(1)

LRTA vs. Venus ten (10)-year Agreement expired on June 8, 1994,

they renewed the same, initially on a yearly basis,
Facts: and subsequently on a monthly basis.
This is a consolidated petitions of Light Rail July 25, 2000, the Union filed a Notice of Strike
Transit Authority (LRTA) and Metro Transit with the National Conciliation and Mediation
Organization, Inc. (METRO), seeking the reversal Board – National Capital Region against METRO
of the Decision of the Court of Appeals directing on account of a deadlock in the collective
them to reinstate private respondent workers to bargaining negotiation. On the same day, the
their former positions without loss of seniority Union struck. The power supply switches in the
and other rights and privileges, and ordering different light rail transit substations were
them to jointly and severally pay the latter their turned off. The members of the Union picketed
full back wages, benefits, and moral damages. the various substations. They completely
paralyzed the operations of the entire light rail
Petitioner LRTA is a government-owned and
transit system. As the strike adversely affected
controlled corporation, on the other hand is
the mobility of the commuting public, then
Petitioner METRO, formerly Meralco Transit
Secretary of Labor Bienvenido E. Laguesma
Organization, Inc., was a qualified transportation
issued on that same day an assumption of
corporation duly organized in accordance with
jurisdiction order directing all the striking
the provisions of the Corporation Code,
employees "to return to work immediately upon
registered with the Securities and Exchange
receipt of this Order and for the Company to
Commission, and existing under Philippine laws.
accept them back under the same terms and
Petitioner LRTA constructed a light rail transit conditions of employment prevailing prior to the
system from Monumento in Kalookan City to strike.
Baclaran in Parañaque, Metro Manila. To provide
Despite the issuance, posting, and publication of
the commuting public with an efficient and
the assumption of jurisdiction and return to
dependable light rail transit system, petitioner
work order, the Union officers and members,
LRTA, after a bidding process, entered into a ten
including herein private respondent workers,
(10)-year Agreement for the Management and
failed to return to work. private respondents,
Operation of the Metro Manila Light Rail Transit
Perfecto Venus, Jr., Bienvenido P. Santos, Jr.,
System from June 8, 1984 until June 8, 1994 with
Rafael C. Roy, Nancy C. Ramos, Salvador A. Alfon,
petitioner METRO
Noel R. Santos, Manuel A. Ferrer, Salvador G.
Pursuant to the Agreement, petitioner METRO Alinas, Ramon D. Lofranco, Amador H. Policarpio,
hired its own employees, including herein Reynaldo B. Gener, and Bienvenido G. Arpilleda,
private respondents. Petitioner METRO were considered dismissed from employment.
thereafter entered into a collective bargaining Meanwhile the agreement between LRTA and
agreement with Pinag-isang Lakas ng METRO expired and was not renewed and the
Manggagawa sa METRO, Inc. – National LRTA management instead took over the
Federation of Labor, otherwise known as operations the private respondents filed a
PIGLAS-METRO, INC. – NFL – KMU (Union), the complaint for illegal dismissal before the NLRC
certified exclusive collective bargaining

representative of the rank-and-file employees of
petitioner METRO. abor Arbiter Luis D. Flores rendered a
consolidated judgment in favor of the private
On June 9, 1989 LRTA and METRO executed a
respondent workers declaring that the
Deed of Sale where petitioner LRTA purchased
complainants were illegally dismissed from
the shares of stocks in petitioner METRO.
employment and ordering their reinstatement to
However, petitioners LRTA and METRO
their former positions without loss of seniority
continued with their distinct and separate
and other rights and privileges.
juridical personalities. Hence, when the above
On appeal, the NLRC found that the striking corporate veils must be pierced to satisfy the
workers failed to heed the return to work order money claims of the illegally dismissed private
and reversed and set aside the decision of the respondent employees.
labor arbiter. The suit against LRTA was
dismissed since "LRTA is a government-owned Issue:
and controlled corporation created by virtue of Whether or not the NLRC has jurisdiction over
Executive Order No. 603 with an original LRTA’s employees or is it the CSC?
charter"10and "it ha[d] no participation
whatsoever with the termination of Whether or not private respondents were
complainants’ employment."11In fine, the cases illegally dismissed?
against the LRTA and METRO were dismissed,
respectively, for lack of jurisdiction and for lack Held:
of merit. Hence, twin petitions for review
The SC agrees with petitioner LRTA. Section 2
on certiorari of the decision of public respondent
(1), Article IX – B, 1987 Constitution, expressly
appellate court filed by LRTA and METRO which
provides that "[t]he civil service embraces all
this Court eventually consolidated.
branches, subdivisions, instrumentalities, and
Petitioner LRTA argues that it has no employer- agencies of the Government, including
employee relationship with private respondent government-owned or controlled corporations
workers as they were hired by petitioner METRO with original charters." Corporations with
alone pursuant to its ten (10)-year Agreement original charters are those which have been
for the Management and Operation of the Metro created by special law and not through the
Manila Light Rail Transit System with petitioner general corporation law. In contrast, petitioner
METRO. Private respondent workers recognized METRO is covered by the Labor Code despite its
that their employer was not petitioner LRTA later acquisition by petitioner LRTA, SC holds
when their certified exclusive collective that the employees of petitioner METRO cannot
bargaining representative, the Pinag-isang Lakas be considered as employees of petitioner LRTA.
ng Manggagawa sa METRO, Inc. – National The employees hired by METRO are covered by
Federation of Labor, otherwise known as the Labor Code and are under the jurisdiction of
PIGLAS-METRO, INC. – NFL – KMU, entered into the Department of Labor and Employment,
a collective bargaining agreement with whereas the employees of petitioner LRTA, a
petitioner METRO. Piercing the corporate veil of government-owned and controlled corporation
METRO was unwarranted, as there was no with original charter, are covered by civil service
competent and convincing evidence of any rules. Herein private respondent workers cannot
wrongful, fraudulent or unlawful act on the part have the best of two worlds, e.g., be considered
of METRO, and, more so, on the part of LRTA. government employees of petitioner LRTA, yet
LRTA further contends that it is a government- allowed to strike as private employees under our
owned and controlled corporation with an labor laws. Petitioner LRTA cannot be held liable
original charter, Executive Order No. 603, Series to the employees of petitioner METRO.
of 1980, as amended, and thus under the
With regard the issue of illegal dismissal,
exclusive jurisdiction only of the Civil Service
petitioner METRO maintains that private
Commission, not the NLRC.
respondent workers were not illegally dismissed
On the other hand Private respondent workers, but should be deemed to have abandoned their
however, submit that petitioner METRO was not jobs after defying the assumption of jurisdiction
only fully-owned by petitioner LRTA, but all and return-to-work order issued by the Labor
aspects of its operations and administration Secretary. Private respondent workers, on the
were also strictly controlled, conducted and other hand, submit that they could not
directed by petitioner LRTA. And since petitioner immediately return to work as the light rail
METRO is a mere adjunct, business conduit, and transit system had ceased its operations. The
alter ego of petitioner LRTA, their respective contention of the petitioner that the private
respondents abandoned their position is also not
acceptable. An employee who forthwith takes
steps to protest his lay-off cannot by any logic be
said to have abandoned his work.
For abandonment to constitute a valid cause for
termination of employment there must be a
deliberate, unjustified refusal of the employee to
resume his employment. This refusal must be
clearly established. As we stressed in a recent
case, mere absence is not sufficient; it must be
accompanied by overt acts unerringly pointing to
the fact that the employee simply does not want
to work anymore.

(2) Clientlogic (SITEL) vs. Castro Article 82 of the Labor Code states that the
provisions of the Labor Code on working
During respondent’s stint at the Dot Green conditions and rest periods shall not apply to
Account, respondent noticed that some of the managerial employees. Generally, managerial
call center agents under him would often make employees are not entitled to overtime pay for
excuses to leave their work stations. Their most services rendered in excess of eight hours a day.
common excuse was that they would visit the
company’s medical clinic. To verify that they Article 212 (m) of the Labor Code defines a
were not using the clinic as an alibi to cut their managerial employee as “one who is vested with
work hours, respondent sent an e-mail to the powers or prerogatives to lay down and execute
clinic’s personnel requesting for the details of management policies and/or to hire, transfer,
the agents’ alleged medical consultation. His suspend, lay-off, recall, discharge, assign or
request was denied on the ground that medical discipline employees, or to effectively
records of employees are highly confidential and recommend such managerial actions.
can only be disclosed in cases involving health
issues, and not to be used to build any Employees are considered occupying managerial
disciplinary case against them. positions if they meet all of the following
conditions, namely:
On October 11, 2006, respondent received a
notice requiring him to explain why he should 1) Their primary duty consists of
not be penalized for: (1) violating Green Dot management of the establishment in which they
Company’s Policy and Procedure for Direct are employed or of a department or subdivision
Deposit Bank Info Request when he accessed a thereof;
customer’s online account and then gave the
latter’s routing and reference numbers for direct 2) They customarily and regularly direct
deposit; and (2) gravely abusing his discretion the work of two or more employees therein;
when he requested for the medical records of his
team members. Respondent did not deny the 3) They have the authority to hire or fire
infractions imputed against him. He, however, other employees of lower rank; or their
justified his actuations by explaining that the suggestions and recommendations as to the
customer begged him to access the account hiring and firing and as to the promotion or any
because she did not have a computer or an other change of status of other employees are
internet access and that he merely requested for given particular weight.
a patient tracker, not medical records
They are considered as officers or
On January 22, 2007, SITEL posted a notice of members of a managerial staff if they perform
vacancy for respondent’s position, and on the following duties and responsibilities:
February 12, 2007, he received a Notice of
Termination. These events prompted him to file 1) The primary duty consists of the
a complaint for illegal dismissal; non-payment of performance of work directly related to
overtime pay, rest day pay, holiday pay, service management of policies of their employer;
incentive leave pay; full backwages; damages;
and attorney’s fees before the Labor Arbiter 2) Customarily and regularly exercise
against herein petitioners SITEL and its officers, discretion and independent judgment;
Joseph Velasquez, Irene Roa, and Rodney Spires.
3) (a) Regularly and directly assist a
Issue: WON respondent is a member of the proprietor or a managerial employee whose
managerial staff of petitioner. primary duty consists of management of the
establishment in which he is employed or
Held: subdivision thereof; or (b) execute under general
supervision work along specialized or technical
lines requiring special training, experience, or
knowledge; or (c) execute, under general
supervision, special assignment and tasks xxx.

