disability benefits in the event that the principal fails or refuses to pay the benefits or
wages due the seaman although the seaman may not be a regular employee of the
agency.
The Court squarely passed upon the issue in Millares v. NLRC17 where one of the issues
raised was whether seafarers are regular or contractual employees whose employment
are terminated everytime their contracts of employment expire. The Court explained:
xxx Their employment is governed by the contracts they sign everytime they are rehired
and their employment is terminated when the contract expires. Their employment is
contractually fixed for a certain period of time. They fall under the exception of Article
280 whose employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of engagement of
the employee or where the work or services to be performed is seasonal in nature and
the employment is for the duration of the season xxx
There are certain forms of employment which also require the performance of usual and
desirable functions and which exceed one year but do not necessarily attain regular
employment status under Article 280. Overseas workers including seafarers fall under
this type of employment which are governed by the mutual agreements of the parties.
Thus, in the present case, the Court of Appeals erred in ruling that Tanchico was a
regular employee of Petroleum Shipping.
In this jurisdiction and as clearly stated in the Coyoca case, Filipino seamen are governed
by the Rules and Regulations of the POEA. The Standard Employment Contract governing
the employment of All Filipino Seamen on Board Ocean-Going Vessels of the POEA,
particularly in Part I, Sec. C specifically provides that the contract of seamen shall be for a
fixed period. And in no case should the contract of seamen be longer than 12 months.
The period of employment shall be for a fixed period but in no case to exceed 12 months
and shall be stated in the Crew Contract. Any extension of the Contract period shall be
subject to the mutual consent of the parties.
Undeniably, this circumstance of continuous re-hiring was dictated by practical
considerations that experienced crew members are more preferred. Petitioners were
only given priority or preference because of their experience and qualifications but this
does not detract the fact that herein petitioners are contractual employees. They can not
be considered regular employees. x x x18
Respondent not entitled to 13th month pay.
The Court of Appeals also ruled that petitioners are not exempt from the coverage of PD
851 which requires all employers to pay their employees a 13th month pay.
We do not agree with the Court of Appeals. Again, Tanchico was a contractual, not a
regular, employee. Further, PD 851 does not apply to seafarers. The WHEREAS clauses of
PD 851 provides:
WHEREAS, it is necessary to further protect the level of real wages from ravages of
world-wide inflation;
WHEREAS, there has been no increase in the legal minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune time for society to show its concern for
the plight of the working masses so they may properly celebrate Christmas and New
Year.
PD 851 contemplates the situation of land-based workers, and not of seafarers who
generally earn more than domestic land-based workers.
Tanchico’s employment is governed by his Contract of Enlistment (“Contract”), approved
by the POEA. The Contract of Employment,22 which is the standard employment
contract of the POEA, likewise does not provide for the payment of 13th month pay.
Furthermore, petitioner’s contract did not provide for separation benefits. In this
connection, it is important to note that neither does POEA standard employment
contract for Filipino seamen provide for such benefits.
As a Filipino seaman, petitioner is governed by the Rules and Regulations Governing
Overseas Employment and the said Rules do not provide for separation or termination
pay. x x x23
Hence, in the absence of any provision in his Contract governing the payment of 13th
month pay, Tanchico is not entitled to the benefit.
PETITION GRANTED. We REMAND the case to the Labor Arbiter to determine if Florello
Tanchico has been paid his disability benefits for 18 days in accordance with his Contract
of Enlistment. If no payment has been made, the Labor Arbiter is DIRECTED to determine
the amount Tanchico is entitled.
________________________________
NOTES:
On the Issue of Disability Benefits
Petitioner allege that allege that the vacation period is not part of the period of
employment.
The contact of employment provides, among others:
xxxx
If disability should occur while SEAFARER is on vacation, he must, within 3 days from
date thereof, notify the COMPANY’s Agent in the Philippines in order that the latter shall
be able to certify as to his condition. Certification of disability required for payment of
any disability benefits must be approved by a doctor appointed by the COMPANY and
SEAFARER must be disabled seven (7) days or more to be eligible to benefits and sick
leave status, COMPANY benefits shall be limited to a maximum of 18 days.
Indications that Tanchico was suffering from ischemia were detected on 8 December
1992 during Tanchico’s vacation period. Thus, petitioners paid him disability benefits for
18 days in accordance with the Contract. Tanchico cannot claim that he only acquired the
illness during his last deployment since the Medical Report26 he submitted to the NLRC
showed that he has been hypertensive since 1983 and diabetic since 1987. In the
absence of concrete proof that Tanchico acquired his disability during his last
deployment and not during his vacation, he is only entitled to disability benefits for 18
days.
Petitioners claim that they already paid Tanchico his disability benefits for 18 days but
he refused to sign the receipt.27 Tanchico alleged that he was only paid under the Career
Employment Incentive Plan.28 This is a factual matter which this Court cannot resolve.
This matter has to be remanded to the Labor Arbiter for resolution.
Producers Bank v. NLRC, 355 SCRA 489
FACTS: The present petition originated from a complaint filed by private respondent on
11 February 1988 with the Arbitration Branch, NLRC, charging petitioner with
diminution of benefits, non-compliance with Wage Order No. 6 and non-payment of
holiday pay. In addition, private respondent prayed for damages.
Labor arbiter dismissed the complaint for lack of merit. NLRC, however, granted all of
private respondent’s claims, except for damages. Petition filed a Motion for Partial
Reconsideration, which was denied by the NLRC. Hence, recourse to this Court.
Petitioner contends: that the NLRC gravely abused its discretion in ruling as it did for the
succeeding reasons stated: (1) it contravened the Supreme Court decision in Traders
Royal Bank v. NLRC, et al., G.R. No. 88168, promulgated on August 30, 1990, (2) its ruling
is not justified by law and Art. 100 of the Labor Code, (3) its ruling is contrary to the CBA,
and (4) the so-called “company practice invoked by it has no legal and moral bases” (4)
petitioner, under conservatorship and distressed, is exempted under Wage Order No. 6.
ISSUE: WON respondent is entitled for the payment of the above-mentioned monetary
claims, particularly BONUS.[Hindi ko na po sinama ung ibang issues]
HELD:
As to the bonuses, private respondent declared in its position papers filed with the NLRC
that –
Producers Bank of the Philippines, a banking institution, has been providing several
benefits to its employees since 1971 when it started its operation. Among the benefits it
had been regularly giving is a mid-year bonus equivalent to an employee’s one-month
basic pay and a Christmas bonus equivalent to an employee’s one whole month salary
(basic pay plus allowance);
When P.D. 851, the law granting a 13thmonth pay, took effect, the basic pay previously
being given as part of the Christmas bonus was applied as compliance to it (P.D. 851), the
allowances remained as Christmas bonus;
From 1981 up to 1983, the bank continued giving one month basic pay as mid-year
bonus, one month basic pay as 13thmonth pay but the Christmas bonus was no longer
based on the allowance but on the basic pay of the employees which is higher;
In the early part of 1984, the bank was placed under conservatorship but it still provided
the traditional mid-year bonus;
By virtue of an alleged Monetary Board Resolution No. 1566, bank only gave a one-half
(1/2) month basic pay as compliance of the 13thmonth pay and none for the Christmas
bonus.
Respondent’s Contention: that the mid-year and Christmas bonuses, by reason of their
having been given for thirteen consecutive years, have ripened into a vested right and, as
such, can no longer be unilaterally withdrawn by petitioner without violating Article 100
of Presidential Decree No. 4429 which prohibits the diminution or elimination of
benefits already being enjoyed by the employees. Although private respondent concedes
that the grant of a bonus is discretionary on the part of the employer, it argues that, by
reason of its long and regular concession, it may become part of the employee’s regular
compensation.
Petitioner asserts: that it cannot be compelled to pay the alleged bonus differentials due
to its depressed financial condition, as evidenced by the fact that in 1984 it was placed
under conservatorship by the Monetary Board. According to petitioner, it sustained
losses in the millions of pesos from 1984 to 1988, an assertion which was affirmed by the
labor arbiter. Moreover, petitioner points out that the collective bargaining agreement of
the parties does not provide for the payment of any mid-year or Christmas bonus. On the
contrary, section 4 of the collective bargaining agreement states that –
Acts of Grace. Any other benefits or privileges which are not expressly provided in this
Agreement, even if now accorded or hereafter accorded to the employees, shall be
deemed purely acts of grace dependent upon the sole judgment and discretion of the
BANK to grant, modify or withdraw.
A bonus is an amount granted and paid to an employee for his industry and loyalty which
contributed to the success of the employer’s business and made possible the realization
of profits. It is an act of generosity granted by an enlightened employer to spur the
employee to greater efforts for the success of the business and realization of bigger
profits.12 The granting of a bonus is a management prerogative, something given in
addition to what is ordinarily received by or strictly due the recipient.13 Thus, a bonus is
not a demandable and enforceable obligation,14 except when it is made part of the wage,
salary or compensation of the employee.15
However, an employer cannot be forced to distribute bonuses which it can no longer
afford to pay. To hold otherwise would be to penalize the employer for his past
generosity. Thus, in Traders Royal Bank v. NLRC,16 we held that –
It is clear x x x that the petitioner may not be obliged to pay bonuses to its employees.
The matter of giving them bonuses over and above their lawful salaries and allowances is
entirely dependent on the profits, if any, realized by the Bank from its operations during
the past year.
xxx
In light of these submissions of the petitioner, the contention of the Union that the
granting of bonuses to the employees had ripened into a company practice that may not
be adjusted to the prevailing financial condition of the Bank has no legal and moral
bases. Its fiscal condition having declined, the Bank may not be forced to distribute
bonuses which it can no longer afford to pay and, in effect, be penalized for its past
generosity to its employees. –
Private respondent’s contention, that the decrease in the mid-year and year-end bonuses
constituted a diminution of the employees’ salaries, is not correct, for bonuses are not
part of labor standards in the same class as salaries, cost of living allowances, holiday
pay, and leave benefits, which are provided by the Labor Code.
This doctrine was reiterated in the more recent case of Manila Banking Corporation v.
NLR1
Petitioner was not only experiencing a decline in its profits, but was reeling from
tremendous losses triggered by a bank-run which began in 1983. In such a depressed
financial condition, petitioner cannot be legally compelled to continue paying the same
amount of bonuses to its employees. Thus, the conservator was justified in reducing the
mid-year and Christmas bonuses of petitioner’s employees. To hold otherwise would be
to defeat the reason for the conservatorship which is to preserve the assets and restore
the viability of the financially precarious bank. Ultimately, it is to the employees’
advantage that the conservatorship achieve its purposes for the alternative would be
petitioner’s closure whereby employees would lose not only their benefits, but their jobs
as well.
International School Alliance of Educators v. Quisumbing, G.R. No. 128845, June 1,
2000, 333 SCRA 13
FACTS: International School Alliance of Educators (the School) hires both foreign and
local teachers as members of its faculty, classifying the same into two: (1) foreign-hires
and (2) local-hires.
In which, the School grants foreign-hires certain benefits not accorded local-hires
including housing, transportation, shipping costs, taxes, home leave travel allowance and
a salary rate 25% more than local hires based on “significant economic disadvantages”
The labor union and the collective bargaining representative of all faculty members of
the School, contested the difference in salary rates between foreign and local-hires.
The Union claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires
constitutes racial discrimination.
ISSUE: Whether or not the Union can invoke the equal protection clause to justify its
claim of parity.
RULING: Yes. The Labor Code’s and the Constitution’s provisions impregnably
institutionalize in this jurisdiction the long honored legal truism of "equal pay for equal
work." Persons who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should be paid similar salaries.
If an employer accords employees the same position and rank, the presumption is that
these employees perform equal work. If the employer pays one employee less than the
rest, it is not for that employee to explain why he receives less or why the others receive
more. That would be adding insult to injury.
The employer in this case has failed to discharge this burden. There is no evidence here
that foreign-hires perform 25% more efficiently or effectively than the local-hires. Both
groups have similar functions and responsibilities, which they perform under similar
working conditions.
Hence, the Court finds the point-of-hire classification employed by respondent School to
justify the distinction in the salary rates of foreign-hires and local hires to be an invalid
classification. There is no reasonable distinction between the services rendered by
foreign-hires and local-hires.
SHS Perforated Materials v. Diaz, G.R. No. 185814, October 13, 2010
FACTS:
SHS is a start-up corporation organized and existing under the Philippines and registered
with the PEZA. Petitioner Hartmannshenn, a German national, is its president, in which
capacity he determines the administration and direction of the day-to-day business
affairs of SHS. Petitioner
Schumacher, also a German national, is the treasurer and one of the board directors. As
such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever
nature upon maturity.
Schumacher is also the EVP of the European Chamber of Commerce of the Philippines
(ECCP) which is a separate entity from SHS. Both entities have an arrangement where
ECCP handles the payroll requirements of SHS to simplify business operations and
minimize operational expenses.
Thus, the wages of SHS employees are paid out by ECCP, through its Accounting Services
Department headed by Taguiang.
Respondent Diaz was hired by petitioner SHS as Manager for Business Development on
probationary status from July 18, 2005 to January 18, 2006, with a monthly salary of
P100,000.00. He was tasked to perform sales/marketing functions, represent the
company in its events, perform all functions, duties and responsibilities to be assigned by
the employer in due course, among others. In addition to the above-mentioned
responsibilities, respondent was also instructed by Hartmannshenn to report to the SHS
office and plant at least two (2) days every work week to observe technical processes
involved in the manufacturing of perforated materials, and to learn about the products of
the company, which respondent was hired to market and sell.
During respondentʼs employment, Hartmannshenn was often abroad and, because of
business exigencies, his instructions to respondent were either sent by electronic mail or
relayed through telephone or mobile phone. When he would be in the Philippines, he and
the respondent held meetings. As to respondentʼs work, there was no close supervision
by him. However, during meetings with the respondent, Hartmannshenn expressed his
dissatisfaction over respondentʼs poor performance. Respondent allegedly failed to
make any concrete business proposal or implement any specific measure to improve the
productivity of the SHS office. In addition, respondent was said not to have returned
Hartmannshenn's calls and e-mails, to which Diaz denied.
Hartmannshenn instructed Taguiang not to release respondentʼs salary. Later that
afternoon, respondent called and inquired about his salary. Taguiang informed him that
it was being withheld and that he had to immediately communicate with
Hartmannshenn. The next day, respondent served on SHS a demand letter and a
resignation letter, citing illegal and unfair labor practices.
ISSUES:
• WON the temporary withholding of respondentʼs salary/wages by petitioners was a
valid exercise of management prerogative
• WON respondent voluntarily resigned
HELD:
FIRST ISSUE- NO. Management prerogative refers “to the right of an employer to regulate
all aspects of employment, such as the freedom to prescribe work assignments, working
methods, processes to be followed, regulation regarding transfer of employees,
supervision of their work, lay-off and discipline, and dismissal and recall of work.”
Although management prerogative refers to “the right to regulate all aspects of
employment,” it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee. To sanction such an interpretation
would be contrary to Article 116 of the Labor Code.
Any withholding of an employeeʼs wages by an employer may only be allowed in the
form of wage deductions under the circumstances provided in Article 113 of the Labor
Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person,
shall make any deduction from the wages of his employees, except:
(a) In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium on the
insurance;
(b) For union dues, in cases where the right of the worker or his union to check-off has
been recognized by the employer or authorized in writing by the individual worker
concerned; and
(c) In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor.
As correctly pointed out by the LA, “absent a showing that the withholding of
complainantʼs wages
falls under the exceptions provided in Article 113, the withholding thereof is thus
unlawful.”
The Court finds petitionersʼ evidence insufficient to prove that respondent did not work
from November 16 to November 30, 2005. As can be gleaned from respondentʼs Contract
of Probationary Employment and the exchanges of electronic mail messages between
Hartmannshenn and respondent, the latterʼs duties as manager for business
development entailed cultivating business ties, connections, and clients in order to make
sales. Such duties called for meetings with prospective clients outside the office rather
than reporting for work on a regular schedule. In other words, the nature of respondentʼs
job did not allow close supervision and monitoring by petitioners. Neither was there any
prescribed daily monitoring procedure established by petitioners to ensure that
respondent was doing his job. Therefore, granting that respondent failed to answer
Hartmannshennʼs mobile calls and to reply to two electronic mail messages and given
the fact that he admittedly failed to report to work at the SHS plant twice each week
during the subject period, such cannot be taken to signify that he did not work from
November 16 to November 30, 2005.
SECOND ISSUE
The Court, however, agrees with the LA and the CA that respondent was forced to resign
and was, thus, constructively dismissed. In Duldulao v. Court of Appeals, it was written:
"There is constructive dismissal if an act of clear discrimination, insensibility, or disdain
by an employer becomes so unbearable on the part of the employee that it would
foreclose any choice by him except to forego his continued employment. It exists where
there is cessation of work because continued employment is rendered impossible,
unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay."
What made it impossible, unreasonable or unlikely for respondent to continue working
for SHS was the unlawful withholding of his salary. For said reason, he was forced to
resign.
Milan v. NLRC, G.R. No. 202961, February 4, 2015
FACTS:
1. Milan et.al are Solid Mills, Inc.’s (Solid Mills) employees. They are represented by the
National Federation of Labor Unions (NAFLU), their collective bargaining agent.
2. As Solid Mills’ employees, Milan et.al. and their families were allowed to occupy SMI
Village, a property owned by Solid Mills.  According to Solid Mills, this was “[o]ut of
 liberality and for the convenience of its employees . . . [and] on the condition that the
employees would vacate the premises anytime the Company deems fit.”
3. In September 2003, Milan et.al were informed that effective October 10, 2003, Solid
Mills would cease its operations due to serious business losses. NAFLU recognized
Solid Mills’ closure due to serious business losses in the memorandum of agreement
dated September 1, 2003. The memorandum of agreement provided for Solid Mills’
grant of separation pay less accountabilities, accrued sick leave benefits, vacation
leave benefits, and 13th month pay to the employees. The agreement was entered
into with full knowledge by the parties of their rights under the law and they bound
themselves not to conduct any concerted action of whatsoever kind, otherwise the
grant of financial assistance as discussed above will be withheld.
4. Solid Mills filed its Department of Labor and Employment termination report on
September 2, 2003.
5. Later, Solid Mills, through Alfredo Jingco, sent to Milan et.al individual notices to
vacate SMI Village.
6. Milan et.al. were no longer allowed to report for work by October 10, 2003. They
were required to sign a memorandum of agreement with release and quitclaim
before their vacation and sick leave benefits, 13th month pay, and separation pay
would be released.  Employees who signed the memorandum of agreement were
considered to have agreed to vacate SMI Village, and to the demolition of the
constructed houses inside as condition for the release of their termination benefits
and separation pay. Milan et.al. refused to sign the documents and demanded to be
paid their benefits and separation pay.
7. Hence, they filed complaints before the Labor Arbiter for alleged non-payment of
separation pay, accrued sick and vacation leaves, and 13th month pay. They argued
that their accrued benefits and separation pay should not be withheld because their
payment is based on company policy and practice. Moreover, the 13th month pay is
based on law, specifically, Presidential Decree No. 851. Their possession of Solid
Mills property is not an accountability that is subject to clearance procedures. They
had already turned over to Solid Mills their uniforms and equipment when Solid
Mills ceased operations.
8. On the other hand, Solid Mills argued that Milan et.al.’s complaint was premature
because they had not vacated its property.
9. The Labor Arbiter ruled in favor of Milan et.al.  According to the Labor Arbiter, Solid
Mills illegally withheld petitioners’ benefits and separation pay. The memorandum
of agreement dated September 1, 2003 stated no condition to the effect that
petitioners must vacate Solid Mills’ property before their benefits could be given to
them. Milan et.al.’s possession should not be construed as their“accountabilities”
that must be cleared first before the release of benefits. er.
10. Silodd Mills appealed to the National Labor Relations Commission. The National
Labor Relations Commission affirmed part of the decision but reversed and set aside
another part and decided that Milan et.al.’s monetary claims in the form of
separation pay, accrued 13th month pay for 2003, accrued vacation and sick leave
pays are held in abeyance pending compliance of their accountabilities to
respondent company by turning over the subject lots they respectively occupy at
SMI Village Sucat Muntinlupa City, Metro Manila to Solid Mills. Linga and four other
were already paid their respective separation pays and benefits. Meanwhile,
Teodora Mahilom already retired long before Solid Mills’ closure. She was already
given her retirement benefits.
11. The National Labor Relations Commission ruled that because of petitioners’ failure
to vacate Solid Mills’ property, Solid Mills was justified in withholding their benefits
and separation pay.35  Solid Mills granted the petitioners the privilege to occupy its
property on account of petitioners’ employment. 36  It had the prerogative to
terminate such privilege.37  The termination of Solid Mills and petitioners’ employer-
employee relationship made it incumbent upon petitioners to turn over the
property to Solid Mills.
12. The Court of Appeals ruled that Solid Mills’ act of allowing its employees to make
temporary dwellings in its property was a liberality on its part.  It may be revoked
any time at its discretion.
ISSUE: Whether or not an employer is allowed to withhold terminal pay and benefits
pending the employee’s return of its properties
RULING/RATIO: Yes. The fact that majority of NAFLU’s members were not occupants of
respondent Solid Mills’ property is evidence that possession of the property was not
contemplated in the agreement. “Accountabilities” should be interpreted to refer only to
accountabilities that were incurred by petitioners while they were performing their
duties as employees at the worksite. Moreover, applicable laws, company practice, or
policies do not provide that 13th month pay, and sick and vacation leave pay benefits,
may be withheld pending satisfaction of liabilities by the employee.
Requiring clearance before the release of last payments to the employee is a standard
procedure among employers, whether public or private.  Clearance procedures are
instituted to ensure that the properties, real or personal, belonging to the employer but
are in the possession of the separated employee, are returned to the employer before the
employee’s departure.
As a general rule, employers are prohibited from withholding wages from employees
(Art. 116, Labor Code). The Labor Code also prohibits the elimination or diminution of
benefits (Art. 100, Labor Code).
However, our law supports the employers’ institution of clearance procedures before the
release of wages.  As an exception to the general rule that wages may not be withheld
and benefits may not be diminished, the Labor Code provides: Art. 113. Wage deduction.
No employer, in his own behalf or in behalf of any person, shall make any deduction from
the wages of his employees, except:
1. In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as premium
on the insurance;
2. For union dues, in cases where the right of the worker or his union to check-off
has been recognized by the employer or authorized in writing by the individual
worker concerned; and
3. In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment.
The Civil Code provides that the employer is authorized to withhold wages for debts due:
Article 1706. Withholding of the wages, except for a debt due, shall not be made by the
employer. “Debt” in this case refers to any obligation due from the employee to the
employer.  It includes any accountability that the employee may have to the employer. 
There is no reason to limit its scope to uniforms and equipment, as petitioners would
argue.

