Marites Bernardo, et al. v. NLRC and Far East Bank & Trust Co.
Applying the test laid down in De Leon v NLRC, 27 of the plaintiffs were found to
I. Facts
Bernardo and 42 others were deaf-mutes who were contracted by Far East Bank
as Money Sorters and Counters under uniformly worded Employment Contracts
for Handicapped Workers. They began working for Far East at various points
between 1988 and 1993. RA 7277 or the Magna Carta for Disabled Persons was
enacted in 1992.
The employment contract provided that there shall be a training period of one (1)
month during which the Bank will decide whether to finish the contract which will
run for a total of six (6) months unless extended in writing by the company. 27 of
the 43 plaintiffs in this case had their contracts extended by Far East.
By 1994, they had all been dismissed. The reason given by the company for this
was the shift to nighttime sorting and counting of money which would make it
dangerous for these handicapped employees to travel at night. They filed for illegal
dismissal with the Labor Arbiter.
The Labor Arbiter ruled in favor of Far East which ruling was affirmed by the NLRC.
The NLRC affirmed the ruling because the complainants were hired as an
accommodation by the company for civic-oriented personalities under an
employment contract as specified by Article 80 of the Labor Code. Article 280 of
the Labor Code is therefore not controlling.
II. Issues-Held
WON a review of the factual findings may be allowed in a petition for certiorari: No, but
in deciding the case, the Court did not overturn any factual findings but only reviewed
the application of the NLRC of the law to the said facts.
WON plaintiffs are regular employees of the company: Yes, they are. 27 of the 43
plaintiffs were found to have been performing tasks necessary and desirable to the
business of the company for more than 6 months. These were therefore held to be
regular and entitled to back wages and separation pay.
III. Ratio
While plaintiffs were employed under a valid contract as specified by Article 80 of
the Labor Code relating to handicapped workers, the fact that they had their
contracts renewed indicated that they were performing tasks necessary and
desirable to the business and were furthermore qualified to perform their tasks.
Under section 5 of RA 7277, a qualified disabled employee shall be subject to the
same terms and conditions of employment as qualified able-bodied persons.
Because of this provision, article 280 can now be made to apply. This article
distinguishes between regular and casual employees.
be regular employees since they were performing a task necessary and desirable
to the companys business (counting and sorting bills).
o The test in De Leon is whether the activity performed is usually necessary or
desirable to the business of the employer. Also if the employee has been
performing the job for at least one year, this is proof that the job is necessary
and desirable.
Since the company failed to show that there was any just or authorized cause for
their termination, they are entitled to backwages and reinstatement. However,
since the job of sorting money is no longer available and has been assigned back
to the tellers, plaintiffs are awarded separation pay instead of reinstatement.
RECAP: Of the 56 deaf-mute employees of Far East from 1988 to 1994, 43 are plaintiffs
in this case. Of those 43, 27 had their contracts renewed beyond the initial six month
period and were therefore qualified disabled employees under section 5. As a result,
they were entitled to the same terms and conditions as able-bodied employees,
removing them from the ambit of article 80 and placing them under article 280. Applying
that article, their work of sorting bills was found necessary and desirable to the bank
and they were therefore regular employees.
Brent School v Zamora where the Court upheld fixed term employment cannot
apply in this case since the term limit in the present contracts were premised on
the fact that the employees were disabled and the company had to determine their
fitness for the work. Since they had proven themselves qualified disabled
employees entitled to equal treatment under RA 7277, that premise no longer
applies.
The other arguments of the respondent bank were that they were merely
accommodating the employees, that they did not go out of their way to recruit them
and that they were informed from the start that they could not become regular
employees. In addressing these, the Court held that the character of the
employment is not determined by the stipulations of the contract or the reason for
hiring them but the nature of the work performed.
Decision of the NLRC denying the claims of the employees is REVERSED. Far East
Bank is ORDERED to pay back wages and separation pay to 27 employees out of the
43 plaintiffs as these had been regularized.
MANILA TERMINAL COMPANY INC V CIR(MANILA TERMINAL RELIEF AND
MUTUAL AID ASSN)
91 PHIL 625
PARAS; 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 Manila's 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 Harvor 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.
ISSUE
- WON overtime pay should be granted to the workers
HELD
YES
- Petitioner stressed that the contract between it and the Association stipulates
12 hrs a day at certain rates including overtime, but the record does not bear
out these allegations.
