GREPALIFE ASSURANCE CORPORATION V. HONORADO JUDICO In the case of Grepalife v.

Judico, the Court upheld the existence of an employer-employee relationship between the insurance company and its agents, despite the fact that the compensation that the agents on commission received was not paid by the company but by the investor or the person insured. The relevant factor remains, as stated earlier, whether the "employer" controls or has reserved the right to control the "employee" not only as to the result of the work to be done but also as to the means and methods by which the same is to be accomplished. Neither does it follow that a person who does not observe normal hours of work cannot be deemed an employee. In the case of Cosmopolitan Funeral Homes, Inc. v. Maalat, the employer similarly denied the existence of an employeremployee relationship, as the claimant according to it, was a supervisor on commission basis who did not observe normal hours of work. This Court declared that there was an employer-employee relationship, noting that [the] supervisor, although compensated on commission basis, [is] exempt from the observance of normal hours of work for his compensation is measured by the number of sales he makes.

G.R. No. L-72654-61 January 22, 1990 ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE GUZMAN, respondents Facts: Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several fishing vessels owned and operated by private respondent De Guzman Fishing Enterprises which is primarily engaged in the fishing business with port and office at Camaligan, Camarines Sur. Petitioners rendered service aboard said fishing vessel in various capacities, as follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer; Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco, second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen. For services rendered in the conduct of private respondent's regular business of "trawl" fishing, petitioners were paid on percentage commission basis in cash by one Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise, they received ten percent (10%) of the total proceeds of the sale. The patron/pilot, chief engineer and master fisherman received a minimum income of P350.00 per week while the assistant engineer, second fisherman, and fishermanwinchman received a minimum income of P260.00 per week. On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge de Guzman, president of private respondent, to proceed to the police station at Camaligan, Camarines Sur, for investigation on the report that they sold some of their fish-catch at midsea to the prejudice of private respondent. Petitioners denied the charge claiming that the same was a countermove to their having formed a labor union and becoming members of Defender of Industrial Agricultural Labor Organizations and General Workers Union (DIALOGWU) on September 3, 1983. During the investigation, no witnesses were presented to prove the charge against petitioners, and no criminal charges were formally filed against them. Notwithstanding, private respondent refused to allow petitioners to return to the fishing vessel to resume their work on the same day, September 11, 1983. On September 22, 1983, petitioners individually filed their complaints for illegal dismissal and non-payment of 13th month pay, emergency cost of living allowance and service incentive pay, with the then Ministry (now Department) of Labor and Employment, Regional Arbitration Branch No. V, Legaspi City, Albay. They uniformly contended that they were arbitrarily dismissed without being given ample time to look for a new job. Issue:

Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprises. Ruling: Disputing the finding of public respondent that a "joint fishing venture" exists between private respondent and petitioners, petitioners claim that public respondent exceeded its jurisdiction and/or abused its discretion when it added facts not contained in the records when it stated that the pilot-crew members do not receive compensation from the boat-owners except their share in the catch produced by their own efforts; that public respondent ignored the evidence of petitioners that private respondent controlled the fishing operations; that public respondent did not take into account established jurisprudence that the relationship between the fishing boat operators and their crew is one of direct employer and employee. We have consistently ruled that in determining the existence of an employer-employee relationship, the elements that are generally considered are the following (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employer's power to control the employee with respect to the means and methods by which the work is to be accomplished. 8 The employment relation arises from contract of hire, express or implied. 9 In the absence of hiring, no actual employer-employee relation could exist. From the four (4) elements mentioned, we have generally relied on the so-called right-of-control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. The test calls merely for the existence of the right to control the manner of doing the work, not the actual exercise of the right. The petition is GRANTED. The questioned resolution of the National Labor Relations Commission dated May 30,1985 is hereby REVERSED and SET ASIDE. Private respondent is ordered to reinstate petitioners to their former positions or any equivalent positions with 3-year backwages and other monetary benefits under the law. No pronouncement as to costs.

Jo vs. NLRC, G.R. No. 121605, February 2, 2000; 324 SCRA 437
Posted by Pius Morados on November 10, 2011

(Labor Standards Existence of employer-employee relationship) Facts: Private respondent working as a barber on piece-rate basis was designated by petitioners as caretaker of their barbershop. Private respondents duties as caretaker, in addition to his being a barber, were: 1) to report to the owners of the barbershop whenever the aircondition units malfunction and/or whenever water or electric power supply was interrupted; 2) to call the laundry woman to wash dirty linen; 3) to recommend applicants for interview and hiring; 4) to attend to other needs of the shop. For this additional job, he was given an honorarium equivalent to1/3 of the net income of the shop. Private respondent left his job voluntarily because of his misunderstanding with his co-worker and demanded separation pay and other monetary benefits. Petitioners contends that respondent was not their employee but their partner in trade whose compensation was based on a sharing arrangement per haircut or shaving job done. Issue: Whether or not there exist an employer-employee relationship. Held: Yes. In determining the existence of an employer-employee relationship, the following elements are considered: 1) selection and engagement of worker; 2) power of dismissal; 3) the payment of wages; and 4) the power to control the workers conduct, with the latter assuming primacy in the overall consideration. The power of control refers to the existence of the power and not necessarily to the actual exercise thereof. It is not essential for the employer to actually supervise the performance of duties of the employee; it is enough that the employer has the right to wield that power.