More importantly, respondent Solid Mills and NAFLU, the union representing petitioners,
agreed that the release of petitioners’ benefits shall be “less accountabilities.”
Accountabilities of employees are personal.  They need not be uniform among all
employees in order to be included in accountabilities incurred by virtue of an employer-
employee relationship. Milan et.al. do not categorically deny Solid Mills’ ownership of the
property, and they do not claim superior right to it.  What can be gathered from the
findings of the Labor Arbiter, National Labor Relations Commission, and the Court of
Appeals is that Solid Mills allowed the use of its property for the benefit of Milan et.al. as
its employees.  Milan et.al were merely allowed to possess and use it out of Solid Mills’
liberality.  The employer may, therefore, demand the property at will.
DISPOSITIVE: Solid Mills won.
DOCTRINE: An employer is allowed to withhold terminal pay and benefits pending the
employee’s return of its properties. As a general rule, No employer, in his own behalf or
in behalf of any person, shall make any deduction from the wages of his employees. The
following cases are considered exceptions:
1. In cases where the worker is insured with his consent by the employer, and the
deduction is to recompense the employer for the amount paid by him as
premium on the insurance;
2. For union dues, in cases where the right of the worker or his union to check-off
has been recognized by the employer or authorized in writing by the individual
worker concerned; and
3. In cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment.
Coca-Cola Bottlers v. Iloilo Coca-Cola Plant Employees Labor Union, G.R. No.
195297, December 5, 2018
Iloilo Coca-Cola Plant Employees Labor Union (ICCPELU) filed a complaint for
disallowing the employees to report during Saturday as a violation of their Collective
Bargaining Agreement against Coca-Cola Bottlers Philippines, Inc. (CCBPI).
FACTS:
CCBPI’s Manufacturing Manager met with ICCPELU to propose to stop the work schedule
on during Saturdays, citing operational necessity as the reason for the decision, however,
this was opposed and rejected. The CBA defined Saturday that the management has the
option to schedule work on the basis of operational necessity. Despite opposition, CCBPI
pushed through.
CCBPI brought its grievances to the office of the National Conciliation and Mediation
Board (NMCB) whether the CCBPI could be compelled to provide work during Saturdays
under the CBA, and whether the respondents were entitled to receive their basic pay
during Saturdays under the CBA even if they would not report for work. The Panel of
Arbitrators ruled in favour of CCBPI, causing ICCPELU to elevate the case to the Court of
Appeals, which reversed the decision.
ISSUE:
Are the employees entitled to work on Saturdays?
RULING:
The Supreme Court affirmed the decision of NMCB. The Court finds that a more logical
and harmonious interpretation of the CBA provisions wherein Saturday work is optional
and mandatory keeps more with the agreement between the parties. There is no
ambiguity to the provisions, in which there is no other interpretation of the word “work”
other than the work itself and not the working hours. If Saturday work is indeed
mandatory under the CBA, the phrase in its CBA provision “required to work on
Saturday” would be superfluous. It is made more apparent that workers who work on
Saturdays are paid a premium for such work.
Moreover, the Court with the CA’s ruling that Saturday work ripened into company
practice which is covered by Article 100 of the Labor Code that diminution of benefits is
prohibited. The fact that Saturday work was made subject to a condition and such
condition prevails, i.e., on the basis of operational necessity, negates the application of
Article 100.
In labor law and social legislation, the scales of justice usually tilts in favour of the
workingman, however this has not blinded the Court, for the law does not authorize the
oppression or self-destruction of the employer. Management also has its own rights,
entitled to respect and enforcement in the interest of simple fair play.
DOCTRINE:
The Collective Bargaining Agreement shall govern the employee-employer relationship.
Though employees are usually favoured, management also has its own rights, deserving
fair play.
Barayoga v. Asset Privatization Trust, G.R. No. 160073, October 24, 2005
FACTS:
Asset Privatization Trust (APT) is a public trust whose mandate is to provisionally
manage and dispose of non-performing assets of the government. When former
President Aquino issued AO No. 14, which identified certain assets of government
institutions that were to be transferred to the National government, among those
transferred assets were the financial claim of PNB against Bicolandia Sugar Development
Corp. (BISUDECO) in a form of a secured loan. BISUDECO is a sugar plantation mill
located in Camarines Sur. Consequently, APT was constituted as trustee over
BISUDECO’s account with PNB by virtue of a trust agreement between the government
and APT.
In August 1988, BISUDECO contacted the services of Philippine Sugar Corp (Philsucor) to
take over management of the sugar plantation and milling operation until August 1992.
And because of the continued failure of BISUDECO to pay its outstanding loan with PNB,
its mortgage properties were foreclosed and subsequently sold in a public auction to
APT. In July 1992, APT accepted the offer of Bicol-Agro-Industrial Coop (BAPCI) to buy
the sugar plantation and mill. And in the event of the company’s privatization, ATP
authorized the payment of separation benefit’s to BISUDECO’s employees. Then BAPCI
purchased the foreclosed assets of BISUDECO and took over its sugar milling operations
under the trade name Peñ afrancia Sugar Mill (Pensumil).
The Bisudeco-Philsucor Corfarm Workers Union filed a complaint for unfair labor
practice, illegal dismissal, illegal deduction and underpayment of wages and other labor
standard benefits plus damages in 1991. The again they filed a similar complaint in 1992.
Then in 1993, they filed an amended complaint impleading as additional party
respondents APT and Pensumil.
In 1998 Labor Arbiter ordered APT to pay complainants of the mandatory employment
benefits. The NLRC affirmed APT’s liability for petitioners’ money claims. Respondent
sought relief from the CA and they ruled that APT should not be held liable for
petitioners’ claim.
ISSUE:
1. Whether or not the liabilities of the previous owners to their employees are
enforceable against the buyer or transferee who purchased the company’s
assets.
2. Whether or not ordinary preferred credits is the first choice over special
preferred credit.
HELD:
Petition is DENIED and the assailed decision is AFFIRMED.
RULING:
Any assumption of liability must be specifically and categorically agreed upon. Unless,
expressly assumed, labor contracts like collective bargaining agreements are not
enforceable against the transferee of an enterprise. Labor contracts are in personam and
thus binding only between the parties. The liabilities of the previous owner to its
employees are not enforceable against the buyer or transferee, unless (1) the latter
unequivocally assumes them; or (2) the sale or transfer was made in bad faith.
Under Art 2241 and 2242 of the Civil Code, a mortgage credit is a special preferred credit
that enjoys preference with respect to a specific/determinate property of a debtor. On
the other hand, the workers preference under Art 110 of the Labor code is an ordinary
preferred credit. While this provision raises the worker’s money claim to first priority in
the order of preference established in Art 2244 of the Civil Code, the claim has no
preference over special preferred credits. Being a mortgage credit APT’s lien on
BISUDECO’s mortgaged assets is a special preferred lien that must be satisfied first
before the claims of the workers.
Metrobank v. National Wages and Productivity Commission, G.R. No. 144322,
February 6, 2007
Facts:
On October 1995, the Regional Tripartite Wages and Productivity Board, Region II,
Tuguegarao, Cagayan (RTWPB), by virtue of Republic Act No. 6727 (R.A. No. 6727),
otherwise known as the Wage Rationalization Act, issued Wage Order No. R02-03
(Wage Order), as follows: Section 1. Upon effectivity of this Wage Order, all
employees/workers in the private sector throughout Region II, regardless of the
status of employment are granted an across-the-board increase of P15.00 daily.
The Wage Order was published in a newspaper of general circulation on December
2, 1995 and took effect on January 1, 1996. Its Implementing Rules were approved
on February 14, 1996. Per Section 13 of the Wage Order, any party aggrieved by the
Wage Order may file an appeal with the National Wages and Productivity
Commission (NWPC) through the RTWPB within 10 calendar days from the
publication of the Wage Order.
Banker’s Council in a letter inquiry to NWPC requested for ruling to seek exemption
from coverage of the wage order since the members bank are paying more than the
regular wage. NWPC replied that the member banks are covered by the wage order
and does not fall with the exemptible categories. In another letter inquiry,
Metrobank asked for the interpretation of the applicability of the wage order. NWPC
referred it to RTWPB.
Issue: WON the wage order is void thus it has no legal effect and the RTWPB acted in
excess of its jurisdiction.
 Held: Section 1, Wage Order No. R02-03 is void insofar as it grants a wage
increase to employees earning more than the minimum wage rate; and
pursuant to the separability clause of the Wage Order, Section 1 is declared
valid with respect to employees earning the prevailing minimum wage rate.
 The powers of NWPC are enumerated in ART. 121. Powers and Functions of the
Commission. - The Commission shall have the following powers and functions:
(d) To review regional wage levels set by the Regional Tripartite Wages and
Productivity Boards to determine if these are in accordance with prescribed
guidelines and national development plans; (f) To review plans and programs
of the Regional Tripartite Wages and Productivity Boards to determine whether
these are consistent with national development plans; (g) To exercise technical
and administrative supervision over the Regional Tripartite Wages and
Productivity Boards.
 R.A. No. 6727 declared it a policy of the State to rationalize the fixing of
minimum wages and to promote productivity-improvement and gain-sharing
measures to ensure a decent standard of living for the workers and their
families; to guarantee the rights of labor to its just share in the fruits of
production; to enhance employment generation in the countryside through
industrial dispersal; and to allow business and industry reasonable returns on
investment, expansion and growth.
 In line with its declared policy, R.A. No. 6727 created the NWPC, vested with the
power to prescribe rules and guidelines for the determination of appropriate
minimum wage and productivity measures at the regional, provincial or
industry levels; and authorized the RTWPB to determine and fix the minimum
wage rates applicable in their respective regions, provinces, or industries
therein and issue the corresponding wage orders, subject to the guidelines
issued by the NWPC. Pursuant to its wage fixing authority, the RTWPB may
issue wage orders which set the daily minimum wage rates, based on the
standards or criteria set by Article 124 of the Labor Code.
  The Court declared that there are two ways of fixing the minimum wage: the
"floor-wage" method and the "salary-ceiling" method. The "floor-wage"
method involves the fixing of a determinate amount to be added to the
prevailing statutory minimum wage rates. On the other hand, in the
"salary-ceiling" method, the wage adjustment was to be applied to
employees receiving a certain denominated salary ceiling. In other words,
workers already being paid more than the existing minimum wage (up to a
certain amount stated in the Wage Order) are also to be given a wage increase.
 In the present case, the RTWPB did not determine or fix the minimum wage
rate by the "floor-wage method" or the "salary-ceiling method" in issuing the
Wage Order. The RTWPB did not set a wage level nor a range to which a wage
adjustment or increase shall be added. Instead, it granted an across-the-board
wage increase of P15.00 to all employees and workers of Region 2. In doing so,
the RTWPB exceeded its authority by extending the coverage of the Wage
Order to wage earners receiving more than the prevailing minimum wage rate,
without a denominated salary ceiling. As correctly pointed out by the OSG, the
Wage Order granted additional benefits not contemplated by R.A. No. 6727.
P.I. Manufacturing v. P.P. Manufacturing Supervisors and Foremen Association,
543 SCRA 613
FACTS:
Petitioner P.I. Manufacturing, Incorporated is a domestic corporation engaged in the
manufacture and sale of household appliances. Respondent P.I. Manufacturing
Supervisors and Foremen Association (PIMASUFA) is an organization of petitioner’s
supervisors and foremen, joined in this case by its federation, the National Labor Union
(NLU).
December 10, 1987, R.A. No. 6640 was passed providing an increase in the statutory
minimum wage and salary rates of employees and workers in the private sector, to
which it is increased by P10.00 per day, except non-agricultural workers and employees
outside Metro Manila who shall receive an increase of P11.00 per day: Provided, That
those already receiving above the minimum wage up to P100.00 shall receive an increase
of P10.00 per day. Excepted from the provisions of this Act are domestic helpers and
persons employed in the personal service of another.
December 18, 1987, petitioner and respondent PIMASUFA entered into a new CBA (1987
CBA) whereby the supervisors were granted an increase of P625.00 per month and the
foremen, P475.00 per month. The increases were made retroactive to May 12, 1987, or
prior to the passage of R.A. No. 6640, and every year thereafter until July 26, 1989.
January 26, 1989, respondents PIMASUFA and NLU filed a complaint with NLRC charging
petitioner with violation of R.A. No. 6640. Respondents attached to their complaint a
numerical illustration of wage distortion resulting from the implementation of R.A. No.
6640.
LA favored respondents ordering Petitioner to give members of respondent PIMASUFA
wage increases equivalent to 13.5% of their basic pay they were receiving prior to
December 14, 1987. On appeal by petitioner, the NLRC affirmed LA’s judgment.
Petitioner filed a petition for certiorari with SCourt. However, SC referred the petition to
CA. CA affirmed the Decision of the NLRC with modification by raising the 13.5% wage
increase to 18.5%. M.R. was denied. Petitioner went to SC but it favored respondents.
Hence this MR.
ISSUES:
Whether the implementation of R.A. No. 6640 resulted in a wage distortion
Whether such distortion was cured or remedied by the 1987 CBA.
RULING:
Yes. R.A. No. 6727, otherwise known as the Wage Rationalization Act, explicitly
defines“wage distortion”as: “a situation where an increase in prescribed wage rates
results in the elimination or severe contraction of intentional quantitative differences in
wage or salary rates between and among employee groups in an establishment as to
effectively obliterate the distinctions embodied in such wage structure based on skills,
length of service, or other logical bases of differentiation.”
Otherwise stated, wage distortion means the disappearance or virtual disappearance of
pay differentials between lower and higher positions in an enterprise because of
compliance with a wage order. The increase in the wage rates by virtue of R.A. No. 6640
resulted in wage distortion or the elimination of the intentional quantitative differences
in the wage rates of the supervisor employees of petitioner.
II. Yes. Wage distortions were cured or remedied when respondent PIMASUFA entered
