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A.

APPRENTICE
4.02 APPRENTICE
A. DEFINED 4(j) of RA. 7796
Apprenticeship training within employment with
compulsory related theoretical instructions involving a
contract between an apprentice and an employer on an
approved apprenticeable occupation.
B. APPRENTICEABLE OCCUPATION 4(m) RA
7796
Apprenticeable Occupation is an occupation officially
endorsed by a tripartite body and approved for
apprenticeship by the Authority
C. QUALIFICATION Sec.12, RA 7610, as amended
by RA 7658
Sec. 12. Employment of Children. Children below
fifteen (15) years of age may be employed except:
(1) When a child works directly under the sole
responsibility of his parents or legal guardian and where
only members of the employer's family are employed:
Provided, however, That his employment neither
endangers his life, safety and health and morals, nor
impairs his normal development: Provided, further, That
the parent or legal guardian shall provide the said minor
child with the prescribed primary and/or secondary
education; or
(2) When a child's employment or participation in public
& entertainment or information through cinema, theater,
radio or television is essential: Provided, The employment
contract concluded by the child's parent or guardian, with
the express agreement of the child concerned, if possible,
and the approval of the Department of Labor and
Employment: Provided, That the following requirements
in all instances are strictly complied with:
(a) The employer shall ensure the protection,
health, safety and morals of the child;
(b) the employer shall institute measures to
prevent the child's exploitation or discrimination
taking into account the system and level of
remuneration, and the duration and
arrangement of working time; and;
(c) The employer shall formulate and implement,
subject to the approval and supervision of
competent authorities, a continuing program for
training and skill acquisition of the child.
In the above exceptional cases where any such child may
be employed, the employer shall first secure, before
engaging such child, a work permit from the Department
of Labor and Employment which shall ensure observance
of the above requirement.
The Department of Labor Employment shall promulgate
rules and regulations necessary for the effective
implementation of this Sec.
D. ALLOWED EMPLOYMENT Requirement Program Approval
Nitto Enterprises vs. NLRC
318 Phil 780
Kapunan

FACTS: Roberto Capili was hired as an apprentice on May


1990, paid 75% of minimum wage at P66.75 in Nitto
Enterprises as a machinist , molder, and core maker. On
August 1, 1990,m the piece of glass he was working on
accidentally hit and injured the leg of a secretary. On the
same day after work hours, he entered the office premises
and operated one of the machines without authority and
injured his left thumb. The company paid for his medical
expenses and was asked to resign and sign a tagalog
quitclaim.
The labor arbiter found that he was an apprentice, and that
the termination was valid due to his gross negligence
The NLRC found him as a regular employee under Art 280,
and found his termination to be invalid.
ISSUE:
1. WON the employee in question should be considered
as an apprentice - No
2. WON there was valid cause in his termination
HELD:
1. While there had been an apprenticeship agreement in
accordance with Art 61, the same has not been filed
with the DOLE until June 1990, and was pending
approval, during the time of termination. He was also
initially hired as a kargador. Prior approval, the
apprenticeship program is a condition sine qua non.
The act of filing does not give rise to an employee
apprentice relationship. Prior approval is needed.
Without which, he is to be considered as a regular
employee.
Article 61 of the Labor Code 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
apprenticeship 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.
2. For there be a valid dismissal the twin requirements of
procedural and substantive due process is needed. As
can be ascertained, he filed a case of illegal dismissal 3
days after he was made to sign a quit claim shows
that his resignation was not voluntary and that he was
strong-armed into signing the quitclaim.
Decision of the NLRC affirmed.
E. TERMS AND CONDITIONS OF EMPLOYMENT
61, 72
Art. 61. Contents of apprenticeship agreements.
Apprenticeship agreements, including the wage rates of
apprentices, shall conform to the rules issued by the
Secretary of Labor and Employment. The period of
apprenticeship shall not exceed six months.
Apprenticeship agreements providing for wage rates
below the legal minimum wage, which in no case shall
start below 75 percent of the applicable minimum wage,
may be entered into only in accordance with
apprenticeship programs duly approved by the Secretary
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of Labor and Employment. The Department shall develop


standard model programs of apprenticeship. (As amended
by Section 1, Executive Order No. 111, December 24, 1986)
Art. 72. Apprentices without compensation. The Secretary
of Labor and Employment may authorize the hiring of
apprentices without compensation whose training on the
job is required by the school or training program
curriculum or as requisite for graduation or board
examination.
F. COSTS 71
Art. 71. Deductibility of training costs. An additional
deduction from taxable income of one-half (1/2) of the
value of labor training expenses incurred for developing
the productivity and efficiency of apprentices shall be
granted to the person or enterprise organizing an
apprenticeship program: Provided, That such program is
duly recognized by the Department of Labor and
Employment: Provided, further, That such deduction shall
not exceed ten (10%) percent of direct labor wage: and
Provided, finally, That the person or enterprise who
wishes to avail himself or itself of this incentive should pay
his apprentices the minimum wage.
G. ENFORCEMENT 65, 66, 67
Art. 65. Investigation of violation of apprenticeship
agreement. Upon complaint of any interested person or
upon its own initiative, the appropriate agency of the
Department of Labor and Employment or its authorized
representative shall investigate any violation of an
apprenticeship agreement pursuant to such rules and
regulations as may be prescribed by the Secretary of
Labor and Employment.
Art. 66. Appeal to the Secretary of Labor and
Employment. The decision of the authorized agency of the
Department of Labor and Employment may be appealed
by any aggrieved person to the Secretary of Labor and
Employment within five (5) days from receipt of the
decision. The decision of the Secretary of Labor and
Employment shall be final and executory.
Art. 67. Exhaustion of administrative remedies. No person
shall institute any action for the enforcement of any
apprenticeship agreement or damages for breach of any
such agreement, unless he has exhausted all available
administrative remedies.
B. LEARNERS
4.05 LEARNERS
A. DEFINED 4(n), R.A. 7796
Learners refer to persons hired as trainees in semiskilled and other industrial occupations which are nonapprenticeable.
Learnership programs must be approved by the
Authority.
B. ALLOWED EMPLOYMENT 74 (b)?
Art. 74. When learners may be hired. Learners may be
employed when no experienced workers are available, the
employment of learners is necessary to prevent
curtailment of employment opportunities, and the

employment does not create unfair competition in terms of


labor costs or impair or lower working standards.
C. TERMS AND CONDITIONS OF EMPLOYMENT
75, 76
Art. 75. Learnership agreement. Any employer desiring to
employ learners shall enter into a learnership agreement
with them, which agreement shall include: The names and
addresses of the learners; The duration of the learnership
period, which shall not exceed three (3) months;The wages
or salary rates of the learners which shall begin at not less
than seventy-five percent (75%) of the applicable
minimum wage; and A commitment to employ the
learners if they so desire, as regular employees upon
completion of the learnership. All learners who have been
allowed or suffered to work during the first two (2)
months shall be deemed regular employees if training is
terminated by the employer before the end of the
stipulated period through no fault of the learners.
The learnership agreement shall be subject to inspection
by the Secretary of Labor and Employment or his duly
authorized representative.
Art. 76. Learners in piecework. Learners employed in
piece or incentive-rate jobs during the training period
shall be paid in full for the work done.
C. HANDICAPPED WORKERS
4.06 HANDICAPPED WORKER RA 7277 (1992,
MAGNA CARTA FOR DISABLED PERSONS)
A. DEFINED 4(a), (b), (c), (d), 1-8 RA 7277
Section 1. Title. This Act shall be known and cited as
the "Magna Carta for Disabled Persons."
Sec. 2. Declaration of Policy The grant of the rights and
privileges for disabled persons shall be guided by the
following principles:
(a) Disabled persons are part of Philippine
society, thus the State shall give full support to
the improvement of the total well-being of
disabled persons and their integration into the
mainstream of society. Toward this end, the State
shall adopt policies ensuring the rehabilitation,
self-development and self-reliance of disabled
persons. It shall develop their skills and
potentials to enable them to compete favorably
for available opportunities.
(b) Disabled persons have the same rights as
other people to take their proper place in society.
They should be able to live freely and as
independently as possible. This must be the
concern of everyone the family, community
and all government and nongovernment
organizations. Disabled persons' rights must
never be perceived as welfare services by the
Government.
(c) The rehabilitation of the disabled persons
shall be the concern of the Government in order
to foster their capacity to attain a more
meaningful, productive and satisfying life. To
reach out to a greater number of disabled
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persons, the rehabilitation services and benefits


shall be expanded beyond the traditional urbanbased centers to community based programs,
that will ensure full participation of different
sectors as supported by national and local
government agencies.
(d) The State also recognizes the role of the
private sector in promoting the welfare of
disabled persons and shall encourage
partnership in programs that address their needs
and concerns.
(e) To facilitate integration of disabled persons
into the mainstream of society, the State shall
advocate for and encourage respect for disabled
persons. The State shall exert all efforts to
remove all social, cultural, economic,
environmental and attitudinal barriers that are
prejudicial to disabled persons.
Sec. 3. Coverage. This Act shall cover all disabled
persons and, to the extent herein provided, departments,
offices and agencies of the National Government or
nongovernment organizations involved in the attainment
of the objectives of this Act.
Sec. 4. Definition of Terms. For purposes of this Act,
these terms are defined as follows:
(a) Disabled persons are those suffering from
restriction or different abilities, as a result of a
mental, physical or sensory impairment, to
perform an activity in the manner or within the
range considered normal for a human being;
(b) Impairment is any loss, diminution or
aberration of psychological, physiological, or
anatomical structure or function;
(c) Disability shall mean 1) a physical or mental
impairment that substantially limits one or more
psychological, physiological or anatomical
function of an individual or activities of such
individual; 2) a record of such an impairment; or
3) being regarded as having such an
impairment;
(d) Handicap refers to a disadvantage for a given
individual, resulting from an impairment or a
disability, that limits or prevents the function or
activity, that is considered normal given the age
and sex of the individual;
(e) Rehabilitation is an integrated approach to
physical, social, cultural, spiritual, educational
and vocational measures that create conditions
for the individual to attain the highest possible
level of functional ability;
(f) Social Barriers refer to the characteristics of
institutions, whether legal, economic, cultural,
recreational or other, any human group,
community, or society which limit the fullest
possible participation of disabled persons in the
life of the group. Social barriers include negative
attitudes which tend to single out and exclude

disabled persons and which distort roles and


inter-personal relationships;
(g) Auxiliary Aids and Services include:
(1) qualified interpreters or other effective
methods of delivering materials to individuals
with hearing impairments;
(2) qualified readers, taped tests, or other
effective methods of delivering materials to
individuals with visual impairments;
(3) acquisition or modification of equipment or
devices; and
(4) other similar services and actions or all types
of aids and services that facilitate the learning
process of people with mental disability.
(h) Reasonable Accommodation include 1)
improvement of existing facilities used by
employees in order to render these readily
accessible to and usable by disabled persons; and
2) modification of work schedules, reassignment
to a vacant position, acquisition or modification
of equipment or devices, appropriate
adjustments or modifications of examinations,
training materials or company policies, rules and
regulations, the provision of auxiliary aids and
services, and other similar accommodations for
disabled persons;
(i) Sheltered Employment refers to the provision
of productive work for disabled persons through
workshops providing special facilities, incomeproducing projects or homework schemes with a
view to giving them the opportunity to earn a
living thus enabling them to acquire a working
capacity required in open industry;
(j) Auxiliary Social Services are the supportive
activities in the delivery of social services to the
marginalized sectors of society;
(k) Marginalized Disabled Persons refer to
disabled persons who lack access to rehabilitative
services and opportunities to be able to
participate fully in socioeconomic activities and
who have no means of livelihood and whose
incomes fall below the poverty threshold; chan
robles virtual law library
(l) Qualified Individual with a Disability shall
mean an individual with a disability who, with or
without reasonable accommodations, can
perform the essential functions of the
employment position that such individual holds
or desires. However, consideration shall be given
to the employer's judgment as to what functions
of a job are essential, and if an employer has
prepared a written description before advertising
or interviewing applicants for the job, this
description shall be considered evidence of the
essential functions of the job;
(m) Readily Achievable means a goal can be
easily attained and carried out without much
3

difficulty or expense. In determining whether an


action is readily achievable, factors to be
considered include
(1) the nature and cost of the action;
(2) the overall financial resources of the facility
or facilities involved in the action; the number of
persons employed at such facility; the effect on
expenses and resources, or the impact otherwise
of such action upon the operation of the facility;
(3) the overall financial resources of the covered
entity with respect to the number of its
employees; the number, type and location of its
facilities; and
(4) the type of operation or operations of the
covered entity, including the composition,
structure and functions of the work force of such
entity; the geographic separateness,
administrative or fiscal relationship of the
facility or facilities in question to the covered
entity.
(n) Public Transportation means transportation
by air, land and sea that provides the public with
general or special service on a regular and
continuing basis;
(o) Covered Entity means an employer,
employment agency, labor organization or jointlabor management committee; and
(p) Commerce shall be taken to mean as travel,
trade, traffic, commerce, transportation, or
communication among the provinces or between
any foreign country or any territory or
possession and any province.

Sec. 7. Apprenticeship. Subject to the provisions of the


Labor Code as amended, disabled persons shall be eligible
as apprentices or learners: Provided, That their handicap
is not as much as to effectively impede the performance of
job operations in the particular occupation for which they
are hired; Provided, further, That after the lapse of the
period of apprenticeship, if found satisfactory in the job
performance, they shall be eligible for employment.
Sec. 8. Incentives for Employers. (a) To encourage the
active participation of the private sector in promoting the
welfare of disabled persons and to ensure gainful
employment for qualified disabled persons, adequate
incentives shall be provided to private entities which
employ disabled persons.
(b) Private entities that employ disabled persons who meet
the required skills or qualifications, either as regular
employee, apprentice or learner, shall be entitled to an
additional deduction, from their gross income, equivalent
to twenty-five percent (25%) of the total amount paid as
salaries and wages to disabled persons: Provided,
however, That such entities present proof as certified by
the Department of Labor and Employment that disabled
persons are under their employ: Provided, further, That
the disabled employee is accredited with the Department
of Labor and Employment and the Department of Health
as to his disability, skills and qualifications.
(c) Private entities that improve or modify their physical
facilities in order to provide reasonable accommodation
for disabled persons shall also be entitled to an additional
deduction from their net taxable income, equivalent to
fifty percent (50%) of the direct costs of the improvements
or modifications. This Section, however, does not apply to
improvements or modifications of facilities required under
Batas Pambansa Bilang 344.

TITLE II: RIGHTS AND PRIVILEGES OF


DISABLED PERSONS
CHAPTER I: EMPLOYMENT
Sec. 5. Equal Opportunity for Employment. No disable
person shall be denied access to opportunities for suitable
employment. A qualified disabled employee shall be
subject to the same terms and conditions of employment
and the same compensation, privileges, benefits, fringe
benefits, incentives or allowances as a qualified able
bodied person.
Five percent (5%) of all casual emergency and contractual
positions in the Departments of Social Welfare and
Development; Health; Education, Culture and Sports; and
other government agencies, offices or corporations
engaged in social development shall be reserved for
disabled persons.

B. ALLOWED EMPLOYMENT 5 RA 7277


Regular Worker
BERNARDO ET AL V. NLRC
July 12, 1999 J. Panganiban
Topic: Regular Handicapped Workers

Sec. 6. Sheltered Employment If suitable employment


for disabled persons cannot be found through open
employment as provided in the immediately preceding
Section, the State shall endeavor to provide it by means of
sheltered employment. In the placement of disabled
persons in sheltered employment, it shall accord due
regard to the individual qualities, vocational goals and
inclinations to ensure a good working atmosphere and
efficient production.

FACTS:
Bernardo and 37 others were deaf mutes who were hired
for various periods by Far East Bank and Trust Co as
Money Sorters and Counters
They were dismissed after a few years of renewal of
contracts
Bank says that their employment was only an
accommodation in response to the requests of government
officials and civic-minded citizens
LA said they could not be deemed regular; NLRC affirmed

Doctrine: 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. (copy paste from previous digest)

ISSUE: WON Handicapped workers may be considered


regular workers
HELD: Yes

Art. 84. Hours worked. Hours worked shall include (a) all
time during which an employee is required to be on duty
or to be at a prescribed workplace; and (b) all time during
which an employee is suffered or permitted to work.

RATIO:
LC 280 regular employee if performs activities that are
necessary or desirable
Task of counting and sorting bills is necessary to the
business of the bank
Renewal also indicates that the contracts of the
handicapped workers leads to the conclusion that their
tasks were beneficial and necessary to the bank
The fact that the employees were qualified disabled
persons necessarily removes the employment contracts
from the ambit of LC 80
They should be treated and granted the same rights like
any other regular employees

Rest periods of short duration during working hours shall


be counted as hours worked.

SECTION 5. CONDITIONS OF EMPLOYMENT


HOURS OF WORK
STATUTORY REFERENCE ARTS. 82-90; BOOK
III, RULE I, IA, II, OMNIBUS RULES
IMPLEMENTING THE LABOR CODE

Art. 87. Overtime work. Work may be performed beyond


eight (8) hours a day provided that the employee is paid
for the overtime work, an additional compensation
equivalent to his regular wage plus at least twenty-five
percent (25%) thereof. Work performed beyond eight
hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours
on a holiday or rest day plus at least thirty percent (30%)
thereof.

Art. 82. Coverage. The provisions of this Title shall apply


to employees in all establishments and undertakings
whether for profit or not, but not to government
employees, managerial employees, field personnel,
members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in
appropriate regulations.
As used herein, "managerial employees" refer to those
whose primary duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof, and to other officers or
members of the managerial staff.
"Field personnel" shall refer to non-agricultural
employees who regularly perform their duties away from
the principal place of business or branch office of the
employer and whose actual hours of work in the field
cannot be determined with reasonable certainty.

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.
Art. 86. Night shift differential. Every employee shall be
paid a night shift differential of not less than ten percent
(10%) of his regular wage for each hour of work
performed between ten oclock in the evening and six
oclock in the morning.

Art. 88. Undertime not offset by overtime. Undertime


work on any particular day shall not be offset by overtime
work on any other day. Permission given to the employee
to go on leave on some other day of the week shall not
exempt the employer from paying the additional
compensation required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be
required by the employer to perform overtime work in
any of the following cases:
a.

b.

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 percent (30%)
of their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall include
resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.

c.

d.
e.

When the country is at war or when any


other national or local emergency has been
declared by the National Assembly or the
Chief Executive;
When it is necessary to prevent loss of life or
property or in case of imminent danger to
public safety due to an actual or impending
emergency in the locality caused by serious
accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
When there is urgent work to be performed
on machines, installations, or equipment, in
order to avoid serious loss or damage to the
employer or some other cause of similar
nature;
When the work is necessary to prevent loss
or damage to perishable goods; and
Where the completion or continuation of the
work started before the eighth hour is
necessary to prevent serious obstruction or
prejudice to the business or operations of the
employer.
Any employee required to render overtime
work under this Article shall be paid the
5

additional compensation required in this


Chapter.
Art. 90. Computation of additional compensation. For
purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular
wage" of an employee shall include the cash wage only,
without deduction on account of facilities provided by the
employer.
RULE I: Hours of Work
SECTION 1. General statement on coverage. The
provisions of this Rule shall apply to all employees in all
establishments and undertakings, whether operated for
profit or not, except to those specifically exempted under
Section 2 hereof.
SECTION 2. Exemption. The provisions of this Rule
shall not apply to the following persons if they qualify for
exemption under the conditions set forth herein:
(a) Government employees whether employed by the
National Government or any of its political subdivision,
including those employed in government-owned and/or
controlled corporations;
(b) Managerial employees, if they meet all of the following
conditions:
(1) Their primary duty consists of the management
of the establishment in which they are employed or
of a department or sub-division thereof.
(2) They customarily and regularly direct the work
of two or more employees therein.
(3) They have the authority to hire or fire
employees of lower rank; or their suggestions and
recommendations as to hiring and firing and as to
the promotion or any other change of status of
other employees, are given particular weight.
(c) Officers or members of a managerial staff if they
perform the following duties and responsibilities:
(1) The primary duty consists of the performance of
work directly related to management policies of
their employer;
(2) Customarily and regularly exercise discretion
and independent judgment; and
(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists
of the management of the establishment in which he
is employed or subdivision thereof; or (ii) execute
under general supervision work along specialized or
technical lines requiring special training, experience,
or knowledge; or (iii) execute, under general
supervision, special assignments and tasks; and
(4) Who do not devote more than 20 percent of their
hours worked in a work week to activities which
are not directly and closely related to the
performance of the work described in paragraphs
(1), (2) and (3) above.
(d) Domestic servants and persons in the personal service
of another if they perform such services in the employer's
home which are usually necessary or desirable for the
maintenance and enjoyment thereof, or minister to the

personal comfort, convenience, or safety of the employer


as well as the members of his employer's household.
(e) Workers who are paid by results, including those who
are paid on piece-work, "takay," "pakiao" or task basis,
and other non-time work if their output rates are in
accordance with the standards prescribed under Section
8, Rule VII, Book Three of these regulations, or where such
rates have been fixed by the Secretary of Labor and
Employment in accordance with the aforesaid Section.
(f) Non-agricultural field personnel if they regularly
perform their duties away from the principal or branch
office or place of business of the employer and whose
actual hours of work in the field cannot be determined
with reasonable certainty.
SECTION 3. Hours worked. The following shall be
considered as compensable hours worked:
(a) All time during which an employee is required to
be on duty or to be at the employer's premises or to be
at a prescribed work place; and
(b) All time during which an employee is suffered or
permitted to work.
SECTION 4. Principles in determining hours worked.
The following general principles shall govern in
determining whether the time spent by an employee is
considered hours worked for purposes of this Rule:
(a) All hours are hours worked which the employee is
required to give his employer, regardless of whether
or not such hours are spent in productive labor or
involve physical or mental exertion.
(b) An employee need not leave the premises of the
work place in order that his rest period shall not be
counted, it being enough that he stops working, may
rest completely and may leave his work place, to go
elsewhere, whether within or outside the premises of
his work place.
(c) If the work performed was necessary, or it
benefited the employer, or the employee could not
abandon his work at the end of his normal working
hours because he had no replacement, all time spent
for such work shall be considered as hours worked, if
the work was with the knowledge of his employer or
immediate supervisor.
(d) The time during which an employee is inactive by
reason of interruptions in his work beyond his control
shall be considered working time either if the
imminence of the resumption of work requires the
employee's presence at the place of work or if the
interval is too brief to be utilized effectively and
gainfully in the employee's own interest.
SECTION 5. Waiting time. (a) Waiting time spent by an
employee shall be considered as working time if waiting is
an integral part of his work or the employee is required or
engaged by the employer to wait.
(b) An employee who is required to remain on call in the
employer's premises or so close thereto that he cannot use
the time effectively and gainfully for his own purpose shall
be considered as working while on call. An employee who
is not required to leave word at his home or with company
6

officials where he may be reached is not working while on


call.
SECTION 6. Lectures, meetings, training programs.
Attendance at lectures, meetings, training programs, and
other similar activities shall not be counted as working
time if all of the following conditions are met:
(a) Attendance is outside of the employee's regular
working hours;
(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive
work during such attendance.
SECTION 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 (16) hours a day;
(c) In case of actual or impending emergencies or
there is urgent work to be performed on machineries,
equipment or installations to avoid serious loss which
the employer would otherwise suffer; and
(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.
SECTION 8. Overtime pay. Any employee covered by
this Rule who is permitted or required to work beyond
eight (8) hours on ordinary working days shall be paid an
additional compensation for the overtime work in the
amount equivalent to his regular wage plus at least
twenty-five percent (25%) thereof.
SECTION 9. Premium and overtime pay for holiday and
rest day work. (a) Except employees referred to under
Section 2 of this Rule, an employee who is permitted or
suffered to work on special holidays or on his designated
rest days not falling on regular holidays, shall be paid
with an additional compensation as premium pay of not
less than thirty percent (30%) of his regular wage. For
work performed in excess of eight (8) hours on special
holidays and rest days not falling on regular holidays, an
employee shall be paid an additional compensation for the
overtime work equivalent to his rate for the first eight
hours on a special holiday or rest day plus at least thirty
percent (30%) thereof.
(b) Employees of public utility enterprises as well as those
employed in non-profit institutions and organizations
shall be entitled to the premium and overtime pay
provided herein, unless they are specifically excluded from
the coverage of this Rule as provided in Section 2 hereof.
(c) The payment of additional compensation for work
performed on regular holidays shall be governed by Rule
IV, Book Three, of these Rules.