Besa v. Trajano

FACTS:

Respondent KAMPI filed a Petition for Certification Election. Petitioner opposed alleging that there is no ER-EE relationship between Besa and petitioners. These petitioners are shoe shiners paid on a commission basis. The question of ER-EE relationship became a primordial consideration in resolving whether or not the subject shoe shiners have the juridical personality and standing to present a petition for certification as well as to vote therein.

ISSUE: W/N ER-EE relationship exists betweem shoe shiners and Besa

HELD: No. Shoe shiner is different from a piece worjer:

Piece Woker 1. paid for work accomplished 2. the employer pays his wages 3. paid for work accomplished without concern to the pr ofit derived by employer 4. the employer supervises and controls his work

Shoe shiner 1. contributes anything to the capital of the employer 2. paid directly by his customer 3. the proceeds derived from the trade are divided share wit h respondent BESA 4. respondent does not exercise control

Thus, shoe shiners are not employees of the company, but are partners, because there is no control by the owner and shoe shiners have their own customers whom they charge a fee and divide the proceeds equally with the owner.

INSULAR LIFE ASSURANCE vs NLRC Case Digest

[G.R. No. 84484 November 15, 1989] INSULAR LIFE ASSURANCE CO., LTD., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION and MELECIO BASIAO, respondents. FACTS: Since 1968, respondent Basiao has been an agent for petitioner company, and is authorized to solicit within the Philippines applications for insurance policies and annuities in accordance with the existing rules and regulations of the company. In return, he would receive compensation, in the form of commissions. Some four years later, in April 1972, the parties entered into another contract an Agency Manager's Contract and to implement his end of it Basiao organized an agency or office to which he gave the name M. Basiao and Associates, while concurrently fulfilling his commitments under the first contract with the Company. In May, 1979, the Company terminated the Agency Manager's Contract. After vainly seeking a reconsideration, Basiao sued the Company in a civil action and this, he was later to claim, prompted the latter to terminate also his engagement under the first contract and to stop payment of his commissions starting April 1, 1980. Basiao thereafter filed with the then Ministry of Labor a complaint against the Company and its president. The complaint sought to recover commissions allegedly unpaid thereunder, plus attorney's

fees. The respondents disputed the Ministry's jurisdiction over Basiao's claim, asserting that he was not the Company's employee, but an independent contractor. ISSUE: Whether or not there exist an employer-employee relationship between Basiao and Insular Life. HELD: The SC ruled in favor of Insular Life. Not every form of control that the hiring party reserves to himself over the conduct of the party hired in relation to the services rendered may be accorded the effect of establishing an employer-employee relationship between them in the legal or technical sense of the term. A line must be drawn somewhere, if the recognized distinction between an employee and an individual contractor is not to vanish altogether. Logically, the line should be drawn between rules that merely serve as guidelines towards the achievement of the mutually desired result without dictating the means or methods to be employed in attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use of such means. The first, which aim only to promote the result, create no employer-employee relationship unlike the second, which address both the result and the means used to achieve it. The distinction acquires particular relevance in the case of an enterprise affected with public interest, as is the business of insurance, and is on that account subject to regulation by the State with respect, not only to the relations between insurer and insured but also to the internal affairs of the insurance company. Rules and regulations governing the conduct of the business are provided for in the Insurance Code and enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company to promulgate a set of rules to guide its commission agents in selling its policies that they may not run afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe the qualifications of persons who may be insured, subject insurance applications to processing and approval by the Company, and also reserve to the Company the determination of the premiums to be paid and the schedules of payment. None of these really invades the agent's contractual prerogative to adopt his own selling methods or to sell insurance at his own time and convenience, hence cannot justifiably be said to establish an employer-employee relationship between him and the company. The respondents limit themselves to pointing out that Basiao's contract with the Company bound him to observe and conform to such rules and regulations as the latter might from time to time prescribe. No showing has been made that any such rules or regulations were in fact promulgated, much less that any rules existed or were issued which effectively controlled or restricted his choice of methods or the methods themselves of selling insurance. Absent such showing, the Court will not speculate that any exceptions or qualifications were imposed on the express provision of the contract leaving Basiao "... free to exercise his own judgment as to the time, place and means of soliciting insurance." The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee of the petitioner, but a commission agent, an independent contractor whose claim for unpaid commissions should have been litigated in an ordinary civil action. NLRC Decision set aside.