into the 1987 CBA with petitioner after the effectivity of R.A. No. 6640. The 1987 CBA
increased the monthly salaries of the supervisors by P625.00 and the foremen, by
P475.00, effective May 12, 1987. These increases re-established and broadened the gap,
not only between the supervisors and the foremen, but also between them and the rank-
and-file employees. Significantly, the 1987 CBA wage increases almost doubled that of
the P10.00 increase under R.A. No. 6640.
The P625.00/month means P24.03 increase per day for the supervisors, while the
P475.00/month means P18.26 increase per day for the foremen. Such gap as re-
established by virtue of the CBA is more than a substantial compliance with R.A. No.
6640. CA erred in not taking into account the provisions of the CBA. The provisions of the
CBA should be read in harmony with the wage orders, whose benefits should be given
only to those employees covered thereby.
To require petitioner to pay all the members of respondent PIMASUFA a wage increase
of 18.5%, over and above the negotiated wage increases provided under the 1987 CBA, is
highly unfair and oppressive to the former. It was not the intention of R.A. No. 6640 to
grant an across-the-board increase in pay to all the employees of petitioner. Only those
receiving wages P100.00 and below are entitled to the P10.00 wage increase. The
apparent intention of the law is only to upgrade the salaries or wages of the employees
specified therein. Almost all of the members of respondent PIMASUFA have been
receiving wage rates above P100.00 and, therefore, not entitled to the P10.00 increase.
Only 3 of them are receiving wage rates below P100.00, thus, entitled to such increase.
TO compel employers simply to add on legislative increases in salaries or allowances
without regard to what is already being paid, would be to penalize employers who grant
their workers more than the statutory prescribed minimum rates of increases. Clearly,
this would be counter-productive so far as securing the interests of labor is concerned.
It must be stressed that a CBA constitutes the law between the parties when freely and
voluntarily entered into. Iit has not been shown that respondent PIMASUFA was coerced
or forced by petitioner to sign the 1987 CBA. All of its 13 officers signed the CBA with the
assistance of respondent NLU. They signed it fully aware of the passage of R.A. No. 6640.
The duty to bargain requires that the parties deal with each other with open and fair
minds. Respondents cannot invoke the beneficial provisions of the 1987 CBA but
disregard the concessions it voluntary extended to petitioner. The goal of collective
bargaining is the making of agreements that will stabilize business conditions and fix fair
standards of working conditions. Respondents’ posture contravenes this goal.
WHEREFORE, we GRANT petitioner’s MR.
Prubankers Association v. Prudential Bank & Trust Company, G.R. No. G.R. No.
131247, January 25, 1999
Facts
 Nov. 1993, Regional Tripartite Wages and Productivity Board issued Wage
Order(1st) providing for a COLA to workers in the private sector who
rendered service for at least 3 months before its effectivity and for the
same period thereafter: P17.50 = Naga and Legaspi city/ P15.50 for
Tabaco, Daraga, Pili and Iriga/ P10.00 = all other areas in Bicol Region
 Subsequent Wage Order (2nd), directing integration of the COLA into the
basic pay of all workers. + increase in the minimum wage rates for all
workers/employees in the private sectors
 Respondent granted COLA of P17.50 to its employees at Naga Branch, only
branch covered by the 1st wage order, integrated the P150/month COLA
into the basic pay of its rank-and-file employees at Cebu, Mabolo and P. del
Rosario branches, covered by the 2nd Wage Order
 Ptr wrote respondent requesting Labor Management Committee to discuss
and resolve the alleged wage distortion created in the salary structure
upon implementation of said wage orders.  demanded in the meetings
for extension of the application of wage orders to employees outside
Regions V and VII (regions that came up w/ the wage orders)
 It went to voluntary arbitration. Arbitration Committee: Froilan Bacungan
as Chairman, Attys Anonuevo and de Guzman as members  ruled wage
distortion, resolve in accordance w/ Art 124 (LC)
 CA: Reversed. No wage distortion. Variance in salary rates of employees in
different regions justified by RA 6727  based on distinctive situations
and needs existing in each region.
 PETITIONER: wage distortion in wage rates of employees nationwide
Issue/Holding/Ratio
W/N discrepancy of employees’ wages in different regions results to wage
distortion?
 Wage distortion = situation where an increase in prescribed wage results
in the elimination or severe contraction of intentional quantitative
differences in wage or salary rates between and among employee groups
in an establishment as to effectively obliterate the distinctions embodied in
such wage structure based on skills, length of service, or other logical
bases of differentiation
o Presupposes a classification of positions and ranking of these
positions at various levels.
o (FROM GOOGLE) “happens when a wage order increasing the
rates of wages removes or significantly reduces the pay
advantage of one position of employees over another.” 
 Wage distortion. 4 elements:
1) Existing hierarchy of positions w/ corresponding salary rates
2) Significant change in the salary rate of lower pay class w/o a
concomitant increase in the salary rate of a higher one
3) Elimination of the distinction between the 2 levels
4) Existence of the distortion in the same region of the country
 No wage distortion occurred in the covered branches
o Increase in salary rates of ALL pay classes  the hierarchy of
positions was preserved
o Wage disparity between employees holding similar positions but
in different regions =/= wage distortion as contemplated by law
 In addition, RA 6727 recognizes regional disparities in the cost of living.
o Uniform national wage is contrary to this law
o Still “equal pay for equal work” coz that only means all workers
in the region have to have equal pay for equal work but doesn’t
mean Region 1 = Region 13
 Establishment does NOT include all branches and offices in different
regions
o “applicable in the place where they are sanctioned”
Ruling
ASSAILED DECISION IS AFFIRMED
Bay Haven v. Abuan, G.R. No. 160859, July 30, 2008
FACTS:
Upon complaint of Florentino Abuan, one of herein respondents, the DOLE, in the
exercise of its visitorial, inspection and enforcement powers, through its Regional
Director for the National Capital Region (NCR), issued an Order commanding petitioners
to pay respondents a total of P638,187.15 corresponding to the latter’s claims for
underpayment as petitioners’ workers.
The Regional Director based his Order on the results of the inspection conducted by one
of its inspectors who found that petitioner New Bay Haven Restaurant, located at the
Army and Navy Club, Kalaw St., Manila, under the ownership or management of
petitioner Te, committed violations of Labor Standards Law:
Underpayment of minimum wage.
Underpayment of thirteenth month pay.
Underpayment of regular holiday pay.
Underpayment of special holiday pay.
Non-payment of night shift differential pay.
Occupational Safety and Health Standards.
Non-registration of the firm under Rule 1020 of OSHS.4
New Bay-Haven Restaurant and its co-petitioner Te filed with the DOLE-NCR Regional
Office a Motion for Reconsideration of order, alleging that the office had no jurisdiction
over the case and that the order was issued in denial of petitioners’ right to due process.
They argued that jurisdiction over the case was lodged with the National Labor Relations
Commission (NLRC), and not the DOLE-NCR, due to the amount of the claims involved.
They added that their right to due process was also denied because the order was issued
without them being furnished copies of the complaint and the inspection report and
without being notified of the hearings held in the case.
The DOLE-NCR Assistant Regional Director, acting for the Regional Director, issued an
Order granting petitioners’ motion for reconsideration as he found merit in petitioners’
allegation of absence of due process in the issuance of the first order. The order,
however, stated that the DOLE had jurisdiction over the case, pursuant to the Labor
Code, as amended by Republic Act (R.A.) No. 7730, that intends to strengthen the
visitorial and enforcement powers of the Secretary of Labor and Employment.
Consequently, another hearing for the case was set.
During the hearing, petitioners submitted their Position Paper attaching thereto payroll
sheets and waivers and quitclaims allegedly signed by the respondents to prove that
petitioner properly paid respondents the amounts due them.
Respondents Florentino Abuan, Francisco Abentajado, Mario Guray, Juan Villaruz, Jerry
Asense and Joselito Razon, however, outrightly denied the validity of the payroll sheets
and quitclaims. In their Joint Affidavit , respondents claimed that the actual daily pay
they received was much smaller than the amounts stated in the payroll and they denied
having received the cash amount stated in the quitclaims. They added that they were
merely forced to sign the payrolls and quitclaims in blank and in one sitting after they
were accepted as applicants for their positions.
The DOLE-NCR Regional Director, giving credence to the affidavit of the respondents
denying the validity of the payroll sheets and quitclaims, issued an Order denying
petitioners’ motion for reconsideration of the Order . The Order held petitioners New
Bay Haven Restaurant, Bay Haven, Inc., its President Johnny T. Co, and/or Vivian Te as
the ones liable as employers of respondents. However, the liability of petitioners was
reduced to P468,444.16.13
Petitioners filed a Motion for Reconsideration of the Order. In the motion, petitioners
insisted that their documentary evidence proved that their obligations to respondents
had been discharged and that the DOLE had no jurisdiction over the case.
Treating the motion for reconsideration as an appeal, the DOLE Undersecretary issued a
Resolution , denying the appeal filed by petitioners,16 upholding the Regional Director’s
finding that the quitclaims could not be relied upon to deny respondents’ claims, and
reiterating that the DOLE had jurisdiction to decide the case.
Petitioners filed a Motion for Reconsideration of Resolution which was denied by DOLE
Secretary Sto. Tomas in a Resolution.
Aggrieved, petitioners filed a Petition for Certiorari under Rule 65 of the Rules of Court
with the CA, seeking to annul and set aside the Resolutions.
The CA rendered its Decision, dismissing the petition, ruling that the DOLE had
jurisdiction over the labor standards case and that petitioners did not present enough
evidence to refute the claims made by respondents.
Petitioners filed a Motion for Reconsideration of the Decision which the CA denied in its
Resolution.
Respondents did not file a comment on the petition, but instead filed a Memorandum
simultaneous with petitioners’ filing of their Memorandum.
In their Memorandum, respondents aver that the decision of the DOLE-NCR, as upheld by
the DOLE Secretary, was rendered in the exercise of its jurisdiction, specifically its
visitorial and enforcement powers as conferred by law. They also allege that petitioners
were given the opportunity to present evidence to refute respondents’ claims, but failed
to do so.
ISSUE:
1) whether the DOLE Secretary and her authorized representatives have jurisdiction to
impose the monetary liability against petitioners; and 2) whether the DOLE-NCR, as
upheld by the DOLE Secretary and the CA committed an error in awarding the claims of
respondents.
RULING:
We deny the petition.
The DOLE Secretary and her authorized representatives such as the DOLE-NCR Regional
Director, have jurisdiction to enforce compliance with labor standards laws under the
broad visitorial and enforcement powers conferred by Article 128 of the Labor Code, and
expanded by R.A. No. 7730.
The Court has held that the visitorial and enforcement powers of the Secretary, exercised
through his representatives, encompass compliance with all labor standards laws and
other labor legislation, regardless of the amount of the claims filed by workers. This has
been the rule since R.A. No. 7730 was enacted on June 2, 1994, amending Article 128(b)
of the Labor Code, to expand the visitorial and enforcement powers of the DOLE
Secretary. Under the former rule, the DOLE Secretary had jurisdiction only in cases
where the amount of the claim does not exceed P5,000.00.
The records also clearly indicate that the Regional Director and the DOLE Secretary
resolved the case based on violations found by the labor inspection officer, which do not
include illegal dismissal.
The said violations are within the jurisdiction of the DOLE Secretary and his petitioners, which may be used in evidence against them.49 Aptly, this then became one
representatives to address. The questioned Orders dated December 29, 1998, April 18, of the bases of the Regional Director’s award of overtime pay to respondents.
2000 and September 19, 2001 did not mention illegal dismissal, and properly so, because
there was no such finding in the inspector’s report.31 Being in the nature of compliance In summary, we hold that only the awards granted to the following respondents be
orders, said orders, under Art. 128(b) of the Labor Code, are strictly based on “the affirmed:
findings of labor employment and enforcement officers x x x made in the course of
inspection,” and not on any complaint filed. Though a complaint may initiate the case or Juan Villaruz
an inspection, its allegations may not necessarily be upheld by the labor inspector or the Francisco Abentajado
Regional Director. Jerry Asense
Mario Guray
Petitioners fail to persuade. The mere disagreement by the employer with the findings of Joselito Razon
the labor officer, or the simple act of presenting controverting evidence, does not
automatically divest the DOLE Secretary or any of his authorized representatives such as
the regional directors, of jurisdiction to exercise their visitorial and enforcement powers The award in favor of Florentino Abuan is deleted, as his claim for illegal dismissal is
under the Labor Code. within the original and exclusive jurisdiction of the Labor Arbiter, and outside of the
jurisdiction of the DOLE Secretary and the Regional Director. The awards granted to the
Under prevailing jurisprudence, the so-called exception clause in Art. 128(b) of the Labor rest of the respondents are likewise deleted for lack of evidence to prove petitioners’
Code has the following elements, which must all concur to divest the regional director of liability as to them.
jurisdiction over workers’ claims:
WHEREFORE, the decision appealed from is AFFIRMED, with the MODIFICATION that
(a) that the employer contests the findings of the labor regulations officer and raises only respondents Juan Villaruz, Francisco Abentajado, Jerry Asense, Mario Guray, and
issues thereon; Joselito Razon be GRANTED their monetary awards while the awards given to the rest of
(b) that in order to resolve such issues, there is a need to examine evidentiary matters; the respondents are DELETED.
and
(c) that such matters are not verifiable in the normal course of inspection.37
Ex-Bataan Veterans v. Sec. of Labor, G.R. No. 152396, November 20, 2007
Thus, the key requirement for the Regional Director and the DOLE Secretary to be
divested of jurisdiction is that the evidentiary matters are not verifiable in the course of
inspection. Where the evidence presented was verifiable in the normal course of
inspection, even if presented belatedly by the employer, the Regional Director, and later
the DOLE Secretary, may still examine them; and these officers are not divested of
jurisdiction to decide the case.