The test of “supervisory” or “managerial status”
depends on whether a person possesses
authority to act in the interest of his employer
and whether such authority is not merely
routinary or clerical in nature, but requires the
use of independent judgment. The position held
by respondent and its concomitant duties failed
to hurdle this test.

As a coach or team supervisor, respondent’s
main duty was to deal with customer complaints
which could not be handled or solved by call
center agents. If the members of his team could
not meet the needs of a customer, they passed
the customer’s call to respondent.

This job description does not indicate that
respondent can exercise the powers and
prerogatives equivalent to managerial actions
which require the customary use of independent
judgment. There is no showing that he was
actually conferred or was actually exercising the
following duties attributable to a “member of the
managerial staff,”

From the foregoing, respondent is entitled to
holiday pay, service incentive leave pay,
overtime pay, and rest day.

Petition denied

(3) M + W Zander Phil vs Enriquez confidence in using her authority and/or
influence as Administrative Manager over her
Facts: Respondent Enriquez was hired on subordinate to stage a ‘no work day.’ Article 282
probationary basis as the Administration (c) of the Labor Code allows an employer to
Manager and Executive Assistant to the General terminate the services of an employee for loss of
Manager of petitioner M + W Zander, Inc. She trust and confidence. Loss of confidence should
was confirmed as a permanent employee on not be simulated. It must be genuine, not a mere
December 4, 2001. In January 2002, M + W afterthought to justify earlier action taken in bad
Zander relieved its General Manager, Mr. Eric faith. Loss of trust and confidence stems from a
Van Stiegeren, and in his place appointed Mr. breach of trust founded on a dishonest, deceitful
Wiltschek. The appointment of Wiltschek as the or fraudulent act. In the case at bar, respondent
Acting General Manager was announced in a did not commit any act which was dishonest or
meeting. On the same day, a Letter of Appeal was deceitful. She did not use her authority as the
signed by 29 employees of M + W Zander Administration Manager to misappropriate
opposing the appointment of Wiltschek. A day company property nor did she abuse the trust
after the Letter of Appeal was released, a number reposed in her by petitioners with respect to her
of employees did not report to work. responsibility to implement company rules. The
Petitioners allege that respondent actively most that can be attributed to respondent is that
solicited signatures for a letter opposing the she influenced a single subordinate, without
appointment of Wiltschek. The petitioners exerting any force or making any threats, not to
claimed that Enriquez used her influence and report to work. This does not constitute
moral ascendancy to coerce several employees dishonest or deceitful conduct which would
into signing the letter of appeal. Upon justify the conclusion of loss of trust and
discovering respondent Enriquez’s participation confidence.
in drafting and in circulating the Letter of Appeal,
M + W Zander sent a Notice to respondent
Enriquez requiring her to explain within 48
hours from receipt of the notice why no
disciplinary action should be taken against her
for willful breach of trust and using her authority
and/or influence over her subordinates to stage
a no work day. Unsatisfied with her explanation,
she was dismissed.

Issue: w/n Enriques was illegally dismissed?

Decision:
Labor Arbiter held that respondent Enriquez was
illegally dismissed. The NLRC reversed the
decision of the Labor Arbiter and found that
respondent was not illegally dismissed because
she committed serious misconduct which
destroyed the trust and confidence of the
management in her. The Court of Appeals
reversed the decision of the NLRC and reinstated
the decision of the Labor Arbiter, declaring that
the dismissal of respondent was illegal.
SC affirmed the decision of the Court of Appeals
and find that respondent was illegally dismissed.
The sole ground for respondent’s termination by
petitioners is "willful breach of trust and
(4) Charlito Peñaranda vs Baganga Plywood ISSUE: Whether or not Peñaranda is entitled to
Corporation and Hudson Chua overtime and premium pay.

In June 1999, Peñaranda was hired by Baganga HELD: No. Though there is an error made by the
Plywood Corporation (owned by Hudson Chua) NLRC in finding Peñaranda as a managerial
to take charge of the operations and employee, the Supreme Court still ruled that
maintenance of its steam plant boiler. Peñaranda Peñaranda is not entitled to overtime and
was employed as a Foreman/Boiler Head/Shift premium pay.
Engineer tasked to do the following tasks among
others: Peñaranda is not a managerial employee. Under
the Implementing Rules and Regulations of the
“1. To supply the required and continuous steam Labor Code, managerial employees are those
to all consuming units at minimum cost. that perform the following:

“2. To supervise, check and monitor manpower “(1) Their primary duty consists of the
workmanship as well as operation of boiler and management of the establishment in which they
accessories. are employed or of a department or subdivision
thereof;
“3. To evaluate performance of machinery and
manpower. “(2) They customarily and regularly direct the
work of two or more employees therein;
xxx
“(3) They have the authority to hire or fire other
“5. To train new employees for effective and employees of lower rank; or their suggestions
safety while working. and recommendations as to the hiring and firing
and as to the promotion or any other change of
xxx status of other employees are given particular
weight.”
“7. To recommend personnel actions such as:
promotion, or disciplinary action. Peñaranda does not meet the above
requirements.
xxx
Peñaranda is instead considered as a managerial
In 2001, BPC shut down due to some repairs and staff. Under the Implementing Rules and
maintenance. BPC did not technically fire Regulations of the Labor Code, managerial staffs
Peñaranda but due to the latter’s insistence, BPC are those that perform the following:
gave him his separation benefits.
“(1) The primary duty consists of the
BPC subsequently reopened but Peñaranda did performance of work directly related to
not reapply. management policies of the employer;

Peñaranda now claims that BPC still needed to “(2) Customarily and regularly exercise
pay him his overtime pays and premium pays. discretion and independent judgment;

The NLRC ruled that Peñaranda is a managerial “(3) (i) Regularly and directly assist a proprietor
employee and as such he is not entitled to or a managerial employee whose primary duty
overtime and premium pay as stated under the consists of the management of the establishment
Labor Code. Peñaranda appealed. He said that he in which he is employed or subdivision thereof;
is not a managerial employee. or (ii) execute under general supervision work
along specialized or technical lines requiring
special training, experience, or knowledge; or (iii)
execute under general supervision special
assignments and tasks; and

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

their hours worked in a workweek to activities
which are not directly and closely related to the
performance of the work described in
paragraphs (1), (2), and (3) above.”

Peñaranda’s function as a shift engineer

illustrates that he was a member of the
managerial staff. His duties and responsibilities
conform to the definition of a member of a
managerial staff under the Implementing Rules.

Peñaranda supervised the engineering section of

the steam plant boiler. His work involved
overseeing the operation of the machines and
the performance of the workers in the
engineering section. This work necessarily
required the use of discretion and independent
judgment to ensure the proper functioning of the
steam plant boiler.

Further, Peñaranda in his position paper

admitted that he was a supervisor for BPC. As
supervisor, petitioner is deemed a member of
the managerial staff.

(6) Association of Marine Officers and
Seamen of Reyes and Lim Co. vs. Laguesma,
239 SCRA 460

Facts: Petitioner union claims that the positions

major patron, minor patron, chief mate and chief
engineer are not managerial employees but rank
and file, and hence these employees would be
eligible to form part of the union and take part in
the certification election. Petitioner contends
that the marine officers in question must possess
the power to lay down and formulate
management policies aside from just executing
such policies. Said marine officers do not have
this power because they merely navigate the bay
and rivers of Pasig and Bataan hauling LPGs.

Public respondent opined in an evaluation of the

afore-mentioned job descriptions that these are
managerial positions based on Article 212 (m) of
the Labor Code which defines managerial
employees as “one who is vested with powers or
prerogatives to lay down and execute
management policies and/or to hire, transfer ,
suspend, lay-off, recall, discharge, assign or
discipline employees.”

Issue: WON the positions of major patron, minor

patron, chief mate and chief engineer are
managerial.

Held: Yes. The job description on record

discloses that the major patron’s duties include
taking complete charge and command of the ship
and performing responsibilities and duties of a
ship captain; the minor patron also commands
the vessel, plying the limits of inland waterways,
ports and estuaries; the chief mate performs the
functions of an executive officer next in
command to the captain; and the chief marine
engineer takes over-all charge of the operations
of the ship’s mechanical and electrical equipment.

Thus the exercise of discretion and judgment in

directing a ship’s course is as much managerial
in nature as decisions arrived at in the confines
of the more conventional board room or
executive office.

(7) NATIONAL SUGAR REFINERIES ISSUE: W/N supervisory employees should be
CORPORATION vs. NATIONAL LABOR considered as officers or members of the
RELATIONS COMMISSION managerial staff under Article 82, Book III of the
same Code, and hence are not entitled to
FACTS: Petitioner National Sugar Refineries overtime rest day and holiday pay.
Corporation (NASUREFCO), a corporation which
is fully owned and controlled by the Government, HELD: YES. Article 212(m), Book V of the Labor
operates three (3) sugar refineries located at Code on Labor Relations reads:
Bukidnon, Iloilo and Batangas. Private
respondent union represents the former “(m) ‘Managerial employee’ is one who is vested
supervisors of the NASUREFCO Batangas Sugar with powers or prerogatives to lay down and
Refinery. execute management policies and/or to hire,
transfer, suspend, lay-off, recall, discharged,
On June 1, 1988, petitioner implemented a Job assign or discipline employees. Supervisory
Evaluation (JE) Program affecting all employees, employees are those who, in the interest of
from rank-and-file to department heads. As a the employer effectively recommend such
result, all positions were re-evaluated, and all managerial actions if the exercise of such
employees including the members of respondent authority is not merely routinary or clerical
union were granted salary adjustments and in nature but requires the use of independent
increases in benefits commensurate to their judgment. All employees not falling within any
actual duties and functions. of those above definitions are considered rank-
and-file employees of this Book.”
For about ten years prior to the JE Program, the
members of respondent union were treated in Respondent NLRC, in holding that the union
the same manner as rank-and file employees. As members are entitled to overtime, rest day and
such, they used to be paid overtime, rest day and holiday pay, and in ruling that the latter are not
holiday pay. With the implementation of the JE managerial employees, adopted the definition
Program, the following adjustments among stated in the aforequoted statutory provision.
others were made: (1) the members of
respondent union were re-classified under levels A cursory perusal of the Job Value Contribution
S-5 to S-8 which are considered managerial staff Statements of the union members will readily
for purposes of compensation and benefits; (2) show that these supervisory employees are
there was an increase in basic pay of the average under the direct supervision of their respective
of 50% of their basic pay prior to the JE Program, department superintendents and that generally
with the union members now enjoying a wide they assist the latter in planning, organizing,
gap (P1,269.00 per month) in basic pay staffing, directing, controlling communicating
compared to the highest paid rank-and-file and in making decisions in attaining the
employee. company’s set goals and objectives.

