CACHO VS BALAGTAS
Facts
 Constructive Dismissal Case filed by
Balagtas against North Star and Pres
Camacho
 Balagtas said she was a former employee of
TQ3 Travel Solution/North Star Intl
- She alleged that she s one of the
original incorporators-directors in
1990
- Then she became the General Manager
 After 14 years, Balagtas was place under
preventive suspension for 30 days due to
alleged transactions that she entered
without authority; then the next day, she
was ordered to explain within 5 days which
she heeded
 While under preventive suspension, She
wrote Camacho that she as assuming her
position as Exec VP/CEO but was prevented
 She then requested for the financial
statement of the corp but was ignored thus
she claims to be constructively dismissed
 Corp said suspension was to protect the
corp property, prevent her from
influencing potential witnesses; violated
the suspension when she went to the office
and insisted to work
LA: Illegally dismissed
NLRC: reversed; LA no juris since this was
intra-corporate dispute
 Elected as EVP and CEO; position “VP” in
the by-laws thus a corporate officer
CA: reversed; she’s just an employee
Issues: Is this an Intra-Corporate Dispute? –
yes. EVP is a Corporate Officer Position
Held
Relationship Test
 (a) between the corporation, partnership,
or association and the public; (b) between
the corporation, partnership, or
association and its stockholders,
partners, members, or officers; (c)
between the corporation, partnership, or
association and the State as far as its
franchise, permit or license to operate is
concerned; and (d) among the stockholders,
partners, or associates themselves.
 How is a Corporate Office created?
1. Created by Charter/By-Laws AND
2. Officer elected or appointed by corp’s
board of director
 In this case, the position is created by
the Corp’s By-laws: “one or more vice
presidents”
 Unlike the CA ruling that the exact
position name should appear in the bylaws
is constricting
 “one or more” gives the intent to create
such position as corp office
 Position must be created but what makes
one a corporate officer is when she is
elected or appointed with BOD approval; in
this case she was elected
o Duties and responsibilities
irrelevant
o GIS does not govern; neither
establish not govern position
 She did not even present proof to her
allegations that Secretary’s Certificate
signature was forged
Nature of Controversy Test
 Relationship does not excusively govern;
it must also pertain to the ENFORCEMENT OF
PARTIES’ CORRELATIVE RIGHTS AND
OBLIGATIONS (corp code and bylaws)
o Like when there are not reelected;
election is prerogative of the
board
o Dismissal must relate to any such
nature surrounding the intra-
corporate relationship
 In this case, the dismissal was due to
loss of trust and confidence
 Corp not estopped from questioning
jurisdiction as held in Tijam
1. Philippine Airlines vs. Ligan, February 29,
2008
Facts
 PAL and Synergy Service entered into a
contract where Synergy will load, deliver
baggage to and from Mactan Station
o Synergy(Contractor) will furnish
all capital, workers
o Expressly provided to be an
Independent Provider and there
would be no EER
o If Synergy fails to improve
service, fail to perform, PAL may
at its option terminate the
Agreement
 Synergy employees (janitors, assigned to
PAL filed complaint for underpayment, non-
payment of various monetary benefits
 Workers complain that they were just
verbally dismissed
LA: PAL and Synergy jointly and severally
lilable
NLRC: Synergy is a Labor-Only Contractor; PAL
must accept as regular employees the
complainants; ordered reinstatement
CA: Affirmed NLRC Decision
Issues: Are the complainants employees of PAL?
(bec if job-only, can be employees of PAL; if
Synergy is a legitimate contractor, no EER ART
106)
Held
 Labor-only – person supplying workers:
o Do not have substantial capital,
tools, etc
o Performing activities which are
directly related to the principal
business
 DO No. 18-02 (2002) – Trilateral
relationship in contracting arrangements
o Sec 3 - Trilateral relationship
among:
 Contract of specific job –
Principal and contractor
 Contract of employment –
contractor and workers
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 o Sec 5 – Prohibition against labor-
only contracting
 Where contractor/sub only
recruits and any of the
following is present:
 Doesn’t exercise the
right to control over
performance over work
of contractual
employees
Labor-only exists when
1. Substantial capital –
capital stocks and
subscribed capital of
corp; tools, etc directly
used by the contractor in
the performance; OR
2. Right to control – right
reserved for one for whom
service is given to
determine:
1. What to achieve
AND
2. Manner and means
 Even if only one element
is present
o In this case, the work done by the
petitioners – loading passenger,
cargo etc, is directly related to
PAL’s main business. Equipment used
is that of PAL’s
 It was only in CA did PAL
wished to prove Synergy’s
financial capacity
 The control test in DO 18-02 (#2.) is not
present in DO 10 (1997)
 Even the agreement does not support labor-
only setup:
o Workers subject to Owner’s rules
and regulations; furnish IDs,
uniforms, discipline
o Work schedule dependent on plane
arrival
o The clause that there is no “EER
and only Independent contractor” is
NOT binding; THERE MUST BE TOTALITY
OF FACTS AND SURROUNDING
CIRCUMSTANCES THAT DETERMINE THE
RELATIONSHIP
CONCLUSION: Accept them as Regular Employees
2. San Miguel Corporation vs. Aballa, June 28,
2005
Facts
 San Miguel entered into a one-year
contract, renewable monthly with Sunflower
Muti-Purpose Coop for Shrimp Processing
o Provide messenger/janitor;
harvester; sanitation
o Cooperative shall employee
necessary personnel and equipment
o Wage is given in consideration
o No EER; treated as self-
employed/Independent Contractor
o Coop shall keep under its control
the premises
o Coop has exclusive discretion in
the hiring
o Coop shall pay the wage of its
member-workers
 Workers filed a complaint to be recognized
as Regular
 Pending this, SMC file a Notice of Closure
of its aquaculture operation citing
serious business losses
LA: Job-contractor; no need to Regularize;
closure of the plant means termination of the
contract with the cooperative
NLRC: affirmed; Sunflower is an Independent
Contractor
CA: reversed; LABOR-ONLY; Must be regular
employees; grant pay
 Workers under the direct control of SMC
o Manner and method AND Result
 Sunflower did not have substantial
capital; work office is a mere carinderia
 It appears that the contract is a
circumvention of the law since notary
public that signed the bylaws of Sunflower
associated with SMC
Issues: Is there EER? – YES
Held:
 Workers are labor-only contractors
 TEST OF DETERMINING EXISTENCE OF
INDEPENDENT CONTRACTORSHIP:
1. Work according to own methods
AND
2. Without being subject of the
control of the employer, except
only as to the results
 In legitimate labor contacting, law
creates EER for limited purpose:
o Ensure salary is paid; Principal
and Contractor J&S liable
 In Labor-Only Contracting – law creates
EER for Comprehensive purpose:
o Prevent circumvention of labor laws
 The test determines the relationship, not
the words of the contract
o In this case, Sunflower has no
substantial capital; all tools used
owned by SMC
o Job description DIRECTLY related to
the aquaculture operation
o SMC also exercise power and control
over workers while inside the camp
o Sunflower did not cater to any
client other than SMC
CONCLUSION: There exists EER between SMC and
workers-complainants
3. Meralco Industrial Engineering Services vs.
NLRC, March 14, 2008
Facts
 Miescor, a corp, entered into a contract
with OPLGS, a firm engaged in providing
general services (janitor,etc)
o 49 employees assigned to Miescor
for P51.50 min wage
 Employees filed complaint for illegal
deduction, underpayment, non-payment of
overtime pay
 Pending, Miescor informed employees that
it was terminating the Contract Order;
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 thus complaint now includes illegal NLRC: affirmed LA decision in toto
dismissal CA: Meralco changed security agency three times
 So there were two cases: the non-payment but guards are same = clear circumvention of law
and whose liability to evade security of tenure
LA: Dismissed complaint for lack of merit  Using the four-fold test, MERALCO and
NLRC: (only 1 of 49 continued with the illegal guards have EER
constructive dismissal case); affirmed LA Issues: Is there EER between guards and Meralco?
decision; Miescor is solidarily liable since it Held
is the direct employer  Guards never raised in LA and NLRC that
CA: Miescor is solidarily liable since it is the Meralco was their employer but insisted
Principal based on Art 109 LC that AFSISI is; only in CA
o CA should not have considered this
Issues: Is Miescor (Principal) J&S liable with new theory
OPLGS  In this case, agreement clearly states
Held that ASFAI is the employer of the guards,
 CA’s basis of Art 109 (J&S liability) must not Meralco
be read in conjunction with Art 107  RE Meralco’s right to seek replacement of
(definition of Indirect Employer) and Art any guard: not a form of control but
106 (employer is J&S liable with his normal provision for a service-oriented
contractor) enterprise to provide
 While it is true that Miescor is the  Re Meralco’s Right to inspect guards – not
indirect employers, its liability is only control since it is not a unilateral
if Contactor FAILS TO PAY THE WAGE right; the agency also has such right
o Liability of both is not the same;
LABOR-ONLY INDEPENDENT
J&S liable only up to the extent of
CONTRACTOR
unpaid wage
Contractor is a mere a. Contractor
 Hence, although not liable for the agent or carries on an
separation pay, it is liabe for the intermediary of independent
underpayment of wage and non-payment of OT principal business and
 But this is moot since Miescor had already Principal becomes undertakes the
paid responsible to contact work on his
workers as if they own account accdg
4. Manila Electric Company vs. Benamira, July were directly hired to his own manner
14, 2005 and method, free
Facts from control of
 Respondents Benamira, et al. are licensed Principal except to
security guards of PSI deployed to the result thereof
MERALCO’s head office b. Contractor has
o PSI shall provide 220 licensed, substantial capital
uniformed guards in the form of
o Dutyis 8 hours a day tools, equipment,
o Meralco shall furnish PSI of machineries, ork
instruction for duties and premises
responsibilities
o Consideration of P3.8 to P4.2k  In this case, Guards are not regular
depending on time employees of Meralco
o Meralco can demand replacement  BUT!!! Even though Meralco and guards have
without explanation no EER, Meralco still not exonerated from
o Guards hired by PSI; no EER liability  unpaid wage as indirect
 GUARDS WERE ABSORBED BY ASDAI AND RETAINED employer
AT MERALCO’S HEAD OFFICE
 Guards filed complaint for underpayment of 5. Dole Phils. vs. Esteva, November 30, 2006
monetary benefits against ASDAI and Facts
Meralco  Petitioner DOLE (corp) entered into a
 Pending, Meralco terminated service service contract with CAMPCO (coop)
agreement with ASDAI; entered new one with o Contract shall not exceed P220k and
AFISISI (agreement’s terms and condition per job basis
almost identical with the first agreement) o Contractor (coop) shall use its
 Complaint amended to include illegal tools, etc
dismissal  Labor Department conducted an
o ASDAI denied liability for the investigation into labor practice of Dole
claims pursuant to a Resolution passed by
o MERALCO denied also due to lack of Polomolok SB
EER o Dole wrote to explain that it was
o AFSISI: denied also claiming that not conducting labor-only practice;
guards were not absorbed that coop was not attempt to
LA: Meralco and ASDAI J&S liable; ASDAI is the replace regular employees
employer
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  DOLE: held that CAMPCO, and five others,  P&G – engaged in manufacture and
were engaged in labor-only practice; thus production of different consumer and
prohibited bec circumvention of labor law health products
prohibition against worker’s right to  In 1991, Petitioners filed a Complaint for
security of tenure Regularization against P&G
 Workers filed a case for Regularization; LA: dismissed for lack of merit; no EER
CAMPCO was just a conduit of Dole NLRC: affirmed LA decision
LA: CAMPCO NOT engaged in labor-only contracting CA: Affirmed NLRC
 Campco has substantial capital, as seen on
its Financial Statement Issues: is there EER between workers and P&G?
