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CACHO VS BALAGTAS o GIS does not govern; neither

Facts establish not govern position


 Constructive Dismissal Case filed by  She did not even present proof to her
Balagtas against North Star and Pres allegations that Secretary’s Certificate
Camacho signature was forged
 Balagtas said she was a former employee of Nature of Controversy Test
TQ3 Travel Solution/North Star Intl  Relationship does not excusively govern;
- She alleged that she s one of the it must also pertain to the ENFORCEMENT OF
original incorporators-directors in PARTIES’ CORRELATIVE RIGHTS AND
1990 OBLIGATIONS (corp code and bylaws)
- Then she became the General Manager o Like when there are not reelected;
 After 14 years, Balagtas was place under election is prerogative of the
preventive suspension for 30 days due to board
alleged transactions that she entered o Dismissal must relate to any such
without authority; then the next day, she nature surrounding the intra-
was ordered to explain within 5 days which corporate relationship
she heeded  In this case, the dismissal was due to
 While under preventive suspension, She loss of trust and confidence
wrote Camacho that she as assuming her  Corp not estopped from questioning
position as Exec VP/CEO but was prevented jurisdiction as held in Tijam
 She then requested for the financial
statement of the corp but was ignored thus 1. Philippine Airlines vs. Ligan, February 29,
she claims to be constructively dismissed 2008
 Corp said suspension was to protect the Facts
corp property, prevent her from  PAL and Synergy Service entered into a
influencing potential witnesses; violated contract where Synergy will load, deliver
the suspension when she went to the office baggage to and from Mactan Station
and insisted to work o Synergy(Contractor) will furnish
LA: Illegally dismissed all capital, workers
NLRC: reversed; LA no juris since this was o Expressly provided to be an
intra-corporate dispute Independent Provider and there
 Elected as EVP and CEO; position “VP” in would be no EER
the by-laws thus a corporate officer o If Synergy fails to improve
CA: reversed; she’s just an employee service, fail to perform, PAL may
at its option terminate the
Issues: Is this an Intra-Corporate Dispute? –
Agreement
yes. EVP is a Corporate Officer Position
Held  Synergy employees (janitors, assigned to
Relationship Test PAL filed complaint for underpayment, non-
payment of various monetary benefits
 (a) between the corporation, partnership,
or association and the public; (b) between  Workers complain that they were just
the corporation, partnership, or verbally dismissed
association and its stockholders, LA: PAL and Synergy jointly and severally
partners, members, or officers; (c) lilable
between the corporation, partnership, or NLRC: Synergy is a Labor-Only Contractor; PAL
association and the State as far as its must accept as regular employees the
franchise, permit or license to operate is complainants; ordered reinstatement
concerned; and (d) among the stockholders, CA: Affirmed NLRC Decision
partners, or associates themselves. Issues: Are the complainants employees of PAL?
(bec if job-only, can be employees of PAL; if
 How is a Corporate Office created?
Synergy is a legitimate contractor, no EER ART
1. Created by Charter/By-Laws AND 106)
2. Officer elected or appointed by corp’s Held
board of director  Labor-only – person supplying workers:
 In this case, the position is created by o Do not have substantial capital,
the Corp’s By-laws: “one or more vice tools, etc
presidents” o Performing activities which are
 Unlike the CA ruling that the exact directly related to the principal
position name should appear in the bylaws business
is constricting  DO No. 18-02 (2002) – Trilateral
 “one or more” gives the intent to create relationship in contracting arrangements
such position as corp office o Sec 3 - Trilateral relationship
 Position must be created but what makes among:
one a corporate officer is when she is  Contract of specific job –
elected or appointed with BOD approval; in Principal and contractor
this case she was elected  Contract of employment –
o Duties and responsibilities contractor and workers
irrelevant

1
o Sec 5 – Prohibition against labor- o Coop shall pay the wage of its
only contracting member-workers
 Where contractor/sub only  Workers filed a complaint to be recognized
recruits and any of the as Regular
following is present:  Pending this, SMC file a Notice of Closure
 Doesn’t exercise the of its aquaculture operation citing
right to control over serious business losses
performance over work LA: Job-contractor; no need to Regularize;
of contractual closure of the plant means termination of the
employees contract with the cooperative
Labor-only exists when NLRC: affirmed; Sunflower is an Independent
1. Substantial capital – Contractor
capital stocks and CA: reversed; LABOR-ONLY; Must be regular
subscribed capital of employees; grant pay
corp; tools, etc directly  Workers under the direct control of SMC
used by the contractor in o Manner and method AND Result
the performance; OR  Sunflower did not have substantial
2. Right to control – right capital; work office is a mere carinderia
reserved for one for whom  It appears that the contract is a
service is given to circumvention of the law since notary
determine: public that signed the bylaws of Sunflower
1. What to achieve associated with SMC
AND Issues: Is there EER? – YES
2. Manner and means Held:
 Even if only one element  Workers are labor-only contractors
is present
o In this case, the work done by the  TEST OF DETERMINING EXISTENCE OF
INDEPENDENT CONTRACTORSHIP:
petitioners – loading passenger,
1. Work according to own methods
cargo etc, is directly related to
AND
PAL’s main business. Equipment used 2. Without being subject of the
is that of PAL’s control of the employer, except
 It was only in CA did PAL only as to the results
wished to prove Synergy’s  In legitimate labor contacting, law
financial capacity creates EER for limited purpose:
 The control test in DO 18-02 (#2.) is not o Ensure salary is paid; Principal
present in DO 10 (1997) and Contractor J&S liable
 Even the agreement does not support labor-  In Labor-Only Contracting – law creates
only setup: EER for Comprehensive purpose:
o Workers subject to Owner’s rules o Prevent circumvention of labor laws
and regulations; furnish IDs,  The test determines the relationship, not
uniforms, discipline the words of the contract
o Work schedule dependent on plane o In this case, Sunflower has no
arrival substantial capital; all tools used
o The clause that there is no “EER owned by SMC
and only Independent contractor” is o Job description DIRECTLY related to
NOT binding; THERE MUST BE TOTALITY the aquaculture operation
OF FACTS AND SURROUNDING o SMC also exercise power and control
CIRCUMSTANCES THAT DETERMINE THE over workers while inside the camp
RELATIONSHIP o Sunflower did not cater to any
CONCLUSION: Accept them as Regular Employees client other than SMC
CONCLUSION: There exists EER between SMC and
2. San Miguel Corporation vs. Aballa, June 28, workers-complainants
2005
Facts 3. Meralco Industrial Engineering Services vs.
 San Miguel entered into a one-year NLRC, March 14, 2008
contract, renewable monthly with Sunflower Facts
Muti-Purpose Coop for Shrimp Processing  Miescor, a corp, entered into a contract
o Provide messenger/janitor; with OPLGS, a firm engaged in providing
harvester; sanitation general services (janitor,etc)
o Cooperative shall employee o 49 employees assigned to Miescor
necessary personnel and equipment for P51.50 min wage
o Wage is given in consideration  Employees filed complaint for illegal
o No EER; treated as self- deduction, underpayment, non-payment of
employed/Independent Contractor overtime pay
o Coop shall keep under its control  Pending, Miescor informed employees that
the premises it was terminating the Contract Order;
o Coop has exclusive discretion in
the hiring
2
thus complaint now includes illegal NLRC: affirmed LA decision in toto
dismissal CA: Meralco changed security agency three times
 So there were two cases: the non-payment but guards are same = clear circumvention of law
and whose liability to evade security of tenure
LA: Dismissed complaint for lack of merit  Using the four-fold test, MERALCO and
NLRC: (only 1 of 49 continued with the illegal guards have EER
constructive dismissal case); affirmed LA Issues: Is there EER between guards and Meralco?
decision; Miescor is solidarily liable since it Held
is the direct employer  Guards never raised in LA and NLRC that
CA: Miescor is solidarily liable since it is the Meralco was their employer but insisted
Principal based on Art 109 LC that AFSISI is; only in CA
o CA should not have considered this
Issues: Is Miescor (Principal) J&S liable with new theory
OPLGS  In this case, agreement clearly states
Held that ASFAI is the employer of the guards,
 CA’s basis of Art 109 (J&S liability) must not Meralco
be read in conjunction with Art 107  RE Meralco’s right to seek replacement of
(definition of Indirect Employer) and Art any guard: not a form of control but
106 (employer is J&S liable with his normal provision for a service-oriented
contractor) enterprise to provide
 While it is true that Miescor is the  Re Meralco’s Right to inspect guards – not
indirect employers, its liability is only control since it is not a unilateral
if Contactor FAILS TO PAY THE WAGE right; the agency also has such right
o Liability of both is not the same;
LABOR-ONLY INDEPENDENT
J&S liable only up to the extent of
CONTRACTOR
unpaid wage
Contractor is a mere a. Contractor
 Hence, although not liable for the agent or carries on an
separation pay, it is liabe for the intermediary of independent
underpayment of wage and non-payment of OT principal business and
 But this is moot since Miescor had already Principal becomes undertakes the
paid responsible to contact work on his
workers as if they own account accdg
4. Manila Electric Company vs. Benamira, July were directly hired to his own manner
14, 2005 and method, free
Facts from control of
 Respondents Benamira, et al. are licensed Principal except to
security guards of PSI deployed to the result thereof
MERALCO’s head office b. Contractor has
o PSI shall provide 220 licensed, substantial capital
uniformed guards in the form of
o Dutyis 8 hours a day tools, equipment,
o Meralco shall furnish PSI of machineries, ork
instruction for duties and premises
responsibilities
o Consideration of P3.8 to P4.2k  In this case, Guards are not regular
depending on time employees of Meralco
o Meralco can demand replacement  BUT!!! Even though Meralco and guards have
without explanation no EER, Meralco still not exonerated from
o Guards hired by PSI; no EER liability  unpaid wage as indirect
 GUARDS WERE ABSORBED BY ASDAI AND RETAINED employer
AT MERALCO’S HEAD OFFICE
 Guards filed complaint for underpayment of 5. Dole Phils. vs. Esteva, November 30, 2006
monetary benefits against ASDAI and Facts
Meralco  Petitioner DOLE (corp) entered into a
 Pending, Meralco terminated service service contract with CAMPCO (coop)
agreement with ASDAI; entered new one with o Contract shall not exceed P220k and
AFISISI (agreement’s terms and condition per job basis
almost identical with the first agreement) o Contractor (coop) shall use its
 Complaint amended to include illegal tools, etc
dismissal  Labor Department conducted an
o ASDAI denied liability for the investigation into labor practice of Dole
claims pursuant to a Resolution passed by
o MERALCO denied also due to lack of Polomolok SB
EER o Dole wrote to explain that it was
o AFSISI: denied also claiming that not conducting labor-only practice;
guards were not absorbed that coop was not attempt to
LA: Meralco and ASDAI J&S liable; ASDAI is the replace regular employees
employer
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 DOLE: held that CAMPCO, and five others,  P&G – engaged in manufacture and
were engaged in labor-only practice; thus production of different consumer and
prohibited bec circumvention of labor law health products
prohibition against worker’s right to  In 1991, Petitioners filed a Complaint for
security of tenure Regularization against P&G
 Workers filed a case for Regularization; LA: dismissed for lack of merit; no EER
CAMPCO was just a conduit of Dole NLRC: affirmed LA decision
LA: CAMPCO NOT engaged in labor-only contracting CA: Affirmed NLRC
 Campco has substantial capital, as seen on
its Financial Statement Issues: is there EER between workers and P&G?
 Assists only on odd-jobs Workers P&G
Workers appealed citing that DOLE’s earlier -recruited by the -Promm-Gem or SAPS is
decision already final salesmen of P&G the employer using the
NLRC: affirmed LA decision; no res judicata -did merchandising four-fold test
CA: reversed; Campco is a labor-only contractor; chores of P&g long -labor code did not
but Dole is only an agent or intermediary of before SAPS/Promm-Gem provide which service
Campco -when there was re- may or may not be
CA MR: reversed earlier ruling; Dole is declared alignment, they signed ooutsourced
the employer form and report to
agencies P&G created
Issues: is there EER between Dole and the -Promm-Gem and SAPS
workers-complainant? are labor-only
contractors
Held
Held
 Complaint filed BEFORE the issuance of the
DOLE DO thus no retroactive effect; the  Labor-only Contracting vs. Jo Contracting
ruling must be based on DO 10 (1997) o Refer to Art 106
o DO 18-02 distinguishes legitimate
 Re DOLE’s decision pursuant to its
and labor-only contacting
visitorial power; it can make rulings in
LEGITIMATE PROHIBITED
the exercise of its quasi-judicial power
(Labor-only)
with respect to violations of labor
standards allegations; THUS, RES JUDICATA Trilateral Bilateral only
relationship
 NOW, what is left for NLRC to do is
 Principal Contractor
determine whether there was illegal
 Contractor merely recruits
dismissal and workers should be
workers to
regularized  Worker
perform a job
 Dole findings that Campco was engaged in for the
labor-only practice is conclusive principal AND
o Asset: multimillion but amassed 1.No
after its establishment substantial
o Did not carry out independent Capital
business from Petitioner; precisely 2.Contractor no
established to render service to control over
petitioner during peak seasons performance
o Dole exercised control over Campco of work of
members employees
o Campco not engaged to perform a
Contractor is Contractor
specific and special job or service
the direct becomes a mere
o Campco members performs activities
employer of the agent of the
directly related to the principal
workers Principal
business of petitioner
 Substantial capital --
CONCLUSION: since performing illegal labor-only
refers to capital stocks and
practice, Campco is a mere agent and Dole is the
subscribed capitalization in
employer; thus, EER exists
the case of corporations,
tools, equipment,
6. Aliviado vs. Procter and Gamble, March 9,
implements, machineries and
2010
work premises, actually and
Facts
directly used by the
 Petitioners were merchandiser of P&G contractor or subcontractor
o Individually signed contract and in the performance or
assigned in different outlets completion of the job, work
 SAPS and Promm—Gem imposed disciplinary or service contracted out.
measures on erring merchandisers for  Right to Control -- right
habitual absenteeism, dishonesty, changing reserved to the person for
day-off without prior notice whom the services of the
contractual workers are
performed, to determine not
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only the end to be achieved, o EVEN THE CBA RECOGINZED THIS
but also the manner and PREROGATIVE
means to be used in reaching o Contract employees do not perform
that end the same functions
 Thus, while it is true that contracting is VA: forwarding is a universally accepted and
allowed, it must be independent contractor normal business practice; Temic VALIDLY
only and not contracted out its forwarding services BUT went
 THERE IS LABOR-ONLY CONTRACT: beyond the allowable contracting out bec
1. Contractor only recruits and supplies funcition same with regular R&F employees
workers to perform job covered by the CBA thus they must be covered too
2. ANY of the following is present: CA: affirmed the VA’s decision
a. No substantial capital AND  Question of fact and law; findings are
employees performing activites binding
directly related to the main  Right to contrct limited to forwarding but
business of the principal; OR failed to prove that what it contracted
b. Contractor no exercise of was within that limitation only
control over the performance of  Affirmed that Company employs control over
the work of the Contractual those who render service such as clerk,
Employee encoders, etc thus Regular
 In the case at bar, Promm-Gem has Issues: Does the decision of VA constitute res
substantial investment which relates to judicata
the work performed Held
o It supplies the tools, equipment, VALITDITY OF THE CONTRACTING OUT
etc  Forwarders are agents; arrange transport
o THUS, NOT LABOR-ONLY and recommend packing methods, help
 In the case of SAPS, no showing of arrange documentation
substantial capital; its paid up capital  SC concurs with VA and CA that Temic is
is only P31,250 within its right to contract;
o SUBSTANTIAL CAPITAL --  such activity is legitimate AS LONG AS
capitalization used in the done in
performance or completion of the o good faith
job, work or service contracted out o not for the circumvention of the
 Also, Court earlier held that law
merchandising and promotion is directly o does not involve arbitrary action
related to the manufacturing business  SC ruled that the agreement complies with
ILLEGAL DISMISSAL the provision of ART 106 and IRR
 Promm-gem procedurally correct in  FORWARDING – single activity but of
dismissing workers several services that complement each
 SAPS only made verbal notice and was done other
in the initiation of P&G  Also, the forwarding was already in place
CONCLUSION: only SAPS conducted labor-only when CBA was made; meaning Union
practice implicitly accepted that the forwarding is
not part of the CBA (due to silence)
7. Temic Automotive vs. Temic Automotive Phils. CONCLUSION: forwarding contractual employees NOT
Employees Union, December 23, 2009 regular employees
Facts
 Petitioner Temic Automotive and the Union 8. Smart Communications vs. Astorga, January 28,
entered into a CBA in 2005 effective for 4 2008
years (2009) Facts
 As a practive, Temic contracts out some  Astorga (1997) employed by Smart as
work in the warehouse to three independent District Sales Manager; enjoyed additional
service providers benefits like performance
o This outsourcing gave rise to union  1998, Smart launched an organizational
grievance esp WON the task realignment; Part of it is outsourcing of
performed by contractual employees the marketing sales force
were tasks of the R&F employees o Entered contract with NTT of Japan
o Thus, Union demanded the = SNMI
forwarders’ employees be absorbed
 To soften the blow, SNMI absorbed CSMG
into the regular force
personnel recommended by Smart based on
 Company’s Position performance
o 19 regular company and 26 contract o Astorga landed last in performance
employees evaluation BUT was offered a
o Invokes management prerogative to supervisory position in the
contract independent service Customer Care Department; she
providers (inherent prerogative) refused bec of lower salary rank
o Highly reputable freight forwarding and rate
companies

5
 Despite abolition of her department,
Astorga continued reporting for work; Held
eventually received memo advising her of ART 106 differentiates Independent Contractor
the termination of her employment due to and Labor-Only Contractor
redundancy  Accdg to provision, labor-only contracting
 Filed case for Illegal Dismissal, etc; gives rise to:
abolishing dept was against her right to 1. the creation of an employer-employee
security of tenure relationship between the principal and
 Smart said it was valid; also demanded the employees of the contractor or
that she pay CMV of car or surrender the sub-contractor; and
same = Replevin Case 2. the solidary liability of the
LA: illegally dismissed; Smart’s move to abolish principal and the contractor to the
dept was not done in good faith or good causes; employees in the event of any
violation of the Labor Code.
ploy to terminate Astorga’s employment
THIS IS A LABOR-ONLY CONTACT
RTC: Astorga’s MTD in the replevin case dismissed
NLRC: reversed LA decision; valid organizational  the elements are present:
action 1. does not have substantial capital AND
CA: affirmed NLRC decision 2. workers recruited and placed by such
person perform activities DIRECTLY
 Non-absorption not made in bad faith related to the principal business of
the employer
Issues: Did Smart valid contract services of
 in this case, complainants were salesmen;
SNMI? – YES. Valid reorganization
nature of the business: manufacture,
Held
distribution and sale of softdrinks
DISMISSAL OF ASTORGA VALID
o thus, work done is indispensable to
 She was not able to prove that it was done business
with malice
 On capital, although authorized capital
 Organizational realignment valid stock is P2Mm only P625k is paid up
 BUT! Smart failed to comply with the o Amount of money not the sole factor
mandatory one-month notice o Contactor has the burden of proof
that it has substantial capital to
9. Coca-Cola Bottlers vs. Agito, February 13, engage in contracting
2009  Lack of Control of Interserve over workers
Facts o Par 3 of the contract says
 Agito et al filed complaint against Coca- Interserve, including workers,,
Cola, Interserve, Peerless Integrated will comply with Coke’s policies,
Services, Inc., Better Builders, Inc., and rules and regulations
Excellent Partners, Inc. for reinstatement  Even subject to oon-the-spot
with backwages, regularization, nonpayment inspection
of 13th month pay, and damages  This provision indicates
o Asserts they were salesmen at the
control over workers’ conduct
Largo Sales Office
=degree of supervision
o Employed or 4 years
o But did not explain why filing o Par 4 – provide reliever and
complaint against Interserve, etc replacement indication also because
IC need not guarantee daily
 Coke said they were employees of attendance of workers assigned
Interserve tasked to perform Contracted o Also, the contract requires the
Service (Contract of Services); qualification and type of workers
Independent Contractor needed AND NOT the work needed to
o Interserve was the one that hired be performed and final result
them o Certification of DOLE that it is IC
o They have Contract of Temporary does not sway the Court
Employment there CONCLUSION: Since labor-only, complainants
o Payroll records of Interserve considered regular employees of Coke
LA: Complaint dismissed; Complainants employees
of Interserve 10. Manila Water vs. Dalumpines, October 4, 2010
NLRC: affirmed LA; No EER; Interserve is an Facts
Independent contractor
CA: reversed; Interserve is a labor only  Pursuant to RA 8041, MWSS was given
contractor authority to enter into concession
agreements with private sector for its
 Insufficient capital operations
 Respondents used equipment, tools etc of o Manila Water is one of the two
Coke in day-to-day ops private concessionaires contracted
 Coke has effective control over means and by MWSS (East)
method o Under agreement, Manila Water will
 ABSORB regular employees of MWSS
Issues: Is Interserve an Independent Contractor? o Worker-Complainants among 121
– no, labor-only contracting employees not absorbed; thus they
6
signed 3-month contract to perform  Petitioners filed a Complaint for
collection services on commission Regularization
basis LA: dismissed complaint; complainants employees
o Before the end of the 3-month of BMSI
contract, they formed a corp NLRC: reversed; BMSI engaged in labor-only
registered in SEC as the contracting
Association Collector’s Group, Inc.  BMSI no equipment; only rented from
(ACGI) Lorenzo
 Engaged in courier service  No independent business or activity to
o Manila Water entred into service perform; work performed necessary and
agreement with FCSI for courier desirable to main business of Lorenzo;
needs; gave ACGI members to submit same work as regular
letter of intent to join FCCSI;
 No other client but Lorenzo
hired.
CA: reversed; BMSI is an Independent Contractor
o Thereafter, they were gradually
terminated as their contract with  Contract of lease does not ipso facto make
FCCSI not renewed since employed BMSI labor-only
new scheme of payment (remit
through Bayad Center) Issues: Is BMSI engaged in labor-only
contracting? – YES.
 Complainants said that their employment
Held
had four stages but as early as the 3-
ELEMENTS OF LEGITIMATE JOB CONTRACTING
month contract phase, Manila Water
1. Contractors carries a distinct and
attempted to treat them as Individual
independent business and undertakes the
Contractor, not employees
contract work on own account; free from
o That using the four-fold test, EER
control in the manner of performance
exists
2. Contractor has substantial capital or
o They did not have substantial
investment
capial
3. Agreement bet Principal and Contractor
LA: Complaint dismissed; No EER with Manila
Water ensures contractual employees’ entitlement
NLRC: LA decision affirmed to all labor and occupational safty and
CA: reversed; EER exists health standards, self-org, security of
tenure, social welfare benefits
 FCCSI is a Labor-only contractor
BMSI is a labor-only contractor
Issues: Is there EER bet Manila Water and  Place of work: LSC’s premises and nowhere
else
Collector or ACGI an IC? – EER exists
Held  No proof adduced that BMSI had substantial
FCCSI is a labor-only contractor capital
 No substantial capital to undertake  Performs activities directly related to
contract services fo Manila Water the main business of LSC
o Since it had close to 100  No other client but LSC
collectors TERMINATION OF AGREEMENT NOT JUST CAUSE FOR
o Serving other companies do not DISMISSAL
indicate substantial capital  It appears therefore that they were
 Manila Water is the employer using the summarily dismissed
Four-Fold Test
 Work performed as bill collector directly 12. Teng vs. Pahagac, November 17, 2010
related to the principal business of Facts
Manila Water; necessary and desirable  Abert Teng Fish Trading (deep sea fishing)
enters into a JVA with master fishermen
11. Babas vs. Lorenzo Shipping, December 15, (maestros) who are skilled and experts in
2010 deep sea fishing
Facts o Take charge of the management of
 Lorenzo Shipping Corp (shipping industry) each fishing venture including
entered into a General Equipment hiring of membrs
Maintenance Repair and Management Services o ATFT averred that it was the
Agreement with Best Manpowe Services Inc maestros who hired the complainants
(BMSI) as checkers of volume of catch
o Provide maintenance and repair  Workers filed a Complaint for Illegal
services to Lorenzo’s container Dismissal
vans, equipment, etc o Teng hired them without written
o Simultaneously, Lorenzo leased its employment contract to serve as his
equipment to BMSI eyes and ears aboard the fishing
o Complainants were hired by BMSI as boats, classify fish caught
checkers, welders, etc o Teng sometime in 2002 expressed
o 6 years after, Lorenzo entered into doubts as to the volume of fish
new contract with BMSI, this time a caught and thus dismissed them
Service Contract VA: No EER existed
7
CA: reversed: EER existed; pay monetary claims  Supplemental Agreement: DFI
will shoulder cost of
Issues: Is there EER between Teng Fishing and agricultural operation under
the Workers? – YES. BPPA like packing operation
 Since Coop hampered by lack
Held of manpower, DFI engaged
EER EXISTS BETWEEN TENG AND WORKERS service of respondent-
MAESTROS ARE LABOR-ONLY CONTRACTORS contractors who in turn
 Although the maestros hired the workers, employed the complaining
proof shows that there’s EER workers
o Company issued ID with Teng’s  Labor disputes happened among Coop, DFI
signature and respondent-contractors
o Receive wages on a regular basis 1. 400 workers jointly employed by Coop and
with gradual increase in 13 years DFI
o THERE WAS CONTROL - Med-Arbiter declared that Coop was the
 Owned the tools and employer
equipment 2. 300 workers filed case for underpayment of
 Directed how the workers wages, etc
were to perform their jobs CA: DFI is the true employer
as checkers
 Acted as Teng’s eyes and ears Issues: Who is the employer of the complainant-
 Workers did not have substantial capital workers? -- DFI
or investment Held
Respondent-Contractor involved in Labor-Only
 They performed work necessary and
Contracting
desirable to business
 GR: Contractor is presumed to be a labor-
 Finding that Maestros are labor-only
only contractor, unless such contractor
contractor makes Teng the employer; EER
overcomes the burden of proving that it
exists
has the substantial capital, investment,
DISMISSAL MUST COMPLY WITH SUBSTANTIAL AND
tools
PROCEDURAL REQUISITES
 Contractor admitted the following:
 In this case, Teng summarily dismissed o It was Commissioned and contracted
them by DFI to recruit
o They had no adequate capital to
13. Diamond Farms vs. Farms Agrarian Reform acquire purchase
Beneficiaries Multi-purpose Cooperative, January o They were directly supervised and
13, 2016 managed by DFI esp on work
Facts assignements and performance
 DFI owns original plantation (800 ha) targets
which was subject to compulsory o Attendance time sheets prepared
acquisition and distribution thru CARL submitted to DFi for payment of
 But DAR granted DFI deferment privilege to wages
continue agri operations until 1998 Finding that there was labor-only, DFI in effect
 But due to marketing problems, DFI “lay- is the employer
follow” or closed areas of operation and  In labor-only contracting, it is the law
laid off its employees which creates an employer-employee
 Laid off employees petitioned before the relationship between the principal and the
DAR the cancellation of DFI’s deferment workers of the labor-only contractor.
privilege alleging it abandoned its area
of operations 14. Manila Memorial Park Cemetery vs. Luiz,
 DAR recalled = compulsory acquisition and February 3, 2016
distribution under the CARL Facts
 To minimize losses, DFI offered to give up  Manila Memorial entered into a Contract of
its rights and interest over the original Service with Ward Trading as Independent
plantation thru Voluntary Offer to Sell Contractor
o Interment and exhumation services
 Pending cancellation of the deferment
o Complainant-workers were assigned
privilege, awarded plantation turned over
by Ward to Manila Memorial
to qualified ARBs who are the same farmers
who were working in the original  In 2007, workers filed Complaint for
plantation Regularization and CBA benefits; amended
o Farmers then formed DARBMUPCO complaint to include illegal dismissal
(cooperative) o Despite denial of recognition of
o Coop entered into a Banana Manila Memorial, complainants still
Production and Purchase Agreement joined the Union
with DFI LA: no EER
 Coop grows; will be sold to NLRC: reversed; Ward is labor-only contractor
DFI only for 10 years and agent of Manila Memorial
CA: affirmed NLRC decision
8
Issues: is there EER (which is the basis of
benefits)? – yes.
Held
WARD TRADING IN LABOR-ONLY CONTRACTING
 Manila Memorial entered into a Contract
Sevice with Ward Trading – a single
proprietorship owned by Emmanuel Mayor
Ward
o Closer look: does not have
substantial capital
 Contract indicates Manila
Memorial owns the equipment
– Sale of equipment provided
but Manila Memorial did not
prove that the sale pushed
through
 Manila Morial reserved the
right to rent all or any of
the contractor’s equipment in
the event Manila requires
the use of it
 Financial Statement: how can
Ward raise amount in such a
short time
o Ward subject to the control of
Manila Memorial
 Ward supervisor will conduct
regular inspection
 Ward will provide enough
manpower during peak
 BUT if MM finds work
unsatisfactory
o Also, Ward is not a registered
contractor thus there is a
presumption that it is engaged in
labor-only contracting

