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San Miguel Corp v. NLRC & Maliksi, GR No. 147566, Dec. 6, 2006 Manila Water Co., Inc. v. Pena, 434 SCRA 52 (2004)

The act if hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent. Regularization is a labor benefit that should apply to all qualified employees similarly situated and may not be denied merely because some employees were allegedly not parties to or were not impleaded in the voluntary arbitration case. It must be noted that the Court extended the benefit of regularization not only to the original complainants but also to those workers who are similarly situated to therein complainants. LIIKHA-PMPB v. Burlinggame corp., GR No. 162833, June 15, 2007

Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of the business. Mentioned sec. 5 of DO 18-02 which states the prohibition against labor-only contracting (see DO) Promo-girls were directly related to the principal business or operation of Burlingame. Marketing and selling of products is an essential activity to the main business of the principal. In labor-only contracting, the law creates an employer-employee relationship to prevent a circumvention of labor laws. The contractor is merely an agent of the principal employer and the latter is responsible to the employees of the laboronly contractor as if such employees had been directly employed by the principal employer. Coca-Cola Bottlers Phil., Inc. v. NLRC, 307 SCRA 131 (1999)

ACGI was engaged in labor-only contracting and as such, is considered merely an agent of the petitioner. In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive purpose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Private resp performed activities which were necessary or desirable to its principal trade or business. Thus, they were regular employees of petitioner regardless of whether the engagement was merely an accommodation of their request pursuant to Art. 280 (compare with Far East Bankblind employees). Art. 280: the provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. Under this provision, the evil sought to be prevented is singled out: agreements entered into precisely to circumvent security of tenure. It has no application where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought upon the employee and absent any circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less terms with no moral dominance whatever being exercised by the former over the latter. Under 279 of LC, an employee who is unjustly dismissed form work is entitled to reinstatement without loss of seniority rights and other privileges, and to his full back wages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. If reinstatement is no longer possible, the employer has the alternative of paying the employee his separation pay in lieu of reinstatement. Lanzaderas v. Amethyst Security & General Services, Inc.,

mentioned Singer Sewing Machine vs Drilon: the definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party shall render services for and in behalf of another for a consideration (no matter how necessary for the latters business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. Art 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees i.e. regular and casual for purposes of determining the right of an employee to certain benefits, to join or form a union or to security of tenure. Art 280 does not apply where the existence of an employment relationship is in dispute (compare with Manila Water) Painting jobs performed we sporadic. The infrequency or irregularity of assignments countervails Canonicatos submission that he was assigned to undertake the task for the whole year round.

The only time the indirect employer may be made solidarily liable with the contractor is when the contractor fails to pay his employees their wages and other benefits claimed. Security of tenure, although provided in the Constitution, does not give an employee an absolute vested right in a position as would deprive the company of its prerogative to change their assignment or transfer them where they will be most uselful. When a transfer is not unreasonable, nor inconvenient, nor prejudicial to an employee; and it doesn not involve a demotion in rank or

diminution of his pay, benefits, and other privileges, the employee may not complain that it amounts to a constructive dismissal.

just cause under 282, because the dismissal is imputable to the employee.

San Miguel Corporation v. Abella, 461 SCRA 392 (2005)

effect of finding: there being a finding of labor-only contracting, liability must be shouldered by either SMC (principal) or Sunflower (contractor) or shared by both. SMC however should be held solely liable for Sunflower became non-existent with the closure of the aquaculture of business of SMC (CA reason). In legitimate labor contracting, the law creates an employer-employee relationship for a limited purpose, i.e. to ensure that the employees are paid their wages. The principal employer becomes jointly and severally liable with the job contractor, only for the payment of the employees wages whenever the contractor fails to pay the same. Other than that, the principal employer is not responsible for any claim made by the employees. In labor-only contracting, the statute creates an employer-employee relationship for a comprehensive prupose: to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Retrenchment is a management prerogative consistently recognized and affirmed by this Court. It is, however, subject to faithful compliance with the substantive and procedural requirements laid down by law and jurisprudence. For retrenchment to be considered valid, the following substantial requirements must be met: the losses expected should be substantial and not merely de minimis in extent substantial losses apprehended must be reasonably imminent such as can be perceived objectively and in good faith by the employer the retrenchment must be reasonably necessary and likely to effectively prevent the expected losses the alleged losses, if already incurred, and the expected imminent losses sought to be forestalled, must be proved by sufficient and convincing evidence. SMC proved substantial business reverses justifying retrenchment of its employees For termination due to retrenchment be valid, the law requires that written notices of the intended retrenchment be served by the employer on the worker and on the DOLE at least 1 month before the actual date of the retrenchment in order to give employees some time to prepare for the eventual loss of their jobs, as well as to give DOLE the opportunity to ascertain the verity of the alleged cause of termination. Where the dismissal is based on an authorized cause under Art 283 but the employer failed to comply with the notice requirement, the sanction should be stiff as the dismissal process was initiated by the employers exercise of his management prerogative, as opposed to a dismissal based on a

1) 2) 3) 4)

Almodiel v. NLRC, 223 SCRA 341 (1993)

Redundancy for purposes of our Labor Code, exists where the services of an employee are in excess of what is reasonably demanded by the actual requirements of the enterprise. The characterization of an employees services as no longer necessary or sustainable, and therefore, properly terminable, was an exercise of business judgment on the part of the employer. The wisdom or soundness of such characterization was not subject to discretionary review on the part of the LA nor of the NLRC so long, of course, as violation of law or merely arbitrary of malicious action is not shown. In International Macleod vs IAC, it was held that the determination of the need for the phasing out of a department as a labor and cost saving device because it was no longer economical to retain said services is a management prerogative and the courts will not interfere with the exercise thereof as long as no abuse of discretion or merely arbitrary or malicious action on the part of management is shown. An employer has a much wider discretion in terminating employment relationship of managerial personnel compared to rank and file because officers in such key positions perform not only functions which by nature require the employers full trust and confidence but also functions that spell the success or failure of an enterprise. On Alien Employment: a resident alien without a working permit is not what is prohibited in Art 40. The provision requires employment permit to nonresident aliens. The employment permit is required for entry into the country for employment purposes and is issued after determination of the nonavailability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired.

Nitto Enterprises v. NLRC, 258 SCRA 654 (1995)

Art 61 of the LC provides: contents of apprenticeship agreement. Apprenticeship agreements, including the main rates of apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of apprentices shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship. It is mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment. Prior approval by the DOLE of the proposed apprenticeship is, therefore, a condition sine qua non before an apprenticeship agreement can be validly entered into. The act of filing the proposed apprenticeship program with DOLE is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship. Hence, apprenticeship agreement bet petitioner and private resp has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE. Art. 280 is cited. Twin requirements of notice and hearing constitute the essential elements of due process.

General Milling Corp. v. Torres, 196 SCRA 215 (1991)

GMCs claim that hiring of a foreign coach is an employers prerogative has no legal basis. Art. 40 states that an employer seeking employment of an alien must first obtain an employment permit from the DOLE. GMCs right to choose is limited by the statutory requirement of an alien employment permit. The Labor Code empowers the Secretary to make a determination as to the availability of the services of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which an alien is desired. DOLE is the agency vested with jurisdiction to determine the question of availability of local workers.

extent the length of performance and its continued existence. The noble objectives of Magna Carta for Disabled Persons are not based merely on charity or accommodation, but on justice and the equal treatment of qualified persons, disabled or not.

Bernardo v. NLRC & FEBTC, 310 SCRA 186 (1999)

The Magna Carta for Disabled Persons mandates that qualified disabled persons be granted the same terms and conditions of employment as qualified able-bodied employees. Once they have attained the status of regular workers, they should be accorded all the benefits granted by law, notwithstanding written or verbal contracts to the contrary. This treatment is rooted not merely on charity or accommodation, but on justice for all. The magna carta madates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied person. equal opportunity for employment as provided for by sec. 5. The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Art. 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Art. 280. The test whether an employee is regular was laid down in De Leon vs. NLRC: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least one year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evident of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists. Accommodated employees: this fact does not change the nature of their employment. An employee is regular because of the nature of work and the length of service, not because of the mode or even the reason for hiring them. In LT Datu v NLRC: the determination of whether employment is casual or regular does not depend on the will or word of the employer, and the procedure of hiringxxx but on the nature of the activities performed by the employee, and to some

(a) (b) (c)


Manila Terminal Co. Inc. v. CIR, 91 Phil. 625 (1952) The Association cannot be said to have impliedly waived the right to overtime compensation, for the obvious reason that they could not have expressly waived it. Principle of laches and estoppel cannot be invoked: It would be contrary to the spirit of the Eight-Hour Labor Law, under which, as already seen, the laborers cannot waive their right to extra compensation. The law principally obligates the employer to observe it, so much so that it punishes the employer for its violation and leaves the employee or laborer free and blameless. The employee or laborer is in such a disadvantageous position as to be naturally reluctant or even apprehensive in asserting any claim which may cause the employer to devise a way for exercising his right to terminate the employment. If laches and estoppel will be applied, it may bring a situation whereby the employee or laborer who cannot expressly renounce their right to extra compensation under the Eight-Hour Labor Law, may be compelled to accomplish the same thing by mere silence of lapse of time, thereby frustrating the purpose of the law by indirection. The public is interested in the strict enforcement of the Eight-Hour Labor Law. This was designed not only to safeguard the health and welfare of the laborer or employee, but in a way to minimize unemployment by forcing employers in cases where more than 8-hour operation is necessary, to utilize different shifts of laborers or employees working only for eight hours each. Charlito Peranda v. Baganga Plywood Corp., et al., G.R. 159577, May 3, 2006

Sec. 2(c) of the Implementing Rules of LC, Book III, Rule I defines members of a managerial staff as those with the following duties and responsibilities: The primary duty consists of the performance of work directly related to management policies of the employer. Customarily and regularly exercises discretion and independent judgment. i. Regularly and directly assist a proprietor or a managerial employee whose primary duty consists of the management of the establishment in which he is employed or subdivision thereof; or ii. execute under general supervision work along specialized or technical lines requiring special training, experience, or knowledge; iii. execute under general supervision special assignment and tasks Who do not devote more than 20 percent of their hours worked in a workweek to activities which are not directly and closely related to the performance of the work described in paragraphs (1), (2) and (3) above. He admitted that he was a supervisor and his work necessarily required the use of discretion and independent judgment to ensure the proper functioning of the steam plant boiler. As a supervisor, he is deemed a member of the managerial staff.


Asia Pacific Christening, Inc. v. Farolan, 393 SCRA 454 (2004)



Requisites for a valid dismissal of an employee is thus in order, to wit: (a) the employee must be afforded due process i.e. he must be given opportunity to be heard and to defend himself (b) dismissal must be for a valid cause as provided in art 282 of LC or any of the authorized causes under 283 and 284 of the same Code The rule is settled that in termination cases, the employer bears the onus of proving that the dismissal is for just cause failing which the dismissal is not justified and the employee is entitled to reinstatement. Treatment to managerial employees: Thus with respect to rank and file personnel, loss of trust and confidence as ground for valid dismissal requires proof of involvement in the alleged events in question and that mere uncorroborated assertions and accusations by the employer will not be sufficient. But as regards a managerial employee, mere existence of a basis for believing that such employee has breached the trust of his employer would suffice for his dismissal.

a. b.

Samson vs NLRC: Before one may be properly considered a managerial employee, all the following conditions must be met: Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; They customarily and regularly direct the work of two or more employees therein;

Managerial employees and members of the managerial staff are exempted from the provisions of the Labor Code on labor standards. Since petitioner belongs to this class of employees, he is not entitled to overtime pay and premium pay for working on rest days. Managerial employees are those whose primary duty consists of the management of the establishment in which they are employed or of a department of subdivision.


They have the authority to hire or fire other employees of lower rank, or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight. (SEC 2(b) Rule I, Book III of the Omnibus) In Paper Industries Corp vs Laguesma: Managerial employees are ranked as Top Mangers, Middle Mangers and First Line Managers. The mere fact that an employee is designated as manager does not

ipso factor make him onedesignation should be reconciled with the actual job description of the employee for it is the job description that determines the nature of employment. The absence of a written job description or prescribed work standards, however, leaves this court in the dark. Loss of confidence should have a basis and determination thereof cannot be left entirely to the employer. Loss of trust and confidence to be a valid ground for an employees dismissal must be based on a willful breach and founded on clearly established facts. A breach is willful if it is done intentionally, knowingly and purposely, without justifiable excuse, as distinguished from an act done carelessly, thoughtlessly, heedlessly, and inadvertently. Failure to observe prescribed standards of work, or to fulfill reasonable work assignments due to inefficiency may be just cause for dismissal but it must be shown what standards of work or reasonable work assignment were prescribed which respondent failed to observe not that if she did fail to observe any such, it was due to inefficiency. While an employee may be dismissed because of inefficiency, neglect or carelessness, the law implies a situation or undertaking by an employee in entering into a contract of employment that he is competent to perform the work undertaken and is possessed of the requisite skill and knowledge to enable him to do so, and that he will do the work of the employer in a careful manner. If he is not qualified to do the work which he undertakes, if he is incompetent, unskillful or inefficient, or if he executes his work in a negligent manner or is otherwise guilty of neglect of duty, he may lawfully be discharged before the expiration of his term of employment. On moral damages: it must be shown that the dismissal was attended by bad faith or constituted an act opposite to labor or was done in a manner contrary to morals, good customs, or public policy. Award of moral damages and exemplary damages for an illegally dismissed employee is proper where the employee had been harassed and arbitrarily terminated by the employer.

Fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioners buiness offices, the fact remains that throughout the duration of their work, they are under the effective control and supervision of petitioner through the vessels patron or master. On abandonment: To constitute abandonment, there must be concurrence of the intention to abandon and some overt acts from which it may be inferred that the employee concerned has no more interest in working. The filing of complaint which asked for reinstatement plus backwages is inconsistent with resp defense of abandonment.

Merdicar Fishing Corp v. NLRC, 297 SCRA 440 (1998)

Auto Bus Transport Systems, Inc. v. Bautista, 458 SCRA 578 (2005)

Art. 82 provides that the Title Working Conditions and Rest period Provisions of the LC shall not apply to: (a) government employees (b) field personnel (c) members of the family of the employer who are dependent on him for support (d) domestic helpers (e) persons in the personal service of another (f) workers who are paid by results as determined by the Sec of Labor Field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the filed cannot be determined with reasonable certainty. Rule IV, Sec. 1 (e), Book III of the IRR states that: Field personnel and other employees whose time and performance is unsupervised by the employerxxx The latter provision did not add another element to the LC but merely interpreted and expounded the clause of the provision of the LC.