 Assists only on odd-jobs Workers P&G
Workers appealed citing that DOLE’s earlier -recruited by the -Promm-Gem or SAPS is
decision already final salesmen of P&G the employer using the
NLRC: affirmed LA decision; no res judicata -did merchandising four-fold test
CA: reversed; Campco is a labor-only contractor; chores of P&g long -labor code did not
but Dole is only an agent or intermediary of before SAPS/Promm-Gem provide which service
Campco -when there was re- may or may not be
CA MR: reversed earlier ruling; Dole is declared alignment, they signed ooutsourced
the employer form and report to
agencies P&G created
Issues: is there EER between Dole and the -Promm-Gem and SAPS
workers-complainant? are labor-only
contractors
Held
Held
 Complaint filed BEFORE the issuance of the
DOLE DO thus no retroactive effect; the  Labor-only Contracting vs. Jo Contracting
ruling must be based on DO 10 (1997) o Refer to Art 106
o DO 18-02 distinguishes legitimate
 Re DOLE’s decision pursuant to its
and labor-only contacting
visitorial power; it can make rulings in
LEGITIMATE PROHIBITED
the exercise of its quasi-judicial power
(Labor-only)
with respect to violations of labor
standards allegations; THUS, RES JUDICATA Trilateral Bilateral only
relationship
 NOW, what is left for NLRC to do is
 Principal Contractor
determine whether there was illegal
 Contractor merely recruits
dismissal and workers should be
workers to
regularized  Worker
perform a job
 Dole findings that Campco was engaged in for the
labor-only practice is conclusive principal AND
o Asset: multimillion but amassed 1.No
after its establishment substantial
o Did not carry out independent Capital
business from Petitioner; precisely 2.Contractor no
established to render service to control over
petitioner during peak seasons performance
o Dole exercised control over Campco of work of
members employees
o Campco not engaged to perform a
Contractor is Contractor
specific and special job or service
the direct becomes a mere
o Campco members performs activities
employer of the agent of the
directly related to the principal
workers Principal
business of petitioner
 Substantial capital --
CONCLUSION: since performing illegal labor-only
refers to capital stocks and
practice, Campco is a mere agent and Dole is the
subscribed capitalization in
employer; thus, EER exists
the case of corporations,
tools, equipment,
6. Aliviado vs. Procter and Gamble, March 9,
implements, machineries and
2010
work premises, actually and
Facts
directly used by the
 Petitioners were merchandiser of P&G contractor or subcontractor
o Individually signed contract and in the performance or
assigned in different outlets completion of the job, work
 SAPS and Promm—Gem imposed disciplinary or service contracted out.
measures on erring merchandisers for  Right to Control -- right
habitual absenteeism, dishonesty, changing reserved to the person for
day-off without prior notice whom the services of the
contractual workers are
performed, to determine not
4
 only the end to be achieved,
but also the manner and
means to be used in reaching
that end
 Thus, while it is true that contracting is
allowed, it must be independent contractor
only and not
 THERE IS LABOR-ONLY CONTRACT:
1. Contractor only recruits and supplies
workers to perform job
2. ANY of the following is present:
a. No substantial capital AND
employees performing activites
directly related to the main
business of the principal; OR
b. Contractor no exercise of
control over the performance of
the work of the Contractual
Employee
 In the case at bar, Promm-Gem has
substantial investment which relates to
the work performed
o It supplies the tools, equipment,
etc
o THUS, NOT LABOR-ONLY
 In the case of SAPS, no showing of
substantial capital; its paid up capital
is only P31,250
o SUBSTANTIAL CAPITAL --
capitalization used in the
performance or completion of the
job, work or service contracted out
 Also, Court earlier held that
merchandising and promotion is directly
related to the manufacturing business
ILLEGAL DISMISSAL
 Promm-gem procedurally correct in
dismissing workers
 SAPS only made verbal notice and was done
in the initiation of P&G
CONCLUSION: only SAPS conducted labor-only
practice
7. Temic Automotive vs. Temic Automotive Phils.
Employees Union, December 23, 2009
Facts
 Petitioner Temic Automotive and the Union
entered into a CBA in 2005 effective for 4
years (2009)
 As a practive, Temic contracts out some
work in the warehouse to three independent
service providers
o This outsourcing gave rise to union
grievance esp WON the task
performed by contractual employees
were tasks of the R&F employees
o Thus, Union demanded the
forwarders’ employees be absorbed
into the regular force
 Company’s Position
o 19 regular company and 26 contract
employees
o Invokes management prerogative to
contract independent service
providers (inherent prerogative)
o Highly reputable freight forwarding
companies
o EVEN THE CBA RECOGINZED THIS
PREROGATIVE
o Contract employees do not perform
the same functions
VA: forwarding is a universally accepted and
normal business practice; Temic VALIDLY
contracted out its forwarding services BUT went
beyond the allowable contracting out bec
funcition same with regular R&F employees
covered by the CBA thus they must be covered too
CA: affirmed the VA’s decision
 Question of fact and law; findings are
binding
 Right to contrct limited to forwarding but
failed to prove that what it contracted
was within that limitation only
 Affirmed that Company employs control over
those who render service such as clerk,
encoders, etc thus Regular
Issues: Does the decision of VA constitute res
judicata
Held
VALITDITY OF THE CONTRACTING OUT
 Forwarders are agents; arrange transport
and recommend packing methods, help
arrange documentation
 SC concurs with VA and CA that Temic is
within its right to contract;
 such activity is legitimate AS LONG AS
done in
o good faith
o not for the circumvention of the
law
o does not involve arbitrary action
 SC ruled that the agreement complies with
the provision of ART 106 and IRR
 FORWARDING – single activity but of
several services that complement each
other
 Also, the forwarding was already in place
when CBA was made; meaning Union
implicitly accepted that the forwarding is
not part of the CBA (due to silence)
CONCLUSION: forwarding contractual employees NOT
regular employees
8. Smart Communications vs. Astorga, January 28,
2008
Facts
 Astorga (1997) employed by Smart as
District Sales Manager; enjoyed additional
benefits like performance
 1998, Smart launched an organizational
realignment; Part of it is outsourcing of
the marketing sales force
o Entered contract with NTT of Japan
= SNMI
 To soften the blow, SNMI absorbed CSMG
personnel recommended by Smart based on
performance
o Astorga landed last in performance
evaluation BUT was offered a
supervisory position in the
Customer Care Department; she
refused bec of lower salary rank
and rate
5
  Despite abolition of her department,
Astorga continued reporting for work;
eventually received memo advising her of
the termination of her employment due to
redundancy
 Filed case for Illegal Dismissal, etc;
abolishing dept was against her right to
security of tenure
 Smart said it was valid; also demanded
that she pay CMV of car or surrender the
same = Replevin Case
LA: illegally dismissed; Smart’s move to abolish
dept was not done in good faith or good causes;
ploy to terminate Astorga’s employment
RTC: Astorga’s MTD in the replevin case dismissed
NLRC: reversed LA decision; valid organizational
action
CA: affirmed NLRC decision
 Non-absorption not made in bad faith
Issues: Did Smart valid contract services of
SNMI? – YES. Valid reorganization
Held
DISMISSAL OF ASTORGA VALID
 She was not able to prove that it was done
with malice
 Organizational realignment valid
 BUT! Smart failed to comply with the
mandatory one-month notice
9. Coca-Cola Bottlers vs. Agito, February 13,
2009
Facts
 Agito et al filed complaint against Coca-
Cola, Interserve, Peerless Integrated
Services, Inc., Better Builders, Inc., and
Excellent Partners, Inc. for reinstatement
with backwages, regularization, nonpayment
of 13th month pay, and damages
o Asserts they were salesmen at the
Largo Sales Office
o Employed or 4 years
o But did not explain why filing
complaint against Interserve, etc
 Coke said they were employees of
Interserve tasked to perform Contracted
Service (Contract of Services);
Independent Contractor
o Interserve was the one that hired
them
o They have Contract of Temporary
Employment there
o Payroll records of Interserve
LA: Complaint dismissed; Complainants employees
of Interserve
NLRC: affirmed LA; No EER; Interserve is an
Independent contractor
CA: reversed; Interserve is a labor only
contractor
 Insufficient capital
 Respondents used equipment, tools etc of
Coke in day-to-day ops
 Coke has effective control over means and
method
 ABSORB regular employees of MWSS
Issues: Is Interserve an Independent Contractor?
– no, labor-only contracting
Held
ART 106 differentiates Independent Contractor
and Labor-Only Contractor
 Accdg to provision, labor-only contracting
gives rise to:
1. the creation of an employer-employee
relationship between the principal and
the employees of the contractor or
sub-contractor; and
2. the solidary liability of the
principal and the contractor to the
employees in the event of any
violation of the Labor Code.
THIS IS A LABOR-ONLY CONTACT
 the elements are present:
1. does not have substantial capital AND
2. workers recruited and placed by such
person perform activities DIRECTLY
related to the principal business of
the employer
 in this case, complainants were salesmen;
nature of the business: manufacture,
distribution and sale of softdrinks
o thus, work done is indispensable to
business
 On capital, although authorized capital
stock is P2Mm only P625k is paid up
o Amount of money not the sole factor
o Contactor has the burden of proof
that it has substantial capital to
engage in contracting
 Lack of Control of Interserve over workers
o Par 3 of the contract says
Interserve, including workers,,
will comply with Coke’s policies,
rules and regulations
 Even subject to oon-the-spot
inspection
 This provision indicates
control over workers’ conduct
=degree of supervision
o Par 4 – provide reliever and
replacement indication also because
IC need not guarantee daily
attendance of workers assigned
o Also, the contract requires the
qualification and type of workers
needed AND NOT the work needed to
be performed and final result
o Certification of DOLE that it is IC
does not sway the Court
CONCLUSION: Since labor-only, complainants
considered regular employees of Coke
10. Manila Water vs. Dalumpines, October 4, 2010
Facts
 Pursuant to RA 8041, MWSS was given
authority to enter into concession
agreements with private sector for its
operations
o Manila Water is one of the two
private concessionaires contracted
by MWSS (East)
o Under agreement, Manila Water will
o Worker-Complainants among 121
employees not absorbed; thus they
6
 signed 3-month contract to perform
collection services on commission
basis
o Before the end of the 3-month
contract, they formed a corp
registered in SEC as the
Association Collector’s Group, Inc.
(ACGI)
 Engaged in courier service
o Manila Water entred into service
agreement with FCSI for courier
needs; gave ACGI members to submit
letter of intent to join FCCSI;
hired.
o Thereafter, they were gradually
terminated as their contract with
FCCSI not renewed since employed
new scheme of payment (remit
through Bayad Center)
 Complainants said that their employment
had four stages but as early as the 3-
month contract phase, Manila Water
attempted to treat them as Individual
Contractor, not employees
o That using the four-fold test, EER
exists
o They did not have substantial
capial
LA: Complaint dismissed; No EER with Manila
Water
NLRC: LA decision affirmed
CA: reversed; EER exists
 FCCSI is a Labor-only contractor
Issues: Is there EER bet Manila Water and
Collector or ACGI an IC? – EER exists
Held
FCCSI is a labor-only contractor
 No substantial capital to undertake
contract services fo Manila Water
o Since it had close to 100
collectors
o Serving other companies do not
indicate substantial capital
 Manila Water is the employer using the
Four-Fold Test
 Work performed as bill collector directly
related to the principal business of
Manila Water; necessary and desirable
11. Babas vs. Lorenzo Shipping, December 15,
2010
Facts
 Lorenzo Shipping Corp (shipping industry)
entered into a General Equipment
Maintenance Repair and Management Services
Agreement with Best Manpowe Services Inc
(BMSI)
o Provide maintenance and repair
services to Lorenzo’s container
vans, equipment, etc
o Simultaneously, Lorenzo leased its
equipment to BMSI
o Complainants were hired by BMSI as
checkers, welders, etc
o 6 years after, Lorenzo entered into
new contract with BMSI, this time a
Service Contract
 Petitioners filed a Complaint for
Regularization
LA: dismissed complaint; complainants employees
of BMSI
NLRC: reversed; BMSI engaged in labor-only
contracting
 BMSI no equipment; only rented from
Lorenzo
 No independent business or activity to
perform; work performed necessary and
desirable to main business of Lorenzo;
same work as regular
 No other client but Lorenzo
CA: reversed; BMSI is an Independent Contractor
 Contract of lease does not ipso facto make
BMSI labor-only
Issues: Is BMSI engaged in labor-only
contracting? – YES.
Held
ELEMENTS OF LEGITIMATE JOB CONTRACTING
1. Contractors carries a distinct and
independent business and undertakes the
contract work on own account; free from
control in the manner of performance
2. Contractor has substantial capital or
investment
3. Agreement bet Principal and Contractor
ensures contractual employees’ entitlement
to all labor and occupational safty and
health standards, self-org, security of
tenure, social welfare benefits
BMSI is a labor-only contractor
 Place of work: LSC’s premises and nowhere
else
 No proof adduced that BMSI had substantial
capital
 Performs activities directly related to
the main business of LSC
 No other client but LSC
TERMINATION OF AGREEMENT NOT JUST CAUSE FOR
DISMISSAL
 It appears therefore that they were
summarily dismissed
12. Teng vs. Pahagac, November 17, 2010
Facts
 Abert Teng Fish Trading (deep sea fishing)
enters into a JVA with master fishermen
(maestros) who are skilled and experts in
deep sea fishing
o Take charge of the management of
each fishing venture including
hiring of membrs
o ATFT averred that it was the
maestros who hired the complainants
as checkers of volume of catch
 Workers filed a Complaint for Illegal
Dismissal
o Teng hired them without written
employment contract to serve as his
eyes and ears aboard the fishing
boats, classify fish caught
o Teng sometime in 2002 expressed
doubts as to the volume of fish
caught and thus dismissed them
VA: No EER existed
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CA: reversed: EER existed; pay monetary claims
Issues: Is there EER between Teng Fishing and
the Workers? – YES.
