Sie sind auf Seite 1von 30

LABOR LAW

The State shall afford protection to labor; promote full


The law that defines State policies on labor and employment employment, ensure equal work opportunities regardless of
and governs the rights and duties of the employer and sex, race, or creed, and regulate the relations between workers
employees with respect to: and employers. The State shall assure the rights of workers to
1. The terms and conditions of employment self-organization, collective bargaining, security of tenure, and
2. Labor disputes arising from collective bargaining or other just and humane conditions of work.
concerted activity respecting such terms and conditions.
 Basic state policy in relation to labor.
The term “labor law” covers the following:  “protection to labor”
1. Statutes passed by the State to promote the welfare of the
workers and Ees and regulate their relations with their Ers. Sanchez v. Harry Lyons Construction; G.R. No. L-2779,
2. Judicial decisions applying and interpreting the aforesaid October 18, 1950.
statutes (NCC, Art. 8).
3. Rules and regulations issued by administrative agencies, “xxx In the matter of employment bargaining, there is no doubt
within their legal competence, to implement labor statutes. that the employer stands on higher footing than the employee.
First of all, there is greater supply than demand for labor.
LABOR CODE OF THE PHILIPPINES Secondly, the need for employment by labor comes from vital
PRESIDENTIAL DECREE NO. 442, AS AMENDED and even desperate, necessity. Consequently, the law must
protect labor, at least, to the extent of raising him to equal
o A DECREE INSTITUTING A LABOR CODE THEREBY footing in bargaining relations with capital and to shield him from
REVISING AND CONSOLIDATING LABOR AND SOCIAL abuses brought about by the necessity for survival. It is safe to
LAWS TO AFFORD PROTECTION TO LABOR, PROMOTE presume therefore, that an employee or laborer who waives in
EMPLOYMENT AND HUMAN RESOURCES advance any benefit granted him by law does so, certainly not
DEVELOPMENT AND INSURE INDUSTRIAL PEACE in his interest or through generosity but under the forceful
BASED ON SOCIAL JUSTICE intimidation of urgent need, and hence, he could not have so
acted freely and voluntarily. xxx”
I. GENERAL PROVISIONS
Vigilla v. Philippine College of Criminology, Inc.; G.R. No.
ARTICLE 1. NAME OF DECREE 200094, June 10, 2013.

This decree shall be known as the “Labor Code of the “While it is the duty of the courts to prevent the exploitation of
Philippines” employees, it also behooves the courts to protect the sanctity
of contracts that do not contravene the law. The law in
ARTICLE 2. DATE OF EFFECTIVITY protecting the rights of the laborer authorizes neither
oppression nor self-destruction of the employer. While the
This Code shall take effect six months after its promulgation Constitution is committed to the policy of social justice and the
protection of the working class, it should not be supposed that
 The Labor Code is a codification of previous labor laws. every labor dispute will be automatically decided in favor of
 General structure of the Labor Code. (Preliminary title and labor. Management also has its own rights, which, as such, are
7 books) entitled to respect and enforcement in the interest of simple fair
play. Out of its concern for those with less privileges in life, the
o Preliminary Title (Arts. 1 – 11) 
 Court has inclined more often than not toward the worker and
o I – Pre employment (Arts. 12 – 42) 
 upheld his cause in his conflicts with the employer. Such
o II – Human Resources Development (Arts. 43 – 81) 
 favoritism, however, has not blinded the Court to the rule that
o III – Conditions of Employment (Arts. 82 – 161) 
 justice is in every case for the deserving, to be dispensed in the
o IV – Health, Safety and Social Welfare Benefits (Arts. 162 – light of the established facts and applicable law and doctrine.”
217) 

o V – Labor Relations (Arts. 218 – 292) 
 PLDT Co. V. NLRC; G.R. No. 80609, August 23, 1998.
o VI – Post Employment (Arts. 293 – 302) 

o VII – Transitory and Final Provisions (Arts. 303– 317) (As The policy of social justice is not intended to countenance
renumbered by R.A. 10151) wrongdoing simply because it is committed by the
underprivileged. At best it may mitigate the penalty but it
LABOR LABOR RELATIONS certainly will not condone the offense. Compassion for the poor
STANDARDS is an imperative of every humane society but only when the
o Books1 to 4 Books 5 & 6 recipient is not a rascal claiming an undeserved privilege. Social
justice cannot be permitted to be refuge of scoundrels any more
o Prescribes the o Defines status, rights and duties, than can equity be an impediment to the punishment of the
minimum terms & and institutional mechanisms, that guilty. Those who invoke social justice may do so only if their
conditions of govern the individual & collective hands are clean and their motives blameless and not simply
employment interactions of employers, because they happen to be poor. This great policy of our
employees, or their representatives Constitution is not meant for the protection of those who have
proved they are not worthy of it, like the workers who have
tainted the cause of labor with the blemishes of their own
character.
 Date of effectivity of the Labor Code – November 1, 1974

ARTICLE 3. DECLARATION OF BASIC POLICY

1
AIM OF LABOR LAW: SOCIAL JUSTICE b) Sec. 10 - Promotion of social justice in all phases of
The promotion of social justice, however, is to be achieved not national development.
through a mistaken sympathy towards any given group. c) Sec. 11 - Full respect for human rights.
d) Sec. 13 - Vital role of the youth in nation-building.
Social justice is "neither communism, nor despotism, nor e) Sec. 14 - Role of women in nation-building, and
atomism, nor anarchy," but the humanization of laws and the fundamental equality before the law of women and men.
equalization of social and economic forces by the State so Law: Magna Carta of Women
that justice in its rational and objectively secular conception may f) Sec. 20 Indispensable role of the private sector,
at least be approximated. g) Protection-to-labor clause:
“Sec. 18 - The State affirms labor as a primary social
Social Justice means the promotion of the welfare of all the economic force. It shall protect the rights of workers and
people, the adoption by the Government of measures promote their welfare.
calculated to ensure economic stability of all the competent
elements of society, through the maintenance of a proper NOTE: Article 2 is merely a statement of principles and state
economic and social equilibrium in the interrelations of the policies. Its provisions are not self-executing. They do not
members of the community, constitutionally, thru the adoption embody judicially enforceable constitutional rights but
of measures legally justifiable, or extra-constitutionally, through guidelines for legislation. These broad constitutional principles
the exercise of powers underlying the existence of all need legislative enactments to implement them. The disregard
governments on the time-honored principle of salus populi est of these provisions cannot give rise to a cause of action in
suprema lex. (Calalang v. Williams 70 Phil. 726 (1940) the courts. Consequently, no case can be filed based on
these principles. There must be enabling laws to
Limitations in invoking the principle of social justice implement them.
1. Not to undermine property rights resulting in confiscation. It
should not tolerate usurpation of property, public or private. Under Article 3 (Bill of Rights):
2. May only protect the laborers who come to court with clean a) Sec. 1 - Due process and equal protection of the law
hands and their motives blameless b) Sec. 4 - Freedom of speech, of expression, or of the
3. Never result to an injustice or oppression of the employer press, or the right of the people peaceably to assemble
4. If it is used to shield wrongdoings. It cannot be permitted to and petition the government for redress of grievances
be the refuge of scoundrels c) Sec. 7 - Right of the people to information on matters of
public concern. Access to official records, and to
“FULL EMPLOYMENT” documents and papers pertaining to official acts,
A situation where everyone willing to work at the going wage transactions, or decisions, as well as to government
rate is able to get a job. research data used as basis for policy development, shall
be afforded the citizen, subject to such limitations as
 “equal work opportunities regardless of sex, race or creed” may be provided by law.
d) Sec. 8 - Right of public and private sector employees to
SECTION 12, ARTICLE XII OF THE CONSTITUTION form unions, associations, or societies for purposes
“The State shall promote the preferential use of Filipino labor, not contrary to law shall not be abridged. Law: EO 180
domestic materials and locally produced goods, and adopt (1987) providing for guidelines for the exercise of the right
measures that help make them competitive.” to organize of government employees, creating a Public
Sector Labor Managament Council and for other purposes
ARTICLE 40, LABOR CODE e) Sec. 10 - Non-impairment of obligations of contracts.
Employment Permit of Non- resident Aliens. — Any alien f) Sec. 16 - Right to speedy disposition of cases in judicial,
seeking admission to the Philippines for employment purposes quasi-judicial or administrative bodies.
and any domestic or foreign employer who desires to engage g) Sec. 18(2) - Prohibitions against involuntary servitude.
an alien for employment in the Philippines shall obtain an
employment permit from the Department of Labor. Under Article 13 (Social Justice and Human Rights):

The employment permit may be issued to a non- resident alien a) Sec. 1 - The Congress shall give highest priority to the
or to the applicant employer after a determination of the non- enactment of measures that protect and enhance the right
availability of a person in the Philippines who is competent, able of all the people to human dignity, reduce social, economic,
and willing at the time of application to perform the services for and political inequalities, and remove cultural inequities by
which the alien is desired. equitably diffusing wealth and political power for the
common good. To this end, the State shall regulate the
acquisition, ownership, use, and disposition of property
 “regulate the relations between workers and employers” and its increments.
b) Sec 2 - The promotion of social justice shall include the
ARTICLE 1700, CIVIL CODE
commitment to create economic opportunities based on
“The relations between capital and labor are not merely freedom of initiative and self-reliance.
contractual. They are so impressed with public interest that c) Sec. 13– The State shall establish a special agency for
labor contracts must yield to the common good. xxx” disabled persons for their rehabilitation, self-development
and self-reliance and their integration into the mainstream
 Related Constitutional and Statutory Provisions: of society. Law: RA 7277 Magna Carta for Disabled
Person
RELATE WITH 1987 CONSTITUTION d) Sec. 14 – The State shall protect working women by
Under Article 2 (Declaration of Principles and State providing safe and healthful working conditions, taking into
Policies): account their maternal functions, and such facilities and
a) Sec. 9 - Promotion of full employment, a rising standard opportunities that will enhance their welfare and enable
of living, and an improved quality of life for all.

2
them to realize their full potential in the service of the effective fifteen (15) days after announcement of their adoption
nation. Law: Maternal benefits law in newspapers of general circulation.

RELATE WITH CIVIL CODE:  Rule-making authority.


Art. 19. Every person must, in the exercise of his rights and in  Administrative rules have the force and effect of law.
the performance of his duties, act with justice, give everyone his  Administrative rules must not contravene, amend, restrict
due, and observe honesty and good faith. or enlarge the scope of the laws they seek to implement.

Art. 1305. A contract is a meeting of minds between two Why is there a need to delegate the rule making power to
persons whereby one binds himself, with respect to the other, the DOLE?
to give something or to render some service. (1254a)
SC: “It has been necessitated by ‘the growing complexity of the
Art. 1306. The contracting parties may establish such modern society’. More and more administrative bodies are
stipulations, clauses, terms and conditions as they may deem necessary to help in the regulation of society's ramified
convenient, provided they are not contrary to law, morals, good activities. ‘Specialized in the particular field assigned to them,
customs, public order, or public policy. they can deal with the problems thereof with more expertise and
dispatch than can be expected from the legislature or the courts
Art. 1315. Contracts are perfected by mere consent, and from of justice’
that moment the parties are bound not only to the fulfillment of
what has been expressly stipulated but also to all the TO BE VALID AND ENFORCEABLE
consequences which, according to their nature, may be in The rules and regulations must be properly published, and filed
keeping with good faith, usage and law. in the Office of the National Administrative Register as required
by the following:
Art. 1318. There is no contract unless the following requisites
concur: Art. 2 Civil Code. –
(1) Consent of the contracting parties; Laws shall take effect after 15 days following the completion of
(2) Object certain which is the subject matter of the contract; their publication in the Official Gazette or in a newspaper of
(3) Cause of the obligation which is established. general circulation in the Philippines, unless it is otherwise
provided.
ARTICLE 4. CONSTRUCTION IN FAVOR OF LABOR
Art. 7 Civil Code –
All doubts in the implementation and interpretation of the Laws are repealed only by subsequent ones, and their violation
provisions of this Code, including its implementing rules and or non-observance shall not be excused by disuse, or custom
regulations, shall be resolved in favor of labor or practice to the contrary.

RELATE TO: Article 1702, Civil Code When the courts declared a law to be inconsistent with the
In case of doubt, all labor legislation and all labor contracts shall Constitution, the former shall be void and the latter shall govern.
be construed in favor of the safety and decent living for the Administrative or executive acts, orders and regulations shall
laborer. be valid only when they are not contrary to the laws or the
Constitution.
CASES
Sections 3(1) and 4, Chapter 2, Book 7 of the Administrative
Code of 1987
Torres v. Rural Bank of San Juan, Inc.; G.R. No. 184520,
March 13, 2013. Sec. 3. Filing. - (1) every agency shall file with the UP Law
Center 3 certified copies of every rule adopted by it. Rules in
“At any rate, the absence of the clearance upon which the force on the date of effectivity of this Code which are not filed
contradicting claims of the parties could ideally be resolved, within 3 months from that date shall not thereafter be the basis
should work against the respondents. With only sworn of any sanction against any party or persons.
pleadings as proof of their opposite claims on the true contents
of the clearance, the Court is bound to apply the principle that Sec 4. Effectivity.— In addition to other rule-making
the scales of justice should be tilted in favor of labor in case of requirements provided by law not inconsistent with this Book,
doubt in the evidence presented.” each rule shall become effective 15 days from the date of filing
as above provided unless a different date is fixed by law, or
Songco v. NLRC; G.R. Nos. 50999-51000, March 23, 1990. specified in the rule in cases of imminent danger to public
health, safety and welfare, the existence of which must be
Inasmuch as the words "wages", "pay" and "salary" have the expressed in a statement accompanying the rule. The agency
same meaning, and commission is included in the definition of shall take appropriate measures to make emergency rules
"wage", the logical conclusion, therefore, is, in the computation known to persons who may be affected by them.
of the separation pay of petitioners, their salary base should
include also their earned sales commissions CASE

ARTICLE 5. RULES AND REGULATIONS Insular Bank of Asia and America Employees’ Union v.
Inciong; G.R. No. L-52415, October 23, 1984.
The Department of Labor and other government agencies
charged with the administration and enforcement of this Code In Policy Instruction No. 9, the then Secretary of Labor went as
or any of its parts shall promulgate the necessary implementing far as to categorically state that the benefit is principally
rules and regulations. Such rules and regulations shall become intended for daily paid employees, when the law clearly states

3
that every worker shall be paid their regular holiday pay. Armed Forces of the Philippines, and any person employed as
This is a flagrant violation of the mandatory directive of Article casual, emergency temporary, substitute or contractual, or any
4 of the Labor Code, which states that "All doubts in the person compulsorily covered by the SSS under Republic Act
implementation and interpretation of the provisions of this Code, Numbered Eleven hundred sixty-one, as amended.
including its implementing rules and regulations, shall be
resolved in favor of labor." Moreover, it shall always be Article 219 (e), (f)
presumed that the legislature intended to enact a valid and Art. 219 (e): "Employer" includes any person acting in the
permanent statute which would have the most beneficial effect interest of an employer, directly or indirectly. xxx
that its language permits
Art. 219 (f): "Employee" includes any person in the employ of
ARTICLE 6. APPLICABILITY an employer. xxx The existence of an employment relationship
is a question of fact that is decided on a case to case basis.
All rights and benefits granted to workers under this Code shall,
except as may otherwise be provided herein, apply alike to all  “The question of whether an employer-employee
workers, whether agricultural or non- agricultural. relationship exists in a certain situation continues to
bedevil the courts.” (Brotherhood Labor Unity Movement
 Determination of existence of ER-EE relationship of the Philippines, et al. vs. Zamora, et al., supra).

