LABOR1 | ATTY.
MARLON MANUEL
IV. WORKING CONDITIONS
Case Digests
1. San Miguel Brewery Sales v. Ople (Liz)
February 8, 1989 | GRIÑO-AQUINO, J | Introduction: Management Prerogative
PETITIONER: SAN MIGUEL BREWERY SALES FORCE UNION (PTGWO)1
RESPONDENT: HON. BLAS F. OPLE, as Minister of Labor and SAN
MIGUEL CORPORATION
SUMMARY: This is a petition for review of the Order of the Minister of Labor in
Labor Case approving the San Miguel Brewery Sales Force Union’ (PTWGO) s
marketing scheme, known as the "Complementary Distribution System", (CDS),
and dismissing the petitioner labor union's complaint for unfair labor practice. A
collective bargaining was entered into by petitioner, San Miguel Corporation Sales
Force Union (PTGWO), and the private respondent, San Miguel Corporation,
Section 1, of Article IV of which provided as follows: "Art. IV, Section 1.
Employees within the appropriate bargaining unit shall be entitled to a basic
monthly compensation plus commission based on their respective sales." In
September 1979, the company introduced a marketing scheme known as the
"Complementary Distribution Systems" (CDS) whereby its beer products were
offered for sale directly to wholesalers through San Miguel's sales offices. The
labor union (herein petitioner) filed a complaint for unfair labor practice in the
Ministry of Labor, with a notice of strike on the ground that the CDS was contrary
to the existing marketing scheme whereby the Route Salesmen were assigned
specific territories within which to sell their stocks of beer, and wholesalers had to
buy beer products from them, not from the company. It was alleged that the new
marketing scheme violates Section 1, Article IV of the collective bargaining
agreement because the introduction of the CDS would reduce the take-home pay
of the salesmen and their truck helpers for the company would be unfairly
competing with them. I: Whether or not the Complementary Distribution Systems
should be upheld considering that the act was unilaterally made by the employer?
yes
DOCTRINE: So long as a company's management prerogatives are 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 them
1 Philippine Trade and General Workers' Organization (PTGWO)
FACTS:
1. This is a petition for review of the Order of the Minister of Labor in
Labor Case approving the private respondent's marketing scheme,
known as the "Complementary Distribution System", (CDS), and
dismissing the petitioner labor union's complaint for unfair labor
practice.
2. A collective bargaining was entered into by petitioner, San Miguel
Corporation Sales Force Union (PTGWO), and the private respondent,
San Miguel Corporation, Section 1, of Article IV of which provided as
follows:
a. "Art. IV, Section 1. Employees within the appropriate
bargaining unit shall be entitled to a basic monthly
compensation plus commission based on their respective
sales."
3. In September 1979, the company introduced a marketing scheme
known as the "Complementary Distribution Systems" (CDS) whereby
its beer products were offered for sale directly to wholesalers through
San Miguel's sales offices.
4. The labor union (herein petitioner) filed a complaint for unfair labor
practice in the Ministry of Labor, with a notice of strike on the ground
that the CDS was contrary to the existing marketing scheme whereby
the Route Salesmen were assigned specific territories within which to
sell their stocks of beer, and wholesalers had to buy beer products from
them, not from the company.
5. It was alleged that the new marketing scheme violates Section 1,
Article IV of the collective bargaining agreement because the
introduction of the CDS would reduce the take-home pay of the
salesmen and their truck helpers for the company would be unfairly
competing with them.
ISSUE: Whether or not the Complementary Distribution Systems should be upheld
considering that the act was unilaterally made by the employer? yes
RULING: WHEREFORE, the petition for certiorari is dismissed for lack of merit.
RATIO:
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 LABOR1 | ATTY. MARLON MANUEL

1. The CDS is a valid exercise of management prerogatives:

a. "Except as limited by special laws, an employer is free
regulate, according to his own discretion and judgment, all
aspects of employment, including hiring, work assignments,
working methods, time, place and manner of work, tools to be
used, processes to be followed, supervision of workers,
working regulations, transfer of employees, work supervision,
lay-off of workers and the discipline, dismissal and recall of
work.
b. Every business enterprise endeavors to increase its profits. In
the process, it may adopt or devise means designed towards
that goal.
c. In Abott Laboratories vs. NLRC, The Court ruled: Even as the
law is solicitous of the welfare of the employees, it must also
protect the right of an employer to exercise what are clearly
management prerogatives. The free will of management to
conduct its own business affairs to achieve its purpose cannot
be denied."
d. So long as a company's management prerogatives are
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 them
San Miguel Corporation's offer to compensate the members of its sales force who
will be adversely affected by the implementation of the CDS, by paying them a so-
called "back adjustment commission" to make up for the commissions they might
lose as a result of the CDS, proves the company's good faith and lack of intention to
bust their union.

2

2. PT&T v. NLRC (KARA)
May 23, 1997 | Regalado, J. | Management Prerogative – Discrimination against
married women
PETITIONER: PHILIPPINE TELEGRAPH AND TELEPHONE
COMPANY
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION
and GRACE DE GUZMAN
SUMMARY: De Guzman was hired as a reliever, specifically a
Supernumerary Project Worker, for a fixed period by PT&T. She was
asked to join as a probationary employee. However, in her application, she
indicated SINGLE in the civil status even if she has contracted marriage a
few months earlier. She was reminded about the company’s policy of not
accepting married women for employment. De Guzman stated that she
was not aware of such policy and that she did not deliberately conceal her
civil status. Unconvinced, PT&T dismissed De Guzman. De Guzman filed
a case for illegal dismissal. Whether or not PT&T’s company policy is
discriminatory and runs afoul to the Labor Code? YES. An employer is
free to regulate, according to his discretion and best business judgment, all
aspects of employment, from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law. PT&T’s company
policy is not only a derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of
stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by
all accounts inheres in the individual as an intangible and inalienable right.
DOCTRINE: Art. 136. Stipulation against marriage. — It shall be
unlawful for an employer to require as a condition of employment or
continuation of employment that a woman shall not get married, or to
stipulate expressly or tacitly that upon getting married, a woman employee
shall be deemed resigned or separated, or to actually dismiss, discharge,
discriminate or otherwise prejudice a woman employee merely by reason
of marriage.
FACTS:
1. De Guzman was hired as a reliever, specifically a Supernumerary Project
Worker, for a fixed period by PT&T. Under the Reliever Agreement, her
employment was to be immediately terminated upon expiration of the
agreed period.
LABOR1 | ATTY. MARLON MANUEL
2. In one occurrence, she was asked to join as a probationary employee for a
period of 150 days. She filled out a job application and indicated in the
portion of civil status that she was “SINGLE,” although she had contracted
marriage a few months earlier. In subsequent Reliever Agreements, she
made the same representation.
3. When PT&T supposedly learned about the same, its branch supervisor sent
to De Guzman a memorandum requiring her to explain the discrepancy. In
that memorandum, she was reminded about the company’s policy of not
accepting married women for employment. In her reply, De Guzman stated
that she was not aware of such policy and that she did not deliberately
conceal her civil status.
4. Unconvinced, PT&T dismissed De Guzman. The latter countered by filing a
COMPLAINT FOR ILLEGAL DISMISSAL, coupled with a claim for non-
payment of cost of living allowances (COLA) before the Regional
Arbitration Branch of the NLRC. At the preliminary conference, De
Guzman volunteered information that she had failed to remit a small some
of money of her collections. To remedy this, she executed a promissory note
in favor of PT&T.
5. The Labor Arbiter ruled that De Guzman was a regular employee who was
illegally dismissed by PT&T. Her reinstatement, plus payment of back
wages and COLA were ordered. The NLRC upheld the Labor Arbiter’s
decision and further ruled that De Guzman was the subject of an unjust and
unlawful discrimination by her employer.
ISSUE:
1. Whether or not PT&T’s company policy is discriminatory and runs afoul to
the Labor Code and no less than the Constitution itself? – YES.
HELD:
1. PT&T’s company policy is not only a derogation of the provisions of
Article 136 of the Labor Code on the right of a woman to be free from any
kind of stipulation against marriage in connection with her employment, but
it likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by all
accounts inheres in the individual as an intangible and inalienable right.
2. The Constitution and various laws recognize the protection to labor, security
of tenure, the role of women and the assurance of equality of employment
opportunities. In fact, Article 136 of the Labor Code explicitly prohibits
discrimination merely by reason of the marriage of a female employee.
3. To fulfill this mandate, an employer is required, as a condition sine qua non
prior to severance of the employment ties of an individual under his employ,
to convincingly establish, through substantial evidence, the existence of a
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 LABOR1 | ATTY. MARLON MANUEL

valid and just cause in dispensing with the services of such employee, labor
being regarded as constitutionally protected property.
4. On the other hand, it is recognized that regulation of manpower by the
company falls within the so-called management prerogatives, which
prescriptions encompass the matter of hiring, supervision of workers, work
assignments, working methods and assignments, as well as regulations on
the transfer of employees, lay-off of workers, and the discipline, dismissal,
and recall of employees. As put in a case, an employer is free to regulate,
according to his discretion and best business judgment, all aspects of
employment, from hiring to firing, except in cases of unlawful
discrimination or those which may be provided by law.
5. PT&T’s policy of not accepting or considering as disqualified from work
any woman worker who contracts marriage runs afoul of the test of, and the
right against, discrimination, afforded all women workers by our labor laws
and by no less than the Constitution. Contrary to PT&T’s assertion that it
dismissed De Guzman from employment on account of her dishonesty, the
record discloses clearly that her ties with the company were dissolved
principally because of the company’s policy that married women are
not qualified for employment in PT&T, and not merely because of her
supposed acts of dishonesty.

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3. GOYA INC. v. GOYA UNION (STREEGAN)
January 21, 2013 | Peralta, J. | Management Prerogative
PETITIONER: GOYA INC.
RESPONDENTS: GOYA UNION
SUMMARY: Goya (Company) hired contractual employees from PESO
to perform temporary and occasional services. Goya Union (Union) said
that this constitutes unfair labor practice which is in contravention with the
CBA. The Company argues that this is a management prerogative. VA
Laguesma dismissed the Unions charge of ULP for being purely
speculative and for lacking in factual basis, but the Company was
directed to observe and comply with its commitment under the CBA.
CA dismissed the appeal of the Company.
WoN Goya Inc's exercise of its management prerogative is valid. NO
DOCTRINE: To emphasize, declaring that a particular act falls within the
concept of management prerogative is significantly different from
acknowledging that such act is a valid exercise thereof. What the VA and
the CA correctly ruled was that the Companys act of contracting
out/outsourcing is within the purview of management prerogative. Both
did not say, however, that such act is a valid exercise thereof. Obviously,
this is due to the recognition that the CBA provisions agreed upon by the
Company and the Union delimit the free exercise of management
prerogative pertaining to the hiring of contractual employees. Indeed, the
VA opined that "the right of the management to outsource parts of its
operations is not totally eliminated but is merely limited by the CBA,"
while the CA held that "this management prerogative of contracting out
services, however, is not without limitation.
FACTS:
1. Goya, Inc. (Company), a domestic corporation engaged in the manufacture,
importation, and wholesale of top quality food products, hired contractual
employees from PESO Resources Development Corporation (PESO) to
perform temporary and occasional services in its factory in Parang,
Marikina City.
2. This prompted respondent Goya, Inc. Employees UnionFFW (Union) to
request for a grievance conference on the ground that the contractual
workers do not belong to the categories of employees stipulated in the
existing Collective Bargaining Agreement (CBA).
LABOR1 | ATTY. MARLON MANUEL
3. The Company and the Union manifested before Voluntary Arbitrator (VA)
Bienvenido E. Laguesma that amicable settlement was no longer possible;
hence, they agreed to submit for resolution the solitary issue of "[w]hether
or not the Company is guilty of unfair labor acts in engaging the services of
PESO, a third party service provider".
4. The Union asserted that the hiring of contractual employees from PESO is
not a management prerogative and in gross violation of the CBA
tantamount to unfair labor practice (ULP). It noted that the contractual
workers engaged have been assigned to work in positions previously
handled by regular workers and Union members, in effect violating Section
4, Article I of the CBA.
5. It was averred that the categories of employees had been a part of the CBA
since the 1970s and that due to this provision, a pool of casual employees
had been maintained by the Company from which it hired workers who then
became regular workers when urgently necessary to employ them for more
than a year. Likewise, the Company sometimes hired probationary
employees who also later became regular workers after passing the
probationary period. With the hiring of contractual employees, the Union
contended that it would no longer have probationary and casual employees
from which it could obtain additional Union members.
a. Union moreover advanced that sustaining the Companys position
would easily weaken and ultimately destroy the former with the
latters resort to retrenchment and/or retirement of employees and
not filling up the vacant regular positions through the hiring of
contractual workers from PESO, and that a possible scenario could
also be created by the Company wherein it could "import" workers
from PESO during an actual strike.
6. VA Laguesma dismissed the Unions charge of ULP for being purely
speculative and for lacking in factual basis, but the Company was directed
to observe and comply with its commitment under the CBA.
7. Union moved for partial reconsideration of the VA Decision,8the Company
immediately filed a petition for review before the Court of Appeals (CA)
under Rule 43 of the Revised Rules of Civil Procedure.
8. CA dismissed the petition.
9. Hence this petition in the SC.
ISSUE:
1. WoN Goya Inc's exercise of its management prerogative is valid. NO
HELD:
1. The Company kept on harping that both the VA and the CA conceded that its
engagement of contractual workers from PESO was a valid exercise of
5
 LABOR1 | ATTY. MARLON MANUEL

management prerogative. It is confused. To emphasize, declaring that a

particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise
thereof. What the VA and the CA correctly ruled was that the Companys act of
contracting out/outsourcing is within the purview of management prerogative.
Both did not say, however, that such act is a valid exercise thereof.
Obviously, this is due to the recognition that the CBA provisions agreed
upon by the Company and the Union delimit the free exercise of
management prerogative pertaining to the hiring of contractual
employees. Indeed, the VA opined that "the right of the management to
outsource parts of its operations is not totally eliminated but is merely limited
by the CBA," while the CA held that "this management prerogative of
contracting out services, however, is not without limitation. x x x These
categories of employees particularly with respect to casual employees serve as a
limitation to the Company's prerogative to outsource parts of its operations
especially when hiring contractual employees.
2. The collective bargaining agreement or CBA refers to the negotiated contract
between a legitimate labor organization and the employer concerning wages,
hours of work and all other terms and conditions of employment in a bargaining
unit. As in all contracts, the parties in a CBA may establish such stipulations,
clauses, terms and conditions as they may deem convenient provided these are
not contrary to law, morals, good customs, public order or public policy. Thus,
where the CBA is clear and unambiguous, it becomes the law between the
parties and compliance therewith is mandated by the express policy of the
law.
3. This case, Section 4, Article I (on categories of employees) of the CBA between
the Company and the Union must be read in conjunction with its Section 1,
Article III (on union security). Both are interconnected and must be given full
force and effect. Also, these provisions are clear and unambiguous. The terms
are explicit and the language of the CBA is not susceptible to any other
interpretation. Hence, the literal meaning should prevail. As repeatedly held, the
exercise of management prerogative is not unlimited; it is subject to the
limitations found in law, collective bargaining agreement or the general
principles of fair play and justice

6

4. National Sugar Refineries Corp. v. NLRC (Pat)
24 March 1993 | J. Regalado | When considered a managerial employee
PETITIONER: National Sugar Refineries Corp.
RESPONDENTS: NLRC and NBSR Supervisory Union, (PACIWU) TUCP
SUMMARY:
The privatized Batangas refinery of NASUREFCO implemented a Job
Evaluation program which resulted in the re-evaluation of the positions of the
employees, including the Union members who were then granted salary
adjustments and increases in benefits commensurate to their actual duties and
functions. 2 years after the JEP implementation, the Union members filed a
complaint for non-payment of overtime, rest day and holiday pay allegedly in
violation of Article 100 of the Labor Code. Both LA and NLRC ruled in favor of
the Union members and held that they were not managerial employees based on
the definition found in Art. 212 (m) of the Labor Code. Hence this petition
before the SC.
NASUREFCO argues that the Union members are considered managerial
employees under Art. 82 and Sec. 2, Rule I, Book III of the LC IRR, which
should be the applicable Labor Code provision (in determining entitlement to the
payments claimed) and not Art. 212 (m). The SC held that the members of the
union discharge duties and responsibilities which ineluctably qualify them as
officers or members of the managerial staff under Art. 82 and Sec. 2, Rule I,
Book III of the LC IRR. The supervisory employees are under the direct
supervision of their respective department superintendents and that generally
they assist the latter in planning, organizing, staffing, directing, controlling
communicating and in making decisions in attaining the company's set goals and
objectives. They are likewise responsible for the effective and efficient operation
of their respective departments. Since they are managerial employees, they are
not entitled to the payments claimed.
DOCTRINE:
Employees with the following functions are qualified as officers or members of
the managerial staff:
1. their primary duty consists of the performance of work directly related
to management policies of their employer;
2. they customarily and regularly exercise discretion and independent
LABOR1 | ATTY. MARLON MANUEL
judgment;
3. They regularly and directly assist the managerial employee whose
primary duty consist of the management of a department of the
establishment in which they are employed
4. they execute, under general supervision, work along specialized or
technical lines requiring special training, experience, or knowledge; (5)
they execute, under general supervision, special assignments and tasks;
and
5. they do not devote more than 20% of their hours worked in a work-
week to activities which are not directly and clearly related to the
performance of their work hereinbefore described.
FACTS:
1. National Sugar Refineries Corporation (NASUREFCO) is a corporation
fully owned and controlled by the Government. It operates 3 sugar
refineries in Bukidnon, Iloilo and Batangas. The Batangas refinery was
privatized in 1992.
2. The NBSR Supervisory Union (Union) represents the former supervisors of
the NASUREFCO Batangas Sugar Refinery.
3. In 1988, NASUREFCO implemented a Job Evaluation (JE) Program
affecting all employees, from rank-and-file to department heads. It was
designed to rationalize the duties and functions of all positions, reestablish
levels of responsibility, and recognize both wage and operational structures.
Jobs were ranked according to effort, responsibility, training and working
conditions and relative worth of the job.
4. As a result, all positions were re-evaluated, and all employees including the
members of the Union were granted salary adjustments and increases in
benefits commensurate to their actual duties and functions.
5. For about ten years prior to the JE Program, the members of the Union were
treated in the same manner as rank-and-file employees. As such, they used
to be paid overtime, rest day and holiday pay pursuant to the provisions of
Articles 87, 93 and 94 of the Labor Code as amended.
6. The following are the adjustments made under the JEP:
a. Union members were re-classified under levels S-5 to S-8 which
are considered managerial staff for purposes of compensation and
benefits;
7

b. There was an increase in basic pay of the average of 50% of their
basic pay prior to the JEP with the union members now enjoying a
wide gap (P1,269.00 per month) in basic pay compared to the
highest paid rank-and-file employee;
c. Longevity pay was increased on top of alignment adjustments;
d. They were entitled to increased company COLA of P225.00 per
month;
e. There was a grant of P100.00 allowance for rest day/holiday work.
7. 2 years after the implementation of the JE Program, the Union members
filed a complaint with the executive labor arbiter for non-payment of
overtime, rest day and holiday pay allegedly in violation of Article 100 of
the Labor Code.
8. Labor Arbiter → ordered NASUREFCO to pay because
a. The long span of time during which benefits were paid to the
supervisors has ripened into a contractual obligation
b. Union cannot be estopped from questioning the validity of the new
compensation package despite the benefits received because the
union was formed only a year after the JEP was implemented (and
thus the supervisors were not able to express collective response)
9. NLRC → affirmed LA on the following grounds
a. Union members are not managerial employees based on the
definition in Art. 212(m) of the Labor Code
b. The supervisory employees are merely exercising recommendatory
powers subject to the evaluation, review and final action by their
department heads; their responsibilities do not require the exercise
of discretion and independent judgment; they do not participate in
the formulation of management policies nor in the hiring or firing
of employees; and their main function is to carry out the ready
policies and plans of the corporation.
10. Hence this petition before the SC. NASUREFCO argues that members of
union are members of the managerial staff who are not entitled to overtime,
rest day and holiday pay.
ISSUES:
1. Whether the Union members, as supervisory employees, are to be
considered as officers or members of the managerial staff - YES
LABOR1 | ATTY. MARLON MANUEL
RATIO:
1. Don’t use Art. 212(m)2 in defining managerial employees for this case. The
applicable provisions of law are found in Art. 82 3 of the Labor Code &
Section 2, Rule I, Book III of the Rules to Implement the Labor Code.4
2 Art. 212(m). "(m) 'Managerial employee' is one who is vested with powers or prerogatives
to lay down and execute management policies and/or to hire, transfer, suspend, lay-off, recall,
discharged, assign or discipline employees.
Supervisory employees are those who, in the interest of the employer effectively recommend
such managerial actions if the exercise of such authority is not merely routinary or clerical in
nature but requires the use of independent judgment. All employees not falling within any of
those above definitions are considered rank-and-file employees of this Book."
3 Art. 82. Coverage. — The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees,
managerial employees, field personnel, members of the family of the employer who are
dependent on him for support, domestic helpers, persons in the personal service of another,
and workers who are paid by results as determined by the Secretary of Labor in Appropriate
regulations.
As used herein, 'managerial employees' refer to those whose primary duty
consists of the management of the establishment in which they are employed or of a
department or subdivision thereof, and to other officers or members of the managerial
staff.
4 Sec. 2. Exemption. — The provisions of this rule shall not apply to the following persons if
they qualify for exemption under the condition set forth herein:
xxx xxx xxx
(b) Managerial employees, if they meet all of the following conditions, namely:
(1) Their primary duty consists of the management of the establishment in which
they are employed or of a department or subdivision thereof:
(2) They customarily and regularly direct the work of two or more employees
therein:
(3) They have the authority to hire or fire other employees of lower rank; or their
suggestions and recommendations as to the hiring and firing and as to the
promotion or any other change of status of other
employees are given particular weight.
(c) Officers or members of a managerial staff if they perform the following duties and
responsibilities:
(1) The primary duty consists of the performance of work directly related to
management policies of their employer;
(2) Customarily and regularly exercise discretion and independent judgment;
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 LABOR1 | ATTY. MARLON MANUEL

2. A cursory perusal of the Job Value Contribution Statements of the union 9. If the union members really wanted to continue receiving the benefits which
members will readily show that these supervisory employees are under attach to their former positions, there was nothing to prevent them from
the direct supervision of their respective department superintendents refusing to accept their promotions and their corresponding benefits.
and that generally they assist the latter in planning, organizing, 10. Promotion of its employees is one of the jurisprudentially-recognized
staffing, directing, controlling communicating and in making decisions exclusive prerogatives of management, provided it is done in good faith. In
in attaining the company's set goals and objectives. These supervisory the case at bar, the union has miserably failed to convince this Court that
employees are likewise responsible for the effective and efficient NASUREFCO acted in bad faith in implementing the JE Program. There is
operation of their respective departments. no showing that the JE Program was intended to circumvent the law and
3. It is apparent that the members of the union discharge duties and deprive the members of respondent union of the benefits they used to
responsibilities which ineluctably qualify them as officers or members of receive.
the managerial staff, as defined in Section 2, Rule I Book III of the
aforestated Rules to Implement the Labor Code. SEPARATE OPINIONS: None
4. The union members should be considered as officers and members of the
5. managerial staff and are, therefore, exempt from the coverage of Article 82.
Perforce, they are not entitled to overtime, rest day and holiday.
6. Prior to the JE Program, the union members, while being supervisors,
received benefits similar to the rank-and-file employees such as overtime,
rest day and holiday pay, simply because they were treated in the same
manner as rank-and-file employees, and their basic pay was nearly on the
same level as those of the latter, aside from the fact that their specific
functions and duties then as supervisors had not been properly defined and
delineated from those of the rank-and-file.
7. After the JE Program there was an ascent in position, rank and salary. This
in essence is a promotion which is defined as 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.
8. With the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their positions.

(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work
along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute under general supervision special assignments and
tasks; and
(4) Who do not devote more than 20 percent of their hours worked in a work-week
to activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and above.
9

5. Peñarada v. Banaga (Sylina)
May 3, 2006 | Panganiban, CJ | Coverage - Exemption from labor standards
provisions
PETITIONER: CHARLITO PEÑARANDA
RESPONDENTS: BAGANGA PLYWOOD CORPORATION and HUDSON
CHUA
SUMMARY: Peñaranda was hired as an employee of BPC to take charge of the
operations and maintenance of its steam plant boiler. Peñaranda filed a
Complaint for illegal dismissal with money claims against BPC and its general
manager, Hudson Chua, before the NLRC. BPC alleges that complainant’s
separation from service was done pursuant to Art. 283 of the Labor Code. They
were on temporary closure due to repair and general maintenance and it applied
for clearance with the DOLE to shut down and to dismiss employees. Further,
they claim that being a managerial employee, Peñaranda is not entitled to
overtime pay and if ever he rendered services beyond the normal hours of work,
there was no office order/or authorization for him to do so. The main issue is
WON Peñaranda is a regular employee entitled to the payment of
OVERTIME PAY and OTHER MONETARY BENEFITS to which the
Court held in the negative. Peñaranda was a member of the managerial staff. His
duties and responsibilities conform to the definition of a member of a managerial
staff under the Implementing Rules.
DOCTRINE:Article 82 of the Labor Code exempts managerial employees
from the coverage of labor standards. Like managerial employees, officers
and members of the managerial staff are not entitled to the provisions of
law on labor standards.
IRR of the Labor Code define members of a managerial staff as those with
the following duties and responsibilities:
a. The primary duty consists of the performance of work
directly related to management policies of the employer;
b. Customarily and regularly exercise discretion and
independent judgment;
c. (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is employed
LABOR1 | ATTY. MARLON MANUEL
or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or
(iii) execute under general supervision special assignments
and tasks; and
d. who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly
and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above.
FACTS:
1. Charlito Peñaranda was hired as an employee of Baganga Plywood
Corporation (BPC) to take charge of the operations and maintenance of its
steam plant boiler
2. Peñaranda filed a Complaint for illegal dismissal with money claims against
BPC and its general manager, Hudson Chua, before the NLRC.
3. They failed to settle amicably
4. Peñaranda alleges that he was employed by respondent BPC on March 15,
1999 with a monthly salary of P5K as Foreman/Boiler Head/Shift Engineer
until he was illegally terminated on December 19, 2000.
a. Peñaranda claims that his services were terminated without the
benefit of due process and valid grounds in accordance with law.
b. Furthermore, he was not paid his overtime pay, premium pay for
working during holidays/rest days, night shift differentials and
finally claims for payment of damages and attorney’s fees having
been forced to litigate the present complaint.
5. BPC alleges that complainant’s separation from service was done pursuant
to Art. 283 of the Labor Code.
a. They were on temporary closure due to repair and general
maintenance and it applied for clearance with the DOLE to shut
down and to dismiss employees
b. Peñaranda was paid separation benefits due to his insistence
c. When BPC reopened, Peñaranda didn’t reapply
d. Peñaranda was not terminated from employment much less
illegally. He opted to severe employment when he insisted
payment of his separation benefits.
10

e. Being a managerial employee, Peñaranda is not entitled to
overtime pay and if ever he rendered services beyond the normal
hours of work, there was no office order/or authorization for him
to do so.
6. LA: no illegal dismissal
7. NLRC: deleted the award of overtime pay and premium pay for working on
rest days. Peñaranda was not entitled to these awards because he was a
managerial employee.
8. CA dismissed Peñaranda’s Petition for Certiorari as Peñaranda failed to: 1)
attach copies of the pleadings submitted before the labor arbiter and NLRC;
and 2) explain why the filing and service of the Petition was not done by
personal service
ISSUES:
1. WON NLRC committed GADALEJ when it entertained the APPEAL of the
respondent[s] despite the lapse of the mandatory period of TEN DAYS. NO
2. WON Peñaranda is a regular employee entitled to the payment of
OVERTIME PAY and OTHER MONETARY BENEFITS. NO
RATIO:
WON NLRC committed GADALEJ when it entertained the APPEAL of the
respondent[s] despite the lapse of the mandatory period of TEN DAYS.
2. Court does not hesitate to grant liberality in favor of petitioner and to tackle
his substantive arguments in the present case. Rules of procedure must be
adopted to help promote, not frustrate, substantial justice.
3. The Court frowns upon the practice of dismissing cases purely on
procedural grounds.
4. Considering that there was substantial compliance, a liberal interpretation of
procedural rules in this labor case is more in keeping with the constitutional
mandate to secure social justice.
5. Petitioner’s claim that respondents filed their appeal beyond the required
period is not substantiated. In the pleadings before us, petitioner fails to
indicate when respondents received the Decision of the labor arbiter.
Neither did the petitioner attach a copy of the challenged appeal. Thus, this
Court has no means to determine from the records when the 10-day period
commenced and terminated. Since petitioner utterly failed to support his
claim that respondents’ appeal was filed out of time, we need not belabor
LABOR1 | ATTY. MARLON MANUEL
that point. The parties alleging have the burden of substantiating their
allegations.
WON Peñaranda is a regular employee entitled to the payment of OVERTIME
PAY and OTHER MONETARY BENEFITS.
6. Article 82 of the Labor Code exempts managerial employees from the
coverage of labor standards.
7. Labor standards provide the working conditions of employees, including
entitlement to overtime pay and premium pay for working on rest days.
8. Under this provision, managerial employees are "those whose primary duty
consists of the management of the establishment in which they are
employed or of a department or subdivision.
9. IRR of the Labor Code state that managerial employees are those who meet
the following conditions:
a. Their primary duty consists of the management of the
establishment in which they are employed or of a department or
subdivision thereof;
b. They customarily and regularly direct the work of two or more
employees therein;
c. 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.
10. Peñaranda is not a managerial employee but a managerial staff, which
also takes him out of the coverage of the labor standard
11. Like managerial employees, officers and members of the managerial
staff are not entitled to the provisions of law on labor standards.
12. IRR of the Labor Code define members of a managerial staff as those
with the following duties and responsibilities:
a. The primary duty consists of the performance of work directly
related to management policies of the employer;
b. Customarily and regularly exercise discretion and independent
judgment;
c. (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of
the establishment in which he is employed or subdivision
thereof; or (ii) execute under general supervision work along
11
 LABOR1 | ATTY. MARLON MANUEL

specialized or technical lines requiring special training,

experience, or knowledge; or (iii) execute under general
supervision special assignments and tasks; and
d. who do not devote more than 20 percent of their hours worked
in a workweek to activities which are not directly and closely
related to the performance of the work described in
paragraphs (1), (2), and (3) above.
13. As shift engineer, petitioner’s duties and responsibilities were as follows:
a. To supply the required and continuous steam to all consuming
units at minimum cost.
b. To supervise, check and monitor manpower workmanship as well
as operation of boiler and accessories.
c. To evaluate performance of machinery and manpower.
d. To follow-up supply of waste and other materials for fuel.
e. To train new employees for effective and safety while working.
f. Recommend parts and supplies purchases.
g. To recommend personnel actions such as: promotion, or
disciplinary action.
h. To check water from the boiler, feedwater and softener, regenerate
softener if beyond hardness limit.
i. Implement Chemical Dosing.
j. Perform other task as required by the superior from time to time."
14. The foregoing enumeration, particularly items 1, 2, 3, 5 and 7 illustrates that
Peñaranda was a member of the managerial staff. His duties and
responsibilities conform to the definition of a member of a managerial staff
under the Implementing Rules.
15. He supervised the engineering section of the steam plant boiler.
16. This work necessarily required the use of discretion and independent
judgment to ensure the proper functioning of the steam plant boiler. As
supervisor, petitioner is deemed a member of the managerial staff.

12

6. SAN MIGUEL v. DEMOCRATIC LABOR (Maye)
July 31, 1963 | Bautista Angelo, J.| Eight-Hour Labor Law application
PETITIONER: San Miguel Brewery Inc
RESPONDENT: Democratic Labor Organization
SUMMARY: Respondent Democratic Labor Assoc. filed a manifestation
claiming for the following against petitioner SMB: overtime pay, night-shift
differential pay, attorney’s fees, separation pay, and sick and vacation leave
compensation. Judge Bautista ruled that those working outside the company’s
premises are entitled to overtime compensation, hence, the Eight-Hour Labor
Law applies to them. SMB filed this petition questioning Bautista’s ruling that
outside or field sales personnel are entitled to the benefits of the Eight-Hour
Labor law. The issue is WoN the Eight-Hour Labor Law applies to respondent
workers. SC held no. The Eight-Hour Labor Law only applies to an employee
who is paid on a monthly or daily basis. This law has no application to
employees paid on a piece-work basis. CIR is wrong to apply the law to the
piece-work employees. According to a 1957 DOLE ruling, field sales personnel
receiving regular monthly salaries plus commission, are NOT subject to the
Eight-Hour Labor Law.
DOCTRINE: The Eight-Hour Labor Law only applies to employees who are
paid on a monthly or daily basis. Employees who are paid on a piece-work or
commission basis are EXCLUDED.
FACTS:
1. January 1955, Democratic Labor Association (“union”) filed a complaint
against the San Miguel Brewery (SMB) embodying 12 demands for the
betterment of the conditions of employment of its members.
2. SMB filed its answer specifically denying its material averments. Asked for
the dismissal of the complaint.
3. September 1955 – The union manifested its desire to confine its claim to its
demand for (1) overtime, (2) night-shift differential pay, (3) atty’s fees.
a. It was also allowed to present evidence on service rendered during
Sundays and holidays or its claim for additional separation pay and
sick and vacation leave.
4. Judge Bautista, who received the evidence, rendered decision:
a. For overtime compensation, he held that the provisions of the
Eight-Hour Labor Law apply to the employees concerned for
those working in the field or engaged in the sale of the
company’s products outside its premises and consequently
should be paid extra compensation in addition to the monthly
salary and commission earned, regardless of meal allowance given.
LABOR1 | ATTY. MARLON MANUEL
b. For employees who work at night, he held that they should be
paid their corresponding salary differentials for work done at night
w/ the present qualification: 25% of their salary for those who
work at 6pm-12am and 75% for those who work from 12:01-6am.
c. For work done during Sundays and holidays, employees must be
paid an additional compensation of 25% even if they had been paid
a compensation on monthly salary basis.
d. The demands for the application of the Minimum Wage Law to
workers paid on “pakiao” basis, payment of accumulated vacation
and sick leave and other claims were dismissed or set aside.
5. SMC filed this petition questioning the ruling that outside or field sales
personnel are entitled to the benefits of the Eight-Hour Labor Law.
6. SMC alleged the following facts:
a. After the morning roll call, employees leave the plant to go on
their respective sales route (7 am or 8 am). They do not have a
daily time record as they were never required to start earlier.
b. The sales routes were planned in a way that they can be completed
within 8 hrs at most or within such number of hours.
c. The moment these outside or field employees leave the plant and
while in their sales routes, they are on their own.
d. They receive monthly salaries and sales commissions, depending
upon their individual efforts or industry. Besides the monthly
salary, they are paid sales commission ranging from P30-109 a
month.
7. SMB contends that since employees concerned are paid a commission on
the sales they make outside of the required 8 hrs beside the fixed salary, the
Court of Industrial Relations erred in ordering that they be paid an overtime
compensation as required by the Eight-Hour Labor Law. The commission
they are paid already takes the place of such overtime compensation.
ISSUE: WoN the Eight Hour Labor Law is applicable to an employee or
laborer who is paid on piece-work, “pakiao”, or commission basis? NO.
RATIO:
1. Overtime compensation is an additional pay for work or services rendered
in excess of 8 hrs a day by an employee. If the employee is already given
extra compensation (like commission) for excess labor, he is not covered by
the law.
2. The Eight-Hour Labor Law only has application where an employee or
laborer is paid on a monthly or daily basis, or is paid a monthly or
daily compensation. As such, if he is made to work beyond the requisite 8
hours, he should be paid the additional compensation prescribed by law.
3. The law has no application when the employee or laborer is paid on a
13
 LABOR1 | ATTY. MARLON MANUEL

piece-work, “pakiao”, or commission basis, regardless of the time a. General rule: This is MANDATORY, regardless of the nature of
employed. compensation.
a. Reason: His earnings in the form of commission is based on his b. Exception: Not mandatory on public utilities who perform some
gross receipts of the day. His participation depends upon his public service.
industry so that more hours → higher commission. In addition, he
is not subject to his employer’s personal supervision. WHEREFORE, the decision of the industrial court is MODIFIED:
4. In this case, the employees concerned are paid a fixed salary for their month ● The award with regard to extra work performed by those employed in the
of service, and sometimes they work in excess of the 8-hour period. For outside or field sales force is set aside.
their extra work, they are paid a COMMISSION, in lieu of the extra ● The rest of decision (pay for Sundays and holidays and the award for night
compensation to which they are entitled (See Fact 6d) salary differentials) is AFFIRMED.
5. Insofar as the extra work they perform, the union can be considered as
employees paid on piece work, “pakiao” or commission basis. This is in
accord with the DOLE Opinion, when it made a ruling to the effect that
field sales personnel receiving regular monthly salaries, plus
commission, are NOT subject to the Eight-Hour Labor Law.
6. Therefore, the industrial court erred in holding that the Eight-Hour Labor
Law applies to the employees composing the outside service force.

Re: Claim for night salary differentials: See fact 4b for ruling.
a. Industrial court found that claimants worked with SMB and
rendered night duties once every 3 weeks during the period of
employment and they were never given any additional
compensation aside from their monthly salaries. Company started
paying night differentials only in 1949. As such, it ordered the
payment of night differentials retroactively (Fact 4b)
7. SMB argument: an award for night shift differentials cannot be given
retroactive effect; can only be entertained from demand, which was 1953.
8. SC: It appears that before the filing of the petition concerning the claim for
night salary differentials, a similar one had already been filed long ago,
which had been the subject of negotiations between the union and the
company which culminated in a strike in 1952.

