Articles 82-95: Conditions of Employment

Employee-Employer Relationship

Brotherhood Labor Unity Movement of the Phil. v. Zamora

Facts:
The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as pahinantes or
kargadors for almost seven years. They worked exclusively at the SMC plant, never having been assigned to Page | 1
other companies or departments of San Miguel Corp, even when the volume of work was at its minimum. Their
work was neither regular nor continuous, depending on the volume of bottles to be loaded and unloaded, as well
as the business activity of the company. However, work exceeded the eight-hour day and sometimes, necessitated
work on Sundays and holidays. -for this, they were neither paid overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor Unity Movement
(BLUM). They wanted to be paid to overtime and holiday pay. They pressed the SMC management to hear their
grievances. BLUM filed a notice of strike with the Bureau of Labor Relations in connection with the dismissal of
some of its members. San Miguel refused to bargain with the union alleging that the workers are not their
employees but the employees of an independent labor contracting firm, Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass factory despite their regularly
reporting for work. A complaint was filed for illegal dismissal and unfair labor practices.

Issue:
Whether or not there was employer-employee (ER-EE)relationship between the workers and San Miguel Corp.

Held:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was used by the Supreme
Court. These are:
The selection and engagement of the employee
Payment of wages
Power of dismissal
Control Test- the employers power to control the employee with respect to the means and methods by
which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral agreements of employment with the
workers. Considering the length of time that the petitioners have worked with the company, there is justification
to conclude that they were engaged to perform activities necessary in the usual business or trade. Despite past
shutdowns of the glass plant, the workers promptly returned to their jobs. The term of the petitioners
employment appears indefinite and the continuity and habituality of the petitioners work bolsters the claim of an
employee status.
As for the payment of the workers wages, the contention that the independent contractors were paid a lump sum
representing only the salaries the workers where entitled to have no merit. The amount paid by San Miguel to the
contracting firm is no business expense or capital outlay of the latter. What the contractor receives is a percentage
from the total earnings of all the workers plus an additional amount from the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had already been refused entry to the
premises. It is apparent that the closure of the warehouse was a ploy to get rid of the petitioners, who were then
agitating the company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the companys control over the workers. That San Miguel
has the power to recommend penalties or dismissal is the strongest indication of the companys right of control
over the workers as direct employer.

TABAS VS. CALIFORNIA MANUFACTURING INCGR NO. 806680, JANUARY 26, 1989
FACTS

1.Petitioners were the employees of Livi Manpower Services. They were assigned tothe respondent pursuant to a
manpower supply agreement as promotionalmerchandisers.2.It was provided in the agreement that: 1)
California would have no control orsupervision over the workers as to how they perform or accomplish their work,
2) Liviis an independent contractor and that it has the sole responsibility of complying withall the existing as well as
future laws, rules and regulations pertinent to employmentof labor, 3) the assignment to California was seasonal
and contractual, and 4)payroll, including COLA and holiday pay shall be delivered Livi at
Californiaspremises.3.Petitioners were made to sign 6-month employment contracts which were renewedfor the
same period. Unlike regular employees of California, they did not receivefringe benefits and bonuses and were
paid only a daily allowance.4.Petitioners contend that they have become regular employees of
California.Subsequent to their claim for regularization, California no longer re-hired them. Livi,on the other hand,
claims the workers as its employees and that it is an independentcontractor.5.Labor Arbiter found that no
employer-employee relationship existed. The NLRCaffirmed the ruling.

ISSUE
Is there an employer-employee relationship between California and the petitioners?

HELD
YES. The existence of an employer-employee relationship is a question of law and cannotbe made subject to
agreement. The stipulations in the manpower supply agreement will noterase either partys obligations as an
employer.Livi is a labor-only contractor, notwithstanding the provisions in the agreement. The natureof ones
business is not determined by self-serving appellations but by test provided bystatute and the prevailing
case law.Californias contention that the workers are not performing activities which are directlyrelated to its
general business of manufacturing is untenable. The promotion or sale ofproducts, including the task of occasional
price tagging, is an integral part of themanufacturing business. Livi as a placement agency had simply supplied the
manpowernecessary for California to carry out its merchandising activities, using the latters premisesand
equipment. Merchandising is likewise not a specific project because it is an activityrelated to the day-to-day
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operations of California.Based on Article 106 of the Labor Code, the labor-only contractor is considered merely
anagent of the employer and liability must be shouldered by either one or by both.Petitioners are ordered
reinstated as regular employees.

Sevilla vs. CA

FACTS:

A contract by and between Noguera and Tourist World Service (TWS), represented by Canilao, wherein TWSleased
the premises belonging to Noguera as branch office of TWS. When the branch office was opened, it was runby
appellant Sevilla payable to TWS by any airline for any fare brought in on the efforts of Mrs. Sevilla, 4% was togo to
Sevilla and 3% was to be withheld by the TWS.Later, TWS was informed that Sevilla was connected with rival firm,
and since the branch office was losing, TWS considered closing down its office.On January 3, 1962, the contract
with appellee for the use of the branch office premises was terminatedand while the effectivity thereof was
January 31, 1962, the appellees no longer used it. Because of this, Canilao, thesecretary of TWS, went over to the
branch office, and finding the premises locked, he padlocked the premises.When neither appellant Sevilla nor any
of his employees could enter, a complaint was filed by the appellantsagainst the appellees. TWS insisted that
Sevilla was a mere employee, being the branch manager of its branch office and thatshe had no say on the lease
executed with the private respondent, Noguera.

ISSUE:
W/N ER-EE relationship exists between Sevilla and TWS

HELD:

The records show that petitioner, Sevilla, was not subject to control by the private respondent TWS. In thefirst
place, under the contract of lease, she had bound herself in solidum as and for rental payments, anarrangement
that would belie claims of a master-servant relationship. That does not make her an employee of TWS,since a true
employee cannot be made to part with his own money in pursuance of his employers business, orotherwise,
assume any liability thereof.In the second place, when the branch office was opened, the same was run by the
appellant Sevilla payableto TWS by any airline for any fare brought in on the effort of Sevilla. Thus, it cannot be
said that Sevilla was underthe control of TWS. Sevilla in pursuing the business, relied on her own capabilities.It is
further admitted that Sevilla was not in the companys payroll. For her efforts, she retained 4% incommissions
from airline bookings, the remaining 3% going to TWS. Unlike an employee, who earns a fixed salary,she earned
compensation in fluctuating amount depending on her booking successes. The fact that Sevilla had been
designated branch manager does not make her a TWS employee. Itappears that Sevilla is a bona fide travel agent
herself, and she acquired an interest in the business entrusted toher. She also had assumed personal obligation for
the operation thereof, holding herself solidary liable for thepayment of rentals.Wherefore, TWS and Canilao are
jointly and severally liable to indemnify the petitioner, Sevilla.

G.R. No. L-43825 May 9, 1988

CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner, vs.NATIONAL LABOR RELATIONS COMMISSION
(NLRC); ARBITRATOR JOSE T. COLLADO and RODITO NASAYAO, respondents.
PADILLA, J.:
FACTS:
Rodito Nasayao claimed that he was appointed plant manager of the corporation and receiving a compensation of
P3,000.00, a month or 25% of the monthly net income of the company, which ever is greater, when the company
failed to give his salary for the months of May, June and July Nasayo filed a complaint with the NLRC.
Continental Marble Corp., denied the claim of Rodito Nasayao, that the latter was not an employee of the
company, an undertaking agreed upon by the parties as joint venture, a sort of partnership, wherein Rodito
Nasayao was to keep the machinery in good working condition and, in return, he would get the contracts from
end-users for the installation of marble products, in which the company would not interfere. In addition, private
respondent Nasayao was to receive an amount equivalent to 25% of the net profits that the corporation will earn,
should there be any.
The case was submitted for voluntary arbitration and the parties selected Jose T. Collado as voluntary arbitrator.
In the course of the proceeding, Continental Marble Corp., challenged the arbitrator's capacity to try and decide
the case fairly and judiciously and asked him to desist from further hearing the case. But, the respondent arbitrator
refused. Later a judgement was rendered in favor of Rodito Nasayao.
Upon receipt of the decision, Continental Marble Corp., appealed to the National Labor Relations Commission on
grounds that the labor arbiter gravely abused his discretion in persisting to hear and decide the case
notwithstanding petitioners' request for him to desist therefrom: and that the appealed decision is not supported
by evidence.
Rodito Nasayao filed a motion to dismiss the appeal on the ground that the decision of the voluntary arbitrator is
final, unappealable, and immediately executory; and a motion for the issuance of a writ of execution. The
Commission, dismissed the appeal on the ground that the decision appealed from is final, unappealable and
immediately executory. Continental Marble Corp., seek to annul and set aside the decision.
ISSUE:
Whether or not there exist an employee-employer relationship between Rodito Nasayao and Continental Marble
Corp.?
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HELD:
No. The court relied on the so -called "control test" that is the most important element, in determining the
existence of an employer-employee relationship, the elements that are generally considered are the following: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer's power to control the employee with respect to the means and methods by which the work is to be
accomplished.
In the instant case, it appears that the petitioners had no control over the conduct of Rodito Nasayao in the
performance of his work. He decided for himself on what was to be done and worked at his own pleasure. He was
not subject to definite hours or conditions of work and, in turn, was compensated according to the results of his
own effort. He had a free hand in running the company and its business.
The Court has accorded great respect for, and finality to, findings of fact of a voluntary arbitrator and
administrative agencies which have acquired expertise in their respective fields, like the Labor Department and the
National Labor Relations Commission, their findings of fact and the conclusions drawn therefrom have to be
supported by substantial evidence.
In that instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an employee of the petitioner
corporation is not supported by the evidence or by the law.
The court find the version of the petitioners to be more plausible and in accord with human nature and the
ordinary course of things. As pointed out by the petitioners, it was illogical for them to hire the private respondent
Rodito Nasayao as plant manager with a monthly salary of P3,000.00, an amount which they could ill-afford to pay,
considering that the business was losing, at the time he was hired, and that they were about to close shop in a few
months' time.
Besides, there is nothing in the record which would support the claim of Rodito Nasayao that he was an employee
of the petitioner corporation. He was not included in the company payroll, nor in the list of company employees
furnished the Social Security System.
Most of all, the element of control is lacking. Absent the power to control the employee with respect to the means
and methods by which his work was to be accomplished, there was no employer- employee relationship between
the parties. Hence, there is no basis for an award of unpaid salaries or wages to Rodito Nasayao

Case Title: ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., vs. NLRC G.R. No.: 87098 Date:
November 4, 1996 Petitioner(s): Encyclopedia Britanica (Philippines), Inc. Respondent (s): NLRC, Labor Arbiter
Teodorico Rogelio and Benjamin Limjoco Ponente: Torres, Jr., J.:
Facts:
Benjamin Limjoco was a sales division manager of Encyclopedia Britanica. Limjoco has his own agents on which he
receives commission out of their sales. Limjoco and petitioner Britanica agreed however that office expenses will
be deducted from his commission. On June 14 1974, Limjoco resigned to pursue his own business. On October 30,
1975 he filed a complaint against petitioner Encyclopedia Britannica with the Department of Labor and
Employment, claiming for non-payment of separation pay and other benefits, and also for illegal deduction from
his sales commissions.
Petitioner argued that respondent is not its employee but an independent dealer who received commission there
from. Respondent insisted his claim that he was indeed an employee of respondent company assigned at the sales
department earning an average monthly income of P4, 000.00 as his sales commission. He further claimed that he
was under the supervision of the petitioner's officials who issued to him and his other personnel, memoranda,
guidelines on company policies, instructions and other orders. Petitioner argued that it had no control and
supervision over the complainant as to the manner and means he conducted his business operations. The latter
did not even report to the office of the petitioner and did not observe fixed office hours. Consequently, there was
no employer-employee relationship.
The Labor Arbiter decided in favor of respondent Limjoco, later affirmed by the NLRC, hence this petition.
Issue:
Whether or not respondent Limjoco is and employee of petitioner Encyclopedia Britanica.
Held:
The court held that respondent Limjoco is not an employee of Encyclopedia Britanica. He was merely an agent or
independent dealer of the company.
In determining the existence of an employer-employee relationship the following elements must be present: 1)
selection and engagement of the employee; 2) payment of wages; 3) power of dismissal; and 4) the power to
control the employee's conduct. Of the above, control of employee's conduct is commonly regarded as the most
crucial and determinative indicator of the presence or absence of an employer- employee relationship. Although
the company issued memoranda to respondent does not sufficiently prove that indeed the company has control
over Limjoco. In fact it only issued such memoranda merely to set up guidelines and policies which the sales
managers follow and impose on their respective agents. The issuance of such memoranda was done by the
petitioner only to notify the respondent and other sales manager of the company's policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were free to conduct and promote their sales
operations. Furthermore, the fixing of the price by petitioner was only for the purpose of uniformity, but never the
less respondent is free to conduct his own marketing operations. Finally, respondent was absolutely free to
conduct his work and indulge in other means of livelihood, wherein fact at that time he was also a director and
later president of the Farmer's Rural Bank. If he was indeed an employee of petitioner it could have barred him
from indulging in other employment or demanded his full time devotion to the company.

Case Title:DY KEH BEN vs. INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET
AL. G.R. No.: L-32245 Date: May 25, 1979 Petitioner(s): Dy Keh Beng Respondent(s): NLRC, et. al. Ponente:
De Castro, J.:
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Facts:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket factory, for discriminatory
acts within the meaning of Section 4(a), sub-paragraph (1) and (4). Republic Act No. 875, by dismissing on
September 28 and 29, 1960, respectively, Carlos N. Solano and Ricardo Tudla for their union activities.
Petitioner contended that he did not know Tudla while Solano was not his employee. He said that Solano would
only appear to the establishment when there is work which he did on pakyaw basis, each work being under
separate contact. Moreover, Dy Keh Beng countered with a special defense of simple extortion committed by the
head of the labor union, Bienvenido Onayan. Petitioner further contended that without satisfying the control test
there can be no employer-employee relationship.
The hearing examiners report which was affirmed in toto by the CIR found that indeed there was employer-
employee relationship between petitioner and respondents. Solano and Tudla became employees of Dy Keh Beng
from May 2, 1953 and July 15, 1955, respectively, and that except in the event of illness, their work with the
establishment was continuous although their services were compensated on piece basis.
Issue:
Whether or not there existed an employee employer relation between petitioner Dy Keh Beng and the
respondents Solano and Tudla .
Held:
Contrary to the petitioners contention that the control test is not sufficiently satisfied, the court found that indeed
petition exercise control over respondents. It should be borne in mind that the control test calls merely for the
existence of the right to control the manner of doing the work, not the actual exercise of the right. Considering the
finding by the Hearing Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of baskets
known as kaing, it is natural to expect that those working under Dy would have to observe, among others, Dy's
requirements of size and quality of the kaing. Some control would necessarily be exercised by Dy as the making of
the kaing would be subject to Dy's specifications. Since the work on the baskets is done at Dy's establishments, it
can be inferred that the proprietor Dy could easily exercise control on the men he employed. As to the contention
that Solano was not an employee since he only worked on pakyaw basis, the court adopted the finding of the court
examiner that payment by the piece is just a method of compensation and does not define the essence of the
relation. The court also noted the opinion of Justices Perfecto, concurring with Chief Justice Ricardo Paras who
penned the decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523), who
stated that "Judicial notice of the fact that the so- called "pakyaw" system mentioned in this case as generally
practiced in our country, is, in fact, a labor contract -between employers and employees, between capitalists and
laborers."