In the present case, petitioners’ pieces of evidence of the alleged contract of lease, payroll
sheets, and quitclaims were all verifiable in the normal course of inspection and, granting
that they were not examined by the labor inspector, they have nevertheless been
thoroughly examined by the Regional Director and the DOLE Secretary. For these
reasons, the exclusion clause of Art. 128(b) does not apply.

In addition, the findings of the said officers on the invalidity or low probative value of
these documents are findings of a factual nature which this Court will accord with great
respect.

Anent the second issue, There is merit in petitioners’ contentions.

However, we do not sustain petitioners’ allegation that the Regional Director and the
DOLE Secretary erroneously awarded overtime pay to the respondents, despite the lack
of proof that overtime work had been rendered. Suffice it to state that petitioners’ own
evidence, which are the payroll sheets they submitted to the Regional Director,48 show
that respondents indeed rendered overtime work. This amounts to an admission by
Ceprado, Jr. v. Nationwide Security and Allied Services, G.R. No. 175198, September
23, 2015

RULING:
We grant the Petition.

This case is a labor standards case involving "the minimum requirements prescribed by
existing laws, rules and regulations and other issuances relating to wages, hours of work,
cost of living allowances and other monetary and welfare benefits, including those set by
occupational safety and health standards."46 When this case was commenced, the Rules
on the Disposition of Labor Standards Cases in the Regional Offices governed labor
inspections.
Rule II, Section 19 of the Rules on the Disposition of Labor Standards Cases in the
Regional Offices allows an aggrieved party to file a motion for reconsideration of the
Order of the Regional Office.48 In this case, respondent filed a Motion for
Reconsideration of Regional Director Martinez's April 19, 2001 Order.
As respondent failed to furnish petitioners a copy of its Motion for Reconsideration of the
April 19, 2001 Order, Regional Director Martinez had no jurisdiction to act on the Motion
for Reconsideration. The Resolution dated May 8, 2002 granting the Motion for
Reconsideration is null and void for want of jurisdiction.1â шphi1
Moreover, the filing of the Motion for Reconsideration did not toll the running of the
seven-day reglementary period under Rule II, Section 19 of the Rules on the Disposition
of Labor Standards Cases in the Regional Offices. Thus, the April 19, 2001 Order became
final and executory after seven (7) days from the filing of the Motion, i.e., on May 16,
2001.
The Court of Appeals, therefore, correctly set aside all the orders subsequent to the April
19, 2001 Order, specifically: the Regional Director's Resolution dated May 8, 2002
granting respondent's Motion for Reconsideration; the Department of Labor and
Employment's Order dated March 12, 2003 granting petitioners' appeal; the Order dated
March 23, 2004 denying the Motion to Quash and Recall Writ of Execution; and the Order
dated July 19, 2004 denying respondent's Motion for Reconsideration.
However, the Court of Appeals erred in remanding the case to the Regional Director for
further proceedings on the Motion for Reconsideration. The proper course of action is to
issue a writ of execution to implement the April 19, 2001 Order.
Appeal is a purely statutory privilege that "may be exercised only in the manner and in
accordance with the provisions of law."58 If an appellate court or tribunal takes
cognizance of an appeal that does not comply with the rules, the appellate court or
tribunal acts without jurisdiction.59 The decision on the appeal is null and void.
Secretary Sto. Tomas, thus, acted without jurisdiction in treating petitioners' Letter dated
May 27, 2002 as an appeal. Although the Rules on the Disposition of Labor Standards
Cases in the Regional Offices provide that the rules "shall be liberally construed,"62 still,
courts and tribunals are "limited by the legislative will and intent, as expressed in the
law itself."63 In this case, the law consists of rules issued under the quasi-legislative
power delegated by the legislative branch to the Secretary of Labor and Employment.64
The Secretary of Labor should have strictly followed the rules on appeal under the Rules
on the Disposition of Labor Standards Cases in the Regional Offices.
In any case, the April 19, 2001 Order is already final and executory and may no longer be
disturbed. It has become "immutable and unalterable."65 The April 19, 2001 Order "may
no longer be modified in any respect, even if the modification is meant to correct what is
perceived to be an erroneous conclusion of fact or law[.]"
Ocean Builders Construction Corp. v. Sps. Cubcub, G.R. No. 150898, April 13, 2011
FACTS: Bladimir Cubacub was employed as maintenance man by petitioner Ocean
Builders Construction Corp. at its office in Caloocan City.
Bladimir was afflicted with chicken pox. He was thus advised by petitioner Hao, the
company’s general manager, to rest for 3 days which he did at the company’s “barracks.”
3 days later, Bladimir went about his usual chores. Later in the afternoon, however, he
asked a co-worker Silangga, to accompany him to his house in Capas, Tarlac so he could
rest. Informed by Silangga of Bladimir’s intention, Hao gave Bladimir P1,000.00 and
ordered Silangga to instead bring Bladimir to the nearest hospital.
Along with co-workers Narding and Vergado, Silangga thus brought Bladimir to the
nearest Community Hospital, a primary-care hospital around 1 kilometer away from the
office of the company.
The hospital did not allow Bladimir to leave the hospital. He was then confined. The
next day, Bladimir’s parents-respondent spouses Cubacub, with their friend Dr. Frias,
arrived at the Hospital and transferred Bladimir to the Quezon City General Hospital
where he was placed in the ICU and died the following day.
Bladimir’s parents-herein respondents later filed before the Tarlac RTC at Capas a
complaint for damages against petitioners, alleging that Hao was guilty of negligence
which resulted in the deterioration of Bladimir’s condition leading to his death.
The Tarlac RTC dismissed the complaint, holding that Hao was not negligent. On
respondents’ appeal, the CA eversed the trial court’s decision, holding that by Hao’s
failure to bring Bladimir to a better-equipped hospital, he violated Article 161 of the
Labor Code.
ISSUE: Is petitioner company and its co-petitioner manager Hao guilty of negligence.
HELD: NO
Art. 161 of the Labor Code provides:
ART. 161. Assistance of employer. – It shall be the duty of any employer to provide all
the necessary assistance to ensure the adequate and immediate medical and dental
attendance and treatment to an injured or sick employee in case of emergency.
The Implementing Rules of the Code do not enlighten what the phrase “adequate and
immediate” medical attendance means in relation to an “emergency.” It would thus
appear that the determination of what it means is left to the employer, except when a
full-time registered nurse or physician are available on-site as required, also under the
Labor Code, specifically Art. 157 which provides:
Article 157. Emergency Medical and Dental Services. ─ It shall be the duty of every
employer to furnish his employees in any locality with free medical and dental
attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds
fifty (50) but not more than two hundred (200) except when the employer does not
maintain hazardous workplaces, in which case, the services of a graduate first-aider shall
be provided for the protection of workers, where no registered nurse is available. The
Secretary of Labor and Employment shall provide by appropriate regulations, the
services that shall be required where the number of employees does not exceed fifty (50)
and shall determine by appropriate order, hazardous workplaces for purposes of this
Article;
(b) The services of a full-time registered nurse, a part-time physician and dentist, and an
emergency clinic, when the number of employees exceeds two hundred (200) but not
more than three hundred (300); and
(c) The services of a full-time physician, dentist and a full-time registered nurse as well
as a dental clinic and an infirmary or emergency hospital with one bed capacity for every
one hundred (100) employees when the number of employees exceeds three hundred
(300).
In the present case, there is no allegation that the company premises are hazardous.
Neither is there any allegation on the number of employees the company has. If Hao’s
testimony would be believed, the company had only seven regular employees and 20
contractual employees ─ still short of the minimum 50 workers that an establishment
must have for it to be required to have a full-time registered nurse.
The Court can thus only determine whether the actions taken by petitioners when
Bladimir became ill amounted to the “necessary assistance” to ensure “adequate and
immediate medical . . . attendance” to Bladimir as required under Art. 161 of the Labor
Code.
As found by the trial court and borne by the records, petitioner Hao’s advice for Bladimir
to, as he did, take a 3-day rest and to later have him brought to the nearest hospital
constituted “adequate and immediate medical” attendance that he is mandated, under
Art. 161, to provide to a sick employee in an emergency.
AT ALL EVENTS, the alleged negligence of Hao cannot be considered as the proximate
cause of the death of Bladimir. Proximate cause is that which, in natural and continuous
sequence, unbroken by an efficient intervening cause, produces injury, and without
which, the result would not have occurred. An injury or damage is proximately caused
by an act or failure to act, whenever it appears from the evidence in the case that the act
or omission played a substantial part in bringing about or actually causing the injury or
damage, and that the injury or damage was either a direct result or a reasonably
probable consequence of the act or omission.
Ecasinas v. Shangri-La’s Mactan Island Resort, G.R. No. 178827, March 4, 2009
FACTS: RNs Escasinas and Singco were engaged by Dr. Pepito to work in her clinic at
respondent Shangri-la’s Mactan Island Resort in Cebu of which she was a retained
physician.
Petitioners filed with the NLRC Regional Arbitration Branch No. VII a complaint for
regularization, underpayment of wages, non-payment of holiday pay, night shift
differential and 13th month pay differential against respondents, claiming that they are
regular employees of Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees but of respondent
doctor whom it retained via Memorandum of Agreement (MOA) pursuant to Article 157
of the Labor Code, as amended.
Labor Arbiter Carreon declared petitioners to be regular employees of Shangri-la. The
Arbiter thus ordered Shangri-la to grant them the wages and benefits due them as
regular employees from the time their services were engaged.
The NLRC granted Shangri-la’s and respondent doctor’s appeal and dismissed
petitioners’ complaint for lack of merit, it finding that no employer-employee
relationship exists between petitioner and Shangri-la.
ISSUE: are petitioners regular employees of Shangri-la?
HELD: NO, but of independent contractor Dr. Pepito
Art. 157 does not require the engagement of full-time nurses as regular employees of a
company employing not less than 50 workers
ART. 157. Emergency medical and dental services. – It shall be the duty of every
employer to furnish his employees in any locality with free medical and dental
attendance and facilities consisting of:
(a) The services of a full-time registered nurse when the number of employees exceeds
fifty (50) but not more than two hundred (200) except when the employer does not
maintain hazardous workplaces, in which case the services of a graduate first-aider shall
be provided for the protection of the workers, where no registered nurse is available.
The Secretary of Labor shall provide by appropriate regulations the services that shall be
required where the number of employees does not exceed fifty (50) and shall determine
by appropriate order hazardous workplaces for purposes of this Article;
(b) The services of a full-time registered nurse, a part-time physician and dentist, and an
emergency clinic, when the number of employees exceeds two hundred (200) but not
more than three hundred (300); and
(c) The services of a full-time physician, dentist and full-time registered nurse as well as
a dental clinic, and an infirmary or emergency hospital with one bed capacity for every
one hundred (100) employees when the number of employees exceeds three hundred
(300).
In cases of hazardous workplaces, no employer shall engage the services of a physician
or dentist who cannot stay in the premises of the establishment for at least two (2)
hours, in the case of those engaged on part-time basis, and not less than eight (8) hours
in the case of those employed on full-time basis. Where the undertaking is nonhazardous
in nature, the physician and dentist may be engaged on retained basis, subject to such
regulations as the Secretary of Labor may prescribe to insure immediate availability of
medical and dental treatment and attendance in case of emergency.
Under the foregoing provision, Shangri-la, which employs more than 200 workers, is
mandated to “furnish” its employees with the services of a full-time registered nurse, a
part-time physician and dentist, and an emergency clinic which means that it should
provide or make available such medical and allied services to its employees, not
necessarily to hire or employ a service provider. As held in Philippine Global
Communications vs. De Vera:

x x x while it is true that the provision requires employers to engage the services of
medical practitioners in certain establishments depending on the number of their
employees, nothing is there in the law which says that medical practitioners so engaged
be actually hired as employees, adding that the law, as written, only requires the
employer “to retain”, not employ, a part-time physician who needed to stay in the
premises of the non-hazardous workplace for two (2) hours.
The term “full-time” in Art. 157 cannot be construed as referring to the type of
employment of the person engaged to provide the services, for Article 157 must not be
read alongside Art. 280 in order to vest employer-employee relationship on the
employer and the person so engaged. So De Vera teaches:
x x x For, we take it that any agreement may provide that one party shall render services
for and in behalf of another, no matter how necessary for the latter’s business, even
without being hired as an employee. This set-up is precisely true in the case of an
independent contractorship as well as in an agency agreement. Indeed, Article 280 of the
Labor Code, quoted by the appellate court, is not the yardstick for determining the
existence of an employment relationship. As it is, the provision merely distinguishes
between two (2) kinds of employees, i.e., regular and casual. x x x
The phrase “services of a full-time registered nurse” should thus be taken to refer to the
kind of services that the nurse will render in the company’s premises and to its
employees, not the manner of his engagement.
**
As to whether respondent doctor can be considered a legitimate independent contractor,
the pertinent sections of DOLE Department Order No. 10, series of 1997, illuminate:
Sec. 8. Job contracting. – There is job contracting permissible under the Code if the
following conditions are met:
(1) The contractor carries on an independent business and undertakes the contract
work on his own account under his own responsibility according to his own manner and
method, free from the control and direction of his employer or principal in all matters
connected with the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of tools, equipment,
machineries, work premises, and other materials which are necessary in the conduct of
his business.
Sec. 9. Labor-only contracting. –
(a) Any person who undertakes to supply workers to an employer shall be deemed to be
engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment,
machineries, work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which
are directly related to the principal business or operations of the employer in which
workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and the person acting
as contractor shall be considered merely as an agent or intermediary of the employer
who shall be responsible to the workers in the same manner and extent as if the latter
were directly employed by him.
(c) For cases not falling under this Article, the Secretary of Labor shall determine
through appropriate orders whether or not the contracting out of labor is permissible in
the light of the circumstances of each case and after considering the operating needs of
the employer and the rights of the workers involved. In such case, he may prescribe
conditions and restrictions to insure the protection and welfare of the workers.
The existence of an independent and permissible contractor relationship is generally
established by considering the following determinants: whether the contractor is
carrying on an independent business; the nature and extent of the work; the skill
required; the term and duration of the relationship; the right to assign the performance
of a specified piece of work; the control and supervision of the work to another; the
employer’s power with respect to the hiring, firing and payment of the contractor’s
workers; the control of the premises; the duty to supply the premises, tools, appliances,
materials and labor; and the mode, manner and terms of payment.
On the other hand, existence of an employer- employee relationship is established by
the presence of the following determinants:
(1) the selection and engagement of the workers;
(2) power of dismissal;
(3) the payment of wages by whatever means; and
(4) the power to control the worker’s conduct, with the latter assuming primacy in the
overall consideration.
Against the above-listed determinants, the Court holds that respondent doctor is a
legitimate independent contractor. That Shangri-la provides the clinic premises and
medical supplies for use of its employees and guests does not necessarily prove that
respondent doctor lacks substantial capital and investment. Besides, the maintenance of
a clinic and provision of medical services to its employees is required under Art. 157,
which are not directly related to Shangri-la’s principal business – operation of hotels and
restaurants.
As to payment of wages, respondent doctor is the one who underwrites the following:
salaries, SSS contributions and other benefits of the staff; group life, group personal
accident insurance and life/death insurance, as well as value added taxes and
withholding taxes. It is unlikely that respondent doctor would report petitioners as
workers, pay their SSS premium as well as their wages if they were not indeed her
employees
With respect to the supervision and control of the nurses and clinic staff, it is not
disputed that a document, “Clinic Policies and Employee Manual” claimed to have been
prepared by respondent doctor exists, to which petitioners gave their conformity and in
which they acknowledged their co-terminus employment status. It is thus presumed
that said document, and not the employee manual being followed by Shangri-la’s regular
workers, governs how they perform their respective tasks and responsibilities.
In fine, as Shangri-la does not control how the work should be performed by petitioners,
it is not petitioners’ employer.
Orient Hope Agencies v. Jara, G.R. No. 204307, June 6, 2018
Failure of the company-designated physician to render a final and definitive assessment of
a seafarer's condition within the 240-day extended period transforms the seafarer's
temporary and total disability to permanent and total disability.
FACTS:
Jara was hired by Orient Hope, on behalf of its foreign principal, Zeo Marine, as engine
cadet on board M/V Orchid Sun.The employment contract was for duration of 10 months
with a basic monthly salary of US$230.00. On its way to Oman, M/V Orchid Sun sank off
Muscat on July 12, 2007, during which Jara sustained leg injuries. He was treated at
Khoula Hospital in Oman and thereafter repatriated and admitted on August 3, 2007 at
the Metropolitan Hospital in Manila. Jara was diagnosed to have suffered from "fracture,
shaft of left ulna and left fibula." On August 28, 2007 and January 9, 2008, he underwent
knee operations. He did not return to the company-designated doctor after his check up
on March 17, 2008.
Meanwhile, on March 6, 2008,Jara filed a complaint with the Labor Arbiter, insisting that
he was entitled to total permanent disability benefits amounting to US$60,000.00.
On May 29, 2008, Assistant Medical Coordinator Dr. Mylene Cruz Balbon of the Marine
Medical Services of Metropolitan Medical Center issued a letter, stating that based on his
last follow-up, his suggested disability grading is Grade 11 – stretching leg or ligaments
of a knee resulting in instability of the joint.
Labor Arbiter Daniel J. Cajilig found Jara entitled to compensation equivalent to Grade 11
disability. He solely relied on the assessment of the company-designated physician. He
found no evidence or other medical report on record to dispute the company designated
physician's determination and to support Jara's claim.
The National Labor Relations Commission affirmed the Labor Arbiter's award. Jara filed
a Motion for reconsideration but it was denied by the NLRC.
Insisting that he was entitled to permanent disability compensation, Jara elevated the
matter to the Court of Appeals through a Petition for Certiorari under Rule 65.
In its August 15, 2012 Decision, the Court of Appeals held that Jara was "entitled to
permanent disability benefits because the assessment of the company-designated
physician that he was suffering from a grade '11' disability was issued after nine (9)
months or more than 120 days from the time he was medically repatriated.”
ISSUE:
Whether or not respondent Jara is entitled to permanent and total disability
compensation considering that there was a Grade 11 disability grading given by the
company-designated physician (YES)
RULING:
The prevailing rule is that a seafarer's mere inability to perform his or her usual work
after 120 days does not automatically lead to entitlement to permanent and total
disability benefits because the 120-day period for treatment and medical evaluation by a
company-designated physician may be extended to a maximum of 240 days.
However, there must be a sufficient justification to extend the medical treatment from
120 days to 240 days. In other words, the 240-day extended period remains to be an
exception, and as such, must be clearly shown to be warranted under the circumstances
of the case before it can be applied.
Applying the case of Talaroc v. Arpaphil Shipping Corp. stressed that for a company-
designated physician to avail of the extended 240-day period, he or she must perform
some complete and definite medical assessment to show that the illness still requires
medical attendance beyond the 120 days, but not to exceed 240 days. In such case, the
temporary total disability period is extended to a maximum of 240 days. Without
sufficient justification for the extension of the treatment period, a seafarer's disability
shall be conclusively presumed to be permanent and total. This Court summarized the
following guidelines to be observed when a seafarer claims permanent and total
disability benefits:
1. The company-designated physician must issue a final medical assessment on
the seafarer's disability grading within a period of 120 days from the time the
seafarer reported to him;
2. If the company-designated physician fails to give his assessment within the
period of 120 days, without any justifiable reason, then the seafarer's disability
becomes permanent and total;
3. If the company-designated physician fails to give his assessment within the
period of 120 days with a sufficient justification (e.g., seafarer required further
medical treatment or seafarer was uncooperative), then the period of diagnosis
and treatment shall be extended to 240 days. The employer has the burden to
prove that the company-designated physician has sufficient justification to
extend the period; and
4. If the company-designated physician still fails to give his assessment within the
extended period of 240 days, then the seafarer's disability becomes permanent
and total, regardless of any justification.
 Accordingly, in Carcedo v. Maine Marine Philippines, Inc.,this Court declared that a
partial and permanent disability could, by legal contemplation, become total and
permanent when a company-designated physician fails to arrive at a definite
assessment within the 120- or 240-day periods prescribed under Article 198 [192]
(c)(1) of the Labor Code and the Amended Rules on Employee Compensation,
implementing Book IV, Title II of the Labor Code.
Madridejos v. NYK-FIL Shipmanagement, Inc., G.R. No. 204262, June 7, 2017
Facts: Petitioner Madridejos was a Filipino seafarer hired by respondent NYK-Fil Ship
Management, Inc. (NYK-FIL), a registered local manning agency operating by virtue of
Philippine laws for its foreign principal, International Cruise Services, Limited.
Madridejos signed an employment contract with NYK-FIL as a Demi Chef. Madridejos
commenced to work aboard the vessel. Two (2) weeks after, he claimed that he suddenly
slipped on a metal stairway and fell down, hitting his abdomen and chest on a metal pipe.
He was brought to the ship doctor and was diagnosed to have a sebaceous cyst to the
right of the umbilicus. After two (2) months, NYK-FIL terminated Madridejos' services
through its foreign principal. Madridejos insisted that he did not finish his employment
contract with NYK-FIL due to his unwanted health condition. Not being at fault for the
pre-termination of his employment contract, he made demands upon NYK-FILto pay his
disability benefits
Issue: Is Madridejos entitled to disability benefits?
Ruling: No. Madridejos cannot claim disability benefits since he was not medically
repatriated. Even assuming that Madridejos was medically repatriated, he still cannot
claim for disability benefits since his sebaceous cyst was not work-related. Illnesses not
listed as an occupational disease under Section 32 of the 2000 Philippine Overseas
Employment Administration Amended Standard Terms and Conditions Governing the
Employment of Filipino Seafarers on Board Ocean-Going Vessels are disputably
presumed to be work-related. However, seafarers must prove through substantial
evidence the correlation between their illness and the nature of their work for their
claim for disability benefits to prosper. For an illness to be compensable, it is not
necessary that the nature of the employment be the sole and only reason for the illness
suffered by the seafarer. It is enough that there is a reasonable linkage between the
disease suffered by the employee and his work to lead a rational mind to conclude that
his work may have contributed to the establishment or, at the very least, aggravation of
any pre-existing condition he might have had. Madridejos cannot solely rely on the
disputable presumption. For his failure to substantiate his claim that his cyst was either
work-related or work-aggravated, this Court cannot grant him relief. For this reason, this
Court cannot presuppose that it is work-related. Furthermore, it was already settled that
Madridejos was not repatriated due to his alleged medical condition but due to the
expiration of his contract as a probationary employee. Clearly, it becomes unnecessary
for NYK-FIL to overcome the disputable presumption that Madridejos' illness was work-
related.
Hanseatic Shipping v. Ballon, G.R. No. 212764, September 9, 2015
FACTS: Petitioner Hanseatic Shipping Philippines, Inc. (Hanseatic), a domestic
corporation and the manning agency of its foreign principal, petitioner Reederei Hans
Peterson & Soehne GMBH & Co. HG. (Reederei), employed respondent Aries Ballon
(Ballon), a seafarer by profession, sometime in November 2001. In his last employment
with Hanseatic, Ballon signed a 6-month contract on May 25, 2010. After undergoing the
required pre-employment medical examination (PEME), he was hired by Hanseatic as an
Able Bodied (AB) Seaman, and on May 31, 2010, he embarked on "MV Westerems."
Complainant Ballon's Position
While on board the vessel, Ballon felt extreme pain in his right jaw which he complained
to his second officer. While the ship was docked in Manila, he was referred to the
company-designated physician of Shiphealth, Inc. (Shiphealth).[5] On July 12, 2010, he
was diagnosed to have "Reactive Lymphadenopath" and was advised to come back for a
check-up after two (2) weeks, when the vessel would be back in Manila.
On November 8, 2010, Ballon signed the Certificate of Fitness for Work[16] which stated
that he was holding Shiphealth and Hanseatic free from all liabilities. He, however,
vehemently denied that he executed the same willingly and voluntarily.[17]
On November 18, 2010, Ballon filed a complaint[18] for permanent disability
compensation, reimbursement of medical expenses and payment of sick wages, moral
and exemplary damages before the LA against Hanseatic and its President, Rosalinda
Bauman, and its foreign principal, Reederei (petitioners).
Petitioners' Position
Petitioners averred that Ballon himself requested that he be signed-off from the vessel.
On July 13, 2010, while the vessel was docked in Manila, he completed his duty and was
allowed to go ashore. While he was still on land, "MV Westerems" had to seek shelter due
to an impending typhoon so he was instructed to immediately return on board. He,
however, returned only on the next day. The master of the vessel required him to explain
his delay in returning to the vessel.
In a hand-written letter,[22] dated July 16, 2010, Ballon justified his delay by stating that
he saved the life of his nephew. He then asked the master of the vessel that he be
repatriated to Manila. On July 19, 2010, the master of the vessel relayed the incident and
Ballon's explanation to his superior.[23] Thereafter, on July 26, 2010, Ballon
disembarked from the ship.
The LA dismissed the complaint and ruled that Ballon was not entitled to any disability
benefits. On January 6, 2012, the NLRC reversed and set aside the April 15, 2011 decision
of the LA. It concluded that Ballon was entitled to the amount of US$60,000.00 as
permanent total disability benefits, US$2,772.00 as sickness allowance, and attorney's
fees equivalent to 10% of the monetary awards.
Unperturbed, petitioners filed a petition for certiorari before the CA, arguing that Ballon
was able to work again as a seaman under another manning agency on December 24,
2011. The appellate court also held that Ballon's employment by another manning
agency on December 24, 2011, did not erase the fact that he was not able to work as a
seaman for more than a year. The law did not require that the illness should be incurable
to be classified as a permanent and total disability. The CA, thus, found that Ballon
suffered from a permanent and total disability as he was unable to perform his
customary work for more than 120 days.
ISSUE: WHETHER THE DECLARATION OF FITNESS TO WORK BY THE COMPANY-
DESIGNATED PHYSICIAN AND THE SUBSEQUENT HIRING OF BALLON AS A SEAFARER
BY ANOTHER MANNING AGENCY ARE OVERWHELMING PROOF THAT HE IS FIT TO
WORK.
RULING:
The petition is bereft of merit.
Observance of the
mandatory post-employment
medical examination
Before a seafarer can claim permanent and total disability benefits, he must comply with
certain requirements set forth by the 2000 Philippine Overseas Employment
Administration-Standard Employment Contract (POEA-SEC). Section 20 (B) (3) of POEA-
SEC provides:
B. COMPENSATION AND BENEFITS FOR INJURY OR ILLNESS
xxxx
3. Upon sign-off from the vessel for medical treatment, the seafarer is entitled to sickness
allowance equivalent to his basic wage until he is declared fit to work or the degree of