9
C. Classes of Employees (b) Employment shall be deemed as casual in
Labor Code: Articles 293, 295-296 nature if it is not covered by the preceding
Omnibus Rules: Book VI, Sections 5-6 paragraph; Provided, That any employee who has
rendered at least one year of service, whether
TITLE I such service is continuous or not, shall be
Termination of Employment considered a regular employee with respect to
the activity in which he is employed and his
ARTICLE 278. Coverage. — The provisions of this employment shall continue while such activity
Title shall apply to all establishments or exists.
undertakings, whether for profit or not.
(c) An employee who is allowed to work after a
ARTIXLE 279. Security of tenure. — In case of probationary period shall be considered a
regular employment, the employer shall not regular employee.
terminate the services of an employee except for
a just cause or when authorized by this Title. SECTION 6. Probationary employment. — (a) Where
An employee who is unjustly dismissed from work the work for which an employee has been engaged
shall be entitled to reinstatement without loss is learnable or apprenticeable in accordance
of seniority rights and to his backwages with the standards prescribed by the Department
computed from the time his compensation was of Labor, the probationary employment period of
withheld from him up to the time of his the employee shall be limited to the authorized
reinstatement. learnership or apprenticeship period, whichever
is applicable.cralaw
ARTICLE 280. Regular and casual employment. —
The provisions of written agreement to the (b) Where the work is neither learnable nor
contrary notwithstanding and regardless of the apprenticeable, the probationary employment
oral agreements of the parties, an employment period shall not exceed six (6) months reckoned
shall be deemed to be regular where the employee from the date the employee actually started
has been engaged to perform activities which are working.cralaw
usually necessary or desirable in the usual
business or trade of the employer except where (c) The services of an employee who has been
the employment has been fixed for a specific engaged on probationary basis may be terminated
project or undertaking, the completion or only for a just cause or when authorized by
termination of which has been determined at the existing laws, or when he fails to qualify as a
time of the engagement of the employee or where regular employee in accordance with reasonable
the work or service to be performed is seasonal standards prescribed by the employer.
in nature and the employment is for the duration
of the season. (d) In all cases involving employees engaged on
probationary basis, the employer shall make
An employment shall be deemed to be casual if it known to the employee the standards under which
is not covered by the preceding paragraph: he will qualify as a regular employee at the
Provided, That any employee who has rendered at time of his engagement.
least one year of service, where the position no
longer exists at the time of reinstatement for CASES:
reasons not attributable to the fault of the
employer, the employee shall be entitled to Probationary Employees
separation pay equivalent to at least one-month 1. Abbott Laboratories v. Alcaraz, July 23,
salary or to one-month salary for every year of 2013, April 22, 2014
service, whichever is higher, a fraction of at
least six months being considered as one whole FACTS:
year. (Articles 278 to 280 and then Section 5,  PEARLIE ANN ALCARAZ filed this MR re SC
these are what appeared in the official version) Decision
 SC found that CA committed an error in
SECTION 5. Regular and casual employment. — (a) holding that NLRC did not commit GAD when
The provisions of written agreements to the NLRC ruled that she was a illegally
contrary notwithstanding and regardless of the dismissed (bec NLRC said regular status)
oral agreements of the parties, an employment o The SC ruled that her failure to
shall be considered to be regular employment for perform the duties made known to
purposes of Book VI of the Labor Code where the her is a ground for her non-
employee has been engaged to perform activities regularization
which are usually necessary or desirable in the  Abbott published before in a newspaper the
usual business or trade of the employer except need for a REGULATORY AFFAIRS MANAGER with
where the employment has been fixed for a job description
specific project or undertaking the completion o Alcaraz submitted her application
or termination of which has been determined at o She was hired on a probationary
the time of the engagement of the employee or status for 6 months; she signed the
where the work or service to be performed is employment contract
seasonal in nature and the employment is for the o Organizational structure and her
duration of the season. job description was thereafter
emailed to her
10
o She also underwent pre-employment reasonable, might conceivably opine
orientation an training program; otherwise
the procedure for evaluating the CONCLUSION: FOR FAILURE TO MEET THE STANDARD FOR
performance of probationary REGULARIZATION, HER TERMINATION WAS JUSTIFIED
employees was also explained to her
 One evaluation system for 2. Philippine National Oil Company-Energy
all Development Corporation v. Buenviaje, June
o She has worked for another pharma 29, 2016
company before and admitted to have
an extensive training and FACTS: PNOC-EDC hired Amelyn Buenviaje as
background fit for the job Assistant to the Chairman/President and CEO
 The SC said she was a probationary Apostol
employee  Term: until June 30, 2004 or co-terminus,
o Attendant circumstances prove that whichever comes first
she was well aware of her duties  PNOC created a new Marketing Division
and that her failure to adequately which created new positions, including the
perform the same would lead to her Marketing Division Manager which Buenviaje
non-regularization and eventual assumed
termination  Then Apostol filed his COC as Governor of
ISSUE: Is Alcaraz a probationary employee thus Leyte YET continued to discharge function
not illegally dismissed? – YES. Only as President of PNOC
probationary; non-regularization led to her o Buenviaje also continued her job as
termination assistant
HELD  The New Pres of PNOC, Aquino, appointed
 Employee’s adequate performance of his BUenviahe as Senior Manager for Marketing
duties and responsibilities constitute the Division; appointment provides:
inherent and implied standard for o HR to emend her employment status
regularization to regular status entitled to all
o That if she was adequately informed the rights and privileges
of her duties and she failed to o Appointment is subject to the
comply, she is subject to confirmation by your immediate
termination superior based on your performance
o ADEQUATE PERFORMANCE is NOT in all during the NEXT 6 MONTHS
cases measurable by quantitative o Regular status is retroactive to
specification such as sales quota; 2001(for service credit and other
it is also qualitative assessment company benefits)
o It is a management prerogative o Buenviaje affixed her signature
o Not all position can be therein
quantitatively assessed like  For the performance appraisal:
lawyers, journalists, etc o First week = satisfactory grade of
 As in this case, her position entails three
supervision of a particular department = a o Second = unsatisfactory grade of
managerial role four
o Thus, when she was briefed of her o Thus, the VP for Corp Affairs
duties and responsibilities, it was Guerzon informed her in writing
an IMPLIED STANDARD OF that she did not qualify for
REGULARIZATION regular employement; non-
o The valid cause for termination = confirmation of appointment and her
failure to meet the standards separation from the company
required for regularization  Thus, Buenviaje filed a complaint for
(a) did not manage her time illegal dismissal, et al
effectively; LA: she’s regular employee; dismissal without
(b) failed to gain the trust of her basis thus illegal
staff and to build an effective
 Regular because appointment letter clearly
rapport with them;
says so
(c) failed to train her staff
effectively; and  That the confirmation clause must be
(d) was not able to obtain the resolved against PNOC
knowledge and ability to make sound  PNOC failed to prove reasonable standards
judgments on case processing and were explained to Buenviaje; that the said
article review which were necessary standards were only discussed with her
for the proper performance of her more than a month after her actual
duties. appointment
 QUANTUM OF PROOF for employer: Substantial  Only ground to dismiss a regular employee:
Evidence 282 and 283
o Amount of relevant evidence as a NLRC: affirmed; she is a regular employee
reasonable mind might accept as  Terms of appointment grants her regular
adequate to support a conclusion, status
even if other minds, equally
11
 That she was already performing the job do so makes the employee a regular
for 6 months before being formally employee
appointed to the posision  The job description is just ONE OF the
 BUT NOT ILLEGALLY DISMISSED BEC NO attendant circumstance to inform of the
SECURITY OF TENNURE (bec appointment was performance standard
subject to confirmation) o It answers what duties does the
o Only upon confirmation would she position entail rather than how
enjoy security would the employer guage the
CA: illegally dismissed performance of the probbie employee
THUS, SHE WAS ILLEGALLY DISMISSED
ISSUE: Is Buenviaje a permanent employee? – YES.  A Probationary Employee also enjoys
Thus, illegally dismissed security of tenure although not on the
HELD: her position performs activities that are same plane as that of a permanent
usually necessary and desirable to the business  In dismissal of Probationary Employee,
of PNOC; thus, regular employee there is NO NEED for notice and hearing
 An employee’s (either permanent or on but due process must still be made
probation) has right to security of tenure o Inform of reasonable standards
immediately from the moment of hiring expected of him during probationary
o Permanent – dismissed only on just period AT THE TIME of his
or authorized cause engagement
o Probationary – dismissed for a just o Serving him a WRITTEN NOTICE within
or authorized cause OR when he a reasonable time from the
fails to qualify as a regular effective date of termination
employee in accordance with  In this case, unsatisfactory rating can be
reasonable standards made known to a just cause for dismissal only if it
him by the employer at the time of amounts to gross and habitual neglect of
his engagement duties
 The last criterion for CONCLUSION: she was a regular employee;
Probationary Employee is a illegally dismissed
balance bet right of
employee and prerogative of
employer to choose who will 3. Umali v. Hobbywing Solutions, Inc., March
be regularized 14, 2018
 Employer has the right to FACTS: MARIA CARMELA UMALI was hired as a
set or fix probationary Pitboss Supervisor OF HOBBYWING SOLUTIONS INC,
period within which it may an online casino gaming establishment
test employee’s conduct  Her duties and responsibilities: supervise
 In this case, PNOC exercised the online casino dealers and operations of
prerogative to hire her as permanent RIGHT the entire gaming area or studio
FROM THE START (on her appointment) –  She never signed any employment contract
wherein she was informed of the change in before the commencement of her service but
her status from co-term to regular and regularly received her salary every month
shall be retroactive to July 1, 2001  7 months after being hired, she was asked
o The intent is clear notwithstanding to sign 2 contracts
the clause of “subject to o First was for a period of 5 months
confirmation by her immediate o Second was for period of 3 months
superior;” the clause did not make  Then, she was informed that her employment
her regularization conditional but was already terminated; told to wait
only effectively informed her that whether she will be rehired or
her work performance will be regularized; asked to sign exit clearance
evaluated and was no longer allowed to work
o There was no ambiguity in the  Thus, she filed a complaint for illegal
appointment letter; even if there dismissal
was, it must be resolved in favor o Employer said it was Umali who did
of the employee not accept the offer to continue
 A PROBATIONARY EMPLOYEE is defined as one bec her best friend was not
who is on trial by an employer during retained by the company
which the employer determines whether or LA: dismissed the complaint for lack of merit
not he is qualified for permanent  Employee Umali failed to substantiate her
employment claim that she was dismissed from
o Cannot exceed 6 months; otherwise, employment that she only opted not to
shall be considered a regular continue with her work out of her own
employee volition
o Must be informed of reasonable NLRC: illegally dismissed
standards that shall be sued as  She attained a regular status by operation
basis for her regularization at the of law when allowed to work beyond the
time of his engagement; failure to probationary period of employment; thus,
enjoyed security of tenure
12
CA: reversed NLRC decision o Also, there was no justifiable
 Employee Umali failed to prove fact of reason
dismissal; there was no letter of  Thus, having rendered service after the
termination but only exit clearance form lapse of probationary period, the employee
which she personally processed = severance attained regular status
was her choice CONCLUSION: REGULAR EMPLOYEE THUS ILLEGALLY
DISMISSED
ISSUE: Was Umali a regular employee? – YES.
HELD: there is a fact of dismissal Regular and Casual Employees
 She was priorly hired on Probation
o Although the time when her 4. Kimberly Clark Phils. v. Secretary,
probationary status commenced was November 23, 2007
in dispute FACTS: the CBA between Kimberly and UKCEO
 Umali said 7 months after expired
being hired  Within the freedom period, Kilusan-Olalia,
 Employer said from the start a newly formed labor union challenged the
o But proof shows that for the first incumbency of UKCEO by filing a Petition
contract of her probationary job, for Certification Election with DOLE
the contract was signed SEVEN o Certification election was
MONTHS after the commencement of conducted with UKCEO winning by 20
the job votes
 That the extension contract o 64 votes were not counted bec
was signed months after she allegedly cast by casual workers
has started working whose regularization in question
 THUS, the contracts were  During the Pendency of the case
made to create a semblance challenging the election, Kimberly
of legality in the dismissed several employees
employment and severance  SC in that case decided to count the 64
 That from June 19, 2012 until feb 18, 2013 votes thus making Kilusan the duly elected
– she already attained regular status certified bargaining representative of the
protected from arbitrary termination regular employees of Kimberly
 The extension of probationary period – o Kilusan filed a Motion for
which was in one case held valid by the Execution of the SC decision with
DOLE
court to allow employee to improve work –
o Cannot be fully executed bec not
finds no application in this case:
all 64 employees could be found;
(1) there was no evaluation upon the
only 22 were benefited
expiration of the period of probationary
employment;  The Bureau of Working Conditions found 47
(2) the supposed extension of the of the 76 complainants were entitled to be
probationary period was made after the regularized
lapse of the original period agreed by the o This, Kimberly filed an MR bec not
parties. all rendered at least 1 year of
service
 In this case, she was evaluated for the
 Denied for lack of merit
June 2012-Nov 2013 probation only on Feb
2013, where she had 88.3% rating  Kimberly appealed before the CA, claiming
o At the time of evaluation, the that those who were filed due to illegal
original period of probation strike should not be awarded
already lapsed on Nov 2012 regularization differentials
o Thus, no reason to extend the o CA dismissed for failure to show
probation period bec she had GAD
satisfactory rating ISSUE: Are the concerned employees regular thus
 Actually, the SC held in some cases that entitled to regularization differentials? – YES.
despite the extension of the probationary Regular status effective on hiring date.
period, the employee may attain regular HELD: There are two kinds of Regular Employees:
status already 1. those who are engaged to perform
o EXTENSION OF THE PERIOD IS THE EXN. activities which are USUALLY NECESSARY OR
 Employer has the burden of DESIRABLE in the usual business or trade
proof the show that the of the employer; and
extension is warranted 2. those who have RENDERED AT LEAST ONE YEAR
OF SERVICE, whether continuous or broken,
 Without valid ground, the
with respect to the activity in which they
extension shall be taken
are employed.
against the employer esp if
used to circumvent  The employees concerned here fall under
regularization the second
o They are mechanics, electricians,
 In this case, there was no valid extension
machinists, etc who have been
o The period has lapsed long before
employed for more than 1 year at
the company thought of extending
the same
13
the time of filing the petition for (1) REGULAR EMPLOYEES or those whose work
certification election by Kilusan is necessary or desirable to the usual
 Bec of the length of service, they have business of the employer;
become regular by operation of law (1) regular employees by nature of
o Status of regular employment work; and
attaches to casual worker on the those employees who perform a
day immediately after the end of particular activity which is
his first year of service necessary or desirable in the
o Becomes regular after 1 year with usual business or trade of
respect to the activity in which he the employer, regardless of
is employed their length of service
o THE LAW DOES NOT PROVIDE THE (2) regular employees by years of
QUALIFICATION THAT THE EMPLOYEE service.
MUST FIRST BE ISSUED A REGULAR those employees who have
APPOINTMENT been performing the job,
 Since they become regular WITH RESPECT TO regardless of the nature
THE ACTIVITY THEY WERE IMPLOYED, the thereof, for at least a
reckoning date for determining his year.
regularization is his HIRING DATE (2) PROJECT EMPLOYEES or those whose
o Not the day after the lapse of one employment has been fixed for a specific
year project or undertaking, the completion or
o Bec they attained regular status by termination of which has been determined
operation of law at the time of the engagement of the
CONCLUSION: the reckoning point of employee or where the work or services to
regularization if by operation of law is on the be performed is seasonal in nature and the
Hiring Date employment is for the duration of the
season; and
5. Rowell Industrial Corporation v. CA, March (3) CASUAL EMPLOYEES or those who are
7, 2007 neither regular nor project employees.
FACTS: Joel Taripe was hired by Rowell  But!!! Despite 280, even though employee
Industrial as a rectangular power press machine is made to perform activities necessary or
operator desirable to the business, it does not
 Hiring date: Nov. 8, 1999 prohibit parties from agreeing on a period
o Was made to sign a contract that of time for the performance of such
was never explained to him and was activities
made as a condition for his hiring; (1) that the fixed period of employment
no copy given to him was knowingly and voluntarily agreed
upon by the parties, without any force,
 On Feb 15, 2000, he filed a Complaint for
duress or improper pressure being
regularization AND indemnity for severed
brought to bear upon the employee and
finger; then illegal dismissal
absent any other circumstances
o While the case was pending, he was
vitiating his consent; or
summarily dismissed although he
(2) it satisfactorily appears that the
never violated any rules
employer and employee dealt with each
 For its part, RIC said Taripe was a other on more or less equal terms with
contractual employee hired to meet the no moral dominance whatever being
demand brought by the Christmas season exercised by the former on the latter.
o That on Mar 6, 2000, his contract o What it prevents is the
expired circumvention of the law thru
LA: contractual employee; Taripe complain arbitrary dismissal
dismissed
 In the case at bar, Taripe is a Regular
NLRC: reversed; regular employee; illegally
Employee because under the contract, he
dismissed
shall be contractual for 5 months UNLESS
CA: affirmed NLRC decision
said contract is renewed by mutual consent
o But it was never conveyed to him
ISSUE: Is Taripe a regular employee? – YES.
that his employment was for a
HELD: Art 280 was applied
specific undertaking only; that it
 The contract saying that Taripe was hired was for the Christmas Season only
as contractual employee for five months o What the contract said is that it
only cannot prevail over the undisputed was for a period of 5 months – NOT
fact that he was hired to perform the SEASONAL IN NATURE
function that is necessary or desirable in o It was a Contract of Adhesion =
the employer’s business bargaining parties are not of equal
o His work in line with the trade of footing
manufacturing of tin cans
 The Contract for 5 months was a
 ART 280 CLASSIFIES EMPLOYEES INTO 3 circumvention of the law; the work
CATEGORIES: performed was necessary to the business

14
 Thus, he is a regular employee bec he does position was abolished, PLDT can still
not fall in any of the exception in 280 regularize her in equivalent position
(Specific Project or Seasonal) RECKONING POINT: date of reinstatement
CONCLUSION: PURSUANT TO 280, WHEN EMPLOYEE DOES DOCTRINE: even if the nature of the work does
NOT FALL ON THE EXCEPTION, HE IS A REGULAR not squarely fit #1 criterion in 280, so long as
EMPLOYEE employee has rendered more than 1 year in
service, employee is eligible to be regularized

6. PLDT v. Arceo, May 5, 2006 7. ABS-CBN Broadcasting Corp. v. Nazareno


FACTS: Employee Rosalina Arceo applied as REPEATED CASE. Second case under first topic
Telephone Operator with Employer PLDT-Tarlac
 She failed the pre-employment qualifying 8. Fulache v. ABS CBN, January 21, 2010
examination REPEATED CASE
 Thus, she requested to be allowed to work
9. Fuji Television v. Espiritu, December 3,
without pay
2014
 PLDT agreed and assigned her to its REPEATED CASE
commercial section; made her do tasks like
photocopying docs
 a fixed term did not automatically mean
 After two weeks, PLDT decided to pay her that she could never be a regular employee
min wage which is precisely what Article 280 of the
 Thereafter, PLDT found no further need for Labor Code sought to avoid.
Arceo’s services and decided to fire her  The repeated renewal of Espiritu's
o But Arceo’s supervisor recommended contract coupled with the nature of work
that she be put for an OJT on minor performed pointed to the regular nature of
traffic work her employment despite contrary claims of
o When she failed to assimilate Fuji and the nomenclature of the contract.
traffic procedure, PLDT transferred  the repeated engagement under contract of
her to auxiliary services, a minor hire is indicative of the necessity and
facility desirability of the [employee's] work in
 She once again took two more pre- respondent's business and where employee's
qualifying exams for the position of contract has been continuously extended or
telephone operator and failed again renewed to the same position, with the
 Finally, PLDT discharged her from same duties and remained in the employ
employment in 1991 without any interruption, then such
 Thus, Arceo filed a case for illegal employee is a regular employee.
dismissal
 LA: ordered PLDT to reinstate her to her 10. Pier 8 Arrastre & Stevedoring Services v.
former or equivalent position Boclot,
 Assigned to photocopy documents and sort FACTS: Employee Jeff Boclot was hired by PASSI
out bills to perform the functions of a stevedore starting
Sept. 20, 1999
 After three years from reinstatement,
Arceo filed a complaint for unfair labor  Duration: 36 months, 228.5 days (until
practice, etc bec she had not been June 2003)
regularized since then  On April 15, 2000, PH Ports Authority
 LA: Arceo qualified to be regularized seized the facilites and took over the
operations of PASSI through Special
 NLRC: affirmed LA decision
Takeover Unit, absorbing PASSI workers and
 CA: Affirmed relievers
ISSUE: Is Arceo eligible to become a regular
 But thru CA decision, PASSI was able to
employee? – YES. regain control of its arrastre and
HELD: SHE IS QUALIFIED TO BE REGULAR PURSUANT TO stevedoring operations on Mar 12, 2001
280
 On May 9, 2003, Boclot filed a complaint
1. Usually necessary and desirable
for Regularization
 photocopying documents, sorting out o That he was hired in Oct 1999
telephone bills and disconnection notices, o Issued ID, PPA Pass and SSS
was certainly "necessary or desirable" to documents
the business of PLDT o Contend that he has been regular
2. Casual Employee rendering at least 1 year since 2000 since it was 6
of service continuous months
 Granting her work is not under 1, she has  PASSI said no, he remained casual
rendered service for more than one year as o Relied on the CBA provision
casual employee o That he was merely hired as a
PLDT: POSITION HAS BEEN ABOLISHED reliever stevedore and thus could
 Unmeritorious. It does not preclude not become a regular employee
Arceo’s right to become a regular employee LA: dismissed Employee’s complaint
 The order was “former or equivalent
position” thus even when the original
15
 Mere extra worker who is called upon to  In the case at bar, 228.5 days is not
work at the peir in the absence of. considered one year BUT rules may be bent
Regular stevedores on certain shift if the court sees the imposition of period
 280 and 281 inapplicable as a preclusion to acquire tenurial
o Not a probationary nor casual but security
mere reliever o It struck down such arrangement
o That only had a total of 228.5 days  Boclot is a regular employee pursuant to
– short of 365 the CBA wherein the company agrees to
NLRC: regular convert regular status to all incumbent
 Term “reliever” but work on rotation basis probationary or casual employees who
just like the regular stevedores served for an accumulated service term of
CA: Affirmed NLRC ruling NOT LESS THAN 6 MONTHS FROM HIS ORIGINAL
 What determines the casualness or DATE OF HIRING
regularity is the NATURE OF THE JOB and o Skilled workers after 3 months
not the contract o Semi-skilled after 4 months
o Non-skilled after 6 months
 Even though worked only for 228.5 days out
of 36 months, his service was still  Also, by virtue of the Union-shop
utilized for the operation of business condition agreed by PASSI as condition of
employment:
ISSUE: Did Boclot attain regular status as PASSI o Nonmembers may be hired but he is
required to become a union member
employee? – YES.
after a certain period in order to
retain employment
HELD: Regular Employee pursuant to the CBA
CONCLUSION: considered regular employee after 6
 As held in De Leon vs NLRC, the Primary months of accumulated service(conversion to
Standard of determining a regular regular status) BUT not entitled to avail
employment is the service incentives bec still not rendered 1 year
1. REASONABLE CONNECTION between the of service
particular activity performed by the DOCTRINE: an employee may become regularized by
employee in relation to the usual virtue of the provisions of the CBA
business or trade of the employer
o Nature of work performed and its
relation to the scheme of the 11. The Peninsula Manila v. Alipio, June 17,
particular business or trade in its 2008
entirety FACTS: COMPLAINANT ELAINE M. ALIPIO was hired by
2. Performing the job for AT LEAST ONE The Peninsula Manila as a reliver nurse since
YEAR, even if not continuous or merely Dec. 11, 1993
intermittent
 Hotel operates a clinic 24 hours a day and
o The repeated and continuing need
employees three regular nurses with 8-hour
for its performance is a sufficient
shift each
evidence of necessity if not
indispensability of that act to the  She has been performing the job of a
business regular nurse
 The SC took judicial notice that the  After rendering 4 years of service, Alipio
nature of the business requires relievers inquired why she was not receiving her
for smooth operation 13th month pay
o She was asked to submit a Summary
 In this case, Boclot only worked for 228.5
of her Tour of Duty for 1997
days in 36 = 6.34 days a month from Sept
o After submission, she was given her
1999 to June 2003
13th month pay for 1997
o That he could only be given work if
o But no 13th month pay for 1993-1996
a regular employee was absent
 Thereafter, HR Manager Santos met with
 BUT!!! By virtue of 280, all employees not
Alipio
deemed regular, project and seasonal
o Alipio was asked re her payslip
employees are deemed casual
vouchers
o Since he is casual, the law
o Alipio said she made copies of such
provides that if he has rendered at
bec Peninsula does not provide her
least one year of service,
with copies
continuous or broken, he shall be
o Santos was peeved by her answer
considered regular
thus Santos advised Alipio not to
o “at least one year of service” = 12 report to work anymore
months whether continuous or broken
reckoned from the date the employee  Thus, Alipio filed a complaint for illegal
started working including dismissal
authorized absences and paid LA: dismissed but ordered Peninsula to pay
regular holiday separation pay
NLRC: affirmed LA but deleted the awarding of
 EXN: contract provides for
separation pay
less than 12 months; that
CA: reversed; Alipio is a regular staff nurse
period shall be considered
one year nonetheless
16
ISSUE: Has Alipio attained regular status? – o Participate in Medical/Dental
YES. Missions
HELD: ALIPIO HAS GAINED REGULAR STATUS o Formulate Health Services Unit
 Her services were engaged by the hotel Manual
intermittently from 1993 to 1998  LSGI said they were Independent
o Job as reliever nurse was necessary Cotnractors, applying the case of Sonza vs
and desirable in the hotel’s ABSCBN
business of providing comfortable o Does not have control over means
accommodation to its guests and methods
o In any case, she has rendered more LA: they were Independent Contractor but for
than one year of intermittent compassionate social justice awarded separation
service thus regular as early as pay
Dec .12, 1994 NLRC: fixed-period employees, not regular
 Per hotel’s own Certification dated April employees
22, 1997, she was already a “Regular Staff CA: not regular employees despite receiving
benefits such as OT pay, allowances, Christmas
Nurse” until her dismissal
bonus
 THUS, she can only be relieved following
procedural reqs: ISSUE: Are the complainants regular employees? –
1. Causes provided in 282 YES applying Fuji
2. Must be given an opportunity to be HELD: in some cases, SC ruled that medical
heard and to defend himself professionals are Independent Contractors, but
IS OBTAINING COPIES OF PAYSLIP A SERIOUS such ruling is not applied here.
MISCONDUCT?
 The nomenclature of contracts does not
 MISCONDUCT – forbidden act or dereliction define the employment status
of duty o Such is defined by LAW and not what
o Wilfull in character and implies a the parties say it should be
wrongful intent not mere error in
judgment  a fixed-term contract is an employment
o Needs to be serious = grave not contract, the repeated renewals of which
merely trivial make for a regular employment
 Obtaining copies of payslip is not a  Applying Fuji Network, the repeated
misconduct renewal made them regular employees
NOT AFFORDED DUE PROCESS o Uniform one-page contracts of
retainer was prepared by LSGI alone
 Was told right during the meeting that she
 Not of equal footing
will be dismissed; no opportunity to be
 Vaguely shows the control of
heard and defend self
LSGI
(1) repeated renewal of petitioners'
12. Samonte v. La Salle Greenhills, Inc.,
contract for fifteen years, interrupted
February 10, 2016
only by the close of the school year;
FACTS: Petitioners Samonte, et al were hired by
(2) the necessity of the work performed by
LSGI to comprise its Health Service Team
petitioners as school physicians and
 They signed a Contract of Retainer for the dentists; and
period of a specific academic calendar (3) the existence of LSGI's power of
with provisions: control over the means and method pursued
o Retainer is only temporary; limited by petitioners in the performance of their
to project or undertaking or to the job
job/task assigned
o Retainer shall AUTOMATICALLY cease
after expiration of period without 13. Basan v. Coca-cola, February 4, 2015
need of notice FACTS: Complainants Basan et al filed a case for
o Prior to expiration, LSGI may, upon illegal dismissal against Coke alleging they
written notice, terminate this were dismissed without just cause and prior
contract if fails to perform job to written notice
the satisfaction of LSGI and other
 Coke countered that the were merely
just cause
Temporary Route Helpers acting as
 After 15 years of continuous renewal every substitutes for absent regular route
academic year, (last was 2003-2004), helpers for a fixed period
Samonte, et al were informed that their LA: regular employees
contracts will no longer be renewed
 Performing activities necessary and
because LSGI decided to hire 2 full time
desirable to the usual business of Coke
doctors and dentists
for more than the period for
 They filed a case for illegal dismissals regularization
o Duty for 9 hours a day NLRC: affirmed LA decision
o Attend staff meetings and
 No showing that they were hired as project
participate in the
or seasonal employees
formulation/adoption of policies
and programs
o Participate in school programs
17
 Also not Probationary Employees bec they absent any other circumstances
have already rendered work for more than 6 vitiating his consent; or
months 2) It satisfactorily appears that the
While case was pending in CA upon appeal of employer and the employee dealt with
Coke, a Motion for the Issuance of a Writ of each other on more or less equal terms
Execution of LA decision was filed – granted with no moral dominance exercised by
CA: FIXED-TERM EMPLOYEES ONLY the former or the latter.
 No showing that the period was used to  Hence, in the absence of proof showing
circumvent la that petitioners knowingly agreed upon a
fixed term of employment, We uphold the
ISSUE: are the complainants regular employees? – findings of the Labor Arbiter and the NLRC
YES. and so rule that petitioners are, indeed,
HELD: SC applied the ccase of Magsalin: regular employees, entitled to security of
tenure.
 the NATURE OF WORK of route helpers hired
by Coca Cola Bottlers Philippines, Inc. is
14. Gadia v. Sykes Asia, January 28, 2015
necessary and desirable in its usual
FACTS: Petitioners Gadia, et al were hired by
business or trade thereby qualifying them
Sykes (a BPO Company) for its Alltel Project as
as regular employees
CSR, Team Leaders, trainers
 TEST: reasonable connection bet particular
 Thereafter, Alltel sent two letters to
activity performed by the employee in
Sykes termining all support services
relation to the usual business or trade of
provided by Sykes
the employer
COKE’S ARGUMENT THAT THEIR WORK IS POST-  Thus, Sykes sent Petitioners end-of-life
PRODUCTION notices informing them of their dismissal
from employment due to termination of the
 Unmeritorious. The nature of work and its Alltel Project
necessity and desirability must be seen
from a perspective of the business or  Complainants thus filed a case for illegal
trade in its entirety and not on confined dismissal
scope  In response, Sykes said they were not
 REPEATED REHIRING – continuing need for regular employees but mere Project-based
their service employees
THE PERNICIOUS PRACTICE OF ENGAGING FIXED-TERM LA: dismissed complaint; mere project-based
EMPLOYEES MOCKS THE LAW employees
NLRC: regular but were validly terminated due to
 They are regular employees pursuant to Art redundancy
280:
(1) regular employees by nature of work;  Despite informing them of the co-terminus
and nature of employment, the end of
employment was not determined nor made
- employees who perform a particular
known at the time of hiring
activity which is necessary or
CA: reversed; project-based employees
desirable in the usual business or
trade of the employer, regardless of
their length of service ISSUE: Are the Petitioners regular employees? –
(2) regular employees by years of service. NO. Project-based
HELD: SC applied 294 in defining project-based
- employees who have been performing the
employees
job, regardless of the nature thereof,
for at least a year.  Unlike regular, project-based employees
may be terminated upon completion of the
 In the case at bar, the complainants fall
project
under the first
o As route helpers who are engaged in  TEST: whether or not the employees were
the service of loading and assigned to carry out a "specific project
unloading softdrink products of or undertaking," the duration (and scope)
respondent company to its various of which were specified AT THE TIME they
delivery points, which is necessary were engaged for that project.
or desirable in its usual business  PROJECT COULD BE:
or trade (1) a particular job or undertaking that
o So despite rendering service for is within the regular or usual business of
less than 1 year, they are still the employer company, but which is
considered regular employees distinct and separate, and identifiable as
 The requisites to have a valid fixed-term such, from the other undertakings of the
employment are not present in this case. company; or
Thus, agreement on period invalid (2) a particular job or undertaking that
1) The fixed period of employment was is not within the regular business of the
knowingly and voluntarily agreed upon corporation.
by the parties without any force,  To be a valid defense, employer must only
duress, or improper pressure being prove:
brought to bear upon the employee and 1. Duration and scope of the
employment was specified AT THE
TIME they were engaged AND
18
2. There was indeed a Project  They had been under the employ of the
 In the case at bar, facts shows that Sykes Petitioner for some years already
adequately informed the employees of their  Thus, when they were shown the New
employment status at the time of their Contract providing that their employment
engagement (thru contract) will be for 5 months subject to renewal
DURATION - begins and ends at determined or upon terms set by proprietor-petitioner,
determinable times the workers refused to sign it and
o capable of being determined or consequently filed for the money claims
fixed  That the illegal dismissal charge was
 in the case at bar, they were adequately added when Proprietor asked them not to
informed that their employment was made in report for work anymore after they refused
connection with the Alltel Project = to sign the new terms of the contract
“project-based and as such is co-terminus WORKERS ARE REGULAR EMPLOYEES
to the project”  The task they perform are necessary and
 that their security of tenure only lasts desirable in the usual business of
as long as the Alltel Project was petitioner
subsisting  They also rendered service from 1998 to
2007
15. A. Nate Casket Maker v. Arango, October 5,  There is also power of control over the
2016 workers
FACTS: Respondents Arango et al were hired by A. Since they are regular employees illegally
Nat Casket as carpenters, mascilladors and dismissed, they security of tenure; remedy is
painter in the casket-making business either reinstatement or pay separation pay AND
 From 1998 to 2007 OT PAY ET AL
 Petitioner-proprietor claims the
complainants were “pakyaw workers” (task
basis) who were paid per job order
 They are stay-on workers with free board
and lodging but the would always drink,
quarrel with each other thus they could
not accomplish the job orders
 Hence, Nate was forced to contract out to
other workers for the job to be finished
o Their pakyaw system will be changed
to contractual basis and would
provide vacation leave and sick
leave pay and other benefits given
to regular employees
 Complainants’ version” no OT Pay and other
benefits
o They were made to sign contract of
employment
 Contractual for 5 months
 Renewal will be case-to-case
basis
 right to terminate reserved
subject to efficiency and
performance
 wage shall be on a piece-
rate basis
 follow schedule
 no monetary benefits
afforded to regular
 they refused to sign the contract thus
asked to leave and was told that their
employment was terminated
 Thus, they filed a case for illegal
dismissal
LA: Dismissed for lack of merit
NLRC: affirmed
 No substantial evidence presented to show
petitioners terminated their employment
CA: reversed; they were illegally dismissed

ISSUE: Are pakyaw workers considered regular


workers? – YES.
HELD:
19
Project Employees specification of a fixed term of
1. Poseidon Fishing v. NLRC, February 20, the employment agreement
2006 o Otherwise, that agreement will be
FACTS: Poseidon Fishing (fishing company) hired struck down for circumventing labor
worker Jimmy Estoquia as a one of its boat crew laws
o Jan 1988 – Chief Mate  In the case at bar, the contract indicates
o Promoted as Boat Captain a clear objective: frustrate the security
o 1999 – demoted without reason to of tenure of the worker
Radio Optr o Worker has been with the company
 Monitored daily activities for 12 years
in the office, recorded in o His job was directly related to the
the duty logbook the names deep-sea fishing business of the
of callers and time of their company
calls  Necessary and important to
 In 2000, he failed to record a 7:25 am the business
call but he was able to record the same in o Also, unlike Brent, the period of
the other logbook the contract was not fixed and
o Upon checking the two logbooks, he clearly stated – it was vague and
recorded it in the first one but did not specify the actual date of
after the 7:30 am call period
 The next day, Manager Terry de Jesus  Nothing in the contract says
detected the error and asked Estoquia to it was for casual, seasonal
prepare an incident report to explain the or project
oversight  “Pagdating” was only placed
 At 2pm ON THAT SAME DAY, Estoquia was as to merely indicate the
summoned by the company secretary to get possible date of arrival of
his separation pay for P55k the vessel and not indicated
 Thus, Estaquiao filed a complaint for the status of the employment
illegal dismissal o The exception in Art 280 does not
o Terminated without just cause and apply bec the contract is unclear
due process and uncertain – it does not specify
the duration
 Poseidon claims that it was made clear to
o Also, worker has been repeatedly
him that he was employed on a “por viaje”
hired in various capacities =
or per trip basis – that his employment necessity and indispensability of
would end at the end of the trip for which the service to the business or
he was hired; thus, not entitled to the trade
money claims and separation pay
 On the issue of non-exclusivity to work in
LA: ILLEGALLY DISMISSED
the company
 Even if casual at first, he attained o Disputed by worker when he showed
regular sttus his payroll from May-Oct 1988 and
NLRC: affirmed LA decision SSS Employees contributions as of
CA: affirmed 2000 = prove 12 years
HE IS NOT A SEASONAL EMPLOYEE (claimed that
ISSUE: Was he a regular employee at the time his deep-sea fishing is a seasonal industry)
employment was terminated on July 4, 2000? –  activity of catching fish is a continuous
YES. process and could hardly be considered as
HELD: Estaquiao is a regular employee at the seasonal in nature
time of separation
 PROJECT EMPLOYEES are defined as:
 The Brent Case involving an Athletic (1) for a specific project or
Director with 5-year contract is NOT undertaking, and
applicable here (2) the completion or termination
o In Brent, it was discussed that of such project has been determined
there are some employment with at the time of the engagement of
contract – neither seasonal nor the employee
project based – but for a fixed o TEST: whether or not the "project
term like overseas employment, employees" were assigned to carry
appointment as dean, etc out a "specific project or
 BRENT TEST: if from the circumstances it undertaking," the duration and
is apparent that periods have been imposed scope of which were specified at
to preclude acquisition of tenurial the time the employees were engaged
security by the employee, they should be for that project
disregarded for being contrary to public o In the case at bar, worker was not
policy informed that he will be assigned
o That indication of that valid fixed to a specific project or
term must rest upon some aspect of undertaking nor informed of the
the agreement OTHER THAN the mere duration and scope AT THE TIME of
his engagement