Held
EER EXISTS BETWEEN TENG AND WORKERS
MAESTROS ARE LABOR-ONLY CONTRACTORS
 Although the maestros hired the workers,
proof shows that there’s EER
o Company issued ID with Teng’s
signature
o Receive wages on a regular basis
with gradual increase in 13 years
o THERE WAS CONTROL
 Owned the tools and
equipment
 Directed how the workers
were to perform their jobs
as checkers
 Acted as Teng’s eyes and ears
 Workers did not have substantial capital
or investment
 They performed work necessary and
desirable to business
 Finding that Maestros are labor-only
contractor makes Teng the employer; EER
exists
DISMISSAL MUST COMPLY WITH SUBSTANTIAL AND
PROCEDURAL REQUISITES
 In this case, Teng summarily dismissed
them
13. Diamond Farms vs. Farms Agrarian Reform
Beneficiaries Multi-purpose Cooperative, January
13, 2016
Facts
 DFI owns original plantation (800 ha)
which was subject to compulsory
acquisition and distribution thru CARL
 But DAR granted DFI deferment privilege to
continue agri operations until 1998
 But due to marketing problems, DFI “lay-
follow” or closed areas of operation and
laid off its employees
 Laid off employees petitioned before the
DAR the cancellation of DFI’s deferment
privilege alleging it abandoned its area
of operations
 DAR recalled = compulsory acquisition and
distribution under the CARL
 To minimize losses, DFI offered to give up
its rights and interest over the original
plantation thru Voluntary Offer to Sell
 Pending cancellation of the deferment
privilege, awarded plantation turned over
to qualified ARBs who are the same farmers
who were working in the original
plantation
o Farmers then formed DARBMUPCO
(cooperative)
o Coop entered into a Banana
Production and Purchase Agreement
with DFI
 Coop grows; will be sold to
DFI only for 10 years
 Supplemental Agreement: DFI
will shoulder cost of
agricultural operation under
BPPA like packing operation
 Since Coop hampered by lack
of manpower, DFI engaged
service of respondent-
contractors who in turn
employed the complaining
workers
 Labor disputes happened among Coop, DFI
and respondent-contractors
1. 400 workers jointly employed by Coop and
DFI
- Med-Arbiter declared that Coop was the
employer
2. 300 workers filed case for underpayment of
wages, etc
CA: DFI is the true employer
Issues: Who is the employer of the complainant-
workers? -- DFI
Held
Respondent-Contractor involved in Labor-Only
Contracting
 GR: Contractor is presumed to be a labor-
only contractor, unless such contractor
overcomes the burden of proving that it
has the substantial capital, investment,
tools
 Contractor admitted the following:
o It was Commissioned and contracted
by DFI to recruit
o They had no adequate capital to
acquire purchase
o They were directly supervised and
managed by DFI esp on work
assignements and performance
targets
o Attendance time sheets prepared
submitted to DFi for payment of
wages
Finding that there was labor-only, DFI in effect
is the employer
 In labor-only contracting, it is the law
which creates an employer-employee
relationship between the principal and the
workers of the labor-only contractor.
14. Manila Memorial Park Cemetery vs. Luiz,
February 3, 2016
Facts
 Manila Memorial entered into a Contract of
Service with Ward Trading as Independent
Contractor
o Interment and exhumation services
o Complainant-workers were assigned
by Ward to Manila Memorial
 In 2007, workers filed Complaint for
Regularization and CBA benefits; amended
complaint to include illegal dismissal
o Despite denial of recognition of
Manila Memorial, complainants still
joined the Union
LA: no EER
NLRC: reversed; Ward is labor-only contractor
and agent of Manila Memorial
CA: affirmed NLRC decision
8
Issues: is there EER (which is the basis of
benefits)? – yes.
Held
WARD TRADING IN LABOR-ONLY CONTRACTING
 Manila Memorial entered into a Contract
Sevice with Ward Trading – a single
proprietorship owned by Emmanuel Mayor
Ward
o Closer look: does not have
substantial capital
 Contract indicates Manila
Memorial owns the equipment
– Sale of equipment provided
but Manila Memorial did not
prove that the sale pushed
through
 Manila Morial reserved the
right to rent all or any of
the contractor’s equipment in
the event Manila requires
the use of it
 Financial Statement: how can
Ward raise amount in such a
short time
o Ward subject to the control of
Manila Memorial
 Ward supervisor will conduct
regular inspection
 Ward will provide enough
manpower during peak
 BUT if MM finds work
unsatisfactory
o Also, Ward is not a registered
contractor thus there is a
presumption that it is engaged in
labor-only contracting

9
C. Classes of Employees
Labor Code: Articles 293, 295-296
Omnibus Rules: Book VI, Sections 5-6
TITLE I
Termination of Employment
ARTICLE 278. Coverage. — The provisions of this
Title shall apply to all establishments or
undertakings, whether for profit or not.
ARTIXLE 279. Security of tenure. — In case of
regular employment, the employer shall not
terminate the services of an employee except for
a just cause or when authorized by this Title.
An employee who is unjustly dismissed from work
shall be entitled to reinstatement without loss
of seniority rights and to his backwages
computed from the time his compensation was
withheld from him up to the time of his
reinstatement.
ARTICLE 280. Regular and casual employment. —
The provisions of written agreement to the
contrary notwithstanding and regardless of the
oral agreements of the parties, an employment
shall be deemed to be regular where the employee
has been engaged to perform activities which are
usually necessary or desirable in the usual
business or trade of the employer except where
the employment has been fixed for a specific
project or undertaking, the completion or
termination of which has been determined at the
time of the engagement of the employee or where
the work or service to be performed is seasonal
in nature and the employment is for the duration
of the season.
An employment shall be deemed to be casual if it
is not covered by the preceding paragraph:
Provided, That any employee who has rendered at
least one year of service, where the position no
longer exists at the time of reinstatement for
reasons not attributable to the fault of the
employer, the employee shall be entitled to
separation pay equivalent to at least one-month
salary or to one-month salary for every year of
service, whichever is higher, a fraction of at
least six months being considered as one whole
year. (Articles 278 to 280 and then Section 5,
these are what appeared in the official version)
SECTION 5. Regular and casual employment. — (a)
The provisions of written agreements to the
contrary notwithstanding and regardless of the
oral agreements of the parties, an employment
shall be considered to be regular employment for
purposes of Book VI of the Labor Code where the
employee has been engaged to perform activities
which are usually necessary or desirable in the
usual business or trade of the employer except
where the employment has been fixed for a
specific project or undertaking the completion
or termination of which has been determined at
the time of the engagement of the employee or
where the work or service to be performed is
seasonal in nature and the employment is for the
duration of the season.
(b) Employment shall be deemed as casual in
nature if it is not covered by the preceding
paragraph; Provided, That any employee who has
rendered at least one year of service, whether
such service is continuous or not, shall be
considered a regular employee with respect to
the activity in which he is employed and his
employment shall continue while such activity
exists.
(c) An employee who is allowed to work after a
probationary period shall be considered a
regular employee.
SECTION 6. Probationary employment. — (a) Where
the work for which an employee has been engaged
is learnable or apprenticeable in accordance
with the standards prescribed by the Department
of Labor, the probationary employment period of
the employee shall be limited to the authorized
learnership or apprenticeship period, whichever
is applicable.cralaw
(b) Where the work is neither learnable nor
apprenticeable, the probationary employment
period shall not exceed six (6) months reckoned
from the date the employee actually started
working.cralaw
(c) The services of an employee who has been
engaged on probationary basis may be terminated
only for a just cause or when authorized by
existing laws, or when he fails to qualify as a
regular employee in accordance with reasonable
standards prescribed by the employer.
(d) In all cases involving employees engaged on
probationary basis, the employer shall make
known to the employee the standards under which
he will qualify as a regular employee at the
time of his engagement.
CASES:
Probationary Employees
1. Abbott Laboratories v. Alcaraz, July 23,
2013, April 22, 2014
FACTS:
 PEARLIE ANN ALCARAZ filed this MR re SC
Decision
 SC found that CA committed an error in
holding that NLRC did not commit GAD when
NLRC ruled that she was a illegally
dismissed (bec NLRC said regular status)
o The SC ruled that her failure to
perform the duties made known to
her is a ground for her non-
regularization
 Abbott published before in a newspaper the
need for a REGULATORY AFFAIRS MANAGER with
job description
o Alcaraz submitted her application
o She was hired on a probationary
status for 6 months; she signed the
employment contract
o Organizational structure and her
job description was thereafter
emailed to her
10
 o She also underwent pre-employment
orientation an training program;
the procedure for evaluating the
performance of probationary
employees was also explained to her
 One evaluation system for
all
o She has worked for another pharma
company before and admitted to have
an extensive training and
background fit for the job
 The SC said she was a probationary
employee
o Attendant circumstances prove that
she was well aware of her duties
and that her failure to adequately
perform the same would lead to her
non-regularization and eventual
termination
ISSUE: Is Alcaraz a probationary employee thus
not illegally dismissed? – YES. Only
probationary; non-regularization led to her
termination
HELD
 Employee’s adequate performance of his
duties and responsibilities constitute the
inherent and implied standard for
regularization
o That if she was adequately informed
of her duties and she failed to
comply, she is subject to
termination
o ADEQUATE PERFORMANCE is NOT in all
cases measurable by quantitative
specification such as sales quota;
it is also qualitative assessment
o It is a management prerogative
o Not all position can be
quantitatively assessed like
lawyers, journalists, etc
 As in this case, her position entails
supervision of a particular department = a
managerial role
o Thus, when she was briefed of her
duties and responsibilities, it was
an IMPLIED STANDARD OF
REGULARIZATION
o The valid cause for termination =
failure to meet the standards
required for regularization
(a) did not manage her time
effectively;
(b) failed to gain the trust of her
staff and to build an effective
rapport with them;
(c) failed to train her staff
effectively; and
(d) was not able to obtain the
knowledge and ability to make sound
judgments on case processing and
article review which were necessary
for the proper performance of her
duties.
 QUANTUM OF PROOF for employer: Substantial
Evidence
o Amount of relevant evidence as a
reasonable mind might accept as
adequate to support a conclusion,
even if other minds, equally
reasonable, might conceivably opine
otherwise
CONCLUSION: FOR FAILURE TO MEET THE STANDARD FOR
REGULARIZATION, HER TERMINATION WAS JUSTIFIED
2. Philippine National Oil Company-Energy
Development Corporation v. Buenviaje, June
29, 2016
FACTS: PNOC-EDC hired Amelyn Buenviaje as
Assistant to the Chairman/President and CEO
Apostol
 Term: until June 30, 2004 or co-terminus,
whichever comes first
 PNOC created a new Marketing Division
which created new positions, including the
Marketing Division Manager which Buenviaje
assumed
 Then Apostol filed his COC as Governor of
Leyte YET continued to discharge function
as President of PNOC
o Buenviaje also continued her job as
assistant
 The New Pres of PNOC, Aquino, appointed
BUenviahe as Senior Manager for Marketing
Division; appointment provides:
o HR to emend her employment status
to regular status entitled to all
the rights and privileges
o Appointment is subject to the
confirmation by your immediate
superior based on your performance
during the NEXT 6 MONTHS
o Regular status is retroactive to
2001(for service credit and other
company benefits)
o Buenviaje affixed her signature
therein
 For the performance appraisal:
o First week = satisfactory grade of
three
o Second = unsatisfactory grade of
four
o Thus, the VP for Corp Affairs
Guerzon informed her in writing
that she did not qualify for
regular employement; non-
confirmation of appointment and her
separation from the company
 Thus, Buenviaje filed a complaint for
illegal dismissal, et al
LA: she’s regular employee; dismissal without
basis thus illegal
 Regular because appointment letter clearly
says so
 That the confirmation clause must be
resolved against PNOC
 PNOC failed to prove reasonable standards
were explained to Buenviaje; that the said
standards were only discussed with her
more than a month after her actual
appointment
 Only ground to dismiss a regular employee:
282 and 283
NLRC: affirmed; she is a regular employee
 Terms of appointment grants her regular
status
11
  That she was already performing the job
for 6 months before being formally
appointed to the posision
 BUT NOT ILLEGALLY DISMISSED BEC NO
SECURITY OF TENNURE (bec appointment was
subject to confirmation)
o Only upon confirmation would she
enjoy security
CA: illegally dismissed
ISSUE: Is Buenviaje a permanent employee? – YES.