On May 11, 1990, petitioner NASUREFCO These supervisory employees are likewise
recognized herein respondent union as the responsible for the effective and efficient
bargaining representative of all the supervisory operation of their respective departments. The
employees at the NASUREFCO Batangas Sugar members of respondent union discharge duties
Refinery. and responsibilities which ineluctably qualify
them as officers or members of the managerial
Two years after the implementation of the JE staff, as defined in Section 2, Rule I Book III of the
Program the members of herein respondent aforestated Rules to Implement the Labor Code,
union filed a complaint for non-payment of viz.: (1) their primary duty consists of the
overtime, rest day and holiday pay allegedly in performance of work directly related to
violation of Article 100 of the Labor Code. management policies of their employer; (2)
they customarily and regularly exercise
discretion and independent judgment; (3)
they regularly and directly assist the
managerial employee whose primary duty
consist of the management of a department of
the establishment in which they are
employed (4) they execute, under general
supervision, work along specialized or
technical lines requiring special training,
experience, or knowledge; (5) they execute,
under general supervision, special
assignments and tasks; and (6) they do not
devote more than 20% of their hours worked
in a work-week to activities which are not
directly and clearly related to the
performance of their work hereinbefore
described.

Under the facts obtaining in this case, the union

members should be considered as officers and
members of the managerial staff and are,
therefore, exempt from the coverage of Article
82 hence they are not entitled to overtime, rest
day and holiday.

(8) Labor Congress of the Philippines vs. respondents throughout the year, and third, the
NLRC length of time that petitioners worked for
Facts: The 99 persons named as petitioners in private respondents. Thus, while petitioners'
this proceeding were rank-and-file employees of mode of compensation was on a "per piece
respondent Empire Food Products, which hired basis," the status and nature of their
them on various dates. Petitioners filed against employment was that of regular employees.
private respondents a complaint for payment of
money claims and for violation of labor The Rules Implementing the Labor Code exclude
standards laws They also filed a petition for certain employees from receiving benefits such
direct certification of petitioner Labor Congress as nighttime pay, holiday pay, service incentive
of the Philippines as their bargaining leave and 13th month pay, "field personnel and
representative. In an Order dated October 24, other employees whose time and performance is
1990, Mediator Arbiter approved the unsupervised by the employer, including those
memorandum of agreement and certified LCP "as who are engaged on task or contract basis,
the sole and exclusive bargaining agent among purely commission basis, or those who are paid a
the rank-and-file employees of Empire Food fixed amount for performing work irrespective
Products for purposes of collective bargaining of the time consumed in the performance
with respect to wages, hours of work and other thereof."
terms and conditions of employment".
Plainly, petitioners as piece-rate workers do not
On November 1990, petitioners through LCP fall within this group. As mentioned earlier, not
President Navarro submitted to private only did petitioners labor under the control of
respondents a proposal for collective bargaining. private respondents as their employer, likewise
On January 1991, petitioners filed a complaint did petitioners toil throughout the year with the
against private respondents for Unfair Labor fulfillment of their quota as supposed basis for
Practice by way of Illegal Lockout and/or compensation.
Dismissal; Union busting thru Harassments [sic],
threats, and interfering with the rights of Further, in Section 8(b), Rule IV, Book III which
employees to self-organization; Violation of the we quote hereunder, piece workers are
Memorandum of Agreement dated October 23, specifically mentioned as being entitled to
1990; Underpayment of Wages in violation of R.A. holiday pay.
No. 6640 and R.A. No. 6727, such as Wages
promulgated by the Regional Wage Board; Actual, SEC. 8. Holiday pay of certain employees. —
Moral and Exemplary Damages."
(b) Where a covered employee is paid by results
Issue: Whether or not the petitioners are or output, such as payment on piece work, his
entitled to labor standard benefits considering holiday pay shall not be less than his average
they are paid by piece rate worker. daily earnings for the last seven (7) actual
working days preceding the regular holiday:
Ruling: The petitioners are so entitled to these Provided, however, that in no case shall the
benefits namely, holiday pay, premium pay, 13th holiday pay be less than the applicable statutory
month pay and service incentive leave. Three (3) minimum wage rate.
factors lead us to conclude that petitioners,
although piece-rate workers, were regular In addition, the Revised Guidelines on the
employees of private respondents. First, as to the Implementation of the 13th Month Pay Law, in
nature of petitioners' tasks were necessary or view of the modifications to P.D. No. 851 19 by
desirable in the usual business of private Memorandum Order No. 28, clearly exclude the
respondents, who were engaged in the employer of piece rate workers from those
manufacture and selling of such food products; exempted from paying 13th month pay, to wit:
second, petitioners worked for private
2. EXEMPTED EMPLOYERS

The following employers are still not covered by
P.D. No. 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.

The Revised Guidelines as well as the Rules and
Regulations identify those workers who fall
under the piece-rate category as those who are
paid a standard amount for every piece or unit of
work produced that is more or less regularly
replicated, without regard to the time spent in
producing the same.

As to overtime pay, the rules, however, are
different. According to Sec 2(e), Rule I, Book III
of the Implementing Rules, workers who are
paid by results including those who are paid on
piece-work, takay, pakiao, or task basis, if their
output rates are in accordance with the
standards prescribed under Sec. 8, Rule VII, Book
III, of these regulations, or where such rates have
been fixed by the Secretary of Labor in
accordance with the aforesaid section, are not
entitled to receive overtime pay. As such,
petitioners are beyond the ambit of exempted
persons and are therefore entitled to overtime
pay.

(9) Lambo vs.NLRC Case Digest and supervision over the manner as to how the
Facts: Petitioners Avelino Lambo and Vicente work is to be performed. A piece-rate worker
Belocura were employed as tailors by private belongs to this category especially if he performs
respondents J.C. Tailor Shop and/or Johnny Co his work in the company premises.); and (2)
on September 10, 1985 and March 3, 1985, those whose time and performance are
respectively. They worked from 8:00 a.m. to 7:00 unsupervised. (Here, the employer’s control is
p.m. daily, including Sundays and holidays. As in over the result of the work. Workers on pakyao
the case of the other 100 employees of private and takay basis belong to this group.) Both
respondents, petitioners were paid on a piece- classes of workers are paid per unit
work basis, according to the style of suits they accomplished.
made. Regardless of the number of pieces they
finished in a day, they were each given a daily Piece-rate payment is generally practiced in
pay of at least P64.00. garment factories where work is done in the
company premises, while payment on pakyao
On January 17, 1989, petitioners filed a and takay basis is commonly observed in the
complaint against private respondents for illegal agricultural industry, such as in sugar
dismissal and sought recovery of overtime pay, plantations where the work is performed in bulk
holiday pay, premium pay on holiday and rest or in volumes difficult to quantify. 4 Petitioners
day, service incentive leave pay, separation pay, belong to the first category, i.e., supervised
13th month pay, and attorney’s fees. After employees.
hearing, Labor Arbiter found private
respondents guilty of illegal dismissal and In this case, private respondents exercised
accordingly ordered them to pay petitioners’ control over the work of petitioners. As tailors,
claims. On appeal, the NLRC reversed the petitioners worked in the company’s premises
decision of the Labor Arbiter. The NLRC held from 8:00 a.m. to 7:00 p.m. daily, including
petitioners guilty of abandonment of work and Sundays and holidays. The mere fact that they
accordingly dismissed their claims except that were paid on a piece-rate basis does not negate
for 13th month pay. their status as regular employees of private
respondents. The term "wage" is broadly defined
Petitioners allege that they were dismissed by in Art. 97 of the Labor Code as remuneration or
private respondents as they were about to file a earnings, capable of being expressed in terms of
petition with the Department of Labor and money whether fixed or ascertained on a time,
Employment (DOLE) for the payment of benefits task, piece or commission basis. Payment by the
such as Social Security System (SSS) coverage, piece is just a method of compensation and does
sick leave and vacation leave. They deny that not define the essence of the relations. Nor does
they abandoned their work. the fact that petitioners are not covered by the
SSS affect the employer-employee relationship.
Issue: Whether or not the petitioners are
entitled to the minimum benefits provided by As petitioners were illegally dismissed, they are
law. entitled to reinstatement with back wages. The
Arbiter applied the rule in the Mercury Drug case,
Ruling: The petitioners are entitled to the according to which the recovery of back wages
minimum benefits provided by law. There is no should be limited to three years without
dispute that petitioners were employees of qualifications or deductions. Any award in excess
private respondents although they were paid not of three years is null and void as to the excess.
on the basis of time spent on the job but The Labor Arbiter correctly ordered private
according to the quantity and the quality of work respondents to give separation pay.
produced by them. There are two categories of
employees paid by results: (1) those whose time Considerable time has lapsed since petitioners’
and performance are supervised by the dismissal, so that reinstatement would now be
employer. (Here, there is an element of control impractical and hardly in the best interest of the
parties. In lieu of reinstatement, separation pay
should be awarded to petitioners at the rate of
one month salary for every year of service, with
a fraction of at least six (6) months of service
being considered as one (1) year. The awards for
overtime pay, holiday pay and 13th month pay
are in accordance with our finding that
petitioners are regular employees, although paid
on a piece-rate basis.