20
 PROJECT EMPLOYEES CAN BE REGULAR (e) The termination of his employment in
EMPLOYEES: the particular project/undertaking is
(1) continuously, as opposed to reported to the Department of Labor and
intermittently, re-hired by the Employment (DOLE) Regional Office having
same employer for the same tasks or jurisdiction over the workplace within 30
nature of tasks; and days following the date of his separation
(2) these tasks are vital, from work, using the prescribed form on
necessary and indispensable to the employees'
usual business or trade of the terminations/dismissals/suspensions.
employer, then the employee must be (f) An undertaking in the employment
deemed a regular employee. contract by the employer to pay completion
DOCTRINE: to be a project employee, agreement bonus to the project employee as practiced
must satisfy the test; but even so, a project by most construction companies.
employee can be a regular employee  DEFINITION OF PROJECT EMPLOYMENT:
o "employment has been fixed for a
2. Filipinas Pre-fabricated Building Systems specific project or undertaking the
(FilSystems) v. Puente, March 18, 2005 completion or termination of which
FACTS: Worker Roger Puente claims he started has been determined at the time of
working with Filsystem (construction) on June the engagement of the employee or
12, 1989 where the work or services to be
 Initially hired as an installer and then performed is seasonal in nature and
promoted as mobile crane operator the employment is for the duration
o His work was NOT dependent on the of the season."
completion or termination of any o In Consunji, it was held that the
project duration is not the factor
o He has been with the company – controlling but WON the employment
continuous and without interruption was fixed for a specific project or
– for 10 years undertaking – determined at the
o But in 1999, he was terminated bec time of engagement
he was only a project employee  In the case at bar, the Contract attests
 Company averred that he was only a project that worker was hired for specific
employee projects – coterminous with the completion
o Assigned to various project of the projects for which he was hired
assignments o Contract EXPRESSLY provided such
o That after completion of each o Also, Company regularly submitted
project assignment, his employment reports to DOLE of the termination
was terminated and the same was of services of project workers –
correspondingly reported to the confirms that he was a project
DOLE employee
LA: dismissed the illegal dismissal case  Proofs considered by the Court that indeed
NLRC: affirmed he was a Project Employee:
CA: reversed o Place of work: Project to project
 Contract did not have a specified duration (project site)
for each project o No certain day BUT pursuant to the
 Not assigned in the project sites but at DO, “day certain” must only mean
the COMPANY PLANT to attend to maintenance “that which must necessarily come
work of mobile cranes for 10 years although it may not be known
ISSUE: Is the worker a project employee? – YES. EXACTLY when
HELD:  That despite rendering more
 DO NO. 19 S. 1993 Indicator of Project than one year, he cannot
Employment: still be considered regular
(a) The duration of the o That he was assigned to various
specific/identified undertaking for which projects did not preclude him to be
the worker is engaged is reasonably considered project employee
determinable.  This is clear in the
(b) Such duration, as well as the specific exception in 280
work/service to be performed, is defined ON REINSTATEMENT
in an employment agreement and is made  The requisite in the Labor Code is that
clear to the employee at the time of worker be informed the actual basis of the
hiring. dismissal
(c) The work/service performed by the o Here, it was clear that he was
employee is in connection with the terminated because of the
particular project/undertaking for which completion of the project
he is engaged. o He was dismissed on Oct 1, 1999 –
(d) The employee, while not employed and it was not clear whether the
awaiting engagement, is free to offer his project was completed on this day
services to any other employer.  Without a valid cause, the employment of
project employees cannot be terminated
21
prior to expiration. Otherwise, they shall determined at the time of the engagement
be entitled to reinstatement with full of the employee";
back wages. However, if the project or (c) SEASONAL EMPLOYEES or those who work
work is completed during the pendency of or perform services which are seasonal in
the ensuing suit for illegal dismissal, nature, and the employment is for the
the employees shall be entitled only to duration of the season; and
full back wages from the date of the (d) CASUAL EMPLOYEES or those who are not
termination of their employment until the regular, project, or seasonal employees.
actual completion of the project Jurisprudence has added a fifth kind-- a
DOCTRINE: DO enumerates indicator to conclude fixed-term employee.
employee is a project employee  To be a valid Project Employee, the
following must be met:
3. Leyte Geothermal Power Progressive o employee is deemed to understand
Employees Union v. PNOC-EDC that his employment is coterminous
FACTS: PNOC-EDC (GOCC) had a legit Union (herein with the project. He may not expect
petitioner) to be employed continuously beyond
 PNOC had geothermal projects – one of the completion of the project.
which is the Leyte Geothermal Power Plant  In the case at bar, complainants were made
o Within this project are the to sign and accept the employment contract
Tongonan 1 Geothermal Project and indicating the specific PROJECT or PHASE
LGPH of work which they were hired – WITH FIXED
 Supply electricity to whole PERIOD OF EMPLOYMENT
Luzone o Entered freely and voluntarily
o PNOC hired over a hundred workers without force
for these projects on CONTRACTUAL THEY ARE PROJECT EMPLOYEES EVEN IF PERFORMING
BASIS JOB THAT IS UNOB-UBOT:
 Good up to the completion or  If the DURATION of the project is clearly
termination of the project conveyed
 Majority of the complainant-workers had  assigned to carry out a "specific project
become members of the union or undertaking," the duration (and scope)
o They demand that PNOC recognize the of which were specified at the time the
Union as their agent and have CBA employees were engaged for that project
negotiations  “PROJECT” can wither be:
o Such call was not heeded by PNOC 1. particular job or undertaking that is
o Worse, PNOC served Notices of within the regular or usual business
Termination to workers who had of the employer company, but which is
become union members distinct and separate, and
 Thus, workers filed a Notice of Strike identifiable as such, from the other
with DOLE undertakings of the company
o Unfair labor practice for refusal o Such job or undertaking begins
to bargain collectively, union and ends at determined or
busting and mass termination determinable times.
 DOLE intervened and forwarded it for 2. a particular job or undertaking that
compulsory arbitration is not within the regular business of
o Workers ordered to return to work the corporation
within 12 hours; PNOC to accept o Such a job or undertaking must
them also be identifiably separate
o But despite this, workers remained and distinct from the ordinary
adamant; arbitration failed to or regular business operations
bring peaceful compromise of the employer
o PNOC filed a counter-suit o The job or undertaking also
 NLRC: union members are project employees begins and ends at determined or
o Not illegally dismissed determinable times.
 CA: affirmed NLRC decision  the litmus test to determine whether an
individual is a project employee lies in
ISSUE: Are the officers and members of the Union setting a fixed period of employment
mere project employees? – YES. involving a specific undertaking which
HELD: completion or termination has been
 Art 280 contemplates 4 kinds of employees: determined at the time of the particular
(a) REGULAR EMPLOYEES or those who have employee's engagement.
been "engaged to perform activities which  In the case at bar, they were hired for a
are usually necessary or desirable in the specific project; thus, can validly
usual business or trade of the employer"; dismissed upon its completion or its
(b) PROJECT EMPLOYEES or those "whose SUBSTANTIAL COMPLETION
employment has been fixed for a specific EMPLOYMENT FOR MORE THAN A YEAR DOES NOT MAKE
project or undertaking[,] the completion THEM REGULAR
or termination of which has been  Project employees are the exception to the
term of service
22
 He still went on with the 60-day leave;
DOCTRINE: even if performing UNOB-UBOT and for thereafter, he had clearance saying he’s
more than one year, workers may still not attain fit to work
regular status IF the duration of the employment  When he reported back, he was toled that
was made known at the start; or made dependent his services were already terminated on
upon the competition of a project Oct. .19, 2000 and was already replaced
due to expiration of contract
4. Pasos v. PNCC, July 3, 2013
 Thus, this case for illegal dismissal
FACTS: Roy Pasos started working with PNCC on
LA: he has attained regular status
Aug 26, 1996
 Repeated hiring
 “Personnel Action Form Appointment for
Project Employment” states:  Job was UNOD-UBOT
o Designated as Clerk II (Accounting)  Subsequent contracts did not indicate the
assigned to the NAIA-II Project date of completion of the contract
o The contract may be terminated NLRC: reversed
ANYTIME for cause as provided for CA: affirmed NLRC
by law and/or existing Company
Policy ISSUE: Is he a project employee? – no. he
 Services are unsatisfactory attained regular status
 No longer needed – as HELD: although he started as project employee,
determined by the company he eventually became a regular employee
 If needed, may be extended  Valid Project Employment:
beyond validity of the o whether or not the employees were
contract assigned to carry out a specific
 No obligation to re-employ project or undertaking, the
 His employment did not end on July 25, duration or scope of which was
specified at the time the employees
1996 but was extended until Aug 4, 1998 –
were engaged for that project.
more than two years later as agreed upon;
 In the case at bar, Pasos continuously
should’ve ended July 7, 1998
worked for more than two years – as
 That based on “Appointment for Project
supposed to the 3-month duration of the
Employment” he was rehired as “Accounting project with NAIA II Project
Clerk (Reliever)” assigned to the PCSO-QI o The subsequent contracts did not
project specify a particular duration for
o Shall end on Feb 11, 1999 the extension
o But was extended again until Feb o His services were just extended
19, 1999 indefinitely
 He was again hired as Accounting Clerk o For the first three months, he was
assigned to the SM-Project a project employee; thereafter, he
o THIS DID NOT SPECIFY WHEN IT’LL END was a regular bec there was no
but stated that it was co-terminus specification to the duration
with the project o Regular status not affected by the
o It supposedly ended on Aug 19, 1999 fact that he was assigned to
based on the Personnel Action Form several other projects
dated Aug 18, 1999  Proofs considered that he was NOT Project
 But he was again hired for SM Project Employee
(Package II) o Failure of an employer to file
o No end date again but specified termination reports after every
“coterminous with the project) project completion proves that an
o Based on the Oct 17, 2000 form, it employee is not a project employee
ended on Oct 19, 2000  Contrary to DO 19
 Despite termination on Oct 19, his provision
superior instructed him to report for work  PNCC submitted as
the next day – intimating that he will be evidence of its
again employed to succeeding SM Projects compliance with the
 But for this, he underwent medical exam requirement supposed
and was revealed that he had pneumonitis photocopies of its
o Thus, he was advised to take 14-day termination reports, each
sick leave listing petitioner as
o After the leave, another exam among the employees
revealed he contracted Koch’s affected. Unfortunately,
disease thus required to take 60- none of the reports
day leave submitted pertain to the
o He applied for such but was advised NAIA II Project.
that he was not entitled bec he was  Since a regular employee, he can only be
not a regular employee dismissed for just or authorized cause;
otherwise, illegally dismissed

23
CONCLUSION: he became a regular employee after been absent without valid or
the first contract bec the subsequent justifiable reason; and
assignments did not specify particular duration (2) there must have been a clear
intention on the part of the
5. Exodus International Construction v. employee to sever the employer-
Biscocho, February 23, 2011 employee relationship manifested by
FACTS: Exodus is a duly licensed labor some overt act.
contractor for the painting of residential  Burden of Proof: Employer; to show
houses, condo units and commercial buildings deliberate refusal of the employee to
 In 1999, it obtained from Dutch Boy resume his employment without intent of
Philippines a contract for the painting of returning
the Imperial Sky Garden in Binondo WORKERS CAN BE REINSTATED
 Another contract was awarded to Exodus –  Two types of construction workers:
the painting of Pacific Plaza Towers in 1. PROJECT EMPLOYEES or those employed in
Fort Bonifacio connection with a particular
 Thus, Exodus hired Biscocho et al construction project or phase thereof
o BIscocho was assigned at the and such employment is coterminous
Imperial Sky Garden from Feb 8, with each project or phase of the
1999 to Feb 8, 2000 project to which they are assigned.
o Then all of them transferred to the 2. NON-PROJECT EMPLOYEES or those
Pacific Plaza employed without reference to any
 On Nov 27, 2000, workers filed a complaint particular construction project or
for illegal dismissal phase of a project
o That they were orally notified on  Workers here fall under the second
Nov 25 category; thus, considered regular
 Exodus’ side:  In the case at bar, when one project was
o That Gregorio applied as a painter completed, they were transferred to
with the general building another project awarded to Exodus
contractor of Pacific Plaza and  No specification in the contract of the
never reported back to work duration of their employment
o Some went AWOL  Granting they were initially hired as
LA: no illegal dismissal; workers just chose not Project Employee, they can still attain
to report regular status when:
NLRC: affirmed 1. There is a continuous rehiring
CA: affirmed but also awarded monetary claims of project employees even after
sought cessation of a project; and
2. The tasks performed by the
ISSUE: Are the workers illegally dismissed? – alleged "project employee" are
NO. vital, necessary and indespensable
Can they be reinstated? to the usual business or trade of
the employer."
HELD:  Since they are regular employees with no
THERE WAS NO DISMISSAL IN THIS CASE basis for the claim of dismissal, the
 Workers failed to substantiate that they remedy is reinstatement
were dismissed
o They could not name anyone who 6. DM Consunji v. Gobres, August 8, 2010
effected their dismissal and under FACTS: carpenters Gobres, et al, worked for DM
what particular circumstance Consunji
 Burden of Proof for illegal dismissal:  Their termination from employment for each
Employer; must show that the cause is just project was reported to the DOLE
or in accordance with law  Their last assignment was at the Quad 4
 Absent any showing of an overt or positive Project in Glorietta
act proving that petitioners had dismissed o Start: Sept 1, 1998
workers, the claim for illegal dismissal o Notice of Termination: Oct. 14,
cannot be sustained 1998
THERE WAS NO ABANDONMENT OF WORK  Workers complained of illegal dismissal
 Thus, there is nothing to support claim  Consunji claims they were only project
that this is the basis for dismissal employees
o "[m]ere absence or failure to o Employed per project within varying
report for work x x x is not enough estimated periods
to amount to abandonment of work.” o That they were terminated when
"Abandonment is the deliberate and their project was completed
unjustified refusal of an employee o DM also submitted report to DOLE
to resume his employment." o Also, duly paid service incentive
 Elements for Abandonment of work (both leave and 13th month pay
must concur)  Workers say the Quad 4 project had an
(1) the employee must have failed estimated duration of 2 years to finish
to report for work or must have
24
but they were dismissed within the two- the employee concerned, with the
year period assistance of counsel if the employee so
o They had no prior notice (except desires, is given opportunity to respond
for the bulletin board post) to the charge, present his evidence or
o Thus, even though project rebut the evidence presented against him;
employees, they were still and
illegally dismissed (c) A written notice [of] termination
LA: ruled in favor of DM Consunji served on the employee indicating that
NLRC: affirmed LA upon due consideration of all the
CA: reversed; illegal dismissal and ordered circumstance, grounds have been
reinstatement established to justify his termination.
 Even though project employees, they are
entitled to know the reason for their CAUSE OF DISMISSAL DUE PROCESS
dismissal REQUIREMENT
 Due process was violated Authorized Causes 1. Written Notice
under Art 283 2. At least 30
ISSUE: whether or not respondents, as project days
employees, are entitled to nominal damages for 3. Specify grounds
lack of advance notice of their dismissal? Completion of the No prior notice
HELD: Contract or Phase required
 It was consistently found that workers are thereof
project employees – a finding binding with Failure to meet 1. Written notice
SC standards in case of 2. Within
Probationary reasonable time
 In dismissal of project employees,
Employment from effective
dismissal is governed by Section 1 (c),
date of
Rule XXIII, Book V of the Omnibus Rules
termination
Implementing the Labor Code states:
Section 1. Security of tenure. -- (a) In
cases of regular employment, the employer  In the case at bar, the termination was
shall not terminate the services of an due to the completion of work; thus, no
employee except for just or authorized prior notice is required
causes as provided by law, and subject to o It is not part of procedural due
the requirements of due process. process
 Thus, they are not entitled to Nominal
x x x x Damage

(c) In cases of project employment or 7. Malicdem v. Marulas Industrial Corp.,


employment covered by legitimate February 26, 2014
contracting or sub-contracting FACTS: Malicdem and Flores were hired by Marulas
arrangements, no employee shall be (manufacturing sacks) as extruder operators in
dismissed prior to the completion of the 2006
project or phase thereof for which the  Employment contract was for a period of 1
employee was engaged, or prior to the year
expiration of the contract between the  Every year, they were made to sign
principal and contractor, unless the Resignation/Quitclaim in favor of Marulas
dismissal is for just or authorized cause a day after the contracts ended
subject to the requirements of due process  Then they would sign another contract for
or prior notice, or is brought about by 1 year
the completion of the phase of the project
 Then in 2010, Flores was told not to
or contract for which the employee was
report anymore after signing a document
engaged
acknowledging completion of his
contractual status; the same with Malicdem
 Records show that respondents were
 Thus, they filed a case for illegal
dismissed after the expiration of their
dismissal
respective project employment contracts,
LA: no illegal dismissal; contracts merely
and due to the completion of the phases of
expired
work respondents were engaged for
NLRC: affirmed LA decision
o Thus, prior notice does not apply
CA: affirmed
 STANDARD OF DUE PROCESS, REQ OF NOTICE
 that "the repeated and successive rehiring
1. For termination of employment based on
of project employees do not qualify them
just causes as defined in Article 282 of
as regular employees, as length of service
the Code:
is not the controlling determinant of the
(a) A written notice served on the
employment tenure of a project employee,
employee specifying the ground or grounds
but whether the employment has been fixed
for termination, and giving to said
for a specific project or undertaking, its
employee reasonable opportunity within
completion has been determined at the time
which to explain his side;
of the engagement of the employee."
(b) A hearing or conference during which
25
ISSUE: Are the workers regular employees thus  In this case, the fixed-term period
illegally dismissed? – YES. stipulated in the contract is not illicit
Held o The contract valid for 12 months
 The contracts were denominated as “Project did not subject them to a
Employment Agreement” probationary period at all
o Under probation for 6 months  Fixed period in contract is not per se
o That if they comply with the circumvention of law
company’s standards and criteria, o A fixed term agreement, to be
they shall be reclassified as valid, must strictly conform with
Project Employees with respect to the requirements and conditions
the remaining period of the provided in Article 280
effectivity of the contract o TEST: whether or not the employee
 Under the Labor Code, a project employee is assigned to carry out a specific
may be converted to a regular employee project or undertaking, the
when (Maraguinot Doctrine): duration or scope of which was
(1) continuously, as opposed to specified at the time of his
intermittently, re-hired by the same engagement.
employer for the same tasks or nature of  There must be a
tasks; and determination of, or a clear
(2) these tasks are vital, necessary and agreement on, the completion
indispensable to the usual business or or termination of the
trade of the employer project at the time the
 In the case at bar, there is a clear employee is engaged.
intent to circumvent the law:  AGREED VOLUNTARILY
o No actual project  In this case, the period and the project
 Only effectivity date, assignment were clearly stated from the
duties and responsibilities, beginning
and compensation CANNOT BE REGULAR EVEN IF PERFORMING WORK
o The requisites under Maraguinot NECESSARY TO INNODATA’S BUSINESS OF DATA
present in this case PROCESSING
 As held in Consunji, the  necessity and desirability of the work
employment ceases to be performed by the employees are not the
coterminous with specific determinants in term employment, but
projects when the employee rather the "DAY CERTAIN" voluntarily
is continuously rehired due agreed upon by the parties.
to the demands of the
employer’s business and re- 9. E. Ganzon, Inc. (EGI) and Eulalio Ganzon
engaged for more projects v. Ando, Jr., February 20, 2017
without interruption FACTS: Fortunato Ando filed a case of illegal
 Being regular employees, their dismissal dismissal against EGI
is illegal  Alleges that he’s a regular employee
working as a finishing carpenter
8. Jamias v. NLRC, March 9, 2016  Terminated without prior notice and
FACTS: INNODATA is engaged in data processing hearing
and conversion for foreign clients  EGI said is only a project worker:
 It hired Jamias, et al on various dates; o Bahay Pamulinawen Project
good for one year o EGI West Insula Project
 After their respective contracts expired, LA: mere project employee
they filed a complaint for illegal NLRC: affirmed LA
dismissal CA: REVERSED
o Claims that Innodata purported them
as project employees to prevent ISSUE: Is Ando a regular employee? – NO.
them from becoming regular HELD: fixed-term employment is not per se
employees illegal
LA: dismissed case; fixed term employees  To be considered as project-based, the
NLRC: affirmed LA decision; hired for a employer has the burden of proof to show
particular season that:
CA: affirmed (a) the employee was assigned to carry out
a specific project or undertaking and
ISSUE: by performing work necessary and (b) the duration and scope of which were
desirable to the company, have the workers specified at the time the employee was
attained a regular status? – NO. engaged for such project or
HELD undertaking.
 The case of Servidad and Villanueva are  The activities of project employees may or
not applicable here bec those involve may not be usually necessary or desirable
double probation – which is prohibited in the usual business or trade of the
employer

26
 Thus, project may be:  The rehiring is not the controlling
1. Particular Job or undertaking that is determinant of the employment tenure of
WITHIN the regular or usual business the project employee
of the employer company, but which is  It was still project-to-project basis
distinct and separate, and  The conversion to regular employee after
identifiable as such, from the other lapse of one year only applies to CASUAL
undertakings of the company EMPLOYEES
o Such job or undertaking begins
and ends at determined or CONCLUSION: employment of a project employee
determinable times. automatically terminates after completion of the
2. particular job or undertaking that is project; duration may be extended so long as it
sthe regular business of the is conveyed to the worker that the employment is
corporation. for a particular project only; lapse of one year
o Such a job or undertaking must will not convert a project employee to regular
also be identifiably separate status
and distinct from the ordinary
or regular business operations 10. Herma Shipyard, Inc. v. Esguerra, April
of the employer. 17, 2017
o The job or undertaking also FACTS: Herma (shipbuilding and repair) hired
begins and ends at determined or workers as welder, leadman, pipe fitter, etc
determinable times
 In 2009, they filed illegal dismissal case
 In this case, the three project employment claiming they were regular employees who
contracts signed by Ando explicitly have been continuously performing tasks
stipulated the agreement "to engage [his] usually and desirable
services as a Project Worker" o Signed contract for a fixed period
o [His] services with the Project of one-four months to make it
will end upon completion of the appear they are project-based
phase of work for which [he was]
 Herma said they were only project
hired for and is tentatively set on
employees and the job they were hired for
(written date). However, this could
had been completed
be extended or shortened depending
LA: project based only
on the work phasing.
NLRC: affirmed LA
 Stipulation in the contract saying it can CA: project based who attained regular status
be “extended or shortened” depending on  performing tasks that are necessary,
the phasing” will not discount the fact desirable, and vital to the operation of
that he is still a project employee petitioners' business
 Despite adjustments, still a project  Herma failed to present proof that
employee when: respondents were hired for a specific
o Agreed upon knowingly and period
voluntarily  Not clear from the contract that the
o Both parties dealt with each other termination of the project was
on more or less equal terms – no determinable at the time of commencement
moral dominance
 Workers were assigned to different
o Apparent that the period was not
projects different departments of Herma
imposed to preclude acquisition of
Shipyard
tenurial security
 Failed to prove that they reported the
 In this case, Ando was adequately notified
termination to DOLE
that his employment was anchored on the
two projects ISSUE: Did the workers attain regular status? –
o There was no force/vitiated consent NO.
o No attempt to frustrate his Held: PROJECT EMPLOYEES
security of tenure  TEST: whether they were assigned to carry
PROJECT EMPLOYMENT VS FIXED-TERM EMPLOYMENT: out a specific project or undertaking, the
PROJECT FIXED TERM duration and scope of which was specified
DURATION Project or Day certain at, and made known to them, at the time of
work hired for their engagement.
INFORMATION At the time of engagement They knowingly and voluntarily entered into and
signed the project-based employment contracts
 In this case, it was conveyed to Ando that
 In each proj they were hired, they were
the duration of his employment is UPON
fully apprised of the nature and scope of
COMPLETION of the phase of work for which
their work
he was hired for
o Fact determinable  Contract clearly provides that they were
o Expected completion is made known project based whose services are
o The duration is still determinable coterminous with the completion of the
WORKING FOR MORE THAN A YEAR AND JOB NECESSARY specific task indicated
OR DESIRABLE DID NOT IMPAIR VALIDITY OF PROJ o employment shall end upon the
EMPLOYMENT arrival of the target completion

27
date or upon the completion of such  That in case of delay, the employment may
project be extended until completed
o “hanggang 4/30/2009 o sa sandaling  There can be no definite and exact
matapos ang nasabing gawain o completion date – only approximate or
anumang bahagi nito kung saan siya estimate
ay inupahan o kung saan ang kanyang
serbisyo” 11. Minsola v. New City Builders, Inc.,
o “ay hindi maituturing na January 31, 2018
pampirmihan or "regular" na kawani FACTS: NEW CITY (Construction) hired Minsola as
ano man at gaano man katagal ang laborer for the structural phase of its Avida
kanyang paglingkod sa Kumpanya Tower 3 Project
Performance by project-based employees of tasks  Contract says the duration will last until
necessary and desirable to the usual business the competition of the structural phase
operation of the employer will not automatically  Upon completion of the said project, his
result in their regularization. employment was terminated
 project-based employees may or may not be  The next day, New City re-hired him as a
performing tasks usually necessary or mason for the architectural phase of Avida
desirable in the usual business or trade 3
of the employer.
 In Dec., it was found that Minsola had no
 In the case at bar, while the job is appointment paper as a mason for the
necessary and desirable to the business, architectural phas. Thus, he was
the same were distinct, separate, and instructed to update his employment record
identifiable from the other projects or
but this was unheeded by Minsola –
contract services.
continued work without an appointment
Repeated rehiring of project employees to
paper
different projects does not ipso facto make them
regular employees.  The next month, he was summoned to sign
his appointment paper but he still refused
 length of service (through rehiring) is
to comply
not the controlling determinant of the
o Stormed out of the office and never
employment tenure [of project-based
reported back for work
employees but, as earlier mentioned],
whether the employment has been fixed for  After which, Minsola filed a complaint for
a specific project or undertaking, with illegal dismissal
its completion having been determined at LA: only project employee
the time of [their] engagement  Working for more than a year did not
 RATIONALE: construction firms cannot convert him to regular
guarantee work and funding for its  Also, he was not terminated; he merely
payrolls beyond the life of each project stopped reporting
as they have no control over the decisions NLRC: a regular employee who was constructively
and resources of project proponents or dismissed
owners. Thus, once the project is  Attained regular status when continued
completed it would be unjust to require beyond the original term of his project
the employer to maintain these employees employment without benefit of a new
in their payroll since this would be contract fixing the duration of his
tantamount to making the employee a employment
privileged retainer who collects payment CA: Reversed NLRC decision; only a project
from his employer for work not done, and employee
amounts to labor coddling at the expense  Upon completion of the first project, he
of management was rehired in a different capacity
 In this case, Herma by the nature of its
business only hires employee depending on ISSUE: is Minsola a project employee? – YES.
existing contracts for shipbuilding and HELD: Minsola is a Project Employee of New City
repair  In a project-based employment, the
 Also, respondents' employment were neither employee is assigned to a particular
continuous and uninterrupted nor for a project or phase, which begins and ends at
uniform period of one month a determined or determinable time.
o gaps coincide with the completion (i) the employee was hired to carry
of a particular project and the out a specific project or
start of a new specific and undertaking, and
distinct project for which they (ii) the employee was notified of
were individually rehired. the duration and scope of the
 By the end of each project, Herma submits project.
the required report to DOLE  BURDEN: employers must prove that the
PROJECT EMPLOYMENT CONTRACT NOT SUBJECT TO A duration and scope of the employment were
CONDITION – “PALAWIGIN NG MAS MAHABA” specified at the time the employees were
 PAR 10 just shows that the contract was engaged, and prove the existence of the
coterminous project.

28
 In the case at bar, Minsola was hired to
perform work for two different phases
o First for structural phase
o Second for architertural phase
o Thus, he was adequately informed of
his employment status as project
employee at the start of his
engagement
CONTINUOUS WORK + NECESSARY TO BUSINESS DID NOT
CONVERT HIM TO A REGULAR EMPLOYEE
 There are two types of project employees:
(i) a particular job or undertaking that
is WITHIN the regular or usual business of
the employer company, but which is
distinct and separate, and identifiable as
such, from the other undertakings of the
company; or
(ii) a particular job or undertaking that
is NOT WITHIN the regular business of the
corporation."
 The construction industry is unique;
performance of work that is necessary and
vital to the employer's construction
business, and the former's repeated
rehiring, do not automatically lead to
regularization
o length of service is not the
controlling determinant of the
employment tenure of a project
employee, but whether the
employment has been fixed for a
specific project or undertaking,
its completion has been determined
at the time of the engagement of
the employee.
o In construction industry, an
employee's work depends on the
availability of projects
NO CONSTRUCTIVE DISMISSAL
 There is constructive dismissal "where
there is cessation of work, because
continued employment is rendered
impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a
diminution in pay" and other benefits.
o In the case at bar, Minsola failed
to advert to any particular act
showing that he was actually
dismissed or terminated from his
employment. Neither did he allege
that his continued employment with
New City was rendered impossible,
unreasonable or unlikely; nor was
he demoted, nor made to suffer from
any act of discrimination or
disdain
o On the contrary, it was him who
stormed out of the office; thus no
illegal dismissal
CONCLUSION: Construction industry is unique

29
SEASONAL EMPLOYEES o Even though they do not work for
1. Benares v. Pancho, April 29, 2005 one whole year but only for the
FACTS: Jaime Panco et al alleged to started duration of the season
working with Had Maasin II, a sugar cane o The diff: they are called to work
plantation in Negros Occidental owned by Benares when in season and laid off
as SUGAR FARM WORKERS TEMPORARILY but not separated
 weeding, cutting and loading canes,  Merely on leave until re-
planting cane points, fertilizing, employed
cleaning the drainage, etc  In the case, the SC gave credence to the
 They instituted a complaint before DOLE findings of NLRC as affirmed by the CA
regarding their wages and other benefits o That it did not remand the case bec
they claimed they are entitled under the it opted to appreciate the merits
law based on available doc is not GAD;
o Claimed to be terminated without it was a judgment call
being paid termination benefits o The quantum of evidence required of
which they said should be mandatory NLRC is only substantial evidence
 After a routine inspection, DOLE endorsed since quasi-judicial
the complaint to Regional Arbitration  FINDINGS: even the LA found that the
branch of NLRC in Bacolod workers were regular (although dismissed
o No amicable settlement it bec the position papers failed to
LA: dismissed the complaint for lack of merit alleged illegal dismissal)
NLRC: reversed; workers attained the status of  NLRC and CA held them to be regular
regular seasonal workers since working from 1964 seasonal workers having worked for more
to 1985 than one year, whether continuous or
 HDA failed to prove that they were broken in petitioner's hacienda.
terminated for just cause thus illegally o Decision of NLRC having expertise
dismissed accorded by the SC in this case not
CA: Affirmed NLRC ruling only with respect but with finality
CONCLUSION: Regular Seasonal Workers bec
HDA claimed that there was GAD since NLRC did findings of quasi-judicial being expert
not even remand the case when there was, and
admitted by NLRC, a gray area in the case (not
mentioned what) and even awarded COLA and ERA 2. Hacienda Bino/Hortencia Starke v. Cuenca,
despite not being prayed April 15, 2005
 Also, NLRC did not even explain why it FACTS: 76 workers (out of 220) of Had Bino
held that the payroll submitted by HAD was (owned by Starke) performs cultivation, planting
not convincing of cane points, fertilization, watering,
weeding, harvesting, and loading of harvested
ISSUE: whether respondents are regular employees sugarcanes to cargo trucks.
of Hacienda Maasin and thus entitled to their  During off-milling season, Starke issued
monetary claims – YES. REGULAR SEASONAL an Order or Notice:
EMPLOYEES HAVING WORKED FOR MORE THAN 1 YEAR o Please bear in mind that all those
who signed in favor of CARP are
HELD expressing their desire to get out
 In Mercado vs NLRC, the SC ruled that of employment on their own
seasonal workers do not become regular volition.
employees by the mere fact that they have o Those who did not sign for CARP
rendered at least one year of service, will be given employment
whether continuous or broken, because the  The 76 workers regarded the notice as
proviso in the second paragraph of Article their termination thus filed an illegal
280 demarcates as "CASUAL" EMPLOYEES, all dismissal case with money claims
other employees who do not fall under the o Alleged that they are regular and
definition of the preceding paragraph. permanent workers
o Seasonal workers are NOT casual o Dismissed not for just cause but
employees for applying as beneficiaries under
o In the Mercado case, the facts were CARP
the workers were engaged to do  Starke said bec of classification of its
agricultural work; after which they land (some industrial, commercial and
would be free to render service to residential), there was little work
other farms who need their services already and it was off-season
 In contrast, in the case of Hacienda o THAT THEY WERE ONLY SEASONAL THUS
Fatima, the workers performed SAME tasks EMPLOYMENT LEGALLY ENDS UPON
every season for several years COMPLETION OF THE PROJECT OR SEASON
o Thus, they were considered regular o That she issued the notice to give
employees for their respective preference to those who supported
tasks the re-classification
o Also, the workers refused to go to
work

30
LA: Illegally dismissed employees, it is not enough that they
NLRC: affirmed perform work or services that are seasonal
CA: affirmed in nature. They must have been employed
 Stare decisis re status of sugar workers only for the duration of one season.
does not apply here (as held in Mercado, o In this case, although work was
they are held NOT regular and permanent seasonal, no proof that they were
farm workers bec workers work for a hired for the duration of one
definite period bec the land was small; in season only.
this case, it was 236 ha) o In fact, payroll says they were
o Mercado deviates but not abandon GR hired since 1991
that sugar workers are regular and
permanent 3. Universal Robina Sugar Milling Corp. v.
Acibo
ISSUE: Are the workers seasonal employees? – NO. FACTS: Universal Robina is engaged in sugar cane
Held: milling business
There’s no stare decisis  Employee-complainants here were hired as
 doctrine of stare decisis, when a court drivers, crane operators, bucket hookers,
has laid down a principle of law as welders, mechanics, laboratory attendants
applicable to a certain state of facts, it and aides, steel workers, laborers,
will adhere to that principle and apply it carpenters and masons, among others.
to all future cases in which the facts are o Contract: for 1 month OR for a
substantially the same. given season
o Repeatedly hired them for same
 Facts different from Mercado
duties and signed new contracts
Mercado This case
when re-hired
work only for a the enormity of the
definite period for a size of the sugar  Workers filed complaint for regularization
farm worker, after hacienda of and receive benefits under CBA
which they offer petitioner, with an LA: dismissed; only seasonal or project
their services to area of two hundred employees
other farm owners, thirty-six (236)  not at all directly related to the
considering the area hectares, simply do latter’s main operations
in question being not allow for  cannot be regularized; employment
comparatively small, private respondents coterminous with completion of each
comprising of to render work only project
seventeen and a half for a definite NLRC: reversed; regular employees
(17½) hectares of period.  UNAB-UTOB
land, such that the  Repeatedly hired
planting of rice and CA: affirmed; regular although seasonal
sugar cane thereon  TEST: reasonable connection between a
could not possibly particular activity performed by the
entail a whole year employee vis-à-vis the usual trade or
operation. business of the employer.
 performed petitioners did not
 Tasks were necessary if not indispensable
different present any
evidence that the  Employed for at least 1 year; repeatedly
phases of
respondents were hired
agricultural
work in a required to perform
given year. certain phases of Universal’s Petition
 Free to work agricultural work  Contractual or project/seasonal
for other farm for a definite  engaged for a fixed and predetermined
owners “not period of time duration of, on the average, one (1) month
hired at a time that coincides with a particular
regularly and phase of the company’s business operations
repeatedly for or sugar milling season.
the same  employment legally ends upon the end of
phase/s of the predetermined period;
agricultural
work, but on ISSUE: are the workers seasonal employees? – NO.
and off for regular seasonal employees
any single
phase thereof.” HELD:

 TEST: reasonable connection between the THREE CLASSES OF WORKERS UNDER 280
particular activity performed by the 1. REGULAR
employee in relation to the usual trade or a. has been engaged to perform
business of the employer. activities which are usually
 DOCTRINE: For respondents to be excluded necessary or desirable in the usual
from those classified as regular business or trade of the employer
31
TEST: reasonable connection season BUT called to work from
b. Exn: casual whose employment lasted time to time
for more than 1 year 3. No proof that workers worked elsewhere
2. PROJECT/SEASONAL after their completion of tasks with
- the employment has been fixed for a Universal
specific project or undertaking whose  But since REGULAR SEASONAL, not
completion or termination has been automatically covered by CBA since it is
determined at the time of the for regular employees only; Thus, CBA
engagement of the employee benefits awarded are deleted
PROJECT REQUISITES:
A. designation of a specific 4. Gapayao v. Fulo, June 13, 2013
project or undertaking for FACTS: worker-deceased Fulo died of acute renal
which the employee is hired failure secondary ot 1st degree burn 70%
B. clear determination of the electrocution while doing repairs at the
completion or termination residence and business establishment of Gapayao
of the project at the time  Gapayao extended help due to Christian
of the employee’s beliefs
engagement  Fule wido waived right and desisted from
- Unlike regular, length of time is not filing any crirminal or civil action
controlling  Parties entered into a Compromise
- in fact, last for more than a year, Agreement
depending on the needs or o P40k to heir
circumstances of the project. o Release Gapayao from any claims
- EXN: rehiring may serve as a badge of  Thereafter, widow claimed for social
regular employment when the activities security benefits with SSS but learned
performed by the purported "project" that deceased was not registered
employee are necessary and o Widow insisted that husband was
indispensable to the usual business or employed from 1983 until death in
trade of the employer = REGULAR 1997 = 14 years
SEASONAL REQUISITES  laborer in the agricultural
A. the employee must be performing landholdings, a harvester in
work or services that are the abaca plantation, and a
seasonal in nature repairman/utility worker in
several business
B. he had been employed for the establishments owned by
duration of the season petitioner
- exn: continuously and repeatedly hired  Pakyaw workers are employees
to perform the same tasks or
 Control delegated to
activities for several seasons or even
caretaker
after the cessation of the season,
this length of time may likewise serve  Work essential to
as badge of regular employment = harvest
REGULAR  Ever stopped working
o called to work from time to time for him; even in
and are only temporarily laid bakery and grocery
off during the off season o SSS conducted field investigation:
o merely on leave until re-  Fulo was an employee ON AN
employed EXTRA BASIS of Gapayao with
3. CASUAL compensation of P5 to P60
4. CONTRACTUAL OR FIXED TERM – Brent vs  Not only for farm but also
Zamora house repairs
o Thus, SSS demanded Gapayao to pay
 In this case, they are regular seasonal SSS constributions
workers:  When refused, SSS required
1. perform various tasks that did not at Gapayao to present
all pertain to any specific phase of documentary and teti
URSUMCO’s strict milling operations evidence
that would ultimately cease upon SSC: Fulo was an employee working for 9 months a
completion of a particular phase in year
CA: affirmed
the milling of sugar – their duties
were regularly and habitually needed;
not for production of sugarcane ISSUE: Is there an EER? – YES.
o thus, this is necessary and Are Pakyaw workers regular employees? – YES.
desirable
2. regularly and repeatedly hired to Held:
perform the same tasks year after year Farm workers may be considered regular seasonal
o Not working for whole year but employees.
only for duration of the milling