 Importance of determining whether an ER-EE CASES


relationship exists.
Viaña v. Al-Lagadan and Piga; GR No. L-8967, May 31, 1956;
Brotherhood Labor Unity Movement of the Philippines, et 99 Phil. 408
al. vs. Zamora, et al., GR 48645, January 7, 1987; 147 SCRA
49. Viana owned the fishing sailboat "Magkapatid which collided
with the USS "Tingles", a vessel of the U.S. Navy. Alejandro Al-
“Petitioners (kargadores) worked continuously and exclusively Lagadan, a member of the crew, disappeared and died.
for an average of 7 years for the company (SMC plant). Workmen’s Compensation Commission ordered Viana to pay
Considering the length of time that the petitioners have the respondents. Petitioner said, however, that this case does
worked, there is justification to conclude that they were not fall within the purview of Act No. 3428, because Alejandro
engaged to perform activities necessary or desirable in the Al-Lagadan was, at the time of his death, industrial partner, not
usual business of trade of the respondent. Hence, petitioners his employee
are considered “regular employees.”
SC: In determining the existence of employer- employee
“*** that judicial relation spawns obligations connected relationship, the following elements are generally considered,
with workmen's compensation, social security, medicare, namely:
minimum wage, termination pay, and unionism.”
(1) the selection and engagement of the employee; 
 (2) the
Lapanday Agricultural Development Corp. v. Court of payment of wages; 
 (3) The power of dismissal; and (4) The
Appeals; G.R. No. 112139, January 31, 2000. power to control the employees’ conduct — although the latter
is the most important element (35 Am. Jur. 445)
“xxx It is well-settled in law and jurisprudence that where no
employer-employee relationship exists between the parties * The report contained that the patron selects and engages the
and no issue is involved which may be resolved by reference to crew, and also, that the members thereof are subject to his
the Labor Code, other labor statutes or any collective control and may be dismissed by him.
bargaining agreement, it is the Regional Trial Court that has
jurisdiction.” Meteoro v. Creative Creatures, Inc.; G.R. No. 171275, July
13, 2009.
 Statutory Definitions of Employer and Employee
Petitioners were hired as artists, carpenters, and welders,
Article 97 (b), (c) tasked to design, create, assemble, set-up, and dismantle
Art. 97 (b): "Employer" includes any person acting directly or props, and provide sound effects to Creative’s various TV
indirectly in the interest of an employer in relation to an programs and movies. Creative claimed that the petitioners
employee and shall include the Government and all its were only contractual workers, and as such, no employer-
branches, subdivision and instrumentalities, all government- employee relationship existed. Thus, the DOLE could not
owned or controlled corporations and institutions, as well as have exercised jurisdiction over the case, for it had none.
non-profit private institutions, or organizations. Petitioners filed a complaint for illegal dismissal and payment of
their benefits (money claims) – allowed by the DOLE
Art. 97 (c): "Employee" includes any individual employed by an
employer. SC: The DOLE Secretary and her authorized representatives,
such as the DOLE-NCR Director, have jurisdiction to enforce
Article 173 (f), (g) compliance with labor standards laws under the broad
Art. 173(f): "Employer" means any person, natural or juridical, visitorial and enforcement powers conferred by Article 128
employing the services of the employee. of the Labor Code, and expanded by RA No. 7730. But this
notwithstanding, the power of the Regional Director to hear
Art. 173 (g): "Employee" means any person compulsorily and decide money claims is not absolute. The last sentence
covered by the GSIS under Commonwealth Act Numbered One of Article 128 (b) of the Labor Code, otherwise known as the-
hundred eighty- six, as amended, including the members of the exception clause, it provides an instance when the Regional

4
Director or his representatives may be divested of jurisdiction consideration the totality of circumstances surrounding
over a labor standards case. Under prevailing jurisprudence, the true nature of the relationship between the parties.
the so-called exception clause has the following elements, all of
which must concur: Phil. Global Communications, Inc. v. De Vera; GR No.
(a) That the employer contests the findings of the labor 157214, June 7, 2005; 459 SCRA 260
regulations officer and raises issues thereon; (b) That in order
to resolve such issues, there is a need to examine evidentiary *But note par. 4 of Article 106 and Section 5(a)(iii) of DOLE
matters; and (c) That such matters are not verifiable in the Department Order 174-17.
normal course of inspection
De Vera is a physician enlisted by PhilCom to attend to the
Social Security System v. Court of Appeals, G.R. No. medical needs of its employees on a retainer basis (retainer
100388, [December 14, 2000] contract)

Margarita discovered that her husband was never reported for SC: No ER-EE
coverage, nor were his contributions/premiums remitted to the The appellate court's premise that regular employees are those
SSS. Consequently, she was deprived of the burial grant and who perform activities which are desirable and necessary for
pension benefits accruing to the heirs of Tana had he been the business of the employer is not determinative in this case.
reported for coverage. For, we take it that any agreement may provide that one
party shall render services for and in behalf of another, no
The Social Security Commission ruled in favor of the petitioner matter how necessary for the latter's business, even
and finds that the late Ignacio Tana had been employed without being hired as an employee.
continuously from January 1961 to March 1979. He was hired
by Conchita Ayalde on pakyaw basis to perform specific tasks This set-up is precisely true in the case of an independent
in her sugarcane plantations, he is considered an employee; contractorship as well as in an agency agreement. Indeed,
and as such, his heirs are entitled to pension and burial Article 280 of the Labor Code, quoted by the appellate court, is
benefits. not the yardstick for determining the existence of an
employment relationship. As it is, the provision merely
As a farm laborer who has worked exclusively for Ayalde for distinguishes between two (2) kinds of employees, i.e., regular
eighteen (18) years, Tana should be entitled to compulsory and casual. It does not apply where, as here, the very existence
coverage under the Social Security Law, whether his service of an employment relationship is in dispute.
was continuous or broken. The circumstances of his
employment place him outside the ambit of the exception While it is true that Art. 151 of the Labor Code requires
provided in Section 8(j) of Republic Act No. 1611, as amended employers to engage the services of medical practitioners in
by Section 4 of R.A. 2658 certain establishments depending on the number of employees,
nothing in there in law which says that medical
Two-tiered Test: Right of Control Test & Economic Reality Test practitioners so engaged be actually hired as employees,
adding that the law, as written only requires the employers
Sevilla v. CA; GR Nos. 41182-3, April 15, 1988; 160 SCRA “to retain”, not employ, a part-time physician who needed
171 to stay in the premises of the non-hazardous workplace for
two hours.
Tourist World Service, Inc.; The fact that Sevilla had been
designated 'branch manager" does not make her, ergo, Tourist (COMPARED WITH THE CASE OF AMWSLAI)
World's employee. As we said, employment is determined by Air Material Wing Savings and Loan Association, Inc. vs.
the right-of-control test and certain economic parameters. But NLRC, et al., GR 111870, June 30, 1994; 233 SCRA 592.
titles are weak indicators.
Private respondent Luis S. Salas was appointed "notarial and
SC: In this jurisdiction, there has been no uniform test to legal counsel" for AMWSLAI; Letter-contract stating that he is
determine the evidence of an employer-employee relation. In reappointed as Notarial and Legal Counsel of this association
general, we have relied on the so-called right of control test, for a term of 3 years
"where the person for whom the services are performed
reserves a right to control not only the end to be achieved but SC: Terms and conditions set out in the letter-contract entered
also the means to be used in reaching such end." into by the parties on Jan 23 1987, clearly show that Salas
Subsequently, however, we have considered, in addition to the was an employee of the AMWSLAI.
standard of right-of control, the existing economic conditions
prevailing between the parties, like the inclusion of the His selection as the company counsel was done by the board
employee in the payrolls, in determining the existence of an of directors in one of its regular meetings; The petitioner
employer-employee relationship. paid him a monthly compensation/retainer's fee for his
services; Though his appointment was for a fixed term of 3yrs,
Orozco v. CA, et al.; GR No. 155207, August 13, 2008; 562 the petitioner reserved its power of dismissal for cause or
SCRA 36 as it might deem necessary for its interest and protection;
and AMWSLAI also exercised its power of control over
Newspaper Columnist of Phil. Daily Inquirer; Her main Salas by defining his duties and functions as its legal counsel –
occupation is not of PDI but she is a women’s rights advocate, (a) to act on all legal matters pertinent to his Office, (b) to seek
therefore, she is not economically dependent to PDI remedies to effect collection of overdue accounts of members
without prejudice to initiating court action to protect the interest
SC: Aside from the control test, the Court has used the of the association. (c) to defend by all means all suit against the
economic reality test. The economic realities prevailing within interest of the Association
the activity or between the parties are examined, taking into

5
Jardin v. NLRC; GR 119268, February 23, 2000 accomplish the result of the movie making. The petitioners
were under the direction of VIVA. Moreover, all crew members,
Petitioners were taxi drivers; Goodman Taxi admitted that thirty which includes the petitioner, received appointment slips and
pesos were being taken from petitioners’ daily earnings for the vouchers indicating that they received their salaries. All the
washing of the taxis
circumstances indicate an employment relationship between
SC: Previous Supreme Court decisions acknowledged jeepney petitioners and VIVA alone.
operator-driver, bus operator-driver relationship as employers-
employee relationship: Petitioners are undoubtedly employees Vallum Security Services vs. NLRC, et al., GR 97320-27,
of private respondent because as taxi drivers they perform July 30, 1993; 224 SCRA 781.
activities which are usually necessary or desirable in the
usual business or trade of their employer. Hyatt Baguio and Vallum entered into a contract for security
services under the terms of which Vallum agreed to protect the
The act of deducting 30 pesos for washing of taxis is not illegal properties and premises of Hyatt Baguio by providing 50
security guards, on a 24-hour basis/ day
Chavez v. NLRC, et al.; GR No. 146530, January 17, 2005;
448 SCRA 478 SC: Four-Fold Test elements are present

Chavez is a truck driver engaged by Supreme Packaging Inc; Records show that security guards filled up Hyatt employment
SPI furnished him a truck; deliveries were made in accordance application forms and submitted the executed forms directly to
with routing slips issued by SPI indicating time, order, & urgency the Security Department of Hyatt Baguio; Security guards
submitted in evidence 423 pay slips which bore Hyatt Baguio's
SC applied the four-fold test (all elements are present) logo; Contract provided that “upon loss of confidence on the
part of Hyatt Baguio in any security guard furnished by Vallum,
Their right of control was manifested by the following attendant such security guard may be changed immediately upon the
circumstances: request to Vallum by Hyatt Baguio”; Assignments of particular
security guards was subject to the approval of Hyatt
The truck driven by the petitioner belonged to respondent Baguio's Chief Security Officer & promotions of the security
company; There was an express instruction from the guards from casual to regular employees were approved or
respondents that the truck shall be used exclusively to deliver ratified by the Chief Security Officer of Hyatt Baguio
respondent company’s goods; Respondents directed the
petitioner, after completion of each delivery, to park the truck in * Vallum is a labor-only contracting
either of two specific places only, to wit: at its office in Metro
Manila at 2320 Osmeña Street, Makati City or at BEPZ, Cosmopolitan Funeral Homes, Inc. v. Maalat; GR No. 86693,
Mariveles, Bataan; and 
 Respondents determined how, where July 2, 1990; 187 SCRA 108
and when the petitioner would perform his task by issuing to him
gate passes and routing slips SC: The fact that CFHI imposed and applied its rule
* Petitioner performed the delivery services exclusively for the prohibiting superiors from engaging in other funeral
respondent company for a continuous and uninterrupted period business which it considered inimical to company
of ten years interests proves that it had the right of control and actually
exercised its control over the private respondent. In other
Tan v. Lagrama, et al.; GR No. 151228, August 15, 2002; 387 words, Maalat worked exclusively for the petitioner. CFHI failed
SCRA 393 to prove that the contract with private respondent was but a
mere agency, which indicates that a "supervisor" is free to
Lagrama is engaged by Tan as a painter; Dismissed for accomplish his work on his own terms and may engage in other
urinating in places other than the one designated for it means of livelihood. 


SC: Right of Control Cf. Consulta v. CA; GR No. 145443, March 18, 2005; 453
The evidence shows that Lagrama performed his work as SCRA 732
painter under the supervision and control of Tan. Lagrama
worked in a designated work area inside the Crown Theater of SC: Consulta’s appointment had an exclusivity provision. The
petitioner, for the use of which Tan prescribed rules. The rules appointment provided that Consulta must represent Pamana on
included the observance of cleanliness and hygiene and a an exclusive basis. She must not engage directly or indirectly in
prohibition against urinating in the work area and any place activities of other companies that compete with the business of
other than the toilet or the rest rooms. Tan's control over Pamana.
Lagrama's work extended not only to the use of the work area,
but also to the result of Lagrama's work, and the manner and However, the fact that the appointment required Consulta to
means by which the work was to be accomplished. 
 solicit business exclusively for Pamana did not mean that
Pamana exercised control over the means and methods of
Consulta’s work as the term control is understood in labor
Maraguinot v. NLRC; G.R. No. 120969, January 22, 1998
jurisprudence. Neither did it make Consulta an employee of
Pamana. Pamana did not prohibit Consulta from engaging in
Maraguinot is a member of a filming crew; Enero is part of the
any other business, or from being connected with any other
shooting crew; Both petitioners sought to have their salary company, for as long as the business or company did not
adjusted in accordance with the minimum wage law. compete with Pamana’s business.
SC: By applying the four-fold test, there exists an employer-
employee relationship between the Marguinot, Jr. & Enero with Insular Life Assurance Co., Ltd. v. NLRC; GR 84484,
Mr. Del Rosario & VIVA. It provided the means and methods to November 15, 1989.

6
contractual relationship), SONZA asserts that ABS pay him
The Parties entered into two contracts: directly not to MJMDC showing that he is an employee. All
talents fees and benefits were the result of NEGOTIATIONS
First - Basiao was "authorized to solicit within the Philippines that led to the Agreement. If he were an employee, there is no
applications for insurance policies and annuities; He would need to negotiate terms and conditions as to his benefits.
receive compensation in the form of commission; and the duties THIRD ELEMENT indicates an independent contractual
of the Agent, the acts prohibited to him, and the modes of relationship, for violation of any provision of the Agreement,
termination of the agreement both parties may terminate their relationship which SONZA
failed to show that ABS could terminate his services on grounds
Second - An Agency Manager's Contract — and to implement other than breach of contract, such as retrenchment provided
his end of it Basiao organized an agency or office to which he under labor laws. During the life of the Agreement, ABS
gave the name M. Basiao and Associates, while concurrently continued to pay SONZA.
fulfilling his commitments under the first contract with the
Company Applying the control test to the present case, we find that
SONZA is not an employee but an independent contractor. The
SC: Basiao was not an employee of the petitioner, but a control test is the most important test our courts apply in
commission agent, an independent contractor whose claim for distinguishing an employee from an independent
unpaid commissions should have been litigated in an ordinary contractor. This test is based on the extent of control the hirer
civil action. exercises over a worker. The greater the supervision and
control the hirer exercises, the more likely the worker is deemed
an employee. The converse holds true as well – the less
Drawn from the terms of the contract they had entered into,
control the hirer exercises, the more likely the worker is
which, either expressly or by necessary implication, made
considered an independent contractor
Basiao the master of his own time and selling methods, left to
his judgment the time, place and means of soliciting insurance,
To perform his work, SONZA only needed his skills and talent.
set no accomplishment quotas and compensated him on the
How SONZA delivered his lines, appeared on television, and
basis of results obtained. He was not bound to observe any
sounded on radio were outside ABS-CBN’s control. SONZA did
schedule of working hours or report to any regular station; he
not have to render eight hours of work per day.
could seek and work on his prospects anywhere and at anytime
he chose to, and was free to adopt the selling methods he
ABS-CBN did not instruct SONZA how to perform his job. ABS-
deemed most effective. Not every form of control that the
CBN merely reserved the right to modify the program format
hiring party reserves to himself over the conduct of the
and airtime schedule "for more effective programming." ABS-
party hired in relation to the services rendered may be
CBN’s sole concern was the quality of the shows and their
accorded the effect of establishing an employer-employee
standing in the ratings
relationship between them in the legal or technical sense
of the term.
The Agreement does not require SONZA to comply with the
rules and standards of performance prescribed for
Tongko v. Manulife; GR 167622, January 25, 2011 and June employees of ABS- CBN. The code of conduct imposed on
29, 2010. SONZA under the Agreement refers to the "Television and
Radio Code of the Kapisananngmga Broadcaster saPilipinas
SC: Jurisprudence is firmly settled that whenever the existence (KBP), which has been adopted by the COMPANY (ABS-CBN)
of an employment relationship is in dispute, four elements as its Code of Ethics.” The KBP code applies to broadcasters,
constitute the reliable yardstick: (a) the selection and not to employees of radio and television stations. Broadcasters
engagement of the employee; (b) the payment of wages; (c) the are not necessarily employees of radio and television stations.
power of dismissal; and (d) the employer’s power to control the Clearly, the rules and standards of performance referred to in
employee’s conduct. the Agreement are those applicable to talents and not to
employees of ABS-CBN.
In the case at bar, the absence of evidence showing Manulife’s 

control over Tongko’s contrdfb actual duties points to the In any event, not all rules imposed by the hiring party on the
absence of any employer-employee relationship between hired party indicate that the latter is an employee of the former.
Tongko and Manulife. In the context of the established In this case, SONZA failed to show that these rules
evidence, Tongko remained an agent all along; although his controlled his performance. We find that these general rules
subsequent duties made him a lead agent with leadership role, are merely guidelines towards the achievement of the mutually
he was nevertheless only an agent whose basic contract yields desired result, which are top-rating television and radio
no evidence of means-and-manner control. programs that comply with standards of the industry. 


Sonza v. ABS-CBN Broadcasting Corp.; GR No. 138051, Cf. Dumpit-Murillo v. CA; GR 164652, June 8, 2007.
June 10, 2004; 431 SCRA 583
ABC hired Murillo as a newscaster and co-anchor for Balitang
SC: FIRST ELEMENT does not conclusively determine Balita, and early evening news program
SONZA’s status, ABS engaged SONZA because of his
peculiar skills, talents, and celebrity status not possessed by SC: The law provides two kinds of employees concerning
ordinary employees. This is a circumstance indicative, not regular employment namely:
conclusive, of an independent contractual relationship. ABS 1. those who are engaged to perform activities which are
would not have entered an Agreement with SONZA if not for his usually necessary or desirable in the usual business or trade of
peculiar talent and skills but would rather hire him as an the employer; and 2. those who have rendered at least one year
ordinary employee. SECOND ELEMENT (his talent fee of service, whether continuous or broken, with respect to the
amount to P317k indicate more of an independent activity in which they are employed.