Re: Claim for pay for Sundays and holidays for service performed by some
who were watchmen and/or security guards.
a. SMB contends that these employees are not entitled to extra pay
for work done during these days because they are paid on a
monthly basis and are given one day off, which may take the place
of the work they may perform either on Sunday or any holiday.
9. SC: Disagree with this claim as it runs counter to law.
10. Commonwealth Act No. 444 expressly provides that no person, firm, or
corporation may compel an employee or laborer to work during Sundays
and legal holidays unless he is paid an additional sum of 25% of his regular
compensation.
14
 LABOR1 | ATTY. MARLON MANUEL

● 7. Auto Bus Transport v. Bautista (Pau)

the employer.
May 16, 2005 | Mendoza, J. | Hours of Work
FACTS:

PETITIONER: Autobus Transport Inc. 1. Respondent Antonio Bautista (Bautista) has been employed by Petitioner
RESPONDENT : Antonio Bautista Auto Bus Transport (Autobus) as driver-conductor since May 24, 1999.
Bautista was paid on commission basis, 7% of the gross income per travel,
on a twice a month basis.
SUMMARY:
2. On Jan, 3 2000, Bautista was driving along Sta Fe, Nueva Vizcaya when the
Antonio Bautista (Bautista) was employed by Autobus Transport (Autobus) as a
bus he was driving accidentally bumped the rear of Autobus No. 124, as the
driver-conductor. He was paid on a commission basis. Sometime in Jan 2000,
latter vehicle suddenly stopped at a sharp curve without giving any warning.
Bautista figured into an accident when he bumped the rear of another Autobus.
3. Bautista alleged that the accident happened because he was compelled by
After a month, Management terminated his services. Bautista filed a complaint for
management to go back to Roxas, Isabela, although he had not slept for
illegal dismissal + monetary claims.
almost 24 hours, as he had just arrived from Manila from Roxas, Isabela.
LA dismissed the complaint for illegal dismissal but granted Bautista service
Bautista also alleged that he was not allowed to work until he had fully paid
incentive leave pay for all the years he had been in service for Autobus. NLRC
the amount of 75k representing 30% of the repair cost of the damaged
affirmed and maintained the grant of service incentive leave pay.
buses. Despite repeated pleas for reconsideration, the same was ignored by
ISSUE: W/N Bautista is entitled to service incentive leave? - Yes
management.
Service incentive leave has been delimited by the IRR of the Labor Code to apply
After a month, management sent him a letter of termination.
only to those employees not explicitly excluded by Section 1 of Rule V. Those
4. Bautista instituted a complaint for illegal dismissal with money claims.
classified as “field personnel” do not get service incentive leave. “Field personnel”
Autobus maintained that Bautista’s employment was replete with offenses
are those who regularly perform their duties away from the principal place of
involving reckless, imprudence, gross negligence, and dishonesty. Autobus
business of the employer and whose actual hours of work in the field cannot be
asserted that in exercise of its management prerogative, it terminated
determined with reasonable certainty.”
Bautista’s services only after he was provided with an opportunity to
It was found the both the LA & the NLRC That Autobus was able to properly
explain the Jan 3 incident.
supervise and keep track of the hours of work that Bautista would render by means
5. Labor Arbiter - Dismissed the complaint for illegal dismissal, but awarded
of Inspectors who would board the bus at strategic places, Dispatchers who
Bautista service incentive leave pay for all the years he had been in service
insured the prompt arrival and departure from designated stops, and routine
for Autobus.
checkups on the vehicle of Bautista.
NLRC - Affirmed the LA, also maintained the service incentive leave pay.
Bautista is not a “field personnel” but a regular employee.
(It didnt say this in the case but Im fairly (10%) sure that Autobus was
Doctrine: “Field personnel” are those who regularly perform their duties away
trying to argue that Bautista wasnt entitled to service incentive leave pay
from the principal place of business of the employer and whose actual hours of
since he was being paid on a commission basis)
work in the field cannot be determined with reasonable certainty.
ISSUE:
Thus, in order to conclude whether an employee is a field employee, it is also
1. W/N Bautista is entitled to service incentive leave - Ya
necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
RATIO:
whether or not the employee’s time and performance are constantly supervised by
1. Labor Code Art. 95. Right to Service Incentive Leave
15
 LABOR1 | ATTY. MARLON MANUEL

(a) Every employee who has rendered at least one year of conductor. They too, must be at specific place as [sic] specified
service shall be entitled to a yearly service incentive leave time, as they generally observe prompt departure and arrival
of five days with pay. from their point of origin to their point of destination. In each and
Book III, Rule V: Service Incentive Leave (IRR Labor Code) every depot, there is always the Dispatcher whose function is
Section 1. Coverage - This rule shall apply to employees except precisely to see to it that the bus and its crew leave the
(d) Field personnel and other employees whose performance is premises at specific times and arrive at the estimated proper
unsupervised by the employer including those who are engaged time. These, are present in the case at bar. The driver, the
on task or contract basis, purely commission basis, or those who complainant herein, was therefore under constant supervision
are paid in a fixed amount for performing work irrespective of the while in the performance of this work. He cannot be
time consumed in the performance thereof. considered a field personnel”
2. Service incentive leave has been delimited by the IRR of the Labor Code to 6. This Court agrees. Bautista is not a field personnel but a regular employee
apply only to those employees not explicitly excluded by Section 1 of who performs tasks usually necessary and desirable to the usual trade of
Rule V. Those classified as “field personnel” do not get service incentive Autobus’ business.
leave. “Other employees whose performance is unsupervised” serves as an (So yes, he is entitled to service incentive leave pay)
interpretation of “field personnel” under the labor code as those “whose
actual hours of work in the field cannot be determined with reasonable Bam supot
certainty.” WHEREFORE, premises considered, the instant petition is hereby DENIED. The
3. Autobus’ contention that Bautista is not entitled to service incentive leave assailed Decision of the Court of Appeals in CA-G.R. SP. No. 68395 is hereby
simply because he was paid on a purely commission basis is wrong. The AFFIRMED. No Costs
real question that needs to be determined is whether or not he is a “field ●
personnel.”
4. “Field personnel” are those who regularly perform their duties away from ●
the principal place of business of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty.
Thus, in order to conclude whether an employee is a field employee, it is
also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employee’s time and
performance are constantly supervised by the employer.
5. As found the the Labor Arbiter & NLRC:
“... along the routes that are plied by these bus companies, there
are its inspectors assigned at strategic places who board the
bus and inspect the passengers, the punched tickets, and the
conductor’s reports. There is also the mandatory once-a-week
car barn or shop day, where the bus is regularly checked as to
its mechanical, electrical, and hydraulic aspects, whether or not
there are problems thereon as reported by the driver and/or

16

● 8. Mercidar Fishing Corp. v. NLRC (Mina)
October 8, 1998 | Mendoza, J. | Working Condition: Coverage
PETITIONERS: Mercidar Fishing Corporation, represented by its President
Domingo B. Naval
RESPONDENTS: National Labor Relations Commission and Fermin Agao, Jr.
SUMMARY: Fermin Agao Jr., a bodegero/ship quarermaster, filed a complaint
against Mercidar Fishing Corporation for illegal dismissal; and non-payment of
5-days service incentive leave. He claims that he was allowed to go on a one-
month leave without pay because he was sick but when he resported back to
work with a health clearance, he was told to come back another time as he could
not be reinstated immediately. Thereafter, Mercidar refused to give him work.
For this reason, Agao asked for a certificate of employment from Mericdar.
However, when he came back for the certificate, Mercidar refused to issue the
certificate unless he submitted his resignation. Since Agao refused to submit
such letter unless he was given separation pay, Mercidar prevented him from
entering the premises. Mercidar, on the other hand, alleged that it was Agao
who actually abandoned his work. It claimed that Agao failed to report for work
after his leave had expired and was, in fact, absent without leave for three
months. It also claims that, nonetheless, it assigned Agao to another vessel, but
he was left behind. Thereafter, Agao asked for a certificate of employment on
the pretext that he was applying to another fishing company but he refused to
get the certificate and resign unless he was given separation pay. LA sided with
Agao. NLRC affirmed and denied Mercidar’s claim that it cannot be held liable
for service incentive leave pay by fishermen in its employ as the latter
supposedly are field personnel and thus not entitled to such pay under Article 82
of the Labor Code.
Issue: WoN NLRC erred in sustaining the view that fishing crew members,
like Agao, cannot be classified as field personnel under Article 82 or Labor
Code -- No.
Article 82 of the Labor Code provides: The provisions of this Title [Working
Conditions and Rest Periods] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, field
personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and
workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations. x x x "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.” Mercidar argues that
since the work of Agao is performed away from its principal place of business,
LABOR1 | ATTY. MARLON MANUEL
it has no way of verifying his actual hours of work on the vessel. It contends
that Agao and other fishermen in its employ should be classified as field
personnel who have no statutory right to service incentive leave pay. However,
SC provided in multiple jurisprudence 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. In the case at bar, during
the entire course of their fishing voyage, fishermen employed by Mercidar have
no choice but to remain on board its vessel. Although they perform non-
agricultural work away from petitioner's business offices, the fact remains that
throughout the duration of their work they are under the effective control and
supervision of Mercidar through the vessel's patron or master
DOCTRINE: ART. 82. Coverage. - The provisions of this Title [Working
Conditions and Rest Periods] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees, field
personnel, members of the family of the employer who are dependent on him
for support, domestic helpers, persons in the personal service of another, and
workers who are paid by results as determined by the Secretary of Labor in
appropriate regulations. . . . . . . . ...
"Field personnel" shall refer to 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.
FACTS:
1. Fermin Agao Jr. filed a complaint against Mercidar Fishing Corporation for
illegal dismissal; and non-payment of 5-days service incentive leave for
1990. Agao, a bodegero or ships quartermaster, complained that he had
been constructively dismissed by Mercidar when the latter refused him
assignments aboard its boats after he had reported to work
2. Agao claims that he had been sick and thus allowed to go on leave without
pay for one month from April 28, 1990 but that when he reported to work at
the end of such period with a health clearance, he was told to come back
another time as he could not be reinstated immediately. Thereafter,
Mercidar refused to give him work.
3. For this reason, Agao asked for a certificate of employment from Mericdar.
However, when he came back for the certificate, Mercidar refused to issue
the certificate unless he submitted his resignation. Since Agao refused to
submit such letter unless he was given separation pay, Mercidar prevented
him from entering the premises.
4. Mercidar, on the other hand, alleged that it was Agao who actually
abandoned his work. It claimed that the latter failed to report for work after
17

his leave had expired and was, in fact, absent without leave for three months
until August 28, 1998. It also claims that, nonetheless, it assigned Agao to
another vessel, but he was left behind. Thereafter, Agao asked for a
certificate of employment on the pretext that he was applying to another
fishing company but he refused to get the certificate and resign unless he
was given separation pay.
5. LA: Agao to be reinstated and paid 13th month pay and incentive leave pay
6. NLRC: affirmed LA. The NLRC dismissed Mercidar’s claim that it cannot
be held liable for service incentive leave pay by fishermen in its employ as
the latter supposedly are field personnel and thus not entitled to such pay
under Article 82 of the Labor Code.
ISSUE:
1. WoN NLRC erred in sustaining the view that fishing crew members,
like Agao, cannot be classified as field personnel under Article 82 or
Labor Code -- No.
RATIO:
1. Article 82 of the Labor Code:
ART. 82. Coverage. - The provisions of this Title [Working Conditions and
Rest Periods] shall apply to employees in all establishments and
undertakings whether for profit or not, but not to government employees,
field personnel, members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the personal service of
another, and workers who are paid by results as determined by the Secretary
of Labor in appropriate regulations.
.... ... ...
"Field personnel" shall refer to 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.
2. Mercidar argues that since the work of Agao is performed away from its
principal place of business, it has no way of verifying his actual hours of
work on the vessel. It contends that Agao and other fishermen in its employ
should be classified as field personnel who have no statutory right to service
incentive leave pay.
3. In the case of Union of Filipro Employees (UFE) v. Vicar, SC explained the
meaning of the phrase “whose actual hours of work in the field cannot be
determined with reasonable certainty in Art. 82 of the Labor Code," must be
read in conjunction with Rule IV, Book III of the Implementing Rules
which provides:
Rule IV Holidays with Pay
Section 1. Coverage - This rule shall apply to all employees except:
LABOR1 | ATTY. MARLON MANUEL
.... ... ...
(e) Field personnel and other employees whose time and performance
is unsupervised by the employer xxx
While contending that such rule added another element not found
in the law, the petitioner nevertheless attempted to show that its
affected members are not covered by the abovementioned rule. The
petitioner asserts that the company's sales personnel are strictly
supervised as shown by the SOD (Supervisor of the Day) schedule and
the company circular dated March 15, 1984
Contrary to the contention of the petitioner, the Court finds that the
aforementioned rule did not add another element to the Labor Code
definition of field personnel. The clause "whose time and performance
is unsupervised by the employer" did not amplify but merely
interpreted and expounded the clause "whose actual hours of work in
the field cannot be determined with reasonable certainty." The former
clause is still within the scope and purview of Article 82 which defines
field personnel. Hence, in deciding whether or not an employee's actual
working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and
performance is constantly supervised by the employer
4. Accordingly, it was held in the aforementioned case that salesmen of Nestle
Philippines, Inc. were field personnel:
It is undisputed that these sales personnel start their field work at 8:00
a.m. after having reported to the office and come back to the office at
4:00 p.m. or 4:30 p.m. if they are Makati-based.
The petitioner maintains that the period between 8:00 a.m. to 4:00
or 4:30 p.m. comprises the sales personnel's working hours which can
be determined with reasonable certainty.
The Court does not agree. The law requires that the actual hours of
work in the field be reasonably ascertained. The company has no way
of determining whether or not these sales personnel, even if they report
to the office before 8:00 a.m. prior to field work and come back at 4:30
p.m., really spend the hours in between in actual field work.
5. In contrast, in the case at bar, during the entire course of their fishing
voyage, fishermen employed by Mercidar have no choice but to remain on
board its vessel. Although they perform non-agricultural work away from
petitioner's business offices, the fact remains that throughout the duration of
their work they are under the effective control and supervision of Mercidar
through the vessel's patron or master as the NLRC correctly held.
18

9. Labor Congress of the Philippines vs NLRC (Jyn)
21 May 1998| Davide, Jr., J. | Working Conditions – Coverage; “Pakyao” or Piece
Workers
PETITIONER: LABOR CONGRESS OF THE PHILIPPINES (LCP) for and
in behalf of its members, ANA MARIE OCAMPO, MARY INTAL,
ANNABEL CARESO, MARLENE MELQIADES, IRENE JACINTO, NANCY
GARCIA, IMELDA SARMIENTO, LENITA VIRAY, GINA JACINTO,
ROSEMARIE DEL ROSARIO, CATHERINE ASPURNA, WINNIE PENA,
VIVIAN BAA, EMILY LAGMAN, LILIAN MARFIL, NANCY DERACO,
JANET DERACO, MELODY JACINTO, CAROLYN DIZON, IMELDA
MANALOTO, NORY VIRAY, ELIZA SALAZAR, GIGI MANALOTO,
JOSEFINA BASILIO, MARY ANN MAYATI, ZENAIDA GARCIA, MERLY
CANLAS, ERLINDA MANALANG, ANGELINA QUIAMBAO, LANIE
GARCIA, ELVIRA PIEDRA, LOURDES PANLILIO, LUISA PANLILIO,
LERIZA PANLILIO, ALMA CASTRO, ALDA DAVID, MYRA T. OLALIA,
MARIFE PINLAC, NENITA DE GUZMAN, JULIE GACAD, EVELYN
MANALO, NORA PATIO, JANETH CARREON, ROWENA MENDOZA,
ROWENA MANALO, LENY GARCIA, FELISISIMA PATIO, SUSANA
SALOMON, JOYDEE LANSANGAN, REMEDIOS AGUAS, JEANIE
LANSANGAN, ELIZABETH MERCADO, JOSELYN MANALESE,
BERNADETH RALAR, LOLITA ESPIRITU, AGNES SALAS, VIRGINIA
MENDIOLA, GLENDA SALITA, JANETH RALAR, ERLINDA BASILIO,
CORA PATIO, ANTONIA CALMA, AGNES CARESO, GEMMA BONUS,
MARITESS OCAMPO, LIBERTY GELISANGA, JANETH MANARANG,
AMALIA DELA CRUZ, EVA CUEVAS, TERESA MANIAGO, ARCELY
PEREZ, LOIDA BIE, ROSITA CANLAS, ANALIZA ESGUERRA, LAILA
MANIAGO, JOSIE MANABAT, ROSARIO DIMATULAC, NYMPA
TUAZON, DAIZY TUASON, ERLINDA NAVARRO, EMILY MANARANG,
EMELITA CAYANAN, MERCY CAYANAN, LUZVIMINDA CAYANAN,
ANABEL MANALO, SONIA DIZON, ERNA CANLAS, MARIAN
BENEDICTA, DOLORES DOLETIN, JULIE DAVID, GRACE
VILLANUEVA, VIRGINIA MAGBAG, CORAZON RILLION, PRECY
MANALILI, ELENA RONOZ, IMELDA MENDOZA, EDNA CANLAS and
ANGELA CANLAS
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION,
EMPIRE FOOD PRODUCTS, its Proprietor/President & Manager, MR.
GONZALO KEHYENG and MRS. EVELYN KEHYENG
LABOR1 | ATTY. MARLON MANUEL
SUMMARY: The 99 persons named as petitioners in this proceeding were
rank-and-file employees of respondent Empire Food Products, (Empire Food)
and are members of Labor Congress of the Philippines (LCP). On Oct. 23, 1990,
petitioners represented by LCP, and private respondents Gonzalo and Evelyn
Kehyeng (Kehyeng spouses) entered into a Memorandum of Agreement,
recognizing the following:
· Status of LCP as sole and exclusive Bargaining Agent and
Representative for all rank and file employees of the Empire Food
Products regarding "wages, hours of work, and other terms and
conditions of employment";
· With regard to the NLRC complaint, all parties agree to resolve the
issues during the Collective Bargaining Agreement;
· Proper adjustment of wages, withdrawal of case from the Calendar
of NLRC, no Harassment, Threats, Interferences of their respective
rights under the law, no Vengeance or Revenge by each partner nor
any act of ULP which might disrupt the operations of the business
On January 23, 1991, LCP filed a complaint against Empire Food for:
1. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
2. Union busting thru Harassments [sic], threats, and interfering with
the rights of employees to self-organization;
3. Violation of the Memorandum of Agreement dated October 23,
1990;
4. Underpayment of Wages in violation of R.A. No. 6640 and R.A.
No. 6727, such as Wages promulgated by the Regional Wage Board;
5. Actual, Moral and Exemplary Damages.
Labor Arbiter Ariel C. Santos absolved private respondents of the charges of
unfair labor practice, union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners’ prayer for actual, moral and
exemplary damages. Labor Arbiter Santos, however, directed the reinstatement
of the individual complainants. NLRC vacated LA’s decision and remanded the
19

case back to LA due to overlooking “…the testimonies of some of the
individual complainants which are now on record.” LA promulgated a decision
stating that:
· Complainants failed to present with definiteness and clarity the
particular act or acts constitutive of unfair labor practice.
· Declaration of ULP connotes a finding of prima facie evidence of
probability that a criminal offense may have been committed so as to
warrant the filing of a criminal information before the regular court.
· As regards the issue of harassment, threats and interference with the
rights of employees to self-organization which is actually an ingredient
of unfair labor practice, complainants failed to specify what type of
threats or intimidation was committed and who committed the same.
NLRC affirmed. LCP raised the issue that just because they are piece
workers does not imply that they are not regular employees entitled for
reinstatement, holiday pay and 13th month pay. The issue is whether or not
the LCP, being piece workers are exemp from labor standard benefits. The
Court in Applying the two-fold test from LC Article 286(n) [Art. 280 (old)], the
SC found that the supposedly piece workers had three factors in their favor:
a) The nature of the tasks of Ana Marie, et al of repacking snack food items
was NECESSARY and DESIRABLE in the usual business of Empire Foods,
which is a food and fruit processing company. According to Tabas vs
California Manufacturing, merchandisers of processed food who coordinates
for sales of processed food was a necessity and was desirable for the day-to-day
operations of a food processing company. With more reason would the job of
food packers be necessary for the day-to-day operations of a food processing
plant.
b) Ana Marie et al worked throughout the year, with their employment being
independent from a specific project or season.
c) The length of time that petitioners fulfilled the requirement of Article
286(n).
Therefore, the SC considered the employees as regular employees despite their
status as piece workers, according them benefits such as holiday pay, premium
pay, 13th month pay and service incentive leave
LABOR1 | ATTY. MARLON MANUEL
DOCTRINE: Although piece-rate workers, the following are the factors that
lead to the conclusion that such workers are regular employees, and therefore
entitled to such benefits:
1.) The nature of the tasks of the workers is necessary in the
usual business of the company
2.) Workers worked throughout the year, with their
employment not dependent on the specific project or season
3.) Length of time (more than a year)
ART. 82. Coverage. - The provisions of this Title shall apply to employees in
all establishments and undertakings whether for profit or not, but not to
government employees, managerial employees, field personnel, members of the
family of the employer who are dependent on him for support, domestic helpers,
persons in the personal service of another, and workers who are paid by results
as determined by the Secretary of Laborin appropriate regulations.
As used herein, "managerial employees" refer to those whose primary duty
consists of the management of the establishment in which they are employed or
of a department or subdivision thereof, and to other officers or members of the
managerial staff.
Section 8 (b), Rule IV, Book III, piece workers are specifically mentioned as
being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees.
Where a covered employee is paid by results or output, such
as payment on piece work, his holiday pay shall not be less than his
average daily earnings for the last seven (7) actual working days
preceding the regular holiday: Provided, however, that in no case
shall the holiday pay be less than the applicable statutory minimum
wage rate.
FACTS:
1. The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private petitioners in the
20

proceeding (represented by the Labor Congress of the Phils.) were rank-and-file
employees of private respondent Empire Food Products (a food and fruit processing
company), hired on various dates.
2. Ana Marie et filed against Empire an NLRC complaint for payment of money
claims and for violation of labor standards laws. Alongside this they also filed a
petition for direct certification for the Labor Congress to be their bargaining
representative. On Oct. 23, 1990, petitioners represented by LCP, and private
respondents Gonzalo and Evelyn Kehyeng (Kehyeng spouses) entered into a
Memorandum of Agreement, recognizing the following:
· Status of LCP as sole and exclusive Bargaining Agent and
Representative for all rank and file employees of the Empire Food Products
regarding "wages, hours of work, and other terms and conditions of
employment";
· With regard to the NLRC complaint, all parties agree to resolve the
issues during the Collective Bargaining Agreement;
· Proper adjustment of wages, withdrawal of case from the Calendar
of NLRC, no Harassment, Threats, Interferences of their respective rights
under the law, no Vengeance or Revenge by each partner nor any act of
ULP which might disrupt the operations of the business
3. On Oct. 24, 1990, the Mediator Arbiter approved the memorandum and certified
LCP as the sole and exclusive bargaining agent for the rank-and-file employees of
Empire.
4. On November 1990, LCP President Navarro submitted to Empire a proposal for
collective bargaining. However, on January 1991, the private petitioners Ana Marie
et al filed a complaint for:
· Unfair Labor Practices via Illegal Lockout and Dismissal;
· Union-Busting through harassment, threats and interference to the right for self-
organization;
· Violation of the Oct. 23, 1990 memorandum
LABOR1 | ATTY. MARLON MANUEL
· Underpayment of wages
· Actual, moral and exemplary damages
Labor Arbiter:
· Absolved Empire for ULP, union busting, violation of the memorandum of
agreement, underpayment of wages and denied petitioners' prayer for actual, moral
and exemplary damages.
· Denied prayer for actual, moral and exemplary damages
· Directed reinstatement of complainants, due to the fact that Empire did not keep
its payroll records as per requirement of the DOLE. Admonition to Empire given as
well re: further harassment and intimidation.
NLRC:
· Remanded case to Labor Arbiter for further proceedings due to overlooking “…
the testimonies of some of the individual complainants which are now on record”.
Labor Arbiter (after the case was remanded back to him):
· Complainants failed to present with definiteness and clarity the particular act or
acts constitutive of unfair labor practice.
· Declaration of ULP connotes a finding of prima facie evidence of probability that
a criminal offense may have been committed so as to warrant the filing of a criminal
information before the regular court.
· As regards the issue of harassment, threats and interference with the rights of
employees to self-organization which is actually an ingredient of unfair labor
practice, complainants failed to specify what type of threats or intimidation was
committed and who committed the same.
NLRC:
· Affirmed decision of LA.
Petitioners’s arguments:
21

· The fact that they are piece workers does not imply that they are not regular
employees entitled for reinstatement.
· LA and NLRC decisions were not supported by substantial evidence;
· Abandonment of work was not proved by substantial evidence;
· Much credit given to the Kehyeng spouses’ self-serving arguments.
ISSUES:
1. [RELEVANT] WON LCP members are entitled to labor standard benefits,
considering their status as piece rate workers. YES, LCP members are entitled to
labor standards benefits, namely, holiday pay, premium pay, 13 th month pay and
service incentive leave.
2. WON the actions of LCP members constituted abandonment of work. NO,
failure to appear to work did not constitute abandonment
Ratio:
Entitlement to Labor Standard Benefits
1. Supreme Court decision cites that Ana Marie, et al, despite being “pakyao” or
piece workers does not imply that they are not regular employees entitled to
reinstatement. Applying the two-fold test from LC Article 286(n) [Art. 280 (old)],
the SC found that the supposedly piece workers had three factors in their favor:
a. The nature of the tasks of Ana Marie, et al of repacking snack food
items was NECESSARY and DESIRABLE in the usual business of
Empire Foods, which is a food and fruit processing company.
According to Tabas vs California Manufacturing, merchandisers of
processed food who coordinates for sales of processed food was a
necessity and was desirable for the day-to-day operations of a food
processing company. With more reason would the job of food packers
be necessary for the day-to-day operations of a food processing plant.
b. Ana Marie et al (LCP members) worked throughout the year, with
their employment being independent from a specific project or season.
LABOR1 | ATTY. MARLON MANUEL
c. The length of time that petitioners fulfilled the requirement of
Article 286(n).
2. Therefore, the SC considered the employees as regular employees despite their
status as piece workers, according them benefits such as holiday pay, premium pay,
13th month pay and service incentive leave.
3. The Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive leave and
13th month pay, inter alia, "field personnel and other employees whose time and
performance is unsupervised by the employer, including those who are engaged on
task or contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the performance
thereof." However, petitioners as piece-rate workers do not fall within this group.
Not only did the employees labor under the control of Empire, the employees also
worked throughout the year to fulfil their quota as “basis for compensation”.
Further, in Section 8 (b), Rule IV, Book III, piece workers are specifically
mentioned as being entitled to holiday pay.
Sec. 8. Holiday pay of certain employees.
(b) Where a covered employee is paid by results or output, such as
payment on piece work, his holiday pay shall not be less than his average
daily earnings for the last seven (7) actual working days preceding the
regular holiday: Provided, however, that in no case shall the holiday pay
be less than the applicable statutory minimum wage rate.
In addition, the Revised Guidelines on the Implementation of the 13th Month
Pay Law, in view of the modifications to P.D. No. 851 19 by Memorandum
Order No. 28, clearly exclude the employer of piece rate workers from those
exempted from paying 13th month pay, to wit:
EXEMPTED EMPLOYERS - The following employers are still
not covered by P.D. No. 851:
Employers of those who are paid on purely commission,
boundary or task basis, and those who are paid a fixed amount for
performing specific work, irrespective of the time consumed in the
performance thereof, except where the workers are paid on piece-
22
 LABOR1 | ATTY. MARLON MANUEL

rate basis in which case the employer shall grant the required 13th
month pay to such workers.
However, the Revised Guidelines as well as the Rules and Regulations identify those
workers who fall under the piece-rate category as those who are paid a standard
amount for every piece or unit of work produced that is more or less regularly
replicated, without regard to the time spent in producing the same.
Also, the SC considered that, in terminating the employees for abandonment of
work, Empire failed to serve to the employees a written notice of termination (as
required by the Two-Notice rule and Section 2, Rule XIV, Book V of the Omnibus
Rules), violating the employees’ right to security of tenure and the constitutional
right to due process.

They should also be paid for overtime pay, even though Sec. 2(e), Rule I, Book III
of the Implementing Rules states that:

“…workers who are paid by results including those who are paid on piece-
work, takay, pakiao, or task basis, if their output rates are in accordance
with the standards prescribed under Sec. 8, Rule VII, Book III, of these
regulations, or where such rates have been fixed by the Secretary of Labor
in accordance with the aforesaid section, are not entitled to receive overtime
pay.”

In this case, Empire Foods did not allege that they adhered to the standards set forth
in Sec. 8, Rule VII, Book III, nor with the rates prescribed by the Secretary of Labor.
Therefore, even though they are piece workers, they are entitled to overtime pay.

Abandonment of Work

1. With regard to the issue of abandonment of work, the SC cited the Office of
Solicitor General’s observations:

In finding that petitioner employees abandoned their work, the Labor

Arbiter and the NLRC relied on the testimony of Security Guard Rolando
Cairo that on January 21, 1991, petitioners refused to work. As a result of
their failure to work, the cheese curls ready for repacking on said date were
spoiled…

… The failure to work for one day, which resulted in the spoilage of cheese
curls does not amount to abandonment of work. In fact two (2) days after
the reported abandonment of work or on January 23, 1991, petitioners filed
a complaint for, among others, unfair labor practice, illegal lockout and/or
illegal dismissal.

2. Furthermore, the SC stressed that the burden of proving the existence of just cause
for dismissing an employee, such as abandonment, rests on the employer. According
to the SC, Empire Foods failed to discharge this burden as basis for dismissing the
employees.
23
LABOR1 | ATTY. MARLON MANUEL

24

10. DAVID v. MACASIO (tin)
2 Jul. 2014 | Brion, J. | Coverage - “pakyaw” or task basis
PETITIONER: ARIEL L. DAVID, doing business under the name and style
"YIELS HOG DEALER"
RESPONDENTS: JOHN G. MACASIO
SUMMARY: Macasio filed before the LA a complaint against petitioner Ariel L.
David -- doing business under the name and style "Yiels Hog Dealer," -- for non-
payment of overtime pay, holiday pay, and 13th month pay. Macasio alleged before
the LA 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
₱700.00, and (3) approved and disapproved his leaves. In his defense, David claimed
that he hired Macasio as a butcher/chopper merely on “pakyaw” or task basis, 5 i.e.
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 ₱700.00 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.
Thus, Macasio is not entitled to overtime pay, holiday pay, and 13th month pay.
LA dismissed Macasio’s complaint for lack of merit. Upon appeal to the NLRC, the
same was denied. CA reversed. Hence, this petition. In this petition, David asserts
that Macasio’s engagement was on a "pakyaw" or task basis. Hence, the latter is
excluded from the coverage of holiday, SIL and 13th month pay. Also, he posits that
because he engaged Macasio on "pakyaw" or task basis then no employer-employee
relationship exists between them.
(1) Whether an employer-employee relationship exists between David and
Macasio. -- YES. The existence of employment relationship between the parties is
determined by applying the "four-fold" test. Engagement on "pakyaw" or task basis
does not characterize the relationship that may exist between the parties, i.e., whether
5 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.
● In a task-basis work, the emphasis is on the task itself, in the sense that payment is reckoned in
terms of completion of the work, not in terms of the number of time spent in the completion of
work.
● Once the work or task is completed, the worker receives a fixed amount as wage, without
regard to the standard measurements of time generally used in pay computation.
LABOR1 | ATTY. MARLON MANUEL
one of employment or independent contractorship. "Pakyaw" or task basis is simply a
method of pay computation. Employing the control test, we find that such a
relationship exists in the present case.
(2) Whether Macasio is entitled to holiday, SIL and 13th month pay. -- YES to
holiday and SIL pay; NO to 13th month pay. To resolve the issue on whether
Macasio is entitled to overtime pay, holiday pay, and 13th month pay, the Court re-
visited the provisions governing Service Incentive Leave (SIL) and holiday pay. (SC
gave a very long discussion on this [Ratio 11-22], but the bottomline is:) the
payment of an employee on task or pakyaw basis alone is insufficient to exclude
one from the coverage of SIL and holiday pay. They are exempted from the
coverage only if they qualify as "field personnel." In determining whether workers
engaged on "pakyaw" or task basis" is entitled to holiday and SIL pay, the presence
(or absence) of employer supervision as regards the worker’s time and performance
is the key. If the worker is simply engaged on pakyaw or task basis, then the general
rule is that he is entitled to a holiday pay and SIL pay unless exempted from the
exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL
pay) of the Labor Code. In this case, Macasio does not fall under the classification of
"field personnel." He regularly performed his duties at David’s principal place of
business; his actual hours of work could be determined with reasonable certainty; and
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 13th month pay, Macasio is not entitled to receive such. Section 3
(e) of the IRR P.D. No. 85154 (governing law of 13th month pay) provides that
"employers of those who are paid on xxx 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.
DOCTRINE: In determining whether workers engaged on "pakyaw" or task basis"
is entitled to holiday and SIL pay, the presence (or absence) of employer supervision
as regards the worker’s time and performance is the key. If the worker is simply
engaged on pakyaw or task basis, then the general rule is that he is entitled to a
holiday pay and SIL pay unless exempted from the exceptions specifically provided
under Article 94 (holiday pay) and Article 95 (SIL pay) of the Labor Code.
25

FACTS:
1. In January 2009, Macasio filed before the LA a complaint against petitioner
Ariel L. David -- doing business under the name and style "Yiels Hog
Dealer," -- for non-payment of overtime pay, holiday pay and 13th month
pay. He also claimed payment for moral and exemplary damages and
attorney’s fees. Macasio also claimed payment for service incentive leave
(SIL).
2. Macasio alleged before the LA that:
a. he had been working as a butcher for David since January 6, 1995.
b. 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 ₱700.00, which was
increased from ₱600.00 in 2007, ₱500.00 in 2006 and ₱400.00 in
2005; and (3) approved and disapproved his leaves.
c. David owned the hogs delivered for chopping, as well as the work
tools and implements; the latter also rented the workplace.
d. David employs about twenty-five (25) butchers and delivery
drivers.
3. In his defense, David claimed that:
a. he started his hog dealer business in 2005 and that he only has ten
employees.
b. 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 pursuant to the provisions of the Implementing
Rules and Regulations (IRR) of the Labor Code.
c. 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 ₱700.00 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.
4. David claims that Macasio was not his employee as he hired the latter on
"pakyaw" or task basis. He also claimed that he issued the Certificate of
Employment, upon Macasio’s request, only for overseas employment
purposes.
LABOR1 | ATTY. MARLON MANUEL
5. LA dismissed Macasio’s complaint for lack of merit.
a. The LA gave credence to David’s claim that he engaged Macasio
on "pakyaw" or task basis. The LA noted the following facts to
support this finding: (1) Macasio received the fixed amount of
₱700.00 for every work done, regardless of the number of hours
that he spent in completing the task and of the volume or number
of hogs that he had to chop per engagement; (2) Macasio usually
worked for only four hours, beginning from 10:00 p.m. up to 2:00
a.m. of the following day; and (3) the ₱700.00 fixed wage far
exceeds the then prevailing daily minimum wage of ₱382.00.
b. The LA added that the nature of David’s business as hog dealer
supports this "pakyaw" or task basis arrangement.
c. The LA concluded that as Macasio was engaged on "pakyaw" or
task basis, he is not entitled to overtime, holiday, SIL and 13th
month pay.
6. The NLRC affirmed LA's ruling.
7. 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
following the doctrine laid down in Serrano v. Severino Santos Transit.
a. 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."
b. 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.
c. 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.
d. Accordingly, the CA awarded Macasio’s claim for holiday, SIL
and 13th month pay for three years, with 10% attorney’s fees on
26

the total monetary award. The CA, however, denied Macasio’s
claim for moral and exemplary damages for lack of basis.
8. David then filed this petition.
a. David maintains that Macasio’s engagement was on a "pakyaw" or
task basis. Hence, the latter is excluded from the coverage of
holiday, SIL and 13th month pay.
b. He adds that he never had any control over the manner by which
Macasio performed his work and he simply looked on to the "end-
result."
c. He also contends that he never compelled Macasio to report for
work and that under their arrangement, Macasio was at liberty to
choose whether to report for work or not as other butchers could
carry out his tasks.
d. In as much as Macasio is a task basis employee – who is paid the
fixed amount of ₱700.00 per engagement regardless of the time
consumed in the performance – David argues that Macasio is not
entitled to the benefits he claims.
e. Also, he posits that because he engaged Macasio on "pakyaw" or
task basis then no employer-employee relationship exists between
them.
ISSUES: Whether Macasio is entitled to holiday, SIL, and 13th month pay.
YES to holiday and SIL pay; NO to 13th month pay.
RATIO:
1. In insisting before this Court that Macasio was not his employee, David
argues that he engaged the latter on "pakyaw" or task basis. Very
noticeably, 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.
2. At the outset, we reject this assertion of the petitioner.
3. 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.
a. Article 97(6) of the Labor Code defines wages as "xxx the
remuneration or earnings, however designated, capable of being
LABOR1 | ATTY. MARLON MANUEL
expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of
calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for
work done or to be done, or for services rendered or to be
rendered[.]"
b. In relation to Article 97(6), Article 101 of the Labor Code speaks
of workers paid by results or those whose pay is calculated in
terms of the quantity or quality of their work output which includes
"pakyaw" work and other non-time work.
4. We find his claim that no employer-employee relationship exists baseless.
Employing the control test, we find that such a relationship exists in the
present case.
5. 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.
Macasio is engaged on "pakyaw" or task basis
6. At this point, we note that all three tribunals – the LA, the NLRC and the
CA – found that Macasio was engaged or paid on "pakyaw" or task basis.
This factual finding binds the Court under the rule that factual findings of
labor tribunals when supported by the established facts and in accord with
the laws, especially when affirmed by the CA, is binding on this Court.
7. 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.
a. In a task-basis work, the emphasis is on the task itself, in the sense
that payment is reckoned in terms of completion of the work, not
in terms of the number of time spent in the completion of work.
b. Once the work or task is completed, the worker receives a fixed
amount as wage, without regard to the standard measurements of
time generally used in pay computation.
27

8. In Macasio’s case, the established facts show that he would usually start his
work at 10:00 p.m. Thereafter, regardless of the total hours that he spent at
the workplace or of the total number of the hogs assigned to him for
chopping, Macasio would receive the fixed amount of ₱700.00 once he had
completed his task. Clearly, these circumstances show a "pakyaw" or task
basis engagement that all three tribunals uniformly found.
9. In sum, the existence of employment relationship between the parties is
determined by applying the "four-fold" test. Engagement on "pakyaw" or
task basis does not determine the parties’ relationship as it is simply a
method of pay computation. Accordingly, Macasio is David’s employee,
albeit engaged on "pakyaw" or task basis.
10. As an employee of David paid on pakyaw or task basis, we now go to the
core issue of whether Macasio is entitled to holiday, 13th month, and SIL
pay. To resolve these issues, we need to re-visit the provisions involved.
Provisions governing SIL and holiday pay
11. Article 82 of the Labor Code provides the exclusions from the coverage of
Title I, Book III of the Labor Code - provisions governing working
conditions and rest periods.
Art. 82. Coverage.— The provisions of [Title I] shall apply to employees in
all establishments and undertakings whether for profit or not, but not to
government employees, managerial employees, field personnel, members of
the family of the employer who are dependent on him for support, domestic
helpers, persons in the personal service of another, and workers who are
paid by results as determined by the Secretary of Labor in appropriate
regulations.
xxx
"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.
LABOR1 | ATTY. MARLON MANUEL
12. Under Article 82, "field personnel" on one hand and "workers who are paid
by results" on the other hand, are not covered by the Title I provisions.
a. The wordings of Article 82 of the Labor Code additionally
categorize workers "paid by results" and "field personnel" as
separate and distinct types of employees who are exempted from
the Title I provisions of the Labor Code.
13. The pertinent portion of Article 94 of the Labor Code and its corresponding
provision in the IRR 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 (10) workers[.]
Xxx
SECTION 1. Coverage. – This Rule shall apply to all employees except:
(e)Field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in the
performance thereof.
14. On the other hand, Article 95 of the Labor Code and its corresponding
provision in the IRR pertinently provides:
Art. 95. Right to service incentive.
(a) Every employee who has rendered at least one year of service shall be
entitled to a yearly service incentive leave of five days with pay.
(b) This provision shall not apply to those who are already enjoying the
benefit herein provided, those enjoying vacation leave with pay of at least
five days and those employed in establishments regularly employing less
than ten employees or in establishments exempted from granting this benefit
by the Secretary of Labor and Employment after considering the viability or
financial condition of such establishment.
15. Under these provisions, the general rule is that holiday and SIL pay
provisions cover all employees. To be excluded from their coverage, an
28

employee must be one of those that these provisions expressly exempt,
strictly in accordance with the exemption.
a. Under the IRR, exemption from the coverage of holiday and SIL
pay refer to "field personnel and other employees whose time and
performance is unsupervised by the employer including those who
are engaged on task or contract basis[.]"
b. Note that unlike Article 82 of the Labor Code, the IRR on holiday
and SIL pay do not exclude employees "engaged on task basis" as
a separate and distinct category from employees classified as "field
personnel." Rather, these employees are altogether merged into
one classification of exempted employees.
16. Because of this difference, it may be argued that the Labor Code may be
interpreted to mean that those who are engaged on task basis, per se, are
excluded from the SIL and holiday payment since this is what the Labor
Code provisions, in contrast with the IRR, strongly suggest. The arguable
interpretation of this rule may be conceded to be within the discretion
granted to the LA and NLRC as the quasi-judicial bodies with expertise on
labor matters.
17. However, as early as 1987 in the case of Cebu Institute of Technology v.
Ople the phrase "those who are engaged on task or contract basis" in the
rule has already been interpreted to mean as follows:
‘[the phrase] should however, be related with "field personnel" applying the
rule on ejusdem generis that general and unlimited terms are restrained and
limited by the particular terms that they follow xxx Clearly, petitioner's
teaching personnel cannot be deemed field personnel which refers "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.’
18. Petitioner's claim that private respondents are not entitled to the service
incentive leave benefit cannot therefore be sustained.
LABOR1 | ATTY. MARLON MANUEL
19. In short, the payment of an employee on task or pakyaw basis alone is
insufficient to exclude one from the coverage of SIL and holiday pay.
a. They are exempted from the coverage of Title I (including the
holiday and SIL pay) only if they qualify as "field personnel."
b. The IRR therefore validly qualifies and limits the general
exclusion of "workers paid by results" found in Article 82 from the
coverage of holiday and SIL pay.
c. This is the only reasonable interpretation since the determination
of excluded workers who are paid by results from the coverage of
Title I is "determined by the Secretary of Labor in appropriate
regulations."
20. The Cebu Institute Technology ruling was reiterated in 2005 in Auto Bus
Transport Systems, Inc., v. Bautista: ‘According to the Implementing Rules,
Service Incentive Leave shall not apply to employees classified as "field
personnel." The phrase "other employees whose performance is
unsupervised by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the interpretation of the
definition of field personnel under the Labor Code as those "whose actual
hours of work in the field cannot be determined with reasonable certainty."’
21. The Autobus ruling was in turn the basis of Serrano v. Santos Transit which
the CA cited in support of granting Macasio’s petition.
22. In contrast and in clear departure from settled case law, the LA and the
NLRC still interpreted the Labor Code provisions and the IRR as exempting
an employee from the coverage of Title I of the Labor Code based simply
and solely on the mode of payment of an employee.
a. The NLRC’s utter disregard of this consistent jurisprudential ruling
is a clear act of grave abuse of discretion.
b. In other words, by dismissing Macasio’s complaint without
considering whether Macasio was a "field personnel" or not, the
NLRC proceeded based on a significantly incomplete
consideration of the case. This action clearly smacks of grave
abuse of discretion.
29
 LABOR1 | ATTY. MARLON MANUEL

23. In short, in determining whether workers engaged on "pakyaw" or task
basis" is entitled to holiday and SIL pay, the presence (or absence) of
employer supervision as regards the worker’s time and performance is the
key: if the worker is simply engaged on pakyaw or task basis, then the
general rule is that he is entitled to a holiday pay and SIL pay unless
exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of the Labor Code.
a. However, if the worker engaged on pakyaw or task basis also falls
within the meaning of "field personnel" under the law, then he is
not entitled to these monetary benefits.
specific work, irrespective of the time consumed in the
performance thereof" are exempted.
31. Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section
3(e) of the Rules and Regulations Implementing PD No. 851 exempts
employees "paid on task basis" without any reference to "field personnel."
a. 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.