32
 Farm workers generally fall under the
definition of seasonal employees
 seasonal employees may be considered as
regular employees
 REGULAR SEASONAL EMPLOYEES ARE THOSE
CALLED TO WORK FROM TIME TO TIME
o during the off season, they are
temporarily laid off
o regular bec of nature of job and
NOT length of time they have worked
 TEST: reasonable connection between the
particular activity they perform and the
usual trade or business of the employer
o usually necessary or desirable in
the usual business or trade of the
employer
o repeated and continuing need for
its performance as sufficient
evidence of the necessity if not
indispensability of that activity
to the business
o HENCE, THE EMPLOYMENT IS ALSO
CONSIDERED REGULAR, BUT ONLY WITH
RESPECT TO SUCH ACTIVITY AND WHILE
SUCH ACTIVITY EXISTS.
 FACTS USED IN THIS CASE:
1. Working on petitioner’s land by harvesting
abaca and coconut, processing copra, and
clearing weeds
o was continuous in the sense that it
was done for more than one
harvesting season
2. other tasks: a helper in the bakery,
grocery, hardware, and piggery – all owned
by petitioner
o even during the off season, the
deceased was still in the employ of
petitioner.
3. COMPROMISE AGREEMENT EXECUTED
o he was described as the employer of
the deceased
o this was freely entered by him

PAKYAW WORKERS ARE REGULAR EMPLOYEES, PROVIDED


THEY ARE SUBJECT TO THE CONTROL OF PETITIONER

 In this case, petitioner wielded control


over the deceased in the discharge of his
functions

CONCLUSION: since there’s EER deceased has right


of an employee covered by the Social Security
Act

33
Teachers and Professors o As held in Labajo vs Alejandro, the
1. Magis Young Achievers’ Learning Center v. period in the Manual is the MAX and
Manalo may be permanent in less than 3
FACTS: 2002, Manalo was hired as teacher and years
acting principal with P15k salary in Magis o The rule in the Manual has not
 March 29, 2003, he wrote a resignation changed since
letter due to personal and family reasons  REQUISITES:
 March 31, she received a letter re cost- 1. Full-time teacher
cutting scheme to be imposed by the 2. 3 year service
school, one of which is abolishing the 3. Satisfactory service
position of Principal thus her contract  Req of valid probationary employment:
won’t be renewed specify the term of effectivity; failure
 April, Manalo instituted a complaint for may mean contract is binding for 3 full
illegal dismissal and non-payment of year probationary period
benefits  VALID CAUSE FOR TERMINATION:
o That abolition of the position not 1. Causes provided by law
one of valid grounds to terminate 2. End of every yearly contract within
employment the three-year period and does not
 LC requires 30 day notice to meet reasonable standard
DOLE and employee  Thus, in the case at bar, Manalo has not
 Magis said she was legally terminated yet achieved permanent or regular status
o She was on one-year probation and o Her position as Acting Principal is
it has lapsed but failed to meet just temporary
criteria pursuant to DECS Manual  Revocable at will
that only 75 full-time teachers who  RE RESIGNATION
rendered 3 satisfactory service o SC agrees with CA that it is
shall be considered permanent invalid bec either no acceptance by
LA: dismissed complaint the school or not made voluntarily
 Not dismissed but resigned  RE CONTENTIOUS PROVISION IN THE CONTRACT
NLRC: reversed; ordered reinstatement o Doubt as to period of the
CA: affirmed NLRC decision employment
 Manalo: period in blank
ISSUE: Is Manalo a permanent employee thus  Magis: valid for one year
illegally terminated? – PROBATIONARY BUT (April 2002 to March 2003)
ILLEGALLY DISMISSED o Using civil code, doubts to be
HELD: construed against the party who
 EMPLOYEES MAY BE ON PROBATION BUT drafted it
o This is legit management o But the handwriting in Magis’s copy
prerogative is different from the handwriting
o But while there is no law filed up by the other
regulating the min limit, there is o Thus, there is no period in the
a MAX “trial period” contract
 Art 281: shall not exceed 6  RE ISSUE OF ILLEGAL DISMISSAL
months from the date o Since there is no period in
employee started working contract, the three-year
 EXN: apprenticeship probationary period governs
agreement o During this period, employee may
 Terminate: failure to meet only be terminated if there’s
REASONABLE standards made competent proof that her
known at the start of performance was unsatisfactory;
employment otherwise, entitled to continue for
o The limit in 281 DOES NOT apply to 3 years
all classes  Deemed renewed for 2 school
o Academic personnel in private are years
governed by the 1992 Manual of  So yes, there’s illegal
Regulations for Private Schools: dismissal
 Elementary and secondary -
not more than 3 consecutive 2.St. Mary’s University v. CA, March 8,
years 2005
 Tertiary – 6 consecutive FACTS: DONELO started as a teacher on
regular semester or 9 contractual basis in St. Mary’s in 1992
consecutive trimesters  In 1995, he was issued an appointment as
o DOLE-DECS-CHED-TESDA Order: counted Assistant Professor I then promoted to III
in terms of school years and not
 He taught until school year 1999-2000 bec
calendar years
school discontinued to give him teaching
 REASON FOR DIFFERENT RULE (Escudero vs OP) assignments
o 6-mo probation is just the GR

34
 Thus, he filed a complaint for illegal  Thus, Petitioners filed case for
dismissal underpayment of wages
 St. Mary countered saying he is a part-  Sept 7, 2000 -- Pending this, they
time instructor only received memo saying their contract has
o Never attained full time status expired and not renewed; effective 30 days
since did not carry a load of at from notice for not passing the
least 18 units for 3 consecutive Performance Appraisal System for Teachers
years (PAST) and other requirements
o Also, he was under investigation  Complaint amended to include illegal
for giving grades to students who dismissal
did not attend classes but he never LA: Illegally dismissed
responded here NLRC: affirmed LA decision
LA: legally dismissed bec never attained full  The New Guidelines cannot be imposed
time status pursuant to Manual midway the effectivity of the contract of
NLRC: reversed LA rulilng the probationary employees
CA: Affirmed NLRC
 Any standard must be made before start of
employment
ISSUE: Has Donelo attained permanent status? – CA: reversed; not regular thus optional for AMA
HELD: Manual provides requites to be regular not to renew
teacher
 AMA has inherent right to upgrade
 REQUISITES TO BE FULL-TIME standards
1. At least min academic qualifications
prescribed by the Departmnet ISSUE: Can new standards be imposed midway? –
2. Paid monthly or hourly based on YES.
regular teaching load HELD:
3. Total working day of not more than 8
 RULE ON EMPLOYMENT ON PROBATIOARY STATUS
hours a day devoted to the school
o May be terminated for a just cause
4. No other remunerative occupation
when he fails to qualify in
elsewhere that will conflict with
accordance with reasonable standard
working hours in the school
5. Not teaching full-time in any other made known at the time of his
educ institution engagement
o If allowed to work after period, he
 DECS orders provide that regular full-time is considered regular employee
load is between 15 and 24 units; Part time o Only when contract is renewed after
is not more than 12 units the third year does he become
 In this case, Donelo has GENERALLY have regular (pursuant to Manual)
less than 12; also teaches elsewhere from o Period must be stipulated;
1993 to 1996 otherwise, considered for 3 full
 Thus, he did not acquire permanent status; probationary period
can be terminated; twin-notice rule not  ACADEMIC FREEDOM
applicable since not regular or permanent 1. Who may teach
 RE RIGHTS OF PART-TIME EMPLOYEES 2. Who may be taught
o Could not be terminated without 3. How lessons shall be taught
just cause before the end of agreed 4. Who may be admitted to study
period o Thus, the new guidelines are valid
o Only after the expiration of agreed o It is the prerogative of school to
term can he be terminated unless set high standards of efficiency
renewed  TERM UNDER THE CONTRACT IN THIS CASE
 In this case, no contract presented but o Term-to-term basis
judicial notice applied: generally on a o Total of 2 years and three months
per semester or term basis when notice of termination was
CONCLUSION: Illegally dismissed although part- given
time FIXED-TERM PROBATIONARY
Period agreed upon Period based on
3. Mercado v. AMA Computer College, April agreement OR max 6
13, 2010 months (or 3 years
FACTS: PETITIONERS MERCADO ET AL were faculty for teachers)
members of AMA; started teaching May 25, 1998 Employment up to Not automatically
 Contract: non-tenured said period only terminated; but
 Based on new screening guidelines: (expires on its comply with
maintained based on extensive teaching own) requisites to be
experience, capability, potential; valid non-renewal
 entitled to salary increases IF guidelines  During probation, employer must also base
achieved its probationary standards in conformity
 failed to meet passing rating thus not with the probationary rules: reasonable
given salary increase and communicated
 NEW GUIDELINES ARE VALID BUT

35
o They were not introduced as employee to meet the standards of
evidence and no proof how they were the employer in the case of
applied to the teachers probationary employment, it shall
o Thus, the “just cause” was not be sufficient that a written notice
supported hence the termination is is served the employee, within a
illegal reasonable time from the effective
CONCLUSION: there is inherent right to impose date of termination.
upgraded standard but present it in court to o As a matter of due process,
justify “just and reasonable standards” for non- teachers on probationary
renewal of probationary employees employment, just like all
probationary employees, have the
4. Colegio del Santisimo Rosario v. Rojo, right to know whether they have met
September 4, 2013 the standards against which their
FACTS: Colegiio hired high school teacher Rojo performance was evaluated. Should
on probationary basis from 1992 to 1995 (three they fail, they also have the right
terms) to know the reasons therefor
 In 1995, school decided not to renew his o absent any showing of
contract unsatisfactory performance on the
part of respondent, it can be
 Thus, Rojo filed a case for illegal
presumed that his performance was
dismissal
satisfactory, especially taking
o That he served for 3 consecutive
into consideration the fact that
terms thus regular status attained
even while he was still more than a
 Colegio said he was not dismissed; his year into his probationary
contract just expired and not renewed employment, he was already
LA: illegally dismissed designated Prefect of Discipline
 Three years mean 3 10 months, not 12 o he uncovered incidence of drug use
NLRC: affirmed LA decision in the school thus a great
CA: affirmed contribution = satisfactory service

ISSUE: is a teacher on probationary status 5. Son v. University of Sto. Tomas, April


automatically becomes a regular after rendering 18, 2018
service for 3 consecutive school years? – YES. FACTS: Professors Son et al are full time
professors at UST CFAD and Philosophy and
HELD: At the end of this third year, the members of the Faculty Union with CBA
employer may now decide whether to extend a  they were hired 2005/2004 on probationary
permanent appointment to the employee, primarily status
on the basis of the employee having met the  under the CBA, a tenured Faculty is:
reasonable standards of competence and o rendered 6 consecutive semesters
efficiency set by the employer. For the entire with 15 or more units
duration of this three-year period, the teacher
o Master’s degree required but may
remains under probation.
obtain within 5 semesters; if not,
 Can only be terminated for a just cause or he shall be separated at the end of
when he fails to qualify in accordance the fifth semester BUT if he is
with reasonable standards made known to made to serve even without the
him at the time of his engagement
master’s degree, he shall be deemed
 SEC 93 of the 1992 Manual: to have attained tenure
o Full-time teachers who have
 DECS and CHED Memo on Min Faculty
satisfactorily completed their
Qualifications
probationary period shall be
o For Undergraduate Program:
considered regular or permanent.
 Holder of professional
o no vested right to a permanent
license
appointment shall accrue until the
employee has completed the  At least bachelor’s degree
prerequisite three-year period  However, in specific fields
necessary for the acquisition of a where there is dearth of
permanent status. [However, it must holders of Master's degree,
be emphasized that] mere rendition or a holder of a
of service for three consecutive professional license
years does not automatically ripen requiring at least a
into a permanent appointment. It is bachelor's degree may be
also necessary that the employee be qualified to teach.
a:  In this case, Petitioners did not have
1. full-time teacher, and master’s degree but hired by UST on the
2. the services he rendered are condition that they shall obtain it within
satisfactory.” the prescribed period
o If the termination is brought about  Petitioners enrolled but were unable to
by the completion of a contract or finish BUT were allowed to continue to
phase thereof, or by failure of an teach beyond the period
36
 In 2010, CHED issued a Memo re strict 6. Sagun v. ANZ Global Services and
implementation of minimum qualification Operations (Manila), Inc.
requirements particularly the Master’s FACTS: ENRIQUE SAGUN was employed at HSBC Hong
degree and licensure requirements Kong when he applied as Payments and Cash
 Thus, UST wrote petitioners saying they Processing Lead at ANZ in Manila
are ceasing to employ them for failure to  He passed the interview and was offered
comply the position of Customer Service Officer,
o Petitioners did not reply thinking Payments and Cash Resolution which he
they are protected by the CBA accepted
provision  In the contract was the Pre-employment
o Then, they received a screening and ongoing screening clause
termination/thank you letter o Undergo police record check prior
 Thus, they filed a case for illegal to commencing work
dismissal o Employment is conditional subject
LA: Illegally dismissed to:
NLRC: Affirmed LA decision  Police record compatible
CA: reversed  Other required background
 CBA provision is valid insofar as not check
contrary to law  Holding all necessary visas,
o Must be ready in conjunction with immigration requirements
statutory and admin regulations  If not satisfactory, ANZ may
choose not to commence your
ISSUE: Have the professors attained regular employment or end your
status? – NO. employment immediately
HELD: Master’s Degree requirement valid  Sagun tendered his resignation with HSBC
 DECS issued the master’s requirement in and transmitted pre-employment doc reqs
1992 with ANZ
 CBA made in 2006 thus violative of the  But ANZ informed him that job offer was
1992 Revised Manual withdrawn on the ground of MATERIAL
INCONSISTENCIES in his declared
 Thus, both parties are in violation of the
information and document, particularly at
law; in pari delicto
Siemens:
 Private educational institutions must
1. Only Level 1 not Level 2 Technical
still supplementarily refer to the
Support Representative
prevailing standards, qualifications, and
conditions set by the appropriate 2. Terminated not resigned
government agencies  Thus, Sagun instituted Illegal Dismissal
REQUIREMENTS FOR FULL-TIME STATUS: case claiming that employment contract has
1. Probationary Period: already been perfected
a. Elementary, Secondary: 3 LA: DISMISSED; no perfected employment contract
consecutive years NLRC: Affirmed LA decision
b. Tertiary: 6 consecutive regular CA: affirmed
semesters or 9 consecutive regular
trimesters ISSUE: was there a perfected employment
Deemed Regular if rendered work beyond contract? – YES BUT with suspensive condition
period HELD:
2. Minimum Qualifications:  Perfection of a Contract – at the moment
a. Master’s Degree – major fields the parties come to agree upon its terms
b. Appropriate Professional License and conditions, and thereafter, concur in
for at least a bachelor’s degree – the essential elements thereof
for professional courses  In this case, there was a perfected
3. Full Time Status contract but contained several conditions
a. Minimum academic qualification such as: "satisfactory completion of any
otherwise, part-time only checks;” his employment depended on the
PETITIONERS ARE NOT FULL TIME outcome of his background check
 minimum requirement is neither subject to (SUSPENSIVE CONDITION)
the prerogative of the school nor to the o every future and uncertain event
agreement between the parties. For all upon which an obligation or
intents and purposes, this qualification provision is made to depend. It is
must be deemed impliedly written in the a future and uncertain event upon
employment contracts which the acquisition or resolution
of rights is made to depend by
those who execute the juridical
act.
o its effectivity shall take place
only if and when the event which
Conditional Employment Contract constitutes the condition happens
or is fulfilled

37
1987 Constitution, Article XIII, Section 3 4. Business enterprises with a capitalization of
Section 3. The State shall afford full not more than P500,000 and employing not more
protection to labor, local and overseas, than 20 workers.cralaw
organized and unorganized, and promote full
employment and equality of employment SECTION 4. When Wage Increase Due Other Workers.
opportunities for all. — a) All workers and employees who, prior to
It shall guarantee the rights of all workers to July 1, 1989, were already receiving a basic
self-organization, collective bargaining and wage above the statutory minimum wage rates
negotiations, and peaceful concerted activities, provided under Republic Act 6640 but not over
including the right to strike in accordance with P100.00 per day shall receive a wage increase
law. They shall be entitled to security of equivalent to that provided in the preceding
tenure, humane conditions of work, and a living Section.cralaw
wage. They shall also participate in policy and
decision-making processes affecting their rights b) Those receiving not more than the following
and benefits as may be provided by law. monthly basic wage rates prior to July 1, 1989
The State shall promote the principle of shared shall be deemed covered by the preceding
responsibility between workers and employers and subsection:
the preferential use of voluntary modes in
settling disputes, including conciliation, and (i) P3,257.50 — where the workers and employees
shall enforce their mutual compliance therewith work everyday, including premium payments for
to foster industrial peace. Sundays or rest days, special days and regular
The State shall regulate the relations between holidays.cralaw
workers and employers, recognizing the right of
labor to its just share in the fruits of (ii) P3,041.67 — where the workers and employees
production and the right of enterprises to do not work but considered paid on rest days,
reasonable returns to investments, and to special days and regular holidays.cralaw
expansion and growth.
(iii) P2,616.67 — where the workers and
Labor Code: Articles 218, 290 (as amended by employees do not work and are not considered
R.A. 10395) paid on Sundays or rest days.cralaw
A. Concept and Definition
(iv) P2,183.33 — where the workers and employees
do not work and are not considered paid on
Labor Code: Articles 97-98
Saturdays and Sundays or rest days.cralaw
Omnibus Rules: Book III, Rule VII, Sections 2-9
c) Workers and employees who, prior to July 1,
SECTION 2. Effectivity. — The Act takes effect 1989, were receiving a basic wage of more than
on July 1, 1989, 15 days following its complete P100.00 per day or its monthly equivalent, are
publication in two newspapers of general not by law entitled to the wage increase
circulation on June 15, 1989 pursuant to Section provided under the Act. They may however,
15 thereof.cralaw receive wage increases through the correction of
wage distortions in accordance with Section 16,
SECTION 3. Amount of Minimum Wage Increase. — Chapter I of these Rules.cralaw
Effective July 1, 1989, the daily statutory
minimum wage rates of covered workers and SECTION 5. Daily Statutory Minimum Wage Rates. —
employees shall be increased as follows: The daily minimum wage rates of workers and
employees shall be as follows:
a) P25.00 for those in the National Capital
Region; Sector/Industry Under Under
R. A. 6640 R. A. 6727
b) P25.00 for those outside the National Capital (Effective (Effective
Region, except for the following: Dec. 14, July 1,
1987) 1989)
P20.00 for those in plantation agricultural
enterprises with an annual gross sales of less A. NATIONAL CAPITAL REGION
than P5 million in the fiscal year immediately
preceding the effectivity of the Act; Non-Agriculture P64.00
P89.00
P15.00 for those in the following enterprises:
Agriculture
1. Non-plantation agriculture Plantation 54.00 79.00
2. Cottage/handicraft Non-Plantation 43.50 68.50
3. Retail/Service regularly employing not more Cottage/Handicraft
than 10 workers Employing more than 30
workers 52.00 77.00

Employing not more than


38
30 workers 50.00 75.00 employing not more than 20 workers
Non-Agriculture 64.00 79.00
Private Hospitals
With bed capacity of more Agriculture Plantation
than 100 64.00 89.00 Products Other than Sugar 54.00
69.00
With bed capacity of 100
or less 60.00 85.00 Sugar 48.50 63.50

Retail/Service Private Hospitals 60.00 75.00


Employing more than 15
workers 64.00 89.00 Retail/Service
Cities w/ population of more
Employing 11 to 15 than 150,000
workers 60.00 85.00
Employing more than
Employing not more than 15 workers 64.00
10 workers 43.00 68.00 79.00

B. OUTSIDE NATIONAL CAPITAL REGION Employing 11 to 15 workers 60.00


75.00
Non-Agriculture 64.00 89.00
Municipalities and Cities
Agriculture w/ population of not more
Plantation with annual gross than 150,000
sales of P5M or more 54.00
79.00 Employing more than 10
workers 60.00 75.00
Plantation with annual gross
sales of less than P5M 54.00 SECTION 6. Suggested Formula in Determining the
74.00 Equivalent Monthly Statutory Minimum Wage Rates.
— Without prejudice to existing company
Non-plantation 43.50 58.50 practices, agreements or policies, the following
formula may be used as guides in determining the
Cottage/Handicraft equivalent monthly statutory minimum wage rates:
Employing more than
30 workers 52.00 67.00 a) For those who are required to work everyday
including Sundays or rest days, special days and
Employing not more regular holidays:
than 30 workers 50.00 65.00
Equivalent Applicable daily wage rate (ADR) x
Private Hospitals 60.00 85.00 390.90 days

Retail/Service Monthly = ———————————————————


Cities w/ population of more
than 150,000 Rate (EMR) 12

Employing more than Where 390.90 days =


15 workers 64.00 89.00
302 days Ordinary working days
Employing 11 to 15 workers 60.00 85.00
20 days 10 regular holidays x 200%
Employing not more than
10 workers 43.00 58.00 66.30 days 51 rest days x 130%

Sugar Mills 2.60 days 2 special days x 130%

Agriculture 390.90 days Total equivalent number of days.

Plantation w/ annual gross b) For those who do not work but considered paid
sales of P5M or more 48.50 73.50 on rest days, special days and regular holidays:

Plantation w/ annual gross ADR x 365 days


sales of less than P5M 48.50 68.50
EMR = ————————
Non-plantation 43.50 58.50
12
Business Enterprises w/ Capitalization
of not more than P500,000 and Where 365 days =
39
under existing agreements or employer
302 days Ordinary working days practices/policies.cralaw

51 days Rest days SECTION 7. Basis of Minimum Wages Rates. — The


statutory minimum wage rules prescribed under
10 days Regular holidays the Act shall be for the normal working hours,
which shall not exceed eight hours work a
2 days Special days day.cralaw

365 days Total equivalent number of days SECTION 8. Creditable Wage Increase. —

c) For those who do not work and are not a) No wage increase shall be credited as
considered paid on Sundays or rest days: compliance with the increases prescribed under
the Act unless expressly provided under
ADR x 314 days collective bargaining agreements; and, such wage
increase was granted not earlier than April 1,
EMR = ——————— 1989 but not later than July 1, 1989. Where the
wage increase granted is less than the
12 prescribed increase under the Act, the employer
shall pay the difference.cralaw
Where 314 days =
b) Anniversary wage increase provided in
302 days Ordinary working days collective agreements, merit wage increase, and
those resulting from the regularization or
10 days Regular holidays promotion of employees shall not be credited as
compliance thereto.cralaw
2 days Special days (If considered
SECTION 9. Workers Paid by Results. —
paid; If actually worked,
a) All workers paid by results, including those
this is equivalent to 2.6 days) who are paid on piecework, takay, pakyaw, or
task basis, shall receive not less than the
314 days Total equivalent number of days applicable statutory minimum wage rates
prescribed under the Act for the normal working
d) For those who do not work and are not hours which shall not exceed eight hours work a
considered paid on Saturdays or rest days: day, or a proportion thereof for work of less
than the normal working hours.cralaw
ADR x 262 days
The adjusted minimum wage rates for workers paid
EMR = ——————— by results shall be computed in accordance with
the following steps:
12
1) Amount of increase in AMW - Previous AMW x
Where 262 days = 100 = % Increase;

250 days Ordinary working days 2) Existing rate/piece x % increase = increase


in rate/piece;
10 days Regular holidays
3) Existing rate/piece + increase in rate/piece
2 days Special days (If considered paid; If = Adjusted rate/piece.cralaw
actually
Where AMW is the applicable minimum wage
worked, this is equivalent to 2.6 days) rate.cralaw

262 days Total equivalent number of days b) The wage rates of workers who are paid by
results shall continue to be established in
Note: For workers whose rest days fall on accordance with Article 101 of the Labor Code,
Sundays, the number of rest days in a year is as amended and its implementing
reduced from 52 to 51 days, the last Sunday of regulations.cralaw
August being a regular holiday under Executive
Order No. 201. For purposes of computation, said 7. Tan v. Lagrama, August 15, 2002
holiday, although still a rest day for them, is FACTS: LAGRAMA was employed as pinter, making ad
included in the ten regular holidays. For billboards and mural for motion pictures by Tan,
workers whose rest days do not fall on Sundays, owner of Crown and Empire Theater for more than
the number of rest days is 52 days, as there are 10 years
52 weeks in a year.  Lagrama was summoned in 1998 for peeing at
Nothing herein shall be considered as work station; fired “get out of my sight”
authorizing the reduction of benefits granted

40
 Lagrama denied this saying he was not the  On the event proper, he was not seen bec
only one who entered the area; mere minor there was some visitors of the company
infraction  During the program, Lua was furious bec he
 Thus, complaint for illegal dismissal was not recognized and thus did not
filed deliver his inauguration speech – that
 Tan said no, he was an independent they deemed the speech “optional”
contractor paid on a fixed piece-work  The next day, Mahilum ordered to explain
basis = “no mural, no pay” to Lua; asked to submit written
LA: illegally dismissed explanation then consequently suspended
NLRC: reversed  He was later terminated
CA: reversed; there was control  Mahilum thus filed a case for illegal
dismissal
ISSUE: Was Lagrama paid wages? LA: dismissed; quitclaim was executed barring
HELD: USING THE FOUR-FOLD TEST: him to question dismissal thus estopped; made
1. SELECTION AND ENGAGEMENT voluntarily
2. POWER TO TERMINATE NLRC: reversed;
- Fired him when Lagrama urinated  Quitclaim did not bar him to institute
3. CONTROL complaint
- Worked at a designated area inside the
 Illegally dismissed
theater
CA: reversed NLRC
- Rules on prohibition against urinating
 Quitclaim valid
in work area
CA MR: reversed earlier CA decision
- Control is not only on the desirable
result but also in the means and ISSUE: is Mahilum entitled to the award of .25%
method commission on sales fom Feb 2005 up to
4. PAY WAGES termination of case?
- That Lagrama worked for Tan on a fixed HELD:
piece-work basis is of no moment. STATUS OF EMPLOYMENT:
Payment by result is a method of
 He was a regular employee; he was on
compensation and does not define the
probationary status but already rendered 8
essence of the relation: IT IS THE
months of service
METHOD OF COMPUTING COMPENSATION not
 Thus, he was illegally dismissed
basis w/n there’s EER
o Behavior was not tantamount to
- IRR provides employees must be paid
serious misconduct nor willful
thru payroll disobedience
- The fact that there’s no SSS o It was mere inadvertence and
contribution does not mean no EER per mistaken belief that he had
se properly delegated the details of
 There is no abandonment of work either the program
 Finding all four requisites, there is EER o Also, designation did not form part
RE ILLEGAL DISMISSAL CASE: of his duty
 Since regular employee, can only be MONETARY CLAIMS
terminated by just cause  Since illegally dismissed, entitled:
 Prohibition on urinating is a valid ground 1. Reinstatement or
BUT the same was not proved in this case PAYMENT OF SEPARATION PAY – if
that indeed he urinated strained relationship; AND
CONCLUSION: ILLEGALLY DIMISSED 2. Backwages – computed from time of
dismissal up to finality of the
8. Philippine Spring Water Resources v. decision
Mahilum PROPRIETY OF AWARDING COMISSIONS AND DAMAGES
FACTS: Mahilum was hired as VP for Sales and  .25% IS PART OF HIS BACKWAGES
Marketing by Philippine Spring Water with  Backwages are granted for earnings lost
monthly salary of P15k plus .25% commission for due to their illegal dismissal from work
every cash on delivery and another .25% on new
 Reparation
accounts
 OUTSTANDING FEATURE: the degree of
 In Christmas 2004, Mahilum was held as
assuredness to an employee that he would
over-all chairman of the affairs; thus, he
have had them as earnings had he not been
called ground for program of action and
illegally terminated from his employment
budget plan
 based on earnings which the employee would
 But some visitors arrived; they discussed
have obtained, either by virtue of a
sensitive legal issues relative to PH
lawful decree or order, as in the case of
Spring’s water drilling inside the plant a wage increase under a wage order, or by
over the protest of nearby residents rightful expectation, as in the case of
 On rescheduled day, the program was one’s salary or wage.
conducted without Mahilum’s presence; task  determination of whether or not a
delegated to Evangelista, VP for Admin and commission forms part of the basic salary
Finance
41
depends upon the circumstances or ISSUE: Was there illegal dismissal? – YES.
conditions for its payments HELD:
o commissions earned by salesmen form in termination cases the employer bears the
part of their basic salary -- burden of proof to show that the dismissal is
salesmen’s commissions are not for just cause, the failure of which would mean
overtime payments, nor profit- that the dismissal is not justified and the
sharing payments nor any other employee is entitled to reinstatement.
fringe benefit, but a portion of  Allegation without proof that employee
the salary structure “abandoned” her job is not enough to
o ON THE OTHER HAND, commissions paid constitute “just cause”
to or received by medical
 Abandonment requisites:
representatives were excluded from
the term basic salary because these 1. Lack of intention to work
were paid to the medical 2. Presence of overt acts signifying
representatives and rank-and-file employee’s intent not to work
employees as productivity bonuses, LOSS OF CONFIDENCE NOT SUBSTATITATED
which were generally tied to the  It took Hotel some time before instituting
productivity, or capacity for the claim
revenue production, of a  It was made after employee exposed it of
corporation and such bonuses its scheme to avoid obligations under
closely resemble profit-sharing Labor Code
payments and had no clear direct or  Thus, this constitutes unfair labor
necessary relation to the amount of practice
work actually done by each WHAT CONSTITUTE VALID MONEY CLAIMS:
individual employee. Are meals, lodging and electric, water
 Test: if forms part of basic salary, consumption part? – NO.
commission is included 1. Customarily furnished by the trade
 In this case, the commission is based on 2. Deductible facilities must be voluntarily
the monthly sales and cash payments in the accepted in writing by the employee
nature of OVERRIDING COMMISSIONS and not 3. Facilities must be charged at fair and
sales commission reasonable value
o It partook the nature of profit-  These requisites not met in this instant
sharing based on quota case
o Thus, no direct or necessary  Employer failed to present any company
relation to the amount of work he policy that shows that meal and lodging
actually performed are part of the salary
DOCTRINE: when is commission included in
 These were not facilities but supplements
backwages? When it forms part of employee’s basic
– benefit or privilege granted
salary only
 Thus, clearly underpaid
9. Mabeza v. NLRC, April 18, 1997  Given this, employee is entitled to
FACTS: MABEZA was employed by Hotel Supreme receive deficiency of the minimum wage as
Baguio part of the backwages
 Alleged that she and co-workers signed
compliance with min wage and other labor
standard provisions of law: B. Wage-Fixing
o “no complaints and paid accordingly
Labor Code: Articles 99, 101, 120-127
and treated well”
o This affidavit was signed by Mabeza
refised to go to the City
Prosecutor to swear to the veracity Republic Act No. 6727 June 9, 1989
and contents’ but the affidavits
were submitted to DOLE AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION
 For refusing to swear, she was ordered to BY ESTABLISHING THE MECHANISM AND PROPER
turn over keys and remove her belongings; STANDARDS THEREFOR, AMENDING FOR THE PURPOSE
she went on LOA but was advised to ARTICLE 99 OF, AND INCORPORATING ARTICLES 120,
continue her unofficial LOA 121, 122, 123, 124, 126 AND 127
 Thus, filed a case for illegal dismissal INTO, PRESIDENTIAL DECREE NO. 442, AS AMENDED,
and alleged underpayment of wages OTHERWISE KNOWN AS THE LABOR CODE OF THE
LA: dismissed PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING
 Termination valid for loss of confidence WAGE INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE
 Stole 1 piece of bedsheet, thermos and 2 COUNTRYSIDE, AND FOR OTHER PURPOSES
towels
 In fact, theft and perjury cases filed Art. 99. Regional Minimum Wages. — The minimum
against her wage rates for agricultural and non-agricultural
NLRC: AFFIRMED employees and workers in each and every region
CA: of the country shall be those prescribed by the

42
Regional Tripartite Wages and Productivity appropriate Regional Board, action on any
Boards." complaint for alleged non-compliance with this
Act shall be deferred pending resolution of the
application for exemption by the appropriate
Regional Board.
Section 4. (a) Upon the effectivity of this Act,
the statutory minimum wage rates of all workers In the event that applications for exemptions
and employees in the private sector, whether are not granted, employees shall receive the
agricultural or non-agricultural, shall be appropriate compensation due them as provided
increased by twenty-five pesos (P25.00) per day, for by this Act plus interest of one per cent
except that workers and employees in plantation (1%) per month retroactive to the effectivity of
agricultural enterprises outside of the National this Act.
Capital Region (NCR) with an annual gross sales
of less than five million pesos (P5,000,000.00) (d) If expressly provided for and agreed upon in
in the preceding year shall be paid an increase the collective bargaining agreements, all
of twenty pesos (P20.00), and except further increases in the daily basic wage rates granted
that workers and employees of cottage/handicraft by the employers three (3) months before the
industries, non-plantation agricultural effectivity of this Act shall be credited as
enterprises, retail/service establishments compliance with the increases in the wage rates
regularly employing not more than ten (10) prescribed herein, provided that, where such
workers, and business enterprises with a increases are less than the prescribed increases
capitalization of not more than five hundred in the wage rates under this Act, the employer
thousand pesos (P500,000.00) and employing not shall pay the difference. Such increases shall
more than twenty (20) employees, which are not include anniversary wage increases, merit
located or operating outside the NCR, shall be wage increases and those resulting from the
paid only an increase of fifteen pesos (P15.00): regularization or promotion of employees.
Provided, That those already receiving above the
minimum wage rates up to one hundred pesos Where the application of the increases in the
(P100.00) shall also receive an increase of wage rates under this Section results in
twenty-five pesos (P25.00) per day, except that distortions as defined under existing laws in
the workers and employees mentioned in the first the wage structure within an establishment and
exception clause of this Section shall also be gives rise to a dispute therein, such dispute
paid only an increase of twenty pesos (P20.00), shall first be settled voluntarily between the
and except further that those employees parties and in the event of a deadlock, the same
enumerated in the second exception clause of shall be finally resolved through compulsory
this Section shall also be paid an increase of arbitration by the regional branches of the
fifteen pesos (P15.00): Provided, further, That National Labor Relations Commission (NLRC)
the appropriate Regional Board is hereby having jurisdiction over the workplace.
authorized to grant additional increases to the
workers and employees mentioned in the exception
clauses of this Section if, on the basis of its It shall be mandatory for the NLRC to conduct
determination pursuant to Article 124 of the continuous hearings and decide any dispute
Labor Code such increases are necessary. arising under this Section within twenty (20)
calendar days from the time said dispute is
formally submitted to it for arbitration. The
(b) The increase of twenty-five pesos (P25.00) pendency of a dispute arising from a wage
prescribed under this Section shall apply to all distortion shall not in any way delay the
workers and employees entitled to the same in applicability of the increase in the wage rates
private educational institutions as soon as they prescribed under this Section.
have increased or are granted authority to
increase their tuition fees during school year
1989-1990. Otherwise, such increase shall be so
applicable not later than the opening of the RA 8188
next school year beginning 1990. SECTION 1. Section 12 of Republic Act Numbered
Sixty-seven hundred twenty-seven is hereby
amended to read to as follows:
(c) Exempted from the provisions of this Act are
“Sec. 12. Any person, corporation, trust, firm,
household or domestic helpers and persons
partnership, association or entity which refuses
employed in the personal service of another,
or fails to pay any of the prescribed increases
including family drivers.
or adjustments in the wage rates made in
accordance with this Act shall be punished by a
Retail/service establishments regularly fine not less than Twenty-five thousand pesos
employing not more than ten (10) workers may be (P25,000) nor more One hundred thousand pesos
exempted from the applicability of this Act upon (P100,000) or imprisonment of not less than two
application with and as determined by the (2) years nor more than four (4) years, or both
appropriate Regional Board in accordance with such fine and imprisonment at the discretion of
the applicable rules and regulations issued by the court: Provided, That any person convicted
the Commission. Whenever an application for under this Act shall not be entitled to the
exemption has been duly filed with the benefits provided for under the Probation Law.