Art. 95 of the LC vis--vis Sec 1(d), RULE V, Book III of the IRR which provides: Art. 95: Right to Service Incentive Leave (a) Every employee who has rendered at least one year of service shall be entitled to a yearly service incentive leave of five days with pay. And Sec 1(d) provides that: Field personnel and other employees whose performance is unsupervised by the employer includeing those who are engaged on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing work irrespective of the time consumed in the performance thereof; Amplification of the LC. Same is true to the phrase those who are engaged o task or contract basis, purely commission basis should be related with field personnel applying the rule on ejusdem generis that general and unlimited terms are restrained and limited by the particular terms that they follow. Bureau of Working Conditions (BWC), Advisory Opinion: As a general rule, field personnel are those whose performance of their job/service is not supervised by the

employer or his rep, the workplace being away from the principal office and whose hours and days of work cannot be determined with reasonable certainty, hence they are paid specific amount for rendering specific service or performing specific work. If required to be at specific places at specific times, employees including drivers cannot be said to be field personnel despite the fact that they are performing work away from the principal office of the employee. In order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the filed can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employees time and performance are constantly supervised by the employer. Dispatcher: function is precisely to see that the bus and its crew leave the premises at specific times and arrive at the estimated proper time. On prescription: LC provides that all money claims arising from er-ee rel shall be filed within 3 years from the time the cause of action accrued; otherwise, they shall be forever barred. In case of nonpayment of allowances and other monetary benefits, if it is established that the benefirs being claimed have been withheld from the employee for a period longer than 3 yrs, the amount pertaining to the period beyond the three-year prescriptive period is therefore barred by prescription. The amount that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits withheld within 3 years before the filing of the complaint. (In the computation of the prescriptive period, determine when the act constituting the violation was committed).


b. c. -

Are the piece-rate workers entitled to overtime pay, 13th month pay, backwages, separation pay? Procedural aspect: Notice of dismissal is required Sec. 2, Rule XIV, Book V of IRR. If not complied then, Art. 279 as amended by RA 6715 shall apply. The backwages of piece-rate workers are to be determined by the NLRC because there is a need to determine the varying degrees of production and days worked by each worker. In this case, they are regular employees because of the presence of these three factors: nature of petitioners tasks: their job of repacking snack food was necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products petitioners worked for private respondents throughout the year, their employment not having been dependent on a specific project or season length of time that the petitioners worked for private respondents While petitioners mode of compensation was on a per piece basis the status and nature of their employment was that of regular employee. The IRR exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave, and 13th month pay. Petitioners as piece-rate workers do not fall within this group. Not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation. Sec 8(b) Rule IV, Book II provides for holiday pay of certain employees. Revised Guidelines on the Implementation of the 13th Month Pay law, exclude employer of piece-rate workers from those exempted from paying the 13th month pay. Employers still not covered by PD 851: (d) Employers of those who are paid on purely commission, boundary or task basis, and those who are paid a fixed amount for performing specific work, irrespective of the time consumed in the performance thereof, except where the workers are paid on piece-rate basis in which case, the employer shall grant the required 13th month pay to such workers. Revised Guidelines: Workers who fall under the piece-rate category: who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated without regard to the time spent in producing the same. As to the overtime pay: Sec 2(e) Rule I, Book III compare with Sec. 8, Rule VII, Book III. If the employer adhered to Sec. 8 where the Sec of Labor would fix rates, then they are exempted. But employer did not allege adherence, thus sec 2(e) workers who are paid by results, including those who are paid on piece-work, takay, pakiao, or task basis but their employer did not comply with Sec. 8 to fall within the exception, then they are entitled to overtime pay.

On service incentive when does the prescriptive period commence? Service incentive is a curious animal. The employee may commute his accrued incentive leave upon his resignation or separation frm work. Sec 2, Rule V, Book III: Service incentive leave is a right which accrues to every employee who has served within 12 months, whether continuous or broken reckoned from the date the employee started working, including authorized absences and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that provided in the employment contract, is less than 12 months, in which case said period shall be considered as one year. It is commutable to its money equivalent if not used or exhausted at the end of the year. In other words, the employee who has served for one year is entitled to it. He may use it as leave days or he may collect its monetary value. The three-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employees services as the case may be.

Labor Congress v. SCRA 509 (1998)



Battad: Determine whether the employer is using piece-rate worker status to evade liability as to the benefits to which such workers are exempted. This is similar to labor-only vs. independent contractor where factors are to be considered before we could establish which is the true status of the employees

Philippine Airlines, Inc. v. NLRC, 302 SCRA 582 (1999)

Art. 83-Normal Hours of Work, Art. 85, Meal Periods, Sec. 7, Rule I, Book III read together. The eight-hour work period does not include the meal break. Nowhere in the law may it be inferred that employees must take their meals within the company premises. Employees are not prohibited from going out of the premises as long as they return to their posts on time. On moral damages: Bad faith involves a state of mind dominated by ill will or motive. It implies a conscious and intentional design to do a wrongful act for a dishonest purpose of some moral obliquity. Art. 83 and 85 of the Labor Code read: Art. 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight (8) hours a day. Health personnel in cities and municipalities with a population of at least one million (1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred (100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six (6) days or forty-eight (48) hours, in which case they shall be entitled to an additional compensation of at least thirty per cent (30%) of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. (emphasis supplied) Art. 85. Meal periods. Subject to such regulations as the Secretary of Labor may prescribe, it shall be the duty of every employer to give his employees not less than sixty (60) minutes time-off for their regular meals. Sec. 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further states: Sec. 7. Meal and Rest Periods. Every employer shall give his employees, regardless of sex, not less than one (1) hour time-off for regular meals, except in the following cases when a meal period of not less than twenty (20) minutes may be given by the employer provided that such shorter meal period is credited as compensable hours worked of the employee; (a) Where the work is non-manual work in nature or does not involve strenuous physical exertion; (b) Where the establishment regularly operates not less than sixteen hours a day; (c) In cases 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 (d) Where the work is necessary to prevent serious loss of perishable goods. Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be considered as compensable working time.

The thirty (30)-minute assembly time long practiced and institutionalized by mutual consent of the parties under Article IV, Section 3, of the Collective Bargaining Agreement cannot be considered as waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code. .. .Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the employees, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their respective work assignments. Their houses are situated right on the area where the farm are located, such that after the roll call, which does not necessarily require the personal presence, they can go back to their houses to attend to some chores. In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain any provision to this effect; the record is also bare of any proof on this point. This, therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the employer, but ultimately for the employees to indicate their availability or non-availability for work during every working day.

Arica v. NLRC, 170 SCRA 776 (1989)

University of Pangasinan Faculty Union v. University of Pangasinan, 127 SCRA 691 (1984) No work no pay principle does not apply in the case because the petitioners certainly do not ad voluntatem absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from work. Intention of the law to grant ECOLA upon the payment of basic wages. No pay, no ECOLA. But petitioners were paid their wages in full for the months of Nov and Dec notwithstanding the intervening semestral break. Sec. 4 of the Omni: Principles in Determining Hours Woked: (d) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered time either if the imminence of the resumption of work requires the employees presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employees own interest. Semestral break may also be considered as hours worked. Sec. 3 of PD 451 on increase on tuition or other school fees conditions. In University of the East vs UE Faculty Assoc: In effect, the problem posed before Us is whether or not the reference in Sec 3(a) to increase in salaries or wages of the faculty and all other employees of the schools concerned as the first purpose to which the incremental proceeds from authorized increases to tuition fees may be devoted, may be construed to include allowances and benefits. In the negative, which is the position of resp, it would follow that such allowances must be taken from resources of the school not derived from tuition fees. Xxx We note that among the items of the second purpose stated in provision in question is return in investment. And the law provides only for the maximum, not a minimum. In other words, the schools may get a return to investment of not more than 12% but if circumstances warrant, there is no minimum fixed by law which they should get. If the schools happen to have no other resources to grant allowances and benefits, either mandated by law or secured by collective bargaining, such allowances and benefits should be charged against the return to investments referred to in the second purpose stated Sec 3(a). The law provides that 60% should go to wage increases and 40% to institutional developments, student assistance, extension services and return on investments (ROI). Under the law, the last item ROI has flexibility sufficient to accommodate other purposes of the law and the needs of the university. ROI is not set aside for any one purpose of the university such as profits or returns on investments. Besides, ROI is a return or profit over and above the operating expenditures of the university, and still, over and above the profits it may have had prior to the tuition increase. Rada v. (1992) NLRC, 205 SCRA 69

- Sandoval Shipyards, Inc. vs. National Labor Relations Commission, et al. 12 is applicable to the case at bar. Thus: We hold that private respondents were project employees whose work was coterminous with the project or which they were hired. Project employees, as distinguished from regular or non-project employees, are mentioned in section 281 of the Labor Code as those "where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee." Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-employee relations in the construction industry, provides: Project employees are those employed in connection with a particular construction project. Non-project (regular) employees are those employed by a construction company without reference to any particular project. Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain clearance from the Secretary of Labor in connection with such termination. - A non-project employee is different in that the employee is hired for more than one project. A nonproject employee, vis--vis a project employee, is best exemplified in the case of Fegurin vs NLRC: Considering the nature of the work of petitioners, that of carpenter, laborer or mason, their respective jobs would actually be continuous and on-going. When a project to which they are individually assigned is completed, they would be assigned to the next project or a phase thereof. In other words, they belonged to a "work pool" from which the company would draw workers for assignment to other projects at its discretion. They are, therefore, actually "non-project employees." From the foregoing, it is clear that petitioner is a project employee considering that he does not belong to a "work pool" from which the company would draw workers for assignment to other projects at its discretion. It is likewise apparent from the facts obtaining herein that petitioner was utilized only for one particular project, the MNEE Stage 2 Project of respondent company. Hence, the termination of herein petitioner is valid by reason of the completion of the project and the expiration of his employment contract.

1) 2) 3) 4) 5)

Social Security System v. Court of Appeals, 348 SCRA 1 (2000) SSS Payrolls Testimony of other laborers Records of business affairs Power of control

Shell Oil Co. of the Philippines, Ltd. v. National Labor Union, 81 Phil. 315 (1948)

On SSS: The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended by PD 1202 and PD 1636) is premised on the existence of an employer-employee relationship, and Section 8(d) defines an employee as any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services where there is an employer-employee relationship. The essential elements of an employer-employee relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the power of control with regard to the means and methods by which the work is to be accomplished, with the power of control being the most determinative factor. On Payroll: Where the veracity of the alleged documents as payrolls are doubtful considering that the laborers named therein never affixed their signatures to show that they actually received the amounts indicated corresponding to their names, the fact that a particular laborers name does not appear in the payrolls is no proof that he did not work in the workplace. On Testimony of other laborers: The testimonies of other laborers who did not waver in their assertion on certain facts of another laborers employment prevail over the incomplete and inconsistent documentary evidence of the employer; where the employer-employee relationship was sufficiently proved by testimonial evidence, the absence of time sheet, time record or payroll becomes inconsequential. No particular form of evidence is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence to prove the relationship may be admitted. Records of business affairs: The employer is duty-bound to keep faithful and complete records of his or her business affairs, not the least of which would be the salaries of the workers. Documents presented in this case have been selective, few and incomplete in substance and content, thus employer failed to convince the court that husband of petitioner was not its employee. Power of Control: The power of control refers merely to the existence of the powerit is not essential for the employer to actually supervise the performance of duties of the employee, as it is sufficient that the former has a right to wield the power. In this case, the employer has an overseer to whom the employer wielded the power to hire or dismiss, to check on the work, be it in progress or quality of the laborers.

Nightwork has almost invariably been looked upon with disfavor by students of the problem because of the excessive strain involved, especially for women and young persons, the large amount of lost time consequent upon exhaustion of the workers, the additional strain and responsibility upon the executive staff, the tendency of excessively fatigued workers to "keep going" on artificial stimulants, the general curtailment of time for rest, leisure, and cultural improvement, and the fact that night workers, although precluded to an extent from the activities of day life, do attempt to enter into these activities, with resultant impairment of physical well-being. It is not contended, of course, that nightwork could be abolished in the continuous-process industries, but it is possible to put such industries upon a three- or four-shifts basis, and to prohibit nightwork for women and children. (Labor's Progress and Problems, Vol. I, p. 464, by Professors Millis and Montgomery.) Nightwork cannot be regarded as desirable, either from the point of view of the employer or of the wage earner. It is uneconomical unless overhead costs are unusually heavy. Frequently the scale of wages is higher as an inducement to employees to accept employment on the night shift, and the rate of production is generally lower. (Management of Labor Relations, by Watkins & Dodd, pp. 522-524; emphasis ours.) Nightwork. Civilized peoples are beginning to recognize the fact that except in cases of necessity or in periods of great emergency, nightwork is socially undesirable. Under our modern industrial system, however, nightwork has greatly aided the production of commodities, and has offered a significant method of cutting down the ever-increasing overhead costs of industry. This result has led employers to believe that such work is necessary and profitable. Here again one meets a conflict of economic and social interests. Under these circumstances it is necessary to discover whether nightwork has deleterious effects upon the health of laborers and tends to reduce the ultimate supply of efficient labor. If it can proved that nightwork affects adversely both the quality and quantity of productive labor, its discontinuance will undoubtedly be sanctioned by employers. From a social point of view, even a relatively high degree of efficiency in night operations must be forfeited if it is purchased with rapid exhaustion of the health and energy of the workers. From an economic point of view, nightwork may be necessary if the employer is to meet the demand for his product, or if he is to maintain his market in the face of increasing competition or mounting variable production costs.

Wellington Investment Inc. v. Trajano, 245 SCRA 561 (1995) Issue: WON a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an additional pay aside from his usual holiday pay, whenever a regular holiday falls on a Sunday. Held: Yes. Every worker should be paid his regular daily wage during regular holidays even if the worker does no work on these holidays (except in retail and service establishments regularly employing less than 10 workers. This is also applicable in the event of the declaration of any special holiday, or any fortuitous cause precluding work on any particular day or days, the employee is entitled to the salary for the month and the employer has no right to deduct the proportionate amount corresponding to the days when no work was done. The monthly compensation is evidently intended precisely to avoid computations and adjustments resulting from the contingencies just mentioned which are routinely made in the case of workers paid on daily basis. Wellington used 314 factor = it simply deducted 51 Sundays from the 365 days. The monthly salary thus fixed actually covers payment for 314 days of the year including regular and special holidays, as well as days when no work is done by reason of fortuitous cause, as above specified, or causes not attributable to the employees. There is no provision of law requiring any employer to make such adjustments in the monthly salary rate set by him to take account of legal holidays falling on Sundays in a given year, or contrary to the legal provisions bearing on the point, otherwise to reckon a year at more than 365 days. The legal provisions governing monthly compensation are evidently intended precisely to avoid recomputations and alteration in salary on account of the contingencies just mentioned, which, by way are routinely made between employer and employees when the wages are paid on daily basis. San Miguel Corp. v. Court of Appeals, 375 SCRA 311 (2002) Facts: Underpayment of SMC of regular Muslim holiday pay to its employees. Should this be applied to non-Muslim employees? Held: Yes. Art. 2 of the PD 1083 provides that the provisions of this Coude shall be applicable only to Muslims xxx. However, there should be no distinction between Muslims and nonMuslims as regards payment of benefits for Muslim holiday. We must remind the respondent-appellant (employer) that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the workers faith or

religen. Art. 3 also declares that nothing herein shall be construed to operate to the prejudice of a non-Muslim.

pay the security guards, the Wage Order made specific provision to amend existing contracts for security services by allowing the adjustments of the consideration paid by the principal to the security agency concerned. What the Wage orders require, therefore, is the amendment of the contract as to the consideration to cover the service contractors payment of the increases mandated. In the end, therefore, ultimate liability for the payment of the increasees rests with the principal. The Wage Orders are statutory and mandatory and can not be waived. The petitioner can not escape liability since the law provides the joint and solidary liability of the principal and the contractor for the protection of the laborers. But the Court here did not apply the Eagle case because the petitioner is equally guilty by not abiding to the law in the subsequent change of contract even when the WO6 was already implemented. Therefore, security guards immediate recourse is with direct employer but the latter is not prejudiced as to the claim of of the wages it shall give the guards.