Macasio does not fall under the classification of "field personnel" 32. WHEREFORE, in light of these considerations, we hereby PARTIALLY
24. Macasio regularly performed his duties at David’s principal place of GRANT the petition insofar as the payment of 13th month pay to
business; respondent is concerned. In all other aspects, we AFFIRM the decision
25. Second, his actual hours of work could be determined with reasonable dated November 22, 2010 and the resolution dated January 31, 2011 of the
certainty; and, Court of Appeals in CA-G.R. SP No. 116003.
26. Third, David supervised his time and performance of duties. Since Macasio
cannot be considered a "field personnel," then he is not exempted from the SEPARATE OPINIONS: --
grant of holiday, SIL pay even as he was engaged on "pakyaw" or task CONCURRING: --
basis.
27. Not being a "field personnel," we find the CA to be legally correct when it
reversed the NLRC’s ruling dismissing Macasio’s complaint for holiday
and SIL pay for having been rendered with grave abuse of discretion.

Entitlement to 13th month pay

28. With respect to the payment of 13th month pay however, we find that the
CA legally erred in finding that the NLRC gravely abused its discretion in
denying this benefit to Macasio.
29. The governing law on 13th month pay is PD No. 851.53
30. 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. No.
85154 enumerates the exemptions from the coverage of 13th month pay
benefits.
a. Under Section 3(e), "employers of those who are paid on xxx task
basis, and those who are paid a fixed amount for performing a

30

11. Apex Mining Company, Inc. v. NLRC (Patrick)
April 22, 1991 | Ponente | Working Condition – Coverage, househelper in the staff
houses of an industrial company is a regular employee of the firm
PETITIONER: APEX MINING COMPANY, INC
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION and
SINCLITICA CANDIDO
SUMMARY: Candido was employed by Apex Mining Company, Inc. on May
18, 1973 to perform laundry services at its staff house located at, Davao del
Norte. While she was attending to her assigned task and she was hanging her
laundry, she accidentally slipped and hit her back on a stone. She reported the
accident to her immediate supervisor de la Rosa and to the personnel officer,
Asirit. As a result of the accident she was not able to continue with her work.
She was permitted to go on leave for medication. De la Rosa offered her the
amount of P2,000.00 which was increased to P5,000.00 to persuade her to quit
her job, but she refused the offer and preferred to return to work. APEX did not
allow her to return to work and dismissed her. CANDIDO filed a request for
assistance with the DOLE. The labor rendered a decision ordering APEX to pay
a total of P55,161.42. APEX appealed to National Labor Relations Commission
(NLRC), but dismissed the appeal for lack of merit and affirming the appealed
decision. A motion for reconsideration was denied in a resolution of the NLRC.
ISSUE: WON the househelper in the staff houses of an industrial company is a
regular employee of the said firm? – YES, they are Regular employees, not
domestic servant as defined in RULE XIII Sec. 1(b) of Labor Code.
HELD: 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.
LABOR1 | ATTY. MARLON MANUEL
DOCTRINE: 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, Sec. l(b), Book 3 of Labor Code, as amended.
FACTS:
1. Sinclitica Candido (CANDIDO) was employed by Apex Mining Company,
Inc. (APEX) on May 18, 1973 to perform laundry services at its staff house
located at Masara, Maco, Davao del Norte. She was paid on a piece rate
which was changed to a monthly basis at P250.00 a month which was
ultimately increased to P575.00 a month.
2. On December 18, 1987, while she was attending to her assigned task and
she was hanging her laundry, she accidentally slipped and hit her back on a
stone. She reported the accident to her immediate supervisor Mila de la
Rosa and to the personnel officer, Florendo D. Asirit. As a result of the
accident she was not able to continue with her work. She was permitted to
go on leave for medication. De la Rosa offered her the amount of P2,000.00
which was eventually increased to P5,000.00 to persuade her to quit her job,
but she refused the offer and preferred to return to work. APEX did not
allow her to return to work and dismissed her.
3. On March 11, 1988, CANDIDO filed a request for assistance with the
Department of Labor and Employment. The labor rendered a decision
ordering APEX to pay Salary Differential — P16,289.20, Emergency
Living Allowance — 12,430.00, 13th Month Pay Differential — 1,322.32,
Separation Pay (One-month for every year of service [1973-1988]) —
25,119.30 or in the total of P55,161.42.
4. APEX appealed to National Labor Relations Commission (NLRC), but
dismissed the appeal for lack of merit and affirming the appealed decision.
A motion for reconsideration was denied in a resolution of the NLRC.
ISSUES:
31

1. WON the househelper in the staff houses of an industrial company is a
regular employee of the said firm? – YES, they are Regular employees,
not domestic servant as defined under RULE XIII Sec. 1(b) of Labor
Code
RULING: Petition is DISMISSED and the appealed decision and resolution of
NLRC are hereby AFFIRMED
RATIO:
1. 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."
2. The 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 other similar househelps.
3. The definition cannot be interpreted to include househelp or laundry
women working in staffhouses of a company, like petitioner who
attends to the needs of the company’s guest and other persons availing
of said facilities. By the same token, it cannot be considered to extend to
the driver, houseboy, or gardener exclusively working in the company, the
staffhouses and its premises. They may not be considered as within the
meaning of a "househelper" or "domestic servant" as above-defined by law.
4. 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
LABOR1 | ATTY. MARLON MANUEL
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.
5. 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, Sec. l(b), Book 3 of
Labor Code, as amended.
6. APEX denies having illegally dismissed private respondent and maintains
that respondent abandoned her work. This argument notwithstanding, there
is enough evidence to show that because of an accident which took place
while CANDIDO was performing her laundry services, she was not able to
work and was ultimately separated from the service. She is, therefore,
entitled to appropriate relief as a regular employee of APEX. CANDIDO
appears not to be interested in returning to her work for valid reasons, the
payment of separation pay to her is in order.
SEPARATE OPINIONS: NONE
CONCURRING:
32

12. Manila Terminal Co. v. CIR (Gp)
July 16, 1952 | Paras, CJ. | Hours of Work
PETITIONER: Manila Terminal Company, Inc.
RESPONDENTS: The Court of Industrial Relations and Manila Terminal
Relief and Mutual Aid Association
SUMMARY:
On Sept. 1, 1945, Manila Terminal Company, Inc. (MTCI) undertook arrastre
service in some of the piers in Manila’s Port Area at the request and under the
control of the US Army. MTCI hired some 30 men as watchmen on 12-hour
shifts at a compensation of P3/day for the day shift; P6/pay for the night shift.
MTCI began the postwar operation of arrastre service at the request and under
the control of the Bureau of Customs (BOC), by virtue of a contract entered into
with the PH gov’t.
The watchmen of MTCI continued in the service with a number of substitution
and additions, their salaries having been raised during the month of Feb. to
P4/day for the day shift and P6.25/day for the night shift. Jimenez, a member of
the Manila Terminal Relief and Mutual Aid Association (MTRMAA), sent a
letter to the Department of Labor, requesting that the matter of overtime pay be
investigated, but nothing was done by the Department. Cruz and five other
employees, also members of MTRMAA, filed a 5-point demand with the
Department of Labor, including overtime pay, but the Department again failed
to do anything about the matter. Then, MTCI instituted the system of strict 8-
hour shifts.
MTRMAA filed an amended petition with the CIR praying, among others, that
MTCI be ordered to pay to its watchmen or police force overtime pay from the
commencement of their employment. Judge Jimenez of CIR, in his decision,
while dismissing other demands of MTRMAA for lack of jurisdiction, ordered
MTCI to pay to its police force. With reference to the pay for OT service after
the watchmen had been integrated into the MHP, Judge Yanson ruled that the
court has no jurisdiction because it affects the BOC, an instrumentality of the
gov’t having no independent personality and which cannot be sued without the
LABOR1 | ATTY. MARLON MANUEL
consent of the State. MTCI filed an MR. MTRMAA also filed an MR in so far
as its other demands were dismissed.
In a separate decisive opinion, Judge Lanting concurred in the dismissal of other
demands of MTRMAA. With respect to OT compensation, Judge Lanting
Ruled: “Decision under review should be affirmed in so far as it grants
compensation for OT on regular; as to the compensation for work on Sundays
and legal holidays, MTCI should pay to its watchmen the compensation that
corresponds to the OT at the regular rate only, that is, without additional
amount; the watchmen are not entitled to night differential pay for past services,
and therefore the decision should be revered with respect thereto.”
The issue in this case is whether MTCI is liable to pay the OT compensation of
its watchmen.
The Court answered in the affirmative. The important point stressed by MTCI is
that the contract between it and MTRMAA upon the commencement of the
employment of its watchmen was to effect that the latter were to work 12-hours
a day at certain rates of pay, including OT compensation. Record does not bear
out these allegations. MTCI has relied merely on the facts that its watchmen had
worked on 12-hours shifts at specific wages per day and the no complaint was
made about the matter until on March 28, 1947 and April 29, 1947.
As said in Floyd, “A contract of employment, which provides for a weekly
wage for a specified number of hours, sufficient to cover both the statutory
minimum wage and OT compensation, if computed on the basis of the statutory
minimum, and which makes no provision for a fixed hourly rate or that the
weekly wage includes overtime compensation, does not meet the requirements
of the Act." Moreover, after MTCI had instituted the strict 8-hour shifts, no
reduction was made in the salaries which its watchmen received under the 12-
hour arrangement.
As admitted by MTCI, “when the members of the MTRMAA were placed on
strict 8-hour shifts, the lowest salary of all the members of MTRMAA was
P165 a month, or P5.50 daily, for both day and night shifts." Although it may be
argued that the salary for the night shift was somewhat lessened, the fact that
the rate for the day shift was increased in a sense tends to militate against the
33
 LABOR1 | ATTY. MARLON MANUEL

contention that the salaries given during the 12-hour shifts included OT 1. On Sept. 1, 1945, Manila Terminal Company, Inc. (MTCI) undertook
compensation. MTCI’s allegation that MTRMAA had acquiesced in the 12- arrastre service in some of the piers in Manila’s Port Area at the request and
hour shift for more than 18 months, is not accurate, because the watchmen under the control of the US Army.
involved in this case did not enter the service of MTCI on Sept. 1, 1945. 2. MTCI hired some 30 men as watchmen on 12-hour shifts at a compensation
of P3/day for the day shift; P6/pay for the night shift
3. On Feb. 1, 1946, MTCI began the postwar operation of arrastre service at
As Judge Lanting found, "only one of them entered the service of the company
the request and under the control of the Bureau of Customs (BOC), by
on said date, very few during the rest of said month, some during the rest of that
virtue of a contract entered into with the PH gov’t
year (1945) and in 1946, and very many in 1947, 1948 and 1949." MTRMAA
4. The watchmen of MTCI continued in the service with a number of
cannot be said to have impliedly waived the right to OT compensation, for the
substitution and additions, their salaries having been raised during the
obvious reason that they could not have expressly waived it. The principle of
month of Feb. to P4/day for the day shift and P6.25/day for the night shift
estoppel and laches cannot well be invoked against the MTRMAA for the
5. Jimenez, a member of the Manila Terminal Relief and Mutual Aid
following reasons: (a) it would be contrary to the spirit of the 8-Hour Labor
Association (MTRMAA), sent a letter to the Department of Labor,
Law, under which, as already seen, the laborers cannot waive their right to extra
requesting that the matter of overtime pay be investigated, but nothing was
compensation; (b) the law principally obligates the employer to observe it, so
done by the Department
much so that it punishes the employer for its violation and leaves the employee
6. Cruz and five other employees, also members of MTRMAA, filed a 5-point
or laborer free and blameless; and (c) the employee or laborer is in such a
demand with the Department of Labor, including overtime pay, but the
disadvantageous position as to be naturally reluctant or even apprehensive in
Department again failed to do anything about the matter
asserting any claim which may cause the employer to devise a way for
7. MTCI instituted the system of strict 8-hour shifts
exercising his right to terminate the employment. If the principle of estoppel
8. Then, the Manila Port Terminal Police Association, not registered in
and laches is to be applied, it may bring about a situation, whereby the
accordance with the provisions of Commonwealth Act No. 213, filed a
employee or laborer, who cannot expressly renounce their right to extra
petition with CIR
compensation under the 8-Hour Labor Law, may be compelled to accomplish
9. On July 16, 1947, MTRMAA was organized for the first time, having been
the same thing by mere silence or lapse of time, thereby frustrating the purpose
granted certificated no. 375 by the Department of Labor. On July 28, 1947,
of the law by indirection
MTRMAA filed an amended petition with the CIR praying, among others,
DOCTRINE:
that MTCI be ordered to pay to its watchmen or police force overtime pay
Principle of estoppel and laches cannot be invoked for the following reasons:
from the commencement of their employment
(a) it would be contrary to the spirit of the 8-Hour Labor Law, under which, as
10. On May 9, 1949, by virtue of Customs Administrative Order No. 81, and
already seen, the laborers cannot waive their right to extra compensation; (b) the
E.O. No. 228, the entire police force of MTCI was consolidated with the
law principally obligates the employer to observe it, so much so that it punishes
Manila Harbor Police (MHP) of the Customs Patrol Service, a gov’t. agency
the employer for its violation and leaves the employee or laborer free and
under the exclusive control of the Commissioner of Customs and the
blameless; and (c) the employee or laborer is in such a disadvantageous position
Secretary of Finance
as to be naturally reluctant or even apprehensive in asserting any claim which
11. Judge Jimenez of CIR, in his decision, while dismissing other demands of
may cause the employer to devise a way for exercising his right to terminate the
MTRMAA for lack of jurisdiction, ordered MTCI to pay to its police force
employment.
1. Regular or base pay corresponding to 4-hours overtime + 25%
thereof as addition overtime compensation from Sept. 1, 1945 –
FACTS:
May 24, 1947;

34

2. Additional compensation of 25% to those who worked from 6pm –
6pm during the same period;
3. Additional compensation of 50% for work performed on Sundays
and legal holidays during the same period;
4. Additional compensation of 50% for work performed on Sundays
and legal holidays from May 24, 1947 – May 9, 1949; and
5. Additional compensation of 25% for work performed at night from
May 24, 1947 – May 9, 1949
12. With reference to the pay for OT service after the watchmen had been
integrated into the MHP, Judge Yanson ruled that the court has no
jurisdiction because it affects the BOC, an instrumentality of the gov’t
having no independent personality and which cannot be sued without the
consent of the State
13. MTCI filed an MR. MTRMAA also filed an MR in so far as its other
demands were dismissed
14. Judge Yanson, concurred in by Judge Bautista, promulgated a resolution
denying both MRs
15. Presiding Judge Roldan, in a separate opinion, concurred in by Judge
Castillo, agreed that with the decision of Judge Yanson, as to the dismissal
of other demands of MTRMAA but dissented therefrom as to granting of
OT pay
16. In a separate decisive opinion, Judge Lanting concurred in the dismissal of
other demands of MTRMAA. With respect to OT compensation, Judge
Lanting Ruled:
1. Decision under review should be affirmed in so far as it grants
compensation for OT on regular
2. As to the compensation for work on Sundays and legal holidays,
MTCI should pay to its watchmen the compensation that
corresponds to the OT at the regular rate only, that is, without
additional amount
3. The watchmen are not entitled to night differential pay for past
services, and therefore the decision should be revered with respect
thereto
17. Hence, this appeal. MTCI’s contentions may be summed up in the
following propositions:
1. CIR has no jurisdiction to render a money judgment involving
obligations in arrears
LABOR1 | ATTY. MARLON MANUEL
2. Agreement under which its police force were paid certain specific
wages for 12-hour shifts, included OT compensation
3. MTRMAA is barred from recovery by estoppel and laches
4. The nullity or invalidity of the employment contract precludes any
recovery by MTRMAA
5. Commonwealth Act No. 4444 does not authorize recovery of back
OT pay
ISSUES:
1. Whether CIR has jurisdiction to award a money judgment – YES
2. Whether MTCI is liable for OT wages – YES
1. Whether MTRMAA is barred by estoppel and laches - NO
RATIO:
First Issue:
1. The contention that the CIR has no jurisdiction to award a money judgment
was already overruled by the Court in Detective & Protective Bureau, Inc.
in this wise:
1. “… We believe that under Commonwealth Act No. 103, the Court
is empowered to make the order for the purpose of settling disputes
between the employer and employee. As a matter fact this Court
has confirmed an order of the CIR requiring the Elks Club to pay
its employees a certain sum of money as OT back wages…”
Second Issue:
1. The important point stressed by MTCI is that the contract between it and
MTRMAA upon the commencement of the employment of its watchmen
was to effect that the latter were to work 12-hours a day at certain rates of
pay, including OT compensation
2. Record does not bear out these allegations. MTCI has relied merely on the
facts that its watchmen had worked on 12-hours shifts at specific wages per
day and the no complaint was made about the matter until on March 28,
1947 and April 29, 1947
3. In times of acute unemployment, the people, urged by the instinct of self-
preservation, go from place to place and from office to office in search for
any employment, regardless of its terms and conditions, their main concern
in the first place being admission to some work
35

4. MTCI’s watchmen must have railroaded themselves into their employment,
happy in though that they found themselves required to work for 12-hours a
day
5. True, there was an arrangement to work, but can it fairly be supposed that
they had the freedom to bargain in any way, much less to insist in the
observance of the 8-hour Labor Law?
6. As said in Floyd, “A contract of employment, which provides for a weekly
wage for a specified number of hours, sufficient to cover both the statutory
minimum wage and OT compensation, if computed on the basis of the
statutory minimum, and which makes no provision for a fixed hourly rate or
that the weekly wage includes overtime compensation, does not meet the
requirements of the Act.".
7. Moreover, after MTCI had instituted the strict 8-hour shifts, no reduction
was made in the salaries which its watchmen received under the 12-hour
arrangement
8. As admitted by MTCI, “when the members of the MTRMAA were placed
on strict 8-hour shifts, the lowest salary of all the members of MTRMAA
was P165 a month, or P5.50 daily, for both day and night shifts."
9. Although it may be argued that the salary for the night shift was somewhat
lessened, the fact that the rate for the day shift was increased in a sense
tends to militate against the contention that the salaries given during the 12-
hour shifts included OT compensation
10. MTCI’s allegation that MTRMAA had acquiesced in the 12-hour shift for
more than 18 months, is not accurate, because the watchmen involved in
this case did not enter the service of MTCI on Sept. 1, 1945
11. As Judge Lanting found, "only one of them entered the service of the
company on said date, very few during the rest of said month, some during
the rest of that year (1945) and in 1946, and very many in 1947, 1948 and
1949."
12. Case at bar is quite on all fours with the case of Detective & Protective
Bureau, Inc. vs. CIR and United Employees Welfare Association. The only
difference is that, while in said case the employees concerned were paid
monthly salaries, in the case now before us the wages were computed daily
13. MTRMAA cannot be said to have impliedly waived the right to OT
compensation, for the obvious reason that they could not have expressly
waived it
LABOR1 | ATTY. MARLON MANUEL
14. The principle of estoppel and laches cannot well be invoked against the
MTRMAA:
1. In the first place, it would be contrary to the spirit of the 8-Hour
Labor Law, under which, as already seen, the laborers cannot
waive their right to extra compensation
2. In the second place, the law principally obligates the employer to
observe it, so much so that it punishes the employer for its
violation and leaves the employee or laborer free and blameless
3. In the third place, the employee or laborer is in such a
disadvantageous position as to be naturally reluctant or even
apprehensive in asserting any claim which may cause the employer
to devise a way for exercising his right to terminate the
employment
15. If the principle of estoppel and laches is to be applied, it may bring about a
situation, whereby the employee or laborer, who cannot expressly renounce
their right to extra compensation under the 8-Hour Labor Law, may be
compelled to accomplish the same thing by mere silence or lapse of time,
thereby frustrating the purpose of the law by indirection
Wherefore, the appealed decision, in the form voted by Judge Lanting, is affirmed, it
being understood that the petitioner's watchmen will be entitled to extra
compensation only from the dates they respectively entered the service of the
petitioner, hereafter to be duly determined by the Court of Industrial Relations. So
ordered, without costs.
SEPARATE OPINIONS:
CONCURRING:
36

13. San Juan De Dios Hospital Associtation v. NLRC (Lei)
November 28, 1997 | Francisco,, J. | Coverage - “pakyaw” or task basis
PETITIONER: SAN JUAN DE DIOS HOSPITAL EMPLOYEES
ASSOCIATION-AFW/MA. CONSUELO MAQUILING, LEONARDO
MARTINEZ, DOMINGO ELA, JR., RODOLFO CALUCIN, JR., PERLA
MENDOZA, REX RAPHAEL REYES, ROGELIO BELMONTE, AND 375
OTHER EMPLOYEE-UNION MEMBERS
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION, AND
SAN JUAN DE DIOS HOSPITAL
SUMMARY: The officers and members of San Juan De Dios Hospital
Employees Association, herein petitioners, sent a letter requesting and pleading
for the expeditious implementation and payment by respondent San Juan De
Dios Hospital of the “40 HOURS/5-DAY WORKWEEK with compensable
weekly two (2) days off” provided for by Republic Act (RA) 5901 (An Act
prescribing 40 hours a week of labor for government and private hospitals or
clinic personnel) as clarified for enforcement by the Secretary of Labors Policy
Instructions No. 54. Respondent hospital, however, failed to give a favorable
response; thus, petitioners filed a complaint regarding their claims for statutory
benefits under the above-cited law and policy issuance.
The Labor Arbiter dismissed the complaint. Petitioners appealed before public
respondent National Labor Relations Commission (NLRC), which affirmed the
Labor Arbiters decision. Hence, the petitioners filed for petition for certiorari,
ascribing grave abuse of discretion on the part of NLRC in concluding that
Policy Instructions No. 54 proceeds from a wrong interpretation of RA 5901and
Article 83 of the Labor Code.
ISSUE: Whether Policy Instructions No. 54 issued by the Labor Secretary is
valid.
HELD and DOCTRINE: It is invalid. The Policy Instruction No. 54 relies on
and seeks to implement RA 5901, otherwise known as “An Act Prescribing
Forty Hours a Week of Labor for Government and Private Hospitals or Clinic
Personnel,” but reliance to this RA is misplaced since it has long been repealed
with the passage of the Labor Code. Accordingly, only Article 83 of the Labor
Code which appears to have substantially incorporated or reproduced the basic
LABOR1 | ATTY. MARLON MANUEL
provisions of RA 5901 may support Policy Instructions No. 54 on which the
latter’s validity may be gauged. What Article 83 merely provides are: (1) the
regular office hour of eight hours a day, five days per week for health personnel,
and (2) where the exigencies of service require that health personnel work for six
days or forty-eight hours then such health personnel shall be entitled to an
additional compensation of at least thirty percent of their regular wage for work
on the sixth day. There is nothing in the law that supports the Secretary of
Labor’s assertion that “personnel in subject hospitals and clinics are entitled to a
full weekly wage for seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek.” Further, petitioners' position is also negated
by the very rules and regulations promulgated by the Bureau of Labor Standards
which implement RA 5901. Pertinent portions of the implementing rules
provided in Sections 1, 7, and 15 of the said Act.
FACTS:
1. The rank-and-file employee-union officers and members of San Juan De
Dios Hospital Employees Association (the Association), sent on July 08,
1991, a four (4)-page letter with attached support signatures x x x
requesting and pleading for the expeditious implementation and payment by
respondent Juan De Dios Hospital "of the 40 HOURS/5-DAY
WORKWEEK with compensable weekly two (2) days off provided for by
Republic Act 5901 as clarified for enforcement by the Secretary of Labors
Policy Instructions No. 54 dated April 12, 1988.
2. San Juan De Dios Hospital (San Juan Hospital) failed to give a favorable
response; thus, the Association filed a complaint regarding their claims for
statutory benefits under the above-cited law and policy issuance, docketed
as NLRC NCR Case No. 00-08-04815-91.
3. On February 26, 1992, the Labor Arbiter dismissed the complaint.
Petitioners appealed before public respondent National Labor Relations
Commission (NLRC), docketed as NLRC NCR CA 003028-92, which
affirmed the Labor Arbiters decision. The Association’s subsequent motion
for reconsideration was denied; hence, this petition under Rule 65 of the
Rules of Court ascribing grave abuse of discretion on the part of NLRC in
37

concluding that Policy Instructions No. 54 proceeds from a wrong
interpretation of RA 5901 and Article 83 of the Labor Code.
ISSUES: Whether or not Policy Instructions No. 54 issued by then Labor
Secretary (now Senator) Franklin M. Drilon is valid? NO.
RATIO:
1. The policy reads:
Policy Instruction No. 54
To: All Concerned
Subject: Working Hours and Compensation of Hospital/Clinic Personnel
This issuance clarifies the enforcement policy of this Department on the working
hours and compensation of personnel employed by hospital/clinics with a bed
capacity of 100 or more and those located in cities and municipalities with a
population of one million or more.
Republic Act 5901 took effect on 21 June 1969 prescribes a 40-hour/5 day work
week for hospital/clinic personnel. At the same time, the Act prohibits the
diminution of the compensation of these workers who would suffer a reduction in
their weekly wage by reason of the shortened workweek prescribed by the Act. In
effect, RA 5901 requires that the covered hospital workers who used to work seven
(7) days a week should be paid for such number of days for working only 5 days or
40 hours a week.
The evident intention of RA 5901 is to reduce the number of hospital personnel,
considering the nature of their work, and at the same time guarantee the payment to
them of a full weekly wage for seven (7) days. This is quite clear in the Exemplary
Note of RA 5901 which states:
As compared with the other employees and laborers, these hospital and health clinic
personnel are over-worked despite the fact that their duties are more delicate in
nature. If we offer them better working conditions, it is believed that the brain drain,
that our country suffers nowadays as far as these personnel are concerned will be
considerably lessened. The fact that these hospitals and health clinics personnel
perform duties which are directly concerned with the health and lives of our people
does not mean that they should work for a longer period than most employees and
LABOR1 | ATTY. MARLON MANUEL
laborers. They are also entitled to as much rest as other workers. Making them work
longer than is necessary may endanger, rather than protect the health of their
patients. Besides, they are not receiving better pay than the other workers. Therefore,
it is just and fair that they may be made to enjoy the privileges of equal working
hours with other workers except those excepted by law. (Sixth Congress of the
Republic of the Philippines, Third Session, House of Representatives, H. No. 16630)
The Labor Code in its Article 83 adopts and incorporates the basic provisions of RA
5901 and retains its spirit and intent which is to shorten the workweek of covered
hospital personnel and at the same time assure them of a full weekly wage.
Consistent with such spirit and intent, it is the position of the Department that
personnel in subject hospital and clinics are entitled to a full weekly wage for seven
(7) days they have completed the 40-hours/5-day workweek in any given workweek.
2. The Court noted that Policy Instruction No. 54 relies and purports to
implement Republic Act No. 5901, otherwise known as An Act Prescribing
Forty Hours A Week Of Labor For Government and Private Hospitals Or
Clinic Personnel, enacted on June 21, 1969.
3. Reliance on Republic Act No. 5901, however, is misplaced for the said
statute, as correctly ruled by respondent NLRC, has long been repealed with
the passage of the Labor Code on May 1, 1974, Article 302 of which
explicitly provides: All labor laws not adopted as part of this Code
either directly or by reference are hereby repealed. All provisions of
existing laws, orders, decrees, rules and regulations inconsistent
herewith are likewise repealed.
4. Accordingly, only Article 83 of the Labor Code which appears to have
substantially incorporated or reproduced the basic provisions of Republic
Act No. 5901 may support Policy Instructions No. 54 on which the latters
validity may be gauged.
5. Article 83 of the Labor Code states:
Art. 83. Normal Hours of Work. -- The normal hours of work of any
employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population of at least
one million (1,000,000) or in hospitals and clinics with a bed capacity of at
least one hundred (100) shall hold regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive of time for meals, except where the
38

exigencies of the service require that such personnel work for six (6) days
or forty-eight (48) hours, in which case they shall be entitled to an
additional compensation of at least thirty per cent (30%) of their regular
wage for work on the sixth day. For purposes of this Article, health
personnel shall include: resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all other hospital or
clinic personnel. (Underscoring supplied)
6. A cursory reading of Article 83 of the Labor Code betrays petitioners
position that hospital employees are entitled to a full weekly salary with
paid two (2) days off if they have completed the 40-hour/5-day workweek.
What Article 83 merely provides are: (1) the regular office hour of eight
hours a day, five days per week for health personnel, and (2) where the
exigencies of service require that health personnel work for six days or
forty-eight hours then such health personnel shall be entitled to an
additional compensation of at least thirty percent of their regular wage
for work on the sixth day.
7. There is nothing in the law that supports then Secretary of Labors assertion
that personnel in subject hospitals and clinics are entitled to a full weekly
wage for seven (7) days if they have completed the 40-hour/5-day
workweek in any given workweek. Needless to say, the Secretary of Labor
exceeded his authority by including a two days off with pay in
contravention of the clear mandate of the statute.
8. Indeed, even if we were to subscribe with petitioners erroneous assertion
that Republic Act No. 5901 has neither been amended nor repealed by the
Labor Code, we nevertheless find Policy Instructions No. 54 invalid. A
perusal of Republic Act No. 5901 reveals nothing therein that gives two
days off with pay for health personnel who complete a 40-hour work or 5-
day workweek. In fact, the Explanatory Note of House Bill No. 16630 (later
passed into law as Republic Act No. 5901) explicitly states that the bills
sole purpose is to shorten the working hours of health personnel and not to
dole out a two days off with pay..
9. Further, the Association’s position is also negated by the very rules and
regulations promulgated by the Bureau of Labor Standards which
implement Republic Act No. 5901. Pertinent portions of the implementing
LABOR1 | ATTY. MARLON MANUEL
rules provide (there are more sections cited but the important one is Section
15--read the orig to see the other sections):
Section 15. Additional Pay Under the Act and C.A. No. 444. (a)
Employees of covered hospitals and clinics who are entitled to the benefits
provided under the Eight-Hour Labor Law, as amended, shall be paid an
additional compensation equivalent to their regular rate plus at least twenty-
five percent thereof for work performed on Sunday and Holidays, not
exceeding eight hours, such employees shall be entitled to an additional
compensation of at least 25% of their regular rate.
(b) For work performed in excess of forty hours a week, excluding those
rendered in excess of eight hours a day during the week, employees covered
by the Eight-Hour Labor Law shall be entitled to an additional straight-time
pay which must be equivalent at least to their regular rate.
10. If the Association is entitled to two days off with pay, then there appears to
be no sense at all why Section 15 of the implementing rules grants
additional compensation equivalent to the regular rate plus at least twenty-
five percent thereof for work performed on Sunday to health personnel, or
an additional straight-time pay which must be equivalent at least to the
regular rate [f]or work performed in excess of forty hours a week xxx.
Policy Instructions No. 54 to our mind unduly extended the statute. The
Secretary of Labor moreover erred in invoking the spirit and intent of
Republic Act No. 5901 and Article 83 of the Labor Code for it is an
elementary rule of statutory construction that when the language of the law
is clear and unequivocal, the law must be taken to mean exactly what it
says.
SEPARATE OPINIONS: --
CONCURRING: --
39
LABOR1 | ATTY. MARLON MANUEL

40

14. Rada v. NLRC (John)
February 8, 1989 | GRIÑO-AQUINO, J | Hours of Work
PETITIONER: Hilario Rada
RESPONDENT: NLRC and Philnor Consultant and Planners, Inc.
SUMMARY:
Rada was hired to be a driver for the contruction phase of Manila North
Expresswat Extension. His employment was co-terminus to the project. Since the
project was delayed, his contract was renewed multiple times, thus worked for the
company from July 1, 1977- December 31, 1985. When his contract was not
renewed he filed for non-payment of separation pay, overtime, and illegal
termination.
Issues:
W/N Rada was regular? nah
W/N claims to OT and backwages valid? Ya
It must be stressed herein that although Rada worked with Philnor as a driver for
eight years, the fact that his services were rendered only for a particular project
which took that same period of time to complete categorizes him as a project
employee. Petitioner was employed for one specific project
From the foregoing, it is clear that petitioner is a project employee considering
that he does not belong to a "work pool" from which the company would draw
workers for assignment to other projects at its discretion. It is likewise apparent
from the facts obtaining herein that petitioner was utilized only for one particular
project, the MNEE Stage 2 Project of respondent company. Hence, the termination
of herein petitioner is valid by reason of the completion of the project and the
expiration of his employment contract.
Anent the claim for overtime compensation, we hold that petitioner is entitled to
the same. The fact that he picks up employees of Philnor at certain specified points
along EDSA in going to the project site and drops them off at the same points on
his way back from the field office going home to Marikina, Metro Manila is not
merely incidental to petitioner's job as a driver. On the contrary, said
transportation arrangement had been adopted, not so much for the convenience of
LABOR1 | ATTY. MARLON MANUEL
the employees, but primarily for the benefit of the employer, herein private
respondent.
Private respondent does not hesitate to admit that it is usually the project driver
who is tasked with picking up or dropping off his fellow employees. Proof thereof
is the undisputed fact that when petitioner is absent, another driver is supposed to
replace him and drive the vehicle and likewise pick up and/or drop off the other
employees at the designated points on EDSA. If driving these employees to and
from the project site is not really part of petitioner's job, then there would have
been no need to find a replacement driver to fetch these employees. But since the
assigned task of fetching and delivering employees is indispensable and
consequently mandatory, then the time required of and used by petitioner in going
from his residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m.
and from 4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as
averaging three hours each working day, should be paid as overtime work.
Quintessentially, petitioner should be given overtime pay for the three excess
hours of work performed during working days from January, 1983 to December,
1985.
DOCTRINE:
The fact that he picks up employees of Philnor at certain specified points along
EDSA in going to the project site and drops them off at the same points on his way
back from the field office going home to Marikina, Metro Manila is not merely
incidental to petitioner's job as a driver. Since the assigned task of fetching and
delivering employees is indispensable and consequently mandatory, then the time
required of and used by petitioner in going from his residence to the field office
and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00
p.m., which the labor arbiter rounded off as averaging three hours each working
day, should be paid as overtime work.
FACTS:
1. Rada was hired as "Driver" for the construction supervision phase of
the Manila North Expressway Extension, Second Stage (hereinafter
referred to as MNEE Stage 2) for a term of "about 24 months effective
July 1, 1977.
41

2. Highlighting the nature of Petitioner's employment:
a. It is hereby understood that the Employer does not have a
continuing need for the services of the Employee beyond the
termination date of this contract and that the Employee's
services shall automatically, and without notice, terminate
upon the completion of the above specified phase of the
project; and that it is further understood that the engagement
of his/her services is coterminus with the same and not with
the whole project or other phases thereof wherein other
employees of similar position as he/she have been hired.
3. The contract finished earlier than the projects and thus was renewed
multiple times until Dec 31, 1985.
4. Sometime in the 2nd week of December 1985, Petitioner applied for
"Personnel Clearance" with Respondent dated December 9, 1985 and
acknowledged having received the amount of P3,796.20 representing
conversion to cash of unused leave credits and financial assistance.
Petitioner also released Respondent from all obligations and/or claims,
etc. in a "Release, Waiver and Quitclaim"
5. On May 20, 1987, Rada filed before the NLRC, National Capital
Region, Department of Labor and Employment, a Complaint for non-
payment of separation pay and overtime pay
6. Philnor: Rada was not illegally terminated since the project for which he
was hired was completed; that he was hired under three distinct
contracts of employment, each of which was for a definite period, all
within the estimated period of MNEE Stage 2 Project, covering
different phases or areas of the said project; that his work was strictly
confined to the MNEE Stage 2 Project and that he was never assigned
to any other project of Philnor; that he did not render overtime services
and that there was no demand or claim for him for such overtime pay;
that he signed a "Release, Waiver and Quitclaim" releasing Philnor
from all obligations and claims; and that Philnor's business is to
provide engineering consultancy services, including supervision of
construction services, such that it hires employees according to the
requirements of the project manning schedule of a particular contract
7. Rada claimed he was a regular employee and was illegally dismissed
LABOR1 | ATTY. MARLON MANUEL
8. LA: Reinstate Rada and pay overtime for the excess 3 hours from Jan
1983 - Dec 31, 1985
9. NLRC: Set aside ruling
ISSUE:
W/N Rada was regular? nah
W/N claims to OT and backwages valid? ya
RULING: WHEREFORE, subject to the modification regarding the award of
overtime pay to herein petitioner, the decision appealed from is AFFIRMED in all
other respects
RATIO:
1. Court applied Sandoval Shipyards, Inc. vs. National Labor Relations
Commission, et al:
a. We hold that private respondents were project employees
whose work was coterminous with the project or which they
were hired. Project employees, as distinguished from regular
or non-project employees, are mentioned in section 281 of the
Labor Code as those "where the employment has been fixed
for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the employee."
b. It is significant to note that the corporation does not construct
vessels for sale or otherwise which will demand continuous
productions of ships and will need permanent or regular
workers. It merely accepts contracts for shipbuilding or for
repair of vessels form third parties and, only, on occasion
when it has work contract of this nature that it hires workers to
do the job which, needless to say, lasts only for less than a
year or longer
2. It must be stressed herein that although Rada worked with Philnor as a driver for
eight years, the fact that his services were rendered only for a particular project
which took that same period of time to complete categorizes him as a project
employee. Petitioner was employed for one specific project
42
 LABOR1 | ATTY. MARLON MANUEL

3. From the foregoing, it is clear that Rada is a project employee considering that he
does not belong to a "work pool" from which the company would draw workers for
assignment to other projects at its discretion. It is likewise apparent from the facts
obtaining herein that petitioner was utilized only for one particular project, the
MNEE Stage 2 Project of respondent company. Hence, the termination of herein
petitioner is valid by reason of the completion of the project and the expiration of his
employment contract.

4. Anent the claim for overtime compensation, we hold that Rada is entitled to the
same. The fact that he picks up employees of Philnor at certain specified points along
EDSA in going to the project site and drops them off at the same points on his way
back from the field office going home to Marikina, Metro Manila is not merely
incidental to petitioner's job as a driver. On the contrary, said transportation
arrangement had been adopted, not so much for the convenience of the employees,
but primarily for the benefit of the employer, herein private respondent.

5. Private respondent does not hesitate to admit that it is usually the project driver
who is tasked with picking up or dropping off his fellow employees. Proof thereof is
the undisputed fact that when petitioner is absent, another driver is supposed to
replace him and drive the vehicle and likewise pick up and/or drop off the other
employees at the designated points on EDSA. If driving these employees to and from
the project site is not really part of petitioner's job, then there would have been no
need to find a replacement driver to fetch these employees. But since the assigned
task of fetching and delivering employees is indispensable and consequently
mandatory, then the time required of and used by petitioner in going from his
residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from
4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as averaging three
hours each working day, should be paid as overtime work. Quintessentially, Rada
should be given overtime pay for the three excess hours of work performed during
working days from January, 1983 to December, 1985.