Case Title: Zanotte Shoes vs. NLRC G.R. No.: 100665 Date: February 13, 1995 Petitioner: Zanotte
Shoes/Leonardo Lorenzo Respodents: NLRC, Hon. Benigno Villarente, Joseph Lluz et. al. Ponente: VITUG, J.:
Facts:
Private respondents filed a complaint against petitioner Zanotte Shoes owned by Leonardo Lorenzo for illegal
dismissal and other monetary claim, however later the monetary claims were dropped with the respondents
concentrating on the issue of illegal dismissal. Respondents alleged that they were dismissed from work when they
demanded to the respondent to make them members of SSS and increase in their pay rates.
Petitioners, in turn, claimed that their business operations were only seasonal, normally twice a year, one in June
(coinciding with the opening of school classes) and another in December (during the Christmas holidays), when
heavy job orders would come in. Private respondents, according to petitioners, were engaged on purely
contractual basis and paid the rates conformably with their respective agreements.
After the labor Arbiter's investigation, he rendered his findings in favor of the respondents sustaining the claim
that indeed there exists an employer-employee relationship and ordered also the petitioner to pay respondents
their respective separation pay. These findings were sustained by the NLRC, thus this petition.
Issue:
Whether on not the NLRC erred in sustaining the decision of the Labor arbiter finding the existence of employer-
employee relationship and the award of separation pay.
Held:
Once again the Supreme Court emphasized, that factual findings of the NLRC, particularly when they coincide with
that of the Labor Arbiter, are accorded respect, if not finality, and will not be disturbed absent any showing that
substantial evidence which might otherwise affect the result of the case has been discarded.
There being no obvious manifestation that the NLRC committed a grave abuse of its discretion in arriving at its
conclusion. In the case at bar, we see no reason for disturbing the findings of the Labor Arbiter and the NLRC on
the existence of an employer-employee relationship between herein private parties. The work of private
respondents is clearly related to, and in the pursuit of, the principal business activity of petitioners. The critteria
used for determining the existence of an employer-employee relationship, all extant in the case at bench, include
(a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer's power to control the employee with respect to the result of the work to be done and to the means
and methods by which the work to be done and to the means and methods by which the work is to be
accomplished. The reckoning point is the existence of the right to control but not the actual exercise of the right to
control.
While the court sustained the finding of the NLRC, it did not however consider the award of separation pay there
being no actual dismissal nor abandonment. Where-in fact petitioner has insisted his willingness to rehire
respondents but they have steadfastly refused the offer.

G.R. No. 111870 June 30, 1994

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AIR MATERIAL WING SAVINGS AND LOAN ASSOCIATION, INC., petitioner, vs.NATIONAL LABOR RELATIONS
COMMISSION, et al., respondents.
JUSTICE CRUZ, ponente.
FACTS:
Luis S. Salas was appointed "notarial and legal counsel" for petitioner Air Material Wings Savings and Loan
Association (AMWSLAI) in 1980. AMWSLAI issued order reminding Salas of the approaching termination of his legal
services under their contract. This prompted Salas to lodge a complaint against AMWSLAI for separation pay,
vacation and sick leave benefits, cost of living allowances, refund of SSS premiums, moral and exemplary damages,
payment of notarial services rendered from February 1, 1980 to March 2, 1990, and attorney's fees.
AMWSLAI moved to dismiss for lack of jurisdiction. It averred that there was no employer- employee relationship
between them and that his monetary claims properly fell within the jurisdiction of the regular courts. Salas
opposed the motion and presented documentary evidence to show that he was indeed an employee of AMWSLAI.
AMWSLAI was ordered to pay Salas his notarial fees from 1987 up to March 2, 1990, and attorney's fee equivalent
to 10% of the judgment award. The decision affirmed in toto by the Commission prompted Air Material Wings
Savings and Loan Association (AMWSLAI) to seek relief in the court.
ISSUE:
Whether or not employer-employee relationship exist in the case at bar?
HELD:
Yes. The court held in their decisions that the elements of an employer-employee relationship are: (1) selection
and engagement of the employee; (2) payment of wages; (3) power of dismissal; and (4) employer's own power to
control employee's conduct. The existence of such a relationship is essentially a factual question. Which can be
substantiated in the present case.
In the case at bar the terms and conditions set out in the letter-contract entered into by the parties on January 23,
1987, clearly show that Salas was an employee of the petitioner. His selection as the company counsel was done
by the board of directors in one of its regular meetings. The petitioner paid him a monthly
compensation/retainer's fee for his services. Though his appointment was for a fixed term of three years, the
petitioner reserved its power of dismissal for cause or as it might deem necessary for its interest and protection.
No less importantly, AMWSLAI also exercised its power of control over Salas by defining his duties and functions as
its legal counsel.

HYDRO RESOURCES CONTRACTORS CORPORATION, petitioner,

vs.
LABOR ARBITER ADRIAN N. PAGALILAUAN and the NATIONAL LABOR RELATIONS COMMISSION, public
respondents, and ROGELIO A. ABAN,

Facts: Rogelio Aban was hired by petitioner as legal assistant on October 24, 1978. On September 4, 1980 he received
a letter from the petitioner informing him that he will be terminated on October 4, 1970 allegedly for his failure to
perform his duties well. Thereafter, Aban filed a case for illegal dismissal before the labor arbiter which held that
there was indeed an illegal dismissal. This was affirmed by NLRC.

Issue: Whether there is an employer-employee relationship between petitioner and Aban.

Held: Yes.
The determination of whether there is an employer-employee relationship depends upon four standards: 1. the
manner of selection and engagement of the putative employee; 2. the mode of payment of wages; 3. the presence
or absence of a power of dismissal; and, 4. presence or absence of a power to control the putative employee's
conduct. The right of control has been held to be the decisive factor.

The four tests were satisfied by the following facts:

Aban was employed by the petitioner to be its Legal Assistant as evidenced by his appointment paper. The petitioner
paid him a basic salary plus living allowance. Thereafter, Aban was dismissed on his alleged failure to perform his
duties well.

Aban worked solely for the petitioner and dealt only with legal matters involving the said corporation and its
employees. He also assisted the Personnel Officer in processing appointment papers of employees. This latter duty
is not an act of a lawyer in the exercise of his profession but rather a duty for the benefit of the corporation.

Insular Life Assurance Co., Ltd. vs. NLRC

GR No. 119930
Facts: On August 21, 1992, Pantaleon delos Reyes the private respondent and petitioner entered into an agency
contract wherein the former is authorized to solicit within the Philippines applications for life insurance and annuities
for which he would be paid compensation in the form of commissions. On March 1, 1993, parties entered into
another contract wherein private respondent was appointed as Acting Unit Manager. As such, the duties and
responsibilities of De los Reyes included the recruitment, training, organization and development within his
designated territory of a sufficient number of qualified, competent and trustworthy underwriters, and to supervise
and coordinate the sales efforts of the underwriters in the active solicitation of new business and in the furtherance
of the agency's assigned goals. It was similarly provided in the management contract that the relation of the acting
unit manager and/or the agents of his unit to the company shall be that of independent contractor.
Private respondent worked concurrently as agent and Acting Unit Manager until he was notified by Page | 6
petitioner on November 18, 1993 that his services were terminated effective December 18, 1993. He filed a
complaint for illegal dismissal before the labor arbiter which dismissed the same for lack of jurisdiction, there being
no employer-employee relationship. On appeal however, NLRC reversed such decision, finding that there is an
employer-employee relationship.
Issue: Whether or not NLRC has jurisdiction there being an employer-employee relationship.

Held: Yes. It has been settled that an insurance agent on commission basis is not an employee of the insurance
company. However, delos Reyes in this case is not simply an agent but was also appointed as Acting Unit Manager
under the Management (Second) Contract. As such, as found out pursuant to the contract itself, there is an
employer-employee relationship applying the four-fold test.

Petitioner contends that private respondent was never required to go through the pre-employment procedures and
that the probationary employment status was reserved only to employees of petitioner. However, the provisions of
the contract show otherwise. Private respondent was appointed as Acting Unit Manager only upon the
recommendation of the District Manager. This indicates that private respondent was hired by petitioner because of
the favorable endorsement of its duly authorized officer. The endorsement was based on his performance as an
agent. It can be concluded that the agent phase is a probationary period for the eventual employment as unit
manager.
Petitioner also contends that private respondent was compensated on commission basis. However the contract
provides that delos Reyes is entitled to the free portion of Unit Development Financing which for all intents and
purposes comprised the salary regularly paid to him by petitioner.
Petitioner also exercised power of dismissal because the contract provides for grounds thereof and that the private
respondent must exclusively work with the company. It was also found out by NLRC that petitioner indeed exercise
control over the private respondent because he was required to meet certain manpower and production quotas.

Angelina Francisco vs. NLRC

G.R. No. 170087

Facts: In 1995 Francisco was hired by Kasei Corporation during the latter's incorporation stage. SHe was designated
as accountant and corporate secretary and was assigned to handle all accounting needs of the company. She was
also designated as liaison officer to secure business permits, construction permits etc. Althoug designated as Corp
Sec, she was not entrusted with the corporate documnets; neither did she attend any board meeting nor required
to do so.
In 1996, she was designated as Acting Manager who was assigned to handle recruitment of all employees and
perform management administration function. Thereafter, she was replaced by Liza Fuentes as manager. She alleged
that she was required to sign a prepared resolution for her placement but she was assured that she would still be
connected with Kasei Corp. However, Kasei Corp reduced her salary by P2,500/month. She did not receive her
midyear bonus and on October 2001, did not receive her salary. She demanded for the payment thereof but she was
informed that she is no longer connected with the company. Hence she filed an action for constructive dismissal
before the labor arbiter (LA).
Petitioner contends that they did not exercise control and supervision over Francisco. She did not have daily time
record and may come and leave the office any time she wanted. And that her designation as technical consultant
depended solely upon the will of the management and hence her consultancy may be terminated any time. The LA
held that there was an illegal dismissal. This was affirmed by NLRC but was reversed by CA on appeal. Hence this
petition.

Issue: Whether there is an employer-employee relationship.

Held: The control test to determine presence of employer-employee relationship is sometimes not enough; it is
insufficient to give a complete picture of the relationship between parties, owing to the complexity of such
relationship where several positions have been held by the worker. Economic realities of the employment relations
help provide a comprehensive analysis of the true classification of the individual, whether as employee, independent
contractor, corporate officer or some other capacity.

The better approach would therefore be to adopt a two-tiered test involving: (1) the putative employers power to
control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the
underlying economic realities of the activity or relationship.
The determination of the relationship between employer and employee depends upon the circumstances of the
whole economic activity, such as: (1) the extent to which the services performed are an integral part of the
employers business; (2) the extent of the workers investment in equipment and facilities; (3) the nature and degree
of control exercised by the employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative,
skill, judgment or foresight required for the success of the claimed independent enterprise; (6) the permanency and
duration of the relationship between the worker and the employer; and (7) the degree of dependency of the worker
upon the employer for his continued employment in that line of business.

The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his
Page | 7
continued employment in that line of business.

By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation because she was
under the direct control and supervision of Seiji Kamura, the corporations Technical Consultant. She reported for
work regularly and served in various capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager
and Corporate Secretary, with substantially the same job functions, that is, rendering accounting and tax services to
the company and performing functions necessary and desirable for the proper operation of the corporation such as
securing business permits and other licenses over an indefinite period of engagement.

Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent
corporation because she had served the company for six years before her dismissal, receiving check vouchers
indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social
Security contributions from August 1, 1999 to December 18, 2000. Petitioners membership in the SSS as manifested
by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the
inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee
relationship between petitioner and respondent corporation.

It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued
employment in the latters line of business.

Opulencia Ice Plant and Storage vs. NLRC

GR No. L-98368
Facts: Private respondent Manuel Esita worked for 20 years as compressor operator of Tiongson Ice Plant in San
Pablo City. In 1980, he was hired as compressor operator-mechanic for the ice plants of petitioner Dr. Melchor
Opulencia in Tanuan, Batangas and Calamba, Laguna. He worked initially in Tanuan and in 1986, was transferred to
the ice plant in Calamba, which was then undergoing overhauling, taking the place of compressor operator Esera,
who was relieved because he was already old and weak. For less than a month, Esita helped in the construction-
remodeling of Dr. Opulencia's house.
He was subsequently dismissed by petitioner when he demanded for the correct amount of wages due him.
Consequently, he filed with Sub-Regional Arbitration a complaint for illegal dismissal, underpayment etc. The Labor
Arbiter ruled in favor of Esita. On appeal, NLRC affirmed the decision with some modification on the amount of
award. Hence the present petition.
Issue: Whether NLRC has jurisdiction (due to alleged lack of employer-employee relationship).
Held: Yes. There is an employer-employee relationship. Labor arbiters (LAs) and the NLRC can assume jurisdiction
despite the fact that petitioner questioned the existence of such relationship from the start. If we are to follow the
argument of the petitioner that LAs and NLRC do not have jurisdiction once they question the existence of the
relationship, then it would be easy for unscrupulous employers to avoid the jurisdiction of LAs and NLRC, and may
even evade compliance with labor laws only on bare assertion that an employer-employee relationship does not
exist.
Likewise, no particular form of evidence is necessary to prove employer-employee relationship. Any competent and
relevant evidence to prove the relationship may be admitted. Hence, petitioner's argument that Esita's failure to
provide documentary evidence to prove relationship is fatal, is untenable.

[GR. Nos. 83380-81 November 15, 1989]

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO, petitioners,

vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter, Department of Labor and
Employment, National Capital Region), SANDIGAN NG MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its
members, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO L.
ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO ZAPATA, GLORIA ESTRABO,
LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A. VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA
ALCOCEBA and MARIA ANGELES, respondents.

FACTS:

1. Private complainants are working for Makati Haberdashery Inc. as tailors, seamstress, sewers, basters, and
plantsadoras and are paid on a piece-rate basis (except two petitioners- Maria Angeles and Leonila Serafina
 who are paid on a monthly basis) and in addition, they are given a daily allowance of P 3.00 provided they
report before 9:30a.m.
2. Work schedule is 9:30-6 or 7 p.m., Mondays to Saturdays and even on Sundays and holidays during peak
periods.
3. The Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a complaint
for: - underpayment of basic wage and living allowance
-non-payment of holiday pay, overtime work, and service incentive pay
Page | 8
-13th month pay
-benefits provided for under Wage Orders 1-5
4. While the first case was pending decision, Pelobello left an open package containing a jusi barong tagalong
with salesman Rivera. He was caught and confronted about this and he explained that this was ordered by
Zapata, also a worker, for his (personal) customer. Zapata allegedly admitted that he copied the design of
the company but later denied ownership of the same.
5. They were made to explain why no action should be taken against them for accepting a job order which is
prejudicial and in direct competition with the business. However they did not submit and went on AWOL
until the period given for them to explain expired hence the dismissal.
6. Illegal dismissal complaint was filed. Labor arbiter declared petitioners guilty of illegal dismissal and ordered
to reinstate Pelobello and Zapata and found petitioners violating decrees of COLA, service incentive and
13thmonth pay. Commission analyst was directed to compute the monetary awards which retroacts to
three years prior to filing of case. NLRC affirmed but limited backwages to one year.