Philippine Fisheries Development Authority v. NLRC, 213 SCRA 621 (1992) Issue 1: WON an indirect employer is bound by the ruling of NLRC which made the indirect employer liable when the guards are not employees of the petitioner because the contract of services explicitly states that the security guards are not their employees thus, no employer-employee relationship, thus the jurisdiction of the CSC may not be invoked in this case. Held: Notwithstanding that the petitioner is a government agency, its liabilities, which are jointly and solidary with that of the contractor are provided in Art. 106, 107 and 109. Its liabilities are under the NLRC scope and in addition, book three title ii on wages provides that the term employer includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the Government and all its branches, subdivisions and instrumentalities, all GOCCs and institutions as well as non-profit private institutions or organizations.

Doctrine: Principal liable for Wage Orders mandating wage increases. But when principal cannot pay, contractor is the immediate recourse and should pay the whole claim with right to reimbursement from principal. But if contractor is at fault, will be liable to of the claim. Aklan Electric Corp., Inc. v. NLRC, 323 SCRA 259 (2000) Facts: Employees working at Lezo but were told to transfer to Kalibo but they did not transfer. Claiming salaries, wages and benefits. Issue: WON they are entitled to salaries and benefits. Held: No. The employer gave orders to the employees to transfer office because of the dangers the environment poses to the company, yet the employees disobeyed. Moreover, the transfer of office was approved by NEA Administrator in its exercise of supervision and control over all electric cooperatives. When the business transferred, what was left to the employees to work on? Thus no basis that the employees continued to report for work in Lezo. The age-old rule governing the relation between labor and capital, or management and employee of a fair days wage for a fair days labor remains as the basic factor in determining employees wages. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a situation we find is not present in the instant case. It would neither be fair nor just to allow private respondents to recover something they have not earned and could have not earned because they did not render services at the Kalibo office during the stated period. Bankard Employers Union v. NLRC, 423 SCRA 148 (2004) Facts: Petitioners questioning the new salary increase to new employees which were higher than the regular employees. They claim that there was wage distortion, thus the request for an across-the-board increase.

Issue 2: Who should carry the burden of the wage increases? Held: It is settled that in job contracting, the petitioner as principal is jointly and severally liable with the contractor for the payment of unpaid wages. In the case at bar, the action was for the payment of unpaid wage differentials under Wage Order No. 6. In the case of Eagle Security vs. NLRC:

The solidary liability of PTSI and EAGLE, however, does not preclude the right of reimbursement from his co-debtor by the one who paid. It is with respect to this right of reimbursement that petitioners can find support in the aforecited contractual stipulation and Wage Order provision. The Wage Orders are explicit that the payment of the increases are to be borne by the principal or client. To be borne, however, does not mean that the principal, PTSI in this case, would directly pay the security guards the wage and allowance increases because there is no privity of contract between them. The security guards contractual relationship is with their immediate employer, EAGLE. As an employer, EAGLE is tasked, among others, with the payment of their wages. Premises considered, the security guards immediate recourse for the payment of the increases is with their direct employer, EAGLE. However, in order for the security agency to comply with the new wage and allowance rates it has to

Held: No wage distortion. Wage distortion: a situation where an increase in prescribed wage rates results in the elimination or severe contraction of intentional quantitative differences in wage or salary rates between and among employee groups in an establishment as to effectively obliterate the distinctions embodied in such wage structure based on skills, length of service, or other logical bases of differentiation. Four elements of wage distortion (Prubnkers Assoc): 1. 2. 3. 4. An existing hierarchy of positions with corresponding salary rates A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher ones The elimination of the distinction between the two levels and The existence of the distortion in the same region of the country.

facto result to an obligation to rectify it, absent a law or other source of obligation which requires its rectification. Moreover, in this case, the CBA between the Union and Management gives the Company the right to establish such minimum salaries as it may hereafter find appropriate for specific jobs and to adjust the rates of the employees thereby affected xxx.

In a problem dealing with wage distortion, the basic assumption is that there exists a grouping or classification of employees that establishes distinctions among them on some relevant or legitimate bases. The NLRC refutes the petitioners contention that the basis of the levels of classification is the length of service. It stated that, to determine the existence of wage distortion, the historical classification of the employees prior to the wage increase must be established. It must be shown that as between the different classification of employees, there exists a historical gap or difference. Thus the employees of private respondent have been historically classified into levels i.e. I to V and not on the basis of their length of service. The entry of new employees to the company ipso facto places them under any of the levels. There is no hierarchy of positions between the newly hired and regular employees, thus the first element is wanting. Apart from the finding of fact of the NLRC and Ca that some of the elements of wage distortion are absent, the petitioner cannot legally obligate Bankard to correct the alleged wage distortion as the increase in the salaries of the newly-hired was not due to a prescribed law or wage order. Art. 124 should be construed and correlated in relation to minimum wage fixing, the intention of the law being that in the event of ancrease in minimum wage, the distinctions embodies in the wage structure based on skills, length of service or other logical bases of differentiation will be preserved. If the compulsory mandate under Art. 124 to correct wage distortion is applied to voluntary and unilateral increases by the employer in fixing hiring rates which is inherently a business judgment prerogative, then the hands of the employer would be completely tied even in cases where an increase in wages of a particular group is justified due to a re-evaluation of the high productivity or a particular group, or as in the present case, the need to increase the competitiveness of Bankards hiring rate. The mention of Metro Transit case was misplaced where it did not confine to wage distortion resulting from government decreed law or wage order because the rectification in that case was not by virtue of Art. 124 of the Labor Code but by the existing company practice that whenever rank-and-file employees were paid a statutorily mandated salary increase, supervisory employees were, as a matter of practice, also paid the same amount plus an added premium. Wage distortion is a factual and economic condition that may be brought by different causes. The mere factual existence of wage distortion does not, however, ipso

Arms Taxi v. NLRC, 219 SCRA 306 (1993) Facts: Taxi driver Culla was dismissed by forcing open his quarters and removing his personal belongings found therein and bringing them to his residence. He is claiming reinstatement with backwages, plus commission of 15% of the gross income of the taxi business which is the issue at bar. Held: No. He cannot get the 15% commission. If it were true that there had been an agreement regarding the payment of a 15% commission to him, Culla would have not waited almost 6 years to claim it. Considerably delay in asserting ones right is strongly persuasive of the lack of merit of ones claim. SOLGEN: Salary is different from a commission. The defense that the giving of salary is a partial compliance to pay a commission of percentage. While a salary is a fixed compensation for regular work or for continuous service rendered over a period of time, a commission is a percentage or allowance made to a factor or agent for transacting business for another. Thus, before invoking the exception to the Statute of Frauds, petitioner should have proven that he had received a commission, or part of it, in the past. Iran v. NLRC, 289 SCRA 433 (1998) The case where the salesman and truck helpers received commission for cases sold. Then there were irregularities and the respondents were prompted to report cash shortages. After a few days, they stopped reporting for work, thus the conclusion of abandonment. Terminated without notice. On the other hand, complain for illegal dismissal, deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, incentive pay, etc. Issue: WON commissions in the computation of wages must only be paid after the minimum wage has been paid, thus excluding commissions in the computation for benefits which rely on wage.

Held: No. The Court has taken judicial notice of the fact that some salesman do not receive any basic salary but depend entirely on commissions and allowances or commissions alone, although an employer-employee relationship exists. This salary structure is intended for the benefit of the corporation establishing such, on the apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales commission. But this does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to the corporation. There is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employees remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law. In one case it was acknowledged that drivers and conductors who are compensated purely on a commission basis are automatically entitled to the basic minimum pay mandated by law should said commission be less than their basic minimum for eight hours work. It can thus be inferred that where said commissions equal to or even exceed the minimum wage, the employer need not pay, in addition, the basic minimum pay prescribed by law. It follow then that commissions are included in determining compliance with minimum wage requirements.

Philippine Association of Service Exporters v. Drilon (1988) J. Sarmiento Facts: The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the recruitment of Filipino workers, male and female, for overseas placement," 1 challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of "GUIDELINES GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS," in this petition for certiorari and prohibition. Issues: 1. It is an unlawful exercise of police power since this is a power that belongs to the legislative branch not the executive department; and violates the right to travel and impairs the right to contract. Equal Protection clause violation discriminates against women and does not apply to all workers but on to DH. It violates Section 3, of Article XIII, of the Constitution, providing for worker participation "in policy and decision-making processes affecting their rights and benefits as may be provided by law."

2. 3.

Decision: The directive was upheld Discussion: 1. The department order is a valid exercise of police power. Police power is one of the three inherent powers of the state, along with taxation and eminent domain that is not written anywhere in the constitution (Im not sure if this addresses the argument that the said power pertains to the legislative branch not the executive branch; that issue was not specifically tackled by the Court)

It is defined as the "state authority to enact legislation that may interfere with personal liberty or property in order to promote the general welfare." (Edu v. Ericta) As defined, it

consists of (1) an imposition of restraint upon liberty or property, (2) in order to foster the common good.

Its scope, ever-expanding to meet the exigencies of the times, even to anticipate the future where it could be done, provides enough room for an efficient and flexible response to conditions and circumstances thus assuring the greatest benefits." (Edu v. Ericta) Nevertheless, its exercise would be invalid if the same is arbitrary, unreasonable and oppressive. As a general rule, official acts enjoy a presumption of validity. In view of petitioners failure to prove that the law is oppressive, the presumption stands.

of abuses are DHs. It is therefore valid to limit the DOs application to them. Had the ban been given universal applicability, then it would have been unreasonable and arbitrary. For obvious reasons, not all of them are similarly circumstanced.


The petitioners reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes affecting their rights and benefits" is not well-taken. The right granted by this provision, again, must submit to the demands and necessities of the State's power of regulation.


The right to travel may be validly limited in the exercise of police power. The right to travel is subject, among other things, to the requirements of "public safety," "as may be provided by law." (Art III Sec. 6) Department Order No. 1 is a valid implementation of the Labor Code, in particular, its basic policy to "afford protection to labor," pursuant to the respondent Department of Labor's rulemaking authority vested in it by the Labor Code. The non-impairment clause of the Constitution, invoked by the petitioner, must yield to the loftier purposes targetted by the Government. Freedom of contract and enterprise, like all other freedoms, is not free from restrictions, more so in this jurisdiction, where laissez faire has never been fully accepted as a controlling economic way of life. The Equal Protection Clause is not impaired. Equality of the law xxx does not import a perfect identity of rights among men and women. It allows classification, provided that (1) such classifications rest on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply equally to all members of the same class. (People v. Cayat)



Philippine Telegraph and Telephone Company v. NLRC (1997) J. Regalado Facts: Grace de Guzman was hired as a reliever for the employees of PTTC, when the latter go on leave (maternity and other leaves). She spent more than 6 months with the company during the three times she was hired as reliever. In September 1991, she was asked to join the company on a probationary basis (period of probation: 150 days). De Guzman did not indicate in the forms she filed that she got married in May, 1991. When PTTC supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was reminded about the company's policy of not accepting married women for employment. Grace explained that she did not know about the policy but the company fired her anyway, effective January 29. Grace filed a case for illegal dismissal. During the preliminary conference, she volunteered information that she was not able to remit about P2,380 to the company and it was agreed that she sign a promissory note to pay the same. Labor Arbiter: She was already a regular worker1 and entitled to security of tenure. [T]he ground relied upon by petitioner

On 1st element: There is a valid basis for singling out women. As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad, especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical and personal abuse. This is not to say that men do not suffer the same abuses, however, those are isolated cases. On 2nd element: The classification is germane to the purpose of the directive. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for Filipino female overseas workers" This Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good and welfare. On 3rd element: The measure will only be in place until the working environment for DHs becomes better. Accordingly the DO provides that it will be lifted once bilateral agreements (between the Phil. and host countries) and other mechanisms for the protection and welfare of Filipino workers are in place. On 4 element: That it does not apply to all Filipina workers is not a ground to impugn the validity of the classification. Most of the victims

The Supreme Court agreed on this ruling because Grace has been engaged in activities which are usually necessary or desirable in the usual business or trade of the employer. (Art 280) Note also that she was fired just before the probationary

in dismissing private respondent was clearly insufficient, and that it was apparent that she had been discriminated against on account of her having contracted marriage in violation of company rules On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter and, in its decision dated April 29, 1994, it ruled that private respondent had indeed been the subject of an unjust and unlawful discrimination by her employer, PT & T. However, the decision of the labor arbiter was modified with the qualification that Grace de Guzman deserved to be suspended for three months in view of the dishonest nature of her acts which should not be condoned. A motion for reconsideration was denied. Issues: On appeal to the SC, PTTC argues that it did not discriminate on married women. PTTC said that Grace was fired because she concealed information regarding her status, not because of the status itself. She also mishandled company funds, which she herself admitted. Decision: The Court upheld the NLRCs reasoning, i.e,, Grace was a victim of discrimination.

an assurance of entitlement to tenurial security of all workers Sec. 14 Art. XIII - mandates that the State shall protect working women through provisions for opportunities that would enable them to reach their full potential.