43

15. University of Pangasinan Faculty Union vs. University of Pangasinan
(Jay-em)
Feb 20, 1984 | Gutierrez, J | Hours of Work
Petitioner: University of Pangasinan Faculty Union
Respondent: University of Pangasinan
Summary: University of Pangasinan Faculty Union filed a complaint
against the University of Pangasinan with the Arbitration Branch of the
NLRC. In November and December, 1981, the Union’s members were
fully paid their regular monthly salaries. However, from November 7 to
December 5, during the semestral break, they were not paid their
Emergency Cost of Living Allowances (ECOLA). The University 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. The union members filed a complaint to get payment of their
ECOLA for the said semestral break period.
Issue: Whether the semestral break is covered by the “ no work, no pay.”
Ratio: SC held that the "No work, no pay" principle does not apply in the
present case.” It is clear that the law [check ratio #1 for the provision]
contemplates a "no work" situation wherein the employees voluntarily
absent themselves. The union members in this case certainly did not
voluntarily absent themselves during the semestral breaks. These semestral
breaks are in the nature of work interruptions beyond the employees’
control. The duration of the semestral break varies from year to year
dependent on a variety of circumstances. 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 union members cannot be
considered to be on leave without pay so as not to be entitled to ECOLA
since they were paid their wages in full for the months of November and
December of 1981, notwithstanding the intervening semestral break [check
ratio #3 for the provision] In this case, 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. Thus, the
semestral break may also be considered as "hours worked." For this, the
LABOR1 | ATTY. MARLON MANUEL
teachers are paid regular salaries and, for this, they should be entitled to
ECOLA.
Doctrine:
- The law contemplates a "no work" situation where the employees
voluntarily absent themselves. Semestral breaks are in the nature
of work interruptions beyond the employees’ control.
- During semestral breaks, teachers are 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. Thus, the semestral break may also be considered as
"hours worked."
FACTS:
1) University of Pangasinan Faculty Union, through its President, Miss
Consuelo Abad, filed a complaint against the University of
Pangasinan with the Arbitration Branch of the NLRC. The complaint
seeks:
a) The payment of Emergency Cost of Living Allowances
(ECOLA) for November 7 to December 5, 1981, a semestral
break [relevant to topic].
2) The Union’s members are full-time professors, instructors, and
teachers of the University.
a) The teachers in the college level teach for a normal duration
of ten months a school year, divided into two semesters of
five months each, excluding the two months summer
vacation.
b) These teachers are paid their salaries on a regular
monthly basis.
3) In November and December, 1981, the Union’s members were
fully paid their regular monthly salaries. However, from
November 7 to December 5, during the semestral break, they
were not paid their ECOLA.
44
 LABOR1 | ATTY. MARLON MANUEL

a) Defense: The University claims that the teachers are not i) SECTION 5. Allowance for Unworked Days. —
entitled thereto because the semestral break is not an integral "a) All covered employees whether paid on a
part of the school year and there being no actual services monthly or daily basis shall be entitled to their
rendered by the teachers during said period, the principle of daily living allowance when they are paid their
"No work, no pay" applies. basic wage.”
ii) Sec. 4. Principles in Determining Hours Worked. —
ISSUE: Whether the Semestral Break is considered as “work” so as to apply …(d) The time during which an employee is
the “no work, no pay” principle. No. inactive by reason of interruptions in his work
beyond his control shall be considered time either
RATIO: if the imminence of the resumption of work requires
the employee’s presence at the place of work or if
the interval is too brief to be utilized effectively and
1. Relevant provisions of law:
gainfully in the employee’s own interest.”
a) PD’s 1614, 1634, 1678 and 1713: ”Allowances of Fulltime
b) The union members cannot be considered to be on leave
Employees . . .Employees shall be paid in full the required
without pay so as not to be entitled to ECOLA, for, as
monthly allowance regardless of the number of their regular
stated in fact #3, they were paid their wages in full for the
working days if they incur no absences during the month.
months of November and December of 1981,
If they incur absences without pay, the amounts
notwithstanding the intervening semestral break
corresponding to the absences may be deducted from the
c) In this case, although said to be on forced leave,
monthly allowance . . ."
professors and teachers are, nevertheless, burdened with
b) "Leave of Absence Without Pay-…that all covered
the task of working during a period of time supposedly
employees shall be entitled to the allowance provided herein
available for rest and private matters.
when they are on leave of absence with pay."
i) There are papers to correct, students to evaluate,
2. The "No work, no pay" principle does not apply in the present
deadlines to meet, and periods within which to
case.”
submit grading reports. Although they may be
a) It is clear from the aforequoted provision of law that it
considered by the respondent to be on leave, the
contemplates a "no work" situation where the employees
semestral break could not be used effectively for the
voluntarily absent themselves. The union members in
teacher’s own purposes for the nature of a teacher’s
this case certainly did not voluntarily absent themselves
job imposes upon him further duties which must be
during semestral breaks.
done during the said period of time.
b) These semestral breaks are in the nature of work
ii) Thus, the semestral break may also be considered
interruptions beyond the employees’ control.
as "hours worked." For this, the teachers are
c) The duration of the semestral break varies from year to year
paid regular salaries and, for this, they should be
dependent on a variety of circumstances. As such, these
entitled to ECOLA. Not only do the teachers
breaks cannot be considered as absences within the
continue to work during this short recess but much
meaning of the law for which deductions may be made
less do they cease to live for which the cost of living
from monthly allowances.
allowance is intended.
3. The members are also entitled to ECOLA.
a) Relevant provisions:

45
LABOR1 | ATTY. MARLON MANUEL

46

16. NASSCO v. CIR (Pat D.)
December 30, 1961 | Reyes, J.B.L, J. | Working Conditions – Hours of Work
PETITIONER: National Shipyards and Steel Corporation
RESPONDENTS: Court of Industrial Relations and Dominador Malondras
SUMMARY: Malondras and other crew members of NASSCO filed for
payment of overtime compensation with the CIR. The parties entered into a
stipulation of facts, wherein NASSCO admitted that crew members had to work
beyond 8 hours a day and/or during Sundays and legal holidays to meet the
exigencies of their work and that they were not paid additional compensation
for overtime work. Thus, upon the court examiner’s report, the CIR ordered that
they be paid overtime work for 5hrs/day for the year 1957. Another report was
submitted by the examiner finding that the crew members were entitled for
5hrs/day of overtime compensation for the years 1954-1956. However,
Malondras was excluded from this since his daily time sheets were not available
at the time. When his time sheets were located, he filed a petition asking for
payment of overtime compensation from 1954-1956 and Jan-April 1957. The
CIR, pursuant to the examiner’s report, found that Malondras was entitled to
payment for 16 overtime hours/day for the said periods. Issue: WoN Malondras
should be credited with 16 overtime hours per day – NO. Seamen are required
to stay on board their vessels by the very nature of their duties, which is why, 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 16 hours each day, even if he had spent all those
hours resting or sleeping in his bunk, after his regular tour of duty. Under Sec. 1
of CA No. 444 or the Eight-Hour Labor Law: The legal working day for any
person employed by another shall be of not more than 8 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.
DOCTRINE:
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.
In understanding the term ‘working place’ in Sec. 1 of CA 444, 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
LABOR1 | ATTY. MARLON MANUEL
said factory, shop or boat.
FACTS:
1. NASSCO owns several barges and tugboats to transport cargoes and personnel
for its shipbuilding and repair business. It requires its bargemen to stay in their
respective barges so they could immediately be called to duty whenever their
services are needed. In exchange, the bargemen are given living quarters and
subsistence allowance when they are on board. The bargemen may leave their
barges when such are idle upon prior authority of their superior officers.
2. The crew members of NASSCO’s tugboat service, including Malondras, filed
with the CIR a complaint for payment of overtime compensation.
3. In the course of the proceedings, the parties entered into a stipulation of facts,
wherein NASSCO admitted that:
a. To meet the exigencies of the service in the performance of their work,
the crew members have to work when so required in excess of 8 hours
a day and/or during Sundays and legal holidays (actual overtime
service is subject to determination on the basis of the logbook of the
vessels, time sheets and other pertinent records of NASSCO).
b. The crew members are paid their regular salaries and subsistence
allowance, without additional compensation for overtime work.
4. Pursuant to said stipulation, the CIR issued an order directing the court examiner
to compute the overtime compensation due to the crew members. The examiner
found that the crew members rendered an average overtime service of 5hrs/day
for the period of January 1-December 31, 1957. Upon approval of the court, the
crew members were paid overtime compensation by NASSCO.
5. The examiner then submitted a second partial report covering January 1, 1954-
December 31, 1956, again giving each crewman an average of 5 overtime hours
each day. Malondras was not, however, included in this report as his daily time
sheets were not then available. The crewmen concerned were paid their overtime
compensation.
6. Malondras, his time sheets having been located, then filed a petition asking for
the computation and payment of his overtime compensation for the years 1954-
1956 and from January to April 30, 1957, which he alleged was not included in
the first examiner’s report since his time sheets for these months could not be
found at the time.
7. NASSCO opposed the petition and argued that its records do not indicate the
actual number of working hours rendered by Malondras during these periods.
8. The chief examiner submitted a report crediting Malondras with a total of 4,349
overtime hours from 1954-1956, at an average of 5 overtime hours/day and
deducted the aggregate amount of the subsistence allowance he received to
determine his overtime compensation – P2,790.90.
9. The CIR ordered the examiner to make a re-examination of records to determine
Malondras’ overtime service for the periods in question without deducting the
47

subsistence allowance. Pursuant to this, the examiner amended the report giving
Malondras an average of 16 overtime hours/day, on the basis of his time sheets,
and recommending P15,242.15 as his overtime compensation.
ISSUE/s:
1. WoN Malondras should be credited with 16 overtime hours per day – NO.
RULING: Order appealed from is modified. Malondras should be credited 5
overtime hours instead.
RATIO:
1. In crediting Malondras with 16 hours of overtime service daily, the court
examiner relied only on his daily time sheets which, although approved by
NASSCO’s officers in charge and its auditors, do not show the actual number of
hours of work rendered by him each day but only indicate that Malondras was
on ‘Detail’ or ‘Detailed on Board’ almost every day, during which he was on the
boat for 24 hours. The court examiner interpreted the words “Detail” or
“Detailed on Board” to mean that as long as Malondras was in his barge for 24
hours, he should be paid overtime for 16 hours a day or the time in excess of the
legal 8 working hours that he could not leave his barge. The Court does not
agree with such interpretation.
2. Seamen are required to stay on board their vessels by the very nature of their
duties, which is why, 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 16 hours each day, even if he
had spent all those hours resting or sleeping in his bunk, after his regular tour of
duty.
3. 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.
4. Luzon Stevedoring v. Luzon Marine Department Union:
a. Under Sec. 1 of CA No. 444 or the Eight-Hour Labor Law: “The legal
working day for any person employed by another shall be of not more
than 8 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.”
b. There is no need to set a different criterion for seamen and laborers on
land, for under the provisions of said law, the only thing to be done is
to determine the meaning and scope of the term ‘working place’ used
LABOR1 | ATTY. MARLON MANUEL
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.
5. While Malondras’ daily time sheets do not show his actual working hours,
nevertheless, NASSCO has already admitted in the Stipulation of Facts that he
and other crew members rendered service beyond 8 hours a day when so
required by the exigencies of the service; and in fact, Malondras was credited
and already paid for 5 hours daily overtime work during the period from May 1
to December 31, 1957, under the examiner’s first report.
6. Since Malondras has been at the same job since 1954, it can be reasonably
inferred that the overtime service he put in whenever he was required to be
aboard his barge all day from 1954 to 1957 would be more or less the same. The
other crew members who served with Malondras under the same conditions and
period, have been finally paid for an overtime of 5 hours a day, and no
substantial difference exists between their case and the present one, which was
not covered by the same award only because Malondras’ time records were not
found until later.
7. As to whether the subsistence allowance received by Malondras for the periods
covered by the report should be deducted from his overtime compensation –
NO. The stipulation of facts show that this allowance is independent of and has
nothing to do with whatever additional compensation for overtime work was due
the NASSCO’s bargemen. The reason why their bargemen are given living
quarters in their barges and subsistence allowance was because they were
required to stay in their respective barges in order that they could be
immediately called to duty. Having already paid Malondras and his companions
overtime for 1957 without deduction of the subsistence allowances received by
them during this period, and Malondras’ companions having been paid overtime
for the other years also without deducting their subsistence allowances, there is
no valid reason why Malondras should be singled out now and his subsistence
allowance deducted from the overtime compensation still due him.
48
 LABOR1 | ATTY. MARLON MANUEL

8. 17. National Development Company v. CIR and National Textile Workers

company was continuous and therefore the mealtime breaks should be counted
Union (Issa)
as working time for purposes of overtime compensation. NDC gives an eight-
November 30, 1962 | Regala, J. | Hours of Work
hour credit to its employees who work a single shift, say from 6 a.m. to 2 p.m.
Why cannot it credit them sixteen hours should they work in two shifts?
PETITIONER: National Development Company
RESPONDENT: CIR DOCTRINE: "The legal working day for any person employed by another
shall be of not more than 8 hours daily. When the work is not continuous, the
SUMMARY: At the National Development Company (NDC), a government- time during which the laborer is not working and can leave his working place
owned and controlled corporation, there were 4 shifts of work with a 1-hr and can rest completely shall not be counted." - No general rule can be laid
mealtime. Records disclose that although there was a 1-hr mealtime, NDC down as to what constitutes compensable work, but rather the question is one of
nevertheless credited the workers with eight hours of work for each shift and fact depending upon the particular circumstances, to be determined by the
paid them for the same number of hours. However, whenever workers in one courts in controverted cases.
shift were required to continue working until the next shift, NDC, instead of
crediting them with eight hours of overtime work, has been paying them for six
FACTS:
hours only, claiming that the 2 hours corresponding to the mealtime periods
1. At the National Development Company, a government-owned and controlled
should not be included in computing compensation. National Textile Workers
corporation, there were 4 shifts of work with a 1-hr mealtime period:
Union whose members are employed at the NDC, maintained the opposite view
- 8 a.m. to 4 p.m
and asked the Court of Industrial Relations to order the payment of additional
- 6 a.m. to 2 p.m.; meal time 11 a.m. to 12 noon
overtime pay corresponding to the mealtime periods. CIR: mealtime should be
- 2 p.m. to 10 p.m.; meal time 7 p.m. to 8 p.m.
counted in the determination of overtime work and ordered NDC to pay
- 10 p.m. to 6 a.m.
P101,407.96 by way of overtime compensation. NDC appealed. SC: "The
2. Records disclose that although there was a 1-hr mealtime, petitioner
legal working day for any person employed by another shall be of not more
nevertheless credited the workers with eight hours of work for each shift and
than 8 hours daily. When the work is not continuous, the time during which the
paid them for the same number of hours.
laborer is not working and can leave his working place and can rest
3. However, since 1953, whenever workers in one shift were required to continue
completely shall not be counted." (Sec. 1, Com. Act No. 444, as amended.)
working until the next shift, Petitioner, instead of crediting them with eight
Under the law, the idle time that an employee may spend for resting and during
hours of overtime work, has been paying them for six hours only, claiming that
which he may leave the spot or place of work though not the premises 2 of his
the 2 hours corresponding to the mealtime periods should not be included in
employer, is not counted as working time only where the work is broken or is
computing compensation.
not continuous. No general rule can be laid down as to what constitutes
4. Respondent National Textile Workers Union whose members are employed at
compensable work, but rather the question is one of fact depending upon the
the NDC, maintained the opposite view and asked the Court of Industrial
particular circumstances, to be determined by the courts in controverted cases.
Relations to order the payment of additional overtime pay corresponding to the
CIR’s finding that work in NDC was continuous and did not permit employees
mealtime periods.
and laborers to rest completely is not without basis in evidence and following
5. CIR order - holding that mealtime should be counted in the determination of
our earlier rulings, We shall not disturbed the same. CIR found:
"While it may be corrected to say that it is well-nigh impossible for an employee to
overtime work and accordingly ordered petitioner to pay P101,407.96 by way of
work while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating overtime compensation; MR dismissed.
can only be segregated or deducted from his work, if the same is not continuous and the 6. Petitioner appealed to this Court, contending that:
employee can leave his working place and rest completely. The time cards show that the - CIR has no jurisdiction over claims for overtime compensation
work was continuous and without interruption. There is also the evidence adduced by - CIR did not make "a correct appraisal of the facts, in the light of the
the petitioner that the pertinent employees cannot freely leave their working places nor evidence" in holding that mealtime periods should be included in overtime
rest completely. There is furthermore the aspect that during the period covered by the work because workers could not leave their places of work and rest
computation the work was on a 24 hour basis and as previously stated divided into completely during those hours.
shifts." From these facts, the CIR correctly concluded that work in petition

49

7. In support of its contention that the CIR lost its jurisdiction over claims for
overtime pay upon the enactment of the Industrial Peace Act (Republic Act No.
875), petitioner cites a number of decisions of this Court. On May 23, 1960,
however, We ruled in Price Stabilization Corp. v. Court of Industrial Relations,
Et Al., 108 Phil., 138, 139, that.
ISSUE:
1. WON CIR has jurisdiction - YES, CIR has jurisdiction
2. WON CIR erred in holding that mealtime periods should be included in
overtime work because workers could not leave their places of work and rest
completely during those hours.
RULING: WHEREFORE, the order of March 19, 1959 and the resolution of April
27, 1959 are hereby affirmed and the appeal is dismissed, without pronouncement as
to costs
RATIO:
1. A more recent definition of the jurisdiction of the CIR is found in Campos, Et.
Al. v. Manila Railroad Co., in which we held that, for such jurisdiction to come
into play, the following requisites must be complied with:
- there must exist between the parties an employer-employee relationship or
the claimant must seek his reinstatement; and
- the controversy must relate to a case certified by the President to the CIR as
one involving national interest, or must have a bearing on an unfair labor
practice charge, or must arise either under the Eight-Hour Labor Law, or
under the Minimum Wage Law.
In default of any of these circumstances, the claim becomes a mere money claim
that comes under the jurisdiction of the regular courts. Here, petitioner does not
deny the existence of an employer-employee relationship between it and the
members of the union. Neither is there any question that the claim is based on
the Eight-Hour Labor Law (Com. Act No. 444, as amended). We therefore rule
in favor of the Jurisdiction of the CIR over the present claim.
2. "The legal working day for any person employed by another shall be of not
more than 8 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, as amended.)
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 2 of his
employer, is not counted as working time only where the work is broken or is
not continuous.
3. The determination as to whether work is continuous or not is mainly one of fact
which we shall not review as long as the same is supported by evidence. That is
why we brushed aside petitioner’s contention in one case that workers who
LABOR1 | ATTY. MARLON MANUEL
worked under a 6 a.m. to 6 p.m. schedule had enough "free time" and should not
be credited with 4 hours of overtime and held that the finding of the CIR "that
claimants rendered services to the Company from 6:00 a.m. to 6 p.m. including
Sundays and holidays, . . . implies either that they were not allowed to leave the
spot of their working place, or that they could not rest completely."
4. No general rule can be laid down as to what constitutes compensable work, but
rather the question is one of fact depending upon the particular circumstances, to
be determined by the courts in controverted cases.
5. In this case, CIR’s finding that work in NDC was continuous and did not permit
employees and laborers to rest completely is not without basis in evidence and
following our earlier rulings, We shall not disturbed the same. CIR found:
"While it may be corrected to say that it is well-nigh impossible for an employee to work
while he is eating, yet under Section 1 of Com. Act No. 444 such a time for eating can only be
segregated or deducted from his work, if the same is not continuous and the employee can
leave his working place and rest completely. 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 cannot freely leave their working places nor rest completely. There is
furthermore the aspect that during the period covered by the computation the work was on a
24 hour basis and as previously stated divided into shifts."
6. From these facts, the CIR correctly concluded that work in petition company
was continuous and therefore the mealtime breaks should be counted as working
time for purposes of overtime compensation.
7. NDC gives an eight-hour credit to its employees who work a single shift, say
from 6 a.m. to 2 p.m. Why cannot it credit them sixteen hours should they work
in two shifts?
8. (Procedural) Another reason why this appeal should be dismissed: no CIR en
banc decision can be appealed to this Court. Records show that NDC’s motion
for reconsideration was dismissed by the CIR en banc because of petitioner’s
failure to serve a copy of the same on the union.
Section 15 of the rules of the CIR, in relation to Section 1 of Commonwealth Act No. 103,
states:
"The movant shall file the motion (for reconsideration), in six copies within five (5) days from
the date on which he receives notice of the order or decision, object of the motion for
reconsideration, the same to be verified under oath with respect to the correctness of the
allegations of fact, and serving a copy thereof, personally or by registered mail, on the adverse
party. The latter may file an answer, in six (6) copies, duly verified under oath."
In one case (Bien, Et. Al. v. Castillo, etc., Et. Al. G.R. No. L- 7428, May 24, 1955),
We sustained the dismissal of a motion for reconsideration filed outside of the period
provided in the rules of the CIR. A motion for reconsideration, a copy of which has
not been served on the adverse party as required by the rules, stands on the same
footing. For "in the very nature of things, a motion for reconsideration against a
ruling or decision by one Judge is, in effect an appeal to the Court of Industrial
50
 LABOR1 | ATTY. MARLON MANUEL

Relations, en banc," the purpose being "to substitute the decision or order of a
collegiate court for the ruling or decision of any judge." The provision in
Commonwealth Act No. 103 authorizing the presentation of a motion for
reconsideration of a decision or order of the judge to the CIR, en banc, and not direct
appeal therefrom to this Court, is also in accord with the principle of exhaustion of
administrative remedies before resort can be made to this Court.

51

18. Sime Darby Pilipinas, Inc. v. NLRC (Vi)
April 5, 1998|Bellosillo, J. | Hours of Work
PETITIONER: SIME DARBY PILIPINAS, INC
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION (2ND
DIVISION) and SIME DARBY SALARIED EMPLOYEES ASSOCIATION
(ALU-TUCP)
SUMMARY: Sime Darby Pilipinas, Inc. is engaged in the manufacture of
automotive tires, tubes, and other rubber products. The employees of Sime Darby
work from 7:45 am to 3:45 pm with a 30-minute paid on call lunch. Sime Darby
issued a memorandum changing the work schedule of the employees from 7:45
am to 4:45 pm, taking away the 30-min paid on-call lunch and replacing it with an
unpaid 1 hour lunch break.
ISSUE: Whether the new work schedule was discriminatory and constituted
unfair labor practice – NO
The right to fix the work schedules of the employees rests principally on their
employer. Sime Darby, as the employer, said that its reason for the adjustment
was the efficient conduct of its business operations and its improved
production. Sime Darby argued that while the old work schedule included a 30-
minute paid lunch break, the employees could be called upon to do jobs during
that period as they were on call. Even if denominated as lunch break, this period
could very well be considered as working time because the factory employees
were required to work if necessary and were paid accordingly for working. With
the new work schedule, the employees are now given a one-hour lunch break
without any interruption from their employer. Since the employees are no
longer required to work during this one-hour lunch break, there is no need for
them to be compensated for this period.
The Court agreed with the LA that the new work schedule fully complies with the
daily work period of eight (8) hours without violating the Labor Code. Also, the
new schedule applies to all employees in the factory similarly situated whether
they are union members or not. Part of the management prerogative is to change
the working hours of its employees. As long as it is exercised in good faith and not
to defeat the rights of employees under the special laws, the Court will uphold the
exercise of its management prerogative.
DOCTRINE: The right to fix the work schedules of the employees rests
principally on their employer.
FACTS:
LABOR1 | ATTY. MARLON MANUEL
1. Sime Darby Pilipinas, Inc. is engaged in the manufacture of automotive
tires, tubes, and other rubber products. Sime Darby Salaried Employees
Association (ALU-TUCP) 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.
2. On 14 August 1992, Sime Darby 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:
7:45 A.M. 4:45 P.M. (Monday to Friday)
7:45 A.M. 11:45 P.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).
3. ALU-TUCP filed on behalf of its members a complaint with the Labor
Arbiter for unfair labor practice, discrimination and evasion of liability
because of the change in the work schedule and discontinuance of the 30-
minute paid on call lunch break.
4. The Labor Arbiter (LA) 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.
5. The LA also held that the factory workers would be justly enriched if they
continued to be paid during their lunch break even if they were no longer on
call or required to work during the break. He also ruled that the decision in
the earlier Sime Darby case was not applicable to the instant case because it
involved discrimination of certain employees who were not paid for their
30-minute lunch break while the rest of the factory workers were paid;
hence, this Court ordered that the discriminated employees be similarly paid
the additional compensation for their lunch break.
52
 LABOR1 | ATTY. MARLON MANUEL

6. ALU-TUCP appealed to NLRC which sustained the LA and dismissed the 5. Every business enterprise aims to increase its profits and it can create means
appeal. However, upon Motion for Reconsideration, the NLRC, reversed its to attain that goal. Even as the law is solicitous of the welfare of the
earlier decision. employees, it must also protect the right of an employer to exercise what
7. NLRC declared that the new work schedule deprived the employees of the are clearly management prerogatives. Thus, management is free to
benefits of time-honored company practice of providing its employees a 30- regulate, according to its own discretion and judgment, all aspects of
minute paid lunch break resulting in an unjust diminution of company employment, including hiring, work assignments, working methods,
privileges prohibited by Art. 100 of the Labor Code, as amended. time, place and manner of work, processes to be followed, supervision
ISSUE: of workers, working regulations, transfer of employees, work
1. Whether the new work schedule was discriminatory and constituted supervision, lay off of workers and discipline, dismissal and recall of
unfair labor practice – NO workers. Further, management retains the prerogative, whenever exigencies
RATIO: 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
1. The right to fix the work schedules of the employees rests principally
advancement of the employers interest and not for the purpose of
on their employer. In this case, Sime Darby, as the employer, cites as
defeating or circumventing the rights of the employees under special
reason for the adjustment the efficient conduct of its business operations
laws or under valid agreements, this Court will uphold such exercise.
and its improved production. It reasoned out that while the old work
6. While the Constitution is committed to the policy of social justice and the
schedule included a 30-minute paid lunch break, the employees could be
protection of the working class, it doesn’t mean that every dispute will be
called upon to do jobs during that period as they were on call. Even if
automatically decided in favor of labor. Management also has a right and
denominated as lunch break, this period could very well be considered as
is entitled to respect and enforcement in the interest of simple fair play.
working time because the factory employees were required to work if
necessary and were paid accordingly for working.
2. With the new work schedule, the employees are now given a one-hour
lunch break without any interruption from their employer. For a full
one-hour undisturbed lunch break, the employees can freely and effectively
use this hour not only for eating but also for their rest and comfort which
are conducive to more efficiency and better performance in their work.
Since the employees are no longer required to work during this one-hour
lunch break, there is no more need for them to be compensated for this
period.
3. The Court agreed with the LA that the new work schedule fully complies
with the daily work period of eight (8) hours without violating the Labor
Code. Also, the new schedule applies to all employees in the factory
similarly situated whether they are union members or not.
4. The earlier Sime Darby case doesn’t apply here because the issue here is not
about discrimination of employees but about the work hours. The change in
work hours apply to all factory employees in the same line of work, so there
is no discrimination.

53

19. Bisig ng Manggagawa sa PRC v PRC (Melliza ℅ Corinne)
Sept. 30, 1981| Abad Santos, J.| Labor 1
PETITIONER: Bisig ng Manggagawa sa Philippine Refining Company (Bisig)
RESPONDENT: Philippine Refining Company (PRC)
SUMMARY: Bisig filed a petition for declaratory relief seeking that their
Christmas bonus be included as part of their basic pay for the computation of
overtime pay. Bisig cites NAWASA vs. NAWASA Consolidated Unions where it
was declared that the “regular rate” is also deemed to include other incentives and
bonuses which employers may receive as part of their regular pay. On the other
hand, PRC argued that, per the CBA, it was never intended to include the
employees' Christmas bonus in the computation of overtime pay. SC ruled for
PRC. SC said that, per the CBA’s provision regarding overtime pay, it was only
the regular base pay that was considered to compute the overtime pay. Further,
what is important in the Nawasa ruling is that the product resulting from the
computation must always be equal or higher than the statutory requirement of 25%
more than the regular wage. Here, the Nawasa ruling was not violated, since the
formula adopted by the CBA is 50% more than the regular base pay, which when
computed is much higher than what can be arrived at using the statutory formula.
DOCTRINE: "Regular base pay" means regular basic pay which necessarily
exlcudes money received in different concepts such as Christmas bonus and other
fringe benefits. The Nawasa ruling did not limit that the computation of overtime
pay to be based solely on the employees' regular wage or salary, which according
to law includes bonuses and other benefits. What is important is that the product
resulting from the computation must always be equal or higher than the statutory
requirement of 25% more than the regular wage.
FACTS:
1. In 1966, Bisig ng Manggagawa ng Philippine Refining Company, Inc. filed
a petition for declaratory relief seeking that their Christmas bonus be
included as part of their basic pay for the computation of overtime pay.
2. Bisig based its contention primarily on the ruling of the Supreme Court in
NAWASA vs. NAWASA Consolidated Unions where it was declared that
LABOR1 | ATTY. MARLON MANUEL
the “regular rate” is also deemed to include other incentives and bonuses
which employers may receive as part of their regular pay.
3. Philippine Refining Company, Inc. on the other hand contended that in their
CBA, the parties never intended to include the employees' Christmas bonus
in the computation of overtime pay, and that it did agree to raise the
overtime rate to 50% instead of 25% of the regular base pay precisely on the
consideration that it be based only on the regular base pay and should not
include Christmas bonus.
ISSUE: W/N in the interpretation of the CBA regarding overtime pay, the term
“regular base pay” should include Christmas bonus? - NO.
4. The Supreme Court ruled that the term "regular base pay" is clear,
unequivocal and requires no interpretation. It held that the term means
regular basic pay which necessarily excludes money received in different
concepts such as Christmas bonus and other fringe benefits.
5. The Court observed that in framing up their CBA specially on the provision
regarding overtime pay, it was only the regular base pay that was
considered, and the same fact was undeniably known to Bisig.
6. The Nawasa ruling did not limit that the computation of overtime pay to be
based solely on the employees' regular wage or salary, which according to
law includes bonuses and other benefits. What is important is that the
product resulting from the computation must always be equal or higher than
the statutory requirement of 25% more than the regular wage.
7. In the case at bar, the formula adopted by the CBA is 50% more than the
regular base pay, which when computer is much higher than what can be
arrived at using the statutory formula. Thus, the Court declared that the
provisions of the CBA as to the computation of overtime pay has amply
complied with what is required by law, and therefore is valid and not in
contravention to the Nawasa doctrine.
RULING: Petition dismissed, the decision appealed from is affirmed.
20. PESALA v. NLRC (Meryl)
54

August 22, 1996 | Panganiban, J. | Hours of Work
PETITIONER: PAL Employees Saving and Loan Association, Inc. (PESALA)
RESPONDENTS: NLRC and Angel V. Esquejo
SUMMARY: Angel started working with PESALA as a company guard and
was receiving a monthly basic salary of P1,990.00 plus an emergency allowance
in the amount of P510.00. He was required to work twelve (12) hours a day.
Several salary increases were given to him. During Angel’s entire period of
employment with PESALA, Angel was required to perform overtime work
WITHOUT any additional compensation from PESALA. Hence, he filed
with NLRC a complaint for non-payment of overtime pay. Is Angel entitled to
overtime pay for work rendered in excess of the regular 8-hr day despite
having a contract of labor specifying a 12-hr work at a fixed monthly rate
above the minimum wage? YES
While, it is true that Angel received a salary rate which is higher than the
minimum wage, it does not follow that any additional compensation due the
complainant [Angel] can be offset by his salary in excess of the minimum,
especially in the absence of an express agreement to that effect. To consider
otherwise would be in disregard of the rule of non-diminution of benefits
which are above the minimum being extended to the employees.
DOCTRINE: Employee is entitled to overtime pay for work rendered beyond
the regular 8-hr day.
FACTS:
1. Angel V. Esquejo (Angel) filed with NLRC a complaint for non-payment of
overtime pay and non-payment of the P25.00 statutory minimum wage
increase mandated by RA 6727.
2. Angel started working with PESALA as a company guard and was
receiving a monthly basic salary of P1,990.00 plus an emergency allowance
in the amount of P510.00. He was required to work twelve (12) hours a
day.
3. PESALA BOD approved a salary adjustment for Angel increasing his
monthly basic salary to P2,310.00 and an emergency allowance of P510.00.
4. Because of Angel’s impressive performance on his assigned job, another
adjustment was approved by the PESALA Pres. increasing his monthly
basic salary to P2,880.00.
LABOR1 | ATTY. MARLON MANUEL
5. During Angel’s entire period of employment with PESALA, Angel was
required to perform overtime work without any additional
compensation from PESALA.
6. It was also at this point wherein PESALA refused to give the P25 increase
on the minimum wage rates as provided for by law.
7. Angel was suspended for the period of 37 days for an offense allegedly
committed by him.6
8. NLRC granted the claim for overtime pay covering the period October 10,
1987 to November 30, 1989 in the amount of P28,344.55. The claim for
non-payment of P25.00 salary increase pursuant to RA 6727 is dismissed
for lack of merit.
ISSUE:
Whether an employee is entitled to overtime pay for work rendered in excess of
the regular 8-hr day despite having a contract of labor specifying a 12-hr work at
a fixed monthly rate above the minimum wage – YES
RATIO:
1. PESALA argues that there was a meeting of minds since the employment
contract "explicitly states without any equivocation" that the overtime pay
for work rendered for 4 hours in excess of the 8 hour regular working
period is already included in the P1,990.00 basic salary.
2. On the other hand, Angel claims that overtime pay is not so incorporated
and should be considered apart from the P1,990.00 basic salary.
3. SC upheld NLRC's ruling that he is entitled to overtime pay.
4. Based on PESALA’s own computation, it appears that the basic salary plus
emergency allowance given to Angel did not actually include the overtime
pay claimed by Angel.
a. Following PESALA’s computation, it would appear that by adding
the legal minimum monthly salary which at the time was
P1,413.00 and the legal overtime minimum monthly salary which
at the time was P1,413.00 and the legal overtime pay of P877.50,
the total amount due the private respondent as basic salary should
have been P2,290.50.
b. By adding the emergency cost of living allowance (ECOLA) of
P510.00 as provided by the employment contract, the total basic
6 Angel allegedly forwarded checks corresponding to several withdrawals of certain Jimenez and dela
Banda without the signature of the Treasurer and the President of PESALA & failed to leave or
surrender the keys of the office which resulted to damage, injury and embarrassment to PESALA.
55
 LABOR1 | ATTY. MARLON MANUEL

salary plus emergency allowance should have amounted to

P2,800.50.
c. However, PESALA admitted that it actually paid Angel P1,990.00
as basic salary plus P510.00 emergency allowance or a total of
only P2,500.00.
d. Undoubtedly, Angel was shortchanged in the amount of
P300.50.
e. PESALA’s own computations thus clearly establish that Angel's
claim for overtime pay is valid.
5. No meeting of minds. NLRC correctly found no such agreement as to
overtime pay. In fact, the contract was definite only as to the number of
hours of work to be rendered but vague as to what is covered by the
salary stipulated.
a. Appointment Memorandum cannot be taken and accorded credit as
it is so worded in view of this ambiguity. While, it is true that the
complainant received a salary rate which is higher than the
minimum provided by law, it does not however follow that any
additional compensation due the complainant [Angel] can be offset
by his salary in excess of the minimum, especially in the absence
of an express agreement to that effect.
b. To consider otherwise would be in disregard of the rule of non-
diminution of benefits which are above the minimum being
extended to the employees. This fertile ground for a violation of a
labor standards provision can be effectively thwarted if there is a
clear and definite delineation between an employee's regular and
overtime compensation.
6. The general right to contract is subject to the limitation that the agreement
must not be in violation of the Constitution, the statute of some rule of law.
7. Contracts of labor are explicitly subject to the police power of the State
because they are not ordinary contracts but are impressed with public
interest.
21. Lagatic vs NLRC (Myling)
28 January 1998 | Romero, J | Hours of Work - Rest and Holidays cannot be
offset with Regular Work Days

PETITIONER: Romeo Lagatic

RESPONDENT: National Labor Relations Commission, Cityland Development
Corporation, Stephen Roxas, Jesus Go, Grace Liuson, and Andrew Liuson

56

SUMMARY: Lagatic was employed by Cityland and among his duties was to
make cold calls to prospective clients and to submit reports of these. Lagatic
failed to do both on several instances. He was required to explain his inaction
and was given a warning that his continued non-compliance would result to the
termination of his employment. He replied that he merely omitted this. Cityland
found this inadequate, thus, suspended him. He continued to miss submitting
cold calls reports. He was verbally reminded to submit. However, instead of
complying, he wrote a note, "TO HELL WITH COLD CALLS! WHO CARES?",
showed this to his co-employees and left it on his desk. Cityland sent him a
memorandum requiring him to explain why they should not make do their earlier
warning to terminate his employment. He merely replied that his omissions
should not be regarded as gross insubordination. Cityland served him a notice of
dismissal. He filed a complaint with the NLRC. The LA and NLRC dismissed
his complaint.
The SC affirmed the NLRC. He was found not to have been illegally dismissed
as there was just cause for his dismissal (Willful disobedience) and procedural
due process was followed. Lagatic demanded payment for unpaid commissions
claiming that Cityland’s formula resulted to lower commissions every time there
was an increase in salary. The SC held that no law required the payment of
commissions nor the computation for such.
[Main Issue] Lagatic likewise claimed unpaid overtime pay. He alleged that
Cityland merely offset regular working days for work done on weekends and
holidays. The SC found this to circumvent the law on payment of premiums on
rest and holiday work. However, Lagatic failed to submit evidence of his rest and
holiday work.
DOCTRINE: Cityland’s scheme is, by analogy, the same as the principle that
overtime cannot be offset by undertime. To allow offsetting would be prejudicial
to the worker as he would be deprived of the additional pay for the rest day work
he rendered. To allow Cityland to continue with the scheme would be
circumventing the law on payment of premiums for the rest and holiday work.
FACTS:
1. Romeo Lagatic was employed by Cityland as a marketing specialist. He
was tasked with soliciting sales for the company, with the corresponding
duties of accepting call-ins, referrals, and making client calls and cold calls.
Cold calls refer to the practice of prospecting for clients through the
telephone directory.
LABOR1 | ATTY. MARLON MANUEL
2. In order to assess and determine the results of cold calls made by the sales
staff, Cityland requires the submission of daily progress reports.
3. Cityland issued a written reprimand to Lagatic for his failure to submit cold
call reports for September 10, October 1 and 10, 1991. Lagatic again failed
to submit cold call reports for September 2, 5, 8, 10, 11, 12, 15 17, 18, 19,
20, 22, and 28, as well as for October 6, 8, 9, 10, 12, 13 and 14, 1992.
4. Lagatic was required to explain his inaction, with a warning that further
non-compliance would result in his termination from the company.
5. In a reply, Lagatic claimed that the same was an honest omission as he was
concentrating on other aspects of his job. Cityland found said excuse
inadequate and suspended him for three days with a similar warning.
6. Notwithstanding the suspension and warning, Lagatic again failed to
submit cold call reports for February 5, 6, 8, 10 and 12, 1993. He was
verbally reminded to submit the same and was given a deadline.
7. Instead of complying, Lagatic wrote a note, "TO HELL WITH COLD
CALLS! WHO CARES?" and showed the same to his co-employees. To
worsen matters, he left the same lying on his desk where everyone could see
it.
8. Lagatic received a memorandum requiring him to explain why Cityland
should not make good its previous warning for his failure to submit cold
call reports as well as for issuing the written statement aforementioned.
9. In reply, Lagatic alleged that his failure to submit cold call reports should
not be deemed as gross insubordination. Further, he denied any knowledge
of the damaging statement, "TO HELL WITH COLD CALLS!"
10. Finding Lagatic guilty of gross insubordination, Cityland served a notice of
dismissal upon him.
11. Lagatic filed a complaint against Cityland for illegal dismissal, illegal
deduction, underpayment, overtime and rest day pay, damages and
attorney’s fees.
12. The LA dismissed the petition for lack of merit. On appeal, the dismissal
was affirmed by the NLRC.
ISSUE:
1. Was Lagatic illegally dismissed? NO
2. Is Lagatic entitled to unpaid commissions? NO
3. Is Lagatic entitled to overtime pay, rest day pay and holiday premiums?
YES, but he failed to substantiate his work on rest and holidays
4. Is he entitled to moral and exemplary damages, and attorney’s fees? NO as
he was validly dismissed
RULING: The assailed Resolution is AFFIRMED and this petition is
DISMISSEDfor lack of merit.
57