permanent disability has been assessed by the company-designated physician but in no
case shall this period exceed one hundred twenty (120) days.
For this purpose, the seafarer shall submit himself to a post-employment medical
examination by a company-designated physician within three working days upon his
return except when he is physically incapacitated to do so, in which case, a written notice
to the agency within the same period is deemed as compliance. Failure of the seafarer to
comply with the mandatory reporting requirement shall result in his forfeiture of the
right to claim the above benefits.
If a doctor appointed by the seafarer disagrees with the assessment, a third doctor may
be agreed jointly between the Employer and the seafarer. The third doctor's decision
shall be final and binding on both parties.
xxxx
[Underscoring Supplied]
Notably, the post-employment medical examination has two (2) requisites: first, it is
done by a company-designated physician, and second, within three (3) working days
upon the seafarer's return.[33] The post-employment medical examination is obligatory
in nature and may only be excused in a number of exceptional circumstances.
As Ballon was medically repatriated and was able to report to the company-designated
physicians on the same day of his disembarkation, he is deemed to have complied with
the mandatory post-employment medical examination rule.
Permanent disability is the inability of a worker to perform his job for more than 120
days, regardless of whether or not he loses the use of any part of his body. Total
disability, on the other hand, means the disablement of an employee to earn wages in the
same kind of work of similar nature that he was trained for, or accustomed to perform,
or any kind of work which a person of his mentality and attainments could do.
Based on the foregoing, the general rule provides that the company-designated physician
must issue a final medical assessment on the seafarer's disability grading within a period
of 120 days. As an exception, however, the period may be extended to 240 days if there is
a sufficient justification such as when the seafarer required further medical treatment or
when the seafarer was uncooperative.
Permanent total disability means an employee is disabled to earn wages in the same or
similar kind of work that he was trained for or accustomed to perform, or in any kind of
work which a person of his mentality and attainment can do. It does not mean a state of
absolute helplessness but merely the inability to do substantially all material acts
necessary to the prosecution of a gainful occupation without serious discomfort or pain
and without material injury or danger to life. In disability compensation, it is not just the
injury which is compensated but the incapacity to work.
Based on the foregoing, the mere fact that a disabled seafarer subsequently acquired
employment does not ipso facto negate the grant of permanent and total disability
benefits. The facts and circumstances of each case must be scrutinized.
In the case at bench, Ballon was medically repatriated on July 26, 2010. Since then, he
was unable to perform his regular employment due to his disability. He was
incapacitated to accomplish his work as AB seaman. It was only on December 24, 2011,
or one year and five months later, that Ballon was able to return to his duties as a
seaman with another manning agency. As Ballon was evidently deprived of his means of
livelihood for a protracted period of time due to this disability, the Court concludes that
the grant of permanent and total disability benefits in favor of Ballon is definitely
warranted.
Universal Robina Sugar Milling Corporation v. Nagkahiusang Mamumuo sa
URSUMCO-National Federation of Labor, G.R. No. 224558, November 28, 2018
FACTS:
Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a duly registered
domestic corporation engaged in sugar milling business. On the other hand, respondent
Nagkahiusang Mamumuo sa URSUMCO-National Federation of Labor (NAMA-URSUMCO-
NFL) is a legitimate labor organization acting as the sole and exclusive bargaining
representative of all regular monthly paid and daily paid rank-and- file employees of
URSUMCO.
URSUMCO and NAMA-URSUMCO-NFL were able to successfully negotiate and enter into
a Collective Bargaining Agreement (CBA) valid from January 1, 2010 to December 31,
2014. Article VI, Section 2 of the CBA enumerated the employment classification in
URSUMCO, i.e., Permanent or Regular Employees and Regular Seasonal Employees.
From August to September 2011, NAMA-URSUMCO-NFL filed several grievances on
behalf of 78 URSUMCO regular seasonal employees. It sought for the change in the
employment status of the concerned employees from regular seasonal to permanent
regular and for the leveling of the salaries. After the grievance machinery failed to
resolve the issue, NAMA-URSUMCO-NFL requested that the employees' concerns be
submitted to voluntary arbitration. The VA required the parties to submit their
respective position papers.
In its Position Paper, NAMA-URSUMCO-NFL alleged that permanent or regular
employees practically performed the same work as the regular seasonal employees
during milling season; some regular seasonal employees would perform skilled jobs
during the off-milling season, while regular or permanent employees would be assigned
to utility jobs; regular seasonal employees acted as leadmen, while regular permanent or
regular employees were the helpers; longer tenured employees were stuck as regular
seasonal employees, while new hires were given regular or permanent status; and
regular seasonal employees received lower salaries than regular or permanent
employees even if they performed the same functions.
On the other hand, URSUMCO countered in its Position Paper that NAMA- URSUMCO-NFL
was estopped from questioning the classification of employees agreed upon by the
parties in the CBA; regular seasonal employees only performed work during the milling
season; there is no work done during the off-milling season as the period is devoted for
repairs; it assigned regular seasonal employees to repair works during the off-milling
season out of its own volition even if it could contract the same to third parties; it was a
valid exercise of management prerogative to assign some of its regular seasonal
employees as regular employees during off-milling season who would, in effect, be
working as regular employees during the off-milling season; and to compel it to convert
all of its regular seasonal employees as regular or permanent employees would give rise
to a situation wherein employees are hired and classified as permanent or regular to do
nothing but repair work.
The VA sided with NAMA-URSUMCO-NFL. It held that URSUMCO's act of providing work
to regular seasonal employees for several years is deemed a waiver on its part on the
effects of Article VI, Section 2 of the CBA. Aggrieved , URSUMCO appealed before the CA
but the CA affirmed the VA Decision.
ISSUE:
Whether or not URSUMCO’s regular seasonal employees are all permanent/regular
employees.
RULING: YES.
In the present case, URSUMCO argues that the concerned employees are regular seasonal
employees as they only perform work during the milling season, and the tasks assigned
during the off-milling season are limited only to repairs. On the other hand, NAMA-
URSUMCO-NFL believes that the employees in question are regular employees as they
are not laid off during the off-milling season.
Article 295 of the Labor Code defines seasonal employees as those whose work or
engagement is seasonal in nature and the employment is only for the duration of the
season. Seasonal employment becomes regular seasonal employment when the
employees are called to work from time to time. On the other hand, those who are
employed only for a single season remain as seasonal employees. As a consequence of
regular seasonal employment, the employees are not considered separated from service
during the off-milling season, but are only temporarily laid off or on leave until re-
employed. Nonetheless, in both regular seasonal employment and seasonal employment,
the employee performs no work during the off-milling season.
Here, the concerned URSUMCO employees are performing work for URSUMCO even
during the off-milling season as they are repeatedly engaged to conduct repairs on the
machineries and equipment. Strictly speaking, they cannot be classified either as regular
seasonal employees or seasonal employees as their work extended even beyond the
milling season. The nature of the activities performed by the employees, considering the
employer's nature of business, and the duration and scope of work to be done factor
heavily in determining the nature of employment.
On the other hand, regular employees are those who are engaged to perform activities
which are usually necessary or desirable in the usual trade or business of the employer.It
cannot be gainsaid that the conduct of repairs on URSUMCO's machineries and
equipment is reasonably necessary and desirable in its sugar milling business. It is
unreasonable to limit only to activities pertaining to the actual milling process as those
necessary in URSUMCO's usual trade or business. Without the constant repairs
conducted during the off-milling season, the equipment used during the milling season
would not have worked efficiently and productively. Further, the fact that URSUMCO
hired the regular seasonal employees to do the repairs during the off-milling season out
of its own magnanimity is immaterial. To reiterate, employment status is primarily
determined by the nature of the employer's business and the duration and connection of
the tasks performed by the employee — not by the intent or motivations of the parties.
In fact, even a plain reading of the CBA between URSUMCO and NAMA- URSUMCO-NFL
would lead to a conclusion that the concerned employees fall under the category of a
regular or permanent employee and not a regular seasonal employee. It is axiomatic that
in interpreting contracts, the words shall be given their natural and ordinary meaning
unless a technical meaning was intended.26 The CBA between URSUMCO and NAMA-
URSUMCO-NFL defines a regular employee as one who has passed the probation
requirement of a job or position which is connected with the regular operation of
URSUMCO. On the other hand, a regular seasonal employee is defined as one who
regularly works only during the milling season and may be laid off during the off-milling
season or is given preference to work on tasks of variable duration.
Thus, the concerned employees cannot be categorized as regular seasonal employees as
de􏰁ned under the law, jurisprudence or even the parties' CBA. First, they perform work
for URSUMCO even during the off-milling season and there is no showing that they were
free to work for another during the same period. Second, the tasks done are reasonably
necessary and desirable in URSUMCO's regular operation or business.
Gadia v. Sykes Asia, G.R. No. 209499, January 28, 2015
Sykes Asia is a corporation engaged in Business Process Outsourcing (BPO) which
provides support to its international clients from various sectors (e.g., technology,
telecommunications, retail services) by carrying on some of their operations, governed
by service contracts that it enters with them. On September 2, 2003,12 Alltel
Communications, Inc. (Alltel), a United States-based telecommunications firm, contracted
Sykes Asia’s services to accommodate the needs and demands of Alltel clients for its
postpaid and prepaid services (Alltel Project). Thus, on different dates, Sykes Asia hired
petitioners as customer service representatives, team leaders, and trainers for the Alltel
Project.
Sometime in 2009, Alltel informed Sykes that it is terminating its contract with Sykes. As
a result, Sykes sent each of the petitioners end-of-life notices informing them of their
dismissal from service due to the termination of the contract with Alltel. Aggrieved, they
filed a case for illegal dismissal with the NLRC.
As a defense, Sykes alleged that the petitioners were merely project employees, which
was clearly shown by their respective employment contracts.
Issue: Whether or not the petitioners are project employees.
YES.
Article 294 (now, Article 195[280]) of the Labor Code provides that an employee is
deemed regular when he has been engaged to perform activities which are deemed
usually necessary and desirable in the usual business or trade of the employer, except (i)
where the employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of the engagement
of the employee or (ii) where the work or services to be performed is seasonal in nature
and the employment if for the duration of the season.
Accordingly, the the principal test for determining whether particular employees are
properly characterised as project employees as distinguished from "regular employees,"
is whether or not the employees were assigned to carry out a "specific project or
undertaking," the duration (and scope) of which were specified at the time they were
engaged for that project. The project could either be (i) a particular job or undertaking
that is within the regular or usual business of the employer company, but which is
distinct and separate, and identifiable as such, from the other undertakings of the
company; or (ii) a particular job or undertaking that is not within the regular business of
the corporation. In order to safeguard the rights of workers against the arbitrary use of
the word "project" to prevent employees from attaining a regular status, employers
claiming that their workers are project-based employees should not only prove that the
duration and scope of the employment was specified at the time they were engaged, but
also, that there was indeed a project.
Thus, for an employee to be considered project-based, the employer must show
compliance with two (2) requisites, namely that: (a) the employee was assigned to carry
out a specific project or undertaking; and (b) the duration and scope of which were
specified at the time they were engaged for such project.
In this case, the Court held that Sykes was able to prove both requisites.
As regards the first requisite, it held that Sykes adequately informed the petitioners of
their employment status at the time of their engagement. As was shown by their
respective employment contracts, they were hired for the Alltel Project and their
positions were “project-based and as such is co-terminus to the project.”
As regards the second requisite, it held that “the duration of the undertaking begins and
ends at determined or determinable times” which means capable of being determined or
fixed. As such, indicating in the contract that their employment is “co-termius with the
project” is sufficient compliance with this requisite.
Innodata v. Quejada-Lopez, G.R. No. 162839, October 12, 2006
Facts: Innodata Philippines, Inc., is engaged in the encoding/data conversion business.
It employs encoders, indexers, formatters, programmers, quality/quantity staff, and
others, to maintain its business and do the job orders of its clients.
Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters by Innodata
Philippines, Inc. They [worked] from March 4, 1997, until their separation on March 3,
1998. They believed that their job was necessary and desirable to the usual business of
the company which is data processing/conversion and that their employment is regular
pursuant to Article 280 of the Labor Code,they filed a complaint for illegal dismissal and
for damages as well as for attorney’s fees against Innodata Phils., Incorporated.
Innodata contended that their employment contracts expired, having a fixed period of
one (1) year. Since the period expired, their employment was likewise terminated
applying the ruling in the Brent School case.
Labor Arbiter Donato G. Quinto rendered a judgment in favor of complainants holding
complainants Estella G. Natividad and Jocelyn Quejada to have been illegally dismissed
by Innodata Philippines Incorporated and Innodata Processing Corporation and ordering
reinstatement to their former position without loss of seniority rights, or to a
substantially equivalent position, and to pay them jointly and severally, backwages
computed from the time they were illegally dismissed on March 3, 1998 up to the date of
this decision in the amount of P112,535.28 EACH, or in the total amount of P225,070.56
for the two of them; and further ordered to pay them attorney’s fees in the amount
equivalent to 10% of their respective awards.
Innodata appealed to NLRC which reversed and set aside the Labor Arbiter’s decision
declaring that the contract was for a fixed term and therefore, the dismissal at the end of
their one year term agreed upon was valid. An MR was filed but was denied.
The CA ruled that respondents were regular employees in accordance with Section 280
of the Labor Code. It said that the fixed-term contract prepared by petitioner was a crude
attempt to circumvent respondents’ right to security of tenure.
The disputed contract reads, as follows:
“TERM/DURATION
The EMPLOYER hereby employs, engages and hires the EMPLOYEE, and the EMPLOYEE
hereby accepts such appointment as FORMATTER effective March 04, 1997 to March 03,
1998, a period of one (1) year.
xxxxxxxxx
“TERMINATION
7.1 This Contract shall automatically terminate on March 03, 1998 without need of notice
or demand.
xxxxxxxxx
7.4 The EMPLOYEE acknowledges that the EMPLOYER entered into this Contract upon
his express representation that he/she is qualified and possesses the skills necessary and
desirable for the position indicated herein. Thus, the EMPLOYER is hereby granted the
right to pre-terminate this Contract within the first three (3) months of its duration upon
failure of the EMPLOYEE to meet and pass the qualifications and standards set by the
EMPLOYER and made known to the EMPLOYEE prior to execution hereof. Failure of the
EMPLOYER to exercise its right hereunder shall be without prejudice to the automatic
termination of the EMPLOYEE’s employment upon the expiration of this Contract or
cancellation thereof for other causes provided herein and by law.”
The contract provided two periods. Aside from the fixed one-year term set in paragraph
1, paragraph 7.4 provides for a three-month period during which petitioner has the right
to pre-terminate the employment for the “failure of the employees to meet and pass the
qualifications and standards set by the employer and made known to the employee prior