ISSUE:

1. Whether or not there exist an employer-employee relationship between the private complainants and the
petitioner
2. Whether or not there was a valid termination of employment

HELD:

1. YES. Aside from the four-fold test of employer-employee relationship, the so-called control testis the
most important element. It means the determination of whether the employer controls or has reserved
the right to control the employee not only as to the result of the work but also as to the means and
method by which the same is to be accomplished.
The facts at bar reveal that the most important element of control is present. As gleaned from the
operations of petitioner, when a customer enters into a contract with the haberdashery or its proprietor,
the latter directs an employee who may be a tailor, pattern maker, sewer, or plantsadora to take the
customers measurements, and to sew the pants, coat or shirt as specified by the customer. Supervision
is actively manifested in all these aspects- the manner and quality of cutting, sewing and ironing.
Furthermore, it is also evident in the memorandum issued by petitioner dated May 30, 1981.
2. YES, termination was valid.
The private respondents blatant disregard of their employers memorandum is undoubtedly an open
defiance to the lawful orders of the latter, a justifiable ground for termination of employment by the
employer expressly provided for in Article 283 (a) as well as clear indication of guilt for the commission of
acts inimical to the interests of the employer, another justifiable ground under the same article par. (c) .

[G.R. No. 113542. February 24, 1998]

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his capacity as union
president, petitioner, vs. UNDERSECRETARY BIENVENIDO E. LAGUESMA and CORFARM GRAINS, INC., respondents.

[G.R. No. 114911. February 24, 1998]

CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR., president,

petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC. and/or TEODY C. RAPISORA
and HERMINIO RABANG, respondents.

FACTS:

This case consists of 2 consolidated cases.

1. The first case is an appeal from the decision of Laguesma, as Undersecretary of Labor, in the Petition for
Certification Election filed by petitioner-union.
2. The Caurdenataan Piece Workers Union is composed of the employees of Corfarm Grains, Inc. They
work as cargadores in the said company and were paid on a piece rate basis. The said union was
organized when some of their benefits were not given to them. Thus, they filed their petition for
 certification election. The Med-Arbiter granted the petition but this decision was reversed, on appeal, by
Laguesma saying that there was no employer-employee relationship existing.
3. The second case involves a complaint for illegal dismissal against Corfarm. This arose because those
workers who joined the said union were replaced with non-members. As to this case, the labor arbiter
first ruled in favor of the workers but subsequently, the NLRC reversed such ruling.

ISSUE:
Page | 9
Whether or not there was an employer-employee relationship between the cargadores and Corfarm

HELD:

YES.
To determine the existence of an employer-employee relation, this Court has consistently applied the four-
fold test which has the following elements: (1) the power to hire, (2) the payment of wages, (3) the power to
dismiss, and (4) the power to control -- the last being the most important element.

It is undeniable that petitioners members worked as cargadores for private respondent. They loaded, unloaded
and piled sacks of palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work
is directly related, necessary and vital to the operations of Corfarm. Moreover, Corfarm did not even allege, much
less prove, that petitioners members have substantial capital or investment in the form of tools, equipment,
machineries, and work premises, among others. Furthermore, said respondent did not contradict petitioners
allegation that it paid wages directly to these workers without the intervention of any third-party independent
contractor. It also wielded the power of dismissal over petitioners. Clearly, the workers are not independent
contractors. It does not matter that the workers also work for other companies because this is just their way of
coping with their daily expenses.

[G.R. No. L-72654-61 January 22, 1990]

ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO,
PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE
GUZMAN, respondents

FACTS:

1. Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned
and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing
business.
2. Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose
Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin,
master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen.
3. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners
were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private
respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-
catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise, they
received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief engineer and master
fisherman received a minimum income of P350.00 per week while the assistant engineer, second fisherman,
and fisherman-winchman received a minimum income of P260.00 per week.
4. On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president
of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on
the report that they sold some of their fish-catch at midsea to the prejudice of private respondent.
Petitioners denied the charge claiming that the same was a countermove to their having formed a labor
union and becoming members of Defender of Industrial Agricultural Labor Organizations and General
Workers Union (DIALOGWU) on September 3, 1983.
5. During the investigation, no witnesses were presented to prove the charge against petitioners, and no
criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow
petitioners to return to the fishing vessel to resume their work on the same day.
6. Petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay,
emergency cost of living allowance and service incentive pay.They uniformly contended that they were
arbitrarily dismissed without being given ample time to look for a new job.

ISSUE:

Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-
operator, De Guzman Fishing Enterprises
HELD:
The relationship between the fishing boat operators and their crew is one of direct employer and employee.
In determining the existence of an employer-employee relationship, the elements that are generally considered are
the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which
the work is to be accomplished.

Page | 10
From the four (4) elements mentioned, we have generally relied on the so-called right-of-control test where the
person for whom the services are performed reserves a right to control not only the end to be achieved but also the
means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of
doing the work, not the actual exercise of the right.

It is undeniable that petitioners members worked as cargadores for private respondent. They loaded, unloaded and
piled sacks of rice palay from the warehouses to the cargo trucks and from the cargo trucks to the buyers. This work
is directly related, necessary and vital to the operations of Corfarm. Furthermore, said respondent did not contradict
petitioners allegation that it paid wages directly to these workers without the intervention of any third-party
independent contractor. It also wielded the power of dismissal over petitioners. Clearly, the workers are not
independent contractors.

Article 82: Excluded Employees

Managerial Employees

NATIONAL SUGAR REFINERIES CORP VS NLRC G.R. No. 101761 March 24, 1993 Petitioner(s): NATIONAL SUGAR
REFINERIES CORPORATION Respondent(s): NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY
UNION, (PACIWU) TUCP Ponente: J. REGALADO

Facts: Petitioner National Sugar Refineries Corporation, a corporation which is fully owned and controlled by the
Government, operates 3 sugar refineries located at Bukidnon, Iloilo and Batangas. The Batangas refinery was
privatized on April 11, 1992 pursuant to Proclamation No. 50. On June 1, 1988, petitioner implemented a Job
Evaluation (JE) Program affecting all employees, from rank-and-file to department heads. As a result, all positions
were re-evaluated, and all employees including the members of respondent union were granted salary
adjustments and increases in benefits commensurate to their actual duties and functions.We glean from the
records that for about ten years prior to the JE Program, the members of respondent union were treated in the
same manner as rank-and file employees. As such, they used to be paid overtime, rest day and holiday pay. With
the implementation of the JE Program, the following adjustments were made: (1) the members of respondent
union were re-classified under levels S-5 to S-8 which are considered managerial staff for purposes of
compensation and benefits; (2) there was an increase in basic pay of the average of 50% of their basic pay prior to
the JE Program, 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; (3) longevity pay was increased on top of alignment adjustments; (4) they
were entitled to increased company COLA of P225.00 per month; (5) there was a grant of P100.00 allowance for
rest day/holiday work. Two years after the implementation of the JE Program, the members of herein
respondent union filed a complainant with the executive labor arbiter for non-payment of overtime, rest day and
holiday pay allegedly in violation of Article 100 of the Labor Code.

Executive Labor Arbiter decided in favour of labor. Respondent National Labor Relations Commission (NLRC)
affirmed the decision of the labor arbiter on the ground that the members of respondent union are not managerial
employees, as defined under Article 212 (m) of the Labor Code and, therefore, they are entitled to overtime, rest
day and holiday pay. Respondent NLRC declared that these 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.

Issue: Whether supervisory employees, should be considered as officers or members of the managerial staff, and
hence are not entitled to overtime rest day and holiday pay.

Held: A cursory perusal of the Job Value Contribution Statements of the union members will readily show that
these supervisory employees are under the direct supervision of their respective department superintendents and
that generally they assist the latter in planning, organizing, staffing, directing, controlling communicating and in
making decisions in attaining the company's set goals and objectives. These supervisory employees are likewise
responsible for the effective and efficient operation of their respective departments. More specifically, their duties
and functions include, among others, the following operations whereby the employee assist the department
superintendent, trains and guides subordinates, recommends disciplinary actions etc.
 It is apparent that the members of respondent union discharge duties and responsibilities which ineluctably
qualify them as officers or members of the managerial staff, as defined in Section 2, Rule I Book III of the
aforestated Rules to Implement the Labor Code, viz.: (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 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 (6) they do not devote Page | 11
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.

Under the facts obtaining in this case, we are constrained to agree with petitioner that the union members should
be considered as officers and members of the managerial staff and are, therefore, exempt from the coverage of
Article 82. Perforce, they are not entitled to overtime, rest day and holiday.

PENARANDA VS BANGANGA PLYWOOD CORP G.R. No. 159577 May 3, 2006 Petitioner(s): CHARLITO
PEARANDA Respondent(s): BAGANGA PLYWOOD CORPORATION and HUDSON CHUA Ponente: C.J.
PANGANIBAN

Facts: In June 1999, Pearanda was hired by Baganga Plywood Corporation, owned by Hudson Chua, to take
charge of the operations and maintenance of its steam plant boiler. Pearanda was employed as a Foreman/Boiler
Head/Shift Engineer. He was tasked to supply the required and continuous steam to all consuming units at
minimum cost, to supervise, check and monitor manpower workmanship as well as operation of boiler and
accessories, to evaluate performance of machinery and manpower, to train new employees for effective and
safety while working, and to recommend personnel actions such as: promotion, or disciplinary action. In 2001,
BPC shut down due to some repairs and maintenance. BPC did not technically fire Pearanda but due to the
latters insistence, BPC gave him his separation benefits. BPC subsequently reopened but Pearanda did not
reapply. Pearanda now claims that BPC still needed to pay him his overtime pays and premium pays. The NLRC
ruled that Pearanda is a managerial employee and as such he is not entitled to overtime and premium pay as
stated under the Labor Code. Pearanda appealed. He contends that he is not a managerial employee.

Issue: Whether Pearanda is entitled to overtime and premium pay.

Held: Though there is an error made by the NLRC in finding Pearanda as a managerial employee, the Supreme
Court still ruled that Pearanda is not entitled to overtime and premium pay. Pearanda is not a managerial
employee. Under the Implementing Rules and Regulations of the Labor Code, managerial employees are those that
perform the following: 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.

Pearanda does not meet the above requirements. Pearanda is instead considered as a managerial staff. Under
the Implementing Rules and Regulations of the Labor Code, managerial staffs are those that perform the following:
The primary duty consists of the performance of work directly related to management policies of the employer;

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

Pearandas function as a shift engineer illustrates that he 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.
Pearanda supervised the engineering section of the steam plant boiler. His work involved overseeing the
operation of the machines and the performance of the workers in the engineering section. This work necessarily
required the use of discretion and independent judgment to ensure the proper functioning of the steam plant
boiler. Further, Pearanda in his position paper admitted that he was a supervisor for BPC. As supervisor,
petitioner is deemed a member of the managerial staff.

AUTO BUS TRANSPORT SYSTEM INC VS BAUTISTA G.R. No. 156367 May 16, 2005 Petitioner(s): AUTO BUS
TRANSPORT SYSTEMS, INC Respondent(s): ANTONIO BAUTISTA Ponente: J.CHICO-NAZARIO

Facts: Respondent Antonio Bautista has been employed by petitioner 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. Respondent was paid on commission basis, 7% of the total gross income per travel, on a twice a
month basis. While he was driving he accidentally bumped the rear portion of Autobus No. 124. Respondent
averred that the accident happened because he was compelled by the management to go back to Roxas, Isabela,
although he had not slept for almost 24 hours, as he had just arrived in Manila from Roxas, Isabela. Respondent
further alleged that he was not allowed to work until he fully paid the amount of P75,551.50, representing thirty
percent (30%) of the cost of repair of the damaged buses and that despite respondents pleas for reconsideration,
the same was ignored by management. After a month, management sent him a letter of termination. Bautista
instituted a Complaint for Illegal Dismissal with Money Claims for nonpayment of 13th month pay and service
incentive leave pay against Autobus.
Page | 12
Issue: Whether Bautista is entitled to the grant of service incentive leave pay.

Held: Bautista is entitled to Service Incentive Leave. The Supreme Court emphasized that it does not mean that
just because an employee is paid on commission basis he is already barred to receive service incentive leave pay.

The question actually boils down to whether or not Bautista is a field employee. According to Article 82 of the
Labor Code, field personnel shall refer to non-agricultural employees who regularly perform their duties away
from the principal place of business or branch office of the employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.

As a general rule, field personnel are those whose performance of their job/service is not supervised by the
employer or his representative, the workplace being away from the principal office and whose hours and days of
work cannot be determined with reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal
office of the employee.

Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus driver and that is a specific
place that he needs to be at work. There are inspectors hired by Auto Bus to constantly check him. There are
inspectors in bus stops who inspects the passengers, the punched tickets, and the driver. Therefore he is definitely
supervised though he is away from the Auto Bus main office.

UNION OF FILIPINO EMPLOYEES VS VIVAR G.R. No. 79255 January 20, 1992 Petitioner(s): UNION OF FILIPRO
EMPLOYEES (UFE) Respondent(s): BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL
PHILIPPINES, INC. (formerly FILIPRO, INC.) Ponente: J. GUTIERREZ JR

Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor
Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in Chartered
Bank Employees Association v. Ople. Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the
case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2,
1980, Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant
to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal
restrictions as are provided for in the Code.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of
salesmen, sales representatives, truck drivers, merchandisers and medical representatives from the award of the
holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor. Petitioner UFE answered that the award should be
made effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel and
are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which
cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay
award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that
the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled
that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the
reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the
two motions as appeals and forwarded the case to the NLRC which issued a resolution remanding the case to the
respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases
pursuant to Article 263 of the Labor Code. However, in a letter the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had
resigned from service.

Issue: Whether Nestle's sales personnel are entitled to holiday pay

Held: Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-
agritultural employees who regularly perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty." The Court finds that 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. The respondent arbitrator's order to change the divisor
from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261 Page | 13
days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. There is thus no merit in respondent Nestle's claim of overpayment of overtime and
night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily
rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor
must fail in light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Nevertheless, in
order to fully settle the issues, the Court resolved to take up the matter of effectivity of the holiday pay award
raised by Nestle.

Applying the operative factaforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying
on the implicit validity of the implementing rule and policy instruction before this Court nullified them, and
thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved
to grant other concessions to its employees, especially in the collective bargaining agreement. This possibility is
bolstered by the fact that respondent Nestle's employees are among the highest paid in the industry. With this
consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday
benefits up to 1984 was not in any way attributed to Nestle's fault. The Court thereby resolves that the grant of
holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor from the date of
effectivity of the Labor Code, but from the date of promulgation of the IBAA case.