RATIO:
[First Issue] Illegal dismissal
1. To constitute a valid dismissal from employment, two requisites must be
met:
a. the employee must be afforded due process, and
b. the dismissal must be for a valid cause.
Lagatic alleges he was illegally dismissed due to both procedural and
substantive causes.
Substantive aspect - There is just cause for Lagatic’s dismissal
2. Except as provided for, or limited by, special laws, an employer is free to
regulate, according to his discretion and judgment, all aspects of
employment.
Lagatic insists that, in his experience, cold calls are one of the least
effective means of soliciting sales hence his failure to submit the reports
should not warrant his dismissal. Lagatic cannot be allowed to set company
policy on the effectivity of methods for to do so would be to be oppressive
and self-destructive to the employer.
3. Willful disobedience requires the concurrence of the following:
a. The employee’s assailed conduct must have been willful or
intentional. Willfulness is characterized by a wrongful and
perverse attitude
b. The order violated must have been reasonable, lawful, made
known to the employee and must pertain to the duties which he had
been engaged to discharge.
Lagatic’s failure to comply with Cityland’s policy of submitting cold call
reports is clearly willful, given the 28 instances of his failure to do so and
despite a previous reprimand and suspension. The policy is clearly
reasonable and lawful, sufficiently known to Lagatic, and in connection
with the duties which he had been engaged to discharge.
4. His written statement shows his open defiance and disobedience to lawful
rules and regulations of the company.
The rule is that denial, if unsubstantiated by clear and convincing evidence,
is negative and self-serving which has no weight in law. Lagatic merely
denied knowledge of him saying “TO HELL WITH COLD CALLS! WHO
CARES?” Cityland, however, had affidavits of Lagatic’s co-employees
attesting to him saying this.
Procedural Aspect
5. Notice and hearing are the two requisites of due process. The employer
must furnish the employee with two written notices before the termination
of employment can be effected:
LABOR1 | ATTY. MARLON MANUEL
a. The first apprises the employee of the particular acts or omissions
for which his dismissal is sought;
b. the second informs him of the employer’s decision to dismiss him.
6. Lagatic was served the required notices:
a. Lagatic was notified of the charges against him in a memorandum
to which he submitted a letter-reply and wherein he asked that his
failure to submit cold call reports be not interpreted as gross
insubordination.
b. He was given a separate notice of his termination.
7. Lagatic alleges that he was not given the benefit of a hearing as he claims to
not have been informed of the results of the investigation. Neither was he
able to confront the affiants who attested to his controversial statement.
However, “ample opportunity” connotes every kind of assistance that
management must afford the employee to enable him to prepare adequately
for his defense. This requirement of a hearing is complied with as long as
there was an opportunity to be heard, and not necessarily that an actual
hearing be conducted.
Thus, Lagatic had an opportunity to be heard when he submitted his letter-
reply but he adduced no other evidence on his behalf. Further, he admitted
his failure to submit the reports but merely prayed for the same to not be
considered as gross insubordination.
8. Lagatic also failed to submit controverting evidence regarding his written
statement although the memorandum on this charged that he had shown the
statement to several sales personnel. Denials are weak especially when not
substantiated by clear and convincing evidence.
[2nd Issue] Entitlement to illegally deducted amounts from his commission
9. Lagatic claims there were illegal deductions made on his commissions
given the formula Cityland uses for determining commissions:
COMMISSIONS = (CE - CN) - AR
Where CE (Credits Earned) = Monthly Sales Volume x Commission Rate
(CR)
CN (Cumulative Negative)
AR (Amounts Earned) = Monthly Compensation/.75
CR (Commission Rate) = 4.5%
10. In the formula, an increase in salary would result to an increase in AR, thus
diminishing the amount of commissions that Lagatic would receive.
a. Lagatic construes this as violative of the non-diminution of
benefits clause embodied in the wage orders applicable him.
58

b. Cityland has paid Lagatic commissions based on a higher AR each
time there has been a wage increase, Lagatic sees the difference
between the original and subsequent ARs as illegal deductions:
11. Lagatic further claims that with this formula, he even owes Cityland
P1,410.00 because:
Lagatic’s Basic Salary = P4,230.00
AR = 4,230.00/ .75 = 5,640.00
Lagatic’s Basic Salary – AR = P1,410.00
12. While Lagatic’s increase in salary would cause an increase in the AR thus
lessen his commissions, Lagatic however always receives his basic salary
without deductions. His argument on his indebtedness is fallacious as his
basic salary remains the same regardless of his collections.
13. Additionally, there is no law which requires employers to pay commissions,
and when they do so, there is no law which prescribes a method for
computing commissions following the letter-opinion of DOLE dated 19 Feb
1993. The determination of the amount of commissions is the result of
collective bargaining negotiations, individual employment contracts or
established employer practice.
Since the formula for the computation of commissions was presented to and
accepted by Lagatic, the formula is in order.
14. On the allegation that said formula diminishes the benefits being received
by Lagatic whenever there is a wage increase, commissions are not meant to
be in a fixed amount. In fact, there is no assurance that any commission
would be received at all.
Non-diminution of benefits, in this case, merely means that the company
may not remove the privilege to earn a commission but not that they are
entitled to a fixed amount of it.
[3rd and Main Issue] Claims for overtime pay, rest day pay and holiday
premiums
LABOR1 | ATTY. MARLON MANUEL
15. Lagatic alleges that the company owes him overtime pay for the call-ins he
made on weekends.
a. Cityland argues that their employees clamored for the privilege to
attend call-ins and entertain walk in clients on weekends. That
because of the clamor, it had to stagger the schedule of their
employees so everyone may be given a chance to do so.
b. SC however said that if there really was clamor for the weekend
work then why were there weekends that had no call-ins or walk-
ins.
16. Further, the LA and NLRC sanctioned Cityland’s practice of offsetting rest
day or holiday work with equivalent time on regular workdays following
Department Order 21, series of 1990.
a. The DO was however misapplied as it pertained to the shortening
of the workweek from 6 days to 5 days but with prolonged hours
on the 5 days.
b. Overtime premiums were not paid in exchange for longer
weekends.
17. With Lagatic, his weekends were not compressed. Instead, he is claiming
for work over and above his normal 5 ½ days of work in a week.
a. Cityland’s scheme is, by analogy, the same as the principle that
overtime cannot be offset by undertime. To allow offsetting would
be prejudicial to the worker as he would be deprived of the
additional pay for the rest day work he rendered.
b. To allow Cityland to continue with the scheme would be
circumventing the law on payment of premiums for the rest and
holiday work.
18. Lagatic however failed to show his entitlement to overtime and resy day pay
as he only submitted as evidence the minutes of meetings where he was
assigned to work on weekends and holidays. These were not sufficient to
prove his allegations that he actually worked on the said dates.
[4th Issue] Claims for moral and exemplary damages, and attorney’s fees
19. With the finding of Lagatic’s dismissal, such claims must fail.
SEPARATE OPINION: None
59
 LABOR1 | ATTY. MARLON MANUEL

22. Interphil Laboratories Employees Union v. Interphil Laboratories (Pamie) their CBA which was set to expire in a few months. Interphil said that the
December 19, 2001 | Kapunan, J. | Hours of Work - Slowdown matter was best discussed during the formal negotiations.
3. In March 1993, they inquired once more and received the same reply. In
PETITIONER: INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, April 1993, they requested a meeting to discuss the duration and effectivity
ENRICO GONZALES; MA. THERESA MONTEJO, of the CBA. A meeting was held where the union officers asked whether
RESPONDENTS: INTERPHIL LABORATORIES, INC., AND Interphil would be amenable to make the new CBA effective for 2 years.
HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF LABOR Interphil declared that it is premature to discuss the matter and that the
AND EMPLOYMENT company could not make a decision at the moment.
4. The next day, all the rank-and-file employees of the company refused to
follow their regular 2 shift work schedule of from 6:00 a.m. to 6:00 p.m.,
SUMMARY: The union officers inquired with Interphil several times about its
and from 6:00 p.m. to 6:00 a.m. At 2:00 p.m. and 2:00 a.m., the employees
stand regarding the duration of their CBA, which was set to expire in a few
stopped working and left their workplace.
months. Interphil said that the matter was best discussed during the formal
5. When asked why they refused to follow their normal work schedule, the
negotiations. The next day, all the rank-and-file employees of the company did
employees said to ask the union officers. To minimize the damage the
an overtime boycott and work slowdown campaign. A union director said that
overtime boycott was causing the company, Interphil immediately asked for
they would return to their normal work schedule if the company agrees to their
a meeting with the union officers.
demands as to the effectivity and duration of the new CBA.
6. A union director said that the employees would only return to their normal
ISSUE: Did the workers engage in "overtime boycott" and "work slowdown",
work schedule if the company agrees to their demands as to the effectivity
both amounting to illegal strike? - YES, the union’s unjustified unilateral
and duration of the new CBA. Interphil argues that this could be better
alteration of the 24-hour work schedule thru their concerted activities of
discussed during the formal renegotiations. Unsatisfied, the overtime
"overtime boycott" and "work slowdown” to force Interphil to accede to their
boycott continued. In addition, the employees started to engage in a work
unreasonable demands, can be classified as a strike on an installment basis. The
slowdown campaign during the time they were working, thus substantially
workers' concerted refusal to adhere to the work schedule in force for the last
delaying the production of the company.
several years is a slowdown, an inherently illegal activity even in the absence of
7. Afterward, the union submitted its CBA proposal, and Interphil filed its
a no-strike clause in a collective bargaining contract, or statute or rule.
counter-proposal.
8. Interphil then filed with the NLRC a petition to declare illegal the union's
DOCTRINE: A slowdown is a strike on the installment plan; it is generally
"overtime boycott" and "work slowdown" which allegedly amounted to
condemned as inherently illicit and unjustifiable, because while the employees
illegal strike.
continue to work and remain at their positions and accept the wages paid to
9. Interphil also filed with the National Conciliation and Mediation Board
them, they at the same time select what part of their allotted tasks they care to
(NCMB) an urgent request for preventive mediation. The parties failed to
perform of their own volition or refuse openly or secretly, to the employer's
arrive at an agreement and so, Interphil filed with DOLE a petition for
damage, to do other work; in other words, they work on their own terms.
assumption of jurisdiction.
10. The union filed with the NCMB a Notice of Strike citing unfair labor
FACTS:
practice. On 12 February 1994, the union staged a strike.
1. Interphil Laboratories Employees Union-FFW is the exclusive bargaining
11. Secretary of Labor Nieves Confesor issued an assumption order over the
agent of the rank-and-file employees of Interphil Laboratories, Inc.
labor dispute. Interphil was ordered to immediately accept all striking
2. The union president and a union director inquired with Interphil’s VP of
workers, including the 53 terminated union officers, shop stewards and
Human Resources about the stand of the company regarding the duration of
60

union members back to work under the same terms and conditions
prevailing prior to the strike, and to pay all the unpaid accrued year end
benefits of its employees in 1993. The union was directed to comply with
the return-to-work orders.
12. The case before NLRC continued. The union sought to consolidate the case
with the labor dispute pending before the Secretary of Labor. Despite
objection by Interphil, Labor Arbiter Caday held in abeyance the
proceedings before him. However, Acting Labor Secretary Brillantes, after
finding that the issues raised would require a formal hearing and the
presentation of evidentiary matters, directed Labor Arbiter Caday to
proceed with the hearing of the cases and to thereafter submit a report and
recommendation.
13. Secretary Quisumbing approved and adopted the report submitted:
a. Declaring the 'overtime boycott' and 'work slowdown' as illegal
strike;
b. Declaring the union officers who spearheaded and led the overtime
boycott and work slowdown, to have lost their employment status;
and
c. Ordering them to cease and desist from further committing the
aforesaid illegal acts.
ISSUE: Did the workers engage in "overtime boycott" and "work slowdown",
both amounting to illegal strike? - YES
RATIO:
1. Aside from the testimonies of Salazar, the testimonies of other Department
Managers pointing to the union officers as the instigators of the overtime
boycott and work slowdown, the testimony of Epifanio Salumbides a union
member, shows that the union officers released a memo ordering the union
members to make up their own excuses so as not to work overtime. He was
also told to skip work on Friday so that he will not be asked to go to work
on the weekend. Another order was given to skip overtime work when the
union gives the signal “showtime”. When such signal was given by a union
officer, the workers left simultaneously, except for Salumbides. He was
then called in by the union officers where he was cursed at for continuing to
work overtime.
LABOR1 | ATTY. MARLON MANUEL
2. Undeniably, overtime boycott and work slowdown from April 16, 1993 up
to March 7, 1994 had resulted not only in financial losses to the company
but also damaged its business reputation.
3. Evidently, the union’s unjustified unilateral alteration of the 24-hour work
schedule thru their concerted activities of "overtime boycott" and "work
slowdown" from April 16, 1993 up to March 7, 1994, to force Interphil to
accede to their unreasonable demands, can be classified as a strike on an
installment basis.
4. More importantly, the "overtime boycott" or "work slowdown" constituted a
violation of their CBA, which prohibits the union or employee to stage a
strike or engage in slowdown or interruption of work.
5. In Ilaw at Buklod ng Manggagawa vs. NLRC, it was held that the workers'
concerted refusal to adhere to the work schedule in force for the last several
years, is a slowdown, an inherently illegal activity essentially illegal even in
the absence of a no-strike clause in a collective bargaining contract, or
statute or rule. A slowdown is a strike on the installment plan; as a willful
reduction in the rate of work by concerted action of workers for the purpose
of restricting the output of the employer, in relation to a labor dispute; as an
activity by which workers, without a complete stoppage of work, retard
production or their performance of duties and functions to compel
management to grant their demands. A slowdown is generally condemned
as inherently illicit and unjustifiable, because while the employees continue
to work and remain at their positions and accept the wages paid to them,
they at the same time select what part of their allotted tasks they care to
perform of their own volition or refuse openly or secretly, to the employer's
damage, to do other work; in other words, they work on their own terms.
Other issues:
Jurisdiction of Secretary of Labor
6. On the matter of the authority and jurisdiction of the Secretary of Labor to
rule on the illegal strike committed by the union, it is undisputed that the
petition to declare the strike illegal before Labor Arbiter Caday was filed
long before the Secretary of Labor and Employment issued the assumption.
However, it cannot be denied that the issues of "overtime boycott" and
"work slowdown" amounting to illegal strike before Labor Arbiter Caday
are intertwined with the labor dispute before the Labor Secretary. Moreover,
61
 LABOR1 | ATTY. MARLON MANUEL

the subsequent participation of the union in the continuation of the hearing

was in effect an affirmation of the jurisdiction of the Secretary of Labor. Condonation of the illegal acts committed
7. Also, the Secretary was explicitly granted by Article 263(g) of the Labor 12. Finally, the Court cannot agree that in extending substantial separation
Code the authority to assume jurisdiction over a labor dispute causing or package to some officers of the union during the pendency of this case
likely to cause a strike or lockout in an industry indispensable to the resulted in condonation of the illegal acts they committed.
national interest and decide the same accordingly. Necessarily, this 13. At the time these union officers obtained their separation benefits, they were
authority to assume jurisdiction over the said labor dispute must include and still considered employees of the company. Hence, the company was merely
extend to all questions and controversies arising therefrom, including cases complying with its legal obligations. Interphil could have withheld these
over which the labor arbiter has exclusive jurisdiction. benefits pending the final resolution of this case. Yet, considering perhaps
8. The issuance of the assailed orders is within the province of the Secretary. the financial hardships experienced by its employees, it chose to let its
employees avail of their separation benefits. The Court views the gesture as
Rules of evidence in Labor cases an act of generosity for which it should not be punished.
9. In labor cases pending before the Commission or the Labor Arbiter, the
rules of evidence prevailing in courts of law or equity are not controlling.
Rules of procedure and evidence are not applied in a very rigid and
technical sense in labor cases. Hence, the Labor Arbiter is not precluded
from accepting and evaluating evidence other than, and even contrary to,
what is stated in the CBA.
10. In any event, the parties stipulated: Section 1. Regular Working Hours — A
normal workday shall consist of not more than 8 hours. The regular working
hours for the Company shall be from 7:30 A.M. to 4:30 P.M. The schedule
of shift work shall be maintained; however the company may change the
prevailing work time at its discretion, should such change be necessary in
the operations of the Company. [...]
11. It is evident that the working hours may be changed, at the discretion of the
company, should such change be necessary for its operations, and that the
employees shall observe such rules as have been laid down by the company.
In the case before us, Labor Arbiter Caday found that Interphil had to adopt
a continuous 24-hour work daily schedule by reason of the nature of its
business and the demands of its clients. It was established that the
employees adhered to the said work schedule since 1988. The employees
are deemed to have waived the eight-hour schedule since they followed,
without any question or complaint, the two-shift schedule while their CBA
was still in force and even prior thereto. As the employees assented by
23. Ramirez vs Polyson Industries, Inc. (NICKNAME)
practice to this arrangement, they cannot now be heard to claim that the 19 October 2016 | Peralta, J. | Working Conditions-“work slowdown”
overtime boycott is justified because they were not obliged to work beyond
eight hours.

62

PETITIONERS: ERROL RAMIREZ, JULITO APAS, RICKY ROSELO AND
ESTEBAN MISSION, JR.
RESPONDENTS: POLYSON INDUSTRIES, INC. AND WILSON S. YU
SUMMARY:
The instant case arose from a labor dispute, between Ramirez et. al. and Polyson.
Polyson received a rush order from one of its clients which required workers to
work overtime. Five operators indicated their desire to work overtime. However,
three of the five workers did not work overtime which resulted in the delay in
delivery of the order and eventually the cancellation. When management asked the
workers, two of the three workers gave the same reason, "Ayaw nila/ng iba na
mag-OT [overtime] ako". The management then conducted an investigation and a
hearing where it was proved that Ramirez et. al. were the ones who pressured him
to desist from rendering overtime work. After evaluation, the management
terminated Ramirez et. al. Obrero filed a Notice of Strike with the NCMB.
Thereafter, the DOLE Secretary certified the labor dispute to the NLRC for
immediate compulsory arbitration where the parties were required to maintain the
status quo [Article 263(g)]. Issue: WON petitioners' dismissal from their
employment was valid? – YES. SC held Ramirez et. al. were guilty of “overtime
boycott” or “work slowdown”. Ramirez et. al. are guilty of instigating their co-
employees to commit slowdown, an inherently and essentially illegal activity.
DOCTRINE:
Jurisprudence defines a slowdown as a "strike on the installment plan;" as a
willful reduction in the rate of work by concerted action of workers for the
purpose of restricting the output of the employer, in relation to a labor dispute; as
an activity by which workers, without a complete stoppage of work, retard
production or their performance of duties and functions to compel management to
grant their demands. Such a slowdown is generally condemned as inherently illicit
and unjustifiable, because while the employees "continue to work and remain at
their positions and accept the wages paid to them," they are at the same time
"select what part of their allotted tasks they care to perform of their own volition
or refuse openly or secretly, to the employer's damage, to do other work;" in other
words, they "work on their own terms”.
FACTS:
1. Polyson is a duly organized domestic corporation which is primarily engaged in
the business of manufacturing plastic bags for supermarkets, department stores
and the like.
2. Ramirez et. al. were employees of Polyson and officers of Obrero Pilipino
(Obrero), the union of the employees of Polyson.
LABOR1 | ATTY. MARLON MANUEL
3. The instant case arose from a labor dispute, between Ramirez et. al. and
Polyson, which was certified by the DOLE to the NLRC for compulsory
arbitration.
4. Polyson met with the officers of Obrero, led by the union president Ramirez.
Obrero asked that it be voluntarily recognized by Polyson as the exclusive
bargaining agent of the rank-and-file employees of Polyson, but the latter
refused. Furious at such refusal, the Obrero officers threatened the management
that the union will show its collective strength in the coming days.
5. Polyson received a rush order from one of its clients; Polyson informed the
operators that they would be needing workers to work overtime. The supervisors
approached the operators but were told that they would be unable to work
overtime. Five operators indicated their desire to work overtime. However, three
of the five workers did not work overtime which resulted in the delay in delivery
of the order and eventually the cancellation.
6.\ When management asked the workers to indicate the reason for their failure to
do so, two of the three workers gave the same reason, "Ayaw nila/ng iba na
mag-OT [overtime] ako". The management then conducted an investigation
and a hearing where it was proved that Ramirez et. al. were the ones who
pressured him to desist from rendering overtime work.
7. The management then gave notices to Ramirez et. al. asking them to explain
why no disciplinary action would be taken against them. Ramirez et. al.
submitted their respective explanations to the management denying their
liability. After evaluation, the management informed petitioners that it has
decided to terminate petitioners' employment on the ground that they instigated
an illegal concerted activity resulting in losses to the company.
8. Petitioners denied the allegations of Polyson contending that they were
terminated from their employment not because they induced or threatened their
co-employees not to render overtime work but because they established a union
which sought to become the exclusive bargaining agent of the rank-and-file
employees of Polyson; that their termination was undertaken without affording
them substantive and procedural due process; and that Polyson is guilty of unfair
labor practice.
9. Obrero filed a Notice of Strike with the National Conciliation and Mediation
Board (NCMB) which was predicated on various grounds, among which was the
alleged illegal dismissal of herein petitioners.
10. Thereafter, the DOLE Secretary certified the labor dispute to the NLRC for
immediate compulsory arbitration where the parties were required to maintain
the status quo, in accordance with Article 263(g) of the Labor Code.
11. NLRC initially found Ramirez et. al. illegally dismissed for failure of Polyson
to submit in evidence petitioners' supposed written explanations in answer to the
company's Notice to Explain. However, Polyson then filed a MR submitting, the
subject written explanations of petitioners. The NLRC granted Polyson's MR,
thereby reversing and setting aside its original decision and declaring petitioners
63

as validly dismissed. The NLRC found that Polyson was able to present
sufficient evidence to establish that petitioners' termination from employment
was for a valid cause, as they were found guilty of inducing or threatening their
co-employees not to render overtime work, and that petitioners' dismissal was in
conformity with due process requirements.
12.\ The CA affirmed the Resolution of the NLRC. The CA ruled that petitioners'
defense, which is anchored primarily on their denial of the allegations of
Polyson, cannot overcome the categorical statements of Polyson's witnesses who
identified petitioners as the persons who induced or threatened them not to
render overtime work.
ISSUE:
1. WON petitioners' dismissal from their employment was valid? – YES.
RATIO:
1. Due process under the Labor Code involves two aspects: first is substantive,
which refers to the valid and authorized causes of termination of employment
under the Labor Code; and second is procedural, which points to the manner of
dismissal. Thus, to justify fully the dismissal of an employee, the employer
must, as a rule, prove that the dismissal was for a just or authorized cause and
that the employee was afforded due process prior to dismissal. As a
complementary principle, the employer has the onus of proving with clear,
accurate, consistent, and convincing evidence the validity of the dismissal.
2. Anent the substantive aspect, the question that should be resolved is whether
petitioners are guilty of an illegal act and, if so, whether such act is a valid
ground for their termination from employment.
3. The NLRC ruled that "the evidence on record clearly establishes that herein
[petitioners] resorted to an illicit activity. The act of inducing and/or threatening
workers not to render overtime work, given the circumstances surrounding the
instant case, was undoubtedly a calculated effort amounting to 'overtime boycott'
or 'work slowdown'. [Petitioners], in their apparent attempt to make a statement
as a response to [Polyson's] refusal to voluntarily recognize Obrero Pilipino
Polyson Industries Chapter as the sole and exclusive bargaining representative
of the rank-and-file employees, unduly caused [Polyson] significant losses in the
aggregate amount of Two Hundred Ninety Thousand Pesos (PhP290,000.00)."
4. As a reminder to labor leaders, the rule that union officers are duty-bound to
guide their members to respect the law. Contrarily, if the officers urge the
members to violate the law and defy the duly-constituted authorities, their
dismissal from the service is a just penalty or sanction for their unlawful acts.
5 The evidence presented by Polyson has proven that petitioners are indeed guilty
of instigating two employees to abstain from working overtime.
6. Petitioners question the credibility of the two employees’ claims contending that
these are self-serving and that they were merely used by the management to
LABOR1 | ATTY. MARLON MANUEL
manufacture evidence against them. However, there is nothing on record to
indicate any ulterior motive on the part of Visca and Tuting to fabricate their
claim that petitioners were the ones who threatened or induced them not to work
overtime. Absent convincing evidence showing any cogent reason why a
witness should testify falsely, his testimony may be accorded full faith and
credit.
7. Petitioners are guilty of instigating their co-employees to commit slowdown,
an inherently and essentially illegal activity even in the absence of a no-strike
clause in a collective bargaining contract, or statute or rule. Jurisprudence
defines a slowdown as a "strike on the installment plan;" as a willful reduction
in the rate of work by concerted action of workers for the purpose of restricting
the output of the employer, in relation to a labor dispute; as an activity by which
workers, without a complete stoppage of work, retard production or their
performance of duties and functions to compel management to grant their
demands. Such a slowdown is generally condemned as inherently illicit and
unjustifiable, because while the employees "continue to work and remain at their
positions and accept the wages paid to them," they at the same time "select what
part of their allotted tasks they care to perform of their own volition or refuse
openly or secretly, to the employer's damage, to do other work;" in other words,
they "work on their own terms”.
8. The Court is not persuaded by petitioners' contention that they are not guilty of
"illegal concerted activity" as they claim that this term contemplates a "careful
planning of a considerable number of participants to insure that the desired
result is attained." Nothing in the law requires that a slowdown be carefully
planned and that it be participated in by a large number of workers. The essence
of this kind of strike is that the workers do not quit their work but simply reduce
the rate of work in order to restrict the output or delay the production of the
employer.
9. With respect to procedural due process, it is settled that in termination
proceedings of employees, procedural due process consists of the twin
requirements of notice and hearing. The employer must furnish the employee
with two written notices before the termination of employment can be effected:
(1) the first apprises the employee of the particular acts or omissions for which
his dismissal is sought; and (2) the second informs the employee of the
employer's decision to dismiss him. The requirement of a hearing is complied
with as long as there was an opportunity to be heard, and not necessarily that an
actual hearing was conducted. In the present case, Polyson was able to establish
that these requirements were sufficiently complied with.
64
 LABOR1 | ATTY. MARLON MANUEL

10. As to petitioners' liability, the second paragraph of Article 264(a)7 of the

Labor Code is controlling.
11. Finally, strike, as the most preeminent economic weapon of the workers to force
management to agree to an equitable sharing of the joint product of labor and
capital, exert some disquieting effects not only on the relationship between labor
and management, but also on the general peace and progress of society and
economic well-being of the State. This weapon is so critical that the law imposes
the supreme penalty of dismissal on union officers who irresponsibly participate
in an illegal strike and union members who commit unlawful acts during a
strike. The responsibility of the union officers, as main players in an illegal
strike, is greater than that of the members as the union officers have the duty to
guide their members to respect the law. The policy of the State is not to tolerate
actions directed at the destabilization of the social order, where the relationship
between labor and management has been endangered by abuse of one party's
bargaining prerogative, to the extent of disregarding not only the direct order of
the government to maintain the status quo, but the welfare of the entire
workforce though they may not be involved in the dispute. The grave penalty of
dismissal imposed on the guilty parties is a natural consequence, considering the
interest of public welfare.

7 “Any union officer who knowingly participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during a strike may be declared to have lost his
employment status: Provided, That mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment, even if a replacement had been hired by the
employer during such lawful strike.”
65

24. Mercury Drug Co. v. Dayao (Anne)
1987 | Gutierrez Jr., J. | Hours of Work; Night Shift Differential–Art. 86
PETITIONER: MERCURY DRUG CO., INC.
RESPONDENTS: NARDO DAYAO, ET AL.
SUMMARY:
Nardao Dayao, et.al. filed a petition against Mercury Drug Co. praying: 1)
payment of their unpaid back wages for work done on Sundays and legal
holidays plus 25c/c additional compensation from date of their employment up
to June 30, 1962; 2) payment of extra compensation on work done at night; 3)
reinstatement of Januario Referente and Oscar Echalar to their former positions
with back salaries; and, as against the respondent union, for its disestablishment
and the refund of all monies it had collected from petitioners.
The issue here is WON the private respondents are entitled to claims for
25% additional compensation for performing work during Sunday and
legal holidays and nighttime service? YES. Mercury did not deny that the
private respondents rendered nighttime work. In fact, no additional evidence was
necessary to prove that the private respondents were entitled to additional
compensation for whether or not they were entitled to the same is a question of
law which the respondent court answered correctly. The "waiver rule" is not
applicable in the case at bar. Additional compensation for nighttime work is
founded on public policy, hence the same cannot be waived. (Article 6, Civil
Code).
DOCTRINE:
Work performed at night should be paid more than work done at daytime, and
that if that work is done beyond the worker's regular hours of duty, he should
also be paid additional compensation for overtime work. Additional
compensation for nighttime work is founded on public policy, hence the same
cannot be waived.
FACTS:
Nardo Dayao and 70 others filed a case in the Court of Industrial Relations
against Mercury Drug Co., Inc., and/or Mariano Que, President & General
Manager, and Mercury Drug Co., Inc., Employees Association.
1. Petitioners prayed for:
LABOR1 | ATTY. MARLON MANUEL
a. payment of their unpaid back wages for work done on Sundays and legal
holidays plus 25% additional compensation from date of their employment
up to June 30, 1962;
b. payment of extra compensation on work done at night;
c. reinstatement of Januario Referente and Oscar Echalar to their former
positions with back salaries (subsequently Referente and Echalar were
dropped as party petitioners in this case because the court has no
jurisdiction over the subject of the claims); and,
d. as against the respondent union, for its disestablishment and the refund of
all monies it had collected from petitioners. (Court held that 'petitioners'
cause of action against the respondent Association should be dismissed
without prejudice to the refiling of the same as an unfair labor practice case)
Petitioner’s Contentions (Mercury Drug)
1. Petitioners have no cause of action against Mariano Que because their
employer is respondent Mercury Drug Company, Inc., an existing
corporation which has a separate and distinct personality from its
incorporators, stockholders and/or officers,
2. That the company being a service enterprise is excluded from the coverage
of the Eight Hour Labor Law, as amended;
3. That no court has the power to set wages, rates of pay, hours of employment
or other conditions of employment to the extent of disregarding an
agreement thereon between the respondent company and the petitioners, and
of fixing night differential wages;
4. That the petitioners were fully paid for services rendered under the terms
and conditions of the individual contracts of employment;
5. That the petition having been verified by only three of the petitioners
without showing that the others authorized the inclusion of their names as
petitioners does not confer jurisdiction to this Court;
6. That there is no employer-employee relationship between management and
petitioner Nardo Dayao and that his claim has been released and/or barred
by another action;
Ruling of the CIR:
1. The claim of the petitioners for payment of backwages corresponding to the
first four hours work rendered on every other Sunday and first four hours on
legal holidays should be denied for lack of merit.
2. Respondent Mercury Drug Company, Inc., is hereby ordered to pay the
sixty-nine (69) petitioners:
66

a. An additional sum equivalent to 25% of their respective basic or
regular salaries for services rendered on Sundays and legal
holidays during the period from March 20, 1961 up to June 30,
1962; and
b. Another additional sum or premium equivalent to 25% of their
respective basic or regular salaries for nighttime services rendered
from March 20, 1961 up to June 30, 1962.
3. Petitioners' petition to convert them to monthly employees should be, as it is
hereby, denied for lack of merit.
4. Respondent Mariano Que, being an officer and acted only as an agent in
behalf of the respondent corporation, should be absolved from the money
claims of herein petitioners whose employer, according to the pleadings and
evidence, is the Mercury Drug Company, Inc.
ISSUES:
1. WON the private respondents are entitled to claims for 25% additional
compensation for performing work during Sunday and legal holidays
and nighttime service? YES.
RATIO:
1. Mercury Drug Co. did not deny that their workers provided night time
services to their customers There is no serious disagreement between the
petitioners and respondent management on the facts recited above.
2. The variance in the evidence is only with respect to the money claims.
Witnesses for petitioners declared they:
a. worked on regular days and on every other Sunday and also during
all holidays;
b. that for services rendered on Sundays and holidays they were not
paid for the first four (4) hours and what they only received was
the overtime compensation corresponding to the number of hours
after or in excess of the first four hours; and
c. that such payment is being indicated in the overtime pay for work
done in excess of eight hours on regular working days.
3. It is also claimed that their nighttime services could well be seen on their
respective daily time records.
4. The respondent court's ruling on additional compensation for work done at
night is, therefore, not without evidence.
LABOR1 | ATTY. MARLON MANUEL
5. Moreover, Mercury did not deny that the private respondents rendered
nighttime work. In fact, no additional evidence was necessary to prove that
the private respondents were entitled to additional compensation for
whether or not they were entitled to the same is a question of law which the
respondent court answered correctly.
6. The "waiver rule" is not applicable in the case at bar.
7. Additional compensation for nighttime work is founded on public policy,
hence the same cannot be waived. (Article 6, Civil Code).
8. The Court held that the respondent court acted according to justice and
equity and the substantial merits of the case, without regard to technicalities
or legal forms and should be sustained.
9. The Mercury Drug Co., Inc., maintains a chain of drugstores that are open
everyday of the week and, for some stores, up to very late at night because
of the nature of the pharmaceutical retail business.
10. The respondents knew that they had to work Sundays and holidays and at
night, not as exceptions to the rule but as part of the regular course of
employment.
11. Presented with contracts setting their compensation on an annual basis with
an express waiver of extra compensation for work on Sundays and holidays,
the workers did not have much choice.
12. The private respondents were at a disadvantage insofar as the contractual
relationship was concerned. Workers in our country do not have the luxury
or freedom of declining job openings or filing resignations even when some
terms and conditions of employment are not only onerous and inequitous
but illegal.
13. It is precisely because of this situation that the framers of the Constitution
embodied the provisions on social justice (Section 6, Article 11) and
protection to labor (Section 9, Article I I) in the Declaration of Principles
And State Policies.
14. It is pursuant to these constitutional mandates that the courts are ever
vigilant to protect the rights of workers who are placed in contractually
disadvantageous positions and who sign waivers or provisions contrary to
law and public policy.
67

25. Prangan v. NLRC (Rhald)
1998 | Romero., J. | Hours of Work; Burden of Proof is with Employer if the
employee works less than what’s prescribed by law
PETITIONER: EDUARDO B. PRANGAN
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION
(NLRC), MASAGANA SECURITY SERVICES CORPORATION, and/or
VICTOR C. PADILLA,
SUMMARY:
Masagana Security hired Prangan on November 4, 1980 as one of its security
guards. Thereafter, Eduardo Prangan was assigned to the Cat House Bar and
Restaurant with a monthly salary of P2,000.00 until its closure. In 1994, Prangan
filed a case with the LA for non-payment of overtime pay, premium pay for
holiday, rest day, night shift differential, uniform allowance, service incentive
leave pay and 13th-month pay from the year 1990 to 1993. The LA ruled in
favor of him, but his backwages was computed only at a 4-hour work schedule.
He appealed this to the LA. Initially, it was dismissed for lack of merit but later
on an MR was granted. Masagana contends that he only worked for 4 hours per
day but Prangan contends that he worked for 12 hours per day/shift. Masagana
submitted daily time records allegedly signed by the Prangan himself showing
that he only worked four hours daily.
Whether Prangan worked for 12-hours and not 4 and thus the NLRC ruling
is incorrect. Prangan worked for 12 hours. When an employer alleges that his
employee works less than the normal hours of employment as provided for in the
law, he bears the burden of proving his allegation with clear and satisfactory
evidence. Masagana hardly bothered to controvert petitioners assertion, much
less bolster its own contention. They have unlimited access to all relevant
documents and records on the hours of work of the petitioner. Yet, even as it
insists that petitioner only worked for four hours and not twelve, no employment
contract, payroll, notice of assignment or posting, cash voucher or any other
convincing evidence which may attest to the actual hours of work of the
petitioner were even presented. Instead, what the private respondent offered as
evidence were only petitioners daily time record, which the latter categorically
denied ever accomplishing, much less signing.
In said alleged daily time record, it showed that Prangan started work at 10:00
LABOR1 | ATTY. MARLON MANUEL
p.m. and would invariably leave his post at exactly 2:00 a.m. Obviously, such
unvarying recording of a daily time record is improbable and contrary to human
experience. It is impossible for an employee to arrive at the workplace and leave
at exactly the same time, day in day out. The very uniformity and regularity of
the entries are badges of untruthfulness and as such indices of dubiety.
DOCTRINE:
When an employer alleges that his employee works less than the normal hours of
employment as provided for in the law, he bears the burden of proving his
allegation with clear and satisfactory evidence.
FACTS:
1. Masagana is a corporation engaged in providing security services to its
client. It hired Prangan on November 4, 1980 as one of its security guards.
Thereafter, Prangan was assigned to the Cat House Bar and Restaurant with
a monthly salary of P2,000.00 until its closure.
2. On May 4, 1994, Prangan filed a complaint against Masagana for
underpayment of wages, non-payment of salary from August 16-31, 1993,
overtime pay, premium pay for holiday, rest day, night shift differential,
uniform allowance, service incentive leave pay and 13th-month pay from
the year 1990 to 1993.
3. Masagana, in its position paper, rejected Prangan’s claim alleging it merely
acted as an agent of the latter in securing his employment at the Cat House
Bar and Restaurant. Thus, the liability for the claims of the petitioner
should be charged to Cat House Bar and its owner, being his direct
employer.
4. In resolving the dispute in a decision dated May 31, 1995, the Labor Arbiter
brushed aside the Masagana’s contention that it was merely an agent of the
petitioner. Prangan was awarded P9,932.16 for premium pay for holiday
and rest days, night shift differential, service incentive leave pay, 13th-
month pay, uniform allowance, and unpaid salary.
5. Prangan still appealed to the NLRC contending that the Labor Arbiter erred
in concluding that he only worked for four hours and not twelve hours a
day. Evidently, the shorter work hours resulted in a lower monetary award
by the Labor Arbiter.
6. However, the NLRC dismissed his appeal for failure to file the same within
ten-day reglementary period.
68

7. Prangan filed an MR which, in the interest of justice, was favorably granted
by the NLRC resulting in the reinstatement of his appeal. Nonetheless,
petitioners victory was short-lived as the NLRC eventually dismissed his
appeal for lack of merit.
8. Prangan is now before us imputing grave abuse of discretion on the part of
respondent NLRC (a) declaring that he rendered only four hours and not
twelve hours of work, and (b) affirming the monetary award.
9. Arguments and evidence:
a. Masagana submitted the daily time records allegedly signed by the
Prangan himself showing that he only worked four hours daily.
b. Prangan argues that these daily time records were falsified for the
simple reason that he was not required to submit one. He further
stressed that, assuming such documents exist, its authenticity and
due execution are questionable and of doubtful source.
ISSUES:
1. Whether Prangan worked for 12-hours and not 4 and thus the NLRC
ruling is incorrect. Prangan worked for 12 hours. When an employer
alleges that his employee works less than the normal hours of employment
as provided for in the law, he bears the burden of proving his allegation
with clear and satisfactory evidence.
RATIO:
1. The NLRC, in declaring that petitioner only worked for four hours, relied
solely on the supposed daily time records of the petitioner submitted by the
private respondent.
2. We, however, are of the opinion that these documents cannot be considered
substantial evidence as to conclude that petitioner only worked for four
hours.
3. Masagana hardly bothered to controvert petitioners assertion, much less
bolster its own contention. They have unlimited access to all relevant
documents and records on the hours of work of the petitioner. Yet, even as
it insists that petitioner only worked for four hours and not twelve, no
employment contract, payroll, notice of assignment or posting, cash
voucher or any other convincing evidence which may attest to the actual
hours of work of the petitioner were even presented. Instead, what the
private respondent offered as evidence were only petitioners daily time
LABOR1 | ATTY. MARLON MANUEL
record, which the latter categorically denied ever accomplishing, much less
signing.
4. In said alleged daily time record, it showed that Prangan started work at
10:00 p.m. and would invariably leave his post at exactly 2:00 a.m.
Obviously, such unvarying recording of a daily time record is improbable
and contrary to human experience. It is impossible for an employee to arrive
at the workplace and leave at exactly the same time, day in day out. The
very uniformity and regularity of the entries are badges of untruthfulness
and as such indices of dubiety.
5. Another consideration which militates against private respondents claim is
the fact that in the personnel data sheet of Prangan, duly signed by the
formers operation manager, it shows on its face that the latter’s hours of
work are from 7:00 p.m. to 7:00 a.m. or twelve hours a day. They are
estopped from claiming otherwise.
6. All told, private respondent has not adequately proved that petitioners actual
hours of work is only four hours. Its unexplained silence contravening the
personnel data sheet and the attendance sheets of Cat House Bar and
Restaurant presented by the petitioner showing he worked for twelve hours,
has assumed the character of an admission. No reason was proffered for this
silence despite private respondent, being the employer, could have easily
done so.
69