Corrective labor and social laws on gender inequality have emerged with more frequency in the years since the Labor Code was enacted on May 1, 1974 as Presidential Decree No. 442, largely due to our country's commitment as a signatory to the United Nations Convention on the Elimination of All Forms of Discrimination Against Women (CEDAW). 4 Labor Code

Article 130 - involves the right against particular kinds of night work while Article 132 - ensures the right of women to be provided with facilities and standards which the Secretary of Labor may establish to ensure their health and safety. Art. 138 - For purposes of labor and social legislation, a woman working in a nightclub, cocktail lounge, massage clinic, bar or other similar establishments shall be considered as an employee


It is recognized that a company can set regulations and rules for its employees in the exercise of its management prerogatives; however, the same should not result in discrimination and violation of the law.2 The Supreme Court noted that the Constitution, international conventions, statutes, and the Labor Code have provided for the protection of women in the labor force. Nowhere has that prejudice against womankind been so pervasive as in the field of labor, especially on the matter of equal employment opportunities and standards. In the Philippine setting, women have traditionally been considered as falling within the vulnerable groups or types of workers who must be safeguarded with preventive and remedial social legislation against discriminatory and exploitative practices in hiring, training, benefits, promotion and retention. Constitution


Article 135 - recognizes a woman's right against discrimination with respect to terms and conditions of employment on account simply of sex. Article 136 explicitly prohibits discrimination merely by reason of the marriage of a female employee. 3. The company policy against married women cannot stand amidst all these laws and regulations. The Court refused to believe the argument that Grace was not fired for being married and that discrimination was not behind her dismissal: It is illogical to say that she was fired for concealing the fact the she was married and not because of that fact. Besides, the memorandum signed by Ms. Oficial contradicts this argument. Neither was Graces failure to remit certain funds the real basis for firing her. As observed by the labor arbiter, the allegation was a mere afterthought. The act was also not deliberate; it was caused by negligence. Moreover, the


Sec. 14, Art. II3 Sec. 3, Art. XIII - pointedly requires the State to afford full protection to labor and to promote full employment and equality of employment opportunities for all, including

period of her employment ended. She was fired without basis. In fact, the Court said that she was a victim of discrimination. It follows that if she was not unfairly dismissed, she would have finished the probationary period and she would become regular. (My view.) 2 Management prerogative involves prescriptions encompass the matter of hiring, supervision of workers, work assignments, working methods and assignments, as well as regulations on the transfer of employees, lay-off of workers, and the discipline, dismissal, and recall of employees. 19 As put in a case, an employer is free to regulate, according to his discretion and best business judgment, all aspects of employment, "from hiring to firing," except in cases of unlawful discrimination or those which may be provided by law.

The State recognizes the role of women in nationbuilding, and shall ensure the fundamental equality before the law of women and men (Sec.14, Art. II).

The Court cited several examples: RA 6727 (1989)explicitly prohibits discrimination against women with respect to terms and conditions of employment, promotion, and training opportunities. RA 6955 (1990) - which bans the "mail-order-bride" practice for a fee and the export of female labor to countries that cannot guarantee protection to the rights of women workers. RA 7192, The Women in NationBuilding Act (1992) - affords women equal opportunities with men to act and to enter into contracts, and for appointment, admission, training, graduation, and commissioning in all military or similar schools of the Armed Forces of the Philippines and the Philippine National Police; Republic Act No. 7322 15 increasing the maternity benefits granted to women in the private sector. RA 7322 (1995) increasing the maternity benefits granted to women in the private sector. RA 7877 (1995) which outlaws and punishes sexual harassment in the workplace and in the education and training environment. RA 8042, The Migrant Workers and Overseas Filipino Act of 1995.

parties already agreed to allow Grace to pay for the unremitted funds. 4. The Court ended with a discussion of Art. 136 of the Labor Code, above. Its a substantial discussion and has a relation to the next case (Duncan v. Glaxo).

employees of competing drug companies; and if management found that such relationship posed a possible conflict of interest, to resign from the company. Nonetheless, Tecson became romantically involved with Bettsy, an employee of a rival pharmaceutical firm Astra Pharmaceuticals ("Astra"). The two eventually married in September of 1998. The relationship, including the subsequent marriage, was cause for consternation to Glaxo. On January 1999, Tecson's superiors informed him that his marriage to Bettsy had given rise to a conflict of interest. Negotiations ensued, with Tecson adverting to his wife's possible resignation from Astra, and Glaxo making it known that they preferred to retain his services owing to his good performance. Yet no resolution came to pass. In September 1999, Tecson applied for a transfer to Glaxo's milk division, but his application was denied in view of Glaxo's "leastmovement-possible" policy. Then in November 1999, Glaxo transferred Tecson to the Butuan City-Surigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied. The matter was then brought to the Glaxo Grievance Committee, and subsequently to a voluntary arbitrator. The National Conciliation and Mediation Board (NCMB) rendered its decision, declaring as valid Glaxo's policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo's right to transfer Tecson to another sales territory. Issues: 1. Petitioners claim that the company rule applied to him was invalid. It violates the equal protection clause of the Constitution because it creates invalid distinctions among employees on account only of marriage. They claim that the policy restricts the employees right to marry. It was also alleged that Tecson s transfer to Agusan, diminution in pay he suffered, his exclusion from seminars and training sessions for medical representatives, and the prohibition in promoting respondents products which were competing with Astras products all amounted to a constructive dismissal.

In Zialcita v. PAL, the court declared the PAL policy of firing flight attendants after they get married saying it is incompatible to Art. 136 of the Labor Code. Article 136 is not intended to apply only to women employed in ordinary occupations, or it should have categorically expressed so. The sweeping intendment of the law, be it on special or ordinary occupations, is reflected in the whole text and supported by Article 135 that speaks of non-discrimination on the employment of women. The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation 34 considered as void a policy of the same nature. In said case, respondent, in dismissing from the service the complainant, invoked a policy of the firm to consider female employees in the project it was undertaking as separated the moment they get married due to lack of facilities for married women. Branding the policy of the employer as an example of "discriminatory chauvinism" tantamount to denying equal employment opportunities to women simply on account of their sex, the appellate court struck down said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution. This is called sex-plus discrimination under US jurisprudence. However, the ruling in Gualberto cited instances when such discrimination of marriage may be considered valid: Upon the other hand, a requirement that a woman employee must remain unmarried could be justified as a "bona fide occupational qualification," or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both male and female flight attendants, was regarded as unlawful since the restriction was not related to the job performance of the flight attendants.(45A Am Jur. 2d Job Discrimination Sec. 506 p486.)


Decision: CA upheld. Discussion:


The company policy on marriage was valid. It does not prohibit marriage per se. employees are free to marry who they want. What it seeks to prevent is conflict of interest, which may be too detrimental in a very competitive business like the pharma industry. (Court cited a similar case in the US state of Georgia, Emory v. Georgia Hospital)

Duncan Association of Detailman PGTWO v. Glaxo Welcome Philippines (2004) J. Regalado

Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry.

Pedro Tecson ("Tecson") was employed in 1995 by respondent Glaxo Wellcome Philippines, Inc. ("Glaxo") as a medical representative. He was assigned to market Glaxo's products in the Camarines Sur-Camarines Norte sales area. Upon his employment, Tecson signed an employment contract, wherein he agreed, among others, to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or

The prohibition against personal or marital relationships with employees of competitor companies upon Glaxos employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. (This is especially true in this case since Bettsy was Astras Branch coordinator in Albay and

was therefore played an active role in the market war between pharmaceuticals.)

That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers.


There was no constructive dismissal. Constructive dismissal is defined as a quitting, an involuntary resignation resorted to when continued employment becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or diminution in pay; or when a clear discrimination, insensibility or disdain by an employer becomes unbearable to the employee. None of these conditions are present in the instant case. The transfer was in fact made in order to avoid conflict of interest. (The couple would be involved in different sales area and will not be in a position to share marketing information that may be detrimental to Glaxo).

Moreover, in Abbott Laboratories (Phils.), Inc. v. National Labor Relations Commission5 the Court upheld the right of the drug company to transfer or reassign its employee in accordance with its operational demands and requirements. By the very nature of his employment, a drug salesman or medical representative is expected to travel. He should anticipate reassignment according to the demands of their business. ..

It involved a complaint filed by a medical representative against his employer drug company for illegal dismissal for allegedly terminating his employment when he refused to accept his reassignment to a new area.

Makati Haberdashery vs NLRC, 179 SCRA 449 (89) Penned by Justice Fernan Nature:

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

Held: There is such relationship because in the application of the four-fold test, it was found that petitioners had control over the respondents not only as to the result but also as to the means and method by which the same is to be accomplished. Such control is proven by a memorandum which enumerates procedures and instructions regarding job orders, alterations, and their behavior inside the shop. Minimum Wage Held: No dispute that entitled to minimum wage but court dismissed case for lack of sufficient evidence to support claim that there was in fact underpayment which was ruled by the LA and which the private resp did not appeal to in the NLRC nor in the SC. Well-settled is the rule that an appellee who has not himself appealed cannot obtain from the appellate court any affirmative relief other than the ones granted in the decision of the court below. COLA Held: Entitled. They are regular employees. IRR of Wage No. 1, 2, and 5 provide that all workers in the private sector, regardless of their position, designation of status, and irrespective of the method by which their wages are paid are entitled to such allowance.

13th Month pay Held: Entitled under Sec. 3(e) of the IRR of PD 851 which is an exception to the exception of such provision which states that employers whose workers are paid on piece-rate basis in which are covered by such issuance in so far as such workers are concerned.
Illegal dismissal Held: Dismissed for justifiable ground based on Article 283 (a) and (c). Inimical to the interest of the employer. Not dismissed just because of union activities.

Issue: WON employees paid on piece-rate basis are entitled to service incentive pay (relevant to title) Held: NO, fall under exceptions set forth in the implementing rules Ratio: As to the service incentive leave pay: as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under the exceptions stated in Sec 1(d), Rule V, IRR, Book III, Labor Code.

Service Incentive Leave SECTION 1. Coverage. This rule shall apply to all employees except: (d) Field personnel and other employees whose performance is unsupervised by the employer including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof; Other issues discussed: ER-EE relationship

Sentinel Security Agency, Inc. v. NLRC, 295 SCRA 123 1998) Penned by Justice Panganiban Nature: Certiorari seeking the reversal of the two petitions to the NLRC Facts: Five employees of Sentinel Security Agency filed for illegal dismissal against the Agency and its Client Philamlife Cebu and prayed for payment of salary differential, service incentive pay, and separation pay. The complainants were assigned to Philamlife Cebu but after nearly 20 years for some employees and more than 20 years for some, Philam requested on Dec 16, 1993 that security guards be replaced in the Clients offices in Cebu, Bacolod, CDO, Dipolog and Iligan. Agency issued a Relief and Transfer Order replacing the guards and for them to be reassigned to other clients effective on Jan 16 1994. On Jan 18 and Feb 4 1994, the employees filed an illegal dismissal complaint because of a threat from the personnel manager who told them that they were replaced because they were old. Hence the complaint against the Agency and the Client. Client and Agencys defense: No dismissal because the contract allows them to recall security guards from assigned posts at the will of either party and that the Agency is allowed for a period of not more than six months, to retain the complainants on floating status. Agency should have been given a chance to give new assignments to complainants. Clients defense: No ER-EE relationship. Job contract, separate corporate personalities and not necessary and desirable to the business or trade.

LA: Agency and Client ordered to pay solidarily complainants 13th month pay and service incentive leave benefits amounting to a little more than P60K. NLRC: There was constructive dismissal. Modified awards. Deleted 13th month pay for previous years. Twin remedies. Ordered: 1) Agency to give separation pay at the rate of month pay for every year of service and


Agency and Client to solidarily pay backwages and 13th month pay for one year (Jan 1994-1995).

Issue: 1) WON there was illegal dismissal 2) And if so, WON Philam may be held liable Held: 1)Yes there was illegal dismissal but SC does not agree with NLRC for its reasons for ruling that there was ID. NLRCs reason: Client and Agency wanted to circumvent the Retirement Law. SC: You NLRC are speculating and your contention is unsupported! SOLGEN: Complainants were placed on temporary offdetail which is a standard stipulation in employment contracts since the availability of assignment for security guards is dependent on contracts entered into by the agency. Off-detail or Floating status means waiting to be posted and this is not dismissal so long as such status does not continue beyond a reasonable time. However SOLGEN made a pronouncement that although abandonment is inconsistent with illegal

dismissal, such rule is not applicable when the complainants expressly reject this relief and ask for separation pay instead. SC (with conviction): You are wrong SolGen! How dare you be wrong? You know that abandonment requires a deliberate and unjustified refusal of an employee to resume to his work coupled with a clear absence of any intention to return to his/her work and the fact that complainants did not pray for reinstatement is not a sufficient proof of abandonment, you moron. They reported to the Agency on several dates but it did not give any reassignment. Abandonment has been ruled to be incompatible with constructive dismissal as stated in Escobin vs NLRC. Because I am infallible and you are in dire need of enlightenment, let me demonstrate the correct reasoning why they are illegally dismissed. It has been recognized that the management has a prerogative to transfer an employee from one office to another within the same business establishment as the exigency of the business may require provided that transfer: - does not result in a demotion in rank - diminution in salary, benefits, and other privileges - not unreasonable, inconvenient or prejudicial to the latter - not used as a subterfuge by the employer to rid himself of an undesirable worker SC: Solgen, in case you dont know what a transfer means, let me extend my unparalleled mastery of this craft which,unfortunately, you dont have: - Transfer may mean two things: a) from one position to another of equivalent rank, level or salary b) from one office to another within the same business establishment. Oh please, do not even think this is equivalent to promotion because the latter involves a scalar ascent. It should have been a mere changing of the guards, a reshuffling or exchange of their posts or assignments to their posts and such that no security guard would be without assignment. But did the Agency implement such recognized concept? NO!!! It hired new security guards, younger, braver, full of life men whose age are in their prime! This resulted in a lack of posts to which the senile, used and wrinkled men could have been reassigned. Floating status requires the dire exigency of the employers bona fide suspension of operation, business or undertaking. In security services, this happens when the clients do not renew their contracts with a security agency but in the case at bar, the Client awarded a new contract to the Agency. No surplus of security guards over available assignments. No suspension of operation that would have justified placing the complainants off-detail and making them wait for 6 months. SC: The logical conclusion here Solgen, in case you dont know whats logical, is that the Agency illegally dismissed the complainants. 2)Only solidarily to the service incentive leave pay. Since no ER-EE relationship between Client and complainants, cannot be held liable for separation pay and backwages. Art 106, 107 and 109 provide when the principal who contracted the contractor/subcontractor may be held solidarily liable. Art 109 states that every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. In determining the extent of their civil liability under this Chapter, they shall be considered direct employers. Such liability covers service incentive leave pay of the complainant during the time they were posted at the Cebu Branch. Service had been rendered,

liability accrued even when they were eventually transferred or reassigned. Art. 95 of the LC expressly provides that service incentive leave is expressly granted to every employee who has rendered at least one year or service shall be entitled to a yearly service incentive leave of five days with pay. IRR of the LC: Unused service incentive leave is commutable to its money equivalent as provided by Sec. 5: The service incentive leave shall be commutable to its money equivalent if not used or exhausted at the end of the year Pau: May the contrary be stipulated? If yes, when? Supposing the employer gives more than 5 days of service incentive leave, can they now stipulate that such leaves may not be converted to its money equivalent? When can such leaves be not converted into cash? Philippine Federation of Credit Cooperatives, Inc. v. NLRC, 300 SCRA 72 (1998)


Project employees: whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. Casual employees: those who are neither regular not project.