(10) Autobus Transport System vs Bautista The disposition of the issue revolves around the
Case Digest proper interpretation of Article 95 of the Labor
Code vis-à-vis Section 1(D), Rule V, Book III of
Facts: Respondent Antonio Bautista has been the Implementing Rules and Regulations of the
employed by petitioner Auto Bus Transport Labor Code which provides: RIGHT TO SERVICE
Systems, Inc., since May 1995, as driver- INCENTIVE LEAVE, (a) Every employee who has
conductor with travel routes Manila-Tuguegarao rendered at least one year of service shall be
via Baguio, Baguio-Tuguegarao via Manila and entitled to a yearly service incentive leave of five
Manila-Tabuk via Baguio. Respondent was paid days with pay.
on commission basis, seven percent (7%) of the
total gross income per travel, on a twice a month Moreover, Book III, Rule V: SERVICE INCENTIVE
basis. LEAVE also states that this rule shall apply to all
employees except: (d) Field personnel and other
On January 2000, while respondent was driving employees whose performance is unsupervised
Autobus No. 114 along Sta. Fe, Nueva Vizcaya, by the employer including those who are
the bus he was driving accidentally bumped the engaged on task or contract basis, purely
rear portion of Autobus No. 124, as the latter commission basis, or those who are paid in a
vehicle suddenly stopped at a sharp curve fixed amount for performing work irrespective
without giving any warning. Respondent averred of the time consumed in the performance
that the accident happened because he was thereof;
compelled by the management to go back to
Roxas, Isabela, although he had not slept for A careful examination of said provisions of law
almost twenty-four (24) hours, as he had just will result in the conclusion that the grant of
arrived in Manila from Roxas, Isabela. service incentive leave has been delimited by the
Implementing Rules and Regulations of the
Respondent further alleged that he was not Labor Code to apply only to those employees not
allowed to work until he fully paid the amount of explicitly excluded by Section 1 of Rule V.
P75,551.50, representing thirty percent (30%) of According to the Implementing Rules, Service
the cost of repair of the damaged buses and that Incentive Leave shall not apply to employees
despite respondent's pleas for reconsideration, classified as "field personnel."
the same was ignored by management. After a
month, management sent him a letter of The phrase "other employees whose
termination. Thus, on 02 February 2000, performance is unsupervised by the employer"
respondent instituted a Complaint for Illegal must not be understood as a separate
Dismissal with Money Claims for nonpayment of classification of employees to which service
13th month pay and service incentive leave pay incentive leave shall not be granted. Rather, it
against Autobus. serves as an amplification of the interpretation
of the definition of field personnel under the
On 29 September 2000, based on the pleadings Labor Code as those "whose actual hours of work
and supporting evidence presented by the in the field cannot be determined with
parties, Labor Arbiter decided that the complaint reasonable certainty."
be dismissed where the respondent must pay to
the complainant The same is true with respect to the phrase
"those who are engaged on task or contract basis,
Issue: Whether or not respondent is entitled to purely commission basis." Said phrase should be
service incentive leave. related with "field personnel," applying the rule
on ejusdem generis that general and unlimited
Ruling: The respondent is entitled to service terms are restrained and limited by the
incentive leave. particular terms that they follow. Hence,
employees engaged on task or contract basis or
paid on purely commission basis are not
automatically exempted from the grant of service as to whether or not the employee's time and
incentive leave, unless, they fall under the performance are constantly supervised by the
classification of field personnel. employer. Respondent is not a field personnel
but a regular employee who performs tasks
What must be ascertained in order to resolve the usually necessary and desirable to the usual
issue of propriety of the grant of service trade of petitioner's business. Accordingly,
incentive leave to respondent is whether or not respondent is entitled to the grant of service
he is a field personnel. incentive leave.

According to Article 82 of the Labor Code, "field The clear policy of the Labor Code is to grant
personnel" shall refer to non-agricultural service incentive leave pay to workers in all
employees who regularly perform their duties establishments, subject to a few exceptions.
away from the principal place of business or Section 2, Rule V, Book III of the Implementing
branch office of the employer and whose actual Rules and Regulations provides that "every
hours of work in the field cannot be determined employee who has rendered at least one year of
with reasonable certainty. This definition is service shall be entitled to a yearly service
further elaborated in the Bureau of Working incentive leave of five days with pay."
Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Service incentive leave is a right which accrues
Employees Association 10 which states that: to every employee who has served "within 12
months, whether continuous or broken reckoned
As a general rule, field personnel are those from the date the employee started working,
whose performance of their job/service is not including authorized absences and paid regular
supervised by the employer or his representative, holidays unless the working days in the
the workplace being away from the principal establishment as a matter of practice or policy,
office and whose hours and days of work cannot or that provided in the employment contracts, is
be determined with reasonable certainty; hence, less than 12 months, in which case said period
they are paid specific amount for rendering shall be considered as one year." It is also
specific service or performing specific work. If "commutable to its money equivalent if not used
required to be at specific places at specific times, or exhausted at the end of the year." In other
employees including drivers cannot be said to be words, an employee who has served for one year
field personnel despite the fact that they are is entitled to it. He may use it as leave days or he
performing work away from the principal office may collect its monetary value. To limit the
of the employee. award to three years, as the solicitor general
recommends, is to unduly restrict such right.
At this point, it is necessary to stress that the
definition of a "field personnel" is not merely
concerned with the location where the employee
regularly performs his duties but also with the
fact that the employee's performance is
unsupervised by the employer. As discussed
above, field personnel are those who regularly
perform their duties away from the principal
place of business of the employer and whose
actual hours of work in the field cannot be
determined with reasonable certainty. Thus, in
order to conclude whether an employee is a field
employee, it is also necessary to ascertain if
actual hours of work in the field can be
determined with reasonable certainty by the
employer. In so doing, an inquiry must be made
(11) San Miguel Brewer vs. Democratic Labor (On First issue)
Organization
The Eight-Hour Labor Law only has application
NATURE OF THE CASE: This is a petition for
where an employee or laborer is paid on a
review on the CIR decision decreeing that the
monthly or daily basis, or is paid a monthly or
Eight-hour labor law applies to employees who
daily compensation, in which case, if he is made
worked in the field or engaged in the sale of the
to work beyond the requisite period of 8 hours,
company's products outside its premises.
he should be paid the additional compensation
FACTS: Respondent filed a complaint against
prescribed by law. This law has no application
petitioner embodying 12 demands for the
when the employee or laborer is paid on a piece-
betterment of the conditions of employment of
work, "pakiao", or commission basis, regardless
its members, which it eventually confined to
of the time employed. The philosophy behind
specific demands on overtime pay, night-shift
this exemption is that his earnings in the form of
differential pay, attorney’s fees, separation pay,
commission based on the gross receipts of the
and sick and vacation leave compensation.
day. His participation depends upon his industry

Judge Bautista held, among other things, that the so that the more hours he employs in the work

provisions of the Eight-Hour Labor Law apply to the greater are his gross returns and the higher

salesmen and should therefore be paid the extra his commission.

compensation accorded them by said law in According to a ruling by DOLE on Dec. 9, 1957,
addition to the monthly salary and commission field sales personnel receiving monthly salaries
earned by them, regardless of the meal are not subject to the Eight-Hour Labor Law.
allowance given to employees who work up to Although they are paid on a monthly basis, their
late at night. commission shall be considered as payment for
extra time he renders in excess of 8 hours.
Petitioner filed a Motion for Reconsideration
before the CIR, which was denied. (On second issue)

ISSUES: (1) Whether the Eight-Hour Labor Law

They are entitled to such pay. Section 4 of
applies to respondent workers.
Commonwealth Act No. 444 expressly provides

(2) Are the claimants who are watchmen and that no person, firm or corporation may compel

security guards entitled to extra pay for work an employee or laborer to work during Sundays

done on Sundays and Holidays? and legal holidays unless he is paid an additional
sum of 25% of his regular compensation.
HELD: No on the first issue; yes on the second
This proviso is mandatory, regardless of the
RATIO DECIDENDI: nature of compensation. The only exception is
with regard to public utilities who perform some
public service.

DISPOSITIVE: CIR decision modified: the award

with regards to extra work performed by those
employed in the outside or field sales force is set
aside. The rest of the decision concerning night
differentials and works performed on Sundays
and holidays is affirmed.

 (12) Union of Filipro Employees v. Vivar 1) Whether or not Nestle’s sales personnel are
entitled to holiday pay; and
Facts:
2) Whether or not, concomitant with the award
On November 8, 1985, respondent Filipro, Inc. of holiday pay, the divisor should be changed
(now Nestle Philippines, Inc.) filed with the from 251 to 261 days and whether or not the
National Labor Relations Commission (NLRC) a previous use of 251 as divisor resulted in
petition for claims of its monthly paid employees overpayment for overtime, night differential,
for holiday pay. vacation and sick leave pay.

Abitrator Vivar: Filipro to pay its monthly paid Held:

employees holiday pay pursuant to Art 94 of
Labor Code, subject to exclusions and limitations 1. Sales personnel are not entitled to holiday
in Art 82. pay.