FACTS:
26. National Semiconductors Distribution Ltd. v. NLRC (Marian)
26 June 1988 | J. Bellosillo | Working Conditions - Hours of Work; Burden of proof
of payment of night shift differential
PETITIONER: NATIONAL SEMICONDUCTOR (HK) DISTRIBUTION,
LTD.
RESPONDENTS: NATIONAL LABOR RELATIONS COMMISSION (4TH
DIVISION) and EDGAR PHILIP C. SANTOS
SUMMARY: Santos is an employee of NSC who did not report for work on Jan
8, 1993 for his night shift but still recorded that he went in his daily time record.
Santos’s supervisor noticed this so an investigation was conducted where he was
made to explain in writing within 48 hours from notice why no disciplinary
action should be taken against him for dishonesty, falsifying daily time record
(DTR) and violation of company rules and regulations. Santos was dismissed
and now he alleges that payments due to him such as the night shift differential
was never given. The issue: Is complainant Edgar Philip Santos entitled to
recover unpaid salary, holiday pay, night shift differential, allowances, separation
pay, retirement benefits and moral damages? SC held that Santos is entitled
because the burden of proving payment is with NSC and it failed to do so. It is
not disputed that complainant was regularly assigned to a night shift (10:00
P.M. to 7:00 A.M.).
DOCTRINE: Under Section 2, Rule II, Book Three of the Implementing Rules of the
Labor Code, complainant is entitled to an additional benefit of not less ten percent
(10%) of his regular wage for each hour of work performed.
The best evidence for respondent corporation would have been the payrolls,
vouchers, daily time records and the like which under Sections 6, 7, 8, 11 and 12,
Rule X, Book III of the Implementing Rules it is obliged to keep.
Its failure gives rise to the presumption that either it does not have them or if
it does, their presentation is prejudicial to its cause. We rule therefore that
complainant should be awarded a night shift differential but limited to there (3)
years considering the prescriptive period of money claims
LABOR1 | ATTY. MARLON MANUEL
1. Parties:
a. Petitioner ⇒ National Semiconductor (HK) Distribution, Ltd.
(NSC for brevity), a foreign corporation licensed to do business
in the Philippines, manufactures and assembles electronic parts
for export with principal office at the Mactan Export Processing
Zone, Mactan, Lapu-Lapu City.
b. Respondent ⇒ Edgar Philip C. Santos was employed by NSC as
a technician in its Special Products Group with a monthly salary
of P5,501.00 assigned to the graveyard shift starting at ten o'
clock in the evening until six o' clock in the morning.
2. On 8 January 1993 Santos did not report for work on his shift. He resumed
his duties as night shift Technician Support only on 9 January 1993.
However, at the end of his shift the following morning, he made two (2)
entries in his daily time record (DTR) to make it appear that he worked on
both the 8th and 9th of January 1993
a. His immediate supervisor, Mr. Joel Limsiaco, unknown to
private respondent Santos, received the report that there was
no technician in the graveyard shift of 8 January 1993. Thus,
Limsiaco checked the DTRs and found out that Santos indeed did
not report for work on 8 January. But when he checked Santos'
DTR again in the morning of 9 January 1993 he found the entry
made by Santos for the day before.
3. Informal investigations were conducted by management. Santos was
required in a memorandum to explain in writing within 48 hours from
notice why no disciplinary action should be taken against him for
dishonesty, falsifying daily time record (DTR) and violation of company
rules and regulations.
4. On 11 January 1993 Santos submitted his written explanation alleging that
he was ill on the day he was absent. As regards the entry on 8 January, he
alleged that it was merely due to oversight or carelessness on his part.
5. NSC dismissed him on 14 January 1993 on the ground of falsification of his
DTR, which act was inimical to the company and constituted dishonesty
and serious misconduct
70

6. Santos filed a complaint for illegal dismissal and non-payment of back
wages, premium pay for holidays and rest days, night shift differential pay,
allowances, separation pay, moral damages and attorney's fees.
7. Labor Arbiter Dominador A. Almirante found that Santos was dismissed on
legal grounds, although he was not afforded due process, hence, NSC was
ordered to indemnify him P1,000.00. The Labor Arbiter likewise ordered
the payment of P19,801.47 representing Santos' unpaid night shift
differentials
a. NSC appealed to the National Labor Relations Commission
b. NLRC affirmed the Labor Arbiter.
ISSUES:
1. Did respondent National Semiconductor (HK) Distribution Ltd. illegally
dismiss complainant Edgar Philip Santos? - No
2. Is complainant Edgar Philip Santos entitled to recover unpaid salary,
holiday pay, night shift differential, allowances, separation pay, retirement
benefits and moral damages? - Yes
5.
RATIO:
1. In Jimerez v. National Labor Relations Commission, SC declared:
a. As a general rule, one who pleads payment has the burden of
proving it. Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment.
2. For sure, Santos cannot adequately prove the fact of non-payment of night
shift differentials since the pertinent employee files, payrolls, records,
remittances and other similar documents — which will show that private
respondent rendered night shift work; the time he rendered services; and,
the amounts owed as night shift differentials — are not in his possession but
in the custody and absolute control of NSC
3. By choosing not to fully and completely disclose information to prove that
it had paid all the night shift differentials due to Santos, NSC failed to
discharge the burden of proof.
4. [!] Consequently, no grave abuse of discretion can be ascribed to the NLRC
for sustaining the Labor Arbiter when it ruled thus — It is not disputed that
LABOR1 | ATTY. MARLON MANUEL
complainant was regularly assigned to a night shift (10:00 P.M. to 7:00
A.M.).
a. Under Section 2, Rule II, Book Three of the Implementing
Rules of the Labor Code, complainant is entitled to an
additional benefit of not less ten percent (10%) of his regular
wage for each hour of work performed.
b. The record is bereft of evidence that respondent has paid
complainant this benefit.
c. The best evidence for respondent corporation would have been the
payrolls, vouchers, daily time records and the like which under
Sections 6, 7, 8, 11 and 12, Rule X, Book III of the Implementing
Rules it is obliged to keep.
d. Its failure gives rise to the presumption that either it does not
have them or if it does, their presentation is prejudicial to its
cause. We rule therefore that complainant should be awarded a
night shift differential but limited to there (3) years considering the
prescriptive period of money claims
The minimum requirements of due process have been fulfilled by petitioner.
a. That the investigations conducted by petitioner may not be
considered formal or recorded hearings or investigations is
immaterial.
b. A formal or trial type hearing is not all times and in all instances
essential to due process, the requirements of which are satisfied
where the parties are afforded fair and reasonable opportunity to
explain their side of the controversy.
c. It is deemed sufficient for the employer to follow the natural
sequence of notice, hearing and judgment.
71

27. Jose Rizal College v. NLRC (Sel)
1987 | Paras | Rest Periods and Holidays
PETITIONER: Jose Rizal College
RESPONDENTS: NLRC and National Alliance of Teachers/Office Workers
SUMMARY: Jose Rizal College (JRC) is a NSNF school. It has 3 groups of
employees: (a) Personnel on monthly basis; (b) Personnel on daily basis; and
(c)Collegiate faculty who are paid on the basis of student contract hour -- before
the start of the sem, they sign contracts with the college undertaking to meet
their classes as per schedule. National Alliance of Teachers and Office Workers
(NATOW) filed with the Ministry of Labor a complaint for non-payment of
holiday pay. JRC argues that it is not covered by Book V of the Labor Code
considering that it is a non-profit institution and that its hourly paid faculty
members are paid on a “contract” basis because they are required to hold classes
for a particular number of hours. In the programming of these student contract
hours, legal holidays are excluded and labelled in the schedule as “no class day”.
Plus, if a regular week day is declared a holiday, the school calendar is extended
to compensate for that day. ISSUE: Whether the school faculty who according
to their contracts are paid per lecture hour are entitled to unworked holiday
pay -- YES. JRC (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. It is readily apparent that the
declared purpose of the holiday pay which is the prevention of diminution of the
monthly income of the employees on account of work interruptions is defeated
when a regular class day is cancelled on account of a special public holiday and
class hours are held on another working day to make up for time lost in the
school calendar. Otherwise stated, the faculty member, although forced to take a
rest, does not earn what he should earn on that day. Be it noted that when a
special public holiday is declared, the faculty member paid by the hour is
deprived of expected income, and it does not matter that the school calendar is
extended in view of the days or hours lost, for their income that could be earned
from other sources is lost during the extended days.
DOCTRINE: Section 94 of the Labor Code -- 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;
LABOR1 | ATTY. MARLON MANUEL
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;
IRR: SEC. 8. Holiday pay of certain employees: 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..
FACTS:
1. Jose Rizal College (JRC) is a NSNF school. It has 3 groups of employees:
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
c. Collegiate faculty who are paid on the basis of student contract
hour; Before the start of the sem, they sign contracts with the
college undertaking to meet their classes as per schedule.
2. National Alliance of Teachers and Office Workers (NATOW) filed with the
Ministry of Labor a complaint for non-payment of holiday pay.
3. LA:
a. The faculty and personnel of JRC who are paid their salary by the
month uniformly in a school year, irrespective of the number of
working days in a month, w/o deduction for holidays, are
presumed to be already paid the 10 paid legal holidays and are no
longer entitled to separate payment for the regular holidays.
b. The personnel who are paid their wages daily are entitled to be
paid the 10 unworked regular holidays
c. Collegiate faculty 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.
4. NLRC modified: teaching personnel paid by the hour are declared to be
entitled to holiday pay.
5. JRC argues that it is not covered by Book V of the Labor Code considering
that it is a non-profit institution and that its hourly paid faculty members are
paid on a “contract” basis because they are required to hold classes for a
72

particular number of hours. In the programming of these student contract
hours, legal holidays are excluded and labelled in the schedule as “no class
day”. Plus, if a regular week day is declared a holiday, the school calendar
is extended to compensate for that day.
6. On the other hand, the OSG argues that under Article 94 of the Labor Code,
holiday pay applies to all employees except those in retail and service
establishments. Also, NLRC ruled that the purpose of holiday pay is
obvious -- to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced
to take a rest, he earns what he should earn. It’s no excuse therefore that the
school calendar is extended whenever holidays occur because such happens
only in cases of special holidays.
ISSUES:
1. Whether the school faculty who according to their contracts are paid
per lecture hour are entitled to unworked holiday pay -- YES
RATIO:
2. Section 94 of the Labor Code -- 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;
3. IRR: 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..
4. Under these provisions, apparently, JRC (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.
5. The 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
LABOR1 | ATTY. MARLON MANUEL
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).
6. 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.
7. On the other hand, both the law and the Implementing Rules governing
holiday pay are silent as to payment on Special Public Holidays.
8. It is readily apparent that the declared purpose of the holiday pay which is
the prevention of diminution of the monthly income of the employees on
account of work interruptions is defeated when a regular class day is
cancelled on account of a special public holiday and class hours are held on
another working day to make up for time lost in the school calendar.
9. Otherwise stated, the faculty member, although forced to take a rest, does
not earn what he should earn on that day. Be it noted that when a special
public holiday is declared, the faculty member paid by the hour is deprived
of expected income, and it does not matter that the school calendar is
extended in view of the days or hours lost, for their income that could be
earned from other sources is lost during the extended days.
10. Similarly, when classes are called off or shortened on account of typhoons,
floods, rallies, and the like, these faculty members must likewise be paid,
whether or not extensions are ordered.
28. San Miguel Corp. v. CA (MIKA)
January 30, 2002 | Kapunan | Rest Periods and Holidays – Muslim Holiday Pay
PETITIONER: SAN MIGUEL CORPORATION
RESPONDENTS: THE HONORABLE COURT OF APPEALS-FORMER
THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M. ESPAÑOL, JR., Hon.
CRESENCIANO B. TRAJANO, and HON. REGIONAL DIRECTOR ALLAN M.
MACARAYA,
73

RATIO:
SUMMARY: After the DOLE inspection, it was found that SMC’s office in Iligan
City was underpaying its employees as to their regular Muslim holiday pay.
DOLE ordered SMC to consider Muslim holidays as regular holidays and to pay
both its Muslim and non-Muslim employees holiday pay. CA affirmed and
modified the ruling as to the percentage. SMC filed a petition for certiorari under
rule 65 before the SC. SMC argues that its non-Muslim employees are not entitled
to holiday pay and that the Code of Muslim Personal Laws are applicable only to
Muslims.
The issue is WON SMC’s non-employees are entitled to Muslim holiday pay. SC
held YES.
DOCTRINE: There should be no distinction between Muslims and non-
Muslims as regards payment of benefits for Muslim holidays.
We must remind SMC that wages and other emoluments granted by law to
the working man are determined on the basis of the criteria laid down by
laws and certainly not on the basis of the worker’s faith or religion.
FACTS:
1. DOLE, Iligan District Office, conducted a routine inspection of San Miguel
Corp. (SMC) in Iligan City. It was discovered that there was underpayment
by SMC of regular Muslim holiday pay to its employees.
2. SMC contested the findings and DOLE conducted summary hearings. Still,
SMC failed to submit proof that it was paying regular Muslim holiday pay
to its employees.
3. Hence, Alan Macaraya, Director of DOLE Iligan District Office directed
SMC to consider Muslim holidays as regular holidays and to pay both its
Muslim and non-Muslim employees holiday pay.
4. SMC filed an appeal to the DOLE main office but it was dismissed for lack
of merit and the order of Director Macaraya was affirmed. SMC filed a
petition for certiorari with the CA. CA modified the ruling with regards the
payment of Muslim holiday from 200% to 150% of the employee’s basic
salary.
5. SMC’s MR was denied. SMC filed a petition for certiorari, under Rule 65,
before the SC.
ISSUES:
1. WON SMC’s non-Muslim employees are entitled to Muslim holiday
pay. – YES.
LABOR1 | ATTY. MARLON MANUEL
1. Art. 94. Right to holiday pay. —
a. (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. (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;
2. Muslim holidays are provided in Art. 169 (refers to the recognized legal
Muslim holidays) and Art. 170 (refers to the provinces and cities where
officially observed) of Code of Muslim Personal Laws (P.D. No. 1083). The
provisions should be read in conjunction with Art. 94 of the Labor Code.
3. SMC argues that the Code of Muslim Personal Laws is applicable only to
Muslims and merely contends that its non-Muslim employees are not
entitled to Muslim holiday pay. SC disagrees. There should be no
distinction between Muslims and non-Muslims as regards payment of
benefits for Muslim holidays.
4. SC and CA agreed with Undersecretary Español who stated: “Assuming
arguendo that the SMC’s position is correct, then by the same token, Muslims
throughout the Philippines are also not entitled to holiday pays on Christian holidays
declared by law as regular holidays. We must remind SMC that wages and other
emoluments granted by law to the working man are determined on the basis of
the criteria laid down by laws and certainly not on the basis of the worker’s
faith or religion.”
5. At any rate, Article 3(3) of P.D. No. 1083 also declares that." . . nothing
herein shall be construed to operate to the prejudice of a non-Muslim."
6. In addition, the 1999 Handbook on Workers’ Statutory Benefits,
categorically stated: “Considering that all private corporations, offices,
agencies, and entities or establishments operating within the designated
Muslim provinces and cities are required to observe Muslim holidays, both
Muslim and Christians working within the Muslim areas may not report for
work on the days designated by law as Muslim holidays.”
7. As regards the allegation that the issue on Muslim holiday pay was already
resolved in NLRC (Napoleon E. Fernan v. SMC Beer Division and
Leopoldo Zaldarriaga), the Court notes that the case was primarily for
illegal dismissal and the claim for benefits was only incidental to the main
case. In that case, the NLRC declared, in passing: “We also deny the claims
74
 LABOR1 | ATTY. MARLON MANUEL

for Muslim holiday pay for lack of factual and legal basis. Muslim holidays are
legally observed within the area of jurisdiction of the present ARMM, particularly in
the provinces of Maguindanao, Lanao del Sur, Sulu and Tawi-Tawi. It is only upon
Presidential Proclamation that Muslim holidays may be officially observed outside
the Autonomous Region and generally extends to Muslims to enable them the
observe said holidays.” – SC found that this decision is not a benchmark nor a
guideline to the present case.

[Irrelevant issues]
8. Regional Director Macaraya acted as the duly authorized representative of
the Secretary of Labor and Employment and it was within his power to
issue the compliance order to SMC.
9. SMC was accorded due process as they were furnished a copy of the
inspection order and it was received and explained to them. There were also
a series of summary hearings.

WHEREFORE, in view of the foregoing, the petition is DISMISSED.

SEPARATE OPINIONS:
CONCURRING:

75

29. Insular Bank of Asia and America Employees Union (IBAAEU) v. Inciong
(JAYA)
Oct 23, 1984 | Makasiar, J. | Rest Periods and Holidays
PETITIONER: INSULAR BANK OF ASIA AND AMERICA EMPLOYEES’
UNION (IBAAEU)
RESPONDENTS: HON. AMADO G. INCIONG, Deputy Minister, Ministry of
Labor and INSULAR BANK OF ASIA AND AMERICA
Insular Union filed a complaint against Insular Bank for payment of holiday pay.
This was granted by the Labor Arbiter and the decision became final and
executory. For awhile Insular Bank complied with the decision and so there was
partial execution. However, when PD 850 was declared and Policy Instruction no.
9 was issued, Insular Bank stopped all its payment arguing that its monthly paid
employees are not receiving less than P240.00 and their monthly pay is uniform
from January to December, and that no deductions are made from the monthly
salaries of its employees on account of holidays in months where they occur.
Thus, Insular Bank said that they are no longer liable to pay for holiday pay. Labor
Arbiter and NLRC dismissed the appeal of Insular Bank but the Office of the
Minister of Labor granted the appeal of Insular Bank.
The first issue is w/n the decision of a Labor Arbiter awarding payment of regular
holiday pay can still be set aside on appeal by the Deputy Minister of Labor even
though it has already become final and had been partially executed. SC held that it
is patently unjust to deprive the members of petitioner Union of their vested right
acquired by virtue of a final judgment on the basis of a labor statute promulgated
following the acquisition of the "right.
On the issue of holiday pay, the SC declared Policy Instruction no. 9 as null and
void. The provisions of the Labor Code on the entitlement to the benefits of
holiday pay are clear and explicit — it provides for both the coverage of and
exclusion from the benefits. In Policy Instruction No. 9, the then Secretary of
Labor went as far as to categorically state that the benefit is principally intended
for daily paid employees, when the law clearly states that every worker shall be
LABOR1 | ATTY. MARLON MANUEL
paid their regular holiday pay. [...] This is a flagrant violation of the mandatory
directive of Article 4 of the Labor Code, which states that "All doubts in the
implementation and interpretation of the provisions of this Code, including its
implementing rules and regulations, shall be resolved in favor of labor."
DOCTRINE
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. . . . .
FACTS
1. INSULAR BANK OF ASIA AND AMERICA EMPLOYEES’ UNION
filed a complaint against INSULAR BANK OF ASIA AND AMERICA for
the payment of holiday pay before the then Department of Labor, National
Labor Relations Commission, Regional Office No. IV in Manila.
2. Labor Arbiter Ricarte T. Soriano rendered a decision, granting the Union’s
complaint for payment of holiday pay.
3. Insular Bank did not appeal from the said decision. Instead, it complied with
the order of Arbiter Ricarte T. Soriano by paying their holiday pay up to
and including January, 1976.
4. On December 16, 1975, Presidential Decree No. 850 was promulgated
amending, among others, the provisions of the Labor Code on the right to
holiday pay to read as follows:
"Art. 94. Right to holiday pay. —
(a) Every worker shall be paid his regular daily wages 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
(c) As used in this Article, ‘holiday’ includes: New Year’s Day,
Maundy Thursday, Good Friday, the ninth of April, the first of
76

May, the twelfth of June, the fourth of July, the thirtieth of
November, the twenty-fifth and the thirtieth of December, and the
day designated by law for holding a general election."
5. Accordingly, by authority of Article 5 of the same Code, the Department of
Labor (now Ministry of Labor) promulgated the rules and regulations for
the implementation of holidays with pay. The controversial section thereof
reads:
"Sec. 2. Status of employees paid by the month. — Employees
who are uniformly paid by the month, irrespective of the number
of working days therein, with a salary of not less than the statutory
or established minimum wage shall be presumed to be paid for all
days in the month whether worked or not.
"For this purpose, the monthly minimum wage shall not be less
than the statutory minimum wage multiplied by 365 days divided
by twelve" (Emphasis supplied).
6. On April 23, 1976, Policy Instruction No. 9 was issued by the then
Secretary of Labor (now Minister) interpreting the above-quoted rule,
pertinent portions of which read:
"x x x "The ten (10) paid legal holidays law, to start with, is
intended to benefit principally daily employees. In the case of
monthly, only those whose monthly salary did not yet include
payment for the ten (10) paid legal holidays are entitled to the
benefit.
"Under the rules implementing P.D. 850, this policy has been fully
clarified to eliminate controversies on the entitlement of monthly
paid employees. The new determining rule is this: If the monthly
paid employee is receiving not less than P240, the maximum
monthly minimum wage, and his monthly pay is uniform from
January to December, he is presumed to be already paid the ten
ISSUE
(10) paid legal holidays. However, if deductions are made from his
monthly salary on account of holidays in months where they occur,
LABOR1 | ATTY. MARLON MANUEL
then he is still entitled to the ten (10) paid legal holidays. . . ."
(Emphasis supplied).
7. Insular bank, by reason of the ruling laid down by the aforecited rule
implementing Article 94 of the Labor Code and by Policy Instruction No. 9,
stopped the payment of holiday pay to all its employees.
8. On August 30, 1976, the Union filed a motion for a writ of execution to
enforce the arbiter’s decision of August 25, 1975, whereby the Insular bank
was ordered to pay its employees their daily wage for the unworked regular
holidays.
9. Insular bank filed an opposition to the motion for a writ of execution
alleging that the said award is already repealed by P.D. 850 which took
effect on December 16, 1975, and by said Policy Instruction No. 9 of the
Department of Labor, considering that its monthly paid employees are not
receiving less than P240.00 and their monthly pay is uniform from January
to December, and that no deductions are made from the monthly salaries of
its employees on account of holidays in months where they occur.
10. The Labor Arbiter Ricarte T. Soriano issued an order enjoining the Insular
bank to continue paying its employees their regular holiday pay on the
following grounds:
(a) that the judgment is already final and the findings which is
found in the body of the decision as well as the dispositive portion
thereof is res judicata or is the law of the case between the parties;
and
(b) that since the decision had been partially implemented by the
respondent bank, appeal from the said decision is no longer
available
11. Insular bank appealed from the above-cited order of Labor Arbiter Soriano
to the National Labor Relations Commission,
12. The NLRC promulgated its resolution en banc dismissing Insular bank’s
appeal
13. Insular bank filed with the Office of the Minister of Labor a motion for
reconsideration/appeal with urgent prayer to stay execution. It was granted.
77

1. W/N the decision of a Labor Arbiter awarding payment of regular holiday
pay can still be set aside on appeal by the Deputy Minister of Labor even
though it has already become final and had been partially executed. -YES
2. W/N the Union is entitled to holiday pay. - YES
RULING
1. Section 2, Rule IV, Book III of the implementing rules and Policy
Instruction No. 9 issued by the then Secretary of Labor are null and void
since in the guise of clarifying the Labor Code’s provisions on holiday pay,
they in effect amended them by enlarging the scope of their exclusion.
Article 94 of the Labor Code, as amended by P.D. 850, provides:
"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. . . . ."
2. The coverage and scope of exclusion of the Labor Code’s holiday pay
provisions is spelled out under Article 82 thereof which reads:
"Art. 82. Coverage. — The provision of this Title shall apply to
employees in all establishments and undertakings, whether for
profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer
who are dependent on him for support, domestic helpers, persons
in the personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate
regulations. "x x x"
3. From the above-cited provisions, it is clear that monthly paid employees are
not excluded from the benefits of holiday pay. However, the implementing
rules on holiday pay promulgated by the then Secretary of Labor excludes
monthly paid employees from the said benefits by inserting, under Rule IV,
Book III of the implementing rules, Section 2, which provides that:
"employees who are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less than the statutory
or established minimum wage shall be presumed to be paid for all days in
the month whether worked or not."
LABOR1 | ATTY. MARLON MANUEL
4. In the case at bar, the provisions of the Labor Code on the entitlement to the
benefits of holiday pay are clear and explicit — it provides for both the
coverage of and exclusion from the benefits. In Policy Instruction No. 9, the
then Secretary of Labor went as far as to categorically state that the benefit
is principally intended for daily paid employees, when the law clearly states
that every worker shall be paid their regular holiday pay.
5. This is a flagrant violation of the mandatory directive of Article 4 of the
Labor Code, which states that "All doubts in the implementation and
interpretation of the provisions of this Code, including its implementing
rules and regulations, shall be resolved in favor of labor."
6. Moreover, it shall always be presumed that the legislature intended to enact
a valid and permanent statute which would have the most beneficial effect
that its language permits. The presumption is always in favor of law,
negatively put, the Labor Code is always strictly construed against
management. While it is true that the contemporaneous construction placed
upon a statute by executive officers whose duty is to enforce it should be
given great weight by the courts, still if such construction is so erroneous, as
in the instant case, the same must be declared as null and void.
7. Accordingly, Deputy Minister of Labor Amado G. Inciong had no basis at
all to deny the members of Union their regular holiday pay as directed by
the Labor Code. It is not disputed that the decision of Labor Arbiter Ricarte
T. Soriano dated August 25, 1975, had already become final, and was, in
fact, partially executed by the Insular bank.
8. Contrary to Insular Bank’s allegations, it is patently unjust to deprive the
members of petitioner Union of their vested right acquired by virtue of a
final judgment on the basis of a labor statute promulgated following the
acquisition of the "right." On the question of whether or not a law or statute
can annul or modify a judicial order issued prior to its promulgation.
Neither the Constitution nor the statutes, except penal laws favorable to the
accused have retroactive effect in the sense of annulling or modifying
vested rights, or altering contractual obligation.
9. The despotic manner by which public respondent Amado G. Inciong
divested the members of the petitioner union of their rights acquired by
virtue of a final judgment is tantamount to a deprivation of property without
due process of law.
78
 LABOR1 | ATTY. MARLON MANUEL

WHEREFORE, THE PETITION IS HEREBY GRANTED, THE ORDER OF

PUBLIC RESPONDENT IS SET ASIDE, AND THE DECISION OF LABOR
ARBITER RICARTE T. SORIANO DATED AUGUST 25, 1975, IS HEREBY
REINSTATED.

79

30. Wellington Investment and Manufacturing Corporation v. Trajano
(Charlie)
July 3, 1995 | Narvasa, C. J. | Rest Periods and Holidays
PETITIONER: WELLINGTON INVESTMENT AND MANUFACTURING
CORPORATION,
RESPONDENTS: CRESENCIANO B. TRAJANO, Under-Secretary of Labor
and Employment, ELMER ABADILLA, and 34 others
SUMMARY: A labor enforcement officer conducted a routine inspection at
Wellington Flour Mills, and made a finding of "(n)on-payment of regular
holidays falling on a Sunday for monthly-paid employees." Wellington sought
reconsideration of the labor inspector’s report, arguing that the monthly salary of
the employees includes holiday pay for all regular holidays, and it pays its
employees a fixed monthly compensation using the 314 factor which includes
payment for all working days + all 10 unworked regular holidays within a year
(meaning it deducted 51 Sundays from the 365 days normally comprising a year
and used the difference, 314, as basis for determining the monthly salary). The
Regional Director ruled that when a regular holiday falls on a Sunday, an extra
or additional working day is created and the employer has the obligation to pay
the employees for the extra day except the last Sunday of August since the
payment for the said holiday is already included in the 314 factor. The
Undersecretary of Labor and Employment affirmed, holding that the divisor
being used by Wellington does not reliably reflect the actual working days in a
year. The issue is W/N a monthly-paid employee, receiving a fixed monthly
compensation, is entitled to an additional pay aside from his usual holiday pay,
whenever a regular holiday falls on a Sunday. SC held NO. Wellington complied
with the minimum norm laid down by law. There is no provision of law
requiring any employer to make such adjustments in the monthly salary rate set
by him to take account of legal holidays falling on Sundays in a given year, or
otherwise to reckon a year at more than 365 days.
DOCTRINE: A legal holiday falling on a Sunday creates no legal obligation for
the employer to pay extra, aside from the usual holiday pay, to its monthly-paid
employees.
FACTS:
LABOR1 | ATTY. MARLON MANUEL
1. The case arose from a routine inspection conducted by a Labor Enforcement
Officer on August 6, 1991 of the Wellington Flour Mills, an establishment
owned and operated by Wellington Investment and Manufacturing
Corporation (Wellington). The officer thereafter drew up a report, a copy of
which was "explained to and received by" Wellington's personnel manager,
in which he set forth his finding of "(n)on-payment of regular holidays
falling on a Sunday for monthly-paid employees."
2. Wellington sought reconsideration of the Labor Inspector's report, by letter
dated August 10, 1991. It argued that "the monthly salary of the company's
monthly-salaried employees already includes holiday pay for all regular
holidays . . . (and hence) there is no legal basis for the finding of alleged
non-payment of regular holidays falling on a Sunday." It expounded on this
thesis in a position paper subsequently submitted to the Regional Director,
asserting that it pays its monthly-paid employees a fixed monthly
compensation "using the 314 factor which undeniably covers and already
includes payment for all the working days in a month as well as all the 10
unworked regular holidays within a year."
3. Wellington's arguments failed to persuade the Regional Director, who ruled
that "when a regular holiday falls on a Sunday, an extra or additional
working day is created and the employer has the obligation to pay the
employees for the extra day except the last Sunday of August since the
payment for the said holiday is already included in the 314 factor." The RD
directed Wellington to pay its employees compensation corresponding to
four (4) extra working days.
4. Wellington filed an MR, pointing out that it was in effect being compelled
to "shell out an additional pay for an alleged extra working day" despite its
complete payment of all compensation lawfully due its workers, using the
314 factor. The MR was treated as an appeal by Trajano, the Undersecretary
of Labor and Employment. The Undersecretary affirmed, holding that the
divisor being used by Wellington does not reliably reflect the actual
working days in a year, and consequently commanded Wellington to pay its
employees the "six additional working days resulting from regular holidays
falling on Sundays in 1988, 1989 and 1990."
5. Again, Wellington moved for reconsideration, and again was rebuffed.
Wellington then instituted the special civil action of certiorari in an attempt
to nullify the order. SC authorized the issuance of a TRO enjoining the
enforcement of the questioned orders.
80

ISSUES:
1. W/N a monthly-paid employee, receiving a fixed monthly compensation, is
entitled to an additional pay aside from his usual holiday pay, whenever a
regular holiday falls on a Sunday. - NO.
RATIO:
1. Every worker should, according to Art. 94 of the Labor Code, "be paid his
regular daily wage during regular holidays, except in retail and service
establishments regularly employing less than ten (10) workers;" this, of
course, even if the worker does no work on these holidays. The regular
holidays include: "New Year's Day, Maundy Thursday, Good Friday, the
ninth of April, the first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth of December, and the day designated
by law for holding a general election (or national referendum or plebiscite).8
2. Particularly as regards employees who are uniformly paid by the month,
"the monthly minimum wage shall not be less than the statutory minimum
wage multiplied by 365 days divided by twelve." This monthly salary shall
serve as compensation "for all days in the month whether worked or not,"
and "irrespective of the number of working days therein." In other words,
whether the month is of thirty (30) or thirty-one (31) days' duration, or
twenty-eight (28) or twenty-nine (29) (as in February), the employee is
entitled to receive the entire monthly salary. So, too, in the event of the
declaration of any special holiday, or any fortuitous cause precluding work
on any particular day or days (such as transportation strikes, riots, or
typhoons or other natural calamities), the employee is entitled to the salary
for the entire month and the employer has no right to deduct the
proportionate amount corresponding to the days when no work was done.
The monthly compensation is evidently intended precisely to avoid
computations and adjustments resulting from the contingencies just
8 “If the employer requires an employee to work on any holiday, he shall pay such employee
"a compensation equivalent to twice his regular rate." And, according to the Omnibus Rules
Implementing the Labor Code, if "the holiday work falls on the scheduled rest day of the
employee, he shall be entitled to an additional premium pay of at least 30% of his regular
holiday rate of 200% based on his regular wage rate." The Omnibus Rules further provide
(Sec. 9) that "A regular holiday falling on the employee's rest day shall be compensated
accordingly . . . and where a regular holiday falls on a Sunday, the following day shall be
considered a special holiday for purposes of the Labor Code, unless said day is also a regular
holiday.
LABOR1 | ATTY. MARLON MANUEL
mentioned which are routinely made in the case of workers paid on daily
basis.
3. In Wellington's case, there seems to be no question that at the time of the
inspection, it was and had been paying its employees "a salary of not
less than the statutory or established minimum wage," and that the
monthly salary thus paid was "not . . . less than the statutory minimum
wage multiplied by 365 days divided by twelve.” There is, in other words,
no issue that to this extent, Wellington complied with the minimum norm
laid down by law.
4. Apparently the monthly salary was fixed by Wellington to provide for
compensation for every working day of the year including the holidays
specified by law — and excluding only Sundays. In fixing the salary,
Wellington used what it calls the "314 factor;" that is to say, it simply
deducted 51 Sundays from the 365 days normally comprising a year
and used the difference, 314, as basis for determining the monthly
salary. The monthly salary thus fixed actually covers payment for 314 days
of the year, including regular and special holidays, as well as days when no
work is done by reason of fortuitous cause, as above specified, or causes not
attributable to the employees.
5. The Labor Officer who conducted the routine inspection of Wellington
discovered that in certain years, two or three regular holidays had fallen on
Sundays. He reasoned that this had precluded the enjoyment by the
employees of a non-working day, and the employees had consequently had
to work an additional day for that month. This ratiocination received the
approval of his Regional Director who opined that "when a regular holiday
falls on a Sunday, an extra or additional working day is created and the
employer has the obligation to pay its employees for the extra day except
the last Sunday of August since the payment for the said holiday is already
included in the 314 factor."
6. This ingenuous theory was adopted and further explained by Labor
Undersecretary, to whom the matter was appealed, as follows:
a. “. . . By using said (314) factor, the Wellington assumes that all the
regular holidays fell on ordinary days and never on a Sunday.
Thus, the Wellington failed to consider the circumstance that
whenever a regular holiday coincides with a Sunday, an additional
working day is created and left unpaid. In other words, while the
said divisor may be utilized as proof evidencing payment of 302
81

working days, 2 special days and the ten regular holidays in a
calendar year, the same does not cover or include payment of
additional working days created as a result of some regular
holidays falling on Sundays.”
7. He pointed out that in 1988 there was "an increase of three (3) working days
resulting from regular holidays falling on Sundays;" hence Wellington
"should pay for 317 days, instead of 314 days." By the same process of
ratiocination, respondent Undersecretary theorized that there should be
additional payment by Wellington to its monthly-paid employees for "an
increment of three (3) working days" for 1989 and again, for 1990. What he
is saying is that in those years, Wellington should have used the "317
factor," not the "314 factor."
8. The theory loses sight of the fact that the monthly salary in Wellington —
which is based on the so-called "314 factor" — accounts for all 365 days of
a year; i.e., Wellington's "314 factor" leaves no day unaccounted for; it is
paying for all the days of a year with the exception only of 51 Sundays.
9. The respondents' theory would make each of the years in question (1988,
1989, 1990), a year of 368 days. Pursuant to this theory, no employer opting
to pay his employees by the month would have any definite basis to
determine the number of days in a year for which compensation should be
given to his work force. He would have to ascertain the number of times
legal holidays would fall on Sundays in all the years of the expected or
extrapolated lifetime of his business. Alternatively, he would be compelled
to make adjustments in his employees' monthly salaries every year,
depending on the number of times that a legal holiday fell on a Sunday.
10. There is no provision of law requiring any employer to make such
adjustments in the monthly salary rate set by him to take account of
legal holidays falling on Sundays in a given year, or, contrary to the
legal provisions bearing on the point, otherwise to reckon a year at
more than 365 days. As earlier mentioned, what the law requires of
employers opting to pay by the month is to assure that "the monthly
minimum wage shall not be less than the statutory minimum wage
multiplied by 365 days divided by twelve," and to pay that salary "for all
days in the month whether worked or not," and "irrespective of the number
of working days therein." That salary is due and payable regardless of the
declaration of any special holiday in the entire country or a particular place
therein, or any fortuitous cause precluding work on any particular day or
LABOR1 | ATTY. MARLON MANUEL
days (such as transportation strikes, riots, or typhoons or other natural
calamities), or cause not imputable to the worker. And as also earlier
pointed out, the legal provisions governing monthly compensation are
evidently intended precisely to avoid re-computations and alterations in
salary on account of the contingencies just mentioned, which, by the way,
are routinely made between employer and employees when the wages are
paid on daily basis.
11. The public respondents argue that their challenged conclusions and
dispositions may be justified by the Implementing Rules, giving the
Regional Director power “to order and administer (in cases where
employer-employee relations still exist), after due notice and hearing,
compliance with the labor standards provisions of the Code and the other
labor legislations based on the findings of their Regulations Officers or
Industrial Safety Engineers (Labor Standard and Welfare Officers) and
made in the course of inspection, and to issue writs of execution to the
appropriate authority for the enforcement of his order, in line with the
provisions of Article 128 in relation to Articles 289 and 290 of the Labor
Code...”
12. The respondents beg the question. Their argument assumes that there are
some "labor standards provisions of the Code and the other labor
legislations" imposing on employers the obligation to give additional
compensation to their monthly-paid employees in the event that a legal
holiday should fall on a Sunday in a particular month — with which
compliance may be commanded by the Regional Director — when the
existence of said provisions is precisely the matter to be established.
13. In promulgating the orders complained of the public respondents have
attempted to legislate, or interpret legal provisions in such a manner as to
create obligations where none are intended. They have acted without
authority, or at the very least, with grave abuse of their discretion. Their acts
must be nullified and set aside.
HELD: WHEREFORE, the orders complained of, namely: that of the respondent
Undersecretary dated September 22, 1993, and that of the Regional Director dated
July 30, 1992, are NULLIFIED AND SET ASIDE, and the proceeding against
petitioner DISMISSED.
82
LABOR1 | ATTY. MARLON MANUEL