ENCYCLOPEDIA BRITANNICA INC vs NLRC Case Digest

ENCYCLOPEDIA BRITANNICA (Philippines), INC. vs. NLRC 264 SCRA 4 Facts: Limjoco was a Sales Divison of Encyclopaedia Britannica and was in charge of selling the products through some sales representatives. As compensation, he would receive commissions from the products sold by his agents. He was also allowed to use the petitioners name, goodwill and logo. It was agreed that office expenses would be deducted from Limjo cos commissions.

In 1974, Limjoco resigned to pursue his private business and filed a complaint against petitioner for alleged non-payment of separation pay and other benefits and also illegal deduction from sales commissions. Petitioner alleged that Limjoco was not an employee of the company but an independent dealer authorized to promote and sell its products and in return, received commissions therein. Petitioner also claims that it had no control and supervision over the complainant as to the manners and means he conducted his business operations. Limjoco maintained otherwise. He alleged he was hired by the petitioner and was assigned in the sales department. The Labor Arbiter ruled that Limjoco was an employee of the company. NLRC also affirmed the decision and opined that there was no evidence supporting allegation that Limjoco was an independent contractor or dealer. Issue: Whether or not there was an employee-employer relationship between the parties. Ruling: There was no employee-employer relationship. In determining the relationship, the following elements must be present: selection and engagement of the employee, payment of wages, power of dismissal and power to control the employees conduct. The power of control is commonly regarded as the most crucial and determinative indicator of the presence or absence of an employee-employer relationship. Under the control test, an employee-employer relationship exists where the person for whom the services are performed reserves a right to control not only the end to be achieved, but also the manner and means to be employed in reaching that end. The issuance of guidelines by the petitioner was merely guidelines on company policies which sales managers follow and impose on their respective agents. Limjoco was not an employee of the company since he had the free rein in the means and methods for conducting the marketing operations. He was merely an agent or an independent dealer of the petitioner. He was free to conduct his work and he was free to engage in other means of livelihood. In ascertaining the employee-employer relationship, the factual circumstances must be considered. The element of control is absent where a person who works for another does so more or less at his own pleasure and is not subject to definite hours or conditions of work, and in turn is compensated in according to the result of his efforts and not the amount thereof. Hence, there was no employeeemployer relationship. Email ThisBlogThis!Share to TwitterShare to Facebook

ABANTE vs LAMADRID BEARING & PARTS CO. Case Digest

EMPERMACO B. ABANTE, JR., petitioner, vs. LAMADRID BEARING & PARTS CORP. and JOSE LAMADRID, President, respondents. [G.R. No. 159890 May 28, 2004] FACTS: Petitioner was a salesman of respondent company earning a commission of 3% of the total paid up sales covering the whole area of Mindanao. Aside from selling, he was also tasked with collection. Respondent corporation through its president, often required Abante to report to a particular area and occasionally required him to go to Manila to attend conferences. Later on, bad blood ensued between the parties due to some bad accounts that Lamadrid forced petitioner to cover. Later petitioner found out that respondent had informed his customers not to deal with petitioner since it no longer recognized him as a commission salesman. Petitioner filed a complaint for illegal dismissal with money claims against respondent company and its president, Jose Lamadrid. By way of defense, respondents countered that petitioner was not its employee but a freelance salesman on commission basis. ISSUE: Whether or not petitioner, as a commission salesman, is an employee of respondent corporation.

HELD: To determine the existence of an employee-employer relationship, we apply the four fold test: 1) the manner of selection and engagement; (2) the payment of wages; (3) the presence or absence of the power of dismissal; and (4) the presence or absence of the power of control. Applying the aforementioned test, an employer-employee relationship is notably absent in this case. It is true that he was paid in commission yet no quota was imposed therefore a dismal performance would not warrant a ground for dismissal. There was no specific office hours he was required to observe. He was not designated to conduct services at a particular area or time. He pursued his selling without interference or supervision from the company. The company did not prescribe the manner of selling merchandise. While he was sometimes required to report to Manila, these were only intended to guide him. Moreover, petitioner was free to offer his services to other companies. Art. 280 is not a crucial factor because it only determines two kinds of employees. It doen;t apply where there is no employer-employee relationship. While the term commission under Article 96 of the LC was construed as being included in the term wage, there is no categorical pronouncement that the payment of commission is conclusive proof of the existence of an employee-employer relationship. The decision of the CA is affirmed.

