• San Miguel Corp v.
NLRC & Maliksi, GR
No. 147566, Dec. 6, 2006
- The act if hiring and re-hiring the petitioners over a
period of time without considering them as regular
employees evidences bad faith on the part of
private respondent.
- Regularization is a labor benefit that should apply to
all qualified employees similarly situated and may
not be denied merely because some employees
were allegedly not parties to or were not impleaded
in the voluntary arbitration case.
- It must be noted that the Court extended the
benefit of regularization not only to the original
complainants but also to those workers who are
“similarly situated” to therein complainants.
• LIIKHA-PMPB v. Burlinggame corp., GR
No. 162833, June 15, 2007
- Job contracting is permissible only if the following
conditions are met: 1) the contractor carries on an
independent business and undertakes the contract
work on his own account under his own
responsibility according to his own manner and
method, free from the control and direction of his
employer or principal in all matters connected with
the performance of the work except as to the
results thereof; and 2) contractor has substantial
capital or investment in the form of tools,
equipment, machineries, work premises, and other
materials which are necessary in the conduct of the
business.
- Mentioned sec. 5 of DO 18-02 which states the
prohibition against labor-only contracting (see DO)
- Promo-girls were directly related to the principal
business or operation of Burlingame. Marketing and
selling of products is an essential activity to the
main business of the principal.
- In labor-only contracting, the law creates an
employer-employee relationship to prevent a
circumvention of labor laws. The contractor is
merely an agent of the principal employer and the
latter is responsible to the employees of the labor-
only contractor as if such employees had been
directly employed by the principal employer.
• Coca-Cola Bottlers Phil., Inc. v. NLRC,
307 SCRA 131 (1999)
- mentioned Singer Sewing Machine vs Drilon: the
definition that regular employees are those who
perform activities which are desirable and
necessary for the business of the employer is not
determinative in this case. Any agreement may
provide that one party shall render services for and
in behalf of another for a consideration (no matter
how necessary for the 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.
- Art 280 is not the yardstick for determining the
existence of an employment relationship because it
merely distinguishes between two kinds of
employees i.e. regular and casual for purposes of
determining the right of an employee to certain
benefits, to join or form a union or to security of
tenure. Art 280 does not apply where the
existence of an employment relationship is in
dispute (compare with Manila Water)
- Painting jobs performed we sporadic. The
infrequency or irregularity of assignments
countervails Canonicato’s submission that he was
assigned to undertake the task for the whole year
round.
• Manila Water Co., Inc. v. Pena, 434
SCRA 52 (2004)
- ACGI was engaged in labor-only contracting and as
such, is considered merely an agent of the
petitioner. In labor-only contracting, the statute
creates an employer-employee relationship for a
comprehensive purpose: to prevent a circumvention
of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is
responsible to the employees of the labor-only
contractor as if such employees had been directly
employed by the principal employer.
- Private resp performed activities which were
necessary or desirable to its principal trade or
business. Thus, they were regular employees of
petitioner regardless of whether the engagement
was merely an accommodation of their request
pursuant to Art. 280 (compare with Far East Bank-
blind employees).
- Art. 280: the provisions of written agreement to the
contrary notwithstanding and regardless of the oral
agreement of the parties, an employment shall be
deemed to be regular where the employee has been
engaged to perform activities which are usually
necessary or desirable in the usual business or
trade of the employer, except where the
employment has been fixed for a specific project or
undertaking the completion or termination of which
has been determined at the time of the
engagement of the employee or where the work or
services to be performed is seasonal in nature and
the employment is for the duration of the season.
- Under this provision, the evil sought to be
prevented is singled out: agreements entered into
precisely to circumvent security of tenure. It has no
application where a fixed period of employment was
agreed upon knowingly and voluntarily by the
parties, without any force, duress or improper
pressure being brought upon the employee and
absent any circumstances vitiating his consent, or
where it satisfactorily appears that the employer
and employee dealt with each other on more or less
terms with no moral dominance whatever being
exercised by the former over the latter.
- Under 279 of LC, an employee who is unjustly
dismissed form work is entitled to reinstatement
without loss of seniority rights and other privileges,
and to his full back wages, inclusive of allowances,
and to his other benefits or their monetary
equivalent computed from the time his
compensation was withheld from him up to the time
of his actual reinstatement. If reinstatement is no
longer possible, the employer has the alternative of
paying the employee his separation pay in lieu of
reinstatement.
• Lanzaderas v. Amethyst Security &
General Services, Inc.,
- The only time the indirect employer may be
made solidarily liable with the contractor is
when the contractor fails to pay his
employees their wages and other benefits
claimed.
- Security of tenure, although provided in the
Constitution, does not give an employee an
absolute vested right in a position as would deprive
the company of its prerogative to change their
assignment or transfer them where they will be
most uselful. When a transfer is not unreasonable,
nor inconvenient, nor prejudicial to an employee;
and it doesn not involve a demotion in rank or
 diminution of his pay, benefits, and other privileges, just cause under 282, because the dismissal is
the employee may not complain that it amounts to imputable to the employee.
a constructive dismissal.

• San Miguel Corporation v. Abella, 461

SCRA 392 (2005)

- effect of finding: there being a finding of labor-only

contracting, liability must be shouldered by either
SMC (principal) or Sunflower (contractor) or shared
by both. SMC however should be held solely liable
for Sunflower became non-existent with the closure
of the aquaculture of business of SMC (CA reason).
- In legitimate labor contracting, the law creates an
employer-employee relationship for a limited
purpose, i.e. to ensure that the employees are paid
their wages. The principal employer becomes jointly
and severally liable with the job contractor, only for
the payment of the employees’ wages
whenever the contractor fails to pay the
same. Other than that, the principal employer
is not responsible for any claim made by the
employees.
- In labor-only contracting, the statute creates an
employer-employee relationship for a
comprehensive prupose: to prevent a circumvention
of labor laws. The contractor is considered merely
an agent of the principal employer and the latter is
responsible to the employees of the labor-only
contractor as if such employees had been directly
employed by the principal employer.
- Retrenchment is a management prerogative
consistently recognized and affirmed by this Court.
It is, however, subject to faithful compliance with
the substantive and procedural requirements laid
down by law and jurisprudence.
- For retrenchment to be considered valid, the
following substantial requirements must be met:
1) the losses expected should be substantial and not
merely de minimis in extent
2) substantial losses apprehended must be reasonably
imminent such as can be perceived objectively and
in good faith by the employer
3) the retrenchment must be reasonably necessary
and likely to effectively prevent the expected losses
4) the alleged losses, if already incurred, and the
expected imminent losses sought to be forestalled,
must be proved by sufficient and convincing
evidence.

- SMC proved substantial business reverses justifying

retrenchment of its employees
- For termination due to retrenchment be valid, the
law requires that written notices of the intended
retrenchment be served by the employer on the
worker and on the DOLE at least 1 month before the
actual date of the retrenchment in order to give
employees some time to prepare for the eventual
loss of their jobs, as well as to give DOLE the
opportunity to ascertain the verity of the alleged
cause of termination.
- Where the dismissal is based on an authorized
cause under Art 283 but the employer failed to
comply with the notice requirement, the sanction
should be stiff as the dismissal process was initiated
by the employer’s exercise of his management
prerogative, as opposed to a dismissal based on a
 • Almodiel v. NLRC, 223 SCRA 341
(1993)

- Redundancy for purposes of our Labor Code, exists

where the services of an employee are in excess of
what is reasonably demanded by the actual
requirements of the enterprise. The characterization
of an employee’s services as no longer necessary or
sustainable, and therefore, properly terminable, was
an exercise of business judgment on the part of the
employer. The wisdom or soundness of such
characterization was not subject to discretionary
review on the part of the LA nor of the NLRC so
long, of course, as violation of law or merely
arbitrary of malicious action is not shown.
- In International Macleod vs IAC, it was held that the
determination of the need for the phasing out of a
department as a labor and cost saving device
because it was no longer economical to retain said
services is a management prerogative and the
courts will not interfere with the exercise thereof as
long as no abuse of discretion or merely arbitrary or
malicious action on the part of management is
shown.
- An employer has a much wider discretion in
terminating employment relationship of managerial
personnel compared to rank and file because
officers in such key positions perform not only
functions which by nature require the employer’s
full trust and confidence but also functions that spell
the success or failure of an enterprise.
- On Alien Employment: a resident alien without a
working permit is not what is prohibited in Art 40.
The provision requires employment permit to 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.
• General Milling Corp. v. Torres, 196
SCRA 215 (1991)
• Nitto Enterprises v. NLRC, 258
SCRA 654 (1995)
- Art 61 of the LC provides: contents of
apprenticeship agreement. Apprenticeship
agreements, including the main rates of
apprentices, shall conform to the rules issued by the
Minister of Labor and Employment. The period of
apprentices shall not exceed six months.
Apprenticeship agreements providing for wage
rates below the legal minimum wage, which in no
case shall start below 75% per cent of the
applicable minimum wage, may be entered into only
in accordance with apprenticeship program duly
approved by the Minister of Labor and Employment.
The Ministry shall develop standard model programs
of apprenticeship.
- It is mandated that apprenticeship agreements
entered into by the employer and apprentice shall
be entered only in accordance with the
apprenticeship program duly approved by the
Minister of Labor and Employment.
- Prior approval by the DOLE of the proposed
apprenticeship is, therefore, a condition sine
qua non before an apprenticeship agreement
can be validly entered into.
- The act of filing the proposed apprenticeship
program with DOLE is a preliminary step towards its
final approval and does not instantaneously give
rise to an employer-apprentice relationship.
- Hence, apprenticeship agreement bet petitioner and
private resp has no force and effect in the absence
of a valid apprenticeship program duly approved by
the DOLE.
- Art. 280 is cited.
- Twin requirements of notice and hearing constitute
the essential elements of due process.

- GMC’s claim that hiring of a foreign coach is an

employer’s prerogative has no legal basis. Art. 40
states that an employer seeking employment of an
alien must first obtain an employment permit from
the DOLE. GMC’s right to choose is limited by the
statutory requirement of an alien employment
permit.
- The Labor Code empowers the Secretary to make a
determination as to the availability of the services
of a “person in the Philippines who is competent,
able and willing at the time of application to perform
the services for which an alien is desired”. DOLE is
the agency vested with jurisdiction to determine the
question of availability of local workers.
 extent the length of performance and its continued
existence.
- The noble objectives of Magna Carta for Disabled
Persons are not based merely on charity or
accommodation, but on justice and the equal
treatment of qualified persons, disabled or not.

• Bernardo v. NLRC & FEBTC, 310 SCRA 186

(1999)

- The Magna Carta for Disabled Persons mandates

that qualified disabled persons be granted the same
terms and conditions of employment as qualified
able-bodied employees. Once they have attained
the status of regular workers, they should be
accorded all the benefits granted by law,
notwithstanding written or verbal contracts to the
contrary. This treatment is rooted not merely on
charity or accommodation, but on justice for all.
- The magna carta madates that a qualified disabled
employee should be given the same terms and
conditions of employment as a qualified able-bodied
person. –equal opportunity for employment as
provided for by sec. 5.
- The fact that the employees were qualified disabled
persons necessarily removes the employment
contracts from the ambit of Art. 80. Since the
Magna Carta accords them the rights of qualified
able-bodied persons, they are thus covered by Art.
280.
- The test whether an employee is regular was laid
down in De Leon vs. NLRC:
The primary standard, therefore, of determining
regular employment is the reasonable connection
between the particular activity performed by the
employee in relation to the usual trade or business
of the employer. The test is whether the former is
usually necessary or desirable in the usual business
or trade of the employer. The connection can be
determined by considering the nature of the work
performed and its relation to the scheme of the
particular business or trade in its entirety. Also if the
employee has been performing the job for at least
one year, even if the performance is not continuous
and merely intermittent, the law deems repeated
and continuing need for its performance as
sufficient evident of the necessity if not
indispensability of that activity to the business.
Hence, the employment is considered regular, but
only with respect to such activity, and while such
activity exists.
- Accommodated employees: this fact does not
change the nature of their employment. An
employee is regular because of the nature of work
and the length of service, not because of the mode
or even the reason for hiring them.
- In LT Datu v NLRC: the determination of whether
employment is casual or regular does not depend
on the will or word of the employer, and the
procedure of hiringxxx but on the nature of the
activities performed by the employee, and to some

• Manila Terminal Co. Inc. v. CIR, 91 Phil.
625 (1952)
- The Association cannot be said to have impliedly
waived the right to overtime compensation, for the
obvious reason that they could not have expressly
waived it.
- Principle of laches and estoppel cannot be invoked:
a) It would be contrary to the spirit of the Eight-Hour
Labor Law, under which, as already seen, the
laborers cannot waive their right to extra
compensation.
b) The law principally obligates the employer to
observe it, so much so that it punishes the employer
for its violation and leaves the employee or laborer
free and blameless.
c) The employee or laborer is in such a
disadvantageous position as to be naturally
reluctant or even apprehensive in asserting any
claim which may cause the employer to devise a
way for exercising his right to terminate the
employment.
- If laches and estoppel will be applied, it may bring a
situation whereby the employee or laborer who
cannot expressly renounce their right to extra
compensation under the Eight-Hour Labor Law, may
be compelled to accomplish the same thing by mere
silence of lapse of time, thereby frustrating the
purpose of the law by indirection.
- The public is interested in the strict enforcement of
the Eight-Hour Labor Law. This was designed not
only to safeguard the health and welfare of the
laborer or employee, but in a way to minimize
unemployment by forcing employers in cases where
more than 8-hour operation is necessary, to utilize
different shifts of laborers or employees working
only for eight hours each.
• Charlito Peñranda v. Baganga Plywood
Corp., et al., G.R. 159577, May 3, 2006
- Managerial employees and members of the
managerial staff are exempted from the provisions
of the Labor Code on labor standards. Since
petitioner belongs to this class of employees, he is
not entitled to overtime pay and premium pay for
working on rest days.
- Managerial employees are those whose primary
duty consists of the management of the
establishment in which they are employed or of a
department of subdivision.
- Sec. 2(c) of the Implementing Rules of LC, Book III,
Rule I defines members of a managerial staff as
those with the following duties and responsibilities:
(a) The primary duty consists of the performance of
work directly related to management policies of the
employer.
(b) Customarily and regularly exercises discretion and
independent judgment.
(c) i. Regularly and directly assist a proprietor or a
managerial employee whose primary duty consists
of the management of the establishment in which
he is employed or subdivision thereof; or
ii. execute under general supervision work along
specialized or technical lines requiring special
training, experience, or knowledge;
iii. execute under general supervision special
assignment and tasks
(d) Who do not devote more than 20 percent of their
hours worked in a workweek to activities which are
not directly and closely related to the performance
of the work described in paragraphs (1), (2) and (3)
above.
- He admitted that he was a supervisor and his work
necessarily required the use of discretion and
independent judgment to ensure the proper
functioning of the steam plant boiler.
- As a supervisor, he is deemed a member of the
managerial staff.
• Asia Pacific Christening, Inc. v. Farolan,
393 SCRA 454 (2004)
- Requisites for a valid dismissal of an employee is
thus in order, to wit:
(a) the employee must be afforded due process i.e. he
must be given opportunity to be heard and to
defend himself
(b) dismissal must be for a valid cause as provided in
art 282 of LC or any of the authorized causes under
283 and 284 of the same Code
- The rule is settled that in termination cases, the
employer bears the onus of proving that the
dismissal is for just cause failing which the dismissal
is not justified and the employee is entitled to
reinstatement.
- Treatment to managerial employees:
“Thus with respect to rank and file personnel, loss of
trust and confidence as ground for valid dismissal
requires proof of involvement in the alleged events in
question and that mere uncorroborated assertions and
accusations by the employer will not be sufficient. But as
regards a managerial employee, mere existence of a
basis for believing that such employee has breached the
trust of his employer would suffice for his dismissal.
- Samson vs NLRC: Before one may be properly
considered a managerial employee, all the
following conditions must be met:
a. Their primary duty consists of the management of
the establishment in which they are employed or of
a department or subdivision thereof;
b. They customarily and regularly direct the work of
two or more employees therein;
c. They have the authority to hire or fire other
employees of lower rank, or their suggestions and
recommendations as to the hiring and firing and as
to the promotion or any other change of status of
other employees are given particular weight. (SEC
2(b) Rule I, Book III of the Omnibus)
- In Paper Industries Corp vs Laguesma:
“Managerial employees are ranked as Top Mangers,
Middle Mangers and First Line Managers. The mere fact
that an employee is designated as manager does not
ipso factor make him one—designation should be - Fishermen employed by petitioner have no choice
reconciled with the actual job description of the but to remain on board its vessel. Although they
employee for it is the job description that determines the perform non-agricultural work away from
nature of employment. petitioner’s buiness offices, the fact remains that
- The absence of a written job description or throughout the duration of their work, they are
prescribed work standards, however, leaves this under the effective control and supervision of
court in the dark. petitioner through the vessel’s patron or master.
- “Loss of confidence” should have a basis and - On abandonment: To constitute abandonment,
determination thereof cannot be left entirely to the there must be concurrence of the intention to
employer. abandon and some overt acts from which it may be
- Loss of trust and confidence to be a valid ground for inferred that the employee concerned has no more
an employee’s dismissal must be based on a willful interest in working.
breach and founded on clearly established facts. A - The filing of complaint which asked for
breach is willful if it is done intentionally, knowingly reinstatement plus backwages is inconsistent with
and purposely, without justifiable excuse, as resp defense of abandonment.
distinguished from an act done carelessly,
thoughtlessly, heedlessly, and inadvertently.
- Failure to observe prescribed standards of work, or
to fulfill reasonable work assignments due to
inefficiency may be just cause for dismissal but it
must be shown what standards of work or
reasonable work assignment were prescribed which
respondent failed to observe not that if she did fail
to observe any such, it was due to inefficiency.
- While an employee may be dismissed because of
inefficiency, neglect or carelessness, the law implies
a situation or undertaking by an employee in
entering into a contract of employment that he is
competent to perform the work undertaken and is
possessed of the requisite skill and knowledge to
enable him to do so, and that he will do the work of
the employer in a careful manner. If he is not
qualified to do the work which he undertakes, if he
is incompetent, unskillful or inefficient, or if he
executes his work in a negligent manner or is
otherwise guilty of neglect of duty, he may lawfully
be discharged before the expiration of his term of
employment.
- On moral damages: it must be shown that the
dismissal was attended by bad faith or constituted
an act opposite to labor or was done in a manner
contrary to morals, good customs, or public policy.
- Award of moral damages and exemplary damages
for an illegally dismissed employee is proper where
the employee had been harassed and arbitrarily
terminated by the employer.