Facts: Victora Abril was employed by PFCCI which was engaged in organizing services to credit and cooperative entities as Auditor/Field Examiner and thereafter held position in different capacities as office secretary and cashier-designate from 1982 to 1988. She gave birth and upon her return in November 1989, a certain Vangie Santos had been permanently appointed to her former position. She accepted then a position as Regional Field Officer on a probationary basis for 6 months. Period elapsed but respondent was given another employment contract for one year until 1991 after which period, her employment was terminated. Illegal dismissal was filed. LA dismissed her file but NLRC reversed and ordered reinstatement. Issue: WON she was illegally dismissed and WON she was a regular employee. Held: Yes. She was illegally dismissed and YES she was a regular employee. Art. 281 of the LC allows the employer to secure services of an employee on a probi basis which allows him to terminate the latter for just cause or upon failure to qualify in accordance with reasonable standards. Probationary Employee: one who is on trial by an employer during which the employer determines whether or nor he is qualified for permanent employment. A probationary employment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee. Probationary employees, notwithstanding their limited tenure, are also entitled to security of tenure. Except for just cause or under employment contract, a probi employee cannot be terminated. Petitioner alleged that she has abandoned her work for 8 months (due to childbirth) and the position she applied for as RFO was fixed for a specific period thus she is considered as a casual or contractual employee under Art. 280. Three kinds of employees:

The contract between the petitioner and the respondent was scrutinized and the Court arrived at a conclusion that the contract was ambiguous, and in a contract of adhesion, if it is ambiguous, any ambiguity therein should be construed strictly against the part who prepared it. (Contract: xxx probationary status for a period not to exceed six (6) months from said effectivity subject to renewal of this contract should the employees performance be satisfactory). Regardless of the designation the petitioner company may have conferred upon resp employment status, it is uncontroverted that the latter, having completed the probationary period and allowed to work thereafter, became a regular employee who may be dismissed only for just or authorized causes. Facts: General Milling Corporation (GMC) is in production and sale of livestock and poultry. It is also a distributor of dressed chicken. It employs hundreds of employees on regular or casual basis (emergency workers). The petitioners were emergency workers under temporary/casual employment contracts for a period of five months. They were chicken dressers, packers and helpers. Upon expiration of contracts, their services were terminated. Filed for illegal dismissal on the basis that based on the nature of their work, they were regular employees. LA: They are regular employees. NLRC: They are regular employees. Issue: WON they are regular employees. Held: No. Art. 280 comprehends 3 kinds of employees (see above). On regular employee: A regular employee is one who is engaged to perform activities which are necessary and desirable in the usual business or trade of the employer as against those which are undertaken for a specific project or are seasonal. There two separate instances whereby it can be determined that an employment is regular: 1) if the particular activity performed b the employee is necessary or desirable in the usual business or trade of the employer if the employee has been performing the job for at least a year Pangilinan v. General Milling corp., 434 SCRA 159 (2004)


Regular employees: whose work is necessary or desirable to the usual business of the employer


In St. Theresas School of Novaliches vs NLRC, it was held that Art. 280 does not prohibit an employment contract with

a fixed period. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual bisness of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employees duties. The records reveal that the stipulations in the employment contracts were knowingly and voluntarily agreed to by the petitioners without force, duress or improper pressure or any circumstances that vitiated their consent. They were hired as emergency workers and while their employment was necessary and desirable in the usual business of the resp, they were employed on a mere temporary basis since their employment was limited to a fixed period. There was no illegal dismissal when the petitioners services were terminated by reason of the expiration of their contracts. Lack of notice of termination is of no consequence, because when the contract specifies the period of its duration, it terminates on the expiration of such period. A contract for employment for a definite period terminates by its own term at the end of such period. Facts: De Leon was an employee of La Tondena Inc in 1981 in the Maintenance Section of the Engineering Department. His work consisted mainly of painting company building and equipment and other odd jobs relating to maintenance. He was paid on a daily basis thru petty cash vouchers. After 1 year, he requested that he be included in the payroll of regular workers and upon this request he was dismissed. LA: He was a regular employee. Emiliano Tanque Jr who was regularly employed by the company as a maintenance job doing same jobs that of De Leon who was also working with the former. He rendered service for more than one year continuously. NLRC: Reversed. Reasoned that he was hired only as a painter and to repaint specifically the Mama Rosa building at the comps Tondo compound. It was made clear to him that he would be so engaged on a casual basis so much so that he was not required to accomplish an application form or to comply with the usual requirements for employment and that he was never paid his salary through the regular payroll and always in petty cash vouchers. SOLGEN: The dismissal of the petitioner after he demanded to be regularized was a subterfuge to circumvent the law on regular employment. He further recommends that the questioned decision and resolution of the NLRC be annulled and that the order of the LA directeing the reinstatement and payment of backwages and other benefits be upheld. SC: NLRC decision should be reversed. An employment is deemed regular when the activities performed by the employee are usually necessary or desirable in the usual business or trade of the employer. Not considered regular are the so-called project employment the completion of termination of which is more or less determinable at the time of employment, such as those employed in connection with a particular construction project and seasonal employment which by its nature is only desirable for a limited period of time. However, an employee who has rendered at least one year of service, whether continuous or intermittent, is deemed De Leon v. NLRC, 176 SCRA 615 (1989)

regular with respect to the activity he performed and while such activity actually exists. The primary standard in determining a regular employment: Reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. The law demands that the nature and entirety of the activities performed by the employee be considered. If his job was truly only to paint a building, there would have been no basis for giving him other work assignments in between painting activities. It is not tenable to argue that the painting and maintenance work of petitioner are not necessary in resps business of manufacturing liquors and wines just as it cannot be said that only those who are directly involved in the process of producing wines and liquors may be considered as necessary employees. Otherwise, there would have been no need for regular Maintenance Section of resp companys Engg Department, manned by Tanque whom petitioner worked with. He was even rehired by the company through a labor agency was returned to his post with the same activities. It is not the will and word of the employer, or the procedure of hiring, or the manning of paying his salary. It is the nature of the activities performed in relation to the particular business or trade considering all circumstances and in some cases, the length of time of its performance and its continued existence. Violeta v. NLRC, 280 SCRA 520 (1997)


Violeta and Baltazar were employees of DISC. Violeta worked in CDCP, a sister corporation of DISC from Dec 1980 to Feb 1981. Then hired him as Erector II at a project for Philphos in Nov 1982 to Dec 1984. Then in Jan 1985 he was reassigned as Erector for Five Stand TCM Project with vacation and sick leaves and was designated as regular project employee at one project with NSC. Again rehired in June 1989 and another in Feb 1992. Because of the completion of the particular item of work, termination of services. Baltazar worked in CDCP in June 1980 as lead carpenter and just like Violeta, he was transferred from one project to another as a regular project employee. He was separated in 1991 as a result of the completion of the said item of work. Quitclaims were executed. Filed for illegal dismissal contending that they are already regular employees who cannot be dismissed on the ground of completion of the particular project where they are engaged.

LA: dismissed for lack of merit but ordered for separation pay because it was the policy of DISC to give separation pay to employees who have rendered one year of service. The conclusion was based on the pet admission that they are regular project employees thus, their employment was deemed coterminous with the project for which their employer engaged them. NLRC: Reversed. Although the appointment specified fixed terms or periods of employment, the fact that hey were hired and transferred from one project to another made both petitioners non-project employees who cannot be terminated by reason alone of the completion of the project. They were hired no only for one particular project but different projects one after the other. BUT! Same division of NLRC reversed itself upon motion of the private resp. Their basis was the employment of petitioners in one of the last projects (ETL #3 Civil Works), it was for a specific or fixed period thus making them project employees. ISSUE: WON they are regular employees. HELD: Yes. They are regular (non-project) and not project employees. In order to properly characterize petitioners employment, it is important to ascertain whether or not their employment falls under the exceptions provided in Article 280 of the Code. The principal test for determining whether particular employees are properly characterized as project employees, as distinguished from regular employees is whether or not the project employees were assigned to carry out a specific project or undertaking, the duration (and scope) of which were specified at the time the employees were engaged for that project. Project employees: those workers hired 1) 2) for a specific project of undertaking (which should be reasonable determinable) the completion or termination of such project or undertaking has been determined at the time of engagement of the employee (which should be defined in an employment agreement and made clear to the employee at the time of hiring).

On the gaps of employment: Art. 280 contemplates both continuous and broken services. Facts: De Guzman was hired by SMC as helper/bricklayer for a specific project, the repair and upgrading of furnace C and his contract was for a specific period (4 months). He was again hired but this time for the draining/cooling down of furnace F and the emergency repair of furnace E. Upon the completion of the last task, termination of services. Illegal dismissal was filed. Issue: Regular employee or Project employee? Held: Project employee. He was hired for a specific project that was not within the regular business of the corporation. Petitioner is not engaged in the business of repairing furnaces. Although the activity was necessary to enable petitioner to continue manufacturing glass, the necessity therefore arose only when a particular furnace reached the end of its life or operating cycle. Or, as in the second undertaking, when a particular furnace required an emergency repair. The undertakings have specified goals and purposes which are fulfilled once the designated work was completed. Moreover, undertaking were also indentifiably separate and distinct from the usual, ordinary or regular business operations of petitioner, which is glass manufacturing. These undertakings, the duration and scope of which had been determined and made known to private resp at the time of his employment, clearly indicated the nature of his employment as a project employee. Thus, his services were terminated legally after the completion of the project. San Miguel Corporation v. NLRC, 297 SCRA 277 (1998)

Based on the above criteria, the petitioners are regular employees of private respondents, and not project employees as postulated by resp NLRC. An examination of said appointments reveals that the completion or termination of the project for which petitioners were hired was not determined at the start of their employment. There is no specific mention of the period or duration when the project will be completed or terminated. It is not enough that an employee is hired for a specific project or phase of work. There must be a determination of or a clear agreement on the completion or termination of the project at the time the employee is engaged if the objective of Article 280 is to be achieved. Since this requirement was not met, they should be considered as regular employees. Jurisprudence abounds with consistent rule that the failure of an employer to report to the nearest Public Employment Office the termination of its workers services every time a project or a phase thereof is completed indicates that the said workers are not project employees. In the case, only the last and final termination was reported to the labor office. Private resp should have filed as many reports of termination as there were construction projects actually finished if pet were indeed proj employees considering that they were hired and rehired for various projects.

performance of such activities (St. Theresas School of Novaliches v. NLRC). ISSUE: WON petitioners were regular employees of GMC HELD: PETITIONERS WERE EMPLOYEES WITH A FIXED PERIOD AND WERE NOT REGULAR EMPLOYEES RATIO: Art. 280, Labor Code comprehends 3 kinds of employees: 1) REGULAR EMPLOYEES or those whose work is necessary or desirable to the usual business of the employer 2) PROJECT EMPLOYEES or those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season 3) CASUAL EMPLOYEES or those who are neither regular nor project employees There are 2 separate instances whereby it can be determined that an employment is regular: 1) If the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer 2) If the employee has been performing the job for at least a year The employment contracts entered into by the petitioners showed that their employment was limited to a fixed period, usually five or six months, and did not go beyond such period. The records reveal that the stipulations in the contracts were knowingly and voluntarily agreed to by petitioners without force, duress or improper pressure, or any circumstances that vitiated their consent. Also, nothing therein shows that these contracts were used as a subterfuge by the respondent GMC to evade the provisions of Arts. 279-280 of the Labor Code. While petitioners employment as chicken dressers is necessary and desirable in the usual business of GMC, they were employed on a mere temporary basis, since their employment was limited to a fixed period. As such, they are merely contractual employees and thus, there was no illegal dismissal Lack of notice of termination is of no consequence because when the contract specifies the period of its duration, it terminates on the expiration of such period. A contract for employment for a definite period terminates by its own term at the end of such period. OTHER ISSUES: A copy of the Labor Arbiters decision was sent by registered mail addressed to Atty. Emmanuel Pacsi, GMCs counsel, but it was Beth Cacal, a clerk of GMC, who received the copy of the decision on October 28, 1997. Contending that the copy was received only on November 3,1997, GMC filed an appeal on November 12,1997 before the NLRC. Petitioners filed a Motion to Dismiss GMCs appeal on the ground that the latter was filed five days late. GMC opposed the motion, contending that Cacal was a mere clerk and not a member of the staff of the Legal Department, and thus Cacals receipt of the decision was not equivalent to receipt by GMCs counsel. The NLRC ruled that GMC filed its appeal within the reglementary period. Service by registered mail is completed on upon actual receipt thereof by the addressee. The CA and SC affirmed, ruling that a service of a copy of a decision on a person who is

PANGILINAN V. GENERAL MILLING CORPORATION FACTS: 1. General Milling Corp. (GMC) is a domestic corporation engaged in the production and sale of livestock and poultry. It is also a distributor of dressed chicken to various restaurants and establishments nationwide. 2. Petitioners were employed by GMC as emergency workers at its Cainta poultry plant under separate temporary/casual contracts of employment for a period of five months. They worked as chicken dressers, packers or helpers. 3. Upon expiration of the employment contracts, petitioners services were terminated. They filed separate complaints for illegal dismissal and nonpayment of holiday pay, 13th month pay, night shift differential and service incentive leave pay before the NLRC. 4. Petitioners allege that they were regular employees of GMC since their work as chicken dressers was necessary and desirable in the usual business of GMC, and that GMC terminated their services without just cause and due notice. They further argued that GMC could not rely on the nomenclature of their employment as temporary or casual. 5. The Labor Arbiter ruled in favour of petitioners declaring that they were regular employees and that they were illegally dismissed. 6. The NLRC rendered a decision reversing that of the Labor Arbiter. It held that petitioners were temporary or contractual employees of GMC and that they were legally terminated upon the expiration of their respective contracts. Citing the case of Brent School Inc. V. Zamora, the NLRC explained that while petitioners work was necessary and desirable in the usual business of GMC, they cannot be considered regular employees since they agreed to a fixed term. 7. The Court of Appeals affirmed the NLRC. The CA ruled that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, it does not necessarily follow that the parties are forbidden from agreeing on a period of time for the

neither a clerk nor one in charge of the attorneys office is invalid. PERPETUAL HELP CREDIT COOPERATIVE, INC. (PHCCI) V. FABURADA FACTS: 1. Private respondents Faburada et. al. filed a complaint against PHCCI for illegal dismissal, premium pay, separation pay, wage differential, moral damages and attys fees. PHCCI filed a motion to dismiss on the ground that no employer-employee relationship exists since private respondents are all members and co-owners of the cooperative. Also, private respondents have not exhausted the remedies provided in the coop by-laws. PHCCI also filed a supplemental motion to dismiss alleging that RA 6939, the Cooperative Development Authority Law, requires conciliation or mediation within the cooperative before a resort to judicial proceeding. The Labor Arbiter ruled in favor of the private respondents, holding that the case is impressed with employer-employee relationship and that the laws on cooperatives is subservient to the Labor Code. The NLRC affirmed.