Thus, illegally dismissed
HELD: her position performs activities that are
usually necessary and desirable to the business
of PNOC; thus, regular employee
 An employee’s (either permanent or on
probation) has right to security of tenure
immediately from the moment of hiring
o Permanent – dismissed only on just
or authorized cause
o Probationary – dismissed for a just
or authorized cause OR when he
fails to qualify as a regular
employee in accordance with
reasonable standards made known to
him by the employer at the time of
his engagement
 The last criterion for
Probationary Employee is a
balance bet right of
employee and prerogative of
employer to choose who will
be regularized
 Employer has the right to
set or fix probationary
period within which it may
test employee’s conduct
 In this case, PNOC exercised the
prerogative to hire her as permanent RIGHT
FROM THE START (on her appointment) –
wherein she was informed of the change in
her status from co-term to regular and
shall be retroactive to July 1, 2001
o The intent is clear notwithstanding
the clause of “subject to
confirmation by her immediate
superior;” the clause did not make
her regularization conditional but
only effectively informed her that
her work performance will be
evaluated
o There was no ambiguity in the
appointment letter; even if there
was, it must be resolved in favor
of the employee
 A PROBATIONARY EMPLOYEE is defined as one
who is on trial by an employer during
which the employer determines whether or
not he is qualified for permanent
employment
o Cannot exceed 6 months; otherwise,
shall be considered a regular
employee
o Must be informed of reasonable
standards that shall be sued as
basis for her regularization at the
time of his engagement; failure to
do so makes the employee a regular
employee
 The job description is just ONE OF the
attendant circumstance to inform of the
performance standard
o It answers what duties does the
position entail rather than how
would the employer guage the
performance of the probbie employee
THUS, SHE WAS ILLEGALLY DISMISSED
 A Probationary Employee also enjoys
security of tenure although not on the
same plane as that of a permanent
 In dismissal of Probationary Employee,
there is NO NEED for notice and hearing
but due process must still be made
o Inform of reasonable standards
expected of him during probationary
period AT THE TIME of his
engagement
o Serving him a WRITTEN NOTICE within
a reasonable time from the
effective date of termination
 In this case, unsatisfactory rating can be
a just cause for dismissal only if it
amounts to gross and habitual neglect of
duties
CONCLUSION: she was a regular employee;
illegally dismissed
3. Umali v. Hobbywing Solutions, Inc., March
14, 2018
FACTS: MARIA CARMELA UMALI was hired as a
Pitboss Supervisor OF HOBBYWING SOLUTIONS INC,
an online casino gaming establishment
 Her duties and responsibilities: supervise
online casino dealers and operations of
the entire gaming area or studio
 She never signed any employment contract
before the commencement of her service but
regularly received her salary every month
 7 months after being hired, she was asked
to sign 2 contracts
o First was for a period of 5 months
o Second was for period of 3 months
 Then, she was informed that her employment
was already terminated; told to wait
whether she will be rehired or
regularized; asked to sign exit clearance
and was no longer allowed to work
 Thus, she filed a complaint for illegal
dismissal
o Employer said it was Umali who did
not accept the offer to continue
bec her best friend was not
retained by the company
LA: dismissed the complaint for lack of merit
 Employee Umali failed to substantiate her
claim that she was dismissed from
employment that she only opted not to
continue with her work out of her own
volition
NLRC: illegally dismissed
 She attained a regular status by operation
of law when allowed to work beyond the
probationary period of employment; thus,
enjoyed security of tenure
12
CA: reversed NLRC decision
 Employee Umali failed to prove fact of
dismissal; there was no letter of
termination but only exit clearance form
which she personally processed = severance
was her choice
ISSUE: Was Umali a regular employee? – YES.
HELD: there is a fact of dismissal
 She was priorly hired on Probation
o Although the time when her
probationary status commenced was
in dispute
 Umali said 7 months after
being hired
 Employer said from the start
o But proof shows that for the first
contract of her probationary job,
the contract was signed SEVEN
MONTHS after the commencement of
the job
 That the extension contract
was signed months after she
has started working
 THUS, the contracts were
made to create a semblance
of legality in the
employment and severance
 That from June 19, 2012 until feb 18, 2013
– she already attained regular status
protected from arbitrary termination
 The extension of probationary period –
which was in one case held valid by the
court to allow employee to improve work –
finds no application in this case:
(1) there was no evaluation upon the
expiration of the period of probationary
employment;
(2) the supposed extension of the
probationary period was made after the
lapse of the original period agreed by the
parties.
 In this case, she was evaluated for the
June 2012-Nov 2013 probation only on Feb
2013, where she had 88.3% rating
o At the time of evaluation, the
original period of probation
already lapsed on Nov 2012
o Thus, no reason to extend the
probation period bec she had
satisfactory rating
 Actually, the SC held in some cases that
despite the extension of the probationary
period, the employee may attain regular
status already
o EXTENSION OF THE PERIOD IS THE EXN.
 Employer has the burden of
proof the show that the
extension is warranted
 Without valid ground, the
extension shall be taken
against the employer esp if
used to circumvent
regularization
 In this case, there was no valid extension
o The period has lapsed long before
the company thought of extending
the same
o Also, there was no justifiable
reason
 Thus, having rendered service after the
lapse of probationary period, the employee
attained regular status
CONCLUSION: REGULAR EMPLOYEE THUS ILLEGALLY
DISMISSED
Regular and Casual Employees
4. Kimberly Clark Phils. v. Secretary,
November 23, 2007
FACTS: the CBA between Kimberly and UKCEO
expired
 Within the freedom period, Kilusan-Olalia,
a newly formed labor union challenged the
incumbency of UKCEO by filing a Petition
for Certification Election with DOLE
o Certification election was
conducted with UKCEO winning by 20
votes
o 64 votes were not counted bec
allegedly cast by casual workers
whose regularization in question
 During the Pendency of the case
challenging the election, Kimberly
dismissed several employees
 SC in that case decided to count the 64
votes thus making Kilusan the duly elected
certified bargaining representative of the
regular employees of Kimberly
o Kilusan filed a Motion for
Execution of the SC decision with
DOLE
o Cannot be fully executed bec not
all 64 employees could be found;
only 22 were benefited
 The Bureau of Working Conditions found 47
of the 76 complainants were entitled to be
regularized
o This, Kimberly filed an MR bec not
all rendered at least 1 year of
service
 Denied for lack of merit
 Kimberly appealed before the CA, claiming
that those who were filed due to illegal
strike should not be awarded
regularization differentials
o CA dismissed for failure to show
GAD
ISSUE: Are the concerned employees regular thus
entitled to regularization differentials? – YES.
Regular status effective on hiring date.
HELD: There are two kinds of Regular Employees:
1. those who are engaged to perform
activities which are USUALLY NECESSARY OR
DESIRABLE in the usual business or trade
of the employer; and
2. those who have RENDERED AT LEAST ONE YEAR
OF SERVICE, whether continuous or broken,
with respect to the activity in which they
are employed.
 The employees concerned here fall under
the second
o They are mechanics, electricians,
machinists, etc who have been
employed for more than 1 year at
13
 the time of filing the petition for
certification election by Kilusan
 Bec of the length of service, they have
become regular by operation of law
o Status of regular employment
attaches to casual worker on the
day immediately after the end of
his first year of service
o Becomes regular after 1 year with
respect to the activity in which he
is employed
o THE LAW DOES NOT PROVIDE THE
QUALIFICATION THAT THE EMPLOYEE
MUST FIRST BE ISSUED A REGULAR
APPOINTMENT
 Since they become regular WITH RESPECT TO
THE ACTIVITY THEY WERE IMPLOYED, the
reckoning date for determining his
regularization is his HIRING DATE
o Not the day after the lapse of one
year
o Bec they attained regular status by
operation of law
CONCLUSION: the reckoning point of
regularization if by operation of law is on the
Hiring Date
5. Rowell Industrial Corporation v. CA, March
7, 2007
FACTS: Joel Taripe was hired by Rowell
Industrial as a rectangular power press machine
operator
 Hiring date: Nov. 8, 1999
o Was made to sign a contract that
was never explained to him and was
made as a condition for his hiring;
no copy given to him
 On Feb 15, 2000, he filed a Complaint for
regularization AND indemnity for severed
finger; then illegal dismissal
o While the case was pending, he was
summarily dismissed although he
never violated any rules
 For its part, RIC said Taripe was a
contractual employee hired to meet the
demand brought by the Christmas season
o That on Mar 6, 2000, his contract
expired
LA: contractual employee; Taripe complain
dismissed
NLRC: reversed; regular employee; illegally
dismissed
CA: affirmed NLRC decision
ISSUE: Is Taripe a regular employee? – YES.
HELD: Art 280 was applied
 The contract saying that Taripe was hired
as contractual employee for five months
only cannot prevail over the undisputed
fact that he was hired to perform the
function that is necessary or desirable in
the employer’s business
o His work in line with the trade of
manufacturing of tin cans
 ART 280 CLASSIFIES EMPLOYEES INTO 3
CATEGORIES:
(1) REGULAR EMPLOYEES or those whose work
is necessary or desirable to the usual
business of the employer;
(1) regular employees by nature of
work; and
those employees who perform a
particular activity which is
necessary or desirable in the
usual business or trade of
the employer, regardless of
their length of service
(2) regular employees by years of
service.
those employees who have
been performing the job,
regardless of the nature
thereof, for at least a
year.
(2) PROJECT EMPLOYEES or those whose
employment has been fixed for a specific
project or undertaking, the completion or
termination of which has been determined
at the time of the engagement of the
employee or where the work or services to
be performed is seasonal in nature and the
employment is for the duration of the
season; and
(3) CASUAL EMPLOYEES or those who are
neither regular nor project employees.
 But!!! Despite 280, even though employee
is made to perform activities necessary or
desirable to the business, it does not
prohibit parties from agreeing on a period
of time for the performance of such
activities
(1) that the fixed period of employment
was knowingly and voluntarily agreed
upon by the parties, without any force,
duress or improper pressure being
brought to bear upon the employee and
absent any other circumstances
vitiating his consent; or
(2) it satisfactorily appears that the
employer and employee dealt with each
other on more or less equal terms with
no moral dominance whatever being
exercised by the former on the latter.
o What it prevents is the
circumvention of the law thru
arbitrary dismissal
 In the case at bar, Taripe is a Regular
Employee because under the contract, he
shall be contractual for 5 months UNLESS
said contract is renewed by mutual consent
o But it was never conveyed to him
that his employment was for a
specific undertaking only; that it
was for the Christmas Season only
o What the contract said is that it
was for a period of 5 months – NOT
SEASONAL IN NATURE
o It was a Contract of Adhesion =
bargaining parties are not of equal
footing
 The Contract for 5 months was a
circumvention of the law; the work
performed was necessary to the business
14
  Thus, he is a regular employee bec he does
not fall in any of the exception in 280
(Specific Project or Seasonal)
CONCLUSION: PURSUANT TO 280, WHEN EMPLOYEE DOES
NOT FALL ON THE EXCEPTION, HE IS A REGULAR
EMPLOYEE
6. PLDT v. Arceo, May 5, 2006
FACTS: Employee Rosalina Arceo applied as
Telephone Operator with Employer PLDT-Tarlac
 She failed the pre-employment qualifying
examination
 Thus, she requested to be allowed to work
without pay
 PLDT agreed and assigned her to its
commercial section; made her do tasks like
photocopying docs
 After two weeks, PLDT decided to pay her
min wage
 Thereafter, PLDT found no further need for
Arceo’s services and decided to fire her
o But Arceo’s supervisor recommended
that she be put for an OJT on minor
traffic work
o When she failed to assimilate
traffic procedure, PLDT transferred
her to auxiliary services, a minor
facility
 She once again took two more pre-
qualifying exams for the position of
telephone operator and failed again
 Finally, PLDT discharged her from
employment in 1991
 Thus, Arceo filed a case for illegal
dismissal
 LA: ordered PLDT to reinstate her to her
former or equivalent position
 Assigned to photocopy documents and sort
out bills
 After three years from reinstatement,
Arceo filed a complaint for unfair labor
practice, etc bec she had not been
regularized since then
 LA: Arceo qualified to be regularized
 NLRC: affirmed LA decision
 CA: Affirmed
ISSUE: Is Arceo eligible to become a regular
employee? – YES.
HELD: SHE IS QUALIFIED TO BE REGULAR PURSUANT TO
280
1. Usually necessary and desirable
 photocopying documents, sorting out
telephone bills and disconnection notices,
was certainly "necessary or desirable" to
the business of PLDT
2. Casual Employee rendering at least 1 year
of service
 Granting her work is not under 1, she has
rendered service for more than one year as
casual employee
PLDT: POSITION HAS BEEN ABOLISHED
 Unmeritorious. It does not preclude
Arceo’s right to become a regular employee
 The order was “former or equivalent
position” thus even when the original
position was abolished, PLDT can still
regularize her in equivalent position
RECKONING POINT: date of reinstatement
DOCTRINE: even if the nature of the work does
not squarely fit #1 criterion in 280, so long as
employee has rendered more than 1 year in
service, employee is eligible to be regularized
7. ABS-CBN Broadcasting Corp. v. Nazareno
REPEATED CASE. Second case under first topic
8. Fulache v. ABS CBN, January 21, 2010
REPEATED CASE
9. Fuji Television v. Espiritu, December 3,
2014
REPEATED CASE
 a fixed term did not automatically mean
that she could never be a regular employee
which is precisely what Article 280 of the
Labor Code sought to avoid.