SECTION 10. Compulsory overtime work. In any of the


following cases, an employer may require any of his
employees to work beyond eight (8) hours a day, provided
that the employee required to render overtime work is
paid the additional compensation required by these
regulations:
(a) When the country is at war or when any other
national or local emergency has been declared by
Congress or the Chief Executive;
(b) When overtime work is necessary to prevent loss of life
or property, or in case of imminent danger to public safety
due to actual or impending emergency in the locality
caused by serious accident, fire, floods, typhoons,
earthquake, epidemic or other disaster or calamities;
(c) When there is urgent work to be performed on
machines, installations, or equipment, in order to avoid
serious loss or damage to the employer or some other
causes of similar nature;
(d) When the work is necessary to prevent loss or damage
to perishable goods;
(e) When the completion or continuation of work started
before the 8th hour is necessary to prevent serious
obstruction or prejudice to the business or operations of
the employer; or
(f) When overtime work is necessary to avail of favorable
weather or environmental conditions where performance
or quality of work is dependent thereon.
In cases not falling within any of these enumerated in this
Section, no employee may be made to work beyond eight
hours a day against his will.
RULE I-A: Hours of Work of Hospital and Clinic
Personnel
SECTION 1. General statement on coverage. This Rule
shall apply to:
(a) All hospitals and clinics, including those with a bed
capacity of less than one hundred (100) which are situated
in cities or municipalities with a population of one million
or more; and
(b) All hospitals and clinics with a bed capacity of at least
one hundred (100), irrespective of the size of the
population of the city or municipality where they may be
situated.
SECTION 2. Hospitals or clinics within the meaning of this
Rule. The terms "hospitals" and "clinics" as used in this
Rule shall mean a place devoted primarily to the
maintenance and operation of facilities for the diagnosis,
treatment and care of individuals suffering from illness,
disease, injury, or deformity, or in need of obstetrical or
other medical and nursing care. Either term shall also be
construed as any institution, building, or place where
there are installed beds, or cribs, or bassinets for twentyfour (24) hours use or longer by patients in the treatment
of disease, injuries, deformities, or abnormal physical and
mental states, maternity cases or sanitorial care; or
7

infirmaries, nurseries, dispensaries, and such other


similar names by which they may be designated.
SECTION 3. Determination of bed capacity and
population. (a) For purposes of determining the
applicability of this Rule, the actual bed capacity of the
hospital or clinic at the time of such determination shall be
considered, regardless of the actual or bed occupancy. The
bed capacity of hospital or clinic as determined by the
Bureau of Medical Services pursuant to Republic Act No.
4226, otherwise known as the Hospital Licensure Act,
shall prima facie be considered as the actual bed capacity
of such hospital or clinic.
(b) The size of the population of the city or municipality
shall be determined from the latest official census issued
by the Bureau of the Census and Statistics.
SECTION 4. Personnel covered by this Rule. This Rule
applies to all persons employed by any private or public
hospital or clinic mentioned in Section 1 hereof, and shall
include, but not limited to, resident physicians, nurses,
nutritionists, dieticians, pharmacists, social workers,
laboratory technicians paramedical technicians,
psychologists, midwives, and attendants.
SECTION 5. Regular working hours. The regular
working hours of any person covered by this Rule shall
not be more than eight (8) hours in any one day nor more
than forty (40) hours in any one week.

SECTION 9. Additional compensation. Hospital and


clinic personnel covered by this Rule, with the exception of
those employed by the Government, shall be entitled to an
additional compensation for work performed on regular
and special holidays and rest days as provided in this
Book. Such employees shall also be entitled to overtime
pay for services rendered in excess of forty hours a week,
or in excess of eight hours a day, whichever will yield the
higher additional compensation to the employee in the
work week.
SECTION 10. Relation to Rule I. All provisions of Rule I
of this Book which are not inconsistent with this Rule shall
be deemed applicable to hospital and clinic personnel.
RULE II: Night Shift Differential
SECTION 1. Coverage. This Rule shall apply to all
employees except:
(a) Those of the government and any of its political
subdivisions, including government-owned and/or
controlled corporations;
(b) Those of retail and service establishments regularly
employing not more than five (5) workers;
(c) Domestic helpers and persons in the personal service of
another;
(d) Managerial employees as defined in Book Three of this
Code;

For purposes of this Rule a "day" shall mean a work day


of twenty-four (24) consecutive hours beginning at the
same time each calendar year. A "week" shall mean the
work of 168 consecutive hours, or seven consecutive 24hour work days, beginning at the same hour and on the
same calendar day each calendar week.

(e) Field personnel and other employees whose time and


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

SECTION 6. Regular working days. The regular


working days of covered employees shall not be more than
five days in a work week. The work week may begin at
any hour and on any day, including Saturday or Sunday,
designated by the employer.

SECTION 2. Night shift differential. An employee shall


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

Employers are not precluded from changing the time at


which the work day or work week begins, provided that
the change is not intended to evade the requirements of
this Rule.

SECTION 3. Additional compensation. Where an


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

SECTION 7. Overtime work. Where the exigencies of the


service so require as determined by the employer, any
employee covered by this Rule may be scheduled to work
for more than five (5) days or forty (40) hours a week,
provided that the employee is paid for the overtime work
an additional compensation equivalent to his regular
wage plus at least thirty percent (30%) thereof, subject to
the provisions of this Book on the payment of additional
compensation for work performed on special and regular
holidays and on rest days.
SECTION 8. Hours worked. In determining the
compensable hours of work of hospital and clinic
personnel covered by this Rule, the pertinent provisions of
Rule 1 of this Book shall apply.

SECTION 4. Additional compensation on scheduled rest


day/special holiday. An employee who is required or
permitted to work on the period covered during rest days
and/or special holidays not falling on regular holidays,
shall be paid a compensation equivalent to his regular
wage plus at least thirty (30%) per cent and an additional
amount of not less than ten (10%) per cent of such
premium pay rate for each hour of work performed.
SECTION 5. Additional compensation on regular holidays.
For work on the period covered during regular
holidays, an employee shall be entitled to his regular wage
during these days plus an additional compensation of no
8

less than ten (10%) per cent of such premium rate for each
hour of work performed.

employer and whose actual hours of work in the field


cannot be determined with reasonable certainty.

SECTION 6. Relation to agreements. Nothing in this


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

Art. 276. Government employees. The terms and


conditions of employment of all government employees,
including employees of government-owned and controlled
corporations, shall be governed by the Civil Service Law,
rules and regulations. Their salaries shall be standardized
by the National Assembly as provided for in the New
Constitution. However, there shall be no reduction of
existing wages, benefits and other terms and conditions of
employment being enjoyed by them at the time of the
adoption of this Code.

5.01 HOURS REGULATION


RATIONALE AND ENFORCEMENT
Manila Terminal Relief and Mutual Aid Assn vs
Manila Terminal Co Inc et al
Facts: Manila Terminal Company hired thirty men as
watchmen on twelve-hour shifts at a compensation of P3
per day for the day shift and P6 per day for the night shift.
A member of the Manila Terminal Relief and Mutual Aid
Association sent a letter to the Department of Labor,
requesting that the matter of overtime pay be instituted.
Petitioner company stressed that the contract between it
and the Association upon the commencement of the
employment of its watchmen was to the effect that the
latter were to work twelve hours a day at certain rates of
pay including overtime compensation. The Supreme Court
ruled in favour of the watchmen, and granted the overtime
pay of the watchmen since the commencement of their
employment.
Doctrine: Petitioners allegation that the workers had
acquiesced in the twelve-hour shifts leading to the
conclusion that they impliedly waived their right to
overtime compensation is untenable. The workers cannot
be said that they have impliedly waived their right for the
simple reason that they cannot waive their right to extra
compensation, for that would be contrary to the spirit of the
Eight-Hour Labor Law. It is high time that all employers
were warned that 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.
5.02 COVERAGE 82; 276
Art. 82. Coverage. The provisions of this Title shall apply
to employees in all establishments and undertakings
whether for profit or not, but not to government
employees, managerial employees, field personnel,
members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in
appropriate regulations.
As used herein, "managerial employees" refer to those
whose primary duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof, and to other officers or
members of the managerial staff.
"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

EXEMPTION MANAGERIAL EMPLOYEE


Penaranda vs. Baganga Plywood Corporation
G.R. No. 159577 / May 3, 2006 / 1st division /
Panganiban, CJ
Facts: Petitioner Charlito Pearanda was hired as an
employee
of Baganga Plywood Corporation (BPC) to take charge of
the operations and maintenance of its steam plant boiler. In
May 2001, Pearanda filed a Complaint for illegal dismissal
with money claims against BPC and its general manager,
Hudson Chua, before the NLRC.
He claims he was not paid his overtime pay, premium pay
for working during holidays/rest days, night shift
differentials and finally claims for payment of damages and
attorneys fees having been forced to litigate the present
complaint.
(There was a procedural issue because he failed to submit
supporting documents. The Court frowns upon the practice
of dismissing cases purely on procedural grounds.
Reviewed and decided based on merits.)
Doctrine: 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.
Article 82 of the Labor Code exempts managerial
employees from the coverage of labor standards. Labor
standards provide the working conditions of employees,
including entitlement to overtime pay and premium pay for
working on rest days. Under this provision, managerial
employees are "those whose primary duty consists of the
management of the establishment in which they are
employed or of a department or subdivision.
For guidance: The Implementing Rules of the Labor Code
define members of a managerial staff as those with the
following duties and responsibilities:
(1) The primary duty consists of the performance of work
directly related to management policies of the employer;
(2) Customarily and regularly exercise discretion and
independent judgment;
(3) (i) Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists of the
management of the establishment in which he is employed
or subdivision thereof; or (ii) execute under general
supervision work along specialized or technical lines
requiring special training, experience, or knowledge; or (iii)
execute under general supervision special assignments and
tasks; and
9

(4) who do not devote more than 20 percent of their hours


worked in a workweek to activities which are not directly
and closely related to the performance of the work
described in paragraphs (1), (2), and (3) above.
Petitioner supervised the engineering section of the steam
plant boiler. His work involved overseeing the operation of
the machines and the performance of the workers in the
engineering section. This work necessarily required the use
of discretion and independent judgment to ensure the
proper functioning of the steam plant boiler. As supervisor,
petitioner is deemed a member of the managerial staff.
Asia-Pacific Chartering (Phils) Inc. vs. Maria Linda
Farolan
393 SCRA 454
Dec. 4, 2002 Carpio-Morales
(there is NOTHING in this case about hours of work. Sir
naman. Tsk.)
FACTS: Respondent Linda was hired as Sales Manager by
petitioner APCI for its passenger and cargo sales for the
Scandinavian Airline System (SAS). She was only verbally
briefed about the nature of the work before she accepted it.
But SAS and APCI suffered decrease in sales. Its highranking officer Roberto Zozobrado took action, informally
taking over Lindas duties but Linda still remained the Sales
Manager and continued to receive her salary. He found out
that Linda did not do her duties. But because of Roberts
efforts, sales increased beyond their target and were
looking good. APCI then sent Linda a letter of termination
on the ground of loss of confidence regarding her work
during the decrease period. So she filed for illegal
dismissal.
ISSUES:
1) Was Linda illegally dismissed? YES
2) What are the differences between rank-and-file
employees and managerial employees in this case?
(please see below)
HELD and RATIO:
requisites for a valid dismissal of an employee:
(a) the employee must be afforded due process, i.e., he
must be given opportunity to be heard and to defend
himself; and
(here, NOT present! Robert took over her
functions without her consent. She was made to
choose between voluntarily resigning or to face
termination. She refused the former, so she was
suddenly terminated. No chance to defend
herself)
(b) dismissal must be for a valid cause as provided in LC
282 or any of the authorized causes LC 283 and 284
(valid or authorized cause NOT present here)
Caoile vs NLRC: 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."
Samson vs NLRC: Before one may be properly considered a
managerial employee, all the following conditions must be
met:

(1) Their primary duty consists of the management of the


establishment in which they are employed or of a
department or subdivision thereof;
(2) They customarily and regularly direct the work of two or
more employees therein;
(3) They have the authority to hire or fire other employees
of lower rank; or their suggestions and recommendations
as to the hiring and firing and as to the promotion or any
other change of status of other employees are given
particular weight. (Section 2(b), Rule I, Book III of the
Omnibus Rules Implementing the Labor Code)
Surigao del Norte Elec. Coop. vs NLRC as cited in National
Bookstore Inc and Ramos vs CA): 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 or inadvertently.
Here, no showing that she had willful breach. The losses
were due to market forces beyond her control.
National Waterworks and Sewerage Authority v
NWSA Consolidated Unions, Et Al
Date: August 31, 1964
Ponente: Bautista Angelo
Facts:

NWSA (P) is a GOCC governed by RA 1383. NWSA


Consolidated Unions (R) are various labor
organizations composed of laborers and
employees of the NAWASA. The intervenors are
Centeno, et. al.

CIR conducted a hearing regarding the


controversy between NWSA and NWSA
Consolidated Unions on the following:
o Implementation of the 40-Hour Week
Law (RA 1880); alleged violations of the
collective bargaining agreement dated
December 28, 1956 concerning "distress
pay"; minimum wage of P5.25;
promotional appointments and filling of
vacancies of newly created positions;
additional compensation for night work;
wage increases to some laborers and
employees; and strike duration pay.
o NWSA Consolidated Unions also raised
the issue of whether the 25% additional
compensation for Sunday work should be
included in computing the daily wage and
whether, in determining the daily wage of
a monthly-salaried employee, the salary
should be divided by 30 days.
o Intervenors issues: Additional
compensation for night work and new
demand for overtime pay in favor of
Jesus Centeno, Cesar Cabrera, Feliciano
Duiguan, Cecilio Remotigue, and other
employees receiving P4,200.00 per
annum or more.

Respondent Court ruled as follows:


1. The NAWASA is an agency not
performing governmental functions and,
therefore, is liable to pay additional
compensation for work on Sundays and
10

legal holidays conformably to


Commonwealth Act No. 444, known as
the Eight-Hour Labor Law, even if said
days should be within the staggered five
work days authorized by the President.
2. The intervenors do not fall within the
category of "managerial employees" as
contemplated in Republic Act 2377 and
so are not exempt from the coverage of
the Eight-Hour Labor Law.
3. Those intervenors attached to the
General Auditing Office and the Bureau
of Public Works come within the purview
of Commonwealth Act No. 444.
4. The computation followed by NAWASA
in computing overtime compensation is
contrary to Commonwealth Act 444.
5. The undertime of a worker should not be
set-off against the worker in determining
whether the latter has rendered service in
excess of eight hours for that day.
6. In computing the daily wage of those
employed on daily basis, the additional
25% compensation for Sunday work
should be included.
7. The computation used by the NAWASA
for monthly salaried employees to wit,
dividing the monthly basic pay by 30 is
erroneous.
8. The minimum wage awarded by
respondent court way back on November
25, 1950 in Case No. 359-V entitled
MWD Workers Union v. Metropolitan
Water District, applies even to those who
were employed long after the
promulgation of the award and even if
their workers are hired only as
temporary, emergency and casual
workers for a definite period and for a
particular project.
9. The authority granted to NAWASA by the
President to stagger the working days of
its workers should be limited exclusively
to those specified in the authorization
and should not be extended to others
who are not therein specified.
10. Under the collective bargaining
agreement entered into between the
NAWASA and respondent unions on
December 28, 1956, as well as under
Resolution No. 29, series of 1957 of the
Grievance Committee, even those who
work outside the sewerage chambers
should be paid 25% additional
compensation as "distress pay."
Issues, Held & Ratio:
1. I: WON NAWASA is performing
governmental functions and, therefore,
essentially a service agency of the
government
H: No. NAWASA, though a public corporation, does not
perform governmental functions. It performs proprietary

functions, and hence, it is covered by Commonwealth Act


No. 444.

The National Waterworks and Sewerage Authority


was not created for purposes of local government.
It was created for the "purpose of consolidating
and centralizing all waterworks, sewerage and
drainage system in the Philippines under one
control and direction and general supervision."

Its functions are but mere ministrant functions of


government which are aimed at advancing the
general interest of society.
2. I: WON NAWASA is a public utility and,
therefore, exempted from paying
additional compensation for work on
Sundays and legal holidays
H: NAWASA is a public utility. Although pursuant to
Section 4 of Commonwealth Act 444 it is not obliged to
pay an additional sum of 25% to its laborers for work
done on Sundays and legal holidays, YET IT MUST PAY
said additional compensation by virtue of the contractual
obligation it assumed under the collective bargaining
agreement.

NAWASA is a public utility because its primary


function is to construct, maintain and operate
water reservoirs and waterworks for the purpose
of supplying water to the inhabitants, as well as
consolidate and centralize all water supplies and
drainage systems in the Philippines.

While under Commonwealth Act No. 444 a public


utility is not required to pay additional
compensation to its employees and workers for
work done on Sundays and legal holidays, there is,
however, no prohibition for it to pay such
additional compensation if it voluntarily agrees to
do so. NAWASA committed itself to pay this
additional compensation. It must pay not because
of compulsion of law but because of contractual
obligation. In the collective bargaining agreement
entered into between the NAWASA and
respondent unions it was agreed that all existing
benefits enjoyed by the employees and laborers
prior to its effectivity shall remain in force and
shall form part of the agreement, among which
certainly is the 25% additional compensation for
work on Sundays and legal holidays therefore
enjoyed by said laborers and employees.
3. I: WON the intervenors are "managerial
employees" within the meaning of
Republic Act 2377 and, therefore, not
entitled to the benefits of Commonwealth
Act No. 444, as amended
H: No. The intervenors are not "managerial employees" as
defined in Republic Act No. 2377, hence they are covered
by Commonwealth Act No. 444 (Eight Hour Labor Law),
as amended.

Discussion on Managerial Employees:


o Section 2, RA 2377: This Act shall apply
to all persons employed in any industry
or occupation, whether public or private
with the exception of farm laborers,
laborers who prefer to be paid on piece
work basis, managerial employees,
outside sales personnel, domestic
servants, persons in the personal service
11

of another and members of the family of


the employer working for him. The term
"managerial employee" in this Act shall
mean either (a) any person whose
primary duty consists of the management
of the establishment in which he is
employed or of a customarily recognized
department or subdivision thereof, or (b)
ally officer or member of the managerial
staff.

Distinguishing Characteristic of
Managerial Employees (RA
2377 Explanatory Note): He is
not subject to the rigid
observance of regular office
hours. The true worth of his
service does not depend so
much on the time he spends in
office but more on the results he
accomplishes. In fact, he is free
to go out of office anytime.
o Reason behind exemption: The
philosophy behind the exemption of
managerial employees from the 8-Hour
Labor Law is that such workers are not
usually employed for every hour of work
but their compensation is determined
considering their special training,
experience or knowledge which requires
the exercise of discretion and
independent judgment, or perform work
related to management policies or
general business operations along
specialized or technical lines. For these
workers it is not feasible to provide a
fixed hourly rate of pay or maximum
hours of labor.
The intervenors are holding position of
responsibility. One of them is the Secretary of the
Board of Directors. Another is the private
secretary of the general manager. Another is a
public relations officer, and many other chiefs of
divisions or sections and others are supervisors
and overseers. Respondent court, however, after
examining carefully their respective functions,
duties and responsibilities found that their
primary duties do not bear any direct relation with
the management of the NAWASA, nor do they
participate in the formulation of its policies nor in
the hiring and firing of its employees. The chiefs of
divisions and sections are given ready policies to
execute and standard practices to observe for their
execution. Hence, it concludes, they have little
freedom of action, as their main function is merely
to carry out the company's orders, plans and
policies.
As a matter of fact, the intervenors are required to
observe working hours and record their time work
and are not free to come and go to their offices,
nor move about at their own discretion.
4. I: WON respondent Court of Industrial
Relations has jurisdiction to adjudicate
overtime pay considering that this issue
was not among the demands of
respondent union in the principal case

but was merely dragged into the case by


the intervenors
H: Yes. The Court of Industrial Relations has jurisdiction
to adjudicate overtime pay in the case at bar there being
an employer-employee relationship existing between
intervenors and petitioner.

SC has held time and again that disputes that call


for the application of the 8-Hour Labor Law are
within the jurisdiction of the Court of Industrial
Relations if they arise while the employeremployee relationship still exists, it is clear that
the matter subject of intervention comes within
the jurisdiction of respondent court.

In labor disputes technicalities of procedure


should as much as possible be avoided not only in
the interest of labor but to avoid multiplicity of
action.
5. I: WON those attached to the General
Auditing Office and the Bureau of Public
Works come within the purview of
Commonwealth Act No. 444, as amended
H: The GAO employees assigned to work in the NAWASA
cannot be regarded as employees of the NAWASA on
matters relating to compensation. They are employees of
the national government and are not covered by the
Eight-Hour Labor Law. The same may be said of the
employees of the Bureau of Public Works assigned to work
in the NAWASA.

Precedent: National Marketing Corporation, et


al. v. Court of Industrial Relations which ruled
that members of audition force are not employees
of now defunct PRISCO but of the Auditor
General, the one who appointed and supervised
them.
6. I: In determining whether one has
worked in excess of eight hours, WON
the undertime for that day should be set
off
H: No. The method used by the NAWASA in off-setting the
overtime with the undertime and at the same time
charging said undertime to the accrued leave is unfair.

This is unfair for under such method the employee


is made to pay twice for his undertime because his
leave is reduced to that extent while he was made
to pay for it with work beyond the regular working
hours. The proper method should be to deduct the
undertime from the accrued leave but pay the
employee the overtime to which he is entitled.
This method also obviates the irregular schedule
that would result if the overtime should be set off
against the undertime for that would place the
schedule for working hours dependent on the
employee.
7. In computing the daily wage, WON the
additional compensation for Sunday
work should be included
H: Yes. The differential pay for Sundays is a part of the
legal wage. Hence, it was correctly included in computing
the weekly wages of those employees and laborers who
worked seven days a week and were regularly receiving
the 25% salary differential for a period of three months
12

prior to the implementation of Republic Act 1880. This is


so even if petitioner is a public utility in view of the
contractual obligation it has assumed on the matter.
8. I: What is the correct method to
determine the equivalent daily wage of a
monthly salaried employee, especially in
a firm which is a public utility?
H: In the computation of the daily wages of employees
paid by the month distinction should be made between
government employees like the GAO employees and those
who are not. The computation for government employees
is governed by Section 254 of the Revised Administrative
Code (i.e. in making payments for part of a month, the
amount to be paid for each day shall be determined by
dividing the monthly pay. Into as many parts as there are
days in the particular month) while for others the correct
computation is the monthly salary divided by the actual
number of working hours in the month or the regular
monthly compensation divided by the number of working
days in the month.
9. I: Considering that the payment of night
compensation is not by virtue of any
statutory provision but emanates only
from an award of respondent Court of
Industrial Relations, whether the same
can be made retroactive and cover a
period prior to the promulgation of the
award
H: Yes. The Court of Industrial Relations did not err in
ordering the payment of night compensation from the
time such services were rendered. The laborer must be
compensated for nighttime work as of the date the same
was rendered.

It is of common occurrence that a working man


who has already rendered night time service takes
him a long time before he can muster enough
courage to confront his employer with the demand
for payment for it for fear of possible reprisal. It
happens that many months or years are allowed to
pass by before he could be made to present such
claim against his employer, and so it is neither fair
nor just that he be deprived of what is due him
simply because of his silence for fear of losing the
means of his livelihood.
10. I: WON minimum wage fixed and
awarded by respondent Court of
Industrial Relations in another case
(MWD Workers Union v. MWD CIR Case
No. 359-V) applies to those employed
long after the promulgation thereof,
whether hired as temporary, emergency
and casual workers for a definite period
and for a specific project
H: Yes. The rates of minimum pay fixed in CIR Case No.
359-V are applicable not only to those who were already
in the service as of the date of the decision but also to those
who were employed subsequent to said date.
11. I: How should the collection bargaining
agreement of December 28, 1956 and
Resolution No. 29, series of 1957 of the
Grievance Committee be interpreted and
construed insofar as the stipulations

therein contained relative to "distress


pay" is concerned?
H: All the laborers, whether assigned to the sewerage
division or not who are actually working inside or outside
the sewerage chambers are entitled to distress pay.

CBA: Because of the peculiar nature of the


function of those employees and laborers of the
Sewerage Division who actually work in the
sewerage chambers, causing "unusual distress" to
them, they shall receive extra compensation
equivalent to twenty-five (25%) of their basic
wage.

November 25, 1957 Agreement between labor and


management: "Distress Management agreed to
pay effective October 1, 1956 25% additional
compensation for those who actually work in and
outside sewerage chambers in accordance with
Resolution No. 9 (explaining CBA stipulation) of
the Grievance Committee."

SC finds that those who are entitled to the distress


pay are those employees and laborers who work in
the sewerage chambers whether they belong to the
sewerage division or not, and by sewerage
chambers should be understood to mean as the
surroundings where the work is actually done,
not necessarily "inside the sewerage chambers." It
is clear then that all the laborers whether of the
sewerage division or not assigned to work in and
outside the sewerage chambers and suffer in
unusual distress because of the nature of their
work are entitled to the extra compensatory. And
this conclusion is further bolstered by the findings
of the industrial court regarding the main
activities of the sewerage division.
o Activities of sewerage division: (a)
cooperation of the sewerage pumping
stations; (b) cleaning and maintenance of
sewer mains; and (c) installation and
repairs of house sewer connections.
o The wet pits, trenches, manholes, which
are full of sewage matters, are filthy
sources of germs and different diseases.
They emit foul and filthy odor dangerous
to health. Those working in such places
and exposed directly to the distress of
contamination.
12. I: WON, under the first indorsement of
the President of the Philippines dated
August 12, 1957, which authorizes herein
petitioner to stagger the working days of
its employees and laborers, those whose
services are indispensably continuous
throughout the year may be staggered in
the same manner as the pump, valve,
filter and chlorine operators, guards,
watchmen, medical services, and those
attached to the recreational facilities.
H: There is no valid reason to disturb the finding of the
Court of Industrial Relations that the work of the
personnel in the construction, sewerage, maintenance,
machineries and shops of petitioner is not continuous as to
require staggering.
13

In resolving this issue, the industrial court


justified the staggering of the work days of those
holding positions as pump operators, valve
operators, filter operators, chlorine operators,
watchmen and guards, and those in the medical
service for the reason that the same was made
pursuant to the authority granted by the President
who in the valid exercise of the powers conferred
upon him by Republic Act No. 1880 could
prescribe the working days of employees and
laborers in government-owned and controlled
corporations depending upon the exigencies of the
service. The court, however, stated that the
staggering should not apply to the personnel in the
construction, sewerage, maintenance, machineries
and shops because they work below 365 days a
year and their services are not continuous to
require staggering.

