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Labor Law I: Labor Standards

Part I - Introduction to Labor Law


1. Brief History of Labor and Labor Legislations
2. Classification of Labor Legislation
3. Legal Framework of Labor Legislations / Sources of Rights of
Labor and Employment
Police Power of the State
St. Lukes Medical Center Employees Foundation AFW vs. NLRC
G.R. No. 162053
ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW
(SLMCEA-AFW) AND MARIBEL S. SANTOS vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S
MEDICAL CENTER, INC.
March 7, 2007
Facts: Maribel S. Santos has been working for St. Luke's Medical Center
for almost eight years. On 1992, Republic Act No. 7431 known as the
Radiologic Technology Act of 1992 was passed. R.A. 7431 requires
individuals who work as radiologists or x-ray technologists in the
Philippines to acquire a legal certificate of registration from the Board of
Radiologic Technology. Upon the laws passage, St. Luke's Medical Center
notified all its employees practicing Radiologic Technology to comply with
the laws requirements. Its notice also warned employees that their failure
to comply with the requirements would result to their transfer to an area
which doesnt require a license, that is if there are still available slots.
Santos, despite receiving several notices failed to comply and was notified
by St. Luke's Medical Center that she will be compelled to retire if they are
left with no other available positions for her in the hospital. Not only did
Santos refuse the offer to retire, but she also was unqualified for any other
vacant positions in the hospital. She also failed the board examination,
afterwards. The events that transpired caused St. Luke's Medical Center to
issue Santos with a notice of separation. Santos, who found her
employers action unfair, filed a case against her employer for illegal
dismissal, non-payment of salaries, allowances, and other monetary
benefits.
The Labor Arbiter ruled in favour of Santos. Santos, however, was
dissatisfied with the decision and filed an appeal before the National Labor
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Relations Commission which agreed with the Labor Arbiters decision. The
National Labor Relations Commission denied Santos motion for
reconsideration. This motivated Santos to file a petition before the Court
of Appeals which agrred with the Commissions decision. Thus, the
petitioners filed a petition before the Supreme Court.
Issue: Whether or not Santos was illegally dismissed by her employer on
the basis of her inability to secure a certificate of registration from the
Board of Radiologic Technology.
Held: No. Section 2 of R.A. 7431 states: It is the policy of the State to
upgrade the practice of radiologic technology in the Philippines for the
purpose of protecting the public from the hazards posed by radiation as
well as to ensure safe and proper diagnosis, treatment and research
through the application of machines and/or equipment using radiation.
One of the states inherent powers is police power. Through the states
police power, it can lay down some regulations in order to improve the
health, morals, educations, good order, safety or general welfare of the
people. The state is justified in prescribing the specific requirements for xray technicians and/or any other professions connected with the health
and safety of its citizens. Santos, being a practitioner in the medical field,
must follow the law and cannot come above the law and override public
interest.
Collective Bargaining Agreements (CBA)
DOLE Philippines vs. Pawis ng Makabayang Obrero
G.R. No. 146650
DOLE PHILIPPINES, INC., petitioner vs.
PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL)
January 13, 2003
Facts: Dole Philippines Inc. and Pawis ng Makabayang Obrero entered into
a collective bargaining agreement which was supposed to last for five
years. The collective bargaining agreement provides that Dole will give its
employees a meal allowance of 10.00 pesos who will render actual
overtime work for at least 2 hours, not exceeding 25.00 pesos after 3
hours of actual overtime work.
Despite the agreement pertained in the collective bargaining agreement
, some of Doles departments granted free meals after exactly three
hours while other departments only give free meals after employees have
rendered more than 3 hours of actual overtime work. Both parties decided
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to submit the dispute to voluntary arbitration. The arbitrator ruled in


favour of Pawis ng Makabayang Obrero, prompting Dole to file a motion
for reconsideration, but was denied. After going to the Court of Appeals to
seek a more favourable decision, the petitioners filed. Thus, it filed a
petition for review before the Supreme Court.
Issue: Whether or not a Dole employee is entitled to free meal after
rendering three hours of actual overtime work.
Held: Yes. The collective bargaining agreement, containing the intent of
both parties, clearly states that free meal is granted to a Dole employee
who renders exactly or no less than three hours of overtime work, and not
only after more than three hours of overtime work. Exercise of
management prerogative is not unlimited but subject to the limitations
found in law, a collective bargaining agreement or the general principles
of fair play and justice. The CBA is the norm of conduct between petitioner
and private respondent and compliance therewith is mandated by the
express policy of the law.

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Chapter I General Provisions


4.
5.
6.
7.

Name of Decree Labor Code Article 1


Date of Effectivity Labor Code Article 2
Declarations of Policy Labor Code Article 3
Construction of Labor Code Labor Code Article 4

Interpretation of Labor Law, Rationale and Intent


Abella vs. NLRC
G.R. No. 71818
ROSALINA PEREZ/HDA. DANAO-RAMONA vs.
THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION,
ROMEO QUITCO AND RICARDO DIONELE, SR.
July 20, 1987
Facts: On June 27, 1960 the petitioner, Rosalina Perez Abella leased a
farm land known as Hacienda Danao-Ramona, for a period of ten (10)
years. She opted to extend the leased contract for another ten (10) years.
During the existence of the lease, she employed the private respondents
Ricardo Dionele, Sr., and Romeo Quitco. Upon the expiration of her
leasehold rights, petitioner dismissed private respondents and turned over
the hacienda to the owners thereof on October 5, 1981, who continued
the management, cultivation and operation of the farm.
On November 20, 1981, private respondents filed a complaint against the
petitioner at the Ministry of Labor and Employment, Bacolod City District
Office, for overtime pay, illegal dismissal and reinstatement with
backwages. After the parties had presented their respective evidence, the
Labor Arbiter ruled that the dismissal is warranted by the cessation of
business, but granted the private respondents separation pay. Petitioner
appealed. The National Labor Relations Commission affirmed the decision

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and dismissed the appeal for lack of merit. Petitioner filed a Motion for
Reconsideration, but the same was denied. Hence, the present petition.
Issue: Whether or not private respondents are entitled to separation pay.
Held: Yes. Article 284 of the Labor Code, as amended by B.P. Blg. 130, is
the law applicable in this case. The purpose of Article 284, as amended, is
obvious the protection of the workers whose employment is terminated
because of the closure of establishment and reduction of personnel.
Without said law, employees like private respondents in the case at bar
will lose the benefits to which they are entitled for the thirty three years
of service in the case of Dionele, and fourteen years in the case of Quitco.
Although they were absorbed by the new management of the hacienda, in
the absence of any showing that the latter has assumed the
responsibilities of the former employer, they will be considered as new
employees and the years of service behind them would amount to
nothing.
It is well-settled that in the implementation and interpretation of the
provisions of the Labor Code and its implementing regulations, the
workingman's welfare should be the primordial and paramount
consideration. It is the kind of interpretation which gives meaning and
substance to the liberal and compassionate spirit of the law as provided
for in Article 4 of the New Labor Code which states that "all doubts in the
implementation and interpretation of the provisions of this Code including
its implementing rules and regulations shall be resolved in favor of labor."
The policy is to extend the applicability of the decree to a greater number
of employees who can avail of the benefits under the law, which is in
consonance with the avowed policy of the State to give maximum aid and
protection to labor.
The instant petition is hereby dismissed and decision of the Labor Arbiter
and the resolution of the Ministry of Labor and Employment are hereby
affirmed.
Manaya vs. Alabang Country Club
G.R. No. 168988
FERNANDO G. MANAYA vs.
ALABANG COUNTRY CLUB INCORPORATED
June 19, 2007

Facts: Petitioner alleged that on 21 August 1989, he was initially hired by


the respondent as a maintenance helper receiving a salary of P198 per
day. He was later designated as company electrician. He continued to
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work for the respondent until 22 August 1998 when the latter, through its
Engineering and Maintenance Department Manager, Engr. Ronnie B. de la
Cruz, informed him that his services were no longer required by the
company. Petitioner alleged that he was forcibly and illegally dismissed
without cause and without due process on August 22, 1998. Hence, he
filed a Complaint before the Labor Arbiter. He claimed that he had not
committed any infraction of company policies or rules and that he was not
paid his service incentive leave pay, holiday pay and 13th month pay. He
further asserted that with his more or less nine years of service with the
respondent, he had become a regular employee. He, therefore, demanded
his reinstatement without loss of seniority rights with full backwages and
all monetary benefits due him.

In its Answer, respondent denied that petitioner was its employee. It


countered by saying that petitioner was employed by First Staffing
Network Corporation (FSNC), with which respondent had an existing
Memorandum of Agreement dated 21 August 1989. Thus, by virtue of a
legitimate job contracting, petitioner, as an employee of FSNC, came to
work with respondent, first, as a maintenance helper, and subsequently as
an electrician. Respondent prayed for the dismissal of the complaint
insisting that petitioner had no cause of action against it.

The Labor Arbiter held the complainant Fernando G. Manaya is found to be


a regular employee of respondent Alabang Country Club, Inc. His dismissal
from the service having been effected without just and valid cause and
without the due observance of due process is hereby declared illegal.
Consequently, respondent Alabang Country Club, Inc. is hereby ordered to
reinstate complainant to his former position without loss of seniority rights
and other benefits appurtenant thereto with full backwages.
Furthermore, respondent Alabang Country Club, Inc. and First Staffing
Network Corporation are hereby ordered to pay complainant, jointly and
severally the service incentive leave, 13th month pay and attorneys fees
of the 10% of the total monetary award. Respondent filed an Appeal with
the NLRC which dismissed the same. The NLRC held that the appeal from
the Decision of November 20, 2000 is dismissed for failure to perfect
appeal within the statutory period of appeal. The Decision is now final and
executory.

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The NLRC found that respondents counsel of record Atty. Angelina A.


Mailon of Monsod, Valencia and Associates received a copy of the Labor
Arbiters Decision on or before 11 December 2000 as shown by the postal
stamp or registry return card. Said counsel did not file a withdrawal of
appearance. Instead, a Memorandum of Appeal dated 26 December 2000
was filed by the respondents new counsel, Atty. Arizala of Tierra and
Associates Law Office. Reckoned from 11 December 2000, the date of
receipt of the Decision by respondents previous counsel, the filing of the
Memorandum of Appeal by its new counsel on 26 December 2000 was
clearly made beyond the reglementary period. The NLRC held that the
failure to perfect an appeal within the statutory period is not only
mandatory but jurisdictional. The appeal having been belatedly filed, the
Decision of the Labor Arbiter had become final and executory.

Respondent filed a Motion for Reconsideration, which the NLRC denied the
same. Respondent filed a Petition for Certiorari under Rule 65 of the Rules
of Court before the Court of Appeals. In a Decision, the Court of Appeals
granted the petition and ordered the NLRC to give due course to
respondents appeal of the Labor Arbiters Decision. Petitioner filed a
Motion for Reconsideration which was denied by the Court of Appeals in a
Resolution dated 21 July 2005. Not to be dissuaded, petitioner filed the
instant petition before this Court.

Issue: Whether or not the court of appeals committed an error when it


ordered the NLRC to give due course to the appeal of respondent Alabang
Country Club, incorporated even if the said appeal was filed beyond the
reglementary period of ten (10) days for perfecting an appeal.

Held: Yes. Remarkably, in highly exceptional instances, we have allowed


the relaxing of the rules on the application of the reglementary periods of
appeal. We pronounced in those cases that technicality should not be
allowed to stand in the way of equitably and completely resolving the
rights and obligations of the parties. In all these, the Court allowed liberal
interpretation given the extraordinary circumstances that justify a
deviation from an otherwise stringent rule. Clearly, emphasized in these
cases is that the policy of liberal interpretation is qualified by the
requirement that there must be exceptional circumstances to allow the
relaxation of the rules.

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The rules, particularly the requirements for perfecting an appeal within


the reglementary period specified in the law, must be strictly followed as
they are considered indispensable interdictions against needless delays
and for orderly discharge of judicial business. Furthermore, the perfection
of an appeal in the manner and within the period permitted by law is not
only mandatory but also jurisdictional and the failure to perfect the appeal
renders the judgment of the court final and executory. Just as a losing
party has the right to file an appeal within the prescribed period, the
winning party also has the correlative right to enjoy the finality of the
resolution of his/her case.

In this particular case, we adhere to the strict interpretation of the rule. In


the case of Bunagan v. Sentinel we declared that:

That the perfection of an appeal within the statutory or reglementary


period is not only mandatory, but jurisdictional, and failure to do so
renders the questioned decision final and executory and deprives the
appellate court of jurisdiction to alter the final judgment, much less to
entertain the appeal. The underlying purpose of this principle is to prevent
needless delay, a circumstance which would allow the employer to wear
out the efforts and meager resources of the worker to the point that the
latter is constrained to settle for less than what is due him. This Court has
declared that although the NLRC is not bound by the technical rules of
procedure and is allowed to be liberal in the interpretation of the rules in
deciding labor cases, such liberality should not be applied where it would
render futile the very purpose for which the principle of liberality is
adopted. The liberal interpretation stems from the mandate that the
workingmans welfare should be the primordial and paramount
consideration. We see no reason in this case to waive the rules on the
perfection of appeal.

This Court has repeatedly ruled that delay in the settlement of labor cases
cannot be countenanced. Not only does it involve the survival of an
employee and his loved ones who are dependent on him for food, shelter,
clothing, medicine and education; it also wears down the meager
resources of the workers to the point that, not infrequently, they either
give up or compromise for less than what is due them. Without doubt, to
allow the appeal of the respondent as what the Court of Appeals had done
and remand the case to the NLRC would only result in delay to the
detriment of the petitioner.
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Nothing is more settled in our jurisprudence than the rule that when the
conflicting interest of loan and capital are weighed on the scales of social
justice, the heavier influence of the latter must be counter-balanced by
the sympathy and compassion the law must accord the under-privileged
worker.
Clemente vs. GSIS
G.R. No. L-47521
CAROLINA CLEMENTE vs.
GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), DEPARTMENT
OF HEALTH (DAGUPAN CITY) AND EMPLOYEES COMPENSATION
COMMISSION
July 31, 1987
Facts: Petitioners husband, Pedro Clemente, was for ten (10) years a
janitor in the Department of Health (Dagupan City), assigned at the Ilocos
Norte Skin Clinic, Laoag City. On November 14, 1976, Pedro Clemente died
of uremia due to nephritis. GSIS denied the claim of benefits because they
found the cause of death not an occupational disease. Petitioner
requested for reconsideration of the GSIS decision, contending that the
ailments of her husband were contracted in the course of his employment
and were aggravated by the nature of his work, as he was exposed to
persons suffering with different skin diseases. The Employees
Compensation Commission affirmed the GSIS decision stating that
Pedros ailments were not listed as an occupational disease. The GSIS
concurs with the views of the respondent Commission. However, it argues
that it should be dropped as a party respondent in this case.
Issue: Whether or not the petitioner can claim death benefits from GSIS.
Held: Yes. Carolina Clemente may claim benefits from the GSIS. The GSIS
maintains that Pedro had the diseases even before his employment with
the Department of Health. The fallacy in this theory lies in the failure to
explain how a sick person was able to enter the government service more
than ten years before he became too ill to work and at a time when
aggravation of a disease was compensable. There is no evidence that Mr.
Clemente was hired inspite of having and existing disease liable to
become worse. When there are two or more possible explanations
regarding an issue of compensability that which forms the claimant must
be chosen.
Colgate Palmolive Philippines, Inc. vs. Ople
G.R. No. 73681
COLGATE PALMOLIVE PHILIPPINES, INC. vs.
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HON. BLAS OPLE, AND COLGATE PALMOLIVE SALES UNION


June 30, 1988
Facts: The respondent union filed a notice of strike with the Bureau of
Labor Relations on ground of unfair labor practice consisting of alleged
refusal to bargain, dismissal of union officers/members, and coercing
employees to retract their membership with the union and restraining
non-union members from joining the union. The petitioner pointed out that
Mejia, Sayson and Reynantes suspension and eventual dismissal from the
company were due to violation of company rules and are therefore carried
out pursuant to the inherent right and prerogative of the management. In
addition, petitioner contends that the union is not the certified agent of
the company salesmen. In fact, according to petitioner, majority of
salesmen not in favor of the notice of strike.
he Minister, Blas Ople, rendered a decision which found no merit in the
unions complaint. He also found that the three salesmen are not without
fault, therefore, the company has grounds to dismiss the salesmen. But
despite that, he ordered the reinstatement of the three on the ground that
the employees were first offenders. In addition, the Minister directly
certified the union as the collective bargaining agent for the sales force in
petitioner company. Petitioner filed a motion for reconsideration.
Issues: Whether or not the Minister committed grave abuse of discretion
when he directly certified the union, and whether or not the same
happened when he ordered the reinstatement of the salesmen.
Held: Yes. The Minister committed grave abuse of discretion in both cases
contended in the petitioners motion for reconsideration. The procedure of
a representation case is outlined in the Labor Code. When the Minister
directly certified the Union, he in fact disregarded this procedure and its
legal requirements. There was therefore failure to determine with legal
certainty whether the union indeed enjoyed majority representation.
Regarding the employees, reinstatement is simply incompatible with a
finding of guilt. Where the totality of the evidence was sufficient to
warrant the dismissal of the employees, the law warrants their dismissal
without making any distinction between a first offender and a habitual
delinquent. The Minister is duly mandated to equally protect and respect
not only the labor or workers side but also the management and/or
employers side. As stated in the case of San Miguel Brewery vs. National
Labor Union, an employer cannot legally be compelled to continue with
the employment of a person who admittedly was guilty of misfeasance or
malfeasance towards his employer, and whose continuance in the service
of the latter is patently inimical to his interest.
Nicario vs. NLRC, et al.

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G.R. No. 125340


EMELITA NICARIO vs.
NATIONAL LABOR RELATIONS COMMISSION, MANCAO
SUPERMARKET, INC. AND/OR MANAGER, ANTONIO MANCAO
September 17, 1998
Facts: Petitioner, Emelita Nicario, was employed with respondent
company Mancao Supermarket, on June 6, 1986 as a salesgirl and was
later on promoted as sales supervisor. However, private respondent
terminated her services on February 7, 1989. A complaint for illegal
dismissal with prayer for backwages, wage differential, service incentive
leave pay, overtime pay, 13th month pay and unpaid wages was filed by
petitioner before the National Labor Relations Commission, Sub-Regional
Arbitration Branch X in Butuan City.
On July 25, 1989, Labor Arbiter Amado M. Solamo dismissed the complaint
for lack of merit. Petitioner appealed to the National Labor Relations
Commission (NLRC), Fifth Division, Cagayan de Oro City. In a resolution
dated July 25, 1989, the NLRC set aside the labor arbiters decision for lack
of due process. It ruled that since petitioner assailed her supposed
signatures appearing on the payrolls presented by the company as a
forgery, the labor arbiter should not have merely depended on the xerox
copies of the payrolls, as submitted in evidence by the private respondent
but ordered a formal hearing on the issue. Thus, the Commission ordered
the case remanded to the arbitration branch for appropriate proceedings.
In a decision dated May 23, 1994, Labor Arbiter Macaraig-Guillen awarded
petitioners claims for unpaid service incentive leave pay, 13 th month pay,
overtime pay and rest day pay for the entire period of her employment,
but dismissed her claims for holiday premium pay and unpaid salaries
from February 3 to 5, 1989. Not satisfied with the decision, private
respondent appealed to the NLRC, and in a resolution dated August 16,
1995, the Commission affirmed in toto Labor Arbiter Macaraig-Guillens
decision. Private respondent then filed a motion for reconsideration. In a
resolution dated December 21, 1995, public respondent NLRC modified its
earlier resolution by deleting the award for overtime pay and ruling that
private respondent Antonio Mancao is not jointly and severally liable with
Mancao Supermarket to pay petitioner the monetary award adjudged.
Issue: Whether or not public respondent NLRC erred in ruling that
petitioner is not entitled to overtime pay.
Held: The Court, in previously 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, has ruled that such
unvarying recording of a daily time record is improbable and contrary to
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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
uniformity and regularity of the entries are badges of untruthfulness and
as such indices of dubiety. The observations made by the Solicitor General
regarding the unreliability of the daily time records would therefore seem
more convincing. On the other hand, respondent company failed to
present substantial evidence, other than the disputed DTRs, to prove that
petitioner indeed worked for only eight hours a day.
It is a well-settled doctrine, that if doubts exist between the evidence
presented by the employer and the employee, the scales of justice must
be tilted in favor of the latter. It is a time-honored rule that in
controversies between a laborer and his master, doubts reasonably arising
from the evidence or in the interpretation of agreements and writing
should be resolved in the formers favor. The policy is to extend the
doctrine to a greater number of employees who can avail of the benefits
under the law, which is in consonance with the avowed policy of the State
to give maximum aid and protection of labor. This rule should be applied
in the case at bar, especially since the evidence presented by the private
respondent company is not convincing. Accordingly, we uphold the finding
that petitioner rendered overtime work, entitling her to overtime pay.
Interpretation of Employment Contract
St. Theresas School of Novaliches Foundation, et al. vs. NLRC
G.R. No. 122955
ST. THERESA'S SCHOOL OF NOVALICHES FOUNDATION and
ADORACION ROXAS vs.
NATIONAL LABOR RELATIONS COMMISSION and ESTHER REYES
April 15, 1998
Facts: Petitioner Adoracion Roxas is the president of St. Theresas School
of Novaliches Foundation. She hired private respondent, Esther Reyes, on
a contract basis, for the period from June 1, 1991 to March 31,
1992. However, private respondent commenced work on May 2,
1991. During the said period of employment, private respondent became
ill. She went on a leave of absence from February 17 to 21 and from
February 24 to 28, 1992, such leave of absence having been duly
approved by petitioner Roxas. On March 2, 1992, private respondent
reported for work, but she only stayed in her place of work from 6:48 to
9:38 a.m. Thereafter, she never returned. For what reason did private
respondent stop working. Petitioners theorize that the private respondent
abandoned her work. On the other hand, the latter maintains that she was
replaced. When she went back to work on February 20, 1992, she found
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out that her table, chair, and other belongings were moved to a corner of
their office, and she was replaced by Annie Roxas, daughter of petitioner
Adoracion Roxas. She tried to contact her employer but the latter could
not be found within the school premises.
On March 25, 1992, petitioners sent private respondent a letter by
registered mail, informing her that her contract, due to expire on March
31, 1992, would not be renewed. Prior thereto, or on March 3, 1992, to be
precise, the private respondent instituted NLRC NCR Case No. 00-0301481-92 against the herein petitioners for unfair labor practice based on
harassment, illegal dismissal, 13th month pay, allowances, removal of desk
and chair form place of work, and refusal to communicate, moral and
exemplary damages.
The Labor Arbiter rendered a decision declaring the complainants
dismissal from the service illegal. Petitioners appealed the aforesaid
decision to the NLRC whereby it reversed and set aside the Labor Arbiters
decision and rendered another decision declaring the separation of Esther
Reyes from service legal and valid.
Issue: Whether or not the employment contract is valid.
Held: Yes. Article 280 of the Labor Code does not proscribe or prohibit an
employment contract with a fixed period provided the same is entered
into by the parties, without any force, duress or improper pressure being
brought to bear upon the employee and absent any other circumstance
vitiating consent. It does not necessarily follow that where the duties of
the employee consist of activities usually necessary or desirable in the
usual business of the employer, the parties are forbidden from agreeing
on a period of time for the performance of such activities. There is thus
nothing essentially contradictory between a definite period of employment
and the nature of the employees duties. It goes without saying that
contracts of employment govern the relationship of the parties. In this
case, private respondents contract provided for a fixed term of nine (9)
months, from June 1, 1991 to March 31, 1992. Such stipulation, not being
contrary to law, morals, good customs, public order and public policy, is
valid, binding and must be respected.
Technical Rules Not Binding Labor Code Article 221
Bantolino, et al. vs. Coca Cola Bottlers Philippines
G.R. No. 153660
PRUDENCIO BANTOLINO, NESTOR ROMERO, NILO ESPINA, EDDIE
LADICA, ARMAN QUELING, ROLANDO NIETO, RICARDO
BARTOLOME, ELUVER GARCIA, EDUARDO GARCIA and NELSON

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MANALASTAS vs.
COCA-COLA BOTTLERS PHILS., INC.
June 10, 2003
Facts: On 15 February 1995 sixty-two (62) employees of respondent
Coca-Cola Bottlers, Inc., and its officers, Lipercon Services, Inc., Peoples
Specialist Services, Inc., and Interim Services, Inc., filed a complaint
against respondents for unfair labor practice through illegal dismissal,
violation of their security of tenure and the perpetuation of the Cabo
System. They thus prayed for reinstatement with full back wages, and the
declaration of their regular employment status. For failure to prosecute as
they failed to either attend the scheduled mandatory conferences or
submit their respective affidavits, the claims of fifty-two (52) complainantemployees were dismissed. Thereafter, Labor Arbiter Jose De Vera
conducted clarificatory hearings to elicit information from the ten (10)
remaining complainants (petitioners herein) relative to their alleged
employment with respondent firm.
On 29 May 1998 Labor Arbiter Jose De Vera rendered a decision ordering
respondent company to reinstate complainants to their former positions
with all the rights, privileges and benefits due regular employees, and to
pay their full back wages which, with the exception of Prudencio Bantolino
whose back wages must be computed upon proof of his dismissal as of 31
May 1998, already amounted to an aggregate of P1,810,244.00.
On appeal, the NLRC sustained the finding of the Labor Arbiter that there
was indeed an employer-employee relationship between the complainants
and respondent company when it affirmed in toto the latters decision.
Respondent Coca-Cola Bottlers appealed to the Court of Appeals which,
although affirming the finding of the NLRC that an employer-employee
relationship existed between the contending parties, nonetheless agreed
with respondent that the affidavits of some of the complainants, namely,
Prudencio Bantolino, Nestor Romero, Nilo Espina, Ricardo Bartolome,
Eluver Garcia, Eduardo Garcia and Nelson Manalastas, should not have
been given probative value for their failure to affirm the contents thereof
and to undergo cross-examination. As a consequence, the appellate court
dismissed their complaints for lack of sufficient evidence. In the same
Decision however, complainants Eddie Ladica, Arman Queling and Rolando
Nieto were declared regular employees since they were the only ones
subjected to cross-examination.
Issue: Whether or not the Court of Appeals erred in giving weight to
respondents claim of failure to cross-examine the petitioners?
Held: Yes. Administrative bodies like the NLRC are not bound by the
technical niceties of law and procedure and the rules obtaining in courts of
law. Indeed, the Revised Rules of Court and prevailing jurisprudence may
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be given only stringent application, i.e., by analogy or in a suppletory


character and effect. The submission by respondent, citing People v.
Sorrel, that an affidavit not testified to in a trial, is mere hearsay evidence
and has no real evidentiary value, cannot find relevance in the present
case considering that a criminal prosecution requires a quantum of
evidence different from that of an administrative proceeding. Under the
Rules of the Commission, the Labor Arbiter is given the discretion to
determine the necessity of a formal trial or hearing. Hence, trial-type
hearings are not even required as the cases may be decided based on
verified position papers, with supporting documents and their affidavits.
Pfizer Inc., et al. vs. Galan
G.R. No. 143389
PFIZER INC., MA. ANGELICA B. LLEANDER and SANDRA WEBB vs.
EDWIN V. GALAN
May 25, 2001
Facts: Respondent Edwin V. Galan was an employee of petitioner Pfizer,
Inc., a drug manufacturer. He was initially hired in August 1982 as a
professional sales representative, commonly known as a medical
representative. He was a recipient of several company awards, which
eventually resulted in his promotion as District Manager for Mindanao in
1996. He continued to reap more awards as he exceeded sales targets.
In September 1997, respondent was recalled to Manila to meet with his
superiors. In the meeting, the sales manager of Pfizer, Inc., issued a
memorandum requiring him to explain his alleged unauthorized use of,
and questionable expense claims made on, the company vehicle, as well
as the doubtful liquidation of his cash advance of US$5,000 for a recent
official trip to Indonesia. After the submission of his explanation, a formal
hearing on the charges was set. In the meantime, respondent was placed
under preventive suspension and was advised to seek legal assistance. On
October 1998, after the conclusion of the hearing, respondent received a
notice of termination signed by Pfizers co-petitioner Ma. Angelica B.
Lleander. The cause for his dismissal was loss of trust and confidence.
Respondent then filed a complaint for illegal dismissal against petitioners
before the National Labor Relations Commission (NLRC) Regional
Arbitration Branch No. 9 in Zamboanga City. He demanded his
reinstatement or separation pay; the payment of back wages, thirteenthmonth pay, and bonuses; the reimbursement of expenses and incentives;
and the payment of moral and exemplary damages and attorneys
fees. Sandra Webb and Ma. Angelica Lleander were impleaded as
respondents in their capacities as Country Manager and Employee
Resources Director, respectively, of Pfizer, Inc.
15 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Labor Arbiter Rhett Julius Plagata declared that respondent was illegally
dismissed and ordered Pfizer, Inc., to pay him back wages, separation pay,
thirteenth month pay, incentives and bonuses, reimbursement of
expenses
and
attorneys
fees.
Respondents
monetary
award
totalled P2,052,013.50. Petitioners appealed from the decision to the
NLRC in Cagayan de Oro City where it affirmed the decision of the Labor
Arbiter. Petitioners also filed with the Court of Appeals but was their
motion for reconsideration was denied. Hence, the petition.
Issue: Whether or not the Court of Appeals erred in dismissing the appeal
for being filed beyond the reglementary period.
Held: In Systems Factors Corporation v. NLRC, the Court declared that the
amendment introduced under A.M. No. 00-2-03-SC is procedural or
remedial in character, as it does not create new or remove vested rights,
but only operates in furtherance of the remedy or confirmation of rights
already existing. It is settled that procedural laws may be given
retroactive effect to actions pending and undetermined at the time of their
passage, there being no vested rights in the rules of procedure. Thus, the
said amendment may be given a retroactive effect.
Thus, by virtue of the retroactive effect of the amendment of Section 4,
Rule 65 of the 1997 Rules of Civil Procedure introduced by our Resolution
in A.M. No. 00-2-03-SC, which allows the filing of a petition
for certiorari within sixty days from notice of the denial of a motion for
reconsideration, the filing of petitioners petition before the Court of
Appeals was on time. Indeed, there is no dispute that their petition was
filed on the sixtieth day from notice of the denial of their motion for
reconsideration.
8. Rule Making Power Labor Code Article 5
Limitations
Sonza vs. ABS-CBN Broadcasting Corporation
G.R. No. 138051
JOSE Y. SONZA vs.
ABS-CBN BROADCASTING CORPORATION
June 10, 2004
Facts: In May 1994, respondent ABS-CBN Broadcasting Corporation (ABSCBN) signed an Agreement (Agreement) with the Mel and Jay
Management and Development Corporation (MJMDC). ABS-CBN was
16 | L a b o r S t a n d a r d s - C a s e D i g e s t s

represented by its corporate officers while MJMDC was represented by


SONZA, as President and General Manager, and Carmela Tiangco
(TIANGCO), as EVP and Treasurer. On 30 April 1996, SONZA filed a
complaint against ABS-CBN before the Department of Labor and
Employment, National Capital Region in Quezon City. SONZA complained
that ABS-CBN did not pay his salaries, separation pay, service incentive
leave pay, 13th month pay, signing bonus, travel allowance and amounts
due under the Employees Stock Option Plan (ESOP). ABS-CBN filed a
Motion to Dismiss on the ground that no employer-employee relationship
existed between the parties. SONZA filed an Opposition to the motion
on 19 July 1996.
Meanwhile, ABS-CBN continued to remit SONZAs monthly talent fees
through his account at PCIBank, Quezon Avenue Branch, Quezon City. In
July 1996, ABS-CBN opened a new account with the same bank where
ABS-CBN deposited SONZAs talent fees and other payments due him
under the Agreement. The Labor Arbiter rendered his decision dismissing
the petition for lack of jurisdiction. SONZA appealed to the NLRC. On 24
February 1998, the NLRC rendered a Decision affirming the Labor Arbiters
decision. SONZA filed a motion for reconsideration, which the NLRC denied
in its Resolution dated 3 July 1998.
On 6 October 1998, SONZA filed a special civil action for certiorari before
the Court of Appeals assailing the decision and resolution of the
NLRC. On 26 March 1999, the Court of Appeals rendered a Decision
dismissing the case. Hence, this petition.
Issues:
1. Whether or not an employer-employee relationship exists between
the parties.
2. Whether or not Sonza can be considered as a regular employee.
Held:
1. No. Case law has consistently held that the elements of an employeremployee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employers power to control the employee on the means and methods
by which the work is accomplished. The last element, the so-called control
test, is the most important element.
Selection and Engagement of Employee
Independent contractors often present themselves to possess unique
skills, expertise or talent to distinguish them from ordinary
employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not conclusive, of an
independent contractual relationship. If SONZA did not possess such
unique skills, talent and celebrity status, ABS-CBN would not have entered

17 | L a b o r S t a n d a r d s - C a s e D i g e s t s

into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.
Payment of Wages
ABS-CBN agreed to pay SONZA such huge talent fees precisely because of
SONZAs unique skills, talent and celebrity status not possessed by
ordinary employees. Obviously, SONZA acting alone possessed enough
bargaining power to demand and receive such huge talent fees for his
services. The power to bargain talent fees way above the salary scales of
ordinary employees is a circumstance indicative, but not conclusive, of an
independent contractual relationship.
Power of Dismissal
During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent
fees as long as AGENT and Jay Sonza shall faithfully and completely
perform each condition of this Agreement. Even if it suffered severe
business losses, ABS-CBN could not retrench SONZA because ABS-CBN
remained obligated to pay SONZAs talent fees during the life of the
Agreement. This circumstance indicates an independent contractual
relationship between SONZA and ABS-CBN.
Power of Control
The hiring of exclusive talents is a widespread and accepted practice in
the entertainment industry This practice is not designed to control the
means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally
spends substantial amounts of money, time and effort in building up its
talents as well as the programs they appear in and thus expects that said
talents remain exclusive with the station for a commensurate period of
time.Normally, a much higher fee is paid to talents who agree to work
exclusively for a particular radio or television station. In short, the huge
talent fees partially compensates for exclusivity, as in the present case.
2. Applying the control test to the present case, the Court held that SONZA is
not an employee but an independent contractor. The control test is
the most important test our courts apply in distinguishing an employee
from an independent contractor. This test is based on the extent of control
the hirer exercises over a worker. The greater the supervision and control
the hirer exercises, the more likely the worker is deemed an employee.
The converse holds true as well the less control the hirer exercises, the
more likely the worker is considered an independent contractor. In any
event, not all rules imposed by the hiring party on the hired party indicate
that the latter is an employee of the former. In this case, SONZA failed to
show that these rules controlled his performance. The Court finds that
these general rules are merely guidelines towards the achievement of
the mutually desired result, which are top-rating television and radio
programs that comply with standards of the industry.
9. Applicability Labor Code Article 6
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National Service Corp. vs. NLRC


G.R. No. L-69870
NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L.
PEREZ vs.
THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS
COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA
AND EUGENIA C. CREDO
November 29, 1988

G.R. No. 70295


EUGENIA C. CREDO vs.
NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES
CORPORATION AND ARTURO L. PEREZ
November 29, 1988
Facts: Eugenia C. Credo was an employee of the National Service
Corporation (NASECO), a domestic corporation which provides security
guards as well as messengerial, janitorial and other similar manpower
services to the Philippine National Bank (PNB) and its agencies. She was
first employed with NASECO as a lady guard on 18 July 1975. Through the
years, she was promoted to Clerk Typist, then Personnel Clerk until she
became Chief of Property and Records, on 10 March 1980. Sometime
before 7 November 1983, Credo was administratively charged by Sisinio S.
Lloren, Manager of Finance and Special Project and Evaluation Department
of NASECO, stemming from her non-compliance with Lloren's
memorandum, dated 11 October 1983, regarding certain entry procedures
in the company's Statement of Billings Adjustment. Said charges alleged
that Credo "did not comply with Lloren's instructions to place some
corrections/additional remarks in the Statement of Billings Adjustment;
and when [Credo] was called by Lloren to his office to explain further the
said instructions, [Credo] showed resentment and behaved in a
scandalous manner by shouting and uttering remarks of disrespect in the
presence of her co-employees."
On 7 November 1983, Credo was called to meet Arturo L. Perez, then
Acting General Manager of NASECO, to explain her side before Perez and
NASECO's Committee on Personnel Affairs in connection with the
administrative charges filed against her. After said meeting, on the same
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date, Credo was placed on "Forced Leave" status for 1 5 days. Before the
expiration of said 15-day leave, Credo filed a complaint for placing her on
forced leave, without due process. She also filed a supplemental
complaint for illegal dismissal in alleging absence of just or authorized
cause for her dismissal and lack of opportunity to be heard.
The labor arbiter rendered a decision, dismissing Credo's complaint, and
directing NASECO to pay Credo separation pay equivalent to one half
month's pay for every year of service. Both parties appealed which was
denied by the NLRC. Hence, the present recourse.
Issue: Whether
reinstatement.

or

not

NLRC

has

jurisdiction

to

order

Credo's

Held: Under the 1973 Constitution, it was provided that: The civil service
embraces every branch, agency, subdivision, and instrumentality of the
Government,
including
every
government-owned
or
controlled
corporation. On the other hand, the 1987 Constitution provides that: The
civil service embraces all branches, subdivisions, instrumentalities, and
agencies of the Government, including government-owned or controlled
corporations with original charter. Thus, the situations sought to be
avoided by the 1973 Constitution and expressed by the Court in the
National Housing appear relegated to relative insignificance by the 1987
Constitutional provision that the Civil Service embraces governmentowned or controlled corporations with original charter; and, therefore, by
clear implication, the Civil Service does not include government-owned or
controlled corporations which are organized as subsidiaries of
government-owned or controlled corporations under the general
corporation law.
On the premise that it is the 1987 Constitution that governs the instant
case because it is the Constitution in place at the time of decision thereof,
the NLRC has jurisdiction to accord relief to the parties. As an admitted
subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a
government-owned or controlled corporation without original charter.
Juco vs. NLRC and National Housing Corp.
G.R. No. 98107
BENJAMIN C. JUCO vs.
NATIONAL LABOR RELATIONS COMMISSION and NATIONAL
HOUSING CORPORATION
August 18, 1997
Facts: Juco was an employee of the NHA. He filed a complaint for illegal
dismissal w/ MOLE but his case was dismissed by the labor arbiter on the
20 | L a b o r S t a n d a r d s - C a s e D i g e s t s

ground that the NHA is a govt-owned corp. and jurisdiction over its
employees is vested in the CSC. On appeal, the NLRC reversed the
decision and remanded the case to the labor arbiter for further
proceedings. NHA in turn appealed to the SC.
Issue: Whether or not the employees of the National Housing
Corporation, a government-owned and/or controlled corporation without
original charter, covered by the Labor Code or by laws and regulations
governing the civil service.
Held: Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil
Service embraces every branch, agency, subdivision and instrumentality
of the Government, including every government owned and controlled
corporation. The inclusion of government-owned and/or controlled
corporation within the embrace of the civil service shows a deliberate
effort at the framers to plug an earlier loophole which allowed
government-owned and/or controlled corporation to avoid the full
consequences of the civil service system. All offices and firms of the
government are covered. This constitutional provision has been
implemented by statute PD 807 is unequivocal that personnel of
government-owned and/or controlled corporation belong to the civil
service and subject to civil service requirements. "Every" means each one
of a group, without exception. This case refers to a government-owned
and/or controlled corporation. It does not cover cases involving private
firms taken over by the government in foreclosure or similar proceedings.
For purposes of coverage in the Civil Service, employees of governmentowned and/or controlled corporation whether created by special law or
formed as subsidiaries are covered by the Civil Service Law, not the Labor
Code, and the fact that private corporations owned or controlled by the
government may be created by special charter does not mean that such
corps. not created by special law are not covered by the Civil Service.
The infirmity of the respondents position lies in its permitting the
circumvention or emasculation of Sec. 1, Art. XII-B [now Art IX, B, Sec. 2
(1)] of the Constitution. It would be possible for a regular ministry of
government to create a host of subsidiary corporation under the Corp.
Code funded by a willing legislature. A government-owned corp. could
create several subsidiary corps. These subsidiary corporations would
enjoy the best of two worlds. Their officials and employees would be
privileged individuals, free from the strict accountability required by the
Civil Service Dec. and the regulations of the COA. Their incomes would not
be subject to the competitive restraint in the open market nor to the
terms and conditions of civil service employment.
Conceivably, all government-owned and/or controlled corporations could
be created, no longer by special charters, but through incorporation under
the general law. The Constitutional amendment including such corporation

21 | L a b o r S t a n d a r d s - C a s e D i g e s t s

in the embrace of the civil service would cease to have application.


Certainly, such a situation cannot be allowed.
Austria vs. NLRC
G.R. No. 124382
PASTOR DIONISIO V. AUSTRIA vs.
HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth
Division), CEBU CITY, CENTRAL PHILIPPINE UNION MISSION
CORPORATION OF THE SEVENTH-DAY ADVENTISTS, ELDER HECTOR
V. GAYARES, PASTORS REUBEN MORALDE, OSCAR L. ALOLOR,
WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON BUHAT,
ISACHAR GARSULA, ELISEO DOBLE, PORFIRIO BALACY, DAVID
RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO
IBESATE, MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR.
ELEUTERIO LOBITANA
August 16, 1999
Facts: Pastor Dionisio Austria has been serving as a pastor for Seventh
Day Adventist, a religious corporation under Philippine Law, for 28 years.
His services was later terminated and was asked by the religious
corporations treasurer to take responsibility for the 15,078.10 worth of
church tithes offerings which was collected by his wife, Thelma Austria.
Austria claimed that he should not be made accountable for the loss since
the authorization for his wife to collect the tithes came from Pastor Gideon
Buhat and Mr. Eufronio Ibesate since the petitioner was indisposed during
that time.
The fact-finding committee created to investigate the anomaly found that
Austria misappropriated denominational funds, made a willful breach of
trust, performed serious misconduct, did gross and habitual neglect of
duties, and committed an offense against the person of employers duly
authorized representative as grounds for termination of services. Austria,
then, filed a complaint before the Labor Arbiter for illegal dismissal,
claiming for backwages, damages and other emoluments. The Labor
Arbiter favoured Austria. The Seventh Day Adventist, however, appealed
to the National Labor Relations Commission which vacated the decision
and entered the decision of dismissal of the case for want of merit.
Austria filed a motion for reconsideration where in the National Labor
Relations Commission reinstated the Labor Arbiters Decision. The
Seventh Day Adventist followed with their own motion of reconsideration,
claiming that the Labor Arbiter had no jurisdiction and there is a
constitutional provision which separated the church and state since the
22 | L a b o r S t a n d a r d s - C a s e D i g e s t s

case is an ecclesiastical affair. The National Labor Relations Commission


reversed its decision again, pushing Austria to file this petition before the
Supreme Court.
Issue: Whether or not Pastor Dionisio Austrias termination of services is
an ecclesiastical affair and such involves the separation of church and
state.
Held: No. The grounds invoked for petitioners dismissal, namely:
misappropriation of denominational funds, willful breach of trust, serious
misconduct, gross and habitual neglect of duties and commission of an
offense against the person of his employers duly authorized
representative, are all based on Article 282 of the Labor Code which
enumerates the just causes for termination of employment. By this alone,
it is palpable that the reason for petitioners dismissal from the service is
not religious in nature. Coupled with this is the act of the SDA in furnishing
NLRC with a copy of petitioners letter of termination. As aptly stated by
the OSG, this again is an eloquent admission by private respondents that
NLRC has jurisdiction over the case. Aside from these, SDA admitted in a
certification issued by its officer, Mr. Ibesate, that petitioner has been its
employee for twenty-eight (28) years. SDA even registered petitioner with
the Social Security System (SSS) as its employee. As a matter of fact, the
workers records of petitioner have been submitted by private
respondents as part of their exhibits. From all of these it is clear that when
the SDA terminated the services of petitioner, it was merely exercising its
management prerogative to fire an employee which it believes to be unfit
for the job. As such, the State, through the Labor Arbiter and the NLRC,
has the right to take cognizance of the case and to determine whether the
SDA, as employer, rightfully exercised its management prerogative to
dismiss an employee. This is in consonance with the mandate of the
Constitution to afford full protection to labor.
Under the Labor Code, the provision which governs the dismissal of
employees, is comprehensive enough to include religious corporations,
such as the SDA, in its coverage. Article 278 of the Labor Code on postemployment states that the provisions of this Title shall apply to all
establishments or undertakings, whether for profit or not. Obviously, the
cited article does not make any exception in favor of a religious
corporation. This is made more evident by the fact that the Rules
Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on
the Termination of Employment and Retirement, categorically includes
religious institutions in the coverage of the law.

23 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Chapter II Concept of Employer-Employee Relationship


10. Statutory Definitions Labor Code Articles 97 (a,b,c), 167
(f,g), 212 (e,f)
Elements of Employer-Employee Relationship
Ruga vs. NLRC
G.R. No. L-72654-61
ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE
BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES
and ELEUTERIO BARBIN vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN
FISHING ENTERPRISES and/or ARSENIO DE GUZMAN
January 22, 1990
Facts: De Guzman Fishing Enterprises is a company which engaged in
fishing transactions along the port and offices at Camaligan, Camarines
Sur. Alipio R. Ruga, along with other petitioners were fishermen-crew and
24 | L a b o r S t a n d a r d s - C a s e D i g e s t s

members of the vessel 7/B Sandyman II, owned and operated by De


Guzman Fishing Enterprises. Ruga and his colleagues were paid on
percentage commission basis in cash by the companys cashier in which
an agreed rate wherein petitioners will receive an amount based on the
success of the fishing trip.
One day, Ruga and his colleagues were surprised when their employer,
Jorge De Guzman, instructed them to participate in an investigation after
there were reports that Ruga and his colleagues sold part of their catch to
someone else. De Guzmans claims were denied by the petitioners. The
petitioners argue that De Guzmans act was due to their forming of a labor
union and their membership in the Defenders of Industrial Agricultural
Labor Organizations and General Workers Union.
No charges were filed against Ruga and his colleagues as the investigation
resulted with no conclusive findings. Despite this, the petitioners were
disallowed by their employer to resume work. This pushed the petitioners
to file a complaint before the Ministry of Labor and Employment on the
grounds of illegal dismissal and non-payment of their 13th month pay and
emergency cost of living and service incentive pay. The Labor Arbiter
dismissed the complaints, stating that there exists no employer-employee
relationship. The National Labor Relations Commission affirmed the Labor
Arbiters decision, causing the petitioners to file a petition before the
Supreme Court.
Issue: Whether or not Ruga and his colleagues fall under the category of
employer-employee relationship.
Ruling: Yes. In determining the existence of an employer-employee
relationship, the elements that are generally considered are the following
(a) the selection and engagement of the employee; (b) the payment of
wages; (c) the power of dismissal; and (d) the employers power to control
the employee with respect to the means and methods by which the work
is to be accomplished. The employment relation arises from contract of
hire, express or implied. In the absence of hiring, no actual employeremployee relation could exist. The right-of-control test where the person
for whom the services are performed reserves a right to control not only
the end to be achieved but also the means to be used in reaching such
end.
Perpetual Help Credit vs. Faburada, et al.
G.R. No. 121948
PERPETUAL HELP CREDIT COOPERATIVE, INC vs.
BENEDICTO FABURADA, SISINITA VILLAR, IMELDA TAMAYO,
HAROLD CATIPAY, and the NATIONAL LABOR RELATIONS
COMMISSION, Fourth Division, Cebu City
October 8, 2001

25 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda


Tamayo and Harold Catipay, private respondents, filed a complaint against
the Perpetual Help Credit Cooperative, Inc. (PHCCI), petitioner, with the
Arbitration Branch, Department of Labor and Employment (DOLE),
Dumaguete City, for illegal dismissal, premium pay on holidays and rest
days, separation pay, wage differential, moral damages, and attorney's
fees.
Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the
ground that there is no employer-employee relationship between them as
private respondents are all members and co-owners of the cooperative.
Furthermore, private respondents have not exhausted the remedies
provided in the cooperative by-laws.
On September 3, 1990, petitioner filed a supplemental motion to dismiss
alleging that Article 121 of R.A. No. 6939, otherwise known as the
Cooperative Development Authority Law which took effect on March 26,
1990, requires conciliation or mediation within the cooperative before a
resort to judicial proceeding. On the same date, the Labor Arbiter denied
petitioner's motion to dismiss, holding that the case is impressed with
employer-employee relationship and that the law on cooperatives is
subservient to the Labor Code. On November 23, 1993, the Labor Arbiter
rendered a decision, the dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered
declaring complainants illegally dismissed, thus respondent is
directed to pay Complainants backwages computed from the time
they were illegally dismissed up to the actual reinstatement but
subject to the three year backwages rule, separation pay for one
month for every year of service since reinstatement is evidently not
feasible anymore, to pay complainants 13th month pay, wage
differentials and Ten Percent (10%) attorney's fees from the
aggregate monetary award. However, complainant Benedicto
Faburada shall only be awarded what are due him in proportion to
the nine and a half months that he had served the respondent, he
being a part-time employee. All other claims are hereby dismissed
for lack of merit.
The computation of the foregoing awards is hereto attached and
forms an integral part of this decision."
On appeal, the NLRC affirmed the Labor Arbiter's decision. Hence, this
petition by the PHCCI.
Issue: Whether or not there is employer-employee relationship between
PHCCI and respondents.
Held: Yes, there is. In determining the existence of an employer-employee
relationship, the following elements are considered: (1 ) the selection and
engagement of the worker or the power to hire; (2) the power to dismiss;
26 | L a b o r S t a n d a r d s - C a s e D i g e s t s

(3) the payment of wages by whatever means; and (4) the power to
control the worker's conduct, with the latter assuming primacy in the
overall consideration. No particular form of proof is required to prove the
existence of an employer-employee relationship. Any competent and
relevant evidence may show the relationship.2
The above elements are present here. Petitioner PHCCI, through Mr.
Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it.
They worked regularly on regular working hours, were assigned specific
duties, were paid regular wages and made to accomplish daily time
records just like any other regular employee. They worked under the
supervision of the cooperative manager. But unfortunately, they were
dismissed.
Chavez vs. NLRC
G.R. No. 146530
PEDRO CHAVEZ vs.
NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING,
INC. and ALVIN LEE, Plant Manager
January 17, 2005
Facts: The respondent company engaged the services of the petitioner,
Pedro Chavez, as truck driver on October 25, 1984. Sometime in 1992, the
petitioner expressed to respondent Alvin Lee, respondent companys plant
manager, his (the petitioners) desire to avail himself of the benefits that
the regular employees were receiving such as overtime pay, nightshift
differential pay, and 13th month pay, among others. Although he
promised to extend these benefits to the petitioner, respondent Lee failed
to actually do so.
On February 20, 1995, the petitioner filed a complaint for regularization
with the Regional Arbitration Branch No. III of the NLRC in San Fernando,
Pampanga. Before the case could be heard, respondent company
terminated the services of the petitioner. Consequently, on May 25, 1995,
the petitioner filed an amended complaint against the respondents for
illegal dismissal, unfair labor practice and non-payment of overtime pay,
nightshift differential pay, 13th month pay, among others. The case was
docketed as NLRC Case No. RAB-III-02-6181-95.
The respondents, for their part, denied the existence of an employeremployee relationship between the respondent company and the
petitioner. They averred that the petitioner was an independent contractor
as evidenced by the contract of service which he and the respondent
company entered into.
After the parties had filed their respective pleadings, the Labor Arbiter
rendered the Decision dated February 3, 1997, finding the respondents
guilty of illegal dismissal. The Labor Arbiter declared that the petitioner
was a regular employee of the respondent company as he was performing
27 | L a b o r S t a n d a r d s - C a s e D i g e s t s

a service that was necessary and desirable to the latters business.


Moreover, it was noted that the petitioner had discharged his duties as
truck driver for the respondent company for a continuous and
uninterrupted period of more than ten years.
Issue: Whether or not employer-employee relationship exists between
petitioner and respondent.
Held: We rule in the affirmative. The elements to determine the existence
of an employment relationship are: (1) the selection and engagement of
the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the employers power to control the employees conduct. The most
important element is the employers control of the employees conduct,
not only as to the result of the work to be done, but also as to the means
and methods to accomplish it. All the four elements are present in this
case.
First. Undeniably, it was the respondents who engaged the services of the
petitioner without the intervention of a third party.
Second. Wages are defined as "remuneration or earnings, however
designated, capable of being expressed in terms of money, whether fixed
or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work
done or to be done, or for service rendered or to be rendered." That the
petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the
existence or absence of employer-employee relationship. One may be
paid on the basis of results or time expended on the work, and may or
may not acquire an employment status, depending on whether the
elements of an employer-employee relationship are present or not. In this
case, it cannot be gainsaid that the petitioner received compensation from
the respondent company for the services that he rendered to the latter.
Moreover, under the Rules Implementing the Labor Code, every employer
is required to pay his employees by means of payroll. The payroll should
show, among other things, the employees rate of pay, deductions made,
and the amount actually paid to the employee. Interestingly, the
respondents did not present the payroll to support their claim that the
petitioner was not their employee, raising speculations whether this
omission proves that its presentation would be adverse to their case.
Third. The respondents power to dismiss the petitioner was inherent in
the fact that they engaged the services of the petitioner as truck driver.
They exercised this power by terminating the petitioners services albeit in
the guise of "severance of contractual relation" due allegedly to the
latters breach of his contractual obligation.

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Fourth. As earlier opined, of the four elements of the employer-employee


relationship, the "control test" is the most important. Compared to an
employee, an independent contractor is one who carries on a distinct and
independent business and undertakes to perform the job, work, or service
on its own account and under its own responsibility according to its own
manner and method, free from the control and direction of the principal in
all matters connected with the performance of the work except as to the
results thereof. Hence, while an independent contractor enjoys
independence and freedom from the control and supervision of his
principal, an employee is subject to the employers power to control the
means and methods by which the employees work is to be performed and
accomplished.
Although the respondents denied that they exercised control over the
manner and methods by which the petitioner accomplished his work, a
careful review of the records shows that the latter performed his work as
truck driver under the respondents supervision and control. Their right of
control was manifested by the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent
company;
2. There was an express instruction from the respondents that the
truck shall be used exclusively to deliver respondent companys
goods;
3. Respondents directed the petitioner, after completion of each
delivery, to park the truck in either of two specific places only, to
wit: at its office in Metro Manila at 2320 Osmea Street, Makati City
or at BEPZ, Mariveles, Bataan; and
4. Respondents determined how, where and when the petitioner
would perform his task by issuing to him gate passes and routing
slips.
a. The routing slips indicated on the column REMARKS, the
chronological order and priority of delivery such as 1st drop,
2nd drop, 3rd drop, etc. This meant that the petitioner had to
deliver the same according to the order of priority indicated
therein.
b. The routing slips, likewise, showed whether the goods were
to be delivered urgently or not by the word RUSH printed
thereon.
c. The routing slips also indicated the exact time as to when
the goods were to be delivered to the customers as, for
example, the words "tomorrow morning" was written on slip
no. 2776.
These circumstances, to the Courts mind, prove that the respondents
exercised control over the means and methods by which the petitioner
accomplished his work as truck driver of the respondent company.

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Francisco vs. NLRC, 500 SCRA 690 (2006)


G.R. No. 170087
ANGELINA FRANCISCO, vs.
NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION,
SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE
BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA
August 31, 2006
Facts: In 1995, petitioner was hired by Kasei Corporation during its
incorporation stage. She was designated as Accountant and Corporate
Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati
to secure business permits, construction permits and other licenses for the
initial operation of the company. In 1996, petitioner was designated
Acting Manager.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager.
On October 15, 2001, petitioner asked for her salary from Acedo and the
rest of the officers but she was informed that she is no longer connected
with the company. Since she was no longer paid her salary, petitioner did
not report for work and filed an action for constructive dismissal before
the labor arbiter.
The Labor Arbiter found that petitioner was illegally dismissed. On April
15, 2003, the NLRC affirmed with modification the Decision of the Labor
Arbiter. On appeal, the Court of Appeals reversed the NLRC decision.
Issue: Whether or not employer-employee relationship exists between
petitioner and respondent.
Held: Yes, there is. In certain cases the control test is not sufficient to give
a com
plete picture of the relationship between the parties, owing to the
complexity of such a relationship where several positions have been held
by the worker. The better approach would therefore be to adopt a twotiered test involving: (1) the putative employers power to control the
employee with respect to the means and methods by which the work is to
be accomplished; and (2) the underlying economic realities of the activity
or relationship.
Thus, the determination of the relationship between employer and
employee depends upon the circumstances of the whole economic
activity, 22 such as: (1) the extent to which the services performed are an
integral part of the employers business; (2) the extent of the workers
investment in equipment and facilities; (3) the nature and degree of
control exercised by the employer; (4) the workers opportunity for profit
and loss; (5) the amount of initiative, skill, judgment or foresight required
for the success of the claimed independent enterprise; (6) the
30 | L a b o r S t a n d a r d s - C a s e D i g e s t s

permanency and duration of the relationship between the worker and the
employer; and (7) the degree of dependency of the worker upon the
employer for his continued employment in that line of business. 23
The proper standard of economic dependence is whether the worker is
dependent on the alleged employer for his continued employment in that
line of business. 24 In the United States, the touchstone of economic
reality in analyzing possible employment relationships for purposes of the
Federal Labor Standards Act is dependency. 25By analogy, the benchmark
of economic reality in analyzing possible employment relationships for
purposes of the Labor Code ought to be the economic dependence of the
worker on his employer.
Under the broader economic reality test, the petitioner can likewise be
said to be an employee of respondent corporation because she had
served the company for six years before her dismissal, receiving check
vouchers indicating her salaries/wages, benefits, 13th month pay,
bonuses and allowances, as well as deductions and Social Security
contributions from August 1, 1999 to December 18, 2000. 26 When
petitioner was designated General Manager, respondent corporation made
a report to the SSS signed by Irene Ballesteros. Petitioners membership in
the SSS as manifested by a copy of the SSS specimen signature card
which was signed by the President of Kasei Corporation and the inclusion
of her name in the on-line inquiry system of the SSS evinces the existence
of an employer-employee relationship between petitioner and respondent
corporation. It is therefore apparent that petitioner is economically
dependent on respondent corporation for her continued employment in
the latters line of business.
Television and Production Exponents, Inc. vs. Servaa
G.R. No. 167648
TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO
P. TUVIERA vs.
ROBERTO C. SERVAA
January 28, 2008
Facts: He alleged that he was first connected with Agro-Commercial
Security Agency but was later on absorbed by TAPE as a regular company
guard. On 2 March 2000, respondent received a memorandum informing
him of his impending dismissal on account of TAPEs decision to contract
the services of a professional security agency. At the time of his
termination, respondent was receiving a monthly salary of P6,000.00.
In a motion to dismiss which was treated as its position paper, TAPE
countered that the labor arbiter had no jurisdiction over the case in the
absence of an employer-employee relationship between the parties. TAPE
made the following assertions: (1) that respondent was initially employed
as a security guard for Radio Philippines Network (RPN-9); (2) that he was
31 | L a b o r S t a n d a r d s - C a s e D i g e s t s

tasked to assist TAPE during its live productions, specifically, to control the
crowd; (3) that when RPN-9 severed its relationship with the security
agency, TAPE engaged respondents services, as part of the support group
and thus a talent, to provide security service to production staff, stars and
guests of "Eat Bulaga!" as well as to control the audience during the oneand-a-half hour noontime program; (4) that it was agreed that
complainant would render his services until such time that respondent
company shall have engaged the services of a professional security
agency; (5) that in 1995, when his contract with RPN-9 expired,
respondent was retained as a talent and a member of the support group,
until such time that TAPE shall have engaged the services of a
professional security agency; (6) that respondent was not prevented from
seeking other employment, whether or not related to security services,
before or after attending to his "Eat Bulaga!" functions; (7) that sometime
in late 1999, TAPE started negotiations for the engagement of a
professional security agency, the Sun Shield Security Agency; and (8) that
on 2 March 2000, TAPE issued memoranda to all talents, whose functions
would be rendered redundant by the engagement of the security agency,
informing them of the managements decision to terminate their services.
On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared
respondent to be a regular employee of TAPE. On appeal, the National
Labor Relations Commission (NLRC) in a Decision8 dated 22 April 2002
reversed the Labor Arbiter and considered respondent a mere program
employee. Reversing the decision of the NLRC, the Court of Appeals found
respondent to be a regular employee.
Issue: Whether or not employer-employee relationship exists between
petitioner an respondent.
Held: Yes, there is. Jurisprudence is abound with cases that recite the
factors to be considered in determining the existence of employeremployee relationship, namely: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d)
the employer's power to control the employee with respect to the means
and method by which the work is to be accomplished. The most important
factor involves the control test. Under the control test, there is an
employer-employee relationship when the person for whom the services
are performed reserves the right to control not only the end achieved but
also the manner and means used to achieve that end.
In concluding that respondent was an employee of TAPE, the Court of
Appeals applied the "four-fold test" in this wise:
First. The selection and hiring of petitioner was done by private
respondents. In fact, private respondents themselves admitted
having engaged the services of petitioner only in 1995 after TAPE
severed its relations with RPN Channel 9.
By informing petitioner through the Memorandum dated 2 March
2000, that his services will be terminated as soon as the services of
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the newly hired security agency begins, private respondents in


effect acknowledged petitioner to be their employee. For the right to
hire and fire is another important element of the employer-employee
relationship.
Second. Payment of wages is one of the four factors to be
considered in determining the existence of employer-employee
relation. Payment as admitted by private respondents was given by
them on a monthly basis at a rate of P5,444.44.
Third. Of the four elements of the employer-employee relationship,
the "control test" is the most important.
The bundy cards representing the time petitioner had reported for
work are evident proofs of private respondents control over
petitioner more particularly with the time he is required to report for
work during the noontime program of "Eat Bulaga!" If it were not so,
petitioner would be free to report for work anytime even not during
the noontime program of "Eat Bulaga!" from 11:30 a.m. to 1:00 p.m.
and still gets his compensation for being a "talent." Precisely, he is
being paid for being the security of "Eat Bulaga!" during the abovementioned period. The daily time cards of petitioner are not just for
mere record purposes as claimed by private respondents. It is a form
of control by the management of private respondent TAPE.
TAPE relies on Policy Instruction No. 40, issued by the Department of
Labor, in classifying respondent as a program employee and equating him
to be an independent contractor. Policy Instruction No. 40 defines program
employees as those whose skills, talents or services are engaged by the
station for a particular or specific program or undertaking and who are not
required to observe normal working hours such that on some days they
work for less than eight (8) hours and on other days beyond the normal
work hours observed by station employees and are allowed to enter into
employment contracts with other persons, stations, advertising agencies
or sponsoring companies. The engagement of program employees,
including those hired by advertising or sponsoring companies, shall be
under a written contract specifying, among other things, the nature of the
work to be performed, rates of pay and the programs in which they will
work. The contract shall be duly registered by the station with the
Broadcast Media Council within three (3) days from its consummation.
TAPE failed to adduce any evidence to prove that it complied with the
requirements laid down in the policy instruction. It did not even present its
contract with respondent. Neither did it comply with the contractregistration requirement.
11. Independent Contractor and Labor-Only Contractor Labor
Code Articles 106, 107, 109; D.O. No. 18-02, S 2002
Requirements for Independent Contractor
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San Miguel Corp. vs. NLRC


G.R. No. 147566
SAN MIGUEL CORPORATION vs.
NATIONAL LABOR RELATIONS COMMISSION and RAFAEL MALIKSI
December 6, 2006
Facts: On 16 October 1990, Rafael M. Maliksi filed a complaint against the
San Miguel Corporation-Magnolia Division, herein referred to as SMC and
Philippine Software Services and Education Center herein referred to as
PHILSSEC to compel the said respondents to recognize him as a regular
employee. He amended the complaint on 12 November 1990 to include
the charge of illegal dismissal because his services were terminated on 31
October 1990.
The complainants employment record indicates that he rendered service
with Lipercon Services from 1 April 1981 to February 1982 as budget head
assigned to SMC-Beer Division, then from July 1983 to April 1985 with
Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division,
then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk
assigned to SMC-Magnolia Finance, and from October 1989 to 31 October
1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk.
The complainant considered himself as an employee of SMC-Magnolia.
Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors
and any one of which had never been his employer. His dismissal,
according to him, was in retaliation for his filing of the complaint for
regularization in service. His dismissal was illegal there being no just
cause for the action. He was not accorded due process neither was his
dismissal reported to the Department of Labor and Employment.
The Labor Arbiter declared Maliksi a regular employee of PHILSSEC and
absolved SMC from liability. In turn, in a decision dated January 26, 1998,
the NLRC reversed that of the Labor Arbiter by declaring Maliksi a regular
employee of the petitioner and ordering the latter to reinstate him without
loss of seniority rights and with full benefits. The CA concluded that on
account of his past employment contracts with SMC under Lipercon and
Skillpower, Maliksi was already a regular employee of SMC when he
entered into SMCs computerization project as part of the PHILSSEC
project complement.
Issue: Whether or not Maliksi is an independent contractor of petitioner.
Held: We DENY. The Court takes judicial notice of the fact that Lipercon
and Skillpower were declared to be labor-only contractors, providing as
they do manpower services to the public for a fee. The existence of an
employer-employee relationship is factual and we give due deference to
the factual findings of both the NLRC and the CA that an employeremployee relationship existed between SMC (or its subsidiaries) and
34 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Maliksi. Indeed, having served SMC for an aggregate period of more than
three (3) years through employment contracts with these two labor
contractors, Maliksi should be considered as SMCs regular employee. The
hard fact is that he was hired and re-hired by SMC to perform
administrative and clerical work that was necessary to SMCs business on
a daily basis. In Bustamante v. National Labor Relations Commission, we
ruled:
In the case at bar, petitioners were employed at various periods
from 1985 to 1989 for the same kind of work they were hired
to perform in September 1989. Both the labor arbiter and
the respondent NLRC agree that petitioners were employees
engaged to perform activities necessary in the usual
business of the employer. As laborers, harvesters or sprayers in
an agricultural establishment which produces high grade bananas,
petitioners tasks are indispensable to the year-round operations of
respondent company. This belies the theory of respondent company
that the employment of petitioners was terminated due to the
expiration of their probationary period in June 1990. If at all
significant, the contract for probationary employment was utilized
by respondent company as a chicanery to deny petitioners their
status as regular employees and to evade paying them the benefits
attached to such status. Some of the petitioners were hired as far
back as 1985, although the hiring was not continuous.They were
hired and re-hired in a span of from two to four years to do
the same type of work which conclusively shows the
necessity of petitioners service to the respondent
companys business. Petitioners have, therefore, become regular
employees after performing activities which are necessary in the
usual business of their employer. But, even assuming that the
activities of petitioners in respondent companys plantation were not
necessary or desirable to its business, we affirm the public
respondents finding that all of the complainants (petitioners) have
rendered non-continuous or broken service for more than one (1)
year and are consequently considered regular employees.
We do not sustain public respondents theory that private
respondent should not be made to compensate petitioners for
backwages because its termination of their employment was not
made in bad faith. The act of hiring and re-hiring the
petitioners over a period of time without considering them
as regular employees evidences bad faith on the part of
private respondent. The public respondent made a finding to this
effect when it stated that the subsequent re-hiring of petitioners on
a probationary status "clearly appears to be a convenient
subterfuge on the part of management to prevent complainants
(petitioners) from becoming regular employees." (Emphasis
supplied)

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As to the petitioners second assigned error, we hold that there is no need


to resolve the present case under the principle that all doubts should be
resolved in favor of the workingman. The perceived doubt does not obtain
in the first place.
We understand Maliksis desperation in making his point clear to SMC,
which unduly refuses to acknowledge his status as a regular employee.
Instead, he was juggled from one employment contract to another in a
continuous bid to circumvent labor laws. The act of hiring and re-hiring
workers over a period of time without considering them as regular
employees evidences bad faith on the part of the employer. Where, from
the circumstances, it is apparent that periods have been imposed to
preclude the acquisition of tenurial security by the employee, the policy,
agreement or practice should be struck down as contrary to public policy,
morals, good customs or public order. In point of law, any person who
willfully causes loss or injury to another in a manner that is contrary to
morals, good customs or public policy shall be liable for the damage.
LIKHA-PMPB vs. Burlingame Corp.
G.R. No. 162833
LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSAPINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME vs.
BURLINGAME CORPORATION
June 15, 2007
Facts: A petition for certification was filed by Lakas sa Industriya ng
Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng
Burlingame before the Department of Labor and Employment. The filing of
certification meant Lakas sa Industriya ng Kapatirang Haligi ng AlyansaPinagbuklod ng Manggagawang Promo ng Burlingames aim to represent
all rank and file employees of the respondent, which counts to 70 all in all.
The petitioner seeks to be recognized by the employer, Burlingame
Corporation, as a collective bargaining agent or the alternative, that a
certification/consent election be held among regular rank and file
employees. The respondent filed a motion for the petitions dismissal,
arguing that the members of LIKHA-PMPB form no employer-employee
relationship with them. The company also argues that the members of
LIKHA-PMPB are actually employees of F. Garil Manpower Services, a duly
licensed local employment agency.
Renato Panungo, the med-ariter, dismissed the petition, stating that there
lacks an employee-employer relationship. The decision forced LIKHA-PMPB
to file a appeal before the Secretary of Labor and Employment. The
Secretary decided in favour of the petitioner. The company appealed to
36 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the Court of Appeals which reversed the Secretarys decision. The


petitioner filed a motion of reconsideration before the same court, but was
denied. Thus, this petition before the Supreme Court.
Issue: Whether or not the members of Lakas sa Industriya ng Kapatirang
Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame
form an employee-employer relationship with Burlingame Corporation
because theyre employees of F. Garil Manpower Services, an independent
contractor.
Held: Yes. Employee-employer relationship does exist. Job contracting is
permissible only if the following conditions are met: 1) the contractor
carries on an independent business and undertakes the contract work on
his own account under his own responsibility according to his own manner
and method, free from the control and direction of his employer or
principal in all matters connected with the performance of the work except
as to the results thereof; and 2) the contractor has substantial capital or
investment in the form of tools, equipment, machineries, work premises,
and other materials which are necessary in the conduct of the business.
Under this circumstance, there is no doubt that F. Garil was engaged in
labor-only contracting, and as such, is considered merely an agent of
Burlingame. In labor-only contracting, the law creates an employeremployee relationship to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and
the latter is responsible to the employees of the labor-only contractor as if
such employees had been directly employed by the principal employer.
Since F. Garil is a labor-only contractor, the workers it supplied should be
considered as employees of Burlingame in the eyes of the law.
Aliviado, et al. vs. Procter & Gamble Philippines and PROMM-GEM, Inc.
G.R. No. 160506
JOEB M. ALIVIADO, ARTHUR CORPUZ, ERIC ALIVIADO, et al. vs.
PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC.
June 6, 2011

Facts: Aliviado and co-petitioners worked as merchandisers for Procter &


Gamble. They had employment contracts with either Promm-Gem or SAPS
for more or less five months at a time. Their work entails being assigned
at different outlets, supermarkets, and stores where they handled all the
products of Procter & Gamble. They receive their wages from Promm-Gem
or SAPS. SAPS and Promm-Gem imposed disciplinary measures on
merchandisers who commit habitual absenteeism, dishonesty, or
changing day-off without prior notice. Procter & Gamble, meanwhile,
manufactures and produces different consumer and health products,
37 | L a b o r S t a n d a r d s - C a s e D i g e s t s

which it sells on a wholesale basis to various supermarkets and


distributors. Procter and Gamble entered into a contract with Promm-Gem
and SAPS for the promotion and merchandising of its products.
The petitioners filed a complaint against Procter & Gamble for
regularization, service incentive leave pay and other benefits with
damages. It was later amended after their dismissal from work. The Labor
Arbiter, however, dismissed the complaint for lack of merit and ruled that
no employer-employee relationship between petitioners and Procter &
Gamble. The four-fold test, when applied, seems to not apply at this
instance, the Labor Arbiter ruled. It was also found that Promm-Gem and
SAPS were legitimate independent job contractors. An appeal was filed
before the National Labor Relations Commission which ruled in favour of
Procter & Gamble. A motion for reconsideration was subsequently filed,
but was denied. When the petitioners filed a petition before the Court of
Appeals, it was denied. Thus, this petition before the Supreme Court.
Issue: Whether or not Promm-Gem and SAPS are labor-only contractors.
Held: No. Promm-Gem cannot be considered as a labor-only contractor. It
is a legitimate independent contractor. The law and its implementing rules
allow contracting arrangements for the performance of specific jobs,
works or services. Indeed, it is management prerogative to farm out any
of its activities, regardless of whether such activity is peripheral or core in
nature. However, in order for such outsourcing to be valid, it must be
made to an independent contractor because the current labor rules
expressly prohibit labor-only contracting. To emphasize, there is labor-only
contracting when the contractor or sub-contractor merely recruits,
supplies or places workers to perform a job, work or service for a principal
and any of the following elements are present: i) The contractor or
subcontractor does not have substantial capital or investment which
relates to the job, work or service to be performed and the employees
recruited, supplied or placed by such contractor or subcontractor are
performing activities which are directly related to the main business of the
principal; or ii) The contractor does not exercise the right to control over
the performance of the work of the contractual employee.
Desirable Unnecessary
Coca Cola Bottlers Philippines, Inc. vs. NLRC
G.R. No. 120466
COCA COLA BOTTLERS PHILS., INC. vs.
NATIONAL LABOR RELATIONS COMMISSION and RAMON B.
CANONICATO
May 17, 1999
38 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: Coca-Cola entered into a contract of janitorial services with


Bacolod Janitorial Services (BJS) stipulating that Coca-Cola desires to
engage the services of BJS, as an independent contractor, to perform and
provide for the maintenance, sanitation, and cleaning services. Every year
thereafter a service contract was entered into between the parties under
similar terms and conditions. Canonicato was hired by Coca Cola as a
casual employee and assigned him to the bottling crew as a substitute for
absent employees. A year after, Coca-Cola terminated Canonicatos casual
employment. Later that year, the latter was re-hired, but this time as a
painter in contractual projects which lasted from 15-30 days. Thereafter,
Canonicato was hired by BJS as a janitor and assigned him to Coca-Cola
considering his familiarity with its premises but his services were again
terminated a year later.
Based on the information that Coca-Cola employed previous BJS
employees who filed a complaint against the company for regularization
pursuant to a compromise agreement, Canonicato filed the same before
the Labor Arbiter. Without notifying BJS, Canonicato no longer reported for
work and sent his sister, Rowena, to claim his salary on his behalf. BJS
released his salary but advised Rowena to tell him to report for work.
Canonicato met with the proprietress of BJS which offered him other
assignments in other firms but Canonicato refused. He amended his
complaint citing in addition as grounds for his complaint illegal dismissal
and underpayment of wages. BJS sent him a letter advising him to report
for work within 3 days, otherwise, itll be considered as if he abandoned
his job.
The Labor Arbiter ruled that there was no employer-employee relationship
between Coca-Cola and Canonicato because BJS was Canonicatos real
employer; BJS was a legitimate job contractor, hence, any liability of Coca
Cola as to Canonicatos salary or wage differentials was solidary with BJS;
Coca-Cola and BJS must jointly and severally pay Canonicato his wage
differentials. Other claims were dismissed on the ground of lack of
employer-employee relationship. The NLRC rejected on appeal the
decision of the Labor Arbiter on the ground that the janitorial services of
Canonicato were found to be necessary or desirable in the usual business
or trade of Coca-Cola.
Issue: Whether or not janitorial services of Canonicato were necessary
and desirable in the usual trade and business of Coca-Cola.
Held: It was held that at the outset of the disposition of the NLRC that
janitorial services are necessary and desirable to the trade or business of
Coca-Cola. However, it is inconsistent in the courts ruling in Kimberly
Independent Labor Union v. Drilon where it took judicial notice of the
practice adopted in several government and private institutions and
industries of hiring janitorial services on an independent contractor basis.
Hence, court ruled that although janitorial services may be considered
39 | L a b o r S t a n d a r d s - C a s e D i g e s t s

directly related to the principal business of an employer, as with every


business, we deemed them unnecessary in the conduct of the employers
principal business.
Labor Contractor Only; Requisites and Prohibition
Manila Water Co., Inc. vs. Pena
G.R. No. 158255
MANILA WATER COMPANY, INC. vs.
HERMINIO D. PENA, ESTEBAN B. BALDOZA, JORGE D. CANONIGO,
JR., IKE S. DELFIN, RIZALINO M. INTAL, REY T. MANLEGRO, JOHN L.
MARTEJA, MARLON B. MORADA, ALLAN D. ESPINA, EDUARDO ONG,
AGNESIO D. QUEBRAL, EDMUNDO B. VICTA, VICTOR C. ZAFARALLA,
EDILBERTO C. PINGUL and FEDERICO M. RIVERA
July 8, 2004
Facts: Manila Water Company, Inc. is one of the two private
concessionaires contracted by the Metropolitan Waterworks and Sewerage
System (MWSS) to manage the water distribution system in the East Zone
of Metro Manila, pursuant to Republic Act No. 8041, otherwise known as
the National Water Crisis Act of 1995. Under the Concession Agreement,
MWC undertook to absorb former employees of the MWSS whose names
and positions were in the list furnished by the latter, while the
employment of those not in the list was terminated on the day MWC took
over the operation of the East Zone, Private respondents, being
contractual collectors of the MWSS, were among the 121 employees not
included in the list; nevertheless, MWC engaged their services without
written contract from August 1, 1997 to August 31, 1997. Thereafter,
on September 1, 1997, they signed a three-month contract to perform
collection services for eight branches of MWC in the East Zone.
Before the end of the three-month contract, the 121 collectors
incorporated the Association Collectors Group, Inc. (ACGI), which was
contracted
by
MWC
to
collect
charges
for
the
Balara Branch. Subsequently, most of the 121 collectors were asked by
MWC to transfer to the First Classic Courier Services, a newly registered
corporation. Only private respondents herein remained with ACGI. MWC
continued to transact with ACGI to do its collection needs until February 8,
1999, when it terminated its contract with ACGI.
Private respondents filed a complaint for illegal dismissal and money
claims against MWC, contending that they were its employees as all the
methods and procedures of their collections were controlled by the latter.
On the other hand, MWC asserts that private respondents were employees
40 | L a b o r S t a n d a r d s - C a s e D i g e s t s

of ACGI, an independent contractor. It maintained that it had no control


and supervision over private respondents manner of performing their work
except as to the results. Thus, it did not have an employer-employee
relationship with the private respondents, but only a service contractorclient relationship with ACGI.
Labor Arbiter Carpio rendered a decision finding the dismissal of private
respondents illegal. He held that private respondents were regular
employees of MWC not only because the tasks performed by them were
controlled by it but, also, the tasks were obviously necessary and
desirable to MWCs principal business. Both parties appealed to the NLRC,
which reversed the decision of the Labor Arbiter. Private respondents filed
a petition for certiorari with the Court of Appeals, contending that the
NLRC acted with grave abuse of discretion amounting to lack or excess of
jurisdiction when it reversed the decision of the Labor Arbiter. The Court of
Appeals reversed the decision of the NLRC and reinstated with
modification the decision of the Labor Arbiter. It held that MWC
deliberately prevented the creation of an employment relationship with
the private respondents; and that ACGI was not an independent
contractor. It likewise denied petitioners motion for reconsideration.
Issue: Whether or not ACGI is an independent contractor or a labor only
contractor.
Held: The ACGI is a labor only contractor. Therefore, private respondents
were considered employees of petitioner. Under Section 5, Department
Order No. 18-02, Rules Implementing Articles 106-109 of the Labor Code,
a labor-only contractor is one where the contractor recruits, supplies or
places workers to perform job, work or service for a principal, and any of
the following elements is present: (i) The contractor or subcontractor does
not have substantial capital or investment which relates to the job, work
or service to be performed and the employees recruited, supplied or
placed by such contractor or subcontractor are performing activities which
are directly related to the main business of the principal; or (ii) The
contractor does not exercise the right to control over the performance of
the work of the contractual employee. The requisites were all present in
the case of ACGI: they have no substantial capitalization and they did not
carry on an independent business or undertake the performance of its
service contract according to its manner and method. In labor-only
contracting, the contractor is merely an agent of the principal employer.
Effect of Finding
San Miguel Corporation vs. Aballa
G.R. No. 149011

41 | L a b o r S t a n d a r d s - C a s e D i g e s t s

SAN MIGUEL CORPORATION vs.