to” their employment. In effect, the paragraph 7.4 is a probationary period.
Innodata claims that it was constrained by the nature of its business to enter into fixed-
term employment contracts with employees assigned to job orders. It relies on the
availability of job orders or undertakings from its clients. Thus, the continuity of work
cannot be ascertained.
Hence, this petition.
ISSUE: whether the alleged fixed-term employment contracts are valid.
HELD: No, Innodata’s contract of employment failed to comply with the standards set by
law and by this Court. “ A contract of employment is impressed with public interest. For
this reason, provisions of applicable statutes are deemed written into the contract.
Hence, the “parties are not at liberty to insulate themselves and their relationships from
the impact of labor laws and regulations by simply contracting with each other.”
Moreover, in case of doubt, the terms of a contract should be construed in favor of labor.”
RATIO: The applicable laws are Article 1700 of the Civil Code which declares:
“Art. 1700. The relations between capital and labor are not merely contractual. They are
so impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor
and similar subjects.”
And Section 280 of the Labor Code.
DISPOSITIVE: Petition is DENIED, and the assailed Decision and Resolution are
AFFIRMED. Costs against petitioner.
Lacuesta v. Ateneo de Manila, G.R. No. 152777, December 9, 2005
FACTS:
Respondent Ateneo hired, on a contractual basis, petitioner Lolita R. Lacuesta as a
part-time lecturer in its English Department for the 2nd semester of school year 1988-
1989. She was re-hired, still on a contractual basis, for the 1st and 2nd semesters of
school year 1989-1990.
On July 13, 1990, the petitioner was first appointed as full-time instructor on
probation, effective June 1, 1990 – March 31, 1991. Thereafter, her contract as faculty on
probation was renewed effective April 1, 1991 – March 31, 1992. She was again hired for
a 3rd year effective April 1, 1992 – March 31, 1993. During these 3 years she was on
probation status.
Respondents Dr. Leovino Ma. Garcia, Dean of Ateneo’s Graduate School and College
of Arts and Sciences, notified petitioner that her contract would no longer be renewed
because she did not integrate well with the English Department. Petitioner appealed to
the President of the Ateneo. Then President Fr. Bernas explained to petitioner that she
was not being terminated, but her contract would simply expire. Fr. Bernas offered
petitioner the job as book editor in the University Press under terms comparable to that
of a faculty member. March 26, 1993, petitioner applied for clearance to collect her final
salary as instructor. Petitioner also signed a Quitclaim, Discharge and Release.
Petitioner worked as editor in the University Press from April 1, 1993 – March 31,
1994 including an extension of two months after her contract expired. Upon expiry of
her contract, petitioner applied for clearance to collect her final salary as editor.
Petitioner decided not to have her contract renewed due to a severe back problem. She
did not report back to work, but she submitted her clearance. Petitioner filed a complaint
for illegal dismissal with prayer for reinstatement, back wages, and moral and exemplary
damages.
LA held that petitioner may not be terminated by mere lapse of the probationary period
but only for just cause or failure to meet the employer’s standards and that the quitclaim,
discharge and release executed by petitioner was not a bar to filing a complaint for illegal
dismissal. He ordered reinstatement with payment of full back wages.
The NLRC reversed LA’s decision and ruled that petitioner was not illegally dismissed,
and that her quitclaim was valid. Petitioner sought MR but it was denied. She went to CA
but it affirmed NLRC’s decision. Hence, this petition.
ISSUE:
Whether the petitioner became a regular employee of Ateneo.
RULING:
The “Manual of Regulations for Private Schools,” and not the Labor Code, determines
whether or not a faculty member in an educational institution has attained regular or
permanent status. Under Policy Instructions No. 11 issued by DOLE “the probationary
employment of professors, instructors and teachers shall be subject to the standards
established by the Department of Education and Culture.” Said standards are embodied
in paragraph 75 (now Section 93) of the Manual of Regulations for Private Schools.
 Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-
time teachers who have satisfactorily completed their probationary period shall be
considered regular or permanent. Moreover, for those teaching in the tertiary level, the
probationary period shall not be more than 6 consecutive regular semesters of
satisfactory service. The requisites to acquire permanent employment, or security of
tenure, are (1) the teacher is a full-time teacher; (2) the teacher must have rendered
three consecutive years of service; and (3) such service must have been satisfactory.
A part-time teacher cannot acquire permanent status. Only when one has served as a
full-time teacher can he acquire permanent or regular status. The petitioner was a part-
time lecturer before she was appointed as a full-time instructor on probation. As a part-
time lecturer, her employment as such had ended when her contract expired. Thus, the
three semesters she served as part-time lecturer could not be credited to her in
computing the number of years she has served to qualify her for permanent status.
Completing the probation period does not automatically qualify her to become a
permanent employee of the university. Petitioner could only qualify to become a
permanent employee upon fulfilling the reasonable standards for permanent
employment as faculty member. Consistent with academic freedom and constitutional
autonomy, an institution of higher learning has the prerogative to provide standards for
its teachers and determine whether these standards have been met. At the end of the
probation period, the decision to re-hire an employee on probation, belongs to the
university as the employer alone.
Probationary employees enjoy security of tenure, but only within the period of
probation. Likewise, an employee on probation can only be dismissed for just cause or
when he fails to qualify as a regular employee in accordance with the reasonable
standards made known by the employer at the time of his hiring. Upon expiration of
their contract of employment, academic personnel on probation cannot automatically
claim security of tenure and compel their employers to renew their employment
contracts. In the instant case, petitioner, did not attain permanent status and was not
illegally dismissed. As found by the NLRC, her contract merely expired.
Petitioner had already signed a valid quitclaim, discharge and release which bars the
present action. This Court has held that not all quitclaims are per se invalid or against
public policy, except (1) where there is clear proof that the waiver was wangled from an
unsuspecting or gullible person, or (2) where the terms of settlement are unconscionable
on their face. In this case, there is no showing that petitioner was coerced into signing
the quitclaim. In her sworn quitclaim, she freely declared that she received to her full
satisfaction all that is due her by reason of her employment and that she was voluntarily
releasing respondent Ateneo from all claims in relation to her employment. Nothing on
the face of her quitclaim has been shown as unconscionable.
WHEREFORE, petition is DENIED for lack of merit.
Mt. Carmel College, Inc. v. NLRC, G.R. No. 117514, October 4, 1996
FACTS:
June 1, 1989, petitioner school hired private respondent as grade school teacher under a
written Contract of Probationary Employment. Paragraph 5 of the contract provides for
private respondent’s salary and the duration of her employment, thus:
“5. That my salary or wage shall be P1,675. 00 per month and until such time as the
School decides to retain me in its permanent employ, my employment therein shall be
deemed to run from SY 1989-1990 to SY 1991-1992 (day to day of month to month) and
my service may be terminated at any time after I fail to comply with the foregoing
conditions laid down by the School. The School shall have no further liability to me
whatsoever, either by way of separation pay or otherwise.”
March 1992, petitioner school terminated the services of private respondent as she did
not pass the National Teacher’s Board examination. Private respondent filed a complaint
for illegal dismissal against the petitioners.
LA favored private respondent. Petitioners appealed to NLRC. It reversed the decision of
LA. NLRC found private respondent’s dismissal to be legal. Public respondent, however,
ordered petitioners to pay private respondent the amount of P10,200.00, representing
her salary for the unexpired portion of her probationary period. According to NLRC,
private respondent’s probationary employment was supposed to end in June 1992, but
her services were terminated 3 months earlier, in March 1992 Hence this petition.
ISSUE:
Whether NLRC erred in finding that there is an “unexpired portion” in private
respondent’s probationary contract, and holding petitioners liable for the payment of her
salary equivalent to that “unexpired portion.”
RULING:
Private respondent’s employment contract stipulated that her employment “shall be
deemed to run from SY 1989-1990 to SY 1991-1992 (day to day of month to month). ”
Under Section 48 of the Manual of Regulations for Private Schools, a school year or
academic year begins on the second Monday of June and shall consist of “approximately
forty weeks of normally five school days each, exclusive of approved vacations and
including legal and special holidays, and special activities.”
There is a distinction between a calendar year and a school year. As applied to private
school teachers, the probationary period is 3 years as provided in the Manual of
Regulations for Private Schools. It must be stressed that the law speaks of 3 years not 3
school years.
Calendar year consists of 12 months, while a school year consists only of 10 months. A
school year begins in June of one calendar year and ends in March of succeeding calendar
year.
Public respondent therefore erred in finding that private respondent’s probationary
employment was supposed to end in June 1992. The contract clearly states the duration
of private respondent’s term – it shall begin at the opening of school year 1989-1990
(i.e., June 1989) and shall end at the closing of school year 1991-1992 (i.e., March, 1992).
Hence, petitioners are not obliged to pay private respondent her salary for the months of
April, May and June as her employment already ceased in March, in accordance with the
provisions of her employment contract.
Award of P10,200.00 in favor of private respondent in the Decision of NLRC is SET
ASIDE.
Fuji Television v. Espiritu, G.R. No. 204944-45, December 3, 2014
SUMMARY: Fuji Television Network hired Arlene Espiritu as a news
correspondent/producer to report Philippine news to Japan, with her contract
renewed annually. However, when she got diagnosed with lung cancer, she informs
Fuji, who then disclosed that they will have a hard time renewing the contract,
considering her situation. Both parties sign a contract for non-renewal, which
stipulates that she would not renew and that she would receive $18,050 as
compensation for services, etc. Arlene filed a complaint against Fuji for illegally
dismissing her. SC decides in her favor.
DOCTRINE: It is the burden of the employer to prove that a person whose services
it pays for is an independent contractor rather than a regular employee with or
without a fixed term. That a person has a disease does not per se entitle the employer
to terminate his or her services. Termination is the last resort. At the very least, a
competent public health authority must certify that the disease cannot be cured
within 6 months, even with appropriate treatment.
ISSUE: Whether CA was correct in holding NLRC to properly rule that Arlene
was a regular employee, not an independent contractor, and that she was
illegally dismissed – YES
******* start of the part of the case where Ma’am asked us to focus *******
 Art. 280, LC classifies employees into four:
o Regular (further classified into two)
 those engaged to perform activities which are usually
necessary or desirable in the usual business or trade of the
employer;
 casual employees who have rendered at least one year of
service, whether such is continuous or broken.
o Project
o Seasonal and
o casual.
 Brent School, Inc. v Zamora, introduces a new classification: employees with
fixed-term contracts, where the decisive determinant in the employment is the
day certain agreed upon for the start and end of employment.
o “Fixed term is an essential and natural appurtenance” in overseas
employment contracts and officers in educational institutions.
o Some employers might abuse such contracts in that periods are
imposed to prevent the employee from getting tenured.
 Void contracts—contrary to public policy or morals.
o Criteria to determine the validity of such contracts:
 1) The fixed period of employment was knowingly and
voluntarily agreed upon by the parties without any
force, duress, or improper pressure being brought to bear
upon the employee and absent any other circumstances
vitiating his consent; or
 2) It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former
or the latter.
o Rationale: when the employee, on account of special skills or
market forces, is in a position to make demands upon the
prospective employer, such prospective employee needs less
protection than the ordinary worker. Lesser limitations on the
 parties’ freedom of contract are thus required for the protection of
the employee.
o The Court cited two cases wherein fixed-term contracts were
upheld as valid. (See notes 3 and 4)
 Art. 106, LC recognizes independent contractors (See note 5).
o Definition: one who carries on a distinct and independent
business and undertakes to perform the job, work, or service on its
own account and under one’s own responsibility according to
one’s own manner and method, free from the control and
direction of the principal in all matters connected with the
performance of the work except as to the results thereof. (Orozco
v. CA)
 No employer-employee relationship exists.
o DOLE Department Order No. 18-A, Series of 2011 defines a
contractor as having “an arrangement whereby a principal agrees
to put out or farm out with a contractor the performance or
completion of a specific job, work or service within a definite or
predetermined period, regardless of whether such job, work or
service is to be performed or completed within or outside the
premises of the principal.” (Sec. 3(c))
 Same Order states: A trilateral relationship in legitimate
job contracting and subcontracting arrangement exists
among:
 Principal (P)
 Contractor (C)
 Employees of contractor hired to accomplish
principal’s work (E)
 Employer-employee relationship existent only between
C,E.
 But where an independent C is an individual with
unique skills and talents that set them apart from
ordinary E, the contractor him/herself performs the work
for the P—not trilateral but a bilateral relationship.
o Two kinds of independent contractors exist:
 Those engaged in legitimate job contracting
 Those who have unique skills and talents that set them
apart from ordinary employees.
******* end of the part of the case where Ma’am asked us to focus *******
 Arlene Espiritu was a regular employee with a fixed term contract.
o Test for determining regular employment: is whether there is a
reasonable connection between the employee’s activities and the
usual business of the employer.
o Art. 280, LC provides that the nature of work must be “necessary
or desirable in the usual business or trade of the employer” as the
test for determining regular employment.
 This repeated engagement under contract of hire is
indicative of the necessity and desirability of the
petitioner’s work in private respondent ABC’s business.
 Philips Semiconductors, Inc. v. Fadriquela: Where an
employee’s contract “had been continuously extended or
renewed to the same position, with the same duties and
remained in the employ without any interruption,” then
such employee is a regular employee.
o An employee can be a regular employee with a fixed-term
contract.
 As long as the employee is the one requesting, or
bargaining, that the contract have a “definite date of
termination,” or that the fixed-term contract be freely
entered into by the employer and the employee, then the
validity of the fixed-term contract will be upheld.
Begino v. ABS-CBN, G.R. No. 199166, April 20, 2015
Respondent ABS-CBN, through Respondent Villafuerte, engaged the services of
Petitioners as cameramen, editors or reporters for TV Broadcasting. Petitioners signed
regularly renewed Talent Contracts (3 months - 1 year) and Project Assignment Forms
which detailed the duration, budget and daily technical requirements of a particular
project. Petitioners were tasked with coverage of news items for subsequent daily
airings in Respondents’ TV Patrol Bicol Program.
The Talent Contract has an exclusivity clause and provides that nothing therein shall be
deemed or construed to establish an employer-employee relationship between the
parties.
Petitioners filed against Respondents a complaint for regularization before the NLRC's
Arbitration branch.
In support of their complaint, Petitioners claimed that they worked under the direct
control of Respondent Villafuerte - they were mandated to wear company IDs, they were
provided the necessary equipment, they were informed about the news to be covered the
following day, and they were bound by the company’s policy on attendance and
punctuality.
Respondents countered that, pursuant to their Talent Contracts and Project Assignment
Forms, Petitioners were hired as talents to act as reporters, editors and/or cameramen.
Respondents further claimed they never imposed control as to how Petitioners
discharged their duties. At most, they were briefed regarding the general requirements
of the project to be executed.
While the case was pending, Petitioners contracts were terminated, prompting the latter
to file a second complaint for illegal dismissal.
The Arbitration Branch ruled that Petitioners were regular employees, and ordered
Respondents to reinstate the Petitioners.
The NLRC affirmed the ruling, but the CA overturned the decision.