7
In other words, regular status arises from either the NATURE whereby the latter was designated to run, administer and
OF WORK of the employee or the DURATION OF HIS operate the CDSPB Girls Department, with a term for 10 years
EMPLOYMENT.
SC: The Agreement shows that petitioner entered into the same
Petitioner’s work was necessary or desirable in the usual not as an independent contractor but, as it claims, a manager
business or trade of the employer which includes, as a pre- or administrator of the school.
condition for its enfranchisement, its participation in the
government’s news and public information dissemination. In It is true that under the Agreement, petitioner had the "sole
addition, her work was continuous for a period of four years. responsibility and expense [over] the administration,
With this, she is considered as a regular employee management and operation of the Girls' Department," as well
as the authority to employ teachers needed by the school,
Cf. Fuji Television Network, Inc. v. Espiritu; G.R. No. impose and collect tuition fees, and pay the expenses of
204944-45, December 3, 2014. operations. However, control and supervision over the school's
operations remained in the hands of the Diocese of Malolos,
Arlene was engaged by Fuji as a news owner of CDSPB, represented by the Parish Priest of Obando,
correspondent/producer "tasked to report Philippine news to Bulacan, who acted as school director.
Fuji through its Manila Bureau field office." Arlene’s
employment contract initially provided for a term of one (1) Nor is there any merit in the claim that "actual and effective
year but was successively renewed on a yearly basis with control" was exercised by RVM since the designation of the
salary adjustment upon every renewal; diagnosed with parish priest as director was "a mere formality, as he did
cancer perform functions which are purely ministerial and figurative in
nature.“
SC: Art. 280 of LC
Regular and casual employment. The provisions of written Time and again we have held that "the 'control test' only
agreement to the contrary notwithstanding and regardless of requires the existence of the right to control the manner of
the oral agreement of the parties, an employment shall be doing the work not necessarily the actual exercise of the
deemed to be regular where the employee has been power by him, which he can delegate.”
engaged to perform activities which are usually necessary 

or desirable in the usual business or trade of the employer, Indeed, although the letters of appointment were signed by the
except where the employment has been fixed for a specific principal/representative of petitioner, they bore the
project or undertaking the completion or termination of which name/letterhead of CDSPB and clearly indicated therein that
has been determined at the time of the engagement of the the employees were hired as teachers/personnel by CDSPB,
employee or where the work or services to be performed is and not by RVM. Moreover, CDSPB itself admits that its name
seasonal in nature and the employment is for the duration of the — not petitioner's — appears in the employees' payroll ledger
season. cards. 


An employment shall be deemed to be casual if it is not covered Leonardo v. CA; GR 152459, June 15, 2006.
by the preceding paragraph; Provided, That, any employee
who has rendered at least one year of service, whether In this case, DIGITEL undoubtedly has the power of control.
such service is continuous or broken, SHALL BE However, DIGITEL’s exercise of the power of control
CONSIDERED A REGULAR EMPLOYEE with respect to the necessarily flows from the exercise of its responsibilities under
activity in which he is employed and his employment shall the management contract which includes providing for
continue while such activity exists. personnel, consultancy and technical expertise in the
management, administration, and operation of the telephone
Bernate v. PBA; GR 192084, September 14, 2011. system. Thus, the control test has no application in this case.

Bernarte was invited to join the PBA as Referees, contract not The Court notes that DIGITEL did not hire petitioners. BALTEL
renewed for unsatisfactory performance, filed for illegal had already employed petitioners when BALTEL entered into
dismissal the management contract with DIGITEL. We also agree with the
Court of Appeals that the fact that DIGITEL uses its payslips
SC: No ER-EE; applied four-fold test does not necessarily imply that DIGITEL pays petitioners’
salaries. As pointed out by the Court of Appeals, DIGITEL
PBA has no control over the referees acts of blowing the introduced its own financial and accounting systems to BALTEL
whistle and making calls during basketball games. The and it included the use of DIGITEL’s payslips for accounting
contractual stipulations do not pertain to, much less dictate, how purposes. The management contract provides that BALTEL
and when petitioner will blow the whistle and make calls. On the shall reimburse DIGITEL for all expenses incurred in the
contrary, they merely serve as rules of conduct or guidelines in performance of its services and this includes reimbursement of
order to maintain the integrity of the professional basketball whatever amount DIGITEL paid or advanced to BALTEL’s
league. Furthermore, the very nature of Bernarte’s job as a employees. 

referee of a professional basketball game demands
freedom of control. Finally, DIGITEL has no power to dismiss BALTEL’s
employees. When DIGITEL wanted to dismiss Roberto Graban
Religious of the Virgin Mary v. NLRC; GR 103606, October for habitual tardiness, BALTEL did not approve DIGITEL’s
13, 1999. recommendation. In the end, Roberto Graban was just
suspended from work. 

Colegio de San Pascual Baylon (CDSPB), a religious education
institution owned by the Diocese of Malolos, Bulacan, entered Francisco v. NLRC; GR No. 170087, August 31, 2006; 500
into an Agreement with the RVM, a religious congregation, SCRA 690

8
Sections 1 and 4 of the employment contract mandate where
Hired as Accountant & Corporate Secretary then Acting and how often she is to perform her work; Sections 3, 5, 6 and
Manager then Technical Asst. to Seiji Kamura & in charge of all 7 show that wages she receives are completely controlled by
BIR matters, Kasei corp withheld her salaries, after asking, WPP; and Sections 10 and 11 clearly state that she is subject
informed that she is no longer part of the company, Kasei claims to the regular disciplinary procedures of WPP.
that Francisco works at her own discretion without controly
The Labor Arbiter had jurisdiction over the illegal dismissal
SC: The better approach would therefore be to adopt a two- complaint filed by Galera. Galera being an employee, the
tiered test involving: (1) the putative employer's power to control Labor Arbiter and the NLRC had jurisdiction over her illegal
the employee with respect to the means and methods by which dismissal complaint. Article 217 of the Labor Code vests the
the work is to be accomplished; and (2) the underlying Labor Arbiter with the jurisdiction to hear and decide, among
economic realities of the activity or relationship. others termination disputes, involving workers, whether
agricultural or non-agricultural.
Thus, the determination of the relationship between employer
and employee depends upon the circumstances of the whole Espino v. NLRC, et al., G.R. Nos. 109642-43, January 5,
economic activity, such as: (1) the extent to which the services 1995.
performed are an integral part of the employer's business; (2)
the extent of the worker's investment in equipment and facilities; Petitioner Leslie W. Espino was the Executive Vice President-
(3) the nature and degree of control exercised by the employer; Chief Operating Officer of private respondent Philippine Airlines
(4) the worker's opportunity for profit and loss; (5) the amount (PAL) when his services were terminated sometime in
of initiative, skill, judgment or foresight required for the success December 1990 by the Board of Directors of PAL as a result of
of the claimed independent enterprise; (6) the permanency and the findings of the panels created by then President Corazon C.
duration of the relationship between the worker and the Aquino to investigate the administrative charges filed against
employer; and (7) the degree of dependency of the worker upon him and other senior officers for their purported involvement in
the employer for his continued employment in that line of four cases, denominated "Goldair," "Robelle," "Kasbah/La
business. Primavera," and "Middle East" which allegedly prejudiced the
interests of both PAL and the Philippine Government. Filed for
The proper standard of economic dependence is whether the illegal dismissal
worker is dependent on the alleged employer for his
continued employment in that line of business. The SEC has jurisdiction. Dismissal of corporate officers is a
benchmark of economic reality in analyzing possible corporate act and an intracorporate controversy. jnThe fact that
employment relationships for purposes of the Labor Code ought petitioner sought payment of his backwages, other benefits, as
to be the economic dependence of the worker on his employer. well as moral and exemplary damages and attorney's fees in
his complaint for illegal dismissal will not operate to prevent
JURISDICTION OF SEC & RTC IN RE: CORP OFFICERS vs the SEC from exercising its jurisdiction under PD 902-A.
EEs While the affirmative reliefs and monetary claims sought by
petitioner in his complaint may, at first glance, mislead one into
placing the case under the jurisdiction of the Labor Arbiter, a
Matling v. Coros; G.R. No. 157802, October 13, 2010 closer examination reveals that they are actually part of the
perquisites of his elective position; hence, intimately linked with
The office of Vice President for Finance and Administration his relations with the corporation.
created by Matlings President pursuant to By Law No. V was an
ordinary, not a corporate, office. Okol v. Slimmers World International, GR. No. 160146,
December 11, 2009
SC: Cognizable by the RTC or regular courts
Leslie Okol, a Vice President of Slimmers World, was
WPP Marketing Communications, Inc., et al. v. Galera; G.R. terminated from employment after an incident with the Bureau
Nos. 169207 & 169239, March 25, 2010 of Customs regarding equipment belonging to/ consigned to
Slimmers World.
Galera is an employee of WPP. She is not a corporate
officer of WPP. An examination of WPP’s by-laws resulted in Since it has been shown that Okol was a corporate officer, her
a finding that Galera’s appointment as a corporate officer (Vice- charges of suspension, illegal dismissal, unpaid commission,
President with the operational title of Managing Director of reinstatement and backwages against Slimmers World, fall
Mindshare) during a special meeting of WPP’s Board of squarely within the ambit of intra-corporate duties. A
Directors is an appointment to a non-existent corporate office. corporate officer’s dismissal is always a corporate act, or an
WPP’s by-laws provided for only one Vice-President. At the intra-corporate controversy which arises between a stockholder
time of Galera’s appointment on December 31, 1999, WPP and corporation. The question of remuneration involving
already had one Vice-President in the person of Webster. stockholder and officer, not a mere employee, is not a simple
Galera cannot be said to be a director of WPP also because all labor problem but a matter that comes within the area of
five directorship positions provided in the by-laws are already corporate affairs and management and is a corporate
occupied. controversy in contemplation of Corporate Code. The
determination of the rights of a director and corporate officer
The appellate court further justified that Galera was an dismissed from his employments as well as the corresponding
employee and not a corporate officer by subjecting WPP and liability of a corporation, if any, is an intra-corporate dispute
Galera’s relationship to the four-fold test: (a) the selection and subject to the jurisdiction of the regular courts.
engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer’s power to control the STA MARIA: RTC [now] has jurisdiction in both cases
employee with respect to the means and methods by which the
work is to be accomplished. The appellate court found that

9
II. CONTRACTING • does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others;
4 types of Work Arrangements and
1. Employer-employee
 • the workers recruited and placed by such person are
2. Job contracting with an individual performing activities which are directly related to the principal
3. Job contracting with an enterprise business of such employer.
4. Illegitimate (labor-only) contracting
Section 6, DO 18-A
I. Principal Laws, Rules and Regulations Governing
Contracting & Subcontracting Labor-only contracting refers to an arrangement where:

ARTICLE 106. CONTRACTOR OR SUBCONTRACTOR i) The contractor or subcontractor does not have substantial
capital or investments in the form of tools, equipment,
Whenever an employer enters into a contract with another machineries, work premises, among others and
person for the performance of the formers work, the employees
of the contractor and of the latter’s subcontractor, if any, shall the employees recruited, supplied or placed by such
be paid in accordance with the provisions of this Code. contractor or subcontractor are performing activities which
are usually necessary or desirable to the opera-on of the
In the event that the contractor or subcontractor fails to pay the company, or directly related to the main business of the
wages of his employees in accordance with this Code, the principal within a definite or predetermined period,
employer shall be jointly and severally liable with his contractor regardless of whether such job, work or service is to be
or subcontractor to such employees to the extent of the work performed or completed within or outside the premises of
performed under the contract, in the same manner and extent the principal;
that he is liable to employees directly employed by him.
OR
The Secretary of Labor and Employment may, by appropriate
regulations, restrict or prohibit the contracting-out of labor to ii) the contractor does not exercise the right to control over
protect the rights of workers established under this Code. In so the performance of the work of the employee.
prohibiting or restricting, he may make appropriate distinctions
between labor-only contracting and job contracting as well as Labor Advisory 10-16
differentiations within these types of contracting and determine
who among the parties involved shall be considered the •Labor only contracting shall refer to an arrangement where the
employer for purposes of this Code, to prevent any violation or contractor or subcontractor merely recruits, supplies or places
circumvention of any provision of this Code. workers to perform a job, work or service for a principal, and the
following elements are present:
There is “labor-only” contracting where the person supplying
workers to an employer does not have substantial capital or 1. The contractor or subcontractor does not have substantial
investment in the form of tools, equipment, machineries, work capital or investment in the form of tools, equipment,
premises, among others, and the workers recruited and placed machineries, work premises, among others, and the
by such person are performing activities which are directly workers recruited and placed by such person are performing
related to the principal business of such employer. In such activities which are directly related to the principal business
cases, the person or intermediary shall be considered merely of such employer. In such cases, the person or intermediary
as an agent of the employer who shall be responsible to the shall be considered merely as an agent of the employer who
workers in the same manner and extent as if the latter were shall be responsible to the workers in the same manner and
directly employed by him. extent as if the latter were directly employed by him; or 

2. The contractor does not exercise the right of control over the
ARTICLE 107. INDIRECT EMPLOYER performance of the work of the employee. 


The provisions of the immediately preceding article shall D.O. No. 174, Sec. 3(h)
likewise apply to any person, partnership, association or
corporation which, not being an employer, contracts with an Labor-only contracting refers to arrangement where the
independent contractor for the performance of any work, task, contractor or subcontractor merely recruits, supplies, or places
job or project. workers to perform a job or work for a principal, and the
elements enumerated in Sec. 5 hereunder are present.
The first two paragraphs set the general rule that: (ESSENTIAL ELEMENTS)
– a principal is permitted by law to engage the services of a
contractor for the performance of a particular job, In relation to Sec. 5. ABSOLUTE PROHIBITION AGAINST
– but the principal, nevertheless, becomes solidarily liable with LABOR-ONLY CONTRACTING (CONFIRMATORY
the contractor for the wages of the contractor's employees. ELEMENTS)

The third paragraph, however, empowers the Secretary of a) i. The contractor or subcontractor does not have substantial
Labor to make distinctions between permissible job capital, or
contracting and "labor-only" contracting, which is a
prohibited act further defined under the last paragraph. ii. The contractor or subcontractor does not have investments
in the form of tools, equipment, machineries, supervision,
The fourth paragraph defines labor-only contracting where work premises, among others,
the person supplying workers to an employer and (“essential”)

10
iii. The contractor’s or subcontractor’s EEs recruited and What is legitimate job contracting?
placed are performing activities which are directly related to
the main business operation of the principal; • Contracting or subcontracting shall be legitimate if all the
following circumstances concur:
b) The contractor or subcontractor does not exercise the right
to control over the performance of the work of the EE – The contractor must be registered in accordance with these
Rules and carries a distinct and independent business and
Guiding Principles undertakes to perform the job, work or service on its own
responsibility, according to its own manner and method, and
• Contracting and subcontracting arrangements free from control and direction of the principal in all matters
connected with the performance of the work except as to the
– are expressly allowed by law and results thereof; 

– are subject to regulations
 – The contractor has substantial capital and/or investment; and
– The Service Agreement ensures compliance with all the
• for the promotion of employment and rights and benefits under Labor Laws.
• the observance of the rights of workers to
Serrano v. NLRC; G.R. No. 117040, January 27, 2000
– just and humane conditions of work,
– security of tenure, Petitioner was hired by Isetann Dep’t as a security checker; As
– self-organization and
 a cost cutting measure, Isetann decided to phase out its entire
– collective bargaining. security section and engage services of an independent
• Labor-only contracting as defined herein shall be prohibited. security agency

What is contracting or subcontracting? Indeed, as we pointed out in another case, the "[management
of a company] cannot be denied the faculty of promoting
"Contracting" or "subcontracting" efficiency and attaining economy by a study of what units are
• [A situation where] an employer [or any person, partnership, essential for its operation. To it belongs the ultimate
association or corporation, not being an employer] enters into a determination of whether services should be performed by its
contract with another person for the performance of the former’s personnel or contracted to outside agencies . . . [While there]
work. (See Art. 106 and 107) should be mutual consultation, eventually deference is to be
paid to what management decides.” Consequently, absent
• refers to an arrangement whereby a principal agrees to put out proof that management acted in a malicious or arbitrary
or farm out with a contractor or subcontractor manner, the Court will not interfere with the exercise of
judgment by an employer.
– the performance or completion of a specific job, work or
service How much is substantial?
– within a definite or predetermined period,
– regardless of whether such job, work or service is to be Sec. 3(l) of DO No. 174
performed or completed within or outside the premises of the Substantial Capital refers to paid-up capital stocks/shares at
principal. least FIVE MILLION PESOS in the case of corporations,
partnerships, and cooperatives; in the case of single
How many parties are involved in a legitimate contracting proprietorship, a net worth of at least FIVE MILLION PESOS.
arrangement?
CCBPI v. Agito
 GR No. 179546, February 13, 2009
Trilateral Relationship in Legitimate Contracting Arrangements • The Court does not set an absolute figure for what it considers
substantial capital for an independent job contractor, but it
• In legitimate contracting, there exists a trilateral relationship measures the same against the type of work which the
under which there is: contractor is obligated to perform for the principal.
– a contract for a specific job, work or service between the Does the law require both substantial capitalization AND
principal and the contractor or subcontractor; and investment?
– a contract of employment between the contractor or
subcontractor and its workers. Neri v. NLRC
 GR No. 97008-09, July 23, 1993
• Hence, there are three parties involved in these arrangements:
• BCC cannot be considered a "labor-only" contractor because
it has substantial capital. 