• Auto Bus Transport Systems, Inc. v.

• Merdicar Fishing Corp v. NLRC, 297 Bautista, 458 SCRA 578 (2005)
SCRA 440 (1998)

- Art. 82 provides that the Title Working Conditions

- Art. 95 of the LC vis-à-vis Sec 1(d), RULE V, Book III
of the IRR which provides:
and Rest period Provisions of the LC shall not apply
Art. 95: Right to Service Incentive Leave
to:
(a) Every employee who has rendered at least one year
(a) government employees
of service shall be entitled to a yearly service
(b) field personnel
incentive leave of five days with pay.
(c) members of the family of the employer who are
- And Sec 1(d) provides that: Field personnel and
dependent on him for support
other employees whose performance is
(d) domestic helpers
unsupervised by the employer includeing those who
(e) persons in the personal service of another
are engaged on task or contract basis, purely
(f) workers who are paid by results as determined by
commission basis, or those who are paid in a fixed
the Sec of Labor
amount for performing work irrespective of the time
- Field personnel shall refer to non-agricultural
consumed in the performance thereof;
employees who regularly perform their duties away
- Amplification of the LC.
from the principal place of business or branch office
- Same is true to the phrase “those who are engaged
of the employer and whose actual hours of work in
o task or contract basis, purely commission basis”
the filed cannot be determined with reasonable
should be related with field personnel applying the
certainty.
rule on ejusdem generis that general and unlimited
- Rule IV, Sec. 1 (e), Book III of the IRR states
terms are restrained and limited by the particular
that:
terms that they follow.
“Field personnel and other employees whose time and
- Bureau of Working Conditions (BWC), Advisory
performance is unsupervised by the employerxxx”
Opinion:
- The latter provision did not add another element to
“ As a general rule, field personnel are those whose
the LC but merely interpreted and expounded the
performance of their job/service is not supervised by the
clause of the provision of the LC.
 employer or his rep, the workplace being away from the
principal office and whose hours and days of work
cannot be determined with reasonable certainty, hence
they are paid specific amount for rendering specific
service or performing specific work. If required to be at
specific places at specific times, employees including
drivers cannot be said to be field personnel despite the
fact that they are performing work away from the
principal office of the employee.
- In order to conclude whether an employee is a field
employee, it is also necessary to ascertain if actual
hours of work in the filed can be determined with
reasonable certainty by the employer. In so doing,
an inquiry must be made as to whether or not the
employee’s time and performance are constantly
supervised by the employer.
- Dispatcher: function is precisely to see that the bus
and its crew leave the premises at specific times
and arrive at the estimated proper time.
- On prescription: LC provides that all money claims
arising from er-ee rel shall be filed within 3 years
from the time the cause of action accrued;
otherwise, they shall be forever barred.
- In case of nonpayment of allowances and other
monetary benefits, if it is established that the
benefirs being claimed have been withheld from the
employee for a period longer than 3 yrs, the amount
pertaining to the period beyond the three-year
prescriptive period is therefore barred by
prescription. The amount that can only be
demanded by the aggrieved employee shall be
limited to the amount of the benefits withheld within
3 years before the filing of the complaint. (In the
computation of the prescriptive period, determine
when the act constituting the violation was
committed).
- On service incentive – when does the prescriptive
period commence?
Service incentive is a curious animal. The employee
may commute his accrued incentive leave upon his
resignation or separation frm work.
- Sec 2, Rule V, Book III: Service incentive leave is a
right which accrues to every employee who has
served within 12 months, whether continuous or
broken reckoned from the date the employee
started working, including authorized absences and
paid regular holidays unless the working days in the
establishment as a matter of practice or policy, or
that provided in the employment contract, is less
than 12 months, in which case said period shall be
considered as one year.
- It is commutable to its money equivalent if not used
or exhausted at the end of the year. In other words,
the employee who has served for one year is
entitled to it. He may use it as leave days or he may
collect its monetary value.
- The three-year prescriptive period commences, not
at the end of the year when the employee becomes
entitled to the commutation of his service incentive
leave, but from the time the employer refuses to
pay its monetary equivalent after demand of
commutation or upon termination of the employee’s
services as the case may be.
- Are the piece-rate workers entitled to overtime pay,
13th month pay, backwages, separation pay?
- Procedural aspect: Notice of dismissal is required –
Sec. 2, Rule XIV, Book V of IRR. If not complied then,
Art. 279 as amended by RA 6715 shall apply.
- The backwages of piece-rate workers are to be
determined by the NLRC because there is a need to
determine the varying degrees of production and
days worked by each worker.
- In this case, they are regular employees because of
the presence of these three factors:
a. 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
b. petitioners worked for private respondents
throughout the year, their employment not having
been dependent on a specific project or season
c. length of time that the petitioners worked for
private respondents
- While petitioners’ mode of compensation was on a
“per piece basis” the status and nature of their
employment was that of regular employee.
- The IRR exclude certain employees from receiving
benefits such as nighttime pay, holiday pay, service
incentive leave, and 13th month pay. Petitioners as
piece-rate workers do not fall within this group. Not
only did petitioners labor under the control of
private respondents as their employer, likewise did
petitioners toil throughout the year with the
fulfillment of their quota as supposed basis for
compensation.
- Sec 8(b) Rule IV, Book II provides for holiday pay of
certain employees.
- Revised Guidelines on the Implementation of the
13th Month Pay law, exclude employer of piece-rate
workers from those exempted from paying the 13th
month pay.
- Employers still not covered by PD 851: (d)
Employers of those who are paid on purely
commission, boundary or task basis, and those who
are paid a fixed amount for performing specific
work, irrespective of the time consumed in the
performance thereof, except where the workers
are paid on piece-rate basis in which case, the
employer shall grant the required 13th month
pay to such workers.
- Revised Guidelines: Workers who fall under the
piece-rate category: who are paid a standard
amount for every piece or unit of work produced
that is more or less regularly replicated without
regard to the time spent in producing the same.
- As to the overtime pay: Sec 2(e) Rule I, Book III
compare with Sec. 8, Rule VII, Book III.
- If the employer adhered to Sec. 8 where the Sec of
Labor would fix rates, then they are exempted.
- But employer did not allege adherence, thus sec
2(e) workers who are paid by results, including
those who are paid on piece-work, takay, pakiao, or
task basis but their employer did not comply with
Sec. 8 to fall within the exception, then they are
entitled to overtime pay.

• Labor Congress v. NLRC, 290

SCRA 509 (1998)

Battad: Determine whether the employer is using piece-rate

worker status to evade liability as to the benefits to which
such workers are exempted. This is similar to labor-only vs.
independent contractor where factors are to be considered
before we could establish which is the true status of the • Philippine Airlines, Inc. v. NLRC,
employees 302 SCRA 582 (1999)
- Art. 83-Normal Hours of Work, Art. 85, Meal Periods,
Sec. 7, Rule I, Book III read together.
- The eight-hour work period does not include the
meal break. Nowhere in the law may it be inferred
that employees must take their meals within the
company premises. Employees are not prohibited
from going out of the premises as long as they
return to their posts on time.
- On moral damages: Bad faith involves a state of
mind dominated by ill will or motive. It implies a
conscious and intentional design to do a wrongful
act for a dishonest purpose of some moral obliquity.
- Art. 83 and 85 of the Labor Code read:
Art. 83. Normal hours of work. � The normal hours of work
of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a
population of at least one million (1,000,000) or in hospitals
and clinics with a bed capacity of at least one hundred
(100) shall hold regular office hours for eight (8) hours a
day, for five (5) days a week, exclusive of time for meals,
except where the exigencies of the service require that
such personnel work for six (6) days or forty-eight (48)
hours, in which case they shall be entitled to an additional
compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this
Article, "health personnel" shall include: resident
physicians, nurses, nutritionists, dieticians, pharmacists,
social workers, laboratory technicians, paramedical
technicians, psychologists, midwives, attendants and all
other hospital or clinic personnel. (emphasis supplied)
- The thirty (30)-minute assembly time long practiced
and institutionalized by mutual consent of the
parties under Article IV, Section 3, of the Collective
Bargaining Agreement cannot be considered as
waiting time within the purview of Section 5, Rule I,
Book III of the Rules and Regulations Implementing
the Labor Code. ..
- .Furthermore, the thirty (30)-minute assembly is a
deeply- rooted, routinary practice of the employees,
and the proceedings attendant thereto are not
infected with complexities as to deprive the workers
the time to attend to other personal pursuits. They
are not new employees as to require the company
to deliver long briefings regarding their respective
work assignments. Their houses are situated right
on the area where the farm are located, such that
after the roll call, which does not necessarily require
the personal presence, they can go back to their
houses to attend to some chores.
- In short, they are not subject to the absolute
control of the company during this period,
otherwise, their failure to report in the
assembly time would justify the company to
impose disciplinary measures. The CBA does
not contain any provision to this effect; the
record is also bare of any proof on this point. This,
therefore, demonstrates the indubitable fact that
the thirty (30)-minute assembly time was not
primarily intended for the interests of the employer,
but ultimately for the employees to indicate their
availability or non-availability for work during every
working day.

Art. 85. Meal periods. � Subject to such regulations as the

Secretary of Labor may prescribe, it shall be the duty of
every employer to give his employees not less than sixty
(60) minutes time-off for their regular meals.

Sec. 7, Rule I, Book III of the Omnibus Rules Implementing

the Labor Code further states:

Sec. 7. Meal and Rest Periods. � Every employer shall

give his employees, regardless of sex, not less than one (1)
hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20)
minutes may be given by the employer provided that such
shorter meal period is credited as compensable hours
worked of the employee;

(a) Where the work is non-manual work in nature or does

not involve strenuous physical exertion;

(b) Where the establishment regularly operates not less

than sixteen hours a day;

(c) In cases of actual or impending emergencies or there is

urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the employer would
otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of

perishable goods.

Rest periods or coffee breaks running from five (5) to

twenty (20) minutes shall be considered as compensable
working time.

• Arica v. NLRC, 170 SCRA 776

(1989)
• University of Pangasinan Faculty
Union v. University of Pangasinan, 127 SCRA 691
(1984)
- No work no pay principle does not apply in the case
because the petitioners certainly do not ad
voluntatem absent themselves during semestral
breaks. Rather, they are constrained to take
mandatory leave from work.
- Intention of the law to grant ECOLA upon the
payment of basic wages. No pay, no ECOLA. But
petitioners were paid their wages in full for the
months of Nov and Dec notwithstanding the
intervening semestral break.
- Sec. 4 of the Omni:
Principles in Determining Hours Woked: (d) The time
during which an employee is inactive by reason of
interruptions in his work beyond his control shall be
considered time either if the imminence of the
resumption of work requires the employee’s
presence at the place of work or if the interval is too
brief to be utilized effectively and gainfully in the
employee’s own interest.
- Semestral break may also be considered as “hours
worked”.
- Sec. 3 of PD 451 on increase on tuition or other
school fees conditions.
- In University of the East vs UE Faculty Assoc: “In
effect, the problem posed before Us is whether or
not the reference in Sec 3(a) to “increase in salaries
or wages of the faculty and all other employees of
the schools concerned’ as the first purpose to which
the incremental proceeds from authorized increases
to tuition fees may be devoted, may be construed to
include allowances and benefits. In the negative,
which is the position of resp, it would follow that
such allowances must be taken from resources of
the school not derived from tuition fees. Xxx We
note that among the items of the second purpose
stated in provision in question is return in
investment. And the law provides only for the
maximum, not a minimum. In other words, the
schools may get a return to investment of not more
than 12% but if circumstances warrant, there is no
minimum fixed by law which they should get.
- If the schools happen to have no other resources to
grant allowances and benefits, either mandated by
law or secured by collective bargaining, such
allowances and benefits should be charged against
the return to investments referred to in the second
purpose stated Sec 3(a).
- The law provides that 60% should go to wage
increases and 40% to institutional developments,
student assistance, extension services and return
on investments (ROI). Under the law, the last item
ROI has flexibility sufficient to accommodate other
purposes of the law and the needs of the university.
ROI is not set aside for any one purpose of the
university such as profits or returns on investments.
- Besides, ROI is a return or profit over and above the
operating expenditures of the university, and still,
over and above the profits it may have had prior to
the tuition increase.
- From the foregoing, it is clear that petitioner is a
• Rada v. NLRC, 205 SCRA 69
(1992)
- Sandoval Shipyards, Inc. vs. National Labor
Relations Commission, et al. 12 is applicable to the
case at bar. Thus:
We hold that private respondents were project
employees whose work was coterminous with the
project or which they were hired. Project employees,
as distinguished from regular or non-project
employees, are mentioned in section 281 of the
Labor Code as those "where the employment has
been fixed for a specific project or undertaking the
completion or termination of which has been
determined at the time of the engagement of the
employee."
Policy Instructions No. 20 of the Secretary of Labor,
which was issued to stabilize employer-employee
relations in the construction industry, provides:
Project employees are those employed in
connection with a particular construction project.
Non-project (regular) employees are those
employed by a construction company without
reference to any particular project.
Project employees are not entitled to termination
pay if they are terminated as a result of the
completion of the project or any phase thereof in
which they are employed, regardless of the number
of projects in which they have been employed by a
particular construction company. Moreover, the
company is not required to obtain clearance from
the Secretary of Labor in connection with such
termination.
- A non-project employee is different in that the
employee is hired for more than one project. A non-
project employee, vis-à-vis a project employee, is
best exemplified in the case of Fegurin vs NLRC:
“Considering the nature of the work of petitioners,
that of carpenter, laborer or mason, their respective
jobs would actually be continuous and on-going.
When a project to which they are individually
assigned is completed, they would be assigned to
the next project or a phase thereof. In other words,
they belonged to a "work pool" from which the
company would draw workers for assignment to
other projects at its discretion. They are, therefore,
actually "non-project employees."
project employee considering that he does not
belong to a "work pool" from which the company
would draw workers for assignment to other
projects at its discretion. It is likewise apparent from
the facts obtaining herein that petitioner was
utilized only for one particular project, the MNEE
Stage 2 Project of respondent company. Hence, the
termination of herein petitioner is valid by reason of
the completion of the project and the expiration of
his employment contract.
 • Social Security System v. Court of
Appeals, 348 SCRA 1 (2000)
1) SSS
• Shell Oil Co. of the Philippines,
2) Payrolls
Ltd. v. National Labor Union, 81
3) Testimony of other laborers
Phil. 315 (1948)
4) Records of business affairs
5) Power of control
Nightwork has almost invariably been looked upon with
disfavor by students of the problem because of the excessive
On SSS: The mandatory coverage under the SSS Law
strain involved, especially for women and young persons, the
(Republic Act No. 1161, as amended by PD 1202 and PD
large amount of lost time consequent upon exhaustion of the
1636) is premised on the existence of an employer-employee
workers, the additional strain and responsibility upon the
relationship, and Section 8(d) defines an “employee” as “any
executive staff, the tendency of excessively fatigued workers
person who performs services for an employer in which
to "keep going" on artificial stimulants, the general curtailment
either or both mental and physical efforts are used and who
of time for rest, leisure, and cultural improvement, and the fact
receives compensation for such services where there is an
that night workers, although precluded to an extent from the
employer-employee relationship.” The essential elements of
activities of day life, do attempt to enter into these activities,
an employer-employee relationship are: (a) the selection
with resultant impairment of physical well-being. It is not
and engagement of the employee; (b) the payment of
contended, of course, that nightwork could be abolished in the
wages; (c) the power of dismissal; and (d) the power of
continuous-process industries, but it is possible to put such
control with regard to the means and methods by which the
industries upon a three- or four-shifts basis, and to prohibit
work is to be accomplished, with the power of control being
nightwork for women and children. (Labor's Progress and
the most determinative factor.
Problems, Vol. I, p. 464, by Professors Millis and Montgomery.)

On Payroll: Where the veracity of the alleged documents as

Nightwork cannot be regarded as desirable, either from the
payrolls are doubtful considering that the laborers named
point of view of the employer or of the wage earner. It is
therein never affixed their signatures to show that they
uneconomical unless overhead costs are unusually heavy.
actually received the amounts indicated corresponding to
Frequently the scale of wages is higher as an inducement to
their names, the fact that a particular laborer’s name does
employees to accept employment on the night shift, and the
not appear in the payrolls is no proof that he did not work in
rate of production is generally lower. (Management of Labor
the workplace.
Relations, by Watkins & Dodd, pp. 522-524; emphasis ours.)