43
“The employer concerned shall be ordered to pay  David said he was on “pakyaw” or task
an amount equivalent to double the unpaid basis thus not entitled to benefits
benefits owing to the employees: Provided, That claimed
payment of indemnity shall not absolve the LA: dismissed complaint; pakyaw basis
employer from the criminal liability imposable NLRC: affirmed
under this Act. “If the violation is committed by CA: reversed
a corporation, trust or firm, partnership,  Yes, pakyaw basis but entitled to claims
association or any other entity, the penalty of MACASIO’S POSITION
imprisonment shall be imposed upon the entity’s  P700 was his daily wage and there’s EER
responsible officers, including, but not limited
to, the president, vicepresident, chief ISSUE: Is Macasio entitled to the claims?
executive officer, general manager, managing HELD:
director or partner.”  First of all, the “pakyaw” basis is not
indicative of EER but merely a mode of
calculating wages only
Republic Act No. 9178 November 13, 2002 o Being pakyaw, not applicable yung
straight-hour work
AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY  Second, there’s EER using the four-fold
MICRO BUSINESS ENTERPRISES (BMBEs), PROVIDING test
INCENTIVES AND BENEFITS THEREFOR, AND FOR OTHER ON ENTITLEMENT TO BENEFIT CLAIMS
PURPOSES.  PD 851 AND ART 82 OF ITS IRR exempts
pakyaw workers from holiday, SIL and 13th
month pay
INCENTIVES AND BENEFITS
 But CA used Serrano vs Severino Transit
saying that exemption only applies if
Section 7. Exemption from Taxes and Fees – All pakyaw worker is a field personnel
BMBEs shall be exempt from tax for income IS MACASIO A FIELD PERSONNEL?
arising from the operations of the enterprise.  "Field personnel" shall refer to non-
agricultural employees who regularly
The LGUs are encouraged either to reduce the perform their duties away from the
amount of local taxes, fees and charges imposed principal place of business or branch
or to exempt BMBEs from local taxes, fees and office of the employer and whose actual
charges. hours of work in the field cannot be
determined with reasonable certainty.
Section 8. Exemption from the Coverage of the  Right to holiday pay – entitled to daily
wage except if retail and service
Minimum Wage Law – The BMBEs shall be exempt from
establishment employee rendering less than
the coverage of the Minimum Wage
10 hours of work
Law: Provided, That all employees covered under
 Service incentive – if rendered 1 year
this Act shall be entitled to the same benefits
already, allowed to 5 days a year of leave
given to any regular employee such as social
with pay
security and healthcare benefits.
o EXCEPT: Field Personnel or those
unsupervised by employer including
NWPC Guidelines No. 2, Series of 2012, those on task or contract basis
Guidelines on the Implementation of the Two- GR: all are entitled
Tiered Wage System EXN: those expressly exempted:
 Filed personnel
Two-Tiered Wage System - refers to a pay system
 employees whose time and performance is
consisting of:
unsupervised by the employer
l. minimum wage; and
2. incentive pay based on productivity  those who are engaged on task or
improvement and gainsharing. contract basis
- The second tier shall consist of productivity  Note that unlike Article 82 of the Labor
bonuses and incentives based on agreement Code, the IRR on holiday and SIL pay do
between workers and management. not exclude employees "engaged on task
- ADVISORY basis" as a separate and distinct category
from employees classified as "field
personnel." Rather, these employees are
Wage Order No. NCR-20
altogether merged into one classification
of exempted employees.
 The discrepancy is resolved by Cebu
10. David v. Macasio, July 2, 2014 Institute vs Ople: those engaged on task
FACTS: MACASIO filed a labor case against David or contractual basis:
(Yiels Hog Dealer) for non-payment of overtime o petitioner's teaching personnel
pay, holiday, 13th month cannot be deemed field personnel
 He was working as butcher which refers "to non-agricultural
o Salary increased to P700 from 2005 employees who regularly perform
their duties away from the
44
principal place of business or provides for exemption,
branch office of the employer and applications thereto shall be filed
whose actual hours of work in the with the appropriate Board which
field cannot be determined with shall process the same, subject to
reasonable certainty. guidelines issued by the
o Thus, entitled Commission.
 RULE: merely a pakyaw employee does not o It is the commissioner that has
automatically exclude them; they must be power to determine w/n qualified
field personnel for the exemption:
 Thus, in this case, NLRC committed GAD in  When accumulated losses at end of the
dismissing employee’s complaint without period under review have impaired by at
first determining if he’s a field least 25 percent the:
personnel or not
MACASIO IS NOT A FIELD PERSONNEL ISSUE: Is the approval of NWPC required? – YES.
Thus, entitled to Holiday Pay and 13th month pay HELD
 Regularly performed his duties at the Power to Prescribe Guidelines Lodged in the
principal place of business NWPC, Not in the RTWPB
 Actual hours of work can be determined  ART 121 LC provides the powers and
with reasonable certainty functions of NWPC
 David supervised his time and performance o (c) Prescribe rules
duties o (d) review regional wage level set
by RTWPB
11. Nasipit Lumber Co. v. NWPC, April 27,  While the RTWPB has the power to issue
1998 wage orders under Article 122 (b) of the
FACTS: Region X Tripartite Wage And Productivity Labor Code, such orders are subject to the
Board issued Wage Order No. RX-01 increasing min guidelines prescribed by the NWPC
wage in Northern Mindanao:  Also, NWPC has power to provide exemptions
 Then Supplemental Wage Order was issued: o the NWPC authorized the RTWPB to
o Upon the effectivity of the issue exemptions from wage orders,
original Wage Order RX-01, all but subject to its review and
workers and employees in the approval
private sector in Region X already o Since the NWPC never assented to
receiving wages above the statutory Guideline No. 3 of the RTWPB, the
minimum wage rates up to one said guideline is inoperative and
hundred and twenty pesos (P120.00) cannot be used by the latter in
per day shall also receive an deciding or acting on petitioners'
increase of P13, P11, P9 per day, application for exemption
as provided for under Wage Order
No. RX-01 The Insertion in Guideline No. 3 of "Distressed
 Contention: Sec 3 (2) of Guidelines No. 3 Industry" as a Criterion for Exemption Void
(determination of distressed applicant-  Thus no vested rights granted to companies
firm) Denial of application not arbitrary
o Establishment belonging to
 Companies were not able to prove to have
distressed industry - an
capital impairment of at least 25% in the
establishment that is engaged in an
last full accounting period preceding the
industry that is distressed due to application
conditions beyond its control as
may be determined by the Board in DOCTRINE: The Labor Code, as amended by RA 6727
consultation with DTI and NWPC (the Wage Rationalization Act), grants the
 Petitioners as engaged in logging industry National Wages and Productivity Commission
claim to be distressed due to worldwide (NWPC) the power to prescribe rules and
recession, etc guidelines for the determination of appropriate
 Oppositors said they are not bec their wages in the country. Hence, "guidelines" issued
capitalization has not been impaired by by the Regional Tripartite Wages and
25% Productivity Boards (RTWPB) without the approval
 Citing liquidity problems and business of or, worse, contrary to those promulgated by
decline in the wood-processing industry, the NWPC are ineffectual, void and cannot be the
the RTWPB approved the applicants' joint source of rights and privileges
application for exemption Oppositors
appealed before the NWPC
 NWPC affirmed the ALCO’s application but 12. ECOP v. NWPC, RTWPB-NCR and TUCP,
reversed the application for exemption by September 24, 1991
NALCO and PWC FACTS: ECOP is questioning the validity of a
o Not valid bec no approval by the Wage Order issued by RTWB-NCR
Commission  The said Wage Order increased the minimum
o That under Sec. 1. Application For wage by P17 daily in NCR
Exemption. Whenever a wage order

45
 Order is assailed as it grants an “across employees receiving a certain
the board” wage increases to workers denominated salary ceiling. In
already being paid more than existing min other words, workers already being
wage rate (up to P125 a day) paid more than the existing minimum
 Alleged that this preempts collective wage (up to a certain amount stated
bargaining in the Wage Order) are also to be
given a wage increase
ISSUE: was the order valid? – YES. 
HELD 13. Metropolitan Bank and Trust Company v.
NWPC
 Valid delegation: Congress may delegate
FACTS: RTWPB Region II issued Wage Order
the power to fix rates provided that, as
granting an across the board wage increase of
in all delegations cases, Congress leaves
P15/day
sufficient standards
Wage Minimum Wage  Banker’s Council for Personnel Management
paid to any employee it means more than seeks exemption from the coverage since it
shall mean the setting a floor wage was already paying the prevailing min wage
remuneration or to upgrade existing in NCR
earnings, however wages, as ECOP takes  Application denied saying BCPM is covered
designated, capable of it to mean. "Minimum by Order
being expressed in wages" underlies the  Thus, BPCM questioned the validity of the
terms of money, effort of the State, Wage Order
whether fixed or as Republic Act No. ISSUE: is the wage order valid?
ascertained on a time, 6727 expresses it, "to Is BCPM covered?
task, piece, or promote productivity-
commission basis, or improvement and gain- HELD:
other method of sharing measures to VALID ACT
calculating the same, ensure a decent  It was in the nature of subordinate
which is payable by an standard of living for legislation
employer to an the workers and their  In this case, the RTWPB did not issue a
employee under a families; to guarantee floor-wage nor salary-ceiling but an
written or unwritten the rights of labor to across the board wage increase
contract of employment its just share in the  In doing so, the RTWPB exceeded its
for work done or to be fruits of production; authority by extending the coverage of the
done, or for services to enhance employment Wage Order to wage earners receiving more
rendered or to be generation in the than the prevailing minimum wage rate,
rendered and includes countryside through without a denominated salary ceiling
the fair and industry dispersal;
 Thus, it granted additional benefits not
reasonable value, as and to allow business
contemplated by R.A. No. 6727
determined by the and industry
Secretary of Labor, of reasonable returns on 
board, lodging, or investment, expansion CONCLUSION: Section 1 of Wage Order No. R02-03
other facilities and growth," 25 and as issued on October 17, 1995 by the Regional
customarily formatted the Constitution Tripartite Wages and Productivity Board for
by the employer to the expresses it, to Region II, Tuguegarao, Cagayan is
employee. "Fair and affirm "labor as a declared VALID insofar as the mandated increase
reasonable value" primary social applies to employees earning the prevailing
shall not include any economic force." 26 As minimum wage rate at the time of the passage of
profit to the employer the Court indicated, the Wage Order and VOID with respect to its
or to any person the statute would have application to employees receiving more than the
affiliated with the no need for a board if prevailing minimum wage rate at the time of the
employer. the question were passage of the Wage Order
simply "how much." The
State is concerned, in 14. NWPC and RTWP v. APL, March 12, 2014
addition, that wages FACTS: RTWPB–NCR issued Wage Order No. NCR–07 on
are not distributed October 14, 1999 imposing an increase of
unevenly, and more P25.50/day on the wages of all private sector
important, that social workers and employees in the NCR and pegging the
justice is subserved minimum wage rate in the NCR at P223.50/day
 However, Section 2 and Section 9 of Wage
 there are two ways of fixing the minimum Order No. NCR–07 exempted certain sectors
wage: the "floor-wage" method and the and industries from its coverage
"salary-ceiling" method: o SEC 1: COVERED ESTABLISHMENTS
o "floor-wage" method involves the o SEC 9: exemption upon application:
fixing of a determinate amount to  Distressed
be added to the prevailing  Exporters including indirect
statutory minimum wage rates exporters with at least 50%
o "salary-ceiling" method, the wage export sales and with
adjustment was to be applied to forward contracts with their
46
foreign buyers/principals FACTS: Union and Chevron executed a CBA
entered into on or twelve effective from Nov 1, 2007 until Oct. 31, 2012
(12) months before the date  Wage Increase:
of publication of this Order o Effective Nov. 1, 2007, P260,000.00
may be exempt during the - lump sum payment for the 1st year
lifetime of said contract of this agreement (taxable).
but not to exceed twelve - Effective Nov. 1, 2008, across
(12) months from the the board increase on the monthly
effectivity of this Order salary in the amount of P1,500.00.
 Due to exemption in the increase, APL and - Effective Nov. 1, 2009, across
TNMR filed an appeal that the exemption the board increase on the monthly
was expanded salary in the amount of P1,500.00.
NWPC: valid provisions o Increase based on year regularized
 Took into consideration the Asian Economic  Union sent a letter to company claiming
Turmoil that the provision is not being properly
CA: reversed implemented and may result to salary
 did not include the power to grant distortion
additional exemptions from the adjusted  Company denies salary distortion and
minimum wage claimed that renumeration is based on
“similar values for similar jobs”
ISSUE: was the provision on exemption valid? – o employees in similarly-valued jobs
YES. would have similar salary rates
HELD:  Dispute brought before Voluntary
Guideline provides how to determine exemption in Arbitration for alleged contravention of
addition to those expressly mentioned: CBA provisions
(1) assist establishments experiencing temporary
 That 2 employees were given salary
difficulties due to losses maintain the
increase despite not attaining regular
financial viability of their businesses and
status
continued employment of their workers;
VA: ruled in favor of Chevron
(2) encourage the establishment of new
CA: affirmed
businesses and the creation of more jobs,
particularly in areas outside the National
ISSUE: was the increase violative of the CBA
Capital Region and Export Processing Zones, in
line with the policy on industry dispersal; and provision? – NO.
(3) ease the burden of micro establishments,
particularly in the retail and service sector, HELD
that have a limited capacity to pay. Increase is valid:
 Exemptible categories outside of the  As claimed by Chevron, increase was due to
abovementioned list may be allowed only if the increase in the hiring rates at the
they are in accord with the rationale for time these employees were hired, and not
exemption reflected due to CBA
CRITERIA FOR EXEMPTION There is no wage distortion
GR: 4 expressed categories:  ELEMENTS OF WAGE DISTORTION:
1. Distressed establishments (1) an existing hierarchy of positions
2. New business enterprises (NBEs) with corresponding salary rates;
3. Retail/Service establishments employing (2) a significant change in the salary
not more than ten (10) workers rate of a lower pay class without a
4. Establishments adversely affected by concomitant increase in the salary
natural calamities rate of a higher one;
EXN: Grant further exemptions based on (3) the elimination of the distinction
(1) in accord with the rationale for between the two levels; and
exemption; (4) the existence of the distortion in
(2) reviewed/approved by the NWPC; and the same region of the country
(3) upon review, the RTWPB issuing the wage  The apparent increase in Lanao and
order must submit a strong and justifiable Cordovales' salaries as compared to the
reason or reasons for the inclusion of other company workers who also have the
such category. It is the compliance with same salary/pay grade with them should not
the second requisite that is at issue here be interpreted to mean that they were
given a premature increase. rather, it was
EXEMPTIONS REVIEWED BY NWPC because when they were hired by respondent
 The wage orders issued by the RTWPBs could in 2009, when the hiring rates were
be reviewed by the NWPC motu proprio or relatively higher as compared to those of
upon appeal the previous years.
OTHER EMPLOYEES NOT ENTITLED TO INCREASE PER SE
 The provision of in 124 re actions taken
15. Philippine Geothermal, Inc. Employees to “resolve wage distortion” not
Union v. Chevron Geothermal Phils. applicable
Holdings, Inc.

47
 If given effect, it’ll tie the hands of  In mandating an adjustment, the law did
employers not require that there be an elimination
 It is management prerogative or total abrogation of quantitative wage
CONCLUSION: NO WAGE DISTORTION or salary differences; a severe
contraction thereof is enough. As has been
aptly observed by Presiding Commissioner
Wage Distortion Edna Bonto-Perez in her dissenting
16. Metropolitan Bank & Trust Company opinion, the contraction between personnel
Employees Union-ALU-TUCP v. NLRC, groupings comes close to eighty-three
September 10, 1993 (83%), which cannot, by any stretch of
FACTS: Bank entered into a CBA with MBTCEU imagination, be considered less than
graning a month P900 wage increase in 1989; P600 severe.
in 1990 and P200 in 1991 o DISSENT: Minimum Wage = % x
 A month later, RA 6727 was enacted: Sec 4: Prescribed = Distortion
o A. P25 inc per day provided that  We find the formula suggested then by
those already receiving min wage up Commissioner Bonto-Perez, which has also
to P100 shall also receive P25 wage been the standard considered by the
increase regional Tripartite Wages and Productivity
o D. If expressly provided for and Commission for the correction of pay scale
agreed upon in the collective structures in cases of wage distortion, to
bargaining agreements, all well be the appropriate measure to balance
increases in the daily basic wage the respective contentions of the parties
rates granted by the employers in this instance. We also view it as being
three (3) months before the just and equitable
effectivity of this Act shall be CONCLUSION: there’s wage distortion based on the
credited as compliance with the formula
increases in the wage rates
prescribed herein, provided that, 17. Prubankers Association v. Prudential
where such increases are less than Bank
the prescribed increases in the FACTS: in 1993, RTWPB Region V issued a Wage
wage rates under this Act, the Order providing for a COLA to workers in private
employer shall pay the difference. sector:
Such increase shall not include  Rendered at least 3 months P17.50, P15.50
anniversary wage increases, merit and P10 in certain regions
wage increase and those resulting  Another Wage Order was issued in Region
from the regularization or VII ordering the integration of such COLA
promotion of employees into the basic pay of all workers
 Pursuant to this, Bank gave P25 increase  Association was then granted P17.50 in
or P750 to its probationary employees and Naga and P150 per month but not applicabe
those already regular but whose daily rate to those outside the region
was P100 and below but not those with more  Thus, Association called for meeting to
than P100 resolve the alleged wage distortion
CA: No wage distortion
ISSUE: whether or not the implementation by the
Metropolitan Bank and Trust Company of Republic ISSUE: whether or not a wage distortion resulted
Act No. 6727, mandating an increase in pay of
from respondent’s implementation of the said Wage
P25 per day for certain employees in the private
sector, created a distortion that would require Orders? – NO.
an adjustment under said law in the wages of the
HELD: there is no wage distortion in covered
latter’s other various groups of employees – YES.
branches
HELD:  In the said branches, there was an
Wage Distortion under RA 6727 IRR increase in the salary rates of all pay
classes.
 Wage Distortion means a situation where an
increase in prescribed wage rates results  Furthermore, the hierarchy of positions
in the elimination or severe contraction based on skills, length of service and
of intentional quantitative differences in other logical bases of differentiation was
wage or salary rates between and among preserved
employee groups in an establishment as to  a disparity in wages between employees
effectively obliterate the distinctions holding similar positions but in different
embodied in such wage structure based on regions does not constitute wage
skills, length of service, or other distortion as contemplated by law.
logical bases of differentiation. o a wage distortion arises when a
 Question of fact wage order engenders wage parity
between employees in different
 In this case, majority of NLRC members
rungs of the organizational ladder
agree that there is wage distortion but
of the same establishment. It bears
differ as to the extent
emphasis that wage distortion
involves a parity in the salary
48
rates of different pay classes - Scheme of classification of employees for
which, as a result, eliminates the compensation is a matter of management
distinction between the different judgment and discretion
ranks in the same region (3) The elimination of the distinction between
RA 6727 ALLOWS DIFFENT REGIONAL WAGES the two levels;
 a disparity in wages between employees - Also wanting
with similar positions in different - to Our mind said gap is not significant as
regions is necessarily expected to obliterate or result in severe
 varying in each region of the country are contraction of the intentional quantitative
controlling factors such as the cost of differences in the salary rates between the
living; supply and demand of basic goods, employee group
services and necessities; and the - as mentioned, the classification is based
purchasing power of the peso. on rank and not on seniority
(4) The existence of the distortion in the same
DOCTRINE: Wage distortion presupposes an
region of the country.
increase in the compensation of the lower ranks
in an office hierarchy without a corresponding
raise for higher-tiered employees in the same  Also, the distortion is not due to
region of the country, resulting in the prescribed law or wage order
elimination or the severe diminution of the o If the compulsory mandate under
distinction between the two groups. Such Article 124 to correct wage
distortion does not arise when a wage order distortion is applied to voluntary
gives employees in one branch of a bank higher and unilateral increases by the
compensation than that given to their employer in fixing hiring rates
counterparts in other regions occupying the same which is inherently a business
pay scale, who are not covered by said wage judgment prerogative, then the
order. In short, the implementation of wage hands of the employer would be
orders in one region but not in others does not completely tied even in cases where
in itself necessarily result in wage distortion an increase in wages of a
particular group is justified due
18. Bankard Employees Union-Workers to a re-evaluation of the high
Alliance Trade Unions v. NLRC, productivity of a particular group,
February 17, 2004 or as in the present case, the need
FACTS: Bankard classifies its employees by to increase the competitiveness of
levels Bankards hiring rate
 The approved New Salary Scale was made
retroactive to make its rate competitive DOCTRINE: The mere factual existence of wage
in the industry distortion does not, however, ipso facto result to
o Level I and V – P1000 an obligation to rectify it, absent a law or
o Level II, III, IV – P900 other source of obligation which requires its
 Adjustment applicable to those with min rectification.
rates
 This move drew the Union to press for the C. Payment of Wages
increase in the salary of its old, regular
employees Labor Code: Articles 102-105, 112-119 (check
 Bankard said no, it has no obligation to Art. 259 – Agency Fees, in relation to Art. 112)
grant across the board increase Omnibus Rules: Book III, Rule VIII
o Level is not on the basis of length RULE VIII
of servie Payment of Wages
 Notice of Strike denied; issue not
stikeable SECTION 1. Manner of wage payment. — As
a general rule, wages shall be paid in
ISSUE: was there a wage distortion in not legal tender and the use of tokens,
applying increase to old employees? promissory notes, vouchers, coupons, or
any other form alleged to represent legal
HELD tender is absolutely prohibited even when
Elements of Wage Distortion: expressly requested by the
(1.) An existing hierarchy of positions with employee.cralaw
corresponding salary rates;
(2) A significant change in the salary rate of a SECTION 2. Payment by check. — Payment
lower pay class without a concomitant increase of wages by bank checks, postal checks or
in the salary rate of a higher one; money orders is allowed where such manner
- This is wanting thin this case of wage payment is customary on the date
- While seniority may be a factor in of the effectivity of the Code, where it
determining the wages of employees, it is so stipulated in a collective
cannot be made the sole basis in cases agreement, or where all of the following
where the nature of their work differs conditions are met:

49
(a) There is a bank or other facility for establishment, massage clinic, dance
encashment within a radius of one (1) hall, or other similar places or in
kilometer from the workplace; places where games are played with stakes
of money or things representing money
(b) The employer or any of his agents or except in the case of persons employed in
representatives does not receive any said places.cralaw
pecuniary benefit directly or indirectly
from the arrangement; SECTION 5. Direct payment of wages. —
Payment of wages shall be made direct to
(c) The employees are given reasonable the employee entitled thereto except in
time during banking hours to withdraw the following cases:
their wages from the bank which time
shall be considered as compensable hours (a) Where the employer is authorized in
worked if done during working hours; and writing by the employee to pay his wages
to a member of his family;
(d) The payment by check is with the
written consent of the employees (b) Where payment to another person of
concerned if there is no collective any part of the employee's wages is
agreement authorizing the payment of authorized by existing law, including
wages by bank checks.cralaw payments for the insurance premiums of
the employee and union dues where the
SECTION 3. Time of payment. — (a) Wages right to check-off has been recognized by
shall be paid not less than once every the employer in accordance with a
two (2) weeks or twice a month at collective agreement or authorized in
intervals not exceeding sixteen (16) writing by the individual employees
days, unless payment cannot be made with concerned; or
such regularity due to force majeure or
circumstances beyond the employer's (c) In case of death of the employee as
control in which case the employer shall provided in the succeeding Section.cralaw
pay the wages immediately after such
force majeure or circumstances have SECTION 6. Wages of deceased employee. —
ceased.cralaw The payment of the wages of a deceased
employee shall be made to his heirs
(b) In case of payment of wages by without the necessity of intestate
results involving work which cannot be proceedings. When the heirs are of age,
finished in two (2) weeks, payment shall they shall execute an affidavit attesting
be made at intervals not exceeding to their relationship to the deceased and
sixteen days in proportion to the amount the fact that they are his heirs to the
of work completed. Final settlement shall exclusion of all other persons. In case
be made immediately upon completion of any of the heirs is a minor, such
the work.cralaw affidavit shall be executed in his behalf
by his natural guardian or next of kin.
SECTION 4. Place of payment. — As a Upon presentation of the affidavit to the
general rule, the place of payment shall employer, he shall make payment to the
be at or near the place of undertaking. heirs as representative of the Secretary
Payment in a place other than the work of Labor and Employment.cralaw
place shall be permissible only under the
following circumstances: SECTION 7. Civil liability of employer
and contractors. — Every employer or
(a) When payment cannot be effected at or indirect employer shall be jointly and
near the place of work by reason of the severally liable with his contractor or
deterioration of peace and order sub-contractor for the unpaid wages of
conditions, or by reason of actual or the employees of the latter. Such
impending emergencies caused by fire, employer or indirect employer may require
flood, epidemic or other calamity the contractor or sub-contractor to
rendering payment thereat impossible; furnish a bond equal to the cost of labor
under contract on condition that the bond
(b) When the employer provides free will answer for the wages due the
transportation to the employees back and employees should the contractor or
forth; and subcontractor, as the case may be, fail
to pay the same.cralaw
(c) Under any other analogous
circumstances; Provided, That the time SECTION 8. Job Contracting. — There is
spent by the employees in collecting job contracting permissible under the
their wages shall be considered as Code if the following conditions are met:
compensable hours worked;
(a) The contractor carries on an
(d) No employer shall pay his employees independent business and undertakes the
in any bar, night or day club, drinking contract work on his own account under
50
his own responsibility according to his may be deducted from the total amount due
own manner and method, free from the the winning party.cralaw
control and direction of his employer or
principal in all matters connected with SECTION 12. Non-interference in disposal
the performance of the work except as to of wages. — No employer shall limit or
the results thereof; and otherwise interfere with the freedom of
any employee to dispose of his wages and
(b) The contractor has substantial no employer shall in any manner oblige
capital or investment in the form of any of his employees to patronize any
tools, equipment, machineries, work store or avail of the services offered by
premises, and other materials which are any person.cralaw
necessary in the conduct of his
business.cralaw SECTION 13. Wages deduction. —
Deductions from the wages of the
SECTION 9. Labor-only contracting. — (a) employees may be made by the employer in
Any person who undertakes to supply any of the following cases:
workers to an employer shall be deemed to
be engaged in labor-only contracting (a) When the deductions are authorized by
where such person: law, including deductions for the
insurance premiums advanced by the
(1) Does not have substantial capital or employer in behalf of the employee as
investment in the form of tools, well as union dues where the right to
equipment, machineries, work premises and check-off has been recognized by the
other materials; and employer or authorized in writing by the
individual employee himself.cralaw
(2) The workers recruited and placed by
such person are performing activities (b) When the deductions are with the
which are directly related to the written authorization of the employees
principal business or operations of the for payment to the third person and the
employer in which workers are habitually employer agrees to do so; Provided, That
employed.cralaw the latter does not receive any pecuniary
benefit, directly or indirectly, from the
(b) Labor-only contracting as defined transaction.cralaw
herein is hereby prohibited and the
person acting as contractor shall be SECTION 14. Deduction for loss or damage.
considered merely as an agent or — Where the employer is engaged in a
intermediary of the employer who shall be trade, occupation or business where the
responsible to the workers in the same practice of making deductions or
manner and extent as if the latter were requiring deposits is recognized to
directly employed by him.cralaw answer for the reimbursement of loss or
damage to tools, materials, or equipment
(c) For cases not falling under this supplied by the employer to the employee,
Rule, the Secretary of Labor and the employer may make wage deductions or
Employment shall determine through require the employees to make deposits
appropriate orders whether or not the from which deductions shall be made,
contracting out of labor is permissible subject to the following conditions:
in the light of the circumstances of each
case and after considering the operating (a) That the employee concerned is
needs of the employer and the rights of clearly shown to be responsible for the
the workers involved. In such case, he loss or damage;
may prescribe conditions and restrictions
to insure the protection and welfare of (b) That the employee is given reasonable
the workers.cralaw opportunity to show cause why deduction
should not be made;
SECTION 10. Payment of wages in case of
bankruptcy. — Unpaid wages earned by the (c) That the amount of such deduction is
employees before the declaration of fair and reasonable and shall not exceed
bankruptcy or judicial liquidation of the the actual loss or damage; and
employer's business shall be given first
preference and shall be paid in full (d) That the deduction from the wages of
before other creditors may establish any the employee does not exceed 20 percent
claim to a share in the assets of the of the employee's wages in a week.
employer.cralaw
19. SHS Perforated Materials v. Diaz,
SECTION 11. Attorney's fees. — October 13, 2010 (compare with Milan
Attorney's fees in any judicial or v. NLRC, February 4, 2015)
administrative proceedings for the FACTS: MASANGKAY ET AL are employees of Solid
recovery of wages shall not exceed 10 Mills represented by the National federation of
percent of the amount awarded. The fees Labor Unions (NAFLU), CBA Agent
51
 Employees and their families are allowed accountability
to occupy SMI Village, a property of Solid THE PRIVILEGE WAS ANCHORED ON THE EER
Mills out of liberality and for  The return of the property’s possession
convenience provided they are to vacate became an obligation or liability on the
anytime the Company deems fit part of the employees when the employer-
 Then Solid Mills informed employees that employee relationship ceased
it will cease operation due to serious  respondent Solid Mills has the right to
business losses withhold petitioners’ wages and benefits
 Closure was recognized by NAFLU thru memo; because of this existing debt or liability
memo provided schedule of monetary
benefits
 Solid Mills filed with DOLE its 20. Commando Security v. NLRC, July 20,
termination report 1992
 Solid Mills sent notice to employees to FACTS: Respondent Decierdo was a security guard
vacate SMI Vill since 1981
 Employees were required to sign a MOA with  In 1987, Commando entred into a contract
release and quitclaim before their to provide guarding services to Alsons
benefits et al are to be released until 1988
o Those who signed agreed to vacate  Then the properties administration head of
o Petitioners herein refused to sugn ALSONS requested for a periodic
the documents and demanded to be reshuffling of guards
paid their benefits and separation  Thus, recall order was served to Devierdo
pay – Report to HQ
 Thus, they filed case for withholding of  Then, he was assigned to Pacific Oil
money benefits Company – but Deceirdo refused to accept
o Solid Mills said complaint is assignment
premature since they have not yet  On the effectivity date of the Detail
vacated the village Order, Decierdo filed a complaint for
LA: ordered Solid Mills to pay illegal dismissal and monetary claims
NLRC: affirmed LA decision LA: Company ordered to pay
 But held in abeyance the release of NLRC: affirmed
benefits for Masangkay et al until they
turn over the property ISSUE: is Desierdo entitled to the separation
 Failure to vacate justifies the pay?
withholding of their benefits
CA: affirmed NLRC NO NEED TO ASCERTAIN PERIOD TO GO BACK TO WORK
 He abandoned his work
ISSUE: whether Payment of the monetary claims of  Thus, claim for separation pay rightfully
petitioners should be held in abeyance pending NOT granted
compliance of their accountabilities to DUE PROCESS AFFORDED
respondent solid mills by turning over the  Full blown trial rightfully dispensed with
subject lots they respectively occupy at SMI bec no necessity pursuant to Sec 3 on the
village – YES. Revised Rules of NLRC – just submit
position papers; NLRC will then determine
HELD: whether there is a need for a formal
Institution of clearance procedures has legal
hearing
bases
o all that respondent had to do was
 Requiring clearance before the release of present its payrolls and other
last payments to the employee is a records which it is required to
standard procedure among employers, keep and maintain and it could
whether public or private already be determined on the face
 Clearance procedures are instituted to thereof if complainant’s monetary
ensure that the properties, real or claims had actually been paid or no
personal, belonging to the employer but o complainant’s entitlements were
are in the possession of the separated computed by the Corporate Auditing
employee, are returned to the employer Examiner on the basis of
before the employee’s departure respondent’s records which was
CLEARANCE PROCEDURE IS THE EXEPTION TO THE RULE secured by virtue of a subpoena
 GR: wages may not be withheld and benefits duces tecum
may not be diminished HOWEVER, DESEIRDO ENTITLED NOT TO HAVE 25%
 EXN: pursuant to clearance procedure DEDUCTION IN HIS SALARY
o CC Article 1706. Withholding of the  this provision was found to iniquitous
wages, except for a debt due, shall hence null
not be made by the employer  it is based on petitioner’s share in
o “Debt” in this case refers to any procuring job placement for him
obligation due from the employee to  courts the duty to be ever vigilant in
the employer. Includes any protecting the rights of workers who are
52
placed in a contractually disadvantaged
position and who sign waivers or
provisions contrary to law and public
policy
 It goes without saying that respondent may
not deduct its so-called ‘share’ from the
salaries of its guards without the
latter’s express consent and if such
deductions are not allowed by law. This is
notwithstanding any previous agreement or
understanding between them. Any such
agreement or contract is void ab initio
being contrary to law and public policy

21. Mabeza v. NLRC, April 18, 1997


(repeated case)

53
PRESIDENTIAL DECREE No. 851 December 16, (a) "Thirteenth-moth pay" shall mean one
1976 twelfth (1/12) of the basic salary of an
employee within a calendar year;
REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A
13th-MONTH PAY (b) "Basic salary" shall include all
remunerations or earnings paid by an
employer to an employee for services
WHEREAS, it is necessary to further protect the
rendered but may not include cost-of-
level of real wages from the ravage of worldwide
living allowances granted pursuant to
inflation;
Presidential Decree No. 525 or Letter of
Instructions No. 174, profit-sharing
WHEREAS, there has been no increase in the legal payments, and all allowances and monetary
minimum wage rates since 1970; benefits which are not considered or
integrated as part of the regular or basic
WHEREAS, the Christmas season is an opportune salary of the employee at the time of the
time for society to show its concern for the promulgation of the Decree on December 16,
plight of the working masses so they may 1975.
properly celebrate Christmas and New Year.
Section 3. Employers covered The Decree shall
NOW, THEREFORE, I, FERDINAND E. MARCOS, by apply to all employers except to:
virtue of the powers vested in me by the
Constitution, do hereby decree as follows: (a) Distressed employers, such as (1)
those which are currently incurring
Section 1. All employers are hereby required to substantial losses or (2) in the case of
pay all their employees receiving a basic salary non-profit institutions and organizations,
of not more than P1,000 a month, regardless of where their income, whether from
the nature of their employment, a 13th-month pay donations, contributions, grants and other
not later than December 24 of every year. earnings from any source, has consistently
declined by more than forty (40%) percent
of their normal income for the last two
Section 2. Employers already paying their (2) years, subject to the provision of
employees a 13th-month pay or its equivalent are Section 7 of this issuance;
not covered by this Decree.
(b) The Government and any of its
Section 3. This Decree shall take effect political subdivisions, including
immediately. government-owned and controlled
corporations, except those corporations
Done in the City of Manila, this 16th day of operating essentially as private
December 1975. subsidiaries of the Government;

(c) Employers already paying their


employees 13-month pay or more in a
calendar year of its equivalent at the
time of this issuance;

RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL (d) Employers of household helpers and
DECREE NO. 851 persons in the personal service of another
in relation to such workers; and
By virtue of the powers vested in me by law, the
following rules and regulations implementing (e) Employers of those who are paid on
Presidential Decree No. 851 are hereby issued purely commission, boundary, or task
for the guidance of all concerned. basis, and those who are paid a fixed
amount for performing a specific work,
irrespective of the time consumed in the
Section 1. Payment of 13-month Pay All employers performance thereof, except where the
covered by Presidential Decree No. 851, workers are paid on piece-rate basis in
hereinafter referred to as the "Decree", shall which case the employer shall be covered
pay to all their employees receiving a basic by this issuance insofar as such workers
salary of not more than P1,000 a month a are concerned.
thirteenth-month pay not later than December 24
of every year.
As used herein, workers paid on piece-rate basis
shall refer to those who are paid a standard
Section 2. Definition of certain terms As used in amount for every piece or unit of work produced
this issuance. that is more or less regularly replicated,
without regard to the time spent in producing
the same.
54
The term "its equivalent" as used in paragraph The report shall conform substantially with the
c) hereof shall include Christmas bonus, mid- following form:
year bonus, profit-sharing payments and other
cash bonuses amounting to not less than 1/12th REPORT ON COMPLIANCE WITH PD NO. 851
of the basic salary but shall not include cash
and stock dividends, cost of living allowances
and all other allowances regularly enjoyed by 1. Name of establishment
the employee, as well as non-monetary benefits.
Where an employer pays less than 1/12th of the 2. Address
employees basic salary, the employer shall pay
the difference.
3. Principal product or business

Section 4. Employees covered Except as provided 4. Total employment


in Section 3 of this issuance, all employees of
covered employers shall be entitled to benefit
provided under the Decree who are receiving not 5. Total number of workers benefited
more than P1,000 a month, regardless of their
position, designation or employment status, and 6. Amount granted per employee
irrespective of the method by which their wages
are paid, provided that they have worked for at
7. Total amount of benefits granted
least one month during the calendar year.