1. the principal which decides to farm out a job or service to a
• While there may be no evidence that it has investment in the
contractor or subcontractor, 
 form of tools, equipment, machineries, work premises, among
2. the contractor or subcontractor which has the capacity to
others, it is enough that it has substantial capital, as was
independently undertake the performance of the job, work or
established before the Labor Arbiter as well as the NLRC. 

service, and 
 • In other words, the law does not require both substantial
3. the contractor’s workers engaged by the contractor or capital and investment in the form of tools, equipment,
subcontractor to accomplish the job work or service. 
 machineries, etc.
• This is clear from the use of the conjunction "or.” If the intention
was to require the contractor to prove that he has both capital
and the requisite investment, then the conjunction "and" should
have been used.

11
Vinoya v. NLRC GR 126586, February 2, 2000 had been declared by authorized DOLE officials as labor-only
contracting.
• It is not enough to show substantial capitalization or
investment in the form of tools, equipment, machineries and Sasan v. NLRC (G.R. No. 176240, October 17, 2008)
work premises, among others, to be considered as an
independent contractor. • The Court again cited the ruling in Neri that the law does not
• In fact, jurisprudential holdings are to the effect that in require both substantial capital and investment in the form of
determining the existence of an independent contractor tools, equipment, machineries, etc.; and said that it is enough
relationship, several factors might be considered such as, but that it has substantial capital. 

not necessarily confined to, • It bears nothing, however, that in this case, the Court ruled
that the contractor had both capital and investment and that it
1. whether the contractor is carrying on an independent was carrying on a business that was independent of the
business; 
 principal and its workers were performing tasks that were
2. the nature and extent of the work; 
 distinguishable from the principal’s business. 

3. the skill required; 
 • The Court also referred to the Vinoya ruling (i.e. the totality of
4. the term and duration of the relationship; 
 circumstances must be considered).

5. the right to assign the performance of specified pieces of
work; 

6. the control and supervision of the workers; 
 W.M. Manufacturing vs. Richard R. Dalag
7. the power of the employer with respect to the hiring, firing (G.R. No. 209418, December 7, 2015)
and payment of the workers of the contractor; 

8. the control of the premises; 
 • The Supreme Court declared that "the basis for determining
9. the duty to supply premises, tools, appliances, materials and the substantiality of a company's 'capital' rests not only thereon
labor; and 
 but also on the tools and equipment it owns in relation to the
10. the mode, manner and terms of payment. job, work, or service it provides."

• the totality of the facts and the surrounding circumstances of Philippine Fuji Xerox Corp. v. NLRC (GR 111501, March 5,
the case are to be considered; and 
 1996)
• each case must be determined by its own facts; and 

• all the features of the relationship are to be considered. • The phrase "substantial capital and investment in the form of
tools, equipment, machineries, work premises, and other
SMC v. MAERC Integrated Services, Inc. GR No. 144672, materials which are necessary in the conduct of his business,"
July 10, 2003. in the Implementing Rules clearly contemplates tools,
equipment, etc., which are directly related to the service it is
• In Neri, the Court considered not only the fact that respondent being contracted to render.
Building Care Corporation (BCC) had substantial capitalization
but noted that BCC carried on an independent business and What if contractor is unable to pay wages of its
performed its contract according to its own manner and method, employees, is this not an indication that it has no
free from the control and supervision of its principal in all substantial capitalization?
matters except as to the results thereof.
• while MAERC's investments in the form of buildings, tools and Baguio v. NLRC (GR 79004-08; October 4, 1991)
equipment amounted to more than P4 Million, we cannot
disregard the fact that it was the SMC which required MAERC • It may be that LUPO subsequently ran out of capital and was
to undertake such investments under the understanding that the unable to satisfy the award to petitioners. That was an after-the-
business relationship between petitioner and MAERC would be fact development, however, and does not detract from his
on a long term basis. 
 status as an independent contractor. Performing activities
• Nor do we believe MAERC to have an independent business. which are usually necessary or desirable to the operation of the
Not only was it set up to specifically meet the pressing needs of company, or directly related to the main business of the
SMC which was then having labor problems in its segregation principal.
division, none of its workers was also ever assigned to any
other establishment, thus convincing us that it was created DIGITEL v. DEU
 (G.R. No. 184903-04, October 10, 2012)
solely to service the needs of SMC. 

• Naturally, with the severance of relationship between MAERC • *** it is management prerogative to farm out any of its
and SMC followed MAERC's cessation of operations, the loss activities, regardless of whether such activity is peripheral or
of jobs for the whole MAERC workforce and the resulting core in nature.
actions instituted by the workers.
• Article 106 of the Labor Code (and Labor Advisory 10-16)
DOLE Phil, Inc. v. Esteva GR No. 161115, November 30, provides that there is "labor-only" contracting where the person
2006 supplying workers to an employer does not have substantial
capital or investment in the form of tools, equipment,
• although petitioner touts the multi-million pesos assets of machineries, work premises, among others, and the workers
CAMPCO, it does well to remember that such were amassed in recruited and placed by such person are performing activities
the years following its establishment. In 1993, when CAMPCO which are directly related to the principal business of such
was established and the Service Contract between petitioner employer.
and CAMPCO was entered into, CAMPCO only had P6,600.00 • DO 18-A has added activities that are usually necessary or
paid-up capital, which could hardly be considered substantial. It desirable.
only managed to increase its capitalization and assets in the
succeeding years by continually and defiantly engaging in what

12
Basan v. Coca-Cola BoJlers Philippines, Inc. (G.R. Nos. determine not only the end to be achieved, but also the manner
174365-366, February 4, 2015) and means to be used in reaching that end. (Section 3(i), DO
18-A)
• whether the work undertaken is necessary or desirable in the
usual business or trade of the employer is *not found in Art. 106; relate to investment
– a fact that can be assessed by looking into the nature of the
services rendered and its relation to the general scheme under Fonterra Brands Phils., Inc. v. Largado; G.R. No. 205300,
which the business or trade is pursued in the usual course. March 18, 2015

• UND ≠ a specific undertaking that is divorced from the normal • The appellate court further correctly held that Fonterra's
activities required in carrying on the particular business or trade. issuance of Merchandising Guidelines, stock monitoring and
inventory forms, and promo mechanics, for compliance and use
• Route helpers who are engaged in the service of loading and of A.C. Sicat's employees assigned to them, does not establish
unloading softdrink products of respondent company, a that Fonterra exercises control over A.C. Sicat. 

softdrink manufacturer, to its various delivery points, are
performing activities that are necessary or desirable in its usual • We agree with the CA's conclusion that these were imposed
business or trade. only to ensure the effectiveness of the promotion services to be
rendered by the merchandisers as it would be risky, if not
MERALCO v. Benamira (GR 145271, July 14, 2005) imprudent, for any company to completely entrust the
performance of the operations it has contracted out. 

• Security services are necessary and desirable to the business
of MERALCO, it is not directly related to its principal business
and may even be considered unnecessary in the conduct of Alilin v. Petron Corp. (GR 177592, June 9, 2014)
MERALCOs principal business, which is the distribution of
electricity. • One manifestation of the power of control is the power to
transfer employees from one work assignment to another. Here,
Janitors Petron could order petitioners to do work outside of their regular
• Neri: directly related but not necessary. 
 "maintenance/utility" job.

• Chevron: Incidental or desirable but not necessary and • Also, petitioners were required to report for work everyday at
directly related. 
 the bulk plant, observe an 8:00 a.m. to 5:00 p.m. daily work
schedule, and wear proper uniform and safety helmets as
• Sasan: (janitors, messengers, and drivers) directly related prescribed by the safety and security measures being
but not necessary. 
 implemented within the bulk plant. All these imply control. 


• In an industry where safety is of paramount concern, control


BPI EU v. BPI
and supervision over sensitive operations, such as those
performed by the petitioners, are inevitable if not at all
• Check clearing, delivery of bank statements, fund transfers,
necessary. 

card production, operations accounting and control, and cash
servicing 

• Indeed, Petron deals with commodities that are highly volatile
and flammable which, if mishandled or not properly attended to,
•[T]he out sourced functions appear to be not in any way directly
may cause serious injuries and damage to property and the
related to the core activities of banks. They are functions in a
environment. Naturally, supervision by Petron is essential in
processing center of BPI which does not handle or manage
every aspect of its product handling in order not to compromise
deposit transactions. Clearly, the functions outsourced are not
the integrity, quality and safety of the products that it distributes
inherent banking functions, and, thus, are well within the
to the consuming public. 

permissible services under CBP Circular No. 138838 that
enumerated functions which are ancillary to the business of
• One manifestation of the power of control is the power to
banks and hence are allowed to be outsourced. 

transfer employees from one work assignment to another. Here,
Petron could order petitioners to do work outside of their regular
• Mgt has the ultimate determination of whether services should
"maintenance/utility" job. Also, petitioners were required to
be performed by its personnel or contracted to outside
report for work everyday at the bulk plant, observe an 8:00 a.m.
agencies.
to 5:00 p.m. daily work schedule, and wear proper uniform and
safety helmets as prescribed by the safety and security
Philippine Airlines, Inc. v. Ligan (GR 146408, February 29,
measures being implemented within the bulk plant. All these
2008)
imply control. In an industry where safety is of paramount
concern, control and supervision over sensitive operations,
• the fact that the contractor’s workers worked alongside the
such as those performed by the petitioners, are inevitable if not
principal's regular employees who were performing identical
at all necessary. Indeed, Petron deals with commodities that are
work is an indicium of labor-only contracting. 

highly volatile and flammable which, if mishandled or not
properly attended to, may cause serious injuries and damage
• In that case, however, it bears nothing that the contractor was
to property and the environment. Naturally, supervision by
found to have no substantial capitalization and/or investments.
Petron is essential in every aspect of its product handling in
order not to compromise the integrity, quality and safety of the
Right of control products that it distributes to the consuming public.
"Right to control" refers to the right reserved to the person for What if contractor is not registered?
whom the services of the contractual workers are performed, to

13
• Failure to register shall give rise to the presumption that the ARTICLE 109. SOLIDARY LIABILITY
contractor is engaged in labor-only contracting.
The provisions of existing laws to the contrary notwithstanding,
• A Certificate of Registration issued by the Department of Labor every employer or indirect employer shall be held responsible
and Employment is not conclusive evidence of such status. The with his contractor or subcontractor for any violation of any
fact of registration simply prevents the legal presumption of provision of this Code. For purposes of determining the extent
being a mere labor-only contractor from arising. (Babas v. of their civil liability under this Chapter, they shall be considered
Lorenzo Shipping Corp; GR 186091, Dec. 15, 2010) as direct employers.

D.O. No. 174, Sec. 6. OTHER ILLICIT FORMS OF ENT Liabilities of the principal under a legitimate
ARRANGEMENTS contracting/subcontracting arrangement
a) When the principal farms out work to a CABO • In the event that the contractor or sub- contractor fails to pay
- refers to a person or group of persons or to a labor group the WAGES of his employees in accordance with this Code,
which under the guise of a labor org, cooperative, or any entity, the employer principal shall be jointly and severally liable with
supplies workers to an ER, w/ or w/o any monetary ot other his contractor or sub- contractor to such employees to the
consideration whether in the capacity of an AGENT of the ER extent of the work performed under the contract, in the same
or as an OSTENSIBLE IND CONTRACTOR manner and extent that he is liable to employees directly
employed by him. (Art. 106, Labor Code)
b) Contracting out of job or work through an in-house agency
- refers to a contractor which is: The provisions of existing laws to the contrary notwithstanding,
• owned, managed, or controlled directly or indirectly by the every employer or indirect employer principal shall be held
principal or one where the principal owns/ represents any share responsible with his contractor or subcontractor for any violation
of stock, and of any provision of this Code. For purposes of determining the
• which operates solely or mainly for the principal extent of their civil liability under this Chapter, they shall be
considered as direct employers. (Art. 109 (Solidary liability),
c) Contracting out of job or work through an in-house Labor Code)
cooperative which merely supplies workers to the principal
– N.B. Art. 1728 of the Civil Code provides that the contractor
d) Contracting out of a job or work by reason of a strike or is liable for all the claims of laborers and others employed by
lockout whether actual or imminent him. The opening phrase of Art. 109 refers to this.
e) contracting out of a job or work being performed by union The liability under Arts. 106 and 109 is solidary.
members and such will interfere with, restrain, or coerce EEs in
the exercise of their rights to self-organization as provided in • The contractual employees may collect directly from the
Article 259 of LC principal. 

• There is no need to prove insolvency or unwillingness to pay
f) Requiring the contractor’s/subcontractor’s EEs to sign, as a on the part of the contractor or subcontractor. 

precondition to ENT or continued ENT, an antedated
resignation letter; a blank payroll; a waiver of labor standards Liabilities of the principal under a labor-only contracting
including minimum wages and social or welfare benefits; or a arrangement
quitclaim releasing the principal or contractor from liability as to
payment of future claims; or require the EE to become member • In [cases of labor-only contracting], the person or intermediary
of a cooperative shall be considered merely as an agent of the employer
“principal” who shall be responsible to the workers in the same
h) Repeated hiring by the contractor/subcontractor of EEs manner and extent as if the latter were directly employed by
under an ENT contract of short duration him. (Art. 106, Labor Code)
i) Requiring EEs under a contracting/subcontracting For violations of Section 7, 8 or 9 of DO 18-A (DO 174)
arrangement to sign a contract fixing the pd of ENT to a term
shorter than the term of the Service Agreement, unless the Sec.5xxx (Now Sec 9. SOLIDARY LIABILITY)
contract is divisible into phases for which substantially different
skills are required and this is made known to the EE at the time • In the event of any violation of any provision of the Labor
of engagement Code, including the failure to pay wages, there exists a solidary
liability on the part of the principal and the contractor for
j) Such other practices, schemes, or ENT arrangements purposes of enforcing the provisions of the Labor Code and
designed to circumvent the right of workers to security of tenure other social legislation, to the extent of the work performed
under the employment contract.
ARTICLE 108. POSTING OF BOND 

• However, the principal shall be deemed the direct employer
An employer or indirect employer may require the contractor or of the contractor’s employee in cases where there is a finding
subcontractor to furnish a bond equal to the cost of labor under by a competent authority of labor-only contracting, or
contract, on condition that the bond will answer for the wages commission of prohibited activities as provided in Section 7, or
due the employees should the contractor or subcontractor, as a violation of either Sections 8 or 9 hereof. 

the case may be, fail to pay the same.
• Effects of finding of labor-only contracting and/or violation of
STA MARIA: Mandatory with re: Service Agreement Sections 7, 8, or 9 of the Rules.

14
– A finding by competent authority of labor-only contracting However, the Interserve is just a labor-only contractor under
shall render the principal jointly and severally liable with the Article 106 of the Labor Code. The contractor, not the
contractor to the latter’s employees, in the same manner and employee, has the burden of proof that it has the substantial
extent that the principal is liable to employees directly hired by capital, investment, and tool to engage in job contracting.
him/her, as provided in Article 106 of the Labor Code, as Although not the contractor itself (since Interserve no longer
amended. 
 appealed the judgment against it by the Labor Arbiter), said
burden of proof herein falls upon Coca-Cola who is invoking the
– A finding of commission of any of the prohibited activities in supposed status of Interserve as an independent job contractor.
Section 7, or violation of either Sections 8 or 9 hereof, shall Noticeably, it failed to submit evidence to establish that the
render the principal the direct employer of the employees of the service vehicles and equipment of Interserve, valued at
contractor or subcontractor, pursuant to Article 109 of the Labor ₱510,000.00 and ₱200,000.00, respectively, were sufficient to
Code, as amended. 
 carry out its service contract with Coca-Cola. In sum, Interserve
did not have substantial capital or investment in the form of
DOLE Circular 01-17 tools, equipment, machineries, and work premises; and
respondents, its supposed employees, performed work which
• DO 174 does not apply to the BPO industry, etc. 
 was directly related to the principal business of Coca-Cola. It is,
thus, evident that Interserve falls under the definition of a labor-
• Construction contractors licensed by the Philippine only contractor, under Article 106 of the Labor Code; as well as
Contractors Accreditation Board shall not be required to register Section 5(i) of the Rules Implementing Articles 106-109 of the
with the DOLE under DO 18-A (now 174). 
 Labor Code, as amended.