On Testimony of other laborers: The testimonies of other

Nightwork. � Civilized peoples are beginning to recognize the
laborers who did not waver in their assertion on certain facts
fact that except in cases of necessity or in periods of great
of another laborer’s employment prevail over the incomplete
emergency, nightwork is socially undesirable. Under our
and inconsistent documentary evidence of the employer;
modern industrial system, however, nightwork has greatly
where the employer-employee relationship was sufficiently
aided the production of commodities, and has offered a
proved by testimonial evidence, the absence of time sheet,
significant method of cutting down the ever-increasing
time record or payroll becomes inconsequential. No
overhead costs of industry. This result has led employers to
particular form of evidence is required to prove the
believe that such work is necessary and profitable. Here again
existence of an employer-employee relationship. Any
one meets a conflict of economic and social interests. Under
competent and relevant evidence to prove the
these circumstances it is necessary to discover whether
relationship may be admitted.
nightwork has deleterious effects upon the health of laborers
and tends to reduce the ultimate supply of efficient labor. If it
Records of business affairs: The employer is duty-bound to can proved that nightwork affects adversely both the quality
keep faithful and complete records of his or her business and quantity of productive labor, its discontinuance will
affairs, not the least of which would be the salaries of the undoubtedly be sanctioned by employers. From a social point
workers. Documents presented in this case have been of view, even a relatively high degree of efficiency in night
selective, few and incomplete in substance and content, thus operations must be forfeited if it is purchased with rapid
employer failed to convince the court that husband of exhaustion of the health and energy of the workers. From an
petitioner was not its employee. economic point of view, nightwork may be necessary if the
employer is to meet the demand for his product, or if he is to
maintain his market in the face of increasing competition or
Power of Control: The power of control refers merely to the
mounting variable production costs.
existence of the power—it is not essential for the employer
to actually supervise the performance of duties of the
employee, as it is sufficient that the former has a right to
wield the power. In this case, the employer has an overseer
to whom the employer wielded the power to hire or dismiss,
to check on the work, be it in progress or quality of the
laborers.
 Wellington Investment Inc. v. Trajano, 245 SCRA 561
(1995)

Issue: WON a monthly-paid employee, receiving a fixed

monthly compensation, is entitled to an additional pay aside
from his usual holiday pay, whenever a regular holiday falls
on a Sunday.

Held: Yes. Every worker should be paid his regular daily wage
during regular holidays even if the worker does no work on
these holidays (except in retail and service establishments
regularly employing less than 10 workers.

This is also applicable in the event of the declaration of any

special holiday, or any fortuitous cause precluding work on
any particular day or days, the employee is entitled to the
salary for the month and the employer has no right to deduct
the proportionate amount corresponding to the days when
no work was done. The monthly compensation is evidently
intended precisely to avoid computations and adjustments
resulting from the contingencies just mentioned which are
routinely made in the case of workers paid on daily basis.

Wellington used 314 factor = it simply deducted 51 Sundays

from the 365 days. The monthly salary thus fixed actually
covers payment for 314 days of the year including regular
and special holidays, as well as days when no work is
done by reason of fortuitous cause, as above
specified, or causes not attributable to the
employees.

There is no provision of law requiring any employer to make

such adjustments in the monthly salary rate set by him to
take account of legal holidays falling on Sundays in a given
year, or contrary to the legal provisions bearing on the point,
otherwise to reckon a year at more than 365 days.

The legal provisions governing monthly compensation are

evidently intended precisely to avoid recomputations and
alteration in salary on account of the contingencies just
mentioned, which, by way are routinely made between
employer and employees when the wages are paid on daily
basis.

San Miguel Corp. v. Court of Appeals, 375 SCRA 311

(2002)

Facts: Underpayment of SMC of regular Muslim holiday pay

to its employees. Should this be applied to non-Muslim
employees?

Held:

• Yes. Art. 2 of the PD 1083 provides that “the provisions of

this Coude shall be applicable only to Muslims xxx. However,
there should be no distinction between Muslims and non-
Muslims as regards payment of benefits for Muslim holiday.

• We must remind the respondent-appellant (employer) that

wages and other emoluments granted by law to the working
man are determined on the basis of the criteria laid down by
laws and certainly not on the basis of the worker’s faith or
religen. Art. 3 also declares that “nothing herein shall be
construed to operate to the prejudice of a non-Muslim”.
Philippine Fisheries Development Authority v. NLRC,
213 SCRA 621 (1992)
Issue 1: WON an indirect employer is bound by the ruling of
NLRC which made the indirect employer liable when the
guards are not employees of the petitioner because the
contract of services explicitly states that the security guards
are not their employees thus, no employer-employee
relationship, thus the jurisdiction of the CSC may not be
invoked in this case.
Held:
• Notwithstanding that the petitioner is a government
agency, its liabilities, which are jointly and solidary
with that of the contractor are provided in Art. 106,
107 and 109.
• Its liabilities are under the NLRC scope and in
addition, book three title ii on wages provides that
the term employer includes any person acting
directly or indirectly in the interest of an
employer in relation to an employee and shall
include the Government and all its branches,
subdivisions and instrumentalities, all GOCCs
and institutions as well as non-profit private
institutions or organizations.
Issue 2: Who should carry the burden of the wage increases?
Held:
• It is settled that in job contracting, the petitioner as
principal is jointly and severally liable with the
contractor for the payment of unpaid wages. In the
case at bar, the action was for the payment of
unpaid wage differentials under Wage Order No. 6.
• In the case of Eagle Security vs. NLRC:
“The solidary liability of PTSI and EAGLE, however, does not
preclude the right of reimbursement from his co-debtor by
the one who paid. It is with respect to this right of
reimbursement that petitioners can find support in the
aforecited contractual stipulation and Wage Order provision.
The Wage Orders are explicit that the payment of the
increases are “to be borne” by the principal or client. “To be
borne”, however, does not mean that the principal, PTSI in
this case, would directly pay the security guards the wage
and allowance increases because there is no privity of
contract between them. The security guards’ contractual
relationship is with their immediate employer, EAGLE. As an
employer, EAGLE is tasked, among others, with the payment
of their wages.
Premises considered, the security guards’ immediate
recourse for the payment of the increases is with their direct
employer, EAGLE. However, in order for the security agency
to comply with the new wage and allowance rates it has to
pay the security guards, the Wage Order made specific
provision to amend existing contracts for security services by
allowing the adjustments of the consideration paid by the
principal to the security agency concerned. What the Wage
orders require, therefore, is the amendment of the contract
as to the consideration to cover the service contractor’s
payment of the increases mandated. In the end, therefore,
ultimate liability for the payment of the increasees rests with
the principal. “
• The Wage Orders are statutory and mandatory and
can not be waived. The petitioner can not escape
liability since the law provides the joint and solidary
liability of the principal and the contractor for the
protection of the laborers.
• But the Court here did not apply the Eagle case
because the petitioner is equally guilty by not
abiding to the law in the subsequent change of
contract even when the WO6 was already
implemented.
• Therefore, security guards immediate recourse is
with direct employer but the latter is not prejudiced
as to the claim of ½ of the wages it shall give the
guards.
Doctrine: Principal liable for Wage Orders mandating
wage increases. But when principal cannot pay,
contractor is the immediate recourse and should pay the
whole claim with right to reimbursement from principal.
But if contractor is at fault, will be liable to ½ of the
claim.
Aklan Electric Corp., Inc. v. NLRC, 323 SCRA 259
(2000)
Facts:
Employees working at Lezo but were told to transfer to
Kalibo but they did not transfer. Claiming salaries, wages and
benefits.
Issue: WON they are entitled to salaries and benefits.
Held: No. The employer gave orders to the employees to
transfer office because of the dangers the environment
poses to the company, yet the employees disobeyed.
Moreover, the transfer of office was approved by NEA
Administrator in its exercise of supervision and control over
all electric cooperatives. When the business transferred,
what was left to the employees to work on? Thus no basis
that the employees continued to report for work in Lezo.
The age-old rule governing the relation between labor and
capital, or management and employee of a “fair day’s
wage for a fair day’s labor” remains as the basic factor in
determining employee’s wages. If there is no work performed
by the employee there can be no wage or pay unless, of
course, the laborer was able, willing and ready to work but
was illegally locked out, suspended or dismissed, or
otherwise illegally prevented from working, a situation we
find is not present in the instant case. It would neither be fair
nor just to allow private respondents to recover something
they have not earned and could have not earned because
they did not render services at the Kalibo office during the
stated period.
Bankard Employers Union v. NLRC, 423 SCRA 148
(2004)
Facts:
Petitioners questioning the new salary increase to new
employees which were higher than the regular employees.
They claim that there was wage distortion, thus the request
for an across-the-board increase.

Held: No wage distortion.
Wage distortion: a situation where an increase in prescribed
wage rates results in the elimination or severe contraction of
intentional quantitative differences in wage or salary rates
between and among employee groups in an establishment
as to effectively obliterate the distinctions embodied in such
wage structure based on skills, length of service, or other
logical bases of differentiation.
Four elements of wage distortion (Prubnkers Assoc):
1. 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 ones
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 a problem dealing with “wage distortion”, the basic
assumption is that there exists a grouping or classification of
employees that establishes distinctions among them on
some relevant or legitimate bases.
The NLRC refutes the petitioners’ contention that the basis of
the levels of classification is the length of service. It stated
that, “to determine the existence of wage distortion, the
“historical” classification of the employees prior to the wage
increase must be established. It must be shown that as
between the different classification of employees, there
exists a “historical” gap or difference.
Thus the employees of private respondent have been
“historically” classified into levels i.e. I to V and not on the
basis of their length of service. The entry of new employees
to the company ipso facto places them under any of the
levels. There is no hierarchy of positions between the newly
hired and regular employees, thus the first element is
wanting.
Apart from the finding of fact of the NLRC and Ca that some
of the elements of wage distortion are absent, the petitioner
cannot legally obligate Bankard to correct the alleged “wage
distortion” as the increase in the salaries of the newly-hired
was not due to a prescribed law or wage order.
Art. 124 should be construed and correlated in relation to
minimum wage fixing, the intention of the law being that in
the event of ancrease in minimum wage, the distinctions
embodies in the wage structure based on skills, length of
service or other logical bases of differentiation will be
preserved.
If the compulsory mandate under Art. 124 to correct “ wage
distortion” is applied to voluntary and unilateral increases by
the employer in fixing hiring rates which is inherently a
business judgment prerogative, then the hands of the
employer would be completely tied even in cases where an
increase in wages of a particular group is justified due to a
re-evaluation of the high productivity or a particular group,
or as in the present case, the need to increase the
competitiveness of Bankard’s hiring rate.
The mention of Metro Transit case was misplaced where it
did not confine to wage distortion resulting from government
decreed law or wage order because the rectification in that
case was not by virtue of Art. 124 of the Labor Code but by
the existing company practice that whenever rank-and-file
employees were paid a statutorily mandated salary increase,
supervisory employees were, as a matter of practice, also
paid the same amount plus an added premium.
Wage distortion is a factual and economic condition that may
be brought by different causes. The mere factual
existence of wage distortion does not, however, ipso
facto result to an obligation to rectify it, absent a law
or other source of obligation which requires its
rectification.
Moreover, in this case, the CBA between the Union and
Management gives the Company the right to establish such
minimum salaries as it may hereafter find appropriate for
specific jobs and to adjust the rates of the employees
thereby affected xxx.
Arms Taxi v. NLRC, 219 SCRA 306 (1993)
Facts:
Taxi driver Culla was dismissed by forcing open his quarters
and removing his personal belongings found therein and
bringing them to his residence.
He is claiming reinstatement with backwages, plus
commission of 15% of the gross income of the taxi business
which is the issue at bar.
Held: No. He cannot get the 15% commission. If it were true
that there had been an agreement regarding the payment of
a 15% commission to him, Culla would have not waited
almost 6 years to claim it. Considerably delay in asserting
one’s right is strongly persuasive of the lack of merit of one’s
claim.
SOLGEN: Salary is different from a commission. The defense
that the giving of salary is a partial compliance to pay a
commission of percentage. While a salary is a fixed
compensation for regular work or for continuous service
rendered over a period of time, a commission is a
percentage or allowance made to a factor or agent for
transacting business for another. Thus, before invoking the
exception to the Statute of Frauds, petitioner should have
proven that he had received a commission, or part of it, in
the past.
Iran v. NLRC, 289 SCRA 433 (1998)
The case where the salesman and truck helpers received
commission for cases sold. Then there were irregularities and
the respondents were prompted to report cash shortages.
After a few days, they stopped reporting for work, thus the
conclusion of abandonment. Terminated without notice.
On the other hand, complain for illegal dismissal, deduction,
underpayment of wages, premium pay for holiday and rest
day, holiday pay, incentive pay, etc.
Issue:
WON commissions in the computation of wages must only be
paid after the minimum wage has been paid, thus excluding
commissions in the computation for benefits which rely on
wage.
Held: No.

The Court has taken judicial notice of the fact that some
salesman do not receive any basic salary but depend entirely
on commissions and allowances or commissions alone,
although an employer-employee relationship exists.

This salary structure is intended for the benefit of the

corporation establishing such, on the apparent assumption
that thereby its salesmen would be moved to greater
enterprise and diligence and close more sales in the
expectation of increasing their sales commission. But this
does not detract from the character of such commissions as
part of the salary or wage paid to each of its salesmen for
rendering services to the corporation.

There is no law mandating that commissions be paid only

after the minimum wage has been paid to the employee.
Verily, the establishment of a minimum wage only sets a
floor below which an employee’s remuneration cannot fall,
not that commissions are excluded from wages in
determining compliance with the minimum wage law.

In one case it was acknowledged that “drivers and

conductors who are compensated purely on a commission
basis are automatically entitled to the basic minimum pay
mandated by law should said commission be less than their
basic minimum for eight hours work. It can thus be inferred
that where said commissions equal to or even exceed the Philippine Association of Service Exporters v. Drilon
minimum wage, the employer need not pay, in addition, the (1988)
basic minimum pay prescribed by law. It follow then that J. Sarmiento
commissions are included in determining compliance with
minimum wage requirements. Facts:

The petitioner, Philippine Association of Service Exporters,

Inc. (PASEI, for short), a firm "engaged principally in the
recruitment of Filipino workers, male and female, for
overseas placement," 1 challenges the Constitutional validity
of Department Order No. 1, Series of 1988, of the
Department of Labor and Employment, in the character of
"GUIDELINES GOVERNING THE TEMPORARY
SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC
AND HOUSEHOLD WORKERS," in this petition for certiorari
and prohibition.

Issues:

1. It is an unlawful exercise of police power since this

is a power that belongs to the legislative branch not
the executive department; and violates the right to
travel and impairs the right to contract.
2. Equal Protection clause violation – discriminates
against women and does not apply to all workers
but on to DH.
3. It violates Section 3, of Article XIII, of the
Constitution, providing for worker participation "in
policy and decision-making processes affecting their
rights and benefits as may be provided by law."

Decision: The directive was upheld

Discussion:

1. The department order is a valid exercise of

police power.
• Police power is one of the three inherent
powers of the state, along with taxation and
eminent domain that is not written anywhere in
the constitution (I’m not sure if this addresses
the argument that the said power pertains to
the legislative branch not the executive branch;
that issue was not specifically tackled by the
Court)
• It is defined as the "state authority to enact
legislation that may interfere with personal
liberty or property in order to promote the
general welfare." (Edu v. Ericta) As defined, it
 consists of (1) an imposition of restraint upon
liberty or property, (2) in order to foster the
common good.
• “Its scope, ever-expanding to meet the
exigencies of the times, even to anticipate
the future where it could be done, provides
enough room for an efficient and flexible
response to conditions and circumstances thus
assuring the greatest benefits." (Edu v. Ericta)
• Nevertheless, its exercise would be invalid
if the same is arbitrary, unreasonable and
oppressive. As a general rule, official acts
enjoy a presumption of validity. In view of
petitioner’s failure to prove that the law is
oppressive, the presumption stands.
of abuses are DHs. It is therefore valid to limit
the DO’s application to them. Had the ban been
given universal applicability, then it would have
been unreasonable and arbitrary. For obvious
reasons, not all of them are similarly
circumstanced.
5. The petitioner’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.

2. The right to travel may be validly limited in

the exercise of police power. The right to travel
is subject, among other things, to the requirements
of "public safety," "as may be provided by law." (Art
III Sec. 6) Department Order No. 1 is a valid
implementation of the Labor Code, in particular, its
basic policy to "afford protection to labor," pursuant
to the respondent Department of Labor's rule-
making authority vested in it by the Labor Code.

3. The non-impairment clause of the

Constitution, invoked by the petitioner, must
yield to the loftier purposes targetted by the
Government. Freedom of contract and enterprise,
like all other freedoms, is not free from restrictions,
more so in this jurisdiction, where laissez faire has
never been fully accepted as a controlling economic
way of life.