Case Title: SAN MIGUEL BREWERY, INC. VS. DEMOCRATIC LABOR ORGANIZATION, ET AL G.R. No.: L 18353
Date: July 31, 1963 Petitioner: San Miguel Brewery, Inc. Respondent: Democratic Labor Organization, et al.
Ponente: J. Bautista

Facts: Petition for review of a decision of the Court of Industrial Relations. Herein respondent filed complaint
the San Miguel Brewery embodying 12 demands for the betterment of the condition of employment of its
members. The union manifested its desire to confine its claim to its demands for overtime night shift differential
pay and attorneys fees, additional separation pay and sick and vacation leave compensation.

Judge Bautista rendered decision that with regard to overtime compensation, the Eight Hour Labor law applies
to the employees concerned for those working in the field or engaged in the sale of the companys products
outside its premises should be paid the extra compensation accorded them in addition to the monthly salary and
commission by earned by them, regardless of the meal allowance given to employees who work up to late at night.

Motion for Reconsideration in the industrial court en banc was denied, hence, this petition.

Issue:

Whether or not outside or field sales personnel are entitled to the benefits of the Eight Hour Labor law?

Held: No. The Court ruled that where after the morning roll call the outside or field sales personnel leave the
plant of the company to go on their respective sales routes and they do not have a daily time record but the sales
routes are so planned that they can be completed within 8 hours at most, and they receive monthly salaries and
sales commission in variable amounts, so that they are made to work beyond the required eight hours similar to
piece work, pakiao, or commission basis regardless of the time employed, and the employees participation
depends on their industry, it is held that the Eight Hour Labor Law has no application to said outside or field sales
personnel and that they are not entitled to overtime compensation. The decision of Industrial Court is modified.

Case Title: MANUEL LARA, ET AL. VS. PETRONILO DEL ROSARIO, JR. G.R. No.: L-6339 Date: April 20, 1954
Petitioner: Manuel Lara Respondent: Petronilo Del Rosario, Jr Ponente: J. Montemayor

Facts: Defendant operated a taxi business in which the plaintiffs are employed as mechanics and drivers. Later
on, defendant sold his 25 units to La Mallorca, a transportation company, without giving said mechanics and
drivers 30 days advance notice ant the reason of losing their jobs because La Mallorca did not want to continue
them in their employment. The petition was filed praying to recover compensation for overtime work rendered
beyond eight hours and on Sundays and Legal holidays and one month salary because the failure of their former
employer to give them notice. The Court dismissed the complaint because the defendant being engaged in the taxi
of transportation business which is a public utility, came under the exception provided by the eight hour Labor
Law; and because plaintiffs did not work on a salary basis, so they had no fixed or regular salary or remuneration
other than the 20%.

Issue: Whether or not Plaintiffs are entitled to extra compensation for work performed in excess of eight hours a
day, Sunday and holidays included?

Held: No. The Court ruled that a laborer or employee with no fixed salary, wages or remuneration but receiving
compensation for his employer uncertain and variable amount depending upon the work done or the result of said
work irrespective of the amount of time employed, is not covered by the eight hour Labor Law and is not entitled Page | 14
to extra compensation should he work in excess of eight hours a day. In the case at bar, it is the result of their
labor, not the labor itself, which determines their commissions. The alleged termination of services of the plaintiffs
by the defendant took place according to the complaint on September 4, 1950, which was after the repeal of Art.
302 which they invoke. If the plaintiffs herein had no fixed salary either by the day, week or month, then
computation of the months salary payable would be impossible. Art. 302 refer to employees receiving fixed salary.
Order appealed is affirmed.

Article 83: Hours of Work

Manila Terminal Company Inc. v. CIR

G.R. No. L-4148, July 16, 1952

Facts: Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the arrastre
service in some of the piers in Manilas Port Area at the request and under the control of the United States
Army. The petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation of P3 per day
for the day shift and P6 per day for the night shift.
The watchmen of the petitioner continued in the service with a number of substitutions and additions, their
salaries having been raised during the month of February to P4 per day for the day shift and P6.25 per day for the
nightshift. The private respondent sent a letter to Department of Labor requesting that the matter of overtime pay
be investigated. But nothing was done by the Dept of Labor. Later on, the petitioner instituted the system of strict
eight-hour shifts. The private respondent filed an amended petition with the Court of Industrial Relations praying,
among others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the
commencement of their employment.
By virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President of the Philippines,
the entire police force of the petitioner was consolidated with the Manila Harbor Police of the Customs Patrol
Service, a Government agency under the exclusive control of the Commissioner of Customs and the Secretary of
Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be referred to as the Association.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision ordered the petitioner to pay to its
police force but regards to overtime service after the watchmen had been integrated into the Manila Harbor
Police, the has no jurisdiction because it affects the Bureau of Customs, an instrumentality of the Government
having no independent personality and which cannot be sued without the consent of the State.
The petitioner filed a motion for reconsideration. The Association also filed a motion for reconsideration in so far
its other demands were dismissed. Both resolutions were denied.
The public respondent decision was to pay the private respondents their overtime on regular days at the regular
rate and additional amount of 25 percent, overtime on Sundays and legal holidays at the regular rate only, and
watchmen are not entitled to night differential pay for past services. The petitioner has filed a present petition for
certiorari.

Issues:
a. Whether or not the CIR has no jurisdiction to render a money judgment involving obligation in arrears.
b. Whether or not the agreement under which its police force were paid certain specific wages for twelve-hour
shifts, included overtime compensation.
c. Whether or not the Association is barred from recovery by estoppel and laches.
d. Whether or not the nullity or invalidity of the employment contract precludes any recovery by the Association.
e. whether or not the Commonwealth Act No. 444 authorizes recovery of back overtime pay.

Held: The Supreme Court affirmed the appealed decision that the petitioners 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.
On the first issue, the Court of Industrial Relations has no jurisdiction to award a money judgment was already
overruled by this Court on the case of Detective & protective Bureau, Inc. vs. Court of Industrial Relations and
United Employees Welfare Association that under Commonwealth Act No. 103the Court is empowered to make
the order for the purpose of settling disputes between the employer and employee.
On the second issue, based on the case of Detective & Protective Bureau, Inc. vs. Court of Industrial Relations and
United Employees Welfare Association, the law gives them the right to extra compensation. And they could not be
held to have impliedly waived such extra compensation, for the obvious reason that could not have expressly
waived it.
On the third issue, the principle of estoppel and the laches cannot well be invoked against the Association. it would
be contrary to the spirit of the Eight Hour Labor Law, under which as already seen, the laborers cannot waive their
right to extra compensation. If the principle of estoppel and laches is to be applied, the employee may be
compelled to accomplish the same thing by mere silence or lapse of time, thereby frustrating the purpose of law
by indirection.
On the fourth issue, the employee in rendering extra service at the request of his employer has a right to assume
that the latter has complied with the requirement of the law, and therefore has obtained the required permission
from the Department of Labor. This was based on the case ofGotamo Lumber Co. vs. Court of Industrial Relations,
wherein both parties are in pari delicto. Moreover, the Eight-Hour Law, in providing that any agreement or
contract between the employer and the laborer or employee contrary to the provisions of this Act shall be null
avoid ab initio.
On the fifth issue, based on Fair Labor Standards Act of the United States which provides that any employer
who violates the provisions of section 206 and section 207 of this title shall be liable to the employee or employees
affected in the amount of their unpaid minimum wages or their unpaid overtime compensation as the case may
Page | 15
be, a provision not incorporated in Commonwealth Act No. 444, our Eight-Hour Labor Law.

We cannot agree to the proposition, because sections 3 and 5 of Commonwealth Act 444 expressly provides for
the payment of extra compensation in cases where overtime services are required, with the result that the
employees or laborers are entitled to collect such extra compensation for past overtime work. To hold otherwise
would be to allow an employer to violate the law by simply, as in this case, failing to provide for and pay overtime
compensation.
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA. THERESA
MONTEJO,Petitioners, v. INTERPHIL LABORATORIES, INC., AND HONORABLE LEONARDO A. QUISUMBING,
SECRETARY OF LABOR AND EMPLOYMENT, Respondents.

Facts:

Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of the rank-and-file
employees of Interphil Laboratories, Inc., a company engaged in the business of manufacturing and packaging
pharmaceutical products. They had a Collective Bargaining Agreement (CBA) effective from 01 August 1990 to 31
July 1993.

Prior to the expiration of the CBA the or sometime in February1993, the Vice president for Human Resources of the
respondent company was approached by the union president with regards to the expiring CBA but the CP for human
Resources told the union president that they will discuss it in a formal meeting. On March 1993, the union again
approached and asked the company regarding the CBA through its officers but received the same reply. The next
day, all the rank and file employees started boycotting their regular work shift schedule and left their workplaces
and also commenced a work slowdown.

On 03 September 1993, respondent company filed with the National Labor Relations Commission (NLRC) a petition
to declare illegal petitioner union's "overtime boycott" and "work slowdown" which, according to respondent
company, amounted to illegal strike.

On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then Secretary of Labor Leonardo
A. Quisumbing.8 Then Secretary Quisumbing approved and adopted the report in his Order, dated 13 August 1997,
hence: declaring the overtime boycott and work slowdown as an illegal strike and finding the private respondents
guilty of unfair labor practice and violating the existing CBA. Respondents moved for reconsideration but was denied.

Issues:

Whether or not the CA committed grave abuse of discretion on the following:

1. when it completely disregarded parol evidence rule in the evaluation and appreciation of
evidenceproferred by the parties;
2. when it did not declare private respondents act of extending substantial separation package to almost
all involved officers of petitioners union, during the pendency of the case, as tantamount to
condonation;
3. when it held that the secretary of labor and employment has jurisdiction over a case which long been
filed and pending with the labor arbiter.

Held:

1st issue: The reliance on the parol evidence rule is misplaced. 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

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. The two-shift schedule
effectively changed the working hours stipulated in the CBA. As the employees assented by practice to this
arrangement, they cannot now be heard to claim that the overtime boycott is justified because they were not obliged
to work beyond eight hours.
2nd issue: Respondent company correctly postured that at the time these union officers obtained their separation
benefits, they were still considered employees of the company. Hence, the company was merely complying with its
legal obligations.

3rd issue: 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. As the appellate court
pointed out, the subsequent participation of petitioner union in the continuation of the hearing was in effect an
affirmation of the jurisdiction of the Secretary of Labor. Also, the Secretary was explicitly granted by Article 263(g)
Page | 16
of the Labor Code the authority to assume jurisdiction over a labor dispute causing or likely to cause a strike or
lockout in an industry indispensable to the national interest, and decide the same accordingly.

Article 84: Hours Worked

Pan American World Airways System Vs. Pan American Employees Association G.R. No. L-16275 February 23, 1961

Facts:

The employees of Pan American World Airways System alleges that the company does not provide them of a one-
hour break period. The employees were asked to wait in case of any emergencies while having their break or they
will be reprimanded, thus the petition of the employees to ask the court for a proper compensation from the
employers. The employees allege that the said one-hour break actually constitutes working over time.

Issue:

Whether or not the time given to the employees for break is considered an over time?

Held:

The Industrial Court's order for permanent adoption of a straight 8-hour shift including the meal period was but a
consequence of its finding that the meal hour was not one of complete rest, but was actually a work hour, since for
its duration, the laborers had to be on ready call. Of course, if the Company practices in this regard should be
modified to afford the mechanics a real rest during that hour (f. ex., by installing an entirely different emergency
crew, or any similar arrangement), then the modification of this part of the decision may be sought from the Court
below. As things now stand, we see no warrant for altering the decision.

The judgment appealed from is affirmed. Costs against appellant.

Case Title: LUZON STEVEDORING CO., INC., VS. LUZON MARINE DEPARTMENT UNION AND THE HON. MODESTO
CASTILLO, THE HON. JOSE S. BAUTISTA, THE HON. V. JIMENEZ YANSON and THE HON. JUAN L. LANTING, JUDGE
OF THE COURT OF INDUSTRIAL RELATIONS G.R. No.: L 9265 Date: April 29, 1957 Petitioner: Luzon
Stevedoring Co., Inc. Respondent: Luzon Marine Department Union And The Hon. Modesto Castillo, The Hon.
Jose S. Bautista, The Hon. V. Jimenez Yanson And The Hon. Juan L. Lanting Ponente: J. Felix

Facts: Petition for review on certiorari in the resolution of the Court of Industrial Relations.

Herein respondents filed a petition with the CIR containing the full recognition of the right of Collective
bargaining, close shop and check off. Also, that the work performed in excess of 8 hours be paid an overtime pay of
50 per cent the regular rate of pay, and that work performed on Sundays and legal holidays be paid double the
regular rate of pay. In one of the hearing of the case, the Court ruled that the employees are only entitled to
receive overtime pay for work rendered in excess of 8 hours on ordinary days including Sundays and legal holidays.
Herein petitioner sought for the reconsideration of the decision only in so far as it interpreted that the period
during which a seaman is aboard a tugboat shall be considered as working time for the purpose of the 8 hours
Labor Law. However, it was denied. Hence, this petition.

Issue:

Whether or not the definition for hours of work as presently applied to dry land laborers equally applicable to
seaman?

Held:

No. The Court ruled that we do not need to set for seaman a criterion different from that applied to laborers on
land, that the only thing to be done is to determine the meaning and scope of the term working place. 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 requires are complied with, the period of such rest shall not be counted. Claimants rendered
services to the Company from 6am to 6pm including Sundays and holidays, which implies either that said laborers
were not given any recess at all, or that they were not allowed to leave the spot their working place, or that they
could not rest completely. Resolutions of the Court of Industrial Relations appealed from are affirmed with costs
against petitioner.

Case Title: JULIO N. CAGAMPAN ET AL. VS. NATIONAL LABOR RELATIONS COMMISSION AND ACE MARITIME
AGENCIES, INC. G.R. No.: G.R. No. 85122 - 24 Date: March 22, 1991 Petitioner: Julio N. Cagampan Respondent:
NLRC And Ace Maritime Agencies, Inc. Ponente: J. Paras

Facts:
Page | 17
Petitioners, all seamen, entered into separate contracts of employment with the Golden Light Ocean Transport,
Ltd; through its local agency, the Ace Maritime Agencies, Inc. Petitioners worked from May 7, 1985 until July 12,
1986. Later, petitioners collectively and / or individually filed complaints for non payment of overtime pay,
vacation pay and terminal pay against private respondents. They also claimed that they signed a blank contract.
Also, although they agreed to work on board the vessel Rio Colorado managed by Golden Light Ocean Transport,
Ltd., the vessel they really boarded was MV SOIC I managed by Columbus Navigation. Two (2) petitioners argued
that although they were employed as Ordinary Seaman, they actually performed the work and duties of Able
Seaman. Hence, this petition.

Issue: Whether or not petitioners should be entitled to overtime pay?