– Moreover, findings of violation/s on labor standards and De Castro v. CA; GR 204261, October 5, 2016
occupational health and safety standards shall be coordinated
with PCAB for its appropriate action, including the possible Nuvoland, a corporation formed primarily "to own, use, improve,
cancellation/suspension of the contractor's license. develop, subdivide, sell, exchange, lease and hold for
investment or otherwise, real estate of all kinds, including
*Not in danger to lose their security of tenure buildings, houses, apartments and other structures," was
registered with the Securities and Exchange Commission
CASES
For the sale and marketing of two condominium buildings, it
American President Lines v Clave (GR L-51641, June 29, would require massive funds for promotions, advertisements,
1982) shows, salaries, and operating expenses of its more or less 40
personnel. In light of this vast business undertaking, it is
American President Lines (APL) entered into a contract with the obvious that the P1 million subscribed capital of Silvericon
Marine Security Agency (MSA) for the latter to guard and would hardly suffice to satisfy this huge engagement. Nuvoland
protect the APL’s vessels while they were moored at the port of was apparently aware of this that it had to fund the marketing
Manila; MSA hired and assigned guards to watch over APL’s expenses of the project in an amount not exceeding P30 million
vessels. The guards were not known to APL who dealt only with per building. This was even provided in paragraph 6 of the SMA.
the agency on matters pertaining to the service of the guards.
This being the case, the paid-in capitalization of Silvericon
SC: No ER-EE between APL and the individual watchmen of amounting to P1 million was woefully inadequate to be
the Marine Security Agency considered as substantial capital. Thus, Silvericon could not
qualify as an independent contractor. The Court agrees with the
Since the petitioner has to deal with the agency, and not the observation of the LA that this set-up would not have been
individual watchmen, on matters pertaining to the contracted resorted to if Silvericon's capital was substantial enough from
task, it stands to reason that the petitioner does not exercise the start of the business venture. It is logical to presume that an
any power over the watchmen’s conduct. Always, the agency established corporation like Nuvoland would select an
stands between the petitioner and the watchmen; and it is the independent contractor, which had the financial resources to
agency that is answerable to the petitioner for the conduct of its adequately undertake its marketing and advertising
guards. requirements, and not an undercapitalized company like
Silvericon. It perplexes the Court that the CA disregarded this
Quintanar v. CCBPI; GR 210565 [2016] set-up as it certainly shows that Silvericon, from the beginning,
did not have substantial capital to service the needs of
Nuvoland. Silvericon had no substantial e quipment in the form
Complainants allege that they are former employees directly
of tools, equipment, machinery, and work premises.
hired by respondent Coca-Cola, assigned as regular Route
Helpers under the direct supervision of the Route Sales
Supervisors; After working for quite sometime as directly-hired Chevron (Phils.) v. Galit (GR 186114, October 7, 2015)
employees of Coca-Cola, complainants were allegedly
transferred successively as agency workers to the following The Court defers to the findings of both the LA and the
manpower agencies, namely, Lipercon Services, Inc., People's NLRC that the job performed by Galit, which essentially
Services, Inc., ROMAC, and the latest being respondent consists of janitorial services, may be incidental or desirable
Interserve Management and Manpower Resources, Inc to petitioner's main activity but it is not necessary and
SC: The repeated rehiring of workers and the continuing need directly related to it.
for their services clearly attest to the necessity or desirability of
their services in the regular conduct of the business or trade of San Miguel Corporation v. Aballa (G.R. No. 149011, June
Coca-Cola, which is well within the definition of a regular 28, 2005)
employee under Art. 280 of the Labor Code.

15
In the case at hand, Sunflower does not have substantial FIRST PHILIPPINE INDUSTRIAL CORPORATION vs.
capitalization or investment in the form of tools, equipment, RAQUEL M. CALIMBAS (G.R. No. 179256, July 10, 2013)
machineries, work premises and other materials to qualify it as
an independent contractor. The lot, building, machineries and SC: Respondents are employees of FPIC.
all other working tools utilized by private respondents in carrying
out their tasks were owned and provided by SMC First, in Vinoya vs NLRC, the SC ruled that the actual paid-in
capital of Php 75,000 could not be considered as substantial
And from the job description provided by SMC itself, the work capital. Thus, DGMS’s actual paid-in capital does not constitute
assigned to private respondents was directly related to the substantial capital essential to carry out its business as an
aquaculture operations of SMC. Undoubtedly, the nature of the independent job contractor.
work performed by private respondents in shrimp harvesting,
receiving and packing formed an integral part of the shrimp Second, FPIC exercised the power of control and supervision
processing operations of SMC. As for janitorial and over the respondents. The fact that DGMS did not assign
messengerial services, that they are considered directly related representatives to supervise respondents’ work in FPIC tends
to the principal business of the employer has been to disprove the independence of DGMS. The test to determine
jurisprudentially recognized. the existence of independent contractorship is whether one
claiming to be an independent contractor has contracted to do
Royale Homes Marketing Corp. v. Alcantara; GR No. the work according to his own methods and without being
195190 subjected to the control of the employer, except only to the
results of the work. On this score alone, petitioner cannot rightly
Royale Homes, a corporation engaged in marketing real claim that DGMS was an independent job contractor inasmuch
estates, appointed Alcantara as its Marketing Director for a as respondents were subjected to the control and supervision
fixed period of one year. His work consisted mainly of marketing of petitioner while they were performing their jobs.
Royale Homes’ real estate inventories on an exclusive basis.
Royale Homes reappointed him for several consecutive years MANILA MEMORIAL PARK CEMETERY, INC., vs. EZARD D.
LLUZ (G.R. No. 208451, February 3, 2016)
SC: Not every form of control is indicative of employer-
employee relationship. A person who performs work for another Manila Memorial Park (MMP) entered into a contract of service
and is subjected to its rules, regulations, and code of ethics with respondent Ward Trading. The Contract of Services
does not necessarily become an employee. As long as the level provided that Ward trading, as an independent contractor, will
of control does not interfere with the means and methods of render interment and exhumation services and other related
accomplishing the assigned tasks, the rules imposed by the work in order to supplement operations at MMP.
hiring party on the hired party do not amount to the labor law
concept of control that is indicative of employer-employee SC: Ward Trading is a labor-only contractor and MMP is the
relationship. employer of the respondents

In this case, the Court agrees with Royale Homes that the rules, There is labor only contracting when the contractor has no
regulations, code of ethics, and periodic evaluation alluded to substantial capital or investment, OR does not exercise the right
by Alcantara do not involve control over the means and to control over the contractual employee’s performance. These
methods by which he was to perform his job. Understandably, two elements are found in the case of Ward Trading.
Royale Homes has to fix the price, impose requirements on
prospective buyers, and lay down the terms and conditions of For failing to register as a contractor, a presumption arises that
the sale, including the mode of payment, which the independent one is engaged in labor-only contracting unless the contractor
contractors must follow. It is also necessary for Royale Homes overcomes the burden of proving that it has substantial capital,
to allocate its inventories among its independent contractors, investment, tools and the like. In this case, however, MMP failed
determine who has priority in selling the same, grant to adduce evidence to prove that Ward Trading had any
commission or allowance based on predetermined criteria, and substantial capital, investment or assets to perform the work
regularly monitor the result of their marketing and sales efforts. contracted for. Thus, the presumption that Ward Trading is a
But to the mind of this Court, these do not pertain to the labor-only contractor stands. Consequently, MMP is deemed
means and methods of how Alcantara was to perform and the employer of respondents.
accomplish his task of soliciting sales. They do not dictate
upon him the details of how he would solicit sales or the Nestle Philippines, Inc. v. Puedan, Jr. (G.R. No. 220617,
manner as to how he would transact business with January 30, 2017)
prospective clients.
ODSI is not a labor--only contractor of Nestle because the latter
Shipside, Inc. v. National Labor Relations Commission, does not exercise control over the former’s business. The CA
G.R. No. 50358, 2 November 1982, 118 SCRA 99 was wrong in ruling that ODSI and Nestle's contract
(Distributorship Agreement) contained provisions
Supreme Court held that STEVEDORES and not SHIPSIDE is demonstrating a labor-only contracting arrangement. A closer
the employer of private respondents since (1) the selection and examination of the Distributorship Agreement reveals that the
engagement of private respondents, (2) the payment of their relationship of Nestle and ODSI is not that of a principal and a
wages, (3) the power to dismiss them, and (4) the power of contractor, but that of a seller and a buyer/re-seller. As
control over their conduct, were all exercised by stipulated in the Distributorship Agreement, Nestle agreed to
STEVEDORES; and not being an employer of private sell its products to ODSI at discounted prices, which in turn will
respondents, SHIPSIDE has no duty to file or submit with the be re-sold to customers. The goods Nestle manufactures are
Labor Ministry the necessary clearance application or report of distributed to the market through various distributors, such as
the termination of the services of private respondents ODSI, which in turn, re-sell the same to designated outlets
through its own employees (respondents). Therefore, the

16
reselling activities allegedly performed by the respondents thereof, and to other officers or members of the managerial
properly relate to ODSI, whose principal business consists of staff.
the "buying, selling, distributing, and marketing goods and
commodities of every kind. “Field personnel” shall refer to non-agricultural employees who
regularly perform their duties away from the principal place of
III. CONDITIONS OF EMPLOYMENT business or branch office of the employer and whose actual
hours of work in the field cannot be determined with reasonable
Terms and Conditions of Employment certainty.

• Sources:  General Rule on Coverage: All employees in all


– Law establishments are covered.
• Labor Code; IRR; Department Orders; Minimum
Wage Orders; Supreme Court Decisions; Other laws  1st type of excluded employees: Government Workers
and issuances
– Contract  Coverage provisions in Book III of the Rules to
• Employment Contract; CBA; Management Prerogative Implement the Labor Code:

HOURS OF WORK Section 2(a), Rule I - Hours of Work


SECTION 2. Exemption. — The provisions of this Rule shall not
 Management Prerogative apply to the following persons if they qualify for exemption
 “management is free to regulate, according to its own under the conditions set forth herein: (a) Government
discretion and judgment, all aspects of employment, employees whether employed by the National Government or
including hiring, work assignments, working methods, any of its political subdivision, including those employed in
time, place, and manner of work, processes to be government-owned and/or controlled corporations;
followed, supervision of workers, working
regulations, transfer of employees, work supervision, Section 1(a), Rule II - Night Shift Differential
lay-off of workers, and discipline, dismissal and recall SECTION 1. Coverage. — This Rule shall apply to all
of workers. Further, management retains the employees except: (a) Those of the government and any of its
prerogative, whenever exigencies of the service so political subdivisions, including government-owned and/or
require, to change the working hours of its employees. controlled corporations;
The exercise of management prerogative, however, is not
absolute as it must be exercised in good faith and with due Section 7, Rule III - Weekly Rest Periods
regard to the rights of labor.” (Royal Plant Workers SECTION 7. Compensation on rest day/Sunday/holiday. —
Union v. Coca-Cola Bottlers Phil., Inc.; GR 198783, (a) Except those employees referred to under Section 2, Rule I,
April 15, 2013) Book Three, an employee who is made or permitted to work on
his scheduled rest day shall be paid with an additional
 “However, the exercise of management prerogative is not compensation of at least 30% of his regular wage. An employee
absolute. By its very nature, encompassing as it could be, shall be entitled to such additional compensation for work
management prerogative must be exercised in good faith performed on a Sunday only when it is his established rest day.
and with due regard to the rights of labor — verily, with the
principles of fair play at heart and justice in mind. While (b) Where the nature of the work of the employee is such that
we concede that management would best know its he has no regular work days and no regular rest days can be
operational needs, the exercise of management scheduled, he shall be paid an additional compensation of at
prerogative cannot be utilized as an implement to least 30% of his regular wage for work performed on Sundays
circumvent our laws and oppress employees. The and holidays.
prerogative accorded management cannot defeat the very
purpose for which our labor laws exist: to balance the (c) Work performed on any special holiday shall be paid with an
conflicting interests of labor and management, not to tilt additional compensation of at least 30% of the regular wage of
the scale in favor of one over the other, but to guaranty the employees. Where such holiday work falls on the
that labor and management stand on equal footing when employee's scheduled rest day, he shall be entitled to additional
bargaining in good faith with each other.” (Unicorn compensation of at least 50% of his regular wage.
Safety Glass, Inc. v. Basarte; GR 154689, November
25, 2004.) (d) The payment of additional compensation for work performed
on regular holiday shall be governed by Rule IV, Book Three, of
ARTICLE 82. COVERAGE these regulations.

(e) Where the collective bargaining agreement or other


The provisions of this Title shall apply to employees in all
applicable employment contract stipulates the payment of a
establishments and undertakings whether for profit or not, but
not to government employees, managerial employees, field higher premium pay than that prescribed under this Section, the
personnel, members of the family of the employer who are employer shall pay such higher rate.
dependent on him for support, domestic helpers, persons in the
Section 1(a), Rule IV - Holidays with Pay
personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in appropriate SECTION 1. Coverage. — This rule shall apply to all employees
regulations. except: (a) Those of the government and any of the political
subdivision, including government-owned and controlled
corporation;
As used herein, “managerial employees” refer to those whose
primary duty consists of the management of the establishment
Section 1(a), Rule V - Service Incentive Leave
in which they are employed or of a department or subdivision

17
SECTION 1. Coverage. — This rule shall apply to all employees SECTION 1. Coverage. — This Rule shall apply to all
except: (a) Those of the government and any of its political employees except:
subdivisions, including government-owned and controlled
corporations; (d) Managerial employees as defined in Book Three of this
Code;
Section 2 (1), Article IX-B, 1987 Constitution
Section 2. (1) The civil service embraces all branches, Section 7, Rule III – Weekly Rest Periods
subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled Section 1(d), Rule IV – Holidays with Pay
corporations with original charters. SECTION 1. Coverage. — This rule shall apply to all employees
except:
CASE
(d) Managerial employees as defined in Book Three of the
LRTA v. Venus, Jr.; GR 163782 & 163881, March 24, 2006. Code;

Section 1(c), Rule V – Service Incentive Leave


There should be no dispute then that employment in petitioner
LRTA should be governed only by civil service rules, and SECTION 1. Coverage. — This rule shall apply to all employees
not the Labor Code and beyond the reach of the Department except:
of Labor and Employment, since petitioner LRTA is a
government-owned and controlled corporation with an (c) Managerial employees as defined in Book Three of this
original charter, Executive Order No. 603, Series of 1980, as Code;
amended
Section 2, Rule VI – Service Charges
SECTION 2. Employees covered. — This rule shall apply to all
 2nd type of excluded employees: Managerial employees
employees of covered employers, regardless of their positions,
designations or employment status, and irrespective of the
 Coverage provisions in Book III of the Rules to method by which their wages are paid except to managerial
Implement the Labor Code: employees. As used herein, a "managerial employee" shall
mean one who is vested with powers or prerogatives to lay
Section 2(b) and 2(c), Rule I – Hours of Work down and execute management policies anopd/or to hire,
SECTION 2. Exemption. — The provisions of this Rule shall not transfer, suspend, lay-off, recall, discharge, assign, or discipline
apply to the following persons if they qualify for exemption employees or to effectively recommend such managerial
under the conditions set forth herein: actions. All employees not falling within this definition shall be
considered rank-and-file employees.
(b) Managerial employees, if they meet all of the following
conditions:  Statutory definitions of managerial employee
(1) Their primary duty consists of the management of the
establishment in which they are employed or of a department  Section 2(b) and 2(c), Rule I, Book III, IRR
or sub-division thereof.  Section 2, Rule VI, Book III, IRR
(2) They customarily and regularly direct the work of two or
more employees therein.  See also Article 218 (m), but note National Sugar
(3) They have the authority to hire or fire employees of lower Refineries Corporation ruling (infra)
rank; or their suggestions and recommendations as to hiring
CASES
and firing and as to the promotion or any other change of status
of other employees, are given particular weight.
Clientlogic Philippines, Inc. v. Castro; GR 186070, April 11,
(c) Officers or members of a managerial staff if they perform 2011.
the following duties and responsibilities: * Call center supervisor
(1) The primary duty consists of the performance of work “Team Supervisor”
directly related to management policies of their employer; As a coach or team supervisor, respondent's main duty was to
deal with customer complaints which could not be handled
(2) Customarily and regularly exercise discretion and
or solved by call center agents. If the members of his team
independent judgment; and could not meet the needs of a customer, they passed the
(3) (i) Regularly and directly assist a proprietor or a managerial customer's call to respondent.
employee whose primary duty consists of the management of
the establishment in which he is employed or subdivision This job description does not indicate that respondent can
thereof; or (ii) execute under general supervision work along exercise the powers and prerogatives equivalent to
specialized or technical lines requiring special training, managerial actions which require the customary use of
experience, or knowledge; or (iii) execute, under general independent judgment. There is no showing that he was
supervision, special assignments and tasks; and actually conferred or was actually exercising the following
(4) Who do not devote more than 20 percent of their hours duties attributable to a "member of the managerial staff
worked in a work week to activities which are not directly and
closely related to the performance of the work described in
paragraphs (1), (2) and (3) above. M+W Zander Philippines, Inc. v. Enriquez; GR 169173, June
5, 2009.
Section 1(d), Rule II – Night Shift Differential

18
* Administration Manager and the Executive Assistant to the Dela Cruz v. NLRC; GR 121288, November 20, 1988.
General Manager *Boat Patron

As chief patron of the M/DCA "Sheenly Joy 1," albeit an


Respondent's duties as the Administration Manager include
management of the administrative assistants who are unlicensed one, petitioner was tasked to take complete charge
and command of the vessel and perform the responsibilities and
assigned to the division heads, in so far as their administrative
duties of a ship captain.
functions are concerned.