 The repeated renewal of Espiritu's
contract coupled with the nature of work
performed pointed to the regular nature of
her employment despite contrary claims of
Fuji and the nomenclature of the contract.
 the repeated engagement under contract of
hire is indicative of the necessity and
desirability of the [employee's] work in
respondent's business and where employee's
contract has been continuously extended or
renewed to the same position, with the
same duties and remained in the employ
without any interruption, then such
employee is a regular employee.
10. Pier 8 Arrastre & Stevedoring Services v.
Boclot,
FACTS: Employee Jeff Boclot was hired by PASSI
to perform the functions of a stevedore starting
Sept. 20, 1999
 Duration: 36 months, 228.5 days (until
June 2003)
 On April 15, 2000, PH Ports Authority
seized the facilites and took over the
operations of PASSI through Special
Takeover Unit, absorbing PASSI workers and
relievers
 But thru CA decision, PASSI was able to
regain control of its arrastre and
stevedoring operations on Mar 12, 2001
 On May 9, 2003, Boclot filed a complaint
for Regularization
o That he was hired in Oct 1999
o Issued ID, PPA Pass and SSS
documents
o Contend that he has been regular
since 2000 since it was 6
continuous months
 PASSI said no, he remained casual
o Relied on the CBA provision
o That he was merely hired as a
reliever stevedore and thus could
not become a regular employee
LA: dismissed Employee’s complaint
15
  Mere extra worker who is called upon to
work at the peir in the absence of.
Regular stevedores on certain shift
 280 and 281 inapplicable
o Not a probationary nor casual but
mere reliever
o That only had a total of 228.5 days
– short of 365
NLRC: regular
 Term “reliever” but work on rotation basis
just like the regular stevedores
CA: Affirmed NLRC ruling
 What determines the casualness or
regularity is the NATURE OF THE JOB and
not the contract
 Even though worked only for 228.5 days out
of 36 months, his service was still
utilized for the operation of business
ISSUE: Did Boclot attain regular status as PASSI
employee? – YES.
HELD: Regular Employee pursuant to the CBA
 As held in De Leon vs NLRC, the Primary
Standard of determining a regular
employment is the
1. REASONABLE CONNECTION between the
particular activity performed by the
employee in relation to the usual
business or trade of the employer
o Nature of work performed and its
relation to the scheme of the
particular business or trade in its
entirety
2. Performing the job for AT LEAST ONE
YEAR, even if not continuous or merely
intermittent
o The repeated and continuing need
for its performance is a sufficient
evidence of necessity if not
indispensability of that act to the
business
 The SC took judicial notice that the
nature of the business requires relievers
for smooth operation
 In this case, Boclot only worked for 228.5
days in 36 = 6.34 days a month from Sept
1999 to June 2003
o That he could only be given work if
a regular employee was absent
 BUT!!! By virtue of 280, all employees not
deemed regular, project and seasonal
employees are deemed casual
o Since he is casual, the law
provides that if he has rendered at
least one year of service,
continuous or broken, he shall be
considered regular
o “at least one year of service” = 12
months whether continuous or broken
reckoned from the date the employee
started working including
authorized absences and paid
regular holiday
 EXN: contract provides for
less than 12 months; that
period shall be considered
one year nonetheless
 In the case at bar, 228.5 days is not
considered one year BUT rules may be bent
if the court sees the imposition of period
as a preclusion to acquire tenurial
security
o It struck down such arrangement
 Boclot is a regular employee pursuant to
the CBA wherein the company agrees to
convert regular status to all incumbent
probationary or casual employees who
served for an accumulated service term of
NOT LESS THAN 6 MONTHS FROM HIS ORIGINAL
DATE OF HIRING
o Skilled workers after 3 months
o Semi-skilled after 4 months
o Non-skilled after 6 months
 Also, by virtue of the Union-shop
condition agreed by PASSI as condition of
employment:
o Nonmembers may be hired but he is
required to become a union member
after a certain period in order to
retain employment
CONCLUSION: considered regular employee after 6
months of accumulated service(conversion to
regular status) BUT not entitled to avail
service incentives bec still not rendered 1 year
of service
DOCTRINE: an employee may become regularized by
virtue of the provisions of the CBA
11. The Peninsula Manila v. Alipio, June 17,
2008
FACTS: COMPLAINANT ELAINE M. ALIPIO was hired by
The Peninsula Manila as a reliver nurse since
Dec. 11, 1993
 Hotel operates a clinic 24 hours a day and
employees three regular nurses with 8-hour
shift each
 She has been performing the job of a
regular nurse
 After rendering 4 years of service, Alipio
inquired why she was not receiving her
13th month pay
o She was asked to submit a Summary
of her Tour of Duty for 1997
o After submission, she was given her
13th month pay for 1997
o But no 13th month pay for 1993-1996
 Thereafter, HR Manager Santos met with
Alipio
o Alipio was asked re her payslip
vouchers
o Alipio said she made copies of such
bec Peninsula does not provide her
with copies
o Santos was peeved by her answer
thus Santos advised Alipio not to
report to work anymore
 Thus, Alipio filed a complaint for illegal
dismissal
LA: dismissed but ordered Peninsula to pay
separation pay
NLRC: affirmed LA but deleted the awarding of
separation pay
CA: reversed; Alipio is a regular staff nurse
16
ISSUE: Has Alipio attained regular status? –
YES.
HELD: ALIPIO HAS GAINED REGULAR STATUS
 Her services were engaged by the hotel
intermittently from 1993 to 1998
o Job as reliever nurse was necessary
and desirable in the hotel’s
business of providing comfortable
accommodation to its guests
o In any case, she has rendered more
than one year of intermittent
service thus regular as early as
Dec .12, 1994
 Per hotel’s own Certification dated April
22, 1997, she was already a “Regular Staff
Nurse” until her dismissal
 THUS, she can only be relieved following
procedural reqs:
1. Causes provided in 282
2. Must be given an opportunity to be
heard and to defend himself
IS OBTAINING COPIES OF PAYSLIP A SERIOUS
MISCONDUCT?
 MISCONDUCT – forbidden act or dereliction
of duty
o Wilfull in character and implies a
wrongful intent not mere error in
judgment
o Needs to be serious = grave not
merely trivial
 Obtaining copies of payslip is not a
misconduct
NOT AFFORDED DUE PROCESS
 Was told right during the meeting that she
will be dismissed; no opportunity to be
heard and defend self
12. Samonte v. La Salle Greenhills, Inc.,
February 10, 2016
FACTS: Petitioners Samonte, et al were hired by
LSGI to comprise its Health Service Team
 They signed a Contract of Retainer for the
period of a specific academic calendar
with provisions:
o Retainer is only temporary; limited
to project or undertaking or to the
job/task assigned
o Retainer shall AUTOMATICALLY cease
after expiration of period without
need of notice
o Prior to expiration, LSGI may, upon
written notice, terminate this
contract if fails to perform job to
the satisfaction of LSGI and other
just cause
 After 15 years of continuous renewal every
academic year, (last was 2003-2004),
Samonte, et al were informed that their
contracts will no longer be renewed
because LSGI decided to hire 2 full time
doctors and dentists
 They filed a case for illegal dismissals
o Duty for 9 hours a day
o Attend staff meetings and
participate in the
formulation/adoption of policies
and programs
o Participate in school programs
o Participate in Medical/Dental
Missions
o Formulate Health Services Unit
Manual
 LSGI said they were Independent
Cotnractors, applying the case of Sonza vs
ABSCBN
o Does not have control over means
and methods
LA: they were Independent Contractor but for
compassionate social justice awarded separation
pay
NLRC: fixed-period employees, not regular
employees
CA: not regular employees despite receiving
benefits such as OT pay, allowances, Christmas
bonus
ISSUE: Are the complainants regular employees? –
YES applying Fuji
HELD: in some cases, SC ruled that medical
professionals are Independent Contractors, but
such ruling is not applied here.
 The nomenclature of contracts does not
define the employment status
o Such is defined by LAW and not what
the parties say it should be
 a fixed-term contract is an employment
contract, the repeated renewals of which
make for a regular employment
 Applying Fuji Network, the repeated
renewal made them regular employees
o Uniform one-page contracts of
retainer was prepared by LSGI alone
 Not of equal footing
 Vaguely shows the control of
LSGI
(1) repeated renewal of petitioners'
contract for fifteen years, interrupted
only by the close of the school year;
(2) the necessity of the work performed by
petitioners as school physicians and
dentists; and
(3) the existence of LSGI's power of
control over the means and method pursued
by petitioners in the performance of their
job
13. Basan v. Coca-cola, February 4, 2015
FACTS: Complainants Basan et al filed a case for
illegal dismissal against Coke alleging they
were dismissed without just cause and prior
written notice
 Coke countered that the were merely
Temporary Route Helpers acting as
substitutes for absent regular route
helpers for a fixed period
LA: regular employees
 Performing activities necessary and
desirable to the usual business of Coke
for more than the period for
regularization
NLRC: affirmed LA decision
 No showing that they were hired as project
or seasonal employees
17
  Also not Probationary Employees bec they
have already rendered work for more than 6
months
While case was pending in CA upon appeal of
Coke, a Motion for the Issuance of a Writ of
Execution of LA decision was filed – granted
CA: FIXED-TERM EMPLOYEES ONLY
 No showing that the period was used to
circumvent la
ISSUE: are the complainants regular employees? –
YES.
HELD: SC applied the ccase of Magsalin:
 the NATURE OF WORK of route helpers hired
by Coca Cola Bottlers Philippines, Inc. is
necessary and desirable in its usual
business or trade thereby qualifying them
as regular employees
 TEST: reasonable connection bet particular
activity performed by the employee in
relation to the usual business or trade of
the employer
COKE’S ARGUMENT THAT THEIR WORK IS POST-
PRODUCTION
 Unmeritorious. The nature of work and its
necessity and desirability must be seen
from a perspective of the business or
trade in its entirety and not on confined
scope
 REPEATED REHIRING – continuing need for
their service
THE PERNICIOUS PRACTICE OF ENGAGING FIXED-TERM
EMPLOYEES MOCKS THE LAW
 They are regular employees pursuant to Art
280:
(1) regular employees by nature of work;
and
- employees who perform a particular
activity which is necessary or
desirable in the usual business or
trade of the employer, regardless of
their length of service
(2) regular employees by years of service.
- employees who have been performing the
job, regardless of the nature thereof,
for at least a year.
 In the case at bar, the complainants fall
under the first
o As route helpers who are engaged in
the service of loading and
unloading softdrink products of
respondent company to its various
delivery points, which is necessary
or desirable in its usual business
or trade
o So despite rendering service for
less than 1 year, they are still
considered regular employees
 The requisites to have a valid fixed-term
employment are not present in this case.
Thus, agreement on period invalid
1) The fixed period of employment was
knowingly and voluntarily agreed upon
by the parties without any force,
duress, or improper pressure being
brought to bear upon the employee and
absent any other circumstances
vitiating his consent; or
2) It satisfactorily appears that the
employer and the employee dealt with
each other on more or less equal terms
with no moral dominance exercised by
the former or the latter.
 Hence, in the absence of proof showing
that petitioners knowingly agreed upon a
fixed term of employment, We uphold the
findings of the Labor Arbiter and the NLRC
and so rule that petitioners are, indeed,
regular employees, entitled to security of
tenure.
14. Gadia v. Sykes Asia, January 28, 2015
FACTS: Petitioners Gadia, et al were hired by
Sykes (a BPO Company) for its Alltel Project as
CSR, Team Leaders, trainers
 Thereafter, Alltel sent two letters to
Sykes termining all support services
provided by Sykes
 Thus, Sykes sent Petitioners end-of-life
notices informing them of their dismissal
from employment due to termination of the
Alltel Project
 Complainants thus filed a case for illegal
dismissal
 In response, Sykes said they were not
regular employees but mere Project-based
employees
LA: dismissed complaint; mere project-based
employees
NLRC: regular but were validly terminated due to
redundancy
 Despite informing them of the co-terminus
nature of employment, the end of
employment was not determined nor made
known at the time of hiring
CA: reversed; project-based employees
ISSUE: Are the Petitioners regular employees? –
NO. Project-based
HELD: SC applied 294 in defining project-based
employees
 Unlike regular, project-based employees
may be terminated upon completion of the
project
 TEST: whether or not the employees were
assigned to carry out a "specific project
or undertaking," the duration (and scope)
of which were specified AT THE TIME they
were engaged for that project.