PROSPERO A. ABALLA, BONNY J. ABARING, EDWIN M. ADLA-ON,
ALVIN C. ALCALDE, CELANIO D. ARROLLADO, EDDIE A.
ARROLLADO, et al., and the COURT OF APPEALS
June 28, 2005
Facts: Petitioner San Miguel Corporation (SMC) and Sunflower MultiPurpose Cooperative (Sunflower) entered into a one-year Contract of
Services commencing on January 1, 1993, to be renewed on a month to
month basis until terminated by either party. Pursuant to the contract,
Sunflower engaged private respondents to, as they did, render services at
SMCs Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The
contract was deemed renewed by the parties every month after its
expiration on January 1, 1994 and private respondents continued to
perform their tasks until September 11, 1995. In July 1995, private
respondents filed a complaint before the NLRC praying to be declared as
regular employees of SMC, with claims for recovery of all benefits and
privileges enjoyed by SMC rank and file employees. Private respondents
subsequently filed on September 25, 1995 an Amended Complaint4 to
include illegal dismissal as additional cause of action following SMCs
closure of its Bacolod Shrimp Processing Plant on September 15, 19955
which resulted in the termination of their services. By Decision of
September 23, 1997, Labor Arbiter Drilon dismissed private respondents
complaint for lack of merit. Private respondents appealed to the NLRC. By
Decision of December 29, 1998, the NLRC dismissed the appeal for lack of
merit, it finding that third party respondent Sunflower was an independent
contractor in light of its observation that "[i]n all the activities of private
respondents, they were under the actual direction, control and supervision
of third party respondent Sunflower, as well as the payment of wages, and
power of dismissal.
Private respondents filed a petition for certiorari before the Court of
Appeals (CA) after NLRC denied its Motion for Reconsideration. By Decision
of February 7, 2001, the appellate court reversed the NLRC decision and
accordingly found the private respondents as employees of SMC ordering
the latter to pay the respondents, among others, separation pay with full
backwages and other benefits or monetary benefits given to regular SMC
employees. SMCs Motion for Reconsideration having been denied for lack
of merit by Resolution of July 11, 2001, it comes before this Court via the
present petition for review on certiorari.
Issue: Whether or not respondents are employees of SMC in view of
Sunflower acting as labor-only contractor.
Held: Yes. Section 5. Prohibition against labor-only contracting. Labor-only
contracting is hereby declared prohibited. For this purpose, labor-only
contracting shall refer to an arrangement where the contractor or
42 | L a b o r S t a n d a r d s - C a s e D i g e s t s

subcontractor merely recruits, supplies or places workers to perform a job,


work or service for a principal, and any of the following elements are
present: i) The contractor or subcontractor does not have substantial
capital or investment which relates to the job, work or service to be
performed and the employees recruited, supplied or placed by such
contractor or subcontractor are performing activities which are directly
related to the main business of the principal, or ii) The contractor does not
exercise the right to control over the performance of the work of the
contractual employee. What appears is that Sunflower does not have
substantial capitalization or investment in the form of tools, equipment,
machineries, work premises and other materials to qualify it as an
independent contractor. Sunflower, during the existence of its service
contract with respondent SMC, did not own a single machinery,
equipment, or working tool used in the processing plant. Everything was
owned and provided by respondent SMC. The lot, the building, and
working facilities are owned by respondent SMC. The machineries and
equipments like washer machine, oven or cooking machine, sizer
machine, freezer, storage, and chilling tanks, push carts, hydraulic jack,
tables, and chairs were all owned by respondent SMC. All the boxes, trays,
molding pan used in the processing are also owned by respondent SMC.
The gloves and boots used by the complainants were also owned by
respondent SMC. Even the mops, electric floor cleaners, brush, hose,
soaps, floor waxes, chlorine, liquid stain removers, Lysol and the like used
by the complainants assigned as cleaners were all owned and provided by
respondent SMC. Furthermore, Sunflower did not carry on an independent
business or undertake the performance of its service contract according to
its own manner and method, free from the control and supervision of its
principal, SMC, its apparent role having been merely to recruit persons to
work for SMC.
With regard to finding of facts, the general rule, no doubt, is that findings
of facts of an administrative agency which has acquired expertise in the
particular field of its endeavor are accorded great weight on appeal. The
rule is not absolute and admits of certain well-recognized exceptions,
however. Thus, when the findings of fact of the labor arbiter and the NLRC
are not supported by substantial evidence or their judgment was based on
a misapprehension of facts, the appellate court may make an independent
evaluation of the facts of the case.
That there has been substantial compliance with the requirement on
verification of position papers under Section 3, Rule V of the 1990 NLRC
Rules of Procedure is not difficult to appreciate in light of the provision of
Section 7, Rule V of the 1990 NLRC Rules, now Section 9, Rule V of the
1999 NLRC Rules which reads:
Section 7. Nature of Proceedings. The proceedings before a Labor Arbiter
shall be non-litigious in nature. Subject to the requirements of due
process, the technicalities of law and procedure and the rules obtaining in
the courts of law shall not strictly apply thereto. The Labor Arbiter may
43 | L a b o r S t a n d a r d s - C a s e D i g e s t s

avail himself of all reasonable means to ascertain the facts of the


controversy speedily, including ocular inspection and examination of wellinformed persons.
Liability of Indirect Employer
Eparwa Security and Janitorial Services, Inc. vs. Liceo de Cagayan
University
G.R. No. 150402
EPARWA SECURITY AND JANITORIAL SERVICES, INC. vs.
LICEO DE CAGAYAN UNIVERSITY
November 28, 2006

Facts: On 1 December 1997, Eparwa and LDCU, through their


representatives, entered into a Contract for Security Services. On 21
December 1998, 11 security guards whom Eparwa assigned to LDCU from
1 December 1997 to 30 November 1998 filed a complaint before the NLRC
in Cagayan de Oro City against both Eparwa and LDCU for underpayment
of salary, legal holiday pay, 13th month pay, rest day, service incentive
leave, night shift differential, overtime pay, and payment for attorneys
fees.
In its decision, the Labor Arbiter found that the security guards are
entitled to wage differentials and premium for holiday and rest day work.
The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to
Article 109 of the Labor Code. Eparwa filed an appeal before the NLRC. For
its part, Eparwa questioned its liability for the security guards claims and
the awarded cross-claim amounts. In a Resolution, the NLRC declared that
although Eparwa and LDCU are solidarily liable to the security guards for
the monetary award, LDCU alone is ultimately liable. LDCU filed a petition
for certiorari before the appellate where LDCUs petition was granted and
the Labor Arbiters decision was reinstated. The appellate court also
allowed LDCU to claim reimbursement from Eparwa. Eparwa filed a motion
for reconsideration of the appellate courts decision. Eparwa stressed that
jurisprudence is consistent in ruling that the ultimate liability for the
payment of the monetary award rests with LDCU alone. The appellate
court denied Eparwas motion for reconsideration for lack of merit. Hence,
this petition.
Issue: Whether or not LDCU alone is ultimately liable to the security
guards for the wage differentials and premium for holiday and rest day
pay.
Held: Articles 106, 107 and 109 of the Labor Code read:

44 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Art. 106. Contractor or subcontractor. Whenever an employer enters into a


contract with another person for the performance of the formers work, the
employees of the contractor and of the latters subcontractor, if any, shall
be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay the wages of
his employees in accordance with this Code, the employer shall be jointly
and severally liable with his contractor or subcontractor to such
employees to the extent of the work performed under the contract, in the
same manner and extent that he is liable to employees directly employed
by him.
The Secretary of Labor may, by appropriate regulations, restrict or prohibit
the contracting out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who
among the parties involved shall be considered the employer for purposes
of this Code, to prevent any violation or circumvention of any provision of
this Code.
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of
tools, equipment, machineries, work premises, among others, and the
workers recruited and placed by such persons are performing activities
which are directly related to the principal business of the employer. In
such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same
manner and extent as if the latter were directly employed by him.
Article 107. Indirect employer. The provisions of the immediately
preceding Article shall likewise apply to any person, partnership,
association or corporation which, not being an employer, contracts with an
independent contractor for the performance of any work, task, job or
project.
Article 109. Solidary liability. The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer shall be
held responsible with his contractor or subcontractor for any violation of
any provision of this Code. For purposes of determining the extent of their
civil liability under this Chapter, they shall be considered as direct
employers.
This Courts ruling in Eagle Security Agency, Inc. v. NLRC, squarely applies
to the present case. In Eagle, we ruled that:
This joint and several liability of the contractor and the principal is
mandated by the Labor Code to assure compliance of the provisions
therein including the statutory minimum wage [Article 99, Labor Code].
The contractor is made liable by virtue of his status as direct employer.
45 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The principal, on the other hand, is made the indirect employer of the
contractors employees for purposes of paying the employees their wages
should the contractor be unable to pay them. This joint and several
liability facilitates, if not guarantees, payment of the workers performance
of any work, task, job or project, thus giving the workers ample protection
as mandated by the 1987 Constitution
In the case at bar, it is beyond dispute that the security guards are the
employees of EAGLE. That they were assigned to guard the premises of
PTSI pursuant to the latters contract with EAGLE and that neither of these
two entities paid their wage and allowance increases under the subject
wage
orders
are
also
admitted.
Thus,
the
application
of
the aforecited provisions of the Labor Code on joint and several liability of
the principal and contractor is appropriate.
In view of the foregoing, the security guards should claim the amount of
the increases from EAGLE. Under the Labor Code, in case the agency fails
to pay them the amounts claimed, PTSI should be held solidarily liable
with EAGLE (Articles 106,107 and 109). Should EAGLE pay, it can claim an
adjustment from PTSI for an increase in consideration to cover the
increases payable to the security guards.
However, in the instant case, the contract for security services had
already expired without being amended consonant with the Wage Orders.
It is also apparent from a reading of a record that EAGLE does not now
demand from PTSI any adjustment in the contract price and its main
concern is freeing itself from liability. Given these peculiar
circumstances, if PTSI pays the security guards, it cannot claim
reimbursement from EAGLE. But in case it is EAGLE that pays them, the
latter can claim reimbursement from PTSI in lieu of an adjustment,
considering that the contract, had expired and had not been renewed.
For the security guards, the actual source of the payment of their wage
differentials and premium for holiday and rest day work does not matter
as
long
as
they
are
paid. This
is
the
import
of Eparwa and LDCUs solidary liability. Creditors, such as the security
guards, may collect from anyone of the solidary debtors. Solidary liability
does not mean that, as between themselves, two solidary debtors are
liable for only half of the payment.
LDCUs ultimate liability comes into play because of the expiration of the
Contract for Security Services. There is no privity of contract between the
security guards and LDCU, but LDCUs liability to the security guards
remains because of Articles 106, 107 and 109 of the Labor
Code. Eparwa is already precluded from asking LDCU for an adjustment in
the contract price because of the expiration of the contract,
but Eparwas liability to the security guards remains because of their
employer-employee relationship. In lieu of an adjustment in the contract
price, Eparwa may claim reimbursement from LDCU for any payment it
may make to the security guards. However, LDCU cannot claim any
46 | L a b o r S t a n d a r d s - C a s e D i g e s t s

reimbursement from Eparwa for any payment it may make to the security
guards.

Chapter III Kinds of Employment/ Employee Classification


12. Regular, Casual Employment and Probationary Employment
Labor Code Articles 280, 281
By Nature of
employee is
necessary or
EVEN if there

Work An employment is deemed regular when an


engaged to perform activities which are usually
desirable to the business or trade of an employer
is a written or oral agreement to the contrary.

Hacienda Fatima vs. National Federation of Sugarcan Workers Food and


General Trade

G.R. No. 149440


HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS
and CRISTINE SEGURA vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND
GENERAL TRADE
January 28, 2003

Facts: After National Federation of Sugarcane Workers-Food and General


Trade was certified as the collective bargaining representative to Hacienda
Fatima, the petitioner refuse to enter into a collective bargaining
agreement with it. The members of the union were not given work for
more than a month. The union, feeling aggrieved, staged a strike which
was subsequently settled after they entered into an agreement with the
employer-company. Hacienda Fatima, reneged on its commitment to
bargain collectively, claiming that the labourers failed to load some
wagons. The employer even used private armed guards to prevent the
organizers from entering the premises.
Again, no work assignments were given to complainants, thus, forcing the
union to stage a strike. The two parties entered into conciliation and
another memorandum of agreement was signed. Again, the petitioner
reneged on its commitment. The labourers, then, filed a complaint. The
National Labor Relations Commission ruled in favour of the respondents.
The Court of Appeals ruled in the same way after an appeal was filed by
the petitioner. Thus, this petition before the Supreme Court.

47 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the seasonal employees have become regular


employees.
Held: Yes. For respondents to be excluded from those classified as regular
employees, it is not enough that they perform work or services that are
seasonal in nature. They must have also been employed only for the
duration of one season. The evidence proves the existence of the first, but
not of the second, condition. The fact that respondents repeatedly worked
as sugarcane workers for petitioners for several years is not denied by the
latter. Evidently, petitioners employed respondents for more than one
season. Therefore, the general rule of regular employment is applicable.
The primary standard, therefore, of determining regular employment is
the reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the
usual trade or business of the employer. The connection can be
determined by considering the nature of the work performed and its
relation to the scheme of the particular business or trade in its entirety.
Also if the employee has been performing the job for at least a year, even
if the performance is not continuous and merely intermittent, the law
deems repeated and continuing need for its performance as sufficient
evidence of the necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but only with
respect to such activity and while such activity exists.
The fact that respondents do not work continuously for one whole year but
only for the duration of the season does not detract from considering
them in regular employment since in a litany of cases this Court has
already settled that seasonal workers who are called to work from time to
time and are temporarily laid off during off-season are not separated from
service in said period, but merely considered on leave until re-employed.
Association of Trade Unions (AU) vs. Abella
G.R. No. 100518
ASSOCIATION OF TRADE UNIONS (ATU), RODOLFO MONTECLARO
and EDGAR JUESAN vs.
HON. COMMISSIONERS OSCAR N. ABELLA, MUSIB N. BUAT, LEON
GONZAGA JR., ALGON ENGINEERING CONSTRUCTION CORP., ALEX
GONZALES and EDITHA YAP
January 24, 2000

Facts: Algon Engineering Construction Corp. is engaged with the


government in doing road construction. Between the years 1968 to 1989,
the company employed the petitioners. In 1989, the companys workers
48 | L a b o r S t a n d a r d s - C a s e D i g e s t s

joined petitioner union as members. When the union filed a petition for
certification election with the Labor Department, the company opposed
the petition. The company claims that the workers were project
employees and therefore not qualified to form part of the rank and file
collective bargaining unit. The petition for certification election was then
dismissed. After making an appeal, the Secretary of Labor and
Employment ruled in favour of the union and reversed the earlier decision
and ordered the immediate holding of a certification election.
Meanwhile, the national president of petitioner union sent a demand letter
to respondent company, seeking the payment of wage differentials to
some affected union members. Petitioner union and the concerned
workers filed a complaint for payment of wage differentials and other
benefits before the Department
of
Labor
and
Employment.
Subsequently, the workers, whose contracts have expred after the
completion of four projects, were terminated by the company. The
terminated employees, however, claim that their dismissal was due to
their participation in the union activities.
Both the Labor Arbiter and National Labor Relations Commission ruled that
the unions strike was illegal and their termination was valid. The aggrived
workers filed with the Regional Arbitration Branch of the National Labor
Relations Commission their individual complaints against private
respondent. The Labor Arbiter decided that there was indeed an illegal
dismissal, but was not entitled to the awards prayed for. Both parties
sought appeal to the National Labor Relations Commission which modified
the earlier decision. It held that the labor arbiter erred in not resolving the
issue of underpayment of wages because not all of the original
complainants filed the same money claims with the labor department.
Thus, it awarded monetary benefits to qualified workers
Issue: Whether or not petitioners are regular employees.
Held: No. Regular employees are those who have been engaged to
perform activities which are usually necessary or desirable in the usual
business or trade of the employer even if the parties enter into an
agreement stating otherwise. In contrast, project employees are those
whose employment has been fixed for a specific project or undertaking
the completion or termination of which has been determined at the time
of the engagement of the employee, or where the work or services to be
performed is seasonal in nature and the employment is for the duration of
the season.
The contracts of employment of the petitioners attest to the fact that they
had been hired for specific projects, and their employment was
coterminous with the completion of the project for which they had been
hired. Said contracts expressly provide that the workers' tenure of
employment would depend on the duration of any phase of the project or
the completion of the awarded government construction projects in any of
49 | L a b o r S t a n d a r d s - C a s e D i g e s t s

their planned phases. Further, petitioners were informed in advance that


said project or undertaking for which they were hired would end on a
stated or determinable date. Besides, public respondent noted that
respondent company regularly submitted reports of termination of
services of project workers to the regional office of the labor department
as required under Policy Instruction No. 20. This compliance with the
reportorial requirement confirms that petitioners were project employees.
Considering that petitioners were project employees, whose nature of
employment they were fully informed about, at the time of their
engagement, related to a specific project, work or undertaking, their
employment legally ended upon completion of said project. The
termination of their employment could not be regarded as illegal
dismissal.
ABS-CBN Broadcasting Corp. vs. Nazareno
G.R. No. 164156
ABS-CBN BROADCASTING CORPORATION vs.
MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and
JOSEPHINE LERASAN
September 26, 2006
Facts: ABS-CBN employed respondents Nazareno, Gezon, Deiparine, and
Lerasan as production assistants (PAS) on different dates. They were
assigned at the news and public affairs, for various radio programs in the
Cebu Broadcasting Station, with a monthly compensation of P4, 000. They
were issued ABS-CBN employees identification cards and were required to
work for a minimum of eight hours a day, including Sundays and holidays.
The respondents filed a Complaint for Recognition of Regular Employment
Status. They insisted that they belonged to a work pool from which ABS
CBN chose persons to be given specific assignments at its discretion, and
were thus under it direct supervision and control regardless of
nomenclature.
For its part, ABS-CBN alleged in its position paper that the respondents
were Pas who basically assists in the conduct of a particular program ran
by an anchor or talent. They are considered in the industry as program
employees in that, as distinguished from regular or station employees,
they are basically engaged by the station for a particular or specific
program broadcasted by the radio station. The Labor Arbiter ruled that the
respondents were regular employees. The NLRC ruled that respondents
were entitled to the benefits under the CBA because they were regular
employees who contributed to the profits of ABS-CBN through their labor.
The Court of Appeals ruled that respondents are not mere project
employees, but regular employees who perform tasks necessary and
50 | L a b o r S t a n d a r d s - C a s e D i g e s t s

desirable in the usual trade of petitioner and not just its project
employees.
Issue: Whether or not respondents are regular employees of ABS-CBN.
Held: The respondents are regular employees of ABS-CBN. The fact that
respondents received pre-agreed talent fees instead of salaries, that
they did not observe the required office hours, and that they were
permitted to join other productions during their free time are not
conclusive of the nature of employment. Respondents cannot be
considered talents because they are not actors or actresses or radio
specialists or mere clerks or utility employees. They are regular
employees who perform several different duties under the control and
direction of ABS-CBN executives and supervisors.
In Universal Robina Corporation v. Catapang, the Court reiterated the test
in determining whether one is a regular employee: The primary standard,
therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. The test is whether
the former is usually necessary or desirable in the usual business or trade
of the employer. The connection can be determined by considering the
nature of work performed and its relation to the scheme of the particular
business or trade in its entirety. Also, if the employee has been performing
the job for at least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing need for its
performance as sufficient evidence of the necessity if not indispensability
of that activity to the business. Hence, the employment is considered
regular, but only with respect to such activity and while such activity exist.
Brent School, Inc. vs. Zamora
G.R. No. L-48494
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs,
Office of the President, and DOROTEO R. ALEGRE
February 5, 1990
Facts: Doroteo R. Alegre was engaged as athletic director by Brent
School, Inc. at a yearly compensation of P20,000.00. The contract fixed a
specific term for its existence, five years from July 18, 1971 to July 17,
1976. Subsequent subsidiary reiterated the same terms and conditions,
including the expiry date, as those contained in the original contract of
July 18, 1971. Some three months before the expiration of the stipulated
period, Alegre was given a copy of the report filed by Brent School with
the Department of Labor advising of the termination of his services
51 | L a b o r S t a n d a r d s - C a s e D i g e s t s

effective on July 16, 1976. The stated ground for the termination was
"completion of contract, expiration of the definite period of employment."
A month or so later, Alegre accepted the amount of P3,177.71, and signed
a receipt therefor containing the phrase, "in full payment of services for
the period May 16, to July 17, 1976 as full payment of contract." However,
at the investigation conducted by a Labor Conciliator of said report of
termination of his services, Alegre, protested the announced termination
of his employment. He argued that although his contract did stipulate that
the same would terminate on July 17, 1976, since his services were
necessary and desirable in the usual business of his employer, and his
employment had lasted for five years, he had acquired the status of a
regular employee and could not be removed except for valid cause. The
Regional Director considered Brent School's report as an application for
clearance to terminate employment (not a report of termination), and
accepting the recommendation of the Labor Conciliator, refused to give
such clearance and instead required the reinstatement of Alegre, as a
"permanent employee," to his former position without loss of seniority
rights and with full back wages. The Director pronounced "the ground
relied upon by the Brent in terminating the services of Alegre . . . (as) not
sanctioned by P.D. 442," as prohibited by Circular No. 8, series of 1969, of
the Bureau of Private Schools. Brent School filed a motion for
reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. The latter sustained the
ruling of the Regional Director. Brent appealed to the Office of the
President but it was rebuffed. That Office dismissed its appeal for lack of
merit and affirmed the Labor Secretary's decision, ruling that Alegre was a
permanent employee who could not be dismissed except for just cause,
and expiration of the employment contract was not one of the just causes
provided in the Labor Code for termination of services. Hence this petition
by Brent.
Issue: Whether or not the termination of Alegres contract of employment
was valid.
Held: Alegres contract of employment was lawfully terminated by reason
of expiration of agreed term of period. Alegre's employment was
terminated upon the expiration of his last contract with Brent School on
July 16, 1976 without the necessity of any notice. The advance written
advice given the Department of Labor with copy to said petitioner was a
mere reminder of the impending expiration of his contract, not a letter of
termination, nor an application for clearance to terminate which needed
the approval of the Department of Labor to make the termination of his
services effective. In any case, such clearance should properly have been
given, not denied. When the employment contract was signed between
Brent School and Alegre on July18, 1971, it was perfectly legitimate for
them to include in it a stipulation fixing the duration thereof. Stipulations
for a term were explicitly recognized as valid by the SC. In Biboso v.
Victorias Milling Co., Inc., which involved teachers in a private school as
regards whom, the following pronouncement was made: "What is decisive
52 | L a b o r S t a n d a r d s - C a s e D i g e s t s

is that petitioners (teachers) were well aware all the time that their tenure
was for a limited duration. Upon its termination, both parties to the
employment relationship were free to renew it or to let it lapse."
The employment contract between Brent School and Alegre was executed
on July 18, 1971, at a time when the Labor Code of the Philippines (P.D.
442) had not yet been promulgated. Indeed, the Code did not come into
effect until November 1, 1974, some three years after the perfection of
the employment contract, and rights and obligations thereunder had
arisen and been mutually observed and enforced. At that time, i.e., before
the advent of the Labor Code, there was no doubt whatever about the
validity of term employment. It was impliedly but nonetheless clearly
recognized by the Termination Pay Law, R.A. 1052, as amended by R.A.
1787. Basically, this statute provided that in cases of employment,
without a definite period, in a commercial, industrial, or agricultural
establishment or enterprise, the employer or the employee may terminate
at any time the employment with just cause; or without just cause in the
case of an employee by serving written notice on the employer at least
one month in advance, or in the case of an employer, by serving such
notice to the employee at least one month in advance or one-half month
for every year of service of the employee, whichever is longer, a fraction
of at least six months being considered as one whole year.
The employer, upon whom no such notice was served in case of
termination of employment without just cause, may hold the employee
liable for damages.
The employee, upon whom no such notice was served in case of
termination of employment without just cause, shall be entitled to
compensation from the date of termination of his employment in an
amount equivalent to his salaries or wages corresponding to the required
period of notice.
Art. 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph: Provided, That any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
activity exists.
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There can of course be no quarrel with the proposition that where from the
circumstances it is apparent that periods have been imposed to preclude
acquisition of tenurial security by the employee, they should be struck
down or disregarded as contrary to public policy, morals, etc. But where
no such intent to circumvent the law is shown, or stated otherwise, where
the reason for the law does not exist. Accordingly, and since the entire
purpose behind the development of legislation culminating in the present
Article 280 of the Labor Code clearly appears to have been, as already
observed, to prevent circumvention of the employee's right to be secure
in his tenure, the clause in said article indiscriminately and completely
ruling out all written or oral agreements conflicting with the concept of
regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered
into precisely to circumvent security of tenure.
It should have no application to instances where a fixed period of
employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
Columbus Philippines Bus Corp. vs. NLRC
G.R. Nos. 114858-59
COLUMBUS PHILIPPINES BUS CORPORATION vs.
NATIONAL LABOR RELATIONS COMMISSION, ZENAIDA DOMASIG
and ROMAN DOMASIG
September 7, 2001
Facts: Columbus Philippines Bus Corporation is engaged in the business
of operating passenger buses. Since the start of its operations in 1990, it
has maintained a list of drivers and conductors who rendered service in its
bus units allegedly on a first come first served basis and compensated
purely on commission. The drivers and conductors/conductress worked for
about ten (10) to fifteen (15) days a month and were allegedly not
required to work everyday.
Roman and Zenaida Domasig, were employed as a driver and a bus
conductress, respectively, under Columbus Bus Corporation. Due to poor
labor practice involving 19-20 hour shifts, illegal deductions, and issues
with security of tenure, petitioners started to encourage other workers to
sign a Sama-Samang Pahayag from the National Federation of Labor for
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the creation of a union. In their affidavits, the Spouses Domasig recalled


not being allowed to board their buses and being illegally dismissed after
having known of their signature campaign and for refusing to take back
their signatures to start a union. Respondents then filed a case for unfair
labor practice, illegal dismissal, illegal deductions from salary, and nonpayment of service incentive leave pay and 13th month pay. Labor Arbiter
found for the respondents and ordered petitioner to reinstate them to
their former positions as driver and bus conductress without loss of
seniority rights and with back pay. Petitioner appealed to NLRC which
affirmed the decision of the Labor Arbiter. CPBC challenged both Decisions
on the ground that private respondents were not regular employees as
they were compensated purely on a commission basis, their services were
rendered on a first-come-first-served basis, and they only worked for only
about 10-15 days and only when they felt to do so.
Issue: Whether or not private respondents were regular employees of the
petitioner company.
Held: The court held that they were regular employees and affirmed the
Decision of the NLRC. In determining whether an employee is regular or
not, the activities he performed must be in relation to the usual business
or trade of the employer. The test is whether the former is usually
necessary or desirable in the usual business or trade of the employer.
Considering the work of the respondents, they were regular employees.
Without their services, the petitioner risked the operation and
management of its business of providing transportation services.
Singer Sewing Machine Company vs. Drilon
G.R. No. 91307
SINGER SEWING MACHINE COMPANY vs.
HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR.,
and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB)
January 24, 1991
Facts: The respondent union filed a petition for direct certification as the
sole and exclusive bargaining agent of all collectors of the Singer Sewing
Machine Company, Baguio City branch. Petitioner opposed the petition on
the ground that the union members were not employees of their company.
Both the Med-Arbiter and the Secretary of Labor found for the respondents
and granted the petition for certification election. Petitioner then filed the
current action.

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Issue: Whether or not there existed an employer-employee relationship


between the petitioner company and the respondents.

Held: No, theres is no employer-employee relationship between the


petitioners and the respondents. The court reversed and set aside the
Resolution and Order. The present case mainly calls for the application of
the control test, which if not satisfied, would lead us to conclude that no
employer-employee relationship exists. Hence, if the union members are
not employees, no right to organize for purposes of bargaining, nor to be
certified as such bargaining agent can ever be recognized. In determining
whether an employer-employee relationship exists, the following elements
must be present: "(1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee's conduct although the latter is the most
important element.
The nature of the relationship between a company and its collecting
agents depends on the circumstances of each particular relationship. Not
all collecting agents are employees and neither are all collecting agents
independent contractors. The collectors could fall under either category
depending on the facts of each case.
The Agreement confirms the status of the collecting agent in this case as
an independent contractor not only because he is explicitly described as
such but also because the provisions permit him to perform collection
services for the company without being subject to the control of the latter
except only as to the result of his work. After a careful analysis of the
contents of the agreement, we rule in favor of the petitioner.
The requirement that collection agents utilize only receipt forms and
report forms issued by the Company and that reports shall be submitted
at least once a week is not necessarily an indication of control over the
means by which the job of collection is to be performed. The agreement
itself specifically explains that receipt forms shall be used for the purpose
of avoiding a co-mingling of personal funds of the agent with the money
collected on behalf of the Company. Likewise, the use of standard report
forms as well as the regular time within which to submit a report of
collection are intended to facilitate order in office procedures. Even if the
report requirements are to be called control measures, any control is only
with respect to the end result of the collection since the requirements
regulate the things to be done after the performance of the collection job
or the rendition of the service.
The Court finds the contention of the respondents that the union members
are employees under Article 280 of the Labor Code to have no basis. The
definition that regular employees are those who perform activities which
are desirable and necessary for the business of the employer is not
determinative in this case. Any agreement may provide that one party
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shall render services for and in behalf of another for a consideration (no
matter how necessary for the latter's business) even without being hired
as an employee. This is precisely true in the case of an independent
contractorship as well as in an agency agreement. The Court agrees with
the petitioner's argument that Article 280 is not the yardstick for
determining the existence of an employment relationship because it
merely distinguishes between two kinds of employees, i.e., regular
employees and casual employees, for purposes of determining the right of
an employee to certain benefits, to join or form a union, or to security of
tenure. Article 280 does not apply where the existence of an employment
relationship is in dispute.
Sonza vs. ABS-CBN Broadcasting Corp., G. R. No. 1380051 (June 10, 2004)
as against Dumpit Murillo vs. C.A., G.R. No. 164652 (June 8, 2007)
G.R. No. 164652
THELMA DUMPIT-MURILLO vs.
COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE
JAVIER AND EDWARD TAN
June 8, 2007
Facts: Associated Broadcasting Company (ABC) hired petitioner Thelma
Dumpit Murillo as a newscaster and co-anchor for Balitang-Balita, an early
evening news program. The contract was for a period of three months. It
was renewed under various subsequent contracts. In addition, petitioners
services were engaged for the program Live on Five. After four years of
repeated renewals, petitioner talent contract expired. Two weeks after the
expiration of the last contract, petitioner sent a letter that she was still
interested in renewing her contract, subject to a salary increase.
Thereafter, petitioner stopped reporting for work. Subsequently, she sent
a demand letter to ABC for reinstatement to her former position and claim
for unpaid wages and other monetary benefits. ABC replied that a check
covering petitioners had been processed for the unpaid wages but refused
to pay the other claim. Petitioner filed a complaint for illegal constructive
dismissal, non-payment of salaries and other benefits and she also
demanded for damages. The Labor Arbiter dismissed the complaint.
On appeal the NLRC reversed the Labor Arbiters decision holding that an
employer-employee relationship existed between petitioners and ABC;
that the talent contract was void; that the petitioner was a regular
employee illegally dismissed. ABC filed a Motion for reconsideration but
was denied. ABC elevated the case to CA. CA ruled that NLRC committed
grave abuse of discretion, and reversed the decision of the NLRC, saying

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that the petitioner was a fixed term employee and not a regular
employee.
Issue: Whether or not petitioner is a regular employee of ABC.
Held: Petitioner was a regular employee under contemplation of law. The
practice of having fixed term contracts in the industry does not make all
talent contracts valid and compliant with labor laws. The assertion that a
talent contract exists does not necessarily prevent a regular employment
status. Requisites for regularity of the performance of petitioners have
been met in the instant case. Petitioners work was necessary or desirable
in the usual business or trade of the employer. Further, the Sonza case is
not applicable. In Sonza, the television station did not instruct Sonza how
to perform his job. How Sonza delivered his lines, appeared on television,
and sounded on radio were outside the television stations control. Sonza
had a free hand on what to say or discuss in his shows provided he did not
attack the television station or its interests. Clearly, the television station
did not exercise control over the means and methods of the performance
of Sonzas work. In the case at bar, ABC had control over the performance
of petitioners work. Noteworthy too, is the comparatively low P28,000
monthly pay of petitioner vis the P300,000 a month salary of Sonza, that
all the more bolsters the conclusion that petitioner was not in the same
situation as Sonza.
In Manila Water Company, Inc. v. Pena, we said that the elements to
determine the existence of an employment relationship are: (a) the selection
and engagement of the employee, (b) the payment of wages, (c) the power
of dismissal, and (d) the employers power to control. The most important
element is the employers control of the employees conduct, not only as to
the result of the work to be done, but also as to the means and methods to
accomplish it. The duties of petitioner as enumerated in her employment
contract indicate that ABC had control over the work of petitioner. Aside
from control, ABC also dictated the work assignments and payment of
petitioners wages. ABC also had power to dismiss her. All these being
present, clearly, there existed an employment relationship between
petitioner and ABC.
Concerning regular employment, the law provides for two kinds of
employees, namely: (1) those who are engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer; and (2) those who have rendered at least one year of service,
whether continuous or broken, with respect to the activity in which they
are employee. In other words, regular status arises from either the nature
of work of the employee or the duration of his employment. In Benares v.
Pancho, we very succinctly said
The primary standard for determining regular employment is
the reasonable connection between the particular activity
performed by the employee vis--vis the usual trade or
business of the employer. This connection can be determined
by considering the nature of the work performed and its
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relation to the scheme of the particular business or trade in its


entirety. If the employee has been performing the job for at
least a year, even if the performance is not continuous and
merely intermittent, the law deems repeated and continuing
need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the
business. Hence, the employment is considered regular, but
only with respect to such activity and while such activity
exists.
In our view, the requisites for regularity of employment have been met in
the instant case. Gleaned from the description of the scope of services
aforementioned, petitioners work was necessary or desirable in the usual
business or trade of the employer.
ABS-CBN Broadcasting Corporation vs. Marquez
G.R. No. 167638
ABS-CBN Broadcasting Corporation vs.
Henrie Marquez, et al.
June 22, 2005
Facts: Petitioner hired the services of respondents on various dates
starting December, 1994 to undertake the production in the Cebuano
dialect of television serial programs for petitioner's week-day afternoon
time slots in Cebu. The television-series did so well that several more were
subsequently produced. The production groups were continuously
engaged to film succeeding programs to replace the concluded ones. On
June 15, 1999, respondents addressed a letter to petitioner asking for a
25% increase in their weekly budget, but the same was denied by
petitioner's AVP for the Visayas Cluster, Ma. Luisa L. Ascalon. Instead,
respondents were informed of the termination of their services effective
August 13, 1999.
Respondents filed with the Regional Arbitration Branch (RAB) at Region VII
of the Department of Labor and Employment their consolidated complaint
for illegal dismissal; illegal deduction; non-payment of overtime and
holiday pay; premium pay for holiday, rest day and night shift differential;
non-payment of 13th month pay, service incentive leave, separation pay,
backwages; and attorney's fees. Subsequently, the Executive Labor
Arbiter of RAB VII rendered a decision in favor of respondents and ordered
petitioner to pay to them their money claims. However, on petitioner's
appeal, the NLRC'S reversed the decision of the Labor Arbiter.
Respondents moved for a reconsideration but their motion was denied by
the NLRC's 4th Division in its resolution of July 30, 2003. From there,
respondents went to the Court of Appeals via a petition for certiorari,
imputing grave abuse of discretion on the part of the NLRC in setting aside
the Labor Arbiter's findings and in ruling that they were hired as
59 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contractual or project employees, i.e. as "talents" engaged for specific


projects, under the special work arrangements with the petitioner, and in
upholding the legality of their dismissal. Respondents asserted that they
are petitioner's regular employees and emphasized the fact of their
continuous work after each tele-series program and the very nature of
their work, which is "necessary and desirable" to the business or trade of
their employer. They also averred that the application of the "four-fold
test" in labor laws clearly shows the existence of an employer-employee
relationship between the parties.
Issue: Whether or not the respondents are regular employees of the
petitioner.
Held: In applying the "four-fold test" to determine the existence of an
employer-employee relationship between the parties, the Court of Appeals
viewed respondents as regular employees of petitioner and not
independent contractors.
Respondents' employment with petitioner passed the "four-fold test" on
employer-employee relations, namely: (1) the selection and engagement
of the employee, or the power to hire; (2) the payment of wages; (3) the
power to dismiss; and (4) the power to control the employee.
Petitioner never denied having engaged the services of respondents.
Neither did it controvert the fact that respondents received their pay from
petitioner twice a month thru automated teller machines (ATM) and
respondents were issued payslips bearing petitioner's corporate name on
the heading. The payment of wages clearly rests upon petitioner. While a
weekly budget is given and the directors are ostensibly given a free hand
on how to spend the same subject only to petitioner's budgetary
limitation, the hard reality is that such payments were done by the
petitioner itself.
As correctly observed by the Labor Arbiter, the elements of control and
supervision over the respondents were evident. Petitioner employed
production supervisors who monitored and saw to it that the filming of the
series shall be finished within a time-frame and the production output to
conform to petitioner's standards.
These were bolstered by various memoranda issued by petitioner relative
to production work-approval of filming and editing schedule, new
assignments of production crew and reminders to tele-series directors and
editors regarding the standard policy on editing services. Respondents
have to follow company rules in the work done in company premises. An
overseer, in the person of an executive producer, is assigned by petitioner
over each production crew to make sure that the end result is acceptable
to petitioner, and the executive producer can dictate the work to be redone. Petitioner also has control in the assignments of crew members and
can thus re-assign or transfer any of them to another production group,
thereby belying petitioner's contention that the directors are the ones that
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control the whole production. All these, taken together, unmistakably


show petitioner's power of control over respondents' work.
Anent the power of dismissal and suspension, it cannot be denied that
petitioner exercised such. The records clearly show that petitioner
sanctioned disciplinary measures on some of the respondents for some
infraction of company rules thru disciplinary measures on erring
employees. For sure, respondent Orlando Carillo was suspended for one
week by his production head on January 25, 1999 for failure to edit an
episode which was to be sent to petitioner's Zamboanga station for airing.
Additionally, the fact that petitioner itself provided the production
equipment such as video cameras, lights, microphone and TV monitors,
largely discounts petitioner's claim that respondents were independent
contractors. It may be so that respondents were assigned to a particular
tele-series. However, petitioner can and did immediately reassign them to
a new production upon completion of a previous one. Hence, they were
continuously employed, the tele-series being a regular feature in
petitioner's network programs. Petitioner's continuous engagement of
respondents from one production after another, for more than five years,
made the latter part of petitioner's workpool who cannot be separated
from the service without cause as they are considered regular. A project
employee or a member of a workpool may acquire the status of a regular
employee when the following concur: there is continuous rehiring of
project employees even after the cessation of the project; and the tasks
performed by the alleged "project employee" are vital, necessary, and
indispensable to the usual business or trade of his employer. It cannot be
denied that the services of respondents as members of a crew in the
production of a tele-series are undoubtedly connected with the business of
the petitioner.
This Court has held that the primary standard in determining regular
employment is the reasonable connection between the particular activity
performed by the employee in relation to the business or trade of his
employer. Here, the activity performed by respondents is, without doubt,
vital to petitioner's trade or business.
Consolidated Broadcasting System, Inc. vs. Oberio
G.R. No. 168424
CONSOLIDATED BROADCASTING SYSTEM, INC. vs.
DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR, WILMA
SUGATON, RUFO DEITA, JR., EMILY DE GUZMAN, CAROLINE
LADRILLO, JOSE ROBERTO REGALADO, ROSEBEL NARCISO &
ANANITA TANGETE
June 8, 2007
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Facts: Respondents alleged that they were employed as drama talents by


DYWB-Bombo Radyo, a radio station owned and operated by petitioner
Consolidated Broadcasting System, Inc. They reported for work daily for
six days in a week and were required to record their drama production in
advance. Some of them were employed by petitioner since 1974, while
the latest one was hired in 1997. Sometime in August 1998, petitioner
reduced the number of its drama productions from 14 to 11, but was
opposed by respondents.
After the negotiations failed, the latter sought the intervention of the
Department of Labor and Employment (DOLE), which on November 12,
1998, conducted through its Regional Office, an inspection of DWYB
station. The results thereof revealed that petitioner is guilty of violation of
labor standard laws, such as underpayment of wages, 13th month pay,
non-payment of service incentive leave pay, and non-coverage of
respondents under the Social Security System. Vexed by the respondents
complaint, petitioner allegedly pressured and intimidated respondents.
Oberio and Delta were suspended for minor lapses and the payment of
their salaries were purportedly delayed. Eventually, on February 3, 1999,
pending the outcome of the inspection case with the Regional Director,
respondents were barred by petitioner from reporting for work; thus, the
former claimed constructive dismissal. On October 12, 1999, respondents
filed a case for illegal dismissal, underpayment/non-payment of wages
and benefits plus damages against petitioner. On April 10, 2000, the Labor
Arbiter dismissed the case without prejudice while waiting for the decision
of the Secretary of Labor on the same issue of the existence of an
employer-employee relationship between petitioner and respondents. On
appeal to the NLRC, respondents raised the issue of employer-employee
relationship and submitted the following to prove the existence of such
relationship. On December 5, 2001, the NLRC rendered a decision holding
that respondents were regular employees of petitioner who were illegally
dismissed by the latter. Hence, petitioner filed the instant recourse.
Issue: Whether or not respondents were regular employees of petitioner.
Held: Yes. The engagement of respondents for a period ranging from 2 to
25 years and the fact that their drama programs were aired not only in
Bacolod City but also in the sister stations of DYWB in the Visayas and
Mindanao areas, undoubtedly show that their work is necessary and
indispensable to the usual business or trade of petitioner. The test to
determine whether employment is regular or not is the reasonable
connection between the particular activity performed by the employee in
relation to the usual business or trade of the employer. Also, if the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability of that activity to the business. Thus,
even assuming that respondents were initially hired as project/contractual
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employees who were paid per drama or per project/contract, the


engagement of their services for 2 to 25 years justify their classification as
regular employees, their services being deemed indispensable to the
business of petitioner.
In ABS-CBN v. Marquez, the Court held that the failure of the employer to
produce the contract mandated by Policy Instruction No. 40 is indicative
that the so called talents or project workers are in reality, regular
employees. Thus
Policy Instruction No. 40 pertinently provides:
Program employees are those whose skills,
talents or services are engaged by the station for
a particular or specific program or undertaking
and who are not required to observe normal
working hours such that on some days they work
for less than eight (8) hours and on other days
beyond the normal work hours observed by
station employees and are allowed to enter into
employment contracts with other persons,
stations, advertising agencies or sponsoring
companies.
The engagement
of
program
employees, including those hired by advertising or
sponsoring companies, shall be under a written
contract
specifying, among
other
things,
the nature of the work to be performed, rates of
pay, and the programs in which they will
work. The contract shall be duly registered by the
station with the Broadcast Media Council within
three days from its consummation.
Ironically, however, petitioner failed to adduce an iota proof that the
requirements for program employment were even complied with by
it. It is basic that project or contractual employees are appraised of
the project they will work under a written contract, specifying, inter
alia, the nature of work to be performed and the rates of pay and
the program in which they will work. Sadly, however, no such
written contract was ever presented by the petitioner. And because
none was presented, we have every reason to surmise that no such
written contract was ever accomplished by the parties, thereby
belying petitioners posture. Hence, the court ruled that absence of
the contract mandated by Policy Instruction No. 40 is an indication
that employee is a regular employee.
Orazco vs. The Fifth Division of the Honorable Court of Appeals
G.R. No. 155207
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WILHELMINA S. OROZCO vs.


THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS,
PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ MAGSANOC
August 13, 2008

Facts: Wilhelmina S. Orozco writes for the Lifestyle Section of Philippine


Daily Inquirer weekly. Orozco submits her articles, except when she went
to NY City which lasted for six months. She also received compensation for
every column that was published. The day came when Orozco was
informed by her editor, Logarta, that the newspaper will stop publishing
her columns for no reason at all and advised her to talk to the editor-inchief. When Orozco talked to Magsanoc, the editor-in-chief, Magsanoc told
her that it was the newspapers chairperson who wanted to stop the
publication of her column. So, Orozco spoke to Apostol, the chairperson,
who told her that Magsanoc informed her that the Lifestyle section had
already many columnists.
The newspaper said that the action aims to improve the Lifestyle section.
After a perusal of Orozcos articles, they found that her column failed to
improve, continued to be superficially and poorly written, and failed to
meet the high standards of the newspaper. Orozco, then, filed a complaint
for illegal dismissal. The Labor Arbiter favored. Orozco in its ruling. On
appeal, the National Labor Relations Commission dismissed the appeal
and affirmed the Labor Arbiters decision. The Court of Appeals, on the
other hand, set aside the National Labor Relations Commissions decision
and dismissed Orozcos complaint.
Issue: Whether or not Wilhelmina Orozco is an employee of Philippine
Daily Inquirer.
Held: No. Though PDI issued guidelines for the petitioner to follow in the
course of writing her columns, careful examination reveals that the factors
enumerated by the petitioner are inherent conditions in running a
newspaper. In other words, the so-called control as to time, space, and
discipline are dictated by the very nature of the newspaper business itself.
Aside from the constraints presented by the space allocation of her
column, there were no restraints on her creativity. Petitioner was free to
write her column in the manner and style she was accustomed to and to
use whatever research method she deemed suitable for her purpose. The
apparent limitation that she had to write only on subjects that befitted the
Lifestyle section did not translate to control, but was simply a logical
consequence of the fact that her column appeared in that section and
therefore had to cater to the preference of the readers of that section.
Although petitioner had a weekly deadline to meet, she was not precluded
from submitting her column ahead of time or from submitting columns to
be published at a later time. More importantly, respondents did not dictate
upon petitioner the subject matter of her columns, but only imposed the
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general guideline that the article should conform to the standards of the
newspaper and the general tone of the particular section. Where a person
who works for another performs his job more or less at his own pleasure,
in the manner he sees fit, not subject to definite hours or conditions of
work, and is compensated according to the result of his efforts and not the
amount thereof, no employer-employee relationship exists.
By Period of Service An employee is considered regular when an
employee has rendered at least one (1) year, whether continuous
or broken, on such activity in which he is employed and his
employment shall continue while such activity exists.
Audion Electric Co., Inc. vs. NLRC
G.R. No. 106648
AUDIO ELECTRIC CO., INC. vs.
NATIONAL LABOR RELATIONS COMMISSION and NICOLAS MADOLID
June 17, 1999
Facts: Private respondent, Nicolas Madolid, was employed for thirteen
(13) years by respondent Audion Electric Company (Audion) as
fabricator and continuously rendered service assigned in different offices
or projects as helper electrician, stockman and timekeeper. Sometime
later, Madolid received a letter informing him that he will be considered
terminated after the turnover of materials, including respondents' tools
and equipment. Complainant alleged that he was dismissed without
justifiable cause and due process and that his dismissal was done in bad
faith which renders the dismissal illegal. Thus, he claimed that he is
entitled to reinstatement with full back wages, moral and exemplary
damages, overtime pay, project allowance, minimum wage increase
adjustment, proportionate 13th month pay and attorney's fees.
Audion moved for the dismissal of the case on the ground that there was
no illegal dismissal, since the employment contract signed by complainant
with respondent is co-terminus with the project. The Labor Arbiter ruled in
favor of Madolid and ordered Audion to 1) reinstate Madolid to his former
position with full back wages from the date of his dismissal up to the
signing of the decision without loss of seniority rights; and 2) to pay
Madolids overtime, project allowances, minimum wage increase
adjustment, proportionate 13th month pay, moral and exemplary
damages, and attorney's fees equivalent to 10% of the total award of
complainant. Audion appealed to the NLRC, which dismissed the same.
The motion for reconsideration was also denied.

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Issue: Whether or not the parties have an employer-employee


relationship, and, if so, whether or not the respondent is legally
terminated.
Held: Yes, there is an employer-employee relationship. Well-settled is the
rule that the findings of the NLRC, affirming those of the Labor Arbiter are
entitled to great weight and will not be disturbed, except when there is
grave abuse of discretion, are practically conclusive on the Court. It is only
when the NLRC's findings are bereft of any substantial support from the
records that the Court may step in and proceed to make its own
independent evaluation of the facts.
Private respondent's employment status was established by the
Certification of Employment issued by petitioner which certified that
private respondent is a bonafide employee of the petitioner. It is also held
that where the employment of project employees is extended long after
the supposed project has been finished, the employees are removed from
the scope of project employees and considered regular employees. The
decision of the NLRC is affirmed with the modification that the awards of
moral and exemplary damages and attorney's fees are deleted.
Universal Robina Corporation vs. Catapang
G.R. No. 164736
UNIVERSAL ROBINA CORPORATION and/or RANDY GREGORIO vs.
BENITO CATAPANG, CARLOS ARARAO, ALVIN ALCANTARA, RESTY
ALCORAN, REYNALDO ARARAO, JUAN ARISTADO, LITO CABRERA,
ONOFRE CASANO, BEN CERVAS, JOSEPH CHUIDIAN, IRENEO
COMENDADOR, ANGELITO CONCHADA, RICHARD CORONADO,
ELMER HILING, RAMON JOYOSA, JOSE LORIA, JR., VICTORIANO
LORIA, RUEL MARIKIT, RODERICK PANG-AO, QUIRINO PLATERO,
PABLITO REDONDO, RAMIL ROXAS, RESTY SALAZAR, NOEL
TRINIDAD, FELICISIMO VARELA, BALTAZAR VILLANUEVA, ELPIDIO
VILLANUEVA, JOEL VILLANUEVA, JONATHAN VILLANUEVA, and
JAIME VILLEGAS
October 14, 2005
Facts: The individual respondents were hired by the petitioner company
on various dates from 1991 to 1993 to work at its duck farm
in Barangay Sto. Tomas, Calauan, Laguna. The respondents were hired
under an employment contract which provided for a five-month period.
After the expiration of the said employment contracts, the petitioner
company would renew them and re-employ the respondents. This practice
continued until sometime in 1996, when the petitioners informed the
respondents that they were no longer renewing their employment
contracts.
In October 1996, the respondents filed separate complaints for illegal
dismissal, reinstatement, backwages, damages and attorneys fees
against the petitioners. The complaints were later consolidated. On March
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30, 1999, after due proceedings, the Labor Arbiter declared that they have
been illegally dismissed. On November 22, 2000, the NLRC affirmed the
decision of the Labor Arbiter with the modification that the award of
attorneys fees was reduced to 10% of the total monetary award. On
August 21, 2003, the CA denied the petition for lack of merit. The CA held
that after rendering more than one year of continuous service, the
respondents became regular employees of the petitioners by operation of
law.
Issue: Whether or not the respondents were regularized by the lapse one
year from the date of their employment.
Held: Yes, they are. In any case, we find that the CA, the NLRC and the
Labor Arbiter correctly categorized the respondents as regular employees
of the petitioner company. In Abasolo v. National Labor Relations
Commission, the Court reiterated the test in determining whether one is a
regular employee:
The primary standard, therefore, of determining regular employment is
the reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be
determined by considering the nature of work performed and its relation
to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity and while such activity exists
It is obvious that the said five-month contract of employment was used by
petitioners as a convenient subterfuge to prevent private respondents
from becoming regular employees. Such contractual arrangement should
be struck down or disregarded as contrary to public policy or morals. To
uphold the same would, in effect, permit petitioners to avoid hiring
permanent or regular employees by simply hiring them on a temporary or
casual basis, thereby violating the employees security of tenure in their
jobs. Petitioners act of repeatedly and continuously hiring private
respondents in a span of 3 to 5 years to do the same kind of work
negates their contention that private respondents were hired for a specific
project or undertaking only.
Abesco Construction and Development Corp. vs. Ramirez
G.R. No. 141168

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ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and


MR. OSCAR BANZON, General Manager vs.
ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA,
REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA
and GARY DISON
April 10, 2006
Facts: Respondents were hired on different dates from 1976 to 1992
either as laborers, road roller operators, painters or drivers. In 1997,
respondents filed two separate complaints1 for illegal dismissal against
the company and its General Manager, Oscar Banzon, before the Labor
Arbiter (LA). Petitioners allegedly dismissed them without a valid reason
and without due process of law. The complaints also included claims for
non-payment of the 13th month pay, five days' service incentive leave
pay, premium pay for holidays and rest days, and moral and exemplary
damages. The LA later on ordered the consolidation of the two complaints.
Petitioners denied liability to respondents and countered that respondents
were "project employees" since their services were necessary only when
the company had projects to be completed. Petitioners argued that, being
project employees, respondents' employment was coterminous with the
project to which they were assigned. They were not regular employees
who enjoyed security of tenure and entitlement to separation pay upon
termination from work.
After trial, the LA declared respondents as regular employees because
they belonged to a "work pool" from which the company drew workers for
assignment to different projects, at its discretion. Petitioners appealed to
the National Labor Relations Commission (NLRC) which affirmed the LA's
decision. The CA dismissed petitioners' appeal. Petitioners filed a motion
for reconsideration but it was dismissed by the CA.
Issue: Whether or not respondent is a regular employee.
Held: We rule that respondents were regular employees. However, we
take exception to the reasons cited by the LA (which both the NLRC and
the CA affirmed) in considering respondents as regular employees and not
as project employees.
Contrary to the disquisitions of the LA, employees (like respondents) who
work under different project employment contracts for several years do
not automatically become regular employees; they can remain as project
employees regardless of the number of years they work.7 Length of
service is not a controlling factor in determining the nature of one's
employment.
Moreover, employees who are members of a "work pool" from which a
company (like petitioner corporation) draws workers for deployment to its
different projects do not become regular employees by reason of that fact
alone. The Court has enunciated in some cases 9 that members of a "work
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pool" can either be project employees or regular employees.The principal


test for determining whether employees are "project employees" or
"regular employees" is whether they are assigned to carry out a specific
project or undertaking, the duration and scope of which are specified at
the time they are engaged for that project. Such duration, as well as the
particular work/service to be performed, is defined in an employment
agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latter's work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, we are
constrained to declare them as regular employees.
Furthermore, petitioners cannot belatedly argue that respondents
continue to be their employees (so as to escape liability for illegal
dismissal). Before the LA, petitioners staunchly postured that respondents
were only "project employees" whose employment tenure was
coterminous with the projects they were assigned to. However, before the
CA, they took a different stance by insisting that respondents continued to
be their employees. Petitioners' inconsistent and conflicting positions on
their true relation with respondents make it all the more evident that the
latter were indeed their regular employees.
Nature of Probationary Employment
Philippine Federation of Credit Cooperatives, Inc. vs. NLRC
G.R. No. 121071
PHIL. FEDERATION OF CREDIT COOPERATIVES, INC, (PFCCI) and
FR. BENEDICTO JAYOMA vs.
NATIONAL LABOR RELATIONS COMMISSION (First Division) and
VICTORIA ABRIL
December 11, 1998
Facts: Sometime in September 1982, private respondent Victoria Abril
was employed by petitioner as Junior Auditor/Field Examiner and
thereafter held positions in different capacities to wit. Upon her return
sometime in November 1989, however, she discovered that a certain
Vangie Santos had been permanently appointed to her former position.
She, nevertheless, accepted the position of Regional Field Officer as
evidenced by a contract which stipulated, among other things, that
respondent's employment status shall be probationary for a period of six
(6) months. Said period having elapsed, respondent was allowed to work
until PFCCI presented to her another employment contract for a period of
one year commencing on January 2, 1991 until December 31, 1991, after
which period, her employment was terminated.
In a complaint for illegal dismissal filed by respondent against PFCCI on
April 1, 1992, Labor Arbiter Cornelio L. Linsangan rendered a decision on
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March 10, 1993 dismissing the same for lack of merit but ordered PFCCI to
reimburse her. On appeal, however, the said decision was reversed by the
National Labor Relations Commission (NLRC), which directs petitioner to
reinstate complainant to her position last held, or to an equivalent position
if such is no longer feasible, with full backwages.
Issue: Whether or not April is a regular employee.
Held: We find no merit in the petition. As defined in the case
ofInternational Catholic Migration v. NLRC, "a probationary employee is
one who is on trial by an employer during which the employer determines
whether or not he is qualified for permanent employment. A probationary
employment is made to afford the employer an opportunity to observe the
fitness of a probationer while at work, and to ascertain whether he will
become a proper and efficient employee." Probationary employees,
notwithstanding their limited tenure, are also entitled to security of
tenure. Thus, except for just cause as provided by law, or under the
employment contract, a probationary employee cannot be terminated.
The contention that respondent could either be classified as a casual or
contractual employee is utterly misplaced; thus, it is imperative for the
Court to elucidate on the kinds of employment recognized in this
jurisdiction. The pertinent provision of the Labor Code, as amended,
states:
Art. 280. Regular and casual employment. The provisions of
written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the
employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed
for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the employee or where the work or services to
be performed is seasonal in nature and the employment is for
the duration of the season.
An employment shall be deemed to be casual if it is not
covered by the preceding paragraph:Provided, That, any
employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be
considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while
such activity exists.
This provision of law comprehends three kinds of employees: (a) regular
employees or those whose work is necessary or desirable to the usual
business of the employer; (b) project employees or those whose
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employment has been fixed for a specific project or undertaking the


completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be
performed is seasonal in nature and the employment is for the duration of
the season; and (c) casual employees or those who are neither regular nor
project employees. After a careful scrutiny of the subject contract, we
arrive at the conclusion that there was no grave abuse of discretion on the
part of the NLRC and, thus, affirm the finding that respondent has become
a regular employee entitled to security of tenure guaranteed under the
Constitution and labor laws.
Regardless of the designation petitioner may have conferred upon
respondent's employment status, it is, however, uncontroverted that the
latter, having completed the probationary period and allowed to work
thereafter, became a regular employee who may be dismissed only for
just or authorized causes under Articles 282, 283 and 284 of the Labor
Code, as amended. Therefore, the dismissal, premised on the alleged
expiration of the contract, is illegal and entitles respondent to the reliefs
prayed for.
Computation of the six (6) Month Probationary Period
Cals Poultry Supply Corp. vs. Roco
G.R. No. 150660
CALS POULTRY SUPPLY CORPORATION and DANILO YAP vs.
ALFREDO ROCO and CANDELARIA ROCO
July 30, 2002
Facts: On March 15, 1984, CALS hired Alfredo Roco as its driver. On May
16, 1995, it hired Candelaria Roco, another sister, as helper,3 also at its
chicken dressing plant on a probationary basis. On March 5, 1996, Alfredo
Roco and Candelaria Roco filed a complaint for illegal dismissal against
CALS and Danilo Yap alleging that Alfredo and Candelaria were illegally
dismissed on January 20, 1996 and November 5, 1996, respectively.
According to Alfredo Roco, he was dismissed on January 20, 1996 when he
refused to accept P30,000.00 being offered to him by CALS' lawyer, Atty.
Myra Cristela A. Yngcong, in exchange for his executing a letter of
voluntary resignation. On the part of Candelaria Roco, she averred that
she was terminated without cause from her job as helper after serving
more than six (6) months as probationary employee.
The Labor Arbiter on April 16, 1998, issued a decision dismissing the
complaints.The National Labor Relations Commission (NLRC), in a decision
promulgated on January 17, 2000, affirmed the judgment of the Labor
Arbiter.
On appeal,the appellate court set aside the NLRC's decision and ordered
reinstatement of Alfredo and Candelaria Roco to their former positions
without loss of seniority of rights and benefits. In holding that Alfredo Roco

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did not abandon his employment, but was illegally dismissed, the Court of
Appeals ratiocinated:
xxx (P)etitioner Alfredo can not be said to have abandoned his
employment. The failure of Alfredo to report for work was justified
under the circumstances. The positive assertion of petitioner that
when he reported for work on January 20, 1996, he was told that his
services were already terminated is more convincing than the mere
denial of respondent Danilo Yap. Petitioner Alfredo's failure to inquire
from private respondent as to the cause of his dismissal should not
be taken against him. It should be noted that when the secretary of
respondent Danilo Yap conveyed the order of dismissal, Alfredo took
steps to verify the same from the company's Chief Maintenance
Officer Rolando Sibugan who confirmed said order. The filing of the
illegal dismissal case against CALS by petitioner Alfredo negates the
charge of abandonment. Private respondent failed to show that
Alfredo clearly and unequivocably performed overt acts to sever the
employer-employee relationship.
In the instant case, private respondent failed to present as evidence
such notice despite every company's standard policy to record and
file every transaction including notices of termination.
CALS' contention that the letter of Rolando Sibugan inquiring from
Alfredo whether he still had intention of resuming work is a
manifestation of its willingness to reinstate the latter to his former
position, thereby negating any intention on its part to dismiss
Alfredo, is not well-taken. The fact that the employer later made an
offer to re-employ Alfredo did not cure the vice of his earlier
arbitrary dismissal. The wrong had been committed and the harm
done. Notably, it was only after the complaint had been filed that
CALS, in a belated gesture of good will, sought to invite Alfredo back
to work. CALS' sincerity is suspect. Its offer of reinstatement is
doubtful since the same could not have been made if Alfredo had
not complained against it. Whether the offer was sincere or not, the
same could not correct the earlier illegal dismissal of Alfredo. It must
be borne in mind that CALS' offer to reinstate Alfredo was obviously
an attempt to escape liability from having illegally terminated the
latter's services. Hence, CALS incurred liability under the Labor Code
from the moment Alfredo was illegally dismissed, and the liability
was not abated as a result of CALS' offer to reinstate.
In ruling in favor of Candelaria Roco, the appellate court held that when
her employment was terminated on November 15, 1995 (she was hired on
May 16, 1995), it was four (4) days after she ceased to be a probationary
employee and became a regular employee within the ambit of Article 281
of the Labor Code, which provides:

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ART. 281. Probationary employment. - Probationary employment


shall not exceed six months from the date the employee started
working, unless it is covered by an apprenticeship agreement
stipulating a longer period. The services of an employee who has
been engaged on a probationary basis may be terminated for a just
cause or when he fails to qualify as a regular employee in
accordance with reasonable standards made known by the employer
to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a
regular employee.
Issue: Whether or not Candelaria was terminated beyond the 6-month
probationary period.
Held: From the facts established, we are of the view that Alfredo Roco has
not established convincingly that he was dismissed. No notice of
termination was given to him by CALS. There is no proof at all, except his
self-serving assertion, that he was prevented from working after the end
of his leave of absence on January 18, 1996. In fact, CALS notified him in a
letter dated March 12, 1996 to resume his work. Both the Labor Arbiter
and the NLRC found that Alfredo, as well as Candelaria Roco, was not
dismissed. Their findings of fact are entitled to great weight.
With respect to Candelaria Roco, there is no dispute that she was
employed on probationary basis. She was hired on May 16, 1995 and her
services were terminated on November 15, 1995 due to poor work
performance. She did not measure up to the work standards on the
dressing of chicken. The Labor Arbiter sustained CALS in terminating her
employment. The NLRC affirmed the Labor Arbiter's ruling.
The Court of Appeals did not disagree with the NLRC's finding that
Candelaria was dismissed because she did not qualify as a regular
employee in accordance with the reasonable standards made known by
the company to her at the time of her employment
CALS argues that the Court of Appeals' computation of the 6-month
probationary period is erroneous as the termination of Candelaria's
services on November 15, 1995 was exactly on the last day of the 6month period.
We agree with CALS' contention as upheld by both the Labor Arbiter and
the NLRC that Candelaria's services was terminated within and not beyond
the 6-month probationary period. In Cebu Royal v. Deputy Minister of
Labor,13 our computation of the 6-month probationary period is reckoned
from the date of appointment up to the same calendar date of the
6th month following. Thus, we held:
The original findings were contained in a one-page order reciting
simply that 'complainant was employed on a probationary period of
employment for six (6) months. After said period, he underwent
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medical examination for qualification as regular employee but the


results showed that he is suffering from PTB minimal. Consequently,
he was informed of the termination of his employment by
respondent.' The order then concluded that the termination was
'justified.'
As there is no mention of the basis of the above order, we may
assume it was the temporary payroll authority submitted by the
petitioner showing that the private respondent was employed on
probation on February 16, 1978. Even supposing that it is not selfserving, we find nevertheless that it is self-defeating. The six-month
period of probation started from the said date of appointment and
so ended on August 17, 1978, but it is not shown that the private
respondent's employment also ended then; on the contrary, he
continued working as usual. Under Article 282 of the Labor Code, 'an
employee who is allowed to work after a probationary period shall
be considered a regular employee.'' Hence, Pilones was already on
permanent status when he was dismissed on August 21, 1978, or
four days after he ceased to be a probationer.
Application of Article 13 of the Civil Code in the computation of
the six month probationary period.
Mitsubishi Motors Philippines Corp. vs. Chrysler Philippines Labor Union
G.R. No. 148738
MITSUBISHI MOTORS PHILIPPINES CORPORATION vs.
CHRYSLER PHILIPPINES LABOR UNION and NELSON PARAS
June 29, 2004
Facts: Nelson Paras was first employed by MMPC as a shuttle bus driver
on March 19, 1976. He resigned on June 16, 1982. He applied for and was
hired as a diesel mechanic and heavy equipment operator in Saudi Arabia
from 1982 to 1993. When he returned to the Philippines, he was re-hired
as a welder-fabricator at the MMPC tooling shop from October 3, 1994 to
October 31, 1994.2 On October 29, 1994, his contract was renewed from
November 1, 1994 up to March 3, 1995.
Sometime in May of 1996, Paras was re-hired on a probationary basis as a
manufacturing trainee at the Plant Engineering Maintenance Department.
He and the new and re-hired employees were given an orientation on May
15, 19964 respecting company rules and Paras started reporting for work
on May 27, 1996. Paras was evaluated and received an average rating.
Later, Lacambacal informed Paras that based on his performance rating,
he would be regularized. However, the Department and Division
Managers, A.C. Velando and H.T. Victoria, including Mr. Dante
Ong,10reviewed the performance evaluation made on Paras. They
unanimously agreed, along with Paras immediate supervisors, that the
performance of Paras was unsatisfactory. On November 3, 1997, the
Voluntary Arbitrator (VA) rendered a decision finding the dismissal of Paras
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valid for his failure to pass the probationary standards of MMPC. In a


Decision promulgated on September 13, 2000, the CA reversed the ruling
of the Voluntary Arbitrator.
Issue: Whether or not respondent Paras was already a regular employee
on November 26, 1996.
Held: Yes, he was. Indeed, an employer, in the exercise of its
management prerogative, may hire an employee on a probationary basis
in order to determine his fitness to perform work.29 Under Article 281 of
the Labor Code, the employer must inform the employee of the standards
for which his employment may be considered for regularization. Such
probationary period, unless covered by an apprenticeship agreement,
shall not exceed six (6) months from the date the employee started
working. The employees services may be terminated for just cause or for
his failure to qualify as a regular employee based on reasonable standards
made known to him.
Respondent Paras was employed as a management trainee on a
probationary basis. During the orientation conducted on May 15, 1996, he
was apprised of the standards upon which his regularization would be
based. He reported for work on May 27, 1996. As per the companys
policy, the probationary period was from three (3) months to a maximum
of six (6) months.
Applying Article 13 of the Civil Code, the probationary period of six (6)
months consists of one hundred eighty (180) days. This is in conformity
with paragraph one, Article 13 of the Civil Code, which provides that the
months which are not designated by their names shall be understood as
consisting of thirty (30) days each. The number of months in the
probationary period, six (6), should then be multiplied by the number of
days within a month, thirty (30); hence, the period of one hundred eighty
(180) days.
As clearly provided for in the last paragraph of Article 13, in computing a
period, the first day shall be excluded and the last day included. Thus, the
one hundred eighty (180) days commenced on May 27, 1996, and ended
on November 23, 1996. The termination letter dated November 25, 1996
was served on respondent Paras only at 3:00 a.m. of November 26, 1996.
He was, by then, already a regular employee of the petitioner under
Article 281 of the Labor Code.
Extension of Probationary Period Relaxed by the Supreme Court
Mariwasa Manufacturing, Inc. vs. Leogardo
G.R. No. 74246

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MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO vs.


HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister
of Ministry of Labor and Employment judgment, and JOAQUIN A.
DEQUILA
January 26, 1989
Facts: Private respondent Joaquin A. Dequila (or Dequilla) was hired on
probation by petitioner Mariwasa Manufacturing, Inc. (hereafter, Mariwasa
only) as a general utility worker on January 10, 1979. Upon the expiration
of the probationary period of six months, Dequila was informed by his
employer that his work had proved unsatisfactory and had failed to meet
the required standards. To give him a chance to improve his performance
and qualify for regular employment, instead of dispensing with his service
then and there, with his written consent Mariwasa extended his probation
period for another three months from July 10 to October 9, 1979. His
performance, however, did not improve and on that account Mariwasa
terminated his employment at the end of the extended period.
Dequila thereupon filed with the Ministry of Labor against Mariwasa and
its Vice-President for Administration, Angel T. Dazo, a complaint for illegal
dismissal and violation of Presidential Decrees Nos. 928 and 1389. His
complaint was dismissed after hearing by Director Francisco L. Estrella,
Director of the Ministry's National Capital Region. On appeal to the Office
of the Minister, however, said disposition was reversed. Respondent
Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a
regular employee at the time of his dismissal.
Issue: Whether or not employer and employee may by agreement extend
the probationary period of employment beyond the six months.
Held: Yes, they may.The petition, as well as the parties' comments
subsequently submitted all underscore the fact that the threshold issue
here is, as first above stated, the legal one of whether employer and
employee may by agreement extend the probationary period of
employment beyond the six months prescribed in Art. 282 of the Labor
Code. For aught that appears of record, the extension of Dequila's
probation was ex gratia, an act of liberality on the part of his employer
affording him a second chance to make good after having initially failed to
prove his worth as an employee. Such an act cannot now unjustly be
turned against said employer's account to compel it to keep on its payroll
one who could not perform according to its work standards. The law,
surely, was never meant to produce such an inequitable result.
By voluntarily agreeing to an extension of the probationary period,
Dequila in effect waived any benefit attaching to the completion of said
period if he still failed to make the grade during the period of extension.
The Court finds nothing in the law which by any fair interpretation
prohibits such a waiver. And no public policy protecting the employee and
the security of his tenure is served by prescribing voluntary agreements
76 | L a b o r S t a n d a r d s - C a s e D i g e s t s

which, by reasonably extending the period of probation, actually improve


and further a probationary employee's prospects of demonstrating his
fitness for regular employment.
Repetitive Probationary Period
Villanueva vs. NLRC
G.R. No. 127448 September 10, 1998
JUANITO VILLANUEVA vs.
NATIONAL LABOR RELATIONS COMMISSION, (Second Division)
HON. COMMISSIONERS: ROGELIO AYALA, RAUL T. AQUINO,
INNODATA PHILS. INC. / INNODATA PROCESSING CORP. and TODD
SOLOMON
Facts: Petitioner Juanito M. Villanueva started working with respondent
Innodata Philippines, Inc.,/Innodata Processing Corporation as an
"abstractor" with a daily salary of P180. Pettitioner worked for respondent
from Feb. 21, 1994, until Aug. 21, 1995, separated then was rehired from
13 March 1995 to 15 August 1995, with a lesser pay of P164.10 per
day. On 13 August 1995, the petitioner was again separated from the
respondent company also on account of "end of contract."This prompted
the petitioner to file a complaint against the respondent company and its
president, Todd Solomon, for illegal dismissal with prayer for moral and
exemplary damages and attorney's fees. In his 21 May 1996 Decision,
Labor Arbiter Manuel R. Caday held that the petitioner was a regular
employee. On appeal, respondent NLRC reversed the Labor Arbiter's
decision and upheld the validity of petitioner's separation from the
respondent company on the ground that his employment contract was for
a fixed period.

77 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not petitioner is regular employee despite his fixed


period contract with respondent.
Held: We resolve the issue in the affirmative. We agree with the OSG that
the contract cannot be strictly construed as one for a fixed term. For one,
while the first paragraph of Section 2 spoke of the contract's duration to
be "one" year, it was in fact, for one year and six months because it was
to commence on 21 February 1994 and terminate on 21 August I995. For
another, while the second paragraph specified the first six-month period
of employment, 21 February to 21 August 1994, as "contractual," the third
sentence of that paragraph granted the petitioner regular employment
status should he "continue his employment beyond August 21, 1994, . . .
upon demonstration of sufficient skill in terms of his ability to meet the
standards" set by the respondent company. It is clear that the first six
months was in reality the "probation period" under Article 281 of the
Labor Code, since petitioner would become a regular employee if the
employment would continue beyond that period upon demonstration of
sufficient skill in accord with the standards set by the respondent
corporation.
The Labor Arbiter found that as an abstractor, the petitioner was engaged
in "processing, encoding of data, precoding, editing, proofreading and
scoring, all of which activities are deemed necessary and desirable in the
usual business of respondent company." The employment then was
"regular" under the first paragraph of Article 280 of the Labor Code, which
reads:
Art. 280. Regular and casual employment. The provisions of
written agreement to the contrary notwithstanding and
regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the
employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of
the employer, except where the employment has been fixed
for a specific project or undertaking the completion or
termination of which has been determined at the time of the
engagement of the employee or where the work or services to
be performed is seasonal in nature and the employment is for
the duration of the season.
The termination of petitioner's employment contract on 21 February 1995,
as well as the subsequent issuance on 13 March 1995 of a "new" contract
for five months as "data encoder," was a devious, but crude, attempt to
circumvent petitioner's right to security of tenure as a regular employee
guaranteed by Article 279 of the Labor Code. Hence, the so-called "end of
contract" on 21 February 1995 amounted to a dismissal without any valid
cause.

78 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Notably, the respondent company prepared the contract of employment. It


was a contract of adhesion, and petitioner had only to adhere to it by
signing it. Its terms should be construed strictly against the party who
prepared it. Any ambiguity therein must be resolved against the
respondent company, especially because under Article 1702 of the Civil
Code, in case of doubt, all labor contracts shall be construed in favor of
the laborer. We cannot allow the respondent company to construe
otherwise what appears to be clear from the wordings of the contract. The
interpretation which the respondent company seeks to wiggle out is
wholly unacceptable, as it would result in a violation of petitioner's right to
security of tenure guaranteed in Section 3 of Article XIII of the Constitution
and in Articles 279 and 281 of the Labor Code.
Stipulation in Employment
Probationary Period

Contract

Fixing

the

Period

of

Innodata Philippines, Inc. vs. Quejada Lopez


G.R. No. 162839
INNODATA PHILIPPINES, INC. vs.
JOCELYN L. QUEJADA-LOPEZ and ESTELLA G. NATIVIDAD-PASCUAL
October 12, 2006
Facts: Estrella G. Natividad and Jocelyn L. Quejada were employed as
formatters by Innodata Philippines, Inc., a company engaged in the
encoding/data conversion business. Both were employed from 1997 to
1998. They both believe that their job was necessary and desirable to the
usual business of the company which is data processing/conversion and
that their employment is regular pursuant to Article 280 of the Labor
Code. The two, then, filed a complaint for illegal dismissal and for
damages as well as for attorneys fees against Innodata Phils.,
Incorporated.
The Labor Arbiter ruled in favour of Estella G. Natividad and Jocelyn
Quejada, stating that they have been illegally dismissed by Innodata
Philippines Incorporated and Innodata Processing Corporation. An appeal
was filed by Innodata to the National Labor Relations Commission which
reversed and set aside the Labor Arbiters decision, declaring that the
contract was for a fixed term and therefore, the dismissal at the end of
their one year term agreed upon was valid. A motion for reconsideration
was filed, but was denied. The Court of Appeals ruled that respondents
were regular employees in accordance with Section 280 of the Labor
Code. It said that the fixed-term contract prepared by petitioner was a
crude attempt to circumvent respondents right to security of tenure.
Thus, Innodata filed this petition.
79 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not Innodatas fixed period contracts are valid.


Held: No. The contract of employment constituted between Innodata and
the complainants failed to comply with the standards set by law and by
this Court. A contract of employment is impressed with public interest. For
this reason, provisions of applicable statutes are deemed written into the
contract. Hence, the parties are not at liberty to insulate themselves and
their relationships from the impact of labor laws and regulations by simply
contracting with each other. Moreover, in case of doubt, the terms of a
contract should be construed in favor of labor.
Exception to Probationary Period Exceeding Six Month Period
Buiser vs. Hon. Leogardo
G.R. No. L-63316
ILUMINADA VER BUISER, MA. CECILIA RILLOACUA and MA.
MERCEDES P. INTENGAN vs.
HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister
of the Ministry of Labor & Employment, and GENERAL TELEPHONE
DIRECTORY, CO.
July 31, 1984
Facts: Iluminada Ver Buiser, Ma. Cecilia Rilloacua, and Ma. Mercedes P.
Intengan were employed by General Telephone Directory Company as
sales representatives and charged with the duty of soliciting
advertisements for inclusion in a telephone directory. Records show that
Buiser and Intengan entered into an employment contract on probationary
status with General Telephone Directory Company, a corporation engaged
in the business of publication and circulation of the directory of the
Philippine Long Distance Telephone Company. Their contract stipulated
that they will work on a probationary status for a period of eighteen (18)
months. It is understood that darung the probationary period of
employment, the Employee may be terminated at the pleasure of the
company without the necessity of giving notice of termination or the
payment of termination pay. They were also given prescribed sales quotas
to be accomplished or met by the petitioners. Because of their failure to
achieve the required quota, the petitioners were dismissed from the
service by the private respondent.
This motivated the petitioners to file with the Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages,
earned commissions and other benefits. The Regional Director dismissed
the complaints of the petitioners. The petitioners sought for a
80 | L a b o r S t a n d a r d s - C a s e D i g e s t s

reconsideration of the decision, but was treated as an appeal to the


Minister of Labor. Leogardo, the Deputy Minister of Ministry of Labor,
affirmed the Regional Director's Order wherein it ruled that the petitioners
have not attained permanent status since private respondent was justified
in requiring a longer period of probation, and that the termination of
petitioners' services was valid since the latter failed to meet their sales
quotas. Thus, this petition before the Supreme Court.
Issue: Whether or not there was an error in ruling that the probationary
employment of petitioners herein is eighteen (18) months instead of the
mandated six (6) months under the Labor Code, and in consequently
further ruling that petitioners are not entitled to security of tenure while
under said probation for 18 months.
Held: Generally, the probationary period of employment is limited to six
(6) months. The exception to this general rule is when the parties to an
employment contract may agree otherwise, such as when the same is
established by company policy or when the same is required by the nature
of work to be performed by the employee. In the latter case, there is
recognition of the exercise of managerial prerogatives in requiring a
longer period of probationary employment, such as in the present case
where the probationary period was set for eighteen (18) months, i.e. from
May, 1980 to October, 1981 inclusive, especially where the employee
must learn a particular kind of work such as selling, or when the job
requires certain qualifications, skills, experience or training.
In the case at bar, it is shown that private respondent Company needs at
least eighteen (18) months to determine the character and selling
capabilities of the petitioners as sales representatives. The Company is
engaged in advertisement and publication in the Yellow Pages of the PLDT
Telephone Directories. Publication of solicited ads are only made a year
after the sale has been made and only then will the company be able to
evaluate the efficiency, conduct, and selling ability of its sales
representatives, the evaluation being based on the published ads.
Moreover, an eighteen-month probationary period is recognized by the
Labor Union in the private respondent company, which is Article V of the
Collective Bargaining Agreement. x x x And as indicated earlier, the very
contracts of employment signed and acquiesced to by the petitioners
specifically indicate that the company hereby employs the employee as
telephone sales representative on a probationary status for a period of
eighteen (18) months, i.e. from May 1980 to October 1981, inclusive.
This stipulation is not contrary to law, morals and public policy.
Probationary period for Apprentices
Nitto Enterprises vs. NLRC
G.R. No. 114337
81 | L a b o r S t a n d a r d s - C a s e D i g e s t s

NITTO ENTERPRISES vs.


NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI
September 29, 1995

Facts: Petitioner Nitto Enterprises, a company engaged in the sale of


glass and aluminum products, hired Roberto Capili sometime in May 1990
as an apprentice machinist, molder and core maker as evidenced by an
apprenticeship agreement for a period of six (6) months from May 28,
1990 to November 28, 1990 with a daily wage rate of P66.75 which was
75% of the applicable minimum wage.
At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a
piece of glass which he was working on, accidentally hit and injured the
leg of an office secretary who was treated at a nearby hospital. Later that
same day, after office hours, private respondent entered a workshop
within the office premises which was not his work station. There, he
operated one of the power press machines without authority and in the
process injured his left thumb. Petitioner spent the amount of P1,023.04 to
cover the medication of private respondent.
The following day, Roberto Capili was asked to resign in a letter . On August
3, 1990 private respondent executed a Quitclaim and Release in favor of
petitioner for and in consideration of the sum of P1,912.79. Three days
after, private respondent formally filed before the NLRC Arbitration
Branch, National Capital Region a complaint for illegal dismissal and
payment of other monetary benefits.
The Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit upon
which was reversed by the NLRC. Petitioner filed a motion for
reconsideration but the same was denied. Hence, the instant petition.
Issue: Whether or not public respondent NLRC erred in holding that
private respondent is not an apprentice.
Held: 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.

82 | L a b o r S t a n d a r d s - C a s e D i g e s t s

In the case at bench, the apprenticeship agreement between petitioner


and private respondent was executed on May 28, 1990 allegedly
employing the latter as an apprentice in the trade of "care maker/molder."
On the same date, an apprenticeship program was prepared by petitioner
and submitted to the Department of Labor and Employment. However, the
apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding
the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.
Based on the evidence, petitioner did not comply with the requirements of
the law. It is mandated that apprenticeship agreements entered into by
the employer and apprentice shall be entered only in accordance with the
apprenticeship program duly approved by the Minister of Labor and
Employment. Prior approval by the Department of Labor and Employment
of the proposed apprenticeship program is, therefore, a condition sine quo
non before an apprenticeship agreement can be validly entered into. The
act of filing the proposed apprenticeship program with the Department of
Labor and Employment is a preliminary step towards its final approval and
does not instantaneously give rise to an employer-apprentice relationship.
Hence, since the apprenticeship agreement between petitioner and
private respondent has no force and effect in the absence of a valid
apprenticeship program duly approved by the DOLE, private respondent's
assertion that he was hired not as an apprentice but as a delivery boy
("kargador" or "pahinante") deserves credence.
Requirements for Regularization of Private School Teachers
Chang Kai Shek School vs. C.A.
G.R. No. L-58028
CHIANG KAI SHEK SCHOOL vs.
COURT OF APPEALS and FAUSTINA FRANCO OH
April 18, 1989
Facts: An unpleasant surprise awaited Fausta F. Oh when she reported for
work at the Chiang Kai Shek School in Sorsogon on the first week of July,
1968. She was told she had no assignment for the next semester. Oh was
shocked. She had been teaching in the school since 1932 for a continuous
period of almost 33 years. And now, out of the blue, and for no apparent
or given reason, this abrupt dismissal. Oh sued. She demanded separation
pay, social security benefits, salary differentials, maternity benefits and
moral and exemplary damages. The Court of First Instance of Sorsogon
dismissed the complaint. On appeal, its decision was set aside by the
respondent court, which held the school suable and liable while absolving
83 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the other defendants. The motion for reconsideration having been


denied, the school then came to this Court in this petition for review
on certiorari.
Issue: Whether or not Oh had become a permanent employee of the
school and entitled to security of tenure at the time of her dismissal.
Held: The petitioner says the private respondent had not been illegally
dismissed because her teaching contract was on a yearly basis and the
school was not required to rehire her in 1968. The argument is that her
services were terminable at the end of each year at the discretion of the
school. Significantly, no explanation was given by the petitioner, and no
advance notice either, of her relief after teaching year in and year out for
all of thirty-two years, the private respondent was simply told she could
not teach any more. The Court holds, after considering the particular
circumstance of Oh's employment that she had become a permanent
employee of the school and entitled to security of tenure at the time of
her dismissal. Since no cause was shown and established at an
appropriate hearing, and the notice then required by law had not been
given, such dismissal was invalid.
Espiritu Santo Parochial School vs. NLRC
G.R. No. 82325
ESPIRITU SANTO PAROCHIAL SCHOOL, SISTER MARY MARTINEZ,
and SISTER MA. ENCARNACION DE LOS SANTOS vs.
NATIONAL LABOR RELATIONS COMMISSION, ESPIRITU SANTO
PAROCHIAL SCHOOL FACULTY ASSOCIATION, EVANGELINE LOPEZ,
CONSTANCIA TEMPONGKO MARISSA, MARTIN BRAVO, EDITHA
ESPIRITU, VIVIAN CAPATI and CORAZON HADAP
September 26, 1989
Facts: The said seven individual private respondents were hired by the
petitioner-school on a probationary basis on June 1, 1984, whereupon,
sometime between April 1 and 15, 1985 their services were terminated.
On May 8, 1985, they charged the petitioner-school with unfair labor
practice and illegal dismissal. They likewise asked for damages. The labor
arbiter ruled in favor of the respondents.
The school appealed to the National Labor Relations Commission, but the
decision of the labor arbiter was affirmed on February 29, 1988 except for
the charge of unfair labor practice which was dismissed for insufficiency of
evidence.

84 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the individual complainants were lawfully


dismissed when respondents failed to hire them.
Held: There is no dispute that the individual complainants were
probationary employees pursuant to the policy enunciated by the Bureau
of Private Schools extending the probationary employment of teachers to
three (3) years. The mentioned policy, however, did not repeal or render
inoperative Article 282 of the Labor Code, as amended which provides
that: The services of an employee who has been engaged on a
probationary basis may be terminated for a just cause or when he fails to
qualify as a regular employee in accordance with reasonable standards
made known to the employee at the time of his engagement.

There was no clear evidence that the individual complainants were


terminated either for a just cause or that they have failed to qualify as
regular employees in accordance with the standards set by respondent
school made known to the former at the time of hiring. In fact, it is shown
that the individual complainants were issued individual certifications of
employment and whose performance ratings ranged from 85% to 90%.
It is not denied that the complainants were hired as probationary
teachers, but the reason for their termination should nevertheless be for a
valid cause or causes. It must be clearly shown that they have failed to
meet certain standards or criteria made known to them beforehand. It
cannot be said that they failed to meet respondents' standards because of
their high marks of performance. Hence, the Court see no valid reason for
the school not to re-hire them, except, of course, for some reasons known
only to the school authorities but which they did not make known to
herein complainants.
13. Project Employment Labor Code Article 280, 1 st paragraph;
Section 5(a), Rule I, Book IV, Implementing Rules and
Regulations as amended by Rule IV, as amended by Article IV,
Department Order No. 19, Series of 1993 amending Policy
Instruction No. 20 (Guidelines Governing the Workers in the
Construction Industry)
Definition and Nature of Project Employment
Hanjin Heavy Industries & Construction Co. vs. Ibaez
G.R. No. 170181

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HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK


KON KIM and/or JHUNIE ADAJAR vs.
FELICITO IBAEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE
DAGOTDOT AND RUEL CALDA
June 26, 2008
Facts: Petitioner HANJIN is a foreign company duly registered with the
Securities and Exchange Commission to engage in the construction
business in the Philippines. Petitioners Hak Kon Kim and Jhunie Adajar
were employed as Project Director and Supervisor, respectively, by
HANJIN. On 11 April 2002, respondents Felicito Ibaez, Aligwas Carolino,
Elmer Gacula, Enrique Dagotdot, Ruel Calda, and four other co-workers
filed a complaint before the NLRC for illegal dismissal with prayer for
reinstatement and full backwages against petitioners. In their Position
Paper, respondents alleged that HANJIN hired them for various positions
on different dates. Respondents stated that their tasks were usual and
necessary or desirable in the usual business or trade of HANJIN.
Respondents additionally averred that they were employed as members of
a work pool from which HANJIN draws the workers to be dispatched to its
various construction projects; with the exception of Ruel Calda, who as a
warehouseman was required to work in HANJIN's main office.
On 15 April 2002, Hanjin dismissed respondents from employment.
Respondents claimed that at the time of their dismissal, HANJIN had
several construction projects that were still in progress, such as Metro Rail
Transit (MRT) II and MRT III, and continued to hire employees to fill the
positions vacated by the respondents. Petitioners denied the respondents'
allegations. They maintained that respondents were hired as project
employees for the construction of the LRT/MRT Line 2 Package 2 and 3
Project. HANJIN and respondents purportedly executed contracts of
employment, in which it was clearly stipulated that the respondents were
to be hired as project employees for a period of only three months, but
that the contracts may be renewed. However, petitioners failed to furnish
the Labor Arbiter a copy of said contracts of employment.
The Labor Arbiter found merit in the respondents' complaint and declared
that they were regular employees who had been dismissed without just
and valid causes and without due process. Petitioners filed an appeal
before the NLRC. The NLRC reversed the Labor Arbiter's Decision dated 30
April 2003, and pronounced that the respondents were project employees
who were legally terminated from employment. On appeal, the Court of
Appeals reversed the NLRC Decision.
Issue: Whether or not respondents were regular or project employees.
Held:The principal test for determining whether particular employees are
properly characterized as "project employees" as distinguished from
86 | L a b o r S t a n d a r d s - C a s e D i g e s t s

"regular employees" is whether or not the project employees were


assigned to carry out a "specific project or undertaking," the duration and
scope of which were specified at the time the employees were engaged
for that project. In a number of cases, the Court has held that the length
of service or the re-hiring of construction workers on a project-to-project
basis does not confer upon them regular employment status, since their
re-hiring is only a natural consequence of the fact that experienced
construction workers are preferred. Employees who are hired for carrying
out a separate job, distinct from the other undertakings of the
company, the scope and duration of which has been determined and
made known to the employees at the time of the employment, are
properly treated as project employees and their services may be lawfully
terminated upon the completion of a project. Should the terms of their
employment fail to comply with this standard, they cannot be considered
project employees.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latters' work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, the
Court were constrained to declare them as regular employees.
Indicators of Project Employment, Section 22, D.O. No. 19 Series
of 1993
Cocomangas Hotel Beach Resort vs. Visca
G.R. No. 167045
COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO vs.
FEDERICO F. VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS,
RICHARD G. VISCA and RAFFIE G. VISCA
August 29, 2008
Facts: The present controversy stemmed from five individual
complaints for illegal dismissal filed on June 15, 1999 by Federico
F. Visca (Visca),
Johnny
G. Barredo,
Ronald
Q. Tibus,
Richard
G. Visca and Raffie G. Visca (respondents)
against CocomangasHotel
Beach Resort and/or its owner-manager, Susan Munro (petitioners) before
the National Labor Relations Commission in Kalibo, Aklan. In their
consolidated Position Paper, respondents alleged that they were regular
employees of petitioners. Petitioners denied any employer-employee
relationship with respondents and countered that respondent Visca was an
independent contractor who was called upon from time to time when some
repairs in the resort facilities were needed and the other respondents were
selected and hired by him.
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On June 30, 2000, the Labor Arbiter rendered a Decision[ dismissing the
complaint, holding that respondent Visca was an independent contractor and
the other respondents were hired by him to help him with his contracted works
at the resort; that there was no illegal dismissal but completion of projects; that
respondents were project workers, not regular employees. Respondents filed an
appeal with the NLRC.
The NLRC rendered a Decision in favor of the respondents. Petitioners then filed
a Motion for Reconsideration, arguing that respondents were project employees.
The NLRC made a complete turnabout from its original decision and issued a
Resolution dismissing the complaint, holding that respondents were not regular
employees but project employees, hired for a short period of time to do some
repair jobs in petitioners' resort business.
Respondents then filed a Petition for Certiorari with the CA. The CA rendered its
assailed Decision where it that held respondents were regular employees, not
project workers, since in the years that petitioners repeatedly hired respondents'
services, the former failed to set, even once, specific periods when the
employment relationship would be terminated; that the repeated hiring of
respondents established that the services rendered by them were necessary and
desirable to petitioners' resort business; at the least, respondents were regular
seasonal employees, hired depending on the tourist season and when the need
arose in maintaining petitioners' resort for the benefit of guests.
Issue: Whether or not respondents regular employees or project
employees.
Held: A project employee is one whose "employment has been fixed for a
specific project or undertaking, the completion or termination of which has
been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the
employment is for the duration of the season." Before an employee hired
on a per-project basis can be dismissed, a report must be made to the
nearest employment office, of the termination of the services of the
workers every time completes a project, pursuant to Policy Instruction No.
20.
In
the
present
case,
respondents
cannot
be
classified
as project employees, since they worked continuously for petitioners from
three to twelve years without any mention of a project to which they were
specifically assigned. While they had designations as foreman, carpenter
and mason, they performed work other than carpentry or masonry. They
were tasked with the maintenance and repair of the furniture, motor
boats, cottages, and windbreakers and other resort facilities. There is
likewise no evidence of the project employment contracts covering
respondents' alleged periods of employment. More importantly, there is
no evidence that petitioners reported the termination of respondents'
supposed project employment to the DOLE as project employees.
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Department Order No. 19, as well as the old Policy Instructions No. 20,
requires employers to submit a report of an employees termination to the
nearest public employment office every time his employment is
terminated due to a completion of a project. Petitioners' failure to file
termination reports is an indication that the respondents were
not project employees but regular employees.
The Employment contract is only signed by the president and the
manager but not the employee concerned.
Abesco Construction and Development Corp. vs. Ramirez
G.R. No. 141168
ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and
MR. OSCAR BANZON, General Manager vs.
ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA,
REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA
and GARY DISON
April 10, 2006
Facts: Petitioner company was engaged in a construction business where
respondents were hired on different dates from 1976 to 1992 either as
laborers, road roller operators, painters or drivers. In 1997, respondents
filed two separate complaints for illegal dismissal against the company
and its General Manager, Oscar Banzon, before the Labor Arbiter.
Petitioners allegedly dismissed them without a valid reason and without
due process of law. The complaints also included claims for non-payment
of the 13th month pay, five days service incentive leave pay, premium pay
for holidays and rest days, and moral and exemplary damages. The LA
later on ordered the consolidation of the two complaints.
After trial, the LA ruled in favor of the respondents. Petitioners appealed to
the National Labor Relations Commission (NLRC) which affirmed the LAs
decision. Subsequently, petitioners filed a petition for review in the Court
of Appeals (CA) arguing that they were not liable for illegal dismissal since
respondents services were merely put on hold until the resumption of their
business operations. They also averred that they had paid respondents
their full wages and benefits as provided by law, hence, the latter had no
more right to further benefits. The CA was not convinced and dismissed
petitioners appeal, hence, the petition.
Issue: Whether
employees.

respondents

were

project

employees

or

regular

Held: The Court ruled that respondents were regular employees. The
principal test for determining whether employees are project employees
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or regular employees is whether they are assigned to carry out a specific


project or undertaking, the duration and scope of which are specified at
the time they are engaged for that project. Such duration, as well as the
particular work/service to be performed is defined in an employment
agreement and is made clear to the employees at the time of hiring.
In this case, petitioners did not have that kind of agreement with
respondents. Neither did they inform respondents of the nature of the
latters work at the time of hiring. Hence, for failure of petitioners to
substantiate their claim that respondents were project employees, the
Court is constrained to declare them as regular employees.
The employment contract is only signed by the president and the
manager but not the employee concerned
Raycor Aircontrol System, Inc. vs. NLRC
G.R. No. 114290
RAYCOR AIRCONTROL SYSTEMS, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION and ROLANDO LAYA, et
al.
September 9, 1996
Facts: Petitioner's sole line of business is installing airconditioning
systems in the buildings of its clients. He hired private respondents who
worked in various capacities as tinsmith, leadman, aircon mechanic,
installer, welder and painter. Private respondents insisted that they had
been regular employees all along, but petitioner maintained that they
were project employees who were assigned to work on specific projects of
petitioner, and that the nature of petitioner's business mere installation
(not manufacturing) of aircon systems and equipment in buildings of its
clients prevented petitioner from hiring private respondents as regular
employees. As found by the Labor Arbiter, their average length of service
with petitioner exceeded one year, with some ranging from two, six, or ten
years. Private respondents filed a case in NLRC for regularization, which
was dismissed for want of cause of action. Consequently, they were
served with uniformly-worded notices of "Termination of Employment" by
petitioner citing their present business status, which terminations were to
be effective the day following the date of receipt of the notices.
Private respondents then averred that had been given their walking
papers after they refused to sign a "Contract Employment" providing for,
among others, a fixed period of employment which "automatically
terminates without necessity of further notice" or even earlier at
petitioner's sole discretion. Hence, they filed a case of illegal dismissal.
The Labor Arbiter dismissed the complaints for lack of merit citing that
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the complainants were project employees assigned to work on specific


projects involving the installation of air-conditioning units as covered by
contracts
between
their
employer
and
the
latter's
clients.
The NLRC reversed the Labor Arbiter's decision and found private
respondents had been regular employees illegally dismissed, and stated
that they belonged to a work pool from which the respondent company
drew its manpower requirements.
Issue: Whether or not private respondents were project employees or
regular employees, and whether or not they were legally dismissed.
Held: The Court held that there was no solid evidence to decide the case
either way. Therefore, considering that in illegal dismissal cases, the
employer always has the burden of proof, and considering that the law
mandates that all doubts, uncertainties, ambiguities and insufficiencies be
resolved in favor of labor, it ruled against petitioner and in favor of private
respondents.
Consent must be knowingly and voluntarily, and without force,
duress or improper pressure
Caramol vs. NLRC, G.R. No. 102973, 225 SCRA 582
G.R. No. 102973
ROGELIO CARAMOL vs.
NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF
and PACIFIC CO. OF MANILA, INC.
August 24, 1993
Facts: Rogelio Caramol was hired by respondent Atlantic Gulf and Pacific
Co. of Manila, Inc., (ATLANTIC GULF), on a "project-to-project" basis but
whose employment was renewed forty-four (44) times by the latter filed a
complaint against the Labor Arbiter for unfair labor practice which the
Labor Arbiter decided favourably. However, the decision was reversed and
set aside by the National Labor Relations Commission (NLRC). The NLRC
found that Caramol is a project employee falling under the exception of
Art. 280 of the Labor Code. Caramol now assails NLRCs decision through
this petition before the Supreme Court.
Issue: Whether or not Rogelio Caramol is a seasonal or a regular
employee.
Held: There is no question that stipulation on employment contract
providing for a fixed period of employment such as project-to-project
contract is valid provided the period was agreed upon knowingly and
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voluntarily by the parties, without any force, duress or improper pressure


being brought to bear upon the employee and absent any other
circumstances vitiating his consent, or where it satisfactorily appears that
the employer and employee dealt with each other on more or less equal
terms with no moral dominance whatever being exercised by the former
over the latter. However, where from the circumstances it is apparent that
periods have been imposed to preclude the acquisition of tenurial security
by the employee, they should be struck down as contrary to public policy,
morals, good custom or public order.
However, with the successive contracts of employment where petitioner
continued to perform the same kind of work, i.e., as rigger throughout his
period of employment, it is clearly manifest that petitioners tasks were
usually necessary or desirable in the usual business or trade of private
respondent. There can therefore be no escape from the conclusion that
petitioner is a regular employee of private respondent ATLANTIC GULF.
Exception to Article 280, a fixed period of employment, a day
certain; Requisites
Brent School, Inc. vs. Zamora
G.R. No. L-48494
BRENT SCHOOL, INC., AND REV. GABRIEL DIMACHE vs.
RONALDO ZAMORA, THE PRESIDENTIAL ASSISTANT FOR LEGAL
AFFAIRS, OFFICE OF THE PRESIDENT, AND DOROTEO R. ALEGRE
February 5, 1990
Facts: Private respondent Doroteo R. Alegre was engaged as athletic
director by petitioner Brent School, Inc. at a yearly compensation of
P20,000.00. The contract fixed a specific term for its existence, five (5)
years, i.e., from July 18, 1971, the date of execution of the agreement, to
July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973,
August 28, 1973, and September 14, 1974 reiterated the same terms and
conditions, including the expiry date, as those contained in the original
contract of July 18, 1971. On April 20,1976, Alegre was given a copy of the
report filed by Brent School with the Department of Labor advising of the
termination of his services effective on July 16, 1976. The stated ground
for the termination was "completion of contract, expiration of the definite
period of employment." Although protesting the announced termination
stating that his services were necessary and desirable in the usual
business of his employer, and his employment lasted for 5 years
therefore he had acquired the status of regular employee Alegre
accepted the amount of P3,177.71, and signed a receipt therefor
containing the phrase, "in full payment of services for the period May 16,
to
July
17,
1976
as
full
payment
of
contract."
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The Regional Director considered Brent School's report as an application


for clearance to terminate employment (not a report of termination), and
accepting the recommendation of the Labor Conciliator, refused to give
such clearance and instead required the reinstatement of Alegre, as a
"permanent employee," to his former position without loss of seniority
rights and with full back wages. Brent School filed a motion for
reconsideration. The Regional Director denied the motion and forwarded
the case to the Secretary of Labor for review. The latter sustained the
Regional Director. Brent appealed to the Office of the President. Again it
was rebuffed. That Office dismissed its appeal for lack of merit and
affirmed the Labor Secretary's decision, ruling that Alegre was a
permanent employee who could not be dismissed except for just cause,
and expiration of the employment contract was not one of the just causes
provided in the Labor Code for termination of services.
Issue: Whether or not the provisions of the Labor Code, as amended,
have anathematized "fixed period employment" or employment for a
term.
Held: No. Respondent Alegre's contract of employment with Brent School
having lawfully terminated with and by reason of the expiration of the
agreed term of period thereof, he is declared not entitled to
reinstatement. The employment contract between Brent School and
Alegre was executed on July 18, 1971, at a time when the Labor Code of
the Philippines (P.D. 442) had not yet been promulgated. At that time, the
validity of term employment was impliedly recognized by the Termination
Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the
Code of Commerce (Article 302) which governed employment without a
fixed period, and also implicitly acknowledged the propriety of
employment with a fixed period. The Civil Code of the Philippines, which
was approved on June 18, 1949 and became effective on August 30, 1950,
itself deals with obligations with a period. No prohibition against term-or
fixed-period employment is contained in any of its articles or is otherwise
deducible
therefrom.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include in
it a stipulation fixing the duration thereof Stipulations for a term were
explicitly
recognized
as
valid
by
this
Court.
The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (PD 442), which went into
effect on November 1, 1974. The Code contained explicit references to
fixed period employment, or employment with a fixed or definite period.
Nevertheless, obscuration of the principle of licitness of term employment
began
to
take
place
at
about
this
time.
Article 320 originally stated that the "termination of employment of
probationary employees and those employed WITH A FIXED PERIOD shall
be subject to such regulations as the Secretary of Labor may prescribe."
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Article 320, dealing with "Probationary and fixed period employment," was
altered by eliminating the reference to persons "employed with a fixed
period," and was renumbered (becoming Article 271).
As it is evident that Article 280 of the Labor Code, under a narrow and
literal interpretation, not only fails to exhaust the gamut of employment
contracts to which the lack of a fixed period would be an anomaly, but
would also appear to restrict, without reasonable distinctions, the right of
an employee to freely stipulate with his employer the duration of his
engagement, it logically follows that such a literal interpretation should be
eschewed or avoided. The law must be given a reasonable interpretation,
to preclude absurdity in its application. Outlawing the whole concept of
term employment and subverting to boot the principle of freedom of
contract to remedy the evil of employer's using it as a means to prevent
their employees from obtaining security of tenure is like cutting off the
nose to spite the face or, more relevantly, curing a headache by lopping
off the head. Such interpretation puts the seal on Bibiso upon the effect of
the expiry of an agreed period of employment as still good rulea rule
reaffirmed in the recent case of Escudero vs. Office of the President (G.R.
No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher
being served by her school a notice of termination following the expiration
of the last of three successive fixed-term employment contracts.
Paraphrasing Escudero, respondent Alegre's employment was terminated
upon
the
expiration of his last contract with Brent School on July 16, 1976 without
the necessity of any notice. The advance written advice given the
Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor
an application for clearance to terminate which needed the approval of
the Department of Labor to make the termination of his services effective.
In any case, such clearance should properly have been given, not denied.
Logically, the decisive determinant in term employment should not be the
activities that the employee is called upon to perform, but the day certain
agreed upon by the parties for the commencement and termination of
their employment relationship, a day certain being understood to be "that
which must necessarily come, although it may not be known when."
Seasonal employment, and employment for a particular project are merely
instances employment in which a period, where not expressly set down,
necessarily implied.
Absence of a provision in the contract of employment of specific
project or undertaking.
Price vs. Innodata Philippines/ Innodata Corp.
G.R. No. 178505
CHERRY J. PRICE, STEPHANIE G. DOMINGO, AND LOLITA ARBILERA
vs.

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INNODATA PHILS. INC.,/INNODATA CORPORATION, LEO RABANG,


AND JANE NAVARETTE
September 30, 2008
Facts: Innodata Philippines Inc. was a domestic corporation engaged in
the data encoding and data conversion business. Cherry Price, Stephanie
Domingo, and Lolita Arbilera (petitioners) were employed as formatters by
Innodata. They entered into a contract denominated as a Contract of
Employment for a Fixed Period stipulating that the contract shall be for a
period of one year (February 16, 1999 to February 16, 2000). During their
employment, petitioners were assigned to handle jobs for various clients
of Innodata and once they finished the job for one client, they were
immediately assigned to do a new job for another client. On February 16,
2009, the Human Resource Manager of Innodata wrote to petitioners
informing them of their last day of work (February 16, 2000). According to
Innodata, this was due to the end of their contract. Petitioners then filed a
complaint for illegal dismissal claiming that they should be considered
regular employees since their positions as formatters were necessary and
desirable to the usual business of Innodata as an encoding, conversion
and data processing company. They also invoked the decisions in
Villanueva v. NLRC and Servidad v. NLRC in which the Court already
purportedly ruled that the nature if employment at Innodata is regular.
They were also neither considered project employees since their
employment was not coterminous with any project or undertaking.
On the other hand, respondents contended that Innodata was engaged in
the business of data processing, type-setting, indexing and abstracting for
its foreign clients and the bulk of the work was data processing, which
involved data encoding, which half of its employees did. Due to the wide
range of services, Innodata was constrained to hire new employees for a
fixed period not more than one year like the petitioners whose contracts
of employment were for a limited period only. Moreover, they claimed that
the petitioners were estopped since they entered into the contracts
knowingly and voluntarily.
The Labor Arbiter held that as formatters, petitioners occupied jobs that
were necessary, desirable and indispensable to the data processing and
encoding business and should be considered regular employees who were
entitled to security of tenure. NLRC, on appeal, reversed finding that
petitioners were not regular employees but fixed-term employees as
stipulated in their contracts. CA affirmed the NLRC ruling.
Issue: Whether or not petitioners were hired by Innodata under valid
fixed-term employment contracts.
Held: No. Thus, they were illegally dismissed. The Court found that there
were no valid fixed-term employment contracts, and petitioners were
regular employees of Innodata who could not dismiss them except for just
or authorized cause. The employment status of a person is defined and
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prescribed by law and not by what the parties say it should be. Based on
Art. 280, the following employees are accorded regular status: (1) those
who are engaged to perform activities which are necessary or desirable in
the usual business or trade of the employer, regardless of the length of
their employment; and (2) those who were initially hired as casual
employees, but have rendered at least one year of service, whether
continuous or broken, with respect to the activity in which they are
employed. Petitioners belong to the first type. The applicable test to
determine whether an employment should be considered regular or nonregular is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of
the employee.
In this case, petitioners were employed as formatters while the primary
business of Innodata is encoding. The formatting of the data entered into
the computers is an essential part of the process of data encoding.
Formatting organizes the data encoded, making it easier to understand for
the clients and/or the intended users, and therefore necessary and
desirable in the business or trade of Innodata. However, it is also true that
while certain forms of employment require the performance of usual or
desirable functions and exceed one year, these do not necessarily result
in regular employment under Article 280 of the Labor Code. Under the
Civil Code, fixed-term employment contracts are not limited, as they are
under the present Labor Code, to those by nature seasonal or for
specific projects with predetermined dates of completion; they also
include those to which the parties by free choice have assigned a specific
date of termination. A fixed-term employment is valid only under certain
circumstances, and where, from the circumstances, it is apparent that the
period was imposed to preclude the acquisition of tenurial security by the
employee, then it should be struck down as being contrary to law, morals,
good customs, public order and public policy. The terms of the contracts of
employment of the petitioners were found to be meant only to circumvent
petitioners right of tenure and are therefore valid. This is supported by
the fact that the contracts were not only ambiguous but also appeared to
be tampered with.
Petitioners alleged and the contracts themselves state that the petitioners
were employed on February 17, 1999. However, respondents asserted
before the Labor Arbiter that the contracts were effective only on
September 6, 1999. While they submitted employment contracts with
September 6, 1999 as beginning of date of effectivity, in one of them, the
original date, February 16, 1999,was merely crossed out and replaced with
September 6. The alterations were very obvious and have not initialed by
the petitioners to indicate their assent to the same. If the contracts were
truly fixed-term contracts, then a change in the term or period agreed
upon is material and would already constitute a novation of the original
contract.

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Innodata further contends that petitioners were project employees whose


employment ceased at the end of the specific project or undertaking. This
is devoid of merit. In Philex Mining Corp v. NLRC, project employees are
those hired: (1) for a specific project or undertaking, and wherein (2) the
completion or termination of such project has been determined at the
time of the engagement of the employee. The employment contracts did
not mention what specific project or undertaking petitioners were hired
for. The conclusion by the Court of Appeals that petitioners were hired for
the Earthweb project is not supported by any evidence on record. More
importantly, there is also a dearth of evidence that such project or
undertaking had already been completed or terminated to justify the
dismissal of petitioners. In fact, petitioners did not work on just one
project, but continuously worked for a series of projects for various clients.
Petitioners, being regular employees, are entitled to security of tenure.
No notice that employees were appraised of the nature of
employment, the specific projects or any phase thereof.
Chua vs. Court of Appeals
G.R. No. 125837
REYNALDO CANO CHUA, DOING BUSINESS UNDER THE NAME &
STYLE PRIME MOVER CONSTRUCTION DEVELOPMENT vs.
COURT OF APPEALS, SOCIAL SECURITY COMMISSION, SOCIAL
SECURITY SYSTEM, ANDRES PAGUIO, PABLO CANALE, RUEL
PANGAN, AURELIO PAGUIO, ROLANDO TRINIDAD, ROMEO TAPANG,
AND CARLOS MALIWAT
October 6, 2004
Facts: Private respondents were employees of the petitioner assigned in
his various construction projects continuously in different capacities and
the periods indicated with the correspondent basic salaries. Respondents
then filed a petition with the SSC for SSS coverage and contributions
claiming they were all regular employees of the petitioner. The
respondents then alleged that petitioner dismissed all of them without
justifiable grounds and without notice. Petitioner argues that the
respondents were project employees and that such employees were not
entitled to coverage under the Social Security Act.
SSC declared that the private respondents were petitioners regular
employees. The Court of Appeals also declared that the respondents were
all regular employees since the various projects of employment lasts for at
least one year and that their work was necessary and desirable to
petitioners business.
Issue: Whether or not the private respondents were petitioners regular
employees.

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Held: Yes. The private respondents were petitioners regular employees.


Such relationship can be easily determined by the application of the
control test and such will hold true that they were petitioners regular
employees since the petitioner having control over the results of the work
done, as well as the means and methods by which the same were
accomplished.
The petitioner cannot claim that the respondents were merely project
employees. It is not enough that an employee is hired for a specific project
or phase of work, there must also be a determination of, or a clear
agreement on, the completion or termination of the project at the time the
employee was engaged if the objectives of Article 280 of the Labor Code
are to be achieved. Petitioner was unable to show that private
respondents were appraised of the nature of their employment, the
specific projects themselves or any phase thereof undertaken by
petitioner and for which private respondents were hired, thus petitioner
failed to substantially give evidence that the private respondents were his
projects employee only.
Elements before a project employee attains a status of regular
employment.
Maraguianot Jr. vs. NLRC
G.R. No. 120969
ALEJANDRO MARAGUINOT, JR. AND PAULINO ENERO vs.
NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION)
COMPOSED OF PRESIDING COMMISSIONER RAUL T. AQUINO,
COMMISSIONER ROGELIO I. RAYALA AND COMMISSIONER
VICTORIANO R. CALAYCAY (PONENTE), VIC DEL ROSARIO AND VIVA
FILMS
January 22, 1998
Facts: Maraguinot and Enero were separately hired by Vic Del Rosario
under Viva Films as part of the filming crew. Sometime in May 1992,
sought the assistance of their supervisor to facilitate their request that
their salary be adjusted in accordance with the minimum wage law. On
June 1992, Mrs. Cesario, their supervisor, told them that Mr. Vic Del
Rosario would agree to their request only if they sign a blank employment
contract. Petitioners refused to sign such document. After which, the Mr.
Enero was forced to go on leave on the same month and refused to take
him back when he reported for work. Mr. Maraguinot on the other hand
was dropped from the payroll but was returned days after. He was again
asked to sign a blank employment contract but when he refused, he was
terminated. Consequently, the petitioners sued for illegal dismissal before
the Labor Arbiter. The private respondents claim the following: (a) that
VIVA FILMS is the trade name of VIVA PRODUCTIONS, INC. and that it was
primarily engaged in the distribution & exhibition of movies- but not then
making of movies; (b) That they hire contractors called producers who
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act as independent contractors as that of Vic Del Rosario; and (c) As such,
there is no employee-employer relation between petitioners and private
respondents.
The Labor Arbiter held that the complainants are employees of the private
respondents. That the producers are not independent contractor but
should be considered as labor-only contractors and as such act as mere
agent of the real employer. Thus, the said employees are illegally
dismissed. The private respondents appealed to the NLRC which reversed
the decision of the Labor Arbiter declaring that the complainants were
project employees due to the ff. reasons: (a) Complainants were hired for
specific movie projects and their employment was co-terminus with each
movie project; (b) the work is dependent on the availability of projects. As
a result, the total working hours logged extremely varied; (c) The
extremely irregular working days and hours of complainants work explains
the lump sum payment for their service; and (d) the respondents alleged
that the complainants are not prohibited from working with other movie
companies whenever they are not working for the independent movie
producers engaged by the respondents. A motion for reconsideration was
filed by the complainants but was denied by NLRC. In effect, they filed an
instant petition claiming that NLRC committed a grave abuse of discretion
in: (a) Finding that petitioners were project employees; (b) Ruling that
petitioners were not illegally dismissed; and (c) Reversing the decision of
the Labor Arbiter. In the instant case, the petitioners allege that the NLRC
acted in total disregard of evidence material or decisive of the
controversy.
Issues: Whether or not the petitioners were illegally dismissed.
Held: Yes. Private respondents contend that petitioners were project
employees whose employment was automatically terminated with the
completion of their respective projects. Petitioners assert that they were
regular employees who were illegally dismissed. It may not be ignored,
however, that private respondents expressly admitted that petitioners
were part of a work pool, and while petitioners were initially hired possibly
as project employees, they had attained the status of regular employees
in view if VIVA's conduct.
A project employee or a member of a work pool may acquire the status of
a regular employee when the following concur:
1) There is a continuous rehiring of project employees even after
cessation of a project; and
2) The tasks performed by the alleged "project employee" are vital,
necessary and indispensable to the usual business or trade of the
employer.
However, the length of time during which the employee was continuously
re-hired is not controlling, but merely serves as a badge of regular
employment.
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Work Pool Employment, Policy Instruction No. 20


Tomas Lao Construction vs. NLRC
G.R. No. 116781
TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION,
THOMAS AND JAMES DEVELOPERS PHILIPPINES, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA,
SR., ROBERTO LABENDIA, NARCISO ADAN, FLORENCIO GOMEZ,
ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO BISNAR,
CIPRIANO BERNALES, ANGEL MABULAY, SR., LEO SURIGAO, AND
ROQUE MORILLO
September 05, 1997
Facts: The respondents were alleging that they were hired for various
periods as construction workers in different capacities. Within the periods
of their respective employments, they alternatively worked for petitioners
Tomas Lao Corporation (TLC), Thomas and James Developers (T&J), and
LVM Construction Corporation (LVM), the three entities comprising a
business conglomerate exclusively controlled and managed by members
of the Lao family. TLC, T&J and LVM are engaged in the construction of
public roads and bridges. Under joint venture agreements they shared not
only tools and equipment but they each one would allow the utilization of
their employees by the other two. With this arrangement, workers were
transferred whenever necessary to on-going projects of the same
company or of the others, or were hired after the completion of the project
or project phase to which they were assigned.
Sometime in 1989, Andres Lao, managing Director of LVM and President of
T&J, issued a memorandum requiring all workers and company personnel
to sign employment contract forms and clearances which were issued on
July 1, 1989 but antedated January 10, 1989. These were to be used
allegedly for audit purposes pursuant to a joint venture agreement
between LVM and T&J. To ensure compliance with the directive, the
company ordered the withholding of the salary of any employee who
refused to sign. Quite notably, the contracts expressly described the
construction workers as project employees whose employments were for a
definite period, i.e., upon the expiration of the contract period or the
completion of the project for which the workers was hired. Except for
Florencio Gomez, all private respondents refused to sign contending that
this scheme was designed by their employer to downgrade their status
from regular employee to mere project employees. Resultantly, their
salaries were withheld. They were also required to explain why their
services should not be terminated for violating company rules and warned
that failure to satisfactorily explain would be construed as disinterest in
continued employment with the company. Since the workers stood firm in
their refusal to comply with the directives, their services were terminated.

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The Labor Arbiter dismissed the complaints finding that private


respondents were project employees whose employments could be
terminated upon completion of the projects or project phase for which
they were hired. The NLRC reversed on appeal the Labor Arbiters decision
and found the private respondents were regular employees who were
dismissed without just cause and denied due process.
The petitioners contend that respondents have no valid cause to complain
about their employment contracts since these documents merely
formalized their status as project employees. They cite Policy Instruction
No. 20 of the Department of Labor which defines project employees as
those employed in connection with a particular construction project,
adding that the ruling in Sandoval Shipyards vs. NLRC applies squarely to
the instant case because there the Court declared that the employment of
project employees is co-terminus with the completion of the project
regardless of the number of projects in which they have worked. And as
their employment is one for a definite period, they are not entitled to
separation pay nor is their employer required to obtain clearance from the
Secretary of Labor in connection with their termination. Petitioners thus
agree that their dismissal from the service of private respondents was
legal since the projects from which they were hired had already been
completed.
Issue: Whether or not the NLRC erred in classifying the employees as
regular employees instead of project employees.
Held: No. The principal test in determining whether particular employees
are project employees, as distinguished from regular employees, is
whether the project employees are assigned to carry out specific project
or undertaking, the duration and scope of which are specified at the time
the employees are engaged for the project. While length of time may not
be a controlling test for project employment, it can be a strong factor in
determining whether the employee was hired for a specific undertaking or
in fact tasked to perform functions which are vital, necessary and
indispensable to the usual business or trade of the employers. In the case
at bar, respondents had already gone through the status of project
employees. But their employments became non-coterminous with specific
projects when they started to be continuously re-hired due to the
demands of petitioners business and were re-engaged for many more
projects without interruption.
The denial by petitioners of the existence of a workpool in the company
because their projects were not continuous is amply belied by petitioners
themselves. A workpool may exist although the workers in the pool do not
receive salaries and are free to seek other employment during temporary
breaks in the business, provided that the worker shall be available when
called to report for a project. Although primarily applicable to regular or
seasonal workers, this set-up can likewise be applied to project workers
insofar as the effect of temporary cessation of work is concerned. This is
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beneficial to both the employer and employee for it prevents the unjust
situation of coddling labor at the expense of capital and at the same
time enables the workers to attain the status of regular employee.
Moreover, if private respondents were indeed employed as project
employees, petitioners should have submitted a report of termination to
the nearest public employment office every time their employment was
terminated due to completion of each construction project. Policy No. 20 is
explicit that the employers of project employees are exempted from the
clearance requirement but not from the submission of termination report.
It is one of the indicators of project employment according to Department
Order No. 19.
Application of work pool in the business of data encoding
Imbuido vs. NLRC
G.R. No. 114734
VIVIAN Y. IMBUIDO vs.
NATIONAL LABOR RELATIONS COMMISSION, INTERNATIONAL
INFORMATION SERVICES, INC., AND GABRIEL LIBRANDO
March 31, 2000
Facts: Petitioner was employed as a data encoder by private respondent
International Information Services, Inc., a domestic corporation engaged in
the business of data encoding and keypunching, from August 26, 1988
until October 18, 1991 when her services were terminated. From August
26, 1988 until October 18, 1991, petitioner entered into thirteen (13)
separate employment contracts with private respondent, each contract
lasting only for a period of three (3) months. Aside from the basic hourly
rate, specific job contract number and period of employment, each
contract contains the following terms and conditions: "a. This Contract is
for a specific project/job contract only and shall be effective for the period
covered as above-mentioned unless sooner terminated when the job
contract is completed earlier or withdrawn by client, or when employee is
dismissed for just and lawful causes provided by law. The happening of
any of these events will automatically terminate this contract of
employment.
In her position paper dated August 3, 1992 and filed before Labor Arbiter
Raul T. Aquino, petitioner alleged that her employment was terminated
not due to the alleged low volume of work but because she "signed a
petition for certification election among the rank and file employees of
respondents," thus charging private respondent with committing unfair
labor practices. Petitioner further complained of non-payment of service
incentive leave benefits and underpayment of 13th month pay.
On the other hand, private respondent, in its position paper filed on July
16, 1992, maintained that it had valid reasons to terminate petitioners
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employment and disclaimed any knowledge of the existence or formation


of a union among its rank-and-file employees at the time petitioners
services were terminated. Private respondent stressed that its business
"relies heavily on companies availing of its services. Its retention by client
companies with particular emphasis on data encoding is on a project to
project basis," usually lasting for a period of "two (2) to five (5) months."
Private respondent further argued that petitioners employment was for a
"specific project with a specified period of engagement." According to
private respondent, "the certainty of the expiration of complainants
engagement has been determined at the time of their (sic) engagement
(until 27 November 1991) or when the project is earlier completed or
when the client withdraws," as provided in the contract. "The happening
of the second event (completion of the project) has materialized, thus, her
contract of employment is deemed terminated per the Brent School
ruling." Finally, private respondent averred that petitioners "claims for
non-payment of overtime time (sic) and service incentive leave (pay) are
without factual and legal basis."
Issue: Whether or not Petitioner was a "regular employee," not a "project
employee" as found by public respondent NLRC.
Held: Yes. In the instant case, petitioner was engaged to perform
activities which were usually necessary or desirable in the usual business
or trade of the employer, as admittedly, petitioner worked as a data
encoder for private respondent, a corporation engaged in the business of
data encoding and keypunching, and her employment was fixed for a
specific project or undertaking the completion or termination of which had
been determined at the time of her engagement, as may be observed
from the series of employment contracts between petitioner and private
respondent, all of which contained a designation of the specific job
contract and a specific period of employment. However, even as we
concur with the NLRCs findings that petitioner is a project employee, we
have reached a different conclusion.
In the recent case of Maraguinot, Jr. vs. NLRC, we held that "(a) project
employee or a member of a work pool may acquire the status of a regular
employee when the following concur: 1) There is a continuous rehiring of
project employees even after [the] cessation of a project; and 2) The tasks
performed by the alleged "project employee" are vital, necessary and
indispensable to the usual business or trade of the employer." The
evidence on record reveals that petitioner was employed by private
respondent as a data encoder, performing activities which are usually
necessary or desirable in the usual business or trade of her employer,
continuously for a period of more than three (3) years, from August 26,
1988 to October 18, 1991 and contracted for a total of thirteen (13)
successive projects. We have previously ruled that "(h)owever, the length
of time during which the employee was continuously re-hired is not
controlling, but merely serves as a badge of regular employment." Based

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on the foregoing, we conclude that petitioner has attained the status of a


regular employee of private respondent.
Project that is within the regular trade or business of the
employer
Magcalas vs. NLRC
G.R. No. 100333
HILARIO MAGCALAS, PROSPERO MARINDA, CELSO GAMALO,
EPIFANIO OMEGA, VIRGILIO CAMPOS, ANTONIO LLAGAS, BERNARD
BENDANILLO, SHALDYAUTENCIO, CIRIACO REYES, JUANITO DE
LEON, EDMUNDO GUZMAN, ALFREDO SANTOS, BENEDICTO
DAGCUTAN, NORBIE LOPENA, ISMAEL ALONZO, ELMER BALETA,
GENITO DALMERO, and CESAR LEDESMA vs.
NATIONAL LABOR RELATIONS COMMISSION and KOPPEL, INC.
March 13, 1997
Facts: The petitioners alleged that they were all regular employees of the
respondent company Koppel, Inc., since they rendered continuous
services in various capacities, ranging from leadman, tinsmith,
tradeshelper to general clerk. Moreover, they also averred that they were
dismissed without prior notice and investigation, and that their dismissals
were effected for no other cause than their persistent demands for
payment of money claims as mandated by law. On the other hand, the
respondents interposed the defense of contract/project employment, i.e.,
the complainants herein were among the contract employees hired by the
respondent to install the air-conditioning equipment at the Asian
Development Bank and Interbank projects. Hence, with the completion of
their task in their respective installation projects, the employment of the
complainants expired as they had no more work to do. The labor arbiter
held that such termination constituted illegal dismissal, thus the
petitioners were entitled to reinstatement, backwages, and attorneys
fees. Public respondent NLRC, however, reversed the decision of the labor
arbiter.
Issue: Whether or not (a) the petitioners were regular employees, and (b)
their termination and/or cessation of their employments were justified
Held: The Court ruled in the affirmative for both issues, and reversed and
set aside the decision of the NLRC. The Court found that the public
respondent did not sufficiently indicate the evidentiary basis for its
reversal of the labor arbiter's decision. After citing provisions in the
collective bargaining agreement (CBA) concerning contract workers and
Policy Instruction No. 20, public respondent correctly stated that
petitioners were performing work necessary or desirable in the usual
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business of private respondent. From this undisputed fact, the NLRC


jumped to strange and strained inferences. First, it held that the
employment of the petitioners was subject to fixed terms. It then leapt to
the non-sequitur conclusion that petitioners were project employees.
Going further, it held that they were entitled to separation pay,
overlooking that under the very law it invoked, "project employees are not
entitled to termination pay." This convolution of facts and law cannot
reverse the decision of the labor arbiter which is grounded on
documentary evidence submitted by the parties. In addition, private
respondent did not even allege, much less did it seek to prove, that
petitioners had been hired on a project-to-project basis during the entire
length of their employment. Rather, it merely sought to establish that
petitioners had been hired to install the air-conditioning equipment at
Asian Development Bank and Interbank and that they were legally
dismissed upon the conclusion of these projects. Private respondent did
not even traverse, and public respondent did not controvert, the labor
arbiter's finding that petitioners were continuously employed without
interruption, from the date of their hiring up to the date of their dismissal,
in spite of the alleged completion of the so-called projects in which they
had been hired.
As regular employees, petitioners' employment cannot be terminated at
the whim of the employer. For a dismissal of an employee to be valid, two
requisites must be met: (1) the employee is afforded due process; and (2)
the dismissal is for a valid cause. The services of petitioners were
purportedly terminated at the end of the ADB and Interbank projects, but
this could not have been a valid cause for they were regular and not
project employees.
As a consequence of their illegal termination, petitioners were entitled to
reinstatement and backwages in accordance with the Labor Code. The
backwages however were to be computed only for three years from the
date of their dismissal without deduction or qualification. Where the illegal
dismissal transpired before the effectivity of RA 6715, or before March 21,
1989, the award of backwages in favor of the dismissed employees is
limited to three (3) years without deduction or qualification.
Project not within the regular trade or business of the employer
Villa vs. NLRC
G.R. No. 117043
FELIX VILLA, ALIBANGBANG, IRENEO; ALIBANGBANG, EFREN; et al.
(All members of NSCWA with Felix Villa as president, representing
Petitioners) vs.
NATIONAL LABOR RELATIONS COMMISSION, Fifth Division and
NATIONAL STEEL CORPORATION
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January 14, 1998


Facts: One of the major projects of the private respondent National Steel
Corporation (NSC) was the billet steelmaking plant. To produce the billets,
the plant would initially use 100% scrap as its raw materials. Eventually,
NSC would "build a Direct Reduced Iron (DRI) plant in line with its
expansion program and integration program." Upon the availability of DRI,
"the raw materials feed mix will eventually be 20 per cent scrap and 80
per cent DRI." In line with its program to use 100% scrap, the NSC
ventured into a shipbreaking operation. Under this operation,
ships/vessels at sea would be cut up into large chunks and brought to land
to be cut further into smaller sizes. However, due to scarcity of
vessels/ships for salvaging, the higher costs of operation and the
unsuitability of raw materials, this experimental project was stopped after
four or five ships had been chopped. When the project was completely
phased out, the laborers hired for said project were terminated. Prior to
the phasing out of the project, the National Steel Corporation Employees
Association Southern Philippines Federation of Labor (NSCEA-SPFL) filed a
notice of strike, and charged the NSC with unfair labor practices consisting
of (a) wage discrimination, (b) interference with the employees' right to
self-organization, (c) nonregularization of contractual employees, (d)
illegal termination of employees, (e) nonpayment of wage/benefit
differentials, and (f) nonrecognition of NSCEA-SPFL as the sole bargaining
representative of the company.
The then Ministry of Labor and Employment exercising jurisdiction over
the case, issued a return-to-work order. In due course, then Labor Minister
dismissed the complaint of NSCEA-SPFL. The petitioners filed for a motion
for reconsideration, but the same was denied. Hence, they filed a petition
to the Supreme Court. The Court affirmed the order of the public
respondent assuming jurisdiction of the labor dispute, upon a showing
that the petitioner was engaged in a pioneer enterprise affected with
public interest and involving its 5,000 employees and their dependents,
and more so since both parties had manifested their concurrence with the
intervention of the Department of Labor in settlement of the said dispute.
However, since there were a number of factual questions that had to be
threshed out, the Court resolved to set aside the dismissal of the
complaint and to remand the case to the NLRC for a formal hearing on the
factual issues raised in the petition.
The NLRC ruled that the greater majority of the individual complainants
were 'contractual' or 'casual employees.' By the very nature of their
employment or job, they cannot be considered as regular employees of
respondent company by virtue of Article 280 of the Labor Code, as
amended, excepting the few who are either made to work or perform
functions along or side by side with the regular employees, such as those
assigned at the Billeting Mill or production line departments, or made to
perform ground maintenance jobs as well as those performing

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administrative and finance support services who may seemingly deserve


to be regularized.
The National Steel Corporation Workers Association, a break-away group
from the NSCEA-SPFL filed a motion for reconsideration of the NLRC
Decision, assailing the same for its incompleteness and failure to resolve
the case with finality. However, the NLRC denied the same.
Issue: Whether or not workers contracted as project employees may be
considered as regular employees on account of their performance of
duties inherent in the business of the employer.
Held: No. The petition was denied. The Court upheld its reliance on the
factual findings the NLRC. Contracts for project employment are valid
under the law. By entering into such a contract, an employee is deemed to
understand that his employment is coterminous with the project. He may
not expect to be employed continuously beyond the completion of the
project. However, the law requires that, upon completion of the project,
the employer must present proof of termination of the services of the
project employees at the nearest public employment office. However, if
the employees' services are extended long after the supposed project had
been completed, the employees are removed from the scope of project
employees and they shall be considered regular employees.
The Court reiterated its ruling in Palomares v. NLRC, wherein the Court
stated that, "The fact that petitioners were required to render services
necessary or desirable in the operation of NSC's business for a specified
duration did not in any way impair the validity of their contracts of
employment which stipulated a fixed duration therefor." Thus, the fact
that petitioners worked for NSC under different project employment
contracts for several years cannot be made a basis to consider them as
regular employees, for they remain project employees regardless of the
number of projects in which they have worked. Length of service is not the
controlling determinant of the employment tenure of a project employee.
Definition of Specific Project or Undertaking
Tucor Industries, Inc. vs. NLRC
G.R. Nos. 96608-09
TUCOR INDUSTRIES, INC., AND PATRICK BOLL vs.
NATIONAL LABOR RELATIONS COMMISSION, FLORENCIO BASCO,
REGINO DAYRIT, FLORANIO GARCIA, JESUS CANLAS, ABEL DAVID,
REYNALDO INFANTE, EDISON TAPANG, LARRY ENRIQUEZ, REY
SALALILA, AND PACIFICO C. DIZON
May 20, 1991
Facts: Petitioner is a corporation principally engaged in the moving and
storage of various goods owned by military personnel residing within the
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United States military facilities in the Philippines. On various dates herein


private
respondents
were
hired
as
packers,
drivers
and
utilitymen/carpenters. They signed uniform company-prepared master
employment contracts. In a memorandum-letter, the Chief of Traffic
Management of Clark Air Base reminded all agents, including petitioner of
the base policy that "(E)mployees who already have passes in their
possession and who fail the polygraph . . ." administered by an
acknowledged security company will be required to return their passes.
On the same day petitioner terminated the employment of private
respondents by sending them separate identical notices of termination
informing the respondents that after an intensive and extensive
investigation conducted as a result of numerous reports of missing items
from shipments, their Base Pass was not cleared by the American
Authorities and for this reason, the Company could no longer avail of their
services. It must be noted that all of private respondents had continuously
been employed by petitioner for more than a year before the services
were terminated.
On August 2, 1989, private respondents, except Pacifico Dizon, filed a
complaint for illegal dismissal against petitioner with the Regional
Arbitration Branch No. 5 of the National Labor Relations Commission
(NLRC) in San Fernando, Pampanga, Private respondent Dizon filed a
complaint later. The case was heard and the parties submitted their
respective position papers On August 7, 1989, the Executive Labor Arbiter
rendered a decision against Tucor Industries, ordering the same to pay
backwages and to reinstate the complainants. Petitioners appealed to
NLRC but it was dismissed and the decision of the Labor Arbiter was
affirmed. A motion of reconsideration was filed but was later denied.
Hence, this petition for certiorari.
Issue: Whether or not the respondents were regular employees and were
illegally dismissed.
Held: Yes. Article 280 of the Labor Code, as amended, provides as follows:
Art. 280. Regular and casual employment.The provisions of a written
agreement to the contrary notwithstanding and regardless of the oral
agreements of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer except where the employment has been fixed for a specific
project or undertaking, the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or service to be performed is seasonal in nature and the employment
is for the duration of the season.
An examination of the contract of employment does not show that private
respondents were hired for a "specific project or undertaking" nor was the
completion or termination of the alleged project for which private
respondents were hired determined at the start of the employment. The
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term "specific project or undertaking" under Article 280 of the Labor Code
contemplates an activity which was commonly or habitually performed or
such type of work which is not done on a daily basis but only for a specific
duration of time or until the completion of the project. The services
employed are thus necessary or desirable in the employer's usual
business only for the period of time it takes to complete the project.
Without the performance of such services on a regular basis, the
employer's main business is not expected to grind to a halt.
In the case at bar, private respondents were assigned to do carpentry
work, packing and driving, activities which are usually necessary and
desirable in petitioners' usual business and which thus had to be done on
a regular basis. The fact that private respondents had rendered more than
one year of service at the time of their dismissal overturns the petitioner's
allegation that private respondents were hired for a specific or a fixed
undertaking for a limited period of time. The company-prepared master
employment contracts placed the private respondents at the mercy of
those who crafted the said contract. The work of the private respondents
is hardly "specific" or "seasonal." Such is one instance under the Code
"where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business." At any rate,
inasmuch as private respondents were engaged in the activities which are
usual and necessary in usual business or trade of petitioner company,
they are regular employees entitled to security of tenure, the provision of
the written agreement to the contrary notwithstanding. Their dismissal
without just cause in this case and without appropriate investigation is
certainly illegal.
The absence of a definite duration for the projects leads to no
other conclusion than that the employment is regular.
PNOC-Energy Development Corp. vs. NLRC
G.R. No. 169353
PNOC-ENERGY DEVELOPMENT CORPORATION, SOUTHERN NEGROS
GEOTHERMAL PROJECT vs.
NATIONAL LABOR RELATIONS COMMISSION, PNOC-EDC, SNGPEUASSOCIATED LABOR UNIONS TUCP, LEONORA A. TORRES,
ALEJANDRO B. TABAERA, JR., ARNEL T. AMOR, ROSELA S.
CALIMPONG, WILSON D. NUAY, AND ROBERTO S. RENZAL
April 13, 2007
Facts: Petitioner PNOC-Energy Development Corporation is a
government-owned and controlled corporation engaged in the exploration,
development, and utilization of energy. It undertakes several projects in
areas where geothermal energy has been discovered. To augment its
manpower requirement occasioned by the increased activities in the
development of PAL II, petitioner hired the respondent employees in the
Administration and Maintenance Section. The termination/expiration of
their respective employment were specified in their initial employment
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contracts, which, however, were renewed and extended on their


respective expiry dates. On May 29, 1998, petitioner submitted reports to
the Department of Labor and Employment (DOLE) Regional Sub-Branch
No. VII in Dumaguete City, stating that six of its employees were being
terminated. Petitioner thereafter furnished the employees uniformly
worded notices of termination, stating that they were being terminated
from employment effective June 30, 1998 due to the substantial
completion of the civil works phase of PAL II.
On October 29, 1998, the six employees, herein respondents, filed before
the National Labor Relations Commission (NLRC) a complaint for illegal
dismissal against petitioner. Aside from reinstatement, respondents
sought the payment of backwages, salary differential, collective
bargaining agreement benefits, damages and attorneys fees.
Respondents averred that they had rendered continuous and satisfactory
services from the dates of their respective employment until illegally
dismissed on June 30, 1998. Respondents further contended that their
dismissal from employment was a clear case of union busting for they had
previously sought union membership and actually filed a notice of strike.
For its part, petitioner asseverated that respondents were contractual
employees; as such, they cannot claim to have been illegally dismissed
because upon the expiration of the term of the contract or the completion
of the project, their employer-employee relationship also ended.
The Labor Arbiter rendered judgment dismissing the complaint for lack of
legal and factual basis. The Labor Arbiter ruled that respondents were not
dismissed from work; the employer-employee relationship between the
parties was severed upon the expiration of the respective contracts of
respondents and the completion of the projects concerned.
Not satisfied, respondents interposed an appeal to the NLRC which
rendered judgment reversing the decision of the Labor Arbiter. It ordered
to reinstate the complainants, except Rosela Calimpong whose claim was
dismissed for lack of merit, to pay each backwages and attorneys fees.
The NLRC ratiocinated that respondents were regular non-project
employees for having worked for more than one year in positions that
required them to perform activities necessary and desirable in the normal
business or trade of petitioner. The NLRC further ruled that the
employment contracts of respondents were not for a specific project or for
a fixed period. Respondents filed a motion for reconsideration, which the
NLRC denied.
Aggrieved, petitioner filed a petition for certiorari before the CA seeking to
have the NLRC decision reversed. It claimed that respondents were
engaged for one definite phase of petitioners geothermal project, the
execution and implementation of the civil works portion of the Fluid
Collection and Disposal System (FCDS) and Associated Work Projects.
Petitioner averred that at the time of respondents termination, the
projects had already been substantially if not fully completed. The CA
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dismissed the petition. The CA ruled that respondents were performing


activities necessary and desirable in the normal operations of the business
of petitioner. The appellate court explained that the repeated re-hiring and
the continuing need for the services of the project employees over a span
of time had made them regular employees. The motion for
reconsideration filed by petitioner was denied by the CA.
Issue: Whether or not the respondents were project employees.
Held: No. Article 280 of the Labor Code of the Philippines states that an
employment shall be deemed to be regular where the employee has been
engaged to perform activities which are usually necessary or desirable in
the usual business or trade of the employer, except where the
employment has been fixed for a specific project or undertaking the
completion or termination of which has been determined at the time of
the engagement of the employee. The principal test for determining
whether particular employees are properly characterized as "project
employees," as distinguished from "regular employees," is whether or not
the project employees were assigned to carry out a "specific project or
undertaking," the duration and scope of which were specified at the time
the employees were engaged for that project. However, petitioner failed
to substantiate its claim that respondents were hired merely as project
employees. A perusal of the records of the case reveals that the supposed
specific project or undertaking of petitioner was not satisfactorily
identified in the contracts of respondents.
Unmistakably, the alleged projects stated in the employment contracts
were either too vague or imprecise to be considered as the "specific
undertaking" contemplated by law. Petitioners act of repeatedly and
continuously hiring respondents to do the same kind of work belies its
contention that respondents were hired for a specific project or
undertaking. The absence of a definite duration for the project/s has led
the Court to conclude that respondents are, in fact, regular employees.
Lack of evidence to prove that employment is project
Olongapo Maintenance Services, Inc. vs. Chamnegco
G.R. No. 156146
OLONGAPO MAINTENANCE SERVICES, INC. vs.
EDGARDO B. CHANTENGCO, SALVACION S. ANIGAN, POLICARPIO S.
ANIGAN, AND 68 OTHERS
June 21, 2007
Facts: OMSI is a corporation engaged in the business of providing
janitorial and maintenance services to various clients, including
government-owned and controlled corporations. On various dates
beginning 1986, OMSI hired the respondents as janitors, grass cutters, and
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degreasers, and assigned them at the Ninoy Aquino International Airport


(NAIA). On January 14, 1999, OMSI terminated respondents' employment.
Claiming termination without just cause and non-payment of labor
standard benefits, respondents filed a complaint for illegal dismissal,
underpayment of wages, and non-payment of holiday and service
incentive leave pays, with prayer for payment of separation pay, against
OMSI.