TESTS FIELD PERSONNEL


Auto Bus Transport Systems, Inc. v. Bautista
May 16, 2005 Chico-Nazario
Doctrine:
The disposition of the first issue revolves around the proper
interpretation of Article 95 of the Labor Code vis-visSection 1(D), Rule V, Book III of the Implementing Rules
and Regulations of the Labor Code 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.
Book III, Rule V: 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
in a fixed amount for performing work irrespective of
the time consumed in the performance thereof; . . .
A careful perusal of said provisions of law will result in
the conclusion that the grant of service incentive leave
has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those
employees not explicitly excluded by Section 1 of Rule
V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified
as "field personnel." The phrase "other employees
whose performance is unsupervised by the employer"
must not be understood as a separate classification of
employees to which service incentive leave shall not be
granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under
the Labor Code as those "whose actual hours of work in
the field cannot be determined with reasonable
certainty."
The same is true with respect to the phrase "those who are
engaged on task or contract basis, purely commission
basis." Said phrase 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. Hence, employees engaged on task
or contract basis or paid on purely commission basis are
not automatically exempted from the grant of service
incentive leave.
What must be ascertained in order to resolve the issue of
propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel"
shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of
business or branch office of the employer and whose actual
hours of work in the field cannot be determined with
reasonable certainty. This definition is further elaborated in
the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial
Employees Association which states that:
As a general rule, [field personnel] are those whose
performance of their job/service is not supervised by
the employer or his representative, 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.
It is necessary to stress that the definition of a "field
personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with
the fact that the employees performance is unsupervised by
the employer. As discussed above, field personnel are those
who regularly perform their duties away from the principal
place of business of the employer and whose actual hours
of work in the field cannot be determined with reasonable
certainty. Thus, in order to conclude whether an employee
is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employees
time and performance are constantly supervised by the
employer.
Fast Facts:
Bautista has been employed by Auto Bus as driverconductor since 1995. He is paid on commission basis. In
2000, the bus Bautista was driving bumped the rear of
another bus of his ER. The management made him
shoulder 30% (P75k+++) of the expenses for the repair of
the damaged bus and since he did and could not pay for it,
he was terminated.
Bautista filed a complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service
incentive leave pay.
However, the ER was able to prove that Bautistas
employment is replete with offenses and that he was given
due process before termination. So, there was no illegal
dismissal but he was entitled to 13th month and service
incentive leave pay.
14

Far-East Agri Supply v Labatique


Fast Facts
Petitioner Far East Agricultural Supply, Inc. (Far East)
hired private respondent Jimmy Lebatique as truck driver.
Lebatique complained of nonpayment of overtime work
ever since he started working for the company. After
talking to Manuel Uy, brother of Far Easts General
Manager, Alexander terminated Lebatique and told him to
look for another job. Hence, Lebatique filed a complaint for
illegal dismissal and nonpayment of overtime pay.
The issue is whether or not Lebatique was a field personnel,
not entitled to overtime pay. The court held that Lebatique
is not a field personnel because (1) company drivers,
including Lebatique, are directed to deliver the goods at a
specified time and place; (2) they are not given the
discretion to solicit, select and contact prospective clients;
and (3) Far East issued a directive that company drivers
should stay at the clients premises during truck-ban hours
which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.
Drivers, like Lebatique, are under the control and
supervision of management officers. Lebatique, therefore,
is a regular employee. Thus, he is entitled to the benefits
accorded to regular employees of Far East, including
overtime pay and service incentive leave pay.
Doctrine
Article 82 of the Labor Code provides that "Field
personnel" shall refer to non-agricultural employees who
regularly perform their duties away from the principal place
of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with
reasonable certainty.
In Auto Bus Transport Systems, Inc. v. Bautista, the Court
emphasized that the definition of a "field personnel" is not
merely concerned with the location where the employee
regularly performs his duties but also with the fact that the
employees performance is unsupervised by the employer.
Field personnel are those who regularly perform their
duties away from the principal place of business of the
employer and whose actual hours of work in the field
cannot be determined with reasonable certainty. Thus, in
order to determine whether an employee is a field
employee, it is also necessary to ascertain if actual hours of
work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be
made as to whether or not the employees time and
performance are constantly supervised by the employer
UNION OF FILIPRO EMPLOYEES (UFE) VS.
BENIGNO VIVAR, JR., NLRC & NESTL
PHILIPPINES, INC. (FILIPRO, INC.)
G.R. No. 79255 January 20, 1992 GUTIERREZ, JR.
Facts:

The sales personnel of Filipro (Nestle now) were


excluded from the holiday pay award and the change of
the divisor in the computation of benefits from 251 to
261 days.

On November 8, 1985, respondent filed with NLRC a


petition for declaratory relief seeking a ruling on its
rights and obligations respecting claims of its monthly
paid employees for holiday pay based on Chartered
Bank Employees Association v. Ople.

On January 2, 1980, Arbitrator Vivar told Filipro to


pay its monthly paid employees holiday pay pursuant
to Article 94 of the Code, subject only to Article 82 and
such other legal restrictions as are provided for in the
Code.
Filipro filed a motion for clarification.
Arbitrator - effectivity of the holiday pay award IS
November 1, 1974, the date of effectivity of the Labor
Code; sales personnel are field personnel and so are
not entitled to holiday pay; the divisor should be
changed from 251 to 261. Ordered the reimbursement
of overpayment for overtime, night differential,
vacation and sick leave pay bec. of 251 days as divisor.

Issue:
1) WON Nestle's sales personnel are entitled to holiday pay.
2) WON the divisor should be changed from 251 to 261
days.
3) WON the use of 251 as divisor resulted in overpayment.
4) Beginning when HP should be computed.
Held: 1) No. 2)Yes. 3) No. 4)
Rationale:
1) Under Art. 82, field personnel are not entitled to holiday
pay. Field personnel = "non-agritultural employees who
regularly perform their duties away from the principal place
of business or branch office of the employer and whose
actual hours of work in the field cannot be
determined with reasonable certainty." Sales
personnel start field work at 8:00 a.m. after reporting to
the office and report back at 4:00/4:30 p.m. if they are
Makati-based. The law requires that actual hours of work in
the field be reasonably ascertained. The company has no
way of determining WON these sales personnel
really spend the hours in between in actual field
work. This requirement for the salesmen is but an exercise
of purely management prerogative of providing
administrative control. Rule IV, Book III of the
Implementing Rules which provides that the rule shall
apply to all employees except field personnel and other
employees whose time and performance is unsupervised
by the employer. The clause "whose time and performance
is unsupervised by the employer" merely
interpreted/expounded the clause "whose actual hours of
work in the field cannot be determined with reasonable
certainty." The former clause is still within the scope of Art.
82 which defines field personnel. So, WON an
employee's actual working hours in the field can be
determined with reasonable certainty WON the
employee's time and performance is constantly
supervised by the employer.
The criteria for granting incentive bonus (sales/collection)
indicate that these sales personnel are given incentive
bonuses precisely because of the difficulty in measuring
their actual hours of field work. They are evaluated by the
result of their work and not by the actual hours of work. A
salesman mostly works individually. There are no
restrictions in the time he works. He earns as much or as
little, within the range of his ability, as his ambition
dictates. In lieu of overtime, he receives commissions. He
works away from his employer's place of business, is not
subject to the personal supervision of his employer, and his
employer has no way of knowing the number of hours he
works per day.
15

2) The divisor assumes an important role in


determining whether or not holiday pay is already
included in the monthly paid employee's salary and
in the computation of his daily rate. In Chartered
Bank Employees Association v. Ople the Chartered Bank,
in computing overtime compensation for its employees,
employs a "divisor" of 251 days. The 251 working days
divisor is the result of subtracting all Saturdays, Sundays
and the ten (10) legal holidays from the total number of
calendar days in a year. If the employees are already paid
for all non-working days, the divisor should be 365 and not
251.
In the petitioner's case, its computation of daily ratio since
September 1, 1980, is as follows [(monthly rate x 12
months)/251 days].
Following the criterion laid down in the Chartered
Bank case, the use of 251 days' divisor by
respondent Filipro indicates that holiday pay is not
yet included in the employee's salary, otherwise
the divisor should have been 261. The daily rate,
assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and
night differential pay and commutation of sick and vacation
leave credits. Necessarily, the daily rate should also be the
same basis for computing the 10 unpaid holidays.
3) The v. arbitrator's order to change the divisor from 251
to 261 days would result in a lower daily rate which is
violative of the prohibition on non-diminution of benefits
found in Article 100 of the Labor Code. If the divisor is
adjusted to 261 days, then the dividend (employee's annual
salary) should be increased to incorporate the holiday pay.
So, there is no merit in respondent Nestle's claim
of overpayment of overtime and night differential
pay and sick and vacation leave benefits, the
computation of which are all based on the daily
rate, since the daily rate is still the same before and
after the grant of holiday pay.
4) Nestle, relying on the implicit validity of the
implementing rule and policy instruction before this Court
nullified them, and thinking that it was not obliged to give
holiday pay benefits to its monthly paid employees, may
have been moved to grant other concessions to its
employees, especially in the collective bargaining
agreement. Nestle's employees are among the highest paid
in the industry. It would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday
benefits up to 1984 was not in any way attributed to
Nestle's fault. So, grant of holiday pay should be effective,
not from the date of promulgation of the Chartered Bank
case nor from the date of effectivity of the Labor Code, but
from October 23, 1984, the date of promulgation of
the IBAA case.
Judgment: The order of the voluntary arbitrator is
modified. The divisor to be used in computing holiday pay
shall be 251 days. HP shall be computed from October 23,
1984.
Salazar v NLRC (April 17, 1996) Kapunan

Doctrines: Field personnel are those who perform their


duties in the project site or away from the principal place or
business of their employer. It does not include managerial
employees.
Facts:
H.L. Carlos Construction employed Engineer
Salazar as a project engineer for the construction of a
building. When the building was completed, Salazar
received a memorandum of his termination. Salazar filed a
complaint for illegal dismissal and non-payment of wages
and other benefits (overtime, service incentive leave pay,
commission, allowance, profit-sharing, separation pay).
The Court held that Salazar was a managerial
employee and not entitled to the benefits he sought to
recover. Salazar tried to argue that since he performs his
duties in the project site or away from the principal place of
business of his employer, he falls under the category of
field personnel and that his actual working hours can be
determined as evidence by the vouchers containing
payments of salries and overtime services; but the Court
disagreed with him. The nature of his work was
supervisory-engineering and even if he was not strictly a
managerial employee, he still falls within the category of
officers or members of a managerial staff; therefore
exempt from receiving such benefits.
Salazar tried to argue that the NLRC failed to give
weight to the fact that the company compensated him for
his overtime services as indicated in various disbursement
vouchers. The Court held that that Salazar was paid
overtime benefits does not automatically and necessarily
denote that he is entitled to such benefits.
Mercidar Fishing Corporation v. NLRC
G.R. No. 112574, 08 October 1998, 297 SCRA 440
Ponente: Mendoza
FACTS:

Fermin Agao Jr. filed a case of illegal dismissal,


alleging that Mercidar has constructively
dismissed him from employ after he took a one
month leave. After his leave, the company refused
to give him work. He asked for a certificate of
employment but was made to come back after 3
days. When he returned, instead he was asked to
resign.

Mercidar Fishing on the other hand alleged that


Fermin did not return after his leave, and was
AWOL for 3 months; that he was assigned to
another vessel but he was left behind. When he
asked for a certificate of employment it was under
the pretext that he was looking for work in another
company. He refused to get the certificate and
resign unless he was given separation pay.

LA ordered reinstatement with payment of


backwages, 13 month pay and incentive leave pay

Mercidar appealed to NLRC claiming that it


should not be held liable for incentive leave pay
because Fermin was considered as filed personnel
and thus not entitled to such benefit. NLRC
denied his petition
ISSUE:
1. WON NLRC erred in holding that Fermin cannot
be classified as a field personnel
16

2.

WON NLRC committed grave abuse of discretion


when it found that there has been constructive
dismissal

HELD: No.
1. The contested provision is :
ART. 82.Coverage. The provisions of this title [Working
Conditions and Rest Periods] shall apply to employees in all
establishments and undertakings whether for profit or not,
but not to government employees, field personnel,
members of the family of the employer who are dependent
on him for support, domestic helpers, persons in the
personal service of another, and workers who are paid by
results as determined by the Secretary of Labor in
appropriate regulations.
xxx
xxx
xxx
"Field personnel" shall refer to non-agricultural employees
who regularly perform their duties away from the principal
place of business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty
Mercidar claims that being a fisherman, the work of Fermin
is performed away from business, and his actual number of
hours worked cannot be verified, qualifying him as a field
personnel.
The court cited the case of Nestle personnel where it held
that in the case of salesmen, while they have to report at
appointed hours in the office, it cannot be ascertained
whether they actually worked or not ouside the office. In
the case at bar, since they are fishermen they cannot leave
the fishing vessel in the meantime, rendering them under
full effective control and supervision of the company.
2.

There was no abuse of discretion that transpired


in the instant case because the LA and NLRC
based their findings on factual evidence (showing
of medical certificate) supported by evidence on
record.

Petition of Mercidar dismissed.


RATIONALE EXEMPTION PIECE WORKER
RED COCONUT PRODUCTS V. CIR
June 30, 1966 J. Bengzon
Doctrine: Although the Eight-Hour Labor Law provides
that it does not cover those workers who prefer to be paid
on piece-work basis, nothing in said law precludes an
agreement for the payment of overtime compensation to
piece workers
FACTS:

Workers of Red Coconut Products entered into a CBA


with the company in 1958 and also in 1961 one of
the provisions provides for payment of night shift
differentials

There were 2 groups of workers Group A 3 shifts;


Group B- 2 shifts.

35c for the second shift, 55c for the third shift

Group B workers said they receive only 55c and were


asking for 35c more

CIR said workers were engaged in piece-work basis


and not entitled to overtime pay under the eight-hour
labor law but CBA was meritorious and said that
payments should be uniform (90c)

ISSUE: WON petitioners are entitled to 90c of payment


for night shift differential even if they were allegedly pieceworkers
HELD: Yes
RATIO:

Although the Eight-Hour Labor Law provides that it


does not cover those workers who prefer to be paid on
piece-work basis, nothing in said law precludes an
agreement for the payment of overtime compensation
to piece workers

The fact that the company and the union agreed to a


CBA and actually paid for the differentials (even if not
in full) shows that the company freely adhered to an
application and implementation of the eight-hour
labor law

SC thinks that laborers are not in the full concept of


piece-workers since they have fixed hours of work

Philosophy of exclusion of piece-workers is that they


are paid depending upon the work they do
irrespective of the amount of time employed in doing
said work
5.03 NORMAL HOURS OF WORK 83
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 percent (30%)
of their regular wage for work on the sixth day. For
purposes of this Article, "health personnel" shall include
resident physicians, nurses, nutritionists, dietitians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives,
attendants and all other hospital or clinic personnel.
5.04 HOURS WORKED 84
Art. 84. Hours worked. Hours worked shall include (a) all
time during which an employee is required to be on duty
or to be at a prescribed workplace; and (b) all time during
which an employee is suffered or permitted to work.
Rest periods of short duration during working hours shall
be counted as hours worked.
IDLE TIME

National Development Co vs.


Court of Industrial Relations

Facts: National Development Co is a government-owned


and controlled corporation were there were four shifts of
work (8am-4pm, 6am-2pm, 2pm-10pm, 10pm-6am). For
each shift there was a one-hour mealtime period, and for
each shift, the workers are credited with eight hours of
work. However, since 1953, whenever workers in one shift
were required to continue working until the next shift,
17

petitioner instead of crediting them with eight hours of


overtime work, has been paying them for six hours only,
petitioner claiming that the two hours corresponding to the
mealtime periods should not be included in computing
compensation. The issue in this case was whether mealtime
breaks should be considered working time and the Court
ruled in this case that yes the meal times were part of the
working hours.
Doctrine: Under the law, the idle time that an employee
may spend for resting and during which he may leave the
spot or place of work though not the premises of his
employer, is not counted as working time only where the
work is broken or is not continuous. No general rule can be
laid down as to what constitutes compensable work, but
under Section of CA 444, such a time for eating can only be
segregated or deducted from his work if the same is not
continuous and the employee can leave his working place
and rest completely.
Luzon Stevedoring Co. vs. Luzon Marine
Department Union
G.R. No. L-9265 / April 29, 1957 / En Banc / Felix,
J.
Facts: Respondent Luzon Marine Department Union filed
a petition with the CIR containing several demands against
herein petitioner Luzon Stevedoring Co., Inc., among which
were the petition for full recognition of the right of
COLLECTIVE bargaining, close shop and check off. They
held a strike which was later declared illegal by the SC. In
view of said ruling, the Union filed a "Constancia" with the
Court of Industrial Relations praying that the remaining
unresolved demands of the Union one of which is: That the
work performed in excess of eight (8) hours he paid an
overtime pay of 50 per cent the regular rate of pay, and that
work performed on Sundays and legal holidays be paid
double the regular rate of pay.
The Court found out that the company gave said employees
3 free meals every day and about 20 minutes rest after each
mealtime; that they worked from 6:00 am. to 6:00 p.m.
every day including Sundays and holidays, and for work
performed in excess of 8 hours, the officers, patrons and
radio operators were given overtime pay in the amount of
P4 each and P2 each for the rest of the crew up to March. It
is, therefore, only a matter of computation whether such
over time pay by the respondent for overtime services
rendered covers the actual overtime work performed by the
employees concerned.
The members of the Union also prayed that those who had
rendered services from 6:00 a.m. to 6:00 p.m. were entitled
to 4 hours' overtime pay.
Is the definition for "hours of work" as presently
applied to dryland laborers equally applicable to
seamen? Or should a different criterion be applied
by virtue of the fact that the seamen's employment
is completely different in nature as well as in
condition of work from that of a dryland laborer?
Petitioner company argues that although the seamen
concerned stayed in petitioner's tugboats, or merely within
its compound, for 12 hours, yet their work was not

continuous but interrupted or broken. It has been the


consistent stand of petitioner that while it is true that the
workers herein were required to report for work at 6:00
a.m. and were made to stay up to 6:00 p.m., their work was
not continuous and they could have left the premises of
their working place were it not for the inherent physical
impossibility peculiar to the nature of their duty which
prevented them from leaving the tugboats.
Section 1 of Commonwealth Act No. 444, known as the
Eight-Hour Labor Law, provides:
SEC. 1. The legal working day for any person employed by
another shall be of not more than eight hours daily. When
the work is not continuous, the time during which the
laborer is not working AND CAN LEAVE HIS WORKING
PLACE and can rest completely, shall not be counted.
Interpretation of this provision / Working place: a laborer
need not leave the premises of the factory, shop or boat in
order that his period of rest shall not be counted, it being
enough that he "cease to work", may rest completely and
leave or may leave at his will the spot where he actually
stays while working, to go somewhere else, whether within
or outside the premises of said factory, shop or boat. If
these requisites are complied with, the period of such rest
shall not be counted.
The Court said that the claimants herein rendered services
to the Company from 6:00 a.m. to 6:00 p.m. including
Sundays and holidays, which implies either that said
laborers were not given any recess at all, or that they were
not allowed to leave the spot of their working place, or that
they could not rest completely.
Laches: There is no question that the right of the laborers
to overtime pay cannot be waived. But there may be cases
in which the silence of the employee or laborer who lets the
time go by for quite a long period without claiming or
asserting his right to overtime compensation may favor the
inference that he has not worked any such overtime or that
his extra work has been duly compensated.
It is of common occurrence that a workingman has already
rendered services in excess of the statutory period of 8
hours for some time before he can be led or he can muster
enough courage to confront his employer with a demand for
payment thereof. Fear of possible unemployment
sometimes is a very strong factor that gags the man from
asserting his right under the law and it may take him
months or years before he could be made to present a claim
against his employer. To allow the workingman to be
compensated only from the date of the filing of the petition
with the court would be to penalize him for his
acquiescence or silence which We have declared in the case
of the Manila Terminal Co. vs. CIR, supra, to be beyond
the intent of the law. It
What if the the delay in asserting the right to back
overtime compensation causes an unreasonable or
irreparable injury to the employer (the
accumulation of such back overtime wages may
become so great that their payment might cause
the bankruptcy or the closing of the business of the
employer)?
18

Perhaps this situation may occur, but We shall not delve on


it this time because petitioner does not claim that the
payment of the back overtime wages it is ordered to pay to
its claimant laborers will cause the injury it foresees or
force it to close its business, a situation which it speaks of
theoretically and in general.
CONTINUOUS WORK
States Marine Corporation and Royal Line, Inc., vs
Cebu Seamen's Association, Inc.
7 SCRA 294 / Feb. 27, 1963
EN BANC Paredes
FACTS:
Petitioners SMC and RLI operates several steamships of
Philippine registry. Their workers have the respondent
union make a CBA with SMC-RLI. Union filed a case,
saying that the workers on board the vessels were not paid
sick leave, vacation leave and overtime pay; that their
salaries were reduced forcibly; that after the Minimum
Wage Law had taken effect, the workers were required to
pay the sum of P.40 for every meal, while the masters and
officers were not required to pay their meals; and that a
certain Captain Asensi who refused the reduction of salaries
was dismissed and is now claiming backwages.
SMC-RLI argues that the work on board a vessel is one of
comparative ease; that they have suffered financial losses in
the operation of their vessels; that there is no law which
provides for the payment of sick leave or vacation leave to
employees or workers of private firms; that as regards the
claim for overtime pay, the petitioners have always
observed the provisions of Comm. Act No. 444, (EightHour Labor Law), notwithstanding the fact that it does not
apply to those who provide means of transportation; that
they were paying the workers according to their profits and
other circumstances; that in enacting RA 602 (Minimum
Wage Law), the Congress had in mind that the amount of
P.40 per meal, furnished the employees should be deducted
from the daily wages; that Captain Asensi was not
dismissed for alleged union activities, but with the
expiration of the terms of the contract between said officer
and the company, his services were terminated.
ISSUES/SYLLABUS TOPICS and respective
DISCUSSIONS:
Hours WorkedContinuous Work (p.21)
There was only one worker, Severino Pepito, who was
alleged to have worked overtime and yet not paid. He
worked during the late hours of the evening and during the
early hours of the day when the boat docks and unloads,
and did other jobs such as removing rusts and cleaning the
vessel, which overtime work totalled to 6 hours a day.
SC said considering the established fact that the work of
Severino Pepito was continuous, and during the time he
was not working, he could not leave and could not
completely rest, because of the place and nature of his
work, the provisions of sec. 1, of Comm. Act No. 444
(Eight-Hour Labor Law), which states "When the work is
not continuous, the time during which the laborer is not
working and can leave his working place and can rest
completely shall not be counted", find NO application in his
case.