8. Name, position and tel. no. of person


Section 5. Option of covered employers A covered giving information
employer may pay one-half of the 13th-month pay
required by the Decree before the opening of the
regular school year and the other half on or Section 9. Adjudication of claims Non-payment of
before the 24th day of December of every year. the thirteenth-month pay provided by the Decree
and these rules shall be treated as money claims
cases and shall be processed in accordance with
In any establishment where a union has been
the Rules Implementing the Labor Code of the
recognized or certified as the collective
Philippines and the Rules of the National Labor
bargaining agent of the employees therein, the
Relations Commission.
periodicity or frequency of payment of the 13th
month pay may be the subject of agreement.
Section 10. Prohibition against reduction or
Nothing herein shall prevent employers from elimination of benefits Nothing herein shall be
giving the benefits provided in the Decree to construed to authorize any employer to
their employees who are receiving more than One eliminate, or diminish in any way, supplements,
Thousand (P1,000) Pesos a month or benefits or other employee benefits or favorable practice
higher than those provided by the Decree. being enjoyed by the employee at the time of
promulgation of this issuance.

Section 6. Special feature of benefit The


benefits granted under this issuance shall not Section 11. Transitory Provision These rules and
be credited as part of the regular wage of the regulations shall take effect immediately and
employees for purposes of determining overtime for purposes of the 13-month pay for 1975, the
and premium pay, fringe benefits, as well as same shall apply only to those who are employees
premium contributions to the State Insurance as of December 16, 1975.
Fund, social security, medicare and private
welfare and retirement plans. Manila, Philippines, 22 December 1975.

Section 7. Exemption of Distressed employers


Distressed employers shall qualify for exemption
from the requirement of the Decree upon prior
authorization by the Secretary of Labor.
Petitions for exemptions may be filed within the
nearest regional office having jurisdiction over SUPPLEMENTARY RULES AND REGULATIONS IMPLEMENTING
the employer not later than January 15, 1976. P.D. NO. 851
The regional offices shall transmit the
petitions to the Secretary of Labor within 24
hours from receipt thereof. To insure uniformity in the interpretation,
application and enforcement of the provisions of
P.D. No. 851 and its implementing regulations,
Section 8. Report of compliance Every covered the following clarifications are hereby made for
employer shall make a report of his compliance the information and guidance of all concerned:
with the Decree to the nearest regional labor
office not later than January 15 of each year.
1. Contractors and Subcontractors,
including Security and Watchman Agencies,

55
are exempt for the year 1975 subject to which provides as
the following conditions: follows:chanroblesvirtuallawlibrary

(a) that the contracts of such "Section 1 of Presidential Decree No. 851
enterprises were entered into is hereby modified to the extent that all
before December 16, 1975; employers are hereby required to pay all
their rank-and-file employees a 13th
month pay not later than December 24 of
(b) that such enterprises have every year." chan robles virtual law
complied with all labor standards library
laws during the year;
Before its modification by the aforecited
(c) that the contract cannot really Memorandum Order, P.D. No. 851 excludes
accomodate 13-month pay or its from entitlement to the 13th month pay
equivalent; and those employees who were receiving a
basic salary of more than P1,000.00 a
month. With the removal of the salary
(d) that the contract does not
ceiling of P1,000.00, all rank and file
provide for cost escalation clause.
employees are now entitled to a 13th
month pay regardless of the amount of
This exemption is without prejudice on the basic salary that they receive in a month
part of the workers to negotiate with if their employers are not otherwise
their employers or to seek payment thereof exempted from the application of P.D. No.
by filing appropriate complaints with the 851. Such employees are entitled to the
Regional Offices of the Department of benefit regardless of their designation
Labor. or employment status, and irrespective of
the method by which their wages are paid,
2. Private school teachers, including provided that they have worked for at
faculty members of colleges and least one (1) month during a calendar
universities, are entitled to 1/12 of year.
their annual basic pay regardless of the
number of months they teach or are paid 2. Exempted Employers.
within a year.
The following employers are still not
covered by P.D. No.
3. New establishments operating for less 851:chanroblesvirtuallawlibrary
than one year are not covered except
subsidiaries or branches of foreign and a. The Government and any of its
domestic corporations. political subdivisions, including
government-owned and controlled
4. Overtime pay, earnings and other corporations, excepts those corporations
remunerations which are not part of the operating essentially as private
basic salary shall not be included in the subsidiaries of the Government;
computation of the 13-month pay.
b. Employers already paying their
5. In view of the lack of sufficient time employees a 13th month pay or more in a
for the dissemination of the provisions of calendar year or its equivalent at the
P.D. No. 851 and its Rules and the time of this issuance;
unavailability of adequate cash flow due
to the long holiday season, compliance and c. Employers of household helpers and
reporting of compliance with this Decree persons in the personal service of
are hereby extended up to March 31, 1976 another in relation to such workers; and
except in private schools where compliance
for 1975 may be made not later than 30 d. Employers of those who are paid on
June 1976. purely commission, boundary, or task
basis, and those who are paid a fixed
amount for performing specific work,
6. Nothing herein shall sanction the irrespective of the time consumed in the
withdrawal or diminution of any performance thereof, except where the
compensation, benefits or any supplements workers are paid on piece-rate basis in
being enjoyed by the employees on the which case the employer shall grant the
effective date of this issuance. required 13th month pay to such workers.

REVISED GUIDELINES ON THE IMPLEMENTATION OF THE As used herein, workers paid on piece-
13TH MONTH PAY LAW. rate basis shall refer to those who are
1. Removal of Salary Ceiling. paid a standard amount for every piece or
unit of work produced that is more or
On August 13, 1986, President Corazon C. less regularly replicated, without regard
Aquino issued Memorandum Order No. 28 to the time spent in producing the same.

56
earlier the inclusion of said COLA as
The term "its equivalent" as used on part of the of the basic pay for the
paragraph (b) hereof shall include purpose of computing the 13th month pay
Christmas bonus, mid-year bonus, cash shall be reckoned from the date of actual
bonuses and other payments amounting to integration.
not less than 1/12 of the basic salary
but shall not include cash and stock The "basic salary" of an employee for the
dividends, cost of living allowances and purpose of computing the 13th month pay
all other allowances regularly enjoyed by shall include all remunerations or
the employee, as well as non-monetary earning paid by this employer for
benefits. Where an employer pays less services rendered but does not include
than required 1/12th of the employees allowances and monetary benefits which
basic salary, the employer shall pay the are not considered or integrated as part
difference. chan robles virtual law of the regular or basic salary, such as
library the cash equivalent of unused vacation
and sick leave credits, overtime,
3. Who are Rank-and File Employees. premium, night differential and holiday
pay, and cost-of-living allowances.
The Labor Code distinguishes a rank-and- However, these salary-related benefits
file employee from a managerial employee. should be included as part of the basic
It provides that a managerial employee is salary in the computation of the 13th
one who is vested with powers of month pay if by individual or collective
prerogatives to lay down and execute agreement, company practice or policy,
management policies and/or to hire, the same are treated as part of the basic
transfer, suspend, lay-off, recall salary of the employees.
discharge, assign or discipline
employees, or to effectively recommend (b) Time of Payment. — The required
such managerial actions. All employees 13th month pay shall be paid not later
not falling within this definition are than December 24 of each year. An
considered rank-and-file employees. employer, however, may give to his
employees one half (½) of the required
The above distinction shall be used as 13th month pay before the opening of the
guide for the purpose of determining who regular school year and the other half on
are rank-and-file employees entitled to before the 24th of December of every
the mandated 13th month pay. year. The frequency of payment of this
monetary benefit may be the subject of
4. Amount and payment of 13th Month Pay agreement between the employer and the
recognized/collective bargaining agent of
(a) Minimum of the Amount. — The the employees.
minimum 13th month pay required by law
shall not be less than one-twelfth of the 5. 13th Month Pay for Certain Types of
total basic salary earned by an employee Employees.
within a calendar year. For the year
1987, the computation of the 13th month (a) Employees Paid by Results. —
pay shall include the cost of living Employees who are paid on piece work
allowances (COLA) integrated into the basis are by law entitled to the 13th
basic salary of a covered employee month pay.
pursuant to Executive Order 178.
Employees who are paid a fixed or
E.O. No. 178 provides, among other guaranteed wage plus commission are also
things, that the P9.00 of the daily COLA entitled to the mandated 13th month pay,
of P17.00 for non-agricultural workers based on their total earnings during the
shall be integrated into the basic pay of calendar year, i.e., on both their fixed
covered employees effective 1 May 1987, or guaranteed wage and commission.
and the remaining P8.00 effective 1
October 1987. For establishments with (b) Those with Multiple Employers. —
less than 30 employees and paid-up Government employees working part time in
capital of P500,000 or less, the a private enterprise, including private
integration of COLAs shall be as follows: educational institutions, as well as
P4.50 effective on 1 May 1987; P4.50 on 1 employees working in two or more private
October 1987; and P8.00 effective 1 firms, whether on full or part time
January 1988. Thus, in the computation of basis, are entitled to the required 13th
the 13th month pay for 1987, the COLAs month pay from all their private
integrated into the basic pay shall be employers regardless of their total
included as of the date of their earnings from each or all their
integration. employers. chan robles virtual law
library
Where the total P17.00 daily COLA was
integrated effective 1 May 1987 or (c) Private School Teachers. — Private
57
school teachers, including faculty month bonus pursuant to PD 851 on top of
members of universities and colleges, are CBA bonuses – strike held
entitled to the required 13th month pay, o Then they entered into a compromise
regardless of the number of months they agreement to wait for the SC w/n
teach or are paid within a year, if they the 13th month pay is separate and
have rendered service for at least one distinct from the bonuses already
(1) month within a year. given
 Marcopper Mining vs Ople
6. 13th Month Pay of Resigned or  The prayer was to annul a
Separated Employee. decision by the Labor Deputy
Minister granting 13th month
An employee who has resigned or whose pay to Marcopper employees
services were terminated at any time in addition to mid-year and
before the time for payment of the 13th Christmas bonuses under a
month pay is entitled to this monetary CBA
benefit in proportion to the length of  This was dismissed with the
time he worked during the year, reckoned vote of 7 Justices
from the time he started working during  MR denied
the calendar year up to the time of his
 After the Marcopper decision became final,
resignation or termination from the
NFSW renewed its demand for 13th month
service. Thus, if he worked only from
pay; CAC refused
January up to September his proportionate
o Strike held again
13th month pay should be equivalent of
o This was declared illegal
1/12 his total basic salary he earned
during that period.  Then Union Filed an Injunction against the
execution of the Marcopper case saying it
The payment of the 13th month pay may be violates fundamental rights
demanded by the employee upon the
cessation of employer-employee ISSUE: Whether under Presidential Decree 851
relationship. This is consistent with the (13th Month Pay Law), CAC is obliged to give its
principle of equity that as the employer workers a 13th month salary in addition to
can require the employee to clear himself Christmas, milling and amelioration bonuses, the
of all liabilities and property aggregate of which admittedly exceeds by far the
accountability, so can the employee disputed 13th month pay – YES
demand the payment of all benefits due
him upon the termination of the HELD:
relationship. PD 851 was issued by Marcos mandating that:
 all employers are hereby required to pay
7. Non-inclusion in Regular Wage. all their employees receiving a basic
salary of not more than P1,000 a month,
The mandated 13th month pay need not be regardless of the nature of their
credited as part of regular wage of employment, a 13th month pay not later
employees for purposes of determining than December 24 of every year
overtime and premium pays, fringe  EXEMPTED: Employers already paying their
benefits insurance fund, Social Security, employees a 13th month pay or its
Medicare and private retirement plans. equivalent . . .
 As seen, the PD grants additional income
8. Prohibitions against reduction or but not to all bec if on top of already
elimination of benefits. chan robles given, it will be seen as 14th, 15th etc
virtual law library “ITS EQUIVALENT” (as interpreted by MOLE)
 Shall include Christmas bonus, mid-year
Nothing herein shall be construed to authorize bonus, profit-sharing payments and other
any employer to eliminate, or diminish in any cash bonuses amounting to not less than
way, supplements, or other employee benefits or 1/12th of the basic salary but shall not
favorable practice being enjoyed by the employee include cash and stock dividends, cost of
at the time of promulgation of this issuance. living allowances and all other allowances
regularly enjoyed by the employee, as well
CASES: as non-monetary benefits. Where an
employer pays less than 1/12th of the
22. National Federation of Sugar Workers
employee’s basic salary, the employer
v. Ovejera, May 31, 1982
shall pay the difference.
FACTS: NFSW is the bargaining agent of Central
MARCOPPER CASE
Azucarera (CAC) rank and file employees
 When CBA was entered, the Marcopper case
 Under the CBA, Bonuses are granted to
was still pending with the MR
parties such as Christmas bonus, milling
bonus, and amelioration bonus  The MR was only denied (main case
o Christmas and Milling are 1.5 affirmed) by only FIVE justices
months’ salary
 Then NFSW compelled the payment of 13th
58
 The Marcopper decision is therefore a and 1/12th of the worker’s yearly
Court decision but without the necessary basic salary
eight voted to be doctrinal.
 The Marcopper decision is therefore a
Court decision but without the necessary 24. Universal Corn Products v. NLRC,
eight voted to be doctrinal. August 21, 1987
 his being so, it cannot be said that the FACTS: Universal Corn Products Workers Union
Marcopper decision "clearly held" that entered into a CBA with the company (3 years:
the" employer is liable to pay the 13th 1971-1974) providing:
month pay separate and distinct from the  The COMPANY agrees to grant all regular
bonuses already given," within the meaning workers within the bargaining unit, with
of the NFSW-CAC compromise agreement at least one (1) year of continuous
service, a Christmas bonus equivalent to
FERNANDO DISSENT ON 13TH MONTH PAY the regular wages for seven (7) working
 Marcopper main case was not doctrinal but days, effective December, 1972. The bonus
there was no dissent shall be given to the workers on the
second week of December.
 Thus, employers liable to pay 13th month
on top  In the event that the service of a worker
is not continuous due to factory shutdown,
ABAD CONCURRING machine breakdown or prolonged absences or
leaves, the Christmas bonus shall be
 In Marcopper, the payment of bonuses under
prorated in accordance with the length of
the CBA was contingent upon the
services that worker concerned has served
realization of profits.
during the year.
 CBA not renewed but entered into an
23. Dole Philippines v. Leogardo, October addendum in 1979
23, 1982  The NEW CBA did not dealt with the
FACTS: STANFILCO merged with DOLE entered into a Christmas Bonus but only salary increases
CBA with Associated Labor Union for 3 years o Company said Christmas bonus was
(1975-1978) expressly excluded bec of issuance
 Under the CBA, Bonus shall be: of PD 851 on DEC 16, 1975
o Year-end productivity bonus = 10  The Union members when to LA for alleged
days of his basic daily wage if 80% failure of company to pay the seven-day
or more of the average total banana Christmas bonus for 1975-1978 pursuant to
production for 2 preceding calendar the 1972 CBA
years with the current year’s
estimate is attained ISSUE: is the bonus in the CBA different from
o This is exclusive to any bonus the 13th month pay in PD 851? – YES.
which the Company may be presently
giving or may give in the future HELD: The intention is clear therefore that the
 80% production level attained in 1975 thus bonus provided in the CBA was meant to be in
they were paid the stipulated year end addition to the legal requirement.
bonus in 1975  A bonus under the CBA is an obligation
 Then, PD 851 took effect created by the contract between the
management and workers while the 13th
o “Its equivalent” Pay 1 and ½ of
month pay is mandated by the law
basic salary
 Or difference if less than  we consider the seven-day bonus here
1.5 salary demanded "to be in addition to the legal
requirement.
 Thus, Stanfilco paid the difference bet
the year end and the 13th month provided  As held in the case of VALENZUELA, this
ISSUE: is this the proper payment of the bonus? case gives the Christmas Bonus to workers
– YES. Year end is party of the 13th month pay with “at least 1 year of continuous
HELD: service” --- a requirement not in the PD
INTERVENING YEARS
 PD 851 only applies to those earning
salary less than P1k  Under the 1972 CBA, when CBA is not
o Intent was to grant an additional renewed, it shall remain in force until a
income in the form of a 13th month new agreement is executed
pay to employees not already  Thus, when the new agreement was silent on
receiving the same. the 7-day bonus should not prevent the
 In this case, it becomes clear that the workers to demand its claim
year-end productivity bonus granted by
petitioner to private respondents pursuant 25. San Miguel Corporation v. Inciong,
to their CBA is, in legal contemplation, February 24, 1981
an integral part of their 13th month pay, FACTS: IN 1977, Cagayan Coca-Cola Free Workers
notwithstanding its conditional nature. Union filed a complaint against SMC for alleged
o Company was current in paying only failure or refusal to include in the computation
the difference between said bonus
59
of the 13th month pay such items as sick,
vacation or maternity leaves
 DOLE regional office ruled in that case
and ordered SMC to pay the difference of 26. Philippine Duplicators v. NLRC,
whatever earnings and the amount actually February 15, 1995
received as 13th month pay excluding FACTS: IN 1993, SC Affirmed a decision ordering
overtime premium and emergency cost of Phililppine Duplicator Inc to pay its employees
living allowance 13th month pay computed on the basis of their
 MOLE affirmed the Regional Office decision fixed wages PLUS SALES COMISSIONS
o such gross basic salary includes:  Now, Duplicator files an MR that the
(1) regular salary or wage; (2) earlier decision is null and void pursuant
payments for sick, vacation and to the ruling in Boie-Takeda
maternity leaves; (3) premium for o In that Boie Takeda, it was held
work performed on rest days or that the Revised Guidelines of the
holidays; (4) holiday pay for Sec. of Labor is null and void
worked or unworked regular holiday;
and (5) emergency allowance if ISSUE: is the decision in Boie Takeda applicable
given in the form of a wage here? – NO.
adjustment."  No Stare Decisis since there are different
factual situations
ISSUE: whether or not in the computation of the  In this case, the Third Division found
13th-month pay under Presidential Decree 851, that there is no question that the sales
payments for sick, vacation or maternity leaves, commission earned by the salesmen who make
premium for work done on rest days and special or close a sale of duplicating machines
holidays, including pay for regular holidays and distributed by petitioner corporation,
night differentials should be considered. – NO. constitute part of the compensation or
remuneration paid to salesmen for serving
HELD: BASIS FOR THE 13TH MONTH PAY as salesmen, and hence as part of the
 Under Presidential Decree 851 and its 'wage'
implementing rules, the basic salary of an o the sales commissions received by
employee is used as the basis in the every duplicating machine sold
determination of his 13th-month pay. constituted part of the basic
o Any compensations or remunerations compensation or remuneration of the
which are deemed not part of the salesmen of Philippine Duplicators
basic pay is excluded as basis in for doing their job.
the computation of the mandatory o correctly, that the sales
bonus commissions were an integral part
o DEEMED NOT PART OF SALARY: of the basic salary structure of
a) Cost-of-living allowances Philippine Duplicators' employees-
granted pursuant to Presidential salesmen
Decree 525 and Letter of o NOT overtime, profit-sharing, or
Instructions No. 174; fringe benefit
- Fringe Benefits not included  Unlike in Boie Takeda, commission was
excluded bec these were paid to medical
b) Profit sharing payments;. representatives and rank and file
employees as PRODUCTIVITY BONUSES
c) All allowances and monetary o Thus, additional monetary benefits
benefits which are not considered o If an employer cannot be compelled
or integrated as part of the to pay a productivity bonus to his
regular basic salary of the employees, it should follow that
employee at the time of the such productivity bonus, when
promulgation of the Decree on given, should not be deemed to fall
December 16, 1975. within the "basic salary" of
o Supplementary Rules and Regulations employees when the time comes to
of the IRR of PD 851 excluded compute their 13th month pay
overtime pay, earnings and other o “commissions” used in this case is
renumerations not the same as “sales commission”
 This dissipated all clouds used in Duplicators
of doubts as to what are o Medical Reps are not salesmen
excluded from the basic o profit-sharing payments, are
salary properly excluded from the ambit of
 As provided in the LC, overtime pay is the term "basic salary" for
computed based on the regular wage – purposes of computing the 13th
HENCE, IT IS ADDITIONAL month pay due to the employees.
 The same is true for Premium for Special Productivity Sales Commissions
Holiday which is 30% on top of regular Bonuses
salary EXCLUDED INCLUDED

60
generally tied to intimately related employee at the time of the promulgation of the
the productivity or to or directly Decree on December 16, 1975.chanrobles virtual
profit generation proportional to the lawlibrary
of the employer extent or energy of
corporation an employee's SEC. 3. Employers covered. — . . . (The law
endeavors applies) to all employers except to:chanrob1es
virtual 1aw library
not directly paid upon the
dependent on the specific results c) Employers already paying their employees a
extent on achieved by a 13-month pay or more in a calendar year or its
individual employee salesman-employee equivalent at the time of this issuance;a
exerts himself
something extra for a percentage of the e) Employers of those who are paid on purely
which no specific sales closed by a commission, boundary, or task basis, and those
additional services salesman and who are paid a fixed amount for performing a
are rendered by any operates as an specific work, irrespective of the time consumed
particular employee integral part of in the performance thereof, except where the
and hence not such salesman's workers are paid on piece-rate basis in which
legally demandable, basic pay case the employer shall be covered by this
absent a issuance insofar as such workers are concerned.
contractual
undertaking to pay The term "its equivalent" as used in paragraph
it (c) shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other cash
CONCLUSION: This Motion is denied; sales bonuses amounting to not less than 1/12th of the
commission included in the basic salary of basic salary but shall not include cash and
Duplicator employees stock dividends, cost of living allowances and
all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits.
Where an employer pays less than 1/12th of the
employee’s basic salary, the employer shall pay
27. Boie-Takeda Chemicals v. Dela Serna the difference
FACTS:
Sections 1 and 2 of Presidential Decree No. 851, Supplementary Rules and Regulations Implementing
the Thirteenth Month Pay Law, read as P.D. 851 were subsequently issued by Minister
follows:chanrob1es virtual 1aw library Ople which inter alia set out items of
compensation not included in the computation of
SEC. 1. All employers are hereby required to pay the 13th month pay, viz.:chanrob1es virtual 1aw
all their employees receiving basic salary of library
not more than P1,000.00 a month, regardless of
the nature of the employment, a 13th month pay SEC. 4. Overtime pay, earnings and other
not later than December 24 of every year. remunerations which are not part of the basic
salary shall not be included in the computation
Sec. 2. Employers already paying their employees of the 13th month pay.chanrobles.com:cralaw:red
a 13th month pay or its equivalent are not
covered by this Decree. On August 13, 1986, President Corazon C. Aquino
promulgated Memorandum Order No. 28, which
The Rules and Regulations Implementing P.D. 851 contained a single provision modifying
promulgated by then Labor Minister Blas Ople on Presidential Decree No. 851 by removing the
December 22, 1975 contained the following salary ceiling of P1,000.00 a month set by the
relevant provisions relative to the concept of latter, as follows:chanrob1es virtual 1aw
"thirteenth month pay" and the employers library
exempted from giving it, to wit:.
Section 1 of Presidential Decree No. 851 is
SEC. 2. Definition of certain terms. — . . . hereby modified to the extent that all employers
are hereby required to pay all their rank-and-
a) "Thirteenth month pay" shall mean one twelfth file employees a 13th month pay not later than
(1/12) of the basic salary of an employee within December 24, of every year.
a calendar year;
In 1987, a Revised Guidelines on the IRR was
b) "Basic Salary" shall include all promulgated
remunerations or earnings paid by an employer to
an employee for services rendered but may not 4. Amount and payment of 13th Month Pay.
include cost-of-living allowances granted The basic salary of an employee for the purpose
pursuant to Presidential Decree No. 525 or of computing the 13th month pay shall include
Letter of Instructions No. 174, profit-sharing all remunerations or earnings paid by his
payments, and all allowances and monetary employer for services rendered but does not
benefits which are not considered or integrated include allowances and monetary benefits which
as part of the regular or basic salary of the are not considered or integrated as part of the
61
regular or basic salary, such as the cash second paragraph of Section 5 (a) of the
equivalent of unused vacation and sick leave Revised Guidelines on the Implementation
credits, overtime, premium, night differential of the 13th Month Pay Law unduly expanded
and holiday pay, and cost-of-living allowances. the concept of "basic salary" as defined
However, these salary-related benefits should be in P.D. 851.
included as part of the basic salary in the
computation of the 13th month pay if by
individual or collective agreement, company
practice or policy, the same are treated as part
of the basic salary of the employees.ch

5. 13th Month Pay for Certain Types of


Employees.
(a) Employees Paid by Results. — Employees who
are paid on piece work basis are by law entitled
to the 13th month pay.
Employees who are paid a fixed or guaranteed
wage plus commission are also entitled to the
mandated 13th month pay based on their total
earnings during the calendar year, i.e., on both
their fixed or guaranteed wage and commission.

 A routine inspection was conducted on


Boie-Takeda and found that the company was
not including the commissions earned by
its medical representatives in the
 In this case Boie-Takeda wrote DOLE
contesting the Notice of Inspection
Results and claimed that the “commission”
paid to Medical Reps are not part of the
REGULAR salary thus excluded
o “If no sales is (sic) made under
the effort of a particular
representative, there is no
commission during the period when
no sale was transacted, so that
commissions are not and cannot be
legally defined as regular in
nature.”
 Similar routine Inspection conducted with
Philippine Fuji Xerox
o That there is an underpayment of
the 13th month of 62 employees
 Thus, both challenge the validity of
Drilon’s Interpretation

ISSUE: should this commission be included in the


13th Month?
HELD:
MEMO ORDER NO. 28
 Sec 1 removed the P1k salary ceiling
SUPPLEMENTAL RULES AND REGULATIONS IMPLEMENTING
PD
 As such they are deemed not part of the
basic salary and shall not be considered
in the computation of the 13th-month pay

BASIC SALARY
 "basic salary" is to be understood in its
common, generally-accepted meaning
 we construed the term in its generic sense
to refer to all types of "direct
remunerations for services rendered,
including commissions
 In including commissions in the
computation of the 13th month pay, the

62
28. Philippine Agricultural Commercial and at the time of the promulgation of the
Industrial Workers Union v. NLRC Decree on December 16, 1975.
FACTS: Petitioner Union filed a complaint
against Vallacar Transit for underpayment of 13th xxx xxx xxx
month pay of drivers and conductors
 They said that although they were on
On August 13, 1986, President Corazon C.
“purely commission basis” the CBA provides
Aquino, exercising both executive and
that there are entitled to the basic
legislative authority, issued Memorandum Order
minimum wage
No. 28 which provided as follows:
 In response, Vallacar said the
complainants are not entitled pursuant to
Sec 2 Art 14 of CBA: xxx xxx xxx
o expressly provided that "drivers
and conductors paid on a purely Sec.1. of Presidential Decree No. 851 is
commission are not legally entitled hereby modified to the extent that all
to 13th month pay." employers are hereby required to pay all
LA: dismissed the complaint their rank-and-file employees a 13th
NLRC: affirmed month pay not later than December 24 of
every year.
ISSUE: are they entitled to 13th month pay? –
YES. xxx xxx xxx
HELD:
In connection with and in implementation of
on December 16, 1975, P.D. 851, otherwise Memorandum Order No. 28, the then Minister of
known as the "13th Month Pay" Law, was Labor and Employment issued MOLE Explanatory
promulgated. The same prescribed payment of Bulletin No. 86-12 on November 24, 1986. Item
13th month pay in the following terms: No. 5 (a) of the said issuance read:

Sec. 1. All employers are hereby xxx xxx xxx


required to pay all their employees
receiving a basic salary of not more than Employees who are paid a fixed
P1,000.00 a month, regardless of the or guaranteed wage plus commission are
nature of the employment, a 13th month also entitled to the mandated 13th month
pay not later than December 24 of every pay, based on their total earning(s)
year. during the calendar year, i.e., on both
their fixed and guaranteed wage and
Sec. 2. Employers already paying their commission.
employees a 13th month pay or its
equivalent are not covered by this  Rule: every employee receiving a
Decree. commission in addition to a fixed or
guaranteed wage or salary, is entitled to
The Rules and Regulations Implementing P.D. a 13th month pay. (GUARANTEED WAGE)
No. 851, issued by the then Secretary of Labor o Doesn’t matter if wage with
and Employment on December 22, 1975, defined commission or commission with
the following basic terms: guaranteed wage
 MOLE EXPLANATORY BULLETIN
86-12
xxx xxx xxx
 In this case, entitled to 13th month bec
although they have commission, it is
(a) 13th month pay shall mean one- admitted that they are AUTOMATICALLY
twelfth (1/12) of the basic salary of an entitled to basic min pay mandated by law
employee within a calendar year; IN CASE THEIR COMISSION IS LESS THAN THE
MIN FOR 8 HOURS
(b) basic salary shall include all  The CBA provision is interpreted narrowly
remunerations or earnings paid by an and against mandated by law
employer to an employer for services  Computation:
rendered, but may not include cost of o Min wage – if commission less than
living allowances granted pursuant to statutory min
Presidential Decree No. 525 or Letter of o Commission – if over the statutory
Instructions No. 174, profitsharing min
payments, and all allowances and o = 1.5 of their total earnings
monetary benefits which are not during the calendar year
considered or integrated as part of the
regular or basic salary of the employee 29. Ariel L. David v. Macasio, July 2,
2014

63
FACTS: MACASIO filed a complaint against David
doing business as Yiels Hog dealer for non-
payment of 13th month, other pay
 Hog dealer since 2005 on pakyaw basis

ISSUE: entitled to 13th month pay?