For its part, OMSI denied the allegations in the complaint. It averred that
when Manila International Airport Authority (MIAA) awarded to OMSI the
service contracts for the airport, OMSI hired respondents as janitors,
cleaners, and degreasers to do the services under the contracts. OMSI
informed the respondents that they were hired for the MIAA project and
their employments were coterminous with the contracts. As project
employees, they were not dismissed from work but their employments
ceased when the MIAA contracts were not renewed upon their expiration.
The termination of respondents employment cannot, thus, be considered
illegal. The Labor Arbiter dismissed the complaints. On the other hand, the
NLRC, upon appeal, modified the ruling, holding that the respondents were
regular and not project employees. OMSI sought reconsideration of the
ruling, but the NLRC denied the motion.
Petitioner went up to the Court of Appeals via a petition for certiorari,
imputing grave abuse of discretion to the NLRC for reversing the factual
findings and the decision of the Labor Arbiter. However, the Court of
Appeals dismissed the petition. The appellate court agreed with the NLRC
that the continuous rehiring of respondents, who performed tasks
necessary and desirable in the usual business of OMSI, was a clear
indication that they were regular, not project employees. The court added
that OMSI failed to establish that respondents employment had been
fixed for a specific project or undertaking, the completion or termination of
which had been determined at the time of their engagement or hiring.
Neither had it shown that respondents were informed of the duration and
scope of their work when they were hired. Furthermore, OMSI did not
submit to the Department of Labor and Employment (DOLE) reports of
termination of the respondents, thereby bolstering respondents claim of
regular employment. OMSI filed a motion for reconsideration, but the
Court of Appeals denied.
Issue: Whether or not the respondents were regular employees.

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Held: Yes. The principal test in determining whether an employee is a


project employee is whether he/she is assigned to carry out a "specific
project or undertaking," the duration and scope of which are specified at
the time the employee is engaged in the project, or where the work or
service to be performed is seasonal in nature and the employment is for
the duration of the season. A true project employee should be assigned to
a project which begins and ends at determined or determinable times, and
be informed thereof at the time of hiring.
In the instant case, the record is bereft of proof that the respondents
engagement as project employees has been predetermined, as required
by law. We agree with the Court of Appeals that OMSI did not provide
convincing evidence that respondents were informed that they were to be
assigned to a "specific project or undertaking" when OMSI hired them.
Notably, the employment contracts for the specific project signed by the
respondents were never presented. All that OMSI submitted in the
proceedings a quo are the service contracts between OMSI and the MIAA.
Clearly, OMSI utterly failed to establish by substantial evidence that,
indeed, respondents were project employees and their employment was
coterminous with the MIAA contract.
In termination cases, the burden of proof rests on the employer to show
that the dismissal is for a just cause. Thus, employers who hire project
employees are mandated to state and, once its veracity is challenged, to
prove the actual basis for the latter's dismissal. Unfortunately for OMSI, it
failed to discharge the burden. All that we have is OMSIs self-serving
assertion that the respondents were hired as project employees.
Worker hired on a phase project can be dismissed on completion
of such phase project and not coterminous with the completion of
the whole project; termination of phase project
Saberola vs. Suarez
G.R. No. 151227
GREGORIO S. SABEROLA vs.
RONALD SUAREZ, AND RAYMUNDO LIRASAN, JR.
July 14, 2008
Facts: Petitioner is the owner and manager of G.S. Saberola Electrical
Services, a firm engaged in the construction business specializing in
installing electrical devices in subdivision homes and in commercial and
non-commercial buildings. Respondents were employed by petitioner as
electricians. They worked from Monday to Saturday and, occasionally, on
Sundays, with a daily wage of P110.00. Respondent Ronald Suarez
(Suarez) was employed by petitioner from February 1995 until October
1997; while respondent Raymundo Lirasan, Jr. (Lirasan) worked from
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February 1995 until September 1997. Respondent Lirasan alleged that he


was dismissed without cause and due process. He was merely informed by
petitioner that his services were no longer needed without any
explanation why he was terminated. Both respondents claimed that they
received compensation below the minimum wage. They were given a fixed
rate of P110.00 while the mandated minimum wage was P135.00, per
Wage Order No. 5 issued by the Regional Tripartite and Productivity Board
of Region XI. They also alleged that they did not receive 13th month pay
for the entire period of their employment. Both likewise claimed payment
of overtime and service incentive leave.
In his defense, petitioner averred that respondents were part-time project
employees and were employed only when there were electrical jobs to be
done in a particular housing unit contracted by petitioner. He maintained
that the services of respondents as project employees were coterminous
with each project. As project employees, the time of rendition of their
services was not fixed. Thus, there was no practical way of determining
the appropriate compensation of the value of respondents
accomplishment, as their work assignment varied depending on the needs
of a specific project.
The Labor Arbiter rendered a Decision dismissing the complaint for lack of
merit, ruling that respondents were project employees and were not
entitled to their monetary claims. On appeal, the National Labor Relations
Commission (NLRC) affirmed with modification the findings of the Labor
Arbiter. It maintained that respondents were project employees of
petitioner. However, it declared that respondent Suarez was illegally
dismissed from employment. It also awarded the monetary claims of
respondents. Petitioner filed a motion for reconsideration which was
denied. Petitioner filed a petition for certiorari under Rule 65 of the Rules
of Court before the CA but was later denied.
Issue: Whether or not respondent Suarez was illegally terminated.
Held: Yes. Petitioner, as an electrical contractor, depends for his business
on the contracts that he is able to obtain from real estate developers and
builders of buildings. Thus, the work provided by petitioner depends on
the availability of such contracts or projects. The duration of the
employment of his work force is not permanent but coterminous with the
projects to which the workers are assigned. Viewed in this context, the
respondents are considered as project employees of petitioner. Indeed,
the status of respondents as project employees was upheld by the Court
of Appeals based on the findings of facts of the Labor Arbiter and the
NLRC.
However, respondents, even if working as project employees, enjoy
security of tenure. Section 3, Article XIII, of the Constitution guarantees
the right of workers to security of tenure, and because of this, an
employee may only be terminated for just or authorized causes that must
114 | L a b o r S t a n d a r d s - C a s e D i g e s t s

comply with the due process requirements mandated by law. In Archbuild


Masters and Construction, Inc. v. NLRC, we held that the employment of a
project worker hired for a specific phase of a construction project is
understood to be coterminous with the completion of such phase and not
upon the accomplishment of the whole project. Nonetheless, when a
project employee is dismissed, such dismissal must still comply with the
substantive and procedural requirements of due process.
In this regard, we hold that respondent Suarez was illegally terminated by
petitioner. A project employee must be furnished a written notice of his
impending dismissal and must be given the opportunity to dispute the
legality of his removal. In termination cases, the burden of proof rests on
the employer to show that the dismissal was for a just or authorized
cause. Employers who hire project employees are mandated to state and
prove the actual basis for the employees dismissal once its veracity is
challenged.
Petitioner failed to present any evidence to disprove the claim of illegal
dismissal. It was uncontested that the last work of the respondents with
petitioners company was the electrical installation in some housing units
at the Ciudad Esperanza Housing Project. No evidence was presented by
petitioner to show the termination of the project which would justify the
cessation of the work of respondents. Neither was there proof that
petitioner complied with the substantive and procedural requirements of
due process.
Project to Project Basis of Employment
Sandoval Shipyard, Inc. vs. NLRC
G.R. No. L-65689
SANDOVAL SHIPYARDS, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION, ROGELIO DIAMANTE,
MANUEL PACRES, ROLANDO CERVALES, DIONISIO CERVALES, AND
MACARIO SAPUTALO
May 31, 1985
G.R. No. L-66119
SANDOVAL SHIPYARDS, INC. vs.
VICENTE LEOGARDO, JR., DEPUTY MINISTER OF LABOR AND
EMPLOYMENT, DANILO DELA CRUZ, AND 16 OTHERS
May 31, 1985
Facts: Sandoval Shipyards, Inc. has been engaged in the building and
repair of vessels. It contends that each vessel is a separate project and
that the employment of the workers is terminated with the completion of
each project. The workers contend otherwise. They claim to be regular

115 | L a b o r S t a n d a r d s - C a s e D i g e s t s

workers and that the termination of one project does not mean the end of
their employment since they can be assigned to unfinished projects.

In G.R. No. 65689, Rogelio Diamante, Manuel Pacres, Macario Saputalo,


Rolando Cervales and Dionisio Cervales were assigned to the construction
of the LCT Catarman, Project No. 7511. After three months of work, the
project was completed on July 26, 1979. The five workers were served a
termination notice. The termination was reported to the Ministry of Labor
on August 3, 1979. They filed a complaint for illegal dismissal. The
National Labor Relations Commission affirmed the decision of the Labor
Arbiter ordering the reinstatement of the five complainants with
backwages.
In G.R. No. 66119, respondents Danilo de la Cruz, et al., 17 in all, were
assigned to work in Project No. 7901 for the construction of a tanker
ordered by Mobil Oil Philippines, Inc. There were 55 workers in that
project. The tanker was launched on January 31, 1980. Upon the yard
manager's recommendation, the personnel manager of Sandoval
Shipyards terminated the services of the welders, helpers and
construction workers effective February 4, 1980. The termination was duly
reported to the Ministry of Labor and Employment.

Three days later, or on February 7, twenty-seven out of the 55 workers


were hired for a new project. The 27 included four of the 17 respondents
who filed a complaint for illegal dismissal on February 6. After hearing, the
Director of the Ministry's Capital Region ordered the reinstatement of the
complainants. The Deputy Minister of Labor affirmed that order.

Issue: Whether or not the respondents were regular employees.

Held: No. We hold that private respondents were project employees


whose work was coterminous with the project for which they were hired.
Project employees, as distinguished from regular or non-project
employees, are mentioned in section 281 of the Labor Code as those
"where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined
at the time of the engagement of the employee."

116 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Policy Instructions No. 20 of the Secretary of Labor, which was issued to


stabilize employer-employee relations in the construction industry,
provides that project employees are those employed in connection with a
particular construction project. Non-project (regular) employees are those
employed by a construction company without reference to any particular
project. Project employees are not entitled to termination pay if they are
terminated as a result of the completion of the project or any phase
thereof in which they are employed, regardless of the number of projects
in which they have been employed by a particular construction company.
Moreover, the company is not required to obtain clearance from the
Secretary of Labor in connection with such termination.

Engaged in contracting electrical services depending on the


availability of project works
Cartagenas vs. Romago Elecric Co., Inc.
G.R. No. 82973
MARIO CARTAGENAS, JESUS N. MIRABALLES, VICTOR C. MONSOD
AND VICENTE BARROA vs.
ROMAGO ELECTRIC COMPANY, INC., NATIONAL LABOR RELATIONS
COMMISSION
September 15, 1989
Facts: Respondent Romago is a general contractor engaged in
contracting and sub-contracting of specific building construction projects
or undertaking such as electrical, mechanical and civil engineering
aspects in the repair of buildings and from other kindred services.
Individual complainants are employed by the respondent in connection
with particular construction projects. Effective July 12,1986, individual
complainants and Lawrence Deguit were temporarily laid-off by virtue of a
memorandum issued by the respondent. In said memorandum they were
also informed that a meeting regarding the resumption of operation will
be held on July 16, 1986 and that they will be notified as to when they will
resume work.
On July 28, 1986, complainants filed the instant case for illegal dismissal
but before the respondent could receive a copy of the complaint and the
notification and summons issued by the NLRC National Capital Region
(actually received only on August 22, 1986, page 4, records) individual
complainants re-applied with the respondent and were assigned to work
with its project at Robinson-EDSA. In hiring the herein complainants to be
assigned to a particular project they have to fill up an employment
application form and are subjected to a pre-hiring examination. If
evaluated to be qualified they sign at the end portion of their employment
application form that their employment is for a fixed period of time only.
117 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The NLRC held that the complainants were project employees. The fact
that the complainants worked for the respondent under different project
employment contracts for so many years could not be made a basis to
consider them as regular employees for they remain project employees
regardless of the number of projects in which they have worked.
Issue: Whether or not they were regular employees.
Held: No. As an electrical contractor, the private respondent depends for
its business on the contracts it is able to obtain from real estate
developers and builders of buildings. Since its work depends on the
availability of such contracts or "projects," necessarily the duration of the
employment of its work force is not permanent but co-terminus with the
projects to which they are assigned and from whose payrolls they are
paid. It would be extremely burdensome for their employer who, like
them, depends on the availability of projects, if it would have to carry
them as permanent employees and pay them wages even if there are no
projects for them to work on. We hold, therefore, that the NLRC did not
abuse its discretion in finding, based on substantial evidence in the
records, that the petitioners are only project workers of the private
respondent.
Repeated rehiring of project to project employment
Samson vs. NLRC
G.R. No. 113166
ISMAEL SAMSON vs.
NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF
AND PACIFIC CO., MANILA, INC.
February 1, 1996
Facts:
Petitioner
has
been
employed
with
private
respondent Atlantic Gulf and Pacific Co., Manila, Inc. (AG & P) in the
latters various construction projects since April, 1965, in the course of
which employment he worked essentially as a rigger, from laborer to
rigger foreman. From 1977 up to 1985, he was assigned to overseas
projects of AG & P, particularly in Kuwait and Saudi Arabia.
On November 5, 1989, petitioner filed a complaint for the conversion of
his employment status from project employee to regular employee, which
complaint was later amended to include claims for underpayment, nonpayment of premium pay for holiday and rest day, refund of reserve fund,
and 10% thereof as attorneys fees. Petitioner alleged therein that on the
118 | L a b o r S t a n d a r d s - C a s e D i g e s t s

basis of his considerable and continuous length of service with AG & P. he


should already be considered a regular employee and, therefore, entitled
to the benefits and privileges appurtenant thereto.
The labor arbiter, in a decision declared that petitioner should be
considered a regular employee. On appeal, public respondent NLRC
reversed the decision of the labor arbiter and dismissed the complaint for
lack of merit.
Issue: Whether or not petitioner is a regular or project employee.
Held: The petitioner is a regular employee. It is not disputed that
petitioner had been working for private respondent for approximately
twenty-eight (28) years as of the adjudication of his plaint by respondent
NLRC, and that his project-to-project employment was renewed several
times. With the successive contracts of employment wherein petitioner
continued to perform virtually the same kind of work, i.e., as rigger,
throughout his period of employment, it is manifest that petitioners
assigned tasks were usually necessary or desirable in the usual business
or trade of private respondent. The repeated re-hiring and continuing
need for his services are sufficient evidence of the necessity and
indispensability of such services to private respondents business or trade.
Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee,
they should be struck down as contrary to public policy, morals, good
customs or public order. As observed by the Solicitor General, the record
of this case discloses, as part of petitioners position paper, a certification
duly issued by private respondent clearly showing that the formers
services were engaged by private respondent on a continuing basis since
1965. The certification indubitably indicates that after a particular project
has been accomplished, petitioner would be re-hired immediately the
following day save for a gap of one (1) day to one (1) week from the last
project to the succeeding one. There can, therefore, be no escape from
the conclusion that petitioner is a regular employee of private respondent.
The length of service of project employees is not the controlling
factor.
D.M. Consunji, Inc.vs. NLRC
G.R. No. 116572
D. M. CONSUNJI, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION),
and ALEXANDER AGRAVIADOR, JOVENCIO MENDREZ, FELIPE
BARCELONA, CONCORCIOLASPUA and ROGELIO DIAZ

119 | L a b o r S t a n d a r d s - C a s e D i g e s t s

December 18, 2000


Facts: Alexander Agraviador, Jovencio Mendrez, Felipe Barcelona,
Concorciola Spua, and Rogelio Diaz were hired by petitioner as project
employees to work on its Cebu Super Block Project in Cebu City. Their
separate but identical contracts state that they were hired as project
employees for an estimated period. Agraviador and his colleagues were
surprised when their services were terminated allegedly without regard to
the date of termination as specified in their contracts of employment. D.M.
Consunji Inc. reported the termination of their services to the nearest
Regional Office of the Department of Labor alleging that the term of the
contracts of employment had expired.
Agraviador and fellow aggrieved colleagues then filed their respective
complaints for illegal dismissal. The Labor Arbiter found the dismissal of
the private respondents without just cause and ordering petitioner to
reinstate them to their former positions without loss of benefits and
seniority rights and to pay them their backwages. The Labor Arbiter
alsoconcluded that the contracts of employment of the private
respondents should not be honored because they were made more for
breach rather than for observance.
The National Labor Relations Commission affirmed the decision of the
Labor Arbiter. It ruled that the employment period need not reach six
months in order that the private respondents attain the status of regular
employees citing Article 280 of the Labor Code. It agreed with the Labor
Arbiter that the private respondents could not be considered contract
workers because they worked even after the expiration of their contracts
of employment. Dissatisfied with the decision, the petitioner appealed to
the Supreme Court.
Issue: Whether or not the private respondents were project employees.
Held: The length of service of a project employee is not the controlling
test of employment tenure but whether or not the employment has been
fixed for a specific project or undertaking the completion or termination of
which has been determined at the time of the engagement of the
employee. Project employee is one whose employment has been fixed for
a specific project or undertaking the completion or termination of which
has been determined at the time of the engagement of the employee or
where the work or services to be performed is seasonal in nature and the
employment is for the duration of the season. At the time of the
termination of the private respondents employment, the respective
periods or terms of employment of private respondents Felipe Barcelona,
Consorcio Laspuna and Rogelio Diaz had already expired. The fact that
they were allowed to work for weeks after the expiration of their contracts
would not necessarily show that petitioner had dishonored the contracts.
Indeed, some phases of the project may not have been completed after
120 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the estimated one month period and that their services were still
necessary.
Rehiring of the employees on a project to project basis does not
ipso facto make their employment regular.
Cioco vs. C.E. Construction Corp.
G. R. No. 156748
ISAAC CIOCO, JR., REBIE A. MERCADO, BENITO V. GALVADORES,
CECILIO SOLVER, CARMELO
JUANZO, BENJAMIN BAYSA, and RODRIGO NAPOLES vs.
C. E. CONSTRUCTION CORPORATION and/or JOHNNY TAN
September 8, 2004
G.R. No. 156896
C. E. CONSTRUCTION CORPORATION vs.
ISAAC CIOCO, JR., REBIE A. MERCADO, BENITO V. GALVADORES,
CECILIO SOLVER, CARMELO JUANZO, BENJAMIN BAYSA, and
RODRIGO NAPOLES
September 8, 2004
Facts: Isaac Cioco, Jr., Rebie A. Mercado, Benito V. Galvadores, Cecilio
Solver, Carmelo Juanzo, Benjamin Baysa, and Rodrigo Napoles (WORKERS)
were hired by C.E. Construction Corporation (COMPANY), a domestic
corporation engaged in the construction business and managed by its
owner-president, Mr. Johnny Tan. They were hired as carpenters and
laborers in various construction projects from 1990 to 1999, the latest of
which was the GTI Tower in Makati. Prior to the start of every project, the
WORKERS signed individual employment contracts. Sometime in May and
June 1999, the WORKERS, along with sixty-six (66) others, were
terminated by the COMPANY on the ground of completion of the phases of
the GTI Tower project for which they had been hired. Alleging that they
were regular employees, the WORKERS filed complaints for illegal
dismissal with the Arbitration Branch of the NLRC. Claims for underpaid
wages and unpaid overtime pay, premium for holiday and rest days,
service incentive leave pay, night shift differential, and 13 thmonth pay
were likewise demanded.
On April 17, 2000, the Labor Arbiter rendered judgment in favor of the
COMPANY. The NLRC affirmed the Labor Arbiters decision on appeal.
121 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the WORKERS were regular or project employees.


Held: The Court held that the fact that the WORKERS have been
employed with the COMPANY for several years on various projects, the
longest being nine (9) years, did not automatically make them regular
employees considering that the definition of regular employment in Article
280 of the Labor Code, makes specific exception with respect to project
employment. The re-hiring of petitioners on a project-to-project basis did
not confer upon them regular employment status. The practice was
dictated by the practical consideration that experienced construction
workers are more preferred. It did not change their status as project
employees.
Employees were rehired on interval basis.
Caseres vs. Universal Robina Sugar Milling Corp.
G.R.No. 159343
PEDY CASERES and ANDITO PAEL vs.
UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO)
and/or RESIDENT MANAGER RENE CABATE
September 28, 2007
Facts: Universal Robina Sugar Milling Corporation (respondent) is a
corporation
engaged
in
the
cane
sugar
milling
business. Pedy Caseres (petitioner Caseres)
started
working
for
respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the
start of their respective employments, they were made to sign a Contract
of Employment for Specific Project or Undertaking. Petitioners' contracts
were renewed from time to time, until May 1999 when they were informed
that their contracts will not be renewed anymore. Petitioners filed a
complaint for illegal dismissal, regularization, incentive leave pay,
13th month pay, damages and attorneys fees.
In a Decision dated August 24, 1999, the Labor Arbiter dismissed the
complaint for not being substantiated with clear and convincing evidence.
The National Labor Relations Commission affirmed the LA's dismissal, and
the Court of Appeals dismissed the petition filed before it.
Issue: Whether or not the petitioners are
employees not regular employees of respondents.

seasonal/project/term

Held: The fact that petitioners were constantly re-hired does not ipso
facto establish that they became regular employees. Their respective
122 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contracts with respondent show that there were intervals in their


employment. In petitioner Caseres' case, while his employment lasted
from August 1989 to May 1999, the duration of his employment ranged
from one day to several months at a time, and such successive
employments were not continuous. With regard to petitioner Pael, his
employment never lasted for more than a month at a time. These support
the conclusion that they were indeed project employees, and since their
work depended on the availability of such contracts or projects,
necessarily the employment of respondents work force was not
permanent but co-terminous with the projects to which they were
assigned and from whose payrolls they were paid.
Moreover, even if petitioners were repeatedly and successively re-hired,
still it did not qualify them as regular employees, as length of service is
not the controlling determinant of the employment tenure of a project
employee, but whether the employment has been fixed for a
specific project or undertaking, its completion has been determined at the
time of the engagement of the employee. Further, the proviso in Article
280, stating that an employee who has rendered service for at least one
(1) year shall be considered a regular employee, pertains to
casual employees and not to project employees. Accordingly, petitioners
cannot complain of illegal dismissal inasmuch as the completion of the
contract or phase thereof for which they have been engaged
automatically terminates their employment.
Repeated extension
employment regular.

of

employment

contracts

make

the

Tomas Lao Construction vs. NLRC


G.R. No. 116781
TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION,
THOMAS and JAMES DEVELOPERS (PHIL.), INC. vs.
NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA,
SR., ROBERTO LABENDIA, NARCISO ADAN, FLORENCIO GOMEZ,
ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO BISNAR,
CIRPRIANO BERNALES, ANGEL MABUHAY, SR., LEO SURIGAO, and
ROQUE MORILLO
September 5, 1997
Facts: From October to December 1990 private respondents individually
filed complaints for illegal dismissal against petitioners with the National
Labor Relations Commission in Tacloban City. Alleging that they were hired
for various periods as construction workers in different capacities they
described their contractual terms. Within the periods of their respective
123 | L a b o r S t a n d a r d s - C a s e D i g e s t s

employments, they alternately worked for petitioners Tomas Lao


Corporation (TLC), Thomas and James Developers (T&J) and LVM
Construction Corporation (LVM), altogether informally referred to as
the Lao Group of Companies, the three (3) entities comprising a business
conglomerate exclusively controlled and managed by members of the Lao
family.
TLC, T&J and LVM are engaged in the construction of public roads and
bridges. Under joint venture agreements they entered into among each
other, they would undertake their projects either simultaneously or
successively so that, whenever necessary, they would lease tools and
equipment to one another. Each one would also allow the utilization of
their employees by the other two (2). With this arrangement, workers
were transferred whenever necessary to on-going projects of the same
company or of the others, or were rehired after the completion of the
project or project phase to which they were assigned. Soon after,
however, TLC ceased its operations while T&J and LVM stayed on.
Sometime in 1989 Andres Lao, Managing Director of LVM and President of
T&J, issued a memorandum requiring all workers and company personnel
to sign employment contract forms and clearances which were issued on
1 July 1989 but antedated 10 January 1989. These were to be used
allegedly for audit purposes pursuant to a joint venture agreement
between LVM and T&J. To ensure compliance with the directive, the
company ordered the withholding of the salary of any employee who
refused to sign. Quite notably, the contracts expressly described the
construction workers as project employees whose employments were for a
definite period, i.e., upon the expiration of the contract period or the
completion of the project for which the workers was hired.
Except for Florencio Gomez all private respondents refused to sign
contending that this scheme was designed by their employer to
downgrade their status from regular employees to mere project
employees. Resultantly, their salaries were withheld. They were also
required to explain why their services should not be terminated for
violating company rules and warned that failure to satisfactorily explain
would be construed as disinterest in continued employment with the
company. Since the workers stood firm in their refusal to comply with the
directives their services were terminated.
NLRC RAB VIII dismissed the complaints lodged before it. The decision of
Labor Arbiter was reversed on appeal by the Fourth Division of the
National Labor Relations Commission of Cebu City which found that
private respondents were regular employees who were dismissed without
just cause and denied due process.
Issue: Whether or not the NLRC erred in classifying the employees as
regular instead of project employees.

124 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Held: While it may be allowed that in the instant case the workers were
initially hired for specific projects or undertakings of the company and
hence can be classified as project employees, the repeated re-hiring and
the continuing need for their services over a long span of time (the
shortest, at seven [7] years) have undeniably made them regular
employees. Thus, we held that where the employment of project
employees is extended long after the supposed project has been finished,
the employees are removed from the scope of project employees and
considered regular employees.
While length of time may not be a controlling test for project employment,
it can be a strong factor in determining whether the employee was hired
for a specific undertaking or in fact tasked to perform functions which are
vital, necessary and indispensable to the usual business or trade of the
employer. In the case at bar, private respondents had already gone
through the status of project employees. But their employments became
non-coterminous with specific projects when they started to be
continuously re-hired due to the demands of petitioners business and
were re-engaged for many more projects without interruption.
14. Seasonal Employment Labor Code Article 280; Section 5,
Rule I, Book IV, Implementing Rules
Seasonal workers do not become regular employees even after
one year of service.
Mercado vs. NLRC
G.R. No. 79869
FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO
MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA
MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA
MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA
ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO
MERCADO and LEON SANTILLAN vs.
NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD
DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; AURORA L.
CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and
STO. NIO REALTY, INCORPORATED
September 5, 1991
Facts: Petitioners alleged in their complaint that they were agricultural
workers utilized by private respondents in all the agricultural phases of
work on the 7 1/2 hectares of ace land and 10 hectares of sugar land
125 | L a b o r S t a n d a r d s - C a s e D i g e s t s

owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan
worked in the farm of private respondents since 1949, Fortunato Mercado,
Jr. and Antonio Mercado since 1972 and the rest of the petitioners since
1960 up to April 1979, when they were all allegedly dismissed from their
employment. Private respondent Aurora Cruz in her answer to petitioners'
complaint denied that said petitioners were her regular employees and
instead averred that she engaged their services, through Spouses
Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is,
persons who take charge in supplying the number of workers needed by
owners of various farms, but only to do a particular phase of agricultural
work necessary in rice production and/or sugar cane production, after
which they would be free to render services to other farm owners who
need their services. The other private respondents denied having any
relationship whatsoever with the petitioners and state that they were
merely registered owners of the land in question included as
correspondents in this case.
Issue: Whether or not petitioners are regular and permanent farm
workers.
Held: A project employee has been defined to be one whose employment
has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement
of the employee, or where the work or service to be performed is seasonal
in nature and the employment is for the duration of the season as in the
present case.
The second paragraph of Art. 280 demarcates as "casual" employees, all
other employees who do not fan under the definition of the preceding
paragraph. The proviso, in said second paragraph, deems as regular
employees those "casual" employees who have rendered at least one year
of service regardless of the fact that such service may be continuous or
broken.
Clearly, therefore, petitioners being project employees, or, to use the
correct term, seasonal employees, their employment legally ends upon
completion of the project or the season. The termination of their
employment cannot and should not constitute an illegal dismissal.
Seasonal workers become regular employees after one year of
service.
Tacloban Sagkahan Rice and Corn Mills, Co. vs. NLRC
G.R. No. 73806
TACLOBAN SAGKAHAN RICE and CORN MILLS, CO., and/or TAN
CHENG PIAN (alias PIANA), Owner vs.
126 | L a b o r S t a n d a r d s - C a s e D i g e s t s

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION,


SECOND DIVISION, THE HONORABLE EXECUTIVE LABOR ARBITER,
REGIONAL ARBITRATION BRANCH NO. VIII, NATIONAL LABOR
RELATIONS COMMISSION, TACLOBAN CITY, and, CARLITO CODILAN,
MAXIMO DOCENA, TEOFILO TRANGRIA, EUGENIO GO, and,
REYNALDO TULIN
March 21, 1990
Facts: It appears that private respondents, before their termination on
July 25, 1983, were all regular employees of petitioners. Carlito Codilan
and Maximo Docena started working in 1958; Eugenio Go in 1961; Teofilo
Trangria in 1968; and Reynaldo Tulin in 1977. On July 25, 1983, petitioner
Tan Cheng Pian alias "Piana" told private respondents "to look for another
job" without giving any reason. Private respondents thus filed their
complaint for illegal dismissal with the Regional Office, NLRC at Tacloban
City on August 23, 1983. At the hearing of September 28, 1983, private
respondents, who had been employed elsewhere, demanded payment of
separation pay instead of seeking reinstatement.
After submission of private respondents' joint affidavit and petitioners'
position paper, Executive Labor Arbiter' Armando Polintan rendered the
Decision of April 11, 1984 ordering petitioners to pay private respondents
their separation pay as specifically indicated in the said decision.
Petitioners appealed the above decision to the respondent Commission
which dismissed the appeal and affirmed the decision in its Resolution of
December 28, 1984. Petitioners moved for reconsideration of the
aforesaid resolution which the NLRC denied in the questioned Resolution
of September 20, 1985. Hence, this petition for certiorari.
Issue: Whether or not private respondents can be considered as regular
employees.
Held: Art. 280. Regular and Casual Employment. The provisions of
written agreement to the contrary notwithstanding and regardless of the
oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which
are usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the
preceding paragraph:Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
127 | L a b o r S t a n d a r d s - C a s e D i g e s t s

shall be considered a regular employee with respect to the activity in


which he is employed and his employment shall continue while such
actually exists.
The evidence on record has established that private respondents Carlito
Codilan and Maximo Docena had been working for petitioners for 25
years, respondent Eugenio Go for 22 years, respondent Teofilo Trangria for
15 years and respondent Reynaldo Tulin for 6 years. Aside from their
lengthy service, it should be noted that private respondents' employment
was not fixed for a specific project or undertaking the completion or
termination of which has been determined at the time of their
appointment or hiring. Likewise, it must be borne in mind that petitioners
never rebutted private respondents' claim that they performed activities
usually necessary or desirable in the usual business of the former.

Furthermore, the services performed or to be performed by private


respondents are not seasonal in nature. While it may be true that the
harvest of palay is seasonal, the milling operation which is the main
business of petitioners are not seasonal. The fact is that big rice mills such
as the one owned by petitioners continue to operate and do business
throughout the year even if there are only two or three harvest seasons
within the year. It is a common practice among farmers and rice dealers to
store their palay and to have the same milled as the need arises. Thus,
the milling operations have no let-up.

Finally, considering the number of years that they have worked for
petitioners (the lowest is 6 years), private respondents have long attained
the status of regular employees as defined under Art. 280 of the Labor
Code.
Requisites in order that seasonal employment may be regular
employment
Hacienda Fatima vs. National Federation of Sugarcane Workers- Food and
General Trade
G.R. No. 149440
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS
and CRISTINE SEGURA vs.
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NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND


GENERAL TRADE
January 28, 2003
Facts: When complainant union was certified as the collective bargaining
representative in the certification elections, respondents under the pretext
that the result was on appeal, refused to sit down with the union for the
purpose of entering into a collective bargaining agreement. Moreover, the
workers including complainants herein were not given work for more than
one month. In protest, complainants staged a strike which was however
settled upon the signing of a Memorandum of Agreement. However,
alleging that complainants failed to load the fifteen wagons, respondents
reneged on its commitment to sit down and bargain collectively. Instead,
respondent employed all means including the use of private armed guards
to prevent the organizers from entering the premises.
Moreover, starting September 1991, respondents did not any more give
work assignments to the complainants forcing the union to stage a strike
on January 2, 1992. But due to the conciliation efforts by the DOLE,
another Memorandum of Agreement was signed by the complainants and
respondents. When respondents again reneged on its commitment,
complainants filed the present complaint.

Issue: Whether or not the Court of Appeals erred in holding that


respondents, admittedly seasonal workers, were regular employees,
contrary to the clear provisions of Article 280 of the Labor Code, which
categorically state that seasonal employees are not covered by the
definition of regular employees under paragraph 1, nor covered under
paragraph 2 which refers exclusively to casual employees who have
served for at least one year.
Held: Article 280 of the Labor Code, as amended, states: Art.
280. Regular and Casual Employment. - The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be deemed to be regular
where the employee has been engaged to perform activities which are
usually necessary or desirable in the usual business or trade of the
employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been
determined at the time of the engagement of the employee or where the
work or services to be performed is seasonal in nature and the
employment is for the duration of the season.

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An employment shall be deemed to be casual if it is not covered by the


preceding paragraph: Provided, That, any employee who has rendered at
least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in
which he is employed and his employment shall continue while such
activity exist.

For respondents to be excluded from those classified as regular


employees, it is not enough that they perform work or services that are
seasonal in nature. They must have also been employed only for the
duration of one season. The evidence proves the existence of the first, but
not of the second, condition. The fact that respondents -- with the
exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy
Silva -- repeatedly worked as sugarcane workers for petitioners for several
years is not denied by the latter. Evidently, petitioners employed
respondents for more than one season. Therefore, the general rule of
regular employment is applicable.

The test of whether or not an employee is a regular employee has been


laid down in De Leon v. NLRC, in which this Court held: The primary
standard, therefore, of determining regular employment is the reasonable
connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. The test is whether
the former is usually necessary or desirable in the usual trade or business
of the employer. The connection can be determined by considering the
nature of the work performed and its relation to the scheme of the
particular business or trade in its entirety. Also if the employee has been
performing the job for at least a year, even if the performance is not
continuous and merely intermittent, the law deems repeated and
continuing need for its performance as sufficient evidence of the necessity
if not indispensability of that activity to the business. Hence, the
employment is considered regular, but only with respect to such activity
and while such activity exists.

Where there is no showing of clear, valid and legal cause for the
termination of employment, the law considers the matter a case of illegal
dismissal and the burden is on the employer to prove that the termination
was for a valid and authorized cause. In the case at bar, petitioners failed
to prove any such cause for the dismissal of respondents who, as
discussed above, are regular employees.
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Abasolo vs. NLRC


G.R. No. 118475
ELVIRA ABASOLO, ANTONIO ABAY, PURIFICACION ABAY, CATALINA
ABELLERA, DANIEL ABELLERA, ELSIE ABELLERA, LOURDES ADUSE,
et al. vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
RICARDO N. OLAIREZ, LA UNION TOBACCO REDRYING
CORPORATION and SEE LIN CHAN
November 29, 2000
Facts: La Union Tobacco Redrying Corporation (LUTORCO), which is owned
by See Lin Chan, is engaged in the business of buying, selling, redrying
and processing of tobacco leaves and its by-products. Elvira Abasolo and
co-workers have been under the employ of LUTORCO for several years
until their employment with LUTORCO was abruptly interrupted when
Compania General de Tabaccos de Filipinas (also known as TABACALERA)
took over LUTORCOs tobacco operations. New signboards were posted
indicating a change of ownership and petitioners were then asked by
LUTORCO to file their respective applications for employment with
TABACALERA. Petitioners were caught unaware of the sudden change of
ownership and its effect on the status of their employment, though it was
alleged that TABACALERA would assume and respect the seniority rights
of the petitioners.
The employees instituted before the National Labor Relations Commission
a complaint on the ground that there was a termination of their
employment due to the closure of LUTORCO as a result of the sale and
turnover to TABACALERA. The Labor Arbiter dismissed the complaint for
lack of merit. The petitioners then appealed the decision of the Labor
Arbiter to NLRC. The National Labor Relations Commission affirmed the
dismissal of the consolidated complaints. A motion for reconsideration was
also filed, but it was futile. Petitioners now files a petition before the
Supreme Court, questioning the decision.
Issue: Whether or not the petitioners are regular or seasonal workers.
Held: The primary standard of determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer. The
test is whether the former is usually necessary or desirable in the usual
business or trade of the employer. The connection can be determined by
considering the nature of the work performed and its relation to the
scheme of the particular business or trade in its entirety. Also if the
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employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity, and while such activity exists. Thus, the nature of ones
employment does not depend solely on the will or word of the employer.
Nor on the procedure for hiring and the manner of designating the
employee, but on the nature of the activities to be performed by the
employee, considering the employers nature of business and the duration
and scope of work to be done.
In the case at bar, while it may appear that the work of petitioners is
seasonal, inasmuch as petitioners have served the company for many
years, some for over 20 years, performing services necessary and
indispensable to LUTORCOs business, serve as badges of regular
employment. Moreover, the fact that petitioners do not work continuously
for one whole year but only for the duration of the tobacco season does
not detract from considering them in regular employment since in a litany
of cases this Court has already settled that seasonal workers who are
called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but are merely
considered on leave until re-employed.
15. Casual Employment Labor Code Article 280; Section 5(b),
Rule 1, Book IV (Amended by Article IV, D.O. No. 10 Series of
1997)
Casual employee needs no appointment paper to be a regular
employee after one year of service.
Kimberly Clark Philippines vs. Secretary of Labor
G.R. No. 156668
KIMBERLY-CLARK (PHILS.), INC. vs.
SECRETARY OF LABOR, AMBROCIO GRAVADOR, ENRICO PILI,
PAQUITO GILBUENA, ROBERTO DEL MUNDO, ALMARIO ROMINQUIT,
et al.
November 23, 2007
Facts: A Collective Bargaining Agreement was executed by and between
Kimberly-Clark (Phils.), Inc., (Kimberly), a Philippine-registered corporation
engaged in the manufacture, distribution, sale and exportation of paper
products, and United Kimberly-Clark Employees Union-Philippine Transport
and General Workers Organization (UKCEO-PTGWO) expired. The
KILUSAN-OLALIA, then a newly-formed labor organization, challenged the
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incumbency of UKCEO-PTGWO, by filing a petition for certification election


with the Department of Labor and Employment. A certification election
was subsequently conducted with UKCEO-PTGWO winning over KILUSANOLALIA. The then Ministry of Labor and Employment issued an order that
the casual workers not performing janitorial and yard maintenance
services had attained regular status on even date. UKCEO-PTGWO was
then declared as the exclusive bargaining representative of Kimberlys
employees, having garnered the highest number of votes in the
certification election.
KILUSAN-OLALIA filed with the Supreme Court a petition assailing the
order of the Ministry with prayer for a temporary restraining order. During
the pendency of the case, Kimberly dismissed from service several
employees and refused to heed the workers grievances, impelling
KILUSAN-OLALIA to stage a strike on May 17, 1987. Kimberly filed an
injunction case with the National Labor Relations Commission (NLRC),
which prompted the latter to issue temporary restraining orders (TROs).
Eventually, the pending case was decided ordering the opening and
counting of the 64 challenged votes, and that the union with the highest
number of votes be thereafter declared as the duly elected certified
bargaining representative of the regular employees of KIMBERLY. It also
ordered KIMBERLY to pay the workers who have been regularized. The
KILUSAN-OLALIA and 76 individual complainants filed a motion for
execution with the DOLE (formerly MOLE). The DOLE considered as
physically impossible, and moot and academic the opening and counting
of the 64 challenged ballots because they could no longer be located
despite diligent efforts, and KILUSAN-OLALIA no longer actively
participated when the company went through another CBA cycle.
The Bureau of Working Conditions then submitted its report finding 47 out
of the 76 complainants as entitled to be regularized. Kimberly filed a
motion for reconsideration of the DOLE Order as well as the BWC Report,
but it was denied. Kimberly filed a petition before the appellate court, but
it was again dismissed. Hence, Kimberly filed a petition before the
Supreme Court.
Issue: Whether or not the workers became regular by operation of law,
without the need for appointment papers.
Held: Owing to their length of service with the company, these workers
became regular employees, by operation of law, one year after they were
employed by KIMBERLY through RANK. While the actual regularization of
these employees entails the mechanical act of issuing regular
appointment papers and compliance with such other operating procedures
as may be adopted by the employer, it is more in keeping with the intent
and spirit of the law to rule that the status of regular employment
attaches to the casual worker on the day immediately after the end of his
first year of service. To rule otherwise, and to instead make their
133 | L a b o r S t a n d a r d s - C a s e D i g e s t s

regularization dependent on the happening of some contingency or the


fulfillment of certain requirements, is to impose a burden on the employee
which is not sanctioned by law.
The law thus provides for two kinds of regular employees, namely: (1)
those who are engaged to perform activities which are usually necessary
or desirable in the usual business or trade of the employer; and (2) those
who have rendered at least one year of service, whether continuous or
broken, with respect to the activity in which they are employed. The
individual petitioners herein who have been adjudged to be regular
employees fall under the second category. These are the mechanics,
electricians, machinists, machine shop helpers, warehouse helpers,
painters, carpenters, pipefitters and masons. It is not disputed that these
workers have been in the employ of Kimberly for more than one year at
the time of the filing of the petition for certification election by KILUSANOLALIA.
Repeated rehiring of casual employees makes him a regular
employee.
Tan vs. Lagrama
G.R. No. 151228
ROLANDO Y. TAN vs.
LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF APPEALS
August 15, 2002
Facts: Petitioner Rolando Tan is the president of Supreme Theater
Corporation and the general manager of Crown and Empire Theaters in
Butuan City. Private respondent Leovigildo Lagrama is a painter, making
ad billboards and murals for the motion pictures shown at the Empress,
Supreme, and Crown Theaters for more than 10 years, from September 1,
1988 to October 17, 1998.
On October 17, 1998, private respondent Lagrama was summoned by Tan
and complaimed about the latters behavior. Lagrama filed a complaint
with the Sub-Regional Arbitration Branch No. X of the National Labor
Relations Commission (NLRC) in Butuan City. He alleged that he had been
illegally dismissed and sought reinvestigation and payment of 13th month
pay, service incentive leave pay, salary differential, and damages. Labor
Arbiter Rogelio P. Legaspi directed the parties to file their position papers.
On June 17, 1999, he rendered a decision declaring respondents dismissal
as illegal. Petitioner Rolando Tan appealed to the NLRC Fifth Division,
Cagayan de Oro City, which, on June 30, 2000, rendered a
decision4 finding Lagrama to be an independent contractor, and for this
reason reversing the decision of the Labor Arbiter. Respondent Lagrama
filed a motion for reconsideration, but it was denied for lack of merit.
Accordingly, on May 31, 2001, the Court of Appeals rendered a decision
reinstating Labor Arbiter Legaspis decision.
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Issue: Whether or not an employer-employee relationship existed


between petitioner and private respondent.
Held: In determining whether there is an employer-employee relationship,
we have applied a "four-fold test," to wit: (1) whether the alleged
employer has the power of selection and engagement of employees; (2)
whether he has control of the employee with respect to the means and
methods by which work is to be accomplished; (3) whether he has the
power to dismiss; and (4) whether the employee was paid wages.7 These
elements of the employer-employee relationship are present in this case.
First. The existence in this case of the first element is undisputed. It was
petitioner who engaged the services of Lagrama without the intervention
of a third party. It is the existence of the second element, the power of
control, that requires discussion here.
In the case at bar, albeit petitioner Tan claims that private respondent
Lagrama was an independent contractor and never his employee, the
evidence shows that the latter performed his work as painter under the
supervision and control of petitioner. Lagrama worked in a designated
work area inside the Crown Theater of petitioner, for the use of which
petitioner prescribed rules. The rules included the observance of
cleanliness and hygiene and a prohibition against urinating in the work
area and any place other than the toilet or the rest rooms.9 Petitioner's
control over Lagrama's work extended not only to the use of the work
area, but also to the result of Lagrama's work, and the manner and means
by which the work was to be accomplished.
Second. That petitioner had the right to hire and fire was admitted by him
in his position paper submitted to the NLRC, the pertinent portions of
which stated:
Complainant did not know how to use the available comfort rooms
or toilets in and about his work premises. He was urinating right at
the place where he was working when it was so easy for him, as
everybody else did and had he only wanted to, to go to the comfort
rooms. But no, the complainant had to make a virtual urinal out of
his work place! The place then stunk to high heavens, naturally, to
the consternation of respondents and everyone who could smell the
malodor.
Given such circumstances, the respondents had every right, nay all
the compelling reason, to fire him from his painting job upon
discovery and his admission of such acts. Nonetheless, though
thoroughly scolded, he was not fired. It was he who stopped to paint
for respondents.

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By stating that he had the right to fire Lagrama, petitioner in effect


acknowledged Lagrama to be his employee. For the right to hire and fire is
another
important
element
of
the
employer-employee
relationship.13 Indeed, the fact that, as petitioner himself said, he waited
for Lagrama to report for work but the latter simply stopped reporting for
work reinforces the conviction that Lagrama was indeed an employee of
petitioner. For only an employee can nurture such an expectancy, the
frustration of which, unless satisfactorily explained, can bring about some
disciplinary action on the part of the employer.
Third. Payment of wages is one of the four factors to be considered in
determining the existence of employer-employee relation. Wages are
defined as "remuneration or earnings, however designated, capable of
being expressed in terms of money, whether fixed or ascertained on a
time, task, piece, or commission basis, or other method of calculating the
same, which is payable by an employer to an employee under a written or
unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered." That Lagrama worked for Tan on a
fixed piece-work basis is of no moment. Payment by result is a method of
compensation and does not define the essence of the relation. It is a
method of computing compensation, not a basis for determining the
existence or absence of employer-employee relationship. One may be
paid on the basis of results or time expended on the work, and may or
may not acquire an employment status, depending on whether the
elements of an employer-employee relationship are present or not.
The primary standard for determining regular employment is the
reasonable connection between the particular activity performed by the
employee in relation to the usual trade or business of the employer.19 In
this case, there is such a connection between the job of Lagrama painting
billboards and murals and the business of petitioner. To let the people
know what movie was to be shown in a movie theater requires billboards.
Petitioner in fact admits that the billboards are important to his business.
Lagrama had been employed by petitioner since 1988. Under the law,
therefore, he is deemed a regular employee and is thus entitled to
security of tenure, as provided in Art. 279 of Labor Code:
ART. 279. Security of Tenure. In cases of regular employment, the
employer shall not terminate the services of an employee except for
a just cause or when authorized by this Title. An employee who is
unjustly dismissed from work shall be entitled to reinstatement
without loss of seniority rights and other privileges and to his full
backwages, inclusive of allowances, and to his other benefits or their
monetary equivalent computed from the time his compensation was
withheld from him up to the time of his actual reinstatement.
This Court has held that if the employee has been performing the job for
at least one year, even if not continuously but intermittently, the repeated
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and continuing need for its performance is sufficient evidence of the


necessity, if not indispensability, of that activity to the business of his
employer. Hence, the employment is also considered regular, although
with respect only to such activity, and while such activity exists.
16.

Fixed Term Employment

Brent School, Inc. vs. Zamora and Alegre


G.R. No. L-48494
BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE vs.
RONALDO ZAMORA, the Presidential Assistant for Legal Affairs,
Office of the President, and DOROTEO R. ALEGRE
February 5, 1990
Facts: The root of the controversy at bar is an employment contract in
virtue of which Doroteo R. Alegre was engaged as athletic director by
Brent School, Inc. at a yearly compensation of P20,000.00. The contract
fixed a specific term for its existence, five (5) years, i.e., from July 18,
1971, the date of execution of the agreement, to July 17, 1976.
Subsequent subsidiary agreements dated March 15, 1973, August 28,
1973, and September 14, 1974 reiterated the same terms and conditions,
including the expiry date, as those contained in the original contract of
July 18, 1971.
Some three months before the expiration of the stipulated period, or more
precisely on April 20,1976, Alegre was given a copy of the report filed by
Brent School with the Department of Labor advising of the termination of
his services effective on July 16, 1976. The Director pronounced "the
ground relied upon by the respondent (Brent) in terminating the services
of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and,
quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau
of Private Schools.
Brent School filed a motion for reconsideration. The Regional Director
denied the motion and forwarded the case to the Secretary of Labor for
review. The latter sustained the Regional Director. Brent appealed to the
Office of the President. Again it was rebuffed. That Office dismissed its
appeal for lack of merit.
Issue: Whether or not the provisions of the Labor Code, as amended,
have anathematized "fixed period employment" or employment for a
term.
Held: The employment contract between Brent School and Alegre was
executed on July 18, 1971, at a time when the Labor Code of the
Philippines (P.D. 442) had not yet been promulgated. The validity of term
employment was impliedly but nonetheless clearly recognized by the
Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto,
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it was the Code of Commerce which governed employment without a fixed


period. Now, the Civil Code of the Philippines, which was approved on June
18, 1949 and became effective on August 30,1950, itself deals with
obligations with a period. No prohibition against term-or fixed-period
employment is contained in any of its articles or is otherwise deducible
therefrom.
It is plain then that when the employment contract was signed between
Brent School and Alegre, it was perfectly legitimate for them to include in
it a stipulation fixing the duration explicitly recognized as valid by this
Court.
The status of legitimacy continued to be enjoyed by fixed-period
employment contracts under the Labor Code (Presidential Decree No.
442), which went into effect on November 1, 1974. The Code contained
explicit references to fixed period employment, or employment with a
fixed or definite period. Nevertheless, obscuration of the principle of
licitness of term employment began to take place at about this time
Article 320, entitled "Probationary and fixed period employment,"
originally stated that the "termination of employment of probationary
employees and those employed WITH A FIXED PERIOD shall be subject to
such regulations as the Secretary of Labor may prescribe." Article 321
prescribed the just causes for which an employer could terminate
"an employment without a definite period." And Article 319 undertook to
define "employment without a fixed period."
There is, on the other hand, the Civil Code, which has always recognized,
and continues to recognize, the validity and propriety of contracts and
obligations with a fixed or definite period, and imposes no restraints on
the freedom of the parties to fix the duration of a contract, whatever its
object, be it specie, goods or services, except the general admonition
against stipulations contrary to law, morals, good customs, public order or
public policy. Under the Civil Code, therefore, and as a general proposition,
fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects
with pre-determined dates of completion; they also include those to which
the parties by free choice have assigned a specific date of termination.
As it is evident from even only the three examples already given that
Article 280 of the Labor Code, under a narrow and literal interpretation,
not only fails to exhaust the gamut of employment contracts to which the
lack of a fixed period would be an anomaly, but would also appear to
restrict, without reasonable distinctions, the right of an employee to freely
stipulate with his employer the duration of his engagement, it logically
follows that such a literal interpretation should be eschewed or
avoided. The law must be given a reasonable interpretation, to
preclude absurdity in its application. Outlawing the whole
concept of term employment and subverting to boot the principle
of freedom of contract to remedy the evil of employer's using it
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as a means to prevent their employees from obtaining security of


tenure is like cutting off the nose to spite the face or, more
relevantly, curing a headache by lopping off the head.
Such interpretation puts the seal on Bibiso upon the effect of the expiry of
an agreed period of employment as still good rulea rule reaffirmed in
the recent case of Escudero vs. Office of the President (G.R. No. 57822,
April 26, 1989) where, in the fairly analogous case of a teacher being
served by her school a notice of termination following the expiration of the
last of three successive fixed-term employment contracts, the Court held:
Reyes (the teacher's) argument is not persuasive. It loses sight
of the fact that her employment was probationary, contractual
in nature, and one with a definitive period. At the expiration of
the period stipulated in the contract, her appointment was
deemed terminated and the letter informing her of the nonrenewal of her contract is not a condition sine qua non before
Reyes may be deemed to have ceased in the employ of
petitioner UST. The notice is a mere reminder that Reyes'
contract of employment was due to expire and that the
contract would no longer be renewed. It is not a letter of
termination. The interpretation that the notice is only a
reminder is consistent with the court's finding in Labajo supra.
Paraphrasing Escudero, respondent Alegre's employment was terminated
upon the expiration of his last contract with Brent School on July 16, 1976
without the necessity of any notice. The advance written advice given the
Department of Labor with copy to said petitioner was a mere reminder of
the impending expiration of his contract, not a letter of termination, nor
an application for clearance to terminate which needed the approval of
the Department of Labor to make the termination of his services effective.
In any case, such clearance should properly have been given, not denied.
Requisites for a valid fixed term contract of employment
PNOC vs NLRC
G.R. No. 97747 March 31, 1993
PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT
CORPORATION/FRANCIS PALAFOX vs.
NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO MATA
March 31, 1993

Facts: On November 11, 1980, petitioners hired private respondent


Francisco Mata as Service Driver on a daily wage of P39.74. Assigned to
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the PNOC-EDA Bacon-Manito Geothermal Project in Bonga, Sorsogon,


Sorsogon, he worked there until September 1, 1985. On this day, his
employment was terminated through a letter advice dated September 1,
1985, signed by his supervisor, B.B. Balista, allegedly for "contract
expiration" (Exh "A", p. 10, Records), even when the project was still a
continuing one. On November 8, 1985, private respondent complained of
illegal dismissal, and accused petitioners of withholding his backwages,
overtime pay, and separation pay (p. 1, Records). A dismissal of the
complaint was sought on jurisdictional ground, petitioner company
asserting that it is a government-owned and controlled corporation,
hence, its employees must be governed by the Civil Service Law and not
by the Labor Code, and citing National Housing Corporation v. Benjamin
Juco and the NLRC (134 SCRA 176). On February 26, 1987, Labor Arbiter
Voltaire A. Balitaan dismissed the complaint for lack of jurisdiction. On
appeal to public respondent, however, the First Division, on September 16,
1988, set aside the Labor Arbiter's decision, assumed jurisdiction over the
case, and directed the Arbitration Branch to conduct further proceedings.
Petitioners maintained that private respondent was a project employee
whose employment was for a definite period and coterminous with the
project for which he was hired. It was for this reason that his employment
was terminated. Finding for private respondent, Executive Labor Arbiter
Vito C. Bose's Decision of August 23, 1990, held finding respondent
company guilty of illegal dismissal and ordering the same to pay
complainant.

Issue: Whether or not respondent is a regular employee.

Held: No, they are not. Petitioners claim that the fixed contract of
employment which private respondent entered into was read, translated
to, comprehended and voluntarily accepted by him. No evidence was
presented to prove improper pressure or undue influence when he
entered, perfected and consummated said contract. And even if private
respondent's services were necessary and desirable in petitioner's
business, nevertheless private respondent's term was limited, citing as
authority Brent School v. Zamora. Much can be learned from the leading
case of Brent School v. Zamora, supra. In this case, the Court analyzed the
development of Article 280 from its first version as Article 319 and its
amendments under PD 850 and BP 130 and made the following
observation:

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Accordingly, and since the entire purpose behind the


development of legislation culminating in the present Article
280 of the Labor Code clearly appears to have been, as
already observed, to prevent circumvention of the employee's
right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral
agreements conflicting with the concept of regular
employment as defined therein should be construed to refer to
the substantive evil that the Code itself has singled out:
agreements entered into precisely to circumvent security of
tenure. It should have no application to instances where a
fixed period of employment was agreed upon knowingly and
voluntarily by the parties, without any force, duress or
improper pressure being brought to bear upon the employee
and absent any other circumstances vitiating his consent, or
where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms
with no moral dominance whatever being exercised by the
former over the latter. Unless thus limited in its purview. the
law would be made to apply to purposes other than those
explicitly stated by its framers; it thus becomes pointless and
arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.

As can be gleaned from the said case, the two guidelines, by which fixed
contracts of employments can be said NOT to circumvent security of
tenure, are either:
1. The fixed period of employment was knowingly and
voluntarily agreed upon by the parties, without any force,
duress or improper pressure being brought to bear upon the
employee and absent any other circumstances vitiating his
consent; or:
2. It satisfactorily appears that the employer and employee
dealt with each other on more or less equal terms with no
moral dominance whatever being exercised by the former on
the latter.

Does petitioner's fixed contract of employment with private respondent


satisfy any of the guidelines above stated? Yes, it does. A careful
examination of the last Employment Contract signed by respondent Mata
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shows that he indeed signed the same. 5 In fact petitioners claim that all
the previous employment contracts were also translated for the benefit of
private respondent, and it was only when he understood the same that he
signed said contracts. As per Guideline No. 1, given the circumstances
behind private respondent Mata's employment, private respondent is a
project employee. As explained by petitioners in their memorandum:

[I]t must be clarified that the Bacon-Manito Geothermal


Project is one big "project consisting of several phases,
namely the exploration, development and operation stages.
Mata was employed in connection with the well-completion
project which was part of the exploration stage. Said wellcompletion which follows a drilling operation is now finished
and completed. The other projects in the development stage
are still on-going but the project for which Mata's services
were required is now complete and terminated. . .

Paraphrasing Rada v. NLRC, it is clear that private respondent Mata is a


project employee considering that he does not belong to a "work pool"
from which petitioner PNOC would draw workers for assignment to other
projects at its discretion. It is likewise apparent from the facts of the case
that private respondent Mata was utilized only for one particular project,
the well-completion project which was part of the exploration stage of the
PNOC Bacon-Manito Geothermal Project. Hence, private respondent Mata
can be dismissed upon the termination of the projects as there would be
no need for his services. We should not expect petitioner to continue on
hiring private respondent in the other phases of the project when his
services will no longer be needed.
Duties (need not) are usually necessary or desirable in the
employers usual business or trade.
AMA Computer College Paraaque vs. Austria
G.R. No. 164078
AMA COMPUTER COLLEGE, PARAAQUE, and/or AMABLE C.
AGUILUZ IX, President, MRS. CELESTE BANSALE, School Director,
MS. SOCORRO, MR. PATRICK AZANZA, GRACE BERANIA and MAJAL
JACOB vs.
ROLANDO A. AUSTRIA
November 23, 2007

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Facts: Petitioner AMA Computer College, Paraaque (AMA) is an


educational institution duly organized under the laws of the Philippines.
The rest of the petitioners are principal officers of AMA. Respondent
Rolando A. Austria4(respondent) was hired by AMA on probationary
employment as a college dean on April 24, 2000.5 On August 22, 2000,
respondents appointment as dean was confirmed by AMAs Officer-inCharge (OIC), Academic Affairs. In the event that Mr. Austria gives up the
Dean position or fails to meet the standards of the (sic) based on the
evaluation of his immediate superior, he shall be considered for a faculty
position and the appointee agrees that he shall lose the transportation
allowance he enjoys as Dean and be entitled to his faculty rate. Sometime
in August 2000, respondent was charged with violating AMAs Employees
Conduct and Discipline provided in its Orientation Handbook (Handbook).
This resulted to the loss of trust and confidence in your credibility as a
company officer holding a highly sensitive position. In view of this, your
services as Dean of AMA Paraaque is hereby terminated effective
immediately. You are hereby instructed to report to the branch HR
Personnel for further instructions.1avvphi1 Please bear in mind that as a
company policy you are required to accomplish your clearance and turn
over all documents and responsibilities to the appropriate officers. You are
barred from entering the company premises unless with clearance from
the HRD.
On October 27, 2000, respondent filed a Complaint for Illegal Dismissal,
Illegal Suspension, Non-Payment of Salary and 13th Month Pay with prayer
for Damages and Attorney's Fees against AMA and the rest of the
petitioners. Trial on the merits ensued.
In his Decision dated December 6, 2000, the Labor Arbiter held that
petitioners accorded respondent due process. On March 31, 2003, the
NLRC, in its Decision, found merit in respondent's appeal. The NLRC
opined that the petitioners did not contravene respondent's allegation
that he had attained regular status after serving the three (3)-month
probationary period required under the Handbook. On March 29, 2004, the
CA held that based on the Handbook and on respondent's appointment, it
can be inferred that respondent was a regular employee, and as such, his
employment can only be terminated for any of the causes provided under
Article 28 of the Labor Code and after observance of the requirements of
due process.
Issue: Whether or not an employee an employee hired for a fixed term
may do duties necessary for an employers business.
Held: We agree. We held that Article 280 of the Labor Code does not
proscribe or prohibit an employment contract with a fixed period. Even if
the duties of the employee consist of activities necessary or desirable in
the usual business of the employer, the parties are free to agree on a
fixed period of time for the performance of such activities. There is
nothing essentially contradictory between a definite period of employment
and the nature of the employees duties.
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Thus, this Court's ruling in Brent School, Inc. v. Zamora is instructive:


The question immediately provoked. . . is whether or not a voluntary
agreement on a fixed term or period would be valid where the employee
"has been engaged to perform activities which are usually necessary or
desirable in the usual business or trade of the employer." The definition
seems non sequitur. From the premise that the duties of an employee
entail "activities which are usually necessary or desirable in the usual
business or trade of the employer" the conclusion does not necessarily
follow that the employer and employee should be forbidden to stipulate
any period of time for the performance of those activities. There is nothing
essentially contradictory between a definite period of an employment
contract and the nature of the employee's duties set down in that contract
as being "usually necessary or desirable in the usual business or trade of
the employer." The concept of the employee's duties as being "usually
necessary or desirable in the usual business or trade of the employer" is
not synonymous with or identical to employment with a fixed term.
Logically, the decisive determinant in term employment should not be the
activities that the employee is called upon to perform, but the day certain
agreed upon by the parties for the commencement and termination of
their employment relationship, a day certain being understood to be "that
which must necessarily come, although it may not be known when."
Seasonal employment, and employment for a particular project are merely
instances of employment in which a period, where not expressly set down,
is necessarily implied.
The instant case involves respondent's position as dean, and comes within
the purview of the Brent School doctrine.
First. The letter of appointment was clear. Respondent was confirmed as
Dean of AMA College, Paraaque, effective from April 17, 2000 to
September 17, 2000. In numerous cases decided by this Court, we had
taken notice, that by way of practice and tradition, the position of dean is
normally an employment for a fixed term. Although it does not appear on
record and neither was it alleged by any of the parties that respondent,
other than holding the position of dean, concurrently occupied a teaching
position, it can be deduced from the last paragraph of said letter that the
respondent shall be considered for a faculty position in the event he gives
up his deanship or fails to meet AMA's standards. Such provision
reasonably serves the intention set forth in Brent School that the deanship
may be rotated among the other members of the faculty.
Second. The fact that respondent did not sign the letter of appointment is
of no moment. We held in Brent School, to wit:
Accordingly, and since the entire purpose behind the development of
legislation culminating in the present Article 280 of the Labor Code clearly
appears to have been, as already observed, to prevent circumvention of
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the employee's right to be secure in his tenure, the clause in said article
indiscriminately and completely ruling out all written or oral agreements
conflicting with the concept of regular employment as defined therein
should be construed to refer to the substantive evil that the Code itself
has singled out: agreements entered into precisely to circumvent security
of tenure. It should have no application to instances where a fixed period
of employment was agreed upon knowingly and voluntarily by the parties,
without any force, duress or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his
consent, or where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms with no moral
dominance whatever being exercised by the former over the latter.
Unless, thus, limited in its purview, the law would be made to apply to
purposes other than those explicitly stated by its framers; it thus becomes
pointless and arbitrary, unjust in its effects and apt to lead to absurd and
unintended consequences.
The fact that respondent voluntarily accepted the employment, assumed
the position, and performed the functions of dean is clear indication that
he knowingly and voluntarily consented to the terms and conditions of the
appointment, including the fixed period of his deanship. Other than the
handwritten notes made in the letter of appointment, no evidence was
ever presented to show that respondents consent was vitiated, or that
respondent objected to the said appointment or to any of its conditions.
Furthermore, in his status as dean, there can be no valid inference that he
was shackled by any form of moral dominance exercised by AMA and the
rest of the petitioners.
Pantranco North Express, Inc. vs. NLRC
G.R. No. 106654
PANTRANCO NORTH EXPRESS, INC., and/or ABELARDO DE LEON vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division, and
RODOLFO PERONILA
December 16, 1994
Facts: It appears on the record that sometime in 1971, private
respondent Peronila was employed as a driver of Pantranco North Express,
Inc. In 1973, Peronila was administratively investigated by the corporation
for his absence from work of more than two and one-half months without
leave. According to an investigation report of petitioners' area manager,
dated March 10, 1973, Peronila claimed that he went on absence without
leave from his work from November 1, 1972 up to February 16, 1973
which was date of the investigation, or one hundred seven calendar days
continuously, because "he went to Cotabato, Mindanao to visit his dead
grandfather during the period of his unofficial absence."
In an order dated March 20, 1973, Mediator-Factfinder Loreto V. Poblete of
the National Relations Commission, Regional Office No. II in Tuguegarao,
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Cagayan, affirmed the dismissal made by petitioner. Fifteen years after


such termination of his employment, Peronila was then again hired as a
driver, but on a contractual basis for a fixed period of one month.
Barely fifteen days from such employment as a contractual driver, or on
April 20, 1988, private respondent was involved in a vehicular mishap in
Nueva Vizcaya wherein the bus he was driving hit another vehicle. After
an administrative investigation conducted by petitioner corporation,
Peronila was found guilty thereof, hence his employment contract was
terminated and was no longer renewed thereafter.
Labor Arbiter Patricio P. Libo-on dismissed the case on February 12, 1991,
ruling that "(a)lthough as a driver, his services (are) usual and necessary
to the business of the respondent, yet it is also true that complainant's
case falls within one of the exceptions. When he was rehired, it was clear
to him that he would be working only for one (1) month. . . . Apparently,
the reason for this is to fill or to stop-gap the requirements of the
employe(r)/respondent during the period (when) he was rehired, and
which it foresees to ease up in May 1988." On appeal, public respondent
NLRC declared that the dismissal was illegal.
Issue: Whether or not the employment contract which stipulates that
there is no employer-employee relationship between petitioner and
Peronila is valid.
Held: Yes, it is valid. We are persuaded to hold that the re-employment of
Peronila as a contractual bus driver was merely an act of generosity on
the part of petitioner.
Although we have ruled in a number of cases applying Article 280 of the
Labor Code that when the activities performed by the employee are
usually necessary or desirable in the usual trade of the employer, the
employment
is
deemed
regular
notwithstanding
a
contrary
agreement, there are exceptions to this rule especially if circumstances
peculiar to the case warrant a departure therefrom.
The petitioner had validly dismissed Peronila long before he entered into
the contested employment contract. It was Peronila who earnestly
pleaded with petitioner to give him a second chance. The re-hiring of
private respondent was out of compassion and not because the petitioner
was impressed with the credentials of Peronila. Peronila's previous
violations of company rules explains the reluctant attitude to the
petitioner in re-hiring him. When the bus driven by Peronila figured in a
road mishap, that incident finally prompted petitioner to sever any further
relationship with said private respondent.
In upholding the validity of a contract of employment with fixed or specific
period in a number of cases, we explained therein that the decisive
determinant in term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon the
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parties for the commencement and termination of their employment


relationship, a day certain being understood to be that which must
necessarily come, although it may not be known when. . . . This ruling is
only in consonance with Article 280 of the Labor Code."
In the present dispute, the services of respondent Peronila had been
validly terminated by petitioner, when the latter absented himself without
official leave, fifteen years before he was re-hired as a contractual driver
for just one month. Definitely, his re-hiring cannot be construed to mean
that Peronila reacquired his former permanent status.
Fixed term employment for less than six months same with
probationary employment.
Caparoso vs. NLRC
G.R. No. 155505
EMILIO M. CAPAROSO and JOEVE P. QUINDIPAN vs.
COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION,
COMPOSITE ENTERPRISES INCORPORATED, and EDITH TAN
February 15, 2007