WageFacilities and SupplementsValuation of


Meals and other Facilities (p.25)
When the workers are hired, they are made to sign
shipping articles which clearly state the
salaries/wages they would receive. These articles
have a stipulation that says the master of the
vessel will provide each member of the crew such
daily subsistence as shall be mutually agreed daily
upon between said master and crew; or, in lieu of
such subsistence the crew may reserve the right to
demand at the time of execution of these articles
that adequate daily rations be furnished each
member of the crew."
It is, therefore, apparent that, aside from the
payment of the respective salaries or wages, set
opposite the names of the crew members, the
SMC-RLI bound themselves to supply the crew
with ship's provisions, daily subsistence or daily
rations, which include food.
They were indeed given food until August 4, 1951,
when the Minimum Wage Law (RA 602) became
effective. After this date, however, the companies
began deducting the cost of meals from the wages
or salaries of crew members; but no such
deductions were made from the salaries of the
deck officers and engineers in all the boats of
SMC-RLI. SC said this is a great and unjust
discrimination
We hold that such deductions are not authorized.
In the coastwise business of transportation of
passengers and freight, the men who compose the
complement of a vessel are provided with free
meals by the shipowners, operators or agents,
because they hold on to their work and duties,
regardless of "the stress and strain concomitant
of a bad weather, unmindful of the dangers that
lurk ahead in the midst of the high seas."
Sec. 3 par. f of RA 602 (Minimum Wage
Law) says: Until and unless investigations by the
Secretary of Labor on his initiative or on petition
of any interested party result in a different
determination of the fair and reasonable value, the
furnishing of meals shall be valued at not more
than 30 centavos per meal for agricultural
employees and not more than 40 centavos for
any other employees covered by this Act this is
the GENERAL RULE.
Sec 19 of RA 602 says: Relations to other labor
laws and practices. Nothing in this Act shall
deprive an employee of the right to seek fair
wages, shorter working hours and better working
conditions nor justify an employer in violating any
other labor law applicable to his employees, in
reducing the wage now paid to any of his
employees in excess of the minimum wage
established under this Act, or in reducing
supplements furnished on the date of enactment.
This is the EXCEPTION.
Atok Big Wedge Assn. vs. Atok Big Wedge Co. (CA
decision, 1955)
o "Supplements", therefore, constitute
extra remuneration or special privileges
or benefits given to or received by the
laborers over and above their ordinary
19

earnings or wages. "Facilities", on the


other hand, are items of expense
necessary for the laborer's and his
family's existence and subsistence so that
by express provision of law (Sec. 2[g]),
they form part of the wage and when
furnished by the employer are deductible
therefrom, since if they are not so
furnished, the laborer would spend and
pay for them just the same.
In short, the benefit or privilege given to the
employee which constitutes an extra
remuneration above and over his basic or
ordinary earning or wage, is supplement; and
when said benefit or privilege is part of the
laborers' basic wages, it is a facility. The
criterion is not so much with the kind of the
benefit or item (food, lodging, bonus or sick
leave) given, but its purpose
Considering, therefore, as definitely found by the
CIR that the meals were freely given to crew
members prior to August 4, 1951, while they were
on the high seas "not as part of their wages but as
a necessary matter in the maintenance of the
health and efficiency of the crew personnel during
the voyage", the deductions therein made for the
meals given after August 4, 1951, should be
returned to them, and the operator of the
coastwise vessels affected should continue giving
the same benefit.
If we follow SMC-RLI, then a crew member whose
salary before RA 602 was P100, then we are to
deduct P0.40 as meals, then he would only be
getting P86 per month, which is way below the
minimum wage of P122. Congress did not intend
this!
The meals here are SUPPLEMENTS!

WAITING TIME

Arica v NLRC
February 28, 1989

Paras

Facts:

Arica and others filed a complaint against STANFILCO


(Standard Phil. Fruits Corp.) regarding their assembly
time, and award of moral damages and attorney's fees.
o They contend that the preliminary activities
as workers of STANFILCO in the assembly
area is compensable as working time (5:306:00 am) since these preliminary activities
are necessarily and primarily for private
respondent's benefit.

First there is the roll call. This is followed


by getting their individual work
assignments from the foreman.

Thereafter, they are individually required


to accomplish the Laborer's Daily
Accomplishment Report during which
they are often made to explain about
their reported accomplishment the
following day.

Then they go to the stockroom to get the


working materials, tools and equipment.

Lastly, they travel to the field bringing


with them their tools, equipment and
materials.
LA dismissed the complaint. It held that the 30-minute
assembly time cannot be compensated because it
cannot be considered waiting time or work time.
According to LA, this ruling has become the law of the
case which can no longer be disturbed without doing
violence to the time- honored principle of res-judicata.
NLRC affirmed LA. MR denied.
STANFILCO: Instant complaint is not new (i.e. ruling
in Associated Labor Union v STANFILCO).

Issues:
1. WON 30-minute assembly time is compensable under
the Labor Code
2. WON NLRC committed grave abuse of discretion
Held: No (for both).
Ratio:

Associated Labor Union v STANFILCO (Citing


Minister of Labor Blas Ople): The thirty 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. Said time is a deeplyrooted, 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. Also, employees 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. This, therefore,
demonstrates the indubitable fact that the 30-minute
assembly time was not primarily intended for the
interests of the employer, but ultimately for the
employees to indicate their availability or nonavailability for work during every working day.

NLRC cannot be faulted for ruling that petitioners'


claim is already barred by res-judicata. The noncompensability of the claim having been earlier
established (i.e. previous case), constitute the
controlling legal rule or decision between the parties
and remains to be the law of the case making this
petition without merit.

Moreover, as a rule, the findings of facts of quasijudicial agencies which have acquired expertise
because their jurisdiction is confined to specific
matters are accorded not only respect but at times even
finality if such findings are supported by substantial
evidence
Dispositive: PREMISES CONSIDERED, the petition is
DISMISSED for lack of merit and the decision of the
National Labor Relations Commission is AFFIRMED.
Sarmiento (Dissenting): GRANT THE PETITION. Res
judicata is not a bar. ALU v STANFILCO is not a controlling
precedent. It is evident that the Ople decision was
predicated on the absence of any insinuation of
20

obligatoriness in the course or after the assembly activities


on the part of the employees. 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.
As indicated, however, by the petitioners in the instant
case, things had since changed (for these substantial
changes, see 4 preliminary activities above), and the latter
had since been placed under a number of restrictions. My
considered opinion is that the thirty-minute assembly time
had become, in truth and fact, a "waiting time" as
contemplated by the Labor Code; hence, compensable.
TRAVEL TIME
Rada v. NLRC and Philnor Consultants and
Planners, Inc.
January 9, 1992 Regalado
Doctrine:
Anent the claim for overtime compensation, we hold that
petitioner is entitled to the same. The fact that he picks up
employees of Philnor at certain specified points along
EDSA in going to the project site and drops them off at the
same points on his way back from the field office going
home to Marikina, Metro Manila is not merely incidental to
petitioner's job as a driver. On the contrary, said
transportation arrangement had been adopted, not so much
for the convenience of the employees, but primarily for the
benefit of the employer.
Private respondent does not hesitate to admit that it is
usually the project driver who is tasked with picking up or
dropping off his fellow employees. Proof thereof is the
undisputed fact that when petitioner is absent, another
driver is supposed to replace him and drive the vehicle and
likewise pick up and/or drop off the other employees at the
designated points on EDSA. If driving these employees to
and from the project site is not really part of petitioner's
job, then there would have been no need to find a
replacement driver to fetch these employees. But since the
assigned task of fetching and delivering employees is
indispensable and consequently mandatory, then the time
required of and used by petitioner in going from his
residence to the field office and back, that is, from 5:30 a.m.
to 7:00 a.m. and from 4:00 p.m. to around 6:00 p.m.,
which the labor arbiter rounded off as averaging three
hours each working day, should be paid as overtime work.
Quintessentially, petitioner should be given overtime pay
for the three excess hours of work performed during
working days from January, 1983 to December, 1985.
Fast Facts:
In 1977, Rada was hired as driver under a Contract of
Employment for a Definitie Period for the construction
supervision phase of the Manila North Expressway
Extension, 2nd Stage. However, after the phase for which he
was hired for was finished, he was hired again for the other
phases of the construction. This continuous rehiring was
done until 1985 when the project was finally completed.
Part of Radas job was to drive his co-employees to and
from the project site.
Rada was thereafter terminated since the project was
already completed. He filed a complaint for non-payment of
separation pay and overtime pay.

The issue in point under this topic is whether he is entitled


to overtime payment for his travel from his house to his
place of work.
ENTRY TIME CARDS
Aklan Electric Coop v NLRC
Fast Facts
Complainants alleged that prior to the temporary transfer
of the office of AKELCO from Lezo Aklan to Amon Theater,
Kalibo, Aklan, they were continuously performing their task
and were duly paid of their salaries at their main office
located at Lezo, Aklan. However, they claim that from June
1992 up to March 18, 1993, those who continuously
reported for work at Lezo, Aklan in compliance with a
resolution were not paid their salaries.
The issue is whether or not they were not indeed paid their
salaries. The court held that the complainants failed to
prove that they rendered services from June 16, 1992 to
March 18, 1993 so as to entitle them to payment of wages.
The pieces of evidence which the complainants presented:
(a) letter requesting for the payment of private
respondents unpaid wages from June 16, 1992 to March 18,
1993; (b) memorandum where Atty. Mationg made an
assurance that he will recommend such request; (c) their
own computation of their unpaid wages, did not establish
the fact that they actually rendered services in the Kalibo
office during the stated period.
Doctrine
There must be competent proof such as time cards or office
records to show that they actually rendered compensable
service during the stated period to entitle them to wages. It
was incumbent upon the complainants to prove that they
indeed rendered services for petitioner, which they failed to
do. It is a basic rule in evidence that each party must prove
his affirmative allegation.
EDUARDO B. PRANGAN VS. NLRC, MASAGANA
SECURITY SERVICES CORPORATION, and/or
VICTOR C. PADILLA
G.R. No. 126529
April 15, 1998 ROMERO
Facts:

Private respondent provides security services to its


clients and hired petitioner on November 4, 1980 as
one of its security guards. Prangan was assigned to the
Cat House Bar and Restaurant with a monthly salary
of P2,000.00 until its closure on August 31, 1993.

On May 4, 1994, petitioner filed a complaint against


private respondent for underpayment of wages, nonpayment of salary from August 16-31, 1993, overtime
pay, premium pay for holiday, rest day, night shift
differential, uniform allowance, service incentive leave
pay and 13th month pay from the year 1990 to 1993.

Private respondent claimed to be an agent of the


Prangan in securing his employment. So, the liability
for the claims of the petitioner should be charged to
Cat House Bar and its owner, being his direct
employer.

Labor Arbiter ordered Masagana Security Service


Corporation and Victor C. Padilla to pay premium pay
for holiday and rest days, night shift differential,
service incentive leave pay, 13th month pay, uniform
21

allowance, and unpaid salary based on a 4 hr work


day.
Petitioner still appealed to NLRC saying that he
worked twelve hours a day and not four. NLRC
dismissed his appeal.

Issue: WON petitioner worked for 12 hours


Held: 12 HOURS.
Rationale:

Private respondent submitted the forged daily time


records showing that petitioner only worked four hours
daily. Petitioner argues that he was not required to
submit one. There is no dispute that matters
concerning an employees actual hours of work are
within the ambit of management prerogative.
However, when an employer alleges that his
employee works less than the normal hours of
employment as provided for in the law, he
bears the burden of proving his allegation with
clear and satisfactory evidence.

The NLRC relied solely on the supposed daily time


records of the petitioner submitted by the private
respondent. However, these documents cannot be
considered substantial evidence as to conclude that
petitioner only worked for four hours. The petitioner
said he never made nor submitted any daily time
record and his signature was forged.

Private respondent has unlimited access to all relevant


documents and records on the hours of work of the
petitioner. No employment contract, payroll, notice of
assignment or posting, cash voucher or any other
convincing evidence which may attest to the actual
hours of work of the petitioner were even presented.

In said alleged daily time record, it showed that


petitioner started work at 10:00 p.m. and would
invariably leave his post at exactly 2:00 a.m. Such
unvarying recording of a daily time record is
improbable and contrary to human experience.
It is impossible for an employee to arrive at the
workplace and leave at exactly the same time,
day in day out. The very uniformity and
regularity of the entries are badges of
untruthfulness and as such indices of dubiety.

In the personnel data sheet of the petitioner, duly


signed by the formers operation manager, it shows on
its face that his hours of work are from 7:00 p.m. to
7:00 a.m. or twelve hours a day. Hence, private
respondent is estopped from assailing the contents of
its own documents.

The attendance sheets of Cat House Bar and


Restaurant showed that petitioner worked from 7:00
p.m. to 7:00 a.m. daily, documents which were never
repudiated by the private respondent.
Judgment: The petition is granted. Whatever money
claims due to the petitioner shall be computed on the basis
of a twelve-hour daily work schedule. Remanded to the
Labor Arbiter for immediate recomputation of claims.
Nicario v NLRC (September 17, 1998)
Ponente: Romero
Topic: Entry Time Card

Doctrines: In evaluating the evidentiary value of daily


time records especially those which show uniform entries
with regard to the hours of work rendered by an employee,
the Court has ruled that such unvarying recording of a
daily time record is improbable and contrary to human
experience. It is impossible for an employee to arrive at a
workplace and leave at exactly the same time, day in day
out. The uniformity and regularity of the entries are badges
of untruthfulness and as such indices of dubiety.
Facts:

Emelita Nicario is a sales supervisor of Mancao


Supermarket. When she was terminated, she filed a
complaint for illegal dismissal with prayer for backwages,
wage differential, service incentive leave pay, overtime pay,
13th month pay, and unpaid wages. The LA awarded all
except for the holiday premium pay and unpaid salaries.
The NLRC affirmed the decision of the LA but deleted the
award for overtime pay.
Nicario claimed that she worked for 12 hours a day
from 7:30am 7:30pm, thus rendering overtime work for 4
hours each day. The LA based its decision on the fact that
all Mancao establishments open at 8:00am and close at
8:00pm.
The NLRC however gave more credence to the
daily time records (DTRs) presented by the company which
showed that Nicario worked only 8 hours a day from
9:00am-12:00pm and 2:00pm-7:00pm.
The Court held that the DTRs were unreliable
because:
1) The originals were not presented in evidence
2) They made it appear that Nicario had a 2-hour rest
period which is highly unusual for a store establishment
because employees should attend to customers almost
every minute as well as contrary to the judicial notice that
no noon break is observed
3) All entries were suspiciously consistent: Nicario never
reported earlier than 9:00am and never went home later
than 8:00pm
The Court agreed with the LA and took notice that
all establishments open at 8:00am and close at 8:00pm
with no noon break so it was believable tat employees
rendered 4 hours of overtime, 7 days a week. It is also a
well-settled doctrine that if doubt exists between the
evidence presented by the employer and the employee, the
scales of justice may be tilted in favor of the latter.
5.05 MEAL PERIOD 85
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.
MEAL TIME FREE TIME
PAL vs. NLRC
GR 132805 Puno
FACTS:

Private respondent was employed as flight surgeon at


petitioner company Philippine Air Lines (PAL). He was
assigned at the PAL Medical Clinic at Nichols. On
22

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. The nurse on duty called private respondent at
home to inform him of the emergency. When private
respondent reached the clinic around 7:50 in the
evening, the nurse on duty had already left with the
patient. The patient died the following day.

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


is entitled to a thirty-minute meal break; that he
immediately left his residence after being informed by
the nurse about the emergency; that the nurse
panicked and brought the patient to the hospital
without waiting for him.

Finding his explanation unacceptable, the


management charged private respondent with
abandonment of post while on duty. In his answer,
private respondent denied the charge. He said that he
only left his clinic to have his dinner at home and he
returned at 7:51 in the evening upon being informed of
the emergency.

After evaluating the charge, as well as the answer of


private respondent, PAL decided to suspend private
respondent for three months. Private respondent filed
a complaint for illegal suspension against petitioner.

The Labor Arbiter rendered a decision finding the


suspension illegal. Petitioner appealed to the NLRC.
The NLRC dismissed the appeal after finding that the
decision of the Labor Arbiter is supported by the facts
on record and the law on the matter.
ISSUE: WON Respondent was to be held liable for
abandonment of work
HELD: No.
Supreme Court held that there was no abandonment of
work and that public respondent NLRC did not err in
nullifying the three-month suspension of private
respondent. The NLRC, however, erred in awarding moral
damages to private respondent.
There was no abandonment as the doctors house was a few
minutes drive away and his whereabouts were known to
the nurse on duty. He also arrived immediately after being
informed of the incident.
Secondly, the 8 hour work period does not include the meal
hour of the respondent and nowhere in the law does it state
the respondent has to stay within the company premises
during this time.
The award of moral damages was deleted because there was
no malicious intent on the part of PAL to suspend him
Provisions in Question in the case:
ARTICLE 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:
SECTION 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.
PAN AMERICAN AIRWAYS V. PAN AMERICAN
EMPLOYEES ASSOCIATION
February 23, 1961
J.B.L. Reyes
Topic: Meal time free time
Doctrine: the straight 8-hour shift included the meal hour
because it was no one of complete rest but actually a work
hour since laborers had to be on ready call
FACTS:

Company believes that the one-hour meal period


should not be considered overtime work because the
evidence allegedly showed that employees could rest
completely and were not in any manner under the
control of the company

CIR said that during the meal periods, the mechanics


were required to stand by for emergency work and they
were reprimanded if they fail to be available
ISSUE: WON the meal period should be included as
overtime work
HELD: Yes
RATIO: The straight 8-hour shift included the meal hour
because it was no one of complete rest but actually a work
hour since laborers had to be on ready call
5.06 OVERTIME WORK AND OFFSETTING
PROHIBITION 87-89
Art. 87. Overtime work. Work may be performed beyond
eight (8) hours a day provided that the employee is paid
for the overtime work, an additional compensation
equivalent to his regular wage plus at least twenty-five
percent (25%) thereof. Work performed beyond eight
hours on a holiday or rest day shall be paid an additional
compensation equivalent to the rate of the first eight hours
on a holiday or rest day plus at least thirty percent (30%)
thereof.

23

Art. 88. Undertime not offset by overtime. Undertime


work on any particular day shall not be offset by overtime
work on any other day. Permission given to the employee
to go on leave on some other day of the week shall not
exempt the employer from paying the additional
compensation required in this Chapter.
Art. 89. Emergency overtime work. Any employee may be
required by the employer to perform overtime work in
any of the following cases:
When the country is at war or when any other national or
local emergency has been declared by the National
Assembly or the Chief Executive;
When it is necessary to prevent loss of life or property or
in case of imminent danger to public safety due to an
actual or impending emergency in the locality caused by
serious accidents, fire, flood, typhoon, earthquake,
epidemic, or other disaster or calamity;
When there is urgent work to be performed on machines,
installations, or equipment, in order to avoid serious loss
or damage to the employer or some other cause of similar
nature;
When the work is necessary to prevent loss or damage to
perishable goods; and
Where the completion or continuation of the work started
before the eighth hour is necessary to prevent serious
obstruction or prejudice to the business or operations of
the employer.
Any employee required to render overtime work under
this Article shall be paid the additional compensation
required in this Chapter.
Art. 90. Computation of additional compensation. For
purposes of computing overtime and other additional
remuneration as required by this Chapter, the "regular
wage" of an employee shall include the cash wage only,
without deduction on account of facilities provided by the
employer.
DEFINITION AND RATIONALE OVERTIME PAY
Letran Calamba Faculty and Employees
Association vs NLRC
Facts: The Letran Calamba Faculty and Employees
Association filed a complaint against Colegio de San Juan
de Letran for collection of various monetary claims due its
members. One of the allegations of the Association is that
in the computation of the thirteenth month pay of its
academic personnel, CSJL does not include as basis
therefor their compensation for overloads; it only takes into
account the pay the faculty members receive for their
teaching loads not exceeding 18 units. The teaching
overloads are rendered within 8 hours a day.
The basic salary of an employee is used as the basis in the
determination of his 13th month pay. Any compensations
or remunerations which are deemed not part of the basic
pay is excluded as basis in the computation of the
mandatory bonus. Petitioner argues that under the Revised
Guidelines on the Implementation of the 13th-Month Pay
Law, promulgated by the Secretary of Labor on November

16, 1987, the basic pay of an employee includes


remunerations or earnings paid by his employer for
services rendered, and that excluded therefrom are the cash
equivalents of unused vacation and sick leave credits,
overtime, premium, night differential, holiday pay and
cost-of-living allowances. Petitioner claims that since the
pay for excess loads or overloads does not fall under any of
the enumerated exclusions and considering that the said
overloads are being performed within the normal working
period of eight hours a day, it only follows that the
overloads should be included in the computation of the
faculty members' 13th-month pay.
Doctrine: In resolving the issue of the inclusion or
exclusion of overload pay in the computation of a teacher's
13th-month pay, it is decisive to determine what "basic
salary" includes and excludes. In the same manner that
payment for overtime work and work performed during
special holidays is considered as additional compensation
apart and distinct from an employee's regular wage or basic
salary, an overload pay, owing to its very nature and
definition, may not be considered as part of a teacher's
regular or basic salary, because it is being paid for
additional work performed in excess of the regular teaching
load.
Caltex Regular Employees vs. Caltex Phils. Inc
G.R. No. 111359 / August 15, 1995 / 3rd division /
Feliciano, J.
Facts: Petitioner Union and private respondent Caltex
(Philippines), Inc. ("Caltex") entered into a Collective
Bargaining Agreement ("1985 CBA") which was to be in
effect until midnight of 31 December 1988. The CBA
included, among others, the following provision:
ARTICLE III
HOURS OF WORK
In conformity with Presidential Decree 442, otherwise
known as the Labor Code of the Philippines, as amended,
the regular work week shall consist of eight (8) hours per
day, seven (7) days, Monday through Sunday, during which
regular rates of pay shall be paid in accordance with Annex
B and work on the employee's one "Day of Rest," shall be
considered a special work day, during which "Day of
Rest" rates of pay shall be paid as provided in Annex B.
Daily working schedules shall be established by
management in accordance with the requirements of
efficient operations on the basis of eight (8) hours per day
for any five (5) days. Provided, however employees
required to work in excess of forty (40) hours in any
week shall be compensated in accordance with Annex B of
this Agreement.
(Huhuhu Annex B is a long list of equations)
The Union called Caltex's attention to alleged violations by
Caltex of Annex "B" of the 1985 CBA, e.g. non-payment of
night-shift differential, non-payment of overtime pay and
non-payment at "first day-off rates" for work performed on
a Saturday. Subsequently, Petitioner Union charged Caltex
with shortchanging its employees when Caltex
compensated work performed on the first 2 1/2 hours of
Saturday, an employees' day of rest, at regular rates, when
it should be paying at "day of rest" or "day off" rates.
24

Regular pay:
1) Hourly rate = X
2) OT Hourly Rate 12 MN = (X + 50% X)
3) NSD 6 PM - 12 MN = (X + 25% X)
4) OT Hourly Rate NSD 6 PM - 12 MN
= (X + 25% X) + 50% (X + 25% X)
5) NSD 12 MN - 6 AM = (X + 50% X)
6) OT Hourly Rate NSD 12 MN - 6 AM
= (X + 50% X) + 50% (X + 50% X)
Sunday as day off
1. Hourly Rate = (X + 100% X)
2. OT HR = (X + 100% X) + 50% (X + 100% X)
3. NSD 6 PM - 12 MN
= [ (X + 100% X) + 25% (X+ 100% X) ]
4. OT Hourly Rate NSD 6 PM - 12 MN
= [ (X + 100% X) + 25% (X + 100% X) ] +
50% [ (X+ 100% X) + 25% (X + 100% X) ]
5. NSD 12 MN - 6 AM
= [ (X + 100% X) + 50% (X + 100% X) ]
6. OT Hourly Rate NSD 12 MN - 6 AM
= [ (X + 100% X) + 50% (X + 100% X) ] +
50% [ (X + 100% X) + 50% (X + 100% X) ]
Caltex denied the accusations of the Union. It averred that
Saturday was never designated as a day of rest, much less a
"day-off". It maintained that the 1985 CBA provided only 1
day of rest and that is Sunday.
SC said that Article III provide that only "work on an
employee's one day of rest "shall be paid on the basis of
"day of rest rates". The relevant point here is that petitioner
Union had never suggested that more than 1 day of rest had
been agreed upon, and certainly Caltex had never treated
Article III or any other portion of the CBAs as
providing two (2) days of rest.
Doctrine: Overtime work consists of hours worked on a
given day in excess of the applicable work period, which
here is eight (8) hours. It is not enough that the hours
worked fall on disagreeable or inconvenient hours. In order
that work may be considered as overtime work, the hours
worked must be in excess of and in addition to the eight (8)
hours worked during the prescribed daily work period, or
the forty (40) hours worked during the regular work week
Monday thru Friday.
In the present case, under the 1985 CBA, hours worked on a
Saturday do not, by that fact alone, necessarily constitute
overtime work compensable at premium rates of pay,
contrary to petitioner's assertion. These are normal or
regular work hours, compensable at regular rates of pay, as
provided in the 1985 CBA; under that CBA, Saturday
is not a rest day or a "day off". It is only when an
employee has been required on a Saturday to
render work in excess of the forty (40) hours which
constitute the regular work week that such
employee may be considered as performing
overtime work on that Saturday. We consider that the
statutory prohibition against offsetting undertime one day
with overtime another day has no application in the case at
bar.
PNB vs. PNB Employees Association (PEMA)
115 SCRA 507 / July 30, 1982
EN BANC Barredo

(ok guys, this is long . SC copied 2 previous cases.