That Faburada worked only on a part-time basis does not mean that he is not a regular employee. Regularity of employment is not determined by the number of hours one works but by the nature and length of time one has been in that particular job.

SANDOVAL SHIPYARDS V. NLRC FACTS: 1. Sandoval Shipyards is engaged in the building and repair of vessels. It contends that each vessel is a separate project and that the employment of workers is terminated with the completion of each project. In GR No. 65689, private respondents Diamante et. al. were assigned to the construction of LCT Catarman. After 3 months, the project was completed, and Diamante et. al. were served a termination notice. The termination was reported to the Ministry of Labor. The workers filed a complaint for illegal dismissal with the NLRC The LA and NLRC ordered the reinstatement of Diamante et.al In GR No. 66119, private respondents Dela Cruz et. al. were assigned to the construction a tanker M/T Oil Queen VII, ordered by Mobile Oil Philippines. Upon completion of the project, Dela Cruz et. al. who worked aswelders, helpers and construction workers were terminated. The termination was duly reported to the Ministry of Labor. The workers also filed for illegal dismissal. The NCR Director and the Deputy Minister of Labor ordered the reinstatement of Dela Cruz et. al.




3. 4.

ISSUE: WON there is an employer-employee relationship between the parties and WON private respondents were regular employees HELD: YES. YES. RATIO: Elements in determining existence of employeremployee relationship: 1) Selection and engagement of the worker or the power to hire 2) The power to dismiss 3) Payment of wages by whatever means 4) Power to control the workers conduct The above elements are present here. PHCCI through its Manager Mr. Edilberto Lantaca, Jr. hired respondents as computer programmer and clerks. They worked regular working hours, were assigned specific duties, were paid regular wages, and made to accomplish regular time records, and worked under the supervision of the manager. Art. 280, Labor Code comprehends 3 kinds of employees: 1) REGULAR EMPLOYEES or those whose work is necessary or desirable to the usual business of the employer 2) PROJECT EMPLOYEES or those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season 3) CASUAL EMPLOYEES or those who are neither regular nor project employees There are 2 separate instances whereby it can be determined that an employment is regular: 1) If the particular activity performed by the employee is necessary or desirable in the usual business or trade of the employer 2) If the employee has been performing the job for at least a year Private respondents were rendering services necessary to the day-to-day operations of PHCCI. This alone qualified them as regular employees. Moreover, all of them except one worked with PHCCI for more than 1 year. 5.

ISSUE: WON the workers were project employees HELD: YES RATIO: Project The private respondents were project employees whose work was coterminous with the project for which they were hired Project employees are those where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee (Art. 281, LC) Project employees are those employed in connection with a particular construction project. Regular employees are those employed by a construction company without reference to any particular project (Policy Instruction No. 20)

Workers who are hired by a firm whose work is solely contracting for the repair of vessels are project employees who may be automatically laid off after the project is completed. Here, it is significant to note that Sandoval Shipyards does not construct vessels for sale or otherwise which will demand continuous productions of ships and will need permanent or regular workers. It merely accepts contracts for shipbuilding or repair of vessels from third parties and only on those occasions that it hires workers to do the job which lasts only for less than ayear or longer The completion of the project automatically terminates the employment, and the employer is only obliged to report the termination of the employment with the Ministry of Labor.


1. Private respondents filed a petition with the Social Security Commission for SSS coverage and constributions against petitioner Chua, claiming that they were all regular employees in the latters construction business. 2. Private respondents claimed they were assigned by petitioner Chua, owner of Prime Mover Construction Development, as carpenters, masons and fine graders in the latters various construction projects. They allege that Chua dismissed them without justifiable grounds and without notice to them and the Ministry of Labor. 3. Petitioner Chua claimed that private respondents had no cause of action against him, and assuming there was any, the same was barred by prescription and laches. He also claimed that the workers were not regular but project employees, and thus not covered by SSS. Granting that private respondents were entitled to SSS coverage, his failure to remit contributions was due to an honest belief that respondents are project employees. 4. SSC ruled in favour of private respondents. The CA affirmed. ISSUE: WON private respondents are entitled to compulsory SSS coverage HELD: YES RATIO: The Social Security Act was enacted to develop, establish gradually and perfect a social security system which shall be suitable to the needs of the labourers throughout the Phil, and shall provide protection against the hazards of disability, sickness, old age and death. It provides for compulsory coverage of all employees not over 60 years old and their employers. Mandatory coverage is premised on the existence of and employeremployee relationship. All employees, regardless of tenure, would classify for compulsory membership in the SSS, except those classes of employees contemplated in Section 8 (j) of the Social Security Act. Private respondents are regular employees. As masons, carpenters and fine graders in petitioners various construction projects, they performed work which was usually necessary and desirable to petitioners business which involves construction of roads and bridges. It is not enough that an employee is hired for a specific project or phase of work. There must also be a determination of, and a clear agreement on, the completion or termination of the project at the time the employee is engaged (Violeta v. NLRC) The repeated re-hiring and continuing need for respondents services over a long span of time (shortest is 2 years and the longest 8 years) have made them regular employees Also, petitioner was unable to show that private respondents were appraised of the project nature of their employment. He failed to show employment contracts and records that would indicate dates of hiring and termination. Also, no proof that he submitted reports of termination with the Ministry of Labor No prescription: only 8 years had passed from the time delinquency of employer was discovered. Period of prescription is 20 years No laches: no proof that private respondents had failed or neglected to assert their right, considering that they filed their claim within the prescriptive period Good faith of employer is irrelevant since the law does not distinguish




Subsequently, he was designated Assistant Electrician and then promoted to the rank of Electrician. Meanwhile, petitioner Enero claims that he was employed in 1990 by private respondents as a member of the shooting crew. Petitioners tasks consisted of loading, unloading and arranging movie equipment in the shooting area as instructed by the cameraman, returning the equipment to Vivas warehouse, assisting in the fixing of the lighting system and performing other tasks that the cameraman/director may assign. In May 1992, petitioners sought the assistance of their supervisor Cesario to facilitate their request that private respondents adjust their salary in accordance with the minimum wage law. Cesario informed them that their salary would be increased only if they signed a blank employment contract. Petitioners refused to sign. As a result their services were terminated. Petitioners sued for illegal dismissal Private respondents assert that Viva is primarily engaged in the distribution and exhibition of movies but not in the business of making movies. Vic del Rosario is merely and executive producer a financier who invests a certain sum of money for the production of movies. They claim that there is no employer-employee relationship between them and petitioners. Viva contracts persons called associate producers to produce or make movies, and that petitioners are project employees of the associate producers. LA ruled in favour of petitioners. The NLRC reversed.

ISSUES: WON an employer-employee relationship existed between petitioners and Viva WON petitioners are project employees of associate producers who are in turn independent contractors HELD: YES. NO. RATIO: A job contractor under Sec. 8, Rule VIII, Bk III of the Omnibus Rules Implementing the Labor Code must have tools, equipment, machinery, work premises and other materials necessary for the conduct of the business. Here, the associate producers have none of these; all the equipment is owned by Viva and the associate producer merely leases the equipment from Viva. The relationship between Viva and the associate producers is that of agency, as the latter make movies on behalf of Viva, whose business is to make movies. As such, the employment relationship between petitioners and producers is actually one between petitioners and Viva, with the latter being the direct employer The employer-employee relationship can further be established by the control test. The 4 elements of selection, payment of wages, power of dismissal and control are present and can be shown in the ff circumstance The producer has to work within the limits of the budget he is given by the company Viva employs a Supervising Producer, who acts as the eyes and ears of the company to monitor the progress of the associate producers work accomplishment. He conducts rounds of inspection in the field to see if there is any problem that the associate producer is encountering and to make sure that the film project is finished on schedule and that any additional budget requested by the associate producer is really justified Viva requires that the end result must be a quality film acceptable to the company The appointment slips issued to all crew members contain the words superiors and

MARAGUINOT V. NLRC FACTS: 1. Petitioner Maraguinot maintains that he was employed in 1989 by private respondents Vic del Rosario and Viva Films as part of the filming crew. -

top management which can only refer to the superiors and top management of Viva. Also, it is Vivas corporate name which appears on the heading. It is Viva that paid wages to petitioners, evidenced by vouchers containing Vivas letterhead Petitioners were part of a work pool. While they were initially hired as project employees, they had attained regular status since the following conditions concur: 1) there is continuous rehiring of project employees even after cessation of the project 2) the tasks performed are vital, necessary and indispensable to the usual business or trade of the employer Here, Maraguinot was employed for 3 years and worked on 23 projects, while Enero for 2 years and on 18 projects A work pool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is beneficial to both the employer and employee for it prevents the unjust situation of coddling labor at the expense of capital and at the same time enables the workers to attain the status of regular employees J&DO AGUILAR CORPORATION V. NLRC FACTS: 1. Private respondent Acedillo began working for petitioner J&DO Aguilar (engaged in the business of refrigeration) in Feb 1989 as helper-electrician. In Jan 1992, his services were terminated allegedly due to lack of available projects and excess in the number of workers needed. He filed a case for illegal dismissal when he learned that new workers were being hired by petitioner while his request for work was ignored 2. Petitioner company maintains that its workers were hired on a contractual basis and their employment deemed terminated upon completion of the project for which they were hired. It claims that Acedillo was not a regular employee because his employment was for a definite period and made only to augment the regular workforce 3. The LA ruled in favour of respondent Acedillo. The NLRC affirmed. ISSUE: WON Acedillo is a project employee HELD: NO RATIO: Project employees are those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season Here, the petitioner did not specify the duration and scope of the project when it hired Acedillo. It failed to present an employment contract showing that Acedillo was engaged only for a specific project. It is not even clear if Acedillo signed an employment contract

Acedillos work as helper-electrician was an activity necessary and desirable in the usual business or trade of the employer, since refrigeration requires considerable electrical work. Petitioner admits maintaining 2 sets of workers, i.e., those permanently employed regardless of the availability of work and those hired on a project basis. The practice of keeping a work pool renders untaenable the position that Acedillo is not a regular employee: Members of a work pool from a which a construction company draws its project employees, if considered employees of the construction company while in the work pool, are nonproject employees or employees for an indefinite period. If they are employed in a particular project, the completion of the project or any phase thereof will not mean severance of the employer-employee relationship (PNCC v. NLRC)


Nature: Petition to review the decision of the Secretary of Labor Facts: In 1974, a complaint for unfair labor practice was filed by Norberto Luna against Republic Bank. While the case was still pending, there was a substantial change in the corporate structure of Republic Bank. To save the bank from financial collapse, an agreement was entered into between the old stockholders that the Philippine Sugar Commission (PSC) will buy a substantial portion of the bank to inject fresh capital. As a consequence of this reorganization, the old Republic Bank became the Republic Planters Bank, with new controlling stockholders, board membership and management. The bank was also made the financing arm of the PSC. On November 12, 1981, the Supreme Court rendered a decision finding that Luna was illegally dismissed by Republic Bank. The court held that Luna is entitled to reinstatement to his former position as San Juan Branch Manager, without loss of seniority rights and other benefits and increases recognized by law or granted by the bank during the period of the illegal dismissal, with backwages limited to three years. Republic Planters Bank only learned of this case after it was furnished a copy of the decision. The old management did not advise the present management of the pendency of the case. Thus, the bank filed a manifestation and motion to bring to the attention of the SC these facts and circumstances that occurred while the case was still pending. The bank argues that it should not be made to suffer the consequences of the unfair labor practices of the old management. The bank also manifested reinstatement of Luna to his old position would disturb the current organizational structure of the company.

Before the court ruled on the motion, the bank paid Luna his backwages equivalent to three years without qualification.

Issue: WON Luna should be reinstated to his former position Held: NO, he should be reinstated to a substantially equivalent position. Ratio: Reinstatement is a restoration to a state from which one has been removed or separated. It is the return to the position from which he was removed and assuming again the functions of the office already held. Reinstatement presupposes that the previous position from which one had been removed still exists, or that there is an unfilled position more or less of similar nature as the one previously occupied by the employee. Closure of business There was no closure of business notwithstanding that the bank was almost at a brink of a financial ruin. Despite the widespread restructuring and reorganization, the position previously held by Luna was not abolished, but is now held by the incumbent manager who replaced him. Section 4, Rule 1, Book VI of the Implementing Rules states that: An employee who is separated from work without just cause should be reinstated to his former position unless such position no longer exists, at the time of his reinstatement, in which case he shall be given a substantially equivalent position in the same establishment without loss of seniority rights. Even though his former position still exists, Luna cannot be reinstated as San Juan Branch Manager because such position relates to trust and confidence and therefore the incumbent manager who has already won the companys trust and confidence should not be dismissed in favor of Luna, whose competence and integrity has not been tested. The fact that Luna had worked for the bank for 22 years without any showing of irregularity in the performance of his duties DOES NOT prove that he has the trust and confidence of the bank. Economic and Business Conditions - The reinstatement remedy must always be adapted to economicbusiness conditions. The bank had to undergo innovations (such as the replacement of management, hiring of new managers) to ensure recovery. To order the reinstatement of Luna to his former position would undermine the banks efforts at recovery Considering these conditions, it is inevitable that these be reflected in the desire for efficient and productive management. This can only be effectuated if Luna is reinstated to a substantially equivalent position and the incumbent manager who is now holding Lunas former position should be allowed to continue with his tested competence and integrity. Other issues: (1) Is Luna entitled to increases and benefits recognized by law or granted by the bank during the period of his dismissal? NO. Mere continuance as an employee does not qualify him for benefits and increases. Benefits and increases are allowed because of outstanding performance of duties and not solely because of the length of service.

(2) Can the bank deduct the income derived by Luna from other sources during his illegal dismissal from the amount of backwages to be paid? Generally YES. An employer is entitled to deduct from what the Court orders to be paid as backwages whatever an employee has earned elsewhere during the period for which backwages are supposed to be paid. Such qualification is implied in all judgments ordering reinstatement, unless otherwise expressly ordered by the Court. (NOTE: This ruling no longer applies after RA 6715 was enacted on March 21, 1989. See Bustamante vs. NLRC case) However, the bank can no longer make deductions because it has already paid the full amount to Luna. Equity must operate in favor of the employee equally as it favors the employer. NOTES: DIVINE WORD HIGH SCHOOL vs. NLRC

August 6, 1986 Nature: Petition to review the decision of the NLRC. FACTS: Luz Catenza, a high school teacher of Divine Word College, filed a complaint for illegal dismissal against her employer. In her complaint, Catenza alleged that she went on a vacation leave but when she tried to report back to work, she was informed that she is not anymore allowed to teach because of the misdeeds and immoral acts of her husband Pablo, who was then the principal of the same school In its answer to the complaint, the school alleged that Catenza was dismissed not because of the acts of her husband, but because of her own contemporaneous and subsequent conduct of covering up and concealing the immoral acts of her husband. Catenza apparently threatened to kill Remie Ignacio, the victim of her husbands immoral acts. The Labor Arbiter held that there was illegal dismissal, and ordered the reinstatement of Catenza. The NLRC modified this decision by giving Catenza a choice of whether she wanted to be reinstated with full backwages or be separated from the service with termination pay. (NOTE: The NLRC considered the moral repercussions of Catenzas act which it may have towards the minds of the students of the Divine Word, which was a catholic institution. ) Issues: (1) (2) WON there was illegal dismissal If yes, WON her reinstatement is proper

Held: (1) YES A review of the records clearly shows that Catenza was dismissed without valid cause. The reason why she was dismissed was because of the alleged immoral conduct of her husband. However, her husband was never investigated nor was he ever convicted of the serious act alluded to him. Catenza should not be made to suffer for her husbands indiscretion and infidelity.