Facts: Composite Enterprises Incorporated is engaged in the distribution


and supply of confectioneries to various retail establishments within the
Philippines. Emilio M. Caparoso and Joeve P. Quindipan were Composites
deliverymen. Caparoso and Quindipan were dismissed from the service.
They filed a consolidated position paper before the Labor Arbiter charging
Composite and its Personnel Manager, Edith Tan, with illegal dismissal.
The Labor Arbiter ruled that the petitioners are regular employees of
respondents. It was ruled that by the very nature of respondents business
and the nature of petitioners services, there is no doubt as to the
employment status of petitioners. Composite appealed to the National
Labor Relations Commission which set aside the Labor Arbiters Decision
and dismissed the petitioners complaint for illegal dismissal. The NLRC
ruled that the mere fact that the employees duties are necessary or
desirable in the business or trade of the employer does not mean that
they are forbidden from stipulating the period of employment. The NLRC
held that petitioners contracts of employment are valid and binding
between the contracting parties and shall be considered as the law
between them. The NLRC ruled that petitioners are bound by their
employment contracts.
The petitioners filed a motion for reconsideration. The Commission denied
the motion. Hence, the petitioners filed a petition for certiorari before the
Court of Appeals, which dismissed the petition and affirmed the
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Commissions resolution. This prompted the petitioners to file a motion for


reconsideration, but it was again denied. Thus, a petition before the
Supreme Court was filed.
Issue: Whether or not Caparoso and Quindipan are regular employees.
Held: Under Article 280 of the Labor Code, a regular employee is (1) one
who is engaged to perform activities that are necessary or desirable in the
usual trade or business of the employer, or (2) a casual employee who has
rendered at least one year of service, whether continuous or broken, with
respect to the activity in which he is employed. However, even if an
employee is engaged to perform activities that are necessary or desirable
in the usual trade or business of the employer, it does not preclude the
fixing of employment for a definite period.
The Court thus laid down the criteria under which fixed-term employment
could not be said to be in circumvention of the law on security of tenure,
thus: 1. The fixed period of employment was knowingly and voluntarily
agreed upon by the parties without any force, duress, or improper
pressure being brought to bear upon the employee and absent any other
circumstances vitiating his consent; or 2. It satisfactorily appears that the
employer and the employee dealt with each other on more or less equal
terms with no moral dominance exercised by the former or the latter.
Employees employment contract on a five month period
Pure Foods Corp. vs. NLRC
G.R. No. 122653
PURE FOODS CORPORATION vs.
NATIONAL LABOR RELATIONS COMMISSION, RODOLFO CORDOVA,
VIOLETA CRUSIS, ET AL.
December 12, 1997
Facts: Rodolfo Cordova, Violeta Crusis, and their colleagues were hired by
Pure Foods Corporation to work for a fixed period of five months at its tuna
cannery plant in Tambler, General Santos City. After the expiration of their
respective contracts, their services were terminated. Cordova and her
colleagues filed before the National Labor Relations Commission a
complaint for illegal dismissal against Pure Foods Corporation and its plant
manager, Marciano Aganon.
The labor arbiter dismissed the complaint on the ground that the private
respondents were mere contractual workers, and not regular employees;
hence, they could not avail of the law on security of tenure. This prompted
Cordova and Crusis to appeal the decision to the National Labor Relations
Commission. The NLRC affirmed the labor arbiter's decision. But, upon
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their filing of motion for reconsideration, the NLRC rendered another


decision vacating and setting aside its earlier decision and holding that
the private respondent and their co-complainants were regular
employees. It declared that the contract of employment for five months
was a "clandestine scheme employed by the petitioner to stifle private
respondents' right to security of tenure" and should therefore be struck
down and disregarded for being contrary to law, public policy, and morals.
Hence, their dismissal on account of the expiration of their respective
contracts was illegal. Having been denied, the petitioner came to the
Supreme Court.
Issue: Whether or not the contracts entered into by the parties were
intended to circumvent the constitutional guarantee on security of tenure.
Held: The five-month period specified in private respondents
employment contracts having been imposed precisely to circumvent the
constitutional guarantee on security of tenure should, therefore, be struck
down or disregarded as contrary to public policy or morals. To uphold the
contractual arrangement between the petitioner and the private
respondents would, in effect, permit the former to avoid hiring permanent
or regular employees by simply hiring them on a temporary or casual
basis, thereby violating the employees security of tenure in their jobs.
The criteria under which term employment cannot be said to be in
circumvention of the law on security of tenure: 1) The fixed period of
employment was knowingly and voluntarily agreed upon by the parties
without any force, duress, or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his
consent; or 2) It satisfactorily appears that the employer and the
employee dealt with each other on more or less equal terms with no moral
dominance exercised by the former or the latter.
The scheme of an employer in hiring workers on a uniformly fixed contract
basis and replacing them upon the expiration of their contracts with other
workers on the same employment status was apparently designed to
prevent the casual employees from attaining the status of a regular
employee.
Universal Robina Corp. vs. Catapang
G.R. No. 164736
UNIVERSAL ROBINA CORPORATION and/or RANDY GREGORIO vs.
BENITO CATAPANG, CARLOS ARARAO, ALVIN ALCANTARA, RESTY
ALCORAN, REYNALDO ARARAO, JUAN ARISTADO, LITO CABRERA,
ONOFRE CASANO and 22 OTHERS
October 14, 2005

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Facts: Universal Robina Corporation is a corporation duly organized and


existing under the Philippine laws, while petitioner Randy Gregorio is the
manager of the URCS duck farm in Laguna. The individual respondents
were hired by URC on various dates from 1991 to 1993 to work at its duck
farm. The respondents were hired under an employment contract which
provided for a five-month period. After the expiration of the said
employment contracts, URC would renew them and re-employ the
respondents. This practice continued until sometime in 1996, when URC
informed the respondents that they were no longer renewing their
employment contracts.
The respondents filed separate complaints for illegal dismissal,
reinstatement, backwages, damages and attorneys fees against URC. The
Labor Arbiter rendered a decision in favor of the respondents declaring
that they have indeed been illegally dismissed from their employment.
Accordingly, respondents are hereby ordered to reinstate individual
complainants to their former positions without loss of seniority rights. URC
filed an Appeal Memorandum with the NLRC on the ground that the LA
erred in ruling that the respondents are their (URC) regular employees.
Aggrieved, URC filed a petition for certiorari with the Court of Appeals
(CA). The CA denied the petition for lack of merit. The CA held that after
rendering more than one year of continuous service, the respondents
became regular employees of the petitioners by operation of law.
Moreover, URCS used the five-month contract of employment as a
convenient subterfuge to prevent the respondents from becoming regular
employees and such contractual arrangement should be struck down or
disregarded as contrary to public policy or morals. URCs act of repeatedly
and continuously hiring the respondents in a span of three to five years to
do the same kind of work negates their assertion that the respondents
were hired for a specific project or undertaking only.
URC submit that the respondents are not regular employees. They aver
that it is of no moment that the respondents have rendered service for
more than a year since they were covered by the five-month individual
contracts to which they duly acquiesced. URC contend that they were free
to terminate the services of the respondents at the expiration of their
individual contracts. URC asserts that the respondents contracts of
employment were not intended to circumvent security of tenure. They
point out that the respondents knowingly and voluntarily agreed to sign
the contracts without the petitioners having exercised any undue
advantage over them. Moreover, there is no evidence showing that the
petitioners exerted moral dominance on the respondents.
The respondents aver that they acquired the status as regular employees
after rendering one year of service to the petitioner company. They
contend that the contracts providing for a fixed period of employment
should be struck down as contrary to public policy, morals, good customs

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or public order as it was designed to preclude the acquisition of tenurial


security.
Issue: Whether or not the CA erred when it ruled that the respondents
attained the status of regular employment after the lapse of one year
from the date of their employment.
Held: In any case, we find that the CA, the NLRC and the Labor Arbiter
correctly categorized the respondents as regular employees of the
petitioner company. In Abasolo v. National Labor Relations Commission,
the Court reiterated the test in determining whether one is a regular
employee:
The primary standard, therefore, of determining regular employment is
the reasonable connection between the particular activity performed by
the employee in relation to the usual trade or business of the employer.
The test is whether the former is usually necessary or desirable in the
usual business or trade of the employer. The connection can be
determined by considering the nature of work performed and its relation
to the scheme of the particular business or trade in its entirety. Also, if the
employee has been performing the job for at least a year, even if the
performance is not continuous and merely intermittent, the law deems
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is considered regular, but only with respect to such
activity and while such activity exists.
Thus, we quote with approval the following excerpt from the decision of
the CA: It is obvious that the said five-month contract of employment was
used by petitioners as a convenient subterfuge to prevent private
respondents from becoming regular employees. Such contractual
arrangement should be struck down or disregarded as contrary to public
policy or morals. To uphold the same would, in effect, permit petitioners to
avoid hiring permanent or regular employees by simply hiring them on a
temporary or casual basis, thereby violating the employees security of
tenure in their jobs.
Petitioners act of repeatedly and continuously hiring private respondents
in a span of 3 to 5 years to do the same kind of work negates their
contention that private respondents were hired for a specific project or
undertaking only.
Employees allowed to work after the fixed period of employment
becomes regular
Viernes vs. NLRC

G.R. No. 108405


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JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO,


DANILO C. BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA,
ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA,
ARTHUR M. ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT
A. ORDOO, BERNARD V. JULARBAL, IGNACIO C. ALINGBAS and
LEODEL N. SORIANO vs.
NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), and
BENGUET ELECTRIC COOPERATIVE, INC. (BENECO)
April 4, 2003

Facts: These are consolidated cases for illegal dismissal, underpayment


of wages and claim for indemnity pay against Benguet Electric
Cooperative, Inc. (BENECO) represented by its Acting Gen. Manager,
Versoza. Complainants services as meter readers were contracted for
hardly a months duration, or from October 8 to 31, 1990.
The said term notwithstanding, the complainants were allowed to work
beyond October 31, 1990, or until January 2, 1991. On January 3, 1991,
they were each served their identical notices of termination dated
December 29, 1990. On the same date, the complainants filed separate
complaints for illegal dismissal. And following the amendment of said
complaints, they submitted their joint position paper.
It is the contention of the complainants that they were not apprentices but
regular employees whose services were illegally and unjustly terminated
in a manner that was whimsical and capricious. On the other hand, the
respondent invokes Article 283 of the Labor Code in defense of the
questioned dismissal.
The Labor Arbiter rendered its decision dismissing the complaints filed by
the complainants for lack of merit. However, in view of the offer of the
respondent to enter into another temporary employment contract with the
complainants, the respondent is directed to so extend such contract to
each complainant, with the exception of Jaime Viernes. BENECO is also
ordered to pay complainants the amount representing underpayment of
their wages and to extend to Viernes an appointment as regular employee
for the position of meter reader, the job he held prior to his termination,
and to pay him indemnity.
The case was appealed to the CA which modified the decision of the LA by
declaring complainants dismissal illegal, thus ordering their reinstatement
to their former position as meter readers or to any equivalent position
with payment of backwages limited to one year and deleting the award of
indemnity and attorneys fees. The case was elevated to the SC. Hence,
this petition.
Issue: Whether or not the respondent NLRC committed grave abuse of
discretion in ordering the reinstatement of petitioners to their former
152 | L a b o r S t a n d a r d s - C a s e D i g e s t s

position as meter readers on probationary status in spite of its finding that


they are regular employees under Article 280 of the Labor Code.
Held: The court sustained petitioners claim that they should be reinstated
to their former position as meter readers, not on a probationary status,
but as regular employees. Reinstatement means restoration to a state or
condition from which one had been removed or separated. In case of
probationary employment, Article 281 of the Labor Code requires the
employer to make known to his employee at the time of the latters
engagement of the reasonable standards under which he may qualify as a
regular employee.
A review of the records shows that petitioners have never been
probationary employees. There is nothing in the letter of appointment, to
indicate that their employment as meter readers was on a probationary
basis. It was not shown that petitioners were informed by the private
respondent, at the time of the latters employment, of the reasonable
standards under which they could qualify as regular employees. Instead,
petitioners were initially engaged to perform their job for a limited
duration, their employment being fixed for a definite period, from October
8 to 31, 1990.
The principle we have enunciated in Brent School v. Zamora, applies only
with respect to fixed term employments. While it is true that petitioners
were initially employed on a fixed term basis as their employment
contracts were only for October 8 to 31, 1990, after October 31, 1990,
they were allowed to continue working in the same capacity as meter
readers without the benefit of a new contract or agreement or without the
term of their employment being fixed anew. After October 31, 1990, the
employment of petitioners is no longer on a fixed term basis. The
complexion of the employment relationship of petitioners and private
respondent is thereby totally changed. Petitioners have attained the
status of regular employees.
The fact that the petitioners were allowed to continue working after the
expiration of their employment contract is evidence of the necessity and
desirability of their service to private respondents business.
Employees allowed to work for more than one year becomes
regular.
Megascope General Services vs. NLRC
G.R. No. 109224
MEGASCOPE GENERAL SERVICES vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ARIEL
C. SANTOS, ERLINDA ARAOJO, LILING C. ARAGO, LUZ P. BALENA,
153 | L a b o r S t a n d a r d s - C a s e D i g e s t s

ADELA R. BAUTISTA, GEMENA D. CANTA, VICTORINA S. COLLENA,


ELISA H. DE GUZMAN, YOLANDA J. GOB, JULING R. GOB,
FRANCISCO N. GUMARO, LOURDES P. MANALO, ROSALINA O.
RAMIREZ, RODRIGO O. RAMIREZ, VENTURA RAMOS, REYNALDO
MAGTANONG, AURELIA M. SAN JOSE, NESTOR SERIL, LUIS TUTOL
and GENER J. DEL ROSARIO
June 19, 1997

Facts: Megascope General Services is a sole proprietorship engaged in


contracting out general services. It entered into a landscaping contract
with the System and Structures, Inc. (SSI) which subcontracted the
construction of the National Power Corporation Housing Village in Bagac,
Bataan. In hiring laborers, petitioner would give them work from five (5) to
ten (10) days as the need arose and there were periodical gaps in the
hiring of employees.
Between February 15, 1977 and January 1, 1989, it contracted the
services of nineteen (19) private respondents as gardeners, helpers and
maintenance workers. They were deployed at the National Power
Corporation (NPC) except for Gener J. del Rosario whose employment
ended on April 30, 1989, the work of the other workers ceased on January
31,1991. At the time, Nestor Seril and Gener J. del Rosario were
receiving P 65.00 a day; Reynaldo Magtanong, P 56.00 a day, and the
rest, P54.00 a day.

Consequently, private respondents filed before the Labor Arbiter of


Pampanga a complaint for illegal dismissal, underpayment of
salaries, nonpaymentof five-day service incentive leave credits and
holiday pay against MGS and Andres M. David.

MGS and David countered that private respondents were hired for a
definite period of employment, the commencement and termination of
which were already known to them; that the two-year period stipulated in
the private respondents' contract with NPC had expired; that it was
the NPC which requested MGS and David for an extension on a monthly
basis of the employment of some of the private respondents; and that the
reason for the termination of private respondents' employment was the
termination itself of MGSs contract with NPC.

154 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Labor Arbiter Ariel C. Santos promulgated his decision finding that, by the
nature of their employment, private respondents were "usually
contractual employees." Nonetheless, he opined, in view of the length of
their service, that private respondents had attained the status of "regular
contractual employees" who, pursuant to Policy Instruction No. 20 issued
by then Labor Secretary Blas Ople, "cannot just be terminated after the
expiration of a contract in an area to where they are assigned without
paying them the corresponding separation pay from the time they have
served respondent's company. MGS and David appealed to the NLRC
which affirmed the LAs decision.

Issue: Whether or not employees allowed to work for more than 1 year
are considered regular employee.
Held: Its a well-settled rule that the yardstick in the determination of the
existence of an employer-employee relationship consists of these four (4)
elements: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal, and (4) the power to
control the employee's conduct. All these elements are present in this
case.
Private respondents were selected and hired by MGS which assigned them
to the NPC housing village in Bagac and Bataan. They drew their salaries
from MGS which eventually dismissed them. MGS's control over private
respondents was manifest in its power to assign and pull them out of
clients at its own discretion. It is enough that the former has the right to
wield the power.

The existence of an employer-employee relationship in the case at bar


was established, not merely by the allegations and assertions of private
respondents, but also by MGSs own admission that "complainants had
been respondent's employees assigned at the National Power Corporation
in its housing Villages situated at Bagac and Bataan as gardeners under
Megascope Lawn and Garden Maintenance contract with NPC.

On whether or not private respondents were regular employees of


petitioner, it is undeniable that private respondents had been performing
activities which were necessary or desirable in the usual trade or business
of petitioner. Their services as gardeners, helpers and maintenance
workers were continuously availed of by petitioner in the conduct of its
155 | L a b o r S t a n d a r d s - C a s e D i g e s t s

business as supplier of such services to clients. Thus, even if there were a


contrary agreement between the parties, if the worker has worked for
more than a year and there is a reasonable connection between the
particular activity performed by the employee in relation to the usual
business or trade of the employer, an employer-employee relationship is
deemed to exist between the parties.
Granting arguendo that private respondents were initially contractual
employees, by the sheer length of service they had rendered for MGS,
they had been converted into regular employees by virtue of the provision
in the second paragraph of Art. 280 since they all served petitioner's client
for more than a year.

Thus, in Baguio Country Club Corporation v. NLRC, the Court said: if the
employee has been performing the job for at least one year, even if the
performance is not continuous or merely intermittent, the law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity if not indispensability of that activity to the business. Hence,
the employment is also considered regular but only with respect to such
activity and while such activity exists.
Agusan del Norte Electric Coop., Inc. vs. Cagampang and Garzon
G.R. No. 167627
AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. and HORACIO T.
SANTOS vs.
JOEL CAGAMPANG and GLENN GARZON
October 10, 2008
Facts: Respondents Joel Cagampang and Glenn Garzon started working as
linemen for petitioner Agusan del Norte Electric Cooperative, Inc. (ANECO)
on October 1, 1990, under an employment contract which was for a period
not exceeding three months.
They were both allegedly required to work eight hours a day and
sometimes on Sundays, getting a daily salary of P122.00. When the
contract expired, the two were laid-off for one to five days and then
ordered to report back to work but on the basis of job orders. After several
renewals of their job contracts in the form of job orders for similar
employment periods of about three months each, the said contracts
eventually expired on April 31, 1998 and July 30, 1999. Respondents'
156 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contracts were no longer renewed, resulting in their loss of employment.


Thus, on January 11, 2001, respondents filed an illegal dismissal case
against petitioners before the LA. They prayed for payment of backwages,
salary differential, allowances, premium for alleged work during holidays
and rest days, service incentive leave, and separation pay. LA ruled that
there was illegal dismissal. However, NLRC reversed the LAs decision. CA
however set aside NLRCs decision.
Issue: Whether or not Cagampang and Garzon are regular
employees/workers of the petitioner.
Held: SC denied the petition. It held that respondents Cagampang and
Garzon are deemed regular workers, and as such were illegally dismissed.
There is no dispute that the respondents' work as linemen was necessary
or desirable in the usual business of ANECO. Additionally, the respondents
have been performing the job for at least one year. The law deems the
repeated and continuing need for its performance as sufficient evidence of
the necessity, if not indispensability, of that activity to the business. As
held in Integrated Contractor and Plumbing Works, Inc. v. National Labor
Relations Commission:
The test to determine whether employment is regular or not is the
reasonable connection between the particular activity performed by the
employee in relation to the usual business or trade of the employer. Also,
if the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems
the repeated and continuing need for its performance as sufficient
evidence of the necessity, if not indispensability of that activity to the
business.
While length of time may not be the controlling test for project
employment, it is vital in determining if the employee was hired for a
specific undertaking or tasked to perform functions vital, necessary and
indispensable to the usual business or trade of the employer. Here, private
respondent had been a project employee several times over. His
employment ceased to be coterminous with specific projects when he was
repeatedly re-hired due to the demands of petitioners business. Where
from the circumstances it is apparent that periods have been imposed to
preclude the acquisition of tenurial security by the employee, they should
be struck down as contrary to public policy, morals, good customs or public
order. Respondents in the present case being regular employees, ANECO as
the employer had the burden of proof to show that the respondents
termination was for a just cause.
Unfortunately, however, what petitioners did was merely to refuse, without
justifiable reason, to renew respondents work contracts for the performance
of what would otherwise be regular jobs in relation to the trade or business
of the former. Such conduct dismally falls short of the requirements of our
labor laws regarding dismissals. No twin notices of termination were issued
to the employees, hence the employer did not observe due process in
157 | L a b o r S t a n d a r d s - C a s e D i g e s t s

dismissing them from their employment. Their dismissals were patently


illegal. Thus court considered respondents as regular employees.
Successive renewals
becomes regular

of

fixed

period

employment

contract

Philips Semiconductors vs. Fadriquela


G.R. No. 141717
PHILIPS SEMICONDUCTORS (PHILS.), INC. vs.
ELOISA FADRIQUELA
April 14, 2004
Facts: Philips Semiconductors (Phils.), Inc. is a domestic corporation
engaged in the production and assembly of semiconductors such as power
devices, RF modules, CATV modules, RF and metal transistors and glass
diods. It caters to domestic and foreign corporations that manufacture
computers, telecommunications equipment and cars. Aside from
contractual employees, the petitioner employed 1,029 regular workers.
The employees were subjected to periodic performance appraisal based
on output, quality, attendance and work attitude. One was required to
obtain a performance rating of at least 3.0 for the period covered by the
performance appraisal to maintain good standing as an employee.
On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of
Employment with the petitioner in which she was hired as a production
operator with a daily salary of P118. Her initial contract was for a period of
three months up to August 8, 1992, but was extended for two months
when she garnered a performance rating of 3.15. Her contract was again
renewed for two months or up to December 16, 1992, when she received
a performance rating of 3.8. After the expiration of her third contract, it
was extended anew, for three months, that is, from January 4, 1993 to
April 4, 1993. After garnering a performance rating of 3.4, the
respondents contract was extended for another three months, that is,
from April 5, 1993 to June 4, 1993. However, she incurred five absences in
the month of April, three absences in the month of May and four absences
in the month of June. Her line supervisor, Shirley Velayo, asked the
respondent why she incurred the said absences. The latter failed to
explain her side. The respondent was warned that if she offered no valid
justification for her absences, Velayo would have no other recourse but to
recommend the non-renewal of her contract.
Fadriquela still failed to respond, as a consequence of which her
performance rating declined to 2.8. Velayo recommended to the petitioner
that the respondents employment be terminated due to habitual

158 | L a b o r S t a n d a r d s - C a s e D i g e s t s

absenteeism, in accordance with the Company Rules and Regulations.


Thus, the respondents contract of employment was no longer renewed.
Issue: Whether or not the respondent was still a contractual employee of
the petitioner as of June 4, 1993.
Held: The two kinds of regular employees under the law are (1) those
engaged to perform activities which are necessary or desirable in the
usual business or trade of the employer; and (2) those casual employees
who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed. The
primary standard to determine a regular employment is the reasonable
connection between the particular activity performed by the employee in
relation to the business or trade of the employer. The test is whether the
former is usually necessary or desirable in the usual business or trade of
the employer. If the employee has been performing the job for at least one
year, even if the performance is not continuous or merely intermittent, the
law deems the repeated and continuing need for its performance as
sufficient evidence of the necessity, if not indispensability of that activity
to the business of the employer. Hence, the employment is also
considered regular, but only with respect to such activity and while such
activity exists. The law does not provide the qualification that the
employee must first be issued a regular appointment or must be declared
as such before he can acquire a regular employee status.
In this case, the respondent was employed by the petitioner on May
8, 1992 as production operator. She was assigned to wire building at the
transistor division. There is no dispute that the work of the respondent
was necessary or desirable in the business or trade of the petitioner. She
remained under the employ of the petitioner without any interruption
since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight
(28) days. The original contract of employment had been extended or
renewed for four times, to the same position, with the same chores. Such
a continuing need for the services of the respondent is sufficient evidence
of the necessity and indispensability of her services to the petitioners
business. By operation of law, then, the respondent had attained the
regular status of her employment with the petitioner, and is thus entitled
to security of tenure as provided for in Article 279 of the Labor Code.

159 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Chapter IV Special Group of Workers/ Employees


16.

Overseas Workers

Prohibited Business Agencies and Entities, Articles 16, 18, 25, 26;
2002 POEA Rules and Regulations, Part I, Rule II, Section 2
Hornales vs. NLRC
G.R. No. 118943
MARIO HORNALES vs.
THE NATIONAL LABOR RELATIONS COMMISSION, JOSE CAYANAN
AND JEAC INTERNATIONAL MANAGEMENT CONTRACTOR SERVICES
September 10, 2001
Facts: Mario Hornales filed with POEA a complaint for non-payment of
wages and recovery of damages against JEAC International Management
& Contractor Services (JEAC) and its owner, Jose Cayanan. As JEACs
surety, Country Bankers Insurance Corporation (Country Bankers) was
later on impleaded by Hornales. The complaint alleged that Cayanan
through JEAC sent Hornales, together with other Filipinos, to Singapore. At
their departure, they were advised that someone would meet them in
160 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Singapore. True enough, they were welcomed by Victor Lim, the owner of
Step-Up Employment Agency. He informed them that they would be
working as fishermen with a monthly salary of US $200.00
each. Thereafter, they boarded Ruey Horn #3, a vessel owned by Min Fu
Fishery Co. Ltd. of Taiwan.
On board the vessel, Hornales was subjected to inhumane work
conditions, like inadequate supply of food and water, maltreatment by the
ship captain, and lack of medical attendance. He was also required to
work for twenty-two hours a day without pay. Hornales, together with
other Filipino workers, left the vessel while it was docketed in Mauritius
Island because theyre unable to bear the situation. Hornales returned to
the Philippines. Upon his return, he asked Cayanan to pay his
salaries. Instead of doing so, they required him to surrender his passport
promising that they would procure another job for him. Later, Cayanan
gave him the amount of P500.00
Cayanan filed an answer claiming that, Hornales and Victor Lim and Min
Fee Fishery Co. Ltd are all total strangers to them. They even offered in
evidence the Joint Affidavit of 2 of Hornales co-workers in Singapore,
stating that while they were in Singapore, Hornales admitted to them that
he did not apply in any agency in the Philippines; that he came to
Singapore merely as a tourist; and that, he applied directly and personally
with Step-Up Agency to which such statements were corroborated through
a certification issued by Step-Up Agency.
Hornales filed a Supplemental Affidavit claiming that he was not a total
stranger to JEAC, and as a matter of fact, he knew Cayanan for a long time
already. The POEA rendered a decision in favor of Hornales. JEAC, Cayanan
and Travellers Insurance Corp. were ordered to jointly and severally pay
Hornales. On appeal, NLRC vacated the decision of the POEA and
dismissed Hornales complaint mainly on the ground that there was no
employer-employee relationship between the parties.
Hornales filed a petition for certiorari on the ground that the NLRC
committed a grave abuse of discretion in vacating the decision of the
POEA. He avers that Cayanan was the one who deployed him to Singapore
to work as fisherman and that, NLRCs conclusion that respondent JEAC
was a mere travel agency and petitioner, a mere tourist, has no basis in
fact and in law. JEAC maintained their position that the NLRC did not
commit grave abuse of discretion when it set aside the decision of the
POEA, since Hornales failed to show any POEA record or document to
prove that they deployed him to work in Singapore. Neither did he present
a Special Power of Attorney to prove that Step-Up Agency authorized JEAC
to recruit and deploy contract workers in its behalf. The Solicitor
General joins Hornales in assailing the decision of the NLRC as baseless
and erroneous.

161 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not JEAC violates the POEA Rules and can be held liable
against Hornales.
Held: Notwithstanding the foregoing, it must be emphasized that the
proceedings before the POEA is non-litigious in nature. The technicalities
of law and procedure and the rules obtaining in the courts of law shall not
strictly apply thereto and a hearing officer may avail himself of all
reasonable means to ascertain the facts of the case. The scale of evidence
must tilt in favor of petitioner.
We cannot give credence to Cayanans contentions that Hornales is a total
stranger to them and that MIN Fee Fishery Co. Ltd. is not its principal,
neither do we believe that Cayanan do not know Mr. Victor Lim who met
Hornales
in
Singapore. Cayanans
position
paper
belies
his
contentions. How could he write to a certain Step-Up Employment Agency
in Singapore, Hornales employer, when the latter is not even mentioned
in his complaint? We wonder where Cayanan got the name of this
employer if the same is really not known to them.
It is very unlikely for Hornales to proceed to Singapore as a tourist without
knowing anybody at the site and just to apply for work. Had there not
been previous arrangements with Cayanan, it is not all possible for
Hornales to land on a job in Singapore because he is only a tourist.
Cayanan had to resort to this misrepresentation of allowing its recruits to
leave as tourist because it is a service contractor and it is not authorized
to deploy fishermen.
Cayanan further argued that they cannot be held liable by Hornales
because no employment contract between him and Step-Up Agency had
been approved by the POEA. They also claim that the absence of a Special
Power of Attorney and an Affidavit of Responsibility, as required under
Sections 1 and 2, Rule 1, Book III of the POEA Rules and Regulations only
proves that they did not deploy Hornales to Singapore.
Their argument is far from persuasive. Surely, they cannot expect us to
utilize their non-compliance with the POEA Rules and Regulations as a
basis in absolving them. To do so would be tantamount to giving premium
to acts done in violation of established rules. At most, private respondents
act of deploying Hornales to Singapore without complying with the POEA
requirements only made them susceptible to cancellation or suspension of
license as provided by Section 2, Rule I, Book VI of POEA Rules and
Regulations:
Section 2. Grounds for suspension/cancellation of license.
m. Deploying workers whose employment and travel documents were not
processed by the Administration;
n. Deploying workers workers or seafarers to vessels or principals not
accredited by the Administration;
162 | L a b o r S t a n d a r d s - C a s e D i g e s t s

But of course, such violations should be threshed out in a proper


administrative proceeding for suspension or cancellation of license. The
court uphold POEAs Decision holding Cayanan and Travelers Insurance
Corporation jointly and severally liable to petitioner. Section 2 (e), Rule V,
Book I of the Omnibus Rules Implementing the Labor Code requires a
private employment agency to assume all responsibilities for the
implementation of the contract of employment of an overseas worker.This
provision is substantially reiterated in Section 1 (f) (3) of Rule II, Book II of
the POEA Rules and Regulations which provides:
Section 1. Requirements for Issuance of License Every applicant for
license to operate a private employment agency or manning agency shall
submit a written application together with the following requirements:
f) A verified undertaking stating that the applicant:
(3) Shall assume joint and solidary liability with the employer which may
arise in connection with the implementation of the contract, including but
not limited to payment of wages, health and disability compensation and
repatriation.
The court reinstated the decision of the POEA subject to the modification.
Illegal Recruitment Labor Code Articles 34, 38; R.A. No. 8042,
Sections 6-12 as amended
People vs. Dujua
G.R. Nos. 149014-16
PEOPLE OF THE PHILIPPINES vs.
ROSE DUJUA (at large); EDITHA S. SING (at large); GUILLERMO
"WILLY" SAMSON (at large); RAMON SAMSON DUJUA, RAMON
SAMSON DUJUA
February 5, 2004

Facts: Ramon Dujua, his mother Rose, his aunt, Editha Singh, and his
uncle, Guillermo Samson were charged with Illegal Recruitment in large
scale. Only Ramon was arrested. Four testified against Ramon Dujua. They
were also charged with separate counts of Estafa. In the alleged
information filed by the complainants against Dujua, et al, all of them said
that they were promised employment abroad upon payment of fees but
they were not actually deployed. Apparently, all of the complainants were
able to give Dujua money for placement fees and other fee asked from
them in exchange for the possibility to work abroad. Of the four accused,
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only Ramon Dujua was arrested and arraigned. His mother, aunt and uncle
remain at large. Ramon entered a plea of not guilty to each of the
charges, whereupon trial commenced. While the Information for illegal
recruitment named several persons as having been promised jobs by the
accused, only four of them testified.
Issue: Whether or not illegal recruitment in large scale was committed by
Ramon Dujua, et al.
Held: All three elements in committing Illegal Recruitment have been
established beyond reasonable doubt to wit: (1) the accused engages in
acts of recruitment and placement of workers defined under Article 13(b)
or in any prohibited activities under Art. 34 of the Labor Code; (2) the
accused has not complied with the guidelines issued by the Secretary of
Labor and Employment, particularly with respect to the securing of a
license or an authority to recruit and deploy workers, either locally or
overseas; and (3) the accused commits the unlawful acts against three or
more persons, individually or as a group.

First, the testimonies of the complaining witnesses satisfactorily prove


that appellant promised them employment and assured them placement
overseas. Complainants were firm and categorical. All of them positively
identified appellant as the person who recruited them for employment
abroad. Their testimonies dovetail each other on material points. There is
no adequate showing that any of them was impelled by any ill motive to
testify against appellant. Their testimonies were straightforward, credible
and convincing. As against the positive and categorical testimonies of the
three complainants, appellants mere denials cannot prevail. It is
irrelevant whether or not complainants claims are supported by
receipts. The absence of receipts in a case for illegal recruitment does not
warrant the acquittal of the appellant and is not fatal to the prosecutions
case. As long as the prosecution is able to establish through credible
testimonial evidence that the appellant has engaged in Illegal
Recruitment, a conviction for the offense can very well be justified.

Second, appellant did not have any license or authority to recruit persons
for overseas work, as shown by the Certification issued by the
POEA. Neither did his employer, the World Pack Travel and Tours, possess
such license or authority.

Third, it bears clarifying that although Romulo Portos was named as


among those recruited by appellant the evidence reveals that Romulo
164 | L a b o r S t a n d a r d s - C a s e D i g e s t s

withdrew his application in lieu of which his wife Melodea Villanueva


applied for placement with appellant. Villanueva, however, is not named
as one of appellants victims.

Nevertheless, it has been alleged and proven that appellant undertook the
recruitment of not less than three persons, namely, Cabus, Caluten and
Perlas.
People vs. Domingo
G.R. No. 181475
PEOPLE OF THE PHILIPPINES vs.
LARRY "LAURO" DOMINGO
April 7, 2009
Facts: Lauro Domingo was charged with the crime of illegal recruitment
pursuant to Article 38 in relation to Articles 34 and 39 of the Labor Code.
In the information filed against Domingo it was alleged that on or about
November 1999 to January 2000, Domingo, being a non-licensee or nonholder of authority from the DOLE to recruit and/ or place workers under
local or overseas employment, undertake illegal recruitment, placement
or deployment of the 23 complainants. In the informations for 23 counts of
Estafa, it was alleged that Domingo falsely represented himself that he
has power and capacity to recruit and employ workers in Saipan and could
facilitate necessary papers in connection therewith if given the necessary
amount, and by means of deceit inveigled Manzo to give P14, 000 (which
the latter gave and delivered to Domingo) which Domingo
misappropriated himself to the damage and prejudice of Manzo. It was
verified with the DOLE that Domingo wasnt a licensed recruiter. Out of
the 23 complainants, only 5 (Cambay, Ondra, Aguilar, Vivas, and Cabigao)
of them testified. Thereafter, Cabigao recanted his testimony averring that
the one who actually recruited him was Gimeno and not Domingo and that
they only agreed among themselves to file a case against Domingo
because Gimeno was nowhere to be found.
Domingo denied all accusations against him claiming that he was a driver
hired by Gimeno whom he met at a bus bound for Manila. It was Gimeno
who undertook the recruitment activities. Domingo likewise presented
complainants Espiritu and Castillo who corroborated his claim that it was
Gimeno who actually recruited them.
The trial court found Domingo guilty beyond reasonable doubt of Illegal
Recruitment (Large Scale) and of 2 counts of Estafa. On appeal to the CA,
Domingo maintained that the trial court erred in finding him guilty beyond
reasonable doubt on the basis that there were no receipts shown to prove
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payment and he faulted trial court for failing to give credit to Cabigaos
retraction.
Issue: Whether or not Domingo is guilty of Illegal Recruitment in Large
Scale and Estafa.
Held: The court affirmed the decision of the CA in finding Domingo guilty
of Illegal recruitment and Estafa. With respect to the receipts questioned
by Domingo, the court held that the non-presentation of the receipts had
no bearing on his culpability in light of the assertions of the witnesses that
it was Domingo who recruited them. As for Cabigaos recantation, the
court held that mere retraction by a prosecution witness doesnt
necessarily vitiate his original testimony and that, in any event, the
prosecution had proven beyond reasonable doubt that at least 3 were
illegally recruited by the accused.
The term recruitment is defined under Article 13 (b) of the Labor Code, it
refers to any act of canvassing, enlisting, contracting, transporting,
utilizing, hiring, or procuring worker, and includes referrals, contract
services, promising or advertising for employment, locally or abroad,
whether for profit or not. Provided, that any person or entity which, in any
manner, offers or promises fir a fee employment to 2 or more persons
shall be deemed engage in recruitment and placement. On the other
hand, Article 38, paragraph (a) of the labor code provides:
Art. 38 Illegal Recruitment - (a) Any recruitment activities, including
the prohibited practices enumerated under Article 34 of this Code, to be
undertaken by non-licensees or non-holders of authority shall be deemed
illegal and punishable under Article 39 of this Code. The Ministry of Labor
(now DOLE) or any law enforcement officer may initiate complaints under
this Article. (b) Illegal recruitment when committed by a syndicate or in
large scale shall be considered an offense involving economic sabotage
and shall be penalized in accordance with Article 39 hereof.
Illegal Recruitment is deemed committed by a syndicate or in large scale if
carried out by a group of 3 or more persons conspiring and/or
confederating with one another in carrying out any unlawful or illegal
transaction, enterprise or scheme defined under the 1 st par. hereof. Illegal
Recruitment is deemed committed in large scale if committed against 3 or
more persons individually or as a group.
From the foregoing provisions, it is clear that any recruitment activities to
be undertaken by non-licensee or non-holder of authority shall be deemed
illegal and punishable under Article 39 of the Labor Code. The court finds
that the prosecution ably discharged its onus of proving guilt beyond
reasonable doubt of the crimes charged against Domingo.
People vs. Gallo

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G.R. No. 187730


PEOPLE OF THE PHILIPPINES vs.
RODOLFO GALLO y GADOT, Accused-Appellant,
FIDES PACARDO y JUNGCO and PILAR MANTA y DUNGO
June 29, 2010
Facts: Gallo, et al. were charged with syndicated illegal recruitment and
18 counts of estafa committed against 18 complainants. However, records
reveal that cases filed against Gallo, Pacardo, Manta for syndicated illegal
recruitment and estafa proceeded to trial due to the fact that the said
accused remained at large. Further, other cases filed against said accused
were provisionally dismissed upon their motion for failure to appear and
testify during trial. After trial, Pacardo and Manta were acquitted for
insufficiency of evidence. Likewise, Gallo was acquitted for cases file
against him by Guantero and Sare. However, he was found guilty beyond
reasonable doubt in the criminal case filed by Dela Caza for syndicated
illegal recruitment and estafa. Thus, appeal concerns solely on Gallos
conviction for syndicated illegal recruitment and estafa.
That on or about November 2000 and December 2001, Gallo, et al.
represented themselves to have the capacity to contract, enlist and
transport Filipino workers for employment abroad. They were able to
acquire payments from the complainants for supposed placement and
other fees but without valid reasons and without fault of the said
complainants failed to deploy them and failed to reimburse expenses
incurred by the said complainants with their documentation and
processing for purposes of their deployment.
When arraigned, Gallo pleaded not guilty to all charges. The pre-trial was
terminated and trial ensued. The trial court found Gallo guilty beyond
reasonable doubt of the crime of Illegal Recruitment committed a
syndicate. On appeal to the CA, it held that the totality of the
prosecutions evidence showed that Gallo, et al. engaged in the
recruitment of Dela Caza.
Issue: Whether or not Gallo is authorized to contract, enlist, recruit and
place workers abroad for employment.
Held: The court disagree with Gallos averment that he cannot be held
criminally liable for illegal recruitment because he was neither an officer
nor an employee of MPM Agency. Further, the court stated that to commit
syndicated illegal recruitment, 3 elements must be established: (1) the
offender undertakes either any activity within the meaning of recruitment
and placement under Art. 13 (b), or any of the prohibited practices
enumerated under Art. 34 of the Labor Code; (2) he has no valid license or
authority required by law to enable one to lawfully engage in recruitment
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and placement of workers; and (3) the illegal recruitment is committed by


a group of 3 or more persons conspiring or confederating with one
another. When illegal recruitment is committed by a syndicate or in a
large scale if it is committed against 3 or more persons individually or as a
group, its considered an offense involving economic sabotage.
Under Art. 13(b) of the Labor Code, recruitment and placement refers to
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring
or procuring workers, and includes referrals, contract services, promising
or advertising for employment, locally or abroad, whether for profit or not.
After a thorough review of the records, the prosecution was able to
establish the elements of the offense sufficiently. The evidence readily
reveals that MPM Agency was never licensed by the POEA to recruit
workers for overseas employment.
Even with a license, however, illegal recruitment could still be committed
under Section 6 of Republic Act No. 8042 (R.A. 8042), otherwise known as
the Migrants and Overseas Filipinos Act of 1995:
Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean
any act of canvassing, enlisting, contracting, transporting, utilizing, hiring,
or procuring workers and includes referring, contract services, promising
or advertising for employment abroad, whether for profit or not, when
undertaken by a non-licensee or non-holder of authority contemplated
under Article 13(f) of Presidential Decree No. 442, as amended, otherwise
known as the Labor Code of the Philippines: Provided, That any such nonlicensee or non-holder who, in any manner, offers or promises for a fee
employment abroad to two or more persons shall be deemed so engaged.
It shall, likewise, include the following act, whether committed by any
person, whether a non-licensee, non-holder, licensee or holder of
authority:
(a) To charge or accept directly or indirectly any amount greater than
that specified in the schedule of allowable fees prescribed by the
Secretary of Labor and Employment, or to make a worker pay any amount
greater than that actually received by him as a loan or advance;
(l) Failure to actually deploy without valid reason as determined by the
Department of Labor and Employment; and
(m) Failure to reimburse expenses incurred by the worker in connection
with his documentation and processing for purposes of deployment and
processing for purposes of deployment, in cases where the deployment
does not actually take place without the workers fault. Illegal recruitment
when committed by a syndicate or in large scale shall be considered an
offense involving economic sabotage.
Illegal recruitment is deemed committed by a syndicate if carried out by a
group of three (3) or more persons conspiring or confederating with one
another. It is deemed committed in large scale if committed against three
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(3) or more persons individually or as a group. The persons criminally


liable for the above offenses are the principals, accomplices and
accessories. In case of juridical persons, the officers having control,
management or direction of their business shall be liable.
In the instant case, Gallo committed the acts enumerated in Sec. 6 of R.A.
8042. Testimonial evidence presented by the prosecution clearly shows
that, in consideration of a promise of foreign employment, Gallo received
the amount of Php 45,000.00 from Dela Caza. When Gallo made
misrepresentations concerning the agencys purported power and
authority to recruit for overseas employment, and in the process,
collected money in the guise of placement fees, the former clearly
committed acts constitutive of illegal recruitment.
The Court finds the existence of a conspiracy between Gallo and the other
persons in the agency who are currently at large, resulting in the
commission of the crime of syndicated illegal recruitment.
In this case, it cannot be denied that Gallo together with Mardeolyn and
the rest of the officers and employees of MPM Agency participated in a
network of deception. Verily, the active involvement of each in the
recruitment scam was directed at one single purpose to divest
complainants with their money on the pretext of guaranteed employment
abroad. Without a doubt, the nature and extent of the actions of Gallo, as
well as with the other persons in MPM Agency clearly show unity of action
towards a common undertaking. Hence, conspiracy is evidently present.
Salazar vs. Achacoso
G.R. 81510
HORTENCIA SALAZAR vs.
HON. TOMAS D. ACHACOSO, ADMINISTRATOR OF THE PHILIPPINE
OVERSEAS
EMPLOYMENT
ADMINISTRATION,
AND
FERDIE
MARQUEZ
March 14, 1990
Facts: Rosalie Tesoro charged petitioner Hortencia Salazar for illegal
recruitment before the Philippine Overseas Employment Administration
(POEA). Rosalie claims that upon arriving from Japan, Hortencia took her
PECC Card on the premise that Hortencia would find her another booking
in Japan. Nine months passed and there is still no booking. Rosalie
transferred to another agency but Hortencia would not give her PECC
Card.
The POAE ordered Hortencia to appear before the POEA Anti-Illegal
Recruitment Unit. That same day, public respondent Administrator Tomas
D. Achacoso issued a Closure and Seizure order against Hortencia, having
ascertained that the petitioner had no license to operate a recruitment
agency. Subsequently, a POEA group, assisted by Mandaluyong policemen
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and mediamen, proceeded to the residence of Hortencia to implement the


Closure and Seizure Order. There it was found that petitioner was
operating Hannalie Dance Studio. Inside the studio, the team chanced
upon 12 talent performers practicing a dance number and saw about 20
more waiting outside, The team confiscated assorted costumes, which
were duly receipted for by Mrs. Asuncio Maguelan and witnessed by Mrs.
Flora Salazar. Because of this event, Hortencia filed a letter with the POEA
requesting that the personal properties seized at her residence be
immediately returned. The petitioner contends that she has not been
given any prior notice or hearing, hence the Closure and Seizure Order
violated due process of law guaranteed under Section 1, Article III, of
the Philippine Constitution. She also avers that POEAs actions violate
Section 2, Article III of the Philippine Constitution which guarantees right
of the people to be secure in their persons, houses, papers, and effects
against unreasonable searches and seizures of whatever nature and for
any purpose.
Issue: Whether or not the Philippine Overseas Employment
Administration (or the Secretary of Labor) may validly issue warrants of
search and seizure (or arrest) under Article 38 of the Labor Code.
Held: No. Under the new Constitution, No search warrant or warrant of
arrest shall issue except upon probable cause to be determined personally
by the judge after examination under oath or affirmation of the
complainant and the witnesses he may produce, and particularly
describing the place to be searched and the persons or things to be
seized. The Closure and Seizure Order was based on Article 38 of the
Labor Code. The Supreme Court held, We reiterate that the Secretary of
Labor, not being a judge, may no longer issue search or arrest warrants.
Hence, the authorities must go through the judicial process. To that
extent, we declare Article 38, paragraph (c), of the Labor Code,
unconstitutional and of no force and effect The power of the President to
order the arrest of aliens for deportation is, obviously, exceptional. It (the
power to order arrests) cannot be made to extend to other cases, like the
one at bar. Under the Constitution, it is the sole domain of the courts.
Furthermore, the search and seizure order was in the nature of a general
warrant. The court held that the warrant is null and void, because it must
identify specifically the things to be seized. Therefore, Article 38,
paragraph (c) of the Labor Code is declared unconstitutional and null and
void. The respondents are ordered to return all materials seized as a result
of the implementation of Search and Seizure Order No. 1205.
Labor Arbiter over Money Claims R.A. No. 8042, Section 10, as
amended
Flourish Maritime Shipping vs. Almanzor, 568 SCRA 713 (2008) (NOTE:
Serrano vs. Gallant Maritime Services, Inc., 582 SCRA 254 (2009) The
clause or for three months for every year of the unexpired term,

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whichever is less is unconstitutional for being violative of the equal


protection clause.)
G.R. No. 177948
FLOURISH MARITIME SHIPPING and LOLITA UY vs.
DONATO A. ALMANZOR
March 14, 2008
Facts: Donato Almanzor entered into a 2-year contract with Flourish
Maritime Shipping as a fisherman. It was stipulated in the said agreement
that he will receive a monthly salary of NT15, 840.00 with free meals and
accommodation. Almanzor was deployed to Taiwan as part of the crew of
the fishing vessel FV Tsang Cheng 6 but he was surprised that were only
5 crew members on board and that he had to pay his meals and
accommodation contrary to the stipulation in the contract. While on
board, the master of the vessel gave orders to Almanzor but he was not
able to understand the orders, thus, he was hit in the right dorsal part of
his body. He asked for medical assistance from Lolita Uy, the manning
agency owner of FMS. While the vessel was docketed at the Taipei port,
Almanzor was informed that he will be repatriated. When he arrived in the
Philippines, he reported to UY and was given medical assistance, declaring
the former fit to work. Uy promised Almanzor that he will be redeployed
but it turned out that it was possible because of his age.
Almanzor filed a complaint for illegal dismissal and for payment of the
unexpired term of his employment contract as well as damages and
attorneys fees. This was opposed by Uy saying that it was Almanzor who
voluntarily resigned. Further, Uy sought the dismissal of the complaint for
failure to comply with the grievance machinery and arbitration clause in
the contract.
The Labor Arbiter ruled in favor of Almanzor which was affirmed by the
NLRC, it ordered that FMS and Wang Yung Chin be jointly and solidarily
liable to pay Almanzor the amount of NT15,840 times 6 months or a total
of NT95,040. The case was appealed to the Court of Appeals which
affirmed the decisions of both the Labor Arbiter and the NLRC but with
modification that the monetary award be increased in accordance to
Section 10 of RA 8042. Both the LA and the NLRC Board of Commissioners
awarded such amount equivalent to Almanzors salary for 6 months (3
months for every year of the unexpired term) considering the latters
employment contract covered a 2-year period and was dismissed from
employment after only 26 days of actual work.
According to the CA, since Almanzor actually worked for 26 days and was
thereafter dismissed. The unexpired portion of the contract is 1 year, 11
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months and 4 days. For the unexpired 2nd year, the court awarded 3
months of salary. With regard to the 11 months, and 4 days of the 1 st year,
the CA refused to apply the 3-month rule.
Issue: Whether or not Almanzor was illegally dismissed from employment
and if so, to determine the correct award of compensation due him.
Held: Section 10 of R.A. 8042 provides: In case of termination of overseas
employment without just, valid and authorized cause as defined by law or
contract, the worker shall be entitled to the full reimbursement of his
placement fee with interest at 12% per annum, plus his salaries for the
unexpired portion of his employment contract or for 3 months for every
year of the unexpired term, whichever is less.
The Court affirmed the decision of the CA with the modification that the
monetary award to be paid to Almanzor shall be the amount set forth by
the Labor Arbiter which was affirmed by the NLRC. It added that the
correct interpretation of the above-mentioned provision was settled in the
case of Marsaman Manning Agency Inc. v. NLRC where the court held that
the choice of which amount to award an illegally dismissed overseas
contract worker, i.e., whether his salaries for the unexpired portion of his
employment contract, or 3 months salary for every year of the unexpired
term, whichever is less, comes into play when the employment contract
concerned has a term of at least 1 year or more. The employment
contract involved in the case covers a 2-year period but the overseas
contract worker actually worked for only 26 days prior to his illegal
dismissal. Thus, the 3-month rule applies. The SC didnt agree with the
CAs ruling that Almanzor should be paid his salaries for 14 months and 4
days. Record show that his actual employment lasted only for 26 days.
Considering the aforementioned provision, the contract covers a 2-year
period. Hence, Almanzor is entitled to 6 months salary.
Alien Employment Coverage, Exemption Labor Code Article 40;
D.O. No. 97-09, Sections 1,2
Almodiel vs. NLRC
G.R. No. 100641
FARLE P. ALMODIEL vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION),
RAYTHEON PHILS., INC.
June 14, 1993
Facts: Farle Almodiel is a CPA who was hired by Raytheon Philippines, Inc.
as Cost Accounting Manager through John Clements Consultants, Inc. with
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a starting salary of P18,000. Before his employment with Raytheon, he


worked as accounts executive of Integrated Microelectronics, Inc. He
started as a probationary or temporary employee of Raytheon. As Cost
Accounting Manager, his major duties were: 1.) Plan, coordinate, carry out
year and physical inventory; 2.) Formulate and issue out hard copies of
Standard Product costing and other cost/pricing analysis if needed and
required and 3.) Set up written Cost Accounting System for the whole
company. After a few months, he was given a regularization increase of
P1,600 a month. Not long thereafter, his salary was increased to P21,600
a month.
Almodiel recommended and submitted a Cost Accounting/ Finance
Reorganization, affecting the whole finance group but the same was
disapproved by the Controller. The latter was assured by the Controller
that should his position or department which was apparently a one-man
department with no staff becomes untenable or unable to deliver the
needed service due to manpower constraint, he would be given a 3 year
advance notice.
When the standard cost accounting system was installed and used at the
Raytheon plants and subsidiaries worldwide which was adopted and
installed in the Philippine operations, the services of a Cost Accounting
Manager allegedly entailed only the submission of periodic reports that
would use computerized forms prescribed and designed by the
international head office of the Raytheon Company.
Thereafter, Almodiel was summoned by his immediate boss, Rolando
Estrada and was told of the abolition of his position on the ground of
redundancy. He pleaded to defer the managements decision or to transfer
him to another department but the decision became final and was
conveyed to the DOLE. Almodiel filed a complaint for illegal dismissal
against Estrada.
The Labor Arbiter ruled in favor of Almodiel declaring that his termination
on the ground of redundancy was without legal and factual basis, thus,
ordering Raytheon to reinstate Almodiel former position without loss of
seniority rights and other benefits plus damages.
Raytheon appealed the LAs decision to the NLRC which reversed the
formers decision and directed that they (Raytheon) pay Almodiel
P100,000 as separation pay/ financial assistance.
Almodiel claimed that the functions of his position were absorbed by the
Payroll/Mis/Finance Department under the management of Ang Tan Chai, a
resident alien without any working permit from the DOLE as required by
law. Granting that his department has to be declared redundant, he claims
that he should have been the Manager of the Payroll/Mis/Finance
Department since he has the qualities for the said position. He claims that
hes better qualified than Ang Tan Chai. However, Raytheon insists that
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Almodiels functions as Cost Accounting Manager had not been absorbed


by Ang Tan Chai, a permanent resident born in this country. It claims to
have established that Ang Tan Chai didnt displace Almodiel or absorb his
functions and duties as they were occupying different and distinct
positions requiring different sets of expertise. The case was elevated to
the SC.
Issue: 1.) Whether or not Almodiel was validly dismissed on the ground of
redundancy.
2.) Whether or not a resident alien without a working permit
authorized by DOLE is allowed to occupy a position in a Philippine
Corporation.
Held:
1.) The court ruled that the governing provision on the termination of an
employees services because of redundancy is Art. 283 of the Labor Code.
In the case at bar, there was no dispute that Almodiel was duly advised a
month before his termination on the ground of redundancy in a written
notice by his immediate superior. He was issued a check of P54, 863
representing separation pay but because of his refusal to accept said pay,
it was sent to him through registered mail. The DOLE was served a copy of
the notice of termination of Almodiel.
Further, its a well-settled rule that labor laws dont authorize interference
with the employers judgment in the conduct of business. The
determination of the qualification and fitness of workers for hiring, firing,
promotion or reassignment are exclusive prerogatives of management.
The Labor Code and its IRR do not vest in the Labor Arbiters nor in the
different divisions of the NLRC managerial authority. The employer is free
to determine, using his own sound discretion and business judgment, all
elements of employment, from hiring to firing except in cases of
unlawful discrimination or those by which may be provided by law. Theres
none in the instant case. Hence, the court found no abuse of grave
discretion on the part of the NLRC in reversing and annulling LAs decision
and that on the contrary, the termination of Almodiel was anchored on a
valid and authorized cause under Art. 283.
2.)

Likewise destitute of merit is petitioner's imputation of unlawful


discrimination when Raytheon caused corollary functions appertaining to
cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien
without a working permit. Article 40 of the Labor Code which requires
employment permit refers to non-resident aliens. The employment permit
is required for entry into the country for employment purposes and is
issued after determination of the non-availability of a person in the
Philippines who is competent, able and willing at the time of application to
perform the services for which the alien is desired. Since Ang Tan Chai is a
resident alien, he does not fall within the ambit of the provision.
Conditions for Grant of Permit/ Denial D.O. No. 97-09, Sections
3, 4, 5, 6, 10
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General Milling Corporation vs. Torres


G.R. No. 93666
GENERAL MILLING CORPORATION and EARL TIMOTHY CONE vs.
HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and
Employment, HON. BIENVENIDO E. LAGUESMA, in his capacity as
Acting Secretary of Labor and Employment, and BASKETBALL
COACHES ASSOCIATION OF THE PHILIPPINES
April 22, 1991
Facts: The National Capital Region of the Department of Labor and
Employment issued Alien Employment Permit in favor of petitioner Earl
Timothy Cone, a United States citizen, as sports consultant and assistant
coach for petitioner General Milling Corporation ("GMC"). GMC and Cone
entered into a contract of employment whereby the latter undertook to
coach GMC's basketball team. The Board of Special Inquiry of the
Commission on Immigration and Deportation approved Cone's application
for a change of admission status from temporary visitor to pre-arranged
employee.
A month after, GMC requested for the renewal of Cone's alien employment
permit. GMC also requested that it be allowed to employ Cone as fullfledged coach. DOLE Regional Director Piezas granted the request. An
Alien Employment Permit was issued valid until December 25, 1990.
The Basketball Coaches Association of the Philippines ("BCAP") appealed
the issuance of said alien employment permit to the DOLE who, then,
issued a decision ordering cancellation of Cone's employment permit on
the ground that there was no showing that there is no person in the
Philippines who is competent, able and willing to perform the services
required nor that the hiring of petitioner Cone would redound to the
national interest. GMC filed a Motion for Reconsideration and two (2)
Supplemental Motions for Reconsideration but said Motions were denied
by Acting Secretary of Labor Laguesma.
Issue: 1.) Whether or not the Secretary of Labor gravely abused his
discretion when he revoked petitioner Cone's alien employment permit;
and
2.) Whether or not Section 6 (c), Rule XIV, Book I of the Omnibus
Rules Implementing the Labor Code is null and void as it is in violation of
the enabling law as the Labor Code does not empower respondent
Secretary to determine if the employment of an alien would redound to
national interest.

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Held: With regard to the first issue, the Court considers that petitioners
have failed to show any grave abuse of discretion or any act without or in
excess of jurisdiction on the part of respondent Secretary of Labor in
rendering his decision, revoking petitioner Cone's Alien Employment
Permit. Petitioner GMC's claim that hiring of a foreign coach is an
employer's prerogative has no legal basis at all. Under Article 40 of the
Labor Code, an employer seeking employment of an alien must first
obtain an employment permit from the Department of Labor. Petitioner
GMC's right to choose whom to employ is, of course, limited by the
statutory requirement of an alien employment permit.
The provisions of the Labor Code and its Implementing Rules and
Regulations requiring alien employment permits were in existence long
before petitioners entered into their contract of employment. It is firmly
settled that provisions of applicable laws, especially provisions relating to
matters affected with public policy, are deemed written into contracts.
Private parties cannot constitutionally contract away the otherwise
applicable provisions of law.
In short, the Department of Labor is the agency vested with jurisdiction to
determine the question of availability of local workers. The constitutional
validity of legal provisions granting such jurisdiction and authority and
requiring proof of non-availability of local nationals able to carry out the
duties of the position involved, cannot be seriously questioned. Petitioners
apparently also questioned the validity of the Implementing Rules and
Regulations, specifically Section 6 (c), Rule XIV, Book I of the
Implementing Rules, as imposing a condition not found in the Labor Code
itself. Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides
as follows:
Section 6. Issuance of Employment Permit the Secretary of Labor may
issue an employment permit to the applicant based on:
a) Compliance by the applicant and his employer with the requirements of
Section 2 hereof;
b) Report of the Bureau Director as to the availability or non-availability of
any person in the Philippines who is competent and willing to do the job
for which the services of the applicant are desired.
(c) His assessment as to whether or not the employment of the applicant
will redound to the national interest;
(d) Admissibility of the alien as certified by the Commission on
Immigration and Deportation;
(e) The recommendation of the Board of Investments or other appropriate
government agencies if the applicant will be employed in preferred areas
of investments or in accordance with the imperative of economic
development;
Article 40 of the Labor Code reads as follows:

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Art. 40. Employment per unit of non-resident aliens. Any alien seeking
admission to the Philippines for employment purposes and any domestic
or foreign employer who desires to engage an alien for employment in the
Philippines shall obtain an employment permit from the Department of
Labor.
The employment permit may be issued to a non-resident alien or to the
applicant employer after a determination of the non-availability of a
person in the Philippines who is competent, able and willing at the time of
application to perform the services for which the alien is desired.
For an enterprise registered in preferred areas of investments, said
employment permit may be issued upon recommendation of the
government agency charged with the supervision of said registered
enterprise.
e) To regulate the employment of aliens, including the establishment of a
registration and/or work permit system;
17.

Apprentice/ Learners/ Persons with Disabilities

Allowed Employment/ Requirements Program Approval Labor


Code Article 60
Nitto Enterprises vs. NLRC
G.R. No. 114337
NITTO ENTERPRISES vs.
NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI
September 29, 1995
Facts: Nitto Enterprises, a company engaged in the sale of glass and
aluminum products, hired Roberto Capili sometime in May 1990 as an
apprentice machinist, molder and core maker as evidenced by an
apprenticeship agreement for a period of 6 months with a daily wage rate
of P66.75 which was 75% of the applicable minimum wage. At around
1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of
glass which he was working on, accidentally hit and injured the leg of an
office secretary who was treated at a nearby hospital. Later that same
day, after office hours, private respondent entered a workshop within the
office premises which was not his work station. There, he operated one of
the power press machines without authority and in the process injured his
left thumb. Petitioner spent the amount of P1,023.04 to cover the
medication of private respondent. The following day, Roberto Capili was
asked to resign. On August 3, 1990 private respondent executed a
Quitclaim and Release in favor of petitioner for and in consideration of the
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sum of P1,912.79. Three days after, private respondent formally filed


before the NLRC NCR a complaint for illegal dismissal and payment of
other monetary benefits.
The Labor Arbiter rendered his decision finding the termination of private
respondent as valid and dismissing the money claim for lack of merit.
Labor Arbiter gave two reasons for ruling that the dismissal of Roberto
Capilian was valid. First, private respondent who was hired as an
apprentice violated the terms of their agreement when he acted with
gross negligence resulting in the injury not only to himself but also to his
fellow worker. Second, private respondent had shown that "he does not
have the proper attitude in employment particularly the handling of
machines without authority and proper training.
On appeal, the NLRC issued an order reversing the decision of the Labor
Arbiter and directed to reinstate complainant to his work last performed
and pay backwages computed from the time his wages were withheld up
to the time he is actually reinstated. The NLRC declared that private
respondent was a regular employee of petitioner by ruling that the
complainant was correct since the apprenticeship agreement was filed
with the Department of Labor only on June 7, 1990 could be validly used
by the Labor Arbiter as basis to conclude that the complainant was hired
by respondent as a plain "apprentice" on May 28, 1990.
Clearly, therefore, the complainant was a regular employee of Nitto
Enterprises pursuant to Article 280 of the Labor Code, as early as May 28,
1990, who thus enjoyed the security of tenure guaranteed in Section 3,
Article XIII of 1987 Constitution. The complainant being illegal dismissed
(among others) it then behooves upon respondent to prove that the
dismissal of complainant was for a valid cause. Absent such proof, NLRC
cannot but rule that the complainant was illegally dismissed. On January
28, 1994, Labor Arbiter Libo-on called for a conference at which only
private respondent's representative was present. On April 22, 1994, a Writ
of Execution was issued to effect the reinstatement of herein to his work
last performed or at the option of the respondent by payroll reinstatement
and to collect the amount of P122,690.85 representing his backwages as
called for in the dispositive portion, and turn over such amount to this
Office for proper disposition. Petitioner filed a motion for reconsideration
but the same was denied. Hence, the instant petition for certiorari.
Issue: Whether or not respondent NLRC committed grave abuse of
discretion in holding the private respondent was not an apprentice.
Held: The law is clear on this matter. Article 61 of the Labor Code
provides:
Contents of apprenticeship agreement. Apprenticeship
agreements, including the main rates of apprentices, shall
178 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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.

In the case at bench, the apprenticeship agreement between petitioner


and private respondent was executed on May 28, 1990 allegedly
employing the latter as an apprentice in the trade of "care maker/molder."
On the same date, an apprenticeship program was prepared by petitioner
and submitted to the Department of Labor and Employment. However, the
apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding
the absence of approval by the Department of Labor and Employment, the
apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the
requirements of the law. It is mandated that apprenticeship agreements
entered into by the employer and apprentice shall be entered only in
accordance with the apprenticeship program duly approved by the
Minister of Labor and Employment. Prior approval by the Department of
Labor and Employment of the proposed apprenticeship program is,
therefore, a condition sine quo non before an apprenticeship agreement
can be validly entered into. The act of filing the proposed apprenticeship
program with the Department of Labor and Employment is a preliminary
step towards its final approval and does not instantaneously give rise to
an employer-apprentice relationship. Article 57 of the Labor Code provides
that the State aims to "establish a national apprenticeship program
through the participation of employers, workers and government and nongovernment agencies" and "to establish apprenticeship standards for the
protection of apprentices." To translate such objectives into existence,
prior approval of the DOLE to any apprenticeship program has to be
secured as a condition sine qua non before any such apprenticeship
agreement can be fully enforced. The role of the DOLE in apprenticeship
programs and agreements cannot be debased. Hence, since the
apprenticeship agreement between petitioner and private respondent has
no force and effect in the absence of a valid apprenticeship program duly
approved by the DOLE, private respondent's assertion that he was hired
not as an apprentice but as a delivery boy ("kargador" or "pahinante")
deserves credence.
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Rights and Privileges R.A. No. 7277, Sections 5, 6, 7


Bernardo vs. NLRC & FEBTC

G.R. No. 122917


MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID,
DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND
M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M.
YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M.
TABAQUERO, et al. vs.
NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK
AND TRUST COMPANY
July 12, 1999
Facts: Complainants are deaf-mutes who were hired on various periods
from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money
Sorters and Counters through a uniformly worded agreement called
Employment Contract for Handicapped Workers. Disclaiming that
complainants were regular employees, respondent Far East Bank and Trust
Company maintained that complainants who are a special class of workers
the hearing impaired employees were hired temporarily under a special
employment arrangement which was a result of overtures made by some
civic and political personalities to the respondent Bank; that complainants
were hired due to pakiusap which must be considered in the light of the
context of the respondent Banks corporate philosophy as well as its career
and working environment which is to maintain and strengthen a corps of
professionals trained and qualified officers and regular employees who are
baccalaureate degree holders from excellent schools which is an
unbending policy in the hiring of regular employees; that in addition to
this, training continues so that the regular employee grows in the
corporate ladder; that the idea of hiring handicapped workers was
acceptable to them only on a special arrangement basis; that it adopted
the special program to help tide over a group of handicapped workers
such as deaf-mutes like the complainants who could do manual work for
the respondent Bank; that the task of counting and sorting of bills which
was being performed by tellers could be assigned to deaf-mutes; that the
counting and sorting of money are tellering works which were always
logically and naturally part and parcel of the tellers normal functions; that
from the beginning there have been no separate items in the respondent
Bank plantilla for sorters or counters; that the tellers themselves already
did the sorting and counting chore as a regular feature and integral part of
their duties; that through the pakiusap of Arturo Borjal, the tellers were
relieved of this task of counting and sorting bills in favor of deaf-mutes
without creating new positions as there is no position either in the
180 | L a b o r S t a n d a r d s - C a s e D i g e s t s

respondent or in any other bank in the Philippines which deals with purely
counting and sorting of bills in banking operations.
The Labor Arbiter and, on appeal, the NLRC ruled against herein
petitioners. In affirming the ruling of the Labor Arbiter that herein
petitioners could not be deemed regular employees under Article 280 of
the Labor Code, as amended, Respondent Commission ratiocinated as
follows:
We agree that Art. 280 is not controlling herein. We give due credence to
the conclusion that complainants were hired as an accommodation to the
recommendation of civic oriented personalities whose employments were
covered by xxx Employment Contracts with special provisions on duration
of contract as specified under Art. 80. Hence, as correctly held by the
Labor Arbiter a quo, the terms of the contract shall be the law between
the parties.
Petitioners maintain that they should be considered regular employees,
because their task as money sorters and counters was necessary and
desirable to the business of respondent bank. They further allege that
their contracts served merely to preclude the application of Article 280
and to bar them from becoming regular employees. Private respondent,
on the other hand, submits that petitioners were hired only as special
workers and should not in any way be considered as part of the regular
complement of the Bank. Rather, they were special workers under Article
80 of the Labor Code. Private respondent contends that it never solicited
the services of petitioners, whose employment was merely an
accommodation in response to the requests of government officials and
civic-minded citizens. They were told from the start, with the assistance of
government representatives that they could not become regular
employees because there were no plantilla positions for money sorters,
whose task used to be performed by tellers. Their contracts were renewed
several times, not because of need but merely for humanitarian
reasons. Respondent submits that as of the present, the special position
that was created for the petitioners no longer exists in private respondent
bank, after the latter had decided not to renew anymore their special
employment contracts.
The NLRC also declared that the Magna Carta for Disabled Persons was
not applicable, considering the prevailing circumstances/milieu of the
case.
Issue: 1.) Whether or not the NLRC committed grave abuse of discretion
in holding that the petitioners - money sorters and counters working in a
bank - were not regular employees.
2.) Whether or not the NLRC committed grave abuse of discretion in
not applying the provisions of the Magna Carta for the Disabled (Republic
Act No. 7277), on proscription against discrimination against disabled
persons.

181 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Held: The petition is meritorious. However, only the employees, who


worked for more than six months and whose contracts were renewed are
deemed regular. Hence, their dismissal from employment was illegal.
The facts, viewed in light of the Labor Code and the Magna Carta for
Disabled Persons, indubitably show that the petitioners, except sixteen of
them, should be deemed regular employees. As such, they have acquired
legal rights that this Court is duty-bound to protect and uphold, not as a
matter of compassion but as a consequence of law and justice.
The uniform employment contracts of the petitioners stipulated that they
shall be trained for a period of one month, after which the employer shall
determine whether or not they should be allowed to finish the 6-month
term of the contract. Furthermore, the employer may terminate the
contract at any time for a just and reasonable cause. Unless renewed in
writing by the employer, the contract shall automatically expire at the end
of the term.
According to private respondent, the employment contracts were
prepared in accordance with Article 80 of the Labor Code, which provides:
ART. 80. Employment agreement. Any employer who employs
handicapped workers shall enter into an employment agreement with
them, which agreement shall include:
(a) The names and addresses of the handicapped workers to be
employed;
(b) The rate to be paid the handicapped workers which shall be not less
than seventy five (75%) per cent of the applicable legal minimum wage;
(c) The duration of employment period; and
(d) The work to be performed by handicapped workers.
The stipulations in the employment contracts indubitably conform with the
aforecited provision. Succeeding events and the enactment of RA No.
7277 (the Magna Carta for Disabled Persons), however, justify the
application of Article 280 of the Labor Code. Respondent bank entered
into the aforesaid contract with a total of 56 handicapped workers and
renewed the contracts of 37 of them. In fact, two of them worked from
1988 to 1993. Verily, the renewal of the contracts of the handicapped
workers and the hiring of others lead to the conclusion that their tasks
were beneficial and necessary to the bank. More important, these facts
show that they were qualified to perform the responsibilities of their
positions. In other words, their disability did not render them unqualified
or unfit for the tasks assigned to them.
In this light, the Magna Carta for Disabled Persons mandates that
a qualified disabled employee should be given the same terms and
conditions of employment as a qualified able-bodied person. Section 5 of
the Magna Carta provides:
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Section 5. Equal Opportunity for Employment. No disabled 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.
The fact that the employees were qualified disabled persons necessarily
removes the employment contracts from the ambit of Article 80. Since the
Magna Carta accords them the rights of qualified able-bodied persons,
they are thus covered by Article 280 of the Labor Code, which provides:
As regular employees, the twenty-seven petitioners are entitled to
security of tenure; that is, their services may be terminated only for a just
or authorized cause. Because respondent failed to show such cause, these
twenty-seven petitioners are deemed illegally dismissed and therefore
entitled to back wages and reinstatement without loss of seniority rights
and other privileges, Considering the allegation of respondent that the job
of money sorting is no longer available because it has been assigned back
to the tellers to whom it originally belonged, petitioners are hereby
awarded separation pay in lieu of reinstatement. Because the other
sixteen worked only for six months, they are not deemed regular
employees and hence not entitled to the same benefits.
18. Women Workers Labor Code Articles 130-138; Omnibus
Rules, Book III, Rule XII, Section 1; Philippine Constitution
Articles II, Section 1, XIII, Section 14; Women in Development
and National Building Act (R.A. No. 7192); Anti-Sexual
Harassment Act of 1995 (R..A. No. 7877); Anti-Violence Against
Women and Their Children Act of 2004 (R.A. 9262); The Magna
Carta of Women (R.A. No. 9710)
Women under the Constitution Philippine Constitution Articles
II, Section 14, XIII, Section 14
Philippine Association of Service Exporters vs. Drilon
G.R. No. 81958
PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. vs.
HON. FRANKLIN M. DRILON as Secretary of Labor and
Employment, and TOMAS D. ACHACOSO, as Administrator of the
Philippine Overseas Employment Administration
June 30, 1988
Facts: The petitioner, Philippine Association of Service Exporters, Inc.
(PASEI, for short), a firm "engaged principally in the recruitment of Filipino
workers, male and female, for overseas placement," challenges the
Constitutional validity of Department Order No. 1, Series of 1988, of the
Department of Labor and Employment, in the character of "GUIDELINES
183 | L a b o r S t a n d a r d s - C a s e D i g e s t s

GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO


DOMESTIC AND HOUSEHOLD WORKERS." Specifically, the measure is
assailed for "discrimination against males or females;" that it "does not
apply to all Filipino workers but only to domestic helpers and females with
similar skills," and that it is violative of the right to travel. In its
supplement to the petition, PASEI invokes Section 3, of Article XIII, of the
Constitution, providing for worker participation "in policy and decisionmaking processes affecting their rights and benefits as may be provided
by law."
On May 25, 1988, the Solicitor General, on behalf of the respondents
Secretary of Labor and Administrator of the Philippine Overseas
Employment Administration, filed a Comment informing the Court that on
March 8, 1988, the respondent Labor Secretary lifted the deployment ban
in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States,
Italy, Norway, Austria, and Switzerland. In submitting the validity of the
challenged "guidelines," the Solicitor General invokes the police power of
the Philippine State.
Issue: Whether or not Department Order No. 1 is valid under the
Constitution
Held: In the light of the foregoing, the petition must be dismissed. As a
general rule, official acts enjoy a presumed vahdity. In the absence of
clear and convincing evidence to the contrary, the presumption logically
stands.
The petitioner has shown no satisfactory reason why the contested
measure should be nullified. There is no question that Department Order
No. 1 applies only to "female contract workers," but it does not thereby
make an undue discrimination between the sexes. It is well-settled that
"equality before the law" under the Constitution does not import a perfect
Identity of rights among all men and women. It admits of classifications,
provided that (1) such classifications rest on substantial distinctions; (2)
they are germane to the purposes of the law; (3) they are not confined to
existing conditions; and (4) they apply equally to all members of the same
class.
The Court is satisfied that the classification made-the preference for
female workers rests on substantial distinctions. As a matter of judicial
notice, the Court is well aware of the unhappy plight that has befallen our
female labor force abroad, especially domestic servants, amid exploitative
working conditions marked by, in not a few cases, physical and personal
abuse. The sordid tales of maltreatment suffered by migrant Filipina
workers, even rape and various forms of torture, confirmed by testimonies
of returning workers, are compelling motives for urgent Government
action. As precisely the caretaker of Constitutional rights, the Court is
called upon to protect victims of exploitation. In fulfilling that duty, the
Court sustains the Government's efforts.
184 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The same, however, cannot be said of our male workers. In the first place,
there is no evidence that, except perhaps for isolated instances, our men
abroad have been afflicted with an Identical predicament. The petitioner
has proffered no argument that the Government should act similarly with
respect to male workers. The Court, of course, is not impressing some
male chauvinistic notion that men are superior to women. What the Court
is saying is that it was largely a matter of evidence (that women domestic
workers are being ill-treated abroad in massive instances) and not upon
some fanciful or arbitrary yardstick that the Government acted in this
case. It is evidence capable indeed of unquestionable demonstration and
evidence this Court accepts. The Court cannot, however, say the same
thing as far as men are concerned. There is simply no evidence to justify
such an inference. Suffice it to state, then, that insofar as classifications
are concerned, this Court is content that distinctions are borne by the
evidence. Discrimination in this case is justified.
There is likewise no doubt that such a classification is germane to the
purpose behind the measure. Unquestionably, it is the avowed objective
of Department Order No. 1 to "enhance the protection for Filipino female
overseas workers" this Court has no quarrel that in the midst of the
terrible mistreatment Filipina workers have suffered abroad, a ban on
deployment will be for their own good and welfare.
The Order does not narrowly apply to existing conditions. Rather, it is
intended to apply indefinitely so long as those conditions exist. This is
clear from the Order itself, meaning to say that should the authorities
arrive at a means impressed with a greater degree of permanency, the
ban shall be lifted. As a stop-gap measure, it is possessed of a necessary
malleability, depending on the circumstances of each case.
Neither is there merit in the contention that Department Order No. 1
constitutes an invalid exercise of legislative power. It is true that police
power is the domain of the legislature, but it does not mean that such an
authority may not be lawfully delegated. As we have mentioned, the Labor
Code itself vests the Department of Labor and Employment with
rulemaking powers in the enforcement whereof.
The petitioners's reliance on the Constitutional guaranty of worker
participation "in policy and decision-making processes affecting their
rights and benefits" is not well-taken. The right granted by this provision,
again, must submit to the demands and necessities of the State's power
of regulation.
The Constitution declares that:
Sec. 3. The State shall afford full protection to labor, local and
overseas, organized and unorganized, and promote full
employment and equality of employment opportunities for all.
185 | L a b o r S t a n d a r d s - C a s e D i g e s t s

"Protection to labor" does not signify the promotion of employment alone.