CA HELD: yes. labor law provisions, when read


together with the Serrano ruling, exempt those
engaged on "pakyaw" or task basis only if they
qualify as "field personnel.”
 The question is w/n Macasia is a field
personnel or
 Pakyaw basis but not a field personnel
SC HELD:
 IRR of Labor Code limited the grant of
service incentives:
o did not include “field personnel”
or those whose performance is
unsupervised by employer; whose
actual hours of work in the field
cannot be determined with
REASONABLE CERTAINTY
INCLUDING Those engaged on task or
contract basis, purely commission
basis
 the presence (or absence) of employer
supervision as regards the worker’s time
and performance is the key: if the worker
is simply engaged on pakyaw or task basis,
then the general rule is that he is
entitled to a holiday pay and SIL pay
unless exempted from the exceptions
specifically provided under Article 94
(holiday pay) and Article95 (SIL pay) of
the Labor Code
MACASIO NOT A FIELD PERSONNEL
 works at place of business; actual hours
of work determined with reasonable
certainty
 As with holiday and SIL pay, 13th month
pay benefits generally cover all
employees; an employee must be one of
those expressly enumerated to be
exempted.
 CA DECISION REVERSED

64
E. Service Charge twelve (12) months immediately preceding the
abolition of withdrawal of such charges.cralaw
Labor Code: Article 96 SECTION 6. Relation to agreements. — Nothing
Article 96. Service charges. in this Rule shall prevent the employer and
CASE: All service charges collected by hotels, his employees from entering into any agreement
restaurants and similar establishments with terms more favorable to the employees
RULE: It shall be distributed at the rate of: than those provided herein, or be used to
• 85% for all covered employees and diminish any benefit granted to the employees
• 15% for management. under existing laws, agreement and voluntary
CASE: The share of the employees employer practice.cralaw
RULE: It shall be equally distributed among SECTION 7. This rule shall be without
them. In case prejudice to existing, future collective
the service charge is abolished, the share of bargaining agreements.cralaw
the covered Nothing in this rule shall be construed to
employees shall be considered integrated in justify the reduction or diminution of any
their wages. benefit being enjoyed by any employee at the
time of effectivity of this rule.
Omnibus Rules: Book III, Rule VI
RULE VI F. Non-Diminution
Service Charges Labor Code: Article 100
SECTION 1. Coverage. — This rule shall apply Article 100. Prohibition against elimination
only to establishments collecting service or diminution
charges such as hotels, restaurants, lodging of benefits.
houses, night clubs, cocktail lounge, massage Nothing in this Book shall be construed to
clinics, bars, casinos and gambling houses, eliminate or in
and similar enterprises, including those any way diminish:
entities operating primarily as private • supplements, or
subsidiaries of the Government.cralaw • other employee benefits
SECTION 2. Employees covered. — This rule being enjoyed at the time of promulgation of
shall apply to all employees of covered this Code.
employers, regardless of their positions,
designations or employment status, and CASES:
irrespective of the method by which their 1. Royal Plant Workers Union v. Coca Cola
wages are paid except to managerial employees. Bottlers, April 15, 2013
As used herein, a "managerial employee" shall Facts: Coca Cola (manufacture, sale and
mean one who is vested with powers or distribution of softdrinks)
prerogatives to lay down and execute  20 bottling operators are members of the
management policies and/or to hire, transfer, Union
suspend, lay-off, recall, discharge, assign, o Two shifts: 8am to 5; 5-finish
or discipline employees or to effectively o Shift has rotation of work time and
recommend such managerial actions. All break time
employees not falling within this definition o Bottling Line 2 operators were
shall be considered rank-and-file provided chairs in 1974; Line 1 in
employees.cralaw 1988
SECTION 3. Distribution of service charges. —  But in 2008, this was
All service charges collected by covered removed
employers shall be distributed at the rate of  "I Operate, I Maintain, I
85% for the employees and 15% for the Clean" program
management. The 85% shall be distributed  Avoid sleeping; move around
equally among the covered employees. The 15% to clean
shall be for the disposition by management to o This became an issue
answer for losses and breakages and  Failed to reach amicable
distribution to managerial employees at the settlement
discretion of the management in the latter Arbitration: Removal of Chair not valid
case.cralaw  It had ripened into a benefit; could not
SECTION 4. Frequency of distribution. — The be reduced
shares referred to herein shall be distributed
 While removal was in good faith,
and paid to the employees not less than once
allegation of sleeping on duty was not
every two (2) weeks or twice a month at
proven
intervals not exceeding sixteen (16)
CA: reversed
days.cralaw
 Removal within management prerogatives
SECTION 5. Integration of service charges. —
In case the service charges is abolished the  Valid coz chair not necessary for the
share of covered employees shall be considered exigency of work or would expose them to
integrated in their wages. The basis of the some hazards
amount to be integrated shall be the average
monthly share of each employee for the past ISSUE: was the removal of the bottling operators’
chairs from CCBPI’s production/manufacturing

65
lines a valid exercise of a management o Diminution of employee benefits
prerogative? – YES.  Parties failed to resolve issue
Is the chair a “benefit” embraced by Art 100 thus VA: Union won.
cannot be taken? – NO.
ISSUE: was the re-computation a diminution of
HELD: benefits? – YES.
NO VIOLATION OF ART 100 HELD:
 Such benefits or privileges form part of  Claim of mistake in computation
the employees’ wage, salary or unmeritorious
compensation making them enforceable o Impossible to find out about it in
obligations. 1999 only
 article speaks of non-diminution of o The submitted docs of the company
supplements and other employee benefits did not include explanation on why
o Supplements arc privileges given to it included such pay
an employee which constitute as  The payment of COLA before the CBA in 1982
extra remuneration besides his or and in compliance with Wage Orders 1 to 5
her basic ordinary earnings and are voluntary act of the company which
wages cannot now be unilaterally withdrawn
o ONLY THOSE SUSCEPTIBLE OF MONETARY o It was practiced over a long period
CONSIDERATIONS of time and consistent and
A Valid Exercise of Management Prerogative deliberate
 CCBPI removed the operators’ chairs  TEST: Company KNOWING FULLY WELL that such
pursuant to a national directive and in pay are not covered by law but continued
line with its "I Operate, I Maintain, I giving the same
Clean" program, launched to enable the  FRINGE BENEFITS (not included in base for
Union to perform their duties and 13th month pay): COLA, Profit sharing
responsibilities more efficiently payments and Others not included in basic
o Chairs not removed indiscriminately pay
 In exchange, they were compensated with:  When petitioner Sevilla Trading still
a) a reduction of the operating hours of included over the years non-basic benefits
the bottling operators from a two-and-one- of its employees, such as maternity leave
half (2 ½)-hour rotation period to a one- pay, cash equivalent of unused vacation
and-a-half (1 ½) hour rotation period; and sick leave, among others in the
and computation of the 13th-month pay, this
b) an increase of the break period from 15 may only be construed as a voluntary act
to 30 minutes between rotations. on its part. Putting the blame on the
 It was done in good faith: promote work petitioners payroll personnel is
efficiency inexcusable
NO LABOR LAW VIOLATION  The considerable length of time the
 Did not expose them to safety and health questioned items had been included by
hazards petitioner indicates a unilateral and
voluntary act on its part, sufficient in
 Actually, moving around benefits them
itself to negate any claim of mistake.
(health, death)
o Prolonged sitting may result to  LENGTH OF TIME = varies from case to case
cramps, fatigue o TEST: so long it ripened into
o Sedentary employees also face company practice or policy 
gradual deterioration in health cannot unilaterally withdraw
NO CBA PROVISION VIOLATED  In this case, it has been done for 2 years
 Actually, Sec 2 states that any voluntary = already a voluntary employer practice
benefits and privileges not agreed do not subject to Art 100
create an obligation
3. Arco Metal Products v. Samahan ng mga
2. Sevilla Trading Co. v. Semana, April 28, Manggagawa sa Arco-Metal-NAFLU, May 14,
2004 2008
FACTS: SEVILLA COMPANY added in the base pay of FACTS: In an earlier case, it was decided that
its employee for computation of 13th month pay: 13th month pay, vacation leave and sick leave
overtime premium, legal holiday, night premium, conversion to cash shall be paid in full to
etc pay Union members REGARDLESS of actual years of
 Sevilla said this happened bec it service rendered in a year
entrusted the preparation of payroll to  In 2003, Company paid PRORATED benefits to
its office staff so when they used 3 Union Members who rendered less than 12
computerized system, it discovered the months of service
inclusion of the non-basic pay and other  Members protested the prorated scheme
benefits o Several years ago, it did not
o Hence, it excluded the other prorate the same benefits to 2
benefits previously given employees
 Super Union was not happy
66
o Such prorate is diminution of the days that the employees are paid their
benefits basic wage, even if said days are unworked
VA: giving full payment for less than 12 months o MEANING, on days that employees are
of service did not ripen into a practice not paid their basic wage, payment
CA: reversed; pay full regardless of actual of COLA is not mandated
service rendered in a year o No Pay, No COLA
 Thus, for monthly paid employees, if their
ISSUE: Is the prorated pay a violation of Art monthly salary covers all the days in a
100? – yes. month, they are deemed paid their basic
wage for all those days
HELD: CBA provides to be entitled:  In the case at bar, CBA provides that
 Vacation Leave – at least one year of monthly basic pay is computed on the basis
service of 5 days a week or 22 days a month
 Sick Leave – at least one year of service  It has been consistently used by the
 Emergency Leave company, the 22 days
 CBA provides that to be entitled to the
full monetization, one must have rendered 5. Insular Hotel Employees Union v.
at least one year of service Waterfront Insular Hotel Davao, September
BUT PAYMENT IN FULL TO 7 OTHERS CONSTITUTES 22, 2010
VOLUNTARY EMPLOYER PRACTICE – not a mistake FACTS: COMPANY submitted to DOLE a Notice of
Suspension of Operations for 6 months due to
 employer had freely and continuously
severe and serious business losses
included in the computation of the 13th
month pay those items that were expressly  That if company cannot resume work within
excluded by the law, we held that the act 6 months, it will still pay the employees
which was favorable to the employees their benefits legally due
though not conforming to law had thus  Union wrote company that they are willing
ripened into a practice and could not be to work with them just to keep their jobs
withdrawn, reduced, diminished, even adjust economic benefits
discontinued or eliminated. o That those in service for 25 years
 In the years 1992, 1993, 1994, 1999, 2002 be paid retirement benefits and
and 2003, petitioner had adopted a policy then put their length of service to
of freely, voluntarily and consistently zero without loss of status of
granting full benefits to its employees employment with min hiring rate
regardless of the length of service o 1) Suspension of [the] CBA for ten
rendered. True, there were only a total of years, No strike no lock-out shall
seven employees who benefited from such a be enforced.
practice, but it was an established o 2) Pay all the employees their
practice nonetheless. benefits due, and put the length of
service to zero with a minimum
 In cases involving money claims of
hiring rate. Payment of benefits
employees, the employer has the burden of
may be on a staggered basis or as
proving that the employees did receive the
available.
wages and benefits and that the same were
o 3) Night premium and holiday pays
paid in accordance with law
shall be according to law. Overtime
o In this case, Company did not
hours rendered shall be offsetted
present proofs of other employees
as practiced.
similarly situated but did not
o 4) Reduce the sick leaves and
receive prorated pay
vacation leaves to 15 days/15days.
o 5) Emergency leave and birthday off
4. Globe Mackay Cable v. NLRC, June 29, 1988
are hereby waived.
FACTS: Wage Order No. 6 took effect increasing
o 6) Duty meal allowance is fixed at
COLA
P30.00 only. No more midnight
 Company complied by multiplying the P3 snacks and double meal allowance.
increase by 22 which is the number of The cook drinks be stopped as
working days practiced.
 Union protested saying it should be 30 o 7) We will shoulder 50% of the
days group health insurance and family
o It has been the company practice medical allowance be reduced to
that it should cover 30 days thus 1,500.00 instead of 3,000.00.
cannot be unilaterally changed o 8) The practice of bringing home
LA: ruled in favor of company; only 22 days our uniforms for laundry be
NLRC: reversed; guilty of illegal deductions continued.
o 9) Fixed manning shall be
ISSUE: Should it be x 22 or 30? – 22 implemented, the rest of manpower
HELD requirements maybe sourced thru WAP
 Implementing Rules of the Wage Order and casual hiring. Manpower for
provides that COLA is mandated only for fixed manning shall be 145 rank-
and-file union members.

67
o 10) Union will cooperate fully on o PAL-PALEA is applicable
strict implementation of house  Promote industrial peace
rules in order to attain desired  In th case at bar, while the terms of the
productivity and discipline. The MOA undoubtedly reduced the salaries and
union will not tolerate problem certain benefits previously enjoyed by the
members. members of the Union, it cannot escape
o 11) The union in its desire to be this Court's attention that it was the
of utmost service would adopt execution of the MOA which paved the way
multi-tasking for the hotel to be for the re-opening of the hotel,
more competitive. notwithstanding its financial distress.
 It is understood that with the suspension More importantly, the execution of the MOA
of the CBA renegotiations, the same allowed respondents to keep their jobs. It
existing CBA shall be adopted and that all would certainly be iniquitous for the
provisions therein shall remain enforced members of the Union to sign new contracts
except for those mentioned in this prompting the re-opening of the hotel only
proposal. These agreements supersede CBA to later on renege on their agreement on
 Then a Manifesto was submitted to the fact of the non-ratification of the
concretize the proposals MOA.
 The company downsized o ROJAS WAS PROPERLY AUTHORIZED TO
 Then they entered into a MOA NEGOTIATE WITH THE COMPANY
 Then signed a Reconfirmation of Employment
6. Asis v. Minister of Labor, March 15, 1989
 2001, Hotel resumed operations FACTS: ATTY. ASIS is the in house legal cousel
 2002, Joves and Planas filed a Notice of of Central Azucarera then later concurrently
Mediation for Diminution of wages and appointed as Head of Manpower and Services
other benefits to unlawful MOA – employees Department
signed it in individual capacity not as  In addition to his salary, he was given
union thus void; it was only NFL other fringe benefits such as monthly
VA: NFL proper party ration of 200 liters of gas, LPG
VA MR: MOA invalid since contrary to law and  Then this was revoked 5 years after due to
public policy cost reduction measure
CA: reversed; MOA valid
 So he filed a complaint for the
restoration
ISSUE: was the MOA valid and not contrary to Art
100? – YES.  Then Central issued a Memo ordaining his
HELD: Individual union members HAVE the capacity relief
to enter MOA  Hence, he theorized he was already
 CBA: only Union is authorized to bring dismissed, illegally
dispute before VA DOLE: valid cost reduction measure
 BUT!!! The Federation which the Union is ISSUE: was the revocation of the monthly ration
affiliated has standing but in the
illegal? – NO.
capacity of an Agent of the Union
HELD: revocation is valid due to occasion forced
 THUS, VA HAS NO JURISDICTION by the circumstance
BUT MOA IS VALID FOR THE CONTINUANCE OF
 Monthly ration is not part of his basic
OPERATIONS
salary
 Even so, Court tilt the balance of justice
 It was not found in any management payroll
to labor
vouchers
 Thus, it upheld the MOA valid bec it will
 Also, Central reimbursed him for actual
avoid prejudice to the employees
consumption of fuel during period of
o Bec at that time, Company was in
suspension
financial distress
ON DIMINUTION
7. American Wire and Cable Daily Rated
 the prohibition against elimination or Employees Union v. American Wire and
diminution of benefits set out in Article Cable, April 29, 2005
100 of the Labor Code is specifically FACTS: AMERICAN WIRE has two unions: Monthly-
concerned with benefits already enjoyed at Rated and Daily- Rated Unions
the time of the promulgation of the Labor
 The two Unions filed a case for diminution
Code. Article 100 does not, in other
of benefits:
words, purport to apply to situations
o Service award, Premium pay,
arising after the promulgation date of the
Christmas party
Labor Code
o That the grant of these benefits
 Even assuming arguendo that Article 100 was a customary practice that can
applies to the case at bar, this Court no longer be unilaterally withdrawn
agrees with respondent that the same does by private respondent without the
not prohibit a union from offering and tacit consent of the petitioner.
agreeing to reduce wages and benefits of
 Company said no, it has not ripened into
the employees
practice thus not demandable right
o THEY HAVE RIGHT TO SUSPEND CBA
68
VA: Company NOT guilty under Art 100  It is quite clear from the provisions that
CA: Affirmed VA a declaration of bankruptcy or a judicial
liquidation must be present before the
ISSUE: was Art 100 violated? – NO. worker's preference may be enforced.
HELD: the money given by the company are in the  Article 110 must not be viewed in
form of BONUSES given our of company’s generosity isolation and must always be reckoned with
 The grant of the same was management the provisions of the Civil Code
prerogative  THERE IS A NECESSITY OF JUDICIAL
 For a bonus to be enforceable, it must ADJUDICATION
have been promised by the employer and  The case filed by DBP is for the
expressly agreed upon by the parties, or collection of money
it must have had a fixed amount31 and had  LA erred when it ruled that unpaid workers
been a long and regular practice on the have preference absent judicial
part of the employer adjudication
 The benefits/entitlements in question were NECESSITY OF PROCEEDING
never subjects of any express agreement  Constructive notice to all claimants
between the parties.  For a fair and binding adjudication
o Never incorporated in the CBA instead of piece meal settlement
o Not in fixed amount
o Not given since time immemorial
since Union failed to adduce 9. Development Bank of the Philippines v.
evidence that it has been a regular Secretary,
practice FACTS: The earlier case with RMC involves
o To force company to pay them is to complaint for illegal dismissal, unfair labor
penalize it for past generosity practice etc
G. Worker Preference  Workers won and sheriff was directed to
Labor Code: Article 110 collect P1.2M from RMC or if unable,
execute the writ by selling its properties
Article 110. Worker preference in case of
not exempt from execution
bankruptcy
 Writ was returned unserved bec premises
CASE: In the event of bankruptcy or were padlocked and foreclosed by DBP
liquidation of an employer’s business  DOLE said workers have preference over
creditors
RULE: His workers shall ENJOY FIRST
PREFERENCE as regards their wages and other ISSUE: Does DBP have preference? – YES.
monetary claims, any provisions of law to HELD: It is clear from the wording of the law
that the preferential right accorded to
the contrary notwithstanding.
employees and workers under Article 110 may be
CASE: Unpaid wages and monetary claims invoked only during bankruptcy or judicial
liquidation proceedings against the employer
• claims of the government and  The rationale for making the application
• other creditors may be paid. of Article 110 of the Labor Code
contingent upon the institution of
8. Development Bank of the Philippines v. bankruptcy or judicial liquidation
Labor Arbiter, March 8, 1989 proceedings against the employer is
FACTS: RMC WAS BANKRUPT premised upon the very nature of a
preferential right of credit.
 DBP claim that Art 110 does not apply to
company where there was extrajudicial  Indubitably, the preferential right of
foreclosure credit attains significance only after the
properties of the debtor have been
 When the property of Riverside Mills Corp
inventoried and liquidated, and the claims
was levied, NLRC awarded pay to workers
held by his various creditors have been
 BUT pending this, DBP obtained Writ of established
Possession of the said property pursuant
 bankruptcy, insolvency and general
to an extrajudicial foreclosure
judicial liquidation proceedings provide
o It was bought by the bank in a
the only proper venue for the enforcement
public auction
o It was subsequently leased to of a creditor’s preferential right such as
that established in Article 110 of the
Egret, Rosario and General Textile
Labor Code, for these are in rem
Mills
proceedings binding against the whole
LA: Employees of RMC have preference for unpaid
world where all persons having any
wages and other benefits over the property
interest in the assets of the debtor
GIVING BACK FORECLOSED ASSET VIOLATES WRIT OF
ISSUE: In extra-judicial proceeding, do workers
EXEC
have preference over creditors? – NO.
 It was validly extrajudicially foreclosed
HELD: NO PREFERENCE WHEN THERE’S DECLARATION OF
and RMC failed to redeemed it
BUNKRUPTCY OR JUDICIAL LIQUIDATION

69
 Article 110 of the Labor Code establishes  The amendment expands worker preference to
is not a lien, but a preference of credit cover not only unpaid wages but also other
in favor of employees monetary claims to which even claims of
 Moreover, a preference does not exist in the Government must be deemed subordinate.
any effective way prior to, and apart  Notably, the terms "declaration" of
from, the institution of these bankruptcy or "judicial" liquidation have
proceedings, for it is only then that the been eliminated
legal provisions on concurrence and AMENDMENT DID NOT DO AWAY WITH THE DECLARATION
preference of credits begin to apply 1. Article 110 of the Labor Code, in
determining the reach of its terms, cannot
10. Development Bank of the Philippines v. be viewed in isolation. MUST STILL BE READ
NLRC, March 19, 1990 (including dissenting IN CONNECTION WITH CC
opinion) 2. There must be harmonization of laws
FACTS: LIRAG property mortgaged to DBP 3. In the event of insolvency, a principal
 Complaining workers (union members) were objective should be to effect an equitable
terminated on the ground of retrenchment distribution of the insolvent’s property
 Then LIRAG ceased to operate among his creditors. To accomplish this
 Illegal Dismissal case was instituted and there must first be some proceeding
claim for monetary benefits and pay 4. A distinction should be made between a
demanded preference of credit and a lien
o PREFENCE - applies only to claims
 LA ordered LIRAG to pay complainants;
which do not attach to specific
order became final and executory
properties
 Writ of Execution for that case was issued o LIEN - creates a charge on a
on the same day DBP extrajudicially particular property
foreclosed the mortgage
 ART 110 recognizes preference and not lien
o Thus, Writ of Execution returned
5. The DBP anchors its claims on a mortgage
unsatisfied
credit. A mortgage directly and
 LA granted Writ of Garnishment and immediately subjects the property upon
directed DBP to remit proceeds of the which it is imposed
foreclosed property
 It creates a real right which is
enforceable against the whole world
ISSUE: Did NLRC commit GAD for affirming LA’s
 IT IS A LIEN, NOT PREFERENCE
grant of Writ of Garnishment? – YES.
6. Assuming arguendo that amendment gives
Does the Amendment of PD 442 by the Labor Code
preference to unpaid workers, it has no
remove requisite of bankruptcy declaration or
retroactive effect
judicial liquidation? – NO.
 It is impairment of contract
HELD: It is quite clear from the provisions that
CONCLUSION the right to preference given to
a declaration of bankruptcy or a judicial
workers under Article 110 of the Labor Code
liquidation must be present before the worker’s cannot exist in any effective way prior to the
preference may be enforced time of its presentation in distribution
 LABOR CODE AMENDED PD 442 proceedings
PD 442 Labor Code
"Article 110. Worker Article 110. Worker DISSENT:
preference in case of preference in case of 1. CRUZ -- I was convinced that it was the
bankruptcy. — In the bankruptcy. — In the intention of the legislature to give
event of bankruptcy or event of bankruptcy or absolute preference to the workers’ claims
liquidation of an liquidation of an pursuant to the social justice policy.
employer’s business, employer’s business, Social Justice is not a mere catchphrase
his workers shall his workers shall 2. PADILLA – LIRAG’S only asset was mortgaged
enjoy first preference enjoy first preference to DBP
as regards wages due as regards their - It ceased operation in 1983 but Labor Code
them for services unpaid wages and other was approved in 1989
rendered during the monetary claims, any
- Under the system of preferences in the
period prior to the provision of law to
Civil Code, only taxes enjoy absolute
bankruptcy or the contrary
preference
liquidation, any notwithstanding. Such
provision to the unpaid wages and - With the amendment of Article 110 of the
contrary monetary claims shall Labor Code by Republic Act 6715, a three-
notwithstanding. be paid in full before tier order of preference is established
Unpaid wages shall be the claims of the wherein unpaid wages and other monetary
paid in full before Government and other claims of workers enjoy absolute
other creditors may creditors may be paid. preference over all other claims,
establish any claim to including those of the Government, in
a share in the assets cases where a debtor-employer is unable to
of the employer." pay in full all his obligations.
- The absolute preference given to monetary
claims of workers, to which claims of the
70
Government, i.e., taxes, are now o whereby its beer products were
subordinated, manifests the clear and offered for sale directly to
deliberate intent of our lawmaker to put wholesalers through San Miguel’s
flesh and blood into the expressed sales offices.
Constitutional policy of protecting the  Union protested this saying it is contrary
rights of workers and promoting their to existing marketing scheme whereby the
welfare Route Salesmen were assigned specific
NO NEED FOR LIQUIDATION PROCEEDING territories within which to sell their
1. Nowhere is it stated in the present law stocks of beer, and wholesalers had to buy
and its new implementing rule that a prior beer products from them, not from the
declaration of bankruptcy or judicial company
liquidation is a condition sine qua non to o Violates Sec 1 Art IV of the CBA
the operation of Article 110. bec it would reduce take home pay
- the phrase declaration of bankruptcy or of salesmen and truck helpers;
judicial liquidation of the employer’s company will be competing with them
business WAS DELETED LA: ruled in favor of SMC; Notice of Strike
2. a proceeding in rem, by its nature, seeks dismissed
to bar any other person who claims any
interest in the property or right subject ISSUE: Is the CDS valid? – YES.
of the suit. it appears that such a HELD: the CDS is a valid exercise of management
proceeding is essential only where the prerogatives
credits are concurring and enjoy no  Except as limited by special laws, an
preference over one another, but not when employer is free to regulate, according to
the law accords to one of the credits his own discretion and judgment, all
absolute priority and undisputed supremacy aspects of employment, including hiring,
work assignments, working methods, time,
3. SARMIENTO – joins Padilla in his dissent place and manner of work, tools to be
- Preference of unpaid workers is mandated used, processes to be followed,
not just by the Labor Code but by the supervision of workers, working
Constitution itself regulations, transfer of employees, work
- ART. 1702. In case of doubt, all labor supervision, lay-off of workers and the
legislation and all labor contracts shall discipline, dismissal and recall of work
be construed in favor of the safety and  Company may adopt or devise means designed
decent living for the laborer towards increasing its profits
 So long as a company’s management
prerogatives are exercised in good faith
H. Attorney’s Fees for the advancement of the employer’s
Labor Code: Article 111 interest and not for the purpose of
CASE: Unlawful withholding of wages defeating or circumventing the rights of
RULE: The culpable party may be assessed the employees under special laws or under
attorney’s fees equivalent to 10% of the valid agreements, this Court will uphold
amount of wages recovered. them
 San Miguel Corporation’s offer to
compensate the members of its sales force
WORKING CONDITIONS who will be adversely affected by the
A. Management Prerogative implementation of the CDS, by paying them
- right of the employer to regulate all a so-called "back adjustment commission"
aspects of employment, such as the freedom to make up for the commissions they might
to prescribe work assignments, working lose as a result of the CDS, proves the
methods, processes to be followed, company’s good faith and lack of intention
regulation regarding transfer of to bust their union
employees, supervision of their work, lay-
off and discipline, and dismissal and 12. PT & T v. NLRC, May 23, 1997
recall of work, presupposing the existence FACTS: Grace de Guzman was hired by PT&T as
of employer-employee relationship Supernumerary Project Worker for position of
Tenorio who went on maternity leave
CASES:  Under Reliever Agreement, her employment
11. San Miguel Brewery Sales v. Ople, February was to be immediately terminated upon
8, 1989 expiration of agreed period
FACTS: SMC AND PTGWO Union entered into a CBA:  But upon expiration, her services were
 "Art. IV, Section 1. Employees within the engaged again for other employees who went
appropriate bargaining unit shall be on leave
entitled to a basic monthly compensation  Then was once again asked to be employed
plus commission based on their respective for probationary period of up to 150 days
sales." o For this contract, she indicated in
 1979, Company introduced “Complementary the job application form that she
Distribution System” (CDS) was single although contracted
marriage a few months earlier
71
 Then it appears she made the same that is precisely the factor that
representation in two successive reliever militates against the policy of
agreements respondent. The standards have not yet
 Branch supervisor learned about this and been established as set forth in the first
issued a Memo asking her to explain the paragraph, nor has the Secretary of Labor
discrepancy issued any regulation affecting flight
o She was remined of the company attendants
policy of not accepting married  Article 135 that speaks of non-
women for employment discrimination on the employment of women
 In reply, she said she was not aware of  Under American jurisprudence, job
such policy; that she never hid her requirements which establish employer
marital status preference or conditions relating to the
 Thus, she filed Illegal Dismissal case marital status of an employee are
LA: De Guzman attained regular status thus categorized as a sex-plus discrimination
illegally dismissed where it is imposed on one sex and not on
NLRC: affirmed the other
 In the case at bar, petitioners policy of  where the employer discriminates against
not accepting or considering as married women, but not against married
disqualified from work any woman worker men, the variable is sex and the
who contracts marriage runs afoul of the discrimination is unlawful
test of, and the right against,  Petitioners policy is not only in
discrimination, afforded all women workers derogation of the provisions of Article
by our labor laws and by no less than the 136 of the Labor Code on the right of a
Constitution. Contrary to petitioners woman to be free from any kind of
assertion that it dismissed private stipulation against marriage in connection
respondent from employment on account of with her employment, but it likewise
her dishonesty, the record discloses assaults good morals and public policy,
clearly that her ties with the company tending as it does to deprive a woman of
were dissolved principally because of the the freedom to choose her status, a
companys policy that married women are not privilege that by all accounts inheres in
qualified for employment in PT&T, and not the individual as an intangible and
merely because of her supposed acts of inalienable right
dishonesty.  Parenthetically, the Civil Code provisions
on the contract of labor state that the
ISSUE: Is the company policy valid? – NO. relations between the parties, that is, of
HELD: capital and labor, are not merely
 De Guzman at the time of termination was contractual, impressed as they are with so
already a regular employee much public interest that the same should
 The termination would have been valid if yield to the common good
effected during her probationary period
POLICY VIOLATES ART 136 OF LABOR CODE 13. Ernesto G. Ymbong v. ABS CBN, March 9,
2012
Article 134 [136]. Stipulation against
FACTS: YMBONG started working with ABS in Cebu
marriage.
as TV talent, co-anchoring Hoy Gising and TV
An employer SHALL NOT
Patrol Cebu; extended to radio; then voice
 require as a condition of talent and director and scriptwriter
employment or continuation of  Then in 1996, ABS issued a Policy of
employment that a woman Employees Seeking Public Office
employee shall not get married Any employee who intends to run for any
 stipulate expressly or tacitly public office position, must file his/her
that upon getting married, a woman letter of resignation, at least thirty
employee shall be deemed resigned (30) days prior to the official filing of
or separated, or the certificate of candidacy either for
 to actually dismiss, discharge, national or local election.
discriminate or otherwise x x x
prejudice a woman employee merely Further, any employee who intends to join a
by reason of her marriage. political group/party or even with no political
 Such policy, even prior to the approval of affiliation but who intends to openly and
the Labor Code, was declared invalid by PD aggressively campaign for a candidate or group
148 or the Women and Child Labor Law of candidates (e.g. publicly speaking/endorsing
 True, Article 132 enjoins the Secretary of candidate, recruiting campaign workers,
Labor to establish standards that will etc.) must file a request for leave of absence
ensure the safety and health of women subject to management’s approval. For this
employees and in appropriate cases shall particular reason, the employee should file the
by regulation require employers to leave request at least thirty (30) days prior to
determine appropriate minimum standards the start of the planned leave period.
for termination in special occupations,
such as those of flight attendants, but
72
 Pursuant to this Policy and the coming 3. Policy No. HR-ER-016 was not
1998 Election, Cebu Station Manager issued superseded by the March 25, 1998
a Memo: Memorandum (Luzon’s)
“Please be informed that per company - Memorandum issued by Luzon which only
policy, any employee/talent who wants to requires employees to go on leave if they
run for any position in the coming intend to run for any elective position is
election will have to file a leave of in absolute contradiction with Policy No.
absence the moment he/she files his/her HR-ER-016 issued by the ABS-CBN Head
certificate of candidacy.” Office in Manila which requires the
resignation, not only the filing of a
 But upon checking, it should have been leave of absence, of any employee who
suspension, and not LOA intends to run for public office
 Ymbong informed Luzon (Station Manager) - Luzon issued Memo beyond scope of
that he will take a leave; but another authority thus void
employee, Patalinghug (also running) was 4. Ymbong is deemed resigned when he ran
considered resigned for councilor
 Both Ymbong and Patalinghug lost in the - He was separated from ABS-CBN not because
1998 elections he was dismissed but because he resigned.
 They both tried to come back to ABS but - In addition, we do not subscribe to
was refused due to the company policy Ymbong’s claim that he was not in a
o That their employment automatically position to know which of the two
terminated when they ran for a
issuances was correct. Ymbong most likely
local government position than not, is fully aware that the
 Ymbong said he only took LOA; thus upon subsisting policy is Policy No. HR-ER-016
expiration, he reported back as a regular and not the March 25, 1998 Memorandum and
talent and in fact continued to receive it was for this reason that
his salary
 They both filed illegal dismissal case
LA: illegally dismissed 14. Goya v. Goya Employees Union, January 21,
NLRC: affirmed LA decision 2013
CA: revered FACTS: IN 2004, Goya hired contractual employees
 Pursuant to the policy, they were deemed from PESO to perform temporary and occasional
resigned services
 Thus, Goya Union filed Request for
ISSUE: was the policy valid? – YES. Grievance Conference bec such move was in
HELD violation of CBA
 Although §11(b) of R.A. No. 6646 does not o Not a management prerogative
require mass media commentators and o That CBA laid down categories of
announcers such as private respondent to employees since 1970s
resign from their radio or TV stations but o That contracting such workers would
only to go on leave for the duration of weaken Union’s stance and that they
the campaign period, we think that the will be the one working in case of
company may nevertheless validly require an Actual Strike
them to resign as a matter of policy. In VA: dismissed Union’s charge
this case, the policy is justified on the  CBA allows company to hire contractual
following grounds: employees who will perform occasional and
1. Working for the government and the seasonal work directly connected with the
company at the same time is clearly regular operations but it should hire
disadvantageous and prejudicial to the casual employees instead of outsourcing
rights and interest not only of the from PESO
company but the public as well CA: affirmed
- They’ll be working for two employers  the engagement of PESO is not in keeping
- In case of loses, their impartiality is with the intent and spirit of the CBA
suspect thus eroding the confidence and  PESO contractual employees do not fall
trust of the listening public within the enumerated categories of
2. We have consistently held that so long employees stated in the CBA of the
as a company’s management prerogatives parties; thus, it should have employed
are exercised in good faith for the casual instead of engaging PESO
advancement of the employer’s interest
and not for the purpose of defeating While case is pending, Corporation shortened its
or circumventing the rights of the corporate existence
employees under special laws or under
valid agreements, this Court will ISSUE: Is this a valid management prerogative? –
uphold them. NO.
- In this case, the rationale of ABS was to HELD: the hiring of contractual employees from
uphold credibility and objectivity PESO was not in keeping with the intent and
spirit of the CBA.