4. The Equal Protection Clause is not impaired.

“Equality of the law xxx does not import a perfect
identity of rights among men and women. It allows
classification, “provided that (1) such classifications
rest on substantial distinctions; (2) they are
germane to the purposes of the law; (3) they are
not confined to existing conditions; and (4)
they apply equally to all members of the same
class. (People v. Cayat)
• On 1st element: There is a valid basis for
singling out women. As a matter of judicial
notice, the Court is well aware of the unhappy
plight that has befallen our female labor force
abroad, especially domestic servants, amid
exploitative working conditions marked by, in
not a few cases, physical and personal abuse.
This is not to say that men do not suffer the
same abuses, however, those are isolated
cases.
• On 2nd element: The classification is
germane to the purpose of the directive.
Unquestionably, it is the avowed objective of
Department Order No. 1 to "enhance the
protection for Filipino female overseas workers"
This Court has no quarrel that in the midst of
the terrible mistreatment Filipina workers have
suffered abroad, a ban on deployment will be
for their own good and welfare.
• On 3rd element: The measure will only be in
place until the working environment for DHs
becomes better. Accordingly the DO provides
that it will be lifted once bilateral agreements
(between the Phil. and host countries) and
other mechanisms for the protection and
welfare of Filipino workers are in place.
• On 4 element: That it does not apply to all
th
Filipina workers is not a ground to impugn the
validity of the classification. Most of the victims
Philippine Telegraph and Telephone Company v. NLRC
(1997)
J. Regalado
Facts:
Grace de Guzman was hired as a reliever for the employees
of PTTC, when the latter go on leave (maternity and other
leaves). She spent more than 6 months with the company
during the three times she was hired as reliever. In
September 1991, she was asked to join the company on a
probationary basis (period of probation: 150 days). De
Guzman did not indicate in the forms she filed that she got
married in May, 1991. When PTTC supposedly learned about
the same later, its branch supervisor in Baguio City, Delia M.
Oficial, sent to private respondent a memorandum dated
January 15, 1992 requiring her to explain the
discrepancy. In that memorandum, she was reminded
about the company's policy of not accepting married
women for employment. Grace explained that she did not
know about the policy but the company fired her anyway,
effective January 29. Grace filed a case for illegal dismissal.
During the preliminary conference, she volunteered
information that she was not able to remit about P2,380 to
the company and it was agreed that she sign a promissory
note to pay the same.
Labor Arbiter: She was already a regular worker1 and entitled
to security of tenure. “[T]he ground relied upon by petitioner
1
The Supreme Court agreed on this ruling because Grace has
been engaged in activities which “are usually necessary or
desirable in the usual business or trade of the employer.” (Art
280) Note also that she was fired just before the probationary
in dismissing private respondent was clearly insufficient, and
that it was apparent that she had been discriminated against
on account of her having contracted marriage in violation of
company rules
On appeal to the National Labor Relations Commission
(NLRC), said public respondent upheld the labor arbiter and,
in its decision dated April 29, 1994, it ruled that private
respondent had indeed been the subject of an unjust and
unlawful discrimination by her employer, PT & T. However,
the decision of the labor arbiter was modified with the
qualification that Grace de Guzman deserved to be
suspended for three months in view of the dishonest nature
of her acts which should not be condoned. A motion for
reconsideration was denied.
Issues:
On appeal to the SC, PTTC argues that it did not discriminate
on married women. PTTC said that Grace was fired because
she concealed information regarding her status, not because
of the status itself. She also mishandled company funds,
which she herself admitted.
Decision: The Court upheld the NLRC’s reasoning, i.e,,
Grace was a victim of discrimination.
1. It is recognized that a company can set regulations
and rules for its employees in the exercise of its
management prerogatives; however, the same
should not result in discrimination and violation of
the law.2
2. The Supreme Court noted that the Constitution,
international conventions, statutes, and the Labor
Code have provided for the protection of women in
the labor force. “Nowhere has that prejudice against
womankind been so pervasive as in the field of
labor, especially on the matter of equal employment
opportunities and standards. In the Philippine
setting, women have traditionally been
considered as falling within the vulnerable
groups or types of workers who must be
safeguarded with preventive and remedial
social legislation against discriminatory and
exploitative practices in hiring, training,
benefits, promotion and retention.”
a. Constitution
• Sec. 14, Art. II3
• Sec. 3, Art. XIII - pointedly requires the
State to afford full protection to labor and
to promote full employment and equality of
employment opportunities for all, including
period of her employment ended. She was fired without
basis. In fact, the Court said that she was a victim of
discrimination. It follows that if she was not unfairly
dismissed, she would have finished the probationary period
and she would become regular. (My view.)
2
Management prerogative involves “prescriptions encompass
the matter of hiring, supervision of workers, work
assignments, working methods and assignments, as well as
regulations on the transfer of employees, lay-off of workers,
and the discipline, dismissal, and recall of employees. 19 As
put in a case, an employer is free to regulate, according to his
discretion and best business judgment, all aspects of
employment, "from hiring to firing," except in cases of
unlawful discrimination or those which may be provided
by law.”
3 private sector. RA 7877 (1995) which outlaws and punishes
The State recognizes the role of women in nation-
building, and shall ensure the fundamental equality
before the law of women and men (Sec.14, Art. II).
an assurance of entitlement to tenurial
security of all workers
• Sec. 14 Art. XIII - mandates that the State
shall protect working women through
provisions for opportunities that would
enable them to reach their full potential.
b. Corrective labor and social laws on gender
inequality have emerged with more frequency in the
years since the Labor Code was enacted on May 1,
1974 as Presidential Decree No. 442, largely due
to our country's commitment as a signatory to
the United Nations Convention on the
Elimination of All Forms of Discrimination
Against Women (CEDAW). 4
c. Labor Code
• Article 130 - involves the right against
particular kinds of night work while
• Article 132 - ensures the right of women
to be provided with facilities and standards
which the Secretary of Labor may establish to
ensure their health and safety.
• Art. 138 - For purposes of labor and social
legislation, a woman working in a nightclub,
cocktail lounge, massage clinic, bar or other
similar establishments shall be considered as
an employee
• Article 135 - recognizes a woman's right
against discrimination with respect to terms
and conditions of employment on account
simply of sex.
• Article 136 explicitly prohibits
discrimination merely by reason of the
marriage of a female employee.
3. The company policy against married women
cannot stand amidst all these laws and
regulations. The Court refused to believe the
argument that Grace was not fired for being
married and that discrimination was not
behind her dismissal:
• It is illogical to say that she was fired for
concealing the fact the she was married and
not because of that fact. Besides, the
memorandum signed by Ms. Oficial contradicts
this argument.
• Neither was Grace’s failure to remit certain
funds the real basis for firing her. As observed
by the labor arbiter, the allegation was a mere
afterthought. The act was also not deliberate; it
was caused by negligence. Moreover, the
4
The Court cited several examples: RA 6727 (1989)-
explicitly prohibits discrimination against women with
respect to terms and conditions of employment, promotion,
and training opportunities. RA 6955 (1990) - which bans the
"mail-order-bride" practice for a fee and the export of female
labor to countries that cannot guarantee protection to the
rights of women workers. RA 7192, The Women in Nation-
Building Act (1992) - affords women equal opportunities
with men to act and to enter into contracts, and for
appointment, admission, training, graduation, and
commissioning in all military or similar schools of the Armed
Forces of the Philippines and the Philippine National Police;
Republic Act No. 7322 15 increasing the maternity benefits
granted to women in the private sector. RA 7322 (1995) -
increasing the maternity benefits granted to women in the
sexual harassment in the workplace and in the education and
training environment. RA 8042, The Migrant Workers and
Overseas Filipino Act of 1995.
 parties already agreed to allow Grace to pay for
the unremitted funds.
4. The Court ended with a discussion of Art. 136 of the
Labor Code, above. It’s a substantial discussion and
has a relation to the next case (Duncan v. Glaxo).
• In Zialcita v. PAL, the court declared the PAL
policy of firing flight attendants after they get
married saying it is incompatible to Art. 136 of
the Labor Code. “Article 136 is not intended to
apply only to women employed in ordinary
occupations, or it should have categorically
expressed so. The sweeping intendment of the
law, be it on special or ordinary occupations, is
reflected in the whole text and supported by
Article 135 that speaks of non-discrimination on
the employment of women.”
• The judgment of the Court of Appeals in
Gualberto, et al. vs. Marinduque Mining &
Industrial Corporation 34 considered as void a
policy of the same nature. In said case,
respondent, in dismissing from the service the
complainant, invoked a policy of the firm to
consider female employees in the project it was
undertaking as separated the moment they get
married due to lack of facilities for married
women. Branding the policy of the employer as
an example of "discriminatory chauvinism"
tantamount to denying equal employment
opportunities to women simply on account of
their sex, the appellate court struck down said
employer policy as unlawful in view of its
repugnance to the Civil Code, Presidential
Decree No. 148 and the Constitution. This is
called sex-plus discrimination under US
jurisprudence.
• However, the ruling in Gualberto cited
instances when such discrimination of marriage
may be considered valid: “Upon the other hand,
a requirement that a woman employee must
remain unmarried could be justified as a "bona
fide occupational qualification," or BFOQ, where
the particular requirements of the job would
justify the same, but not on the ground of a
general principle, such as the desirability of
spreading work in the workplace. A requirement
of that nature would be valid provided it
reflects an inherent quality reasonably
necessary for satisfactory job performance.
Thus, in one case, a no-marriage rule applicable
to both male and female flight attendants, was
regarded as unlawful since the restriction was
not related to the job performance of the flight
attendants.”(45A Am Jur. 2d Job Discrimination
Sec. 506 p486.)
Duncan Association of Detailman –PGTWO v. Glaxo
Welcome Philippines (2004)
J. Regalado
Pedro Tecson ("Tecson") was employed in 1995 by
respondent Glaxo Wellcome Philippines, Inc. ("Glaxo") as a
medical representative. He was assigned to market Glaxo's
products in the Camarines Sur-Camarines Norte sales area.
Upon his employment, Tecson signed an employment
contract, wherein he agreed, among others, to study and
abide by existing company rules; to disclose to
management any existing or future relationship by
consanguinity or affinity with co-employees or
employees of competing drug companies; and if
management found that such relationship posed a
possible conflict of interest, to resign from the
company.
Nonetheless, Tecson became romantically involved with
Bettsy, an employee of a rival pharmaceutical firm Astra
Pharmaceuticals ("Astra"). The two eventually married in
September of 1998. The relationship, including the
subsequent marriage, was cause for consternation to Glaxo.
On January 1999, Tecson's superiors informed him that his
marriage to Bettsy had given rise to a conflict of interest.
Negotiations ensued, with Tecson adverting to his wife's
possible resignation from Astra, and Glaxo making it known
that they preferred to retain his services owing to his good
performance. Yet no resolution came to pass. In September
1999, Tecson applied for a transfer to Glaxo's milk division,
but his application was denied in view of Glaxo's "least-
movement-possible" policy. Then in November 1999, Glaxo
transferred Tecson to the Butuan City-Surigao City-Agusan
del Sur sales area. Tecson asked Glaxo to reconsider its
decision, but his request was denied.
The matter was then brought to the Glaxo Grievance
Committee, and subsequently to a voluntary arbitrator. The
National Conciliation and Mediation Board (NCMB) rendered
its decision, declaring as valid Glaxo's policy on relationships
between its employees and persons employed with
competitor companies, and affirming Glaxo's right to transfer
Tecson to another sales territory.
Issues:
1. Petitioners claim that the company rule applied to
him was invalid. It violates the equal protection
clause of the Constitution because it creates invalid
distinctions among employees on account only of
marriage. They claim that the policy restricts the
employees’ right to marry.
2. It was also alleged that Tecson’ s transfer to
Agusan, diminution in pay he suffered, his exclusion
from seminars and training sessions for medical
representatives, and the prohibition in promoting
respondent’s products which were competing with
Astra’s products all amounted to a constructive
dismissal.
Decision: CA upheld.
Discussion:
1. The company policy on marriage was valid. It
does not prohibit marriage per se. employees
are free to marry who they want. What it
seeks to prevent is conflict of interest, which
may be too detrimental in a very competitive
business like the pharma industry. (Court cited
a similar case in the US state of Georgia, Emory v.
Georgia Hospital)
• 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 Glaxo’s employees is
reasonable under the circumstances because
relationships of that nature might compromise
the interests of the company. In laying down
the assailed company policy, Glaxo only aims
to protect its interests against the
possibility that a competitor company will
gain access to its secrets and procedures.
(This is especially true in this case since Bettsy
was Astra’s Branch coordinator in Albay and
 was therefore played an active role in the
“market war” between pharmaceuticals.)
• That Glaxo possesses the right to protect
its economic interests cannot be denied. No
less than the Constitution recognizes the
right of enterprises to adopt and enforce
such a policy to protect its right to
reasonable returns on investments and to
expansion and growth. Indeed, while our
laws endeavor to give life to the constitutional
policy on social justice and the protection of
labor, it does not mean that every labor dispute
will be decided in favor of the workers.

2. There was no constructive dismissal.

Constructive dismissal is defined as a quitting, an
involuntary resignation resorted to when continued
employment becomes impossible,
unreasonable, or unlikely; when there is a
demotion in rank or diminution in pay; or when a
clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee.
None of these conditions are present in the instant
case.
• The transfer was in fact made in order to avoid
conflict of interest. (The couple would be
involved in different sales area and will not be
in a position to share marketing information
that may be detrimental to Glaxo).
• Moreover, in Abbott Laboratories (Phils.), Inc. v.
National Labor Relations Commission5 the Court
upheld the right of the drug company to
transfer or reassign its employee in accordance
with its operational demands and requirements.
“By the very nature of his employment, a
drug salesman or medical representative
is expected to travel. He should
anticipate reassignment according to the
demands of their business. ..”

5
It involved a complaint filed by a medical
representative against his employer drug company for
illegal dismissal for allegedly terminating his
Makati Haberdashery vs NLRC, 179 SCRA 449 (89)
employment when he refused to accept his
reassignment to a new area. Penned by Justice Fernan
Nature:
Petition for certiorari to review the decision of the NLRC
which affirmed the decision of the Labor Arbiter who jointly
heard and decided two cases filed by the Union in behalf of
the private respondents
Facts:
• Private complainants are working for Makati
Haberdashery Inc as tailors, seamstress, sewers,
basters, and plantsadoras and are paid on a piece-
rate basis (except two petitioners who are paid on a
monthly basis) and in addition, they are given a
daily allowance of P 3.00 provided they report
before 9:30 a.m.
• Work sked: 9:30-6 or 7 p.m., Mondays to Saturdays
and even on Sundays and holidays during peak
periods.
• Union’s first case was on:
 underpayment of
• basic wage
• living allowance
 non-payment of
• holiday pay
• service incentive pay
• 13th month pay
• benefits provided for under Wage
Orders 1-5
• While the first case was pending decision, Pelobello
left an open package containing a jusi barong
tagalong with salesman Rivera. He was caught and
confronted about this and he explained that this
was ordered by Zapata, also a worker, for his
(personal) customer. Zapata allegedly admitted that
he copied the design of the company but later
denied ownership of the same.
• They were made to explain why no action should be
taken against them for accepting a job order which
is prejudicial and in direct competition with the
business. However they did not submit and went on
AWOL until the period given for them to explain
expired hence the dismissal.
• Illegal dismissal complaint on the second case filed
before the LA Diosana.
• LA declared petitioners guilty of illegal dismissal and
ordered to reinstate Pelobello and Zapata and found
petitioners violating decrees of COLA, service
incentive and 13th month pay. Commission analyst
was directed to compute the monetary awards
which retroacts to three years prior to filing of case.
• NLRC affirmed but limited backwages to one year.
Held: There is such relationship because in the application of
the four-fold test, it was found that petitioners had control
over the respondents not only as to the result but also as to
the means and method by which the same is to be
accomplished. Such control is proven by a memorandum
which enumerates procedures and instructions regarding job
orders, alterations, and their behavior inside the shop.
• Minimum Wage
Held: No dispute that entitled to minimum wage but court
dismissed case for lack of sufficient evidence to support
claim that there was in fact underpayment which was ruled
by the LA and which the private resp did not appeal to in the
NLRC nor in the SC. Well-settled is the rule that “an appellee
who has not himself appealed cannot obtain from the
appellate court any affirmative relief other than the ones
granted in the decision of the court below”.
• COLA
Held: Entitled. They are regular employees. IRR of Wage No.
1, 2, and 5 provide that “all workers in the private sector,
regardless of their position, designation of status, and
irrespective of the method by which their wages are
paid” are entitled to such allowance.
• 13th Month pay
Held: Entitled under Sec. 3(e) of the IRR of PD 851 which is
an exception to the exception of such provision which states
that employers whose workers are paid on piece-rate basis in
which are covered by such issuance in so far as such workers
are concerned.
• Illegal dismissal
Held: Dismissed for justifiable ground based on Article 283
(a) and (c). Inimical to the interest of the employer. Not
dismissed just because of union activities.

Issue: WON employees paid on piece-rate basis are entitled

to service incentive pay (relevant to title)

Held: NO, fall under exceptions set forth in the implementing

rules

Ratio:
 As to the service incentive leave pay: as piece-rate
workers being paid at a fixed amount for performing
work irrespective of time consumed in the
performance thereof, they fall under the exceptions
stated in Sec 1(d), Rule V, IRR, Book III, Labor Code.