What concerns the Constitution more paramountly is that such an
employment be above all, decent, just, and humane. It is bad enough that
the country has to send its sons and daughters to strange lands because it
cannot satisfy their employment needs at home. Under these
circumstances, the Government is duty-bound to insure that our toiling
expatriates have adequate protection, personally and economically, while
away from home. In this case, the Government has evidence, an evidence
the petitioner cannot seriously dispute, of the lack or inadequacy of such
protection, and as part of its duty, it has precisely ordered an indefinite
ban on deployment.
The Court finds furthermore that the Government has not indiscriminately
made use of its authority. It is not contested that it has in fact removed
the prohibition with respect to certain countries as manifested by the
Solicitor General.
Philippine Telegraph and Telephone Company vs. NLRC
G.R. No. 118978
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN
May 23, 1997
Facts: Grace de Guzman was initially hired by petitioner as a reliever,
specifically as a "Supernumerary Project Worker," for a fixed period from
November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on
maternity leave. Thereafter, from June 10, 1991 to July 1, 1991, and from
July 19, 1991 to August 8, 1991, private respondent's services as reliever
were again engaged by petitioner, this time in replacement of one Erlinda
F. Dizon who went on leave during both periods. After August 8, 1991, and
pursuant to their Reliever Agreement, her services were terminated. On
September 2, 1991, private respondent was once more asked to join
petitioner company as a probationary employee, the probationary period
to cover 150 days. In the job application form that was furnished her to be
filled up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a few
months earlier, that is, on May 26, 1991.
It now appears that private respondent had made the same
representation in the two successive reliever agreements which she
signed on June 10, 1991 and July 8, 1991. When petitioner supposedly
learned about the same later, its branch supervisor in Baguio City, Delia
M. Oficial, sent to private respondent a memorandum dated January 15,
1992 requiring her to explain the discrepancy. In that memorandum, she
was reminded about the company's policy of not accepting married
women for employment.
186 | L a b o r S t a n d a r d s - C a s e D i g e s t s

In her reply letter dated January 17, 1992, private respondent stated that
she was not aware of PT&T's policy regarding married women at the time.
Private respondent was dismissed from the company effective January 29,
1992, which she readily contested by initiating a complaint for illegal
dismissal, coupled with a claim for non-payment of cost of living
allowances (COLA), before the Regional Arbitration Branch of the National
Labor Relations Commission in Baguio City.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
decision declaring that private respondent, who had already gained the
status of a regular employee, was illegally dismissed by petitioner. On
appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiters decision dated April 29, 1994.
Issue: Whether or not ptitioners policy against marriage is valid.
Held: No, it is not valid. The Constitution, cognizant of the disparity in
rights between men and women in almost all phases of social and political
life, provides a gamut of protective provisions. To cite a few of the
primordial ones, Section 14, Article II on the Declaration of Principles and
State Policies, expressly recognizes the role of women in nation-building
and commands the State to ensure, at all times, the fundamental equality
before the law of women and men. Corollary thereto, Section 3 of Article
XIII (the progenitor whereof dates back to both the 1935 and 1973
Constitution) pointedly requires the State to afford full protection to labor
and to promote full employment and equality of employment
opportunities for all, including an assurance of entitlement to tenurial
security of all workers. Similarly, Section 14 of Article XIII mandates that
the State shall protect working women through provisions for
opportunities that would enable them to reach their full potential.
In the case at bar, petitioner's policy of not accepting or considering as
disqualified from work any woman worker who contracts marriage runs
afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution.
Contrary to petitioner's assertion that it dismissed private respondent
from employment on account of her dishonesty, the record discloses
clearly that her ties with the company were dissolved principally because
of the company's policy that married women are not qualified for
employment in PT & T, and not merely because of her supposed acts of
dishonesty.
That it was so can easily be seen from the memorandum sent to private
respondent by Delia M. Oficial, the branch supervisor of the company, with
the reminder, in the words of the latter, that "you're fully aware that the
company is not accepting married women employee (sic), as it was
verbally instructed to you." Again, in the termination notice sent to her by
the same branch supervisor, private respondent was made to understand
187 | L a b o r S t a n d a r d s - C a s e D i g e s t s

that her severance from the service was not only by reason of her
concealment of her married status but, over and on top of that, was her
violation of the company's policy against marriage ("and even told you
that married women employees are not applicable [sic] or accepted in our
company.") Parenthetically, this seems to be the curious reason why it was
made to appear in the initiatory pleadings that petitioner was represented
in this case only by its said supervisor and not by its highest ranking
officers who would otherwise be solidarily liable with the corporation.
The government, to repeat, abhors any stipulation or policy in the nature
of that adopted by petitioner PT & T. The Labor Code state, in no uncertain
terms, as follows:
Art. 136. Stipulation against marriage. It shall be unlawful
for an employer to require as a condition of employment or
continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of
marriage.
Further, it is not relevant that the rule is not directed against all women
but just against married women. And, where the employer discriminates
against married women, but not against married men, the variable is sex
and the discrimination is unlawful. Upon the other hand, a requirement
that a woman employee must remain unmarried could be justified as a
"bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects
an inherent quality reasonably necessary for satisfactory job performance.
Thus, in one case, a no-marriage rule applicable to both male and female
flight attendants, was regarded as unlawful since the restriction was not
related to the job performance of the flight attendants.
Petitioner's policy is not only in derogation of the provisions of Article 136
of the Labor Code on the right of a woman to be free from any kind of
stipulation against marriage in connection with her employment, but it
likewise assaults good morals and public policy, tending as it does to
deprive a woman of the freedom to choose her status, a privilege that by
all accounts inheres in the individual as an intangible and inalienable
right. Hence, while it is true that the parties to a contract may establish
any agreements, terms, and conditions that they may deem convenient,
the same should not be contrary to law, morals, good customs, public
order, or public policy. Carried to its logical consequences, it may even be
said that petitioner's policy against legitimate marital bonds would
encourage illicit or common-law relations and subvert the sacrament of
marriage.
Stipulation Against Marriage Labor Code Article 136
188 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Philippine Telegraph and Telephone Company vs. NLRC


G.R. No. 118978
PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY vs.
NATIONAL LABOR RELATIONS COMMISSION and GRACE DE
GUZMAN
May 23, 1997
Facts: Grace de Guzman was initially hired by petitioner as a reliever,
specifically as a "Supernumerary Project Worker," for a fixed period from
November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on
maternity leave. Thereafter, from June 10, 1991 to July 1, 1991, and from
July 19, 1991 to August 8, 1991, private respondent's services as reliever
were again engaged by petitioner, this time in replacement of one Erlinda
F. Dizon who went on leave during both periods. After August 8, 1991, and
pursuant to their Reliever Agreement, her services were terminated. On
September 2, 1991, private respondent was once more asked to join
petitioner company as a probationary employee, the probationary period
to cover 150 days. In the job application form that was furnished her to be
filled up for the purpose, she indicated in the portion for civil status
therein that she was single although she had contracted marriage a few
months earlier, that is, on May 26, 1991.
It now appears that private respondent had made the same
representation in the two successive reliever agreements which she
signed on June 10, 1991 and July 8, 1991. When petitioner supposedly
learned about the same later, its branch supervisor in Baguio City, Delia
M. Oficial, sent to private respondent a memorandum dated January 15,
1992 requiring her to explain the discrepancy. In that memorandum, she
was reminded about the company's policy of not accepting married
women for employment.
In her reply letter dated January 17, 1992, private respondent stated that
she was not aware of PT&T's policy regarding married women at the time.
Private respondent was dismissed from the company effective January 29,
1992, which she readily contested by initiating a complaint for illegal
dismissal, coupled with a claim for non-payment of cost of living
allowances (COLA), before the Regional Arbitration Branch of the National
Labor Relations Commission in Baguio City.
On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a
decision declaring that private respondent, who had already gained the
status of a regular employee, was illegally dismissed by petitioner. On
appeal to the National Labor Relations Commission (NLRC), said public
respondent upheld the labor arbiters decision dated April 29, 1994.
Issue: Whether or not petitioners policy against marriage is valid.

189 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Held: No, it is not valid. The government, to repeat, abhors any


stipulation or policy in the nature of that adopted by petitioner PT & T. The
Labor Code state, in no uncertain terms, as follows:
Art. 136. Stipulation against marriage. It shall be unlawful
for an employer to require as a condition of employment or
continuation of employment that a woman shall not get
married, or to stipulate expressly or tacitly that upon getting
married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of
marriage.
It would be worthwhile to reflect upon and adopt here the rationalization
in Zialcita, et al. vs. Philippine Air Lines, a decision that emanated from
the Office of the President. There, a policy of Philippine Air Lines requiring
that prospective flight attendants must be single and that they will be
automatically separated from the service once they marry was declared
void, it being violative of the clear mandate in Article 136 of the Labor
Code with regard to discrimination against married women.
The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque
Mining & Industrial Corporation considered as void a policy of the same
nature. In said case, respondent, in dismissing from the service the
complainant, invoked a policy of the firm to consider female employees in
the project it was undertaking as separated the moment they get married
due to lack of facilities for married women. Respondent further claimed
that complainant was employed in the project with an oral understanding
that her services would be terminated when she gets married. Branding
the policy of the employer as an example of "discriminatory chauvinism"
tantamount to denying equal employment opportunities to women simply
on account of their sex, the appellate court struck down said employer
policy as unlawful in view of its repugnance to the Civil Code, Presidential
Decree No. 148 and the Constitution.
Further, it is not relevant that the rule is not directed against all women
but just against married women. And, where the employer discriminates
against married women, but not against married men, the variable is sex
and the discrimination is unlawful. Upon the other hand, a requirement
that a woman employee must remain unmarried could be justified as a
"bona fide occupational qualification," or BFOQ, where the particular
requirements of the job would justify the same, but not on the ground of a
general principle, such as the desirability of spreading work in the
workplace. A requirement of that nature would be valid provided it reflects
an inherent quality reasonably necessary for satisfactory job performance.
Thus, in one case, a no-marriage rule applicable to both male and female
flight attendants, was regarded as unlawful since the restriction was not
related to the job performance of the flight attendants.
Duncan Association of Detailman PTGWO vs. GlaxoWellcome Philippines
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G.R. No. 162994


DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A.
TECSON
vs.
GLAXO WELLCOME PHILIPPINES, INC
September 17, 2004
Facts: Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo
Wellcome Philippines, Inc. (Glaxo) as medical representative on October
24, 1995, after Tecson had undergone training and orientation.
Thereafter, Tecson signed a contract of employment which stipulates,
among others, that he agrees to study and abide by existing company
rules; to disclose to management any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing
drug companies and should management find that such relationship poses
a possible conflict of interest, to resign from the company. If management
perceives a conflict of interest or a potential conflict between such
relationship and the employees employment with the company, the
management and the employee will explore the possibility of a "transfer
to another department in a non-counterchecking position" or preparation
for employment outside the company after six months.
Tecson was initially assigned to market Glaxos products in the Camarines
Sur-Camarines Norte sales area. Subsequently, Tecson entered into a
romantic relationship with Bettsy, an employee of Astra Pharmaceuticals
(Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in
Albay.
Even before they got married, Tecson received several reminders from his
District Manager regarding the conflict of interest which his relationship
with Bettsy might engender. In January 1999, Tecsons superiors informed
him that his marriage to Bettsy gave rise to a conflict of interest. Tecsons
superiors reminded him that he and Bettsy should decide which one of
them would resign from their jobs, although they told him that they
wanted to retain him as much as possible because he was performing his
job well. In November 1999, Glaxo transferred Tecson to the Butuan CitySurigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider
its decision, but his request was denied.
Because the parties failed to resolve the issue at the grievance machinery
level, they submitted the matter for voluntary arbitration. Glaxo offered
Tecson a separation pay of one-half () month pay for every year of
service, or a total of P50,000.00 but he declined the offer. On November
15, 2000, the National Conciliation and Mediation Board (NCMB) rendered
its Decision declaring as valid Glaxos policy on relationships between its
employees and persons employed with competitor companies, and
affirming Glaxos right to transfer Tecson to another sales territory.

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On May 19, 2003, the Court of Appeals promulgated its Decision denying
the Petition for Review.
Issue: Whether or not Glaxos policy prohibiting its employees from
marrying an employee of a competitor company is valid.
Held: Yes, it is valid. No reversible error can be ascribed to the Court of
Appeals when it ruled that Glaxos policy prohibiting an employee from
having a relationship with an employee of a competitor company is a valid
exercise of management prerogative.
Glaxo has a right to guard its trade secrets, manufacturing formulas,
marketing strategies and other confidential programs and information
from competitors, especially so that it and Astra are rival companies in the
highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees
of competitor companies upon Glaxos employees is reasonable under the
circumstances because relationships of that nature might compromise the
interests of the company. In laying down the assailed company policy,
Glaxo only aims to protect its interests against the possibility that a
competitor company will gain access to its secrets and procedures.
That Glaxo possesses the right to protect its economic interests cannot be
denied. No less than the Constitution recognizes the right of enterprises to
adopt and enforce such a policy to protect its right to reasonable returns
on investments and to expansion and growth. Indeed, while our laws
endeavor to give life to the constitutional policy on social justice and the
protection of labor, it does not mean that every labor dispute will be
decided in favor of the workers. The law also recognizes that management
has rights which are also entitled to respect and enforcement in the
interest of fair play.
In any event, from the wordings of the contractual provision and the policy
in its employee handbook, it is clear that Glaxo does not impose an
absolute prohibition against relationships between its employees and
those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the
company merely seeks to avoid is a conflict of interest between the
employee and the company that may arise out of such relationships. As
succinctly explained by the appellate court, thus:
The policy being questioned is not a policy against marriage. An
employee of the company remains free to marry anyone of his or
her choosing. The policy is not aimed at restricting a personal
prerogative that belongs only to the individual. However, an
employees personal decision does not detract the employer from
exercising management prerogatives to ensure maximum profit and
business success. . .
The Court of Appeals also correctly noted that the assailed company
policy which forms part of respondents Employee Code of Conduct and of
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its contracts with its employees, such as that signed by Tescon, was made
known to him prior to his employment. Tecson, therefore, was aware of
that restriction when he signed his employment contract and when he
entered into a relationship with Bettsy. Since Tecson knowingly and
voluntarily entered into a contract of employment with Glaxo, the
stipulations therein have the force of law between them and, thus, should
be complied with in good faith." He is therefore estopped from questioning
said policy.
Sexual Harassment R.A. No. 7877
Philippine Aelous Automotive United Corporation vs. NLRC
G.R. No. 124617
PHILIPPINE AEOLUS AUTO-MOTIVE UNITED CORPORATION and/or
FRANCIS CHUA vs.
NATIONAL LABOR RELATIONS COMMISSION and ROSALINDA C.
CORTEZ April 28, 2000
Facts: Petitioner Philippine Aeolus Automotive United Corporation
(PAAUC) is a corporation duly organized and existing under Philippine
laws, petitioner Francis Chua is its President while private respondent
Rosalinda C. Cortez was a company nurse1 of petitioner corporation until
her termination on 7 November 1994.
On 5 October 1994 a memorandum was a issued by Ms. Myrna Palomares,
Personnel Manager of petitioner corporation, addressed to private
respondent Rosalinda C. Cortez requiring her to explain within forty-eight
(48) hours why no disciplinary action should be taken against her (a) for
throwing a stapler at Plant Manager William Chua, her superior, and
uttering invectives against him on 2 August 1994; (b) for losing the
amount of P1,488.00 entrusted to her by Plant Manager Chua to be given
to Mr. Fang of the CLMC Department on 23 August 1994; and, (c) for
asking a co-employee to punch-in her time card thus making it appear
that she was in the office in the morning of 6 September 1944 when in
fact she was not. The memorandum however was refused by private
respondent although it was read to her and discussed with her by a coemployee. She did not also submit the required explanation, so that while
her case pending investigation the company placed her under preventive
suspension for thirty (30) days effective 9 October 1994 to 7 November
1994.
On 20 October 1994, while Cortez was still under preventive suspension,
another memorandum was issued by petitioner corporation giving her
seventy-two (72) hours to explain why no disciplinary action should be
taken against her for allegedly failing to process the ATM applications of
her nine (9) co-employees with the Allied Banking Corporation. On 21
October 1994 private respondent also refused to receive the second
memorandum although it was read to her by a co-employee. A copy of the
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memorandum was also sent by the Personnel Manager to private


respondent at her last known address by registered mail.
On 3 November 1994 a third memorandum was issued to private
respondent, this time informing her of her termination from the service
effective 7 November 1994. On 6 December 1994 private respondent filed
with the Labor Arbiter a complaint for illegal dismissal, non-payment of
annual service incentive leave pay, 13th month pay and damages against
PAAUC and its president Francis Chua.
On 10 July 1995 the Labor Arbiter rendered a decision holding the
termination of Cortez as valid and legal, at the same time dismissing her
claim for damages for lack of merit. On appeal to the NLRC, public
respondent reversed on 15 February 1996 the decision of the Labor
Arbiter and found petitioner corporation guilty of illegal dismissal of
private respondent Cortez. The NLRC ordered petitioner PAAUC to
reinstate respondent Cortez to her former position with back wages
computed from the time of dismissal up to her actual reinstatement.
On 11 March 1996 petitioners moved for reconsideration. On 28 March
1996 the motion was denied.
Issue: Whether or not respondent should be entitled to exemplary
damages.
Held: No, she should not be. On the issue of moral and exemplary
damages, the NLRC ruled that private respondent was not entitled to
recover such damages for her failure to prove that petitioner corporation
had been motivated by malice or bad faith or that it acted in a wanton,
oppressive or malevolent manner in terminating her services.
Public respondent in thus concluding appears baffled why it took private
respondent more than four (4) years to expose William Chua's alleged
sexual harassment. It reasons out that it would have been more prepared
to support her position if her act of throwing the stapler and uttering
invectives on William Chua were her immediate reaction to his amorous
overtures. In that case, according to public respondent, she would have
been justified for such outburst because she would have been merely
protecting her womanhood, her person and her rights.
We are not persuaded. The gravamen of the offense in sexual harassment
is not the violation of the employee's sexuality but the abuse of power by
the employer. Any employee, male or female, may rightfully cry "foul"
provided the claim is well substantiated. Strictly speaking, there is no time
period within which he or she is expected to complain through the proper
channels. The time to do so may vary depending upon the needs,
circumstances, and more importantly, the emotional threshold of the
employee.

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Private respondent admittedly allowed four (4) years to pass before finally
coming out with her employer's sexual impositions. Not many women,
especially in this country, are made of the stuff that can endure the agony
and trauma of a public, even corporate, scandal. If petitioner corporation
had not issued the third memorandum that terminated the services of
private respondent, we could only speculate how much longer she would
keep her silence. Moreover, few persons are privileged indeed to transfer
from one employer to another. The dearth of quality employment has
become a daily "monster" roaming the streets that one may not be
expected to give up one's employment easily but to hang on to it, so to
speak, by all tolerable means. Perhaps, to private respondent's mind, for
as long as she could outwit her employer's ploys she would continue on
her job and consider them as mere occupational hazards. This uneasiness
in her place of work thrived in an atmosphere of tolerance for four (4)
years, and one could only imagine the prevailing anxiety and resentment,
if not bitterness, that beset her all that time. But William Chua faced
reality soon enough. Since he had no place in private respondent's heart,
so must she have no place in his office. So, he provoked her, harassed
her, and finally dislodged her; and for finally venting her pent-up anger for
years, he "found" the perfect reason to terminate her.
In determining entitlement to moral and exemplary damages, we restate
the bases therefor. In moral damages, it suffices to prove that the
claimant has suffered anxiety, sleepless nights, besmirched reputation
and social humiliation by reason of the act complained of. Exemplary
damages, on the other hand, are granted in addition to, inter alia, moral
damages "by way of example or correction for the public good" if the
employer ''acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner."
Anxiety was gradual in private respondent's five (5)-year employment. It
began when her plant manager showed an obvious partiality for her which
went out of hand when he started to make it clear that he would
terminate her services if she would not give in to his sexual advances.
Sexual harassment is an imposition of misplaced "superiority" which is
enough to dampen an employee's spirit in her capacity for advancement.
It affects her sense of judgment; it changes her life. If for this alone
private respondent should be adequately compensated. Thus, for the
anxiety, the seen and unseen hurt that she suffered, petitioners should
also be made to pay her moral damages, plus exemplary damages, for the
oppressive manner with which petitioners effected her dismissal from the
service, and to serve as a forewarning to lecherous officers and employers
who take undue advantage of their ascendancy over their employees.
Domingo vs. Rayala
G.R. No. 155831
MA. LOURDES T. DOMINGO vs.
ROGELIO I. RAYALA
February 18, 2008
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Facts: On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then


Stenographic Reporter III at the NLRC, filed a Complaint for sexual
harassment against Rayala before Secretary Bienvenido Laguesma of the
Department of Labor and Employment (DOLE). She filed the Complaint for
sexual harassment on the basis of Administrative Order No. 250, the Rules
and Regulations Implementing RA 7877 in the Department of Labor and
Employment.
The Committee heard the parties and received their respective evidence.
On March 2, 2000, the Committee submitted its report and
recommendation to Secretary Laguesma. It found Rayala guilty of the
offense charged and recommended the imposition of the minimum
penalty provided under AO 250, which it erroneously stated as suspension
for six (6) months.
Rayala filed a Motion for Reconsideration, which the OP denied in a
Resolution dated May 24, 2000. He then filed a Petition for Certiorari and
Prohibition with Prayer for Temporary Restraining Order under Rule 65 of
the Revised Rules on Civil Procedure before this Court on June 14,
2000.9 However, the same was dismissed in a Resolution dated June 26,
2000 for disregarding the hierarchy of courts. Rayala filed a Motion for
Reconsideration.
In its Resolution dated September 4, 2000, the Court recalled its June 26
Resolution and referred the petition to the Court of Appeals (CA) for
appropriate action.
The CA rendered its Decision13 on December 14, 2001. It held that there
was sufficient evidence on record to create moral certainty that Rayala
committed the acts he was charged with. It also held that Rayalas
dismissal was proper. The CA pointed out that Rayala was dismissed for
disgraceful and immoral conduct in violation of RA 6713, the Code of
Conduct and Ethical Standards for Public Officials and Employees. Rayala
timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino
voted to affirm the December 14 Decision.
Domingo filed a Petition for Review before this Court, which we denied in
our February 19, 2003 Resolution for having a defective verification. She
filed a Motion for Reconsideration, which the Court granted; hence, the
petition was reinstated.
Rayala likewise filed a Petition for Review with this Court essentially
arguing that he is not guilty of any act of sexual harassment.
Meanwhile, the Republic filed a Motion for Reconsideration of the CAs
October 18, 2002 Resolution. The CA denied the same in its June 3, 2003
Resolution.
Issue: Whether or not Rayala commited sexual harassment.

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Held: Yes, Rayala committed the acts complained of and was guilty of
sexual harassment is, therefore, the common factual finding of not just
one, but three independent bodies: the Committee, the OP and the CA. It
should be remembered that when supported by substantial evidence,
factual findings made by quasi-judicial and administrative bodies are
accorded great respect and even finality by the courts. The principle,
therefore, dictates that such findings should bind us.
He insists, however, that these acts do not constitute sexual harassment,
because Domingo did not allege in her complaint that there was a
demand, request, or requirement of a sexual favor as a condition for her
continued employment or for her promotion to a higher position. Rayala
urges us to apply to his case our ruling in Aquino v. Acosta.
We find respondents insistence unconvincing. Basic in the law of public
officers is the three-fold liability rule, which states that the wrongful acts
or omissions of a public officer may give rise to civil, criminal and
administrative liability. An action for each can proceed independently of
the others. This rule applies with full force to sexual harassment.
The law penalizing sexual harassment in our jurisdiction is RA 7877.
Section 3 thereof defines work-related sexual harassment in this wise:
Sec. 3. Work, Education or Training-related Sexual Harassment
Defined. Work, education or training-related sexual harassment is
committed by an employer, manager, supervisor, agent of the
employer, teacher, instructor, professor, coach, trainor, or any other
person who, having authority, influence or moral ascendancy over
another in a work or training or education environment, demands,
requests or otherwise requires any sexual favor from the other,
regardless of whether the demand, request or requirement for
submission is accepted by the object of said Act.
(a) In a work-related or employment environment, sexual
harassment is committed when:
(1) The sexual favor is made as a condition in the hiring or in the
employment, re-employment or continued employment of said
individual, or in granting said individual favorable compensation,
terms, conditions, promotions, or privileges; or the refusal to grant
the sexual favor results in limiting, segregating or classifying the
employee which in a way would discriminate, deprive or diminish
employment opportunities or otherwise adversely affect said
employee;
(2) The above acts would impair the employees rights or privileges
under existing labor laws; or
(3) The above acts would result in an intimidating, hostile, or
offensive environment for the employee.

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This section, in relation to Section 7 on penalties, defines the criminal


aspect of the unlawful act of sexual harassment. The same section, in
relation to Section 6, authorizes the institution of an independent civil
action for damages and other affirmative relief. Section 4, also in relation
to Section 3, governs the procedure for administrative cases, viz.:
Sec. 4. Duty of the Employer or Head of Office in a Work-related,
Education or Training Environment. It shall be the duty of the
employer or the head of the work-related, educational or training
environment or institution, to prevent or deter the commission of
acts of sexual harassment and to provide the procedures for the
resolution, settlement or prosecution of acts of sexual harassment.
Towards this end, the employer or head of office shall:
(a) Promulgate appropriate rules and regulations in
consultation with and jointly approved by the employees or
students or trainees, through their duly designated
representatives,
prescribing
the
procedure
for
the
investigation or sexual harassment cases and the
administrative sanctions therefor.
Administrative sanctions shall not be a bar to prosecution in
the proper courts for unlawful acts of sexual harassment.
The said rules and regulations issued pursuant to this section
(a) shall include, among others, guidelines on proper decorum
in the workplace and educational or training institutions.
(b) Create a committee on decorum and investigation of cases
on sexual harassment. The committee shall conduct meetings,
as the case may be, with other officers and employees,
teachers, instructors, professors, coaches, trainors and
students or trainees to increase understanding and prevent
incidents of sexual harassment. It shall also conduct the
investigation of the alleged cases constituting sexual
harassment.
In the case of a work-related environment, the committee shall be
composed of at least one (1) representative each from the
management, the union, if any, the employees from the supervisory
rank, and from the rank and file employees.
In the case of the educational or training institution, the committee
shall be composed of at least one (1) representative from the
administration, the trainors, teachers, instructors, professors or
coaches and students or trainees, as the case maybe.
The employer or head of office, educational or training institution
shall disseminate or post a copy of this Act for the information of all
concerned.
The CA, thus, correctly ruled that Rayalas culpability is not to be
determined solely on the basis of Section 3, RA 7877, because he is
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charged with the administrative offense, not the criminal infraction, of


sexual harassment. It should be enough that the CA, along with the
Investigating Committee and the Office of the President, found substantial
evidence to support the administrative charge.
Yet, even if we were to test Rayalas acts strictly by the standards set in
Section 3, RA 7877, he would still be administratively liable. It is true
that this provision calls for a "demand, request or requirement of
a sexual favor." But it is not necessary that the demand, request
or requirement of a sexual favor be articulated in a categorical
oral or written statement. It may be discerned, with equal certitude,
from the acts of the offender. Holding and squeezing Domingos shoulders,
running his fingers across her neck and tickling her ear, having
inappropriate conversations with her, giving her money allegedly for
school expenses with a promise of future privileges, and making
statements with unmistakable sexual overtones all these acts of Rayala
resound with deafening clarity the unspoken request for a sexual favor.
Likewise, contrary to Rayalas claim, it is not essential that the
demand, request or requirement be made as a condition for
continued employment or for promotion to a higher position. It is
enough that the respondents acts result in creating an
intimidating,
hostile
or
offensive
environment
for
the
employee.45 That the acts of Rayala generated an intimidating and
hostile environment for Domingo is clearly shown by the common factual
finding of the Investigating Committee, the OP and the CA that Domingo
reported the matter to an officemate and, after the last incident, filed for a
leave of absence and requested transfer to another unit.
19. Minors Labor Code 139-140; Omnibus Rules, Book III, Rule
XII, Sections 2-3; Special Protection of Children Act of 2003
(R.A. No. 7610, as amended by R.A. No. 9231); D.O. 65-04; ILO
Convention Nos. 130 and 182 (1999); ILO Recommendation No.
190
20. Househelpers/ Caregivers/ Homeworkers Labor Articles
141-152; Omnibus Rules, Book III, Rule XIII
Non-Household Work
Apex Mining Co. vs. NLRC
G.R. No. 94951
APEX MINING COMPANY, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA
CANDIDO
April 22, 1991
Facts: Private respondent Sinclita Candida was employed by petitioner
Apex Mining Company, Inc. on May 18, 1973 to perform laundry services
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at its staff house located at Masara, Maco, Davao del Norte. In the
beginning, she was paid on a piece rate basis. However, on January 17,
1982, she was paid on a monthly basis at P250.00 a month which was
ultimately increased to P575.00 a month.
On December 18, 1987, while she was attending to her assigned task and
she was hanging her laundry, she accidentally slipped and hit her back on
a stone. She reported the accident to her immediate supervisor Mila de la
Rosa and to the personnel officer, Florendo D. Asirit. As a result of the
accident she was not able to continue with her work. She was permitted to
go on leave for medication. De la Rosa offered her the amount of P
2,000.00 which was eventually increased to P5,000.00 to persuade her to
quit her job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed her on
February 4, 1988.
On March 11, 1988, private respondent filed a request for assistance with
the Department of Labor and Employment. After the parties submitted
their position papers as required by the labor arbiter assigned to the case
on August 24, 1988 the latter rendered a decision to direct petitioner to
pay total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND
42/100 (P55,161.42).
Not satisfied therewith, petitioner appealed to the public respondent
National Labor Relations Commission (NLRC), wherein in due course a
decision was rendered by the Fifth Division thereof on July 20, 1989
dismissing the appeal for lack of merit and affirming the appealed
decision. A motion for reconsideration thereof was denied in a resolution
of the NLRC dated June 29, 1990.
Issue: Whether or not a househelper in the staff houses of an industrial
company a domestic helper or a regular employee of the said firm.
Held: The household helper should be treated as a regular employee.
Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the
terms "househelper" or "domestic servant" are defined as follows:
The term "househelper" as used herein is synonymous to the term
"domestic servant" and shall refer to any person, whether male or
female, who renders services in and about the employer's home and
which services are usually necessary or desirable for the
maintenance and enjoyment thereof, and ministers exclusively to
the personal comfort and enjoyment of the employer's family.
The foregoing definition clearly contemplates such househelper or
domestic servant who is employed in the employer's home to minister
exclusively to the personal comfort and enjoyment of the employer's
family. Such definition covers family drivers, domestic servants, laundry
women, yayas, gardeners, houseboys and other similar househelps.
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The definition cannot be interpreted to include househelp or


laundrywomen working in staffhouses of a company, like petitioner who
attends to the needs of the company's guest and other persons availing of
said facilities. By the same token, it cannot be considered to extend to
then driver, houseboy, or gardener exclusively working in the company,
the staffhouses and its premises. They may not be considered as within
the meaning of a "househelper" or "domestic servant" as above-defined
by law.
The criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. While it may be true that the
nature of the work of a househelper, domestic servant or laundrywoman
in a home or in a company staffhouse may be similar in nature, the
difference in their circumstances is that in the former instance they are
actually serving the family while in the latter case, whether it is a
corporation or a single proprietorship engaged in business or industry or
any other agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the employer. In
such instance, they are employees of the company or employer in the
business concerned entitled to the privileges of a regular employee.
Petitioner contends that it is only when the househelper or domestic
servant is assigned to certain aspects of the business of the employer that
such househelper or domestic servant may be considered as such as
employee. The Court finds no merit in making any such distinction. The
mere fact that the househelper or domestic servant is working within the
premises of the business of the employer and in relation to or in
connection with its business, as in its staffhouses for its guest or even for
its officers and employees, warrants the conclusion that such househelper
or domestic servant is and should be considered as a regular employee of
the employer and not as a mere family househelper or domestic servant
as contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as
amended.

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Chapter V Conditions of Employment


21. Conditions of Work Labor Code Articles 82-90; Omnibus
Rules, Book III, Rules I, IA, II
Regulations/ Rationale
Manila Terminal Co. Inc. vs CIR
G.R. No. L-4148
MANILA TERMINAL COMPANY, INC. vs.
THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL
RELIEF AND MUTUAL AID ASSOCIATION
July 16, 1952

Facts: On September 1, 1945, the Manila Terminal Company, Inc.


hereinafter to be referred as to the petitioner, undertook the arrastre
service in some of the piers in Manila's Port Area at the request and under
the control of the United States Army. The petitioner hired some 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. On February 1, 1946,
the petitioner began the postwar operation of the arrastre service at the
present at the request and under the control of the Bureau of Customs, by
virtue of a contract entered into with the Philippine Government. The
watchmen of the petitioner continued in the service with a number of
202 | L a b o r S t a n d a r d s - C a s e D i g e s t s

substitutions and additions, their salaries having been raised during the
month of February to P4 per day for the day shift and P6.25 per day for
the nightshift. On March 28, 1947, Dominador Jimenez, 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
investigated, but nothing was done by the Department. On April 29, 1947,
Victorino Magno Cruz and five other employees, also member of the
Manila Transit Mutual Aid Association, filed a 5-point demand with the
Department of Labor, including overtime pay, but the Department again
filed to do anything about the matter. On May 27, 1947, the petitioner
instituted the system of strict eight-hour shifts. On June 19, 1947, the
Manila Port Terminal Police Association, not registered in accordance with
the provisions of Commonwealth Act No. 213, filed a petition with the
Court of Industrial Relations. On July 16, 1947, the Manila Terminal Relief
and Mutual Aid Association was organized for the first time, having been
granted certificate No. 375 by the Department of Labor. On July 28, 1947,
Manila Terminal Relief and Mutual Aid Association filed an amended
petition with the Court of Industrial Relations praying, among others, that
the petitioner be ordered to pay its watchmen or police force overtime pay
from the commencement of their employment. On May 9, 1949, by virtue
of Customs Administrative Order No. 81 and Executive Order No. 228 of
the President of the Philippines, the entire police force of the petitioner
was consolidated with the Manila Harvor Police of the Customs Patrol
Service, a Government agency under the exclusive control of the
Commissioner of Customs and the Secretary of Finance The Manila
Terminal Relief and Mutual Aid Association will hereafter be referred to as
the Association.
The Court of Industrial Relations rendered a decision dismissing other
demands of the Association for lack of jurisdiction but ordered the
petitioner to pay to its police force. The petitioner filed a motion for
reconsideration but was dismissed. Hence, the present petition.
Issue: Whether or not the agreement under which its police force were
paid certain specific wages for twelve-hour shifts, included overtime
compensation.
Held: Sections 3 and 5 of Commonwealth Act 444 expressly provides for
the payment of extra compensation in cases where overtime services are
required, with the result that the employees or laborers are entitled to
collect such extra compensation for past overtime work. To hold otherwise
would be to allow an employer to violate the law by simply, as in this
case, failing to provide for and pay overtime compensation.
The point is stressed that the payment of the claim of the Association for
overtime pay covering a period of almost two years may lead to the
financial ruin of the petitioner, to the detriment of its employees
themselves. It is significant, however, that not all the petitioner's
watchmen would receive back overtime pay for the whole period specified
203 | L a b o r S t a n d a r d s - C a s e D i g e s t s

in the appealed decision, since the record shows that the great majority of
the watchmen were admitted in 1946 and 1947, and even 1948 and 1949.
At any rate, we are constrained to sustain the claim of the Association as
a matter of simple justice, consistent with the spirit and purpose of the
Eight-Hour Labor Law. The petitioner, in the first place, was required to
comply with the law and should therefore be made liable for the
consequences of its violation.
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.
Managerial Employees Labor Code Article 82; Book III, Rule I,
Section 2(b,c)
Asia Pacific Christerning, Inc. vs. Farolan
G.R. No.151370
ASIA PACIFIC CHARTERING (PHILS.) INC. vs.
MARIA LINDA R. FAROLAN
December 4, 2002
Facts: Petitioner Asia Pacific Chartering (Phils.) Inc. is tasked with the
selling of passenger and cargo spaces for Scandinavian Airlines System.
Petitioner Asia, through its Vice President Catalino Bondoc, offered
Respondent Maria Linda R. Farolan the sales manager position to which
Farolan accepted. Upon Vice President Bondocs request, Farolan
submitted a detailed report attributing the drop of sales revenue to
market forces beyond her control. Consequently, Asia directed Roberto
Zozobrado to implement solutions. Zozobrado informally took over
Farolans marketing and sales responsibilities but she continued to receive
her salary. Asia claims that the increase in sales revenue was due to
Zozobrados management. Asia then sent a letter of termination to
Farolan on the ground of loss of confidence, forcing Farolan to file a
complaint for illegal dismissal. The Labor Arbiter found that the dismissal
was illegal for lack of just cause, however, such decision was reversed by
the National Labor Relations Commission stating that the termination of
employment due to loss of confidence is within management prerogative.
On appeal, the Court of Appeals upheld the labor arbiters decision.
Hence, the filing of this petition.

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Issue: Whether or not an employer has the management prerogative to


replace sales manager whom it has reasonable grounds to believe cannot
effectively discharge the duties demanded by such position.
Held: No. As enunciated in Samson vs. NLRC, before one may be
properly considered a managerial employee, all of the following conditions
must be met: 1. Their primary duty consist 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 and fire
other employees of lower rank; or their suggestions and recommendations
as to hiring and firing and as to promotion and any other change of status
of other employees are given particular weight.
It is not disputed that Farolans job description, and the terms and
conditions of her employment with the exception of her salary and
allowances were never reduced to writing. The absence of a written job
description or prescribed work standards, however leaves the Court in the
dark. Even assuming, however, that respondent was a managerial
employee, the stated ground for her dismissal must be based on a wilful
breach and founded on clearly established facts.
Charlito Pearanda vs. Baganga Plywood Corp.
G.R. No. 159577
CHARLITO PEARANDA vs.
BAGANGA PLYWOOD CORPORATION and HUDSON CHUA
May 3, 2006
Facts: Sometime in June 1999, 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.
After the parties failed to settle amicably, the labor arbiter directed the
parties to file their position papers and submit supporting documents.
Their respective allegations are summarized by the labor arbiter as
follows:
"[Pearanda] through counsel in his position paper alleges that he was
employed by respondent [Baganga] on March 15, 1999 with a monthly
salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was
illegally terminated on December 19, 2000. Further, [he] alleges that his
services [were] terminated without the benefit of due process and valid
205 | L a b o r S t a n d a r d s - C a s e D i g e s t s

grounds in accordance with law. Furthermore, 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.
The labor arbiter ruled that there was no illegal dismissal and that
petitioners Complaint was premature because he was still employed by
BPC Respondents filed an appeal to the NLRC, which deleted the award of
overtime pay and premium pay for working on rest days. According to the
Commission, petitioner was not entitled to these awards because he was a
managerial employee. The CA dismissed Pearandas Petition for
Certiorari and denied reconsideration on the ground that petitioner still
failed to submit the pleadings filed before the NLRC. Hence this Petition.
Issue: Whether or not Pearanda is a regular employee entitled to
monetary benefits under Article 82 of the Labor Code.
Held: The Implementing Rules of the Labor Code state that managerial
employees are those who meet the following conditions: "(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."
The Court
managerial
managerial
standards.
managerial
standards.

disagrees with the NLRCs finding that petitioner was a


employee. However, petitioner was a member of the
staff, which also takes him out of the coverage of labor
Like managerial employees, officers and members of the
staff are not entitled to the provisions of law on labor

Field Personnel Labor Code Article 82; Book III, Rule I, Section
2(l)
Merdicar Fishhing Corp. vs. NLRC
G.R. No. 112574
MERCIDAR FISHING CORPORATION represented by its President
DOMINGO B. NAVAL vs.
NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR.
October 8, 1998

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Facts: Private respondent alleged that he had been sick and thus allowed
to go on leave without pay for one month from April 28, 1990 but that
when he reported to work at the end of such period with a health
clearance, he was told to come back another time as he could not be
reinstated immediately. Thereafter, petitioner refused to give him
work. For this reason, private respondent asked for a certificate of
employment from petitioner on September 6, 1990. However, when he
came back for the certificate on September 10, petitioner refused to issue
the certificate unless he submitted his resignation. Since private
respondent refused to submit such letter unless he was given separation
pay, petitioner prevented him from entering the premises.
Petitioner, on the other hand, alleged that it was private respondent who
actually abandoned his work. It claimed that the latter failed to report for
work after his leave had expired and was, in fact, absent without leave for
three months until August 28, 1998. Petitioner further claims that,
nonetheless, it assigned private respondent to another vessel, but the
latter was left behind on September 1, 1990. Thereafter, private
respondent asked for a certificate of employment on September 6 on the
pretext that he was applying to another fishing company. On September
10, 1990, he refused to get the certificate and resign unless he was given
separation pay.
On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a
decision in favor of the private respondent. Petitioner appealed to the
NLRC which, on August 30, 1993, dismissed the appeal for lack of
merit. The NLRC dismissed petitioners claim that it cannot be held liable
for service incentive leave pay by fishermen in its employ as the latter
supposedly are field personnel and thus not entitled to such pay under the
Labor Code. The NLRC likewise denied petitioners motion for
reconsideration of its decision in its order dated October 25, 1993.
Hence, this petition.
Issue: Whether or not the fishing crew members, like Fermin Agao, Jr.,
cannot be classified as field personnel under Article 82 of the Labor Code.
Held: As provided by Art. 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.
Petitioner argues essentially that since the work of private respondent is
performed away from its principal place of business, it has no way of
verifying his actual hours of work on the vessel. It contends that private
respondent and other fishermen in its employ should be classified as field
personnel who have no statutory right to service incentive leave pay.

207 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The law requires that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining whether or not
these sales personnel, even if they report to the office before 8:00 a.m.
prior to field work and come back at 4:30 p.m., really spend the hours in
between in actual field work.
In contrast, in the case at bar, during the entire course of their fishing
voyage, fishermen employed by petitioner have no choice but to remain
on board its vessel. Although they perform non-agricultural work away
from petitioners business offices, the fact remains that throughout the
duration of their work they are under the effective control and supervision
of petitioner through the vessels patron or master as the NLRC correctly
held.
Auto Bus Transport Systems, Inc. vs. Bautista
G.R. No. 156367
AUTO BUS TRANSPORT SYSTEMS, INC. vs.
ANTONIO BAUTISTA
May 16, 2005

Facts: Since 24 May 1995, respondent Antonio Bautista has been


employed by petitioner Auto Bus Transport Systems, Inc. (Autobus), as
driver-conductor with travel routes Manila-Tuguegarao via Baguio, BaguioTuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid
on commission basis, seven percent (7%) of the total gross income per
travel, on a twice a month basis. On 03 January 2000, while respondent
was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was
driving accidentally bumped the rear portion of Autobus No. 124, as the
latter vehicle suddenly stopped at a sharp curve without giving any
warning.
Respondent averred that the accident happened because he was
compelled by the management to go back to Roxas, Isabela, although he
had not slept for almost twenty-four (24) hours, as he had just arrived in
Manila from Roxas, Isabela. Respondent further alleged that he was not
allowed to work until he fully paid the amount of P75,551.50, representing
thirty percent (30%) of the cost of repair of the damaged buses and that
despite respondents pleas for reconsideration, the same was ignored by
management. After a month, management sent him a letter of
termination. Thus, on 02 February 2000, respondent instituted a
Complaint for Illegal Dismissal with Money Claims for nonpayment of
13th month pay and service incentive leave pay against Autobus.
The Labor Arbiter dismissed the complaint. Not satisfied with the decision,
petitioner appealed the decision to the NLRC which affirmed the Labor
Arbiters decision. Hence, the instant petition.
208 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not respondent is a field personnel.


Held: 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.
At this point, 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.
Therefore, respondent is not a field personnel but a regular employee who
performs tasks usually necessary and desirable to the usual trade of
petitioners business.
Piece Workers Book III, Rule I, Section 2(e)
Labor Congress vs. NLRC
G.R. No. 123938
LABOR CONGRESS OF THE PHILIPPINES (LCP) FOR AND IN BEHALF
OF ITS MEMBERS vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD
PRODUCTS, ITS PROPRIETOR/PRESIDENT & MANAGER, MR.
GONZALO KEHYENG AND MRS. EVELYN KEHYENG
May 21, 1998
Facts: The 99 persons named as petitioners in this proceeding were rankand-file employees of respondent Empire Food Products, which hired them
on various dates. Petitioners filed against private respondents a complaint
for payment of money claim[s] and for violation of labor standard[s]
laws. They also filed a petition for direct certification of petitioner Labor
Congress of the Philippines as their bargaining representative.
On October 23, 1990, petitioners represented by LCP President Benigno B.
Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn
Kehyeng in behalf of Empire Food Products, Inc. entered into a
Memorandum of Agreement which was approved by the Mediator Arbiter
209 | L a b o r S t a n d a r d s - C a s e D i g e s t s

and certified LCP as the sole and exclusive bargaining agent among the
rank-and-file employees of Empire Food Products for purposes of collective
bargaining with respect to wages, hours of work and other terms and
conditions of employment.
On January 23, 1991, petitioners filed a complaint. After the submission by
the parties of their respective position papers and presentation of
testimonial evidence, Labor Arbiter Ariel C. Santos absolved private
respondents of the charges of unfair labor practice, union busting,
violation of the memorandum of agreement, underpayment of wages and
denied petitioners prayer for actual, moral and exemplary damages. Labor
Arbiter Santos, however, directed the reinstatement of the individual
complainants.
On appeal, the National Labor Relations Commission vacated the Decision
dated April 14, 1972 [sic] and remanded the case to the Labor Arbiter for
further proceedings. On appeal, the NLRC, in its Resolution dated 29
March 1995, affirmed in toto the decision of Labor Arbiter Santos. Their
motion for reconsideration having been denied by the NLRC in its
Resolution of 31 October 1995, petitioners filed the instant special civil
action.
Issue: Whether or not piece rate workers are regular employees which
are entitled to benefits.
Held: No. Three (3) factors lead the Court to conclude that petitioners,
although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners tasks, their job of
repacking snack food was necessary or desirable in the usual business of
private respondents, who were engaged in the manufacture and selling of
such food products; second, petitioners worked for private respondents
throughout the year, their employment not having been dependent on a
specific project or season; and third, the length of time that petitioners
worked for private respondents. Thus, while petitioners mode of
compensation was on a per piece basis, the status and nature of their
employment was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees from
receiving benefits such as nighttime pay, holiday pay, service incentive
leave and 13th month pay, inter alia, 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. Plainly,
petitioners as piece-rate workers do not fall within this group. As
mentioned earlier, not only did petitioners labor under the control of
private respondents as their employer, likewise did petitioners toil
throughout the year with the fulfillment of their quota as supposed basis
for compensation.

210 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The Revised Guidelines as well as the Rules and Regulations identify those
workers who fall under the piece-rate category as those who are paid a
standard amount for every piece or unit of work produced that is more or
less regularly replicated, without regard to the time spent in producing the
same.
Regular Meal Period (One Hour) Labor Code Article 85; Book III,
Rule I, Section 7, Paragraph 1
Philippine Airlines, Inc. vs. NLRC
G.R. No. 132805
PHILIPPINE AIRLINES, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ROMULUS PROTACIO and DR. HERMINIO A. FABROS
February 2, 1999
Facts: Private respondent was employed as flight surgeon at petitioner
company. He was assigned at the PAL Medical Clinic at Nichols and was on
duty from 4:00 in the afternoon until 12:00 midnight.
On February 17, 1994, at around 7:00 in the evening, private respondent
left the clinic to have his dinner at his residence, which was about fiveminute drive away. A few minutes later, the clinic received an emergency
call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta,
had suffered a heart attack. The nurse on duty, Mr. Merlino Eusebio, called
private respondent at home to inform him of the emergency. The patient
arrived at the clinic at 7:50 in the evening and Mr. Eusebio immediately
rushed him to the hospital. When private respondent reached the clinic at
around 7:51 in the evening, Mr. Eusebio had already left with the
patient. Mr. Acosta died the following day. Upon learning about the
incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief
Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in
turn, required private respondent to explain why no disciplinary sanction
should be taken against him.
In his explanation, private respondent asserted that he was entitled to a
thirty-minute meal break; that he immediately left his residence upon
being informed by Mr. Eusebio about the emergency and he arrived at the
clinic a few minutes later; that Mr. Eusebio panicked and brought the
patient to the hospital without waiting for him. Finding private
respondents explanation unacceptable, the management charged private
respondent with abandonment of post while on duty. He was given ten
days to submit a written answer to the administrative charge. Private
respondent filed a complaint for illegal suspension against petitioner.
211 | L a b o r S t a n d a r d s - C a s e D i g e s t s

On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a


decision declaring the suspension of private respondent illegal. Petitioner
appealed to the NLRC. The NLRC, however, 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. The NLRC likewise denied petitioners
motion for reconsideration.
Issue: Whether or not the public respondents acted without or in excess
of their jurisdiction and with grave abuse of discretion in nullifying the 3month suspension of private respondent.
Held: The facts do not support petitioners allegation that private
respondent abandoned his post on the evening of February 17,
1994. Private respondent left the clinic that night only to have his dinner
at his house, which was only a few minutes drive away from the clinic. His
whereabouts were known to the nurse on duty so that he could be easily
reached in case of emergency. Upon being informed of Mr. Acostas
condition, private respondent immediately left his home and returned to
the clinic. These facts belie petitioners claim of abandonment.
Articles 83 and 85 of the Labor Code provides that the eight-hour work
period does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as
long as they return to their posts on time. Private respondents act,
therefore, of going home to take his dinner does not constitute
abandonment.
Waiting Time Book III, Rule I, Section 5(a)
Arica vs. NLRC
G.R. No. 78210
TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO,
ABONDIO OMERTA, GIL TANGIHAN, SAMUEL LABAJO, NESTOR
NORBE, RODOLFO CONCEPCION, RICARDO RICHA, RODOLFO NENO,
ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL,
JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY,
AND 561 OTHERS, HEREIN REPRESENTED BY KORONADO B.
APUZEN vs.
NATIONAL LABOR RELATIONS COMMISSION, HONORABLE
FRANKLIN DRILON, HONORABLE CONRADO B. MAGLAYA,
HONORABLE ROSARIO B. ENCARNACION, AND STANDARD
(PHILIPPINES) FRUIT CORPORATION (STANFILCO)
February 28, 1989
Facts: Petitioners contend that the preliminary activities as workers of
Stanfilco in the assembly area is compensable as working time (from 5:30
212 | L a b o r S t a n d a r d s - C a s e D i g e s t s

6:00 in the evening) since these preliminary activities are necessarily


and primarily for private respondents benefit. The preliminary activities
include:
1. Roll call and getting their individual work assignments from the
foreman
2. Laborers Daily Accomplishment Report of the day
3. They go to the stock room to get their working materials, tools and
equipments
4. They travel to the field with their tools and materials.
The Labor Arbiter held in favor of Stanfilco that in an earlier case, the 30minute assembly time long practiced cannot be considered waiting time
or working time, and, therefore, not compensable, has become the law of
the case which can no longer be distributed without doing violence to the
time honored principle of res judicata. The NLRC upheld the decision of
the Labor Arbiters decision.
Issue: Whether or not the 30-minute activity of the petitioners before the
scheduled working time is compensable under the Labor Code.
Held: No. As has been decided in the previous case charged by the
associated Labor Union vs. Stanfilco, the Minister of Labor held, The 30minute assembly time long practiced and institutionalized by mutual
consent of the parties under Article IV, Section 3 of the CBA cannot be
considered as waiting time within the purview of Section 5, Rule I, Book III
of the Rules and Regulations Implementing the Labor Code.
Furthermore, the 30-minute assembly time is deeply-rooted, routinary
practice of the employees of the employees and the proceedings
attendant thereto are not infected with complexities as to deprive the
workers the time to attend to other personal pursuits. They are not subject
to the absolute control of the company during this period, otherwise, their
failure to report in the assembly time would justify the company to impose
disciplinary measures. The 30-minute assembly time has not primarily
intended for the interest of the employer but ultimately for the employees
to indicate their availability or non-availability for work during every
working day.
Inactive Due to Work Interruptions Book III, Rule I, Section 4 (d)
University of Pangasinan Faculty Union vs. University of Pangasinan
G.R. No. L-63122
UNIVERSITY OF PANGASINAN FACULTY UNION vs.
UNIVERSITY OF PANGASINAN AND NATIONAL LABOR RELATIONS
COMMISSION
February 20, 1984

213 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: Petitioner is a labor union composed of faculty members of the


respondent University of Pangasinan, an educational institution duly
organized and existing by virtue of the laws of the Philippines.
On December 18, 1981, the petitioner, through its President, Miss
Consuelo Abad, filed a complaint against the private respondent with the
Arbitration Branch of the NLRC, Dagupan District Office, Dagupan City. The
complaint seeks: (a) the payment of Emergency Cost of Living Allowances
(ECOLA) for November 7 to December 5, 1981, a semestral break; (b)
salary increases from the sixty (60%) percent of the incremental proceeds
of increased tuition fees; and (c) payment of salaries for suspended extra
loads. The petitioners members are full-time professors, instructors, and
teachers of respondent University. The teachers in the college level teach
for a normal duration of ten (10) months a school year, divided into two
(2) semesters of five (5) months each, excluding the two (2) months
summer vacation. These teachers are paid their salaries on a regular
monthly basis.
In November and December, 1981, the petitioners members were fully
paid their regular monthly salaries. However, from November 7 to
December 5, during the semestral break, they were not paid their ECOLA.
The private respondent claims that the teachers are not entitled thereto
because the semestral break is not an integral part of the school year and
there being no actual services rendered by the teachers during said
period,
the
principle
of
"No
work,
no
pay"
applies.
Issue: Whether or not petitioners members are entitled to ECOLA during
the semestral break from November 7 to December 5, 1981 of the 198182 school year.
Held: Yes.The various Presidential Decrees on ECOLAs to wit: PDs 1614,
1634, 1678 and 1713, provide on "Allowances of Fulltime Employees . . ."
that "Employees shall be paid in full the required monthly allowance
regardless of the number of their regular working days if they incur no
absences during the month. If they incur absences without pay, the
amounts corresponding to the absences may be deducted from the
monthly allowance . . ." ; and on "Leave of Absence Without Pay", that "All
covered employees shall be entitled to the allowance provided herein
when
they
are
on
leave
of
absence
with
pay."
It is beyond dispute that the petitioners members are full-time employees
receiving their monthly salaries irrespective of the number of working
days or teaching hours in a month. However, they find themselves in a
most peculiar situation whereby they are forced to go on leave during
semestral breaks. These semestral breaks are in the nature of work
interruptions beyond the employees control. The duration of the
semestral break varies from year to year dependent on a variety of
circumstances affecting at times only the private respondent but at other
times all educational institutions in the country. As such, these breaks
214 | L a b o r S t a n d a r d s - C a s e D i g e s t s

cannot be considered as absences within the meaning of the law for which
deductions may be made from monthly allowances. The "No work, no pay"
principle does not apply in the instant case. The petitioners members
received their regular salaries during this period. It is clear from the
aforequoted provision of law that it contemplates a "no work" situation
where the employees voluntarily absent themselves. Petitioners, in the
case at bar, certainly do not, ad voluntatem, absent themselves during
semestral breaks. Rather, they are constrained to take mandatory leave
from work. For this they cannot be faulted nor can they be begrudged that
which is due them under the law. To a certain extent, the private
respondent can specify dates when no classes would be held. Surely, it
was not the intention of the framers of the law to allow employers to
withhold employee benefits by the simple expedient of unilaterally
imposing "no work" days and consequently avoiding compliance with the
mandate
of
the
law
for
those
days.
Respondents contention that "the fact of receiving a salary alone should
not be the basis of receiving ECOLA", is, likewise, without merit. Particular
attention is brought to the Implementing Rules and Regulations of Wage
Order
No.
1
to
wit.
SECTION

5.

Allowance

for

Unworked

Days.

"a) All covered employees whether paid on a monthly or daily basis shall
be entitled to their daily living allowance when they are paid their basic
wage."
This provision, at once refutes the above contention. It is evident that the
intention of the law is to grant ECOLA upon the payment of basic wages.
Hence, we have the principle of "No pay, no ECOLA" the converse of which
finds application in the case at bar. Petitioners cannot be considered to be
on leave without pay so as not to be entitled to ECOLA, for, as earlier
stated, the petitioners were paid their wages in full for the months of
November and December of 1981, notwithstanding the intervening
semestral break. This, in itself, is a tacit recognition of the rather unusual
state of affairs in which teachers find themselves. Although said to be on
forced leave, professors and teachers are, nevertheless, burdened with
the task of working during a period of time supposedly available for rest
and private matters. There are papers to correct, students to evaluate,
deadlines to meet, and periods within which to submit grading reports.
Although they may be considered by the respondent to be on leave, the
semestral break could not be used effectively for the teachers own
purposes for the nature of a teachers job imposes upon him further duties
which must be done during the said period of time. Learning is a never
ending process. Teachers and professors must keep abreast of
developments all the time. Teachers cannot also wait for the opening of
the next semester to begin their work. Arduous preparation is necessary
for the delicate task of educating our children. Teaching involves not only
an application of skill and an imparting of knowledge, but a responsibility
215 | L a b o r S t a n d a r d s - C a s e D i g e s t s

which entails self-dedication and sacrifice. The task of teaching ends not
with the perceptible efforts of the petitioners members but goes beyond
the classroom: a continuum where only the visible labor is relieved by
academic intermissions. It would be most unfair for the private respondent
to consider these teachers as employees on leave without pay to suit its
purposes and, yet, in the meantime, continue availing of their services as
they prepare for the next semester or complete all of the last semesters
requirements. Furthermore, we may also by analogy apply the principle
enunciated in the Omnibus Rules Implementing the Labor Code to wit:
1aw
library
Sec. 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:
"(d) The time during which an employee is inactive by reason of
interruptions in his work beyond his control shall be considered time either
if the imminence of the resumption of work requires the employees
presence at the place of work or if the interval is too brief to be utilized
effectively and gainfully in the employees own interest."
The petitioners members in the case at bar, are exactly in such a
situation. The semestral break scheduled is an interruption beyond
petitioners control and it cannot be used "effectively nor gainfully in the
employees interest. Thus, the semestral break may also be considered
as "hours worked." For this, the teachers are paid regular salaries and, for
this, they should be entitled to ECOLA. Not only do the teachers continue
to work during this short recess but much less do they cease to live for
which the cost of living allowance is intended. The legal principles of "No
work, no pay; No pay, no ECOLA" must necessarily give way to the
purpose of the law to augment the income of employees to enable them
to cope with the harsh living conditions brought about by inflation; and to
protect employees and their wages against the ravages brought by these
conditions. Significantly, it is the commitment of the State to protect labor
and to provide means by which the difficulties faced by the working force
may best be alleviated. To submit to the respondents interpretation of the
no work, no pay policy is to defeat this noble purpose. The Constitution
and the law mandate otherwise.
Travel Time
Rada vs. NLRC
G.R. No. 96078
HILARIO RADA vs.
NATIONAL LABOR RELATIONS COMMISSION AND PHILNOR
CONSULTANTS AND PLANNERS, INC.
January 9, 1992

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Facts: In 1977, Rada was contracted by Philnor Consultants and Planners,


Inc as a driver. He was assigned to a specific project in Manila. The
contract he signed was for 2.3 years. His task was to drive employees to
the project from 7am to 4pm. He was allowed to bring home the company
vehicle in order to provide a timely transportation service to the other
project workers. The project he was assigned to was not completed as
scheduled hence, since he has a satisfactory record, he was re-contracted
for an additional 10months. After 10 months the project was not yet
completed. Several contracts thereafter were made until the project was
finished in1985.At the completion of the project, Rada was terminated as
his employment was co-terminous with the project. He later sued
Philnorfor for non-payment of separation pay and overtime pay. He said he
is entitled to be paid overtime pay because he uses extra time to get to
the project site from his home and from the project site to his home every
day in total, he spends an average of 3 hours overtime everyday.
Issue: Whether or not Rada is entitled to overtime pay.
Held: Yes. Rada is entitled to overtime pay. 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 Rada'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 Philnor. As embodied in
Philnors memorandum, they allowed their drivers to bring home their
transport vehicles in order for them to provide a timely transport service
and to avoid delay not really so that the drivers could enjoy the benefits
of the company vehicles nor for them to save on fare.
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.
Proof of Work/ Employer Obligation

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Social Security System vs. Court of Appeals


G.R. No. 100388
SOCIAL SECURITY SYSTEM vs.
THE COURT OF APPEALS AND CONCHITA AYALDE
December 14, 2000
Facts: In a petition before the Social Security Commission, Margarita
Tana, widow of the late Ignacio Tana, Sr., alleged that her husband was,
before his demise, an employee of Conchita Ayalde as a farmhand in the
two (2) sugarcane plantations she owned (and leased from the University
of the Philippines. She further alleged that Tana worked continuously six
(6) days a week, four (4) weeks a month, and for twelve (12) months
every year between January 1961 to April 1979. For his labor, Tana
allegedly received a regular salary according to the minimum wage
prevailing at the time. She further alleged that throughout the given
period, 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 SSS, in a petition-in-intervention, revealed that neither
Hda. B-70 nor respondents Ayalde and Maghari were registered membersemployers of the SSS, and consequently, Ignacio Tana, Sr. was never
registered as a member-employee. Likewise, SSS records reflected that
there was no way of verifying whether the alleged premium contributions
were remitted since the respondents were not registered membersemployers.
For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr.
was her employee, admitting only that he was hired intermittently as an
independent contractor to plow, harrow, or burrow Hda. No. Audit B-15-M.
Tana used his own carabao and other implements, and he followed his
own schedule of work hours. Ayalde further alleged that she never
exercised control over the manner by which Tana performed his work as
an independent contractor.

The Social Security Commission finds that the late Ignacio Tana was
employed by respondent Conchita Ayalde from January 1961 to March
1979 with a salary based on the Minimum Wage prevailing during his
employment. Not having reported the petitioners husband for coverage
with the SSS, respondent Conchita Ayalde is, therefore, liable for the
218 | L a b o r S t a n d a r d s - C a s e D i g e s t s

payment of damages equivalent to the death benefits in the amount of


P7,067.40 plus the amount of P750.00 representing funeral benefit or a
total of P7,817.40. Further, the SSS is ordered to pay to the petitioner her
accrued pension covering the period after the 5-year guaranteed period
corresponding to the employers liability.

Respondent Ayalde filed a motion for reconsideration which the


Commission denied. Not satisfied with the Commissions ruling, Ayalde
appealed to the Court of Appeals. The Court of Appeals rendered
judgment in favor of respondent-appellant Conchita Ayalde and dismissed
the claim of petitioner Margarita Tan. The SSS, as intervenor-appellee,
filed a Motion for Reconsideration, which was denied.

Issue: Whether or not an agricultural laborer who was hired on "pakyaw"


basis can be considered an employee entitled to compulsory coverage
and corresponding benefits under the Social Security Law.

Held: The mandatory coverage under the SSS Law (Republic Act No.
1161, as amended by PD 1202 and PD 1636) is premised on the existence
of an employer-employee relationship, and Section 8(d) defines an
"employee" as "any person who performs services for an employer in
which either or both mental and physical efforts are used and who
receives compensation for such services where there is an employeremployee relationship." Claimant Margarita Tana and her corroborating
witnesses testified that her husband was paid daily wages "per quincena"
as well as on "pakyaw" basis. Ayalde, on the other hand, insists that Tana
was paid solely on "pakyaw" basis. To support her claim, she presented
payrolls covering the period January of 1974 to January of 1976; and
November of 1978 to May of 1979. A careful perusal of the records readily
show that the exhibits offered are not complete, and are but a mere
sampling of payrolls. While the names of the supposed laborers appear
therein, their signatures are nowhere to be found. In light of her
incomplete documentary evidence, Ayaldes denial that Tana was her
employee in Hda. B-70 or Hda. B-15-M must fail. The witnesses did not
waver in their assertion that while Tana was hired by Ayalde as an
"arador" on "pakyaw" basis, he was also paid a daily wage which Ayaldes
overseer disbursed every fifteen (15) days. It is also undisputed that they
were made to acknowledge receipt of their wages by signing on sheets of
ruled paper, which are different from those presented by Ayalde as
documentary evidence. In fine, we find that the testimonies of Margarita
219 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Tana, Agaton Libawas and Aurelio Tana prevail over the incomplete and
inconsistent documentary evidence of Ayalde. 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 us that, indeed, Tana was not her employee.

There is substantial testimonial evidence to prove that Tana was paid a


daily wage, and he worked continuously for most part of the year, even
while he was also occasionally called on to plow the soil on a "pakyaw"
basis. As a farm laborer who has worked exclusively for Ayalde for
eighteen (18) years, Tana should be entitled to compulsory coverage
under the Social Security Law, whether his service was continuous or
broken. Ayalde failed to counter these positive assertions. Even on the
assumption that there were no deductions, the fact remains that Tana was
and should have been covered under the Social Security Law. The
circumstances of his employment place him outside the ambit of the
exception provided in Section 8(j) of Republic Act No. 1611, as amended
by Section 4 of R.A. 2658.
Additional Compensation Labor Code Article 86; Book III, Rule II,
Sections 2-5
Shell Company vs. National Labor Union
G.R. No. L-1309
THE SHELL COMPANY OF PHILIPPINE ISLANDS, LIMITED vs.
NATIONAL LABOR UNION
July 26, 1948
Facts: National Labor Union instituted this action to ask for 50%
additional compensation for the employees of Shell Company who work at
night to attend to the foreign planes landing and taking off (at night), to
supply petrol and lubricants, and perform other duties. Court of Industrial
Relations held that The Shell Company pay its workers working at night an
additional compensation of 50% over their salaries by working during
daytime.
Shell argues that there is no legal provision empowering CIR to order
payment of additional compensation to workers who work at night, and
that Act No. 44 relieved the employer of such obligation as it is provided in
the Act where it made compulsory the overtime (additional
220 | L a b o r S t a n d a r d s - C a s e D i g e s t s

compensation) pay for work rendered beyond 8 hours, and such cases do
not include the work at night.
NLU argues decision of the CIR is part of its broad and effective powers as
granted by Commonwealth Act No. 103 the charter of the Industrial
Relations Court, and the Act No. 444 has no Application to this case
because it is referring only to particular and maximum working day
permitted I industrial establishments the 8-hour day.
Issue: Whether or not those who work at night are entitled to 50%
additional compensation.
Held: Yes. The Court discussed a lot of issues about the pernicious effect
of working at night justifying the award of additional 50% to the
compensation of affected workers, affirming the decision of CIR. 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 workers 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 and 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 avoidable 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.
Holidays Coverage/Exclusion Labor Code Article 94 (a)
Mantrade/FMMC Division Employees and Workers Union vs. Bacungan
G.R. No. L-48437
MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION,
REPRESENTED BY PHILIPPINE SOCIAL SECURITY LABOR UNION
TUCP vs.
ARBITRATOR
FROILAN
M.
BACUNGAN
AND
MANTRADE
DEVELOPMENT CORPORATION
September 30, 1986
Facts: This is a petition for Certiorari and Mandamus filed by petitioner
against arbitrator Froilan M. Bacungan and Mantrade Development
Corporation arising from the decision of respondent arbitrator, ruling that
Mantrade Development Corporation is not under legal obligation to pay
221 | L a b o r S t a n d a r d s - C a s e D i g e s t s

holiday pay (as provided for in Article 94 of the Labor Code in the third
official Department of Labor edition) 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 this rule is applicable not only as of March 2, 1976
but as of November 1, 1974. Petitioner questions the validity of the
pertinent section of the Rules and Regulations Implementing the Labor
Code as amended on which respondent arbitrator based his decision.
In denying petitioners claim for holiday pay, respondent arbitrator stated
that although monthly salaried employees are not among those excluded
from receiving such additional pay under Article 94 of the Labor Code of
the Philippines, they appear to be excluded under Sec. 2, Rule IV, Book III
of the Rules and Regulations which states 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 presumed to be paid for all days in the month whether worked or
not. Respondent arbitrator further opined that respondent corporation
does not have any legal obligation to grant its monthly salaried
employees holiday pay, unless it is argued that the pertinent section of
the Rules and Regulations implementing Section 94 of the Labor Code is
not in conformity with the law, and thus, without force and effect.
Issue: Whether or not Mantrade Development Corporation is not under
legal obligation to pay holiday pay to its monthly paid employees.
Held: No. Section 2, Rule IV, Book III of the implementing rules and Policy
Instruction No. 9, issued by the then Secretary of Labor are null and void
since in the guise of clarifying the Labor Codes provisions on holiday pay,
they in effect amended them by enlarging the scope of their exclusion.
The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the
Secretarys 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.
Therefore, respondent corporation is ordered to grant holiday pay to its
monthly salaried employees.
Divisor as Factor
Trans-Asia Philippines Employees Association vs. NLRC
G.R. No. 118289
TRANS-ASIA PHILIPPINES EMPLOYEES ASSOCIATION (TAPEA) AND
ARNEL GALVEZ vs.