Davao Fruits Corporation vs Associated Labor Unions, G.R. No. 85073, August 24, 1993; 225 SCRA 562
Posted by Pius Morados on November 10, 2011

(Labor Standards Fringe benefits not included in 13th month pay) Facts: Respondent ALU for and in behalf of all the rank-and-file workers and employees of petitioner sought to recover from the latter the 13th month pay differential for 1982 of said employees, equivalent to their sick, vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the 13th month pay for 1982. Issue: WON in the computation of the 13th month pay under PD No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays may be excluded in the computation and payment thereof. Held: Yes. Basic salary does not merely exclude the benefits expressly mentioned but all payments which may be in the form of fringe benefits or allowances. Sec. 4 of the Supplementary Rules and Regulations Implementing PD No. 851 provides that overtime pay, earnings and other remunerations which are not part of the basic salary shall not be included in the computation of the 13th month pay. Whatever compensation an employee receives for an 8 hour work daily or the daily wage rate is the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It follows therefore, that payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of determining the 13th month pay.

hilippine Airlines, Inc., vs. NLRC Case Digest

Philippine Airlines, Inc., vs. NLRC 302 SCRA 582 (1999) Facts: Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his

dinner at his residence, which was about five-minute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called private respondent at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately rushed him to the hospital. When private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent asserted that he was entitled to a thirty-minute meal break; that he immediately left his residence upon being informed by Mr. Eusebio about the emergency and he arrived at the clinic a few minutes later; that Mr. Eusebio panicked and brought the patient to the hospital without waiting for him. Finding private respondents explanation unacceptable, the management charged private respondent with abandonment of post while on duty. He was given ten days to submit a written answer to the administrative charge. In his answer, private respondent reiterated the assertions in his previous explanation. He further denied that he abandoned his post on February 17, 1994. He said that he only left the clinic to have his dinner at home. In fact, he returned to the clinic at 7:51 in the evening upon being informed of the emergency. After evaluating the charge as well as the answer of private respondent, petitioner company decided to suspend private respondent for three months effective December 16, 1994. Issue: Whether or not being a full-time employee is obliged to stay in the company premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time, even to take his meals. Ruling: The Court does not agree with the petitioner. Articles 83 and 85 of the Labor Code read: Normal hours of workThe 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 Articl e, 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. 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. Section 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. Thus, 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. Private respondents act of going home to take his dinner does not constitute abandonment.

ANTONIO M. SERRANO VS. GALLANT MARITIME SERVICES, INC. AND MARLOW NAVIGATION CO., INC. GR No. 167614 March 24, 2009 En banc FACTS: Petitioner Antonio Serrano was hired by respondents Gallant Maritime Services, Inc. and Marlow Navigation Co., Inc., under a POEA-approved contract of employment for 12 months, as Chief Officer, with the basic monthly salary of US$1,400, plus $700/month overtime pay, and 7 days paid vacation leave per month. On March 19, 1998, the date of his departure, Serrano was constrained to accept a downgraded employment contract for the position of Second Officer with a monthly salary of US$1,000 upon the assurance and representation of respondents that he would be Chief Officer by the end of April 1998. Respondents did not deliver on their promise to make Serrano Chief Officer. Hence, Serrano refused to stay on as second Officer and was repatriated to the Philippines on May 26, 1998, serving only two (2) months and seven (7) days of his contract, leaving an unexpired portion of nine (9) months and twenty-three (23) days. Serrano filed with the Labor Arbiter (LA) a Complaint against respondents for constructive dismissal and for payment of his money claims in the total amount of US$26,442.73 (based on the computation of $2590/month from June 1998 to February 199, $413.90 for March 1998, and $1640 for March 1999) as well as moral and exemplary damages. The LA declared the petitioners dismissal illegal and awarded him US$8,770, representing his salaray for three (3) months of the unexpired portion of the aforesaid contract of employment, plus $45 for salary differential and for attorneys fees equivalent to 10% of the total amount; however, no compensation for damages as prayed was awarded. On appeal, the NLRC modified the LA decision and awarded Serrano $4669.50, representing three (3) months salary at $1400/month, plus 445 salary differential and 10% for attorneys fees. This decision was based on the provision of RA 8042, which was made into law on July 15, 1995. Serrano filed a Motion for Partial Reconsideration, but this time he questioned the constitutionality of the last clause in the 5th paragraph of Section 10 of RA 8042, which reads: Sec. 10. Money Claims. x x x In case of termination of overseas employment without just, valid or authorized cause as defined by law or contract, the workers shall be entitled to the full reimbursement of his placement fee with interest of twelve percent (12%) per annum, plus his salaries for the unexpired portion of his employment contract or for three (3) months for every year of the unexpired term, whichever is less.