Filipro filed a motion for clarification seeking (1) Under Article 82, field personnel are not entitled
the limitation of the award to three years, (2) to holiday pay. Said article defines field
the exclusion of salesmen, sales representatives, personnel as “non-agritultural employees who
truck drivers, merchandisers and medical regularly perform their duties away from the
representatives (hereinafter referred to as sales principal place of business or branch office of the
personnel) from the award of the holiday pay, employer and whose actual hours of work in the
and (3) deduction from the holiday pay award of field cannot be determined with reasonable
overpayment for overtime, night differential, certainty.”
vacation and sick leave benefits due to the use of
251 divisor. The law requires that the actual hours of work in
the field be reasonably ascertained. The
Petitioner UFE answered that the award should company has no way of determining whether or
be made effective from the date of effectivity of not these sales personnel, even if they report to
the Labor Code, that their sales personnel are the office before 8:00 a.m. prior to field work and
not field personnel and are therefore entitled to come back at 4:30 p.m, really spend the hours in
holiday pay, and that the use of 251 as divisor is between in actual field work.
an established employee benefit which cannot be
diminished. Moreover, the requirement that “actual hours of
work in the field cannot be determined with
Arbitrator Vivar: On January 14, 1986, the reasonable certainty” must be read in
respondent arbitrator issued an order declaring conjunction with Rule IV, Book III of the
that the effectivity of the holiday pay award shall Implementing Rules which provides:
retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged, Rule IV Holidays with Pay
however, that the company’s sales personnel are
field personnel and, as such, are not entitled to Sec. 1. Coverage — This rule shall apply to all
holiday pay. He likewise ruled that with the employees except:
grant of 10 days’ holiday pay, the divisor should
be changed from 251 to 261 and ordered the xxx xxx xxx
reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay (e) Field personnel and other employees whose
due to the use of 251 days as divisor. time and performance is unsupervised by the
employer . . . (Emphasis supplied)
Issues:
Hence, in deciding whether or not an employee’s
actual working hours in the field can be
determined with reasonable certainty, query same daily rate if the divisor is adjusted to 261
must be made as to whether or not such days, then the dividend, which represents the
employee’s time and performance is constantly employee’s annual salary, should
supervised by the employer. correspondingly be increased to incorporate the
holiday pay.
2. The divisor in computing the award of
holiday pay should still be 251 days. To illustrate, if prior to the grant of holiday pay,
the employee’s annual salary is P25,100, then
While in that case the issue was whether or not dividing such figure by 251 days, his daily rate is
salesmen were entitled to overtime pay, the P100.00 After the payment of 10 days’ holiday
same rationale for their exclusion as field pay, his annual salary already includes holiday
personnel from holiday pay benefits also applies. pay and totals P26,100 (P25,100 + 1,000).
Dividing this by 261 days, the daily rate is still
The petitioner union also assails the respondent P100.00. There is thus no merit in respondent
arbitrator’s ruling that, concomitant with the Nestle’s claim of overpayment of overtime and
award of holiday pay, the divisor should be night differential pay and sick and vacation leave
changed from 251 to 261 days to include the benefits, the computation of which are all based
additional 10 holidays and the employees should on the daily rate, since the daily rate is still the
reimburse the amounts overpaid by Filipro due same before and after the grant of holiday pay.
to the use of 251 days’ divisor.
SC Decision:
The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten The Court thereby resolves that the grant of
(10) legal holidays from the total number of holiday pay be effective, not from the date of
calendar days in a year. If the employees are promulgation of the Chartered Bank case nor
already paid for all non-working days, the from the date of effectivity of the Labor Code, but
divisor should be 365 and not 251. from October 23, 1984, the date of promulgation
of the IBAA case (Insular Bank of Asia and
In the petitioner’s case, its computation of daily America Employees’ Union (IBAAEU) v. Inciong,
ratio since September 1, 1980, is as follows: where the court declared that Sec 2, Rule IV, Book
III of IRR which excluded monthly paid employees
monthly rate x 12 months / 251 days from holiday pay benefits, are null and void).

The use of 251 days’ divisor by respondent WHEREFORE, the order of the voluntary
Filipro indicates that holiday pay is not yet arbitrator in hereby MODIFIED. The divisor to be
included in the employee’s salary, otherwise the used in computing holiday pay shall be 251 days.
divisor should have been 261. The holiday pay as above directed shall be
computed from October 23, 1984. In all other
It must be stressed that the daily rate, assuming respects, the order of the respondent arbitrator
there are no intervening salary increases, is a is hereby AFFIRMED.
constant figure for the purpose of computing
overtime and night differential pay and
commutation of sick and vacation leave credits.
Necessarily, the daily rate should also be the
same basis for computing the 10 unpaid holidays.

The respondent arbitrator’s order to change the
divisor from 251 to 261 days would result in a
lower daily rate which is violative of the
prohibition on non-diminution of benefits found
in Article 100 of the Labor Code. To maintain the
#13 SIME DARBY PILIPINAS, INC VS NLRC APR aspects of employment, including hiring, work
15,1998) assignments, working methods, time, place and
manner of work, processes to be followed,
FACTS: All company factory workers of Sime supervision of workers, working regulations,
Darby Pilipinas, Inc., manufacturer of automotive transfer of employees, work supervision, lay off
tires, tubes and other rubber products, in of workers and discipline, dismissal and recall of
Marikina including members of private workers. Management retains the prerogative,
respondent union, Sime Darby Salaried whenever exigencies of the service so require, to
Employees Association (ALU-TUCP), worked change the working hours of its employees. So
from 7:45 a.m. to 3:45 p.m. with a 30-minute long as such prerogative is exercised in good
paid on-call lunch break. On August 14, 1992, the faith for the advancement of the employers
petitioner issued a memorandum to all factory- interest and not for the purpose of defeating or
based employees advising all its monthly circumventing the rights of the employees under
salaried employees in its Marikina Tire Plant a special laws or under valid agreements.
change in work schedule. The new schedule In this case, the new work schedule set by the
extends to 9 hours with two 10-minute paid employer fully complies with the daily work
coffee break and 1-hour unpaid and undisturbed period of eight (8) hours without violating the
lunch break. The Warehouse and Quality Labor Code. Although the old work schedule
Assurance Department working on shifts, are included a 30-minute paid lunch break, the
excluded from this change in work schedule. employees were on call and could be called upon
Private respondent, which is an association of to do jobs during lunch break. With the new
monthly salaried employees of petitioner at its schedule, they can take one-hour lunch break
Marikina factory, filed on behalf of its members a without any interruption from their employer.
complaint with the Labor Arbiter for unfair labor
practice, discrimination and evasion of liability. Moreover, this act was not discriminatory as the
new schedule applies to all employees in the
The Labor Arbiter dismissed the complaint on factory similarly situated whether they are union
the ground that the change in the work schedule members or not.
and the elimination of the 30-minute paid lunch
break of the factory workers constituted a valid
exercise of management prerogative and that the
new work schedule, break time and one-hour
lunch break did not have the effect of
diminishing the benefits granted to factory
workers as the working time did not exceed
eight (8) hours.

NLRC sustained the decision of Labor Arbiter but

upon motion for reconsideration by private
respondent, the NLRC, having two new
commissioners, reversed its earlier decision.

ISSUE: Whether or not the act of management in

revising the work schedule of its employees and
eliminating their paid lunch break constitutes
unfair labor practice?
RULING: The Court held that the employer has
the right to exercise its management
prerogatives. Management is free to regulate,
according to its own discretion and judgment, all
#14 PHILIPPINE GRAPHIC ARTS, INC. VS NLRC The petitioners raise two issues in their petition,
namely:

In October, 1984, the petitioner corporation was
forced by economic circumstances to require its
A. PUBLIC RESPONDENT COMMITTED A GRAVE
workers to go on mandatory vacation leave in ABUSE OF DISCRETION IN RENDERING A
batches of seven or nine for periods ranging from 15, RESOLUTION ON AN ISSUE INVOLVING A
30, to 45 days. The workers were paid while on leave MONEY CLAIM, WHICH WAS NOT A SUBJECT
but the pay was charged against their respective OF AN APPEAL NOR ASSIGNED AS AN ERROR.
earned leaves.
B. PUBLIC RESPONDENT COMMITTED A GRAVE

ABUSE OF DISCRETION IN RENDERING A
As a result, the private respondents filed complaints RESOLUTION IN FAVOR OF THE UNION
for unfair labor practice and discrimination. AND/OR 23 OTHER EMPLOYEES WHO ARE
NOT REAL PARTIES IN THE CASE, NOR IN
On April 9, 1986, the Labor Arbiter rendered a THE PARTIAL APPEAL. (pp. 17 & 22, Rollo)
decision the dispositive portion of which reads:
After considering the petition and treating the
Wherefore, for lack of merit, the complaint for unfair comments of the private respondents and the
labor practice on grounds of discrimination, forced Solicitor General as Answers, the Court resolved to
leave and reduction of working days is hereby, give due course to the petition and decide it on the
DISMISSED. Respondent is hereby ordered to restore basic merits.
and grant to all its employees the company policy
regarding groceries previously enjoyed by them." (p. The principal issue now before the Court is the forced
27, Rollo) vacation leave without pay -- whether or not it is
unfair labor practice and if not an unfair labor
The private respondents filed a "partial appeal" with practice, whether or not it was tainted with
the National Labor Relations Commission (NLRC) arbitrariness.
questioning the Labor Arbiter's dismissal of their
complaint for unfair labor practice and the resultant The Court is convinced from the records now before
forced vacation leaves which were actually without it, that there was no unfair labor practice. As found by
pay. the NLRC, the private respondents themselves never
questioned the existence of an economic crisis but, in
On June 19, 1986, the NLRC affirmed the arbiter's fact, admitted its existence. There is basis for the
decision with modification as follows: petitioner's contentions that the reduction of work
schedule was temporary, that it was taken only after
notice and consultations with the workers and
"Be that as it may, since as intimated at the outset, supervisors, that a consensus was reached on how to
the vacation leave forced upon the complainants was deal with deteriorating economic conditions and
visited with arbitrariness not amounting to unfair reduced sales and that the temporary reduction of
labor practice, a refund of the amount equivalent to working days was a more humane solution instead of
the earned leave of each of the complainants treated a retrenchment and reduction of personnel. The
as their pay during their vacation is believed in order. petitioner further points out that this is in
consonance with the collective bargaining agreement
"WHEREFORE, modified as above indicated, the between the employer and its employees.
decision appealed from is hereby AFFIRMED.
(PARTIAL APPEAL TO THE NATIONAL LABOR The Court, therefore, agrees with the Solicitor
RELATIONS COMMISSION, P. 1)" (p. 60, Rollo) General in his submission that:

"There is also no showing that the imposition of
forced leave was exercised for the purpose of "As the law stands, both employers and bargaining
defeating or circumventing the rights of employees representative of the employees are required to go
under special laws or under valid agreements. As the through the grievance machinery in case a grievance
records show, petitioners instituted the forced leave arises. And though the law does not provide who, as
due to economic crisis, which private respondents do between labor and capital, should initiate that said
not even question. (Position Paper [Private grievance be brought first to the grievance machinery,
Respondents'], dated July 1985, p. 2) it is only logical, just and equitable that whoever is
aggrieved should initiate settlement of the grievance
"Likewise the forced leave was enforced neither in a through the grievance machinery. To impose the
malicious, harsh, oppressive, vindictive nor wanton compulsory procedure on employers alone would be
manner, or out of malice or spite. Apart from private oppressive of capital, notwithstanding the fact that in
respondents' concurrence that the forced leave was most cases the grievance is of the employees.
implemented due to economic crisis, what only
'hurts' (ibid.) them 'is that said management's plan "In the case at bar, when petitioners sent notice to
was not even discussed in the grievance procedure so complainants, no grievance between petitioners and
that the Union members thereof may well be private respondents that need be threshed out before
apprised of the reason therefore.' (Ibid.) the grievance machinery has yet materialized. But
then, private respondents, who received such notice
"However, to rule that petitioners' failure to bring the and being aggrieved thereof, instituted a case before
question of necessity in the imposition of forced leave the Labor Arbiter for unfair labor practices and
and the distribution of work availability before the discrimination, prior to any referral to the grievance
grievance machinery, as a prior requisite for the machinery, which they are equally mandated to go
implementation of the forced leave scheme, through and under the circumstances they were
constitutes arbitrariness is erroneous." (Rollo, pp. 63- better situated to initiate; likewise, petitioners even
64) prayed before the Labor Arbiter that the complaint
be dismissed and/or referred to the grievance
The decision to resort to forced leaves was, under the machinery. (Position Paper (Petitioners'), dated 24
circumstances, a management prerogative. The July 1985, p. 7) Thus, petitioner should not be faulted
workers' claim of non-resort to the grievance if the grievance machinery was in any way bypassed."
machinery is negated by their failure to initiate steps (Rollo, pp. 64-66)
for its employment.

As stressed by the Solicitor General:
WHEREFORE, the petition is hereby GRANTED. The
June 19, 1987 resolution of the National Labor
"The statutory law on grievance procedure provides Relations Commission is set aside and the April 9,
that: 1986 decision of the Labor Arbiter is REINSTATED.

"'ART. 261. Grievance machinery. Whenever a
grievance arises from the interpretation or
implementation of a collective agreement, including
disciplinary actions imposed on members of the
bargaining unit, the employer and the bargaining
representative shall meet to adjust the grievance.
Where the grievance procedure as provided herein
does not apply, grievances shall be subject to
negotiation, conciliation or arbitration as provided
elsewhere in this Code.'" (Labor Code (Italics supplies)
#15 Linton Commercial Co., vs. Alex A. Hellera et bulletin states that a reduction of the number of
al. regular working days is valid where the arrangement
is resorted to by the employer to prevent serious
G.R. No. 163147 losses due to causes beyond his control, such as when
October 10, 2007 there is a substantial slump in the demand for his
goods or services or when there is lack of raw
materials. Although the bulletin stands more as a set
of directory guidelines than a binding set of
Facts: Linton is a domestic corporation engaged in the
implementing rules, it has one main consideration,
business of importation, wholesale, retail and
consistent with the ruling in Philippine Graphic Arts
fabrication of steel and its by-products. Petitioner
Inc., in determining the validity of reduction of
Desiree Ong is Linton's vice president. On 17
working hours — that the company was suffering
December 1997, Linton issued a memorandum
from losses.
addressed to its employees informing them of the
company's decision to suspend its operations from
18 December 1997 to 5 January 1998 due to the
currency crisis that affected its business operations. Petitioners attempt to justify their action by alleging
Linton submitted an establishment termination that the company was suffering from financial losses
report to the Department of Labor and Employment owing to the Asian currency crisis. Was petitioners'
(DOLE) regarding the temporary closure of the claim of financial losses supported by evidence? A
establishment covering the said period. The close examination of petitioners' financial reports for
company's operation was to resume on 6 January 1997-1998 shows that, while the company suffered a
1998. On 7 January 1997, Linton issued another loss of P3,645,422.00 in 1997, it retained a
memorandum informing them that effective 12 considerable amount of earnings and operating
January 1998, it would implement a new compressed income. Clearly then, while Linton suffered from
workweek of three (3) days on a rotation basis. In losses for that year, there remained enough earnings
other words, each worker would be working on a to sufficiently sustain its operations. In business,
rotation basis for three working days only instead for sustained operations in the black is the ideal but
six days a week. On the same day, Linton submitted being in the red is a cruel reality. However, a year of
an establishment termination report concerning the financial losses would not warrant the immolation of
rotation of its workers. Linton proceeded with the the welfare of the employees, which in this case was
implementation of the new policy without waiting for done through a reduced workweek that resulted in
its approval by DOLE. Aggrieved, sixty-eight (68) an unsettling diminution of the periodic pay for a
workers (workers) filed a Complaint for illegal protracted period. Permitting reduction of work and
reduction of workdays. pay at the slightest indication of losses would be
contrary to the State's policy to afford protection to
labor and provide full employment.

Issue: Whether or not there was an illegal reduction

of work when Linton implemented a compressed
workweek by reducing from six to three the number Certainly, management has the prerogative to come
of working days with the employees working on a up with measures to ensure profitability or loss
rotation basis. minimization. However, such privilege is not absolute.
Management prerogative must be exercised in good
faith and with due regard to the rights of labor. As
previously stated, financial losses must be shown
Ruling: The Bureau of Working Conditions of the
before a company can validly opt to reduce the work
DOLE, moreover, released a bulletin providing for in
hours of its employees. However, to date, no definite
determining when an employer can validly reduce
guidelines have yet been set to determine whether
the regular number of working days. The said
the alleged losses are sufficient to justify the
reduction of work hours. If the standards set in
determining the justifiability of financial losses under
Article 283 (i.e., retrenchment) or Article 286 (i.e.,
suspension of work) of the Labor Code were to be
considered, petitioners would end up failing to meet
the standards. On the one hand, Article 286 applies
only when there is a bona fide suspension of the
employer's operation of a business or undertaking
for a period not exceeding six (6) months. Records
show that Linton continued its business operations
during the effectivity of the compressed workweek,
which spanned more than the maximum period. On
the other hand, for retrenchment to be justified, any
claim of actual or potential business losses must
satisfy the following standards: (1) the losses
incurred are substantial and not de minimis; (2) the
losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to
be effective in preventing the expected losses; and (4)
the alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled, are proven
by sufficient and convincing evidence. Linton failed to
comply with these standards.

All taken into account, the compressed workweek

arrangement was unjustified and illegal. Thus,
petitioners committed illegal reduction of work
hours. Petitioners are ordered to pay respondents,
except the aforementioned 21 workers who executed
waivers and quitclaims, the monetary award as
computed, pursuant to the decision of the Labor
Arbiter with interest at the rate of 6% per annum
from 12 December 2003, the date of promulgation of
the Court of Appeals' decision, until the finality of this
decision, and thereafter at the rate of 12% per annum
until full payment.

#16 BISLIG NG MANGGAGAWA SA TRYCO VS NLRC management prerogative. When the transfer is not
unreasonable, or inconvenient, or prejudicial to the
employee, and it does not involve a demotion in rank
or diminution of salaries, benefits, and other
Facts: privileges, the employee may not complain that it
amounts to a constructive dismissal. However, the
Tryco Pharma Corporation, manufacturer of employer has the burden of proving that the transfer
veterinary medicines with principal office in of an employee is for valid and legitimate grounds.
Caloocan City, and petitioner union Bisig
Manggagawa Sa Tryco (BMT), the exclusive Indisputably, in the instant case, the transfer orders
bargaining representative of the rank-and-file do not entail a demotion in rank or diminution of
employees, signed separate Memoranda of salaries, benefits and other privileges of the
Agreement providing for a compressed workweek petitioners. The Court has previously declared that
schedule to be implemented in the company. BMT mere incidental inconvenience is not sufficient to
and Tryco negotiated for the renewal of their CBA but warrant a claim of constructive dismissal. Objection
failed to arrive at a new agreement. Meanwhile, to a transfer that is grounded solely upon the
Tryco received a letter from the Bureau of Animal personal inconvenience or hardship that will be
Industry of the Department of Agriculture reminding caused to the employee by reason of the transfer is
the former that its production should be conducted in not a valid reason to disobey an order of transfer. The
Bulacan City and not in Caloocan City. Accordingly, distance from Caloocan to San Rafael, Bulacan is not
Tryco issued a memo directing petitioners herein considerably great so as to compel petitioners to seek
who are members of BMT to report to the plant site living accommodations in the area and prevent them
in Bulacan. Contending that the transfer of its from commuting to Metro Manila daily to be with
members constitutes unfair labor practice, BMT their families.
declared a strike. Later, petitioner employees filed
separate complaints for illegal dismissal and added
(2) We cannot see how the mere transfer of its
that the transfer of petitioners to the Bulacan site is
members can paralyze the union. The union was not
intended to paralyze the union. LA dismissed the
deprived of the membership of the petitioners whose
complaint. NLRC and CA affirmed.
work assignments were only transferred to another
location. More importantly, there was no showing or
Issues: any indication that the transfer orders were
motivated by an intention to interfere with the
(1) Whether the transfer of petitioners amounted to petitioners’ right to organize. Unfair labor practice
constructive dismissal; and refers to acts that violate the workers’ right to
organize. With the exception of Article 248(f) of the
(2) Whether the transfer of petitioners amounted to Labor Code of the Philippines, the prohibited acts are
unfair labor practice. related to the workers’ right to self-organization and
to the observance of a CBA. Without that element, the
acts, no matter how unfair, are not unfair labor
Ruling: NO.
practices.

(1) Management’s prerogative of transferring and

The transfer of its production activities to San Rafael,
reassigning employees from one area of operation to
Bulacan, regardless of whether it was made pursuant
another in order to meet the requirements of the
to the letter of the Bureau of Animal Industry, was
business is, therefore, generally not constitutive of
within the scope of its inherent right to control and
constructive dismissal. Thus, the consequent transfer
manage its enterprise effectively.
of Tryco’s personnel, assigned to the Production
Department was well within the scope of its
Management’s prerogative of transferring and
reassigning employees from one area of operation to
another in order to meet the requirements of the
business is, therefore, generally not constitutive of
constructive dismissal. Indisputably, in the instant
case, the transfer orders do not entail a demotion in
rank or diminution of salaries, benefits and other
privileges of the petitioners.