Held:

No. The Court ruled that entitlement to overtime pay must first be established by proof that said overtime work
was actually performed, before an employee way avail of said benefit. The contract provision means that the fixed
overtime pay 30% would be the basis for computing the overtime pay if and when overtime work would be
rendered. For the employer to give him overtime pay for extra bonus hours when he might be sleeping or
attending to his personal chores or even just lulling away his time would be extremely unfair and unreasonable.
The criterion is determining whether or not seamen are entitled to overtime pay is not, whether they were on
board and cannot leave the ship beyond the regular 8 working hours a day, but whether they actually rendered
service in excess of said number of hours. The decision of the NLRC is affirmed with the modification that
petitioners Cagampan and Vicera are awarded their leave pay according to the terms of contract.

Case Title: NATIONAL DEVELOPMENT COMPANY VS. COURT OF INDUSTRIAL RELATIONS AND NATIONAL
TEXTILE WORKERS UNION G.R. No.: L 15422 Date: November 30, 1962 Petitioner: National Development
Company Respondent: Court Of Industrial Relations And National Textile Workers Union Ponente: J. Regala

Facts: Case for review from the Court of Industrial Relations

The National Development Company or government owned and controlled corporation had four shifts of work.
8am 4pm 6am 2pm 2pm 10pm 10pm 6pm Each shift had 1 hr meal time period, to wit; from (1)
11am to 12nn for those working between 6am and 2pm and from (2) 7pm to 8om for those working between 2pm
and 10pm.

The records show that although there was a one hour meal time, petitioner nevertheless credited the workers
with 8 hours of work for each shift and paid them for the same number of hours. Also, whenever workers in one
shift were required to continue working until the next shift, petitioner has been paying them for six hours only, and
argued that the 2 hours corresponding to the mealtime periods should not be included in computing
compensation. Respondents, whose members are employed at the NDC, asked the court of Industrial Relations to
order the payment of additional overtime pay corresponding to the mealtime periods.

CIR issued an order holding that mealtime should be counted in determining overtime work and ordered to pay
P101, 407.96 by way of overtime compensation. Petitioners filed a motion for reconsideration but were dismissed
by the CIR. Hence, this petition.

Issue: Whether or not on the basis of evidence, the mealtime breaks should be considered working time?

Held: Yes. The Court ruled that when the work is not continuous, the time which the laborer is not working place
and can rest completely shall not be counted. Claimants herein rendered services to the Company from 6am 6pm
implies either that they were not allowed to leave the spot of their working place, or that they could not rest
completely. The CIRs finding that work in the petitioner company was continuous and did not permit employees
and laborers to rest completely is not without basis in evidence. The timecards show that the work was continuous
and without interruption breaks should be counted as working time for purposes of overtime compensation. Order
of March 19, 1959 and the resolution of April 27, 1959 are hereby affirmed and the appeal is dismissed.

Case Title: SIME DARBY PILIPINAS, INC. VS. NLRC (2ND DIVISION) AND SIME DARBY SALARIED EMPLOYEES
ASSOCIATION (ALU-TUCP) G.R. No.: G.R. No. 119205 Date: April 15, 1998 Petitioner: Sime Darby Pilipinas, Inc.
Respondent: NLRC (2nd Division) And Sime Darby Salaried Employees Association (ALU-TUCP) Ponente: J.
Bellosillo

Facts: Special Civil Action in the Supreme Court. Certiorari.

Petitioner is engaged in the manufacture of automotive tires, tubes and other rubber products. Private
respondent is an association of monthly salaried employees of petitioner at its Marikina factory. Beforehand, all
company factory workers in Marikina including members of private respondent union worked from 7:45am to
3:45pm with a 30-minute paid on call lunch break. Page | 18

Petitioner issued a memorandum to all factory- based employees advising all its monthly salaried employees in its
Marikina Tire Plant, except those in the Warehouse and Quality Assurance Department working on shifts.

Private respondent felt affected adversely by the change in the work schedule and discontinuance of the 30-
minute paid on call lunch break, hence the filling of complaint for unfair labor practice, discrimination and
evasion of liability. The Labor Article dismissed the complainant on the ground that the change in the work
schedule and the elimination of the 30-minute paid lunch break of factory workers constituted a valid exercise of
management prerogative and did not decrease the benefits granted to factory workers as the working time did not
go beyond 8 hours. Hence, this petition.

Issue: Whether or not there was a diminution of benefits when the 30-minute paid lunch break was eliminated?

Held: The right to fix the work, schedules of the employees rests principally on their employer. The petitioner
cities as reason for the adjustment the efficient conduct of its business operations and its improved production.
Since the employees are no longer required during this one-hour lunch break, there is no more need for them to
be compensated for this period. 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; 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; Management retains the
prerogative, whenever exigencies of the service so require, to change the working hours of its employees Petition
is granted. The dismissed complaint against petitioner for unfair labor practice is affirmed.

Case Title: MERCURY DRUG COMPANY INCORPORATED VS. NARDO DAYAO, ET AL. G.R. No.: L-30452 Date:
September 30, 1982 Petitioner: Mercury Drug Company, Incorporated Respondent: Nardo Dayao Ponente: J.
Gutierrez, Jr.

Facts:

Petition for review on certiorari of the decision of the Court of Industrial Relations.

Herein respondent, filed a petition against Mercury Drug Company, Incorporated contenting: 1) 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; 2) payment of the 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.

Mercury Drug is hereby ordered to pay the 69 petitioners 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. Hence, this petition.

Issue: Whether or not private respondents are entitled for nighttime work premiums although there is a waiver of
said claims and the total absence of evidence there on?

Held:

Yes. Work done at night should be paid more than work done at daytime, and that if that work is done beyond the
workers regular hours of duty, he should also be paid additional compensation for overtime work; Ruling of C.I.R
awarding additional pay for nighttime work is supported by evidence. 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 does
not apply in the case at bar. Additional compensation for nighttime work is founded on public policy; hence the
same cannot be waived. Petition is dismissed.

Case Title: NATIONAL SHIPYARDS AND STEEL CORPORATION VS. COURT OF INDUSTRIAL RELATIONS G.R. No.:
L-17068 Date: December 30, 1961 Petitioner: National Shipyards And Steel Corporation Respondent: Court Of
Industrial Relations Ponente: J. Reyes

Facts:
Petition for review by certiorari of the orders of the Court of Industrial relations requiring it to pay its bargeman,
Malondras, an overtime service of 16 hours a day for a period from January 1, 1954 - December 31, 1956, and from
January 1, 1957 to April 30, 1957, inclusive.

NASSOO, engaged in the business of ship building and repair that needs a service of a bargeman. Bargeman are
required to stay in their barges for on call duty, so they are given living quarters and subsistence allowance of
P1.50 per day during the time they are on board. However, Malondras filed with the Industrial Court a complaint
for the payment of overtime compensation because of his exclusion from the second report of the examiner. The
Page | 19
examiner then submitted an amended report giving Malondras an average of 16 overtime hours a day, and
recommending the payment to him of P15, 242.15 as overtime compensation during the period covered by the
report. Hence, this petition.

Issue: Whether or not respondent Malondras is entitled to 16 hours a day overtime pay?

Held:

No. The Court ruled that the correct criterions in determining whether or not sailors are entitled to overtime pay is
not whether they were on board and cannot leave ship beyond the regular eight working hours a day, but whether
they actually rendered service in excess of said number of hours; In such much as the parties show that the
subsistence allowance is independent of and has nothing to do with whatever additional compensation for
overtime work was due the petitioner, the same should not be deducted from his overtime compensation.
Respondent Malondras should be credited (5) overtime hours instead of (16) hours a day for the periods covered
by the examiners report. Order appealed is affirmed with modifications.

Case Title: PHILIPPINE NATIONAL BANK V. PHILIPPINE NATIONAL BANK EMPLOYEES ASSOCIATION (PEMA) AND
COURT OF INDUSTRIAL RELATIONS G.R. No.: L-30279 Date: July 30, 1982 Petitioner: Philippine National Bank
Respondent: Philippine National Bank Employees Association (PEMA) And Court Of Industrial Relations
Ponente: J. Barredo

Facts: Appeal from the decision of the Court of Industrial Relations.

Petitioner allegedly failed to comply with its commitment of organizing a committee on Personnel Affairs to take
change of screening and deliberating on the promotion of employees covered by a collecting bargaining
agreement then in force between the said parties. In the first and causes of action the respondents Board of
Directors approved a revision of the computation of overtime pay, but since the grant of benefits in question,
without just cause, withdrew said benefits and in spite of repeated demands refused, and still refuses to reinstate
the same up to the present. Petitioner has repeatedly requested Respondent that the cost of living allowance and
longevity pay be taken into account in the computation of OT pay.

Issue: Whether or not the cost of living allowance and longevity pay should be included in the computation of
overtime pay?

Held: No. The Court ruled that the rationale for overtime pay is thus the additional work, labor or service
employed and the adverse effects of his longer stay in place of work that justify and is the real reason for the extra
compensation for overtime pay; There is presently a consciousness towards helping our employees by giving of
additional allowance in times of economic uncertainly; The industrial court cannot even in a certified labor dispute
impose upon the parties terms and conditions inconsistent with existing law and jurisprudence; Longevity pay
cannot be included in the computation of overtime pay when the Collective Bargaining Agreement so stipulates;
The basis of computation of overtime pay beyond the required by law must be the Collective Bargaining
Agreement between the parties.

Art. 94: Holiday and Holiday Pays

Case title: JOSE RIZAL COLLEGE VS. NLRC AND NAT/OFFICE WORKERS G.R number: G.R. No. L-65482 Date:
December 1, 1987 Petitioner: Jose Rizal College Respondent: National Labor Relations Commission and National
Alliance of Teachers/Office Workers Ponente: Paras, J.

Facts: Petitioner is a non-stock, non-profit educational institution. It has three groups of employees categorized as
follows: (a) personnel on monthly basis, who receive their monthly salary uniformly throughout the year,
irrespective of the actual number of working days in a month without deduction for holidays; (b) personnel on
daily basis who are paid on actual days worked and they received un-worked holiday pay; and (c) collegiate faculty
who are paid on the basis of student contract hour. They sign contracts before the start of the semester. National
Alliance of Teachers and Office Workers filed a complaint against the college when the latter failed to pay them
the required holiday pay. In the ruling of the Labor Arbiter, it stated that the faculty and personnel of Jose Rizal
College who are paid their salary by the month uniformly in a school year, irrespective of the number of working
days in a month, without deduction for holidays, are presumed to be already paid the 10 paid legal holidays and
are no longer entitled to the separate payment for the said regular holidays; the personnel of Jose Rizal College
who are paid their wages daily are entitles to be paid the 10 unworked regular holidays according to the pertinent
provisions of the Rules and Regulations Implementing the Labor Code; and, Collegiate faculty of Jose Rizal College
who by contract are paid compensation per student contract hour are not entitled to unworked holiday pay
considering that these regular holidays have been excluded in the programming of the student contract hours. The
NLRC modified the Labor Arbiters decision with regards to the collegiate faculty. NLRC held that collegiate faculty
is entitled to holiday pay. Hence, this petition.

Issue: Whether or not the collegiate faculty according to their contracts is paid per lecture hour are entitled to
unworked holiday pay.
Page | 20
Held: The NLRC rendered a new decision exempting the college from paying hourly paid faculty members their
pay for regular holidays, whether the same be during the regular semesters of the school year or during semestral,
Christmas, or Holy Week vacations but ordering the said college to pay the faculty members their regular hourly
rate on days declares as special holidays or for some reason classes are called off or shortened for the hours they
are supposed to have taught, whether extensions of class days be ordered or not; in case of extensions said faculty
members shall likewise be paid their hourly rates should they teach during said extensions. Article 94 of the Labor
Code states the right to holiday pay. Under par. 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, and Section 8, Rule
IV, Book III of the IRR states the holiday pay of certain employees in which under par. 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 etc.

Under these provisions, the faculty members are entitled for un-worked holiday pay. However, the law is silent
with respect to the faculty members paid by the hour who because of their teachings contracts are obliged to work
and consent to be paid only for work actually done. 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 un-worked days,
and thus this was clearly in their minds when they entered into the teaching contract.

UNION OF FILIPINO EMPLOYEES VS VIVAR G.R. No. 79255 January 20, 1992 Petitioner(s): UNION OF FILIPRO
EMPLOYEES (UFE) Respondent(s): BENIGNO VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL
PHILIPPINES, INC. (formerly FILIPRO, INC.) Ponente: J. GUTIERREZ JR

Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed with the National Labor
Relations Commission (NLRC) a petition for declaratory relief seeking a ruling on its rights and obligations
respecting claims of its monthly paid employees for holiday pay in the light of the Court's decision in Chartered
Bank Employees Association v. Ople. Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the
case for voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On January 2,
1980, Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid employees holiday pay pursuant
to Article 94 of the Code, subject only to the exclusions and limitations specified in Article 82 and such other legal
restrictions as are provided for in the Code.

Filipro filed a motion for clarification seeking (1) the limitation of the award to three years, (2) the exclusion of
salesmen, sales representatives, truck drivers, merchandisers and medical representatives from the award of the
holiday pay, and (3) deduction from the holiday pay award of overpayment for overtime, night differential,
vacation and sick leave benefits due to the use of 251 divisor. Petitioner UFE answered that the award should be
made effective from the date of effectivity of the Labor Code, that their sales personnel are not field personnel and
are therefore entitled to holiday pay, and that the use of 251 as divisor is an established employee benefit which
cannot be diminished.

On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity of the holiday pay
award shall retroact to November 1, 1974, the date of effectivity of the Labor Code. He adjudged, however, that
the company's sales personnel are field personnel and, as such, are not entitled to holiday pay. He likewise ruled
that with the grant of 10 days' holiday pay, the divisor should be changed from 251 to 261 and ordered the
reimbursement of overpayment for overtime, night differential, vacation and sick leave pay due to the use of 251
days as divisor.

Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent Arbitrator treated the
two motions as appeals and forwarded the case to the NLRC which issued a resolution remanding the case to the
respondent arbitrator on the ground that it has no jurisdiction to review decisions in voluntary arbitration cases
pursuant to Article 263 of the Labor Code. However, in a letter the respondent arbitrator refused to take
cognizance of the case reasoning that he had no more jurisdiction to continue as arbitrator because he had
resigned from service.

Issue: Whether Nestle's sales personnel are entitled to holiday pay

Held: Under Article 82, field personnel are not entitled to holiday pay. Said article defines field personnel as "non-
agritultural employees who regularly perform their duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the field cannot be determined with reasonable
certainty." The Court finds that 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. The respondent arbitrator's order to change the divisor
from 251 to 261 days would result in a lower daily rate which is violative of the prohibition on non-diminution of
benefits found in Article 100 of the Labor Code. To maintain the same daily rate if the divisor is adjusted to 261
days, then the dividend, which represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. There is thus no merit in respondent Nestle's claim of overpayment of overtime and Page | 21
night differential pay and sick and vacation leave benefits, the computation of which are all based on the daily
rate, since the daily rate is still the same before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of 251 days as divisor
must fail in light of the Labor Code mandate that "all doubts in the implementation and interpretation of this Code,
including its implementing rules and regulations, shall be resolved in favor of labor." (Article 4). Nevertheless, in
order to fully settle the issues, the Court resolved to take up the matter of effectivity of the holiday pay award
raised by Nestle.