Sinama ko na rin. And copied all the definitions in the
case.)
DOCTRINE of this case according to SC itself:
Doctrinally, We hold that, in the absence of any
specific provision on the matter in a collective
bargaining agreement, what are decisive in
determining the basis for the computation of
overtime pay are two very germane considerations,
namely, (1) whether or not the additional pay is for extra
work done or service rendered and (2) whether or not the
same is intended to be permanent and regular, not
contingent nor temporary and given only to remedy a
situation which can change any time. We reiterate,
overtime pay is for extra effort beyond that
contemplated in the employment contract, hence
when additional pay is given for any other purpose, it is
illogical to include the same in the basis for the
computation of overtime pay. This holding supersedes
NAWASA.
FACTS:
PEMA and PNB had a collective bargaining agreement, but
the portion regarding the computation of overtime pay was
disputed by the parties. Overtime pay was supposed to be
an additional percentage of the basic salary (paid on top of
the latter), but what is included in the basic salary is
disputed. PEMA says the cost of living allowance (COLA)
and longevity pay (not defined in the case but it is pay
based on the length of service in the company, the longer
you worked for them, the higher this pay) should be
included in the basic salary (therefore the overtime pay
would be bigger too). PNB says it should not, because these
2 are not work-related.
ISSUE/topic in syllabus:
Definition and Rationale Overtime Pay
HELD:
The SC in the end said that these 2 are not part of the basic
salary and thus could not be included in the computation of
the overtime pay.
RATIO/DISCUSSION:
The Court cited 2 previous cases. PEMA was basing its
claim on the case of NAWASA. But SC said that is a special
case with a special set of facts. Besides, there is a later case,
Shell. Please see below.
RATIONALE OF OVERTIME PAY:
Why is a laborer or employee who works beyond the
regular hours of work entitled to extra compensation called
in this enlightened time, overtime pay? Verily, there can be
no other reason than that he is made to work longer than
what is commensurate with his agreed compensation for
the statutorily fixed or voluntarily agreed hours of labor
he is supposed to do. When he thus spends additional time
to his work, the effect upon him is multi-faceted: he puts in
more effort, physical and/or mental; he is delayed in
going home to his family to enjoy the comforts thereof; he
might have no time for relaxation, amusement or sports;
he might miss important pre-arranged engagements; etc.,
etc. It is thus the additional work, labor or service
employed and the adverse effects just mentioned of his
25

longer stay in his place of work that justify and is the real
reason for the extra compensation that he called
overtime pay.
Overtime work is actually the lengthening of hours
developed to the interests of the employer and the
requirements of his enterprise. It follows that the wage or
salary to be received must likewise be increased, and more
than that, a special additional amount must be added to
serve either as encouragement or inducement or to make
up fop the things he loses which We (the SC) have already
referred to. And on this score, it must always be borne in
mind that wage is indisputably intended as payment for
work done or services rendered. Thus, in the definition of
wage for purposes of the Minimum Wage Law,
Republic Act No. 602 (old?), it is stated:
'Wage' paid to any employee shall mean the remuneration
or earnings, however designated, capable of being
expressed in terms of money, whether fixed or ascertained
on a time task, piece, 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. 'Fair and reasonable
value' shall not include a profit to the employer which
reduces the wage received by the employee below the
minimum wage applicable to the employee under this Act,
nor shall any transaction between an employer or any
person affiliated with the employer and the employee of the
employer include any profit to the employer or affiliated
person which reduces the employee's wage below the wage
applicable to the employee under this Act. (same definition
in Labor Code Title II Chap 1 Sec 97)
Or simply put,
wage under said law, in whatever means or form it is
given to the worker, is "for work done or to be done or for
services rendered or to be rendered" and logically
"includes (only) 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".
And wage is NOT a supplement, which is defined as:
extra remuneration or benefits received by wage earners
from their employers and include but are not restricted to
pay for vacation and holidays not worked; paid sick leave or
maternity leave; overtime rate in excess of what is required
by law; pension, retirement, and death benefits; profitsharing, family allowances; Christmas, war risk and costof-living bonuses; or other bonuses other than those paid
as a reward for extra output or time spent on the job.
NAWASA vs NAWASA Consolidated Unions (Aug
31, 1964)
In this case, there were some employees of NAWASA who
were working 7 days/week and paid a 25% Sunday
differential. Then RA 1880 was enacted (1957), which
provided that work hours for government employees are
only 40hrs/week, PROVIDED that the monthly salaries
they are receiving shall not be diminished by this reduction
in work hours. Now, NAWASA filed a case and said that
this law meant that the said workers basic daily wage

should not include the 25% differential anymore because it


would increase their daily wage after RA 1880. The CIR
said that that cant be, the salaries the workers were
previously receiving should not be diminished by that RA.
The SC said that It is evident that RA 1880 does not intend
to raise the wages of the employees over what they are
actually receiving. Rather, its purpose is to limit the
working days in a week to five days, or to 40 hours without
however permitting any reduction in the weekly or daily
wage of the compensation which was previously received.
(a simpler way of putting it: theyll work 5days/40 hours
but the pay is the same as when they were working 7 days,
i.e. including the 25% Sunday differential) And these
employees are to be paid the same way 3 months after the
implementation of RA 1880. Then the SC clearly expressed
that this decision has limited application, because it
did not take into consideration other bonuses, payments,
allowances, money value of fringe benefits received outside
the week or any other time in computing the basic daily
wage (or weekly for these employees)
Simple NAWASA (if read wrongly) doctrine: wage
differential awarded on top of the regular wage is part of
the regular wage after RA 1880
Actual doctrine: wage differential paid because it was workrelated is part of the regular wage
Enter the case of
Shell Oil Workers Union vs. Shell Co., et al.
(March 31, 1976)
(also Shell & Affiliates Supervisors Union vs. Shell
Company of the Philippines, et al.,-- CIR case)
In this case, the workers union wanted to include (for
purposes of computing overtime pay) in the regular wage
all these payments: all payments which the parties have
agreed shall be received during the work week, including
piece-work wages, differential payments for working at
undesirable times, such as at night or on Sundays and
holidays, and the cost of board and lodging customarily
furnished the employee, incentive bonus or profit- sharing
payments made in addition to the normal basic pay, and
consider the higher night pay as regular pay because the
higher rate is merely an inducement to accept employment
at times which are not at desirable form a workman's
standpoint, citing NAWASA and some US cases.
The SC said there that
Usually, we dont consider US cases in computing
overtime pay because what is overtime there is
beyond 40hrs/week. Here, it is what is beyond
8hrs/day.
NAWASA is not doctrinal. There are special
circumstances there (the fact that the employees
were previously working 7 days/week and paid
accordingly) that are not present in this case
If we apply NAWASA to each and every case, it
would be unjust. Every employee then would have
a different computation of overtime pay, the
company would have to take note of his working
hours history, it will take longer to pay him, and
this would cause serious disputes then. Companies
would be discouraged from paying fringe benefits
and other bonuses, because it would increase the
basic wage and in turn increase the overtime pay.
NAWASA is NOT applicable here!
26

One more reason is that the SC is not prepared to


accept that it can lay down a less cumbersome
formula for a company-wide overtime pay other
than that which is already provided in the
collective bargaining agreement. Courts cannot
make contracts for the parties themselves.
Yes, there is Comm. Act. 444 which said that
overtime pay is at least 25% additional of the
regular wage. YET, that law did not define what
the regular wage isbecause this is up to the
workers/union and the employer to decide. What
CA 444 emphasizes is that there should be an
additional 25% (at least) as overtime pay
Here the employees were already offered 4-6
times this rate as overtime pay (and this
was a product of union-employer
negotiations resulting in their CBA), so we
cant declare this CBA illegal

Simple Shell doctrine: CBA governs in determination of


overtime pay beyond that of CA 444s 25%
BACK TO THE PRESENT CASE
PEMA argued that PNB started paying the COLA
and longevity pay as per their CBA with PNB and
after the NAWASA case was decided, so NAWASA
should govern
SC said we have already decided in Shell that
NAWASA is not to apply in all cases. The facts
here arent even the same as those in NAWASA
The COLA was granted to the employee by the
PNB to help its employees in these times of
inflation and something something poetic
whatever. Its nature is contingent, its not meant
to be a regular payment (because it may decrease
IF EVER cost of living should go down). It is NOT
dependent on extra or special work of the
employee. It is based on the needs of the families
of these employees. (COLA payment here:
P140/employee regardless of position or civil
status, additional P10/minor dependent child).
PEMA had long bargained for the inclusion of the
COLA in the basic wage, but it was never granted
by the PNB. PEMA seemed to have accepted it in
good grace, for it accepted that decision of the
PNB until this case.
The longevity pay is also NOT based on the
amount of work done by the employee. it is a
gratuity for their loyalty, or their having been in
the bank's employment for consideration periods
of time. The CBA also expressly states that this
pay is not to be part of their basic salary.
The court cannot impose terms and conditions to
the parties in an employer-employee conflict
inconsistent with existing law and jurisprudence,
more so when the parties went to the court for
clarification of legal issues and not because of that
courts arbitration powers.
NAWASA NEVER referred to any extra,
temporary and contingent compensation
unrelated to work done or service rendered, which
as explained earlier is the very nature of cost-ofliving allowance
SC also said
Doctrinally, We hold that, in the absence of any specific
provision on the matter in a collective bargaining

agreement, what are decisive in determining the


basis for the computation of overtime pay are two
very germane considerations, namely, (1) whether or not
the additional pay is for extra work done or service
rendered and (2) whether or not the same is
intended to be permanent and regular, not
contingent nor temporary and given only to
remedy a situation which can change any time. We
reiterate, overtime pay is for extra effort beyond that
contemplated in the employment contract, hence when
additional pay is given for any other purpose, it is illogical
to include the same in the basis for the computation of
overtime pay. This holding supersedes NAWASA.
There is a concurring by Aquino but it only followed the
majority. Useless.
NO COMPUTATION FORMULA BASIC CONTRACT
MANILA TERMINAL CO., INC. (SUPRA)
BUILD IN COMPENSATION
Engineering Equipment, Inc. v Minister of Labor
September 23, 1985
Aquino
Facts:

Miguel Aspera, a mechanical engineer, worked for


Engineering Equipment, Inc. in Saudi Arabia for nearly
a year at a monthly salary of P750 (P860) with a 6-day
work week consisting of 10 working hours. He claims
that his monthly salary should correspond to 8 hours
of daily work only and that for the additional 2 hours
daily, he was entitled to overtime pay at $1.2162 per
hour or to $814.85 for 670 hours during 335 working
days.

The Director of Employment Services and the National


Labor Relations Commission sustained his claim and
awarded him that amount as overtime pay. They
declared VOID the stipulation for a 10-hour working
day because it was contrary to Section 83 of the Labor
Code, formerly Eight-Hour Labor Law, which expressly
provides that "the normal hours of work of any
employee shall not exceed 8 hours a day" and to
section 87 of the same Code which provides that work
performed "beyond 8 hours a day" is treated as
overtime work.

Engineering Equipment Inc. contends the following:


o Section 82 of the Labor Code provides that
managerial employees are not entitled to overtime
pay. Aspera was a managerial employee exercising
supervision and control over its rank-and-file
employees with power to recommend disciplinary
action or their dismissal.
o Written contract signed was with a "built-in"
overtime pay in the 10-hour working day and that
the stipulated basic monthly pay was adjusted to
reflect the higher amount covering the guaranteed
two-hour extra time whether worked or unworked.
o Said contracts (with built-in overtime pay) were
submitted to BES Director Jonathan M.R.A. de la
Cruz, the same director who rendered the
questioned decision He approved the same.
Without his approval, the petitioner would not
have stipulated the 10-hour work schedule and
would have provided for a lower basic salary for an
8-hour working day.
27

Aspera was given free board and lodging while in


Saudi Arabia and free transportation in going to
and returning from that country.

Issue: WON Acting Minister of Labor and Director De la


Cruz committed a grave abuse of discretion amounting to
lack of jurisdiction in awarding overtime pay
Held: Yes
Ratio:
We hold that under the particular circumstances of this
case the Acting Minister of Labor and Director De la Cruz
committed a grave abuse of discretion amounting to lack of
jurisdiction in awarding overtime pay and in disregarding a
contract that De la Cruz himself, who is supposed to know
the Eight-Hour Labor Law, had previously sealed with his
imprimatur. Because of that approval, the petitioner acted
in good faith in enforcing the contract. Furthermore,
Aspera had not denied that he was a managerial employee
within the meaning of section 82. As such, he was not
entitled to overtime pay.
Dispositive: The resolution of the Acting Minister of
Labor dated November 16, 1981 is reversed and set aside.
Aspera's complaint is dismissed. No costs.
PROOF OF WORK

LAGATIC V. NLRC
January 28, 1998 J. Romero

Doctrine: Entitlement to overtime pay must first be


established by proof that said overtime work was actually
performed.
FACTS:
Lagatic was employed as a marketing specialist by
Cityland where he solicits sales from clients and makes cold
calls
Cold calls practice of calling prospective clients using
the telephone directory more sales means less cold calls
Lagatic repeatedly failed to submit cold call reports and so
he was reprimanded by the company to which he replied in
a not TO HELL WITH COLD CALLS! WHO CARES?
He was asked to explain himself but denied making
statements, he was dismissed for gross insubordination
LA says valid dismissal, affirmed by NLRC
ISSUE: WON he was validly dismissed; WON he is entitled
to overtime pay
HELD: Yes; No
RATIO:
Requisites for valid dismissal
O Due process notice and hearing was complied
O Dismissal for a valid cause employee was dismissed
because of violation of a reasonable company rule
Requisites of willful disobedience
O Conduct must be willful/intentional characterized by a
wrongful and perverse attitude
O Order violated must be reasonable, lawful, and made
known to employee
Lagatic claims he is entitled to amounts deducted from his
commissions
SC says that petitioner failed to show his entitlement to
overtime and rest day pay due to the lack of sufficient

evidence as to the number of days and hours when he


rendered overtime and rest day work. Entitlement to
overtime pay must be established by proof that said
overtime work was actually performed, before an employee
may avail of said benefit
SSS v CA
Fast Facts
Margarita Tana, widow of the late Ignacio Tana, Sr., alleged
that her husband was, before his demise, was an employee
of Conchita Ayalde as a farmhand in the two (2) sugarcane
plantations she owned. She further alleged that throughout
the period that he worked, social security contributions, as
well as medicare and employees compensation premiums
were deducted from Tanas wages. It was only after his
death that Margarita discovered that Tana was never
reported for coverage, nor were his
contributions/premiums remitted to the Social Security
System (SSS). Consequently, she was deprived of the burial
grant and pension benefits accruing to the heirs of Tana
had he been reported for coverage.
The issue is whether or not there was sufficient proof of
Tanas employment in Ayaldes farmhand. The court held
that the testimonial evidence of the claimant and her
witnesses constitute positive and credible evidence of the
existence of an employer-employee relationship between
Tana and Ayalde. As the employer, the latter is duty-bound
to keep faithful and complete records of her business
affairs, not the least of which would be the salaries of the
workers. And yet, the documents presented have been
selective, few and incomplete in substance and content.
Consequently, Ayalde has failed to convince the court that,
indeed, Tana was not her employee. Hence, Tana was and
should have been covered under the Social Security Law.
Doctrine
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. For, if only documentary evidence would
be required to show that relationship, no scheming
employer would ever be brought before the bar of justice, as
no employer would wish to come out with any trace of the
illegality he has authored considering that it should take
much weightier proof to invalidate a written instrument.
LAZARO V. DACUT, CESARIO G. CAJOTE,
ROMERLO F. TUNGALA, LOWEL Z. ZUBISTA, and
ORLANDO P. TABOY vs. CA, STA. CLARA
INTERNATIONAL TRANSPORT AND EQUIPMENT
CORPORATION, and NICANDRO LINAO
G.R. No. 169434 March 28, 2008 QUISUMBING
Facts:
Petitioners were crew members of a cargo vessel owned by
Sta. Clara International Transport and Equipment
Corporation. Dacut and Tungala resigned in July 1999 due
to the vessels alleged unseaworthiness. Cajote went on
leave from April 12-28, 1999 to undergo eye treatment.
Fearing that he will be charged as Absent Without Leave
(AWOL), Cajote resigned in June 1999.
On September 22, 1999, petitioners filed a complaint for
constructive dismissal amounting to illegal dismissal
(except for Zubista and Taboy); underpayment of wages,
special and regular holidays; non-payment of rest days, sick
28

and vacation leaves, night shift differentials, subsistence


allowance, and fixed overtime pay; actual, moral and
exemplary damages; and litigation costs and attorneys
fees.
Labor Arbiter dismissed petitioners complaint ruling that
there was sufficient evidence to prove that the vessel was
seaworthy and that Cajote has incurred excessive
unauthorized absences which would warrant his dismissal
under the Labor Code. He noted that except for the holiday
pay, accrued sick and vacation leaves, and wage differential,
petitioners failed to substantiate their monetary claims.
Petitioners appealed to the NLRC. NLRC and CA affirmed
the Labor Arbiters decision.
Issues:
(1) WON Dacut, Tungala and Cajote voluntarily resigned
from their employment (Yes)
(2) WON petitioners were entitled to their monetary claims.
(No)
Rationale:
As crew members, petitioners were required to stay on
board the vessel by the very nature of their duties, and it is
for this reason that, in addition to their regular
compensation, they are given free living quarters and
subsistence allowances when required to be on board. It
could not have been the purpose of our law to require their
employers to give them overtime pay or night shift
differential, even when they are not actually working.
The correct criterion in determining whether they are
entitled to overtime pay or night shift differential is not
whether they were on board and cannot leave ship beyond
the regular eight working hours a day, but whether they
actually rendered service in excess of said number
of hours. Petitioners failed to submit sufficient proof that
overtime and night shift work were actually performed to
entitle them to the corresponding pay.
Judgment: CA AFFIRMED.
Villar v NLRC (May 11, 2000)
Ponente: Bellosillo
Doctrines: The general rule is that the burden rests on the
defendant to prove payment, rather than on the plaintiff to
prove non-payment. The reason for this rule is that
pertinent personnel files, payrolls, records, remittances and
other similar documents which will show that overtime,
differentials, service incentive leave and other claims of
workers have been paid are not in the possession of the
worker but in the custody and absolute control of the
employer.
Facts:
Villar et al (petitioners) were employees of Hi-Tech
Manufacturing Corporation (HI-TECH). They filed for a
certification election among the rank-and-file employees
for a Union but they lost because majority voted for No
Union. The following day, petitioners failed to report for
work because they claimed that they were barred from the
premises. Hi-Tech argued that they didnt report to work
because they lost the vote. Petitioners claimed that they
were summarily dismissed for organizing a labor union and

that they were paid below the minimum wage without


overtime pay, service incentive leave pay and 13th month
pay.
Hi-Tech presented in evidence joint affidavits of the
petitioners (it stated that they werent illegally dismissed
and it completely absolved Hi-Tech from any liability) and
handwritten notes of two petitioners, Arturo and Exequiel
Manimtim, which stated that the 2 asked for financial
assistance and admission that they were the ones at fault.
The NLRC found that there was no record that the
petitioners were terminated and that after they lost in the
certification election, they refused to report to work for no
justification. However, the Court held differently.
Immediately after petitioners supposedly refused to work,
several complaints for illegal dismissal against Hi-Tech
were filed; and it was inconsistent with the concept of
abandonment of work. Also, the statements of the
employees acknowledging their guilt and absolutely
exonerating their employer from liability, were rigidly and
uniformly stated, and appeared too good to be true.
The NLRC next stated that petitioners claims for
underpayment of wages, 13th month pay and service
incentive leave pay were without basis. The Court disagreed
and held that the joint affidavit specified their daily wages,
positions and periods of employment and that the burden
of proving payment rests on the employer.
EMPLOYER OBLIGATION
SSS vs. CA (SUPRA)
COMPUTATION
PCL Shipping Phil Inc v NLRC
511 SCRA 44 Austria Martinez
FACTS:
The case comes to court under RULE 45, petition for
certiorari
Seaman Rusel employed by PCL Shipping Phils jumped
from the vessel he was assigned to and swam 2 nautical
miles after he was denied medical assistance for the
broken/sprained ankle injury he sustained after slipping.
He took a life jacket and swam to shore, and was taken to a
nearby hospital where he was confined for 8 days
The vessels agent found him and put him on a flight
headed to the Philippines
Upon his return he filed a case for illegal dismissal, as well
as claim for non-payment of wages, medical benefits, sick
leave pay and damages
ISSUE:
1. WON desertion was committed by the seaman when he
jumped off the ship and swam to shore
2. WON the seaman was deserving of the benefits accorded
to him by the NLRC when he was terminated with just
cause and his repatriation should be considered in effect as
to cancelling the awards of the NLRC based on the
Memorandum circular No. 41
HELD:
1. For the claim of desertion to prosper, the person involved
should have the intention to leave, and the intention not to
return to his post. While the seaman left his post, it was to
garner medical attention for his injury. The logs presented
29

by PCL were self-serving and only proves his absence on


board but not his intention to not return to his post.
PCL contented that had the pain been unbearable, the
seaman could not have swam to shore. The seamans
hospitalization was not proven to have been caused by an
ankle injury but after his repatriation to the Philippines, his
medical examination showed the swelling it was
consistent evidence with his motive to jump off
2. Part I of Memorandum Circular No. 41, which has almost
identical provisions with Section 19 (C) of Memorandum
Circular No. 055-96, provides as follows:
SECTION H. TERMINATION OF EMPLOYMENT
x xxx
6. If the vessel arrives at a convenient port within
a period of three (3) months before the expiration
of the Contract, the master/employer may
repatriate the seaman from such port provided
that the seaman shall be paid all his earned wages.
In addition, the seaman shall also be paid his leave
pay for the entire contract period plus a
termination pay equivalent to one (1) month of his
basic pay, provided, however, that this mode of
termination may only be exercised by the
master/employer if the original contact period of
the seaman is at least ten (10) months; provided,
further, that the conditions for this mode of
termination shall not apply to dismissal for cause.
3.

PCLs argument is conflicting if it claims


desertion, it cannot later claim that he was
terminated for just cause.

4.

Furthermore, the Court finds nothing in the


records to show that petitioners complied with the
other conditions enumerated in the quoted memo,
such as the payment of all of private respondent's
earned wages together with his leave pay for the
entire contract period as well as termination pay
equivalent to his one month salary.

5.

PCL advances the theory that since they are under


international/ maritime law, the requirements for
due process should not apply the court finds that
the statutory provisions clearly state that our labor
laws apply to Filipinos here and abroad.

6.
Offset for repatriation cost is untenable
Part II of Memorandum Circular No. 41, to wit:
SECTION H. REPATRIATION
x xxx
2. When the seaman is discharged for disciplinary
reasons, the employer shall have the right to
recover the costs of maintenance and repatriation
from the seaman's balance of wages and other
earnings.
x xxx
The employer shall have the right to recover the
cost of repatriation from the seaman's wages and
other earnings only if the concerned seaman is
validly discharged for disciplinary measures. In
the present case, since petitioners failed to prove
that private respondent was validly terminated
from employment on the ground of desertion, it
only follows that they do not have the right to

deduct the costs of private respondent's


repatriation from his wages and other earnings
7.
The grant of overtime pay by the NLRC has been
modified by the SC- such should be paid if there is proof
that service has been rendered beyond the required hours;
in this case there was none.
5.07 NIGHT WORK 86
Art. 86. Night shift differential. Every employee shall be
paid a night shift differential of not less than ten percent
(10%) of his regular wage for each hour of work
performed between ten oclock in the evening and six
oclock in the morning.
RATIONALE PROHIBITION
The Shell Company of Philippine Islands, Limited
v. National Labor Union
July 26, 1948 Briones
Doctrine:
The case against nightwork, then, may be said to rest upon
several grounds. In the first place, there are the remotely
injurious effects of permanent nightwork manifested in the
later years of the worker's life. Of more immediate
importance to the average worker is the disarrangement of
his social life, including the recreational activities of his
leisure hours and the ordinary associations of normal
family relations. From an economic point of view,
nightwork is to be discouraged because of its adverse effect
upon efficiency and output. A moral argument against
nightwork in the case of women is that the night shift forces
the workers to go to and from the factory in darkness.
Recent experiences of industrial nations have added much
to the evidence against the continuation of nightwork,
except in extraordinary circumstances and unavoidable
emergencies. The immediate prohibition of nightwork for
all laborers is hardly practicable; its discontinuance in the
case of women employees is unquestionably desirable. 'The
night was made for rest and sleep and not for work' is a
common saying among wage-earning people, and many of
them dream of an industrial order in which there will be no
night shift. (Labor Problems, 3rd Edition, pp. 325-328, by
Watkins & Dodd.).
Fast Facts:
Shell employs night workers for its services to international
flights which land and take-off at night. The National Labor
Union, wherein Shells employees are members, sent a
petition to the Court of Industrial Relations asking for a
salary that is 50% higher than that received by the day
workers. CIR granted the petition and Shell contested the
same saying that it is not within the power of the CIR to
order payment of additional compensation. It also argued
that nightworkers do not fall under the specific list of
people who should be paid overtime pay.
The Supreme Court ruled that CIR has acted within its
powers. And that nightwork is not considered overtime in
the sense used in CA 444. Instead, it is also similar to a full
days work except that it is done at night. Also, since
nightwork is admittedly more burdensome and heavy, it is
but fair and reasonable to give nightworkers higher
remuneration.
30

DACUT VS. CA (SUPRA)


5.08 HOLIDAY
Mantle Trading Services, Incorporated vs NLRC
Facts: Mantle Trading Services is a company engaged in
the fishing business which hired Pablo Madriaga as a fish
hauler. Subsequently, he became a tagapuno or someone
who filled up tubs with fish. He worked from 6am 6 pm
with a daily pay of 150. Because Madriaga conducted
certain alleged illicit incidents, one of the fish brokers
submitted formal incident reports to the company. It was
alleged that when he was about to be investigated for the
two incident reports, Madriaga abandoned his work, which
warranted his dismissal from service. The Labor Arbiter
held the dismissal to be illegal for lack of due notice, and
Madriaga was awarded with backwages, separation pay,
underpaid wages, and unpaid holiday pay. The Supreme
Cour affirmed the ruling of the Labor Arbiter.
Doctrine: Although petitioner had cause to terminate
Madriaga, this has no bearing on the issue of award of
salary differentials, holiday pay and 13th month pay because
prior to his valid dismissal, he performed work as a regular
employee of the company, and he is entitled to the benefits
provided under the law. An employee should be
compensated for the work he has rendered in accordance
with the minimum wage, and must be appropriately
remunerated when he was suffered to work on a regular
holiday during the time he was employed by the petitioner
company. As regards the 13th month pay, an employee who
was terminated at any time before the time for payment of
the 13th month pay is entitled to this monetary benefit in
proportion to the length of time he worked during the year,
reckoned from the time he started working during the
calendar year up to the time of his termination from the
service.
SECTION 6. CONDITIONS OF EMPLOYMENTWEEKLY REST PERIODS
STATUTORY REFERENCE:
ART. 91. Right to weekly rest day. - (a) It shall be the duty
of every employer, whether operating for profit or not, to
provide each of his employees a rest period of not less than
twenty-four (24) consecutive hours after every six (6)
consecutive normal work days.
(b) The employer shall determine and schedule the weekly
rest day of his employees subject to collective bargaining
agreement and to such rules and regulations as the
Secretary of Labor and Employment may provide.
However, the employer shall respect the preference of
employees as to their weekly rest day when such preference
is based on religious grounds.
ART. 92. When employer may require work on a rest
day. - The employer may require his employees to work on
any day:
(a) In case of actual or impending emergencies caused by
serious accident, fire, flood, typhoon, earthquake, epidemic
or other disaster or calamity to prevent loss of life and
property, or imminent danger to public safety;

(b) In cases of urgent work to be performed on the


machinery, equipment, or installation, to avoid serious loss
which the employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
(d) To prevent loss or damage to perishable goods;
(e) Where the nature of the work requires continuous
operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
(f) Under other circumstances analogous or similar to the
foregoing as determined by the Secretary of Labor and
Employment.
ART. 93. Compensation for rest day, Sunday or holiday
work. - (a) Where an employee is made or permitted to
work on his scheduled rest day, he shall be paid an
additional compensation of at least thirty percent (30%) of
his regular wage. An employee shall be entitled to such
additional compensation for work performed on Sunday
only when it is his established rest day.chanrobles virtual
law library
(b) When the nature of the work of the employee is such
that he has no regular workdays and no regular rest days
can be scheduled, he shall be paid an additional
compensation of at least thirty percent (30%) of his regular
wage for work performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid an
additional compensation of at least thirty percent (30%) of
the regular wage of the employee. Where such holiday work
falls on the employees scheduled rest day, he shall be
entitled to an additional compensation of at least fifty per
cent (50%) of his regular wage.
(d) Where the collective bargaining agreement or other
applicable employment contract stipulates the payment of a
higher premium pay than that prescribed under this
Article, the employer shall pay such higher rate.
BOOK III, RULE III, OMNIBUS RULES
IMPLEMENTING THE LABOR CODE
Weekly Rest Periods
SECTION 1. General statement on coverage. This Rule
shall apply to all employers whether operating for profit or
not, including public utilities operated by private persons.
SECTION 2. Business on Sundays/Holidays. All
establishments and enterprises may operate or open for
business on Sundays and holidays provided that the
employees are given the weekly rest day and the benefits as
provided in this Rule.
SECTION 3. Weekly rest day. Every employer shall give
his employees a rest period of not less than twenty-four
(24) consecutive hours after every six consecutive normal
work days.
SECTION 4. Preference of employee. The preference of
the employee as to his weekly day of rest shall be respected
31

by the employer if the same is based on religious grounds.