ISSUE: W/N Petitioners are regular employees of Respondents.

RULING: Yes.

Of the criteria to determine whether there is an employer-employee relationship, the so-

called "control test" is generally regarded as the most crucial and determinative
indicator of the said relationship.

Under this test, an employer-employee relationship is said to exist where the person for
whom the services are performed reserves the right to control not only the end result
but also the manner and means utilized to achieve the same.

Notwithstanding the nomenclature of their Talent Contracts and/or Project Assignment

Forms and the terms and condition embodied therein, petitioners are regular employees
of ABS-CBN.

As cameramen, editors and reporters, it appears that Petitioners were subject to the
control and supervision of Respondents which provided them with the equipment
essential for the discharge of their functions. The exclusivity clause and prohibitions in
their Talent Contract were likewise indicative of Respondents' control over them,
however obliquely worded.

Also,the presumption is that when the work done is an integral part of the regular
business of the employer and when the worker does not furnish an independent
business or professional service, such work is a regular employment of such employee
and not an independent contractor.

Alaska Milk Corporation v. Paez, G.R. No. 237277, November 27, 2019

Daguinod v. Southgate Foods, G.R. No. 227795, February 20, 2019
FACTS: Petitioner Marvin O. Daguinod (Daguinod) was assigned as counter crew/cashier
of a Jollibee franchise located in Alphaland Southgate Mall, Makati City (Jollibee
Alphaland) pursuant to a Service Agreement between Generation One Resource Service
and Multi-Purpose Cooperative (Generation One) and the franchise operator Southgate
Foods, Inc. (Southgate) (collectively respondents). Under the Service Agreement,
Generation One was contracted by Southgate to provide “specified non-core functions
and operational activities” for its Jollibee Alphaland branch.
Daguinod also executed a Service Contract dated September 9, 2010 with Generation
One which stated that Generation One was contracted by Southgate to perform “specified
peripheral and support services.” In the Service Contract, Daguinod was referred to as a
“service provider” and “member” of Generation One cooperative. The specific work
responsibilities to be performed by Daguinod were left blank. The period of Daguinod’s
services was stated as “beginning September 9, 2010 until the end of the project.” To
become a member of Generation One, Daguinod completed an application form dated
September 8, 2010, which required him to pay a membership fee of P250.00, and
participate in “capital build-up and savings program” which obligated him to acquire 150
paid-up shares in Generation One, valued at P1,500.00. Prior to his
employment/membership in Generation One cooperative, Daguinod was employed
directly by Southgate from March 12, 2010 to August 26, 2010 as counter crew.
In a Decision dated June 28, 2012, Labor Arbiter Romelita N. Rioflorido (LA) held that
Generation One is a legitimate labor contractor and Daguinod was a regular employee of
Generation One. On the issue of illegal dismissal, the LA held that Daguinod was unable
to prove that he was illegally dismissed, or even dismissed from service. The LA gave
credence to Generation One’s averment that its investigation of the allegations against
Daguinod was still ongoing, and even Daguinod admitted that he did not receive a formal
notice of termination.
In its Decision dated December 12, 2012, the NLRC agreed with the LA that Generation
One was a legitimate labor contractor as it is a registered cooperative with substantial
capital, investment, or equipment to perform its business. It also has its own office where
its members meet and conduct activities. The NLRC also affirmed the LA’s findings that
Daguinod was not illegally dismissed; rather, it was Daguinod who prematurely
concluded that he had been dismissed. Thus, Daguinod filed a petition for certiorari
under Rule 65 before the CA alleging that the NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in affirming the LA’s Decision.
ISSUE: Whether Generation One is a legitimate labor contractor.
RULING: Generation One is not a legitimate labor contractor; Daguinod is a regular
employee of Southgate.
The outsourcing of services is not prohibited in all instances. In fact, Article 106 of the
Labor Code of the Philippines provides the legal basis for legitimate labor contracting.
This provision is further implemented by DOLE Order No. 18, Series of 2002 (DO 18-02).
Under Section 4(a) of DO 18-02, legitimate labor contracting or subcontracting refers to
an arrangement whereby a principal agrees to put out or farm out with a contractor or
subcontractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is to
be performed or completed within or outside the premises of the principal. The
“principal” refers to any employer who puts out or farms out a job, service or work to a
contractor or subcontractor.
Meanwhile, labor-only contracting is prohibited and defined under Section 5 of DO 18- Daguinod was also tasked to receive payments and give change. These tasks are
02: undoubtedly necessary and desirable to the business of a fast food restaurant such as
Jollibee. The service of food to customers is the main line of business of any restaurant. It
Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby is not merely a non-core or peripheral activity as Generation One and Southgate claim. It
declared prohibited. For this purpose, labor-only contracting shall refer to an is in the interest of Southgate, franchise owner of Jollibee, that its customers be served
arrangement where the contractor or subcontractor merely recruits, supplies, or places food in a timely manner. Respondents’ position that the gathering of orders and service
workers to perform a job, work or service for a principal, and any of the following of food to customers are “non-core” functions or peripheral activities is simply
elements [is] present: preposterous and is contrary to the basic business model of a fast food restaurant. These
circumstances lead to no other conclusion than that Daguinod was a regular employee of
i) The contractor or subcontractor does not have substantial capital or Southgate and that Generation One was a mere agent of Southgate.
investment which relates to the job, work or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are performing The ownership of substantial capital in the form of tools, equipment, machineries, work
activities which are directly related to the main business of the principal; or premises, and other properties, by the contractor is another factor in establishing
ii) The contractor does not exercise the right to control over the performance of whether it is legitimate. The NLRC held that Generation One was able to prove that it had
the work of the contractual employee.
substantial capital, proving that it was a legitimate labor contractor. The Court disagrees.
The foregoing provisions shall be without prejudice to the application of Article 248 (c)
Thus, registration with DOLE as an independent contractor does not automatically vest it
of the Labor Code, as amended.
with the status of a legitimate labor contractor, it is merely presumptive proof. In the
instant case, the totality of circumstances reveals that Generation One, despite its DOLE
“Substantial capital or investment” refers to capital stocks and subscribed capitalization
registration, is not a legitimate labor contractor.
in the case of corporations, tools, equipment, implements, machineries and work
premises, actually and directly used by the contractor or subcontractor in the
A perusal of Daguinod’s Service Contract shows that the specific work responsibilities
performance or completion of the job, work or service contracted out.
were unspecified, leaving the “[o]ther requirements to perform the services [to] be part
of the orientation at the designated place of assignment,” thus, suggesting that the right
The “right to control” shall refer to the right reserved to the person for whom the
to determine not only the end to be achieved, but also the manner and means to achieve
services of the contractual workers are performed, to determine not only the end to be
that end, was reposed in Southgate. Consequently, Southgate shall be deemed as the
achieved, but also the manner and means to be used in reaching that end. (Emphasis
direct employer of Daguinod.
supplied)
The CA also relied heavily on the Service Agreement between Generation One and
When there is labor-only contracting, Section 7 of DO 18-02 describes the consequences
Southgate which provided for the scope of the agreement as well as the proviso that
thereof:
there would be no employer-employee relationship between Southgate and Generation
One’s employees.
Section 7. Existence of an employer-employee relationship. The contractor or
subcontractor shall be considered the employer of the contractual employee for
The Court holds that it was erroneous for the CA to place reliance on the contracts as the
purposes of enforcing the provisions of the Labor Code and other social legislation. The
provisions therein are not the sole determining factor in ascertaining the true nature of
principal, however, shall be solidarity liable with the contractor in the event of any
the relationship between the principal, contractor, and employees. As held in Petron v.
violation of any provision of the Labor Code, including the failure to pay wages.
Caberte:
The principal shall be deemed the employer of the contractual employee in any of the
x x x [T]he character of the business, whether as labor-only contractor or as a job
following case, as declared by a competent authority:
contractor, should be determined by the criteria set by statute and the parties cannot
(a) where there is labor-only contracting; or
dictate by the mere expedience of a unilateral declaration in a contract the character of
(b) where the contracting arrangement falls within the prohibitions provided in
their business.
Section 6 (Prohibitions) hereof. (Emphasis supplied)
In the instant case, the badges of labor-only contracting are too blatant to ignore and the
In this particular case, it was established that Daguinod was assigned as a counter
Court cannot blindly rely on the contractual declarations of respondents.
crew/cashier in Jollibee Alphaland. The Service Contract of Daguinod with Generation
One does not disclose the specific tasks and functions that he was assigned to do as
With the finding that Generation One is a labor-only contractor, Daguinod is considered a
counter crew/cashier.
regular employee of Southgate, as provided under Section 7 of DO 18-02.
Daguinod was assigned to perform cash control activities which entails gathering of
orders and assembling food on the tray for dine-in customers or for take-out. As cashier,