Mere incidental inconvenience is not sufficient to

warrant a claim of constructive dismissal. Personal
inconvenience or hardship that will be caused to the
employee by reason of the transfer is not a valid
reason to disobey an order of transfer. Moreover, the
adoption of a compressed workweek scheme in the
company will help temper any inconvenience that
will be caused the petitioners by their transfer to a
farther workplace.

The transfer orders do not amount to ULP. Contrary

to BMT’s claim, mere transfer of its members will not
paralyze and render the union ineffective. The union
was not deprived of the membership of the
petitioners whose work assignments were only
transferred to another location. There was no
showing or any indication that the transfer orders
were motivated by an intention to interfere with the
petitioners’ right to organize.

The MOA is enforceable and binding against the

petitioners (esp. waiver of overtime). Where it is
shown that the person making the waiver did so
voluntarily, with full understanding of what he was
doing, and the consideration for the quitclaim is
credible and reasonable, the transaction must be
recognized as a valid and binding undertaking.
Notably, the MOA complied with the following
conditions set by the DOLE, under D.O. No. 21.

#18 LUZON STEVEDORING CO VS LUZON MARINE Company, by the nature of its business and as defined
DEPT UNION by law is considered a public service operator by the
Public Service Commission and, therefore, exempt

from paying additional remuneration or
Facts: compensation for work performed on Sundays and
legal holidays, pursuant to the provisions of section 4
In June 1948, herein respondent Luzon Marine of Commonwealth Act No. 444.
Department Union filed a petition with the Court of
Industrial Relations containing several demands
against herein petitioner Luzon Stevedoring Co., Inc.
Later on, a resolution modifying the decision of
However, while the case was still pending with the
February 10, 1955, was issued, in the sense that the 4
CIR, said labor union declared a strike which was
hours of overtime work included in the regular daily
ruled down as illegal by this Court in 1950. In view of
schedule of work from 6:00 a.m. to 6:00 p.m. should
said ruling, the Union filed a "Constancia" with the
be paid independently of the so-called "coffee-
Court of Industrial Relations praying that the
money", after making a finding that said extra
remaining unresolved demands of the Union
amounts were given to crew members of some
presented in their original petition, be granted. Said
tugboats for work performed beyond 6:00 p.m. over a
unresolved included:
period of some 16 weeks. The Company's motion for
reconsideration was denied.

a. Point No. 2. That the work performed in excess of

eight (8) hours he paid an overtime pay of 50 per
From this resolution, the Luzon Stevedoring Co., Inc.
cent the regular rate of pay, and that work performed
filed the present petition for certiorari and when the
on Sundays and legal holidays be paid double the
Court of Industrial Relations, acting upon said
regular rate of pay.
Company's motion for clarification, ruled that the 20
minutes' rest given the claimants after mealtime
should not be deducted from the 4 hours of overtime
The trial Judge rendered a decision in 1955, finding worked performed by said claimants, petitioner filed
that the company gave said employees 3 free meals a supplemental petition for certiorari, and both
every day and about 20 minutes rest after each petitions were given due course by this Court.
mealtime; that they worked from 6:00 am. to 6:00
p.m. every day including Sundays and holidays, and
for work performed in excess of 8 hours, the officers,
Issue: W/N the definition for "hours of work" as
patrons and radio operators were given overtime pay
presently applied to dryland laborers equally
in the amount of P4 each and P2 each for the rest of
applicable to seamen?
the crew up to March, 1947, and after said date, these
payments were increased to P5 and P2.50,
respectively, until the time of their separation or the
strike of July 19, 1948; that when the tugboats Ruling: NO.
underwent repairs, their personnel worked only 8 Petitioner questions the applicability to seamen of
hours a day excluding Sundays and holidays; that the interpretation given to the phrase "hours of
although there was an effort on the part of claimants work" for the purpose of the Eight-Hour Labor Law,
to show that some had worked beyond 6:00 p.m. insinuating that although the seamen concerned
stayed in petitioner's tugboats, or merely within its
compound, for 12 hours, yet their work was not
continuous but interrupted or broken. It has been the
The evidence was uncertain and indefinite and that
consistent stand of petitioner that while it is true that
demand was, therefore, denied; that respondent
the workers herein were required to report for work term, a laborer need not leave the premises of the
at 6:00 a.m. and were made to stay up to 6:00 p.m., factory, shop or boat in order that his period of rest
their work was not continuous and they could have shall not be counted, it being enough that he "cease to
left the premises of their working place were it not work", may rest completely and leave or may leave at
for the inherent physical impossibility peculiar to the his will the spot where he actually stays while
nature of their duty which prevented them from working, to go somewhere else, whether within or
leaving the tugboats. outside the premises of said factory, shop or boat. If
these requisites are complied with, the period of such
rest shall not be counted.
It is the Company's defense that a literal
interpretation of what constitutes non-working hours
would result in absurdity if made to apply to seamen

aboard vessels in bays and rivers, and We are called
upon to make an interpretation of the law on "non-
working hours" that may comprehend within its
embrace not only the non-working hours of laborers
employed in land jobs, but also of that particular
group of seamen, i.e., those employed in vessels
plying in rivers and bays, since admittedly there is no
need for such ruling with respect to officers and crew
of interisland vessels which have aboard 2 shifts of
said men and strictly follow the 8-hour working
period.

Section 1 of Commonwealth Act No. 444, known as

the Eight-Hour Labor Law, provides:

SEC. 1. The legal working day for any person

employed by another shall be of not more than eight
hours daily. When the work is not continuous, the
time during which the laborer is not working AND
CAN LEAVE HIS WORKING PLACE and can rest
completely, shall not be counted.

The requisites contained in this section are further

implemented by contemporary regulations issued by
administrative authorities (Sections 4 and 5 of
Chapter III, Article 1, Code of Rules and Regulations
to Implement the Minimum Wage Law).

For the purposes of this case, We do not need to set

for seamen a criterion different from that applied to
laborers on land, for under the provisions of the
above quoted section, the only thing to be done is to
determine the meaning and scope of the term
"working place" used therein. As We understand this
#19 J.P. HEILBRONN CO. VS NATIONAL LABOR case of San Miguel Brewery, Inc. v. National Labor
UNION Union, Et Al., case No. 271-V, in passing upon a
demand of laborers for their wages corresponding to
the days that they were on strike, said CIR
FACTS: On July 12, 1948, the Secretary of Labor Held:jgc:chanrobles.com.ph
certified to the Court of Industrial Relations (CIR) a
dispute between the National Labor Union, a labor "As to the demand for the payment of the wages that
organization organized under the provisions of the strikers lost on the occasion of their strike on
Commonwealth Act 213 and the J. P. Heilbronn Co., November 22, 1948, the Court understands that a
hereinafter to be called the Company, a domestic strike is a voluntary and deliberate cessation of work
corporation domiciled in the City of Manila. The case on the part of the workers. Upon this consideration
was docketed as "National Labor Union, Petitioner, v. and based on the equitable tenet of a fair day’s wage
J. P. Heilbronn Co., respondent, case No. 160-V." In for a fair day’s labor, this demand falls of its own
connection with the hearing of that case, particularly weight and must be, as it is hereby, denied."cralaw
incidental motions and petitions concerning virtua1aw library
questions that arose between the management and
its employees who were members of J. P. Heilbronn Again, in the case of Federacion Obrera de Filipinas
Employees Association affiliated with the National (FOF) v. Philippine Rubber Projects Co., Inc., case No.
Labor Union, Armando Ocampo and Protacio Ty, 346-V, ruling upon a similar demand the CIR
President and Secretary, respectively, of the local said:jgc:chanrobles.com.ph
union attended the conferences and hearings before
the CIR, in some cases assisting the lawyer who "The strike was, therefore, justified under the
represented them. circumstances, but for reasons that wages and
salaries represent the compensation of the labor
performed by the laborers or employees and, not
having performed any work during the strike, they
Subsequently, a motion was filed in the case by the should not be paid any wage or salary therefor. For
Labor Union in behalf of Armando Ocampo and this reason this demand is hereby denied."cralaw
Protacio Ty praying the court to order the Company virtua1aw library
to pay to these men the amounts of P88 and P64.65
respectively, corresponding to the deductions in their When in case of strikes, and according to the CIR
salaries made by the Company on the days or hours even if the strike is legal, strikers may not collect
of their absence from their work while attending the their wages during the days they did not go to work,
conferences and hearings already mentioned. for the same reasons if not more, laborers who
voluntarily absent themselves from work to attend

the hearing of a case in which they seek to prove and
Despite opposition of the company to the said motion, establish their demands against the company, the
the same was granted by the CIR through Associate legality and propriety of which demands is not yet
Judge V. Jimenez Yanson. After petition for known, should lose their pay during the period of
reconsideration of said order was denied by the such absence from work. The age-old rule governing
Court of Industrial Relations in banc, the company the relation between labor and capital or
has brought the case to us seeking to reverse the said management and employee is that of a "fair day’s
order. wage for a fair day’s labor." If there is no work
performed by the employee there can be no wage or
The action taken by the CIR is hardly consistent with pay, unless of course, the laborer was able, willing
its previous rulings regarding payment of wages or and ready to work but was illegally locked out,
salaries to laborers or employees who had dismissed or suspended. It is hardly fair or just for an
voluntarily absented themselves from work. In the employee or laborer to fight or litigate against his
employer on the employer’s time.

In a case where a laborer absents himself from work
because of a strike or to attend a conference or
hearing in a case or incident between him and his
employer, he might seek reimbursement of his wages
from his union which had declared the strike or filed
the case in the industrial court. Or, in the present case,
he might have his absence from his work charged
against his vacation leave. Three of the Justices who
sign the present decision believe that the deductions
made from the wages of Armando Ocampo and
Protacio Ty might possibly be charged as damages in
the case in the event that the said case in the CIR
prosecuted in behalf of their union is finally decided
in their favor and against the company.