The NLRC denied the Motion; hence, Serrano filed a Petition for Certiorari with the Court of Appeals (CA), reiterating the constitutional challenge against the subject clause. The CA affirmed the NLRC ruling on the reduction of the applicable salary rate, but skirted the constitutional issue raised by herein petitioner Serrano. ISSUES: 1. Whether or not the subject clause violates Section 10, Article III of the Constitution on non-impairment of contracts; 2. Whether or not the subject clause violate Section 1, Article III of the Constitution, and Section 18, Article II and Section 3, Article XIII on labor as a protected sector. HELD: On the first issue. The answer is in the negative. Petitioners claim that the subject clause unduly interferes with the stipulations in his contract on the term of his employment and the fixed salary package he will receive is not tenable. Section 10, Article III of the Constitution provides: No law impairing the obligation of contracts shall be passed. The prohibition is aligned with the general principle that laws newly enacted have only a prospective operation, and cannot affect acts or contracts already perfected; however, as to laws already in existence, their provisions are read into contracts and deemed a part thereof. Thus, the non-impairment clause under Section 10, Article II is limited in application to laws about to be enacted that would in any way derogate from existing acts or contracts by enlarging, abridging or in any manner changing the intention of the parties thereto. As aptly observed by the OSG, the enactment of R.A. No. 8042 in 1995 preceded the execution of the employment contract between petitioner and respondents in 1998. Hence, it cannot be argued that R.A. No. 8042, particularly the subject clause, impaired the employment contract of the parties. Rather, when the parties executed their 1998 employment contract, they were deemed to have incorporated into it all the provisions of R.A. No. 8042. But even if the Court were to disregard the timeline, the subject clause may not be declared unconstitutional on the ground that it impinges on the impairment clause, for the law was enacted in the exercise of the police power of the State to regulate a business, profession or calling, particularly the recruitment and deployment of OFWs, with the noble end in view of ensuring respect for the dignity and well-being of OFWs wherever they may be employed. Police power legislations adopted by the State to promote the health, morals, peace, education, good order, safety, and general welfare of the people are generally applicable not only to future contracts but even to those already in existence, for all private contracts must yield to the superior and legitimate measures taken by the State to promote public welfare. On the second issue. The answer is in the affirmative. Section 1, Article III of the Constitution guarantees: No person shall be deprived of life, liberty, or property without due process of law nor shall any person be denied the equal protection of the law. Section 18, Article II and Section 3, Article XIII accord all members of the labor sector, without distinction as to place of deployment, full protection of their rights and welfare. To Filipino workers, the rights guaranteed under the foregoing constitutional provisions translate to economic security and parity: all monetary benefits should be equally enjoyed by workers of similar category, while all monetary obligations should be borne by them in equal degree; none should be denied the protection of the laws which is enjoyed by, or spared the burden imposed on, others in like circumstances. Such rights are not absolute but subject to the inherent power of Congress to incorporate, when it sees fit, a system of classification into its legislation; however, to be valid, the classification must comply with these requirements: 1) it is based on substantial distinctions; 2) it is germane to the purposes of the law; 3) it is not limited to existing conditions only; and 4) it applies equally to all members of the class.