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NATIONAL
LABOR
RELATIONS
COMMISSION,
(PHILIPPINES) AND ERNESTO S. DE CASTRO
December 13, 1999

TRANS-ASIA

Facts: On 7 July 1988, Trans-Asia Philippines Employees Association


(TAPEA), the duly-recognized 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. Despite the conclusion of the CBA, however, an issue was
still left unresolved with regard to the claim of TAPEA for payment of
holiday pay covering the period from January of 1985 up to December of
1987. Since the parties were not able to arrive at an amicable settlement
despite the conciliation meetings, TAPEA, led by its President, petitioner
Arnie Galvez, filed a complaint before the labor arbiter, on 18 August
1988, for the payment of their holiday pay in arrears. On 18 September
1988, 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.

In their Position Paper, petitioners contended that their claim for holiday
pay in arrears is based on the non-inclusion of the same in their monthly
pay. With regard to the pre-condition for the payment of holiday pay
stated in the Employees' Manual and the absence of a stipulation on
holiday pay in the employees' appointment papers, Trans-Asia asserted
that the above circumstances are not indicative of its non-payment of
holiday pay since 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. In support of this claim, Trans-Asia pointed out
that it has long been the standing practice of the company to use the
divisor of "286" days in computing for its employees' overtime pay and
daily rate deductions for absences.

Trans-Asia further clarified that the "286" days divisor already takes into
account the ten (10) 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 half-day during Saturdays).

223 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The Labor Arbiter held a decision against the petitioners, finding that in
the absence of such agreement, the Supreme Court in said Chartered
Bank Case took into consideration existing practices in the bank in
resolving the issue, such as employment by the bank of a divisor of 251
days which is the result of subtracting all Saturdays, Sundays and the ten
(10) legal holidays from the total number of calendar days in a year.
Further, the Court took note of the fact that the bank used conflicting or
different divisors in computing salary-related benefits as well as the
employees' absence from work. In the case at bar, not only did the CBA
between the complainants and respondents herein provides (sic) that the
ten (10) 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, unlike that obtaining in the
Chartered Bank Case, never used conflicting or different divisors but
consistently employed the divisor of 286 days, which as earlier pointed
out, was arrived at by subtracting only the unworked 52 Sundays and the
26 half-day-worked Saturdays from the total number of days in a year. 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. The NLRC
dismissed the petitioners appeal as well as the motion for
reconsideration, affirming the decision of the Labor Arbiter.

Issue: Whether or not the NLRC erred in ruling for Trans-Asia in using the
286 days divisor.

Held: No. Trans-Asia's inclusion of holiday pay in petitioners' monthly


salary is clearly established by its consistent use of the divisor of "286"
days in the computation of its employees' benefits and deductions. The
use by Trans-Asia of the "286" days divisor was never disputed by
petitioners. A simple application of mathematics would reveal that the ten
(10) legal holidays in a year are already accounted for with the use of the
said divisor. As explained by Trans-Asia, if one is to deduct the unworked
52 Sundays and 26 Saturdays (derived by dividing 52 Saturdays in half
since petitioners are required to work half-day on 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. Thus, when viewed against this
very convincing piece of evidence, the arguments put forward by
petitioners to support their claim of non-payment of holiday pay, i.e., the
224 | L a b o r S t a n d a r d s - C a s e D i g e s t s

pre-condition stated in the Employees' Manual for entitlement to holiday


pay, the absence of a stipulation in the employees' appointment papers
for the inclusion of holiday pay in their monthly salary, the stipulation in
the CBA recognizing the entitlement of the petitioners to holiday pay with
a concomitant provision for the granting of an "allegedly" very generous
holiday pay rate, would appear to be merely inferences and suppositions
which, in the apropos words of the labor arbiter, "paled in the face of the
prevailing company practices and circumstances abovestated."
Nevertheless, petitioners' cause is not entirely lost. The Court notes that
there is a need to adjust the divisor used by Trans-Asia to 287 days,
instead of only 286 days, in order to properly account for the entirety of
regular holidays and special days in a year as prescribed by Executive
Order No. 203 in relation to Section 6 of the Rules Implementing Republic
Act 6727. According to these, 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. 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.
Sunday Labor Code Article 93(a), 2 nd sentence; Book III, Rule III,
Section 2
Wellington Investment, Inc. vs. Trajano
G.R. No. 114698
WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION
vs.
CRESENCIANO B. TRAJANO, UNDERSECRETARY OF LABOR AND
EMPLOYMENT, ELMER ABADILLA AND 34 OTHERS
July 03, 1995
Facts: A routine inspection was conducted by a Labor Enforcement Officer
on August 06, 1991 in the Wellington Flour Mills, owned and operated by
Wellington Investment and Manufacturing Corporation. The officer drew up
a report which set forth his finding of non-payment of regular holidays
falling on a Sunday for monthly-paid employees.

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Wellington sought reconsideration, arguing that the monthly salary of the


companys monthly-paid employees already includes holiday pay for all
regular holidays and hence, there is no legal basis for the finding of
alleged non-payment of regular holidays falling on a Sunday. It asserts
that it pays its monthly-paid employees a fixed monthly compensation
using the 314 factor. It simply deducted 51 Sundays from the 365 days
normally comprising a year and used the difference, 314, as the basis for
determining the monthly salary. The monthly salary thus fixed actually
covers payment for 314 days of the year, including regular and special
holidays, as well as days when no work is done by reason of fortuitous
cause, as above specified, or causes not attributable to the employees.
The Regional Director ruled against Wellington, directing it to pay its
employees 4 extra working days, equivalent of the regular holidays falling
on a Sunday. Wellington filed a motion for reconsideration. Its motion was
treated as an appeal and was acted on by the Undersecretary which
affirmed the decision of the Regional Director, ad commanded Wellington
to pay its employees additional working days resulting from regular
holidays falling on Sundays in 1988, 1989, and 1990. Wellington moved
for reconsideration but was rebuffed.
Issue: Whether or not a monthly-paid employee, receiving a fixed
monthly compensation, is entitled to an additional pay aside from his
usual pay, whenever a regular holiday falls on a Sunday.
Held: No. There is no provision of law requiring an employee 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. As earlier mentioned, what 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 12 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 just mentioned which, by the way, are
routinely made between employer and employees when the wages are
paid on daily basis.
Muslim Holiday Labor Code Articles 169-172; P.D. No. 1083; R.A.
No. 9492
San Miguel Coproration vs. Court of Appeals
G.R. No. 146775
SAN MIGUEL CORPORATION vs.

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THE HONORABLE COURT OF APPEALS, HON. UNDERSECRETARY


JOSE M. ESPAOL, JR., HON. CRESENCIANO B. TRAJANO, HON.
REGIONAL DIRECTOR ALLAN M. MACARAYA
January 30, 2002
Facts: On 17 October 1992, the Department of Labor and Employment
(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. 1 SMC contested
the findings and DOLE conducted summary hearings on 19 November
1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit
proof that it was paying regular Muslim holiday pay to its employees.
Hence, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued
a compliance order, dated 17 December 1993, directing SMC to consider
Muslim holidays as regular holidays and to pay both its Muslim and nonMuslim employees holiday pay within thirty (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. The dismissal of the appeal for late
filing was later on reconsidered in the order of 17 July 1998 after it was
found that the appeal was filed within the reglementary period. However,
the appeal was still dismissed for lack of merit and the order of Director
Macaraya was affirmed.
SMC went to this Court for relief via a petition for certiorari, which this
Court referred to the Court of Appeals. The CA modified the payment of
Muslim holiday pay from 200% to 150% of the employers salary. Hence,
this petition.

Issue: Whether or not the CA erred in affirming the Directors order to


consider Muslim Holidays as regular holidays and to pay both Muslim and
non-Muslim employees on such holidays.

Held: No. 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,
227 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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.
The foregoing provisions should be read in conjunction with Article 94 of
the Labor Code, which provides:

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; x x x.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083


provides that "(t)he provisions of this Code shall be applicable only to
Muslims x x x." However, there should be no distinction between Muslims
and non-Muslims as regards payment of benefits for Muslim holidays. The
Court of Appeals did not err in sustaining Undersecretary Espaol who
stated:
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.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that
"x x x nothing herein shall be construed to operate to the prejudice of a
non-Muslim." In addition, the 1999 Handbook on Workers Statutory
Benefits, approved by then DOLE Secretary Bienvenido E. Laguesma on 14
December 1999 categorically stated:

228 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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.
Service Incentive Leave Coverage/ Exclusions Labor Code Article
95(a,b); Book III, Rule V, Section 1
Makati Haberdashery, Inc. vs. NLRC
G.R. Nos. 83380-81
MAKATI HABERDASHERY, INC., JORGE LEDESMA AND CECILIO G.
INOCENCIO vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA,
SANDIGAN NG MANGGAGAWANG PILIPINO TUCP AND ITS
MEMBERS, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y.
LAURETO AND 14 OTHERS
November 15, 1989
Facts: Individual complainants, private respondents herein, have been
working for petitioner Makati Haberdashery, Inc. as tailors, seamstress,
sewers, basters (manlililip) and "plantsadoras". They are paid on a piecerate basis except Maria Angeles and Leonila Serafina who are paid on a
monthly 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.

Private respondents are required to work from or before 9:30 a.m. up to


6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even
on Sundays and holidays.

On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor


organization of the respondent workers, filed a for (a) underpayment of
the basic wage; (b) underpayment of living allowance; (c) non-payment of
overtime work; (d) non-payment of holiday pay; (e) non-payment of
service incentive pay; (f) 13th month pay; and (g) benefits provided for
under Wage Orders Nos. 1, 2, 3, 4 and 5.

229 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The Labor Arbiter found the Haberdashery to have violated the decrees on
the cost of living allowance, service incentive leave pay and the 13th
Month Pay. In view thereof, the economic analyst of the Commission is
directed to compute the monetary awards due each complainant based on
the available records of the respondents retroactive as of three years prior
to the filing of the instant case. The NLRC affirmed the Labor Arbiters
decision.

Issue: Whether or not the workers are entitled to monetary claims.

Held: Yes. As a consequence of their status as regular employees of the


petitioners, they can claim cost of living allowance. Private respondents
are also entitled to claim their 13th Month Pay under Section 3(e) of the
Rules and Regulations Implementing P.D. No. 85.

On the other hand, 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. For the same reason
private respondents cannot also claim holiday pay (Section 1(e), Rule IV,
Implementing Regulations, Book III, Labor Code).
Labor Congress vs. NLRC
G. R. No. 123938
LABOR CONGRESS OF THE PHILIPPINES (LCP) FOR AND IN BEHALF
OF ITS MEMBERS vs.
NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD
PRODUCTS, ITS PROPRIETOR/PRESIDENT & MANAGER, MR.
GONZALO KEHYENG AND MRS. EVELYN KEHYENG
May 21, 1998
Facts: The 99 persons as private petitioners in the proceeding
represented by the LCP were rank-and-file employees of private
respondent Empire Food Products, a food and fruit processing company,
hired on various dates. Ocampo, et al, filed against Empire and NLRC
complaint for payment of money claims and for violation of Labor
Standards laws. Alongside this, they also filed a petition for direct
certification for the Labor Congress to be their bargaining representative.
230 | L a b o r S t a n d a r d s - C a s e D i g e s t s

On October 23, 1990, petitioners, represented by LCP, and private


respondents Gonzalo and Evelyn Kehyeng enetered into a Memorandum
of Agreement (1) recognizing LCP as sole and exclusive bargaining agent
and representative for all rank-and-file employees of the Empire Food
Products regarding wages, hours of work, and other terms and conditions
of employment, (2) agreeing to resolve the issues in the NLRC complaint
during the Collective Bargaining Agreement and (3) agreeing for the
proper adjustment of wages, withdrawal of case from the Calendar of the
NLRC, and non-interference or any ULP act. On October 24, 1990, the
Mediator Arbiter approved the memorandum and certified LCP as the sole
and exclusive bargaining agent for the rank-and-file employees of Empire.
On November 1990, LCP President Navarro submitted to Empire a
proposal for collective bargaining. However, on January 1991, the private
petitioners Ana Marie, et al, filed a complaint for unfair labor practices via
illegal lockout and dismissal, union-busting through harassment, threats
and interference to the right for self-organization, violation of the October
23, 1990 memorandum, underpayment of wages, and actual, moral and
exemplary damages.
The Labor Arbiter absolved Empire for ULP, union busting, violation of the
memorandum of agreement, underpayment of wages and denied the
petitioners prayer for damages. But it ordered reinstatement of
complainants, due to the fact that Empire did not keep its payroll records
as per requirement of the DOLE. The decision was appealed to the NLRC.
It remanded the case to the Labor Arbiter for further proceedings due to
overlooking the testimonies of some of the individual complainants. The
Labor Arbiter then found that the complainants failed to present with
definiteness and clarity the particular act or acts constitutive of unfair
labor practice. Upon appeal, the NLRC affirmed the Labor Arbiters
decision.
Issue: Whether or not the petitioners are entitled to Labor Standard
Benefits, considering their status as piece rate workers.
Held: Yes. The Court considered the employees as regular employees
despite their status as pakyaoor piece workers, according them benefits
such as holiday pay, premium pay, 13 th month pay, and service incentive
leave, having found the nature of their tasks necessary and desirable in
the usual business of Empire Foods. The Rules Implementing the Labor
Code exclude certain employees from receiving benefits such as nighttime
pay, holiday pay, service incentive leave and 13 th month pay. However,
petitioners as piece rate workers do not fall within this group. Not only did
the employees labor under the control of Empire, the employees also
worked throughout the year to fulfill their quota as basis for
compensation.
Computation and Liability

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Sentinel Security Agency, Inc. vs. NLRC


G.R. No. 122468
SENTINEL SECURITY AGENCY, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION, ADRIANO CABANO,
JR., VERONICO C. ZAMBO, HELCIAS ARROYO, RUSTICO ANDOY, AND
MAXIMO ORTIZ
November 16, 1998
G.R. No. 122716
PHILIPPINE AMERICAN LIFE INSURANCE COMPANY vs.
NATIONAL LABOR RELATIONS COMMISSION, VERONICO ZAMBO,
HELCIAS ARROYO, ADRIANO CABANO, MAXIMO ORTIZ, AND
RUSTICO ANDOY
November 16, 1998
Facts: Petitioner Client a clarification of its own liability. That the
complainants' illegal dismissal was the sole responsibility of the Agency
was clearly stated by the Court in the assailed Decision, which we quote
There was no suspension of operation, business or undertaking, bona fide
or not, that would have justified placing the complainants off-detail and
making them wait for a period of six months. . . . The only logical
conclusion from the foregoing discussion is that the Agency illegally
dismissed the complainants. Hence, as a necessary consequence, the
complainants are entitled to . . . back wages Relevant to this
controversy is the recent pronouncement of the Court in Rosewood v.
National Labor Relations Commission An order to pay back wages and
separation pay is invested with a punitive character, such that an indirect
employer should not be made liable without a finding that it had
committed or conspired in the illegal dismissal.

Issue: Whether or not the Client should pay back wages, separation pay
and service incentive leave pay.

Held: For back wages and separation pay, no. For service incentive leave
pay, yes. The Client was not responsible for the illegal dismissal of the
complainants and, thus, not liable for the payment of back wages and
separation pay. However, the Decision did not completely exonerate the
Client which, as an indirect employer, is solidarily liable with Petitioner
Agency for the complainants' unpaid service incentive leave, pursuant to
Articles 106, 107 and 109 of the Code. As clarified by the Court in
Rosewood: Under these cited provisions of the Labor Code should the
232 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contractor fail to pay the wages of its employees in accordance with law,
the indirect employer (the petitioner in this case), is jointly and severally
liable with the contractor, but such responsibility should be understood to
be limited to the extent of the work performed under the contract, in the
same manner and extent that he is liable to the employees directly
employed by him. This liability of petitioner covers the payment of the
workers' performance of any work, task, job or project. So long as the
work, task, job or project has been performed for petitioner's benefit or on
its behalf, the liability accrues for such period even if, later on, the
employees are eventually transferred or reassigned elsewhere.
Auto Bus Transport Systems, Inc. vs. Bautista
G.R. No. 156367
AUTO BUS TRANSPORT SYSTEMS, INC. vs.
ANTONIO BAUTISTA
May 16, 2005
Facts: Antonio Bautista was employed by Auto Bus Transport Systems,
Inc. in May 1995. He was assigned to the Isabela-Manila route and he was
paid by commission (7% of gross income per travel for twice a month). In
January 2000, while he was driving his bus, he bumped another bus
owned by Auto Bus. He claimed he accidentally bumped the bus as he
was so tired and that he has not slept for more than 24 hours because
Auto Bus required him to return to Isabela immediately after arriving at
Manila. Damages were computed and 30% or P75,551.50 of it was being
charged
to
Bautista.
Bautista
refused
payment.
Auto Bus terminated Bautista after due hearing as part of Auto Bus
management prerogative. Bautista sued Auto Bus for illegal dismissal. The
Labor Arbiter Monroe Tabingan dismissed Bautistas petition but ruled that
Bautista is entitled to P78,1117.87 13th month pay payments and
P13,788.05 for his unpaid service incentive leave pay. The case was
appealed before the National Labor Relations Commission. NLRC modified
the LAs ruling. It deleted the award for 13th Month pay. The Court of
Appeals affirmed the NLRC. Auto Bus averred that Bautista is a
commissioned employee and if that is not reason enough that Bautista is
also a field personnel, hence, he is not entitled to a service incentive
leave. They invoke Booki III, Rule V of the Implementing Rules which
provides for the coverage of service incentive leave pay and which
excludes 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.
233 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not Bautista is entitled to Service Incentive Leave. If he


is, up to what amount of service incentive leave pay is he entitled to?
Held: Yes. Employees engaged on task or contract basis or paid on purely
commission basis are not automatically exempted from the grant of
service incentive leave, unless, they fall under the classification of field
personnel. However, respondent is not a field personnel but a regular
employee who performs tasks usually necessary and desirable to the
usual trade of petitioners business. The driver was under constant
supervision while in the performance of this work. Accordingly, respondent
is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service


incentive leave pay respondent is entitled to. The response to this query
inevitably leads us to the correlative issue of whether or not the three (3)year prescriptive period under Article 291 of the Labor Code is applicable
to respondents claim of service incentive leave pay. By virtue of the
decision in Fernandez v. NLRC, it can be conscientiously deduced that the
cause of action of an entitled employee to claim his service incentive
leave pay accrues from the moment the employer refuses to remunerate
its monetary equivalent if the employee did not make use of said leave
credits but instead chose to avail of its commutation. Accordingly, if the
employee wishes to accumulate his leave credits and opts for its
commutation upon his resignation or separation from employment, his
cause of action to claim the whole amount of his accumulated service
incentive leave shall arise when the employer fails to pay such amount at
the time of his resignation or separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the
service incentive leave, we can conclude that the three (3)-year
prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service incentive
leave, but from the time when the employer refuses to pay its monetary
equivalent after demand of commutation or upon termination of the
employees services, as the case may be.

22. Minimum Wages and Wage Fixing Machinery Labor Code


Articles 97-119; Omnibus Rules, Book III, Rules VII-VIII

234 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Coverage Labor Code Article 97 (b,c,e), 98; Book III, Rule VII,
Section 3
Philippine Fisheries Development Authority vs NLRC
G.R. No. 94825
PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs.
NATIONAL LABOR RELATIONS COMMISSION, ODIN SECURITY
AGENCY, AS REPRESENTATIVE OF ITS SECURITY GUARDS
September 04, 1992
Facts: The petitioner is a government-owned or controlled corporation
created by P.D. No. 977. On November 11, 1985, it entered into a contract
with the Odin Security Agency for security services of its Iloilo Fishing Port
Complex in Iloilo City. The contract provides that the schedule of
compensation includes among others, the minimum wage (Wage Order
No.5), rest day pay, night differential, incentive leave pay, 13 th month pay,
emergency cost of living allowance, 4% contractors tax, operational
expenses and overhead. On October 24, 1987, and during the effectivity
of the said Security Agreement, the private respondent requested the
petitioner to adjust the contract rate in view of the implementation of
Wage Order No. 6 which took effect on November 1, 1984. Requests for
adjustment of the contract price were reiterated on January 14, 1988 and
February 19, 1988 but were ignored by the petitioner.
Thus on June 7, 1988, the private respondent filed with the Office of the
Sub-Regional Arbitrator in Region VI, Iloilo City a complaint for unpaid
amount of re-adjustment rate under Wage Order No. 6 together with wage
salary differentials arising from the integration of the cost of living
allowance under Wage Order No. 1, 2, 3 and 5 pursuant to Executive
Order No. 178 plus the amount of P25,000.00 as attorneys fees and cost
of litigation.
The Labor Arbiter dismissed the complaint stating that the petitioners
being a government-owned or controlled corporation would place it under
the scope and jurisdiction of the Civil Service Commission and not within
the ambit of the NLRC. Upon appeal, the NLRC set aside the order and
granted reliefs to private respondent. A motion for reconsideration was
filed but was denied.
Issue: Whether or not the NLRC erred in setting aside the decision of the
Labor Arbiter which states that the case is not within NLRCs jurisdiction.
Held: No. The petitioner is a government-owned or controlled corporation
with a special charter. This places it under the scope of the civil service.
However, the guards are not employees of the petitioner. The contract of
services explicitly states that the security guards are not considered
employees of the petitioner. There being no employer-employee
relationship between the petitioner and the security guards, the
235 | L a b o r S t a n d a r d s - C a s e D i g e s t s

jurisdiction of the Civil Service Commission may not be invoked in this


case. The contract entered into by the petitioner which is merely job
contracting makes the petitioner an indirect employer. The issue,
therefore, is whether or not an indirect employer is bound by the rulings of
the
NLRC.
Notwithstanding that the petitioner is a government agency, its liabilities,
which are joint and solidary with that of the contractor, are provided in
Articles 106, 107 and 109 of the Labor Code. This places the petitioners
liabilities under the scope of the NLRC. Moreover, Book Three, Title II on
Wages specifically provides that the term "employer" includes any person
acting directly or indirectly in the interest of an employer in relation to an
employee and shall include the Government and all its branches,
subdivisions and instrumentalities, all government-owned or controlled
corporation and institutions as well as non-profit private institutions, or
organizations. The NLRC, therefore, did not commit grave abuse of
discretion in assuming jurisdiction to set aside the Order of dismissal by
the Labor Arbiter.
Definition Labor Code Article 97(f)
Chavez vs. NLRC
G.R. No. 146530
PEDRO CHAVEZ vs.
NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING,
INC. AND ALVIN LEE
January 17, 2005

Facts: The respondent company, Supreme Packaging, Inc., is in the


business of manufacturing cartons and other packaging materials for
export and distribution. It engaged the services of the petitioner, Pedro
Chavez, as truck driver on October 25, 1984. Sometime in 1992, the
petitioner expressed to respondent Alvin Lee, respondent companys plant
manager, his (the petitioners) desire to avail himself of the benefits that
the regular employees were receiving such as overtime pay, nightshift
differential pay, and 13th month pay, among others. Although he
promised to extend these benefits to the petitioner, respondent Lee failed
to actually do so. On February 20, 1995, the petitioner filed a complaint
for regularization with the Regional Arbitration Branch No. III of the NLRC
in San Fernando, Pampanga. Before the case could be heard, respondent
company terminated the services of the petitioner. Consequently, on May
236 | L a b o r S t a n d a r d s - C a s e D i g e s t s

25, 1995, the petitioner filed an amended complaint against the


respondents for illegal dismissal, unfair labor practice and non-payment of
overtime pay, nightshift differential pay, 13th month pay, among others.
The respondents, for their part, denied the existence of an employeremployee relationship between the respondent company and the
petitioner. They averred that the petitioner was an independent
contractor. The respondents insisted that the petitioner had the sole
control over the means and methods by which his work was
accomplished. He paid the wages of his helpers and exercised control over
them.

The Labor Arbiter found the respondents guilty of illegal dismissal because
the petitioner was a regular employee of the respondent company as he
was performing a service that was necessary and desirable to the latters
business. Moreover, it was noted that the petitioner had discharged his
duties as truck driver for the respondent company for a continuous and
uninterrupted period of more than ten years. The respondents were
ordered to pay backwages, separation pay, 13 th month pay and service
incentive leave pay. The respondents appealed to NLRC but it was
dismissed as the Commission affirmed the decision of the Labor Arbiter.
However, upon motion for reconsideration, the NLRC reversed its earlier
decision holding that no employer-employee relationship existed between
the respondent and petitioner. Upon appeal, the CA upheld the Labor
Arbiters decision. But on motion for reconsideration by the respondents,
the CA made a compelete turn-around, upholding the contract of service
between the petitioner and the respondent company. The fact that the
petitioner had been with the respondent company for more than ten years
was, according to the CA, of no moment because his status was
determined not by the length of service but by the contract of service.

Issue: Whether or not there existed an employer-employee relationship


between the respondent company and the petitioner.

Held: Yes. The elements to determine the existence of an employment


relationship are: (1) the selection and engagement of the employee; (2)
the payment of wages; (3) the power of dismissal; and (4) the employers
power to control the employees conduct. All the four elements are
present in this case. First. Undeniably, it was the respondents who
engaged the services of the petitioner without the intervention of a third
party. Second. Wages are defined as "remuneration or earnings, however
237 | L a b o r S t a n d a r d s - C a s e D i g e s t s

designated, capable of being expressed in terms of money, whether fixed


or ascertained on a time, task, piece or commission basis, or other
method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work
done or to be done, or for service rendered or to be rendered." That the
petitioner was paid on a per trip basis is not significant. This is merely a
method of computing compensation and not a basis for determining the
existence or absence of employer-employee relationship. Third. The
respondents power to dismiss the petitioner was inherent in the fact that
they engaged the services of the petitioner as truck driver. Fourth, the
element of control has been proven by evidence.
No Work, No Pay
Aklan Electric Corporation vs. NLRC
G.R. No. 121439
AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO) vs.
NATIONAL LABOR RELATIONS COMMISSION, RODOLFO M. RETISO
AND 165 OTHERS
January 25, 2000

Facts: On January 22, 1991, by way of a resolution of the Board of


Directors of AKELCO, it allowed the temporary holding of office at Amon
Theater, Kalibo, Aklan upon the recommendation of Atty. Leovigildo
Mationg, then project supervisor, on the ground that the office at Lezo,
Aklan was dangerous and unsafe. Majority of the employees including the
herein complainants, continued to report for work at Lezo, Aklan and were
paid of their salaries. The complainants claimed that transfer of office
from Lezo, Aklan to Kalibo, Aklan was illegal because it failed to comply
with the legal requirements under P.D. 269, thus the they remained and
continued to work at the Lezo Office until they were illegally locked out
therefrom by the respondents. Despite the illegal lock out however,
complainants continued to report daily to the location of the Lezo Office,
prepared to continue in the performance of their regular duties.
Complainants who continuously reported for work at Lezo, Aklan were not
paid their salaries from June 1992 up to March 18, 1993.

238 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Labor Arbiter dismissed the complaints. NLRC reversed and set aside the
Labor Arbiters decision and ruling that private respondents are entitled to
unpaid wages.

Issue: Whether or not NLRC committed grave abuse of discretion


amounting to excess or want of jurisdiction when it reversed the finding of
the Labor Arbiter that private respondent refused to work under the lawful
orders of the petitioner AKELCO management; hence they are covered by
the "no work, no pay" principle and are thus not entitled to the claim for
unpaid wages from June 16, 1992 to March 18, 1993.

Held: Yes. We hold that public respondent erred in merely relying on the
computations of compensable services submitted by private respondents.
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 has been established that the
petitioner's business office was transferred to Kalibo and all its
equipments, records and facilities were transferred thereat and that it
conducted its official business in Kalibo during the period in question. It
was incumbent upon private respondents to prove that they indeed
rendered services for petitioner, which they failed to do.

The age-old rule governing the relation between labor and capital, or
management and employee of a "fair day's wage for a fair day's labor"
remains as the basic factor in determining employees' wages. If there is
no work performed by the employee there can be no wage or pay unless,
of course, the laborer was able, willing and ready to work but was illegally
locked out, suspended or dismissed, or otherwise illegally prevented from
working, a situation which we find is not present in the instant case. It
would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they
did not render services at the Kalibo office during the stated period.
Sugue vs. Triumph International
G.R. No. 164804
VIRGINIA A. SUGUE AND THE HEIRS OF RENATO S. VALDERRAMA
vs.
TRIUMPH INTERNATIONAL (PHILS.), INC.
January 30, 2009
239 | L a b o r S t a n d a r d s - C a s e D i g e s t s

G.R. No. 164784


TRIUMPH INTERNATIONAL (PHILS.), INC. vs.
VIRGINIA A. SUGUE AND THE HEIRS OF RENATO S. VALDERRAMA
January 30, 2009
Facts: Triumph hired Sugue in May 1990 as its Assistant Manager for
Marketing and was subsequently promoted to Marketing Services Manager
with a monthly salary of P82,500.00. On the other hand, Valderrama was
hired in April 1993 as Direct Sales Manager with a monthly salary of
P121,000.00. On June 1, 2000, Sugue and Valderrama filed a complaint
with the NLRC against Triumph for payment of money claims arising from
allegedly unpaid vacation and sick leave credits, birthday leave and 14th
month pay for the period 1999-2000.

On June 19, 2000, Sugue and Valderrama personally attended the


preliminary conference of the said case. The following day, Triumphs
Personnel Manager, Ralph Funtila, issued separate memoranda to Sugue
and Valderrama requiring them to inform the office of the General
Manager of their whereabouts on June 19, 2000 from 9:06 a.m. to 11:15
a.m. They replied that they attended the aforementioned preliminary
conference. Triumph charged the one-half day utilized by Sugue and
Valderrama in attending the NLRC hearing on June 19, 2000 to their
vacation leave credits. Valderrama wrote the company a letter stating that
he considered himself constructively dismissed due to the unreasonable
pressures and harassments he suffered the past months which prevented
him from effectively exercising his tasks as Direct Sales Manager.
Subsequently, Triumph issued a memorandum requiring Valderrama to
explain, under pain of dismissal, his continued absences without official
leave. Valderrama failed to respond, thus, Triumph decided to terminate
Valderramas employment for abandonment of work. Meanwhile, Sugue
also wrote the company stating that she considers herself constructively
dismissed. Then, she received a memorandum instructing her to report to
Mr. Efren Temblique, who was appointed OIC for Marketing as a result of a
reorganization prompted by Valderramas continued absences. Sugue
claimed that such act by Triumph was an outright demotion considering
that Mr. Temblique was her former assistant. Triumph required Sugue to
explain why she should not be terminated for continued absences without
official leave. Sugue failed to comply, thus, her employment was
terminated for abandonment of work. Prior to the actual termination of
their employment by Triumph, Sugue and Valderrama filed a complaint for
constructive dismissal against Triumph. Labor Arbiter Salimathar Nambi
rendered a decision, declaring that Sugue and Valderrama were
240 | L a b o r S t a n d a r d s - C a s e D i g e s t s

constructively dismissed. Triumph was ordered to pay separation pay,


backwages and damages.

Aggrieved, Triumph filed an appeal with the NLRC, which granted the
appeal and reversed the ruling of Labor Arbiter Nambi. Not satisfied with
the NLRC decision, Sugue and Valderrama elevated the matter to the CA
by way of a petition for certiorari. While the matter was pending with the
CA, Valderrama passed away and notice of his death was filed by his
counsel. The CA set aside the decision of the NLRC and reinstated the
Labor Arbiters decision. Triumphs subsequent motion for reconsideration
as well as the motion for partial reconsideration filed by Sugue and the
heirs of Valderrama were both denied by the appellate court. Hence, the
parties filed the present consolidated petitions.
Issue: Whether or not Triumph correctly deducted their half-day absence
attending the NLRC hearing on June 19, 2000 from their vacation leave
credit.

Held: Yes. We can conceive of no reason to ascribe bad faith or malice to


Triumph for charging to the leave credits of Sugue and Valderrama the
half-day that they spent in attending the preliminary conference of the
case they instituted against Triumph. It is fair and reasonable for Triumph
to do so considering that Sugue and Valderrama did not perform work for
one-half day on June 19, 2000. Indeed, we find it surprising that Sugue
and Valderrama would even have the temerity to contend that the hours
they spent in attending the hearing were compensable time. As the NLRC
correctly pointed out, as early as the case of J.B. Heilbronn Co. v. National
Labor Union, this Court held that: When the case of strikes, and
according to the CIR even if the strike is legal, strikers may not collect
their wages during the days they did not go to work, for the same reasons
if not more, laborers who voluntarily absent themselves from work to
attend the hearing of a case in which they seek to prove and establish
their demands against the company, the legality and propriety of which
demands is not yet known, should lose their pay during the period of such
absence from work. The age-old rule governing the relation between labor
and capital or management and employee is that a "fair day's wage for a
fair day's labor." If there is no work performed by the employee there can
be no wage or pay, unless of course, the laborer was able, willing and
ready to work but was illegally locked out, dismissed or suspended. It is
hardly fair or just for an employee or laborer to fight or litigate against his
employer on the employer's time.
241 | L a b o r S t a n d a r d s - C a s e D i g e s t s

In a case where a laborer absents himself from work because of a strike or


to attend a conference or hearing in a case or incident between him and
his employer, he might seek reimbursement of his wages from his union
which had declared the strike or filed the case in the industrial court. Or,
in the present case, he might have his absence from his work charged
against his vacation leave.
Equal Pay for Work of Equal Value ILO Convention 100 (1951)
International School alliance of Education vs. Quisumbing
G.R. No. 128845
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs.
HON. LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND
EMPLOYMENT;
HON.
CRESENCIANO
B.
TRAJANO,
ACTING
SECRETARY OF LABOR AND EMPLOYMENT; DR. BRIAN MACCAULEY,
SUPERINTENDENT
OF
INTERNATIONAL
SCHOOLMANILA,
INTENRATIONAL SCHOOL, INC.
June 01, 2000
Facts: The International School Manila (ISM), under Presidential Decree
732, is a domestic educational institution established primarily for
dependents of foreign diplomatic personnel and other temporary
residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to employ its own teaching and
management personnel selected by it either locally or abroad, from
Philippine or other nationalities, such personnel being exempt from
otherwise applicable laws and regulations attending their employment,
except laws that have been or will be enacted for the protection of
employees.
The local-hires union of the ISM were crying foul over the disparity in
wages that they got compared to that of their foreign teaching
counterparts. The School grants foreign-hires certain benefits to the
foreign hires such as housing, transportation, and 25% more pay than
locals under the theory of (a) the "dislocation factor" and (b) limited
tenure. The first was grounded on leaving his home country, the second
was on the lack of tenure when he returns home. The negotiations
between the school and the union caused a deadlock between the parties.
The DOLE resolved in favor of the school, while DOLE Secretary
Quisumbing denied the unions motion for reconsideration He said, The
Union cannot also invoke the equal protection clause to justify its claim of
parity. It is an established principle of constitutional law that the
guarantee of equal protection of the laws is not violated by legislation or
private covenants based on reasonable classification. A classification is
reasonable if it is based on substantial distinctions and apply to all
members of the same class. Verily, there is a substantial distinction
242 | L a b o r S t a n d a r d s - C a s e D i g e s t s

between foreign hires and local hires, the former enjoying only a limited
tenure, having no amenities of their own in the Philippines and have to be
given a good compensation package in order to attract them to join the
teaching faculty of the School. The union appealed to the Supreme Court.
The petitioner called the hiring system discriminatory and racist. The
school alleged that some local hires were in fact of foreign origin. They
were paid local salaries.
Issue: Whether or not the Schools system of compensation is violative of
the principle of equal pay for equal work.
Held: Yes. The Constitution also directs the State to promote "equality of
employment opportunities for all." Similarly, the Labor Code provides that
the State shall "ensure equal work opportunities regardless of sex, race or
creed. Article 248 declares it an unfair labor practice for an employer to
discriminate in regard to wages in order to encourage or discourage
membership in any labor organization. In this jurisdiction, there is the
term equal pay for equal work, pertaining to persons being paid with
equal salaries and have similar skills and similar conditions. There was no
evidence here that foreign-hires perform 25% more efficiently or
effectively than the local-hires. For the same reason, the "dislocation
factor" and the foreign-hires' limited tenure also cannot serve as valid
bases for the distinction in salary rates. The dislocation factor and limited
tenure affecting foreign-hires are adequately compensated by certain
benefits accorded them which are not enjoyed by local-hires, such as
housing, transportation, shipping costs, taxes and home leave travel
allowances.
Persons who work with substantially equal qualifications, skill, effort and
responsibility, under similar conditions, should paid similar salaries. If an
employer accords employees the same position and rank, the
presumption is that these employees perform equal work. This
presumption is borne by logic and human experience. If the employer has
discriminated against an employee, it is for the employer to explain why
the employee is treated unfairly. This rule applies to the School,
notwithstanding its international character.
Form Agreement for Compensation of Services Labor Code
Article 97(f)
Arms Taxi vs. NLRC
G.R. No. 104523
ARMS TAXI AND/OR DOROTHEA TANONGON vs.
NATIONAL LABOR RELATIONS, AND LUDIVICO CULLA
March 08, 1993
243 | L a b o r S t a n d a r d s - C a s e D i g e s t s

G.R. No. 104526


LUDIVICO CULLA vs.
NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER,
SPOUSES NORBERTO TANONGON AND DOROTHEA TANONGON
AND/OR ARMS TAXI, AND AIDA DELA CRUZ
Facts: The spouses Tanongon own and operate taxicabs under the names
of Arms Taxi and Lin-lin Taxi. However, the taxicabs are registered
under the kabit systemin the name of Aida dela Cruz who holds a
certificate of public convenience to operate a taxicab service. In the early
1980, Culla was hired by the Tanongon spouses to work as mechanic, shop
manager, garage caretaker, dispatches and liaison man in their taxi
business, at a monthly salary of P5,000 plus commission on the daily or
monthly gross income of the business in addition to the payment of his
Social Security System (SSS) premium. On June 11, 1986, without Cullas
consent, the Tanongon spouses asked one of their taxi drivers to force
open his quarters in the Tanongon compound in Cainta, Rizal. They
removed his personal belongings and brought them to his residence in
Sta. Ana, Manila.
Culla filed with the arbitration branch of the then Ministry of Labor and
Employment, a complaint alleging that his ejectment from his living
quarters and dismissal from employment were illegal because there was
no prior investigation or written notice of the charges against him. His
dismissal was allegedly due to his demands for payment of the benefits,
percentage and privileges, and premium to the SSS. He prayed for
reinstatement with backwages, plus his commission of 15% of the gross
income of the taxi business with legal interest plus damages.
In their position paper, the Tanongon spouses denied that they were the
operators of the Arms Taxi and Lin-lin Taxi. They denied the existence of
employer-employee relationship between them and Culla as they averred
that Arms Taxi is owned and operated by Aida dela Cruz and the
ownership of Lin-Lin Taxi has not been transferred to them. On the other
hand, dela Cruz denied that she hired Culla and averred at the most, Culla
could be considered as an independent contractor paid on a piece-work
basis and therefore, he was not entitled to regular benefits, much less to
the alleged 15% commission.
The Labor Arbiter found for Culla, declaring that Culla was and employee
of the Tanongon spouses, that Culla was illegally dismissed and that Aida
dela Cruz should be considered an indirect employer of Culla. However, he
denied Cullas claim for 15% commission on the gross earnings of the taxi
business as Culla failed to substantially prove the same by precise,
concrete and convincing evidence. The agreement on the commission
should have been in writing, note or memorandum, and subscribed by
the parties, to be enforceable. Furthermore, Culla was not entitled to the
13th month pay under P.D. No. 851 and to overtime pay, for time was not
of the essence in his kind of employment. The parties appealed to the
NLRC.
244 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the payment to him of P5,000 a month for his
service was in partial fulfillment of Tanongons promise to pay him a 15%
commission, removing said requirement from coverage of the Statue of
Frauds.
Held: No. Cullas reference to the Statute of Frauds under Article 1403,
paragraph 2 of the Civil Code is misplaced. An agreement for
compensation of service rendered is not one of the contracts mentioned in
1403 which must be in writing to be enforceable by action. The payment
of a P5,000 monthly salary to the petitioner for his services may not be
considered as partial compliance by his employers with the alleged
agreement to pay him a commission or percentage of the daily earnings of
their taxi business because, as correctly pointed out by the Solicitor
General, a salary is different from a commission. While a salary is a fixed
compensation for regular work or for continuous service rendered over a
period of time, a commission is a percentage or allowance made to a
factor or agent for transacting business for another. Thus, before invoking
the exception to the Statute of Frauds, petitioner should have proven that
he had received a commission, or a part of it, in the past.
Furthermore, as aptly noted by the NLRC, if it were true that there had
been an agreement regarding the payment of a 15% commission to him,
the petitioner would not have waited almost 6 years to claim it.
Considerable delay in asserting ones right is strongly persuasive of the
lack of merit of ones own claim.
Determination of Compliance with Minimum Wage
Iran vs. NLRC
G.R. No. 121927
ANTONIO W. IRAN (doing business under the name and style of
Tones Iran Enterprises) vs.
NATIONAL LABOR RELATIONS COMMISSION (Fourth Division),
GODOFREDO O. PETRALBA, MORENO CADALSO, PEPITO TECSON,
APOLINARIO GOTHONG GEMINA, JESUS BANDILAO, EDWIN
MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M.
COLINA
April 22, 1998
Facts: Petitioner Antonio Iran is engaged in softdrinks merchandising and
distribution in Mandaue City, Cebu, employing truck drivers who double as
salesmen, truck helpers, and non-field personnel in pursuit
thereof. Petitioner hired private respondents Godofredo Petralba, Moreno
245 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Cadalso, Celso Labiaga and Fernando Colina as drivers/salesmen while


private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao,
Edwin Martin and Diosdado Gonzalgo were hired as truck helpers.
Drivers/salesmen drove petitioners delivery trucks and promoted, sold and
delivered softdrinks to various outlets in Mandaue City. The truck helpers
assisted in the delivery of softdrinks to the different outlets covered by the
driver/salesmen.
Sometime in June 1991, petitioner, while conducting an audit of his
operations, discovered cash shortages and irregularities allegedly
committed by private respondents. Pending the investigation of
irregularities and settlement of the cash shortages, petitioner required
private respondents to report for work everyday. They were not allowed,
however, to go on their respective routes. A few days thereafter, despite
aforesaid order, private respondents stopped reporting for work,
prompting petitioner to conclude that the former had abandoned their
employment. Consequently, petitioner terminated their services. He also
filed on November 7, 1991, a complaint for estafa against private
respondents.
On the other hand, private respondents, on December 5, 1991, filed
complaints against petitioner for illegal dismissal, illegal deduction,
underpayment of wages, premium pay for holiday and rest day, holiday
pay, service incentive leave pay, 13th month pay, allowances, separation
pay, recovery of cash bond, damages and attorneys fees.
The labor arbiter found that petitioner had validly terminated private
respondents,
there
being
just
cause
for
the
latters
dismissal. Nevertheless, he also ruled that petitioner had not complied
with minimum wage requirements in compensating private respondents,
and had failed to pay private respondents their 13 th month pay. NLRC
affirmed private respondents dismissal. Hence, the petition.
Issue: Whether or not commissions are included in determining
compliance with the minimum wage requirement.
Held: Art. 97(f) 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, or commission
basis, or other method of calculating the same, which is payable by an
employer to an employee under a written or unwritten contract of
employment for work done or to be done, or for services rendered or to be
rendered and includes the fair and reasonable value, as determined by the
Secretary of Labor, of board, lodging, or other facilities customarily
furnished by the employer to the employee.
This definition explicitly includes commissions as part of wages. While
commissions are, indeed, incentives or forms of encouragement to inspire
employees to put a little more industry on the jobs particularly assigned to
246 | L a b o r S t a n d a r d s - C a s e D i g e s t s

them, still these commissions are direct remunerations for services


rendered. In fact, commissions have been defined as the recompense,
compensation or reward of an agent, salesman, executor, trustee,
receiver, factor, broker or bailee, when the same is calculated as a
percentage on the amount of his transactions or on the profit to the
principal. The nature of the work of a salesman and the reason for such
type of remuneration for services rendered demonstrate clearly that
commissions are part of a salesmans wage or salary. Thus, the
commissions earned by private respondents in selling softdrinks constitute
part of the compensation or remuneration paid to drivers/salesmen and
truck helpers for serving as such, and hence, must be considered part of
the wages paid them.
Likewise, there is no law mandating that commissions be paid only after
the minimum wage has been paid to the employee. Verily, the
establishment of a minimum wage only sets a floor below which an
employees remuneration cannot fall, not that commissions are excluded
from wages in determining compliance with the minimum wage law.
Facilities and Supplements/ Allowances
Millares vs NLRC & PCIOP
G.R. No. 122827
LIDUVINO M. MILLARES, J. CAPISTRANO CORDITA, SHIRLEY P. UY,
et al. vs.
NATIONAL LABOR RELATIONS COMMISSION, (FIFTH DIVISION) and
PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP)
March 29, 1999
Facts: Petitioners numbering one hundred sixteen (116) occupied the
positions of Technical Staff, Unit Manager, Section Manager, Department
Manager, Division Manager and Vice President in the mill site of
respondent Paper Industries Corporation of the Philippines (PICOP) in
Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback
allegedly brought about by the joint impact of restrictive government
regulations on logging and the economic crisis. To avert further losses, it
undertook a retrenchment program and terminated the services of
petitioners. Accordingly, petitioners received separation pay computed at
the rate of one (1) month basic pay for every year of service. Believing
however that the allowances they allegedly regularly received on a
monthly basis during their employment should have been included in the
computation thereof they lodged a complaint for separation pay
differentials.

247 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Applying Art.,97, par. (f), of the Labor Code which defines if wage," the
Executive Labor Arbiter opined that the subject allowances, being
customarily furnished by respondent PICOP and regularly received by
petitioners, formed part of the latter's wages. Resolving the controversy
from another angle, on the strength of the ruling in Santos v. NLRC and
Soriano v. NLRC that in the computation of separation pay account should
be taken not just of the basic salary but also of the regular allowances
that the employee had been receiving, he concluded that the allowances
should be included in petitioners' base pay. Thus respondent PICOP was
ordered on 28 April 1994 to pay petitioners Four Million Four Hundred
Eighty-One Thousand Pesos (P4,481,000.00) representing separation pay
differentials plus ten per cent (10%) thereof as attorney's fees.
The National Labor Relations did not share the view of the Executive Labor
Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing
that the allowances did not form part of the salary base used in computing
separation pay.
Issue: Whether or not petitioners allowances are included in the
definition of "facilities" in Article 97, par. (f), of the Labor Code.
Held: "Customary" is founded on long-established and constant
practice connoting regularity. The receipt of an allowance on a monthly
basis does not ipso facto characterize it as regular and forming part of
salary because the nature of the grant is a factor worth considering. On
the other hand, the transportation allowance is in the form of advances for
actual transportation expenses subject to liquidation x x x given only to
employees who have personal cars.
The Bislig allowance is given to Division Managers and corporate officers
assigned in Bislig, Surigao del Norte. Once the officer is transferred
outside Bislig, the allowance stops. The Court added that in the availment
of the transportation allowance, respondent PICOP set another
requirement that the personal cars be used by the employees in the
performance of their duties. When the conditions for availment ceased to
exist, the allowance reached the cutoff point. The finding of the NLRC
along the same line likewise merits concurrence, i.e., petitioners'
continuous enjoyment of the disputed allowances was based on
contingencies the occurrence of which wrote finis to such enjoyment.
Although it is quite easy to comprehend "board" and "lodging," it is not so
with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing
the Labor Code gives meaning to the term as including articles or services
for the benefit of the employee or his family but excluding tools of the
trade or articles or service primarily for the benefit of the employer or
necessary to the conduct of the employer's business. The Staff /Manager's
allowance may fall under "lodging" but the transportation and Bislig
allowances are not embraced in "facilities" on the main consideration that
they are granted as well as the Staff/Manager's allowance for respondent
248 | L a b o r S t a n d a r d s - C a s e D i g e s t s

PICOP's benefit and convenience, i.e., to insure that petitioners render


quality performance. In determining whether a privilege is a facility, the
criterion is not so much its kind but its purpose.
Cash Wage/ Commission
Songco vs. NLRC
G.R. No. L-50999
JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL vs.
NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION),
LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC.
March 23, 1990
Facts: Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as
Zuellig) filed with the Department of Labor (Regional Office No. 4) an
application seeking clearance to terminate the services of petitioners Jose
Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as
petitioners) allegedly on the ground of retrenchment due to financial
losses. This application was seasonably opposed by petitioners alleging
that the company is not suffering from any losses. They alleged further
that they are being dismissed because of their membership in the union.
At the last hearing of the case, however, petitioners manifested that they
are no longer contesting their dismissal. The parties then agreed that the
sole issue to be resolved is the basis of the separation pay due to
petitioners. Petitioners, who were in the sales force of Zuellig received
monthly salaries of at least P40,000. In addition, they received
commissions for every sale they made.
On June 26,1978, the Labor Arbiter rendered a decision, ordering to pay
the complainants separation pay equivalent to their one month salary
(exclusive of commissions, allowances, etc.) for every year of service that
they have worked with the company. The appeal by petitioners to the
National Labor Relations Commission was dismissed for lack of merit.
Hence, the present petition.
Issue: Whether or not earned sales commissions and allowances should
be included in the monthly salary of petitioners for the purpose of
computation of their separation pay.
Held: Insofar as the issue of whether or not allowances should be
included in the monthly salary of petitioners for the purpose of
computation of their separation pay is concerned, this has been settled in
the case of Santos v. NLRC, et al., G.R. No. 76721, September 21, 1987,
154 SCRA 166, where We ruled that "in the computation of backwages and
separation pay, account must be taken not only of the basic salary of
249 | L a b o r S t a n d a r d s - C a s e D i g e s t s

petitioner but
allowances."

also

of

her

transportation

and

emergency

living

Article 97(f) by itself is explicit that commission is included in the


definition of the term "wage". It has been repeatedly declared by the
courts that where the law speaks in clear and categorical language, there
is no room for interpretation or construction; there is only room for
application. A plain and unambiguous statute speaks for itself, and any
attempt to make it clearer is vain labor and tends only to obscurity.
However, it may be argued that if We correlate Article 97(f) with Article
XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code
and Sections 9(b) and 10 of the Implementing Rules, there appears to be
an ambiguity.
Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the
implementing rules in conjunction with Articles 273 and 274 (sic) of the
Code specifically states that the basis of the termination pay due to one
who is sought to be legally separated from the service is 'his latest salary
rates. Even Articles 273 and 274 (sic) invariably use 'monthly pay or
monthly salary'.
The above terms found in those Articles and the particular Rules were
intentionally used to express the intent of the framers of the law that for
purposes of separation pay they mean to be specifically referring to salary
only. Each particular benefit provided in the Code and other Decrees on
Labor has its own pecularities and nuances and should be interpreted in
that light. Thus, for a specific provision, a specific meaning is attached to
simplify matters that may arise there from. The general guidelines in (sic)
the formation of specific rules for particular purpose. Thus, that what
should be controlling in matters concerning termination pay should be the
specific provisions of both Book VI of the Code and the Rules. At any rate,
settled is the rule that in matters of conflict between the general provision
of law and that of a particular- or specific provision, the latter should
prevail.
Boie Takeda vs. De La Serna
G.R. No. 92174
BOIE-TAKEDA CHEMICALS, INC. vs.
HON. DIONISIO DE LA SERNA, Acting Secretary of the Department
of Labor and Employment
December 10, 1993

250 | L a b o r S t a n d a r d s - C a s e D i g e s t s

G.R. No. L-102552


PHILIPPINE FUJI XEROX CORP. vs.
CRESENCIANO B. TRAJANO, Undersecretary of the Department of
Labor and Employment, and PHILIPPINE FUJI XEROX EMPLOYEES
UNION
December 10, 1993
Facts: A routine inspection was conducted on May 2, 1989 in the
premises of petitioner Boie-Takeda Chemicals, Inc. by Labor
and Development Officer Reynaldo B. Ramos under Inspection Authority
No. 4-209-89. Finding that Boie-Takeda had not been including the
commissions earned by its medical representatives in the computation of
their 13th month pay, Ramos served a Notice of Inspection Results on
Boie-Takeda through its president, Mr. Benito Araneta, requiring BoieTakeda within ten (10) calendar days from notice to effect restitution or
correction of "the underpayment of 13th month pay for the year(s) 1986,
1987 and 1988 of Med Rep (Revised Guidelines on the Implementation of
13th month pay # 5) in the total amount of P558,810.89."
Boie-Takeda wrote the Labor Department contesting the Notice of
Inspection Results. Regional Director Luna C. Piezas directed Boie-Takeda
to appear before his Office on June 9 and 16, 1989. On the appointed
dates, however, and despite due notice, no one appeared for Boie-Takeda,
and the matter had perforce to be resolved on the basis of the evidence at
hand. On July 24, 1989, Director Piezas issued an Order directing BoieTakeda to pay itsmedical representatives and its managers the total
amount of FIVE HUNDRED SIXTY FIVE THOUSAND SEVEN HUNDRED FORTY
SIX AND FORTY SEVEN CENTAVOS (P565,746.47) representing
underpayment of thirteenth (13th) month pay for the years 1986, 1987,
and 1988. A motion for reconsideration was seasonably filed by BoieTakeda with the Labor Secretary who affirmed the July 24, 1989 Order with
modification.
Issue: Whether or not the respondent labor officials in computing the
thirteen month pay committed "grave abuse of discretion amounting to
lack of jurisdiction".
Held: In remunerative schemes consisting of a fixed or guaranteed wage
plus commission, the fixed or guaranteed wage is patently the "basic
salary" for this is what the employee receives for a standard work period.
Commissions are given for extra efforts exerted in consummating sales or
other related transactions. They are, as such, additional pay, which this
Court has made clear do not form part of the "basic salary."

251 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Respondents would do well to distinguish this case from Songco


vs. National Labor Relations Commission, supra, upon which they rely so
heavily. What was involved therein was the term "salary" without the
restrictive adjective "basic". Thus, in said case, the Court construed the
term in its generic sense to refer to all types of "direct remunerations for
services rendered," including commissions. In the same case, the Court
also took judicial notice of the fact "that some salesmen do not receive
any basic salary but depend on commissions and allowances or
commissions alone, although an employer-employee relationship exists,"
which statement is quite significant in that it speaks of a "basic salary"
apart and distinct from "commissions" and "allowances". Instead of
supporting respondents' stand, it would appear that Songco itself
recognizes that commissions are not part of "basic salary."
In including commissions in the computation of the 13th month pay, the
second paragraph of Section 5(a) of the Revised Guidelines on the
Implementation of the 13th Month Pay Law unduly expanded the concept
of "basic salary" as defined in P.D. 851. It is a fundamental rule that
implementing rules cannot add to or detract from the provisions of the law
it is designed to implement. Administrative regulations adopted under
legislative authority by a particular department must be in harmony with
the provisions of the law they are intended to carry into effect. They
cannot widen its scope. An administrative agency cannot amend an act of
Congress.
Philippine Duplicators vs. NLRC
G.R. No. 110068
PHILIPPINE DUPLICATORS, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE
DUPLICATORS EMPLOYEES UNION-TUPAS
February 15, 1995

Facts: On 17 January 1994, petitioner Duplicators filed (a) a Motion for


Leave to Admit Second Motion for Reconsideration and (b) a Second
Motion for Reconsideration. This time, petitioner invoked the decision
handed down by this Court, through its Second Division, on 10 December
1993 in the two (2) consolidated cases of Boie-Takeda Chemicals,
Inc. vs. Hon. Dionisio
de
la
Serna and Philippine
Fuji
Xerox
Corp. vs. Hon. Cresenciano B.Trajano, in G.R. Nos. 92174 and 102552,
respectively. In its decision, the Second Division inter alia declared null
and void the second paragraph of Section 5 (a) of the Revised Guidelines
issued by then Secretary of Labor Drilon. Petitioner submits that the
decision in the Duplicators case should now be considered as having been
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abandoned or reversed by the Boie-Takeda decision, considering that the


latter went "directly opposite and contrary to" the conclusion reached in
the former. Petitioner prays that the decision rendered in Duplicators be
set aside and another be entered directing the dismissal of the money
claims of private respondent Philippine Duplicators' Employees' Union.
Issue: Whether or not private respondent employees were entitled to
13th month computed on the basis of their fixed wages plus sales
commissions.
Held: If an employer cannot be compelled to pay a productivity bonus to
his employees, it should follow that such productivity bonus, when given,
should not be deemed to fall within the "basic salary" of employees when
the time comes to compute their 13th month pay.
The Court observed that the third item excluded from the term "basic
salary" is cast in open ended and apparently circular terms: "other
remunerations which are not part of the basic salary." However, what
particular types of earnings and remuneration are or are not properly
included or integrated in the basic salary are questions to be resolved on
a case to case basis, in the light of the specific and detailed facts of each
case. In principle, where these earnings and remuneration are closely akin
to fringe benefits, overtime pay or profit-sharing payments, they are
properly excluded in computing the 13th month pay. However, sales
commissions which are effectively an integral portion of the basic salary
structure of an employee, shall be included in determining his 13th month
pay.
The Court recognized that both productivity bonuses and sales
commissions may have an incentive effect. But there is reason to
distinguish one from the other here. Productivity bonuses are generally
tied to the productivity or profit generation of the employer corporation.
Productivity bonuses are not directly dependent on the extent an
individual employee exerts himself. A productivity bonus is something
extra for which no specific additional services are rendered by any
particular employee and hence not legally demandable, absent a
contractual undertaking to pay it. Sales commissions, on the other hand,
such as those paid in Duplicators, are intimately related to or directly
proportional to the extent or energy of an employee's endeavors.
Commissions are paid upon the specific results achieved by a salesmanemployee. It is a percentage of the sales closed by a salesman and
operates as an integral part of such salesman's basic pay.
Finally, the statement of the Second Division in Boie-Takeda declaring null
and void the second paragraph of Section 5(a) of the Revised Guidelines
Implementing the 13th Month Pay issued by former Labor Secretary
Drilon, is properly understood as holding that that second paragraph
provides no legal basis for including within the term "commission" there
used additional payments to employees which are, as a matter of fact, in
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the nature of profit-sharing payments or bonuses. If and to the extent that


such second paragraph is so interpreted and applied, it must be regarded
as invalid as having been issued in excess of the statutory authority of the
Secretary of Labor. That same second paragraph however, correctly
recognizes that commissions, like those paid in Duplicators, may
constitute part of the basic salary structure of salesmen and hence should
be included in determining the 13th month pay; to this extent, the second
paragraph is and remains valid.
Gratuity, Salary, and Wages; Differences
Plastic Town Center Corporation vs. NLRC
G.R. No. 81176
PLASTIC TOWN CENTER CORPORATION vs.
NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG
LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN
April 19, 1989
Facts: On September 7,1984, the respondent Nagkakaisang Lakas ng
Manggagawa (NLM)-Katipunan filed a complaint dated August 30, 1984.
Complainant sustains the view that a month salary pertains to salary for
30 days, citing the provision of the Civil Code on the matter.
On August 30, 1987, the respondent labor union appealed to the National
Labor Relations Commission. The NLRC reversed the questioned decision
and ordered the respondent to grant Pl.00 increase for July 1, 1984 and
the equivalent of thirty days salary in gratuity pay, as required by its CBA
with the complainants. The motion for reconsideration of said decision was
denied on December 7, 1987. Hence, this petition.
Issue: Whether or not the one month salary for daily paid workers should
be computed on the basis of twenty-six (26) days and not thirty (30) days
since daily wage workers do not work every day of the month including
Sundays and holidays.
Held: No. The Court finds no abuse of discretion on the part of the NLRC
in granting gratuity pay equivalent to one month or 30 days salary. From
the foregoing, gratuity pay is therefore, not intended to pay a worker for
actual services rendered. It is a money benefit given to the workers whose
purpose is "to reward employees or laborers, who have rendered
satisfactory and efficient service to the company." (Sec. 2, CBA) While it
may be enforced once it forms part of a contractual undertaking, the grant
of such benefit is not mandatory so as to be considered a part of labor
standard law unlike the salary, cost of living allowances, holiday pay,
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leave benefits, etc., which are covered by the Labor Code. Nowhere has it
ever been stated that gratuity pay should be based on the actual number
of days worked over the period of years forming its basis. We see no point
in counting the number of days worked over a ten-year period to
determine the meaning of "two and one- half months' gratuity."
The Civil Code also provides that when months are not designated by
name, a month is understood to be thirty (30) days. The provision applies
under the circumstances of this case.
Effect on Benefits
Davao Fruits Corporation vs. Associated Labor Union
G.R. No. 85073
DAVAO FRUITS CORPORATION vs.
ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rankand-file workers/employees of DAVAO FRUITS CORPORATION and
NATIONAL LABOR RELATIONS COMMISSION
August 24, 1993
Facts: On December 28, 1982 respondent Associated Labor Unions (ALU),
for and in behalf of all the rank-and-file workers and employees of
petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82) before the
Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao
City, against petitioner, for "Payment of the Thirteenth-Month Pay
Differentials." Respondent ALU sought to recover from petitioner the
thirteenth month pay differential for 1982 of its rank-and-file employees,
equivalent to their sick, vacation and maternity leaves, premium for work
done on rest days and special holidays, and pay for regular holidays which
petitioner, allegedly in disregard of company practice since 1975,
excluded from the computation of the thirteenth month pay for 1982.
A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C.
Ramos, in favor of respondent ALU. Petitioner appealed the decision of the
Labor Arbiter to the NLRC, which affirmed the said decision accordingly
dismissed the appeal for lack of merit. Hence, the present petition.
Issue: Whether or not in the computation of the thirteenth month pay
given by employers to their employees under P.D. No. 851, payments for
sick, vacation and maternity leaves, premiums for work done on rest days
and special holidays, and pay for regular holidays may be excluded in the
computation and payment thereof, regardless of long-standing company
practice.

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Held: Clearly, the term "basic salary" includes renumerations or earnings


paid by the employer to employee, but excludes cost-of-living allowances,
profit-sharing payments, and all allowances and monetary benefits which
have not been considered as part of the basic salary of the employee as of
December 16, 1975. The exclusion of cost-of-living allowances and profit
sharing payments shows the intention to strip "basic salary" of payments
which are otherwise considered as "fringe" benefits. This intention is
emphasized in the catch all phrase "all allowances and monetary benefits
which are not considered or integrated as part of the basic salary." Basic
salary, therefore does not merely exclude the benefits expressly
mentioned but all payments which may be in the form of "fringe" benefits
or allowances. In fact, the Supplementary Rules and Regulations
Implementing P.D. No. 851 are very emphatic in declaring that overtime
pay, earnings and other remunerations shall be excluded in computing the
thirteenth month pay.
In other words, whatever compensation an employee receives for an
eight-hour work daily or the daily wage rate in the basic salary. Any
compensation or remuneration other than the daily wage rate is excluded.
It follows therefore, that payments for sick, vacation and maternity leaves,
premium for work done on rest days special holidays, as well as pay for
regular holidays, are likewise excluded in computing the basic salary for
the purpose of determining the thirteen month pay.
Regional Tripartite Wages and Productivity Board R.A. No. 6727,
Section 3; Labor Code Article 122, 126
Nasipit Lumber Company, Inc. vs. NLRC
G.R. No. 54424
NASIPIT LUMBER COMPANY, INC. vs.
NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR
ARBITER ILDEFONSO G. AGBUYA and JUANITO COLLADO
August 31, 1989
Facts: On October 20, 1990, the Region X [Tripartite Wages and
Productivity] Board issued Wage Order No. RX-01; Subsequently, a
supplementary Wage Order No. RX-01-A was issued by the Board. Upon
the effectivity of the original Wage Order RX-01, all workers and
employees in the private sector in Region X already receiving wages
above the statutory minimum wage rates up to one hundred and twenty
pesos (P120.00) per day shall also receive an increase of P13, P11, P9 per
day, as provided for under Wage Order No. RX-01;

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Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine


Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO),
claiming to be separate and distinct from each other but for expediency
and practical purposes, jointly filed an application for exemption from the
above-mentioned Wage Orders as distressed establishments under
Guidelines No. 3, issued by the herein Board on November 26, 1990,
specifically Sec. 3(2); Applicants/appellees aver that they are engaged in
logging and integrated wood processing industry but are distressed due to
conditions beyond their control.
On the other hand, oppositor/appellant Unions jointly opposed the
application for exemption on the ground that said companies are not
distressed establishments since their capitalization has not been impaired
by 25%. Dissatisfied with the RTWPBs Decision, the private respondents
lodged an appeal with the NWPC, which affirmed ALCOs application but
reversed the applications of herein petitioners, NALCO and PWC. Hence,
this recourse.
Issue: Whether or not a guideline issued by an RTWPB without the
approval of or, worse, contrary to the guidelines promulgated by the
NWPC valid.
Held: To allow RTWPB Guideline No. 3 to take effect without the approval
of the NWPC is to arrogate unto RTWPB a power vested in the NWPC by
Article 121 of the Labor Code, as amended by RA 6727. The Court will not
countenance this naked usurpation of authority. It is a hornbook doctrine
that the issuance of an administrative rule or regulation must be in
harmony with the enabling law. If a discrepancy occurs between the basic
law and an implementing rule or regulation, it is the former that
prevails. This is so because the law cannot be broadened by a mere
administrative issuance. It is axiomatic that [a]n administrative agency
cannot amend an act of Congress. Article 122 (e) of the Labor Code
cannot be construed to enable the RTWPB to decide applications for
exemption on the basis of its own guidelines which were not reviewed and
approved by the NWPC, for the simple reason that a statutory grant of
powers should not be extended by implication beyond what may be
necessary for their just and reasonable execution. Official powers cannot
be merely assumed by administrative officers, nor can they be created by
the courts in the exercise of their judicial functions.
There is no basis for petitioners claim that their vested rights were
prejudiced by the NWPCs alleged retroactive application of its own rules
which were issued on February 25, 1991 and took effect on March 18,
1991. Such claim cannot stand because Guideline No. 3, as previously
discussed and as correctly concluded by the NWPC, was not valid and,
thus, cannot be a source of a right; much less, a vested one.
Salary-Ceiling Method

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Employers Confederation of the Philippines vs. Secretary of Labor and


Employment
G.R. No. 96169
EMPLOYERS CONFEDERATION OF THE PHILIPPINES vs.
NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND
REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR,
TRADE UNION CONGRESS OF THE PHILIPPINES
September 24, 1991

Facts: On October 15, 1990, the Regional Board of the National Capital
Region issued Wage Order No. NCR-01, increasing the minimum wage by
P17.00 daily in the National Capital Region. The Trade Union Congress of
the Philippines (TUCP) moved for reconsideration; so did the Personnel
Management Association of the Philippines (PMAP). 5ECOP opposed.
On October 23, 1990, the Board issued Wage Order No. NCR-01-A
amending Wage Order No. NCR-01; ECOP appealed to the National Wages
and Productivity Commission. On November 6, 1990, the Commission
promulgated an Order, dismissing the appeal for lack of merit. On
November 14, 1990, the Commission denied reconsideration.
Issue: Whether or not Wage Order No. NCR-01-A providing for new wage
rates, as well as authorizing various Regional Tripartite Wages and
Productivity Boards to prescribe minimum wage rates for all workers in the
various regions, and for a National Wages and Productivity Commission to
review, among other functions, wage levels determined by the boards is
valid.
Held: The Supreme Court held that Republic Act No. 6727 was intended to
rationalize wages, first, by providing for full-time boards to police wages
round-the-clock, and second, by giving the boards enough powers to
achieve this objective. The Court is of the opinion that Congress meant
the boards to be creative in resolving the annual question of wages
without labor and management knocking on the legislature's door at every
turn.
The Court's opinion is that if Republic No. 6727 intended the boards alone
to set floor wages, the Act would have no need for a board but an
accountant to keep track of the latest consumer price index, or better,
would have Congress done it as the need arises, as the legislature, prior to
the Act, has done so for years. The fact of the matter is that the Act
sought a "thinking" group of men and women bound by statutory
standards. The Court is not convinced that the Regional Board of the
National Capital Region, in decreeing an across-the-board hike, performed
an unlawful act of legislation. It is true that wage-firing, like rate-fixing,
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constitutes an act Congress; it is also true, however, that Congress may


delegate the power to fix rates provided that, as in all delegations cases,
Congress leaves sufficient standards. As this Court has indicated, it is
impressed that the above-quoted standards are sufficient, and in the light
of the floor-wage method's failure, the Court believes that the Commission
correctly upheld the Regional Board of the National Capital Region.
Validity
Cagayan Sugar Milling Company vs. Secretary of Labor and Employment
G.R. No. 128399
CAGAYAN SUGAR MILLING COMPANY vs.
SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S.
MARTINEZ, SR., and CARSUMCO EMPLOYEES UNION
January 15, 1998
Facts: Regional Wage Order No. RO2-02 was issued by RTWPB on
November 1993. On September 1994, labor inspectors from DOLE
Regional Office examined the books of Cagayan Sugar Milling Company
(CSMC) to determine its compliance with the said wage order and found
out that did not implement it across the board increase. DOLE Regional
Director ruled that CSMC indeed violated the said order. CSMC, dissatisfied
with ruling, appealed to Labor Secretary Quisumbing. On the same date,
RTWPB issued Wage Order No. RO20-02-A amending the former wage
order.
Issue: Whether or not Wage Order No. RO20-02-A is valid.
Held: No. The Court held that Wage Order No. RO20-02-A is indeed null
and void since it did not undergo the correct procedure of how a wage
order is to be issued. Any Wage Order shall only take effect after 15 days
from its complete publication in at least one general circulation on the
region and undergo public hearings and consultations and giving notice to
any party that has interest or will be affected by such wage order. And,
CSMC was found to have complied with Wage RO2-02.
Wage Distortion
Prubankers Association vs. Prudential Bank & Trust Company
G.R. No. 131247

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PRUBANKERS ASSOCIATION vs.