 PROJECT COULD BE:
(1) a particular job or undertaking that
is within the regular or usual business of
the employer company, but which is
distinct and separate, and identifiable as
such, from the other undertakings of the
company; or
(2) a particular job or undertaking that
is not within the regular business of the
corporation.
 To be a valid defense, employer must only
prove:
1. Duration and scope of the
employment was specified AT THE
TIME they were engaged AND
18
 2. There was indeed a Project  They had been under the employ of the
 In the case at bar, facts shows that Sykes Petitioner for some years already
adequately informed the employees of their  Thus, when they were shown the New
employment status at the time of their Contract providing that their employment
engagement (thru contract) will be for 5 months subject to renewal
DURATION - begins and ends at determined or upon terms set by proprietor-petitioner,
determinable times the workers refused to sign it and
o capable of being determined or consequently filed for the money claims
fixed  That the illegal dismissal charge was
 in the case at bar, they were adequately added when Proprietor asked them not to
informed that their employment was made in report for work anymore after they refused
connection with the Alltel Project = to sign the new terms of the contract
“project-based and as such is co-terminus WORKERS ARE REGULAR EMPLOYEES
to the project”  The task they perform are necessary and
 that their security of tenure only lasts desirable in the usual business of
as long as the Alltel Project was petitioner
subsisting  They also rendered service from 1998 to
2007
15. A. Nate Casket Maker v. Arango, October 5,  There is also power of control over the
2016 workers
FACTS: Respondents Arango et al were hired by A. Since they are regular employees illegally
Nat Casket as carpenters, mascilladors and dismissed, they security of tenure; remedy is
painter in the casket-making business either reinstatement or pay separation pay AND
 From 1998 to 2007 OT PAY ET AL
 Petitioner-proprietor claims the
complainants were “pakyaw workers” (task
basis) who were paid per job order
 They are stay-on workers with free board
and lodging but the would always drink,
quarrel with each other thus they could
not accomplish the job orders
 Hence, Nate was forced to contract out to
other workers for the job to be finished
o Their pakyaw system will be changed
to contractual basis and would
provide vacation leave and sick
leave pay and other benefits given
to regular employees
 Complainants’ version” no OT Pay and other
benefits
o They were made to sign contract of
employment
 Contractual for 5 months
 Renewal will be case-to-case
basis
 right to terminate reserved
subject to efficiency and
performance
 wage shall be on a piece-
rate basis
 follow schedule
 no monetary benefits
afforded to regular
 they refused to sign the contract thus
asked to leave and was told that their
employment was terminated
 Thus, they filed a case for illegal
dismissal
LA: Dismissed for lack of merit
NLRC: affirmed
 No substantial evidence presented to show
petitioners terminated their employment
CA: reversed; they were illegally dismissed

ISSUE: Are pakyaw workers considered regular

workers? – YES.
HELD:
19
Project Employees
1. Poseidon Fishing v. NLRC, February 20,
2006
FACTS: Poseidon Fishing (fishing company) hired
worker Jimmy Estoquia as a one of its boat crew
o Jan 1988 – Chief Mate
o Promoted as Boat Captain
o 1999 – demoted without reason to
Radio Optr
 Monitored daily activities
in the office, recorded in
the duty logbook the names
of callers and time of their
calls
 In 2000, he failed to record a 7:25 am
call but he was able to record the same in
the other logbook
o Upon checking the two logbooks, he
recorded it in the first one but
after the 7:30 am call
 The next day, Manager Terry de Jesus
detected the error and asked Estoquia to
prepare an incident report to explain the
oversight
 At 2pm ON THAT SAME DAY, Estoquia was
summoned by the company secretary to get
his separation pay for P55k
 Thus, Estaquiao filed a complaint for
illegal dismissal
o Terminated without just cause and
due process
 Poseidon claims that it was made clear to
him that he was employed on a “por viaje”
or per trip basis – that his employment
would end at the end of the trip for which
he was hired; thus, not entitled to the
money claims and separation pay
LA: ILLEGALLY DISMISSED
 Even if casual at first, he attained
regular sttus
NLRC: affirmed LA decision
CA: affirmed
ISSUE: Was he a regular employee at the time his
employment was terminated on July 4, 2000? –
YES.
HELD: Estaquiao is a regular employee at the
time of separation
 The Brent Case involving an Athletic
Director with 5-year contract is NOT
applicable here
o In Brent, it was discussed that
there are some employment with
contract – neither seasonal nor
project based – but for a fixed
term like overseas employment,
appointment as dean, etc
 BRENT TEST: if from the circumstances it
is apparent that periods have been imposed
to preclude acquisition of tenurial
security by the employee, they should be
disregarded for being contrary to public
policy
o That indication of that valid fixed
term must rest upon some aspect of
the agreement OTHER THAN the mere
specification of a fixed term of
the employment agreement
o Otherwise, that agreement will be
struck down for circumventing labor
laws
 In the case at bar, the contract indicates
a clear objective: frustrate the security
of tenure of the worker
o Worker has been with the company
for 12 years
o His job was directly related to the
deep-sea fishing business of the
company
 Necessary and important to
the business
o Also, unlike Brent, the period of
the contract was not fixed and
clearly stated – it was vague and
did not specify the actual date of
period
 Nothing in the contract says
it was for casual, seasonal
or project
 “Pagdating” was only placed
as to merely indicate the
possible date of arrival of
the vessel and not indicated
the status of the employment
o The exception in Art 280 does not
apply bec the contract is unclear
and uncertain – it does not specify
the duration
o Also, worker has been repeatedly
hired in various capacities =
necessity and indispensability of
the service to the business or
trade
 On the issue of non-exclusivity to work in
the company
o Disputed by worker when he showed
his payroll from May-Oct 1988 and
SSS Employees contributions as of
2000 = prove 12 years
HE IS NOT A SEASONAL EMPLOYEE (claimed that
deep-sea fishing is a seasonal industry)
 activity of catching fish is a continuous
process and could hardly be considered as
seasonal in nature
 PROJECT EMPLOYEES are defined as:
(1) for a specific project or
undertaking, and
(2) the completion or termination
of such project has been determined
at the time of the engagement of
the employee
o TEST: whether or not the "project
employees" were assigned to carry
out a "specific project or
undertaking," the duration and
scope of which were specified at
the time the employees were engaged
for that project
o In the case at bar, worker was not
informed that he will be assigned
to a specific project or
undertaking nor informed of the
duration and scope AT THE TIME of
his engagement
20
  PROJECT EMPLOYEES CAN BE REGULAR
EMPLOYEES:
(1) continuously, as opposed to
intermittently, re-hired by the
same employer for the same tasks or
nature of tasks; and
(2) these tasks are vital,
necessary and indispensable to the
usual business or trade of the
employer, then the employee must be
deemed a regular employee.
DOCTRINE: to be a project employee, agreement
must satisfy the test; but even so, a project
employee can be a regular employee
2. Filipinas Pre-fabricated Building Systems
(FilSystems) v. Puente, March 18, 2005
FACTS: Worker Roger Puente claims he started
working with Filsystem (construction) on June
12, 1989
 Initially hired as an installer and then
promoted as mobile crane operator
o His work was NOT dependent on the
completion or termination of any
project
o He has been with the company –
continuous and without interruption
– for 10 years
o But in 1999, he was terminated bec
he was only a project employee
 Company averred that he was only a project
employee
o Assigned to various project
assignments
o That after completion of each
project assignment, his employment
was terminated and the same was
correspondingly reported to the
DOLE
LA: dismissed the illegal dismissal case
NLRC: affirmed
CA: reversed
 Contract did not have a specified duration
for each project
 Not assigned in the project sites but at
the COMPANY PLANT to attend to maintenance
work of mobile cranes for 10 years
ISSUE: Is the worker a project employee? – YES.
HELD:
 DO NO. 19 S. 1993 Indicator of Project
Employment:
(a) The duration of the
specific/identified undertaking for which
the worker is engaged is reasonably
determinable.
(b) Such duration, as well as the specific
work/service to be performed, is defined
in an employment agreement and is made
clear to the employee at the time of
hiring.
(c) The work/service performed by the
employee is in connection with the
particular project/undertaking for which
he is engaged.
(d) The employee, while not employed and
awaiting engagement, is free to offer his
services to any other employer.
(e) The termination of his employment in
the particular project/undertaking is
reported to the Department of Labor and
Employment (DOLE) Regional Office having
jurisdiction over the workplace within 30
days following the date of his separation
from work, using the prescribed form on
employees'
terminations/dismissals/suspensions.
(f) An undertaking in the employment
contract by the employer to pay completion
bonus to the project employee as practiced
by most construction companies.
 DEFINITION OF PROJECT EMPLOYMENT:
o "employment has been fixed for a
specific project or undertaking the
completion or termination of which
has been determined at the time of
the engagement of the employee or
where the work or services to be
performed is seasonal in nature and
the employment is for the duration
of the season."
o In Consunji, it was held that the
duration is not the factor
controlling but WON the employment
was fixed for a specific project or
undertaking – determined at the
time of engagement
 In the case at bar, the Contract attests
that worker was hired for specific
projects – coterminous with the completion
of the projects for which he was hired
o Contract EXPRESSLY provided such
o Also, Company regularly submitted
reports to DOLE of the termination
of services of project workers –
confirms that he was a project
employee
 Proofs considered by the Court that indeed
he was a Project Employee:
o Place of work: Project to project
(project site)
o No certain day BUT pursuant to the
DO, “day certain” must only mean
“that which must necessarily come
although it may not be known
EXACTLY when
 That despite rendering more
than one year, he cannot
still be considered regular
o That he was assigned to various
projects did not preclude him to be
considered project employee
 This is clear in the
exception in 280
ON REINSTATEMENT
 The requisite in the Labor Code is that
worker be informed the actual basis of the
dismissal
o Here, it was clear that he was
terminated because of the
completion of the project
o He was dismissed on Oct 1, 1999 –
it was not clear whether the
project was completed on this day
 Without a valid cause, the employment of
project employees cannot be terminated
21
 prior to expiration. Otherwise, they shall
be entitled to reinstatement with full
back wages. However, if the project or
work is completed during the pendency of
the ensuing suit for illegal dismissal,
the employees shall be entitled only to
full back wages from the date of the
termination of their employment until the
actual completion of the project
DOCTRINE: DO enumerates indicator to conclude
employee is a project employee
3. Leyte Geothermal Power Progressive
Employees Union v. PNOC-EDC
FACTS: PNOC-EDC (GOCC) had a legit Union (herein
petitioner)
 PNOC had geothermal projects – one of
which is the Leyte Geothermal Power Plant
o Within this project are the
Tongonan 1 Geothermal Project and
LGPH
 Supply electricity to whole
Luzone
o PNOC hired over a hundred workers
for these projects on CONTRACTUAL
BASIS
 Good up to the completion or
termination of the project
 Majority of the complainant-workers had
become members of the union
o They demand that PNOC recognize the
Union as their agent and have CBA
negotiations
o Such call was not heeded by PNOC
o Worse, PNOC served Notices of
Termination to workers who had
become union members
 Thus, workers filed a Notice of Strike
with DOLE
o Unfair labor practice for refusal
to bargain collectively, union
busting and mass termination
 DOLE intervened and forwarded it for
compulsory arbitration
o Workers ordered to return to work
within 12 hours; PNOC to accept
them
o But despite this, workers remained
adamant; arbitration failed to
bring peaceful compromise
o PNOC filed a counter-suit
 NLRC: union members are project employees
o Not illegally dismissed
 CA: affirmed NLRC decision
ISSUE: Are the officers and members of the Union
mere project employees? – YES.
HELD:
 Art 280 contemplates 4 kinds of employees:
(a) REGULAR EMPLOYEES or those who have
been "engaged to perform activities which
are usually necessary or desirable in the
usual business or trade of the employer";
(b) PROJECT EMPLOYEES or those "whose
employment has been fixed for a specific
project or undertaking[,] the completion
or termination of which has been
determined at the time of the engagement
of the employee";
(c) SEASONAL EMPLOYEES or those who work
or perform services which are seasonal in
nature, and the employment is for the
duration of the season; and
(d) CASUAL EMPLOYEES or those who are not
regular, project, or seasonal employees.
Jurisprudence has added a fifth kind-- a
fixed-term employee.
 To be a valid Project Employee, the
following must be met:
o employee is deemed to understand
that his employment is coterminous
with the project. He may not expect
to be employed continuously beyond
the completion of the project.
 In the case at bar, complainants were made
to sign and accept the employment contract
indicating the specific PROJECT or PHASE
of work which they were hired – WITH FIXED
PERIOD OF EMPLOYMENT
o Entered freely and voluntarily
without force
THEY ARE PROJECT EMPLOYEES EVEN IF PERFORMING
JOB THAT IS UNOB-UBOT:
 If the DURATION of the project is clearly
conveyed
 assigned to carry out a "specific project
or undertaking," the duration (and scope)
of which were specified at the time the
employees were engaged for that project
 “PROJECT” can wither be:
1. particular job or undertaking that is
within the regular or usual business
of the employer company, but which is
distinct and separate, and
identifiable as such, from the other
undertakings of the company
o Such job or undertaking begins
and ends at determined or
determinable times.