The employee shall make known his preference to the
employer in writing at least seven (7) days before the
desired effectivity of the initial rest day so preferred.
Where, however, the choice of the employee as to his rest
day based on religious grounds will inevitably result in
serious prejudice or obstruction to the operations of the
undertaking and the employer cannot normally be expected
to resort to other remedial measures, the employer may so
schedule the weekly rest day of his choice for at least two
(2) days in a month.
SECTION 5. Schedule of rest day. (a) Where the weekly
rest is given to all employees simultaneously, the employer
shall make known such rest period by means of a written
notice posted conspicuously in the work place at least one
week before it becomes effective.
(b) Where the rest period is not granted to all employees
simultaneously and collectively, the employer shall make
known to the employees their respective schedules of
weekly rest through written notices posted conspicuously in
the work place at least one week before they become
effective.
SECTION 6. When work on rest day authorized. An
employer may require any of his employees to work on his
scheduled rest day for the duration of the following
emergencies and exceptional conditions:
(a) In case of actual or impending emergencies caused by
serious accident, fire, flood, typhoon, earthquake, epidemic
or other disaster or calamity, to prevent loss of life or
property, or in cases of force majeure or imminent danger
to public safety;
(b) In case of urgent work to be performed on machineries,
equipment or installations to avoid serious loss which the
employer would otherwise suffer;
(c) In the event of abnormal pressure of work due to special
circumstances, where the employer cannot ordinarily be
expected to resort to other measures;
(d) To prevent serious loss of perishable goods;
(e) Where the nature of the work is such that the employees
have to work continuously for seven (7) days in a week or
more, as in the case of the crew members of a vessel to
complete a voyage and in other similar cases; and
(f) When the work is necessary to avail of favorable weather
or environmental conditions where performance or quality
of work is dependent thereon.
No employee shall be required against his will to work on
his scheduled rest day except under circumstances
provided in this Section: Provided, However, that where an
employee volunteers to work on his rest day under other
circumstances, he shall express such desire in writing,
subject to the provisions of Section 7 hereof regarding
additional compensation.
SECTION 7. Compensation on rest day/Sunday/holiday.
(a) Except those employees referred to under Section 2,
Rule I, Book Three, an employee who is made or permitted

to work on his scheduled rest day shall be paid with an


additional compensation of at least 30% of his regular
wage. An employee shall be entitled to such additional
compensation for work performed on a Sunday only when
it is his established rest day.
(b) Where the nature of the work of the employee is such
that he has no regular work days and no regular rest days
can be scheduled, he shall be paid an additional
compensation of at least 30% of his regular wage for work
performed on Sundays and holidays.
(c) Work performed on any special holiday shall be paid
with an additional compensation of at least 30% of the
regular wage of the employees. Where such holiday work
falls on the employee's scheduled rest day, he shall be
entitled to additional compensation of at least 50% of his
regular wage.
(d) The payment of additional compensation for work
performed on regular holiday shall be governed by Rule IV,
Book Three, of these regulations.
(e) Where the collective bargaining agreement or other
applicable employment contract stipulates the payment of a
higher premium pay than that prescribed under this
Section, the employer shall pay such higher rate.
SECTION 8. Paid-off days. Nothing in this Rule shall
justify an employer in reducing the compensation of his
employees for the unworked Sundays, holidays, or other
rest days which are considered paid-off days or holidays by
agreement or practice subsisting upon the effectivity of the
Code.
SECTION 9. Relation to agreements. Nothing herein
shall prevent the employer and his employees or their
representatives in entering into any agreement with terms
more favorable to the employees than those provided
herein, or be used to diminish any benefit granted to the
employees under existing laws, agreements, and voluntary
employer practices.
6.01. RATIONALE
Rationale
Manila Electric Company vs. The Public Utilities
Employees Association
G.R. No. L-1206 / October 30, 1947 / En banc /
Feria, J.
Facts: Manila Electric Company challenges the decision of
the CIR which states that:
Although the practice of the company has been
to grant one day vacation with pay to every
workingman who had worked for seven
consecutive days including Sundays, the Court
considers justified the opposition presented by the
workingmen to the effect that they need Sundays
and holidays for the observance of their religion
and for rest. Therefore, the Court orders the
respondent company to pay 50 per cent increase
for overtime work done on ordinary days and 50
per cent increase for work done during Sundays
and legal holidays irrespective of the number of
days they work during the week.
32

Relevant to this case is Section 4 of Commonwealth Act No.


444, which reads:
No person, firm, or corporation, business
establishment or place or center of labor shall
compel an employee or laborer to work during
Sundays and legal holidays, unless he is paid an
additional sum of at least twenty-five per centum
of his regular remuneration: | Provided,
however, That this prohibition shall not apply to
public utilities performing some public service
such as supplying gas, electricity, power, water, or
providing means of transportation or
communication.
As the appellant is a public utility that supplies the
electricity and provides means of transportation to the
public, it is evident that the appellant is exempt from the
qualified prohibition established in the enactment clause,
and may compel its employees or laborers to work during
Sundays and legal holidays without paying them said extra
compensation.
Analysis of the provision (it has 2 parts):
To hold that the exception or second part of section 4,
Commonwealth Act No. 444, only exempts public utilities
mentioned therein from the prohibition to compel
employees or laborers to work during Sundays and legal
holidays, but not from the obligation to pay them an extra
or additional compensation for compelling them to work
during those days, is to make the exception meaningless or
a superfluity, that is, an exception to a general rule that
does not exist, because the prohibition in the enactment
clause is not an absolute prohibition to compel a laborer or
employee to work during Sundays and legal holidays. The
prohibition to compel a laborer or employee to work during
those days is qualified by the clause "unless he is paid an
additional sum of at least twenty five per centum of his
regular remuneration," which is inseparable from the
prohibition which they qualify and of which they are a part
and parcel. The 2nd portion of said section is in reality an
exception and not a proviso although it is introduced by the
word "provided"; and it is elemental that an exception takes
out of an enactment something which would otherwise be
part of the subject matter of it.
Issue on equal protection of the law: The division is not
arbitrary, and the basis thereof is reasonable. Public
utilities exempted from the prohibition since they are
required to perform a continuous service including Sundays
and legal holidays to the public, since the public good so
demands.
To require public utilities performing service to do pay an
additional or extra compensation from their regular pay
would be tantamount to penalize them for performing
public service during said days in compliance with the
requirement of the law and public interest.
Rational for the weekly rest periods was actually in
the dissent:
It is a fact that Sundays and legal holidays are set aside by
law as days of rest. The life, existence, and happiness of a
person do not depend only on the satisfaction of his
physical needs. There are moral, intellectual and spiritual

needs as imperative as the physical ones. Ordinarily,


Sundays and legal holidays are dedicated to reading and
instruction so as to fill the mind with culture or some sort
of advancement. On those days the laborer enjoys longer
hours in the company of his family. That gives him an
opportunity to satisfy his moral needs. During Sundays and
holidays more time is dedicated to worship and other
religious services. That gives a laborer an opportunity to
satisfy his spiritual needs. The deprivation of that
opportunity to satisfy mental, moral, and spiritual needs
should not be ignored, and should be properly
compensated.
6.02. COVERAGE
ART. 82. Coverage. - The provisions of this Title shall apply
to employees in all establishments and undertakings
whether for profit or not, but not to government employees,
managerial employees, field personnel, members of the
family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service
of another, and workers who are paid by results as
determined by the Secretary of Laborin appropriate
regulations.
As used herein, "managerial employees" refer to those
whose primary duty consists of the management of the
establishment in which they are employed or of a
department or subdivision thereof, and to other officers or
members of the managerial staff.
"Field personnel" shall refer to non-agricultural employees
who regularly perform their duties away from the principal
place of business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty.
Art. 91 (a) supra
6.03. SCHEDULING OF REST DAY Art 91 (b)
supra
6.04.
COMPULSORY
WORK
COMPENSATION Art 92 supra

AND

SECTION 7. CONDITIONS OF EMPLOYMENT


HOLIDAYS
STATUTORY REFERENCE
HOLIDAYS, SERVICE INCENTIVE LEAVES
AND SERVICE CHARGES
ART. 94. Right to holiday pay. - (a) Every worker shall be
paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing
less than ten (10) workers;
(b) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation
equivalent to twice his regular rate; and
(c) As used in this Article, "holiday" includes: New Years
Day, Maundy Thursday, Good Friday, the ninth of April,
the first of May, the twelfth of June, the fourth of July, the
thirtieth of November, the twenty-fifth and thirtieth of
33

December and the day designated by law for holding a


general election.
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.
(b) This provision shall not apply to those who are already
enjoying the benefit herein provided, those enjoying
vacation leave with pay of at least five days and those
employed in establishments regularly employing less than
ten employees or in establishments exempted from
granting this benefit by the Secretary of Labor and
Employment after considering the viability or financial
condition of such
establishment.chanroblesvirtuallawlibrary
(c) The grant of benefit in excess of that provided herein
shall not be made a subject of arbitration or any court or
administrative action.
EXECUTIVE ORDER NO. 203 June 30, 1987
PROVIDING A LIST OF REGULAR HOLIDAYS AND
SPECIAL DAYS TO BE OBSERVED THROUGHOUT
THE PHILIPPINES AND FOR OTHER PURPOSES
WHEREAS, a Cabinet Assistance Secretariat Committee
was constituted to review all existing public holidays;
WHEREAS, there are too many holidays being observed
which has caused confusion among the public.
NOW, THEREFORE, I, CORAZON C. AQUINO, President
of the Philippines, do hereby order:
Sec. 1. Unless otherwise modified by law, order or
proclamation, the following regular holidays and special
days shall be observed in this country:
A. Regular Holidays
New Year's Day
January 1
Maundy Thursday
Movable date
Good Friday
Movable date
Araw ng Kagitingan (Bataan and April 9
Corregidor Day)
Labor Day
May 1
Independence Day
June 12
National Heroes Day
Last Sunday of
August
Bonifacio Day
November 30
Christmas Day
December 25
Rizal Day
December 30
B. Nationwide Special Days
All Saints Day
November 1
Last Day of the Year
December 31
Sec. 2. Henceforth, the terms "legal or regular holiday" and
"special holiday", as used in laws, orders, rules and
regulations or other issuances shall now be referred to as
"regular holiday" and "special day", respectively.
Sec. 3. All laws, orders, issuances, rules and regulations or
parts thereof inconsistent with this Executive Order are
hereby repealed or modified accordingly.

Sec. 4. This Executive Order shall take effect immediately.


RULE IV
Holidays with Pay
SECTION 1. Coverage. This rule shall apply to all
employees except:
(a) Those of the government and any of the political
subdivision, including government-owned and controlled
corporation;
(b) Those of retail and service establishments regularly
employing less than ten (10) workers;
(c) Domestic helpers and persons in the personal service of
another;
(d) Managerial employees as defined in Book Three of the
Code;
(e) Field personnel and other employees whose time and
performance is unsupervised by the employer including
those who are engaged on task or contract basis, purely
commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the
performance thereof.
SECTION 2. Status of employees paid by the month.
Employees who are uniformly paid by the month,
irrespective of the number of working days therein, with a
salary of not less than the statutory or established
minimum wage shall be paid for all days in the month
whether worked or not.
For this purpose, the monthly minimum wage shall not be
less than the statutory minimum wage multiplied by 365
days divided by twelve.
SECTION 3. Holiday Pay. Every employer shall pay his
employees their regular daily wage for any worked regular
holidays.
As used in the rule, the term 'regular holiday' shall
exclusively refer to: New Year's Day, Maundy Thursday,
Good Friday, the ninth of April, the first of May, the twelfth
of June, the last Sunday of August, the thirtieth of
November, the twenty-fifth and thirtieth of December.
Nationwide special days shall include the first of November
and the last day of December.
As used in this Rule legal or regular holiday and special
holiday shall now be referred to as 'regular holiday' and
'special day', respectively.
SECTION 4. Compensation for holiday work. Any
employee who is permitted or suffered to work on any
regular holiday, not exceeding eight (8) hours, shall be paid
at least two hundred percent (200%) of his regular daily
wage. If the holiday work falls on the scheduled rest day of
the employee, he shall be entitled to an additional premium
pay of at least 30% of his regular holiday rate of 200%
based on his regular wage rate.
SECTION 5. Overtime pay for holiday work. For work
performed in excess of eight hours on a regular holiday, an
employee shall be paid an additional compensation for the
overtime work equivalent to his rate for the first eight hours
on such holiday work plus at least 30% thereof.
Where the regular holiday work exceeding eight hours falls
on the scheduled rest day of the employee, he shall be paid
an additional compensation for the overtime work
equivalent to his regular holiday-rest day for the first 8
34

hours plus 30% thereof. The regular holiday rest day rate of
an employee shall consist of 200% of his regular daily wage
rate plus 30% thereof.
SECTION 6. Absences. (a) All covered employees shall be
entitled to the benefit provided herein when they are on
leave of absence with pay. Employees who are on leave of
absence without pay on the day immediately preceding a
regular holiday may not be paid the required holiday pay if
he has not worked on such regular holiday.
(b) Employees shall grant the same percentage of the
holiday pay as the benefit granted by competent authority
in the form of employee's compensation or social security
payment, whichever is higher, if they are not reporting for
work while on such benefits.
(c) Where the day immediately preceding the holiday is a
non-working day in the establishment or the scheduled rest
day of the employee, he shall not be deemed to be on leave
of absence on that day, in which case he shall be entitled to
the holiday pay if he worked on the day immediately
preceding the non-working day or rest day.
SECTION 7. Temporary or periodic shutdown and
temporary cessation of work. (a) In cases of temporary or
periodic shutdown and temporary cessation of work of an
establishment, as when a yearly inventory or when the
repair or cleaning of machineries and equipment is
undertaken, the regular holidays falling within the period
shall be compensated in accordance with this Rule.
(b) The regular holiday during the cessation of operation of
an enterprise due to business reverses as authorized by the
Secretary of Labor and Employment may not be paid by the
employer.
SECTION 8. Holiday pay of certain employees. (a)
Private school teachers, including faculty members of
colleges and universities, may not be paid for the regular
holidays during semestral vacations. They shall, however,
be paid for the regular holidays during Christmas vacation;
(b) Where a covered employee, is paid by results or output,
such as payment on piece work, his holiday pay shall not be
less than his average daily earnings for the last seven (7)
actual working days preceding the regular holiday;
Provided, However, that in no case shall the holiday pay be
less than the applicable statutory minimum wage rate.
(c) Seasonal workers may not be paid the required holiday
pay during off-season when they are not at work.
(d) Workers who have no regular working days shall be
entitled to the benefits provided in this Rule.
SECTION 9. Regular holiday falling on rest days or
Sundays. (a) A regular holiday falling on the employee's
rest day shall be compensated accordingly.
(b) Where a regular holiday falls on a Sunday, the following
day shall be considered a special holiday for purposes of the
Labor Code, unless said day is also a regular holiday.
SECTION 10. Successive regular holidays. Where there
are two (2) successive regular holidays, like Holy Thursday
and Good Friday, an employee may not be paid for both
holidays if he absents himself from work on the day
immediately preceding the first holiday, unless he works on
the first holiday, in which case he is entitled to his holiday
pay on the second holiday.

SECTION 11. Relation to agreements. Nothing in this


Rule shall justify an employer in withdrawing or reducing
any benefits, supplements or payments for unworked
holidays as provided in existing individual or collective
agreement or employer practice or policy.
7.01. COVERAGE 94 (a) supra
Coverage and Purpose
Mantrade/FMMC Division Employees and Workers
Union vs Bacungan and Mantrade Devt Corp.
144 SCRA 510 / Sept. 30, 1986
Feria. Petition for certiorari and mandamus
FACTS:
Voluntary Arbitrator (VA) Bacungan (former Dean!)
decided in a case that Mantrade (respondent) does not
have to pay holiday pay to its monthly paid employees who
are uniformly paid by the month, irrespective of the
number of working days therein, with a salary of not less
than the statutory or established minimum wage and
citing LC 94. Petitioner union now questions the validity
of the LC Rules. Mantrade assails this on procedural
grounds, saying that decisions of VA are final and
inappealable (sic) based on LC 263 and their CBA, that
certiorari does not lie because a VA does not exercise
judicial functions, mandamus does not lie because this is
not a duty, etc. Bacungan also said that although LC 94
does not exclude monthly salaried employees from being
given holiday pay, they seem to be excluded under Sec.2,
Rule IV, Book III of the Rules and Regulations
implementing the LC.
ISSUE:
Are the workers entitled to holiday pay?
HELD and RATIO.
YES, they are entitled to holiday pay.
(regarding the procedural issues, SC said the case of
Oceanic Bic Division vs Romero answers these in the
negative. Even though the VA has first rate credentials like
Flerida Romeroa Director of the UP Law Centerthey are
to be given only the highest respect and a certain measure
of finality except when there is abuse of discretion, gross
incompetence, lack of jurisdiction, lack of due process etc.
Plus a VA acts in a quasi-judicial capacity so certiorari may
apply)
SC also said this question of holiday pay was already
answered in a former case (NOT en banc): Insular Bank
of Asia etc. vs Inciong (1984)
Sec.2, Rule IV, Book III of the Rules (OLD
RULES) (and Policy Instruction No. 9 of the Sec.
of Labor) is null and void because it enlarges the
scope of the exclusion of the LCs provisions on
holiday pay (See LC 94, LC 82)
o Article 82. Coverage. The provision of
this Title (Title I: Working
Conditions and Rest Periods) shall
apply to employees in all establishments
and undertakings, whether for profit or
not, but not to government employees,
managerial employees, field personnel,
members of the family of the employer
who are dependent on him for support,
35

domestic helpers, persons in the personal


service of another and workers who are
paid by results as determined by the
Secretary of Labor and Employment in
appropriate regulations.
Monthly paid employees are NOT excluded from
the benefits of holiday pay

and reiterated in Chartered Bank Employees


Association vs Ople (en banc) (1985)
The questioned Section 2, Rule IV, Book III of the
Integrated Rules and the Secretary's Policy
Instruction No. 9 add another excluded group,
namely, "employees who are uniformly paid by the
month." While the additional exclusion is only in
the form of a presumption that all monthly paid
employees have already been paid holiday pay, it
constitutes a taking away or a deprivation which
must be in the law if it is to be valid. An
administrative interpretation which diminishes
the benefits of labor more than what the statute
delimits or withholds is obviously ultra vires
(beyond the powers).
Re: mandamus argument, SC said: True it is also that
mandamus is not proper to enforce a contractual
obligation, the remedy being an action for specific
performance however, in view of the above-cited
subsequent decisions of this Court clearly defining the
legal duty to grant holiday pay to monthly salaried
employees, mandamus is an appropriate equitable
remedy.

San Miguel Corporation v CA


Date: January 30, 2002
Ponente: Kapunan
Related Laws:

Muslim holidays are provided under Articles 169


and 170, Title I, Book V, of Presidential Decree No.
1083, otherwise known as the Code of Muslim
Personal Laws, which states:
o Art. 169. Official Muslim holidays. - The
following are hereby recognized as legal
Muslim holidays: (a) New Year which
falls on the first day of the first lunar
month of Muharram; (b) Birthday of
Prophet Muhammad which falls on the
twelfth day of the third lunar month of
Rabi-ul-Awwal; (c) Nocturnal Journey
and Ascension of the Prophet
Muhammad) which falls on the twentyseventh day of the seventh lunar month
of Rajab; (d) Hari Raya Puasa which
falls on the first day of the tenth lunar
month of Shawwal, commemorating the
end of the fasting season; and (e) Hari
Raya Haji which falls on the tenth day of
the twelfth lunar month of Dhul Hijja.
o Art. 170. Provinces and cities where
officially observed. - (1) Muslim holidays
shall be officially observed in the

Provinces of Basilan, Lanao del Norte,


Lanao del Sur, Maguindanao, North
Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim
provinces and cities as may hereafter be
created; (2) Upon proclamation by the
President of the Philippines, Muslim
holidays may also be officially observed
in other provinces and cities.
Facts:

October 17, 1992 - DOLE Iligan District Office


conducted a routine inspection in the premises of
San Miguel Corporation (SMC) in Sta. Filomena,
Iligan City. In the course of the inspection, it was
discovered that there was underpayment by SMC
of regular Muslim holiday pay to its employees.

DOLE sent a copy of the inspection result to SMC


and it was received by and explained to its
personnel officer Elena dela Puerta.

SMC contested the findings and DOLE conducted


summary hearings on November 19, 1992, May
28, 1993 and October 4-5, 1993. Still, SMC failed
to submit proof that it was paying regular Muslim
holiday pay to its employees.

December 17, 1993 - Alan M. Macaraya, Director


IV of DOLE Iligan District Office issued a
compliance order directing SMC to consider
Muslim holidays as regular holidays and to pay
both its Muslim and non-Muslim employees
holiday pay within 30 days from the receipt of the
order.

SMC appealed to the DOLE main office in Manila


but its appeal was dismissed for having been filed
late. Later, the appeal was found to be filed within
reglementary period; however, it was still
dismissed for lack of merit and the order of
Director Macaraya was affirmed. CA affirmed this
decision with modifications (i.e. modified with
regards the payment of Muslim holiday pay from
200% to 150% of the employee's basic salary) and
remanded to the Regional Director for the proper
computation of the said holiday pay.

In this petition for certiorari, SMC contends the


following:
o There was grave abuse of discretion in
granting Muslim holiday pay to nonMuslim employees.

SMC asserts that Article 3(3) of


Presidential Decree No. 1083
provides that (t)he provisions
of this Code shall be applicable
only to Muslims. [SC: SMC did
not deny that it was not paying
Muslim holiday pay to its nonMuslim employees. SMC merely
contends that its non-Muslim
employees are not entitled to
Muslim holiday pay.]