There are three levels of scrutiny at which the Court reviews the constitutionality of a classification embodied in a law: a) the deferential or rational basis scrutiny in which the challenged classification needs only be shown to be rationally related to serving a legitimate state interest; b) the middle-tier or intermediate scrutiny in which the government must show that the challenged classification serves an important state interest and that the classification is at least substantially related to serving that interest; and c) strict judicial scrutiny in which a legislative classification which impermissibly interferes with the exercise of a fundamental right or operates to the peculiar disadvantage of a suspect class is presumed unconstitutional, and the burden is upon the government to prove that the classification is necessary to achieve a compelling state interest and that it is the least restrictive means to protect such interest. Upon cursory reading, the subject clause appears facially neutral, for it applies to all OFWs. However, a closer examination reveals that the subject clause has a discriminatory intent against, and an invidious impact on, OFWs at two levels: First, OFWs with employment contracts of less than one year vis--vis OFWs with employment contracts of one year or more; Second, among OFWs with employment contracts of more than one year; and Third, OFWs vis--vis local workers with fixed-period employment; In sum, prior to R.A. No. 8042, OFWs and local workers with fixed-term employment who were illegally discharged were treated alike in terms of the computation of their money claims: they were uniformly entitled to their salaries for the entire unexpired portions of their contracts. But with the enactment of R.A. No. 8042, specifically the adoption of the subject clause, illegally dismissed OFWs with an unexpired portion of one year or more in their employment contract have since been differently treated in that their money claims are subject to a 3-month cap, whereas no such limitation is imposed on local workers with fixed-term employment. The Court concludes that the subject clause contains a suspect classification in that, in the computation of the monetary benefits of fixed-term employees who are illegally discharged, it imposes a 3-month cap on the claim of OFWs with an unexpired portion of one year or more in their contracts, but none on the claims of other OFWs or local workers with fixed-term employment. The subject clause singles out one classification of OFWs and burdens it with a peculiar disadvantage. There being a suspect classification involving a vulnerable sector protected by the Constitution, the Court now subjects the classification to a strict judicial scrutiny, and determines whether it serves a compelling state interest through the least restrictive means. What constitutes compelling state interest is measured by the scale of rights and powers arrayed in the Constitution and calibrated by history. It is akin to the paramount interest of the state for which some individual liberties must give way, such as the public interest in safeguarding health or maintaining medical standards, or in maintaining access to information on matters of public concern. In the present case, the Court dug deep into the records but found no compelling state interest that the subject clause may possibly serve. In fine, the Government has failed to discharge its burden of proving the existence of a compelling state interest that would justify the perpetuation of the discrimination against OFWs under the subject clause. Assuming that, as advanced by the OSG, the purpose of the subject clause is to protect the employment of OFWs by mitigating the solidary liability of placement agencies, such callous and cavalier rationale will have to be rejected. There can never be a justification for any form of government action that alleviates the burden of one sector, but imposes the same burden on another sector, especially when the favored sector is composed of private businesses such as placement agencies, while the disadvantaged sector is composed of OFWs whose protection no less than the Constitution commands. The idea that private business interest can be elevated to the level of a compelling state interest is odious. Moreover, even if the purpose of the subject clause is to lessen the solidary liability of placement agencies visa-vis their foreign principals, there are mechanisms already in place that can be employed to achieve that purpose without infringing on the constitutional rights of OFWs.

The POEA Rules and Regulations Governing the Recruitment and Employment of Land-Based Overseas Workers, dated February 4, 2002, imposes administrative disciplinary measures on erring foreign employers who default on their contractual obligations to migrant workers and/or their Philippine agents. These disciplinary measures range from temporary disqualification to preventive suspension. The POEA Rules and Regulations Governing the Recruitment and Employment of Seafarers, dated May 23, 2003, contains similar administrative disciplinary measures against erring foreign employers. Resort to these administrative measures is undoubtedly the less restrictive means of aiding local placement agencies in enforcing the solidary liability of their foreign principals. Thus, the subject clause in the 5th paragraph of Section 10 of R.A. No. 8042 is violative of the right of petitioner and other OFWs to equal protection. The subject clause or for three months for every year of the unexpired term, whichever is less in the 5th paragraph of Section 10 of Republic Act No. 8042 is DECLARED UNCONSTITUTIONAL.

Feagle Construction Corp. vs. Gayda, 186 SCRA 589

Posted by Pius Morados on November 10, 2011

(Labor Standards Recruiter not solidarily liable when workers agreed not to hold the recruiter liable) Facts: Herein respondents, 40 Filipino workers formerly employed with Algosaibi-Bison, Ltd. Requested petitioner recruiter to return them to their job site in Saudi Arabia. Petitioner informed the workers that it did not want to send back any workers because of the big risk due to the financial difficulties of Algosaibi-Bison Ltd.. Respondent workers assured petitioner that they were willing to assume the risk and emphasized that they were willing to sign a written statement indicating that they would not hold petitioner liable for any delay or nonpayment of their salaries and any amounts due them from Algosaibi-Bison, Ltd. It was under the foregoing circumstances that petitioner reluctantly agreed to send back private respondents to Saudi Arabia to help them in their dire financial need if they would sign the aforementioned statements. When Algosaibi-Bison Ltd went into bankruptcy, private respondents filed with the POEA a complaint against petitioner for unpaid claims with the liquidator of Algosaibi-Bison Ltd. Issue: WON petitioner may be held solidarily liable with the foreign employer for any unpaid claims of private respondents against their foreign principal employer even as they have a stipulation to this effect. Held: No. As a rule, a recruiter is solidarily liable with unpaid wages of workers sent abroad. Case at bar is an exception because it was the workers who persuaded recruiter to send them back abroad despite knowledge that foreign employer might not pay their wages and they agreed not to hold recruiter responsible thereof.

Ilas vs. NLRC, G.R. Nos. 90394-97, 7 February 1991; 193 SCRA 682
Posted by Pius Morados on November 10, 2011

(Labor Standards Agents hired without knowledge and consent of recruitment agency) Facts: Petitioners applying for overseas employment in Doha, Qatar, with CBT/Sheik International, were assisted by a liaison officer of private respondent All Season Manpower International Services, who processed their papers and gave them travel exit passes (TEPS). After being deployed and worked for 4 months without being paid, they filed a complaint to recover their unpaid salaries and for wages covering the unexpired portion of their contracts against private respondent. Issue: WON a recruitment agency be liable for unpaid wages and other claims of overseas workers who appear to be recruited by its agent without its knowledge and consent.