Applying the operative factaforementioned doctrine to the case at bar, it is not far-fetched that Nestle, relying
on the implicit validity of the implementing rule and policy instruction before this Court nullified them, and
thinking that it was not obliged to give holiday pay benefits to its monthly paid employees, may have been moved
to grant other concessions to its employees, especially in the collective bargaining agreement. This possibility is
bolstered by the fact that respondent Nestle's employees are among the highest paid in the industry. With this
consideration, it would be unfair to impose additional burdens on Nestle when the non-payment of the holiday
benefits up to 1984 was not in any way attributed to Nestle's fault. The Court thereby resolves that the grant of
holiday pay be effective, not from the date of promulgation of the Chartered Bank case nor from the date of
effectivity of the Labor Code, but from the date of promulgation of the IBAA case.

Case title: WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION VS. CRESENCIANO B. TRAJANO,
ELMER ABADILLA AND 34 OTHERS G.R. number: G.R. No. 114698 Date: July 3, 1995 Petitioner: Wellington
Investment and Manufacturing Corporation Respondent: Cresenciano B. Trajano, Under-Secretary of Labor and
Employment, Elmer Abadilla, and 34 others Ponente: Narvasa, C.J.

Facts: By virtue of the routine inspection conducted by a Labor Enforcement Officer, Wellington Flour Mills owned
by the petitioner-company was found non-payment of regular holidays falling on a Sunday for monthly-paid
employees. Wellington argued that the monthly-paid employees already includes holiday pay for all regular
holidays and there is no legal basis for the finding of alleged non-payment of regular holidays falling on a Sunday. It
further contends 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 un-
worked regular holidays within a year. The Regional Director ordered the petitioner to pay the employees
additional compensation corresponding to 4 extra working days. However, the petitioner argued that the
company, using the 314 factor already gave complete payment of all compensation due to its workers. Petitioner
appealed and was acted on by the respondent Undersecretary. But still, Regional Directors decision was affirmed.
Hence, this petition. Issue: Whether or not a monthly-paid employees, 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. Held:
Regional Directors decision, affirmed by the Undersecretary, is nullified and set aside. Every worker should be paid
his regular daily wage during regular holidays; except in retail and service establishments regularly employing less
than 10 workers, even if the worker does not work on these regular holidays. The Wellington had been paying its
employees a salary of not less than the statutory minimum wage and that the monthly salary, thus, paid was not
less than the statutory minimum wage multiplied by 365 days divided by 12. Apparently the monthly salary was
fixed by Wellington to provide for compensation for every working day of the year including holidays specified by
law and excluding only Sundays. Wellington leaves no day unaccounted for, it is paying for all the days of a year
with the exception only of 51 Sundays.

Case title: NICANOR M. BALTAZAR VS. SAN MIGUEL BREWERY, INC. G.R. number: G.R. No. L-23076 Date:
February 27, 1969 Petitioner: Nicanor M. Baltazar Respondent: San Miguel Brewery, Inc. Ponente: Dizon, J.

Facts: The petitioner is the salesman-in-charge of San Miguel Brewery, Inc. in Dagupan warehouse with a monthly
pay of P240.00, P5.00 per diem and a commission of P0.75 per case sold. On October 9, 1956, 8 days after Baltazar
was appointed as the salesman-in-charge, the regular employees in Dagupan warehouse went on strike because of
unjust treatment. Baltazar was recalled to appellants Manila Office on the 13th of October, 1956 upon the order of
his superior and conduct an investigation. The investigation found that the employees grievances were well
founded. The next day, the strikers returned to their work voluntarily. On October 15, the petitioner was informed
that he was not to return to Dagupan anymore but he still reported to work at the main office from October 16 to
November 2, 1956 waiting for assignment. From November 3 to December 19 on the same year, he absented
himself from work without consent from his superiors and without advising them or anybody else of the reason for
his prolonged absence. He was dismissed from work because of petitioners unauthorized absence and if the
company would consider its health, welfare and retirement plan requiring sick leave, still the petitioner did
inexcusable actions since sick leave, to be considered authorized and excusable, must be certified to by the
company physician and the appellant-company informed that Baltazar was dismissed effective November 30,
1956. Baltazar initiated a complaint which the trial court ruled that Baltazars dismissal was justified but, however,
ordering San Miguel Brewery Inc. to pay Baltazar one month separation pay, plus the cash value of 6 months
accumulated sick leave. Issue: Whether or not the petitioner is entitled to one month separation pay and the cash Page | 22
value of 6 months accumulated sick leave. Held: No, the petitioner is not entitled to one month separation pay
and the cash value of 6 months accumulated sick leave. Under the Marcaida vs. Philippine Education Company 53
O.G. No. 23, RA 1052 makes reference to termination of employment, instead of dismissal, to exclude employees
separated from the service for causes attributable to their own fault. It is limited in its operation, to cases of
employment without definite period. When the employment is for a fixed duration, the employer may terminate it
even before the expiration of a stipulated period, should there be a substantial breach of obligations by the
employee; in which event the latter is not entitles to advance notice or separation pay. it would patently, be
absurd to grant a right thereto to an employee guilty of the same breach of obligation, when the employment is
without a definite period, as if he were entitled to greater protection than employees engaged for a fixed duration.
In connection with the question of whether or not petitioner is entitled to the cash value of 6 months accumulated
sick leave, it appears that while under the last paragraph of Article 5 of appellants Rules and Regulations of Health,
Welfare and Retirement Plan, unused sick leave may be accumulated up to a maximum of 6 months, the same is
not commutable or payable in cash upon the employees option.

Case title: DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. RUBEN V. ABARQUEZ AND THE ASSOCIATION
OF TRADE UNIONS (ATUTUCP) G.R. number: G.R. No. 102132 Date: March 19, 1993 Petitioner: Libron, Gaspar
and Associates Respondent: Bansalan B. Metilla for Association of Trade Unions (ATUTUCP)

Facts: The petitioner and the private respondent entered into a Collective Bargaining Agreement (CBA) which,
under Sections 1 and 3 of Article VIII, provides for sick leave with pay benefits each year to its employees who have
rendered at least one year of service with the company. Under Section 1, Article VIII, the company agrees to grant
15 days sick leave with pay each year to every regular non-intermittent worker who already rendered at least one
year of service with the company. However, such sick leave can only be enjoyed upon certification by a company
designated physician, and if the same is not enjoyed within one year period of the current year, any unenjoyed
portion thereof, shall be converted to cash and shall be paid at the end of the said one year period. And provided
however, that only those regular workers of the company whose work are not intermittent, are entitled to the sick
leave privilege. On the other hand, under Section 3 of the said article, it provides that all intermittent workers of
the company who are members of the Regular Labor Pool shall be entitled to vacation and sick leaves per year of
service with pay with the basis of the number of hours rendered including overtime. During the effectivity of the
CBA until three months of its renewal with a total of 3 years and 9 months, all the field workers of petitioner who
are members of the regular labor pool and the present regular extra labor pool who had rendered at least 750
hours to 1,500 hours were extended sick leave with pay benefits. Every unenjoyed portion thereof at the end of
the current year was converted to cash and paid at the end of the said one- year period. However, the
commutation of unenjoyed portion of the sick leave was withdrawn when the petitioner-company had a new
assistant manager. It stopped the payment of its cash equivalent on the ground that they are not entitled to the
said benefits under the 1989 CBA, particularly Sections 1 and 3. The Union brought the matter to NCMB and the
parties mutually designated Ruben Abarquez, Jr. to act as voluntary arbitrator. He ruled that Davao Integrated Port
Stevedoring Corporation should grant and extend sick leave privilege of the commutation of the unenjoyed portion
of the sick leave of all the intermittent field workers who are members of the regular labor pool and the present
extra pool in accordance with the CBA. The petitioner-company disagreed with the ruling. Hence, this petition.
Issue: Whether or not intermittent field workers who are members of the regular labor pool and the present extra
pool in accordance with the CBA are entitled to the commutation of the unenjoyed portion of the sick leave.

Held: The petition is denied. A CBA, as used in Article 252 of the Labor Code, is a contract executed upon request
of either the employer or the exclusive bargaining representative incorporating the agreement reached after the
negotiations with respect to wages, hours of work and all other terms and conditions of employment, including
proposals for adjusting any grievances or questions arising such agreement. It is unreasonable for the petitioner to
isolate Section 1 of Article VIII of the 1989 CBA from the other related section on sick leave with pay benefits. The
manner they were deprive of the privilege previously recognized and extended to them by the petitioner is not
only tainted with arbitrariness but likewise discriminatory in nature. Petitioner is of mistaken notion that since the
privilege of commutation or conversion to cash of the unenjoyed portion of the sick leave with pay benefits is
found in Section 1, Article VIII, only the regular non-intermittent workers and no other can avail of the said
privilege because of the proviso found in the last paragraph thereof. Public respondents correctly observed that
the parties to the CBA clearly intended the same sick leave privilege to be accorded the intermittent workers in
the same way that they are both given the same treatment with respect to vacation leaves non-commutable and
non-cummulative. If they are treated equally with respect to vacation leave privilege, with more reason should
they be on par with each other with respect to sick leave benefits. Besides, if the intention is otherwise, during its
negotiations, why did not the parties expressly stipulate in the 1989 CBA that regular intermittent workers are not
entitled to commutation of the unenjoyed portion of their sick leave with pay benefits? There had been no grave
abuse of discretion by public respondent in issuing the decision. Moreover, his interpretation of Sections 1 and 3,
Article VIII of the 1989 CBA cannot be faulted and is absolutely correct.

Case title: DONALD KWOK VS. PHILIPPINE CARPET MANUFACTURING CORPORATION G.R. number: G.R. No.
149252 Date: April 28, 2005 Petitioner: Donald Kwok Respondent: Philippine Carpet Manufacturing Corporation
Ponente: Callejo, Sr., J.
Page | 23
Facts: Donald Kwok and his father-in-law, Patricio L. Lim, along with some other stockholders, established the
Philippine Carpet Manufacturing Company in 1965. The petitioner retired 36 years later and upon retirement, he
claimed the cash equivalent of what he believed to be his accumulated vacation and sick leave credits during the
entire length of his service with the company, which the total amount reached P7, 080, 546.00 plus interest. The
respondent corporation refused to accede to the petitioners demand claiming that the latter is not entitled to it.
The petitioner filed a complaint before the NLRC. He claimed that Lim made a verbal promise to give him unlimited
sick leave and vacation leave benefits and its cash conversion upon his retirement or resignation without the need
for application therefor. The respondent denied all of these and claimed that petitioners demand was without
legal basis. It was further pointed out that as per Memorandum dated November 6, 1981, only regular employees
and managerial and confidential employees falling under Category I were entitled to vacation and sick leave
credits. The petitioner, whose position did not fall under Category I was not entitled to the benefits under the said
memorandum. Labor Arbiter ruled in favor of the petitioner. The corporation was directed to pay the petitioner
the amount he was demanding plus interest and 10% attorneys fees. The corporation appealed the decision and
the NLRC reversed the decision of the Labor Arbiter. the petitioner appealed the NLRCs decision to the CA but the
CA affirmed the NLRCs decision. Hence, this petition. Issue: Whether or not the petitioner is entitled, based on
the documentary and testimonial evidence on record, to the cash value of his vacation and sick leave credits in the
total amount of P7, 080, 546.00.

Held: The petition is denied. The petitioner failed to convince the Court that the actual findings of the CA were
arbitrary. Contracts entered into by a corporate officer or obligations or prestations assumed by such officer for
and in behalf of such corporation are binding on the said corporation only if such ofiicer acted within the scope of
his authority or if such officer exceeded the limits of his authority, the corporation has ratified such contracts. In
the present case, the petitioner relied principally on his testimony to prove that Lim made a verbal promise to give
him vacation and sick leave credits, as well as the privilege of converting the same into cash upon retirement. The
Court agrees that those who belong to the upper corporate echelons would have more privileges. However, the
Court cannot presume the existence of such privileges. The petitioner was burdened to prove not only the
existence of such benefits but also that he is entitled to the same, especially considering that such privileges are
not inherent to the positions occupied by the petitioner in the respondent corporation. In a testimonial evidence,
the petitioner is aware that he is not covered of the Memorandum granting the PCMC employees the conversion
of their unused vacation and sick leaves into cash. Even assuming that the petitioner is included among the regular
employees referred in the memorandum, there is no evidence that he complied with the cut-off dates for the filing
of the cash conversion of vacation and sick leaves. This being so, the petitioners money claim have already been
barred by the three-year prescriptive period under Article 291 of the Labor Code. Additional to that, there is no
proof that petitioner has filed vacation and sick leaves with the companys personnel department. Without a
record of petitioners absences, there is no way to determine the actual number of leave credits he is entitled to.
The amount which the petitioner is demanding is baseless. Regarding the verbal promise that Lim made to the
petitioner, the promise cannot bind the company in the absence of any Board resolution to that effect. The
personal act of the company president cannot bind the corporation.

Art. 97: Wages and Salary

Case title: JOSE SONGCO VS. NLRC (FIRST DIVISION) G.R. number: G.R. No. L-50999 Date: March 23, 1990
Petitioner: Jose Songco, Romeo Cipres and Amancio Manuel Respondent: National Labor Relations Commission
(First Division), Labor Arbiter Flavio Aguas, and F.E. Zuellig (M), Inc. Ponente: Medialdea, J.

Facts: Zuellig (M) Inc. filed with the Department of Labor (Regional Office No. 4) a clearance to terminate the
services of petitioners Jose Songco, Romeo Cipres and Amancio Manuel due to alleged financial losses. However,
the petitioners argued that the company is not suffering any losses and the real reason for their termination was
their membership in the union. At the last hearing of the case, the petitioner manifested that they no longer
contesting their dismissal, however, they argued that they should be granted a separation pay. Each of the
petitioners was receiving a monthly salary of P40, 000.00 plus commissions for every sale they made. Under the
CBA entered by the Zuellig Inc. and the petitioners, in Article XIV, Section 1(a), Any employee, who is separated
from employment due to old age, sickness, death or permanent lay-off not due to the fault of said employee shall
receive from the company a retirement gratuity in an amount equivalent to one months salary per year of service.
One month of salary as used in this paragraph shall be deemed equivalent to the salary at date of retirement;
years of service shall be deemed equivalent to total service credits, a fraction of at least six months being
considered one year, including probationary employment. Other basis for petitioners contention are Article 284 of
the Labor Code with regards to reduction of personnel and Sections 9(b) and 10 of Rule 1, Book VI of the Rules
Implementing the Labor Code. The Labor Arbiter rendered his decision directing the company to pay the
complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for
every year of service that they have worked with the company. The petitioners appealed to the NLRC but it was
denied. Petitioner Romeo Cipres filed a Notice of Voluntary Abandonment and Withdrawal of petition contending
that he had received, to his full and complete satisfaction, his separation pay. Hence, this petition.

Issue: Whether or not earned sales commissions and allowances should be included in the monthly salary of
Page | 24
petitioners for the purpose of computation of their separation pay.