She also takes charge of the implementation of company Petitioner, an employee who falls squarely within the category
rules on housekeeping and cleanliness, oversees the of "officers or members of a managerial staff," is thus exempted
security of the premises and the sensitive areas of the from payment of overtime pay, premium pay for holidays and
company, monitors the inventory of company property, rest days and service incentive leave pay.
and ensures the timely provision of supplies and
equipment. Therefore, the labor arbiter was correct in holding that petitioner
was not entitled to overtime pay, legal holiday pay, premium pay
for holidays and rest days
The position of an Administration Manager may thus be
properly considered as a managerial position, being a head of
Association of Marine Officers and Seamen of Reyes and
administrative assistants of other divisions, and because of the Lim Co. v. Laguesma; GR 107761, December 27, 1994.
performance of work directly related to management *major patron, minor patron, chief mate, and chief engineer
policies and company rules
Petitioner claims that the marine officers in question must
Penaranda v. BPC; GR 159577, May 3, 2006. possess the power to lay down and formulate management
policies aside from just executing such policies.
1.To supply the required and continuous steam to all
consuming units at minimum cost. Public respondent committed no error in concluding that the
2. To supervise, check and monitor manpower positions of major patron, minor patron, chief mate, and chief
workmanship as well as operation of boiler and engineer are managerial because the job descriptions on record
accessories. disclose that:
3. To evaluate performance of machinery and manpower.
4. To follow-up supply of waste and other materials for fuel. the major patron's duties include taking complete charge and
5. To train new employees for effective and safety white command of the ship and performing the responsibilities and
working. duties of a ship captain; the minor patron also commands the
6. Recommend parts and suppliers purchases. vessel, plying the limits of inland waterways, ports and
7. To recommend personnel actions such as: promotion, estuaries; the chief mate performs the functions of an executive
or disciplinary action. officer next in command to the captain; and the chief marine
8. To check water from the boiler, feedwater and softener, engineer takes over-all charge of the operation of the ship's
regenerate softener if beyond hardness limit. mechanical and electrical equipment.
9. Implement Chemical Dosing.
10. Perform other task as required by the superior from time to The functions which these officers discharge pertain to the
time navigation of the vessel. Even if there are advanced
communications equipment on board, the importance of the
The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 position of the officers in assessing risks and evaluating the
illustrates that petitioner was a member of the managerial vessel's situation remains indisputable. The exercise of
staff. His duties and responsibilities conform to the definition of discretion and judgment in directing a ship's course is as
a member of a managerial staff under the Implementing Rules. much managerial in nature as decisions arrived at in the
Petitioner supervised the engineering section of the steam plant confines of the more conventional board room or executive
boiler. His work involved overseeing the operation of the office.
machines and the performance of the workers in the
engineering section. This work necessarily required the use of National Sugar Refineries Corporation v. NLRC; GR
discretion and independent judgment to ensure the proper 101761; March 24, 1993
functioning of the steam plant boiler.
The NLRC affirmed the decision of the labor arbiter on the
As supervisor, petitioner is deemed a member of the ground that the members of respondent union [supervisory
managerial staff. employees] are not managerial employees, as defined under
Article 212 (m) of the Labor Code and, therefore, they are
Noteworthy, even petitioner admitted that he was a supervisor. entitled to overtime, rest day and holiday pay.
– In his Position Paper, he stated that he was the foreman
responsible for the operation of the boiler. Art. 212 [now 219] (m) is not the proper standard to
– The term foreman implies that he was the representative of determine supervisory employees’ entitlement to labor
management over the workers and the operation of the standard benefits..
department. Petitioner's evidence also showed that he was the The distinction made by respondent NLRC on the basis of
supervisor of the steam plant. His classification as supervisors whether or not the union members are managerial employees,
is further evident from the manner his salary was paid. to determine the latter's entitlement to the questioned benefits,
He belonged to the 10% of respondent's 354 employees who is misplaced and inappropriate.
were paid on a monthly basis; the others were paid only on a
daily basis. It is admitted that these union members are supervisory
employees xxx. Hence, to distinguish them from a managerial

19
employee, as defined either under Articles 82 or 212 (m) of the thereof, and ministers exclusively to the personal comfort and
Labor Code, is puerile and in efficacious. enjoyment of the employer’s family.

The controversy actually involved here seeks a determination The definition cannot be interpreted to include house helper or
of whether or not these supervisory employees ought to be laundry women working in staffhouses of a company, like
considered as officers or members of the managerial staff. private respondent who attends to the needs of the company’s
guest and other persons availing of said facilities.
The distinction, therefore, should have been made along that
line and its corresponding conceptual criteria The mere fact that the house helper or domestic servant is
working within the premises of the business of the
 3rd type of excluded employees: Domestic servants and employer and in relation to or in connection with its
persons in the personal service of another business, as in its staffhouses for its guest or even for its
officers and employees, warrants the conclusion that such
 Coverage provisions in Book III of the Rules to house helper or domestic servant is and should be
Implement the Labor Code: considered as a regular employee.

Section 2(d), Rule I – Hours of Work  4th type of excluded employees: Workers who are paid by
SECTION 2. Exemption. — The provisions of this Rule shall not results.
apply to the following persons if they qualify for exemption
under the conditions set forth herein:  Read the following provisions in Book III of the Rules to
(d) Domestic servants and persons in the personal service of Implement the Labor Code:
another if they perform such services in the employer's home
which are usually necessary or desirable for the maintenance
Section 2(e), Rule I – Hours of Work
and enjoyment thereof, or minister to the personal comfort,
SECTION 2. Exemption. — The provisions of this Rule shall not
convenience, or safety of the employer as well as the members
apply to the following persons if they qualify for exemption
of his employer's household.
under the conditions set forth herein:
(e) Workers who are paid by results, including those who are
Section 1(c), Rule II- Night Shift Differential
paid on piece-work, "takay," "pakiao" or task basis, and other
SECTION 1. Coverage. — This Rule shall apply to all
non-time work if their output rates are in accordance with the
employees except:
standards prescribed under Section 8, Rule VII, Book Three of
(c) Domestic helpers and persons in the personal service of
these regulations, or where such rates have been fixed by the
another;
Secretary of Labor and Employment in accordance with the
aforesaid Section
Section 7, Rule III – Weekly Rest Periods
Section 1(e), Rule II - Night Shift Differential
Section 1(c), Rule IV - Holidays with Pay
SECTION 1. Coverage. — This Rule shall apply to all
SECTION 1. Coverage. — This Rule shall apply to all
employees except:
employees except:
(e) Field personnel and other employees whose time and
(c) Domestic helpers and persons in the personal service of
performance is unsupervised by the employer including those
another;
who are engaged on task or contract basis, purely commission
basis, or those who are paid a fixed amount for performing work
Section 1(b), Rule V - Service Incentive Leave
irrespective of the time consumed in the performance thereof.
SECTION 1. Coverage. — This Rule shall apply to all
employees except:
Section 1 & 7(a), Rule III - Weekly Rest Periods
(b) Domestic helpers and persons in the personal service of
SECTION 1. General statement on coverage. — This Rule shall
another;
apply to all employers whether operating for profit or not,
including public utilities operated by private persons.
 Considered as a special group of employees. Terms and
conditions of employment governed by RA 10361 (Batas
SECTION 7. Compensation on rest day/Sunday/holiday. —
Kasambahay), which repealed Chapter III, Title III, Book III,
(a) Except those employees referred to under Section 2, Rule I,
Labor Code. [We will discuss the rights of kasambahays
Book Three, an employee who is made or permitted to work on
when we tackle the special groups of employees.]
his scheduled rest day shall be paid with an additional
CASE compensation of at least 30% of his regular wage. An employee
shall be entitled to such additional compensation for work
Apex Mining Company, Inc. v. NLRC; GR 94951, April 22, performed on a Sunday only when it is his established rest day.
1991.
Section 1(e) & 8(b), Rule IV - Holidays with Pay
Private respondent Sinclita Candida was employed by SECTION 1. Coverage. — This Rule shall apply to all
petitioner Apex Mining Company, Inc. to perform laundry employees except:
services at its staff house.; During work, she met an accident (e) Field personnel and other employees whose time and
performance is unsupervised by the employer including those
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as who are engaged on task or contract basis, purely commission
amended, the term “house helper” as used herein is basis, or those who are paid a fixed amount for performing work
synonymous to the term “domestic servant” and shall refer to irrespective of the time consumed in the performance thereof.
any person, whether male or female, who renders services in SECTION 8. Holiday pay of certain employees.
and about the employer’s home and which services are usually (b) Where a covered employee, is paid by results or output,
necessary or desirable for the maintenance and enjoyment such as payment on piece work, his holiday pay shall not be
less than his average daily earnings for the last seven (7) actual

20
working days preceding the regular holiday; Provided, piece-rate basis does not negate their status as regular
However, that in no case shall the holiday pay be less than the employees of private respondents
applicable statutory minimum wage rate.
Auto Bus Transport Systems, Inc. v. Bautista; G.R. No.
Section 1(e), Rule V - Service Incentive Leave 156367, May 16, 2005.
SECTION 1. Coverage. — This rule shall apply to all employees
except: Respondent Antonio Bautista has been employed by petitioner
(e) Those who are already enjoying the benefit herein provided; Auto Bus Transport Systems, Inc. (Autobus), as driver-
conductor with travel routes Manila-Tuguegarao
IN RELATION TO FF CASES
SC: Respondent is entitled to Service Incentive Leave
Labor Congress of the Philippines v. NLRC; GR 123938,
May 21, 1998. It is necessary to stress that the definition of a "field personnel"
is not merely concerned with the location where the employee
Piece workers paid on a pakiao basis regularly performs his duties but also with the fact that the
employee’s performance is unsupervised by the employer. As
Petitioners are entitled to the benefits namely, holiday pay, discussed above, field personnel are those who regularly
premium pay, 13th month pay and service incentive leave. perform their duties away from the principal place of business
of the employer and whose actual hours of work in the field
First, as to the nature of petitioners tasks, their job of repacking cannot be determined with reasonable certainty. Thus, in order
snack food was necessary or desirable in the usual business of to conclude whether an employee is a field employee, it is also
private respondents, who were engaged in the manufacture and necessary to ascertain if actual hours of work in the field can be
selling of such food products. determined with reasonable certainty by the employer. In so
doing, an inquiry must be made as to whether or not the
Second, petitioners worked for private respondents throughout employee’s time and performance are constantly supervised by
the year, their employment not having been dependent on a the employer.
specific project or season.
It is of judicial notice that along the routes that are plied by these
Third, the length of time that petitioners worked for private bus companies, there are its inspectors assigned at strategic
respondents. places who board the bus and inspect the passengers, the
punched tickets, and the conductor’s reports. There is also the
Thus, while petitioner’s mode of compensation was on a per mandatory once-a-week car barn or shop day, where the bus is
piece basis, the status and nature of their employment was that regularly checked as to its mechanical, electrical, and hydraulic
of regular employees. aspects, whether or not there are problems thereon as reported
by the driver and/or conductor. They too, must be at specific
Petitioners are beyond the ambit of exempted persons and are place as specified time, as they generally observe prompt
therefore entitled to overtime pay. departure and arrival from their point of origin to their point of
destination. In each and every depot, there is always the
Lambo v. NLRC; GR 111042, October 26, 1999. Dispatcher whose function is precisely to see to it that the
bus and its crew leave the premises at specific times and
arrive at the estimated proper time. These, are present in the
The awards for overtime pay, holiday pay and 13th month pay
case at bar. The driver, the complainant herein, was
are in accordance with our finding that petitioners are regular
therefore under constant supervision while in the
employees, although paid on a piece-rate basis
performance of this work. He cannot be considered a field
personnel.
The Court pointed out that there are 2 categories of employees
paid by results:
(1) Those whose time and performance are supervised by the  5th type of excluded employees: Field Personnel
employer.
CASES
Here, there is an element of control and supervision over the
manner as to how the work is to be performed. San Miguel Brewery, Inc. v. Democratic Labor
Organization; GR L-18353, July 31, 1963.
A piece-rate worker belongs to this category especially if he
performs his work in the company premises. It is contended that since the employees concerned are paid a
commission on the sales they make outside of the required 8
(2) Those whose time and performance are unsupervised. hours besides the fixed salary that is paid to them, the Court of
Industrial Relations erred in ordering that they be paid an
Here, the employer’s control is over the result of the work. overtime compensation as required by the Eight-Hour Labor
Law for the reason that the commission they are paid already
Workers on pakyao and takay basis belong to this group. Both takes the place of such overtime compensation. Indeed, it is
classes of workers are paid per unit accomplished. Petitioners claimed, overtime compensation is an additional pay for work
belong to the first category, i.e., supervised employees. or services rendered in excess of 8 hours a day by an
employee, and if the employee is already given extra
In this case, private respondents exercised control over the compensation for labor performed in excess of 8 hours a day,
work of petitioners. As tailors, petitioners worked in the he is not covered by the law. His situation, the company
company’s premises from 8:00 a.m. to 7:00 p.m. daily, including contends, can be likened to an employee who is paid on piece-
Sundays and holidays. The mere fact that they were paid on a work, "pakiao", or commission basis, which is expressly
excluded from the operation of the Eight-Hour Labor Law.

21
3. To minimize unemployment by forcing employers, in cases
The remaining point to be determined refers to the claim for pay where more than 8-hour operation is necessary, to utilize
for Sundays and holidays for service performed by some different shifts.
claimants who were watchmen or security guards. It is
contended that these employees are not entitled to extra pay  Eight-Hour Labor Law: “designed not only to safeguard the
for work done during these days because they are paid on a health and welfare of the laborer or employee, but in a way
monthly basis and are given one day off which may take the to minimize unemployment by forcing employers, in cases
place of the work they may perform either on Sunday or any where more than 8-hour operation is necessary, to utilize
holiday. different shifts of laborers or employees working only for
eight hours each.” (Manila Terminal Co., Inc. v. Court of
We disagree with this claim because it runs counter to law. Industrial Relations; GR L-4148, July 16, 1952.)
Section 4 of Commonwealth Act No. 444 expressly provides
that no person, firm or corporation may compel an employee or  Meaning of “day”; “week”.
laborer to work during Sundays and legal holidays unless he is
paid an additional sum of 25% of his regular compensation. This  “For purposes of this Rule a "day" shall mean a work day
proviso is mandatory, regardless of the nature of compensation. of twenty-four (24) consecutive hours beginning at the
The only exception is with regard to public utilities who perform same time each calendar year. A "week" shall mean the
some public service. work of 168 consecutive hours, or seven consecutive 24-
hour work days, beginning at the same hour and on the
Union of Filipro Employees v. Vivar, Jr.; GR 79255, January same calendar day each calendar week.” (Section 5, Rule
20, 1992. I-A, Book III, Rules to Implement the Labor Code.)

Sales Personnel are not entitled to holiday pay Section 2(e), Rule I, Book III
SECTION 8. Payment by result.
Under Article 82, field personnel are not entitled to holiday pay.
(a) On petition of any interested party, or upon its initiative, the
Said article defines field personnel as "non-agritultural
Department of Labor shall use all available devices, including
employees who regularly perform their duties away from the
the use of time and motion studies and consultation with
principal place of business or branch office of the employer and
representatives of employers' and workers' organizations,
whose actual hours of work in the field cannot be determined
to determine whether the employees in any industry
with reasonable certainty.”
enterprise are being compensated in accordance with the
The law requires that the actual hours of work in the field be minimum wage requirements of this Rule. (Rule VII, Book
reasonably ascertained. The company has no way of III)
(b) The basis for the establishment of rates for piece, output or
determining whether or not these sales personnel, even if they
contract work shall be the performance of an ordinary worker
report to the office before 8:00 a.m. prior to field work and come
of minimum skill or ability
back at 4:30 p.m, really spend the hours in between in actual
(c) An ordinary worker of minimum skill or ability is the average
field work.
worker of the lowest producing group representing 50% of
the total number of employees engaged in similar
Further, the requirement that, “Actual hours of work in the field
employment in a particular establishment, excluding learners,
cannot be determined with reasonable certainty" must be read
in conjunction with Rule IV, Book III of the Implementing Rules apprentices and handicapped workers employed therein.

At what time should a workday begin?