Held: No. It is true that the rules and regulations of the POEA provide that the private employment or recruitment agency is made to assume full and complete responsibility for all acts of its officials and representatives done in connection with recruitment and placement. However, where the recruitment was actually made by respondent agencys agent in behalf of CBT/Shiek International, not the private respondent, and the name of private respondent was only used as a means to enable petitioners to be issued TEPS for travel purposes, obviously without the knowledge and consent of private respondent, the latter cannot be held liable for the claims of petitioners.

JMM Promotion and Management, Inc. vs. CA, G.R. No. 120095, August 5, 1996; 260 SCRA 319
Posted by Pius Morados on November 10, 2011

(Labor Standards Artist Record Book as a requirement for overseas employment contract) Facts: The deployment of female entertainers to Japan was controlled by the government through Department Order No. 3, wherein said entertainers were required an Artist Record Book as a precondition to the processing by the POEA of any contract for overseas employment. Petitioners contends that overseas employment is a property right within the meaning of the Constitution and avers that the alleged deprivation thereof through the onerous requirement of an ARB violates due process and constitutes an invalid exercise of police power. Issue: WON an Artist Record Book is a valid requirement for overseas employment. Held: Yes. The ARB requirement and the questioned Department order related to its issuance were issued pursuant to a valid exercise of police power which considers the welfare of Filipino performing artists, particularly the women.

Dole Philippines, Inc. vs Leogardo, Jr., G. R. No. 60018, October 23, 1982; 117 SCRA 938
Posted by Pius Morados on November 10, 2011

(Labor Standards Employer paying a year-end bonus less than 1/12th of the basic pay required under the law, can pay its difference) Facts: STANFILCO, a company merged with petitioner Dole Philippines, inc entered into a collective bargaining agreement with the Associated Labor Union. The CBA provided among others, the grant of a yearend productivity bonus to all workers within the collective bargaining unit. The company agrees to grant each worker within the bargaining unit a year-end productivity bonus equivalent to ten days of his basic daily wage if eighty percent or more of the average total production for the two preceding calendar years together with the current years estimate is attained. Thereafter, PD 851 took effect. Section 1 thereof required all employers to pay their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of their employment, a 13th month pay not later than December 24 of every year. Section 2, however exempted from its coverage those employers already paying their employees a 13th month pay or its equivalent. Sec. 3 of The Rules and regulations Implementing PD 851 provides that the term its equivalent shall include Christmas bonus, mid-year bonus, profit sharing payments and other cash bonuses amounting to not less than 1/12th of the basic salary but shall not include cash and stock dividends, cost of living allowances and other allowances regularly enjoyed by the employees as well as non-monetary benefits. The rules further added that where an employer pays less than 1/12th of the employees basic salary, the employer shall pay the difference. Complying with the provision of PD 851 and relying on the interpretation of section 2 by the MOLEs implementing rules, STANFILCO paid its workers the difference between 1/12th of their yearly basic salary and their year-end productivity bonus. Respondent ALU, joined by petitioners employees filed a complaint for the non-implementation of the CBA provision on the year-end productivity bonus.

Issue: WON productivity bonus agreed in the CBA is demandable aside from the 13th month pay provided for in the PD 851. Held: No. Year-end productivity bonus granted by petitioner to private respondents pursuant to their CBA is, in legal contemplation, an integral part of their 13th month pay, notwithstanding its conditional nature. In complying with PD 851, petitioner credited the year-end productivity bonus as part of the 13th month pay and adopted the procedure of paying only the difference between said bonus and 1/12th of the workers yearly basic salary, it acted well within the letter and spirit of the law and its implementing rules. For in the event that an employer pays less than 1/12th of the employees basic salary, all that the said employer is required to do under the law is to pay the difference.

Ace Navigation Co., Inc. vs CA, 338 SCRA 70

Posted by Pius Morados on November 17, 2011

(Labor Standards Tips) Facts: Under the POEA approved contract of employment, private respondent, who works as a bartender on board the vessel MV Orient Express, shall receive a monthly basic salary of US S450.00, flat rate, including overtime pay for 12 hours of work daily plus tips of US S2.00 per passenger per day. He was also entitled to 2.5 days of vacation leave with pay each month. Private respondent filed a complaint before the labor arbiter for vacation leave pay and unpaid tips amounting to US S36,000.00. The Labor Arbiter ordered the recruitment agency and the principal to pay jointly and severally private respondent his vacation leave pay. The claim for tips was dismissed for lack of merit. On appeal, NLRC ordered the payment of unpaid tips. Issue: WON employers are liable to pay tips. Held: No. Payment for overtime was included in the monthly salary, the supposed tips mentioned in the contract should be deemed included thereat. It is presumed that the parties were aware of the plain, ordinary and common meaning of the word tip. A bartender cannot feign ignorance on the practice of tipping and that tips are normally paid by customers and not by the employer. It has been said that a tip denotes a voluntary act, but whether considered from the standpoint of the giver or the recipient, a tip lacked the essential element of a gift, namely, the free bestowing of a gratuity without a consideration, and that despite its apparent voluntariness, there is an element of compulsion in tipping.