(2) NO Although Catenza was found to be illegally dismissed, her reinstatement is not proper. Her continued presence in the school may be met antipathy and antagonism by the Catholic school community.

Held: NO CISP did not have any retirement plan for its employees. Thus, Sec. 13 Book IV of the Omnibus Rules shall apply. This rule provides that in the absence of a retirement plan, an employee may be retired upon reaching the age of 60 years. This provision has been construed to mean that an employee may retire, or may be retired by his employer, upon reaching sixty. Thus, Espejo cannot be reinstated anymore because he was already sixty years old at the time the decision was rendered. Generally, an illegally dismissed employee who cannot be reinstated is entitled to separation pay and backwages. However, considering that Espejo has already reached the statutory retirement age of sixty, he is only entitled to backwages. He is entitled to backwages because it is a form of relief that restores the income lost by reason of the unlawful dismissal. He is NOT entitled to separation pay because separation pay is oriented towards the immediate future, the transitional period the dismissed employee must undergo before locating a replacement job. However, the amount of backwages should only cover the time when Espejo was illegally dismissed up to the time when he reached sixty (from October 11, 1989 to January 31, 1990).. Moral and exemplary damages cannot be awarded because the decision to sell the company car was made by the Board, and not the individual whom Espejo considers to be his enemy. Also, the sale was made to meet certain requirements of the Insurance Commission. CISP also relied on the term irrevocable in accepting the resignation and did not take into account Espejos change of heart. This misapprehension of Espejos intentions cannot be deemed bad faith on the part of CISP. Judgment affirmed, but portion relating to period of backwages set aside. LA ordered to compute award of backwages. Kay Products, Inc. v. CA 464 SCRA 544 (2005) FACTS: Employees of KPI wanted to form a union. When the management got the info, it called a meeting to announce that the said employees were to be transferred to an employment agency. Through a memorandum, KPI, through its president, Mr. Kay Lee, promised that the employees would receive bigger and better benefits under the agency as regular employees thereof. KPI directed all employees concerned to sign resignation letters preparatory to their employment with the agency. Employees continued to report for work in KPI but received less wages/salaries. Less than a month later, KPI issued a Memo to the employees, stating that the agency had been dissolved and that there was a need for them to sign separate contracts with another manpower agency. In the meantime, KPI employees were able to organize their union. The employees claimed that the petitioners were guilty of unfair labor practice, underpayment of salaries and service incentive leave pay, and failure to classify them as regular employees. Issue: WON the corporate directors and officers are solidarily liable with the corporation for the termination of employees.

Thus, Divine Word is ordered to pay Catenza separation pay equivalent to one month pay for every year of service, plus her backwages (not to exceed three years) from the time of the dismissal up to the time of actual payment.

NOTE: The issue of lack of due process was also raised by the school, because the LA had considered the case submitted for decision despite the fact that the school had not yet rested its case. However, a scrutiny of the records show that the school was afforded every opportunity to present its evidence but no one appeared at the four consecutive hearings scheduled for the purpose. Espejo v. NLRC, 255 SCRA 430 (1996) FACTS: On August 1, 1987, the Cooperative Insurance System of the Philippines (CISP) hired Espejo as General Manager with a monthly salary of P9,000 plus some privileges, including the use of a company car with driver. On September 11, 1989, the Board of Directors of CISP held a meeting to discuss the cease and desist order issued by the Insurance Commission against CISP on the grounds of capital impairment and margin of solvency deficiency. In order to meet the capital requirements, the Board passed a resolution authorizing the sale of some CISP properties, including the car assigned to Espejo. Espejo objected to the proposed sale. The Board did not act on his objection so Espejo was prompted to tender his irrevocable resignation effective October 11, 1989. On September 22, 1989, the Board held another meeting, where they affirmed the sale of CISP properties. The Board also resolved to act on Espejos resignation. On September 26, 1989, the Chairman of the company met with Espejo who manifested that he had changed his mind about resigning and that he would continue as General Manager despite the sale of the company car. The Chairman wrote a memo to the Board on October 3 to inform the latter of Espejos oral revocation. On October 9, 1989, Espejo received a letter from the Chariman relaying the acceptance of his resignation effective October 11. Espejo replied stating that he was surprised about this action of the Board, since he had earlier verbally withdrawn his resignation. On November 14, 1989, CISP paid Espejo his unpaid benefits. Espejo filed a complaint for illegal dismissal and damages. The LA ruled in his favor and ordered CISP to reinstate him to his former position and to pay full backwages limited to three years. The NLRC affirmed the finding of illegal dismissal but deleted the reinstatement for having become moot and academic since Espejo was already 60 years old. The award of backwages was limited to 18 months. Issue: WON an illegally dismissed employee may be reinstated even if he had already reached retirement age

Held: YES In labor cases, corporate directors and officers are solidarily liable with the corporation for the termination of employment of corporate employees done with malice or bad faith. Kay Lee, as the president, actively managed the business. In fact, she was the one who decided the employees transfer to the employment agencies, and signed the memoranda ordering such transfer, in bad faith. In Naguiat v. NLRC, SC held that the president of a corporation, who actively manages the business, falls within the meaning of an employer as contemplated by the labor code, and may be held jointly and severally liable for the obligations of the corporation to its dismissed employees. Thus, Kay Lee and KPI are jointly and severally liable for the latters obligations. Serrano v. NLRC, 323 SCRA 445 (2000) FACTS: Petitioner was hired by private respondent Isetann as a security checker to apprehend shoplifters and prevent pilferage of merchandise. Initially hired on Oct 1984 on contractual basis, eventually became regular on 1985 and on 1988 became head of the Security Checkers Section. In 1991, as a cost-cutting measure, Isetann decided to phase out its entire security section and engage the services of an independent security agency. Serrano was given a memorandum terminating his services effective on that same day on Oct 11, 1991. Serrano filed a complaint for illegal dismissal, illegal layoff, unfair labor practice, underpayment of wages, and nonpayment of salary and overtime pay. The Labor Arbiter ruled for Serrano. On appeal the NLRC reversed the decision of the Labor Arbiter. Issues: 1. WON hiring an independent security agency by Isetann to replace its current security section as a valid ground. 2. WON the denial of the right to be given a written notice is tantamount to an illegal dismissal. Held: 1. No. Absent proof that management acted in a malicious or arbitrary manner, the court will not interfere with exercise of the judgment by an employer. The only bare assertion is that Isetanns real purpose is to avoid payment to the security checkers of the wage increases provided, such assertion is not a sufficient basis. Indeed, that the phase-out of the security section constituted a legitimate business decision is a factual finding of an administrative agency which must be accorded respect and even finality by this court. Accordingly, SC held that the termination of the petitioners services was for an authorized cause redundancy. Hence, pursuant to Art. 283 of the Labor Code, petitioner should be given separate pay at the rate of one month pay for every year of service. 2. No. The SC do not agree that to disregard the notice requirement by an employer renders the dismissal of employment null and void. Such a stance is actually a reversion to the discredited pre-Wenphil rule ordering an employee to be reinstated and paid backwages when it is shown that he has not given notice and hearing although his dismissal or layoff is later found to be a just or authorized cause. Such rule is abandoned in Wenphil because it is really unjust to require an employer to keep in his service one who is guilty, for example, of an attempt on the life of the

employer or the latters family, or when the employer is precisely retrenching in order to prevent losses. Rather, the remedy is to order the payment to the employee of full backwages from the time of his dismissal until the court finds that the dismissal was for a just cause. But, otherwise, his dismissal must be upheld and he should not be reinstated. This is because his dismissal is ineffectual. The cases cited by both Justice Puno and Panganiban refer, however, to the denial of due process by the State, which is not the case here. There are three reasons why, on the other hand, violation of the employer of the notice of requirement cannot be considered a denial of due process resulting in the nullity of the employees dismissal or layoff. a) The Due Process Clause of the Constitution is a limitation to the governmental powers. It does not apply to the exercise of private power, such as termination of employment under the labor code. b) Notice and hearing are required under the Due Process Clause before the power of organized society are brought to bear upon the individual. This is obviously not the case of termination of employment under Art 283. Here the employee is not faced with an aspect of the adversary system. The purpose is requiring for a 30-day written notice before an employee is laid off is not to afford him an opportunity to be heard on any charge against him, for there is none. The purpose rather is to give him time to prepare for the eventual loss of his job and the DOLE an opportunity to determine whether economic causes do exist justifying the termination of his employment. c) Another reason why the notice requirement under Art 283 can not be considered a requirement of the Due Process Clause is that the employer cannot really be expected to be entirely an impartial judge of his own cause. This is also the cause under Art 282. Lack of notice only makes termination Ineffectual Not all notice requirements are requirements of due process. Some are simply part of the procedure to be followed before a right granted to a party can be exercised. Others are simply an application of the Justinian precept, embodied in the Civil Code, to act with justice, give everyone his due, and observe honesty and good faith toward ones fellowmen. Such is the notice of requirement in Art 282-283. The consequence of the failure either of the employer or the employee to live up to this precept is to make him liable in damages, not to render his act (dismissal or resignation, as the case may be) void. In sum, we hold that in proceedings for reinstatement under Art 283, it is shown that the termination of employment was due to an authorized cause, then the employee concerned should not be ordered reinstated even though there is failure to comply with the 30-day notice requirement. Instead, he must be granted separation pay and backwages from the time his employment was terminated until it is determined that the termination of employment is for a just cause because the failure to hear him before he is dismissed renders the termination of his employment without effect. Puno, Dissenting We must immediately set Wenphil in its proper perspective as it is a very exceptional case. Its doctrine must be limited to its distinct facts. In Wenphil, it was clearly established that the employee had a violent temper, caused trouble during office hours and even defied his superiors as they tried to pacify him. The Labor Arbiter proved that the employee was guilty of grave misconduct and insubordination; we concluded with the rule that it would be highly prejudicial to

the interest of the employer to reinstate the employee, but the employer must indemnify the employee the amount of P1000.00 for dismissing him without notice. At the outset, Puno emphasized that Wenphil itself held, and repeatedly held that the failure of petitioner to give private respondent the benefit of hearing before he was dismissed, constitutes an infringement of his constitutional right to due process of law and equal protection of the laws. Before Wenphil, we protected employees with the ruling that dismissals without prior notice are illegal and the illegally dismissed employee must be reinstated with backwages. Wenphil diluted that rule when it held that due process is satisfied if the employee is given the opportunity to be heard by the Labor Arbiter. It further held that an employee cannot be reinstated if it is established in the hearing that his dismissal is for a just cause. The failure of the employer is for a just cause. The failure of the employer to give a predismissal notice is only to be penalized by payment of an indemnity. The dilution of the rule has been abused by unscrupulous employers who then followed the dismiss now, pay later strategy. This evil practice of employers was what Puno expected the majority to address in re-examining the Wenphil doctrine. At the very least, Puno thought the majority would restore the balance of rights between an employee and an employer by giving back the employees mandatory right to notice before dismissal. LLOSA TAN V. SILAHIS INTERNATIOINAL HOTEL J. ; 1990 FACTS: Was front office cashier of Silahis International Hotel since November 2, 1976. Since 1977, Corporate Policy No. 014 was issued to minimize losses experienced by company because of checks encashed by them which later bounced. Petitioner allegedly violated said policy when she encashed $1200 check of Mr. Gayondato, the general cashier of Puerto Azul Beach resort and nephew of EVP. Suatengco ordered petitioner to explain and also placed her under preventive suspension. Petitioner wrote a letter of explanation but her services were nevertheless terminated on October 30, 1982. LA: illegal dismissal: reinstate NLRC: set aside decision, dismissed complaint for illegal dismissal for lack of merit Issue: WON petitioner was validly dismissed on the ground of gross negligence Held: NO 1. gross negligence: the want of any right or slight care or the utter disregard of consequences not proven 2. a. b. encashment violated policy but: no bad faith policy not strictly enforced

Employer has a standing policy prohibiting the encashment of checks of its employees and officials even if endorsed by top executives of the company. Employee herein was terminated for such encashment after she was assured that the executive VP approved of it. However, it is found that such prohibition policy has been relaxed and that respondent employer was informed of such encashment but only acted upon it when checks bounced. They are thus estopped from imposing the penalty of termination. An alleged just cause for termination cannot be used as a shield to dismiss an employee arbitrarily. (Llosa Tan v. Silahis International Hotel) Interorient Maritime Enterprises Inc. v. NLRC, 235 SCRA 268 (1994) FACTS: Captain Tayog was hired by Trenda World Shipping and Sea Horse Hip Management Inc thru petitioner as Master of the M/V Oceanic Mindoro. He was given the instruction to assume the command of the vessel at Port of Hongkong where he was to replenish bunker and diesel fuel and to sail forthwith to Richard Bay, South Africa in order to load 120,000 metric tons of coal. Upon hearing that storm Gordon was to hit Hongkong, Tayog followed up the request for oxygen and acetylene which were necessary for the repaid of the turbo-charger and the economizer. The ships agent however informed them that the supplies could be delivered only at 0800 hours, 7 hours after the ETD from the port to Africa. Tayog waited for the supplies and voyage was delayed. Upon arriving at Richard bay, he was instructed to turn-over his post to a new captain and thereafter was repatriated to the Philippines. He was not informed of charges. POEA: validly dismissed NLRC: illegal: no opportunity to be heard, no evidence to prove loss of trust or confidence Issue: WON he was validly dismissed Held: NO 1. Confidential employees cannot be arbitrarily dismissed at any time, and without cause as reasonably established in an investigation. never informed of charges not accorded opportunity to hear he had valid and justifiable reasons for causing the delay 2. Captains are confidential employees who perform both management and fiduciary functions a. b. general agent of shipowner commander and technical director of the vessel

c. superiors were aware: petitioner told Assistant manager Grulla who assured her that such is alright 3. The right of employer to freely select or discharge his employees is regulated by the state because the preservation of the lives of the citizens is a basic duty of the state, more vital than the preservation of corporate profit. 4. Security of tenure is a right of paramount value guaranteed by the consti and should not be denied on mere speculation.

c. representative of the country under whose flag he navigates Azcor Manufacturing v. NLRC, 303 SCRA 26 (1999) FACTS: Capulso worked with Azcor for more than 2 years as a ceramics worker. He verbally requested to go on sick leave because of bronchial asthma. Capulsos supervisor approved

his request but when he reported to work, he was told that only the owner could allow him to resume his employment. Capulso filed a complaint for constructive illegal dismissal when he was not reinstated even after going to Azcor 5 times to follow up his employment. Azcor averred that there was no employer-employee relationship as Capulso was a former employee who resigned. Azcor presented a contract of employment and 2 resignation letters as evidence. Labor Arbiter dismissed the complaint for illegal dismissal but ordered Azcor to pay Capulso P200. NLRC modified the LAs decision by declaring Capulsos dismissal as illegal and ordering reinstatement and payment of backwages. ISSUE/HELD: WON Azcor was able to prove that Capulsos termination was valid No in cases of illegal dismissal, burden of proof that the dismissal was for a valid and authorized cause rests on the employer failure to prove the same would mean that the dismissal is not justified and is, therefore, illegal in this case, the pieces of evidence presented by Azcor was not enough to establish the validity of the dismissal The contract of employment stipulated that it was for a period of 6 months, but it was proven that Capulso continued working after the lapse of such period 2 resignation letters, purportedly executed by Capulso, were presented but disregarded because a. they were exactly worded tend to show that they were prepared by Azcor b. they were written in English, a language that Capulso was not conversant with c. they were pre-drafted with blank spaces such that details, like the dates of effectivity, were only filled in after since Azcor was the party who presented the above pieces of evidence, it was incumbent upon them to prove their authenticity

Labor arbiter transfer not sanctioned by law, illegal and tantamount to unjust dismissal. NLRC affirmed LA; lady guard discriminated upon; no reason for reassignment.