Held: The petition is granted. Petitioners contention that in arriving at the correct and legal amount of separation
pay due to them, whether under the Labor Code or the CBA, their basic salary, earned sales commissions and
allowances should be added together. Insofar as whether the allowances should be included in the monthly salary
of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the
case of Santos vs. NLRC, 76721, in the computation of backwages and separation pay, account must be taken not
only of the basic salary of petitioner but also of her transportation and emergency living allowances. In the issue of
whether commission should be included in the computation of their separation pay, it is proper to define first
commission. Blacks Law Dictionary defined commission as the recompensed, compensation or reward of an agent,
salesman, executor, trustees, receiver, factor, broker or bailee, when the same is calculated as a percentage on the
amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason
for such type of remuneration for services rendered demonstrate clearly that the commission are part of
petitioners wage and salary. Some salesmen do not receive any basic salary but depend on commission and
allowances or commissions alone, are part of petitioners wage and salary. Some salesman do not received any
basic salary but depend on commission and allowances or commissions alone, although an employer-employee
relationship exist. In Soriano v. NLRC, it is ruled then that, the commissions also claimed by petitioner (override
commission plus net deposit incentive) are not properly includible in such base figure since such commissions must
be earned by actual market transactions attributable to petitioner. Applying this by analogy, since the commissions
in the present case were earned by actual market transactions attributable to petitioners, these should be included
in their separation pay. In the computation thereof, what should be taken into account is the average commissions
earned during their last year of employment.

Case title: ALIPIO R. RUGA ET AL. VS. NLRC G.R. number: G.R. No. L-72654-61 Date: January 22, 1990 Petitioner:
Alipio R. Ruga, Jose Parma, Eladio Calderon, Laurente Bautu, Jaime Barbin, Nicanor Francisco, Philip Cervantes
and Eleuterio Barbin Respondent: National Labor Relations Commission and De Guzman Fishing Enterprises
and/or Arsenio de Guzman Ponente: Fernan, J.

Facts: The petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned
by the De Guzman Fishing Enterprises which is primarily in the fishing business with port and office at Camarines
Sur. On September 11, 1983, petitioners were told to proceed to the police station for investigation on the report
that they sold some of their fish-catch at midsea. The petitioners denied the charge claiming that the allegation
was a countermove because of the formation of their union. The complaint was dismissed because there were no
witnesses that would support the companys allegation. The petitioners, however, were not allowed to return to
the fishing vessel to resume their work on that same day. Each of the them filed a complaints for illegal dismissal
and non-payment of 13th month pay, emergency cost-of-living allowance and service incentive pay with the
Ministry (now DOLE). The company denied the petitioners being their employees, further contending that they
were only engaged in a joint venture. The Labor Arbiter rendered a joint decision dismissing all the complaint of
the petitioners. Petitioners appealed the case to the NLRC which affirmed the Labor Arbiters decision that a joint
fishing venture and not employer-employee relationship exist between the private respondent and the petitioners.
Hence, this petition.

Issue: Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of
its owner-operator, De Guzman Fishing Enterprise, and if so, whether or not they were illegally dismissed from
their employment.

Held: The petitioners were illegally dismissed from their employment. In determining the existence of employer-
employee relationship, the elements that are generally considered are the following: (a) the selection and
engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers power
to control the employee with respect to the means and methods by which the work is to be accomplished. The
employment arises from contract of hire, express or implied. In the absence of hiring, no employer-employee
relationship could exist. Records show in the instant case that petitioners were directly hired by the general
manager of the company and its operations manager. Petitioner Alipio Ruga was hired on September 29, 1974 as
patron/captain of the fishing vessels; Eladio Calderon started as mechanic on April 16, 1968 until he was promoted
as chief engineer of the fishing vessel; Jose Pama was employed on September 29, 1974 as assistant engineer;
Jaime Barbin started as a pilot of the motor boat until he was transferred as a master fisherman to the fishing
vessel 7/B Sandyman II; Philip Cervantes was hired as winchman on August 1, 1972 while Eleuterio Barbin was
hired as winchman on April 15, 1976. While tenure or length of employment is not considered as the test of
employment, nevertheless the hiring of petitioners to perform work which is necessary or desirable in the usual
business or trade of private respondent for a period of 8-15 years since 1968 qualify them as regular employees
within the meaning of Article 281 of the Labor Code as they were indeed engaged to perform activities usually
necessary or desirable in the usual fishing business or occupation of private respondent. The virtual dismissal of
petitioners from their employment was characterized by undue haste when less extreme measures consistent with
the requirements of due process should have been first exhausted. In that sense, the dismissal of petitioners was
tainted with illegality.
Page | 25

Case title: STATE MARINE CORPORATION VS. CEBU SEAMENS ASSOCIATION G.R. number: G.R. No. L-12444
Date: February 28, 1963 Petitioner: State Marine Corporation and Royal Line, Inc. Respondent: Cebu Seamens
Association Ponente: Paredes, J.

Facts: The petitioners were engaged in the business of marine coastwise transportation. They had a CBA with the
Cebu Seamens Association. On September 12, 1952, the respondent union filed a complaint against the
petitioners alleging that the officers and men working on board the petitioners vessels have not been paid their
sick leave, vacation leave and overtime pay; that the petitioners threatened then to accept the reduction of
salaries, observed by other shipowners; that after the Minimum Wage Law had taken effect, the petitioners
required their employees on board their vessels, to pay the sum of P0.40 for every meal, while the masters and
officers were required to pay their meals and that because the captain had refused to yield to the general
reduction of salaries, the petitioners dismissed the captain. The petitioner, on their defense, stated that they have
suffered a financial losses in the operation of their vessels and there is no law which provides for the payment of
sick leave or vacation leave to employees of private firms; that with regards to their overtime pay, they have
always observed the Eight-hour labor Law and that overtime does not apply to those who provide means of
transportation. The decision ruled in favor of the respondent union. Hence, this petition.

Issue: Whether or not the required meals which the petitioner company deducted from the salary of the
employees is considered as facilities, and not supplements.

Held: Supplements constitute extra remuneration or special privileges or benefits given to or received by the
laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense
necessary for the laborers and his familys existence and subsistence so that by express provisions of law, they
form part of the wage and when furnished by the employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay them just the same. It is argued that the food or meal given to the
deck officers, marine engineers and unlicensed crew members in question, were mere facilities which should be
deducted from wages, and not supplements which, according to Section 19 of the Minimum Wage Law, should not
be deducted from such wages. It was found out that the meals were freely given to crew members prior to the
effectivity of the Minimum Wage Law while they were on the high seas not as part of their wages but as a
necessary matter in the maintenance of the health and efficiency of the crew members during the voyage. The
deductions therein made for the meals given after August 4, 1951, should be returned to them, and the operator
of the coastwise vessels should continue giving the benefits. Wherefore, the petition is dismissed, finding out that
the meals or food in question are not facilities but supplements.

Case title: NORMA MABEZA VS. NLRC G.R. number: G.R. No. 118506 Date: April 18, 1997 Petitioner: Norma
Mabeza Respondent: National Labor Relations Commission and Peter Ng/Hotel Supreme Ponente: Kapunan, J.

Facts: Petitioner Norma Mabeza and her co-employees at the Hotel Supreme in Baguio City were asked by the
hotels management to sign an instrument attesting to the latters compliance with minimum wage and other
labor standard provision. The instrument provides that they have no complaints against the management of the
Hotel Supreme as they are paid accordingly and that they are treated well. The petitioner signed the affidavit but
refused to go to the Citys Prosecutors Office to confirm the veracity and contents of the affidavit as instructed by
management. That same day, as she refused to go to the City Prosecutors Office, she was ordered by the hotel
management to turn over the keys to her living quarters and to remove her belongings to the hotels premises. She
then filed a leave of absence which was denied by her employer. She attempted to return to work but the hotels
cashier told her that she should not report to work and instead continue with her unofficial leave of absence.
Three days after her attempt to return to work, she filed a complaint against the management for illegal dismissal
before the Arbitration Branch of the NLRC in Baguio City. In addition to that, she alleged underpayment of wages,
non-payment of holiday pay, service incentive leave pay, 13th month pay, night differential and other benefits.
Peter Ng, in their Answer, argued that her unauthorized leave of absence from work is the ground for her
dismissal. He even maintained that her alleged of underpayment and non-payment of benefits had no legal basis.
He raises a new ground of loss of confidence, which was supported by his filing of criminal case for the alleged
qualified theft of the petitioner. The Labor Arbiter ruled in favor of the hotel management on the ground of loss of
confidence. She appealed to the NLRC which affirmed the Labor Arbiters decision. Hence, this petition.

Issue: Whether or not the dismissal by the private respondent of petitioner constitutes an unfair labor practice.

Held: The NLRCs decision is reversed. The pivotal question in any case where unfair labor practice on the part of
the employer is alleged is whether or not the employer has exerted pressure, in the form of restraint, interference
or coercion, against his employees right to institute concerted action for better terms and conditions of
employment. Without doubt, the act of compelling employees to sign an instrument indicating that the employer
observed labor standard provisions of the law when he might not have, together with the act of terminating or
coercing those who refuse to cooperate with the employees scheme constitutes unfair labor practice. The labor
arbiters contention that the reason for the monetary benefits received by the petitioner between 1981 to 1987
were less than the minimum wage was because petitioner did not factor in the meals, lodging, electric
consumption and water she received during the period of computations. Granting that meals and lodging were
provided and indeed constituted facilities, such facilities could not be deducted without the employer complying Page | 26
first with certain legal requirements. Without satisfying these requirements, the employer simply cannot deduct
the value from the employees ages. First, proof must be shown that such facilities are customarily furnished by
the trade. Second, the provision of deductible facilities must be voluntary accepted in writing by the employee.
Finally, facilities must be charged at fair and reasonable value. These requirements were not met in the instant
case. Private respondent failed to present any company policy to show that the meal and lodging are part of the
salary. He also failed to provide proof of the employees written authorization and he failed to show how he
arrived at the valuations. More significantly, the food and lodging, or electricity and water consumed by the
petitioner were not facilities but supplements. A benefit or privilege granted to an employee for the convenience
of the employer is not a facility. The criterion in making a distinction between the two not so much lies in the kind
but the purpose. Considering, therefore, that hotel workers are required to work on different shifts and are
expected to be available at various odd hours, their ready availability is a necessary matter in the operations of a
small hotel, such as the private respondents hotel.

Case title: PHILIPPINE AIRLINES, INC. VS. NLRC G.R. number: G.R. No. 55159 Date: December 22, 1989
Petitioner: Philippine Airlines Inc. Respondent: National Labor Relations Commission and Armando Dolina
Ponente: Cortes, J.

Facts: Armando Dolino was admitted to the PAL Aviation School for training as a pilot. The training agreement
bound PAL to provide regular and permanent employment to Dolina upon the completion of the training course.
Dolina completed the course and he was issued a license as Commercial Pilot and PAL extended him a temporary
appointment for 6 months for Limited First Officer. When his appointment was due to expire, he fell short of the
required time and to enable him to complete the requirement, his employment was extended for another 6
months which appointment was described as permanent. When hes appointment was due to expire again, he was
still short of the minimum flying time requirement and he was extended again. On the third extension of his
appointed, he completed the flying time requirements. Pending his physical examination, hes employment was
extended again. When Dolina took a psychological examination, his adaptability rating was found unacceptable.
The Board then decided that Dolina is not qualified for regular employment in the Company. PAL filed a clearance
application for Dolinas termination and in the meantime, Dolina was placed under preventive suspension.
However, the Department of Labor lifted the preventive suspension and ordered petitioner to reinstate Dolina to
his former position with full backwages. PAL appealed the case and the decision was reversed. PAL removed Dolina
from its payroll and claiming that it was no longer obliged to return Dolina from its payroll since the decision of the
Labor Arbiter was a final resolution of the case by arbitration. Dolina appealed to the NLRC which the latter
dismissed the clearance application of PAL. Dolina must be restored to the payroll and paid for his salaries from
the date he was dropped from the PALs payroll. Hence, this petition.

Issue: Whether or not the NLRC committed grave abuse of discretion in holding that private respondent Dolina
was entitled to his salaries from the time he was dropped from PALs payroll until this case is finally resolved.

Held: The decision requiring the petitioner to restore private respondent to its payroll and ordering the payment
of his salaries from the time he was dropped from PALs payroll until this case is finally resolved is null and void. In
lieu of reinstatement and the payment of his backwages, private respondent was included in the petitioners
payroll; effective from the time he was preventively suspended until final resolution of the case by arbitration,
without having to perform any work for the petitioner. In entering into agreement, the parties could not have
intended to include in the clause final resolution of the case by arbitration the whole adjudicatory process,
including appeal. For it were so, even proceedings on certiorari before this court would be embraced by the term
arbitration and private respondent will continue to receive monthly salary without rendering any service to the
petitioner regardless of the outcome of the proceedings before the Labor Arbiter, for as long as one of the parties
appeal to the NLRC and until the case is finally resolved by this court. This is absolutely in contrast with the
principle of Fair Days Wage for a Fair Days Labor. The court holds that respondents NLRCs order for the
continued payment of Dolinas salaries from he was dropped from the PALs payroll until the case is finally
resolved is contrary to law and established jurisprudence and the NLRC acted in excess of its jurisdiction in issuing
the assailed order.

Case title: SSS vs. SSS Supervisors Union-CUGCO G.R. number: G.R. No. L-31831Date: October 23, 1982
Petitioner: Social Security System Respondent: SSS Supervisors Union-CUGCO and Court of Industrial Relations
Ponente: Melencio-Herrera, J.
Facts: The members of the respondent Union did not work during the 17-day strike declared in 1968 by the rank
and file Union (the Philippine Association of Free Labor Unions <PALFU>). The SSS and the PALFU had a
disagreement concerning the interpretation of the provisions of their CBA. The PALFUs decision to strike is the
effect of the CIR Order of August 29, 1968 enjoining the parties, for the sake of industrial peace..to maintain the
status quo- the Union not to declare any strike and the Management not to dismiss nor suspend any of its
employees nor to declare any lock out. The SSS, in that same case, filed an Urgent Petition to declare the strike
illegal. The respondent Union filed a Motion for Intervention in the said case alleging that it had not participated in
the strike; that its members wanted to report for work but were prevented by the picketers from entering the Page | 27
work premises; that under the circumstances, they were entitled to their salaries corresponding to the duration of
the strike, which could be deducted from the accrued leave credits of their members.

Issue: Whether or not the members of the respondent Union who admittedly did not work during the 17- day
strike conducted by the PALFU is entitled to their salaries.

Held: According to the doctrine of Fair days wage for a Fair days labor, if there is no work performed by the
employee there can be no wage or pay, unless of course the laborer was able, willing and ready to work but was
illegally locked out, dismissed nor suspended. It is hardly fair or just for an employee or laborer to fight or litigate
against his employer on the employers time. In this case, the failure to work on the part of the members of the
respondent Union was due to circumstances not attributable to themselves. But neither should the burden of the
economic loss suffered by them be shifted to their employer, the SSS, which was equally faultless, considering that
the situation was not a direct consequence of the employers lockout or unfair practice. With this, it is fair that
they wont be receiving their salary for those days they did not work.