illares vs. NLRC Case Digest

Liduvino Millares, et al. vs. NLRC 305 SCRA 501

Facts: Petitioners numbering one hundred sixteen occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur.

In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the

allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials.

Issue: Whether the allowances are included in the definition of "facilities" in Art. 97, par. (f), of the Labor Code, being necessary and indispensable for their existence and subsistence.

Ruling: The allowances are not part of the wages of the employees. Wage is defined in letter (f) as the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee.

When an employer customarily furnishes his employee board, lodging or other facilities, the fair and reasonable value thereof, as determined by the Secretary of Labor and Employment, is included in "wage." Customary is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. The court agrees with the observation of the Office of the Solicitor General that the subject allowances were temporarily, not regularly, received by petitioners. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business.

In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Revenue Audit Memo Order No. 1-87 pertinently provides 3.2 transportation, representation or entertainment expenses shall not constitute taxable compensation if: (a) It is for necessary travelling and representation or entertainment expenses paid or incurred by the employee in the pursuit of the trade or business of the employer, and (b) The employee is required to, and does, make an accounting/liquidation for such expense in accordance with the specific requirements of substantiation for such category or expense.Board and lodging allowances furnished to an employee not in excess of the latter's needs and given free of charge, constitute income to the latter except if such allowances or benefits are furnished to the employee for the convenience of the employer and as necessary incident to proper performance of his duties in which case such benefits or allowances do not constitute taxable income.

The Secretary of Labor and Employment under Sec. 6, Rule VII, Book III, of the Rules Implementing the Labor Code may from time to time fix in appropriate issuances the "fair and reasonable value of board, lodging and other facilities customarily furnished by an employer to his employees." Petitioners' allowances do not represent such fair and reasonable value as determined by the proper authority simply because the Staff/Manager's allowance and transportation allowance were amounts given by respondent company in lieu of actual provisions for housing and transportation needs whereas the Bislig allowance was given in consideration of being assigned to the hostile environment then prevailing in Bislig. The inevitable conclusion is that subject allowances did not form part of petitioners' wages.

Celestial, et al. vs Southern Mindanao Experimental Station, et al., 106 Phil 696; G.R. No. L-12950, December 9, 1959
Posted by Pius Morados on November 15, 2011

(Labor Standards Agricultural Employees) Facts: The Minimum Wage Law provides that in order than an employee or laborer may be paid the minimum wage of P2.50 a day, he must be employed by an enterprise engaged in agriculture; said enterprise should operate a farm comprising more than 12 hectares; and said employee or laborer should be engaged in agriculture. Section 2 of the Minimum Wage Law (RA 602) provides a definition of agriculture: Agriculture includes farming in all its branches and among other things include cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products. Respondent experimental station, which operates a farm comprising of 960 hectares, is an agency of the Bureau of Plant Industry which are both engaged in agriculture or are dedicated in agricultural functions as provided by sections 1753 and 1754 of the Revised Administrative Code. Petitioners, employees of the experimental station alleged that they are entitled to the minimum wage of P4.00 a day, instead of P2.50, which was actually paid them by the respondent experimental station. The Auditor General rendered a decision that they are entitled to the latter amount. Issue: WON employees of an experimental station engaged in agriculture are agricultural employees. Held: Yes. Where an experimental station operates a farm comprising 960 hectares, and, through its employees and laborers actually tills the soil, introduces and plants seeds of the best crop varieties found by it after study and experiment, raises said crops in the best approved methods of cultivation, including the spacing of each plant or seedling and the amount of water needed through irrigation, weeding, etc., and the other proper harvesting of the crops, including the timing and method, discovers plant pests and their eradication by means of treatment with the proper insecticides, and thereafter extracts the seeds from the harvest for sale and distribution to farmers, there can be no question that all these acts and functions fall within the definition of agriculture provided in the Minimum Wage Law, and consequently, are agricultural. It follows that the laborers and farm workers who actually carry out and perform these functions are also engaged in agriculture. Some employees in the experimental station may be engaged in office work. In as much as they are all employed by the same, which is a farm enterprise, and their work is incidental to agriculture, they may also be considered as agricultural workers and employees.