Service Incentive Leave

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

Other issues discussed:

• ER-EE relationship

Sentinel Security Agency, Inc. v. NLRC, 295 SCRA 123
1998)
Penned by Justice Panganiban
Nature:
Certiorari seeking the reversal of the two petitions to the
NLRC
Facts:
• Five employees of Sentinel Security Agency filed for
illegal dismissal against the Agency and its Client
Philamlife Cebu and prayed for payment of salary
differential, service incentive pay, and separation
pay.
• The complainants were assigned to Philamlife Cebu
but after nearly 20 years for some employees and
more than 20 years for some, Philam requested on
Dec 16, 1993 that security guards be replaced in
the Client’s offices in Cebu, Bacolod, CDO, Dipolog
and Iligan.
• Agency issued a Relief and Transfer Order replacing
the guards and for them to be reassigned to other
clients effective on Jan 16 1994. On Jan 18 and Feb
4 1994, the employees filed an illegal dismissal
complaint because of a threat from the personnel
manager who told them that they were replaced
because they were old.
• Hence the complaint against the Agency and the
Client.
• Client and Agency’s defense: No dismissal because
the contract allows them to recall security guards
from assigned posts at the will of either party and
that the Agency is allowed for a period of not more
than six months, to retain the complainants on
floating status. Agency should have been given a
chance to give new assignments to complainants.
• Client’s defense: No ER-EE relationship. Job
contract, separate corporate personalities and not
necessary and desirable to the business or trade.
LA: Agency and Client ordered to pay solidarily complainants
13th month pay and service incentive leave benefits
amounting to a little more than P60K.
NLRC: There was constructive dismissal. Modified awards.
Deleted 13th month pay for previous years. Twin remedies.
Ordered:
1) Agency to give separation pay at the rate of ½
month pay for every year of service and
2) Agency and Client to solidarily pay backwages and
13th month pay for one year (Jan 1994-1995).
Issue: 1) WON there was illegal dismissal
2) And if so, WON Philam may be held liable
Held:
1)Yes there was illegal dismissal but SC does not agree
with NLRC for its reasons for ruling that there was
ID. NLRC’s reason: Client and Agency wanted to
circumvent the Retirement Law. SC: You NLRC are
speculating and your contention is unsupported!
• SOLGEN: Complainants were placed on temporary off-
detail which is a standard stipulation in employment
contracts since the availability of assignment for
security guards is dependent on contracts entered
into by the agency. Off-detail or Floating status
means “waiting to be posted” and this is not
dismissal so long as such status does not continue
beyond a reasonable time.
• However SOLGEN made a pronouncement that
although abandonment is inconsistent with illegal
dismissal, such rule is not applicable when the
complainants expressly reject this relief and ask for
separation pay instead.
• SC (with conviction): “You are wrong SolGen! How
dare you be wrong? You know that abandonment
requires a deliberate and unjustified refusal of an
employee to resume to his work coupled with a
clear absence of any intention to return to his/her
work and the fact that complainants did not pray for
reinstatement is not a sufficient proof of
abandonment, you moron. They reported to the
Agency on several dates but it did not give any
reassignment. Abandonment has been ruled to be
incompatible with constructive dismissal as stated
in Escobin vs NLRC. Because I am infallible and you
are in dire need of enlightenment, let me
demonstrate the correct reasoning why they are
illegally dismissed.”
• It has been recognized that the management has a
prerogative to transfer an employee from one office
to another within the same business establishment
as the exigency of the business may require
provided that transfer:
- does not result in a demotion in rank
- diminution in salary, benefits, and other privileges
- not unreasonable, inconvenient or prejudicial to the
latter
- not used as a subterfuge by the employer to rid
himself of an undesirable worker
• SC: “Solgen, in case you don’t know what a transfer
means, let me extend my unparalleled mastery of
this craft which,unfortunately, you don’t have:
- Transfer may mean two things: a) from one position to
another of equivalent rank, level or salary b) from one
office to another within the same business
establishment. Oh please, do not even think this is
equivalent to promotion because the latter involves a
scalar ascent.”
• It should have been a mere changing of the guards, a
reshuffling or exchange of their posts or assignments
to their posts and such that no security guard would
be without assignment. But did the Agency implement
such recognized concept? NO!!! It hired new security
guards, younger, braver, full of life men whose age
are in their prime! This resulted in a lack of posts to
which the senile, used and wrinkled men could have
been reassigned.
• Floating status – requires the dire exigency of the
employer’s bona fide suspension of operation,
business or undertaking. In security services, this
happens when the clients do not renew their contracts
with a security agency but in the case at bar, the
Client awarded a new contract to the Agency. No
surplus of security guards over available assignments.
No suspension of operation that would have justified
placing the complainants off-detail and making them
wait for 6 months.
• SC: “The logical conclusion here Solgen, in case you
don’t know what’s logical, is that the Agency illegally
dismissed the complainants.
2)Only solidarily to the service incentive leave pay.
Since no ER-EE relationship between Client and
complainants, cannot be held liable for separation
pay and backwages.
• Art 106, 107 and 109 provide when the principal who
contracted the contractor/subcontractor may be
held solidarily liable. Art 109 states that every
employer or indirect employer shall be held
responsible with his contractor or subcontractor for
any violation of any provision of this Code. In
determining the extent of their civil liability under
this Chapter, they shall be considered direct
employers.
• Such liability covers service incentive leave pay of the
complainant during the time they were posted at
the Cebu Branch. Service had been rendered,
 liability accrued even when they were eventually
transferred or reassigned.
• Art. 95 of the LC expressly provides that service
incentive leave is expressly granted to every
employee who has rendered at least one year or
service shall be entitled to a yearly service incentive
leave of five days with pay.
• IRR of the LC: Unused service incentive leave is
commutable to its money equivalent as provided by
Sec. 5: The service incentive leave shall be
commutable to its money equivalent if not used or
exhausted at the end of the year
Pau: May the contrary be stipulated? If yes, when?
Supposing the employer gives more than 5 days of
service incentive leave, can they now stipulate that such
leaves may not be converted to its money equivalent?
When can such leaves be not converted into cash?
• Philippine Federation of Credit
Cooperatives, Inc. v. NLRC, 300
SCRA 72 (1998)
Facts:
Victora Abril was employed by PFCCI which was engaged in
organizing services to credit and cooperative entities as
Auditor/Field Examiner and thereafter held position in
different capacities as office secretary and cashier-designate
from 1982 to 1988.
She gave birth and upon her return in November 1989, a
certain Vangie Santos had been permanently appointed to
her former position. She accepted then a position as
Regional Field Officer on a probationary basis for 6 months.
Period elapsed but respondent was given another
employment contract for one year until 1991 after which
period, her employment was terminated.
Illegal dismissal was filed. LA dismissed her file but NLRC
reversed and ordered reinstatement.
Issue: WON she was illegally dismissed and WON she was a
regular employee.
Held: Yes. She was illegally dismissed and YES she was a
regular employee.
Art. 281 of the LC allows the employer to secure services of
an employee on a probi basis which allows him to terminate
the latter for just cause or upon failure to qualify in
accordance with reasonable standards.
Probationary Employee: one who is on trial by an
employer during which the employer determines whether or
nor he is qualified for permanent employment. A
probationary employment is made to afford the employer an
opportunity to observe the fitness of a probationer while at
work, and to ascertain whether he will become a proper and
efficient employee. Probationary employees, notwithstanding
their limited tenure, are also entitled to security of tenure.
Except for just cause or under employment contract, a probi
employee cannot be terminated.
Petitioner alleged that she has abandoned her work for 8
months (due to childbirth) and the position she applied for as
RFO was fixed for a specific period thus she is considered as
a casual or contractual employee under Art. 280.
Three kinds of employees:
a) Regular employees: whose
work is necessary or
desirable to the usual
business of the employer
b) Project employees: whose
employment has been fixed
for a specific project or
undertaking the completion
or termination of which has
been determined at the
time of the engagement of
the employee or where the
work or services to be
performed is seasonal in
nature and the employment
is for the duration of the
season.
c) Casual employees: those
who are neither regular not
project.
The contract between the petitioner and the respondent was
scrutinized and the Court arrived at a conclusion that the
contract was ambiguous, and in a contract of adhesion, if it is
ambiguous, any ambiguity therein should be construed
strictly against the part who prepared it. (Contract: xxx
probationary status for a period not to exceed six (6) months
from said effectivity subject to renewal of this contract
should the employee’s performance be satisfactory).
Regardless of the designation the petitioner company may
have conferred upon resp employment status, it is
uncontroverted that the latter, having completed the
probationary period and allowed to work thereafter, became
a regular employee who may be dismissed only for just or
authorized causes.
• Pangilinan v. General Milling
corp., 434 SCRA 159 (2004)
Facts:
General Milling Corporation (GMC) is in production and sale
of livestock and poultry. It is also a distributor of dressed
chicken. It employs hundreds of employees on regular or
casual basis (“emergency workers”).
The petitioners were emergency workers under
temporary/casual employment contracts “for a period of five
months”. They were chicken dressers, packers and helpers.
Upon expiration of contracts, their services were terminated.
Filed for illegal dismissal on the basis that based on the
nature of their work, they were regular employees.
LA: They are regular employees.
NLRC: They are regular employees.
Issue: WON they are regular employees.
Held: No. Art. 280 comprehends 3 kinds of employees (see
above).
On regular employee:
A regular employee is one who is engaged to perform
activities which are necessary and desirable in the usual
business or trade of the employer as against those which are
undertaken for a specific project or are seasonal.
There two separate instances whereby it can be determined
that an employment is regular:
1) if the particular activity performed b the employee
is necessary or desirable in the usual business or
trade of the employer
2) if the employee has been performing the job for at
least a year
In St. Theresa’s School of Novaliches vs NLRC, it was held
that Art. 280 does not prohibit an employment contract with
a fixed period. It does not necessarily follow that where the
duties of the employee consist of activities usually necessary
or desirable in the usual bisness of the employer, the parties
are forbidden from agreeing on a period of time for the
performance of such activities. There is thus nothing
essentially contradictory between a definite period of
employment and the nature of the employee’s duties.
The records reveal that the stipulations in the employment
contracts were knowingly and voluntarily agreed to by the
petitioners without force, duress or improper pressure or any
circumstances that vitiated their consent.
They were hired as emergency workers and while their
employment was necessary and desirable in the usual
business of the resp, they were employed on a mere
temporary basis since their employment was limited to a
fixed period.
There was no illegal dismissal when the petitioners’ services
were terminated by reason of the expiration of their
contracts. Lack of notice of termination is of no consequence,
because when the contract specifies the period of its
duration, it terminates on the expiration of such period. A
contract for employment for a definite period terminates by
its own term at the end of such period.
• De Leon v. NLRC, 176 SCRA 615 (1989)
Facts:
De Leon was an employee of La Tondena Inc in 1981 in the
Maintenance Section of the Engineering Department. His
work consisted mainly of painting company building and
equipment and other odd jobs relating to maintenance. He
was paid on a daily basis thru petty cash vouchers.
After 1 year, he requested that he be included in the payroll
of regular workers and upon this request he was dismissed.
LA: He was a regular employee. Emiliano Tanque Jr who was
regularly employed by the company as a maintenance job
doing same jobs that of De Leon who was also working with
the former. He rendered service for more than one year
continuously.
NLRC: Reversed. Reasoned that he was hired only as a
painter and to repaint specifically the Mama Rosa building at
the comp’s Tondo compound. It was made clear to him that
he would be so engaged on a casual basis so much so that
he was not required to accomplish an application form or to
comply with the usual requirements for employment and that
he was never paid his salary through the regular payroll and
always in petty cash vouchers.
SOLGEN: The dismissal of the petitioner after he demanded
to be regularized was a subterfuge to circumvent the law on
regular employment. He further recommends that the
questioned decision and resolution of the NLRC be annulled
and that the order of the LA directeing the reinstatement and
payment of backwages and other benefits be upheld.
SC: NLRC decision should be reversed.
An employment is deemed regular when the activities
performed by the employee are usually necessary or
desirable in the usual business or trade of the employer.
Not considered regular are the so-called “project
employment” the completion of termination of which is
more or less determinable at the time of employment, such
as those employed in connection with a particular
construction project and seasonal employment which by its
nature is only desirable for a limited period of time.
However, an employee who has rendered at least one year of
service, whether continuous or intermittent, is deemed
regular with respect to the activity he performed and while
such activity actually exists.
The primary standard in determining a regular
employment:
Reasonable connection between the particular activity
performed by the employee in relation to the usual business
or trade of the employer. The test is whether the former is
usually necessary or desirable in the usual business or trade
of the employer. The connection can be determined by
considering the nature of the work performed and its relation
to the scheme of the particular business or trade in its
entirety.
Also, if the employee has been performing the job for at least
a year, even if the performance is not continuous or merely
intermittent, the law deems the repeated and continuing
need for its performance as sufficient evidence of the
necessity if not indispensability of that activity to the
business. Hence, the employment is also considered regular,
but only with respect to such activity and while such activity
exists.
The law demands that the nature and entirety of the
activities performed by the employee be considered. If his
job was truly only to paint a building, there would have been
no basis for giving him other work assignments in between
painting activities.
It is not tenable to argue that the painting and maintenance
work of petitioner are not necessary in resp’s business of
manufacturing liquors and wines just as it cannot be said
that only those who are directly involved in the process of
producing wines and liquors may be considered as necessary
employees. Otherwise, there would have been no need for
regular Maintenance Section of resp company’s Engg
Department, manned by Tanque whom petitioner worked
with.
He was even rehired by the company through a labor agency
was returned to his post with the same activities.
It is not the will and word of the employer, or the procedure
of hiring, or the manning of paying his salary. It is the nature
of the activities performed in relation to the particular
business or trade considering all circumstances and in some
cases, the length of time of its performance and its
continued existence.
• Violeta v. NLRC, 280 SCRA 520 (1997)
Facts:
Violeta and Baltazar were employees of DISC.
Violeta worked in CDCP, a sister corporation of DISC from
Dec 1980 to Feb 1981. Then hired him as Erector II at a
project for Philphos in Nov 1982 to Dec 1984. Then in Jan
1985 he was reassigned as Erector for Five Stand TCM
Project with vacation and sick leaves and was designated as
regular project employee at one project with NSC. Again
rehired in June 1989 and another in Feb 1992. Because of the
completion of the particular item of work, termination of
services.
Baltazar worked in CDCP in June 1980 as lead carpenter and
just like Violeta, he was transferred from one project to
another as a regular project employee. He was separated in
1991 as a result of the completion of the said item of work.
Quitclaims were executed.
Filed for illegal dismissal contending that they are already
regular employees who cannot be dismissed on the ground
of completion of the particular project where they are
engaged.
LA: dismissed for lack of merit but ordered for separation pay On the gaps of employment: Art. 280 contemplates both
because it was the policy of DISC to give separation pay to continuous and broken services.
employees who have rendered one year of service. The
conclusion was based on the pet admission that they are • San Miguel Corporation v. NLRC, 297
regular project employees thus, their employment was SCRA 277 (1998)
deemed coterminous with the project for which their
employer engaged them. Facts:

NLRC: Reversed. Although the appointment specified fixed
terms or periods of employment, the fact that hey were hired
and transferred from one project to another made both
petitioners non-project employees who cannot be terminated
by reason alone of the completion of the project. They were
hired no only for one particular project but different projects
one after the other.
De Guzman was hired by SMC as helper/bricklayer for a
specific project, the repair and upgrading of furnace C and
his contract was for a specific period (4 months). He was
again hired but this time for the draining/cooling down of
furnace F and the emergency repair of furnace E. Upon the
completion of the last task, termination of services. Illegal
dismissal was filed.

BUT! Same division of NLRC reversed itself upon motion of
the private resp. Their basis was the employment of
petitioners in one of the last projects (ETL #3 Civil Works), it
was for a specific or fixed period thus making them project
employees.
ISSUE: WON they are regular employees.
HELD: Yes. They are regular (non-project) and not project
employees.
In order to properly characterize petitioners’ employment, it
is important to ascertain whether or not their employment
falls under the exceptions provided in Article 280 of the
Code.
The principal test for determining whether particular
employees are properly characterized as “project
employees”, as distinguished from “regular employees” is
whether or not the “project employees” were assigned to
carry out a “specific project or undertaking”, the duration
(and scope) of which were specified at the time the
employees were engaged for that project.
Project employees: those workers hired
Issue: Regular employee or Project employee?
Held: Project employee.
He was hired for a specific project that was not within the
regular business of the corporation. Petitioner is not engaged
in the business of repairing furnaces. Although the activity
was necessary to enable petitioner to continue
manufacturing glass, the necessity therefore arose only
when a particular furnace reached the end of its life or
operating cycle. Or, as in the second undertaking, when a
particular furnace required an emergency repair.
The undertakings have specified goals and purposes which
are fulfilled once the designated work was completed.
Moreover, undertaking were also indentifiably separate and
distinct from the usual, ordinary or regular business
operations of petitioner, which is glass manufacturing.
These undertakings, the duration and scope of which had
been determined and made known to private resp at the
time of his employment, clearly indicated the nature of his
employment as a project employee. Thus, his services were
terminated legally after the completion of the project.

1) for a specific project of undertaking (which should

be reasonable determinable)
2) the completion or termination of such project or
undertaking has been determined at the time of
engagement of the employee (which should be
defined in an employment agreement and made
clear to the employee at the time of hiring).

Based on the above criteria, the petitioners are regular

employees of private respondents, and not project
employees as postulated by resp NLRC.

An examination of said appointments reveals that the

completion or termination of the project for which petitioners
were hired was not determined at the start of their
employment. There is no specific mention of the period or
duration when the project will be completed or terminated.

It is not enough that an employee is hired for a specific

project or phase of work. There must be a determination of
or a clear agreement on the completion or termination of the
project at the time the employee is engaged if the objective
of Article 280 is to be achieved. Since this requirement was
not met, they should be considered as regular employees.

Jurisprudence abounds with consistent rule that the failure of

an employer to report to the nearest Public Employment
Office the termination of its workers’ services every time a
project or a phase thereof is completed indicates that the
said workers are not project employees. In the case, only the
last and final termination was reported to the labor office.
Private resp should have filed as many reports of termination
as there were construction projects actually finished if pet
were indeed proj employees considering that they were hired
and rehired for various projects.