- In times of acute employment, people go from office to office to search for
work, and the workers here found themselves required to render 12 hrs a day.
True, there was an agreement, but did the workers have freedom to bargain
much less insist in the observance of the Eight Hour Labor Law?
- We note that after petitioner instituted 8 hr shifts, no reduction was made in
salaries which its watchmen received under the 12 hr agreement.
- Petitioners allegation that the Association had acquiesced in the 12 hr shifts
for more than 18 mos is not accurate. Only one of the members entered in
September 1945. The rest followed during the next few months.
- The Association cant be said to have impliedly waived the right to overtime
pay, for the obvious reason that it could not have expressly waived it.
- Estoppel and laches cant also be invoked against Association. First, it is
contrary to spirit of the Eight Hour Labor Law. Second, law obligates employer
to observe it. Third, employee is at a disadvantage as to be reluctant in
asserting any claim.
- The argument that the nullity of the employment contract precludes recovery
by the Association of overtime pay is untenable. The employer may not be
heard to plead its own neglect as exemption or defense.
- Also, Commonwealth Act 444 expressly provides for payment of extra
compensation in cases where overtime services are required.
- The point that payment of overtime pay may lead to ruin of the petitioner cant
be accepted. It is significant that not all watchmen should receive back
overtime pay for the whole period, since the members entered the firm in
different times.
- The Eight-Hour Labor Law was designed not only to safeguard the health and
welfare of the laborer or employee, but in a way to minimize unemployment
by forcing employers, in cases where more than 8-hour operation is
necessary, to utilize different shifts of laborers or employees working only for
eight hours each.
ASIA PACIFIC CHARTERING (PHILS.) INC. v. MARIA LINDA R. FAROLAN
393 SCRA 454 (2002)
The termination of a managerial employee on the ground of loss of confidence should
have a basis and the determination of the same cannot be left entirely to the employer.
FACTS:
Petitioner Asia Pacific Chartering (Phils.) Inc. (Asia) is tasked with the selling of
passenger and cargo spaces for Scandinavian Airlines System. Petitioner Asia, through
its Vice President Catalino Bondoc (Bondoc),offered Respondent Maria Linda
R. Farolan (Farolan) the sales manager position to which Farolan accepted.Upon Vice
President Bondocs request, Farolan submitted a detailed report attributing the drop of
sales revenue to market forces beyond her control. Consequently, Asia directed
Roberto Zozobrado (Zozobrado)to implement solutions. Zozobrado informally took
over Farolans marketing and sales responsibilities butshe continued to receive her
salary. Asia claims that the increase in sales revenue was due to Zozobrados
management. Asia then sent a letter of termination to Farolan on the ground of loss of
confidence, forcing Farolan to file a complaint for illegal dismissal. The Labor Arbiter
found that the dismissal was illegal for lack of just cause, however, such decision was
reversed by the National Labor Relations Commission (NLRC) stating that the
termination of employment due to loss of confidence is within management prerogative.
On appeal,the Court of Appeals upheld the labor arbiters decision. Hence, the filing of
this petition.
ISSUE:
Whether or not Respondent Farolans dismissal was illegal
HELD:
A statement of the requisites for a valid dismissal of an employee is thus in order, to
wit: (a) the employee must be afforded due process, i.e., he must be given opportunity
to be heard and to defend himself; and (b)dismissal must be for a valid cause. The
manner by which Respondent Farolan was dismissed violated the basic precepts of
fairness and due process - Respondent Farolan was dismissed, without being afforded
the opportunity to be heard and to present evidence in her defense. She was never
given a written notice stating the particular acts or omission constituting the grounds
for her dismissal as required by law.
With respect to rank and file personnel, loss of trust and confidence as ground for valid
dismissal requires proof of involvement in the alleged events in question and that mere
uncorroborated assertions and accusations by the employer will not be sufficient. But
as regards a managerial employee, mere existence of a basis for believing that such
employee has breached the trust of his employer would suffice for his dismissal.Loss
of trust and confidence to be a valid ground for an employees dismissal must be based
on a willful breach and founded on clearly established facts. A breach is willful if it is
done intentionally, knowingly and purposely, without justifiable excuse.