83

31. Caltex Regular Employees v. Caltex (¥)
15 August 1995 |Feliciano, J. | Rest Days as stipulated in the CBA
Petitioners: Caltex Regular Employees t Manila Office, Legazpi Bulk
Depot and Marinduque Bulk Depot - (MACLU)
Respondents: Caltex and NLRC
Summary: The Union andCaltex entered into a CBA agreement in 1985
to be effective until midnight of 31 December 1988. Included in the CBA
is a provision of work hours which indicated that employee shall have 1
rest day, however, the Union alleges that Caltex violated provisions of the
CBA when Caltex paid them at Regular rates on Saturdays instead of “first
day-off” rates as indicated in Annex B of the 1985 CBA. A complaint was
then filed, in which the LA ruled in favour of the Union, saying that as
indicated in Annex B which supersedes the provision on work hours, the
parties actually agreed on 2 rest days, hence Saturday should be paid at
“first day-off” rates. The NLRC however, reversed the LA, saying that its
decision was unsupported by the evidence on record. SC agreed with the
NLRC. The 1985 CBA expressly stated that employees old have only 1
rest day. And even though the 1970 CBA indicated that there were 2, the
subsequent CBAs no longer contained such provision, hence indicating the
parties’ intention of making the rest day only 1 day. The Annex B was not
meant to superseded the CBA since it only has a subordinate role.
Moreover, the second day of only applies to certain types of employees,
i.e. the operational staff who are required to be at work 7 days straight.
Doctrine: Under [the] CBA, Saturday is not a rest day or a "day off." It is
only when an employee has been required on a Saturday to render work in
excess of the forty (40) hours which constitute the regular work week that
such employee may be considered as performing overtime work on that
Saturday.
FACTS:
1. In 1985, the Union (petitioners) and Caltex entered into a CBA (“1985
CBA”) which was to be in effect until midnight of 31 December 1988.
2. The CBA included the ff. provision:
Art. III - HOURS OF WORK: In conformity with the Labor Code of the Philippines,
as amended, the regular work week shall consist of eight (8) hours per day, seven (7)
days, Monday through Sunday, during which regular rates of pay shall be paid in
accordance with Annex B and work on the employee’s one ‘Day of Rest,’ shall be
considered a special work day, during which ‘Day of Rest’ rate of pay shall be paid
as provided in Annex B. Daily working schedules shall be established by
management in accordance with the requirements of efficient operations on the basis
of eight (8) hours per day for any five (5) days. Provided, however, employees
LABOR1 | ATTY. MARLON MANUEL
required to work in excess of forty (40) hours in any week shall be compensated in
accordance with Annex B of this Agreement. (D/N: Annex B just enumerated the
formulae for the computation of the different kids of pay. The Annex included a
computation for a “Second Day Off”)
3. Sometime in August 11986, the Union allied Caltex’s attention to alleged
violations by Caltex of Annex “B” of the1985 CBA such as non-payment of
night-shift differential, non payment of overtime pay and non-payment at
‘first day-off rates’ for work performed on a Saturday.
4. Caltex’s Industrial Relations manager immediately evaluated the Union’s
claims and informed it that differential payments would be timely
implemented. In the implementation of the re-computed claim, however, no
differential payment was made with respect to work performed on the first 2
½ hours on a Saturday.
5. The Union then instituted a complaint for unfair Labor practice against
Caltex allegingviolations of the provisions of the 1985 CBA.
a. Union changed Caltex with shortchanging its employees when
Caltex compensated work performed on the first 2 1.2 hours of
Saturday, an employee’s day of rest, at regular rates, when it
should be paying at “dy of rest” or “day off” rates.
b. Caltex denied this. It averred that Saturday was never designated
as a day of rest, much less a “day-off”. It maintained tat the 1985
CBA provided only 1 day of rest at the Manila Office as well as
employees similarly situated at the Legazpi and Marinduque Bulk
depots. This day of rest was Sunday.
6. LA ruled in favour of the Union, while finding at the same time that Caltex
was not guilty of any unfair Labor practice. LA interpreted Art. III and
Annex “B” of the 1985 CBA by concluding that the employees where given
2 days of rest, with the result that work performed on the employee's first
day of rest, viz Saturday, should be compensated at “first day-off” rates.
7. On appeal, NLRC set aside the decision of LA and found that the decision
of the latter was unsupported by the evidence on record. NLRC, interpreting
the provisions of the 1985 CBA, concluded that it only granted 1 day of
rest, i.e. Sunday. The MR wa denied, hence, this petition.
ISSUE:
1. W/N the employees were granted only 1 day of rest under the 1985 CBA -
YES
HELD: Petition is dismissed.
RATIO:
1. SC agrees with the NLRC that the intention of the parties to the 1985 CBA
was to provide only 1 day of rest. The plain and ordinary meaning of the
language of Art. III is that CAltex and the Union had agreed to pay “day of
84

rest” rates for work performed on “an employee’s one day of rest.” To the
Sc’s mind, the use of the word :one” describing the phrase “day of rest”
emphasises the fact that the parties had agreed that only a single day of rest
shall be scheduled and shall be provided to the employee.
2. The SC noted that the contract clauses governing the previous CBAs,
namely, the 1973, 1976, 1979, and 1982 ones, all contained provisions
parallel, if not identical to those set out in art. III of the 1985 CBA (Refer to
Fact No. 2).
a. In all these CBAs, Art. III provides that only "work on an
employee’s one day of rest" shall be paid on the basis of "day of
rest rates." The relevant point here is that Union had never
suggested that more than 1 day of rest had been agreed upon, and
certainly Caltex had never treated Article III or any other portion
of the CBAs as providing 2 days of rest. It is well settled that the
contemporaneous and subsequent conduct of the parties may
be taken into account by a court called upon to interpret and
apply a contract entered into by them.
3. LA, in justifying its ruling, held that when Annex "B" referred to "First
Day-off Rates" and "Second Day-off Rates, these were meant to express an
agreement that the parties intended to provide employees 2 days of rest. He
then declared that Annex "B" should prevail over Article III because the
former was a more specific provision than the latter.
a. SC: An annex expresses the idea of joining a smaller or
subordinate thing with another, larger or of higher importance. An
annex has a subordinate role, without any independent significance
separate from that to which it is tacked on. Annex "B," in the case
at bar, is one such document. It is not a memorandum of
amendments or a codicil containing additional or new terms or
stipulations. Annex "B" cannot be construed as modifying or
altering the terms expressed in the body of the agreement
contained in the1985 CBA. It did not confer any rights upon
employees represented by Union; neither did impose any
obligations upon Caltex. In fact, the contents of Annex "B" have
no intelligible significance in and of themselves when considered
separately from the 1985 CBA.
b. Moreover, Annex "B" was intended to serve as acompany-wide
guide in computing compensation for work performed by all its
employees, including but not limited to the Manila Office
employees represented by Union. Caltex also points out that the
mathematical formulae contained in Annex "B" are not all
applicable to all classes of employees, there being some formulae
applicable only to particular groups or classes of employees. Thus,
"First Day-off rates" and "Second Day-off rates" are applicable
LABOR1 | ATTY. MARLON MANUEL
only to employees stationed at the refinery and associated facilities
like depots and terminals which must be in constant twenty-four 24
hours a day, 7 days a week, operation, hence necessitating the
continuous presence of operations personnel. The work of such
operations personnel required them to be on duty for 6 consecutive
days. Upon the other hand, "First Day-off rates" and "Second Day-
off rates" are not applicable to personnel of the Manila Office
which consisted of other groups or categories of employees (e.g.,
office clerks, librarians, computer operators, secretaries, collectors,
etc.), since the nature of their work did not require them to be on
duty for 6 consecutive days.
c. SC also noted that the LA merely suspected that the parties agreed
to provide 2 days of rest on the ground that they had so stipulated
in their 1970 CBA. A principal difficulty with this view is that it
disregards the fact that Article III of the 1985 CBA no longer
contained a particular proviso found in the 1970 CBA. In fact, all
the CBAs subsequent to 1970 (1973, 1976, 1979, 1982) had
similarly deleted the proviso in the 1970 CBA providing for 2
days-off. To the Court’s mind, such deletion means only one thing
— that is — the parties had agreed to remove such stipulation.
Accordingly, the proviso found in Article III of the 1970 CBA
ceased to be a demandable obligation. Union cannot now
unilaterally re-insert such a stipulation by strained inference from
Annex "B."
4. SC also ruled on the issue of overtime work by defining it.9
a. Held that node the 1985 CBA, hours worked on a Saturday do not,
by that fact alone,necessarily constitute overtime work
compensable at premium rates of pay. These are normal or regular
work hours, compensable at regular rates of pay, as provided in the
1985 CBA; under that CBA, Saturday is not a rest day or a "day
off." It is only when an employee has been required on a Saturday
to render work in excess of the forty (40) hours which constitute
the regular work week that such employee may be considered as
performing overtime work on that Saturday. SC considers that the
statutory prohibition against offsetting undertime one day with
9 Overtime work consists of hours worked on agiven day in excess of the
applicable work period, which here is eight (8) hours. It is not enough that the
hours worked fall on disagreeable or inconvenient hours. In order that work
may be considered as overtime work, the hours worked must be in excess of
and in addition to the eight (8) hours worked during the prescribed daily work
period, or the forty (40) hours worked during the regular work weekMonday
thru Friday.
85
 LABOR1 | ATTY. MARLON MANUEL

overtime another day has no application in the case at bar.

b. The company practice of allowing employees to leave thirty (30)
minutes earlier than the scheduled off-time had been established
primarily for the convenience of the employees most of whom
have had to commute from workplace to home and in order that
they may avoid the heavy rush hour vehicular traffic. There is no
allegation here by petitioner Union that such practice was resorted
to by Caltex inorder to escape its contractual obligations.
5. In sum:
a. The parties’ 1985 CBA stipulated that employees at the Manila
Office, as well as those similarly situated at the Legazpi and
Marinduque Bulk Depots, shall be provided only one (1) day of
rest;
b. Sunday, and not Saturday, was designated as this day of rest.
c. Work performed on a Saturday is accordingly to be paid at regular
rates of pay, as a rule, unless the employee shall have been
required to render work in excess of forty (40) hours in a calendar
week. The employee must, however, have in fact rendered work in
excess of forty (40) hours before hours subsequently worked
become payable at premium rates.

SEPARATE OPINIONS: CONCURRING: None

32. A. Soriano Aviation v. Employees Association of A. Soriano Aviation (Jen)

August 14, 2009 | Carpio Morales, J | Rest Periods and Holidays
PETITIONER: A. Soriano Aviation
RESPONDENTS: Employees Association of A. Soriano Aviation et al.
SUMMARY:
A. Soriano and the Union entered into a CBA. On May 1 & 12 and June 12, 1997,
which were legal holidays and peak season for the company, 8 mechanic-members
of the Union refused to render overtime work. Petitioner treated the refusal to
work as a concerted action which is a violation of the "No-Strike, No-Lockout"
clause in the CBA. It thus meted the workers a 30-day suspension. It also filed a
complaint for illegal strike in the NLRC which was dismissed to give way to
settlement without prejudice to refiling. Settlement being futile, the Union filed a
Notice of Strike with NCMB. Union went on strike. The company filed a Motion
to Re-open the Case in NLRC which was granted. LA said that the newly
implemented work-shift schedule was a valid exercise of management prerogative.
and the refusal of herein individual respondents to work on three consecutive
holidays was a form of protest by the Union, hence, deemed a concerted action.
The strike was declared illegal. 8 months into the second strike company filed
against respondents before LA praying for the declaration as illegal of the strike
due to force and violence and for the loss of their employment. LA declared the
2nd strike as illegal; the 1st strike violated the No-Strike No-Lockout clause in the
CBA and there’s no strikeable issue. NLRC affirmed. CA reversed NLRC ruling.
The issue is whether the strike is illegal due to alleged commission of illegal acts
and violation of the “No Strike-No Lockout” clause of the CBA - YES The Court
notes that, as found by the Labor Arbiter in NLRC Case No. 07-05409- 97,
the first strike or the mechanics' refusal to work on consecutive holidays was
prompted by their disagreement with the management-imposed new work
schedule. Having been grounded on a non-strikeable issue and without
complying with the procedural requirements, then the same is a violation of
the "No Strike-No Lockout Policy" in the existing CBA. Court holds that the
second strike became invalid due to the commission of illegal action in its course.
The exercise of the right of private sector employees to strike is not absolute.

86

FACTS:
1. A. Soriano Aviation which is engaged in providing transportation of guests
to and from Amanpulo and El Nido resorts in Palawan, and respondent
Employees Association of A. Soriano Aviation (the Union), the duly-
certified exclusive bargaining agent of the rank and file employees of
petitioner, entered into a Collective Bargaining Agreement (CBA)
2. On May 1 & 12, and June 12, 1997, which were legal holidays and peak
season for the company, eight mechanics-members of respondent Union, its
herein co-respondents Aguila, Amimita, Balisbis, Barco, Bungabong,
Espino, Neri and Ramos refused to render overtime work.
3. Petitioner treated the refusal to work as a concerted action which is a
violation of the "No-Strike, No-Lockout" clause in the CBA. It thus meted
the workers a 30-day suspension. It also filed on July 31, 1997 a complaint
for illegal strike against them, docketed as NLRC Case No. 07-05409-97,
which was later dismissed at its instance in order to give way to settlement,
without prejudice to its re-filing should settlement be unavailing.
4. The attempted settlement between the parties having been futile, the Union
filed a Notice of Strike with the National Conciliation and Mediation Board
(NCMB) on October 3, 1997, attributing to petitioner the following acts: (1)
union busting, (2) illegal dismissal of union officer, (3) illegal suspension of
eight mechanics, xxx (9) constructive dismissal of the Union President,
Julius Vargas (Vargas). Despite conciliation, no amicable settlement of the
dispute was arrived at. The Union went on strike.
5. pursuant to its reservation in NLRC Case No. 07-05409-97, petitioner filed
a Motion to Re-Open the Case which was granted by Labor Arbiter Manuel
P. Asuncion.
6. By Decision rendered in petitioner's complaint in NLRC Case No. 07-
05409-97, the Labor Arbiter declared that the newly implemented work-
shift schedule was a valid exercise of management prerogative and the
refusal of herein individual respondents to work on three consecutive
holidays was a form of protest by the Union, hence, deemed a concerted
action. Noting that the Union failed to comply with the formal requirements
prescribed by the Labor Code in the holding of strike, the strike was
declared illegal.
4. Union appealed to the NLRC which was dismissed.
LABOR1 | ATTY. MARLON MANUEL
5. Eight months into the "second strike", petitioner filed a complaint against
respondents before the Labor Arbiter, praying for the declaration as illegal
of the strike on account of their alleged pervasive and widespread use of
force and violence and for the loss of their employment,
6. Labor Arbiter Ramon Valentin C. Reyes declared the "second strike"
illegal. Taking judicial notice of the September 28, 1998 Decision of Labor
Arbiter Asuncion, he noted that as the Union went on the "first strike" on a
non- strikeable issue — the questioned change of work schedule, it violated
the "No-Strike, No-Lockout" clause in the CBA and, in any event, the
Union failed to comply with the requirements for a valid strike. Labor
Arbiter went on to hold individual respondents were deemed to have lost
their employment due to violent 2nd strike.
7. NLRC affirmed.
8. CA: the appellate court reversed and set aside the NLRC ruling, holding
that the acts of violence committed by the Union members in the course of
the strike were not, as compared to the acts complained of in these cases
was applied by the Labor Arbiter in his Decision of September 28, 2008
where the acts of violence resulted in loss of employment, concluded that
the acts in the present case were not as serious or pervasive as in these
immediately-cited cases to call for loss of employment of the striking
employees.
a. Took note that when the company filed its complaint 8 months
after the commencement of strike; acts of violence were committed
only during 9 non-consecutive days.
b. These does not warrant a declaration of the strike as illegal and
would not result in the loss of employment of the strikers.
c. Name-calling and using banner imputing negligence and crim acts
to comp. And officers: not grave or serious to warrant the loss of
emploment
9. Petitioner insists that, contrary to the appellate court's finding, the
questioned acts of the strikers were of a serious character, widespread and
pervasive; and that the Union's imputation of crime and negligence on its
part, and the prolonged strike resulted in its loss of goodwill and business
10. Apart from the acts of violence committed by the strikers, petitioner bases
its plea that the strike should be declared illegal on the violation of the "No-
Strike-No- Lockout" clause in the CBA, the strike having arisen from non-
strikeable issues. Petitioner proffers that what actually prompted the holding
87

of the strike was the implementation of the new shift schedule, a valid
exercise of management prerogative.
ISSUE:
1. Whether the strike is illegal due to the alleged commission of illegal acts
and violation of the “No Strike-No Lockout” clause of the CBA - YES
1. The Court notes that, as found by the Labor Arbiter in NLRC Case No. 07-
05409- 97, the first strike or the mechanics' refusal to work on consecutive
holidays was prompted by their disagreement with the management-
imposed new work schedule. Having been grounded on a non-strikeable
issue and without complying with the procedural requirements, then the
same is a violation of the "No Strike-No Lockout Policy" in the existing
CBA.
2. Respecting the second strike, where the Union complied with procedural
requirements, the same was not a violation of the "No Strike- No Lockout"
provisions, as a "No Strike-No Lockout" provision in the Collective
Bargaining Agreement (CBA) is a valid stipulation but may be invoked
only by employer when the strike is economic in nature or one which is
conducted to force wage or other concessions from the employer that are
not mandated to be granted by the law. It would be inapplicable to prevent a
strike which is grounded on unfair labor practice.
3. In the present case, the Union believed in good faith that petitioner
committed unfair labor practice when it went on strike on account of the 30-
day suspension meted to the striking mechanics, dismissal of a union officer
and perceived union-busting, among others.
4. As held in Malayang Samahan ng mga Manggaggawa sa M. Green􏰀eld v.
Ramos: On the submission that the strike was illegal for being grounded on
a non- strikeable issue, that is, the intra-union con􏰂ict between the
federation and the local union, it bears reiterating thatwhen respondent
company dismissed the union officers, the issue was transformed into a
termination dispute and brought respondent company into the picture. Xxx
Even if the allegations of unfair labor practice are subsequently found out to
be untrue, the presumption of legality of the strike prevails.
5. Court holds that the second strike became invalid due to the commission of
illegal action in its course. The exercise of the right of private sector
LABOR1 | ATTY. MARLON MANUEL
employees to strike is not absolute. Thus Section 3 of Article XIII of the
Constitution provides: it shall guarantee the rights of all workers to self-
organization, collective bargaining and negotiations and peaceful concerted
activities, including the right to strike in accordance with law. Xxx
6. Indeed, even if the purpose of a strike is valid, the strike may still be held
illegal where the means employed are illegal. Thus, the employment of
violence, intimidation, restraint or coercion in carrying out concerted
activities which are injurious to the right to property renders a strike
illegal.And so is picketing or the obstruction to the free use of property or
the comfortable enjoyment of life or property, when accompanied by
intimidation, threats, violence, and coercion as to constitute nuisance.
7. The appellate court found in the present case, as in fact it is not disputed,
that the acts complained of were the following: shouted "insults and other
abusive, vulgar and foul-mouthed word" with the use of a megaphone,
thrown gravel and sand to the car owned by Celso Villamor Gomez, lead
man of the Company etc.
8. It cannot be gainsaid that by the above-enumerated undisputed acts, the
Union committed illegal acts during the strike. The Union members'
repeated name-calling, harassment and threats of bodily harm directed
against company officers and non- striking employees and, more
significantly, the putting up of placards, banners and streamers with vulgar
statements imputing criminal negligence to the company, which put to
doubt reliability of its operations, come within the purview of illegal acts
under Art. 264 and jurisprudence.
9. That the alleged acts of violence were committed in nine non-consecutive
days during the almost eight months that the strike was on-going does not
render the violence less pervasive or widespread to be excusable. Nowhere
in Art. 264 does it require that violence must be continuous or that it should
be for the entire duration of the strike.
10. The appellate court took against petitioner its filing of its complaint to have
the strike declared illegal almost eight months from the time it commenced.
Art. 264 does not, however, state for purposes of having a strike declared as
illegal that the employer should immediately report the same. It only lists
what acts are prohibited. It is thus absurd to expect an employer to file a
complaint at the first instance that an act of violence is alleged to be
committed, especially, as in the present case, when an earlier complaint to
have the refusal of the individual respondents to work overtime declared as
88
 LABOR1 | ATTY. MARLON MANUEL

an illegal strike was still pending — an issue resolved in its favor only on the commission of violent acts during the illegal strike in the case of union
September 25, 1998. members, the records do not indicate. While respondent Julius Vargas was
11. The records show that the Union went on strike on October 22, 1997, and identi􏰀ed to be a union o􏰁cer, there is no indication if he knowingly
the 􏰀rst reported harassment incident occurred on October 29, 1997, while participated in the illegal strike. The Court not being a trier of facts, the
the last occurred in January, 1998. Those instances may have been sporadic, remand of the case to the NLRC is in order only for the purpose of
but as found by the Labor Arbiter and the NLRC, the display of placards, determining the status in the Union of individual respondents and their
streamers and banners even up to the time the appeal was being resolved by respective liability, if any.
the NLRC works against the Union's favor
12. The acts complained of including the display of placards and banners RULING: WHEREFORE, the petition is GRANTED. The Court of Appeals
imputing criminal negligence on the part of the company and its o􏰁cers, Decision and Resolution dated April 16, 2004 and January 25, 2005, respectively,
apparently with the end in view of intimidating the company's clientele, are, are REVERSED and SET ASIDE. The Resolutions dated October 31, 2001 and
given the nature of its business, that serious as to make the "second strike" December 14, 2001 of the National Labor Relations Commission a􏰁rming the
illegal. Specifically with respect to the putting up of those banners and Decision of the Labor Arbiter in NLRC-NCR Case No. 00-06-04890-98 are
placards, coupled with the name-calling and harassment, the same indicates AFFIRMED with the MODIFICATION in light of the foregoing discussions. The
that it was resorted to to coerce the resolution of the dispute — the very evil case is accordingly REMANDED to the National Labor Relations Commission for
which Art. 264 seeks to prevent. the purpose of determining the Union status and respective liabilities, if any, of the
13. While the strike is the most preeminent economic weapon of workers to individual respondents.
force management to agree to an equitable sharing of the joint product of
labor and capital, it exerts some disquieting effects not only on the
relationship between labor and management, but also on the general peace
and progress of society and economic well-being of the State.15 If such
weapon has to be used at all, it must be used sparingly and within the
bounds of law in the interest of industrial peace and public welfare.
14. As to the issue of loss of employment of those who participated in the
illegal strike, Sukhothai 16 instructs:Any union officer who knowingly
participates in an illegal strike and any worker or union officer who
knowingly participates in the commission of illegal acts during an illegal
strike may be declared to have lost his employment status: Provided, That
mere participation of a worker in a lawful strike shall not constitute
sufficient ground for termination of his employment,
15. The liability for prohibited acts has thus to be determined on an individual
basis. A perusal of the Labor Arbiter's Decision, which was affirmed in toto
by the NLRC, shows that on account of the staging of the illegal strike,
individual respondents were all deemed to have lost their employment,
without distinction as to their respective participation.
16. Of the participants in the illegal strike, whether they knowingly participated
in the illegal strike in the case of union officers or knowingly participated in

89

33. Chartered Bank Employees Association v. Ople (FELI)
August 28, 1985 | J. Gutierrez, Jr. | Working Conditions - REST PERIODS AND
HOLIDAYS
PETITIONER: Chartered Bank Employees Association
RESPONDENTS: Hon. Blas Ople, Incumbent Secretary of Labor, and
The Chartered Bank
SUMMARY: On May 20, 1975, Chartered Bank Employees Association
(CBEA), in representation of its monthly paid employees/members,
instituted a complaint with the Regional Office No. IV of the Department
of Labor against Chartered Bank for the payment of 10 unworked legal
holidays, as well as for premium and overtime differentials for worked
legal holidays from November 1, 1974. Chartered Bank justified this,
alleging that all the regular monthly paid employees are receiving salaries
way beyond the statutory or minimum rates and are among the highest
paid employees in the banking industry. Moreover, the salaries of the
monthly paid employees suffer no deduction for holidays occurring within
the month. The arbitrator and the NLRC ruled in favor of CBEA. On
appeal, the Minister of Labor set aside the decision of the NLRC and
dismissed CBEAs claim for lack of merit, basing its decision on Sec 2,
Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9,
which provide for certain presumptions of payment of salaries for
monthly-paid employees (see Fact #5a &b for the full provision). CBEA
alleged that the Minister of Labor abused his discretion as the guidelines
promulgated by the Minister contravened the Code by excluding the
members from the benefits of holiday pay, when the Code itself did not
provide for their exclusion. The respondents argue that the guidelines did
not deprive the members of the benefits of holiday pay, but merely
classified those whose monthly salary already includes holiday pay and
those whose do not. Moreover, the rationale for the guidelines is to benefit
daily paid workers who suffer deductions in their salaries for not working
on holidays.
The issue is WON the Minister of Labor abused his discretion in
applying the provisions of Sec 2 and Policy Instruction No. 9 to deny
the claim of petitioners to their holiday pay. The SC held YES. Based
on Insular Bank of Asia and America Employees’ Union v. Inciong, Sec 2,
LABOR1 | ATTY. MARLON MANUEL
Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9
are contrary to the Labor Code and are therefore invalid. The
provisions of the Labor Code on the entitlement to the benefits of holiday
pay are clear and explicit (SEE DOCTRINE). However, in Policy
Instruction No. 9, the Secretary of Labor stated that the benefit is
principally intended for daily paid employees, when the law clearly states
that every worker shall be paid their regular holiday pay. Moreover, while
it is in the form of a presumption, it constitutes a taking away or a
deprivation which must be in the law. Thus, since Chartered Bank
premises its action on the invalidated rule and policy instruction, it is clear
that the employees are entitled to the payment of 10 legal holidays.
DOCTRINE: P.D. 800 ART. 82. Coverage. — The provision of this
Title shall apply to employees in all establishments and undertakings,
whether for profit or not, but not to: Government employees
a. Managerial employees
b. Field personnel
c. Members of the family of the employer who are
dependent on him for support
d. Domestic helpers
e. Persons in the personal service of another
f. Workers who are paid by results as determined by the
Secretary of Labor
When the law provides benefits for “employees in all establishments
and undertakings, whether for profit or not” and lists specifically the
employees not entitled to those benefits, the admin agency
implementing that law cannot exclude certain employees from its
coverage simply because they are paid by the month or because they
are highly paid.
FACTS:
1. On May 20, 1975, the Chartered Bank Employees Association (CBEA), in
representation of its monthly paid employees/members, instituted a
complaint with the Regional Office No. IV of the Department of Labor (or
Ministry of Labor and Employment/MOLE as it was called before) against
90

Chartered Bank for the payment of 10 unworked legal holidays, as well as
for premium and overtime differentials for worked legal holidays from
November 1, 1974.
2. Chartered Bank alleged that under the existing CBA, the monthly
employees are paid for overtime work as follows:
a. Sec 1. The basic work week for all employees, except security
guards (who are required to be at their posts 365 days per year),
shall be 40 hours based on five 8-hour days, Monday to Friday.
b. Sec 2. Time and a quarter hourly rate shall be paid for authorized
work performed in excess of 8 hours from Monday to Friday, and
for any hour of work performed on Saturdays.
c. Sec 3. Time and a half hourly rate shall be paid for authorized
work performed on Sundays, legal and special holidays.
d. Sec 5. The provisions of Sec 1 notwithstanding, the BANK may
revert to the 6 day work week to include Saturday for a 4 hour day,
in the even that the Central Bank should require commercial banks
to open for business on Saturday.
3. Chartered Bank also alleged that in computing the overtime pay and
premium pay for work done during regular holidays, the divisor used in
arriving at the daily rate is 251 days (this was when the bank was still
working on a 6-day work week basis). However, for computing deductions
corresponding to absences without pay, the divisor is 365 days.
4. Finally, Chartered Bank alleged that all the regular monthly paid employees
are receiving salaries way beyond the statutory or minimum rates and are
among the highest paid employees in the banking industry. Moreover, the
salaries of the monthly paid employees suffer no deduction for holidays
occurring within the month.
5. The arbitrator and the NLRC ruled in favor of CBEA. On appeal, the
Minister of Labor set aside the decision of the NLRC and dismissed CBEAs
claim for lack of merit, basing its decision on Sec 2, Rule IV, Book III of
the Integrated Rules and Policy Instruction No. 9.
a. Sec 2. Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a salary of
not less than the statutory or established minimum wage shall be
presumed to be paid for all days in the month whether worked or
not."
LABOR1 | ATTY. MARLON MANUEL
b. Policy Instruction No. 9: ‘If the monthly paid employee is
receiving not less than P240, the maximum monthly minimum
wage, and his monthly pay is uniform from January to December,
he is presumed to be already paid the ten (10) paid legal holidays.
However, if deductions are made from his monthly salary on
account of holidays in months where they occur, then he is still
entitled to the ten (10) paid legal holidays.
6. Arguments of the parties
a. Petitioners: The Minister of Labor gravely abused his discretion
in promulgating the above-mentioned provisions. While the
Minister has the authority to promulgate rules and regulations to
implement the Labor Code, the guidelines promulgated by the
Minister contravened the Code by excluding the members from the
benefits of holiday pay, when the Code itself did not provide for
their exclusion.
b. Respondents: The guidelines did not deprive the members of the
benefits of holiday pay, but merely classified those whose monthly
salary already includes holiday pay and those whose do not. The
guidelines were promulgated to avoid confusion or
misconstruction in the application of Articles 82 and 94 of the
Labor Code. The rationale for the guidelines is to benefit daily paid
workers who suffer deductions in their salaries for not working on
holidays.
ISSUES:
1. WON the Secretary of Labor erred in promulgating Sec 2, Rule IV, Book
III of the Integrated Rules and Policy Instruction No. 9 - YES
2. WON the Secretary of Labor abused his discretion in applying the
provisions above stated to Chartered Bank’s employees - YES
3. WON the Secretary of Labor abused his discretion in denying the claim of
petitioners for unworked holidays and premium and overtime pay
differentials for worked holidays - YES
RATIO:
2. Insular Bank of Asia and America Employees’ Union v. Inciong: Sec 2,
Rule IV, Book III of the Integrated Rules and Policy Instruction No. 9
are contrary to the Labor Code and are therefore invalid.
91
 LABOR1 | ATTY. MARLON MANUEL

a. The provisions of the Labor Code on the entitlement to the benefits employees work on a holiday, they are given an additional 100%
of holiday pay are clear and explicit (it provides for both the base pay on top of a premium pay of 50%. If the employees
coverage of and exclusion from the benefit). monthly pay already includes their salaries for holidays, they
b. In Policy Instruction No. 9, the Secretary of Labor stated that the should be paid only premium pay.
benefit is principally intended for daily paid employees, when the b. The CBA also already contemplated a divisor of 251 days for
law clearly states that every worker shall be paid their regular holiday pay computations before the presumption in the Integrated
holiday pay. Rules and the Policy Instruction was formulated.
c. Art. 4, Labor Code: All doubts in the regulations shall be 7. When the law provides benefits for “employees in all establishments
resolved in favor of labor. and undertakings, whether for profit or not” and lists specifically the
d. If the construction is so erroneous, the same must be declared null employees not entitled to those benefits, the admin agency
and void. implementing that law cannot exclude certain employees from its
3. Since Chartered Bank premises its action on the invalidated rule and policy coverage simply because they are paid by the month or because they
instruction, it is clear that the employees are entitled to the payment of 10 are highly paid.
legal holidays.
4. P.D. 800, Art. 82: WHO ARE EXCLUDED FROM HOLIDAY PAY
a. Government employees
b. Managerial employees
c. Field personnel
d. Members of the family of the employer who are dependent on him
for support
e. Domestic helpers
f. Persons in the personal service of another
g. Workers who are paid by results as determined by the Secretary of
Labor
5. Sec 2, Rule IV, Book III adds the exclusion of “employees who are
uniformly paid by the month”. While it is in the form of a presumption, it
constitutes a taking away or a deprivation which must be in the law. An
administrative interpretation which diminishes the benefits of labor more
than what the statute delimits is obviously ultra vires.
6. [IDK if this is an important issue] The divisor of 251 used by the Bank in
computing overtime is a result of subtracting all Saturdays, Sundays and the
10 legal holidays from the total number of calendar days. If the employees
are already paid for all non-working days, the divisor should be 365 and not
251.
a. Any remaining doubts which may arise from the conflicting
divisors are resolved by the manner in which work actually
rendered on holidays is paid. Thus, whenever monthly paid

92

34. Odango v. NLRC (Lex)
June 10, 2004 | Carpio, J. | Working Conditions-Rest periods and holidays
PETITIONER: Cezar Odango in his behalf and in behalf of 32 complainants
RESPONDENTS: National Labor Relations Commission and Antique Electric
Cooperative Inc (ANTECO)
SUMMARY: Odango and the other 32 complainants are monthly-paid
employees of ANTECO. Their workdays are from Monday to Friday and half of
Saturday. After a routine inspection, the Regional Branch of the DOLE found
ANTECO liable for underpayment of the monthly salaries of its employees.
DOLE directed ANTECO to pay its employees wage differentials amounting to
P1,427,412.75. ANTECO failed to pay. The 33 monthly-paid employees filed
complaints with the NLRC Sub-Regional Branch VI, Iloilo City, praying for
payment of wage differentials. The Labor Arbiter concluded that ANTECO
owed its employees the wages for 61 days, the difference between 365 and 304,
for every year. The NLRC reversed the LA’s ruling. The CA petition was
insufficient in form and substance for failing to recite where and in what specific
instance public respondent abused its discretion.
The issue before the SC: WoN the Petitioners are entitled to their money claims?
No, Odango et.al’s claims are without basis.
Odango et. al argues that under Section 2, Rule IV of Book III of the Omnibus
Rules Implementing the Labor Code, monthly-paid employees are considered
paid for all days of the month including un-worked days. They assert that they
should be paid for all the 365 days in a year (including Sundays, the un-worked
half of Saturdays and other days that they do not work at all). They argue that
since in the computation of leave credits, ANTECO uses a divisor of 304,
ANTECO is not paying them 61 days every year.
The Court has long ago declared in Insular Bank of Asia v. Inciong that Section
2, Rule IV, Book III of the Implementing Rules and Policy Instructions No. 9
issued by the Secretary (then Minister) of Labor are null and void since in the
guise of clarifying the Labor Codes provisions on holiday pay, they in effect
amended them by enlarging the scope of their exclusion. Even assuming that
Section 2, Rule IV of Book III is valid, petitioners claim will still fail.
The basic rule in this jurisdiction is no work, no pay. The right to be paid for un-
worked days is generally limited to the ten legal holidays in a year. Odango
et.al’s claim is based on a mistaken notion that Section 2, Rule IV of Book III
gave rise to a right to be paid for un-worked days beyond the ten legal holidays.
Odango et.al’s line of reasoning is not only a violation of the no work, no pay
LABOR1 | ATTY. MARLON MANUEL
principle, it also gives rise to an invidious classification, a violation of the equal
protection clause. Sustaining their argument will make monthly-paid employees
a privileged class who are paid even if they do not work. Thus, Section 2 cannot
serve as basis of any right or claim. Absent any other legal basis, petitioners
claim for wage differentials must fail.
DOCTRINE: The Labor Code is clear that monthly-paid employees are not
excluded from the benefits of holiday pay. However, the basic rule in this
jurisdiction is no work, no pay. The right to be paid for un-worked days is
generally limited to the ten legal holidays in a year.
FACTS:
1. Odango et.al are monthly-paid employees of Antique Electric Cooperative
(ANTECO) whose workdays are from Monday to Friday and half of
Saturday.
2. After a routine inspection, the Regional Branch of the Department of Labor
and Employment (DOLE) found ANTECO liable for underpayment of the
monthly salaries of its employees.
3. DOLE directed ANTECO to pay its employees wage differentials
amounting to P1,427,412.75. ANTECO failed to pay.
4. On various dates in 1995, 33 monthly-paid employees filed complaints with
the NLRC Sub-Regional Branch VI, Iloilo City, praying for payment of
wage differentials, damages and attorneys fees.
5. Labor Arbiter Rodolfo G. Lagoc (Labor Arbiter) heard the consolidated
complaints.
6. The Labor Arbiter rendered a Decision in favor of petitioners granting them
wage differentials amounting to P1,017,507.73 and attorneys fees of 10%.
Florentino Tongson, whose case the Labor Arbiter dismissed, was the sole
exception.
7. ANTECO appealed the Decision to the NLRC and the NLRC reversed the
Labor Arbiters’ Decision.
8. Odango et.al then elevated the case to this Court through a petition for
certiorari. However, it was dismissed for failure to comply with Section 11,
Rule 13 of the Rules of Court. Ondango et.al filed motion for
reconsideration and the Court set aside the dismissal, following the doctrine
in St. Martin Funeral Home v. NLRC and referred the case to the CA
9. The CA issued a Resolution dismissing the petition for failure to comply
with Section 3, Rule 46 of the Rules of Court. The CA explained that
Odango failed to allege the specific instances where the NLRC abused its
discretion.
10. The Labor Arbiter:
93

a. ANTECO failed to refute petitioners argument that monthly-paid
employees are considered paid for all the days in a month under
Section 2, Rule IV of Book 3 of the Implementing Rules of the
Labor Code (Section 2). Petitioners claim that this includes not
only the 10 legal holidays, but also their un-worked half of
Saturdays and all of Sundays.
b. The LA gave credence to petitioners arguments on the computation
of their wages based on the 304 divisor used by ANTECO in
converting the leave credits of its employees. The Labor Arbiter
agreed with petitioners that ANTECOs use of 304 as divisor is an
admission that it is paying its employees for only 304 days a year
instead of the 365 days as specified in Section 2. The Labor
Arbiter concluded that ANTECO owed its employees the wages
for 61 days, the difference between 365 and 304, for every year.
11. The NLRC’s Ruling:
a. reversed the Labor Arbiters ruling that ANTECO underpaid its
employees. The NLRC pointed out that the Labor Arbiters own
computation showed that the daily wage rates of ANTECOs
employees were above the minimum daily wage of P124.The
lowest paid employee of ANTECO was then receiving a monthly
wage of P3,788. The NLRC applied the formula in Section 2
[(Daily Wage Rate = (Wage x 12) /365)] to the monthly wage of
P3,788 to arrive at a daily wage rate of P124.54, an amount clearly
above the minimum wage.
b. noted that while the reasoning in the body of the Labor Arbiters
decision supported the view that ANTECO did not underpay, the
conclusion arrived at was the opposite. Finally, the NLRC ruled
that the use of 304 as a divisor in converting leave credits is more
favorable to the employees since a lower divisor yields a higher
rate of pay
12. CA’s ruling:
a. petition was insufficient in form and substance since it does not
allege the essential requirements of the extra-ordinary special
action of certiorari . The Court of Appeals faulted petitioners for
failing to recite where and in what specific instance public
respondent abused its discretion.
b. The appellate court characterized the allegations in the petition as
sweeping and clearly falling short of the requirement of Section 3,
Rule 46 of the Rules of Court.
ISSUE:
1. WoN the Petitioners are entitled to their money claims? No. Odango et.al’s
claim is without basis.
LABOR1 | ATTY. MARLON MANUEL
RATIO:
On the right of the petitioners to wage differentials
1. Odango et. al base their claim on Section 2, Rule IV of Book III of the
Omnibus Rules Implementing the Labor Code.
a. They argue that under this provision monthly-paid employees are
considered paid for all days of the month including un-worked
days.
b. They assert that they should be paid for all the 365 days in a year.
They argue that since in the computation of leave credits,
ANTECO uses a divisor of 304, ANTECO is not paying them 61
days every year.
2. We have long ago declared void Section 2, Rule IV of Book III of the
Omnibus Rules Implementing the Labor Code.
a. In Insular Bank of Asia v. Inciong, we ruled as follows: Section 2,
Rule IV, Book III of the Implementing Rules and Policy
Instructions No. 9 issued by the Secretary (then Minister) of Labor
are null and void since in the guise of clarifying the Labor Codes
provisions on holiday pay, they in effect amended them by
enlarging the scope of their exclusion.
3. The Labor Code is clear that monthly-paid employees are not excluded
from the benefits of holiday pay. However, the implementing rules on
holiday pay promulgated by the then Secretary of Labor excludes monthly-
paid employees from the said benefits by inserting, under Rule IV, Book III
of the implementing rules, Section 2 which provides that monthly-paid
employees are presumed to be paid for all days in the month whether
worked or not.
4. Thus, Section 2 cannot serve as basis of any right or claim. Absent any
other legal basis, petitioners claim for wage differentials must fail.
5. Even assuming that Section 2, Rule IV of Book III is valid, petitioners
claim will still fail.
6. The basic rule in this jurisdiction is no work, no pay. The right to be paid
for un-worked days is generally limited to the ten legal holidays in a year.
7. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of
Book III gave rise to a right to be paid for un-worked days beyond the ten
legal holidays. In effect, petitioners demand that ANTECO should pay them
on Sundays, the un-worked half of Saturdays and other days that they do
not work at all.
a. Petitioners line of reasoning is not only a violation of the no work,
no pay principle, it also gives rise to an invidious classification, a
violation of the equal protection clause.
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b. Sustaining petitioners argument will make monthly-paid

employees a privileged class who are paid even if they do not
work.
8. The use of a divisor less than 365 days cannot make ANTECO
automatically liable for underpayment.
9. The facts show that petitioners are required to work only from Monday to
Friday and half of Saturday. Thus, the minimum allowable divisor is 287,
which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or
52 half Saturdays).
10. Any divisor below 287 days means that ANTECOs workers are deprived of
their holiday pay for some or all of the ten legal holidays.The 304 days
divisor used by ANTECO is clearly above the minimum of 287 days.
11. Finally, Odango cites Chartered Bank Employees Association v. Ople as an
analogous situation. Petitioners have misread this case.
a. In Chartered Bank, the workers sought payment for un-worked
legal holidays as a right guaranteed by a valid law. In this case,
petitioners seek payment of wages for un-worked non-legal
holidays citing as basis a void implementing rule.The
circumstances are also markedly different. In Chartered Bank,there
was a collective bargaining agreement that prescribed the divisor.
No CBA exists in this case. In Chartered Bank, the employer was
liable for underpayment because the divisor it used was 251 days, a
figure that clearly fails to account for the ten legal holidays the law
requires to be paid.Here, the divisor ANTECO uses is 304 days.
This figure does not deprive petitioners of their right to be paid on
legal holidays.
12. ANTECOs defense is likewise based on Section 2, Rule IV of Book III of
the Omnibus Rules Implementing the Labor Code although ANTECOs
interpretation of this provision is opposite that of petitioners.
13. It is deplorable that both parties premised their arguments on an
implementing rule that the Court had declared void twenty years ago in
Insular Bank. This case is cited prominently in basic commentaries.
14. And yet, counsel for both parties failed to consider this. This does not speak
well of the quality of representation they rendered to their clients. This
controversy should have ended long ago had either counsel first checked the
validity of the implementing rule on which they based their contentions.
WHEREFORE, the petition is DENIED.The Resoution of the Court of Appeals
DISMISSING CA-G.R. SP No. 51519 is AFFIRMED.