PANGILINAN V. GENERAL MILLING CORPORATION
FACTS:
1. General Milling Corp. (GMC) is a domestic
corporation engaged in the production and sale of
livestock and poultry. It is also a distributor of
dressed chicken to various restaurants and
establishments nationwide.
2. Petitioners were employed by GMC as “emergency
workers” at its Cainta poultry plant under separate
“temporary/casual contracts of employment” for a
period of five months. They worked as chicken
dressers, packers or helpers.
3. Upon expiration of the employment contracts,
petitioners’ services were terminated. They filed
separate complaints for illegal dismissal and non-
payment of holiday pay, 13th month pay, night shift
differential and service incentive leave pay before
the NLRC.
4. Petitioners allege that they were regular employees
of GMC since their work as chicken dressers was
necessary and desirable in the usual business of
GMC, and that GMC terminated their services
without just cause and due notice. They further
argued that GMC could not rely on the
nomenclature of their employment as “temporary or
casual.”
5. The Labor Arbiter ruled in favour of petitioners
declaring that they were regular employees and
that they were illegally dismissed.
6. The NLRC rendered a decision reversing that of the
Labor Arbiter. It held that petitioners were
temporary or contractual employees of GMC and
that they were legally terminated upon the
expiration of their respective contracts. Citing the
case of Brent School Inc. V. Zamora, the NLRC
explained that while petitioners’ work was
necessary and desirable in the usual business of
GMC, they cannot be considered regular employees
since they agreed to a fixed term.
7. The Court of Appeals affirmed the NLRC. The CA
ruled that where the duties of the employee consist
of activities usually necessary or desirable in the
usual business of the employer, it does not
necessarily follow that the parties are forbidden
from agreeing on a period of time for the
performance of such activities (St. Theresa’s School
of Novaliches v. NLRC).
ISSUE: WON petitioners were regular employees of GMC
HELD: PETITIONERS WERE EMPLOYEES WITH A FIXED
PERIOD AND WERE NOT REGULAR EMPLOYEES
RATIO:
 Art. 280, Labor Code comprehends 3 kinds of
employees:
1) REGULAR EMPLOYEES or those whose work is
necessary or desirable to the usual business of
the employer
2) PROJECT EMPLOYEES or those whose
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee or
where the work or services to be performed is
seasonal in nature and the employment is for
the duration of the season
3) CASUAL EMPLOYEES or those who are neither
regular nor project employees
 There are 2 separate instances whereby it can be
determined that an employment is regular:
1) If the particular activity performed by the
employee is necessary or desirable in the usual
business or trade of the employer
2) If the employee has been performing the job for
at least a year
 The employment contracts entered into by the
petitioners showed that their employment was
limited to a fixed period, usually five or six months,
and did not go beyond such period. The records
reveal that the stipulations in the contracts were
knowingly and voluntarily agreed to by petitioners
without force, duress or improper pressure, or any
circumstances that vitiated their consent. Also,
nothing therein shows that these contracts were
used as a subterfuge by the respondent GMC to
evade the provisions of Arts. 279-280 of the Labor
Code.
 While petitioners’ employment as chicken dressers
is necessary and desirable in the usual business of
GMC, they were employed on a mere temporary
basis, since their employment was limited to a fixed
period. As such, they are merely “contractual
employees and thus, there was no illegal dismissal
 Lack of notice of termination is of no consequence
because when the contract specifies the period of
its duration, it terminates on the expiration of such
period. A contract for employment for a definite
period terminates by its own term at the end of
such period.
OTHER ISSUES:
A copy of the Labor Arbiter’s decision was sent by
registered mail addressed to Atty. Emmanuel Pacsi,
GMC’s counsel, but it was Beth Cacal, a clerk of
GMC, who received the copy of the decision on
October 28, 1997. Contending that the copy was
received only on November 3,1997, GMC filed an
appeal on November 12,1997 before the NLRC.
Petitioners filed a Motion to Dismiss GMC’s appeal
on the ground that the latter was filed five days
late. GMC opposed the motion, contending that
Cacal was a mere clerk and not a member of the
staff of the Legal Department, and thus Cacal’s
receipt of the decision was not equivalent to receipt
by GMC’s counsel.
The NLRC ruled that GMC filed its appeal within the
reglementary period. Service by registered mail is
completed on “upon actual receipt thereof by the
addressee.” The CA and SC affirmed, ruling that a
service of a copy of a decision on a person who is
 neither a clerk nor one in charge of the attorney’s
office is invalid.
PERPETUAL HELP CREDIT COOPERATIVE, INC. (PHCCI) V.
FABURADA
FACTS:
1. Private respondents Faburada et. al. filed a complaint
against PHCCI for illegal dismissal, premium pay,
separation pay, wage differential, moral damages and
atty’s fees.
2. PHCCI filed a motion to dismiss on the ground that no
employer-employee relationship exists since private
respondents are all members and co-owners of the
cooperative. Also, private respondents have not
exhausted the remedies provided in the coop by-laws.
PHCCI also filed a supplemental motion to dismiss
alleging that RA 6939, the Cooperative Development
Authority Law, requires conciliation or mediation within
the cooperative before a resort to judicial proceeding.
3. The Labor Arbiter ruled in favor of the private
respondents, holding that the case is impressed with
employer-employee relationship and that the laws on
cooperatives is subservient to the Labor Code. The
NLRC affirmed.
ISSUE: WON there is an employer-employee relationship
between the parties and WON private respondents were
regular employees
HELD: YES. YES.
RATIO:
• Elements in determining existence of employer-
employee relationship:
1) Selection and engagement of the worker or the
power to hire
2) The power to dismiss
3) Payment of wages by whatever means
4) Power to control the worker’s conduct
The above elements are present here. PHCCI through its
Manager Mr. Edilberto Lantaca, Jr. hired respondents as
computer programmer and clerks. They worked regular
working hours, were assigned specific duties, were paid
regular wages, and made to accomplish regular time records,
and worked under the supervision of the manager.
 Art. 280, Labor Code comprehends 3 kinds of
employees:
1) REGULAR EMPLOYEES or those whose work is
necessary or desirable to the usual business of
the employer
2) PROJECT EMPLOYEES or those whose
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee or
where the work or services to be performed is
seasonal in nature and the employment is for
the duration of the season
3) CASUAL EMPLOYEES or those who are neither
regular nor project employees
 There are 2 separate instances whereby it can be
determined that an employment is regular:
1) If the particular activity performed by the
employee is necessary or desirable in the usual
business or trade of the employer
2) If the employee has been performing the
job for at least a year
Private respondents were rendering services
necessary to the day-to-day operations of PHCCI.
This alone qualified them as regular employees.
Moreover, all of them except one worked with PHCCI
for more than 1 year.
 That Faburada worked only on a part-time basis
does not mean that he is not a regular employee.
Regularity of employment is not determined by the
number of hours one works but by the nature and
length of time one has been in that particular job.
SANDOVAL SHIPYARDS V. NLRC
FACTS:
1. Sandoval Shipyards is engaged in the building and repair
of vessels. It contends that each vessel is a separate
project and that the employment of workers is
terminated with the completion of each project.
2. In GR No. 65689, private respondents Diamante et. al.
were assigned to the construction of LCT Catarman.
After 3 months, the project was completed, and
Diamante et. al. were served a termination notice. The
termination was reported to the Ministry of Labor. The
workers filed a complaint for illegal dismissal with the
NLRC
3. The LA and NLRC ordered the reinstatement of
Diamante et.al
4. In GR No. 66119, private respondents Dela Cruz et. al.
were assigned to the construction a tanker M/T Oil
Queen VII, ordered by Mobile Oil Philippines. Upon
completion of the project, Dela Cruz et. al. who worked
aswelders, helpers and construction workers were
terminated. The termination was duly reported to the
Ministry of Labor. The workers also filed for illegal
dismissal.
5. The NCR Director and the Deputy Minister of Labor
ordered the reinstatement of Dela Cruz et. al.
ISSUE: WON the workers were project employees
HELD: YES
RATIO:
Project
 The private respondents were project employees whose
work was coterminous with the project for which they
were hired
- Project employees are those “where the
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee”
(Art. 281, LC)
- Project employees are those employed in
connection with a particular construction
project. Regular employees are those
employed by a construction company without
reference to any particular project (Policy
Instruction No. 20)
 Workers who are hired by a firm whose work is solely
contracting for the repair of vessels are “project
employees” who may be automatically laid off after the
project is completed. Here, it is significant to note that
Sandoval Shipyards does not construct vessels for sale
or otherwise which will demand continuous productions
of ships and will need permanent or regular workers. It
merely accepts contracts for shipbuilding or repair of
vessels from third parties and only on those occasions
that it hires workers to do the job which lasts only for
less than ayear or longer
 The completion of the project automatically terminates
the employment, and the employer is only obliged to
report the termination of the employment with the
Ministry of Labor.
CHUA V. CA
FACTS:
 1. Private respondents filed a petition with the Social
Security Commission for SSS coverage and
constributions against petitioner Chua, claiming that
they were all regular employees in the latter’s
construction business.
2. Private respondents claimed they were assigned by
petitioner Chua, owner of Prime Mover Construction
Development, as carpenters, masons and fine graders in
the latter’s various construction projects. They allege
that Chua dismissed them without justifiable grounds
and without notice to them and the Ministry of Labor.
3. Petitioner Chua claimed that private respondents
had no cause of action against him, and assuming there
was any, the same was barred by prescription and
laches. He also claimed that the workers were not
regular but project employees, and thus not covered by
SSS. Granting that private respondents were entitled to
SSS coverage, his failure to remit contributions was due
to an honest belief that respondents are project
employees.
4. SSC ruled in favour of private respondents. The CA
affirmed.
ISSUE: WON private respondents are entitled to compulsory
SSS coverage
HELD: YES
RATIO:
 The Social Security Act was enacted “to develop,
establish gradually and perfect a social security system
which shall be suitable to the needs of the labourers
throughout the Phil, and shall provide protection against
the hazards of disability, sickness, old age and death.”
It provides for compulsory coverage of all employees not
over 60 years old and their employers. Mandatory
coverage is premised on the existence of and employer-
employee relationship. All employees, regardless of
tenure, would classify for compulsory membership in the
SSS, except those classes of employees contemplated in
Section 8 (j) of the Social Security Act.
 Private respondents are regular employees. As masons,
carpenters and fine graders in petitioner’s various
construction projects, they performed work which was
usually necessary and desirable to petitioner’s business
which involves construction of roads and bridges. It is
not enough that an employee is hired for a specific
project or phase of work. There must also be a
determination of, and a clear agreement on, the
completion or termination of the project at the time the
employee is engaged (Violeta v. NLRC)
 The repeated re-hiring and continuing need for
respondents’ services over a long span of time (shortest
is 2 years and the longest 8 years) have made them
regular employees
 Also, petitioner was unable to show that private
respondents were appraised of the project nature of
their employment. He failed to show employment
contracts and records that would indicate dates of hiring
and termination. Also, no proof that he submitted
reports of termination with the Ministry of Labor
 No prescription: only 8 years had passed from the time
delinquency of employer was discovered. Period of
prescription is 20 years
 No laches: no proof that private respondents had failed
or neglected to assert their right, considering that they
filed their claim within the prescriptive period
 Good faith of employer is irrelevant since the law does
not distinguish
MARAGUINOT V. NLRC
FACTS:
1. Petitioner Maraguinot maintains that he was
employed in 1989 by private respondents Vic del
Rosario and Viva Films as part of the filming crew.
Subsequently, he was designated Assistant
Electrician and then promoted to the rank of
Electrician. Meanwhile, petitioner Enero claims that
he was employed in 1990 by private respondents as
a member of the shooting crew. Petitioners’ tasks
consisted of loading, unloading and arranging movie
equipment in the shooting area as instructed by the
cameraman, returning the equipment to Viva’s
warehouse, assisting in the fixing of the lighting
system and performing other tasks that the
cameraman/director may assign.
2. In May 1992, petitioners sought the assistance of
their supervisor Cesario to facilitate their request
that private respondents adjust their salary in
accordance with the minimum wage law. Cesario
informed them that their salary would be increased
only if they signed a blank employment contract.
Petitioners refused to sign. As a result their
services were terminated. Petitioners sued for
illegal dismissal
3. Private respondents assert that Viva is primarily
engaged in the distribution and exhibition of movies
but not in the business of making movies. Vic del
Rosario is merely and executive producer – a
financier who invests a certain sum of money for
the production of movies. They claim that there is
no employer-employee relationship between them
and petitioners. Viva contracts persons called
“associate producers” to produce or make movies,
and that petitioners are project employees of the
associate producers.
4. LA ruled in favour of petitioners. The NLRC
reversed.
ISSUES:
WON an employer-employee relationship existed
between petitioners and Viva
WON petitioners are project employees of associate
producers who are in turn independent contractors
HELD: YES. NO.
RATIO:
 A job contractor under Sec. 8, Rule VIII, Bk III of the
Omnibus Rules Implementing the Labor Code must
have tools, equipment, machinery, work premises
and other materials necessary for the conduct of
the business. Here, the associate producers have
none of these; all the equipment is owned by Viva
and the associate producer merely leases the
equipment from Viva. The relationship between
Viva and the associate producers is that of agency,
as the latter make movies on behalf of Viva, whose
business is to make movies. As such, the
employment relationship between petitioners and
producers is actually one between petitioners and
Viva, with the latter being the direct employer
 The employer-employee relationship can further be
established by the control test. The 4 elements of
selection, payment of wages, power of dismissal
and control are present and can be shown in the ff
circumstance
- The producer has to work within the limits of
the budget he is given by the company
- Viva employs a Supervising Producer, who acts
as the eyes and ears of the company to monitor
the progress of the associate producer’s work
accomplishment. He conducts rounds of
inspection in the field to see if there is any
problem that the associate producer is
encountering and to make sure that the film
project is finished on schedule and that any
additional budget requested by the associate
producer is really justified
- Viva requires that the end result must be a
“quality film acceptable to the company”
- The appointment slips issued to all crew
members contain the words “superiors” and
 “top management” which can only refer to the
superiors and top management of Viva. Also, it
is Viva’s corporate name which appears on the
heading.
- It is Viva that paid wages to petitioners,
evidenced by vouchers containing Viva’s
letterhead
 Petitioners were part of a work pool. While they
were initially hired as project employees, they
had attained regular status since the following
conditions concur:
1) there is continuous rehiring of project
employees even after cessation of the
project
2) the tasks performed are vital,
necessary and indispensable to the
usual business or trade of the
employer
Here, Maraguinot was employed for 3 years and
worked on 23 projects, while Enero for 2 years and
on 18 projects
 A work pool may exist although the workers in
the pool do not receive salaries and are free to
seek other employment during temporary
breaks in the business, provided that the
worker shall be available when called to report
for a project. Although primarily applicable to
regular seasonal workers, this set-up can
likewise be applied to project workers insofar as
the effect of temporary cessation of work is
concerned. This is beneficial to both the
employer and employee for it prevents the
unjust situation of coddling labor at the
expense of capital and at the same time
enables the workers to attain the status of
regular employees
J&DO AGUILAR CORPORATION V. NLRC
FACTS:
1. Private respondent Acedillo began working for
petitioner J&DO Aguilar (engaged in the business of
refrigeration) in Feb 1989 as helper-electrician. In
Jan 1992, his services were terminated allegedly
due to lack of available projects and excess in the
number of workers needed. He filed a case for
illegal dismissal when he learned that new workers
were being hired by petitioner while his request for
work was ignored
2. Petitioner company maintains that its workers were
hired on a contractual basis and their employment
deemed terminated upon completion of the project
for which they were hired. It claims that Acedillo
was not a regular employee because his
employment was for a definite period and made
only to augment the regular workforce
3. The LA ruled in favour of respondent Acedillo. The
NLRC affirmed.
ISSUE: WON Acedillo is a project employee
HELD: NO
RATIO:
 Project employees are those whose
employment has been fixed for a specific
project or undertaking the completion or
termination of which has been determined at
the time of the engagement of the employee or
where the work or services to be performed is
seasonal in nature and the employment is for
the duration of the season
 Here, the petitioner did not specify the duration
and scope of the project when it hired Acedillo.
It failed to present an employment contract
showing that Acedillo was engaged only for a
specific project. It is not even clear if Acedillo
signed an employment contract
 Acedillo’s work as helper-electrician was an
activity necessary and desirable in the usual
business or trade of the employer, since
refrigeration requires considerable electrical
work.
 Petitioner admits maintaining 2 sets of workers,
i.e., those permanently employed regardless of
the availability of work and those hired on a
project basis. The practice of keeping a work
pool renders untaenable the position that
Acedillo is not a regular employee: “Members
of a work pool from a which a construction
company draws its project employees, if
considered employees of the construction
company while in the work pool, are non-
project employees or employees for an
indefinite period. If they are employed in a
particular project, the completion of the project
or any phase thereof will not mean severance
of the employer-employee relationship” (PNCC
v. NLRC)
© UNION OF SUPERVISORS (RB) NATU vs. SEC. OF LABOR
March 29, 1984
Nature: Petition to review the decision of the Secretary of
Labor
Facts:
· In 1974, a complaint for unfair labor practice was filed
by Norberto Luna against Republic Bank.
· While the case was still pending, there was a
substantial change in the corporate structure of Republic
Bank. To save the bank from financial collapse, an
agreement was entered into between the old stockholders
that the Philippine Sugar Commission (PSC) will buy a
substantial portion of the bank to inject fresh capital.
· As a consequence of this reorganization, the old
Republic Bank became the Republic Planters Bank, with new
controlling stockholders, board membership and
management. The bank was also made the financing arm of
the PSC.
· On November 12, 1981, the Supreme Court rendered
a decision finding that Luna was illegally dismissed by
Republic Bank. The court held that Luna is entitled to
reinstatement to his former position as San Juan Branch
Manager, without loss of seniority rights and other benefits
and increases recognized by law or granted by the bank
during the period of the illegal dismissal, with backwages
limited to three years. Republic Planters Bank only learned
of this case after it was furnished a copy of the decision. The
old management did not advise the present management of
the pendency of the case.
· Thus, the bank filed a manifestation and motion to
bring to the attention of the SC these facts and
circumstances that occurred while the case was still
pending. The bank argues that it should not be made to
suffer the consequences of the unfair labor practices of the
old management. The bank also manifested reinstatement
of Luna to his old position would disturb the current
organizational structure of the company.
· Before the court ruled on the motion, the bank paid