PRUDENTIAL BANK & TRUST COMPANY
January 25, 1999
Facts: On November 18, 1993, the Regional Tripartite Wages and
Productivity Board of Region V issued Wage Order No. RB 05-03 which
provided for a Cost of Living Allowance (COLA) to workers in the private
sector who ha[d] rendered service for at least three (3) months before its
effectivity, and for the same period [t]hereafter, in the following
categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities
of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the
municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN
PESOS (P10.00) for all other areas in the Bicol Region.
Subsequently on November 23, 1993, the Regional Tripartite Wages and
Productivity Board of Region VII issued Wage Order No. RB VII-03, which
directed the integration of the COLA mandated pursuant to Wage Order
No. RO VII-02-A into the basic pay of all workers. It also established an
increase in the minimum wage rates for all workers and employees in the
private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu,
Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of
Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and
the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran.
The petitioner then granted a COLA of P17.50 to its employees at its Naga
Branch, the only branch covered by Wage Order No. RB 5-03, and
integrated the P150.00 per month COLA into the basic pay of its rank-andfile employees at its Cebu, Mabolo and P. del Rosario branches, the
branches covered by Wage Order No. RB VII-03.
On June 7, 1994, respondent Prubankers Association wrote the petitioner
requesting that the Labor Management Committee be immediately
convened to discuss and resolve the alleged wage distortion created in
the salary structure upon the implementation of the said wage
orders. Respondent Association then demanded in the Labor Management
Committee meetings that the petitioner extend the application of the
wage orders to its employees outside Regions V and VII, claiming that the
regional implementation of the said orders created a wage distortion in
the wage rates of petitioners employees nationwide. As the grievance
could not be settled in the said meetings, the parties agreed to submit the
matter to voluntary arbitration. The Arbitration Committee formed for that
purpose was composed of the following: public respondent Froilan M.
Bacungan as Chairman, with Attys. Domingo T. Anonuevo and Emerico O.
de Guzman as members. The issue presented before the Committee was
whether or not the banks separate and regional implementation of Wage
Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu,
Mabolo and P. del Rosario branches, created a wage distortion in the bank
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nationwide. The Arbitration Committee on June 18, 1996 rendered the


questioned decision.
Issue: Whether or not a wage distortion resulted from respondents
implementation of the aforecited Wage Orders.
Held: The statutory definition of wage distortion is found in Article 124 of
the Labor Code, as amended by Republic Act No. 6727. Elaborating on this
statutory definition, the Court ruled: Wage distortion presupposes a
classification of positions and ranking of these positions at various
levels. One visualizes a hierarchy of positions with corresponding ranks
basically in terms of wages and other emoluments. Where a significant
change occurs at the lowest level of positions in terms of basic wage
without a corresponding change in the other level in the hierarchy of
positions, negating as a result thereof the distinction between one level of
position from the next higher level, and resulting in a parity between the
lowest level and the next higher level or rank, between new entrants and
old hires, there exists a wage distortion. xxx. The concept of wage
distortion assumes an existing grouping or classification of employees
which establishes distinctions among such employees on some relevant or
legitimate basis. This classification is reflected in a differing wage rate for
each of the existing classes of employees.
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country.
In the present case, it is clear that no wage distortion resulted when
respondent implemented the subject Wage Orders in the covered
branches. In the said branches, there was an increase in the salary rates
of all pay classes. Furthermore, the hierarchy of positions based on skills,
length of service and other logical bases of differentiation was
preserved. In other words, the quantitative difference in compensation
between different pay classes remained the same in all branches in the
affected region. Put differently, the distinction between Pay Class 1 and
Pay Class 2, for example, was not eliminated as a result of the
implementation of the two Wage Orders in the said region. Hence, it
cannot be said that there was a wage distortion.
Bankard Employees Union
G.R. No. 140689

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BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS


vs.
NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC.
February 17, 2004

Facts: Bankard, Inc. (Bankard) classifies its employees by levels, to wit:


Level I, Level II, Level III, Level IV, and Level V. On May 28, 1993, its Board
of Directors approved a New Salary Scale, made retroactive to April 1,
1993, for the purpose of making its hiring rate competitive in the
industrys labor market. The New Salary Scale increased the hiring rates of
new employees, to wit: Levels I and V by one thousand pesos (P1,000.00),
and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the
salaries of employees who fell below the new minimum rates were also
adjusted to reach such rates under their levels.
Bankards move drew the Bankard Employees Union-WATU (petitioner), the
duly certified exclusive bargaining agent of the regular rank and file
employees of Bankard, to press for the increase in the salary of its old,
regular employees.
Bankard took the position, however, that there was no obligation on the
part of the management to grant to all its employees the same increase in
an across-the-board manner. As the continued request of petitioner for
increase in the wages and salaries of Bankards regular employees
remained unheeded, it filed a Notice of Strike on August 26, 1993 on the
ground of discrimination and other acts of Unfair Labor Practice (ULP).
A director of the National Conciliation and Mediation Board treated the
Notice of Strike as a Preventive Mediation Case based on a finding that the
issues therein were not strikeable. Petitioner filed another Notice of Strike
on October 8, 1993 on the grounds of refusal to bargain, discrimination,
and other acts of ULP - union busting. The strike was averted, however,
when the dispute was certified by the Secretary of Labor and Employment
for compulsory arbitration.
The NLRC dismissed the case for lack of merit. Petitioners motion for
reconsideration of the dismissal of the case was also denied. Petitioner
thereupon filed a petition for certiorari.
Issue: Whether or not the unilateral adoption by an employer of an
upgraded salary scale that increased the hiring rates of new employees
without increasing the salary rates of old employees resulted in wage
distortion within the contemplation of Article 124 of the Labor Code.
Held: The Court held that wage distortion does not exist in this case as all
the elements were not met. There are four elements of wage distortion
namely: (1) An existing hierarchy of positions with corresponding salary
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rates, (2) a significant change in the salary rate of a lower pay class
without a concomitant increase in the salary rate of a higher one, (3) the
elimination of the distinction between the two levels and (4) the existence
of the distortion in the same region of the country.
In this case, the employees of Bankard have been historically classified
into levels (I-V), and not on the basis of their length of service. New
employees are automatically placed under any of these levels upon their
entry. This is the wage structure formulated by Bankard, a recognized
management prerogative which Bankard Union may not encroach upon by
creating their own independent classification (ie, based on newly hired
and old employees) to use as a basis for demanding an across-the-board
salary increase. According to established jurisprudence, the formulation of
a wage structure through the classification of employees is a matter of
management judgment and discretion. Based on the wage structure, there
is no hierarchy of positions between the newly hired and regular
employees of Bankard since it is a structure which is based on level, not
seniority. The first element of wage distortion is therefore lacking. Second,
the third element of wage distortion i.e. the elimination of the distinction
between the two levels is also missing. Even if there was indeed a
resulting decrease in the wage gap between the salary of the old and new
employees, the gap was held to be insignificant as to result in severe
contraction of the intentional quantitative differences in the salary rates
between the employee group as the classification under the wage
structure is based on rank, and not seniority.
Form of Payment Labor Code Article 102; Civil Code Article 1705;
Book III, Rule VIII, Sections 1,2
Congson vs. NLRC
G.R. No. 114250
DOMINICO C. CONGSON vs.
NATIONAL LABOR RELATIONS COMMISSION, NOE BARGO, ROGER
HIMENO, RAYMUNDO BADAGOS, PATRICIO SALVADOR, SR., NEHIL
BARGO, JOEL MENDOZA, and EMMANUEL CALIXIHAN
April 5, 1995
Facts: Petitioner is the registered owner of Southern Fishing Industry.
Private respondents were hired on various dates by petition'er as regular
piece-rate workers. They were uniformly paid at a rate of P1.00 per tuna
weighing thirty (30) to eighty (80) kilos per movement, that is from the
fishing boats down to petitioner's storage plant at a load/unload cycle of
work until the tuna catch reached its final shipment/destination. They did
the work of unloading tuna from fishing boats to truck haulers; unloading
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them again at petitioner's cold storage plant for filing, storing, cleaning,
and maintenance; and finally loading the processed tuna for shipment.
They worked seven (7) days a week.
During the first week of June 1990, petitioner notified his workers of his
proposal to reduce the rate-per-tuna movement due to the scarcity of
tuna. Private respondents resisted petitioner's proposed rate reduction.
When they reported for work the next day, they were informed that they
had been replaced by a new set of workers, When they requested for a
dialogue with the management, they were instructed to wait for further
notice. They waited for the notice of dialogue for a full week but in vain.
On 15 June 1990, private respondents filed a case against petitioner
before the NLRC Sub-Regional Arbitration. On 2 July 1990, private
respondents filed another case against petitioner, containing an additional
claim for separation pay should their complaint for constructive dismissal
be upheld. Labor Arbiter held that petitioner indeed constructively
dismissed the respondents. On appeal, NLRC ruled that the petitioner was
guilty of illegal dismissal. Hence this petition.
Issue: Whether or not the mode of payment used by the petitioner is
accepted and what the law mandates.
Held: Article 102 of the Labor Code provides that: No employer shall pay
the wages of an employee by means of, promissory notes, vouchers,
coupons, tokens tickets, chits, or any object other than legal tender,even
when expressly requested by the employee. Payment of wages by check
or money order shall be allowed when such manner of payment is
customary on the date of effectivity of this Code, or is necessary as
specified in appropriate regulations to be issued by the Secretary of Labor
or as stipulated in a collective bargaining agreement.
Undoubtedly, petitioner's practice of paying the private respondents the
minimum wage by means of legal tender combined with tuna liver and
intestines runs counter to the above cited provision of the Labor Code.
The fact that said method of paying the minimum wage was not only
agreed upon by both parties in the employment agreement but even
expressly requested by private respondents, does not shield petitioner.
Article 102 of the Labor Code is clear. Wages shall be paid only by means
of legal tender. The only instance when an employer is permitted to pay
wages informs other than legal tender, that is, by checks or money order,
is when the circumstances prescribed in the second paragraph of Article
102 are present
Direct Payment of Wages Labor Code Article 105, Sections 5, 6
Bermiso vs. Escao Inc.
G.R. No. L-11606
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EUFROCIO BERMISO, ET AL. vs.


HIJOS DE F. ESCAO, INC., ET AL.
February 28, 1959
Facts: Petitioners originally numbering 45 and formerly composing the
Democratic Labor Association and the Katubsanan sa Mamumuo instituted
this action before the Court of Industrial Relations on August 5, 1952,
praying for reinstatement with back wages, direct payment of wages to
the laborers instead of through the union, payment of accrued overtime
pay and wage differentials, prohibition from carrying load in excess of 50
kilos, minimum daily wage of P5.00, vacation and sick leave, free
hospitalization, accident insurance, free choice of labor union and
grievance committee. Of the original petitioners only five continued to
take interest in the action, the other having desisted therefrom. After
hearing the Court of Industrial Relations ordered the reinstatement of the
said five laborers to their former work and positions in the Sabay group.
The court held that insofar as the stevedores loading and unloading its
vessels are concerned, the Hijos de F. Escao is an employer of the
petitioners. With respect, however, to the arrastre service, it held that the
question is beyond the scope of the relationship between it and the
petitioners.
After a review of the testimonies given by the petitioners and those given
on behalf of the respondents, the court below also found that the
claimants failed to establish any reasonable basis for all their claims
except that for their reinstatement and, therefore, denied them for lack of
merit. As to the reinstatement of the 5 petitioners, namely, of Eufrocio
Bermiso, Fotunato Geteso, Constancio Olaco, Laureano Amistoso and
Vicente Tuyogan, to their former work and positions in the Sabay group;
their claim for back wages were denied. With respect to the direct
payment of wages to the laborers, the court found that there was no
reason for changing the practice of apportioning the wages for their joint
labor and sharing therein, because of the 150 members only 5 were
dissatisfied.
Issue: Whether or not the decision violates the law ondirect payment of
wages.
Held: The law relied upon by them is Section 10, par. (b) of Republic Act
No. 602, which provides as follows:
SEC. 10. (b) Wages, including wages which may be paid
retroactively for whatever reason, shall be paid directly to the
employee to whom they are due, except:
(1) In cases where the employee is insured with his consent by the
employer, the latter shall entitled to deduct from the wage of the
employee the amount paid by the employer for premiums on the
insurance;
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(2) In cases of force majeure rendering such payments impossible;


and
(3) In cases where the right of the employee or his union to checkoff has been recognized by the employer or authorized in writing by
the individual employees concerned.
There is no question that the work of stevedoring was undertaken by the
laborers, not in their individual capacities, but as a group. The contract to
perform the service was made by the leader of the group, for and on
behalf of the latter, not for each and every one of them individually. For
the sake of convenience it was necessary that the group must be large
enough to be able to perform the task of loading and unloading in as short
time as possible. As the group undertook to render service for vessels
other than those of the Hijos de F. Escao, it was absolutely necessary
that some sort of leadership be instituted in the group to determine which
of the members will work for one vessel and which for another. Leadership
is also essential to obtain work for the group as employers naturally prefer
to deal with a leader of a group than with each member individually.
Leadership was, therefore, essential not only to secure work for the group
but to arrange the laborers who are to perform the service. The leadership
must be paid for and it was not shown that the head of the groups got the
lion's share of the cost of the service rendered. Under the circumstances
we are not prepared to say that the provision of law on direct payment of
wages has been violated. The lower court did not find sufficient evidence
to show that racketeering was employed by the leaders. If any existed the
remedy can not be found in this court; it is for the group or organize into a
closely knitted union which would secure the privileges that the selves
who would not exploit them.
Lastly, the respondent Hijos de F. Escao did not pay for the stevedoring
charges. These were collected by the group from the shippers themselves,
without the intervention of the respondent Escao. How can the court
order the latter to pay the charges to the group or its members, when the
charges were collected by the latter from the shippers, in accordance with
the practice of the group itself?
We also fine no ground for requiring the respondent Hijos de F. Escao to
pay back wages. The latter respondent did not deal with the petitioners
individually, entering into a contract of employment with them. Said
respondent dealt with the group thru its leaders. If the group, thru its
leaders, did not allow the petitioners to work and share in the price paid
therefor, the one responsible is not the respondent Escao but the leader
thru whom the group itself made the contract for work and apportioned
the time of work for each member and the pay therefor. Again as stated
above, the remedy must be sought not in the tribunals of the country but
in the laborers themselves who should organized and thru such
organization as they may establish, as envisioned by the Industrial Peace
Act, secure the privileges demanded.

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Wage Deduction Labor Code Article 113; Book III, Rule VIII,
Section 10
Apodaca vs. NLRC
G.R. No. 80039
ERNESTO M. APODACA vs.
NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and
INTRANS PHILS., INC.
April 18, 1989
Facts: Petitioner was employed in respondent corporation. On August 28,
1985, respondent Jose M. Mirasol persuaded petitioner to subscribe to
1,500 shares of respondent corporation at P100.00 per share or a total of
P150,000.00. He made an initial payment of P37,500.00. On September 1,
1975, petitioner was appointed President and General Manager of the
respondent corporation. However, on January 2, 1986, he resigned.
On December 19, 1986, petitioner instituted with the NLRC a complaint
against private respondents for the payment of his unpaid wages, his cost
of living allowance, the balance of his gasoline and representation
expenses and his bonus compensation for 1986. Petitioner and private
respondents submitted their position papers to the labor arbiter. Private
respondents admitted that there is due to petitioner the amount of
P17,060.07 but this was applied to the unpaid balance of his subscription
in the amount of P95,439.93. Petitioner questioned the set-off alleging
that there was no call or notice for the payment of the unpaid subscription
and that, accordingly, the alleged obligation is not enforceable.
In a decision dated April 28, 1987, the labor arbiter sustained the claim of
petitioner for P17,060.07 on the ground that the employer has no right to
withhold payment of wages already earned under Article 103 of the Labor
Code. Upon the appeal of the private respondents to public respondent
NLRC, the decision of the labor arbiter was reversed in a decision dated
September 18, 1987. The NLRC held that a stockholder who fails to pay
his unpaid subscription on call becomes a debtor of the corporation and
that the set-off of said obligation against the wages and others due to
petitioner is not contrary to law, morals and public policy.
Issue: Whether or not an obligation arising therefrom be offset against a
money claim of an employee against the employer.
Held: No, it cannot be used to offset the obligation. Assuming arguendo
that the NLRC may exercise jurisdiction over the said subject matter under
the circumstances of this case, the unpaid subscriptions are not due and
payable until a call is made by the corporation for payment. Private
respondents have not presented a resolution of the board of directors of
respondent corporation calling for the payment of the unpaid

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subscriptions. It does not even appear that a notice of such call has been
sent to petitioner by the respondent corporation.
What the records show is that the respondent corporation deducted the
amount due to petitioner from the amount receivable from him for the
unpaid subscriptions. 3 No doubt such set-off was without lawful basis, if
not premature. As there was no notice or call for the payment of unpaid
subscriptions, the same is not yet due and payable.
Lastly, assuming further that there was a call for payment of the unpaid
subscription, the NLRC cannot validly set it off against the wages and
other benefits due petitioner. Article 113 of the Labor Code allows such a
deduction from the wages of the employees by the employer, only in
three instances, to wit:
ART. 113. Wage Deduction. No employer, in his own behalf
or in behalf of any person, shall make any deduction from the
wages of his employees, except:
(a) In cases where the worker is insured with his consent by
the employer, and the deduction is to recompense the
employer for the amount paid by him as premium on the
insurance;
(b) For union dues, in cases where the right of the worker or
his union to checkoff has been recognized by the employer or
authorized in writing by the individual worker concerned; and
(c) In cases where the employer is authorized by law or
regulations issued by the Secretary of Labor.
Genesis Transport Service, Inc. vs. UMMGT & Taroy
G.R. No. 182114
GENESIS TRANSPORT SERVICE, INC. and RELY L. JALBUNA vs.
UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT
(UMMGT), and JUAN TAROY
April 5, 2010
Facts: Respondent Juan Taroy was hired on February 2, 1992 by petitioner
Genesis Transport Service, Inc. (Genesis Transport) as driver on
commission basis at 9% of the gross revenue per trip. On May 10, 2002,
Taroy was, after due notice and hearing, terminated from employment
after an accident on April 20, 2002 where he was deemed to have been
driving recklessly.
Taroy thus filed on June 7, 2002 a complaint 1 for illegal dismissal and
payment of service incentive leave pay, claiming that he was singled out
for termination because of his union activities, other drivers who had met
accidents not having been dismissed from employment.
Taroy later amended2 his complaint to implead his herein co-respondent
Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as
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complainant and add as grounds of his cause of action unfair labor


practice (ULP), reimbursement of illegal deductions on tollgate fees, and
payment of service incentive leave pay.
Respecting the claim for refund of illegal deductions, Taroy alleged that in
1997, petitioner started deducting from his weekly earnings an amount
ranging from P160 to P900 representing toll fees, without his consent and
written authorization as required under Article 113 of the Labor Code and
contrary to company practice; and that deductions were also taken from
the bus conductors earnings to thus result to double deduction.
By Decision9 of June 30, 2004, the Labor Arbiter found that Genesis
Transport discharged the burden of proof that Taroys dismissal was on a
valid cause. As to the charge of ULP, the Labor Arbiter ruled that the
respondent union failed to prove that Taroys dismissal was due to his
union membership and/or activities.
With respect to Taroys claim for refund, however, the Labor Arbiter ruled
in his favor for if, as contended by Genesis Transport, tollgate fees form
part of overhead expense, why were not expenses for fuel and
maintenance also charged to overhead expense. The Labor Arbiter thus
concluded that "it would appear that the tollgate fees are deducted from
the gross revenues and not from the salaries of drivers and conductors,
but certainly the deduction thereof diminishes the take home pay of the
employees." Thus, the Labor Arbiter ordered petitioner to refund to
complainant the underpayment/differential due him as a result of the
deduction of the tollgate fees from the gross receipts.
By Resolution of December 29, 2005, the NLRC affirmed the Labor
Arbiters decision with modification. It deleted the award to Taroy of
attorneys fees. The parties filed their respective motions for
reconsideration which were denied. On respondents appeal, the Court of
Appeals reinstated the Labor Arbiters order for petitioners to refund Taroy
"the underpayment."
Issue: Whether or not tollgate fees count as a valid form deduction.
Held: No, it is not.Absent proof that the NLRC cases cited by petitioners
have attained finality, the Court may not consider them to constitute res
judicata on petitioners claim for refund of the "underpayment" due Taroy.
Neither may the Court take judicial notice of petitioners claim that the
deduction of tollgate fees from the gross earnings of drivers is an
accepted and long-standing practice in the transportation industry.
Expertravel & Tours, Inc. v. Court of Appeals10 instructs:
Generally speaking, matters of judicial notice have three material
requisites: (1) the matter must be one of common and general knowledge;
(2) it must be well and authoritatively settled and not doubtful or
uncertain; and (3) it must be known to be within the limits of the
jurisdiction of the court. The principal guide in determining what facts may
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be assumed to be judicially known is that of notoriety. Hence, it can be


said that judicial notice is limited to facts evidenced by public records and
facts of general notoriety. Moreover, a judicially noticed fact must be one
not subject to a reasonable dispute in that it is either: (1) generally known
within the territorial jurisdiction of the trial court; or (2) capable of
accurate and ready determination by resorting to sources whose accuracy
cannot reasonably be questionable.
Things of "common knowledge," of which courts take judicial matters
coming to the knowledge of men generally in the course of the ordinary
experiences of life, or they may be matters which are generally accepted
by mankind as true and are capable of ready and unquestioned
demonstration. Thus, facts which are universally known, and which may
be found in encyclopedias, dictionaries or other publications, are judicially
noticed, provided, they are of such universal notoriety and so generally
understood that they may be regarded as forming part of the common
knowledge of every person. As the common knowledge of man ranges far
and wide, a wide variety of particular facts have been judicially noticed as
being matters of common knowledge. But a court cannot take judicial
notice of any fact which, in part, is dependent on the existence or nonexistence of a fact of which the court has no constructive knowledge.
None of the material requisites for the Court to take judicial notice of a
particular matter was established by petitioners.
Albeit the amounts representing tollgate fees were deducted from gross
revenues and not directly from Taroys commissions, the labor tribunal and
the appellate court correctly held that the withholding of those amounts
reduced the amount from which Taroys 9% commission would be
computed. Such a computation not only marks a change in the method of
payment of wages, resulting in a diminution of Taroys wages in violation
of Article 113 vis--vis Article 100 of the Labor Code, as amended. It need
not be underlined that without Taroys written consent or authorization,
the deduction is considered illegal.
Besides, the invocation of the rule on "company practice" is generally
used with respect to the grant of additional benefits to employees, not on
issues involving diminution of benefits.
Requirement to Make Deposits for Loss of Damage Labor Code
Articles 114, 115; Book III, Rule VIII, Section 11
Dentech Manufacturing Corporation vs. NLRC
G.R. No. 81477
DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA
in his capacity as General Manager vs.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN
MARBELLA, ARMANDO TORNO, JUANITO TAJAN, JR. and JOEL
TORNO
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April 19, 1989


Facts: Private respondents Benjamin Marbella, Armando Torno, Juanito
Tajan, Jr. and Joel Torno are members of the Confederation of Citizens
Labor Union, a labor organization registered with the Department of Labor
and Employment. They used to be the employees of the petitioner firm,
working therein as welders, upholsterers and painters. They were already
employed with the company when it was still a sole proprietorship. They
were dismissed from the firm beginning February 14, 1985.
On June 26, 1985, the private respondents filed a Complaint with the
arbitration branch of the respondent National Labor Relations Commission
(NLRC) against the petitioners for, among others, illegal dismissal and
violation of Presidential Decree No. 851. They were originally joined by
another employee, one Raymundo Labarda, who later withdrew his
Complaint.
At first, they only sought the payment of their 13th month pay under
Presidential Decree No. 851 as well as their separation pay, and the
refund of the cash bond they filed with the company at the start of their
employment. Later on, they sought their reinstatement as well as the
payment of their 13th month pay and service incentive leave pay, and
separation pay in the event that they are not reinstated. It is alleged in
the Complaint and Position Paper accompanying the same that they were
dismissed from the firm for pursuing union activities.
The petitioners also argued that the private respondents are not entitled
to a 13th month pay. They maintained that each of the private
respondents receive a total monthly compensation of more that Pl,000.00
and that under Section 1 of Presidential Decree No. 851, such employees
are not entitled to receive a 13th month pay. The petitioners likewise
alleged that the company is in bad financial shape and that pursuant to
Section 3 of the Decree, the firm is exempted from complying with the
provisions of the Decree.
A hearing was conducted to allow the parties to further ventilate their
views. Thereafter, the labor arbiter assigned to the case rendered a
Decision dated January 28, 1987, ordering the reinstatement of
complainants. We also find respondent's contention for exemption in the
payment of (the) 13th month pay as without validity (sic). The ceiling of
P1,000.00 a month in the matter of 13th month pay has been removed
and complainants are entitled to receive from respondents at least the
unprescribed 13th month pay for the last three years based on their
uncontroverted pleadings. This order includes the money value of the
service incentive leave pay of complainants and the cash bond. In a
Resolution dated November 4,1987, the Third Division of the NLRC
affirmed the Decision of the labor arbiter.
Issue: Whether or not the private respondents are entitled to the refund
of the cash bond.
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Held: Yes, they are. The refund of the cash bond filed by the private
respondents is in order. Article 114 of the Labor Code prohibits an
employer from requiting his employees to file a cash bond or to make
deposits, subject to certain exceptions, to witArt. 114. Deposits for loss or damage.- No employer shall
require his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to
tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades,
occupations or business where the practice of making
deductions or requiring deposits is a recognized one, or is
necessary or desirable as determined by the Secretary of
Labor in appropriate rules and regulations.
The petitioners have not satisfactorily disputed the applicability of this
provision of the Labor Code to the case at bar. Considering further that the
petitioners failed to show that the company is authorized by law to require
the private respondents to file the cash bond in question, the refund
thereof is in order.
The allegation of the petitioners to the effect that the proceeds of the cash
bond had already been given to a certain carinderia to pay for the
accounts of the private respondents therein does not merit serious
consideration. As correctly observed by the Solicitor General, no evidence
or receipt has been shown to prove such payment.
Accordingly, the Court is not convinced that the respondent National Labor
Relations Commission committed a grave abuse of discretion amounting
to loss of jurisdiction in affirming the Decision of the labor arbiter.
Five J Taxi vs. NLRC
G.R. No. 111474
FIVE J TAXI and/or JUAN S. ARMAMENTO vs.
NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN
and GILBERTO SABSALON
August 22, 1994
Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were
hired by the petitioners as taxi drivers 2 and, as such, they worked for 4
days weekly on a 24-hour shifting schedule. Aside from the daily
"boundary" of P700.00 for air-conditioned taxi or P450.00 for non-airconditioned taxi, they were also required to pay P20.00 for car washing,
and to further make a P15.00 deposit to answer for any deficiency in their
"boundary," for every actual working day.
In less than 4 months after Maldigan was hired as an extra driver by the
petitioners, he already failed to report for work for unknown reasons.
Later, petitioners learned that he was working for "Mine of Gold" Taxi
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Company. With respect to Sabsalon, while driving a taxicab of petitioners


on September 6, 1983, he was held up by his armed passenger who took
all his money and thereafter stabbed him. He was hospitalized and after
his discharge, he went to his home province to recuperate.
Sometime in 1989, Maldigan requested petitioners for the reimbursement
of his daily cash deposits for 2 years, but herein petitioners told him that
not a single centavo was left of his deposits as these were not even
enough to cover the amount spent for the repairs of the taxi he was
driving. This was allegedly the practice adopted by petitioners to recoup
the expenses incurred in the repair of their taxicab units. When Maldigan
insisted on the refund of his deposit, petitioners terminated his services.
Sabsalon, on his part, claimed that his termination from employment was
effected when he refused to pay for the washing of his taxi seat covers.
On November 27, 1991, private respondents filed a complaint with the
Manila Arbitration Office of the National Labor Relations Commission
charging petitioners with illegal dismissal and illegal deductions. That
complaint was dismissed, the labor arbiter holding that it took private
respondents two years to file the same and such unreasonable delay was
not consistent with the natural reaction of a person who claimed to be
unjustly treated, hence the filing of the case could be interpreted as a
mere afterthought.
Respondent NLRC concurred in said findings, with the observation that
private respondents failed to controvert the evidence showing that
Maldigan was employed by "Mine of Gold" Taxi Company from February
10, 1987 to December 10, 1990; that Sabsalon abandoned his taxicab on
September 1, 1990; and that they voluntarily left their jobs for similar
employment with other taxi operators. It, accordingly, affirmed the ruling
of the labor arbiter that private respondents' services were not illegally
terminated. It, however, modified the decision of the labor arbiter by
ordering petitioners to pay private respondents the awards.
Issue: Whether or not Maldigan is entitled to refund the accumulated
deposits.
Held: Yes, they can. Respondent NLRC held that the P15.00 daily deposits
made by respondents to defray any shortage in their "boundary" is
covered by the general prohibition in Article 114 of the Labor Code against
requiring employees to make deposits, and that there is no showing that
the Secretary of Labor has recognized the same as a "practice" in the taxi
industry. Consequently, the deposits made were illegal and the
respondents must be refunded therefor.
Article 114 of the Labor Code provides as follows:
Art. 114. Deposits for loss or damage. No employer shall
require his worker to make deposits from which deductions
shall be made for the reimbursement of loss of or damage to
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tools, materials, or equipment supplied by the employer,


except when the employer is engaged in such trades,
occupations or business where the practice of making deposits
is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and
regulations.
It can be deduced therefrom that the said article provides the rule on
deposits for loss or damage to tools, materials or equipments supplied by
the employer. Clearly, the same does not apply to or permit deposits to
defray any deficiency which the taxi driver may incur in the remittance of
his "boundary." Also, when private respondents stopped working for
petitioners, the alleged purpose for which petitioners required such
unauthorized deposits no longer existed. In other case, any balance due to
private respondents after proper accounting must be returned to them
with legal interest.
With respect to Maldigan's deposits, nothing was mentioned questioning
the same even in the present petition. We accordingly agree with the
recommendation of the Solicitor General that since the evidence shows
that he had not withdrawn the same, he should be reimbursed the amount
of his accumulated cash deposits.
Keeping of Employees Records inn a Place Other that the
Workplace (Prohibited) Book III, Rule X, Section 11
South Motorists Enterpises vs Tosoc
G.R. No. 87449
SOUTH MOTORISTS ENTERPRISES vs.
ROQUE TOSOC, ET AL., and HON. SECRETARY OF LABOR AND
EMPLOYMENT
January 23, 1990
Facts: Sometime in January of 1983, complaints for non-payment of
emergency cost of living allowances were filed by 46 workers, Tosoc, et
als., against SOUTH MOTORISTS before the Naga City District Office of
Regional Office No. 5 of the then Ministry of Labor. On 10 January 1983 a
Special Order was issued by the District Labor Officer directing its Labor
Regulation Officers to conduct an inspection and verification of SOUTH
MOTORISTS' employment records.
On the date of the inspection and verification, SOUTH MOTORISTS was
unable to present its employment records on the allegation that they had
been sent to the main office in Manila. The case was then set for
conference on 25 January 1983 but had to be reset to 8 February 1983
upon the request of SOUTH MOTORISTS to enable it to present all the
employment records on such date. On 16 February 1983, SOUTH
MOTORISTS again requested for a resetting to 3 March 1983 because of

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the alleged voluminous records it had to locate and its desire to submit a
memorandum regarding complainants' claims.
On 7 March 1983, the assigned Labor Regulation Officers submitted an
Inspection Report on the basis of which an Order dated 14 April 1983 was
issued by Labor Officer Domingo Reyes directing SOUTH MOTORISTS to
pay Tosoc, et als., the total amount of One Hundred Eighty Four Thousand
Six Hundred Eighty Nine and 12/100 Pesos (P184,689.12) representing the
latter's corresponding emergency cost of living allowances.
SOUTH MOTORISTS moved for reconsideration of the Order, which was
denied. On 11 July 1988, the Secretary of Labor and Employment affirmed
the appealed Order. On 28 July 1988, SOUTH MOTORISTS moved for
reconsideration but this proved unsuccessful. A Second Motion for
Reconsideration was filed, which was likewise denied in an Order dated 7
March 1989.
Issue: Whether or not the Secretary of Labor and Employment erred in
affirming the award based on a mere Inspection Report
Held: No, he did not err. We see no reason for SOUTH MOTORISTS to
complain as it was afforded ample opportunity to present its side. It failed
to present employment records giving as an excuse that they were sent to
the main office in Manila, in violation of Section 11 of Rule X, Book II of the
Omnibus Rules Implementing the Labor Code providing that:
All employment records of the employees of the employer
shall be kept and maintained in or about the premises of the
workplace. The premises of a workplace shall be understood
to mean the main or branch office or establishment, if any,
depending., upon where the employees are regularly
assigned. The keeping of the employee's records in another
place is prohibited.
Garnishment/ Execution Civil Code Article 1708
Gaa vs. Court of Appeals, 140 SCRA 304 (1985)
G.R. No. L-44169
ROSARIO A. GAA vs.
THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES
CORPORATION, and CESAR R. ROXAS, Deputy Sheriff of Manila
December 3, 1985
Facts: It appears that respondent Europhil Industries Corporation was
formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila,
while petitioner Rosario A. Gaa was then the building administrator. On
December 12, 1973, Europhil Industries commenced an action (Civil Case
No. 92744) in the Court of First Instance of Manila for damages against
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petitioner "for having perpetrated certain acts that Europhil Industries


considered a trespass upon its rights, namely, cutting of its electricity, and
removing its name from the building directory and gate passes of its
officials and employees" (p. 87 Rollo). On June 28, 1974, said court
rendered judgment in favor of respondent Europhil Industries, ordering
petitioner to pay the former the sum of P10,000.00 as actual damages,
P5,000.00 as moral damages, P5,000.00 as exemplary damages and to
pay the costs.
The said decision having become final and executory, a writ of
garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas
on August 1, 1975 served a Notice of Garnishment upon El Grande Hotel,
where petitioner was then employed, garnishing her "salary, commission
and/or remuneration." Petitioner then filed with the Court of First Instance
of Manila a motion to lift said garnishment on the ground that her
"salaries, commission and, or remuneration are exempted from execution
under Article 1708 of the New Civil Code. Said motion was denied by the
lower Court in an order dated November 7, 1975. A motion for
reconsideration of said order was likewise denied, and on January 26,
1976 petitioner filed with the Court of Appeals a petition for certiorari
against filed with the Court of Appeals a petition for certiorari against said
order of November 7, 1975.
On March 30, 1976, the Court of Appeals dismissed the petition for
certiorari. In dismissing the petition, the Court of Appeals held that
petitioner is not a mere laborer as contemplated under Article 1708 as the
term laborer does not apply to one who holds a managerial or supervisory
position like that of petitioner, but only to those "laborers occupying the
lower strata." It also held that the term "wages" means the pay given" as
hire or reward to artisans, mechanics, domestics or menial servants, and
laborers employed in manufactories, agriculture, mines, and other manual
occupation and usually employed to distinguish the sums paid to persons
hired to perform manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season," citing 67 C.J. 285,
which is the ordinary acceptation of the said term, and that "wages" in
Spanish is "jornal" and one who receives a wage is a "jornalero."
Issue: Whether or not petitioner is a laborer.
Held: No, he is not. Article 1708 of the New Civil Code which reads as
follows:
ART. 1708. The laborer's wage shall not be subject to
execution or attachment, except for debts incurred for food,
shelter, clothing and medical attendance.
It is beyond dispute that petitioner is not an ordinary or rank and file
laborer but "a responsibly place employee," of El Grande Hotel,
"responsible for planning, directing, controlling, and coordinating the
activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure the
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cleanliness, maintenance and orderliness of all guest rooms, function


rooms, public areas, and the surroundings of the hotel. Considering the
importance of petitioner's function in El Grande Hotel, it is undeniable that
petitioner is occupying a position equivalent to that of a managerial or
supervisory position.
In its broadest sense, the word "laborer" includes everyone who performs
any kind of mental or physical labor, but as commonly and customarily
used and understood, it only applies to one engaged in some form of
manual or physical labor. That is the sense in which the courts generally
apply the term as applied in exemption acts, since persons of that class
usually look to the reward of a day's labor for immediate or present
support and so are more in need of the exemption than are other.
Article 1708 used the word "wages" and not "salary" in relation to
"laborer" when it declared what are to be exempted from attachment and
execution. The term "wages" as distinguished from "salary", applies to the
compensation for manual labor, skilled or unskilled, paid at stated times,
and measured by the day, week, month, or season, while "salary" denotes
a higher degree of employment, or a superior grade of services, and
implies a position of office: by contrast, the term wages " indicates
considerable pay for a lower and less responsible character of
employment, while "salary" is suggestive of a larger and more important
service (35 Am. Jur. 496).
We do not think that the legislature intended the exemption in Article
1708 of the New Civil Code to operate in favor of any but those who are
laboring men or women in the sense that their work is manual. Persons
belonging to this class usually look to the reward of a day's labor for
immediate or present support, and such persons are more in need of the
exemption than any others. Petitioner Rosario A. Gaa is definitely not
within that class.
We find, therefore, and so hold that the Trial Court did not err in denying in
its order of November 7, 1975 the motion of petitioner to lift the notice of
garnishment against her salaries, commission and other remuneration
from El Grande Hotel since said salaries, Commission and other
remuneration due her from the El Grande Hotel do not constitute wages
due a laborer which, under Article 1708 of the Civil Code, are not subject
to execution or attachment.
Work Preference in the Event of Bankruptcy Labor Code Article
110; Book III, Rule VIII, Section 7; Civil Code Articles 1207,
2241(6), 2242(3), 2244(2), 2246, 2248, 2250
Republic vs. Peralta
G.R. No. L-56568

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REPUBLIC OF THE PHILIPPINES, represented by the Bureau of


Customs and the Bureau of Internal Revenue vs.
HONORABLE E.L. PERALTA, PRESIDING JUDGE OF THE COURT OF
FIRST INSTANCE OF MANILA, BRANCH XVII, QUALITY TABACCO
CORPORATION, FRANCISCO, FEDERACION OBRERO DE LA
INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS
(FOITAF) USTC EMPLOYEES ASSOCIATION WORKERS UNIONPTGWO
May 20, 1987
Facts: In the voluntary insolvency proceedings commenced in May 1977
by private respondent Quality Tobacco Corporation (the "Insolvent"), the
following claims of creditors were filed. In its questioned Order of 17
November 1980, the trial court held that the above-enumerated claims of
USTC and FOITAF (hereafter collectively referred to as the "Unions") for
separation pay of their respective members embodied in final awards of
the National Labor Relations Commission were to be preferred over the
claims of the Bureau of Customs and the Bureau of Internal Revenue. The
trial court, in so ruling, relied primarily upon Article 110 of the Labor Code
which reads thus:
Article 110. Worker preference in case of bankruptcy In the
event of bankruptcy or liquidation of an employer's business,
his workers shall enjoy first preference as regards wages due
them for services rendered during the period prior to the
bankruptcy or liquidation, any provision of law to the contrary
notwithstanding. Union paid wages shall be paid in full before
other creditors may establish any claim to a share in the
assets of the employer.
The Solicitor General, in seeking the reversal of the questioned Orders,
argues that Article 110 of the Labor Code is not applicable as it speaks of
"wages," a term which he asserts does not include the separation pay
claimed by the Unions. "Separation pay," the Solicitor General contends, is
given to a laborer for a separation from employment computed on the
basis of the number of years the laborer was employed by the employer;
it is a form of penalty or damage against the employer in favor of the
employee for the latter's dismissal or separation from service.
Issue: Whether or not Article 110 would affect the complete scheme of
classification, concurrence and preference of credits in insolvency set out
in the Civil Code.
Held: Yes, it does. We come to the question of what impact Article 110 of
the Labor Code has had upon the complete scheme of classification,
concurrence and preference of credits in insolvency set out in the Civil
Code. We believe and so hold that Article 110 of the Labor Code did not
sweep away the overriding preference accorded under the scheme of the
Civil Code to tax claims of the government or any subdivision thereof
which constitute a lien upon properties of the Insolvent. It is frequently
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said that taxes are the very lifeblood of government. The effective
collection of taxes is a task of highest importance for the sovereign. It is
critical indeed for its own survival. It follows that language of a much
higher degree of specificity than that exhibited in Article 110 of the Labor
Code is necessary to set aside the intent and purpose of the legislator that
shines through the precisely crafted provisions of the Civil Code. It cannot
be assumed simpliciter that the legislative authority, by using in Article
110 the words "first preference" and "any provision of law to the contrary
notwithstanding" intended to disrupt the elaborate and symmetrical
structure set up in the Civil Code. Neither can it be assumed casually that
Article 110 intended to subsume the sovereign itself within the term
"other creditors" in stating that "unpaid wages shall be paid in full before
other creditors may establish any claim to a share in the assets of
employer." Insistent considerations of public policy prevent us from giving
to "other creditors" a linguistically unlimited scope that would embrace
the universe of creditors save only unpaid employees.
We, however, do not believe that Article 110 has had no impact at all
upon the provisions of the Civil Code. Bearing in mind the overriding
precedence given to taxes, duties and fees by the Civil Code and the fact
that the Labor Code does not impress any lien on the property of an
employer, the use of the phrase "first preference" in Article 110 indicates
that what Article 110 intended to modify is the order of preference found
in Article 2244, which order relates, as we have seen, to property of the
Insolvent that is not burdened with the liens or encumbrances created or
recognized by Articles 2241 and 2242. We have noted that Article 2244,
number 2, establishes second priority for claims for wages for services
rendered by employees or laborers of the Insolvent "for one year
preceding the commencement of the proceedings in insolvency." Article
110 of the Labor Code establishes "first preference" for services rendered
"during the period prior to the bankruptcy or liquidation, " a period not
limited to the year immediately prior to the bankruptcy or liquidation.
Thus, very substantial effect may be given to the provisions of Article 110
without grievously distorting the framework established in the Civil Code
by holding, as we so hold, that Article 110 of the Labor Code has modified
Article 2244 of the Civil Code in two respects: (a) firstly, by removing the
one year limitation found in Article 2244, number 2; and (b) secondly, by
moving up claims for unpaid wages of laborers or workers of the Insolvent
from second priority to first priority in the order of preference established I
by Article 2244.
Manila Banking Corporation vs. NLRC
G.R. No. 107487
THE MANILA BANKING CORPORATION ("Manilabank") and
ARNULFO B. AURELLANO in his capacity as Statutory Receiver of
Manilabank
vs.
THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L.
MENDOZA, ET. AL.
September 29, 1997
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Facts: The antecedents show that on June 5, 1984, petitioner Manila


Banking Corporation (Manilabank) was placed under comptrollership by
then Central Bank Governor Jose B. Fernandez in view of the bank's
financial distress. The decision of the Monetary Board of the Central Bank
was based on the findings that the bank was experiencing liquidity
problems and had incurred chronic reserve deficiencies against deposit
liabilities. In fact, on May 23, 1984, a month before it was placed under
comptrollership, Manilabank was prohibited by the Monetary Board from
granting new loans and making new investments except investments in
government securities with Central Bank support, and from declaring cash
or stock dividends.
Of even date, private respondents filed a complaint against Manilabank
and its statutory receiver with. the arbitration branch of the National
Labor Relations Commission (NLRC) claiming entitlement to the following
additional benefits alleged to have accrued from 1984 to their effective
dates of termination, viz: (a) Wage increases; (b) Christmas bonuses; (c)
Mid-year bonuses; (d) Profit sharing; (e) Car and travel plans; (f) Gasoline
allowances; (g) Differentials on accrued leaves, retirement and other
bonuses; (h) Longevity pay and loyalty pay; (i) Medical, dental and optical
benefits; and (j) Uniform allowances. 7 Such claim to entitlement of the
foregoing benefits was based on Manilabank's alleged practice, policy and
tradition of awarding said benefits. They contended that the policy has
ripened into vested property rights in their favor.
Manilabank, on its part, alleged that the additional benefits sought are
without basis in fact and in law. It argued that the same are conferred by
management only when it deems necessary to do so. The award of the
said benefits is in the nature of a "management prerogative" which, it
contended, can be withheld by management upon a clear showing that
the company is not in a position to grant them either because of financial
difficulties or circumstances which do not warrant conferment of such
benefits. And since it was experiencing financial distress, it claimed that it
was in no position to give the benefits sought.
On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision
ordering Manilabank and its statutory receiver to pay in full all the claims
of private respondents amounting to P193,338,212.33, plus 12% interest
annually and 10% of the total award as attorney's fees.
On November 25, 1989, petitioners Manilabank and the CB statutory
receiver appealed to the NLRC and posted an appeal bond in the form of a
certification from the Central Bank to the effect that a portion of
Manilabank's funds in an amount equal to that of the total award of the
labor arbiter, has been reserved and set aside by the Central Bank to
answer for the private respondents' claims should they finally be adjudged
to be entitled thereto. On September 9, 1992, the NLRC issued a
resolution on the merits of the case and, as above-stated, affirmed with
slight modifications.
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Issue: Whether or not the employees enjoy the first preference in the
event of bankruptcy.
Held: Yes, they do. With respect to G.R No. 107487, the same is
dismissed, the issues raised therein having been rendered moot and
academic by the foregoing disquisitions and disposition. Besides, it is
beyond dispute that employees indeed enjoy first preference in the event
of bankruptcy or liquidation of an employer's business.
Art. 110. Worker preference in case of bankruptcy. In the
event of bankruptcy or liquidation of an employer's business,
his workers shall enjoy first preference as regards their wages
and other monetary claims, any provisions of law to the
contrary notwithstanding. Such unpaid wages and monetary
claims shall be paid in full before claims of the government
and other creditors may be paid.
The implications of the amendment were explained in great detail
by the Court in Development Bank of the Philippines vs. National
Labor Relations Commission, 1 viz:
The amendment expands worker preference to cover not only
unpaid wages but also other monetary claims to which even
claims of the Government must be deemed subordinate.
Notably, the terms "declaration" of bankruptcy or "judicial"
liquidation have been eliminated. Does this mean then that
liquidation proceedings have been done away with?
We opine in the negative, upon the following considerations:
1. Because of its impact on the entire system of credit, Article
110 of the Labor Code cannot be viewed in isolation but must
be read in relation to the Civil Code scheme on classification
and preference of credits.
2. In the same way that the Civil Code provisions on
classification of credits and the Insolvency Law have been
brought into harmony, so also must the kindred provisions of
the Labor Law be made to harmonize with those laws.
3. In the event of insolvency, a principal objective should be to
effect an equitable distribution of the insolvent's property
among his creditors. To accomplish this there must first be
some proceeding where notice to all of the insolvents's
creditors may be given and where the claims of preferred
creditors may be bindingly adjudicated (De Barretto vs.
Villanueva, No. L-14938, December 29, 1962, 6 SCRA 928).
The rationale therefore has been expressed in the recent case
of DBP vs. Secretary of Labor (G.R. No. 79351, 28 November
1989)
4. A distinction should be made between a preference of credit
and a lien. A preference applies only to claims which do no
attach to specific properties. A lien creates a charge on a
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particular property. The right of first preference as regards


unpaid wages recognized by Article 110 does not constitute a
lien on the property of the insolvent debtor in favor of
workers. It is but a preference of credit in their favor, a
preference in application. It is a method adopted to determine
and specify the order in which credits should be paid in the
final distribution of the proceeds of the insolvent's assets. It is
a right to a first preference in the discharge of the funds of the
judgment debtor.
5. Even if Article 110 and its Implementing Rule, as amended,
should be interpreted to mean "absolute preference," the
same should be given only prospective effect in line with the
cardinal rule that laws shall have no retroactive effect, unless
the contrary is provided (Article 4, Civil Code). Thereby, any
infringement on the constitutional guarantee on nonimpairment of the obligation of contracts (Section 10, Article
III, 1987 Constitution) is also avoided. In point of fact, DBP's
mortgage credit antedated by several years the amendatory
law, RA No. 6715. To give Article 110 retroactive effect would
be to wipe out the mortgage in DBP's favor and expose it to a
risk which it sought to protect itself against by requiring a
collateral in the form of real property.
In fine, the right of preference given to workers under Article 110 of the
Labor Code cannot exist in any effective way prior to the time of its
presentation in distribution proceedings. It will find application when, in
proceedings such as insolvency, such unpaid wages shall be paid in full
before the "claims of the Government and other creditors" may be paid.
But, for an orderly settlement of a debtor's assets, all creditors must be
convened, their claims ascertained and inventoried, and thereafter the
preferences determined in the course of judicial proceedings which have
for their object the subjection of the property of the debtor to the payment
of his debts or other lawful obligations.
Wage Recovery/ Jurisdiction Labor Code Article 128, 129, 217,
111; Book III, Rule X, Sections 1-5
Cirineo Bowling Plaza vs. Gerry Sensing
G.R. No. 146572.
CIRINEO BOWLING PLAZA, INC. vs.
GERRY SENSING, BELEN FERNANDEZ, MIRASOL DIAZ, MARGARITA
ABRIL, DARIO BENITEZ, MANUEL BENITEZ, RONILLO TANDOC,
EDGAR DIZON, JOVELYN QUINTO, KAREN REMORAN, JENIFFER
RINGOR, DEPARTMENT OF LABOR AND EMPLOYMENT and COURT
of APPEALS
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January 14, 2005

Facts: On November 27, 1995, Eligio Paolo, Jr., an employee of petitioner,


filed a letter complaint with the Department of Labor and Employment
(DOLE for short), Dagupan District Office, Dagupan City, requesting for the
inspection/investigation of petitioner for various labor law violations like
underpayment of wages, 13th month pay, non-payment of rest day pay,
overtime pay, holiday pay and service incentive leave pay. Pursuant to the
visitorial and enforcement powers of the Secretary of Labor and
Employment, his duly authorized representative under Article 128 of the
Labor Code, as amended, conducted inspections on petitioners
establishment the following day. On April 22, 1996, an Order was issued
by the DOLE Regional Office, the dispositive portion of which ordered
respondent to pay them the total amount of THREE HUNDRED SEVENTY
SEVEN THOUSAND FIVE HUNDRED PESOS AND 58/100. (P377,500.58),
representing their unpaid/underpaid wages, 13th month pay, holiday
premiums, rest day pay and overtime premiums.

On September 12, 1996, DOLE issued its Order stating among others:
Records show that respondent, Luisito Cirineo and his representative
appeared before this Office during the summary investigation of this
instant case but they never once mentioned the issue of separate juridical
personalities. Respondent had always been bent on settling the respective
claims of all thirteen (13) concerned employees. In the process, however,
he acknowledged being their employer. He cannot at this juncture
therefore say, that some of the awardees in our ORDER are employees of
another business entity. This being the case, we cannot grant his request
for indorsement to the NLRC.

WHEREFORE, premises considered, the case of employees Eligio Paolo, Jr.


and Lamberto Solano whose respective claims had been settled by
respondent is hereby DISMISSED. The ORDER for the payment of the
monetary claims of the eleven (11) other cash awardees STANDS. Let
execution follow immediately.

On October 21, 1996, DOLE Regional Director Maximo B. Lim issued a writ
of execution. However, on March 30, 1999, DOLE Undersecretary Jose
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Espaol dismissed the appeal and affirmed the order dated February 7,
1997 of the DOLE Regional Director.
Petitioners motion for reconsideration was denied in a Resolution dated
April 18, 2000.
Petitioner filed a petition for certiorari with prayer for the issuance of
temporary restraining order with the CA.

On August 31, 2000, the CA dismissed the petition for failure of petitioner
to (1) attach a copy of the letter complaint filed by petitioners employees
and the Order dated February 7, 1997 of the DOLE Regional Director and
(2) state the material date when the assailed Orders/Resolutions were
received pursuant to Section 1 of Rule 65 and Section 3 of Rule 46 of the
1997 Rules of Civil Procedure. Petitioner filed a motion for reconsideration
which was also denied by the CA on November 10, 2000, copy of which
was received by petitioner on November 24, 2000.

Issue: Whether or not the instant case falls within the jurisdiction of the
Regional Director.

Held: Likewise, we sustain the jurisdiction of the DOLE Regional Director.


The visitorial and enforcement powers of the DOLE Regional Director to
order and enforce compliance with labor standard laws can be exercised
even where the individual claim exceeds P5,000.00.
While it is true that under Articles 129 and 217 of the Labor Code, the
Labor Arbiter has jurisdiction to hear and decide cases where the
aggregate money claims of each employee exceeds P5,000.00, said
provisions of law do not contemplate nor cover the visitorial and
enforcement powers of the Secretary of Labor or his duly authorized
representatives. Rather, said powers are defined and set forth in Article
128 of the Labor Code (as amended by R.A. No. 7730) thus:

Art. 128. Visitorial and enforcement power.


(a) The Secretary of Labor or his duly authorized representatives,
including labor regulation officers, shall have access to employers records
and premises at any time of the day or night whenever work is being
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undertaken therein, and the right to copy therefrom, to question any


employee and investigate any fact, condition or matter which may be
necessary to determine violations or which may aid in the enforcement of
this Code and of any labor law, wage order or rules and regulations issued
pursuant thereto.
(b) Notwithstanding the provisions of Articles 129 and 217 of this Code to
the contrary, and in cases where the relationship of employer-employee
exists, the Secretary of Labor and Employment or his duly authorized
representatives shall have the power to issue compliance orders to give
effect to the labor standards provisions of this Code and other labor
legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection.
The Secretary or his duly authorized representatives shall issue writs of
execution to the appropriate authority for the enforcement of their orders,
except in cases where the employer contests the finding of the labor
employment and enforcement officer and raises issues supported by
documentary proofs which were not considered in the course of
inspection.

An order issued by the duly authorized representative of the Secretary of


Labor and Employment under this article may be appealed to the latter. In
case said order involved a monetary award, an appeal by the employer
may be perfected only upon the posting of a cash or surety bond issued
by a reputable bonding company duly accredited by the Secretary of
Labor and Employment in the amount equivalent to the monetary award
in the order appealed from.

The aforequoted provision explicitly excludes from its coverage Articles


129 and 217 of the Labor Code by the phrase (N)otwithstanding the
provisions of Articles 129 and 217 of this Code to the contrary . . . thereby
retaining and further strengthening the power of the Secretary of Labor or
his duly authorized representative to issue compliance orders to give
effect to the labor standards provisions of said Code and other labor
legislation based on the findings of labor employment and enforcement
officers or industrial safety engineers made in the course of inspection. In
the case at bar, the Office of respondent Regional Director conducted
inspection visits at petitioners establishment on February 9 and 14, 1995
in accordance with the above-mentioned provision of law. In the course of
said inspection, several violations of the labor standard provisions of the
Labor Code were discovered and reported by Senior Labor Enforcement
Officer Eduvigis A. Acero in his Notice of Inspection Results. It was on the
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bases of the aforesaid findings (which petitioner did not contest), that
respondent Regional Director issued the assailed Order for petitioner to
pay private respondents the respective wage differentials due them.

Clearly, as the duly authorized representative of respondent Secretary of


Labor, and in the lawful exercise of the Secretarys visitorial and
enforcement powers under Article 128 of the Labor Code, respondent
Regional Director had jurisdiction to issue his impugned Order. The instant
case therefore falls squarely within the coverage of the aforecited
amendment as the assailed order was issued to enforce compliance with
the provisions of the Code with respect to the payment of proper wages.
Hence, petitioners claim of lack of jurisdiction on the part of public
respondent is bereft of merit.
Balladares, et al. vs. Peak Ventures Corporation
G.R. No. 161794
NESTOR J. BALLADARES, ROLDAN L. GUANIZO, ARNULFO E.
MERTO, GERONIMO G. GOBUYAN, EDGARDO O. AVILA, and EDUARD
F. RAMOS, JR. vs.
PEAK VENTURES CORPORATION/ EL TIGRE SECURITY AND
INVESTIGATION
AGENCY
and
YANGCO
MARKET
OWNERS
ASSOCIATION/LAO TI SIOK BEE
June 16, 2009
Facts: Petitioners Nestor J. Balladares, Roldan L. Guanizo, Arnulfo E.
Merto, Geronimo G. Gobuyan, Edgardo O. Avila, and Eduard F. Ramos, Jr.
were employed by respondent Peak Ventures Corporation/El Tigre Security
and Investigation Agency (Peak Ventures) as security guards and were
assigned at the premises of respondent Yangco Market Owners and
Administrators Association (YMOAA). They filed a complaint for
underpayment of wages against their employer, Peak Ventures, with the
Department of Labor and Employment (DOLE).
In the Order dated July 21, 1999, Regional Director Maximo Baguyot Lim
rendered judgment in favor of petitioners and ruled that the contractor
was jointly and severally liable with the principal, pursuant to the law and
jurisprudence on the matter. Respondent Peak Ventures filed a Motion for
Reconsideration which was denied for lack of merit. Respondent appealed
the Order to the Office of the Secretary of Labor positing that the Regional
Director committed serious errors in awarding the amount of
P1,106,298.00 to petitioners, which it alleged to be quite excessive. On
December 7, 2000, respondents appeal was dismissed. A subsequent
motion for reconsideration was, likewise, denied by the Secretary of Labor
in a Resolution dated September 11, 2001.
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Issue: Whether or not the instant case falls within the jurisdiction of the
Regional Director.
Held: We uphold the jurisdiction of the DOLE Regional Director. It should
be noted that petitioners complaint involved underpayment of wages and
other benefits. In order to verify the allegations in the complaint, DOLE
conducted an inspection, which yielded proof of violations of labor
standards. By the nature of the complaint and from the result of the
inspection, the authority of the DOLE, under Article 128, came into play
regardless of the monetary value of the claims involved. The extent of this
authority and the powers flowing therefrom are defined and set forth in
Article 128 of the Labor Code, as amended by R.A. No. 7730.
However, if the labor standards case is covered by the exception
clause in Article 128 (b) of the Labor Code, then the Regional
Director will have to endorse the case to the appropriate Arbitration
Branch of the NLRC. In order to divest the Regional Director or his
representatives of jurisdiction, the following elements must be
present: (a) that the employer contests the findings of the labor
regulations officer and raises issues thereon; (b) that in order to
resolve such issues, there is a need to examine evidentiary matters;
and (c) that such matters are not verifiable in the normal course of
inspection. The rules also provide that the employer shall raise such
objections during the hearing of the case or at any time after receipt
of the notice of inspection results.
In this case, the Regional Director validly assumed
jurisdiction over the money claims of private respondents
even if the claims exceeded P5,000 because such jurisdiction
was exercised in accordance with Article 128(b) of the Labor
Code and the case does not fall under the exception clause.
Accordingly, we find no sufficient reason to warrant the certification of the
instant case to the Labor Arbiter and divest the Regional Director of
jurisdiction. Respondent did not contest the findings of the labor
regulations officer. Even during the hearing, respondent never denied that
petitioners were not paid correct wages and benefits. This was, in fact,
even admitted by respondent in its petition filed before the CA. In its
defense, respondent tried to pass the buck to YMOAA, which failed to pay
the correct wages pursuant to the wage orders. Considering that the
liability of the principal and the contractor is joint and solidary, respondent
thereby prayed for a re-computation of the awards it claimed to be quite
excessive. In the motion for reconsideration filed before the Regional
Director, respondent submitted its own computation of the salary
adjustment due petitioners in the amount of P533,220.33 as wage
differentials, deducting further the amount of P39,371.52, which was
already allegedly received by petitioners, as shown in petitioners sample
pay slips and earning cards.
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Meteoro, et al. vs. Creative Creatures, Inc.


G.R. No. 171275
VICTOR METEORO, ET AL. vs.
CREATIVE CREATURES, INC.
July 13, 2009
Facts: Respondent is a domestic corporation engaged in the business of
producing, providing, or procuring the production of set designs and set
construction services for television exhibitions, concerts, theatrical
performances, motion pictures and the like. On the other hand, petitioners
were hired by respondent on various dates as artists, carpenters and
welders. They were tasked to design, create, assemble, set-up and
dismantle props, and provide sound effects to respondents various TV
programs and movies.
Sometime in February and March 1999, petitioners filed their respective
complaints for non-payment of night shift differential pay, overtime pay,
holiday pay, 13th month pay, premium pay for Sundays and/or rest days,
service incentive leave pay, paternity leave pay, educational assistance,
rice benefits, and illegal and/or unauthorized deductions from salaries
against respondent, before the Department of Labor and Employment
(DOLE), National Capital Region (NCR). Their complaints were consolidated
and docketed as NCR00-9902-IS-011.
In its position paper, respondent argued that the DOLE-NCR had no
jurisdiction over the complaint of the petitioners because of the absence
of an employer-employee relationship. It added that petitioners were freelance individuals, performing special services with skills and expertise
inherently exclusive to them like actors, actresses, directors, producers,
and script writers, such that they were treated as special types of workers.
Petitioners, on the other hand, averred that they were employees of
respondent, as the elements of an employer-employee relationship
existed. The Regional Director upheld the DOLE-NCRs jurisdiction to hear
and determine cases in violation of labor standards law.
On appeal, then DOLE Secretary Patricia A. Sto. Tomas affirmed the
findings of the DOLE Regional Director. In upholding the jurisdiction of the
DOLE-NCR, she explained that the Secretary of Labor or his duly
authorized representative is allowed to use his visitorial and enforcement
powers to give effect to labor legislation, regardless of the amount
involved, pursuant to Article 128 of the Labor Code, as amended by
Republic Act (R.A.) No. 7730.
For failure to obtain a favorable decision, respondent elevated the matter
to the Court of Appeals in CA-G.R. SP No. 76942. On May 31, 2005, the
appellate court rendered the assailed decision void.
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Issue: Whether or not said case is within the jurisdiction of the Regional
Director.
Held: We sustain the appellate courts conclusion that the instant case
falls within the exclusive jurisdiction of the NLRC. As it is now worded, and
as consistently held in a number of cases, the visitorial and enforcement
powers of the Secretary, exercised through his representatives,
encompass compliance with all labor standards laws and other labor
legislation, regardless of the amount of the claims filed by workers.
In order to do away with the jurisdictional limitations imposed by the
Servando ruling and to finally settle any lingering doubts on the extent of
the visitorial and enforcement powers of the Secretary of Labor and
Employment, R.A. 7730 was enacted, amending Article 128 (b) to its
present formulation, so as to free it from the jurisdictional restrictions
found in Articles 129 and 217.
This notwithstanding, the power of the Regional Director to hear and
decide the monetary claims of employees is not absolute. The last
sentence of Article 128 (b) of the Labor Code, otherwise known as the
exception clause, provides an instance when the Regional Director or his
representatives may be divested of jurisdiction over a labor standards
case.
Under prevailing jurisprudence, the so-called exception clause has
the following elements, all of which must concur:
(a) that the employer contests the findings of the labor
regulations officer and raises issues thereon;
(b) that in order to resolve such issues, there is a need to
examine evidentiary matters; and
(c) that such matters are not verifiable in the normal course of
inspection.
In the present case, the CA aptly applied the exception clause. At the
earliest opportunity, respondent registered its objection to the findings of
the labor inspector. The labor inspector, in fact, noted in its report that
respondent alleged that petitioners were contractual workers and/or
independent and talent workers without control or supervision and also
supplied with tools and apparatus pertaining to their job. In its position
paper, respondent again insisted that petitioners were not its employees.
It then questioned the Regional Directors jurisdiction to entertain the
matter before it, primarily because of the absence of an employeremployee relationship.
23.

Thirteenth Month Pay

History of the Law


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Dentech Manufacturing Corporation vs. NLRC


G.R. No. 81477
DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA
in his capacity as General Manager vs.
NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN
MARBELLA, ARMANDO TORNO, JUANITO TAJAN, JR. and JOEL
TORNO
April 19, 1989
Facts: The herein petitioner Dentech Manufacturing Corporation is a
domestic corporation organized under Philippine laws. Before the firm
became a corporate entity, it was known as the J.L. Ledesma Enterprises,
a sole proprietorship owned by the herein petitioner Jacinto Ledesma. At
present, he is the president and general manager of the corporation as
well as the owner of the controlling interest thereof. The firm is engaged in
the manufacture and sale of dental equipment and supplies.The herein
private respondents are members of the Confederation of Citizens Labor
Union, a labor organization registered with the Department of Labor and
Employment. They used to be the employees of the petitioner firm,
working therein as welders, upholsterers and painters. They were already
employed with the company when it was still a sole proprietorship. They
were dismissed from the firm beginning February 14, 1985. On June 26,
1985, the private respondents filed a Complaint with the arbitration
branch of the respondent National Labor Relations Commission (NLRC)
against the petitioners for, illegal dismissal and violation of Presidential
Decree No. 851. At first, they only sought the payment of their 13th
month pay under Presidential Decree No. 851 as well as their separation
pay, and the refund of the cash bond they filed with the company at the
start of their employment. Later on, they sought their reinstatement as
well as the payment of their 13th month pay and service incentive leave
pay, and separation pay in the event that they are not reinstated. On the
other hand, the petitioners alleged that the private respondents were not
dismissed from the firm on account of their union activities. They
maintained that the private respondents abandoned their work without
informing the company about their reasons for doing so and that,
accordingly, the private respondents are not entitled to service incentive
leave pay and separation pay.
Issue: Whether or not the private respondents are entitled as a matter of
right to a 13th month pay.
Held: The petitioners reiterate their contention that the private
respondents abandoned their work. In support of this claim, they call
attention to the alleged testimony of the general manager of the
petitioner firm. The petitioners likewise maintain that the company is a
financially distressed firm exempted from complying with the provisions of
Presidential Decree No. 851. Under Section 3 of the rules and regulations
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implementing said Presidential Decree financially distressed employers, i.,


e., those currently incurring substantial losses, are not covered by the
Decree. Section 7 thereof requires, however, that such distressed
employers must obtain the prior authorization of the Secretary of Labor
and Employment before they may qualify for such exemption. The
petitioners have no basis to claim that the company is exempted from
complying with the pertinent provisions of the law relating to the payment
of 13th month compensation. The refund of the cash bond filed by the
private respondents is in order. Article 114 of the Labor Code prohibits an
employer from requiting his employees to file a cash bond or to make
deposits, subject to certain exceptions, to wit- Art. 114. Deposits for loss
or damage.- No employer shall require his worker to make deposits from
which deductions shall be made for the reimbursement of loss of or
damage to tools, materials, or equipment supplied by the employer,
except when the employer is engaged in such trades, occupations or
business where the practice of making deductions or requiring deposits is
a recognized one, or is necessary or desirable as determined by the
Secretary of Labor in appropriate rules and regulations. The petitioners
have not satisfactorily disputed the applicability of this provision of the
Labor Code to the case at bar. Considering further that the petitioners
failed to show that the company is authorized by law to require the private
respondents to file the cash bond in question, the refund thereof is in
order.
Coverage
Archilles Manufacturing Corporation vs. NLRC

G.R. No. 107225


ARCHILLES MANUFACTURING CORPORATION, ALBERTO YU and
ADRIAN YU vs.
NATIONAL LABOR RELATIONS COMMISSION, GERONIMO MANUEL,
ARNULFO DIAZ, JAIME CARUNUNGAN and BENJAMIN RINDON
June 2, 1995
Facts: Archilles Manufacturing Corporation, Alberto Yu and Adrian Yu are
the petitioners, the latter two (2) being the Chairman and the VicePresident of ARCHILLES, respectively. Private respondents Geronimo
Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin Rindon were
employed by ARCHILLES as laborers in its steel factory located in
Barangay Pandayan, Meycauayan, Bulacan, each receiving a daily wage of
P96.00. ARCHILLES was maintaining a bunkhouse in the work area which
served as resting place for its workers including private respondents. In
1988 a mauling incident nearly took place involving a relative of an
employee. As a result ARCHILLES prohibited its workers from bringing any
member of their family to the bunkhouse. But despite this prohibition,
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private respondents continued to bring their respective families to the


bunkhouse, causing annoyance and discomfort to the other workers. This
was brought to the attention of ARCHILLES. On 11 May 1990 the
management ordered private respondent to remove their families from
the bunkhouse and to explain their violation of the company rule. Private
respondents remove their families from the premises but failed to report
to the management as required; instead, they absented themselves from
14 to 18 May 1990. Consequently, on 18 May 1990, ARCHILLES terminated
their employment for abandonment and for violation of the company rule
regarding the use of the bunkhouse. Private respondents filed a complaint
for illegal dismissal and with public respondent National Labor Relations
Commission a motion for the issuance of a writ of execution for their
immediate reinstatement, pending appeal, either physically or in the
company payroll. On 19 September 1991 ARCHILLES opposed the motion.
NLRC reordered ARCHILLES to pay private respondents their "withheld"
salaries from 19 September 1991 on the ground that the order of
reinstatement of the Labor Arbiter was immediately executory, even
pending appeal. Since ARCHILLES in its opposition alleged that actual
reinstatement was no longer possible as it would affect the peace and
order situation in the steel factory, clearly, ARCHILLES had opted for
payroll reinstatement of private respondents.
Issue: Whether or not a writ of execution is still necessary to enforce the
Labor Arbiter's order of immediate reinstatement of employees who were
terminated from service even when pending appeal.
Held: Yes. It must be stressed that although the reinstatement aspect of
the decision is immediately executory pursuant to Article 223 of the Labor
Code, it does not follow that it is self-executory. There must be a writ of
execution which may be issued motuproprio or on motion of an interested
party. Article 224 of the Labor Code provides: Art. 224. Execution of
decisions, orders or awards. (a) The Secretary of Labor and
Employment or any Regional Director, the Commission or any Labor
Arbiter, or med-Arbiter or voluntary arbitrator may, motuproprio or on
motion of any interested party, issue a writ of execution on a judgment
within five (5) years from the date it becomes final and executory. In the
absence of an order for the issuance of a writ of execution on the
reinstatement aspect of the decision of the Labor Arbiter, the petitioner
was under no legal obligation to admit back to work the private
respondent under the terms and conditions prevailing prior to her
dismissal or, at the petitioner's option, to merely reinstate her in the
payroll. An option is a right of election to exercise a privilege, and the
option in Article 223 of the Labor code is exclusively granted to the
employer. The event that gives rise for its exercise is not the
reinstatement decree of the Labor Arbiter, but the writ for its execution
commanding the employer to reinstate the employee, while the final act
which compels the employer to exercise the option is the service upon it
of the writ of execution when, instead of admitting the employee back to
his work, the employer chooses to reinstate the employee in the payroll
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only. If the employer does not exercise this option, it must forthwith admit
the employee back to work, otherwise it may be punished for contempt.
Ultra Villa Food Haus vs. Geniston
G.R. No. 120473
Ultra Villa Food Haus, and/or Rosie Tio vs.
Renato Geniston and National Labor Relations Commission
June 23, 1999
Facts: Geniston alleged that he was employed as a do it all guy acting
as waiter, driver and maintenance man in Ultra Villa Food Haus. His
employment spanned from March 1, 1989 until he was dismissed on May
13, 1992. During the elections of May 11, 1992, Geniston acted as a poll
watcher for the National Union of Christian Democrats. The counting of
votes lasted until 3 p.m. the next day, May 12. He did not report from
work on both days on account of his poll-watching. Upon arriving home,
Geniston discovered that Tio had phoned his mother that morning and
informed the latter that he was dismissed from work.
Geniston prayed that the Labor Arbiter order petitioner Tio to pay him
overtime pay, premium pay, holiday pay, service incentive leave pay,
salary differential, and 13th month pay, as well as damages, and to
reinstate him plus backwages. Tio maintained that Geniston was her
personal driver, not an employee of the Ultra Villa Food Haus. He was
likewise given free meals as well as 13th month pay at the end of the year.
The Labor Arbiter found that Genistoon was indeed Tios personal driver
for if it were true that he was made to perform these functions as a waiter,
it would be incongruous with the position of a driver. Therefore, he was
not entitled to overtime pay, premium pay, service incentive leave pay
and 13th month pay. Upon appeal, the NLRC reversed the decision and
ordered petitioner to reinstate Geniston and to pay him backwages,
overtime pay, premium pay for holiday and rest days, 13 th month pay, and
service incentive leave pay. The NLRC also denied petitioners motion,
reiterating its earlier ruling that private respondent was an employee of
the Ultra Villa Food Haus.
Issue: Whether or not private respondent was an employee of Ultra Villa
Food Haus and entitled to 13th month pay.
Held: No but he is entitled to 13 th month pay. He failed to show evidence
that he was employed in the Ultra Villa Food Haus, therefore the Labor
Arbiter correctly ruled that he was only Tios personal driver. Though his
employment is governed by Article 141 of the Labor Code which includes
family drivers in its coverage, it was, however, silent on the grant of
overtime pay, holiday pay, premium pay and service incentive leave to
those engaged in the domestic or household service. In addition, Article
82 excludes domestic helpers from the coverage of Book III, Title I of the
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Code. Clearly then, petitioner is not obliged by law to grant private


respondent any of these benefits. Employing the same line of analysis, it
would seem that private respondents is not entitled to 13 th month pay.
Nevertheless, we deem it just to award Geniston 13 th month pay in view of
Tios practice of according Gensiton such benefit. Indeed, petitioner
admitted that she gave respondent 13th month pay every December.
Basic Wage/Commissions
Boie Takeda vs. Dela Serna
G.R. No. 92174
BOIE-TAKEDA CHEMICALS, INC. vs.
HON. DIONISIO DE LA SERNA, Acting Secretary of the Department
of Labor and Employment
December 10, 1993

G.R. No. L-102552


PHILIPPINE FUJI XEROX CORP. vs.
CRESENCIANO B. TRAJANO, Undersecretary of the Department of
Labor and Employment, and PHILIPPINE FUJI XEROX EMPLOYEES
UNION
December 10, 1993

Facts: A routine inspection was conducted on May 2, 1989 in the


premises of petitioner Boie-Takeda Chemicals, Inc. by Labor and
Development Officer Reynaldo B. Ramos under Inspection Authority No. 4209-89. Finding that Boie-Takeda had not been including the commissions
earned by its medical representatives in the computation of their 13th
month pay, Ramos served a Notice of Inspection Results on Boie-Takeda
through its president, Mr. Benito Araneta, requiring Boie-Takeda within ten
(10) calendar days from notice to effect restitution or correction of "the
underpayment of 13th month pay for the year(s) 1986, 1987 and 1988 of
Med Rep (Revised Guidelines on the Implementation of 13th month pay #
5) in the total amount of P558,810.89." Boie-Takeda wrote the Labor
Department contesting the Notice of Inspection Results, and expressing
the view "that the commission paid to our medical representatives are not
to be included in the computation of the 13th month pay since the law
and its implementing rules speak of REGULAR or BASIC salary and
therefore exclude all other remunerations which are not part of the
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REGULAR salary." It pointed out that, "If no sales is (sic) made under the
effort of a particular representative, there is no commission during the
period when no sale was transacted, so that commissions are not and
cannot be legally defined as regular in nature." A similar Routine
Inspection was conducted in the premises of Philippine Fuji Xerox Corp. on
September 7, 1989 pursuant to Routine Inspection Authority No. NCRLSED-RI-494-89. In his Notice of Inspection Results, 6 addressed to the
Manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment Officer
Nicanor M. Torres noted the following violation committed by Philippine
Fuji Xerox Corp., to wit: "Underpayment of 13th month pay of 62
employees, more or less pursuant to Revised Guidelines on the
Implementation of the 13th month pay law for the period covering 1986,
1987 and 1988. Philippine Fuji Xerox was requested to effect rectification
and/or restitution of the noted violation within five (5) working days from
notice. In their almost identically-worded petitions, petitioners, through
common counsel, attribute grave abuse of discretion to respondent labor
officials Hon. Dionisiodela Serna and Undersecretary Cresenciano B.
Trajano in issuing the questioned Orders of January 17, 1990 and