73
 This management prerogative of contracting  Under Article 282 of the Labor Code, the
out services, however, is not without employer may terminate the services of its
limitation. In contracting out services, employee for the latter's serious
the management must be motivated by good misconduct or willful disobedience of its
faith and the contracting out should not or its representative's lawful orders.
be resorted to circumvent the law or must (a) the conduct of the employee
not have been the result of malicious must be willful or intentional; and
arbitrary actions (b) the order the employee violated
 A collective bargaining agreement is the must have been reasonable, lawful,
law between the parties made known to the employee, and
o negotiated contract between a must pertain to the duties that he
legitimate labor organization and had been engaged to discharge.
the employer concerning wages, o WILFULL – attended by a wrongful
hours of work and all other terms and perverse mental attitude
and conditions of employment in a rendering the employee's act
bargaining unit inconsistent with proper
 In this case, Section 4, Article I (on subordination
categories of employees) of the CBA  The persistent refusal of the employee to
between the Company and the Union must be obey the employer's lawful order amounts
read in conjunction with its Section 1, to willful disobedience
Article III (on union security). Both are  Disobedience, to be a just cause for
interconnected and must be given full termination, must be willful or
force and effect intentional, willfulness being
characterized by a wrongful and perverse
15. Tabuk Multipurpose Cooperative, Inc. v. mental attitude rendering the employee's
Duclan, March 14, 2016 act inconsistent with proper subordination
FACTS: TAMPCO is engaged in the business  A willful or intentional disobedience of
 In 2002, TAMPCO introduced Special such rule, order or instruction justifies
Investment Loans (SILs) to its members and dismissal only where such rule, order or
prospective borrowers. instruction is
o Among those who availed themselves (1) reasonable and lawful,
of the SILs were Brenda Falgui (2) sufficiently known to the employee,
(Falgui) and Juliet Kotoken and
(Kotoken). (3) connected with the duties which the
 2003, the TAMPCO BOD issued Board Action employee has been engaged to discharge."
(BA) No. 28 which limited the grant of  As TAMPCO Cashier, respondent was, among
SILs to P5 million and instructed her other designated functions and duties,
management to collect outstanding loans responsible and accountable for all
and thus reduce the amount of loans disbursements of cooperative funds and the
granted to allowable levels. coordination of delinquency control and
o Bec there was a report that they collection activities
allowed before a loan for one  despite issuance of BA Nos. 28 and 55,
individual amounting to P14 M respondent and the other officers of the
 Despite this, Falgui (P6.6M) and Kotoken cooperative including its former General
(P3.5M) were allowed loan above the Manager, continued to approve and release
ceiling SILs to borrowers
o Falgui foled for insolvency  Grant of Loan to Falgui and Kotoken after
o Katoken failed to pay her loan BOD issued BA Nos. 28 and 55 was willfully
 Thus, investigation conducted and repeatedly defied a necessary and
o CEO Rev. Sarmiento did not deny reasonable and lawful directive
charge against him “mea culpa,” he o placed the resources of the
said cooperative - the hard-earned
 Resolution of the Board savings of its members - in a
o Cashier Duclan – immediate precarious state as a result of the
suspension without pay inability to collect the loans
o Second suspension for release of owing to the borrowers' insolvency
cash to SIL recipient without first or refusal to honor their
accomplishing the corresponding obligations
loan note which is contrary to o it was gross insubordination
policy – suspended until collection  Due process in dismissing observed
 Unable to collect from borrowers, they (1) the first apprises the employee
were dismissed from employment of the particular acts or omissions
for which his dismissal is sought;
 Thus, Duclan filed illegal dismissal case
and
(2) the second informs the employee
ISSUE: Was the Policy effecting her dismissal
of the employer's decision to
valid? – YES. dismiss him
HELD

74
BUT THE DEICISION TO LET GM RETIRE THAN FIRE IS  HE WAS VALIDLY TERMINATED
VALID MANAGEMENT PREROGATIVE
 the cooperative chose not to waive its B. Coverage
right to discipline and punish her; this Labor Code: Article 82
is its privilege as the holder of such Labor standards provide the working conditions
right of employees, including entitlement to overtime
pay and premium pay for working on rest days
16. Central Azucarera de Bais v. Heirs of Article 82. Coverage.
Apostol
FACTS: Apostol was an employee of CAB for 20 RULE: The provisions of this Title
years shall apply to employees in all
 Initially hired as a Motor Pool Over-all establishments and undertakings
Repairs Supervisor whether for profit or not
 As pre-requisite, he was allowed to stay
at the company house as long as he is a EXCEPTION:
CAB employees  Government employees
 But it was found that he was using company
 Managerial employees
house and equipment to repair privately
owned vehicles  Field personnel
o This was in violation of Rule 9 of  Members of the family of the
CAB’s Rules of Discipline: for employer who are dependent on him
Utilizing material or equipment of for support
the Company, including power for  Domestic helpers
doing private work without  Persons in the personal service of
permission another, AND
 He was ordered to explain within 24 hours
 Workers who are paid by results as
and while this is so, he was preventively
determined by the Secretary of
suspended
Labor in appropriate regulations.
 Then he was terminated
LA: not illegally dismissed [DEFINITION] - "Managerial employees" -
NLRC: reversed. Illegally dismissed Those whose primary duty consists of the
CA: affirmed NLRC
management of the establishment in which
they are employed or of a department or
ISSUE: Was the company policy valid? – YES.
subdivision thereof, and to other officers
whether or not the respondent's act, which is
or members of the managerial staff.
violative of CAB's rules and regulations,
warrants the imposition of the ultimate penalty
[DEFINITION] - "Field personnel" - Non-
of dismissal – YES.
HELD agricultural employees who regularly
perform their duties away from the
 Court accedes to the uniform findings of
principal place of business or branch
the Labor Arbiter, NLRC, and CA that the
office of the employer and whose actual
respondent did indeed violate company
rules and regulations when he used company hours of work in the field cannot be
equipment and materials for his personal determined with reasonable certainty.
vehicles
Omnibus Rules: Book III, Rule I, Sections 1-2
 employers have a right to impose a penalty
of dismissal on supervisors or personnel
occupying positions of responsibility on Hours of Work
the basis of loss of trust and confidence SECTION 1. General statement on coverage. —
o More so, in the case of supervisors The provisions of this Rule shall apply to all
or personnel occupying positions of employees in all establishments and
responsibility, loss of trust, undertakings, whether operated for profit or
justifies termination of not, except to those specifically exempted
employment. under Section 2 hereof.cralaw
o This situation holds where a person SECTION 2. Exemption. — The provisions of this
is entrusted with confidence on Rule shall not apply to the following persons
delicate matters, such as the if they qualify for exemption under the
custody, handling, or care and conditions set forth herein:
protection of the employer's (a) Government employees whether employed by
property. the National Government or any of its
political subdivision, including those
 REQUISITES TO VALID DISMISSAL FOR LOSS OF
employed in government-owned and/or controlled
TRUST AND CONFIDENCE
corporations;
(1) the employee concerned must be holding
(b) Managerial employees, if they meet all of
a position of trust and confidence; and
the following conditions:
(2) there must be an act that would
(1) Their primary duty consists of the
justify the loss of trust and confidence
management of the establishment in which they
(3) such loss of trust relates to the
employee's performance of duties
75
are employed or of a department or sub- reestablish levels of
division thereof.cralaw responsibility, and recognize both
(2) They customarily and regularly direct the wage and operational structures
work of two or more employees therein.cralaw o As a result, all positions were re-
(3) They have the authority to hire or fire evaluated, and all employees
employees of lower rank; or their suggestions including the members of respondent
and recommendations as to hiring and firing union were granted salary
and as to the promotion or any other change of adjustments and increases in
status of other employees, are given benefits commensurate to their
particular weight.cralaw actual duties and functions
(c) Officers or members of a managerial staff  Before, they were treated in the same
if they perform the following duties and manner as rank and file employees thus
responsibilities: paid overtime, rest day and holiday pay
(1) The primary duty consists of the  With the JE Program, member respondent
performance of work directly related to were re-classified for compensation and
management policies of their employer; benefits; there was an increase in basic
(2) Customarily and regularly exercise pay; union members now enjoy wide gap in
discretion and independent judgment; and basic pay; longevity pay was increased;
(3) (i) Regularly and directly assist a entitled to COLA; granted allowance for
proprietor or a managerial employee whose rest day/holiday work
primary duty consists of the management of the  Then in 1990, union members filed a
establishment in which he is employed or complaint for non-payment of overtime,
subdivision thereof; or (ii) execute under rest day and holiday pay
general supervision work along specialized or LA: Company ordered to pay
technical lines requiring special training,
experience, or knowledge; or (iii) execute,  That given the long period of time that it
under general supervision, special assignments was granted, it ripened into a contractual
and tasks; and obligation
(4) Who do not devote more than 20 percent of NLRC: affirmed LA
their hours worked in a work week to  Member-complainants are not occupying
activities which are not directly and closely managerial positions thus entitled to
related to the performance of the work overtime, rest day, holiday pay
described in paragraphs (1), (2) and (3)
above.cralaw ISSUE: are herein complainant entitled to the
(d) Domestic servants and persons in the monetary claims? – NO.
personal service of another if they perform HELD: members of respondent union are
such services in the employer's home which are supervisory employees, as defined employees, as
usually necessary or desirable for the defined under Article 212(m)
maintenance and enjoyment thereof, or minister Article 212(m) ART 82 AND SEC 2 OF
to the personal comfort, convenience, or (COMPANY) RULE 1 BOOK III OF
safety of the employer as well as the members OMINUBUS RULES
of his employer's household.cralaw (EMPLOYEES’)
(e) Workers who are paid by results, including "(m) 'Managerial "Art. 82 Coverage. —
those who are paid on piece-work, "takay," employee' is one who The provisions of this
"pakiao" or task basis, and other non-time is vested with powers title shall apply to
work if their output rates are in accordance or prerogatives to lay employees in all
with the standards prescribed under Section 8, down and execute establishments and
Rule VII, Book Three of these regulations, or management policies undertakings whether
where such rates have been fixed by the and/or to hire, for profit or not, but
Secretary of Labor and Employment in transfer, suspend, not to government
accordance with the aforesaid Section.cralaw lay-off, recall, employees, managerial
(f) Non-agricultural field personnel if they discharged, assign or employees, field
regularly perform their duties away from the discipline employees. personnel, members of
principal or branch office or place of Supervisory employees the family of the
business of the employer and whose actual are those who, in the employer who are
hours of work in the field cannot be interest of the dependent on him for
determined with reasonable certainty.cralaw employer effectively support, domestic
recommend such helpers, persons in
CASES: managerial actions if the personal service
17. National Sugar Refineries Corp. v. NLRC, the exercise of such of another, and
March 24, 1993 authority is not workers who are paid
FACTS: NASUREFCO is owned by the government and merely routinary or by results as
has three sugar refineries in Bukidnon, Iloilo clerical in nature but determined by the
and Batangas requires the use of Secretary of Labor in
 Batangas refinery was privatized in 1992 independent judgment. Appropriate
 In 1988, Company implemented Job All employees not regulations.
Evaluation Program affecting ALL employees falling within any of
o designed to rationalized the duties those above
"As used herein,
and functions of all positions, definitions are
'managerial employees'
76
considered rank-and- refer to those whose  Quintessentially, with the promotion of
file employees of this primary duty consists the union members, they are no longer
Book.” of the management of entitled to the benefits which attach and
the establishment in pertain exclusively to their positions.
which they are Entitlement to the benefits provided for
employed or of a by law requires prior compliance with the
department or conditions set forth therein. With the
subdivision thereof, promotion of the members of respondent
and to other officers union, they occupied positions which no
or members of the longer met the requirements imposed by
managerial staff." law.

EXCEPT: SEC 2 RULE 1 18. Penaranda v. Banganga Plywood Corp, May 3,


(OMNI) 2006
 A cursory perusal of the Job Value Facts: 1999, PENARANDA was hired by BPC to take
Contribution Statements 7 of the union charge of the operations and maintenance of its
members will readily show that these steam plant boiler
supervisory employees are under the direct  2001, she filed a case for illegal
supervision of their respective department dismissal
superintendents o Claims she was a foreman/boiler
 From the foregoing, it is apparent that head/shift engr
the members of respondent union discharge o Was terminated without due process
duties and responsibilities which and not paid overtime, premium,
ineluctably qualify them as officers or holiday and rest pay
members of the managerial staff, as  Company said her serparatio was valid bec
defined in Section 2, Rule I Book III BPC was on temporary closure due to repair
 Under the facts obtaining in this case, we and heneral maintenance
are constrained to agree with petitioner o That when it reopened, she did no
that the union members should be reapply
considered as officers and members of the o Furthermore, being a managerial
managerial staff and are, therefore, employee he is not entitled to
exempt from the coverage of Article 82 overtime pay and if ever he
THUS NOT ENTITLED TO THE PAY rendered services beyond the normal
 It is admitted that these union members hours of work
are supervisory employees and this is one LA: no illegal dismissal; she was still employed
instance where the nomenclatures or titles NLRC: modified; deleted overtime, premium pay
of their jobs conform with the nature of CA: dismissed appeal
their functions
PAY DID NOT RIPEN INTO CONTRACTUAL OBLIGATIO ISSUE: is she entitled to overtime and other
 Prior to the JE Program, they could not be monetary benefits claimed? – NO. SHE WAS NOT A
categorically classified as members or MANAGERIAL EMPLOYEE BUT A MEMBER OF THE
officers of the managerial staff MANAGERIAL STAFF HENCE STILL EXCLUDED
considering that they were then treated
merely on the same level as rank-and-file. HELD: Article 82 of the Labor Code exempts
Consequently, the payment thereof could managerial employees from the coverage of labor
not be construed as constitutive of standards.
voluntary employer practice, which cannot  Labor standards provide the working
be now be unilaterally withdrawn by conditions of employees, including
petitioner entitlement to overtime pay and premium
 It remains undisputed that the pay for working on rest days
implementation of the JE Program, the  Based on her functions, particularly items
members of private respondent union were 1, 2, 3, 5 and 7 illustrates that
re-classified under levels S-5 S-8 which petitioner was a member of the managerial
were considered under the program as staff. His duties and responsibilities
managerial staff purposes of compensation conform to the definition of a member of a
and benefits, that they occupied re- managerial staff under the Implementing
evaluated positions, and that their basic Rules
pay was increased by an average of 50% of  Petitioner supervised the engineering
their basic salary prior to the JE section of the steam plant boiler. His
Program. In other words, after the JE work involved overseeing the operation of
Program there was an ascent in position, the machines and the performance of the
rank and salary. This in essence is a workers in the engineering section. This
promotion which is defined as the work necessarily required the use of
advancement from one position to another discretion and independent judgment to
with an increase in duties and ensure the proper functioning of the steam
responsibilities as authorized by law, and plant boiler. As supervisor, petitioner is
usually accompanied by an increase in deemed a member of the managerial staff
salary
77
 MOREOVER, SHE ADMITED SHE WAS A SUPERVISOR  He is paid on commission basis of the
IN HER POSITION PAPER total gross income per travel on a twice a
 The term foreman implies that he was the month basis
representative of management over the  He figured into an accident
workers and the operation of the o That it was due to management who
department forced him to go back to Roxas even
 supervisor of the steam plant though he hasn’t slept
 also, the manner by which she was paid, o He was then terminated
included in the 10% employees who were  Thus, he filed a complaint for illegal
paid on a monthly basis; others were daily dismissal and money claims
LA: dismissed the complaint but ordered to pay
19. San Miguel Brewery, Inc. v. Democratic 13th month, etc
Labor Organization, July 31, 1963 NLRC: affirmed but deleted the money claims
FACTS: Democratic Labor Assoc filed a complaint awarded such as service incentive leave
against San Miguel demanding for the betterment
of the conditions of employment of its members ISSUE: is he entitled to service incentive
 Then they confined they complaint to leave? – YES.
demand overtime, nigh shift differential HELD: On commission basis but entitled
pay, atty’s fees etc  True, Book III, Rule V exempts field
 Presiding Judge held that the 8-hour labor personnel from receiving service incentive
law applies to the employees working in leave provided in Art 95
the filed or engaged in the sale of  But Art 82 defines Field Personnel
company’s products o As a general rule, [field
o Employees who work at nnight must personnel] are those whose
also have differentials for work performance of their job/service is
done not supervised by the employer or
o Additional pay for those who work his representative, the workplace
on Sundays and holidays being away from the principal
o And application of the Min Wage Law office and whose hours and days of
for workers on pakyaw basis work cannot be determined with
reasonable certainty; hence, they
ISSUE: are the complainants entitled to overtime are paid specific amount for
pay? – NO. rendering specific service or
Does the eight-hour labor law apply to them? – performing specific work. If
NO. required to be at specific places
HELD: they are sales agents on pakyaw basis at specific times, employees
 the Eight-Hour Labor Law only has including drivers cannot be said to
application where an employee or laborer be field personnel despite the fact
is paid in a monthly or daily basis, or is that they are performing work away
paid a monthly or daily compensation, in from the principal office of the
which case, if he is made to work beyond employee.
the requisite period of 8 hours, he should  Those exempt are only those whose actual
be paid the additional compensation hours of work in the field cannot be
prescribed by law determined with reasonable certainty.
 This law has no application when the  Drivers leave at a certain time, there are
employee or laborer is paid on a piece- inspectors assigned at specific places,
work, "pakiao", or commission basis, THEY ARE UNDER CONSTANT SUPERVISION while
regardless of the time employed. in the performance of their work
 The philosophy behind this exemption is
that his earnings are in the form of 21. Mercidar Fishing Corp. v. NLRC, October 8,
commission based on the gross receipts of 1998
the day FACTS: AGAO is employed as bodegero or ships
quartermaster of Mercidar Fishing Corporation
 THIS IS BEC HE WORKS INDIVIDUALLY
 He filed this illegal dismissal case and
 . In lieu of overtime he ordinarily
non-payment of five days service incentive
receives commissions as extra compensation
leave
RE COMPLAINANTS EARNING ON MONTHLY BASIS
 He alleged that he was sick and was
 Even though they work more than 8 hours,
allowed to go on leave without pay for a
the commission is the extra compensation
month but when he came back, he was
they are entitled to
refused work; certificate of employment
 Commission depends on the volume of this not even given unless he tenders his
sales resignation
LA: ordered reinstatement
20. Auto Bus Transport Systems v. Bautista, NLRC: affirmed; ordered to pay service incentive
May 16, 2005 leave
FACTS: BAUTISTA is a driver-conductor of Autobus

78
ISSUE: Is he categorized as field personnel such  The Revised Guidelines as well as the
that he is not entitled to the service incentive Rules and Regulations identify those
leave? – NO. HE IS ENTITLED workers who fall under the piece-rate
HELD: Yes, he works away from the principal category as those who are paid a standard
place of business BUT his actual hours of work amount for every piece or unit of work
is determinable produced that is more or less regularly
 It can be determined with reasonable replicated, without regard to the time
certainty spent in producing the same.
 Although they perform non-agricultural
work away from petitioners business 23. David v. Macasio, July 2, 2014
offices, the fact remains that throughout FACTS: Macasio filed a complaint against David
the duration of their work they are under (Yiels Hog Dealer)
the effective control and supervision of
petitioner through the vessels patron or 24. Apex Mining Company, Inc. v. NLRC, April
master 22, 1991
FACTS: CANDIDA was employed by Apex Mining to
22. Labor Congress of the Philippines v. NLRC, perform launder services a the staff house; she
May 21, 1998 is paid on a monthly basis
FACTS: COMPLAINANTS were rank and file employees  While working, she accidentally slipped
of Empire Food Products and hit her back on a stone; she was not
 They filed this complaint for payment of able to continue with her work
money claims o Was permitted to go on leave
 Then the complainants represented by its o She was offered money and persuaded
president entered into a MOA with the to quit
company o But she said she preferred to
o Union sent a proposal for return to work but she was not
collective bargaining allowed
o Then they filed this complaint  Thus, she filed this case
 On underpayment: LA: ordered Apex to pay her
o They are piece workers or paid on a NLRC: affirmed
pakyao basis but receive no less
than the mon wage for 8 hours of ISSUE: Is the househelper in the staff houses of
work an industrial company a domestic helper or a
LA: ruled in favor of the workers regular employee of the said firm?
NLRC: remanded HELD: rule XIII Sec I(b) Book 3 of Labor Code
cannot include househelp or laundrywomen working
in staffhouses of a company
Under Rule XIII, Section l(b), Book 3 of the
ISSUE: was there underpayment? – YES.
Labor Code, as amended, the terms "househelper"
HELD: That petitioner employees are "pakyao" or
or "domestic servant" are defined as follows:
piece workers does not imply that they are not
regular employees entitled to reinstatement  The term "househelper" as used herein is
synonymous to the term "domestic servant"
 Private respondents, moreover, in
and shall refer to any person, whether
considering petitioners' employment to
male or female, who renders services in
have been terminated by abandonment,
and about the employer's home and which
violated their rights to security of
services are usually necessary or
tenure and constitutional right to due
desirable for the maintenance and
process in not even serving them with a
enjoyment thereof, and ministers
written notice of such termination
exclusively to the personal comfort and
 Petitioners are therefore entitled to enjoyment of the employer's family
reinstatement with full back wages
 Such definition covers family drivers,
pursuant to Article 279 of the Labor Code
domestic servants, laundry women, yayas,
 That being said, the amount of back wages gardeners, houseboys and other similar
to which each petitioner is entitled, househelps
however, cannot be fully settled at this
 The criteria is the personal comfort and
time. Petitioners, as piece-rate workers
enjoyment of the family of the employer in
having been paid by the piece, 14 there is the home of said employer.
need to determine the varying degrees of
production and days worked by each worker  When employed by a company, they are
RE OTHER BENEFITS employees of the company or employer in
the business concerned entitled to the
 petitioners are so entitled to these privileges of a regular employee
benefits bec they are regular employees
o necessary and desirable  The mere fact that the househelper or
o worked throughout the year domestic servant is working within the
o length of time of service premises of the business of the employer
and in relation to or in connection with
 mode of payment was “per piece basis” but its business, as in its staffhouses for
their status is regular employees its guest or even for its officers and
employees, warrants the conclusion that
79
such househelper or domestic servant is CASE: Rest periods of short duration
and should be considered as a regular during working hours
employee of the employer and not as a mere
family househelper or domestic servant as RULE: It shall be counted as hours worked.
contemplated
Article 85. Meal periods.
Labor Code: Articles 83-90 GOVERNING LAW: Subject to such
Article 83. Normal hours of work. regulations as the Secretary of Labor
may prescribe
CASE: The normal hours of work of any
employee CASE: Time-off for their regular meals.

RULE: It shall NOT EXCEED eight (8) hours a RULE: It shall not be less than sixty (60)
day. minutes
Article 86. Night shift differential.
CASE 1: Health personnel in cities and
municipalities with a population of AT CASE: Work performed between ten
LEAST 1 M or o’clock in the evening and six
o’clock in the morning.
CASE 2: Health personnel in hospitals and
clinics with a bed capacity of at least RULE: It shall be paid a night shift
one hundred (100) differential of NOT LESS than ten
percent (10%) of his regular wage
RULE: It shall hold regular office hours Article 87. Overtime work.
for eight (8) hours a day, for five (5)
days a week, EXCLUSIVE of time for meals, RULE: Work may be performed beyond eight
(8) hours a day
EXCEPTIONS:
the employee is paid for the overtime
CASE: The exigencies of the service
work, an additional compensation
require that such personnel work for six
(6) days or forty-eight (48) hours equivalent to his regular wage plus at
least twenty-five percent (25%) thereof.
RULE: They shall be entitled to an Work performed beyond eight hours on a
additional compensation of at least holiday or rest day shall be paid an
thirty percent (30%) of their regular additional compensation equivalent to the
wage for work on the sixth day. rate of the first eight hours on a holiday
or rest day plus at least thirty percent
"health personnel" shall include: (30%) thereof.
Article 88. Undertime not offset by
 resident physicians overtime.
 nurses
 nutritionists CASE: Undertime work on any particular day
 dietitians RULE: It shall NOT BE OFFSET by overtime
 pharmacists work on any other day.
 social workers
 laboratory technicians CASE: Permission given to the employee to
go on leave on some other day of the week
 paramedical technicians
 psychologists
RULE: It shall NOT EXEMPT the employer
 midwives from paying the additional compensation
 attendants and required in this Chapter.
all other hospital or clinic personnel. Article 89. Emergency overtime work.
Article 84. Hours worked. RULE: Any employee may be required by
the employer to perform overtime work in
CASE: Hours worked shall include
any of the following cases:
 ALL time during which an employee is
required to be:
CASE 1: When the country is at war
o on duty or
o at a prescribed workplace; AND
 ALL time during which an employee is
suffered or permitted to work.

80
CASE 2: When any other national or Omnibus Rules: Book III, Rule I, Sections 3-11,
local emergency has been declared by: Rule I-A, Rule II
 the National Assembly OR SECTION 3. Hours worked. — The following shall
be considered as compensable hours worked:
 the Chief Executive
(a) All time during which an employee is
CASE 3: When it is necessary to prevent required to be on duty or to be at the
loss of life or property employer's premises or to be at a prescribed
work place; and
CASE 4: When there is an imminent danger
to PUBLIC SAFETY due to an actual or (b) All time during which an employee is
impending emergency in the locality caused suffered or permitted to work.cralaw
by:
SECTION 4. Principles in determining hours
 serious accidents
worked. — The following general principles
 fire shall govern in determining whether the time
 flood spent by an employee is considered hours
 typhoon worked for purposes of this Rule:
 earthquake
(a) All hours are hours worked which the
 epidemic, or employee is required to give his employer,
 other disaster or regardless of whether or not such hours are
 calamity; spent in productive labor or involve physical
or mental exertion.cralaw
CASE 4: When there is urgent work to be
performed on: (b) An employee need not leave the premises of
 machines the work place in order that his rest period
shall not be counted, it being enough that he
 installations, or stops working, may rest completely and may
 equipment, leave his work place, to go elsewhere, whether
in order to avoid serious loss or damage within or outside the premises of his work
to the employer or some other cause of place.cralaw
similar nature;
(c) If the work performed was necessary, or it
CASE 5: When the work is necessary to benefited the employer, or the employee could
prevent loss or damage to perishable not abandon his work at the end of his normal
goods; and working hours because he had no replacement,
all time spent for such work shall be
CASE 6: Where the completion or
considered as hours worked, if the work was
continuation of the work started before with the knowledge of his employer or
the eighth hour is necessary to immediate supervisor.cralaw
 prevent serious obstruction or
 prejudice to the business or (d) The time during which an employee is
operations of the employer. inactive by reason of interruptions in his
work beyond his control shall be considered
-- working time either if the imminence of the
resumption of work requires the employee's
presence at the place of work or if the
CASE: Any employee required to render interval is too brief to be utilized
overtime work under this Article effectively and gainfully in the employee's
own interest.cralaw
RULE: He shall be paid the additional
compensation required in this Chapter. SECTION 5. Waiting time. — (a) Waiting time
Article 90. Computation of additional spent by an employee shall be considered as
compensation. working time if waiting is an integral part of
his work or the employee is required or
PURPOSE: Computation of overtime and other engaged by the employer to wait.cralaw
additional remuneration as required by
(b) An employee who is required to remain on
this Chapter
call in the employer's premises or so close
thereto that he cannot use the time
CASE: The "regular wage" of an employee
effectively and gainfully for his own purpose
shall be considered as working while on call.
RULE: It shall include the cash wage ONLY,
An employee who is not required to leave word
WITHOUT
at his home or with company officials where he
deduction on account of facilities provided
may be reached is not working while on
by the employer.
call.cralaw

81
SECTION 6. Lectures, meetings, training hours on a special holiday or rest day plus at
programs. — Attendance at lectures, meetings, least thirty percent (30%) thereof.cralaw
training programs, and other similar
activities shall not be counted as working (b) Employees of public utility enterprises as
time if all of the following conditions are well as those employed in non-profit
met: institutions and organizations shall be
entitled to the premium and overtime pay
(a) Attendance is outside of the employee's provided herein, unless they are specifically
regular working hours; excluded from the coverage of this Rule as
provided in Section 2 hereof.cralaw
(b) Attendance is in fact voluntary; and
(c) The payment of additional compensation for
(c) The employee does not perform any work performed on regular holidays shall be
productive work during such attendance.cralaw governed by Rule IV, Book Three, of these
Rules.cralaw
SECTION 7. Meal and Rest Periods. — Every
employer shall give his employees, regardless SECTION 10. Compulsory overtime work. — In any
of sex, not less than one (1) hour time-off of the following cases, an employer may
for regular meals, except in the following require any of his employees to work beyond
cases when a meal period of not less than eight (8) hours a day, provided that the
twenty (20) minutes may be given by the employee required to render overtime work is
employer provided that such shorter meal paid the additional compensation required by
period is credited as compensable hours worked these regulations:
of the employee:
(a) When the country is at war or when any
(a) Where the work is non-manual work in other national or local emergency has been
nature or does not involve strenuous physical declared by Congress or the Chief Executive;
exertion;
(b) When overtime work is necessary to prevent
(b) Where the establishment regularly operates loss of life or property, or in case of
not less than sixteen (16) hours a day; imminent danger to public safety due to actual
or impending emergency in the locality caused
(c) In case of actual or impending emergencies by serious accident, fire, floods, typhoons,
or there is urgent work to be performed on earthquake, epidemic or other disaster or
machineries, equipment or installations to calamities;
avoid serious loss which the employer would
otherwise suffer; and (c) When there is urgent work to be performed
on machines, installations, or equipment, in
(d) Where the work is necessary to prevent order to avoid serious loss or damage to the
serious loss of perishable goods.cralaw employer or some other causes of similar
nature;
Rest periods or coffee breaks running from
five (5) to twenty (20) minutes shall be (d) When the work is necessary to prevent loss
considered as compensable working time.cralaw or damage to perishable goods;

SECTION 8. Overtime pay. — Any employee (e) When the completion or continuation of
covered by this Rule who is permitted or work started before the 8th hour is necessary
required to work beyond eight (8) hours on to prevent serious obstruction or prejudice to
ordinary working days shall be paid an the business or operations of the employer; or
additional compensation for the overtime work
in the amount equivalent to his regular wage (f) When overtime work is necessary to avail
plus at least twenty-five percent (25%) of favorable weather or environmental
thereof.cralaw conditions where performance or quality of
work is dependent thereon.cralaw
SECTION 9. Premium and overtime pay for
holiday and rest day work. — (a) Except In cases not falling within any of these
employees referred to under Section 2 of this enumerated in this Section, no employee may be
Rule, an employee who is permitted or suffered made to work beyond eight hours a day against
to work on special holidays or on his his will.
designated rest days not falling on regular
holidays, shall be paid with an additional RULE I-A
compensation as premium pay of not less than Hours of Work of Hospital and Clinic Personnel
thirty percent (30%) of his regular wage. For
work performed in excess of eight (8) hours on SECTION 1. General statement on coverage. —
special holidays and rest days not falling on This Rule shall apply to:
regular holidays, an employee shall be paid an
additional compensation for the overtime work (a) All hospitals and clinics, including those
equivalent to his rate for the first eight with a bed capacity of less than one hundred
(100) which are situated in cities or
82
municipalities with a population of one on the same calendar day each calendar
million or more; and week.cralaw

(b) All hospitals and clinics with a bed SECTION 6. Regular working days. — The regular
capacity of at least one hundred (100), working days of covered employees shall not be
irrespective of the size of the population of more than five days in a work week. The work
the city or municipality where they may be week may begin at any hour and on any day,
situated.cralaw including Saturday or Sunday, designated by
the employer.cralaw
SECTION 2. Hospitals or clinics within the
meaning of this Rule. — The terms "hospitals" Employers are not precluded from changing the
and "clinics" as used in this Rule shall mean time at which the work day or work week
a place devoted primarily to the maintenance begins, provided that the change is not
and operation of facilities for the diagnosis, intended to evade the requirements of this
treatment and care of individuals suffering Rule.cralaw
from illness, disease, injury, or deformity,
or in need of obstetrical or other medical and SECTION 7. Overtime work. — Where the
nursing care. Either term shall also be exigencies of the service so require as
construed as any institution, building, or determined by the employer, any employee
place where there are installed beds, or covered by this Rule may be scheduled to work
cribs, or bassinets for twenty-four (24) hours for more than five (5) days or forty (40)
use or longer by patients in the treatment of hours a week, provided that the employee is
disease, injuries, deformities, or abnormal paid for the overtime work an additional
physical and mental states, maternity cases or compensation equivalent to his regular wage
sanitorial care; or infirmaries, nurseries, plus at least thirty percent (30%) thereof,
dispensaries, and such other similar names by subject to the provisions of this Book on the
which they may be designated.cralaw payment of additional compensation for work
performed on special and regular holidays and
SECTION 3. Determination of bed capacity and on rest days.cralaw
population. — (a) For purposes of determining
the applicability of this Rule, the actual bed SECTION 8. Hours worked. — In determining the
capacity of the hospital or clinic at the time compensable hours of work of hospital and
of such determination shall be considered, clinic personnel covered by this Rule, the
regardless of the actual or bed occupancy. The pertinent provisions of Rule 1 of this Book
bed capacity of hospital or clinic as shall apply.cralaw
determined by the Bureau of Medical Services
pursuant to Republic Act No. 4226, otherwise SECTION 9. Additional compensation. — Hospital
known as the Hospital Licensure Act, shall and clinic personnel covered by this Rule,
prima facie be considered as the actual bed with the exception of those employed by the
capacity of such hospital or clinic.cralaw Government, shall be entitled to an additional
compensation for work performed on regular and
(b) The size of the population of the city or special holidays and rest days as provided in
municipality shall be determined from the this Book. Such employees shall also be
latest official census issued by the Bureau of entitled to overtime pay for services rendered
the Census and Statistics.cralaw in excess of forty hours a week, or in excess
of eight hours a day, whichever will yield the
SECTION 4. Personnel covered by this Rule. — higher additional compensation to the employee
This Rule applies to all persons employed by in the work week.cralaw
any private or public hospital or clinic
mentioned in Section 1 hereof, and shall SECTION 10. Relation to Rule I. — All
include, but not limited to, resident provisions of Rule I of this Book which are
physicians, nurses, nutritionists, dieticians, not inconsistent with this Rule shall be
pharmacists, social workers, laboratory deemed applicable to hospital and clinic
technicians paramedical technicians, personnel.
psychologists, midwives, and attendants.cralaw
RULE II
SECTION 5. Regular working hours. — The Night Shift Differential
regular working hours of any person covered by
this Rule shall not be more than eight (8) SECTION 1. Coverage. — This Rule shall apply
hours in any one day nor more than forty (40) to all employees except:
hours in any one week.cralaw
(a) Those of the government and any of its
For purposes of this Rule a "day" shall mean a political subdivisions, including government-
work day of twenty-four (24) consecutive hours owned and/or controlled corporations;
beginning at the same time each calendar year.
A "week" shall mean the work of 168 (b) Those of retail and service establishments
consecutive hours, or seven consecutive 24- regularly employing not more than five (5)
hour work days, beginning at the same hour and workers;

83
(c) Domestic helpers and persons in the
personal service of another;

(d) Managerial employees as defined in Book


Three of this Code;

(e) Field personnel and other employees whose


time and performance is unsupervised by the
employer including those who are engaged on
task or contract basis, purely commission
basis, or those who are paid a fixed amount
for performing work irrespective of the time
consumed in the performance thereof.cralaw

SECTION 2. Night shift differential. — An


employee shall be paid night shift
differential of no less than ten per cent
(10%) of his regular wage for each hour of
work performed between ten o'clock in the
evening and six o'clock in the morning.cralaw

SECTION 3. Additional compensation. — Where an


employee is permitted or suffered to work on
the period covered after his work schedule, he
shall be entitled to his regular wage plus at
least twenty-five per cent (25%) and an
additional amount of no less than ten per cent
(10%) of such overtime rate for each hour or
work performed between 10 p.m. to 6 a.m.cralaw

SECTION 4. Additional compensation on


scheduled rest day/special holiday. — An
employee who is required or permitted to work
on the period covered during rest days and/or
special holidays not falling on regular
holidays, shall be paid a compensation
equivalent to his regular wage plus at least
thirty (30%) per cent and an additional amount
of not less than ten (10%) per cent of such
premium pay rate for each hour of work
performed.cralaw

SECTION 5. Additional compensation on regular


holidays. — For work on the period covered
during regular holidays, an employee shall be
entitled to his regular wage during these days
plus an additional compensation of no less
than ten (10%) per cent of such premium rate
for each hour of work performed.cralaw

SECTION 6. Relation to agreements. — Nothing


in this Rule shall justify an employer in
withdrawing or reducing any benefits,
supplements or payments as provided in
existing individual or collective agreements
or employer practice or policy.

84