ARTICLE 83. NORMAL HOURS OF WORK
 the Court will not interfere with the business judgment
The normal hours of work of any employee shall not exceed of an employer in the exercise of its prerogative to devise
eight (8) hours a day. means to improve its operation, provided that it does not
violate the law, CBAs, and the general principles of
Health personnel in cities and municipalities with a population justice and fair play.
of at least one million (1,000,000) or in hospitals and clinics with
a bed capacity of at least one hundred (100) shall hold regular  We have thus held that management is free to regulate,
office hours for eight (8) hours a day, for five (5) days a week, according to its own discretion and judgment, all aspects
exclusive of time for meals, except where the exigencies of the of employment, including hiring, work assignments,
service require that such personnel work for six (6) days or forty- working methods, time, place and manner of work,
eight (48) hours, in which case, they shall be entitled to an processes to be followed, supervision of workers, working
additional compensation of at least thirty percent (30%) of their regulations, transfer of employees, work supervision,
regular wage for work on the sixth day. For purposes of this layoff of workers and discipline, dismissal, and recall of
Article, “health personnel” shall include resident physicians, workers. (Manila Jockey Club Employees Labor Union v.
nurses, nutritionists, dietitians, pharmacists, social workers, MJCI; GR 167760; March 7, 2007)
laboratory technicians, paramedical technicians, psychologists,
midwives, attendants and all other hospital  “The right to fix the work schedules of the employees rests
or clinic personnel. principally on their employer.” (Sime Darby Pilipinas, Inc. v.
NLRC; GR 119205, April 15, 1998.)
3 reasons behind the 8 hour workday:
 Reduction of work hours:
1. To protect the health and welfare of employees;  “The Court is convinced from the records now before it,
2. To afford the employees adequate time to lead richer and that there was no unfair labor practice. As found by the
more fruitful, meaningful lives and to be able to participate NLRC, the private respondents themselves never
intelligently in public concerns; and questioned the existence of an economic crisis but, in fact,

22
admitted its existence. There is basis for the petitioner's 
The adoption of the flexible work arrangements provided
contentions that the reduction of work schedule was herein shall in no case result in diminution of existing
temporary, that it was taken only after notice and benefits of the employees.
consultations with the workers and supervisors, that a  The adoption of flexible work arrangements is being
consensus was reached on how to deal with deteriorating considered to:
economic conditions and reduced sales and that the – improve business competitiveness and productivity and
temporary reduction of working days was a more humane – give employers and employees flexibility in fixing hours
solution instead of a retrenchment and reduction of of work compatible with business requirements and the
personnel. The petitioner further points out that this is in employees' need for balanced work life.
consonance with the collective bargaining agreement
between the employer and its employees.” (Philippine DOLE Department Order No. 2, series of 2009.
Graphic Arts, Inc. v. NLRC; GR 80737, September 29,
1988.)  Compressed workweek refers to one where

 “financial losses must be shown before a company can – the normal workweek is reduced to less than six (6) days
validly opt to reduce the work hours of its employees.” but the total number of work hours of 48 hours per week
(Linton Commercial Co., Inc. v. Hellera; G.R. No. shall remain. (can be 5 days or 4 days)
163147, October 10, 2007.) – The normal workday is increased to more than eight hours but
not to exceed twelve hours, without corresponding overtime
“Work Day” premium.
– The concept can be adjusted accordingly depending on the
 "day" shall mean a work day of twenty-four (24) normal workweek of the company pursuant to the provisions of
consecutive hours beginning at the same time each Department Advisory No. 02, series of 2004, dated 2 December
calendar day. 2004.
 Not necessarily a calendar day.
*fixed hours CWW under DOLE Advisory No. 02, series of 2004.
 May be used in all establishments
ETR to the GR that work hours are fixed – except those
- Flexible work schedule for solo parents. 1. in the construction industry,
2. in health services,
Section 6, R.A. 8972. 3. in occupations requiring heavy manual labor, or
Section 6. Flexible Work Schedule. - The employer shall 4. GR: in occupations or workplaces in which workers are
provide for a flexible working schedule for solo parents: exposed, to airborne contaminants, human carcinogens,
Provided, That the same shall not affect individual and company substances, chemicals or noise that exceed threshold limit
productivity: Provided, further, That any employer may request values or tolerance levels for an eight-hour workday as
exemption from the above requirements from the DOLE on prescribed under existing Occupational Safety and Health
certain meritorious grounds. Standards (OSHS) UNLESS you have certificate that it is alright
to expose them to these noise, etc.
DOLE Advisory No. 04-10
 In the absence of proof of:
• In view of the rapid technological innovations, the 1. voluntary agreement; or 2. safety and health certification,
continuing streamlining and transformation of the work  Applicable to firms using substances, chemicals and
processes brought about by the globalization phenomena, processes or operating under conditions where there are
this Advisory is being issued to assist and guide employers and airborne contaminants, human carcinogens, or noise
employees in the implementation of various flexible work prolonged exposure to which may pose hazards to the
arrangements xxx. employees’ health and safety.
 The employer shall pay the employees concerned any
• The adoption of flexible work arrangements is being overtime pay that may be owing to them as if the CWW
considered to scheme did not exist.
– improve business competitiveness and productivity and  If it turns out that work beyond eight hours is not consistent
– give employers and employees flexibility in fixing hours of with OSHS, the parties shall immediately revert to a
work normal eight-hour workday.

• compatible with business requirements and the employees' DOLE Advisory No. 04-10
need for balanced work life. Another form of flexi-time arrangement:
*more time of work away from home; people wanting more work • Gliding or Flexi-time schedule refers to one where the
balance employees are required to complete the core workhours in the
establishment but are free to determine their arrival and
 Flexible work arrangements in times of economic departure time.
difficulties and national emergencies.
• Flexi-holidays schedule refers to one where the employees
 Refer to alternative arrangements or schedules other than agree to avail the holidays at some other days provided there is
the traditional or standard work hours, workdays and no diminution of existing benefits as a result of such
workweek. The effectivity and implementation of any of arrangement.
the flexible work arrangements shall be based on • The employers and the employees may likewise explore other
voluntary agreements between the employer and the alternative work arrangements under any agreement and
employees. company policy or practice in accordance with existing laws and
regulations.

23
STA MARIA: for example: in US, they don’t celebrate Ninoy DOLE Explanatory Bulletin on Part-Time Employment
Aquino Day. So sasabihin ng ER mo, sige wag ka na lang dated January 2, 1996.
pumasok on that day.
Part-time work is defined by ILO as "a single, regular or
Key differences from Dept. Advisory No. 02-09 voluntary form of employment with hours of work
substantially shorter than those considered as normal in
• FWAs under DA 02-09 are premised on the existence of the establishment."
economic difficulties and national emergencies – stop gap
measure This definition excludes certain forms of employment which
• FWAs under DA 02-10 are premised on rapid technological although referred to as part-time work, are in particular,
innovations and globalization. irregular, temporary or intermittent employment, or cases where
• FWAs under DA 02-09 are temporary. hours of work have been temporarily reduced for economic,
• No similar requirement for FWAs under DA 02-10. technical or structural reasons.
• FWAs under DA 02-09 include arrangements to reduce
working time such as – Part-time work may take different forms depending on the
– Reduction of workdays agreed hours of work in a day, the days of work in a week or
– Rotation of workers other reference periods.
– Forced leave
In the Philippines, however, the two most common and
CASES acceptable forms are four (4) hours work per day and weekend
work or two (2) full days per week.
Bislig ng Manggagawa sa Tryco v. NLRC; GR 151309,
October 15, 2008. xxx for any reduction of hours of work substantially less than
*BENEFITS TO WORKERS the normal, the employer may proportionately decrease the
daily wage and wage-related benefits granted by law.
Workers favor the scheme considering that it would mean
MAXIMUM HOURS OF WORK
– savings on the increasing cost of transportation fares for at
least one (1) day a week; PUB drivers and conductors
– savings on meal and snack expenses; - 12 hrs per 24 hr period
movie and television industry worker/talent
– longer weekends, or an additional 52 off-days a year, that can
- 12 hrs per 24 hr period; if 60 y/o or older: 8 hrs
be devoted to rest, leisure, family responsibilities, studies and
other personal matters, and sea farers on board ships engaged in domestic shipping
– that it will spare them for at least another day in a week from - 14 hrs per 24 hrs/77 hrs per 7 days
certain inconveniences that are the normal incidents of
employment, such as commuting to and from the workplace, ARTICLE 84. HOURS WORKED
travel time spent, exposure to dust and motor vehicle fumes,
dressing up for work, etc. Hours worked shall include:

(a) all time during which an employee is required to be on duty


Linton Commercial Co., Inc. v. Hellera; supra.
or to be at a prescribed workplace; and
As previously stated, financial losses must be shown before
(b) all time during which an employee is suffered or permitted
a company can validly opt to reduce the work hours of its
to work.
employees. However, to date, no definite guidelines have yet
been set to determine whether the alleged losses are sufficient Rest periods of short duration during working hours shall be
to justify the reduction of work hours. If the standards set in counted as hours worked.
determining the justifiability of financial losses under Article 283
(i.e., retrenchment) or Article 286 (i.e., suspension of work) of
the Labor Code were to be considered, petitioners would end Sections 3 to 6, Rule I, Book III, Rules to Implement the
up failing to meet the standards. Labor Code

On the one hand, Article 286 applies only when there is a bona SECTION 3. Hours worked. — The following shall be
fide suspension of the employers operation of a business or considered as compensable hours worked:
undertaking for a period not exceeding six (6) months. Records (a) All time during which an employee is required to be on duty
show that Linton continued its business operations during the or to be at the employer's premises or to be at a prescribed work
effectivity of the compressed workweek, which spanned more place; and
than the maximum period. (b) All time during which an employee is suffered or permitted
to work.
On the other hand, for retrenchment to be justified, any claim of
actual or potential business losses must satisfy the following SECTION 4. Principles in determining hours worked. — The
standards: (1) the losses incurred are substantial and not de following general principles shall govern in determining whether
minimis; (2) the losses are actual or reasonably imminent; (3) the time spent by an employee is considered hours worked for
the retrenchment is reasonably necessary and is likely to be purposes of this Rule:
effective in preventing the expected losses; and (4) the alleged
losses, if already incurred, or the expected imminent losses (a) All hours are hours worked which the employee is required
sought to be forestalled, are proven by sufficient and convincing to give his employer, regardless of whether or not such hours
evidence. Linton failed to comply with these standards. are spent in productive labor or involve physical or mental
 Part-time workers. exertion.
*compensable

24
* Brown-outs not exceeding 20 minutes = compensable.
(Policy Instructions No. 36; May 22, 1978.)
STA MARIA: para wala nang tatawad kaya may policy na

SECTION 5. Waiting time. —


(a) Waiting time spent by an employee shall be considered as
working time if waiting is an integral part of his work or the
employee is required or engaged by the employer to wait.
STA MARIA: waiters are required to wait
Compensable ba kapag naghihintay for fingerprint?

(b) An employee who is required to remain on call in the


employer's premises or so close thereto that he cannot use the
time effectively and gainfully for his own purpose shall be
considered as working while on call. An employee who is not
required to lea ve word at his home or with company
officials where he may be reached is not working while on
call.
*shall be considered as working while on call

TRAVEL TIME

(b) An employee need not leave the premises of the work place Travel from home to work
in order that his rest period shall not be counted, it being enough • Regular workday = 8am to 5pm.
that he stops working, may rest completely and may leave his • Home to work travel = 6am to 730am
work place, to go elsewhere, whether within or outside the – Not compensable
premises of his work place. • Work to home travel = 5:01pm to 8pm
– Not compensable
* Rest periods of short duration during working hours shall • If called back at 8:30pm, all travel time is compensable.
be counted as hours worked. (Art. 84)
* Rest periods or coffee breaks running from five (5) to Travel that is all in the day’s work = travel within the usual
twenty (20) minutes shall be considered as compensable working hours
working time. (Sec. 7, Rule I, Book III) • Travel from jobsite to jobsite during workday is compensable.
What if you work on a boat? • Travel from main workplace (5pm) to jobsite A (6pm) to jobsite
B (7pm) to jobsite C (8pm) to main workplace (9pm) is
Luzon Stevedoring Co. v. Luzon Marine Dept. Union, (GR compensable.
L-9265; April 29, 1957) – But, if instead of travelling back to main workplace, employee
decides to go home from jobsite C, travel time from 8pm no
xxx a laborer need not leave the premises of the factory, shop longer compensable.
or boat in order that his period of rest shall not be counted, it STA MARIA: travel is part of your job
being enough that he "cease to work", may rest completely and
leave or may leave at his will the spot where he actually stays Travel away from home
while working, to go somewhere else, whether within or • Travel that keeps an employee away from home overnight.
outside the premises of said factory, shop or boat. • Ex. Employee travelled away from home from 7am to 7pm.
– 7am to 7:59 = NOT compensable
If these requisites are complied with, the period of such rest – 8am to 12pm; 1:01pm to 5pm = compensable
shall not be counted. – 12:01 to 1pm = NOT compensable
• All work required while travelling is compensable.
(c) If the work performed was necessary, or it benefited the
SECTION 6. Lectures, meetings, training programs. —
employer, or the employee could not abandon his work at the
Attendance at lectures, meetings, training programs, and other
end of his normal working hours because he had no
similar activities shall not be counted as working time if all of
replacement, all time spent for such work shall be considered
the following conditions are met:
as hours worked, if the work was with the knowledge of his
(a) Attendance is outside of the employee's regular working
employer or immediate supervisor.
hours;
*usually covered: security guards
(b) Attendance is in fact voluntary; and
STA MARIA: what if wala pa yung kapalit mo? kapag umalis ka (c) The employee does not perform any productive work during
don, pwede manakawan. you cannot leave your work. such attendance
Necessary ba? Yes. Did it benefit the ER? Yes.
*compensable if alam ng ER mo. so you should inform him na
Attendance in CBA negotiations
wala pa yung kapalit mo. Di kailangan ng approval ng ER GR: NOT compensable
ETR:
(d) The time during which an employee is inactive by reason of
• company policy or practice; CBA stipulation; Employer agrees
interruptions in his work beyond his control shall be
considered working time either if the imminence of the
Attendance in case hearings against employer
resumption of work requires the employee's presence at the –NOT compensable
place of work or if the interval is too brief to be utilized effectively
and gainfully in the employee's own interest.
Attendance in strikes

25
GR: NOT compensable interests of the employer, but ultimately for the employees to
ETR: company practice or policy or CBA stipulation. indicate their availability or nonavailability for work during every
working day.”
J.P. Heilbronn Co. v. National Labor Union (GR L-5121,
January 30, 1953) ARTICLE 85. MEAL PERIODS

It is hardly fair or just for an employee or laborer to fight or Subject to such regulations as the Secretary of Labor may
litigate against his employer on the employer's time. prescribe, it shall be the duty of every employer to give his
Grievances employees not less than sixty (60) minutes time-off for their
regular meals.
Time spent in adjusting or resolving a grievance between the
employer and the employees during the time the employees are SECTION 7. Meal and Rest Periods.
required by the employer to be on the work premises is
considered working time. • GR: Every employer shall give his employees, regardless of
sex, not less than one (1) hour time-off for regular meals,
But in the event that a bona fide union is involved, the counting • EXCEPT in the following cases when a meal period of not
of such time will, as a matter of enforcement policy, be left to less than twenty (20) minutes may be given by the employer
the process of collective bargaining or to the custom or practice provided that such shorter meal period is credited as
under the CBA. compensable hours worked of the employee:

Preliminary Activities • ETR to 1-hour rule:


1. Where the work is non-manual work in nature or does not
involve strenuous physical exertion;
2. Where the establishment regularly operates not less than
sixteen (16) hours a day;
3. In case of actual or impending emergencies or there is
urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the employer would
otherwise suffer; and
4. Where the work is necessary to prevent serious loss of
perishable goods.
• Minimum of 20 minutes and compensable.

May employer change 30-minute compensable lunch


break back to 1 hour NON compensable lunch break?

Sime Darby Pilipinas v. NLRC; GR 119205, April 15, 1998.

SC: YES.

With the new work schedule, the employees are now given a
one-hour lunch break without interruption from their employer.
For a full one-hour undisturbed lunch break, the employees can
freely and effectively use this hour not only for eating but also
for their rest and comfort which are conducive to more efficiency
and better performance in their work. Since the employees are
Arica v. NLRC; GR 78210, February 28, 1989. no longer required to work during this one-hour break,
there is no more need for them to be compensated for this
"Furthermore, the thirty (30)-minute assembly is a deeply- period.
rooted, routinary practice of the employees, and the
proceedings attendant thereto are not infected with National Development Company v CIR; GR. No. L-15422,
complexities as to deprive the workers the time to attend to November 30, 1962
other personal pursuits. They are not new employees as to
require the company to deliver long briefings regarding their The employees of National Development Co., a government-
respective work assignments. owned and controlled corporation are engaged on an 8-hour
work schedule, including the one-hour mealtime period.
Their houses are situated right on the area where the farms are Although there was a one-hour mealtime, petitioner
located, such that after the roll call, which does not necessarily nevertheless credited the workers with eight hours of work for
require the personal presence, they can go back to their houses each shift and paid them for the same number of hours.
to attend to some chores
Whether or not the mealtime breaks should be considered as
In short, they are not subject to the absolute control of the working time.
company during this period, otherwise, their failure to report in
the assembly time would justify the company to impose SC: YES. The legal working day for any person employed by
disciplinary measures. The CBA does not contain any provision another shall be of not more than eight hours daily. When the
to this effect; the record is also bare of any proof on this point. work is not continuous, the time during which the laborer is not
This, therefore, demonstrates the indubitable fact that the thirty working and can leave his working place and can rest
(30)- minute assembly time was not primarily intended for the completely shall not be counted. (Sec. 1, Com. Act No. 444-