Issue on Muslim holiday pay


was already resolved in Fernan
v SMC: We also deny the
claims for Muslim holiday pay
for lack of factual and legal
36

o
o

basis. Muslim holidays are


legally observed within the area
of jurisdiction of the present
Autonomous Region for Muslim
Mindanao (ARMM), particularly
in
the
provinces
of
Maguindanao, Lanao del Sur,
Sulu and Tawi-Tawi. It is only
upon Presidential Proclamation
that Muslim holidays may be
officially observed outside the
Autonomous
Region
and
generally extends to Muslims to
enable them the observe said
holidays.
It was not accorded due process of law.
No/excess of jurisdicition in issuing
compliance order.

Issues:
1. WON Muslim holiday pay should be granted to
non-Musim employees
2. WON SMC was accorded due process of law
3. WON compliance order was issued without/in
excess of jurisdiction
Held & Ratio:
1. Yes.

Muslim holidays provided under Articles 169 and


170, Title I, Book V, of Presidential Decree No.
1083 should be read in conjunction with LC 94.
Thus, there should be no distinction between
Muslims and non-Muslims as regards payment of
benefits for Muslim holidays. At any rate, Article
3(3) of Presidential Decree No. 1083 also declares
that nothing herein shall be construed to operate
to the prejudice of a non-Muslim.

Undersecretary Espaol: Assuming arguendo that


the respondents position is correct, then by the
same token, Muslims throughout the Philippines
are also not entitled to holiday pays on Christian
holidays declared by law as regular holidays. We
must remind the respondent-appellant 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 religion.

1999 Handbook on Workers Statutory Benefits


(approved by then DOLE Secretary Bienvenido E.
Laguesma on 14 December 1999): Considering
that all private corporations, offices, agencies, and
entities or establishments operating within the
designated Muslim provinces and cities are
required to observe Muslim holidays, both Muslim
and Christians working within the Muslim areas
may not report for work on the days designated by
law as Muslim holidays.

Napoleon E. Fernan vs. San Miguel Corporation


Beer Division and Leopoldo Zaldarriaga has no
consequence to issues in the instant case and, as
aptly declared by Undersecretary Espaol, it can
never be a benchmark nor a guideline to the
present case. This is for the reason that the
Fernan case was primarily for illegal dismissal

2.

3.

and the claim for benefits (i.e. Muslim Holiday


pay) was only incidental to the main case.
Yes.
SMC was furnished a copy of the inspection order
and it was received by and explained to its
Personnel Officer.
Series of summary hearings were conducted.
No.
Regional Director Macaraya acted as the duly
authorized representative of the Secretary of
Labor and Employment and it was within his
power to issue the compliance order to SMC (in
accordance with Article 128, Section B of the
Labor Code, as amended by Republic Act No.
7730).
Also, there was no indication that Regional
Director Macaraya failed to consider any
documentary proof presented by SMC in the
course of the inspection.
Asian Transmission Corporation v. CA
March 15, 2004
Carpio-Morales

Doctrine:
Holiday pay is a legislated benefit enacted as part of the
Constitutional imperative that the State shall afford
protection to labor. Its purpose is not merely "to prevent
diminution of the monthly income of the workers on
account of work interruptions. In other words, although the
worker is forced to take a rest, he earns what he should
earn, that is, his holiday pay." It is also intended to enable
the worker to participate in the national celebrations held
during the days identified as with great historical and
cultural significance.
Independence Day (June 12), Araw ng Kagitingan (April
9), National Heroes Day (last Sunday of August), Bonifacio
Day (November 30) and Rizal Day (December 30) were
declared national holidays to afford Filipinos with a
recurring opportunity to commemorate the heroism of the
Filipino people, promote national identity, and deepen the
spirit of patriotism. Labor Day (May 1) is a day traditionally
reserved to celebrate the contributions of the working class
to the development of the nation, while the religious
holidays designated in Executive Order No. 203 allow the
worker to celebrate his faith with his family.
Art. 94 of the Labor Code, as amended, affords a worker the
enjoyment of ten paid regular holidays. The provision is
mandatory, regardless of whether an employee is paid on a
monthly or daily basis.Unlike a bonus, which is a
management prerogative, holiday pay is a statutory benefit
demandable under the law. Since a worker is entitled to the
enjoyment of ten paid regular holidays, the fact that two
holidays fall on the same date should not operate to reduce
to nine the ten holiday pay benefits a worker is entitled to
receive.
It is elementary, under the rules of statutory construction,
that when the language of the law is clear and unequivocal,
the law must be taken to mean exactly what it says. In the
case at bar, there is nothing in the law which provides or
indicates that the entitlement to ten days of holiday pay
37

shall be reduced to nine when two holidays fall on the same


day.
Fast Facts:
The DOLE, through Usec Trajano, issued an Explanatory
Bulletin that employees are entitled to 200% of their basic
wage on April 9, 1993 which was both a Good Friday and
Araw ng Kagitingan. The same Bulletin was issued for April
9, 2008 which was both a Maundy Thursday and Araw ng
Kagitingan.
Despite this, Asian Transmission paid its daily paid
employees only 100% of their basic pay. Bisig ng Asian
Transmission Labor Union (BATLU) protested.
7.02 HOLIDAYS EO 203 (SUPRA)
CODE OF MUSLIM PERSONAL LAWS OF THE
PHILIPPINES (PD 1083, 1977)
Article 169. Official Muslim holidays. The following are
hereby recognized as legal Muslim holidays:
(a) 'Amun Jadid (New Year), which falls on the
first day of the first lunar month of Muharram;
(b) Maulid-un-Nabi (Birthday of the Prophet
Muhammad), which falls on the twelfth day of the
third lunar month of Rabi-ul-Awwal;
(c) Lailatul Isra Wal Mi'raj (Nocturnal Journey
and Ascension of the Prophet Muhammad), which
falls on the twenty-seventh day of the seventh
lunar month of Rajab;
(d) 'Id-ul-Fitr (Hari Raya Pausa), which falls on
the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) 'Id-ul-Adha (Hari Raja Haji), which falls on the
tenth day of the twelfth lunar month of Dhu 1Hijja.
7.03. HOLIDAY PAY 94 supra
Faculty Private School
Jose Rizal College v NLRC
December 1, 1987
Paras
Fast Facts
Petitioner is a non-stock, non-profit educational institution
duly organized and existing under the laws of the
Philippines. It has three groups of employees categorized as
follows: (a) personnel on monthly basis, who receive their
monthly salary uniformly throughout the year, irrespective
of the actual number of working days in a month without
deduction for holidays; (b) personnel on daily basis who are
paid on actual days worked and they receive unworked
holiday pay and (c) collegiate faculty who are paid on the
basis of student contract hour. Before the start of the
semester they sign contracts with the college undertaking to
meet their classes as per schedule. Unable to receive their
corresponding holiday pay, private respondent National
Alliance of Teachers and Office Workers (NATOW) in
behalf of the faculty and personnel of Jose Rizal College
filed a complaint against the college for said alleged nonpayment of holiday pay.
The sole issue in this case is whether or not the school
faculty who according to their contracts are paid per lecture
hour are entitled to unworked holiday pay. There appears
to be no problem as to the first two classes or categories of

petitioner's workers. The problem, however, lies with its


faculty members, who are paid on an hourly basis. The
court held that petitioner is exempted from paying hourly
paid faculty members their pay for regular holidays,
whether the same be during the regular semesters of the
school year or during semestral, Christmas, or Holy Week
vacations; and ordering petitioner to pay said faculty
members their regular hourly rate on days declared as
special holidays or for some reason classes are called off or
shortened for the hours they are supposed to have taught,
whether extensions of class days be ordered or not; in case
of extensions said faculty members shall likewise be paid
their hourly rates should they teach during said extensions..
Doctrine
Subject holiday pay is provided for in the Labor Code
(Presidential Decree No. 442, as amended), which reads:
Art. 94. Right to holiday pay (a) Every worker shall be
paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing
less than ten (10) workers; (b) The employer may require
an employee to work on any holiday but such employee
shall be paid a compensation equivalent to twice his regular
rate; ... " and in the Implementing Rules and Regulations,
Rule IV, Book III, which reads: SEC. 8. Holiday pay of
certain employees. (a) Private school teachers, including
faculty members of colleges and universities, may not be
paid for the regular holidays during semestral vacations.
They shall, however, be paid for the regular holidays during
Christmas vacations. ...
Under the foregoing provisions, apparently, the petitioner,
although a non-profit institution is under obligation to give
pay even on unworked regular holidays to hourly paid
faculty members subject to the terms and conditions
provided for therein.
The court believes that the aforementioned implementing
rule is not justified by the provisions of the law which after
all is silent with respect to faculty members paid by the
hour who because of their teaching contracts are obliged to
work and consent to be paid only for work actually done
(except when an emergency or a fortuitous event or a
national need calls for the declaration of special holidays).
Regular holidays specified as such by law are known to both
school and faculty members as no class days;" certainly the
latter do not expect payment for said unworked days, and
this was clearly in their minds when they entered into the
teaching contracts.
On the other hand, both the law and the Implementing
Rules governing holiday pay are silent as to payment on
Special Public Holidays.
It is readily apparent that the declared purpose of the
holiday pay which is the prevention of diminution of the
monthly income of the employees on account of work
interruptions is defeated when a regular class day is
cancelled on account of a special public holiday and class
hours are held on another working day to make up for time
lost in the school calendar. Otherwise stated, the faculty
member, although forced to take a rest, does not earn what
he should earn on that day. Be it noted that when a special
public holiday is declared, the faculty member paid by the
hour is deprived of expected income, and it does not matter
that the school calendar is extended in view of the days or
hours lost, for their income that could be earned from other
38

sources is lost during the extended days. Similarly, when


classes are called off or shortened on account of typhoons,
floods, rallies, and the like, these faculty members must
likewise be paid, whether or not extensions are ordered.
Divisor as Factor
TRANS-ASIA PHILS. EMPLOYEES ASSOCIATION
(TAPEA) and ARNEL GALVEZ VS. NLRC, TRANSASIA (PHILS.) and ERNESTO S. DE CASTRO
G.R. No. 118289
December 13, 1999
KAPUNAN
Facts:
Trans-Asia Philippines Employees Association, the dulyrecognized collective bargaining agent of the monthlypaid rank-and-file employees of Trans-Asia (Phils.),
entered into a Collective Bargaining Agreement ("CBA")
with their employer. The CBA, which was to be effective
from 1 April 1988 up to 31 March 1991, provided for,
among others, the payment of holiday pay with a
stipulation that if an employee is permitted to work on a
legal holiday, the said employee will receive a salary
equivalent to 200% of the regular daily wage plus a 60%
premium pay. The claim of TAPEA for payment of
holiday pay covering the period from January of 1985 up
to December of 1987 remained unresolved so eventually
petitioners, filed a complaint before the labor arbiter.
Petitioners amended their complaint to include the
payment of holiday pay for the duration of the
recently concluded CBA (from 1988 to 1991), unfair labor
practice, damages and attorney's fees.
Trans-Asia said it has always honored the labor law
provisions on holiday pay by incorporating the same in
the payment of the monthly salaries of its employees.
o Trans-Asia had been using the divisor of "286" days
in computing for its employees' overtime pay and
daily rate deductions for absences. Trans-Asia
explained that this divisor is arrived at by
multiplying the 52 number of weeks in a year with
the 44 number of work hours a week, divided by the
8 number of work hours a day.
Trans-Asia said the divisor takes into account the ten
regular holidays in a year since it only subtracts from the
365 calendar days the unworked and unpaid 52 Sundays
and 26 Saturdays (employees are required to work halfday during Saturdays).
o If the ten regular holidays were not included in the
computation of their employees' monthly salary, the
divisor which they would have used would only be
277 days which is arrived at by subtracting 52
Sundays, 26 Saturdays and the 10 legal holidays
from 365 calendar days.
o Trans-Asia explained that the "286" days divisor is
based on Republic Act No. 6640, wherein the divisor
of 262 days is used in computing for the monthly
rate of workers who do not work and are not
considered paid on Saturdays and Sundays or rest
days. The additional 26 working Saturdays in a year
factored-in to the divisor = "286" days.
Trans-Asia explained that this holiday pay rate was
included in the CBA in order to comply with Section 4,

Rule IV, Book III of the Omnibus Rules Implementing


the Labor Code1.
On the contention that Trans-Asia's acquiescence to the
inclusion of a holiday pay provision in the CBA is an
admission of non-payment of the same in the past,
Trans-Asia reiterated that it is simply a recognition of the
mandate of the Labor Code that employees are entitled to
holiday pay.
LA said the CBA provides that the ten legal holidays are
recognized by the Company as full holiday with pay.
What is more, there can be no doubt that since 1977 up to
the execution of the CBA, the Trans-Asia never used
conflicting or different divisors but consistently
employed the divisor of 286 days. The consistency in the
established practice of the Trans-Asia, which incidentally
is not disputed by complainants, did not give rise to any
doubt which could have been resolved in favor of
complainants.
NLRC dismissed the petitioners appeal and affirmed the
decision of the labor arbiter.
Petitioners' motion for reconsideration was, likewise,
denied.

Issue: WON 286 is the proper divisor based on the


evidence provided.
Held: Depends. (see last paragraph)
Rationale:
Trans-Asia's inclusion of holiday pay in petitioners'
monthly salary is clearly established by its consistent,
undisputed, use of the divisor of "286" days in the
computation of its employees' benefits and deductions. If
one is to deduct the unworked 52 Sundays and 26
Saturdays from the 365 calendar days in a year, the
resulting divisor would be 286 days (should actually be 287
days). Since the ten (10) legal holidays were never included
in subtracting the unworked and unpaid days in a calendar
year, the only logical conclusion would be that the payment
for holiday pay is already incorporated into the said divisor.
Petitioners cite the case of Chartered Bank Employees
Association vs. Ople2. Wrong. In the Chartered Bank case,
the bank used different divisors in computing for its
employees benefits and deductions. For computing
overtime compensation, the bank used 251 days as its
divisor. For computing deductions due to absences, the
1

Sec. 4. Compensation for holiday work. Any


employee who is permitted or suffered to work on any
regular holiday, not exceeding eight (8) hours, shall be
paid at least two hundred percent (200%) of his regular
daily wage. If the holiday falls on the scheduled rest day
of the employee, he shall be entitled to an additional
premium pay of at least 30% of his regular holiday rate of
200% based on his regular wage rate.
2
Any remaining doubts which may arise from the
conflicting or different divisors used in the computation of
overtime pay and employees' absences are resolved by
the manner in which work actually rendered on holidays
is paid. Thus, whenever monthly paid employees work on
a holiday, they are given an additional 100% base pay on
top of a premium pay of 50%. If the employees' monthly
pay already includes their salaries for holidays, they
should be paid only premium pay but not both base pay
and premium pay. 12

39

bank used 365 days as divisor. Due to this confusing


situation, the Court declared that there existed a doubt as
to whether holiday pay is already incorporated in the
employees' monthly salary. Since doubts should be resolved
in favor of labor, the Court in the Chartered Bank case ruled
in favor of the employees and further stated that its
conclusion is fortified by the manner in which the
employees are remunerated for work rendered on holidays.
In the present case, however, there is no confusion
with regard to the divisor used by Trans-Asia in
computing for petitioners' benefits and deductions.
Trans-Asia consistently used a "286" days divisor
for all its computations.
BUT there is a need to adjust the divisor used by Trans-Asia
to 287 days in order to properly account for the entirety of
regular holidays and special days in a year as prescribed by
Executive Order No. 2033 in relation to Section 6 of the
Rules Implementing Republic Act 67274.
The proper divisor that should be used for a situation
wherein the employees do not work and are not considered
paid on Saturdays and Sundays or rest days is 262 days. In
the present case, since the employees of Trans-Asia are
required to work half-day on Saturdays, 26 days should be
added to the divisor of 262 days, thus, resulting to 288
days. However, due to the fact that the rest days of
petitioners fall on a Sunday, the number of unworked but
paid legal holidays should be reduced to nine (9), instead of
ten (10), since one legal holiday under E.O. No. 203 always
falls on the last Sunday of August, National Heroes Day.
Thus, the divisor that should be used in the present case
should be 287 days.
If the divisor is increased to 287 days, the daily rate for
purposes of overtime pay, holiday pay and conversions of
accumulated leaves would be diminished (violative of the
proscription on the non-diminution of benefits under
Section 100 of the Labor Code.)

Sec. 1. Unless otherwise modified by law, order or


proclamation, the following regular holidays and special
days shall be observed in the country:
A. Regular Holidays: New Year's Day January 1 Maundy
Thursday Movable Date Good Friday Movable Date
Araw ng Kagitingan April 9 (Bataan and Corregidor
Day) Labor Day May 1 Independence Day June 12
National Heroes Day Last Sunday of August Bonifacio
Day November 30 Christmas Day December 25 Rizal
Day December 30 B. Nationwide Special Days
All Saints Day November 1 Last Day of the Year
December 31
4

Sec. 6. Suggested Formula in Determining the


Equivalent Monthly Statutory Minimum Wage Rates.
Without prejudice from existing company practices,
agreements or policies, the following formulas may be
used as guides in determining the equivalent monthly
statutory minimum wage rates: d) For those who do not
work and are not considered paid on Saturdays and
Sundays or rest days: Equivalent Monthly = Average
Daily Wage Rate x 262 days
Rate (EMR) 12
Where 262 days =250 days Ordinary working days; 10
days Regular holidays; 2 days Special days (If
considered paid; if actually
worked, this is equivalent to 2.6 days)

The use of the divisor of 287 days would be to the


advantage of petitioners if it is used for purposes of
computing for deductions due to the employee's absences.
So, the adjusted divisor of 287 days should only be
used by Trans-Asia for computations which would
be advantageous to petitioners, i.e., deductions for
absences, and not for computations which would diminish
the existing benefits of the employees, i.e., overtime pay,
holiday pay and leave conversions.
Judgment: NLRC decision is affirmed with the
modification that trans-asia is hereby ordered to adjust its
divisor to 287 days and pay the resulting holiday pay in
arrears brought about by this adjustment starting from 30
June 1987, the date of effectivity of E.O. No. 203.
UNION OF FILIPRO EMPLOYEES (UFE) VS.
BENIGNO VIVAR, JR., NLRC & NESTL
PHILIPPINES, INC. (FILIPRO, INC.)
G.R. No. 79255 January 20, 1992
GUTIERREZ, JR.
Facts:
The sales personnel of Filipro (Nestle now) were
excluded from the holiday pay award and the change of
the divisor in the computation of benefits from 251 to 261
days.
On November 8, 1985, respondent filed with NLRC a
petition for declaratory relief seeking a ruling on its
rights and obligations respecting claims of its monthly
paid employees for holiday pay based on Chartered Bank
Employees Association v. Ople.
Benigno Vivar, Jr. was the voluntary arbitrator.
On January 2, 1980, Arbitrator Vivar told Filipro to pay
its monthly paid employees holiday pay pursuant to
Article 94 of the Code, subject only to Article 82 and such
other legal restrictions as are provided for in the Code.
Filipro filed a motion for clarification seeking (1) the
limitation of the award to 3 years, (2) the exclusion of
salesmen, sales representatives, truck drivers,
merchandisers and medical representatives from the
award of the holiday pay, and (3) deduction from
the holiday pay award of overpayment for overtime, night
differential, vacation and sick leave benefits due to the
use of 251 divisor.
So, the arbitrator held that the effectivity of the holiday
pay award shall be from November 1, 1974, the date of
effectivity of the Labor Code; that the company's sales
personnel are field personnel and so are not entitled to
holiday pay; and that with the grant of 10 days' holiday
pay, the divisor should be changed from 251 to 261 and
ordered the reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay bec. of 251
days as divisor. V. Arbiter said when the claim of the
Union for payment of ten holidays was granted, there
was a consequent need to abandon that 251 divisor.
On appeal, NLRC, in May 25, 1987 remanded the case to
the v. arbitrator on the ground that it has no jurisdiction
to review decisions in voluntary arbitration cases.
V. arbitrator refused to take cognizance of the case
because he had resigned from service effective May 1,
1986.
Issue:
40

1) WON Nestle's sales personnel are entitled to holiday


pay.
2) WON the divisor should be changed from 251 to 261
days.
3) WON the use of 251 as divisor resulted in
overpayment.
4) Beginning when HP should be computed.
Held: 1) No. 2)Yes. 3) No. 4)
Rationale:
1) Under Art. 82, field personnel are not entitled to holiday
pay. Field personnel = "non-agritultural employees who
regularly perform their duties away from the principal place
of business or branch office of the employer and whose
actual hours of work in the field cannot be
determined with reasonable certainty." Sales
personnel start field work at 8:00 a.m. after reporting to
the office and report back at 4:00/4:30 p.m. if they are
Makati-based. The law requires that actual hours of work in
the field be reasonably ascertained. The company has no
way of determining WON these sales personnel
really spend the hours in between in actual field
work. This requirement for the salesmen is but an exercise
of purely management prerogative of providing
administrative control. Between 8:00 a.m. and 4:00 or
4:30 p.m. the extent or scope and result of which are
subject to their individual capacity and industry and which
"cannot be determined with reasonable certainty."
Rule IV, Book III of the Implementing Rules
which provides that the rule shall apply to all employees
except field personnel and other employees whose time
and performance is unsupervised by the employer. The
clause "whose time and performance is unsupervised by the
employer" merely interpreted/expounded the clause
"whose actual hours of work in the field cannot be
determined with reasonable certainty." The former clause is
still within the scope of Art. 82 which defines field
personnel. So, WON an employee's actual working
hours in the field can be determined with
reasonable certainty WON the employee's time
and performance is constantly supervised by the
employer. The criteria for granting incentive bonus
(sales/collection) indicate that these sales personnel are
given incentive bonuses precisely because of the difficulty
in measuring their actual hours of field work. They are
evaluated by the result of their work and not by the actual
hours of work. A salesman mostly works individually. There
are no restrictions in the time he works. He earns as much
or as little, within the range of his ability, as his ambition
dictates. In lieu of overtime, he receives commissions. He
works away from his employer's place of business, is not
subject to the personal supervision of his employer, and his
employer has no way of knowing the number of hours he
works per day.
2) The divisor assumes an important role in
determining whether or not holiday pay is already
included in the monthly paid employee's salary and
in the computation of his daily rate. In Chartered
Bank Employees Association v. Ople the Chartered Bank,
in computing overtime compensation for its employees,
employs a "divisor" of 251 days. The 251 working days
divisor is the result of subtracting all Saturdays, Sundays
and the ten (10) legal holidays from the total number of

calendar days in a year. If the employees are already paid


for all non-working days, the divisor should be 365 and not
251.
In the petitioner's case, its computation of daily
ratio since September 1, 1980, is as follows [(monthly rate x
12 months)/251 days].
Following the criterion laid down in the Chartered
Bank case, the use of 251 days' divisor by
respondent Filipro indicates that holiday pay is not
yet included in the employee's salary, otherwise
the divisor should have been 261. The daily rate,
assuming there are no intervening salary increases, is a
constant figure for the purpose of computing overtime and
night differential pay and commutation of sick and vacation
leave credits. Necessarily, the daily rate should also be the
same basis for computing the 10 unpaid holidays.
3) The v. arbitrator's order to change the divisor from 251
to 261 days would result in a lower daily rate which is
violative of the prohibition on non-diminution of benefits
found in Article 100 of the Labor Code. If the divisor is
adjusted to 261 days, then the dividend (employee's annual
salary) should be increased to incorporate the holiday pay.
So, there is no merit in respondent Nestle's claim
of overpayment of overtime and night differential
pay and sick and vacation leave benefits, the
computation of which are all based on the daily
rate, since the daily rate is still the same before and
after the grant of holiday pay.
4) Nestle, relying on the implicit validity of the
implementing rule and policy instruction before this Court
nullified them, and thinking that it was not obliged to give
holiday pay benefits to its monthly paid employees, may
have been moved to grant other concessions to its
employees, especially in the collective bargaining
agreement. Nestle's employees are among the highest paid
in the industry. It would be unfair to impose additional
burdens on Nestle when the non-payment of the holiday
benefits up to 1984 was not in any way attributed to
Nestle's fault. So, grant of holiday pay should be effective,
not from the date of promulgation of the Chartered Bank
case nor from the date of effectivity of the Labor Code, but
from October 23, 1984, the date of promulgation of
the IBAA case.
Judgment: The order of the voluntary arbitrator is
modified. The divisor to be used in computing holiday pay
shall be 251 days. HP shall be computed from October 23,
1984.
Computation
Agga v NLRC (November 16, 1998)
Ponente: Puno
Doctrines:
The vacation leave pay is different from days-off
pay. Petitioners vacation pay is accounted for with the 13 th
month pay. The two months off with pay refer to the 13 th
month pay and 1 month vacation leave pay. It is therefore
erroneous for the complainants to contend that the
vacation leave pay is a distinct benefir when in truth and in
fact the same has been duly considered in the computation
41

of their statutorily mandated compensation under the


column of 13th month pay.
PD 442 declares that night shift differential and
additional remuneration, overtime, rest day, Sunday and
holiday work shall be computed on the basis of the
employees regular wage.
Facts:

Supply Oilfield Services, Inc. (SOS) hired Agga et


al. (petitioners) to work on board a drillship operated by
Underseas Drilling, Inc (UDI). Their contracts ran from 1
year with petitioners enjoying 2 months off with pay for
every 2 months duty. The contracts provided for service 12
hours a day, 7 days a week in a two-shift 24-hour operation.
The petitioners also received a fixed monthly compensation
covering basic allowances, privileges, travel allowances, and
benefits granted by law during and after employment with
the company.
The petitioners filed a complaint for non-payment
of overtime pay, holiday pay, rest day pay, 13 th month pay
and night shift differential. They added that they were both
land-based and sea-based workers and should be entitled to
the benefits given to both. Lastly, they claimed that they
were not amply covered by insurance.
The Court held that petitioners were not
underpaid
of
their
compensation.
The
alleged
underpayments represent the difference between Actual
Pay on Board and the amounts Basic Salary + OT Pay +
13th month pay and Vacation Pay.
To illustrate, Agga was given as an example:
basic salary = $900
OT Pay = $973.71
13th month/Vacation leave pay = $ 150
TOTAL = $2023.71 (mandated basic salary and benefits)
While on board, Agga received $1500 leaving a
balance of $523.71. This amount is what Agga now claims
as underpayment and for a period of 2 months with a total
claim of $1047.42. But Agga disregarded his day-off pay or
pay on leave which amounted to $750. Adding the $750 to
the $1500 he already received, Agga actually got $2250
which is higher than his mandated basic salary and benefits
of $2027.71. Hence, there is no underpayment.
The Court found that the petitioners were only
land-based workers and not entitled to the benefits given to
sea-based workers. Also, the petitioners were covered by
insurance and even superior to that mandated by law.
Sunday
Wellington Investment Inc v Trajano
GR 114698
Ponente: Narvasa
FACTS:

Due to a routine inspection,, the Labor


Enforcement officer, on August 6, 1991 found that
Wellington has not paid its workers for the regular
holidays that fell on a Sunday.