Issue: WON respondents transfer is tantamount to illegal dismissal?

Held: NO. Transfer is valid. The availability of assignment for security guards is primarily at heart subservient to the contracts entered into by the security agency with its client-third parties. As such, being sidelined temporarily is a standard stipulation in employment contracts. When a security guard is placed "off detail" or on "floating" status, in security agency parlance, it means "waiting to be posted." Private respondent has not even been "off detail" for a week when she filed her complaint. The renewal of the contract of the security agency with the condo hinged on the action taken by the former on the latter's request in the memorandum. Most contracts for security services stipulate that the client may request the replacement of the guards assigned to it and such stipulation is valid. The mere fact that the transfer of the respondent would be inconvenient to her does not by itself maker her transfer illegal. An employee has a right to security of tenure, but this does not give her such a vested right in her position as would deprive petitioner of its prerogative to change her assignment or transfer her where her service, as security guard, will be most beneficial to the client. PAL vs. NLRC Facts: Castro was hired as manifesting clerk by PAL. Together with a coemployee, he was apprehended by government authorities while about to board a flight en route to Hongkong in possession of P39,850.00 in violation of a central bank circular. PAL was informed of the incident, and after failure of the respondent to explain why he should not be charged administratively, it placed him on preventive suspension effective March 27, 1984 for grave misconduct. His suspension lasted until September 18, 1987 (it was for 3 years and 6 months). PAL found him guilty of the offense charged but decided to reinstate him, with the period within which he was out of work serving as his penalty for suspension. Upon reinstatement, he filed a claim against PAL for the backwages and salary increases granted under the CBA covering the period of his suspension. PAL denied his claim. Labor Arbiter PAL should pay complainant his salaries and benefits from April 26, 1984 up to September 18, 1987 . NLRC affirmed LA Issue: WON respondent who was preventively suspended for more than 30 days is entitled to backwages and salary increases granted under the CBA for the period beyond the 30 day limit imposed by law Held: Yes, for the period beyond the first 30 days of the suspension, he is entitled to the backwages and salary increases.

OSS Security & Allied Services vs. NLRC Facts: Legaspi worked as a lady security guard of OSS Security and was assigned at the Vicente Madrigal Condominium II in Ayala Avenue Makati . Due to a memorandum sent by the condominiums administrator to the security agencys president, Legaspi and another lady guard were relieved of their assignments in the condominium. The memorandum contained a complaint (about the laxity of the guards assigned in the condo in enforcing security measures, their alleged falsification of logbook entries, and the dissemination of intrigues among the employees) and a request for the reorganization of the personnel and replacement of some women complement. Legaspi was detailed to Minami International Corp in Taytay Rizal to replace a lady guard going on vacation leave. But she did not report for work and 3 days after she was informed of her new assignment, she filed a complaint for underpayment and constructive dismissal.

Sec 3 and 4, Rule XIV of the Omnibus Rules Implementing the Labor Code is clear that preventive suspension cannot last longer than 30 days. The employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the workers. SC affirmed the decision of the LA and NLRC.

impair at least 25% of paid-up capital). This criterion, Nasipit failed to meet. - Further, by exempting all establishments in a distressed industry, RTWPB takes away the mandated increase in minimum wage awarded to affected workers, which is against declared State policy to rationalize fixing of minimum wage. -Thus, Guideline No. 3 is void, not only because it lacks NWPC approval and contains an arbitrarily inserted exemption, but also because it is inconsistent with avowed Sate policies protective of labor.

Nasipit Lumber Co., Inc. vs. National Wages and Productivity Commission (NWPC) April 27, 1998 PANGANIBAN, J. FACTS: - RTWPB issued a wage order increasing minimum wage rates - Nasipit Lumber filed an application for exemption citing RTWPBs Guideline No. 3 providing for exemption of distressed industries - The RTWPB approved the same. - Union lodged an appeal with the NWPC, which reversed the approval, because Nasipit did not meet NWPCs criteria for exemption ISSUE: - WON a guideline issued by an RTWPB without the approval of or, worse, contrary to the guidelines promulgated by the NWPC is valid? HELD: No. - The Labor Code created both the NWPC and the RTWPB and defined their respective powers. - NWPC - Art 121 (c) To prescribe rules for the determination of minimum wage, (d) To review regional wage levels set by the RTWPB to determine if these are in accordance with prescribed guidelines and national development plans - RTWPB - Art 122 (b) To fix minimum wage rates in their region, and to issue corresponding wage orders, subject to guidelines issued by the NWPC - Clearly, NWPC, not RTWPB, has power to prescribe rules and guidelines for the determination of minimum wage; whatever wage orders RTWPB can issue are subject to such guidelines, and whatever exemptions are subject to review by the NWPC. - NWPC only provides for exemption by establishment, not by industry, the criterion being (i.e. accumulated losses should

Employers Confederation of the Phil vs. National Wage and Productivity Commission (NWPC) September 24, 1991 SARMIENTO, J. FACTS: - RTWPB-NCR issued a wage order increasing minimum wage by P17 daily. Upon appeal by certain employee groups, the same was amended, also granting the increase to those already receiving above the statutory minimum wage upto P125 per day. - ECOP (employer group) contends: 1) RTWPB may only prescribe minimum wages, not determine salary ceilings; 2) wage-fixing is a legislative function - Generally, two methods of wage adjustment: 1) floorwage method amount added to statutory minimum; 2) salary-ceiling/cap method increase applied to employees receiving a certain denominated salary. RTWPBs increasingly, are resorting to the latter method, which has reduced disputes arising from wage distortions brought about, by the floor-wage method and its implementation. ISSUE: - WON the RTWPB-NCR has acted in excess of its powers in adopting the salary-ceiling method HELD: No. - Wage-fixing, although a legislative function, may be delegated, provided there are sufficient standards. The Court finds Art. 12 of RA 6727 providing for Standards/Criteria for Minimum Wage Fixing, sufficient to justify the grant of the power of subordinate legislation. - RA 6727 was intended to rationalize wages by providing full-time boards to police wages by giving them enough power to achieve this objective. Minimum wage means more than setting a floor wage to upgrade existing wages, rather, it underlies the effort of the State as RA 6727 expresses it, to promote productivity-improvement and gain0sharing measures to ensure a decent standard of living. The Court said that in doing this, Congress meant the boards to be creative. - At the moment, the Court finds the salary-ceiling/cap method reasonable policy. If in the future, the method would be perceptibly unfair to management, the Court will take it up then. Cagayan Sugar Milling Company vs. Secretary of Labor and Employment January 15, 1998 PUNO, J. FACTS: - RTWPB-Regional Office No.2 issued a wage order increasing the statutory minimum wage. - Later, labor inspectors examined the books of Cagayan Sugar (CARSUMCO) and found that it violated the wage order as it did not implement an across the board increase, even if CARSUMCO was paying the mandated increase in the minimum wage. - CARSUMCO appealed to Labor Secretary Quisumbing. On the same date, RTWPB issued a purported amendment to the earlier wage order, now granting an across the board wage increase, and further providing that the such amendment was curative and shall retroact to the effectivity of the 1st wage order. - CARSUMCO assails the 2nd wage order on the ground that it passed without the required public consultation and newspaper publication

ISSUES: - WON the second wage order is null and void for having been issued in violation of procedure provided by law and in violation of Petitioners right to due process HELD: - Art. 123 of the Labor Code requires publication in at least 1 newspaper of general circulation in the region, public hearings/consultations, and giving notices. Here, none of the requirements were complied with. - Respondent claims: no need to comply with consultation and publication as the 2nd wage order merely clarified the ambiguous provision of the 1st wage order. But the Court said theres no ambiguity in the 1st wage order mandating, in clear and categorical terms, only an increase in the statutory minimum. The 2nd wage order providing instead for across the board increase changed the essence of the wage order. Non-compliance with the legal requirements deprived Petitioner and other employers of due process as they were not given the opportunity to ventilate their positions regarding the proposed wage increase. Wage Fixing Machinery Wage Order Wage Distortion Prubankers Association vs. Prudential Bank & Trust Co. January 25, 1999 PANGANIBAN, J. FACTS: - RTWPB Regions V and VII issued wage orders increasing COLA and integrating COLA into basic wage and increasing minimum wage rates, for workers in their respective regions. Prudential Bank granted the increases in its branches covered by the wage orders. - Prubankers Association (Union) contend that the employees in the affected regions have higher compensation than their counterparts, of the same level, in other regions. They alleged wage distortion and asked that the wage orders be applied to employees outside of regions V and VII. ISSUES: - WON there is wage distortion HELD: No. - Four elements: 1) An existing hierarchy of positions with corresponding salary rates 2) A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one 3) The elimination of the distinction between the two levels 4) The existence of the distortion in the same region of the country - RA 6727, in fact, recognizes existing regional disparities in cost of living. Likewise, the Standards/Criteria for Minimum Wage Fixing provided for in Art. 124 of the Labor Code, as amended by RA 6727 also takes varying cost of living, supply and demand of basic necessities, and purchasing power of the peso in each regions, into consideration. - Here, in said branches of region V and VII, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved. - Wage distortion is a wage parity between employees of different rungs of the same establishment. Here, instead, there is a wage disparity between employees in the same rung, but located in different regions, which according to the Court, does not constituted wage distortion as contemplated by law. OTHER MINOR ISSUES - Union challenges Banks abandonment of a national wage structure for a regionalized structure in violation of equal pay, for equal work. The Court holds to the position that a uniform national wage structure is antithetical to the purpose of RA 6727 on its face. In any event, it adds that its decisions merely enforce the law, and that it does not have power to pass upon wisdom or propriety. - Union argues that regional offices of the Bank should be construed as merely branches of the establishment (which is the whole bank) in relation to the IRR of RA 6727. The Court belies this argument by quoting the whole provision referred to by the Union, which omits an integral part stating

that wage rates shall be those applicable in the place where they are sanctioned. Further, the Court cites NWPC Guideline No. 1 where it is expressly stated that establishment refers to an economic unit which engages in one or more predominantly one kind of economic activity with a single fixed location. - Union also alleges that Bank violated established management practice of uniform wage policy. The Court held that such practice was adopted prior to the enactment of RA 6727, and that, while the Bank still applied a nationwide implementation of the first wage orders, such single instance cannot be constitutive of management practice. Wage Payment and Protection From of Payment Congson vs. NLRC April 5, 1995 PADILLA, J. FACTS: - Congson is the owner of Southern Fishing Industry. Private respondents are regular piece-rate workers paid P1.00 per tuna-movement (unloading from ship, to storage plant, and loading for shipment). - Congson proposed to reduce the rate per tuna-movement due to the scarcity of tuna. Private respondents resisted, and so were replaced by a new set of workers. - Private respondents sued for constructive dismissal, and wage differentials for failure to meet minimum wage requirements. - With regard to the wage, Congson argued that the computation of the wage should consider that, as agreed upon, respondents get the intestines and liver of the tuna as part of their salary (3 kilos per shipment, saleable @ P15.00 to P20.00 per kilo) ISSUE: - WON the minimum wage was met considering it was agreed that part of the workers wages would be paid in tuna intestines that they could sell for substantial value. HELD: No. - The Labor Code expressly provides: Article 102. Forms of Payment. No employer shall pay the wages of an employee by means of, promissory notes, vouchers, coupons, tokens tickets, chits, or any object other than legal tender, even when expressly requested by the employee. - Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to the above cited provision. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even expressly requested by private respondents, does not shield petitioner. EXTRA: - With regard to the contention of Congson that there is no strained relationship, so an award for separation pay is not proper since reinstatement is an option, the Court held that there was. This is supported by the fact that Congson refused to re-admit respondents into his establishment (which Arturo Lagniton, Sr. vs. National Labor Relations Commission, et al provides, is constitutive of strained relations), and that respondents themselves already indicated an aversion to their continued employment with Congson by their filing a second case specifically for separation pay. Wage Payment and Protection Person to Pay Bermiso et al vs. Escano, Inc., et al February 28, 1959 PADILLA, J. FACTS: - Bermiso et al are the 5 left of 45 stevedores originally bringing this complaint, belonging to a chapter of a Union in Cebu under a foreman or Cabo named Sabay. - Hijos de F. Escano (Company) is a carrier of goods by water. - Escano contracted stevedoring services exclusively from

Sabays group. Escano has never paid the Sabay group; the practice from the start has been for Sabay, as leader, to collect charges for handling of the cargo from the shippers or consignees. The net income from collections, he then distributed to the stevedores. ISSUE: - WON the law on direct payment of wages is violated HELD: No. - The nature of the stevedoring work necessitates a large group, which in turn necessitates a leader because: the group renders services for various employers, so someone has to determine which members will work for one vessel and which for another, also employers prefer to deal with a leader instead of each member individually. - The work of stevedoring was undertaken by laborers, not in their individual capacities, but as a group. And the contract to perform the service was made by the leader, Sabay, for and on behalf of the latter, not for each of them individually. - There was no showing that Sabay as leader was engaged in racketeering, nor that he appropriated a lions share of the income he collected. As such, the Court claimed that it was not prepared to say that there was a violation of the provision on direct payment of wages. EXTRA: - Further, stevedoring charges were collected from shippers themselves; Escano is not the one obliged to pay such charges. - With regard to payment of backwages (because some stevedores were not allowed to work certain jobs and thus denied a share in the price therefor), vacation and sick leave, accident, insurance, etc., the Court held that these must be sought through labor organizations by collective bargaining.