Luna his backwages equivalent to three years without
qualification.
Issue: WON Luna should be reinstated to his former position
Held: NO, he should be reinstated to a substantially
equivalent position.
Ratio:
· Reinstatement is a restoration to a state from which
one has been removed or separated. It is the return to the
position from which he was removed and assuming again the
functions of the office already held.
Reinstatement presupposes that the previous position from
which one had been removed still exists, or that there is an
unfilled position more or less of similar nature as the one
previously occupied by the employee.
· Closure of business – There was no closure of business
notwithstanding that the bank was almost at a brink of a
financial ruin. Despite the widespread restructuring and
reorganization, the position previously held by Luna was not
abolished, but is now held by the incumbent manager who
replaced him.
· Section 4, Rule 1, Book VI of the Implementing Rules
states that:
“An employee who is separated from work without just cause
should be reinstated to his former position unless such
position no longer exists, at the time of his reinstatement, in
which case he shall be given a substantially equivalent
position in the same establishment without loss of seniority
rights.
Even though his former position still exists, Luna cannot be
reinstated as San Juan Branch Manager because such
position relates to trust and confidence and therefore the
incumbent manager who has already won the company’s
trust and confidence should not be dismissed in favor of
Luna, whose competence and integrity has not been tested.
The fact that Luna had worked for the bank for 22 years
without any showing of irregularity in the performance of his
duties DOES NOT prove that he has the trust and confidence
of the bank.
· Economic and Business Conditions - The
reinstatement remedy must always be adapted to economic-
business conditions. The bank had to undergo innovations
(such as the replacement of management, hiring of new
managers) to ensure recovery. To order the reinstatement
of Luna to his former position would undermine the bank’s
efforts at recovery
Considering these conditions, it is inevitable that these be
reflected in the desire for efficient and productive
management. This can only be effectuated if Luna is
reinstated to a substantially equivalent position and the
incumbent manager who is now holding Luna’s former
position should be allowed to continue with his “tested”
competence and integrity.
Other issues:
(1) Is Luna entitled to increases and benefits recognized by
law or granted by the bank during the period of his
dismissal?
NO. Mere continuance as an employee does not qualify him
for benefits and increases. Benefits and increases are
allowed because of outstanding performance of duties and
not solely because of the length of service.
(2) Can the bank deduct the income derived by Luna from
other sources during his illegal dismissal from the amount of
backwages to be paid?
Generally YES. An employer is entitled to deduct from what
the Court orders to be paid as backwages whatever an
employee has earned elsewhere during the period for which
backwages are supposed to be paid. Such qualification is
implied in all judgments ordering reinstatement, unless
otherwise expressly ordered by the Court. (NOTE: This
ruling no longer applies after RA 6715 was enacted on March
21, 1989. See Bustamante vs. NLRC case)
However, the bank can no longer make deductions because
it has already paid the full amount to Luna. Equity must
operate in favor of the employee equally as it favors the
employer.
NOTES:
· DIVINE WORD HIGH SCHOOL vs. NLRC
August 6, 1986
Nature: Petition to review the decision of the NLRC.
FACTS:
· Luz Catenza, a high school teacher of Divine Word
College, filed a complaint for illegal dismissal against her
employer. In her complaint, Catenza alleged that she went
on a vacation leave but when she tried to report back to
work, she was informed that she is not anymore allowed to
teach because of the “misdeeds” and “immoral acts” of her
husband Pablo, who was then the principal of the same
school
· In its answer to the complaint, the school alleged that
Catenza was dismissed not because of the acts of her
husband, but because of her own contemporaneous and
subsequent conduct of covering up and concealing the
immoral acts of her husband. Catenza apparently
threatened to kill Remie Ignacio, the victim of her husband’s
immoral acts.
· The Labor Arbiter held that there was illegal dismissal,
and ordered the reinstatement of Catenza. The NLRC
modified this decision by giving Catenza a choice of whether
she wanted to be reinstated with full backwages or be
separated from the service with termination pay. (NOTE:
The NLRC considered the moral repercussions of Catenza’s
act which it may have towards the minds of the students of
the Divine Word, which was a catholic institution. )
Issues:
(1) WON there was illegal dismissal
(2) If yes, WON her reinstatement is proper
Held:
(1) YES A review of the records clearly shows that Catenza
was dismissed without valid cause. The reason why she was
dismissed was because of the alleged immoral conduct of
her husband. However, her husband was never investigated
nor was he ever convicted of the serious act alluded to him.
Catenza should not be made to suffer for her husband’s
indiscretion and infidelity.
(2) NO Although Catenza was found to be illegally
dismissed, her reinstatement is not proper. Her continued
presence in the school may be met antipathy and
antagonism by the Catholic school community.
Thus, Divine Word is ordered to pay Catenza separation pay
equivalent to one month pay for every year of service, plus
her backwages (not to exceed three years) from the time of
the dismissal up to the time of actual payment.
NOTE: The issue of lack of due process was also raised by
the school, because the LA had considered the case
submitted for decision despite the fact that the school had
not yet rested its case. However, a scrutiny of the records
show that the school was afforded every opportunity to
present its evidence but no one appeared at the four
consecutive hearings scheduled for the purpose.
Espejo v. NLRC, 255 SCRA 430 (1996)
FACTS:
· On August 1, 1987, the Cooperative Insurance System
of the Philippines (CISP) hired Espejo as General Manager
with a monthly salary of P9,000 plus some privileges,
including the use of a company car with driver.
· On September 11, 1989, the Board of Directors of CISP
held a meeting to discuss the “cease and desist order”
issued by the Insurance Commission against CISP on the
grounds of “capital impairment and margin of solvency
deficiency.” In order to meet the capital requirements, the
Board passed a resolution authorizing the sale of some CISP
properties, including the car assigned to Espejo.
· Espejo objected to the proposed sale. The Board did
not act on his objection so Espejo was prompted to tender
his irrevocable resignation effective October 11, 1989.
· On September 22, 1989, the Board held another
meeting, where they affirmed the sale of CISP properties.
The Board also resolved to act on Espejo’s resignation.
· On September 26, 1989, the Chairman of the
company met with Espejo who manifested that he had
changed his mind about resigning and that he would
continue as General Manager despite the sale of the
company car. The Chairman wrote a memo to the Board on
October 3 to inform the latter of Espejo’s oral revocation.
· On October 9, 1989, Espejo received a letter from the
Chariman relaying the acceptance of his resignation effective
October 11. Espejo replied stating that he was surprised
about this action of the Board, since he had earlier verbally
withdrawn his resignation. On November 14, 1989, CISP paid
Espejo his unpaid benefits.
· Espejo filed a complaint for illegal dismissal and
damages. The LA ruled in his favor and ordered CISP to
reinstate him to his former position and to pay full
backwages limited to three years. The NLRC affirmed the
finding of illegal dismissal but deleted the reinstatement for
having become moot and academic since Espejo was already
60 years old. The award of backwages was limited to 18
months.
Issue: WON an illegally dismissed employee may be
reinstated even if he had already reached retirement age
Held: NO · CISP did not have any retirement plan for its
employees. Thus, Sec. 13 Book IV of the Omnibus Rules
shall apply. This rule provides that in the absence of a
retirement plan, an employee may be retired upon reaching
the age of 60 years. This provision has been construed to
mean that an employee may retire, or may be retired by his
employer, upon reaching sixty.
Thus, Espejo cannot be reinstated anymore because he was
already sixty years old at the time the decision was
rendered.
· Generally, an illegally dismissed employee who
cannot be reinstated is entitled to separation pay and
backwages. However, considering that Espejo has already
reached the statutory retirement age of sixty, he is only
entitled to backwages. He is entitled to backwages because
it is a form of relief that restores the income lost by reason of
the unlawful dismissal. He is NOT entitled to separation pay
because separation pay is oriented towards the immediate
future, the transitional period the dismissed employee must
undergo before locating a replacement job.
· However, the amount of backwages should only cover
the time when Espejo was illegally dismissed up to the time
when he reached sixty (from October 11, 1989 to January 31,
1990)..
· Moral and exemplary damages cannot be awarded
because the decision to sell the company car was made by
the Board, and not the individual whom Espejo considers to
be his enemy. Also, the sale was made to meet certain
requirements of the Insurance Commission.
CISP also relied on the term “irrevocable” in accepting the
resignation and did not take into account Espejo’s change of
heart. This misapprehension of Espejo’s intentions cannot be
deemed bad faith on the part of CISP.
Judgment affirmed, but portion relating to period of
backwages set aside. LA ordered to compute award of
backwages.
Kay Products, Inc. v. CA 464 SCRA 544 (2005)
FACTS:
Employees of KPI wanted to form a union. When the
management got the info, it called a meeting to announce
that the said employees were to be transferred to an
employment agency. Through a memorandum, KPI, through
its president, Mr. Kay Lee, promised that the employees
would receive bigger and better benefits under the agency
as regular employees thereof. KPI directed all employees
concerned to sign resignation letters preparatory to their
employment with the agency.
Employees continued to report for work in KPI but
received less wages/salaries. Less than a month later, KPI
issued a Memo to the employees, stating that the agency
had been dissolved and that there was a need for them to
sign separate contracts with another manpower agency. In
the meantime, KPI employees were able to organize their
union.
The employees claimed that the petitioners were
guilty of unfair labor practice, underpayment of salaries and
service incentive leave pay, and failure to classify them as
regular employees.
Issue: WON the corporate directors and officers are
solidarily liable with the corporation for the termination of
employees.
 Held: YES In labor cases, corporate directors and
officers are solidarily liable with the corporation for the
termination of employment of corporate employees done
with malice or bad faith.
Kay Lee, as the president, actively managed the
business. In fact, she was the one who decided the
employees’ transfer to the employment agencies, and signed
the memoranda ordering such transfer, in bad faith. In
Naguiat v. NLRC, SC held that the president of a corporation,
who actively manages the business, falls within the meaning
of an “employer” as contemplated by the labor code, and
may be held jointly and severally liable for the obligations of
the corporation to its dismissed employees. Thus, Kay Lee
and KPI are jointly and severally liable for the latter’s
obligations.
Serrano v. NLRC, 323 SCRA 445 (2000)
FACTS:
Petitioner was hired by private respondent Isetann as a
security checker to apprehend shoplifters and prevent
pilferage of merchandise. Initially hired on Oct 1984 on
contractual basis, eventually became regular on 1985 and on
1988 became head of the Security Checkers Section. In
1991, as a cost-cutting measure, Isetann decided to phase
out its entire security section and engage the services of an
independent security agency. Serrano was given a
memorandum terminating his services effective on that
same day on Oct 11, 1991.
Serrano filed a complaint for illegal dismissal, illegal layoff,
unfair labor practice, underpayment of wages, and
nonpayment of salary and overtime pay. The Labor Arbiter
ruled for Serrano. On appeal the NLRC reversed the decision
of the Labor Arbiter.
Issues:
1. WON hiring an independent security agency by Isetann
to replace its current security section as a valid ground.
2. WON the denial of the right to be given a written notice
is tantamount to an illegal dismissal.
Held:
1. No. Absent proof that management acted in a
malicious or arbitrary manner, the court will not interfere
with exercise of the judgment by an employer. The only bare
assertion is that Isetann’s real purpose is to avoid payment
to the security checkers of the wage increases provided,
such assertion is not a sufficient basis. Indeed, that the
phase-out of the security section constituted a “legitimate
business decision” is a factual finding of an administrative
agency which must be accorded respect and even finality by
this court. Accordingly, SC held that the termination of the
petitioner’s services was for an authorized cause…
redundancy. Hence, pursuant to Art. 283 of the Labor Code,
petitioner should be given separate pay at the rate of one
month pay for every year of service.
2. No. The SC do not agree that to disregard the notice
requirement by an employer renders the dismissal of
employment null and void. Such a stance is actually a
reversion to the discredited pre-Wenphil rule ordering an
employee to be reinstated and paid backwages when it is
shown that he has not given notice and hearing although his
dismissal or layoff is later found to be a just or authorized
cause. Such rule is abandoned in Wenphil because it is really
unjust to require an employer to keep in his service one who
is guilty, for example, of an attempt on the life of the
employer or the latter’s family, or when the employer is
precisely retrenching in order to prevent losses. Rather, the
remedy is to order the payment to the employee of full
backwages from the time of his dismissal until the court finds
that the dismissal was for a just cause. But, otherwise, his
dismissal must be upheld and he should not be reinstated.
This is because his dismissal is ineffectual.
The cases cited by both Justice Puno and Panganiban refer,
however, to the denial of due process by the State, which is
not the case here. There are three reasons why, on the other
hand, violation of the employer of the notice of requirement
cannot be considered a denial of due process resulting in the
nullity of the employee’s dismissal or layoff.
a) The Due Process Clause of the Constitution is a
limitation to the governmental powers. It does not apply to
the exercise of private power, such as termination of
employment under the labor code.
b) Notice and hearing are required under the Due Process
Clause before the power of organized society are brought to
bear upon the individual. This is obviously not the case of
termination of employment under Art 283. Here the
employee is not faced with an aspect of the adversary
system. The purpose is requiring for a 30-day written notice
before an employee is laid off is not to afford him an
opportunity to be heard on any charge against him, for there
is none. The purpose rather is to give him time to prepare for
the eventual loss of his job and the DOLE an opportunity to
determine whether economic causes do exist justifying the
termination of his employment.
c) Another reason why the notice requirement under Art
283 can not be considered a requirement of the Due Process
Clause is that the employer cannot really be expected to be
entirely an impartial judge of his own cause. This is also the
cause under Art 282.
Lack of notice only makes termination Ineffectual
Not all notice requirements are requirements of due process.
Some are simply part of the procedure to be followed before
a right granted to a party can be exercised. Others are
simply an application of the Justinian precept, embodied in
the Civil Code, to act with justice, give everyone his due, and
observe honesty and good faith toward one’s fellowmen.
Such is the notice of requirement in Art 282-283. The
consequence of the failure either of the employer or the
employee to live up to this precept is to make him liable in
damages, not to render his act (dismissal or resignation, as
the case may be) void.
In sum, we hold that in proceedings for reinstatement under
Art 283, it is shown that the termination of employment was
due to an authorized cause, then the employee concerned
should not be ordered reinstated even though there is failure
to comply with the 30-day notice requirement. Instead, he
must be granted separation pay and backwages from the
time his employment was terminated until it is determined
that the termination of employment is for a just cause
because the failure to hear him before he is dismissed
renders the termination of his employment without effect.
Puno, Dissenting
We must immediately set Wenphil in its proper perspective
as it is a very exceptional case. Its doctrine must be limited
to its distinct facts. In Wenphil, it was clearly established that
the employee had a violent temper, caused trouble during
office hours and even defied his superiors as they tried to
pacify him. The Labor Arbiter proved that the employee was
guilty of grave misconduct and insubordination; we
concluded with the rule that it would be highly prejudicial to
the interest of the employer to reinstate the employee, but Employer has a standing policy prohibiting the encashment
the employer must indemnify the employee the amount of of checks of its employees and officials even if endorsed by
P1000.00 for dismissing him without notice. top executives of the company. Employee herein was
terminated for such encashment after she was assured that
the executive VP approved of it. However, it is found that
At the outset, Puno emphasized that Wenphil itself held, and
such prohibition policy has been relaxed and that respondent
repeatedly held that “the failure of petitioner to give private
employer was informed of such encashment but only acted
respondent the benefit of hearing before he was dismissed,
upon it when checks bounced. They are thus estopped from
constitutes an infringement of his constitutional right to due
imposing the penalty of termination. An alleged just cause
process of law and equal protection of the laws.
for termination cannot be used as a shield to dismiss an
employee arbitrarily. (Llosa Tan v. Silahis International Hotel)
Before Wenphil, we protected employees with the ruling that
dismissals without prior notice are illegal and the illegally
Interorient Maritime Enterprises Inc. v. NLRC, 235 SCRA 268
dismissed employee must be reinstated with backwages.
(1994)
Wenphil diluted that rule when it held that due process is
satisfied if the employee is given the opportunity to be heard
by the Labor Arbiter. It further held that an employee cannot FACTS:
be reinstated if it is established in the hearing that his
dismissal is for a just cause. The failure of the employer is for
Captain Tayog was hired by Trenda World Shipping
a just cause. The failure of the employer to give a pre-
and Sea Horse Hip Management Inc thru petitioner as Master
dismissal notice is only to be penalized by payment of an
of the M/V Oceanic Mindoro.
indemnity. The dilution of the rule has been abused by
unscrupulous employers who then followed the “dismiss now,
pay later” strategy. This evil practice of employers was what He was given the instruction to assume the
Puno expected the majority to address in re-examining the command of the vessel at Port of Hongkong where he was to
Wenphil doctrine. At the very least, Puno thought the replenish bunker and diesel fuel and to sail forthwith to
majority would restore the balance of rights between an Richard Bay, South Africa in order to load 120,000 metric
employee and an employer by giving back the employee’s tons of coal. Upon hearing that storm Gordon was
mandatory right to notice before dismissal. to hit Hongkong, Tayog followed up the request for oxygen
and acetylene which were necessary for the repaid of the
turbo-charger and the economizer. The ship’s agent
LLOSA TAN V. SILAHIS INTERNATIOINAL HOTEL
however informed them that the supplies could be delivered
only at 0800 hours, 7 hours after the ETD from the port to
J. ; 1990 Africa. Tayog waited for the supplies and voyage
was delayed. Upon arriving at Richard bay, he was instructed
to turn-over his post to a new captain and thereafter was
FACTS: Was front office cashier of Silahis
repatriated to the Philippines. He was not informed of
International Hotel since November 2, 1976. Since
charges. POEA: validly dismissed NLRC: illegal: no
1977, Corporate Policy No. 014 was issued to minimize
opportunity to be heard, no evidence to prove loss of trust or
losses experienced by company because of checks encashed
confidence
by them which later bounced. Petitioner allegedly
violated said policy when she encashed $1200 check of Mr.
Gayondato, the general cashier of Puerto Azul Beach resort Issue: WON he was validly dismissed
and nephew of EVP. Suatengco ordered petitioner
to explain and also placed her under preventive suspension.
Held: NO
Petitioner wrote a letter of explanation but her
services were nevertheless terminated on October 30, 1982.
LA: illegal dismissal: reinstate NLRC: set aside decision, 1. Confidential employees cannot be arbitrarily dismissed
dismissed complaint for illegal dismissal for lack of merit at any time, and without cause as reasonably established in
an investigation.
Issue: WON petitioner was validly dismissed on the ground of
gross negligence Ø never informed of charges