Case Title: DURABUILT RECAPPING PLANT AND CO. VS NLRC G.R. Number: G.R No. 76746 Date: July 27, 1987
Petitioner: DURABUILT RECAPPING PLANT & COMPANY and EDUARDO LAO, GENERAL MANAGER Respondents:
NATIONAL LABOR RELATIONS COMMISSION, HON. COMM. RICARDO C. CASTRO, HON. ARBITER AMELIA M.
GULOY, KAPISANAN NG MGA MANGGAGAWA SA DURABUILT and REYNALDO BODEGAS

Ponente: Gutierrez, Jr., J.

Facts: On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo Bodegas, against
petitioner Durabuilt, a tire recapping company. In a decision rendered by the Labor Arbiter, the private respondent
was ordered reinstated to his former position with full back wages, from the time he was terminated up to the
time he is actually reinstated, without loss of seniority rights and benefits accruing to him. The petitioners failed to
file a seasonable appeal and entry of final judgment. The petitioner filed its opposition to the computation on the
ground that it contemplated a straight computation of twenty six (26) working days in one month when the period
covered by the computation was intermittently interrupted due to frequent brownouts and machine trouble and
that respondent Bodegas had only a total of 250.75 days of attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as follows: salaries P1,993.00;
ECOLA P1,433.50, and 13th month pay P407.55. The Labor Arbiter denied the opposition to the computation.
The petitioner appealed to the NLRC which affirmed the order of the Labor Arbiter and dismissed the appeal.

Issue: Whether or not the computation of back wages should be based on daily rather than on monthly pay
schedules

Held: The petition is granted. We have held that where the failure of workers to work was not due to the
employer's fault, the burden of economic loss suffered by the employees should not be shifted to the employer.
Each party must bear his own loss. It would neither be fair nor just to allow respondent to recover something he
has not earned and could not have earned and to further penalize the petitioner company over and above the
losses it had suffered due to lack of raw materials and the energy-saving programs of the government. The private
respondent cannot be allowed to enrich himself at the expense of the petitioner company. The computation of
back wages should be based on daily rather than on monthly pay schedules where, as in the case at bar, such basis
is more realistic and accurate.

Case Title: INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) VS. HON. LEANDRO QUISUMBING ET. AL.
G.R. Number: G.R. No. 128845 Date: June 1, 2000 Petitioner: INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS
(ISAE) Respondents: HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of Labor and
Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the Acting Secretary of Labor and Employment;
DR. BRIAN MACCAULEY in his capacity as the Superintendent of International School-Manila; and
INTERNATIONAL SCHOOL, INC. Ponente: Kapunan, J.

Facts: Private respondent International School, Inc. is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue
carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree
authorizes the School to employ its own teaching and management personnel selected by it either locally or
abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have been or will be enacted for the protection of
employees. The School hires both foreign and local teachers as members of its faculty, classifying the same into
two: (1) foreign-hires and (2) local-hires. The School grants foreign- hires certain benefits not accorded local-hires.
These include housing, transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are
also paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the difference on two
"significant economic disadvantages" foreign-hires have to endure, namely: (a) the "dislocation factor" and (b)
limited tenure. Petitioner claims that the point-of-hire classification employed by the School is discriminatory to
Filipinos and that the grant of higher salaries to foreign-hires constitutes racial discrimination. The Acting Secretary
of Labor found that these non-Filipino local-hires received the same benefits as the Filipino local-hires. The Acting Page | 28
secretary upheld the point-of-hire classification for the distinction in salary rates. A perusal of the parties' 1992-
1995 CBA points us to the conditions and provisions for salary and professional compensation wherein the parties
agree as follows: All members of the bargaining unit shall be compensated only in accordance with Appendix C
hereof provided that the Superintendent of the School has the discretion to recruit and hire expatriate teachers
from abroad, under terms and conditions that are consistent with accepted international practice.

Issue: Whether there is difference in salary rates between foreign and local-hires

Held: The petition is given due course. If an employer accords employees the same position and rank, the
presumption is that these employees perform equal work. There is no evidence here that foreign-hires perform
25% more efficiently or effectively than the local-hires. Both groups have similar functions and responsibilities,
which they perform under similar working conditions. The need of the School to attract foreign-hires is recognized,
salaries should not be used as an enticement to the prejudice of local-hires. The local-hires perform the same
services as foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the
"dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in
salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by
certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping
costs, taxes and home leave travel allowances. The Constitution enjoins the State to "protect the rights of workers
and promote their welfare,", "to afford labor full protection." The State, therefore, has the right and duty to
regulate the relations between labor and capital. These relations are not merely contractual but are so impressed
with public interest that labor contracts, collective bargaining agreements included, must yield to the common
good. Should such contracts contain stipulations that are contrary to public policy, courts will not hesitate to strike
down these stipulations. In this case, we find the point-of-hire classification employed by respondent School to
justify the distinction in the salary rates of foreign-hires and local hires to be an invalid classification. There is no
reasonable distinction between the services rendered by foreign-hires and local-hires.

Case Title: CEBU INSTITUTE OF TECHNOLOGY VS. OPLE G.R. Number: G. R. No. L-58870 April 15, 1988 Petitioner:
CEBU INSTITUTE OF TECHNOLOGY (CIT) Respondents: HON. BLAS OPLE, in his capacity as Minister, Ministry of
Labor and Employment, JULIUS ABELLA, ARSENIO ABELLANA, RODRIGO ALIWALAS, ZOSIMO ALMOCERA,
GERONIDES ANCOG, GREGORIO ASIA; ROGER BAJARIAS, BERNARDO BALATAYO, JR., BASILIO CABALLES,
DEMOCRITO TEVES, VOLTAIRE DELA CERNA, ROBERTO CABARRUBIAS, VILMA GOMEZ CHUA, RUBEN GALLITO,
EDGARDO CONCEPCION, VICTOR COQUILLA, JOSE DAKOYKOY, PATERNO WONG, EVELYN LACAYA, RODRIGO
GONZALES, JEOGINA GOZO, MIGUEL CABAL, LES, CONSUELO JAVELOSA, QUILIANO LASCO, FRANKLIN LAUTA,
JUSTINIANA LARGO, RONALD LICUPA, ALAN MILANO, MARIA MONSANTO, REYNALDO NOYNAY, RAMON
PARADELA, NATALIO PLAZA LUZPURA QUIROGA, NOE RODIS, COSMENIA SAAVEDRA, LEONARDO
SAGARIO,LETICIA SERRA, SIEGFREDO TABANAG, LUCINO TAMAOSO, DANILO TERANTE, HELEN CALVO TORRES,
ERNESTORES SANANAM, RODRIGO BACALSO, YOLANDA TABLANTE, ROMERO BALATUCAN, CARMELITA LADOT,
PANFILO CANETE, EMMANUEL CHAVEZ, JR., SERGIO GALIDO, ANGEL COLLERA, ZOSIMO CUNANAN, RENE BURT
LLANTO, GIL O VILLANUEVA, DOLORES VILLONDO, EDWARD YAP, ROWENA VIVARES, DOLBATAYOLA VICENTE
DELANTE, CANDELARIO DE DIOS, JOSE MA. ESTELLA, NECITA TRINIDAD, ROTELLO ILUMBA, TEODORICO
JARAYMUNDO ABSIN, RUDY MANEJA, REYNA RAMOS, ANASTACIA BLANCO, FELICISIMO DELMUNDO, ELNORA
MONTERA, MORRISON MONTESCLAROS, ELEAZAR PANIAMOGAN, BERNARDO PILAPIL, RODOLFO POL,
DEMOSTHENES REDOBLE, PACHECO ROMERO, DELLO SABANAL, SARAH SALINAS, RENATO SOLATORIO,
EDUARDO TABLANTE, EMMANUEL TAN, FELICISIMO TESALUNA, JOSE VERALLO, JR., MAGDALENO VERGARA,
ESMERALDA ABARQUEZ, MAC ARTHUR DACUYCUY ACOMPANADA, TRINIDAD ADLAWAN, FE ELIZORDO
ALCANTARA, REOSEBELLA AMPER, ZENAIDA BACALSO, ELISA BADANA, GEORGIA BAS, ERLINDA BURIAS,
ELDEFONSO BURIAS, CORAZON CASENAS, REGINO CASTANEDA, GEORGE CATADA, CARMENCITA G. CHAVEZ,
LORETTA CUNANAN, FLORES DELFIN, TERESITA ESPINO, ELVIE GALANZA, AMADEA GALELA, TERESITA JUNTILLA,
LEONARDA KAPUNGAN, ADORACION LANAWAN, LINDA LAYAO, GERARDO LAYSON, VIRGILIO LIBETARIO,
RAYMOND PAUL LOGARTA, NORMA LUCERO, ANATOLIA MENDEZ, ELIODORO MENDEZ, JUDALINE MONTE,
ELMA OCAMPO, ESTEFA OLIVARES, GEORGE ORAIS, CRISPINA PALANG, GRETA PEGARIDO, MELBA QUIACHON,
REMEDIOS QUIROS, VIRGINIA RANCES, EDNA DELOS REYES, VICENTE TAN, EMERGENCIA ROSELL, JULIETA
TATING, MERCIA TECARRO, FELISA VERGARA, WEMINA VILLACIN, MACRINA YBARSABAL, MILAGROS CATALAN,
JULIETA AQUINDE, SONIA ARTIAGA, MA. TERESITA OBANDO, ASUNCION ABAYAN, ESTHER CA VITLIANA
VENERACION, LEONCIA ABELLAR, REYNITA VILLACARLOS Ponente: Cortes, J.
Facts: Motions for Reconsideration and Clarification in four of these six consolidated cases decided by the Court
on December 18, 1987 were filed and questions not clearly raised as issues or dealt with in the main petitions but
which are necessary for the full resolution of the cases are presented in the following: I. Fabros Case (G.R. No.
70832) The petitioners express doubt on the applicability of the three-year period of prescription under the Labor
Code. There is no doubt that the three-year period within which to file actions involving money claims arise out of
an employer-employee relationship fixed by Article 292 of Pres. Dec. No. 442 (Labor Code), as amended, equally
applies to claims for the incremental proceeds arising from tuition fee increases under Pres. Dec. No. 451. The
claims which gave rise to all these cases are clearly money claims arising from an employer-employee relationship Page | 29
and thus falls under the coverage of Article 292 of the Labor Code.

II. Biscocho Case (G.R. No. 76521)

This case concerns the award of ten percent (10%) of the backwages payable to all members of the bargaining unit
as negotiation fee which covers attorney's fees. agency fee and the like. This Court in its December 18, 1987
Decision affirmed this award with the modification that only members of the bargaining unit should be made to
pay this assessment.

The present source of ambiguity is the basis for compute the ten percent (10%) negotiation fee. Petitioners and
respondent Espiritu Santo Parochial School share the opinion that the negotiation fee of ten percent (10%) should
not be charged against the sixty percent (60%) incremental proceeds from tuition fee increases on the ground that
this is not a bargainable matter as it has already been fixed by law; hence, only thirty percent (30%) should be
subject to the computation of the ten percent (10%) negotiation fee. The respondent Espiritu Santo Parochial
School Faculty Association takes the contrary view by arguing that the whole ninety percent (90%) incremental
proceeds from tuition fee increases should be the subject to the computation the ten percent (10%) negotiation
fee.

III. Divine Word College Case(G.R. No. 68345)

The original complaint in this case which covered claims for the school years 1979-1980, 1980-1981, 1981-1982
and 1982-1983 was filed on February 17, 1983 before the Regional Office. Invoking Article 292 of the Labor Code,
petitioner school submits that all claims prior to February 17, 1980 have already prescribed. Artide 292 of the
Labor Code expressly provides that the period within which to file actions for money claims which accrued during
the effectivity of the Labor Code is three (3) years from the accrual of the cause of action. Money claims which
accrued more than three (3) years prior to the filing of the complaint are barred by prescription. In the instant
case, inasmuch as the original complaint was filed on February 17, 1983, the claims prior to February 17, 1980
have indeed already prescribed.

IV. Far Eastern University Case (G.R. Nos. 69224-25)

The Court notes the Motion for Clarification of Judgment filed by counsel for petitioner Union as regards the
payment of the " transportation allowance" which was held to be an equivalent an order requiring respondent Far
Eastern University to pay its employees who have been paid such transportation allowance less than one-twelfth
(1/2) of the latter's basic vary, the amount of the difference. A Motion for Issuance of An Order Awarding
Attorney's Lien was filed by petitioner Union's former counsel, Atty. Herminio Z. Florendo. Movant alleges that
pursuant to an agreement with the members of the Union, he filed the complaint for unpaid holiday pays,
underpayment of thirteenth (13th) month pay and for violation of Pres. Dec. No. 451 with the Department of
Labor. The agreement which is attached to the motion provides that the prosecution of the Union members' claim
is on a contingent fee basis in an amount equivalent to thirty percent (30%) of whatever may be recovered relative
to Id claim. The Labor Arbiter in his March 10, 1980 Order awarded the Union's claim for payment of legal holiday
and thirteenth (13th) month pay but dismissed its claim under Pres. Dee. No. 451. Atty. Florendo perfected the
partial appeal and memorandum for complainants-appellants with the National Labor Relations Commission.
Pending the appeal, however, another lawyer entered his appearance for the appellant Union thereby substituting
Atty. Florendo.

Issue: Whether or not salary must be excluded in allowances

Held:

In the Biscocho case, (G.R. No. 76521), to CLARIFY the following points:

A. The ten percent (10%) negotiation fee should be computed only on the amount in excess of the sixty percent
(60%) portion allocated for teachers and other school employees under the law; B. The ten percent (10%)
negotiation fee should be computed on the above amount for the period starting school year 1985-1986 and
ending school year 1987-1988.

In the Divine Word College of Legaspi case (G.R. No. 68345), (1) to MODIFY the Court's Decision of December 18,
1987 so that all claims of private respondents prior to February 17, 1980 shall be considered prescribed; and (2) to
ORDER a recomputation of the actual incremental proceeds received from tuition fee increases.
In the Far Eastern Universitycase (G.R. Nos. 6922425), (1) to MODIFY the Court's Decision of December 18,1987 so
that claims for the school year 1974-1975 shall be considered prescribed; (2) to CLARIFY that Far Eastern
University's remaining liability for the sixty percent (60%) allotment of the incremental proceeds shall be limited
only to the portion of said sixty percent (60%) which answered for the increases in allowances and other benefits
under Pres. Dec. No. 451; (3) to ORDER respondent Far Eastern University t0 pay its employees who have been
paid the transportation allowance in an amount less than one-twelfth (1/12) of their basic salary, the amount of
the difference in thirteenth (13th) month pay subject to the three-year period of prescription under the Labor
Code; (4) to NOTE the two (2) motions for recording of attorney's lien and to REMAND to the National Labor Page | 30
Relations Commission the matter of recording attorney's lien and the determination of the matter of entitlement
of Atty. Herminio Z. Florendo to Attorney's fees.