In view of the foregoing, the order appealed from
ordering the reimbursement of the salaries or wages
of Armando Ocampo and Protacio Ty corresponding
to the days or portions of days they were absent from
work is hereby set aside, with costs.

#20 ARICA VS NLRC (d) Lastly, they travel to the field bringing with them
their tools, equipment and materials.

All these activities take 30 minutes to accomplish.
FACTS: This case stemmed from a complaint filed
against private respondent Stanfilco for assembly .Respondent avers that the instant complaint is not
time, moral damages and attorney’s fees, with the new because it is the very same claim they brought
Regional Arbitration- Davao City. The Labor Arbiter against respondent by the same group of rank and
rendered a decision in favor of private respondent file employees in the case of Arica vs. National Labor
STANFILCO, holding that: Relations Commission which was filed before in a
different case. The said case involved a claim for
“waiting time”, as the complainants purportedly were
“We cannot but agree with respondent that the
required to assemble.
pronouncement in that earlier case, i.e. the thirty-
minute assembly time long practiced cannot be
considered waiting time or work time and, therefore,
not compensable, has become the law of the case which In the previous case, the 30-minute assembly time
can no longer be disturbed without doing violence to long practiced and institutionalized by mutual
the time-honored principle of resjudicata.” consent of the parties under their CBA cannot be
considered as ‘waiting time’ within the purview of
Section 5, Rule 1, Book III of the Rules and
Regulations Implementing the Labor.
NLRC uphold the Labor Arbiters’ decision and
declared that:
“Surely, the customary functions referred to in the ISSUE: W/ON the “assembly time” is compensable.
above-quoted provision of the agreement includes the
long-standing practice and institutionalized non- RULING:
compensable assembly time. This, in effect, estopped
complainants from pursuing this case.
1. The 30-minute assembly is a deeply-rooted,
routinary practice of the employees, and the
MR was denied hence this petition for review on
proceedings attendant thereto are not infected
certiorari. Petitioners contend that the preliminary with complexities as to deprive the workers the
activities as workers of respondents STANFILCO in time to attend to other personal pursuits. They
the assembly area is compensable as working time are not new employees as to require the
(from 5:30am to 6:00 am) since these preliminary company to deliver long briefings regarding their
activities are necessarily and primarily for private respective work assignments. Their houses are
respondent’s benefit. These preliminary activities of situated right on the area where the farms are
located, such that after the roll call, which does
the workers are as follows-.
not necessarily require the personal presence,
they can go back to their houses to attend to
(a) First there is the roll call. Followed by getting
some chores. In short, they are not subject to the
their individual work assignments from the foreman. absolute control of the company during this
period, otherwise, their failure to report in the
(b) Then, they are individually required to
assembly time would justify the company to
accomplish the Laborer’s Daily Accomplishment impose disciplinary measures. The evidence of
Report during which they are often made to explain the case demonstrates that the 30-minute
about their reported accomplishment the following assembly time was not primarily intended for the
day. interests of the employer, but ultimately for the
employees to indicate their availability or non-
(c) Then they go to the stockroom to get the working availability for work during every working day.
materials, tools and equipment.
 2. Herein petitioners are merely reiterating the
very same claim which they filed in Arica vs
NLRC and which records show had already long
been considered terminated and closed by this
Court. Therefore, the NLRC can not be faulted for
ruling that petitioners’ claim is already barred by
res judicata.

Petition is DISMISSED for lack of merit and the

decision of the National Labor Relations Commission
is AFFIRMED.

#21 NATIONAL DEVELOPMENT COMPANY VS In this case, the CIR’s finding that work in the
CIR petitioner company was continuous and did
not permit employees and laborers to rest
completely is not without basis in evidence
FACTS: At the National Development Co., a and following our earlier rulings, shall not
government-owned and controlled corporation, disturb the same.
there were four shifts of work. One shift was
from 8 a.m. to 4 p.m., while the three other shifts The time cards show that the work was
were from 6 a.m. to 2 p.m; then from 2 p.m. to 10 continuous and without interruption. There is
p.m. and, finally, from 10 p.m. to 6 a.m. In each also the evidence adduced by the petitioner that
shift, there was a one-hour mealtime period, to the pertinent employees can freely leave their
wit: From (1) 11 a.m. to 12 noon for those working place nor rest completely. There is
working between 6 a.m. and 2 p.m. and from (2) furthermore the aspect that during the period
7 p.m. to 8 p.m. for those working between 2 p.m. covered the computation the work was on a 24-
and 10 p.m. hour basis and previously stated divided into
(Petitioner does not want to pay for the 1 hour shifts. (ang labo bakit “can freely leave their
lunch time) The records disclose that although working place norrest completely” feeling ko
there was a one-hour mealtime, petitioner typo yan sa scra or ganun talaga?)
nevertheless credited the workers with eight
hours of work for each shift and paid them From these facts, the CIR correctly concluded
for the same number of hours. However, since that work in petitioner company was continuous
1953, whenever workers in one shift and therefore the mealtime breaks should be
were required to continue working until the counted as working time for purposes of
next shift, petitioner instead of crediting overtime compensation.
them with eight hours of overtime work, has
been paying them for six hours only,
petitioner that the two hours corresponding to
the mealtime periods should not be included in
computing compensation.
CIR: Mealtime should be counted in the
determination of overtime work
ISSUE: WON mealtime breaks should be
considered working time

HELD: YES

The legal working day for any person employed
by another shall be of not more than eight hours
daily.When the work is not continuous, the time
during which the laborer is not working and can
leave his working place and can rest completely
shall not be counted. (Sec. 1, Com. Act No. 444)

It will be noted that, under the law, the idle time
that an employee may spend for resting and
during which he may leave the spot or place
of work though not the premises of his
employer, is not counted as working time
only where the work is broken or is not
continuous.

#22 PESALA VS NLRC Furthermore, such arrangement is likewise in
disregard of the manner required by the law on
how overtime compensation must be
determined. There is further the possibility that
in view of subsequent increases in the minimum
FACTS: Angel V. Esquejo was hired by PESALA as a wage, the existing salary for twelve (12) hours
company guard. On October 10, 1990 filed a could no longer account for the increased wage
complaint before the NLRC against PESALA for non- level together with theovertime rate for work
payment of overtime pay. It appears from his rendered in excess of eight hours
appointment letter that Esquejo is bound to work for
12 hours a day, with a P1,990.00 per month salary
plus P510.00 emergency allowance. He now avers
that he is entitled to the payment of overtime pay for
work rendered in excess of 8 hours.

ISSUE: Is an employee entitled to overtime pay for

work rendered in excess of the regular eight hour day
given the fact that he entered into a contract

of labor specifying a work-day of twelve hours at a

fixed monthly rate above the legislated minimum
wage?

HELD: YES.

Based on evidence, it appears that the basic salary

plus emergency allowance given to private
respondent did not actually include the overtime pay
claimed by private respondent. The Appointment
Memorandum cannot be taken and accorded credit as
it is so worded in view of the ambiguity. While it is
true that the complainant received a salary rate
which is higher than the minimum provided by law, it
does not however follow that any additional
compensation due the complainant can be
offset by his salary in excess of the minimum,
especially in the absence of an express
agreement to that effect. To consider otherwise
would be in disregard of the rule of non-diminution
of b e n e f i t s w h i c h a r e a b o v e t h e m i n i m u m
b e i n g e x t e n d e d t o t h e employees.

#23 CALTEX REGULAR EMPLOYEES VS CALTEX It was stated in the CBA that the daily working
PHILIPPINES schedules shall be established by management in
accordance with the requirements of efficient

operations on the basis of eight (8) hours per
FACTS: Sometime in August 1986, the Petitioner day for any five (5) days. Provided, however
called Respondent Caltex’s attention to alleged employees required to work in excess of forty
violations by Caltex of Annex “B” of the 1985 (40) hours in any week shall be compensated in
CBA, e.g. non-payment of night-shift differential, accordance with Annex B of this Agreement.
non-payment of overtime pay and non-payment
at “first day-off rates” for work performed on a
Saturday. Labor Arbiter ruled in favor of petitioner Union,
while finding at the same time that private
respondent Caltex was not guilty of any unfair
Respondent’s Industrial Relations manager labor practice.
immediately evaluated petitioner’s claims and
accordingly informed petitioner Union that
differential payments would be timely ISSUE: Whether or not and undertime work may
implemented, which, however, was never be offset by an overtime work, respectively on
implemented. separate days.

Petitioner’s Contention: Petitioner, then, RULING: Article 88, Labor Code, as amended,
instituted a complaint for unfair labor practice provides:
against Respondent alleging violation of the
provisions of the 1985 CBA. Petitioner Union
charged Respondnet with shortchanging its
Art. 88. Undertime not offset by overtime. —
employees when it compensated work
Undertime work on any particular day shall
performed on the first 2 1/2 hours of Saturday,
not be offset by overtime work on any other
an employees’ day of rest, at regular rates, when
day.Permission given to the employee to go on
it should be paying at “day of rest” or “day off”
leave on some other day of the week shall not
rates.
exempt the employer from paying the additional
compensation required in this Chapter.

Respondent’s Contention: Respondent denied

the accusations of the Petitioner Union. It
In order that work may be considered as
averred that Saturday was never designated as a
overtime work, the hours worked must be in
day of rest, much less a “day-off”. It maintained
excess of and in addition to the eight (8) hours
that the 1985 CBA provided only 1 day of rest for
worked during the prescribed daily work period,
employees at the Manila Office, as well as
or the forty (40) hours worked during the
employees similarly situated at the Legazpi and
regular work week Monday thru Friday.
Marinduque Bulk Depots. This day of rest,
according to Caltex, was Sunday.

As provided in the 1985 CBA; under that CBA,
Saturday is not a rest day or a “day off”. It is only
when an employee has been required on a
Saturday to render work in excess of the forty
(40) hours which constitute the regular work
week that such employee may be considered as
performing overtime work on that Saturday. We
consider that the statutory prohibition against
offsetting undertime one day with overtime
another day has no application in the case at
bar.