SEPARATE OPINIONS:
CONCURRING:

95

35. Cebu Institute of Technology v. Ople (Yvonne)
December 18, 1987 | Cortes, J. | Service Incentive Leave
PETITIONERS: CEBU INSTITUTE OF TECHNOLOGY (CIT)
RESPONDENTS: HON. BLAS OPLE, in his capacity as Minister, Ministry of
Labor and Employment etc.
SUMMARY:
A case was filed against CIT by, Panfilo Canete, et al., teachers of CIT, for non-
payment of: a) cost of living allowances (COLA) under Pres. Dec. Nos. 525,
1123, 1614, 1678 and 1713, b) thirteenth (13th) month pay differentials and c)
service incentive leave. CIT maintained that it had paid the allowances
mandated by various decrees but the same had been integrated in the teacher's
hourly rate. It alleged that the payment of COLA by way of salary increases is
in line with PD No. 451. It also claimed in its position paper that it had paid
13th month pay to its employees and that it was exempt from the payment of
service incentive leave to its teachers who were employed on contract basis. The
Minister of Labor and Employment issued the assailed Order and held that the
basic hourly rate designated in the Teachers' Program is regarded as the basic
hourly rate of teachers exclusive of the COLA, and that COLA should not be
taken from the 60% incremental proceeds of the approved increase in tuition
fee. CIT assailed the aforesaid Order. The Court issued a TRO on December 7,
1981 against the enforcement of the questioned Order of the Minister of Labor
and Employment.
Issue: WON CIT is exempt from paying service incentive leave to its teachers
who were employed on contract basis. NO. Not exempt. The teachers are
entitled to Service Incentive Leave (SIL).
DOCTRINE:
CIT’s teaching personnel cannot be deemed as field personnel which refers "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. (Par.
3, Art. 82, LC). Hence, they do not fall under the exception and are entitled to
service incentive leave.
FACTS:
1. This is a consolidation of six cases involving various private schools as well
as the then Minister of Labor and Employment in order to dispose
uniformly the common legal issue raised, namely the allocation of the
LABOR1 | ATTY. MARLON MANUEL
incremental proceeds of authorized tuition fee increases of private schools
provided for in section 3 (a) of Presidential Decree No. 451, and thereafter,
under the Education Act of 1982 (Batas Pambansa Blg. 232). 3(a) of Pres.
Decree No. 451 which states:
SEC. 3. Limitations. — The increase in tuition or other school fees
or other charges as well as the new fees or charges authorized under the
next preceding section shall be subject to the following conditions; (a) That
no increase in tuition or other school fees or charges shall be approved
unless sixty (60%)per centum 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;
2. This case originated from a Complaint filed with the Regional Office No.
VII of the Ministry of Labor against petitioner Cebu Institute of Technology
(CIT) by private respondents, Panfilo Canete, et al., teachers of CIT, for
non-payment of: a) cost of living allowances (COLA) b) thirteenth (13th)
month pay differentials and c) service incentive leave. CIT contended that it
had paid the allowances mandated by various decrees but the same had been
integrated in the teacher's hourly rate.
3. It alleged that the payment of COLA by way of salary increases is in line
with Pres. Dec. No. 451. It also claimed in its position paper that it had paid
thirteenth month pay to its employees and that it was exempt from the
payment of service incentive leave to its teachers who were employed on
contract basis.
4. Minister of Labor and Employment held that the basic hourly rate
designated in the Teachers' Program is regarded as the basic hourly rate of
teachers exclusive of the COLA, and that COLA should not be taken from
the 60% incremental proceeds of the approved increase in tuition fee.
Petitioner assails the aforesaid Order in this Special Civil Action of
certiorari with Preliminary Injunction and/or Restraining Order. The Court
issued a Temporary Restraining Order on December 7, 1981 against the
enforcement of the questioned Order of the Minister of Labor and
Employment.
ISSUE:
1. WON CIT is exempt from paying service incentive leave to its teachers
who were employed on contract basis. NO. Not exempt. The teachers are
entitled to Service Incentive Leave (SIL).
RATIO:
1. CIT claims that Ople etc. are engaged by the school on a contract basis as
shown by the individual teachers’ contract which defines the nature, scope
and period of their employment. Hence, they are not entitled to the said
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benefit according to Rule V of the Implementing Rules and Regulations of

the Labor Code which provides that the rule on Service Incentive Leave
does not apply to:
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on task or
contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the
performance thereof;
2. The phrase "those who are engaged on task or contract basis" should
however, be related with "field personnel" applying the rule on ejusdem
generis that general and unlimited terms are restrained and limited by the
particular terms that they follow.
3. Clearly, petitioner's teaching personnel cannot be deemed field personnel
which refers "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 under Par. 3, Article 82 of the Labor Code.
4. CIT's claim that Ople etc. are not entitled to the service incentive leave
benefit cannot therefore be sustained.

97

36.. AUTO BUS TRANSPORT v. BAUTISTA (BAM)
16 May 2005 | Chico-Nazario | Working Conditions - SERVICE INCENTIVE
LEAVE PAY
PETITIONER: Auto Bus Transport
RESPONDENTS: Antonio Bautista
SUMMARY:
Antonio Bautista is a driver-conductor of Autobus and was paid on commission
basis equivalent to 7% of the total gross income per travel on a twice a month
basis. While he was driving Autobus No. 114 he accidentally bumped another
Autobus vehicle. Bautista alleged this is because he was compelled to drive
although he has not slept for almost 24-hours. He was not allowed to work until
he has paid the cost of repair of both buses. After a month, he was terminated.
Bautista then filed a complaint for illegal dismissal with money claims for non-
payment of 13th month pay and service incentive leave pay against Autobus.
Autobus argued that Bautista’s employment was replete with offenses involving
reckless imprudence, gross negligence, and dishonesty. It merely exercised its
management prerogative in terminating Bautista and after he was given due
process.
Whether Bautista is field personnel - NO; Whether Bautista is entitled to service
incentive leave pay - YES; Whether Bautista’s claim for the service incentive
leave pay has prescribed - NO
SC Held that Bautista was not a field personnel but a regular employee under
constant supervision while in the performance of this work. Along the routes of
the Bus Company, there are inspectors who board the bus and inspect the
passengers, the punched tickets, and the conductor's reports. There is also the
mandatory once-a-week car barn or shop day. Lastly, there is a dispatcher
whose function is precisely to see to it that the bus and its crew leave the
premises at specific times and arrive at the estimated proper time. Thus, he is
entitled to service incentive leave pay. As to the claim of prescription, in the case
of service incentive leave, the employee may choose to either use his leave
credits or commute it to its monetary equivalent if not exhausted at the end of
the year. Hence, if the employee entitled to service incentive leave does not use
or commute the same, he is entitled upon his resignation or separation from work
LABOR1 | ATTY. MARLON MANUEL
to the commutation of his accrued service incentive leave. Bautista’s cause of
action to claim the payment of his accumulated service incentive leave thus
accrued from the time when his employer dismissed him and failed to pay his
accumulated leave credits. Thus, the claim for the payment of the service
incentive leave pay has not yet prescribed since it was filed a month after
Bautista’s dismissal.
DOCTRINE:
A bus driver who is under the constant supervision of his employer while in the
performance of his duties and is required to be at specific places at specific
times, even if he works away from the principal place of business, is a regular
employee entitled to service incentive leave pay and not a field personnel.
FACTS:
1. Antonio Bautista was employed by Auto Bus Transport Systems, Inc.
(Autobus), as driver-conductor with travel routes Manila-Tuguegarao via
Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio.
2. Bautista was paid on commission basis, seven percent (7%) of the total
gross income per travel, on a twice a month basis.
3. While he was driving Autobus No. 114 he accidentally bumped the rear
portion of Autobus No. 124, as the latter vehicle suddenly stopped at a
sharp curve without giving any warning.
a. Bautista alleged that he was compelled by the management to go
back to Roxas, Isabela, although he had not slept for almost
twenty-four (24) hours.
b. Furthermore, he was not allowed to work until he fully paid the
amount of P75,551.50, representing thirty percent (30%) of the
cost of repair of the damaged buses. His pleas for reconsideration
were ignored. After a month, he was terminated.
4. Bautista filed a complaint for illegal dismissal with money claims for non-
payment of 13th month pay and service incentive leave pay against Autobus.
5. Autobus argued that Bautista’s employment was replete with offenses
involving reckless imprudence, gross negligence, and dishonesty
a. It presented copies of letters, memos, irregularity reports, and
warrants of arrest pertaining to several incidents wherein Bautista
was involved.
b. in the exercise of its management prerogative, employment was
terminated only after Bautista was provided with an opportunity to
explain his side regarding the accident.
98

6. LA dismissed the complaint but ordered Autobus to pay 13 th month pay and
the service incentive leave pay for all the years he has been in service.
7. NLRC affirmed the dismissal and payment of the service incentive leave
pay but deleted the 13th month pay.
ISSUES:
1. Whether Bautista is a field personnel - NO
2. Whether Bautista is entitled to service incentive leave pay - YES
3. Whether Bautista’s claim for the service incentive leave pay has prescribed
- NO
RATIO:
1. The grant of service incentive leave has been delimited by the
Implementing Rules and Regulations of the Labor Code to apply only to
those employees not explicitly excluded
a. According to the Implementing Rules, Service Incentive Leave
shall not apply to employees classified as "field personnel."
b. The phrase "other employees whose performance is unsupervised
by the employer" must not be understood as a separate
classification of employees to which service incentive leave shall
not be granted.
c. Rather, it serves as an amplification of the definition of field
personnel under the Labor Code as those "whose actual hours of
work in the field cannot be determined with reasonable certainty."
2. The same is true with respect to the phrase "those who are engaged on task
or contract basis, purely commission basis."
a. Said phrase should be related with "field personnel," applying the
rule on ejusdem generis
3. Hence, employees engaged on task or contract basis or paid on purely
commission basis are not automatically exempted from the grant of service
incentive leave
a. unless, they fall under the classification of field personnel.
b. Auto Bus' contention that respondent is not entitled to the grant of
service incentive leave just because he was paid on purely
commission basis is misplaced
4. What must be ascertained in order to resolve the issue of propriety of the
grant of service incentive leave to Bautista is whether or not he is a field
personnel.
5. According to Article 82 of the Labor Code, "field personnel" refers to:
LABOR1 | ATTY. MARLON MANUEL
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.
6. In Bureau of Working Conditions Advisory Opinion to Philippine
Technical-Clerical Commercial employees Association, it was elaborated
further:As a general rule, field personnel are those whose performance of
their job/service is
a. not supervised by the employer or his representative, the
workplace being away from the principal office; and
b. whose hours and days of work cannot be determined with
reasonable certainty;
c. hence, they are paid specific amount for rendering specific service
or performing specific work. If required to be at specific places at
specific times, employees including drivers cannot be said to be
field personnel despite the fact that they are performing work away
from the principal office of the employee.
7. Autobus argues that under said advisory opinion, no employee would ever
be considered a field personnel because every employer, in one way or
another, exercises control over his employees.
8. Further, that the only criterion that should be considered is the nature of
work of the employee
a. if the employee's job requires that he works away from the
principal office like that of a messenger or a bus driver, then he is
inevitably a field personnel.
9. We are not persuaded. The definition of a "field personnel" is not merely
concerned with the location where the employee regularly performs his
duties but also with the fact that the employee's performance is
unsupervised by the employer.
10. Field personnel are those who regularly perform their duties away from the
principal place of business of the employer and whose actual hours of work
in the field cannot be determined with reasonable certainty.
11. Thus, in order to conclude whether an employee is a field employee, it is
also necessary to ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer
12. [!] As observed by the LA and concurred in by the CA
along the routes that are plied by these bus companies, there are its
inspectors assigned at strategic places who board the bus and inspect the
passengers, the punched tickets, and the conductor's reports. There is also
the mandatory once-a-week car barn or shop day, where the bus is
regularly checked as to its mechanical, electrical, and hydraulic aspects,
whether or not there are problems thereon as reported by the driver and/or
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 LABOR1 | ATTY. MARLON MANUEL

conductor. They too, must be at specific place as [sic] specified time, as
they generally observe prompt departure and arrival from their point of
origin to their point of destination. In each and every depot, there is always
the Dispatcher whose function is precisely to see to it that the bus and its
crew leave the premises at specific times and arrive at the estimated proper
time.
19. Thus, his cause of action to claim the payment of his accumulated service
incentive leave thus accrued from the time when his employer dismissed
him and failed to pay his accumulated leave credits.
a. Since he filed it a month his dismissal, it is within the prescriptive
period.

13. The driver was therefore under constant supervision while in the
performance of this work. He cannot be considered a field personnel. He
is a regular employee who performs tasks usually necessary and
desirable to the usual trade of petitioner's business.

Whether Bautista’s claim for the service incentive leave pay has prescribed 10

14. the pivotal question to be answered is when does the cause of action for
money claims accrue in order to determine the reckoning date of the three-
year prescriptive period.
15. a determination must be made as to the period when the act constituting a
violation of the workers' right to the benefits being claimed was committed.
16. In the case of service incentive leave, the employee may choose to either:
a. use his leave credits; OR
b. commute it to its monetary equivalent if not exhausted at the end
of the year; OR
c. if the employee entitled to service incentive leave does not use or
commute the same, he is entitled upon his resignation or separation
from work to the commutation of his accrued service incentive
leave.
17. the three (3)-year prescriptive period commences from the time when the
employer refuses to pay its monetary equivalent after demand of
commutation or upon termination of the employee's services, as the case
may be.
18. Bautista did not use his service incentive leave nor demanded for its
commutation until he was terminated. Neither did Auto Bus pay his
accumulated service incentive leave pay at the time of dismissal.

10 Article 291 of the Labor Code states that all money claims arising from
employer-employee relationship shall be filed within three (3) years from the time
the cause of action accrued; otherwise, they shall be forever barred.
100

37. Tan v. Lagrama (JackJack)
Aug 15, 2002 | Mendoza | Working Conditions - Employees Paid by Results
*This case is very short so I put everything in the summary box*
PETITIONER: Rolando Y. Tan
RESPONDENTS: Leovigildo Lagrama and Court of Appeals
SUMMARY: Lagrama works for Tan for more than 10 years as a painter of
billboards and murals for the motion pictures shown at the theaters managed by
Tan (Tan is the president of Supreme Theater Corporation and the general
manager of Crown and Empire Theaters in Butuan City). Lagrama was then
dismissed for having urinated in his working area. Lagrama tried to explain his
side but Tan kept shouting for Lagrama to get out. Lagrama had no choice but to
leave. Lagrama then filed a complaint for illegal dismissal and non payment of
benefits. Tan asserted that Lagrama was an independent contractor as he was
paid in piece-work basis.
Issue is WON Lagrama is an independent contractor or an employee of
Tan? SC held he is an employee.
Applying the four-fold test:
A. Power of Control - Evidence shows that the Lagrama performed his work as
a painter and under the supervision and control of Tan.
1. Lagrama worked in a designated work area inside the theater of Tan for
the use of which Tan prescribed rules, which rules included the
observance of cleanliness and hygiene and prohibition against urinating
in the work area and any other place other than restrooms and
2. Tan's control over Lagrama's work extended not only the use of work
area but also the result of Lagrama’s work and the manner and means
by which the work was to be accomplished
3. Lagrama is not an independent contractor because he did not enjoy
independence and freedom from the control and supervision of Tan and
he was subjected to Tan's control over the means and methods by which
his work is to be performed and accomplished
B. Payment of Wages - this is the topic to focus on
LABOR1 | ATTY. MARLON MANUEL
1. Lagrama worked for Tan on a fixed piece work basis is of no moment.
Payment by results is a method of compensation and does not define the
essence of the relation. It is a method of computing compensation,
not a basis for determining the existence or absence of employer-
employee relationship. One may be paid on the basis of results or time
expended on the work, and may or may not acquire an employment
status, depending on whether the elements of an employer-employee
relationship are present or not.
2. That Lagrama was not reported as an employee to the SSS is not
conclusive, on the question whether he was an employee, otherwise Tan
would be rewarded for his failure or even neglect to perform his
obligation.
C. Power of Dismissal – Tan stated in his position papers that he had the right
to fire Lagrama. Tan in effect acknowledged Lagrama to be his employee.
D. Power of Selection and Engagement of Employees – Tan engaged the
services of Lagrama without the intervention of third party.
Next issue is WON Lagrama was illegally dismissed? SC held YES.
The Implementing Rules of the Labor Code provides that no worker shall be
dismissed except for a just or authorized cause provided by law and after due
process. In this case, by Tan’s refusal to give Lagrama work to do and ordering
Lagrama to get out of his sight as the latter tried to explain his side, Tan made it
plain that Lagrama was dismissed. Urinating in a work place other than the one
designated for the purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under Art. 282(1) of the
Labor Code for purposes of terminating employment, but the same must be
shown by evidence. Here there is no evidence that Lagrama did urinate in a
place other than a restroom in the premises of his work.
Court didn't order reinstatement anymore because the relationship between
the two is strained. So just ordered separation pay and backwages.
Then they mentioned this last paragraph: The Bureau of Working Conditions
classifies workers paid by results into two groups, namely; (1) those whose time
and performance is supervised by the employer, and (2) those whose time and
performance is unsupervised by the employer. The first involves an element of
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control and supervision over the manner the work is to be performed, while the
second does not. If a piece worker is supervised, there is an employer-
employee relationship, as in this case. However, such an employee is not
entitled to service incentive leave pay since, as pointed out in Makati
Haberdashery v. NLRC and Mark Roche International v. NLRC, he is paid a
fixed amount for work done, regardless of the time he spent in
accomplishing such work.

DOCTRINE: Payment by result is a method of compensation and does not

define the essence of the relation. It is a method of computing compensation, not
a basis for determining the existence or absence of employer-employee
relationship. One may be paid on the basis of results or time expended on the
work, and may or may not acquire an employment status, depending on whether
the elements of an employer-employee relationship are present or not.

The Bureau of Working Conditions classifies workers paid by results into two
groups, namely; (1) those whose time and performance is supervised by the
employer, and (2) those whose time and performance is unsupervised by the
employer. The first involves an element of control and supervision over the
manner the work is to be performed, while the second does not. If a piece
worker is supervised, there is an employer-employee relationship, as in this
case. However, such an employee is not entitled to service incentive leave
pay since, as pointed out in Makati Haberdashery v. NLRC and Mark Roche
International v. NLRC, he is paid a fixed amount for work done, regardless of
the time he spent in accomplishing such work.

102

38. RODOLFO J. SERRANO v. SEVERINO SANTOS TRANSIT (Liz)
9 August 2010 | Employees Paid by Results: Service Incentive Leave Pay
PETITIONER: RODOLFO J. SERRANO
RESPONDENT: SEVERINO SANTOS TRANSIT and/or SEVERINO SANTOS
SUMMARY: Petitioner Serrano was hired as bus conductor by respondent
Severino Santos Transit, a bus company owned and operated by its co-respondent
Severino Santos. After 14 years of service Serrano applied for optional retirement
from the company whose representative advised him that he must first sign the
already prepared Quitclaim before his retirement pay could be released. As
Serrano’s request to first go over the computation of his retirement pay was
denied, he signed the Quitclaim on which he wrote “U.P.” (under protest) after his
signature, indicating his protest to the amount of P75,277.45 which he received,
computed by the company at 15 days per year of service. Serrano soon after filed a
complaint, alleging that the company erred in its computation since under
Republic Act No. 7641, otherwise known as the Retirement Pay Law, his
retirement pay should have been computed at 22.5 days per year of service to
include the cash equivalent of the 5-day service incentive leave (SIL) and 1/12 of
the 13th month pay which the company did not. The company maintained,
however, that the Quitclaim signed by Serrano barred his claim and, in any event,
its computation was correct since petitioner was not entitled to the 5-day SIL and
pro-rated 13th month pay for, as a bus conductor, he was paid on commission
basis. I: Whether or not the 22.5 days pay per year of service is the correct
formula in arriving at the complete retirement pay of complainant
DOCTRINE:
For purposes, however, of applying the law on Service Incentive Leave, as well as
on retirement, the Court notes that there is a difference between drivers paid under
the boundary system and conductors who are paid on a commission basis. In
practice, taxi drivers do not receive fixed wages. They retain only those sums in
excess of the boundary or fee they pay to the owners or operators of the vehicles.
Conductors, on the other hand, are paid a certain percentage of the bus earnings
for the day. It bears emphasis that under P.D. 851 or the SIL Law, the exclusion
from its coverage of workers who are paid on a purely commission basis is only
with respect to field personnel. The more recent case of Auto Bus Transport
Systems, Inc v. Bautista clarifies that an employee who is paid on purely
commission basis is entitled to Service Incentive Leave Pay
FACTS:
1. Petitioner Serrano was hired as bus conductor by respondent Severino
LABOR1 | ATTY. MARLON MANUEL
Santos Transit, a bus company owned and operated by its co-respondent
Severino Santos.
2. After 14 years of service, Serrano applied for optional retirement from the
company whose representative advised him that he must first sign the
already prepared Quitclaim before his retirement pay could be released.
3. As Serrano’s request to first go over the computation of his retirement pay
was denied, he signed the Quitclaim on which he wrote “U.P.” (under
protest) after his signature, indicating his protest to the amount of
P75,277.45 which he received, computed by the company at 15 days per
year of service.
4. Serrano soon after filed a complaint before the Labor Arbiter, alleging that
the company erred in its computation since the Retirement Pay Law (RA
No. 7641), his retirement pay should have been computed at 22.5 days per
year of service to include the cash equivalent of the 5-day service incentive
leave (SIL) and 1/12 of the 13th month pay which the company did not.
5. RESPONDENT SEVERINO SANTOS’ CONTENTION: The Quitclaim
signed by Serrano barred his claim and, in any event, its computation was
correct since Serrano was not entitled to the 5-day SIL and pro-rated 13 th
month pay for, as a bus conductor, he was paid on commission basis.
Respondents, noting that the retirement differential pay amounted to only
P1,431.15, explained that in the computation of petitioner’s retirement pay,
five months were inadvertently not included because some index cards
containing his records had been lost.
6. LA’s Ruling: Labor Arbiter ruled in favor of petitioner.
a. In Labor Advisory on Retirement Pay Law, it was decisively made
clear that “the law expanded the concept of “one-half month
salary” from the usual one-month salary divided by two.” “Half-
month’s pay” is “expanded” because it means not just the salary
for 15 days but also one-twelfth of the 13th-month pay and the
cash value of five-day service incentive leave. THIS IS THE
MINIMUM. The retirement pay package can be improved upon
by voluntary company policy, or particular agreement with the
employee, or through a collective bargaining agreement.” Thus,
having established that 22.5 days pay per year of service is the
correct formula in arriving at the complete retirement pay of
complainant.
7. NLRC Ruling: NLRC reversed the Labor Arbiter’s ruling and dismissed
petitioner’s complaint. It, however, ordered respondents to pay retirement
differential in the amount of P2,365.35. NLRC held that since petitioner
was paid on purely commission basis, he was excluded from the coverage
of the laws on 13th month pay and SIL pay, hence, the 1/12 of the 13th month
pay and the 5-day SIL should not be factored in the computation of his
retirement pay. Petitioner’s motion for reconsideration was denied.
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8. CA: The appellate court affirmed the NLRC’s ruling holding that it was implementing rules. Thus, his retirement pay should include the
based on substantial evidence, hence, should be respected. Petitioner’s MR cash equivalent of 5-days SIL and 1/12 of 13th month pay. The
was denied. NLRC’s reliance on the case of R & E Transport, Inc. as a basis
for ruling that bus conductors are not covered by the law on SIL
ISSUE: Whether or not the 22.5 days retirement pay per year of service is the and 13th month pay is erroneous since that involved a taxi driver
correct formula? who was paid according to the “boundary system.” There is a
difference between drivers paid under the “boundary system” and
RULING: conductors who are paid on commission basis. In practice, taxi
1. Republic Act No. 7641 which was enacted on December 9, 1992 amended drivers do not receive fixed wages and retain only those sums in
Article 287 of the Labor Code by providing for retirement pay to qualified excess of the “boundary” or fee they pay to the owners or operators
private sector employees in the absence of any retirement plan in the of the vehicles. Conductors, on the other hand, are paid a certain
establishment. The pertinent provision of said law reads: percentage of the bus’ earnings for the day.
a. Section 1. Article 287 of Presidential Decree No. 442, as amended,
otherwise known as the Labor Code of the Philippines, is hereby
amended to read as follows:
i. In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the
establishment, an employee upon reaching the age of
sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement
age, who has served at least five (5) years in the said
establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month
salary for every year of service, a fraction of at least six
(6) months being considered as one whole year.
2. Unless the parties provide for broader inclusions, the term one-half (1/2)
month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the
13th month pay and the cash equivalent of not more than five (5) days of
service incentive leaves.
3. Admittedly, Serrano worked for 14 years for the bus company which did
not adopt any retirement scheme. Even if Serrano as bus conductor was paid
on commission basis then, he falls within the coverage of R.A. 7641 and its
implementing rules. As thus correctly ruled by the Labor Arbiter, Serrano’s
retirement pay should include the cash equivalent of the 5-day SIL and 1/12
of the 13th month pay.
4. Retirement pay; applicability to employees on commission basis
a. Even if the petitioner as bus conductor was paid on commission
basis, he falls within the coverage of R.A. 7641 and its
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39. Labor Congress of the Philippines v. NLRC (KARA)
May 21, 1998 | Davide, Jr., J. | Working Conditions – Pakiao workers
PETITIONER: Labor Congress of the Philippines
RESPONDENTS: NLRC, Empire Food Products, Mr. Gonzalo Kehyeng
and Mrs. Evelyn Kehyeng
SUMMARY: Petitioners (rank-and-file employees) filed a case against
Empire Food Products for Unfair Labor Practice through Illegal Dismissal
and Underpayment of Wages. LA ruled that there was no illegal dismissal
because petitioners were guilty of abandoning their post without
permission from respondents and that there was no underpayment since
they are piece workers or paid on a pakiao. The only limitation for piece
workers or pakiao workers is that they should receive compensation no
less than the minimum wage for an eight (8) hour work. NLRC affirmed.
WoN petitioners abandoned their work? NO.
SC ruled that failure to work for one day, which resulted in the spoilage of
cheese curls does not amount to abandonment of work. It is the clear,
deliberate and unjustified refusal to resume employment and not mere
absence that constitutes abandonment. The burden of proving the
existence of just cause for dismissing an employee, such as abandonment,
rests on the employer, a burden Empire Food failed to discharge.
Petitioners are therefore entitled to reinstatement with full back wages.
WoN petitioners were underpaid? YES.
Petitioners are entitled to holiday pay, premium pay, 13th month pay
and service incentive leave. Although piece-rate workers, they were
regular employees of private respondents. First, as to the nature of
petitioners' tasks, their job of repacking snack food was necessary or
desirable in the usual business of private respondents, who were engaged
in the manufacture and selling of such food products; second, petitioners
worked for private respondents throughout the year, their employment not
having been dependent on a specific project or season; and third, the
length of time that petitioners worked for private respondents. Thus, while
petitioners' mode of compensation was on a "per piece basis," the status
and nature of their employment was that of regular employees.
Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive
LABOR1 | ATTY. MARLON MANUEL
leave and 13th month pay,  inter alia, "field personnel and other
employees whose time and performance is unsupervised by the employer,
including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing
work irrespective of the time consumed in the performance thereof."
Plainly, petitioners as piece-rate workers do not fall within this group
Further, in Section 8 (b), Rule IV, Book III, piece workers are specifically
mentioned as being entitled to holiday pay.
In addition, the Revised Guidelines on the Implementation of the 13th
Month Pay Law, in view of the modifications to P.D. No. 851 by
Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay
As to overtime pay, the rules, however, are different. According to Sec.
2(e), Rule I, Book III of the Implementing Rules, workers who are paid by
results including those who are paid on piece-work, takay,pakiao, or task
basis, if their output rates are in accordance with the standards prescribed
under Sec. 8, Rule VII, Book III, of these regulations, or where such rates
have been fixed by the Secretary of Labor in accordance with the aforesaid
section, are not entitled to receive overtime pay. Here, private respondents
did not allege adherence to the standards set forth in Sec. 8 nor with the
rates prescribed by the Secretary of Labor. As such, petitioners are beyond
the ambit of exempted persons and are therefore entitled to overtime pay.
FACTS:
1. The 99 persons named as petitioners in this proceeding were rank-and-file
employees of respondent Empire Food Products, which hired them on
various dates.
2. Petitioners filed against private respondents a complaint for payment of
money claim[s] and for violation of labor standard[s] laws (NLRC Case No.
RAB-111-10-1817-90). They also filed a petition for direct certification of
petitioner Labor Congress of the Philippines as their bargaining
representative (Case No. R0300-9010-RU-005).
3. On October 23, 1990, petitioners represented by LCP President Benigno B.
Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn
Kehyeng in behalf of Empire Food Products, Inc. entered into a
Memorandum of Agreement 
4. On January 23, 1991, petitioners filed a complaint docketed as NLRC Case
No. RAB-III-01-1964-91 against private respondents for:
a. Unfair Labor Practice by way of Illegal Lockout and/or Dismissal;
105

b. Union busting thru Harassments [sic], threats, and interfering with
the rights of employees to self-organization;
c. Violation of the Memorandum of Agreement dated October 23,
1990;
d. Underpayment of Wages in violation of R.A. No. 6640 and R.A.
No. 6727, such as Wages promulgated by the Regional Wage
Board;
e. Actual, Moral and Exemplary Damages.
5. Labor Arbiter absolved private respondents of the charges of unfair labor
practice, union busting, violation of the memorandum of agreement,
underpayment of wages and denied petitioners' prayer for actual, moral and
exemplary damages. Labor Arbiter, however, directed the reinstatement of
the individual complainants:
6. NLRC remanded the case to LA
7. LA ruled:
a. the charge of illegal lockout has no leg to stand on because of the
testimony of respondents through their guard Orlando Cairo (TSN,
July 31, 1991 hearing; p. 5-35) that on January 21, 1991,
complainants refused and failed to report for work, hence guilty of
abandoning their post without permission from respondents. As a
result of complainants['] failure to report for work, the cheese curls
ready for repacking were all spoiled to the prejudice of
respondents.
b. The enumeration of complainants' wages in their consolidated
Affidavits of merit and position paper which implies underpayment
has no leg to stand on in the light of the fact that complainants'
admission that they are piece workers or paid on
a pakiao [basis] i.e. a certain amount for every thousand pieces of
cheese curls or other products repacked. The only limitation for
piece workers or pakiao workers is that they should receive
compensation no less than the minimum wage for an eight (8) hour
work [sic]. And compliance therewith was satisfactorily explained
by respondent Gonzalo Kehyeng in his testimony (TSN, p. 12-30)
during the July 31, 1991 hearing. On cross-examination,
complainants failed to rebut or deny Gonzalo Kehyeng's testimony
that complainants have been even receiving more than the
minimum wage for an average workers [sic]. Certainly, a lazy
worker earns less than the minimum wage but the same cannot be
attributable to respondents but to the lazy workers.
8. NLRC affirmed in toto that  the claims for underpayment of wages were
without basis as complainants were admittedly "pakiao" workers and paid
on the basis of their output subject to the lone limitation that the payment
LABOR1 | ATTY. MARLON MANUEL
conformed to the minimum wage rate for an eight-hour workday; and
petitioners were not underpaid.
ISSUE:
1. Whether petitioners are entitled to reinstatement? YES.
2. Whether petitioners were underpaid? YES
HELD:
1. It appear to us that the Labor Arbiter, in concluding in 27 July 1994
Decision was moved by, at worst, spite, or at best, lackadaisically glossed
over petitioner's evidence. On this score, we find the following observations
of the OSG most persuasive:
a. The failure to work for one day, which resulted in the spoilage of
cheese curls does not amount to abandonment of work. In fact two
(2) days after the reported abandonment of work or on January 23,
1991, petitioners filed a complaint for, among others, unfair labor
practice, illegal lockout and/or illegal dismissal. In several cases,
this Honorable Court held that "one could not possibly abandon his
work and shortly thereafter vigorously pursue his complaint for
illegal dismissal
b. In De Ysasi III v. NLRC (supra), this Honorable Court stressed that
it is the clear, deliberate and unjustified refusal to resume
employment and not mere absence that constitutes abandonment.
The absence of petitioner employees for one day on January 21,
1991 as testified [to] by Security Guard Orlando Cairo did not
constitute abandonment.
c. That petitioner employees are "pakyao" or piece workers does not
imply that they are not regular employees entitled to reinstatement.
Private respondent Empire Food Products, Inc. is a food and fruit
processing company. In Tabas v. California Manufacturing
Co., Inc. (169 SCRA 497), this Honorable Court held that the
work of merchandisers of processed food, who coordinate with
grocery stores and other outlets for the sale of the processed food is
necessary in the day-to-day operation[s] of the company. With
more reason, the work of processed food repackers is necessary in
the day-to-day operation[s] of respondent Empire Food Products.
2. It may likewise be stressed that the burden of proving the existence of just
cause for dismissing an employee, such as abandonment, rests on the
employer,  a burden private respondents failed to discharge.
3. Petitioners are therefore entitled to reinstatement with full back wages
pursuant to Article 279 of the Labor Code, as amended by R.A. No. 6715.
Nevertheless, the records disclose that taking into account the number of
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employees involved, the length of time that has lapsed since their dismissal, Memorandum Order No. 28,12 clearly exclude the employer of piece rate
and the perceptible resentment and enmity between petitioners and private workers from those exempted from paying 13th month pay.
respondents which necessarily strained their relationship, reinstatement 9. As to overtime pay, the rules, however, are different. According to Sec.
would be impractical and hardly promotive of the best interests of the 2(e), Rule I, Book III of the Implementing Rules, workers who are paid by
parties. In lieu of reinstatement then, separation pay at the rate of one month results including those who are paid on piece-work, takay,pakiao, or task
for every year of service, with a fraction of at least six (6) months of service basis, if their output rates are in accordance with the standards prescribed
considered as one (1) year, is in order under Sec. 8, Rule VII, Book III, of these regulations, or where such rates
4. That being said, the amount of back wages to which each petitioner is have been fixed by the Secretary of Labor in accordance with the aforesaid
entitled, however, cannot be fully settled at this time. Petitioners, as piece- section, are not entitled to receive overtime pay. Here, private respondents
rate workers having been paid by the piece,  there is need to determine the did not allege adherence to the standards set forth in Sec. 8 nor with the
varying degrees of production and days worked by each worker. Clearly, rates prescribed by the Secretary of Labor. As such, petitioners are beyond
this issue is best left to the National Labor Relations Commission. the ambit of exempted persons and are therefore entitled to overtime pay.
5. As to the other benefits, namely, holiday pay, premium pay, 13th month Once more, the National Labor Relations Commission would be in a better
pay and service incentive leave which the labor arbiter failed to rule on but position to determine the exact amounts owed petitioners, if any.
which petitioners prayed for in their complaint, we hold that petitioners are
so entitled to these benefits. Three (3) factors lead us to conclude that
petitioners, although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners' tasks, their job of
repacking snack food was necessary or desirable in the usual business of
private respondents, who were engaged in the manufacture and selling of
such food products; second, petitioners worked for private respondents
throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time that petitioners
worked for private respondents. Thus, while petitioners' mode of
compensation was on a "per piece basis," the status and nature of their
employment was that of regular employees.
6. The Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive
leave and 13th month pay,  inter alia, "field personnel and other
employees whose time and performance is unsupervised by the employer,
including those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for performing
work irrespective of the time consumed in the performance thereof."
Plainly, petitioners as piece-rate workers do not fall within this group
7. Further, in Section 8 (b), Rule IV, Book III, 11 piece workers are specifically
mentioned as being entitled to holiday pay.
8. In addition, the Revised Guidelines on the Implementation of the 13th
Month Pay Law, in view of the modifications to P.D. No. 851 by
12 The following employers are still not covered by P.D. No. 851:
11 Sec. 8. Holiday pay of certain employees. — d. Employers of those who are paid on purely commission, boundary or task basis, and those
(b) Where a covered employee is paid by results or output, such as payment on piece work, his who are paid a fixed amount for performing specific work, irrespective of the time consumed
holiday pay shall not be less than his average daily earnings for the last seven (7) actual in the performance thereof, except where the workers are paid on piece-rate basis in which
working days preceding the regular holiday: Provided, however, that in no case shall the case the employer shall grant the required 13th month pay to such workers. 
holiday pay be less than the applicable statutory minimum wage rate.
107

40. David v Macasio (STREEGAN)
July 2, 2014 | Brion, J. | Working Conditions – Employees Paid by Results
PETITIONER: ARIEL L. DAVID, doing business under the name and
style "YIELS HOG DEALER"
RESPONDENTS: JOHN G. MACASIO
SUMMARY:
Macasio filed before the LA a complaint against petitioner. David, doing
business under the name and style "Yiels Hog Dealer," for non-payment of
overtime pay, holiday pay and 13th month pay. He is also claiming for
SIL.
David 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 pursuant to the provisions of the Implementing Rules
and Regulations (IRR) of the Labor Code
LA dismissed Macasio’s complaint. NLRC affirmed the LA Ruling. The
CA, however, reversed the decision of the NLRC stating that Macasio is
only excluded from the monetary benefits if he is a “field personnel”.
WoN Macasio is entitled to these labor standards benefits (holiday, SIL
and 13th month pay). YES EXCEPT for the 13th Month Pay
DOCTRINE:
In determining whether workers engaged on "pakyaw" or task basis" is
entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key.
If the worker is simply engaged on pakyaw or task basis, then the
general rule is that he is entitled to a holiday pay and SIL pay unless
exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article95 (SIL pay) of the Labor Code. However, if
the worker engaged on pakyaw or task basis also falls within the
meaning of "field personnel" under the law, then he is not entitled to
these monetary benefits.
FACTS:
LABOR1 | ATTY. MARLON MANUEL
1. Macasio filed before the LA a complaint against petitioner Ariel L. David,
doing business under the name and style "Yiels Hog Dealer," for non-
payment of overtime pay, holiday pay and 13th month pay. He is also
claiming for SIL.
2. Macasio alleged before the LA 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:
a. Set the work day, reporting time and hogs to be chopped, as well
as the manner by which he was to perform his work;
b. Daily paid his salary of P700.00, which was increased from
P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005;
c. Approved and disapproved his leaves. Macasio added that David
owned the hogs delivered for chopping, as well as the work tools
and implements; the latter also rented the workplace.
3. 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 pursuant to the provisions of
the Implementing Rules and Regulations (IRR) of the Labor Code.
4. LA dismissed Macasio's complaint for lack of merit. The LA gave credence
to David's claim that he engaged Macasio on "pakyaw" or task basis.
5. NLRC affirmed the LA ruling.
6. CA partly granted Macasio's certiorari petition and reversed the NLRC's
ruling for having been rendered with grave abuse of discretion.
7. 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.
8. 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.
9. Hence this petition by David in the SC.
ISSUE:
1. WoN Macasio is entitled to these labor standards benefits (holiday, SIL and
13th month pay). YES EXCEPT for the 13th Month Pay
HELD:
1. The SC provides that the general rule is that holiday and SIL pay provisions
cover all employees. To be excluded from their coverage, an employee must
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 LABOR1 | ATTY. MARLON MANUEL

be one of those that these provisions expressly exempt, strictly in

accordance with the exemption.
2. Under the IRR, exemption from the coverage of holiday and SIL pay refer
to field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or
contract basis.
3. Note that unlike Article 82 of the Labor Code , the IRR on holiday and SIL
pay do not exclude employees "engaged on task basis" as a separate and
distinct category from employees classified as field personnel." Rather,
these employees are altogether merged into one classification of exempted
employees.
4. The payment of an employee on task or pakyaw basis alone is insufficient
to exclude one from the coverage of SIL and holiday pay. They are
exempted from the coverage of Title I (including the holiday and SIL pay)
only if they qualify as field personnel. The IRR therefore validly qualifies
and limits the general exclusion of workers paid by results" found in Article
82 from the coverage of holiday and SIL.
5. By dismissing Macasio's complaint without considering whether Macasio
was a "field personnel" or not, the NLRC proceeded based on a
significantly incomplete consideration of the case. This action clearly
smacks of grave abuse of discretion.
6. In determining whether workers engaged on "pakyaw" or task basis" is
entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key.
7. If the worker is simply engaged on pakyaw or task basis, then the general
rule is that he is entitled to a holiday pay and SIL pay unless exempted
from the exceptions specifically provided under Article 94 (holiday pay)
and Article95 (SIL pay) of the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of "field
personnel" under the law, then he is not entitled to these monetary
benefits.
8. Section 3 of the Rules and Regulations Implementing P.D. No. 85154
enumerates the exemptions from the coverage of 13th month pay benefits.
Under Section 3(e), "employers of those who are paid on xxx 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 from 13 month pay.

109