26
Eight Hour Labor Law.) It will be noted that, under the law, the (a) Except employees referred to under Section 2 of this Rule,
idle time that an employee may spend for resting and during an employee who is permitted or suffered to work on special
which he may leave the spot or place of work though not the holidays or on his designated rest days not falling on regular
premises of his employer, is not counted as working time only holidays, shall be paid with an additional compensation as
where the work is broken or is not continuous. The CIR correctly premium pay of not less than thirty percent (30%) of his regular
concluded that work in petitioner company was continuous and wage. For work performed in excess of eight (8) hours on
therefore the mealtime breaks should be counted as working special holidays and rest days not falling on regular holidays,
time for purposes of overtime compensation. While it may be an employee shall be paid an additional compensation for the
correct to say that it is well-high impossible for an employee to overtime work equivalent to his rate for the first eight hours on
work while he is eating, yet under CA 444, such a time for eating a special holiday or rest day plus at least thirty percent (30%)
can be segregated or deducted from his work, if the same is not thereof.
continuous and the employee can leave his working place to (b) Employees of public utility enterprises as well as those
rest completely. The time cards show that the work was employed in non-profit institutions and organizations shall be
continuous and without interruption. There is also the evidence entitled to the premium and overtime pay provided herein,
adduced that the employees were not permitted to rest unless they are specifically excluded from the coverage of this
completely. Rule as provided in Section 2 hereof. (c) The payment of
additional compensation for work performed on regular holidays
shall be governed by Rule IV, Book Three, of these Rules.
ARTICLE 87. OVERTIME WORK
SECTION 10. Compulsory overtime work. — In any of the
Work may be performed beyond eight (8) hours a day provided following cases, an employer may require any of his employees
that the employee is paid for the overtime work, an additional to work beyond eight (8) hours a day, provided that the
compensation equivalent to his regular wage plus at least employee required to render overtime work is paid the
twenty-five percent (25%) thereof. Work performed beyond additional compensation required by these regulations:
eight hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours on a (a) When the country is at war or when any other national or
holiday or rest day plus at least thirty percent (30%) thereof. local emergency has been declared by Congress or the Chief
OT = regular wage x 1.25 Executive;
(b) When overtime work is necessary to prevent loss of life or
IN RE: SECTION 11. Computation of additional property, or in case of imminent danger to public safety due to
compensation. — For purposes of computing the additional actual or impending emergency in the locality caused by serious
compensation required by this Rule, the "regular wage" of an accident, fire, floods, typhoons, earthquake, epidemic or other
employee shall include the cash wage only, without disaster or calamities;
deduction on account of facilities provided by the (c) When there is urgent work to be performed on machines,
employer. installations, or equipment, in order to avoid serious loss or
damage to the employer or some other causes of similar nature;
May an employee be compelled to do overtime work? (d) When the work is necessary to prevent loss or damage to
perishable goods;
Compulsory OT (e) When the completion or continuation of work started before
• GR: No. the 8th hour is necessary to prevent serious obstruction or
• ETR: prejudice to the business or operations of the employer; or
– Art. 89, Labor Code; (f) When overtime work is necessary to avail of favorable
weather or environmental conditions where performance or
– Section 10, Rule I, Book III, Labor Code IRR
quality of work is dependent thereon. In cases not falling within
any of these enumerated in this Section, no employee may be
“In addition to the above, the labor arbiter and the NLRC
made to work beyond eight hours a day against his will.
sanctioned respondent's practice of offsetting rest day or
holiday work with equivalent time on regular workdays xxx.
Is the foregoing enumeration exclusive?
Applying by analogy the principle that overtime cannot be offset
YES. In cases not falling within any of these enumerated in this
by undertime, to allow off-setting would prejudice the worker.
Section, no employee may be made to work beyond eight hours
He would be deprived of the additional pay for the rest day work
a day against his will. (Sec. 10, Rule I, Book III, IRR)
he has rendered and which is utilized to offset his equivalent
time off on regular workdays. To allow City land to do so would
2008 Bar
be to circumvent the law on payment of premiums for rest day
and holiday work.” Lagatic v. NLRC; GR 121004, January 28, • Arnaldo, President of "Bisig" Union in Femwear Company,
1998. readied himself to leave exactly at 5:00 p.m. which was the end
of his normal shift to be able to send off his wife who was
scheduled to leave for overseas. However, the General
Sections 8, 9, 10, & 11, Rule I, Book III, Rules to Implement
Manager required him to render overtime work to meet the
the Labor Code company's export quota. Arnaldo begged off, explaining to
the General Manager that he had to see off his wife who was
SECTION 8. Overtime pay. — Any employee covered by this leaving to work abroad. The company dismissed Arnaldo for
Rule who is permitted or required to work beyond eight (8) hours insubordination. He filed a case for illegal dismissal. Decide
on ordinary working days shall be paid an additional (6%)
compensation for the overtime work in the amount equivalent to STA MARIA: Mayroon bang magpprevent na serious
his regular wage plus at least twenty-five percent (25%) thereof. obstruction…? OT may be compelled if the ER will suffer
serious prejudice.
SECTION 9. Premium and overtime pay for holiday and rest *export quota – maximum amount of goods that you can export
day work. —

27
Involuntary servitude?
Realda v. New Age Graphics, Inc. GR 192190; April 25, 2012 Overtime work consists of hours worked on a given day in
excess of the applicable work period, which here is eight (8)
This Court cannot likewise agree to the petitioners attempt to hours.
brush abide his refusal to render overtime work as It is not enough that the hours worked fall on disagreeable
inconsequential when graphics inc.’s order for him to do so is or inconvenient hours.
justified by the company’s contractual commitments to its client.
Such order is legal under Art. 89 of LC and pet unexplained In order that work may be considered as overtime work, the
refusal to obey is insubordination. hours worked must be in excess of and in addition to the
PESALA v NLRC; GR 105963, August 22, 1996 eight (8) hours worked during the prescribed daily work
* Built-in OT Pay to the agreed salary PROVIDED that the period, or the forty (40) hours worked during the regular work
min. of pay & parties expressly agreed to the Built-in week Monday thru Friday.

Angel V. Esquejo was hired by PESALA as a company guard. ARTICLE 88. UNDERTIME NOT OFFSET BY OVERTIME

Is an employee entitled to overtime pay for work rendered in Undertime work on any particular day shall not be offset by
excess of the regular eight-hour day given the fact that he overtime work on any other day. Permission given to the
entered into a contract of labor specifying a work-day of twelve employee to go on leave on some other day of the week shall
hours at a fixed monthly rate above the legislated minimum not exempt the employer from paying the additional
wage? compensation required in this Chapter.

SC: YES. Based on evidence, it appears that the basic salary Lagatic v. NLRC; GR 121004, January 28, 1998.
plus emergency allowance given to private respondent did not • “In addition to the above, the labor arbiter and the NLRC
actually include the overtime pay claimed by private sanctioned respondent's practice of offsetting rest day or
respondent. The Appointment Memorandum cannot be taken holiday work with equivalent time on regular workdays xxx.
and accorded credit as it is so worded in view of the ambiguity. • Applying by analogy the principle that overtime cannot be
While it is true that the complainant received a salary rate which offset by undertime, to allow off-setting would prejudice
is higher than the minimum provided by law, it does not however the worker.
follow that any additional compensation due the complainant • He would be deprived of the additional pay for the rest day
can be offset by his salary in excess of the minimum, especially work he has rendered and which is utilized to offset his
in the absence of an express agreement to that effect. To equivalent time off on regular workdays. To allow City land to
consider otherwise would be in disregard of the rule of non- do so would be to circumvent the law on payment of premiums
diminution of benefits which are above the minimum being for rest day and holiday work.”
extended to the employees. Furthermore, such arrangement is
likewise in disregard of the manner required by the law on how DOLE Advisory No. 04-10
overtime compensation must be determined. There is further • Flexi-holidays schedule refers to one where the employees
the possibility that in view of subsequent increases in the agree to avail the holidays at some other days provided there is
minimum wage, the existing salary for twelve (12) hours could no diminution of existing benefits as a result of such
no longer account for the increased wage level together with arrangement.
the overtime rate for work rendered in excess of eight hours.
ARTICLE 89. EMERGENCY OVERTIME WORK
May the ER and EE stipulate that the latter’s regular or
basic salary already includes the OT pay such that when Any employee may be required by the employer to perform
the EE actually works OT he cannot claim OT pay? overtime work in any of the following cases:
- Yes, provided the mathematical result shows that the agreed (a) When the country is at war or when any other national or
wage rate & OT pay, computed separately, are equal to or local emergency has been declared by the National Assembly
higher than the separate amounts legally due or the Chief Executive;
Entitled to OT Pay? (b) When it is necessary to prevent loss of life or property or in
• Regular working hours = 8am to 5pm; Monday to Friday. case of imminent danger to public safety due to an actual or
• Worked from 2pm to 8pm on Monday. impending emergency in the locality caused by serious
• Entitled to overtime pay? No. Worked for 6 hours only accidents, fire, flood, typhoon, earthquake, epidemic, or other
disaster or calamity;
Is it violative of Article 88? NO
ARTICLE 88. Undertime not offset by overtime. (c) When there is urgent work to be performed on machines,
• Undertime work on any particular day shall not be offset by installations, or equipment, in order to avoid serious loss or
overtime work on any other day. damage to the employer or some other cause of similar nature;
Entitled to OT Pay? (d) When the work is necessary to prevent loss or damage to
• Regular working hours = 8am to 5pm; Monday to Friday. perishable goods; and
• Worked from 2pm to 8pm on Monday. Worked from 4am to
6am; 8am to 12nn; and 1pm to 5pm on Tuesday. (e) Where the completion or continuation of the work started
*No. Worked for 8 hours only each day. Day is not before the eighth hour is necessary to prevent serious
necessarily calendar day obstruction or prejudice to the business or operations of the
employer.
Caltex Regular Employees v. Caltex (Phils), Inc. (GR
111359, August 15, 1995)

28
Any employee required to render overtime work under this and mental states, maternity cases or sanitorial care; or
Article shall be paid the additional compensation required in this infirmaries, nurseries, dispensaries, and such other similar
Chapter. names by which they may be designated

ARTICLE 90. COMPUTATION OF ADDITIONAL Covered Personnel


• all persons employed by any private or public hospital or
COMPENSATION
clinic
For purposes of computing overtime and other additional
• including, but not limited to:
remuneration as required by this Chapter, the “regular wage” of
an employee shall include the cash wage only, without – resident physicians, – nurses, – nutritionists, – dieticians,
– pharmacists, – social workers, – laboratory technicians
deduction on account of facilities provided by the employer.
– paramedical technicians, – psychologists, – midwives, and
– attendants.
SPECIAL RULES FOR HOSPITAL WORKERS
ARTICLE 86. NIGHT SHIFT DIFFERENTIAL
Rule I-A; Book III, IRR
Every employee shall be paid a night shift differential of not less
SECTION 5. Regular working hours. — The regular working than ten percent (10%) of his regular wage for each hour of
hours of any person covered by this Rule shall not be more than work performed between ten o’clock in the evening and six
eight (8) hours in any one day nor more than forty (40) hours o’clock in the morning.
in any one week.
RULE II, Book III, IRR - Night Shift Differential
SECTION 6. Regular working days. — The regular working
days of covered employees shall not be more than five days SECTION 1. Coverage. — This Rule shall apply to all
in a work week. The work week may begin at any hour and on
employees except: (a) Those of the government and any of its
any day, including Saturday or Sunday, designated by the political subdivisions, including government-owned and/or
employer. controlled corporations; (b) Those of retail and service
establishments regularly employing not more than five (5)
SECTION 7. Overtime work. — Where the exigencies of the
workers; (c) Domestic helpers and persons in the personal
service so require as determined by the employer, any service of another; (d) Managerial employees as defined in
employee covered by this Rule may be scheduled to work for Book Three of this Code; (e) Field personnel and other
more than five (5) days or forty (40) hours a week, provided that employees whose time and performance is unsupervised by the
the employee is paid for the overtime work an additional employer including those who are engaged on task or contract
compensation equivalent to his regular wage plus at least thirty basis, purely commission basis, or those who are paid a fixed
percent (30%) thereof, subject to the provisions of this Book on amount for performing work irrespective of the time consumed
the payment of additional compensation for work performed on in the performance thereof.
special and regular holidays and on rest days.
SECTION 2. Night shift differential. — An employee shall be
Key differences
paid night shift differential of no less than ten per cent (10%) of
• Work for more than 5 days a week already OT even if it does his regular wage for each hour of work performed between ten
not exceed 8 hours. o'clock in the evening and six o'clock in the morning.
• Work for more than 40 hours a week already OT even if it does
not exceed 8 hours a day. *SECTION 3. Additional compensation. — Where an
• OT pay is 30% more (instead of just 25%). employee is permitted or suffered to work on the period covered
after his work schedule, he shall be entitled to his regular wage
What is a “work week”? plus at least twenty-five per cent (25%) and an additional
amount of no less than ten per cent (10%) of such overtime
• A "week" shall mean the work of 168 consecutive hours, or rate for each hour or work performed between 10 p.m. to 6 a.m.
seven consecutive 24- hour work days, beginning at the same
hour and on the same calendar day each calendar week. SECTION 4. Additional compensation on scheduled rest
day/special holiday. — An employee who is required or
This Rule shall apply to:
permitted to work on the period covered during rest days and/or
(a) All hospitals and clinics, including those with a bed capacity special holidays not falling on regular holidays, shall be paid a
of less than one hundred (100) which are situated in cities or compensation equivalent to his regular wage plus at least thirty
municipalities with a population of one million or more (as
(30%) per cent and an additional amount of not less than ten
determined by the latest census); and (10%) per cent of such premium pay rate for each hour of work
(b) All hospitals and clinics with a bed capacity (not actual
performed.
occupancy) of at least one hundred (100), irrespective of the
size of the population of the city or municipality where they may SECTION 5. Additional compensation on regular holidays.
be situated. — For work on the period covered during regular holidays, an
employee shall be entitled to his regular wage during these
Hospitals or clinics (MEMORIZE!)
days plus an additional compensation of no less than ten (10%)
• a place devoted primarily to the maintenance and operation of per cent of such premium rate for each hour of work performed.
facilities for the diagnosis, treatment and care of individuals
suffering from illness, disease, injury, or deformity, or in need of SECTION 6. Relation to agreements. — Nothing in this Rule
obstetrical or other medical and nursing care. shall justify an employer in withdrawing or reducing any
• Either term shall also be construed as any institution, building, benefits, supplements or payments as provided in existing
or place where there are installed beds, or cribs, or bassinets individual or collective agreements or employer practice or
for twenty-four (24) hours use or longer by patients in the policy.
treatment of disease, injuries, deformities, or abnormal physical

29
shall be determined by the DOLE after consulting the labor
ARTICLES 154 to 161 (RA 10151) organizations and employers.
“Article 154. Coverage. - This chapter' shall apply to all
persons, who shall be employed or permitted or suffered to "During the periods referred to in this article:
work at night, except those employed in agriculture, stock "(i) A woman worker shall not be dismissed or given notice of
raising, fishing, maritime transport and inland navigation, during dismissal, except for just or authorized causes provided for in
a period of not less than seven (7) consecutive hours, including this Code that are not connected with pregnancy, childbirth and
the interval from midnight to five o'clock in the morning, to be childcare responsibilities.
determined by the Secretary of Labor and Employment, after "(ii) A woman worker shall not lose the benefits regarding her
consulting the workers' representative/labor organizations and status, seniority, and access to promotion which may attach to
employers. her regular night work position.
"'Night worker' means any employed person whose work "Pregnant women and nursing mothers may be allowed to work
requires performance of a substantial number of hours of night .at night only if a competent physician, other than the company
work which exceeds a specified limit. This limit shall be fixed by physician, shall certify their fitness to render night work, and
the Secretary of Labor after consulting the workers' specify, in the case of pregnant employees, the period of the
representative/labor organizations and employers." pregnancy that they can safely work.
"The measures referred to in this article may include transfer to
"Article 155. Health Assessment. - At their request, workers day work where this is possible, the provision of social security
shall have the right to undergo a health assessment without benefits or an extension of maternity leave.
charge and to receive advice on how to reduce or avoid health "The provisions of this article shall not leave the effect of
problems associated with their work: reducing the protection and benefits connected with maternity
"(a) Before taking up an assignment as a night worker; leave under existing laws."
"(b) At regular intervals during such an assignment; and
"(c) If they experience health problems during such, an "Article 159. Compensation. The compensation for night
assignment which are not caused by factors other than the workers in the form of working time, pay or similar benefits shall
performance of night work. recognize the exceptional nature of night work."
"With the exception of a finding of unfitness for night work, the
findings of such assessments shall not be transmitted to others "Article 160. Social Services. - Appropriate social services
without the workers' consent and shall not be used to their shall be provided for night workers and, where necessary, for
detriment." workers performing night work."

"Article 156. Mandatory Facilities. - Suitable first·aid facilities "Article 161. Night Work Schedules. - Before introducing
shall be made available for workers performing night work, work schedules requiring the services of night workers, the
including arrangements where such workers, where necessary, employer shall consult the workers' representatives/labor
can be taken immediately to a place for appropriate treatment. organizations concerned on the details of such schedules and
The employers are likewise required to provide safe and the forms of organization of night work that are best adapted to
healthful working conditions and adequate or reasonable the establishment and its personnel, as well as on the
facilities such as sleeping or resting quarters in the occupational health measures and social services which are
establishment and transportation from the work premises to the required. In establishments employing night workers,
nearest point of their residence subject to exceptions and consultation shall take place regularly.
guidelines to be provided by the DOLE."
2006 Bar
"Article 157. Transfer. - Night workers who are certified as unfit • Can an employer and an employee enter into an agreement
for night work, due to health reasons, shall be transferred, reducing or increasing the minimum percentage provided for
whenever practicable, to a similar job for which they are fit to night differential pay, overtime pay, and premium pay? 5%
work. STA MARIA: NO. that would be contrary to public policy –
"If such transfer to a similar job is not practicable, these workers freedom to stipulate
shall be granted the same benefits as other workers who are
unable to work, or to secure employment during such period. • Night differential is differentiated from overtime pay in that
"A night worker certified as temporarily unfit for night work shall – while overtime pay is given for overtime work done during
be given the same protection against dismissal or notice of day or night, night differential is given only for work done
dismissal as other workers who are prevented from working for between 10:00 p.m. and 6:00 a.m.
reasons of health."

"Article 158. Women Night Workers. - Measures shall be


taken to ensure that an alternative to night work is available to
women workers who would otherwise be called upon to perform
such work:
"(a) Before and after childbirth, for a period of at least sixteen
(16) weeks, which shall be divided between the time before and
after childbirth;
"(b) For additional periods, in respect of winch a medical
certificate IS produced stating that said additional periods are
necessary for the health of the mother or child:
"(1) During pregnancy;
"(2) During a specified time beyond the period, after childbirth
is fixed pursuant to subparagraph (a) above, the length of which

30

Das könnte Ihnen auch gefallen