2. a particular job or undertaking that
is not within the regular business of
the corporation
o Such a job or undertaking must
also be identifiably separate
and distinct from the ordinary
or regular business operations
of the employer
o The job or undertaking also
begins and ends at determined or
determinable times.
 the litmus test to determine whether an
individual is a project employee lies in
setting a fixed period of employment
involving a specific undertaking which
completion or termination has been
determined at the time of the particular
employee's engagement.
 In the case at bar, they were hired for a
specific project; thus, can validly
dismissed upon its completion or its
SUBSTANTIAL COMPLETION
EMPLOYMENT FOR MORE THAN A YEAR DOES NOT MAKE
THEM REGULAR
 Project employees are the exception to the
term of service
22

DOCTRINE: even if performing UNOB-UBOT and for
more than one year, workers may still not attain
regular status IF the duration of the employment
was made known at the start; or made dependent
upon the competition of a project
4. Pasos v. PNCC, July 3, 2013
FACTS: Roy Pasos started working with PNCC on
Aug 26, 1996
 “Personnel Action Form Appointment for
Project Employment” states:
o Designated as Clerk II (Accounting)
assigned to the NAIA-II Project
o The contract may be terminated
ANYTIME for cause as provided for
by law and/or existing Company
Policy
 Services are unsatisfactory
 No longer needed – as
determined by the company
 If needed, may be extended
beyond validity of the
contract
 No obligation to re-employ
 His employment did not end on July 25,
1996 but was extended until Aug 4, 1998 –
more than two years later as agreed upon;
should’ve ended July 7, 1998
 That based on “Appointment for Project
Employment” he was rehired as “Accounting
Clerk (Reliever)” assigned to the PCSO-QI
project
o Shall end on Feb 11, 1999
o But was extended again until Feb
19, 1999
 He was again hired as Accounting Clerk
assigned to the SM-Project
o THIS DID NOT SPECIFY WHEN IT’LL END
but stated that it was co-terminus
with the project
o It supposedly ended on Aug 19, 1999
based on the Personnel Action Form
dated Aug 18, 1999
 But he was again hired for SM Project
(Package II)
o No end date again but specified
“coterminous with the project)
o Based on the Oct 17, 2000 form, it
ended on Oct 19, 2000
 Despite termination on Oct 19, his
superior instructed him to report for work
the next day – intimating that he will be
again employed to succeeding SM Projects
 But for this, he underwent medical exam
and was revealed that he had pneumonitis
o Thus, he was advised to take 14-day
sick leave
o After the leave, another exam
revealed he contracted Koch’s
disease thus required to take 60-
day leave
o He applied for such but was advised
that he was not entitled bec he was
not a regular employee
 He still went on with the 60-day leave;
thereafter, he had clearance saying he’s
fit to work
 When he reported back, he was toled that
his services were already terminated on
Oct. .19, 2000 and was already replaced
due to expiration of contract
 Thus, this case for illegal dismissal
LA: he has attained regular status
 Repeated hiring
 Job was UNOD-UBOT
 Subsequent contracts did not indicate the
date of completion of the contract
NLRC: reversed
CA: affirmed NLRC
ISSUE: Is he a project employee? – no. he
attained regular status
HELD: although he started as project employee,
he eventually became a regular employee
 Valid Project Employment:
o whether or not the employees were
assigned to carry out a specific
project or undertaking, the
duration or scope of which was
specified at the time the employees
were engaged for that project.
 In the case at bar, Pasos continuously
worked for more than two years – as
supposed to the 3-month duration of the
project with NAIA II Project
o The subsequent contracts did not
specify a particular duration for
the extension
o His services were just extended
indefinitely
o For the first three months, he was
a project employee; thereafter, he
was a regular bec there was no
specification to the duration
o Regular status not affected by the
fact that he was assigned to
several other projects
 Proofs considered that he was NOT Project
Employee
o Failure of an employer to file
termination reports after every
project completion proves that an
employee is not a project employee
 Contrary to DO 19
provision
 PNCC submitted as
evidence of its
compliance with the
requirement supposed
photocopies of its
termination reports, each
listing petitioner as
among the employees
affected. Unfortunately,
none of the reports
submitted pertain to the
NAIA II Project.
 Since a regular employee, he can only be
dismissed for just or authorized cause;
otherwise, illegally dismissed
23
CONCLUSION: he became a regular employee after
the first contract bec the subsequent
assignments did not specify particular duration
5. Exodus International Construction v.
Biscocho, February 23, 2011
FACTS: Exodus is a duly licensed labor
contractor for the painting of residential
houses, condo units and commercial buildings
 In 1999, it obtained from Dutch Boy
Philippines a contract for the painting of
the Imperial Sky Garden in Binondo
 Another contract was awarded to Exodus –
the painting of Pacific Plaza Towers in
Fort Bonifacio
 Thus, Exodus hired Biscocho et al
o BIscocho was assigned at the
Imperial Sky Garden from Feb 8,
1999 to Feb 8, 2000
o Then all of them transferred to the
Pacific Plaza
 On Nov 27, 2000, workers filed a complaint
for illegal dismissal
o That they were orally notified on
Nov 25
 Exodus’ side:
o That Gregorio applied as a painter
with the general building
contractor of Pacific Plaza and
never reported back to work
o Some went AWOL
LA: no illegal dismissal; workers just chose not
to report
NLRC: affirmed
CA: affirmed but also awarded monetary claims
sought
ISSUE: Are the workers illegally dismissed? –
NO.
Can they be reinstated?
HELD:
THERE WAS NO DISMISSAL IN THIS CASE
 Workers failed to substantiate that they
were dismissed
o They could not name anyone who
effected their dismissal and under
what particular circumstance
 Burden of Proof for illegal dismissal:
Employer; must show that the cause is just
or in accordance with law
 Absent any showing of an overt or positive
act proving that petitioners had dismissed
workers, the claim for illegal dismissal
cannot be sustained
THERE WAS NO ABANDONMENT OF WORK
 Thus, there is nothing to support claim
that this is the basis for dismissal
o "[m]ere absence or failure to
report for work x x x is not enough
to amount to abandonment of work.”
"Abandonment is the deliberate and
unjustified refusal of an employee
to resume his employment."
 Elements for Abandonment of work (both
must concur)
(1) the employee must have failed
to report for work or must have
been absent without valid or
justifiable reason; and
(2) there must have been a clear
intention on the part of the
employee to sever the employer-
employee relationship manifested by
some overt act.
 Burden of Proof: Employer; to show
deliberate refusal of the employee to
resume his employment without intent of
returning
WORKERS CAN BE REINSTATED
 Two types of construction workers:
1. PROJECT EMPLOYEES or those employed in
connection with a particular
construction project or phase thereof
and such employment is coterminous
with each project or phase of the
project to which they are assigned.
2. NON-PROJECT EMPLOYEES or those
employed without reference to any
particular construction project or
phase of a project
 Workers here fall under the second
category; thus, considered regular
 In the case at bar, when one project was
completed, they were transferred to
another project awarded to Exodus
 No specification in the contract of the
duration of their employment
 Granting they were initially hired as
Project Employee, they can still attain
regular status when:
1. There is a continuous rehiring
of project employees even after
cessation of a project; and
2. The tasks performed by the
alleged "project employee" are
vital, necessary and indespensable
to the usual business or trade of
the employer."
 Since they are regular employees with no
basis for the claim of dismissal, the
remedy is reinstatement
6. DM Consunji v. Gobres, August 8, 2010
FACTS: carpenters Gobres, et al, worked for DM
Consunji
 Their termination from employment for each
project was reported to the DOLE
 Their last assignment was at the Quad 4
Project in Glorietta
o Start: Sept 1, 1998
o Notice of Termination: Oct. 14,
1998
 Workers complained of illegal dismissal
 Consunji claims they were only project
employees
o Employed per project within varying
estimated periods
o That they were terminated when
their project was completed
o DM also submitted report to DOLE
o Also, duly paid service incentive
leave and 13th month pay
 Workers say the Quad 4 project had an
estimated duration of 2 years to finish
24
 but they were dismissed within the two-
year period
o They had no prior notice (except
for the bulletin board post)
o Thus, even though project
employees, they were still
illegally dismissed
LA: ruled in favor of DM Consunji
NLRC: affirmed LA
CA: reversed; illegal dismissal and ordered
reinstatement
 Even though project employees, they are
entitled to know the reason for their
dismissal
 Due process was violated
ISSUE: whether or not respondents, as project
employees, are entitled to nominal damages for
lack of advance notice of their dismissal?
HELD:
 It was consistently found that workers are
project employees – a finding binding with
SC
 In dismissal of project employees,
dismissal is governed by Section 1 (c),
Rule XXIII, Book V of the Omnibus Rules
Implementing the Labor Code states:
Section 1. Security of tenure. -- (a) In
cases of regular employment, the employer
shall not terminate the services of an
employee except for just or authorized
causes as provided by law, and subject to
the requirements of due process.
x x x x
(c) In cases of project employment or
employment covered by legitimate
contracting or sub-contracting
arrangements, no employee shall be
dismissed prior to the completion of the
project or phase thereof for which the
employee was engaged, or prior to the
expiration of the contract between the
principal and contractor, unless the
dismissal is for just or authorized cause
subject to the requirements of due process
or prior notice, or is brought about by
the completion of the phase of the project
or contract for which the employee was
engaged
 Records show that respondents were
dismissed after the expiration of their
respective project employment contracts,
and due to the completion of the phases of
work respondents were engaged for
o Thus, prior notice does not apply
 STANDARD OF DUE PROCESS, REQ OF NOTICE
1. For termination of employment based on
just causes as defined in Article 282 of
the Code:
(a) A written notice served on the
employee specifying the ground or grounds
for termination, and giving to said
employee reasonable opportunity within
which to explain his side;
(b) A hearing or conference during which
the employee concerned, with the
assistance of counsel if the employee so
desires, is given opportunity to respond
to the charge, present his evidence or
rebut the evidence presented against him;
and
(c) A written notice [of] termination
served on the employee indicating that
upon due consideration of all the
circumstance, grounds have been
established to justify his termination.
CAUSE OF DISMISSAL DUE PROCESS
REQUIREMENT
Authorized Causes 1. Written Notice
under Art 283 2. At least 30
days
3. Specify grounds
Completion of the No prior notice
Contract or Phase required
thereof
Failure to meet 1. Written notice
standards in case of 2. Within
Probationary reasonable time
Employment from effective
date of
termination
 In the case at bar, the termination was
due to the completion of work; thus, no
prior notice is required
o It is not part of procedural due
process
 Thus, they are not entitled to Nominal
Damage
7. Malicdem v. Marulas Industrial Corp.,
February 26, 2014
FACTS: Malicdem and Flores were hired by Marulas
(manufacturing sacks) as extruder operators in
2006
 Employment contract was for a period of 1
year
 Every year, they were made to sign
Resignation/Quitclaim in favor of Marulas
a day after the contracts ended
 Then they would sign another contract for
1 year
 Then in 2010, Flores was told not to
report anymore after signing a document
acknowledging completion of his
contractual status; the same with Malicdem
 Thus, they filed a case for illegal
dismissal
LA: no illegal dismissal; contracts merely
expired
NLRC: affirmed LA decision
CA: affirmed
 that "the repeated and successive rehiring
of project employees do not qualify them
as regular employees, as length of service
is not the controlling determinant of the
employment tenure of a project employee,
but whether the employment has been fixed
for a specific project or undertaking, its
completion has been determined at the time
of the engagement of the employee."
25
ISSUE: Are the workers regular employees thus
illegally dismissed? – YES.
Held
 The contracts were denominated as “Project
Employment Agreement”
o Under probation for 6 months
o That if they comply with the
company’s standards and criteria,
they shall be reclassified as
Project Employees with respect to
the remaining period of the
effectivity of the contract
 Under the Labor Code, a project employee
may be converted to a regular employee
when (Maraguinot Doctrine):
(1) continuously, as opposed to
intermittently, re-hired by the same
employer for the same tasks or nature of
tasks; and
(2) these tasks are vital, necessary and
indispensable to the usual business or
trade of the employer
 In the case at bar, there is a clear
intent to circumvent the law:
o No actual project
 Only effectivity date,
duties and responsibilities,
and compensation
o The requisites under Maraguinot
present in this case
 As held in Consunji, the
employment ceases to be
coterminous with specific
projects when the employee
is continuously rehired due
to the demands of the
employer’s business and re-
engaged for more projects
without interruption
 Being regular employees, their dismissal
is illegal
8. Jamias v. NLRC, March 9, 2016
FACTS: INNODATA is engaged in data processing
and conversion for foreign clients
 It hired Jamias, et al on various dates;
good for one year
 After their respective contracts expired,
they filed a complaint for illegal
dismissal
o Claims that Innodata purported them
as project employees to prevent
them from becoming regular
employees
LA: dismissed case; fixed term employees
NLRC: affirmed LA decision; hired for a
particular season
CA: affirmed
ISSUE: by performing work necessary and
desirable to the company, have the workers
attained a regular status? – NO.