It is not disputed that Farolans job description, and the terms and conditions of her
employment, with the exception of her salary and allowances, were never reduced to
writing. Even assuming, however, that Farolan was a managerial employee, the stated
ground (in the letter of termination) for her dismissal, loss of confidence, should have a
basis and determination thereof cannot be left entirely to the employer.
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 tasked to
do the following tasks among others:
1. To supply the required and continuous steam to all consuming units at minimum
cost.
2. To supervise, check and monitor manpower workmanship as well as operation of
boiler and accessories.
3. To evaluate performance of machinery and manpower.
xxx
5. To train new employees for effective and safety while working.
xxx
7. To recommend personnel actions such as: promotion, or disciplinary action.
xxx
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 said that he is not a managerial employee.
ISSUE: Whether or not Pearanda is entitled to overtime and premium pay.
HELD: No. 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:
(1) The primary duty consists of the performance of work directly related to
management policies of the employer;
(2) Customarily and regularly exercise discretion and independent judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of the management of the establishment in which he is employed
or subdivision thereof; or (ii) execute under general supervision work along specialized
or technical lines requiring special training, experience, or knowledge; or (iii) execute
under general supervision special assignments and tasks; and
(4) who do not devote more than 20 percent of their hours worked in a workweek to
activities which are not directly and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above.
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.
MERDICAR v. NLRC
AUTO BUS TRANSPORT SYSTEMS, INC. v. BAUTISTA
GR No. 156367; May 26, 2005
FACTS:
Respondent Antonio Bautista was employed with petitioner Auto Bus
Transport System, Inc. since May 24, 1995 as a driver-conductor of the latters bus.
Bautista was paid on commission basis per travel on a twice a month basis. On January
3, 2000, the bus driven by Bautista accidentally bumped another bus owned by the
respondent. As a result, Auto Bus did not allow Bautista to work until he paid the cost
of the repair of the damaged bus. Bautista failed to pay and after given the opportunity
to explain his side, Auto Bus sent him a letter for termination. Bautista then instituted a
Complaint for Illegal Dismissal with Money Claims for nonpayment of 13 th month pay
and service incentive leave pay (SILP) against Auto Bus. Labor Arbiter Tabingan
decided on the case in favor of Auto Bus, dimissing the Complaint of Bautista. However,
the LA ordered Auto Bus to pay Bautista his 13th month pay from the date of his hiring
to the date of his dismissal and his SILP for all the years he has been in service for the
former. Auto Bus appealed the decision to the NLRC wherein the latter affirmed with
modification LAs decision. It held that Bautista, being an employee paid on commission
basis, was not entitled for 13th month pay in accordance with Section 3 of the Rules
and Regulations Implementing PD No. 851, leaving Bautista with a claim for his SILP.
Auto Bus filed a motion for reconsideration on the ground that Bautista was also not
entitled for it. It averred that Bautista, being a field personnel, was an exception to the
rule that employees are entitled to SILP. As a legal basis, it cited Section 1(d), Rule V,
Book 3 of the Implementing Rules and Regulations of the Labor Code which delimits
the grant of the SIL, excluding among others field personnel and other employees
whose performance is unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the performance
thereof. Auto Bus motion was denied and so it elevated the case to the CA which
affirmed NLRCs decision.

ISSUES:
1. Whether or not Bautista is a field personnel.
2. Whether or not Bautista is entitled for service incentive leave pay.

RULING:
1. The Court ruled in negative. 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. The
term field personnel is not merely concerned with the location where the employee
regularly performs his duties but also with the fact that the employees performance is
unsupervised by the employer. Thus, in order to conclude whether an employee is a
field employee, it is also necessary to ascertain if actual hours of work in the field can
be determined with reasonable certainty by the employer.
In the case of Bautista, it was observed in the facts found by the LA that he
must be at a specific place in a specified time to be able to observe prompt departure
and arrival from his point of origin to his point of destination. In each and every depot,
there is always a dispatcher whose function is to see to it that Bautistas bus and its
crew leave the premises at specific time and arrive at the estimated proper time.
Therefore, Bautista was under constant supervision while in the performance of his
work. In conclusion, he was not a field personnel but a regular employee who performs
tasks usually necessary and desirable to the usual trade of Auto Bus.
2. The Court ruled in affirmative. Being a regular employee, he has the right to
claim service incentive leave pay under Article 95 of the Labor Code.