Held: NO Ø not accorded opportunity to hear

1. gross negligence: the want of any right or slight care or Ø he had valid and justifiable reasons for causing the delay
the utter disregard of consequencesà not proven
2. Captains are confidential employees who perform both
2. encashment violated policy but: management and fiduciary functions

a. no bad faith a. general agent of shipowner

b. policy not strictly enforced b. commander and technical director of the vessel

c. superiors were aware: petitioner told Assistant c. representative of the country under whose flag he
manager Grulla who assured her that such is alright navigates

3. The right of employer to freely select or discharge his Azcor Manufacturing v. NLRC, 303 SCRA 26 (1999)
employees is regulated by the state because the
preservation of the lives of the citizens is a basic duty of the
FACTS:
state, more vital than the preservation of corporate profit.

Capulso worked with Azcor for more than 2 years as a

4. Security of tenure is a right of paramount value
ceramics worker. He verbally requested to go on sick leave
guaranteed by the consti and should not be denied on mere
because of bronchial asthma. Capulso’s supervisor approved
speculation.
his request but when he reported to work, he was told that
only the owner could allow him to resume his employment.
Capulso filed a complaint for constructive illegal dismissal
when he was not reinstated even after going to Azcor 5 times
to follow up his employment. Azcor averred that there was
no employer-employee relationship as Capulso was a former
employee who resigned. Azcor presented a contract of
employment and 2 resignation letters as evidence. Labor
Arbiter dismissed the complaint for illegal dismissal but
ordered Azcor to pay Capulso P200. NLRC modified the LA’s
decision by declaring Capulso’s dismissal as illegal and
ordering reinstatement and payment of backwages.
ISSUE/HELD:
WON Azcor was able to prove that Capulso’s termination was
valid – No - in cases of illegal dismissal, burden of proof
that the dismissal was for a valid and authorized cause rests
on the employer
- failure to prove the same would mean that the
dismissal is not justified and is, therefore, illegal
- in this case, the pieces of evidence presented by Azcor
was not enough to establish the validity of the dismissal
- The contract of employment stipulated that it was for
a period of 6 months, but it was proven that Capulso
continued working after the lapse of such period
- 2 resignation letters, purportedly executed by Capulso,
were presented but disregarded because
a. they were exactly worded à tend to show that they
were prepared by Azcor
b. they were written in English, a language that Capulso
was not conversant with
c. they were pre-drafted with blank spaces such that
details, like the dates of effectivity, were only filled in after
- since Azcor was the party who presented the above
pieces of evidence, it was incumbent upon them to prove
their authenticity
OSS Security & Allied Services vs. NLRC
Facts:
Legaspi worked as a lady security guard of OSS Security and
was assigned at the Vicente Madrigal Condominium II in
Ayala Avenue Makati . Due to a memorandum sent by the
condominium’s administrator to the security agency’s
president, Legaspi and another lady guard were relieved of
their assignments in the condominium. The memorandum
contained a complaint (about the laxity of the guards
assigned in the condo in enforcing security measures, their
alleged falsification of logbook entries, and the dissemination
of intrigues among the employees) and a request for the
reorganization of the personnel and replacement of some
women complement.
Legaspi was detailed to Minami International Corp in Taytay
Rizal to replace a lady guard going on vacation leave. But
she did not report for work and 3 days after she was
informed of her new assignment, she filed a complaint for
underpayment and constructive dismissal.
Labor arbiter – transfer not sanctioned by law, illegal and
tantamount to unjust dismissal.
NLRC – affirmed LA; lady guard discriminated upon; no
reason for reassignment.
Issue: WON respondent’s transfer is tantamount to illegal
dismissal?
Held: NO. Transfer is valid.
The availability of assignment for security guards is primarily
at heart subservient to the contracts entered into by the
security agency with its client-third parties. As such, being
sidelined temporarily is a standard stipulation in employment
contracts. When a security guard is placed "off detail" or on
"floating" status, in security agency parlance, it means
"waiting to be posted." Private respondent has not even been
"off detail" for a week when she filed her complaint. The
renewal of the contract of the security agency with the condo
hinged on the action taken by the former on the latter's
request in the memorandum. Most contracts for security
services stipulate that the client may request the
replacement of the guards assigned to it and such stipulation
is valid.
The mere fact that the transfer of the respondent would be
inconvenient to her does not by itself maker her transfer
illegal. An employee has a right to security of tenure, but
this does not give her such a vested right in her position as
would deprive petitioner of its prerogative to change her
assignment or transfer her where her service, as security
guard, will be most beneficial to the client.
PAL vs. NLRC
Facts:
Castro was hired as manifesting clerk by PAL. Together with
a coemployee, he was apprehended by government
authorities while about to board a flight en route to
Hongkong in possession of P39,850.00 in violation of a
central bank circular. PAL was informed of the incident, and
after failure of the respondent to explain why he should not
be charged administratively, it placed him on preventive
suspension effective March 27, 1984 for grave misconduct.
His suspension lasted until September 18, 1987 (it was for 3
years and 6 months). PAL found him guilty of the offense
charged but decided to reinstate him, with the period within
which he was out of work serving as his penalty for
suspension. Upon reinstatement, he filed a claim against PAL
for the backwages and salary increases granted under the
CBA covering the period of his suspension. PAL denied his
claim.
Labor Arbiter – PAL should pay complainant his salaries and
benefits from April 26, 1984 up to September 18, 1987 .
NLRC – affirmed LA
Issue: WON respondent who was preventively suspended for
more than 30 days is entitled to backwages and salary
increases granted under the CBA for the period beyond the
30 day limit imposed by law
Held: Yes, for the period beyond the first 30 days of the
suspension, he is entitled to the backwages and salary
increases.
Sec 3 and 4, Rule XIV of the Omnibus Rules Implementing
the Labor Code is clear that preventive suspension cannot
last longer than 30 days. The employer may extend the
period of suspension provided that during the period of
extension, he pays the wages and other benefits due to the
workers. SC affirmed the decision of the LA and NLRC.
Nasipit Lumber Co., Inc. vs. National Wages and
Productivity Commission (NWPC)
April 27, 1998
PANGANIBAN, J.
FACTS:
- RTWPB issued a wage order increasing minimum wage
rates
- Nasipit Lumber filed an application for exemption citing
RTWPB’s Guideline No. 3 providing for exemption of
distressed industries
- The RTWPB approved the same.
- Union lodged an appeal with the NWPC, which reversed the
approval, because Nasipit did not meet NWPC’s criteria for
exemption
ISSUE:
- WON a guideline issued by an RTWPB without the approval
of or, worse, contrary to the guidelines promulgated by the
NWPC is valid?
HELD: No.
- The Labor Code created both the NWPC and the RTWPB and
defined their respective powers.
- NWPC - Art 121 (c) To prescribe rules for the determination
of minimum wage, (d) To review regional wage levels set by
the RTWPB to determine if these are in accordance with
prescribed guidelines and national development plans
- RTWPB - Art 122 (b) To fix minimum wage rates in their
region, and to issue corresponding wage orders, subject to
guidelines issued by the NWPC
- Clearly, NWPC, not RTWPB, has power to “prescribe rules
and guidelines” for the determination of minimum wage;
whatever wage orders RTWPB can issue are subject to such
guidelines, and whatever exemptions are subject to review
by the NWPC.
- NWPC only provides for exemption by establishment, not by
industry, the criterion being (i.e. accumulated losses should
impair at least 25% of paid-up capital). This criterion, Nasipit
failed to meet.
- Further, by exempting all establishments in a distressed
industry, RTWPB takes away the mandated increase in
minimum wage awarded to affected workers, which is
against declared State policy to rationalize fixing of minimum
wage.
-Thus, Guideline No. 3 is void, not only because it lacks
NWPC approval and contains an arbitrarily inserted
exemption, but also because it is inconsistent with avowed
Sate policies protective of labor.
Employers Confederation of the Phil vs. National
Wage and Productivity Commission (NWPC)
September 24, 1991
SARMIENTO, J.
FACTS:
- RTWPB-NCR issued a wage order increasing minimum wage
by P17 daily. Upon appeal by certain employee groups, the
same was amended, also granting the increase to those
already receiving above the statutory minimum wage upto
P125 per day.
- ECOP (employer group) contends: 1) RTWPB may only
prescribe “minimum wages,” not determine “salary ceilings”;
2) wage-fixing is a legislative function
- Generally, two methods of wage adjustment: 1) “floor-
wage” method – amount added to statutory minimum; 2)
“salary-ceiling/cap” method – increase applied to employees
receiving a certain denominated salary. RTWPBs
increasingly, are resorting to the latter method, which has
reduced disputes arising from wage distortions brought
about, by the floor-wage method and its implementation.
ISSUE:
- WON the RTWPB-NCR has acted in excess of its powers in
adopting the “salary-ceiling” method
HELD: No.
- Wage-fixing, although a legislative function, may be
delegated, provided there are sufficient standards. The Court
finds Art. 12 of RA 6727 providing for Standards/Criteria for
Minimum Wage Fixing, sufficient to justify the grant of “the
power of subordinate legislation.”
- RA 6727 was intended to rationalize wages by providing
full-time boards to police wages by giving them enough
power to achieve this objective. “Minimum wage” means
more than setting a floor wage to upgrade existing wages,
rather, it underlies the effort of the State as RA 6727
expresses it, “to promote productivity-improvement and
gain0sharing measures to ensure a decent standard of
living.” The Court said that in doing this, Congress meant the
boards to be creative.
- At the moment, the Court finds the “salary-ceiling/cap”
method reasonable policy. If in the future, the method would
be perceptibly unfair to management, the Court will take it
up then.
Cagayan Sugar Milling Company vs. Secretary of
Labor and Employment
January 15, 1998
PUNO, J.
FACTS:
- RTWPB-Regional Office No.2 issued a wage order increasing
the statutory minimum wage.
- Later, labor inspectors examined the books of Cagayan
Sugar (CARSUMCO) and found that it “violated the wage
order as it did not implement an across the board increase,”
even if CARSUMCO was paying the mandated increase in the
minimum wage.
- CARSUMCO appealed to Labor Secretary Quisumbing. On
the same date, RTWPB issued a purported amendment to the
earlier wage order, now granting an across the board wage
increase, and further providing that the such amendment
was curative and shall retroact to the effectivity of the 1st
wage order.
- CARSUMCO assails the 2nd wage order on the ground that it
passed without the required public consultation and
newspaper publication
ISSUES: that wage rates shall be those applicable in the place where
- WON the second wage order is null and void for having they are sanctioned. Further, the Court cites NWPC Guideline
been issued in violation of procedure provided by law and in No. 1 where it is expressly stated that “’establishment’ refers
violation of Petitioner’s right to due process to an economic unit which engages in one or more
HELD: predominantly one kind of economic activity with a single
- Art. 123 of the Labor Code requires publication in at least 1 fixed location.”
newspaper of general circulation in the region, public - Union also alleges that Bank violated established
hearings/consultations, and giving notices. Here, none of the management practice of uniform wage policy. The Court held
requirements were complied with. that such practice was adopted prior to the enactment of RA
- Respondent claims: no need to comply with consultation 6727, and that, while the Bank still applied a nationwide
and publication as the 2nd wage order merely clarified the implementation of the first wage orders, such single instance
ambiguous provision of the 1st wage order. But the Court said cannot be constitutive of “management practice.”
there’s no ambiguity in the 1st wage order mandating, in
clear and categorical terms, only an increase in the statutory
Wage Payment and Protection – From of Payment
minimum. The 2nd wage order providing instead for across
Congson vs. NLRC
the board increase changed the essence of the wage order.
April 5, 1995
Non-compliance with the legal requirements deprived
PADILLA, J.
Petitioner and other employers of due process as they were
FACTS:
not given the opportunity to ventilate their positions
- Congson is the owner of Southern Fishing Industry. Private
regarding the proposed wage increase.
respondents are regular piece-rate workers paid P1.00 per
tuna-movement (unloading from ship, to storage plant, and
loading for shipment).
Wage Fixing Machinery – Wage Order – Wage Distortion
- Congson proposed to reduce the rate per tuna-movement
Prubankers Association vs. Prudential Bank & Trust
due to the scarcity of tuna. Private respondents resisted, and
Co.
so were replaced by a new set of workers.
January 25, 1999
- Private respondents sued for constructive dismissal, and
PANGANIBAN, J.
wage differentials for failure to meet minimum wage
FACTS:
requirements.
- RTWPB Regions V and VII issued wage orders increasing
- With regard to the wage, Congson argued that the
COLA and integrating COLA into basic wage and increasing
computation of the wage should consider that, as agreed
minimum wage rates, for workers in their respective regions.
upon, respondents get the intestines and liver of the tuna as
Prudential Bank granted the increases in its branches
part of their salary (3 kilos per shipment, saleable @ P15.00
covered by the wage orders.
to P20.00 per kilo)
- Prubankers Association (Union) contend that the employees
ISSUE:
in the affected regions have higher compensation than their
- WON the minimum wage was met considering it was
counterparts, of the same level, in other regions. They
agreed that part of the workers’ wages would be paid in tuna
alleged wage distortion and asked that the wage orders be
intestines that they could sell for substantial value.
applied to employees outside of regions V and VII.
ISSUES:
- WON there is wage distortion HELD: No.
HELD: No. - The Labor Code expressly provides:
- Four elements: Article 102. Forms of Payment. No employer shall pay the
1) An existing hierarchy of positions with corresponding wages of an employee by means of, promissory notes,
salary rates vouchers, coupons, tokens tickets, chits, or any object other
2) A significant change in the salary rate of a lower pay class than legal tender, even when expressly requested by the
without a concomitant increase in the salary rate of a higher employee.
one - Undoubtedly, petitioner's practice of paying the private
3) The elimination of the distinction between the two levels respondents the minimum wage by means of legal tender
4) The existence of the distortion in the same region of the combined with tuna liver and intestines runs counter to the
country above cited provision. The fact that said method of paying
- RA 6727, in fact, recognizes “existing regional disparities in the minimum wage was not only agreed upon by both parties
cost of living.” Likewise, the Standards/Criteria for Minimum in the employment agreement but even expressly requested
Wage Fixing provided for in Art. 124 of the Labor Code, as by private respondents, does not shield petitioner.
amended by RA 6727 also takes varying cost of living, supply
and demand of basic necessities, and purchasing power of
EXTRA:
the peso in each regions, into consideration.
- With regard to the contention of Congson that there is no
- Here, in said branches of region V and VII, there was an
strained relationship, so an award for separation pay is not
increase in the salary rates of all pay classes. Furthermore,
proper since reinstatement is an option, the Court held that
the hierarchy of positions based on skills, length of service
there was. This is supported by the fact that Congson refused
and other logical bases of differentiation was preserved.
to re-admit respondents into his establishment (which Arturo
- Wage distortion is a wage parity between employees of
Lagniton, Sr. vs. National Labor Relations Commission, et al
different rungs of the same establishment. Here, instead,
provides, is constitutive of strained relations), and that
there is a wage disparity between employees in the same
respondents themselves already indicated an aversion to
rung, but located in different regions, which according to the
their continued employment with Congson by their filing a
Court, does not constituted wage distortion as contemplated
second case specifically for separation pay.
by law.
OTHER MINOR ISSUES
- Union challenges Bank’s abandonment of a national wage Wage Payment and Protection – Person to Pay
structure for a regionalized structure in violation of equal
pay, for equal work. The Court holds to the position that a
Bermiso et al vs. Escano, Inc., et al
uniform national wage structure is antithetical to the purpose
February 28, 1959
of RA 6727 on its face. In any event, it adds that its decisions
PADILLA, J.
merely enforce the law, and that it does not have power to
FACTS:
pass upon wisdom or propriety.
- Bermiso et al are the 5 left of 45 stevedores originally
- Union argues that regional offices of the Bank should be
bringing this complaint, belonging to a chapter of a Union in
construed as merely branches of the “establishment” (which
Cebu under a foreman or “Cabo” named Sabay.
is the whole bank) in relation to the IRR of RA 6727. The
- Hijos de F. Escano (Company) is a carrier of goods by water.
Court belies this argument by quoting the whole provision
- Escano contracted stevedoring services exclusively from
referred to by the Union, which omits an integral part stating
Sabay’s group. Escano has never paid the Sabay group; the
practice from the start has been for Sabay, as leader, to
collect charges for handling of the cargo from the shippers or
consignees. The net income from collections, he then
distributed to the stevedores.
ISSUE:
- WON the law on direct payment of wages is violated
HELD: No.
- The nature of the stevedoring work necessitates a large
group, which in turn necessitates a leader because: the
group renders services for various employers, so someone
has to determine which members will work for one vessel
and which for another, also employers prefer to deal with a
leader instead of each member individually.
- The work of stevedoring was undertaken by laborers, not in
their individual capacities, but as a group. And the contract
to perform the service was made by the leader, Sabay, for
and on behalf of the latter, not for each of them individually.
- There was no showing that Sabay as leader was engaged in
racketeering, nor that he appropriated a lion’s share of the
income he collected. As such, the Court claimed that it was
not prepared to say that there was a violation of the
provision on direct payment of wages.

EXTRA:
- Further, stevedoring charges were collected from shippers
themselves; Escano is not the one obliged to pay such
charges.
- With regard to payment of backwages (because some
stevedores were not allowed to work certain jobs and thus
denied a share in the price therefor), vacation and sick leave,
accident, insurance, etc., the Court held that these must be
sought through labor organizations by collective bargaining.