Wellington claimed that such holidays were


already covered by its 314 days salary formula that
it uses as basis for the payment of monthly wages.
The 314 days was derived from 365 51 Sundays.

The labor officer on the other hand contends that


when holidays fall on a Sunday, the employees had
to work for an additional day that month
o
. . . By using said (314) factor, the
respondent (Wellington) assumes that all
the regular holidays fell on ordinary days
and never on a Sunday. Thus, the
respondent failed to consider the
circumstance that whenever a regular
holiday coincides with a Sunday, an
additional working day is created and left
unpaid. In other words, while the said
divisor may be utilized as proof
evidencing payment of 302 working days,
2 special days and the ten regular
holidays in a calendar year, the same
does not cover or include payment of
additional working days created as a
result of some regular holidays falling on
Sundays
o Wellington should have used the "317
factor," not the "314 factor."

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:

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 law requires of employers opting to pay by the


month is to assure that "the monthly minimum
wage shall not be less than the statutory minimum
wage multiplied by 365 days divided by twelve,"
and to pay that salary "for all days in the month
whether worked or not," and "irrespective of the
number of working days therein."

the legal provisions governing monthly


compensation are evidently intended precisely to
avoid re-computations and alterations in salary on
account of the contingencies
Proof of Payment
BUILDING CARE CORP V. NLRC
February 26, 1997
J. Panganiban
Doctrine: Burden of proving that the employee received
holiday pay is on the employer
FACTS:

Rodil claims that he was illegally dismissed and


that his wages, 13th month pay, service incentive
leave and holiday pay were unpaid

Company claims that Rodil was paid and that his


performance was not satisfactory
42

LA ordered company to pay Rodil; NLRC affirmed

ISSUE: WON Rodil is entitled to holiday pay etc


HELD: Yes
RATIO:

If company really paid Rodil his holiday pay, they


could have easily presented its payrolls which
constitute the best proof of payment

Failed to comply with the mandate of the law


they have the burden of proof and not the
employee
SECTION 8. CONDITIONS OF EMPLOYMENT
LEAVES
A.SERVICE INCENTIVE LEAVE
STATUTORY REFERENCE Art 95 supra
RULE V
Service Incentive Leave
SECTION 1. Coverage. This rule shall apply to all
employees except:
(a) Those of the government and any of its political
subdivisions, including government-owned and controlled
corporations;
(b) Domestic helpers and persons in the personal service of
another;
(c) Managerial employees as defined in Book Three of this
Code;
(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;
(e) Those who are already enjoying the benefit herein
provided;
(f) Those enjoying vacation leave with pay of at least five
days; and
(g) Those employed in establishments regularly employing
less than ten employees.
SECTION 2. Right to service incentive leave. 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.
SECTION 3. Definition of certain terms. The term "at
least one-year service" shall mean service for not less than
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.
SECTION 4. Accrual of benefit. Entitlement to the
benefit provided in this Rule shall start December 16, 1975,
the date the amendatory provision of the Code took effect.

SECTION 5. Treatment of benefit. The service incentive


leave shall be commutable to its money equivalent if not
used or exhausted at the end of the year.
SECTION 6. Relation to agreements. Nothing in the Rule
shall justify an employer from withdrawing or reducing any
benefits, supplements or payments as provided in existing
individual or collective agreements or employer's practices
or policies.
8.01. COVERAGE 95 (a) (b) supra
Coverage

Makati Haberdashery, Inc vs NLRC

Facts: Respondents herein have been working for Makati


Haberdashery as tailors, seamstress, sewers, basters
(manlililip) and "plantsadoras". They are paid on a piecerate basis. In addition to their piece-rate, they are given a
daily allowance of three (P 3.00) pesos provided they report
for work before 9:30 a.m. everyday. Dioscoro Pelobello and
Salvador Rivera were dismissed for accepting a job offer
which is prejudicial and in direct competition with the
business of the company. They filed a complaint for illegal
dismissal before the NLRC. The court found the dismissal
to be valid but permitted the employees to claim cost of
living allowance. However, they were not entitled to service
incentive leave pay.
Doctrine: While private respondents are entitled to
Minimum Wage, COLA and 13th Month Pay, they are not
entitled to service incentive leave pay because as piece-rate
workers being paid at a fixed amount for performing work
irrespective of time consumed in the performance thereof,
they fall under one of the exceptions stated in Section 1(d),
Rule V, Implementing Regulations, Book III, Labor Code.
8.02. ENTITLEMENT AND ARBITRATION 95 (a)
(c) supra
8.03. COMPUTATION AND LIABLITY
Auto Bus Transport Systems, Inc. v. Bautista
May 16, 2005
Chico-Nazario
Doctrine:
The disposition of the first issue revolves around the proper
interpretation of Article 95 of the Labor Code vis-visSection 1(D), Rule V, Book III of the Implementing Rules
and Regulations of the Labor Code 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.
Book III, Rule V: 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
43

commission basis, or those who are paid


in a fixed amount for performing work
irrespective of the time consumed in the
performance thereof; . . .
A careful perusal of said provisions of law will result in the
conclusion that the grant of service incentive leave has been
delimited by the Implementing Rules and Regulations of
the Labor Code to apply only to those employees not
explicitly excluded by Section 1 of Rule V. According to the
Implementing Rules, Service Incentive Leave shall not
apply to employees classified as "field personnel." The
phrase "other employees whose performance is
unsupervised by the employer" must not be understood as a
separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an
amplification of the interpretation of the definition of field
personnel under the Labor Code as those "whose actual
hours of work in the field cannot be determined with
reasonable certainty."
The same is true with respect to the phrase "those who are
engaged on task or contract basis, purely commission
basis." Said phrase 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. Hence, employees engaged on task
or contract basis or paid on purely commission basis are
not automatically exempted from the grant of service
incentive leave.
What must be ascertained in order to resolve the issue of
propriety of the grant of service incentive leave to
respondent is whether or not he is a field personnel.
According to Article 82 of the Labor Code, "field personnel"
shall refer to non-agricultural employees who regularly
perform their duties away from the principal place of
business or branch office of the employer and whose actual
hours of work in the field cannot be determined with
reasonable certainty. This definition is further elaborated in
the Bureau of Working Conditions (BWC), Advisory
Opinion to Philippine Technical-Clerical Commercial
Employees Association which states that:
As a general rule, [field personnel] are those
whose performance of their job/service is not
supervised by the employer or his representative,
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.
It is necessary to stress that the definition of a "field
personnel" is not merely concerned with the location where
the employee regularly performs his duties but also with
the fact that the employees performance is unsupervised by
the employer. As discussed above, field personnel are those
who regularly perform their duties away from the principal
place of business of the employer and whose actual hours

of work in the field cannot be determined with reasonable


certainty. Thus, in order to conclude whether an employee
is a field employee, it is also necessary to ascertain if actual
hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an
inquiry must be made as to whether or not the employees
time and performance are constantly supervised by the
employer.
Fast Facts:
Bautista has been employed by Auto Bus as driverconductor since 1995. He is paid on commission basis. In
2000, the bus Bautista was driving bumped the rear of
another bus of his ER. The management made him
shoulder 30% (P75k+++) of the expenses for the repair of
the damaged bus and since he did and could not pay for it,
he was terminated.
Bautista filed a complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service
incentive leave pay.
However, the ER was able to prove that Bautistas
employment is replete with offenses and that he was given
due process before termination. So, there was no illegal
dismissal but he was entitled to 13th month and service
incentive leave pay.
Sentinel Security Agency vs. NLRC
G.R. No. 122468 / September 3, 1998 / First
division / Panganiban, J.
Facts: The complainants were employees of
Sentinel Segurity Agency. They were assigned to render
guard duty at the premises of Philippine American Life
Insurance Company in Cebu City (the Client). The Client
sent notice to all concerned that the Agency was again
awarded the contract of security services together with a
request to replace all the security guards in the company's
offices at the cities of Cebu, Bacolod, Cagayan de Oro,
Dipolog and Iligan.
The Agency issued a Relief and Transfer Order replacing
the complainants as guards of the Client and for them to be
re-assigned to other clients effective January 16, 1994. As
ordered, the complainants reported but were never given
new assignments but instead they were told in the
vernacular, "gui-ilisan mo kay mga tigulang naman mo"
which when translated means, "you were replaced because
you are already old.
In the case at bar, the relief and transfer order per se did
not sever the employment relationship between the
complainants and the Agency. Thus, despite the fact that
complainants were no longer assigned to the Client, Article
287 of the Labor Code, as amended by RA 7641, still binds
the Agency to provide them upon their reaching the
retirement age of sixty to sixty-five years retirement pay
or whatever else was established in the collective
bargaining agreement or in any other applicable
employment contract.
The Court has recognized the prerogative of management to
transfer an employee from one office to another within the
44

same business establishment, as the exigency of the


business my require, provided that the said transfer does
nor result in a demotion in rank or a diminution in salary,
benefits and other privileges of the employee; or is not
unreasonable, inconvenient or prejudicial to the latter.
A transfer means a movement (1) from one
position to another of equivalent rank, level or
salary, without a break in the service; and (2) from
one office to another within the same business
establishment. It is distinguished from a
promotion in the sense that it involves a lateral
change as opposed to a scalar ascent.
However, in the case at bar, this legally recognized concept
of transfer was not implemented. The Agency hired new
security guards to replace the complainants, resulting in a
lack of posts to which the complainants could have been
reassigned.
Regarding liability: Based on Articles 106, 107 and 109, the
indirect employer (the Client) is jointly and severally liable
with the contractor for the workers' wages, in the same
manner and extent that it is liable to its direct employees.
This liability of the Client covers the payment of the service
incentive leave pay of the complainants during the time
they were posted at the Cebu branch of the Client. As
service had been rendered, the liability accrued, even if the
complainants were eventually transferred or reassigned.
Doctrine: Even if the Client is not responsible for the
illegal dismissal of the complainants, it is jointly and
severally liable with the Agency for the complainants'
service incentive leave pay.
B.PATERNITY LEAVE
REPUBLIC ACT NO. 8187
AN ACT GRANTING PATERNITY LEAVE OF
SEVEN (7) DAYS WITH FULL PAY TO ALL
MARRIED MALE EMPLOYEES IN THE PRIVATE
AND PUBLIC SECTORS FOR THE FIRST FOUR (4)
DELIVERIES OF THE LEGITIMATE SPOUSE WITH
WHOM HE IS COHABITING AND FOR OTHER
PURPOSES.
Be it enacted by the Senate and House of Representatives
of the Philippines in Congress assembled:
SECTION 1. Short Title. - This Act shall be known as
the "Paternity Leave Act of 1996".
SECTION 2. Notwithstanding any law, rules and
regulations to the contrary, every married male employee in
the private and public sectors shall be entitled to a
paternity leave of seven (7) days with full pay for the first
four (4) deliveries of the legitimate spouse with whom he is
cohabiting. The male employee applying for paternity leave
shall notify his employer of the pregnancy of his legitimate
spouse and the expected date of such delivery.
For purposes, of this Act, delivery shall include
childbirth or any miscarriage.
SECTION 3. Definition of Term. - For purposes of this

Act, Paternity Leave refers to the benefits granted to a


married male employee allowing him not to report for work
for seven (7)
days but continues to earn the compensation therefor, on
the condition that his spouse has delivered a child or
suffered a miscarriage for purposes of enabling him to
effectively lend
support to his wife in her period of recovery and/or in
the nursing of the newly-born child.
SECTION 4. The Secretary of Labor and Employment,
the Chairman of the Civil Service Commission and the
Secretary of Health shall, within thirty (30) days from the
effectivity of
this Act, issue such rules and regulations necessary for
the proper implementation of the provisions hereof.
SECTION 5. Any person, corporation, trust, firm,
partnership, association or entity found violating this Act or
the rules and regulations promulgated thereunder shall be
punished by a fine not exceeding Twenty-five thousand
pesos (P25,000) or imprisonment of not less than thirty
(30)days nor more than six (6) months.
If the violation is committed by a corporation, trust
or firm, partnership, association or any other entity, the
penalty of imprisonment shall be imposed on the entity's
responsible officers, including, but not limited to, the
president, vice-president, chief executive officer, general
manager, managing director or partner directly
responsible therefor.
SECTION 6. Nondiminution Clause. - Nothing in this
Act shall be construed to reduce any existing benefits of
any form granted under existing laws, decrees, executive
orders, or any
contract agreement or policy between employer and
employee.
SECTION 7. Repealing Clause. - All laws, ordinances,
rules, regulations, issuances, or parts thereof which are
inconsistent with this Act are hereby repealed or modified
accordingly.
SECTION 8. Effectivity. - This Act shall take effect
(15) days from its publication in the Official Gazette or in at
least two (2) newspapers of national circulation.
C. MATERNITY LEAVE
REPUBLIC ACT NO. 7322
AN ACT INCREASING MATERNITY BENEFITS IN
FAVOR OF WOMEN WORKERS IN THE PRIVATE
SECTOR, AMENDING FOR THE
PURPOSE SECTION 14-A OF REPUBLIC ACT NO.
1161, AS AMENDED, AND FOR OTHER PURPOSES
Be it enacted by the Senate and House of
Representatives of the Philippines in Congress assembled:
SECTION 1. Section 14-A of Republic Act No. 1161,
as amended, is further amended to read as follows:
"SEC. 14-A. Maternity Leave Benefit. - A covered
female employee who has paid at least three monthly
45

maternity contributions in the twelve-month period


preceding the semester of her childbirth, abortion or
miscarriage and who is currently employed shall be paid a
daily maternity benefit equivalent to one hundred percent
(100%) of her present basic salary, allowances and other
benefits or the cash equivalent of such benefits for sixty
(60) days subject to the following conditions:
"(a) That the employee shall have notified her employer
of her pregnancy and the probable date of her childbirth
which notice shall be transmitted to the SSS in accordance
with the rules and regulations it may provide;
"(b) That the payment shall be advanced by the
employer in two equal installments within thirty (30) days
from the filing of the maternity leave application:

"(c) That in case of caesarian delivery, the employee


shall be paid the daily maternity benefit for seventy-eight
(78) days;
"(d) That payment of daily maternity benefits shall be a
bar to the recovery of sickness benefits provided by this Act
for the same compensable period of sixty (60) days for the
same childbirth, abortion, or miscarriage;
"(e) That the maternity benefits provided under
this Section shall be paid only for the first four deliveries
after March 13, 1973;
"(f) That the SSS shall immediately reimburse the
employer of one hundred percent (100%) of the amount
of maternity benefits advanced to the employee by the
employer upon receipt of satisfactory proof of such
payment and legality thereof; and
"(g) That if an employee should give birth or
suffer abortion or miscarriage without the required
contributions having been remitted for her by her
employer to the SSS, or without the latter having been
previously notified by the employer of the time of the
pregnancy, the employer shall pay to the SSS damages
equivalent to the benefits which said employee would
otherwise have been entitled to, and the SSS shall in turn
pay such amount to the employee concerned."
D. VACATION AND SICK LEAVE
McLeod vs NLRC
January 23, 2007
Carpio
Facts

John F. McLeod filed a complaint for retirement


benefits, vacation and sick leave benefits, nonpayment of unused airline tickets, holiday pay,
underpayment of salary and 13th month pay,
moral and exemplary damages, attorneys fees
plus interest against Filipinas
Synthetic
Corporation (Filsyn), Far Eastern Textile Mills,
Inc., Sta. Rosa Textiles, Inc., Patricio Lim and Eric
Hu.
McLeods contentions: He was hired at Universal
Textiles, Inc. Under President Patricio Lim.
Patricio Lim formed Peggy Mills, Inc. (PMI) with

Filsyn having controlling interest. He was


absorbed by Peggy Mills. He then retired and
received benefits which were convertible to cash if
unused as per Collective Bargaining Agreement
provision. Respondents however failed to pay him
his vacation and leave credits, his holiday pay up,
etc. due to shortage of funds. Filsyn then ssold
Peggy Mills to Far Eastern Textile Mills and this
was renamed to Sta. Rosa Textile. And when he
reached retirement age, he again requested for his
retirement and other benefits. Hence, this
complaint, asking for full payment of all benefits.
Respondents, being one and the same entities, are
solidarily liable for all benefits that McLeod is
entitled to.
Respondents contentions: Peggy Mills closed due
to irreversible losses but the corporation still
exists. McLeod was hired at Sta. Rosa Textile but
then he resigned. Filsyn and Far Eastern Textiles
are separate legal entitites and have no employeremployee relationship with McLeod. He therefore
has no cause of action against Filsyn, Far Eastern
Textile, Sta. Rosa Textile, and Eric Hu who is the
director of Sta. Rosa Textile Corp. Besides, Sta.
Rosa onlly acquired the assets and not the
liabilities of Peggy Mills. Patricio Lim was only
impleaded as Board Chairman of Sta. Rosa Textile
and not as private individual. And when the union
held a strike resulting in closure due to losses,
McLeod was supposed to remedy the problem but
due to his absence and lack of attention, the
company closed. Furthermore, whatever amount
McLeod is entitled should be offset with the
counterclaims.
Labor arbiter: held all respondents as jointly and
solidarily liable for complainants money claims.
NLRC: reversed labor arbiters decision.
CA: upheld NLRCs findings. It rejected McLeods
theory that all respondent corporations are the
same corporate entity which shall be held
solidarily liable for the payment of his monetary
claims. There should be clear and convincing
evidence that SRTI, FETMI, and Filsyn were being
used as alter ego for the sole benefit of Peggy
Mills, Inc, otherwise said corporations should be
treated as distinct and separate from each other.
McLeod failed to substantiate his claims.

Issues
1. WON CA decision is in accord with law and
jurisprudence
o WON an employer-employee relationship
exists between the private respondents and
McLeod for purposes of determining
employer liability to McLeod
o WON private respondents may avoid
their financial obligations to the petitioner by
invoking the veil of corporate fiction
2. WON McLeod is entitled to the relief he seeks
against private respondents
Held and Ratio
1. Yes

No
46

o Records disclose the McLeod was am employee of


PMI. After the strike, plant operations were
stopped. PMI informed its employees of the
closure. PMI payed all of its employees except
McLeod. Under the compromise agreement,
the employer-employee relationship between
them ended. McLeods claims that FETMI
purchase PMI and that FETMI merely
renamed PMI as SRTI is untenable. What
took place between PMI and SRTI was dation
in payment with lease.
o There is no showing in this case that the subject
dation in payment involved merger or
consolidation. Neither is there any showing of
those indicative factors that SRTI is a mere
instrumentality of PMI. SRTI did not
expressly or impliedly agree to assume any of
PMIs debts..McLeod did not present any
evidence to show the alleged renaming of PMI
to Sta. Rosa Textiles Inc. McLeod could have
presented evidence to support his allegation
of employer-employee relationship between
him and any of Filsyn, SRTI, and FETMI, but
he did not.

No
o The assertion that "for purposes of determining
employer liability, all private respondents are
one and the same employer" because: (1) they
have the same address; (2) they are all
engaged in the same business; and (3) they
have interlocking directors and officers, is
untenable because a corporation is an
artificial being invested by law with a
personality separate and distinct from that of
its stockholders and from that of other
corporations to which it may be connected.
But while a corporation may exist for any
lawful purpose, the law will regard it as an
association of persons or, in case of two
corporations, merge them into one, when its
corporate legal entity is used as a cloak for
fraud or illegality. This is the doctrine of
piercing the veil of corporate fiction. To
disregard the separate juridical personality of
a corporation, the wrongdoing must be
established clearly and convincingly. It cannot
be presumed. Here, the court did not fine any
of the evils sought to be prevented by the
doctrine of piercing the corporate veil.
o Personal liability of corporate directors, trustees
or officers attaches only when (1) they assent
to a patently unlawful act of the corporation,
or when they are guilty of bad faith or gross
negligence; (2) they consent to the issuance of
watered down stocks or when, having
knowledge of such issuance, do not forthwith
file with the corporate secretary their written
objection; (3) they agree to hold themselves
personally and solidarily liable with the
corporation; or (4) they are made by specific
provision of law personally answerable for
their corporate action. McLeod failed to prove
any of the foregoing exceptions in the present
case, hence McLeod cannot hold Patricio
solidarily liable with PMI. Besides, there is

nothing on record to show that Patricio acted


in bad faith in terminating McLeods services
to warrant Patricios personal liability. PMI
had no other choice but to stop plant
operations. The work stoppage therefore was
by necessity.
2.

No
McLeod is a managerial employee who is excluded
from the coverage of entitlement or payment of
vacation leave and sick leave as well as to holiday
pay as mentioned in Title I, Book Three of the
Labor Code.

McLeods assertion of underpayment of his 13th


month pay in December 1993 is unavailing since
he was no longer an employee by that time.

Also unavailing is McLeods claim that he was


entitled to the "unpaid monetary equivalent of
unused plane tickets for PMI has no company
policy granting its officers and employees
expenses for trips abroad. That at one time
PMI reimbursed McLeod for his and his
wifes plane tickets in a vacation to
London. could not be deemed as an
established practice considering that it
happened only once. To be considered a
regular practice, the giving of the
benefits should have been done over a long
period, and must be shown to have been
consistent and deliberate.

McLeod cannot successfully pretend that his


monthly salary was reduced without his consent.
McLeod testified that in 1990, Philip Lim
explained to him why his salary would have to be
reduced.

Since PMI has no retirement plan, Section 5, Rule


II of the Rules Implementing the New Retirement
Law shoould apply. Hence, with McLeod having
worked with PMI for 12 years, from 1980 to 1992,
he is entitled to a retirement pay equivalent to
month salary for every year of service based on his
latest salary rate.

Finally, there is no basis for the award of moral


damages. Moral damages are recoverable only if
the defendant has acted fraudulently or in bad
faith. From the records of the case, the Court finds
no ultimate facts to support a conclusion of bad
faith on the part of PMI.
The awards for exemplary damages and attorneys fees are
not proper in the present case.
REPUBLIC ACT NO. 8972
AN ACT PROVIDING FOR BENEFITS AND
PRIVILEGES TO SOLO PARENTS AND THEIR
CHILDREN, APPROPRIATING FUNDS THEREFOR
AND FOR OTHER PURPOSES
Section 2. Declaration of Policy. - It is the policy of the
State to promote the family as the foundation of the nation,
strengthen its solidarity and ensure its total development.
Towards this end, it shall develop a comprehensive
program of services for solo parents and their children to be
carried out by the Department of Social Welfare and
Development (DSWD), the Department of Health (DOH),
the Department of Education, Culture and Sports (DECS),
47

the Department of the Interior and Local Government


(DILG), the Commission on Higher Education (CHED), the
Technical Education and Skills Development Authority
(TESDA), the National Housing Authority (NHA), the
Department of Labor and Employment (DOLE) and other
related government and nongovernment agencies.
Section 6. Flexible Work Schedule. - The employer shall
provide for a flexible working schedule for solo parents:
Provided, That the same shall not affect individual and
company productivity: Provided, further, That any
employer may request exemption from the above
requirements from the DOLE on certain meritorious
grounds.
Section 8. Parental Leave. - In addition to leave privileges
under existing laws, parental leave of not more than seven
(7) working days every year shall be granted to any solo
parent employee who has rendered service of at least one
(1) year.

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