HELD
 The case of Servidad and Villanueva are
not applicable here bec those involve
double probation – which is prohibited
 In this case, the fixed-term period
stipulated in the contract is not illicit
o The contract valid for 12 months
did not subject them to a
probationary period at all
 Fixed period in contract is not per se
circumvention of law
o A fixed term agreement, to be
valid, must strictly conform with
the requirements and conditions
provided in Article 280
o TEST: whether or not the employee
is assigned to carry out a specific
project or undertaking, the
duration or scope of which was
specified at the time of his
engagement.
 There must be a
determination of, or a clear
agreement on, the completion
or termination of the
project at the time the
employee is engaged.
 AGREED VOLUNTARILY
 In this case, the period and the project
assignment were clearly stated from the
beginning
CANNOT BE REGULAR EVEN IF PERFORMING WORK
NECESSARY TO INNODATA’S BUSINESS OF DATA
PROCESSING
 necessity and desirability of the work
performed by the employees are not the
determinants in term employment, but
rather the "DAY CERTAIN" voluntarily
agreed upon by the parties.
9. E. Ganzon, Inc. (EGI) and Eulalio Ganzon
v. Ando, Jr., February 20, 2017
FACTS: Fortunato Ando filed a case of illegal
dismissal against EGI
 Alleges that he’s a regular employee
working as a finishing carpenter
 Terminated without prior notice and
hearing
 EGI said is only a project worker:
o Bahay Pamulinawen Project
o EGI West Insula Project
LA: mere project employee
NLRC: affirmed LA
CA: REVERSED
ISSUE: Is Ando a regular employee? – NO.
HELD: fixed-term employment is not per se
illegal
 To be considered as project-based, the
employer has the burden of proof to show
that:
(a) the employee was assigned to carry out
a specific project or undertaking and
(b) the duration and scope of which were
specified at the time the employee was
engaged for such project or
undertaking.
 The activities of project employees may or
may not be usually necessary or desirable
in the usual business or trade of the
employer
26
  Thus, project may be:
1. Particular Job or undertaking that is
WITHIN the regular or usual business
of the employer company, but which is
distinct and separate, and
identifiable as such, from the other
undertakings of the company
o Such job or undertaking begins
and ends at determined or
determinable times.
2. particular job or undertaking that is
sthe regular business of the
corporation.
o Such a job or undertaking must
also be identifiably separate
and distinct from the ordinary
or regular business operations
of the employer.
o The job or undertaking also
begins and ends at determined or
determinable times
 In this case, the three project employment
contracts signed by Ando explicitly
stipulated the agreement "to engage [his]
services as a Project Worker"
o [His] services with the Project
will end upon completion of the
phase of work for which [he was]
hired for and is tentatively set on
(written date). However, this could
be extended or shortened depending
on the work phasing.
 Stipulation in the contract saying it can
be “extended or shortened” depending on
the phasing” will not discount the fact
that he is still a project employee
 Despite adjustments, still a project
employee when:
o Agreed upon knowingly and
voluntarily
o Both parties dealt with each other
on more or less equal terms – no
moral dominance
o Apparent that the period was not
imposed to preclude acquisition of
tenurial security
 In this case, Ando was adequately notified
that his employment was anchored on the
two projects
o There was no force/vitiated consent
o No attempt to frustrate his
security of tenure
PROJECT EMPLOYMENT VS FIXED-TERM EMPLOYMENT:
PROJECT FIXED TERM
DURATION Project or Day certain
work hired for
INFORMATION At the time of engagement
 In this case, it was conveyed to Ando that
the duration of his employment is UPON
COMPLETION of the phase of work for which
he was hired for
o Fact determinable
o Expected completion is made known
o The duration is still determinable
WORKING FOR MORE THAN A YEAR AND JOB NECESSARY
OR DESIRABLE DID NOT IMPAIR VALIDITY OF PROJ
EMPLOYMENT
 The rehiring is not the controlling
determinant of the employment tenure of
the project employee
 It was still project-to-project basis
 The conversion to regular employee after
lapse of one year only applies to CASUAL
EMPLOYEES
CONCLUSION: employment of a project employee
automatically terminates after completion of the
project; duration may be extended so long as it
is conveyed to the worker that the employment is
for a particular project only; lapse of one year
will not convert a project employee to regular
status
10. Herma Shipyard, Inc. v. Esguerra, April
17, 2017
FACTS: Herma (shipbuilding and repair) hired
workers as welder, leadman, pipe fitter, etc
 In 2009, they filed illegal dismissal case
claiming they were regular employees who
have been continuously performing tasks
usually and desirable
o Signed contract for a fixed period
of one-four months to make it
appear they are project-based
 Herma said they were only project
employees and the job they were hired for
had been completed
LA: project based only
NLRC: affirmed LA
CA: project based who attained regular status
 performing tasks that are necessary,
desirable, and vital to the operation of
petitioners' business
 Herma failed to present proof that
respondents were hired for a specific
period
 Not clear from the contract that the
termination of the project was
determinable at the time of commencement
 Workers were assigned to different
projects different departments of Herma
Shipyard
 Failed to prove that they reported the
termination to DOLE
ISSUE: Did the workers attain regular status? –
NO.
Held: PROJECT EMPLOYEES
 TEST: whether they were assigned to carry
out a specific project or undertaking, the
duration and scope of which was specified
at, and made known to them, at the time of
their engagement.
They knowingly and voluntarily entered into and
signed the project-based employment contracts
 In each proj they were hired, they were
fully apprised of the nature and scope of
their work
 Contract clearly provides that they were
project based whose services are
coterminous with the completion of the
specific task indicated
o employment shall end upon the
arrival of the target completion
27
 date or upon the completion of such
project
o “hanggang 4/30/2009 o sa sandaling
matapos ang nasabing gawain o
anumang bahagi nito kung saan siya
ay inupahan o kung saan ang kanyang
serbisyo”
o “ay hindi maituturing na
pampirmihan or "regular" na kawani
ano man at gaano man katagal ang
kanyang paglingkod sa Kumpanya
Performance by project-based employees of tasks
necessary and desirable to the usual business
operation of the employer will not automatically
result in their regularization.
 project-based employees may or may not be
performing tasks usually necessary or
desirable in the usual business or trade
of the employer.
 In the case at bar, while the job is
necessary and desirable to the business,
the same were distinct, separate, and
identifiable from the other projects or
contract services.
Repeated rehiring of project employees to
different projects does not ipso facto make them
regular employees.
 length of service (through rehiring) is
not the controlling determinant of the
employment tenure [of project-based
employees but, as earlier mentioned],
whether the employment has been fixed for
a specific project or undertaking, with
its completion having been determined at
the time of [their] engagement
 RATIONALE: construction firms cannot
guarantee work and funding for its
payrolls beyond the life of each project
as they have no control over the decisions
and resources of project proponents or
owners. Thus, once the project is
completed it would be unjust to require
the employer to maintain these employees
in their payroll since this would be
tantamount to making the employee a
privileged retainer who collects payment
from his employer for work not done, and
amounts to labor coddling at the expense
of management
 In this case, Herma by the nature of its
business only hires employee depending on
existing contracts for shipbuilding and
repair
 Also, respondents' employment were neither
continuous and uninterrupted nor for a
uniform period of one month
o gaps coincide with the completion
of a particular project and the
start of a new specific and
distinct project for which they
were individually rehired.
 By the end of each project, Herma submits
the required report to DOLE
PROJECT EMPLOYMENT CONTRACT NOT SUBJECT TO A
CONDITION – “PALAWIGIN NG MAS MAHABA”
 PAR 10 just shows that the contract was
coterminous
 That in case of delay, the employment may
be extended until completed
 There can be no definite and exact
completion date – only approximate or
estimate
11. Minsola v. New City Builders, Inc.,
January 31, 2018
FACTS: NEW CITY (Construction) hired Minsola as
laborer for the structural phase of its Avida
Tower 3 Project
 Contract says the duration will last until
the competition of the structural phase
 Upon completion of the said project, his
employment was terminated
 The next day, New City re-hired him as a
mason for the architectural phase of Avida
3
 In Dec., it was found that Minsola had no
appointment paper as a mason for the
architectural phas. Thus, he was
instructed to update his employment record
but this was unheeded by Minsola –
continued work without an appointment
paper
 The next month, he was summoned to sign
his appointment paper but he still refused
to comply
o Stormed out of the office and never
reported back for work
 After which, Minsola filed a complaint for
illegal dismissal
LA: only project employee
 Working for more than a year did not
convert him to regular
 Also, he was not terminated; he merely
stopped reporting
NLRC: a regular employee who was constructively
dismissed
 Attained regular status when continued
beyond the original term of his project
employment without benefit of a new
contract fixing the duration of his
employment
CA: Reversed NLRC decision; only a project
employee
 Upon completion of the first project, he
was rehired in a different capacity
ISSUE: is Minsola a project employee? – YES.
HELD: Minsola is a Project Employee of New City
 In a project-based employment, the
employee is assigned to a particular
project or phase, which begins and ends at
a determined or determinable time.
(i) the employee was hired to carry
out a specific project or
undertaking, and
(ii) the employee was notified of
the duration and scope of the
project.
 BURDEN: employers must prove that the
duration and scope of the employment were
specified at the time the employees were
engaged, and prove the existence of the
project.
28
  In the case at bar, Minsola was hired to
perform work for two different phases
o First for structural phase
o Second for architertural phase
o Thus, he was adequately informed of
his employment status as project
employee at the start of his
engagement
CONTINUOUS WORK + NECESSARY TO BUSINESS DID NOT
CONVERT HIM TO A REGULAR EMPLOYEE
 There are two types of project employees:
(i) a particular job or undertaking that
is WITHIN the regular or usual business of
the employer company, but which is
distinct and separate, and identifiable as
such, from the other undertakings of the
company; or
(ii) a particular job or undertaking that
is NOT WITHIN the regular business of the
corporation."
 The construction industry is unique;
performance of work that is necessary and
vital to the employer's construction
business, and the former's repeated
rehiring, do not automatically lead to
regularization
o length of service is not the
controlling determinant of the
employment tenure of a project
employee, but whether the
employment has been fixed for a
specific project or undertaking,
its completion has been determined
at the time of the engagement of
the employee.
o In construction industry, an
employee's work depends on the
availability of projects
NO CONSTRUCTIVE DISMISSAL
 There is constructive dismissal "where
there is cessation of work, because
continued employment is rendered
impossible, unreasonable or unlikely, as
an offer involving a demotion in rank or a
diminution in pay" and other benefits.
o In the case at bar, Minsola failed
to advert to any particular act
showing that he was actually
dismissed or terminated from his
employment. Neither did he allege
that his continued employment with
New City was rendered impossible,
unreasonable or unlikely; nor was
he demoted, nor made to suffer from
any act of discrimination or
disdain
o On the contrary, it was him who
stormed out of the office; thus no
illegal dismissal
CONCLUSION: Construction industry is unique

29
SEASONAL EMPLOYEES
1. Benares v. Pancho, April 29, 2005
FACTS: Jaime Panco et al alleged to started
working with Had Maasin II, a sugar cane
plantation in Negros Occidental owned by Benares
as SUGAR FARM WORKERS
 weeding, cutting and loading canes,
planting cane points, fertilizing,
cleaning the drainage, etc
 They instituted a complaint before DOLE
regarding their wages and other benefits
they claimed they are entitled under the
law
o Claimed to be terminated without
being paid termination benefits
which they said should be mandatory
 After a routine inspection, DOLE endorsed
the complaint to Regional Arbitration
branch of NLRC in Bacolod
o No amicable settlement
LA: dismissed the complaint for lack of merit
NLRC: reversed; workers attained the status of
regular seasonal workers since working from 1964
to 1985
 HDA failed to prove that they were
terminated for just cause thus illegally
dismissed
CA: Affirmed NLRC ruling
HDA claimed that there was GAD since NLRC did
not even remand the case when there was, and
admitted by NLRC, a gray area in the case (not
mentioned what) and even awarded COLA and ERA
despite not being prayed
 Also, NLRC did not even explain why it
held that the payroll submitted by HAD was
not convincing
ISSUE: whether respondents are regular employees
of Hacienda Maasin and thus entitled to their
monetary claims – YES. REGULAR SEASONAL
EMPLOYEES HAVING WORKED FOR MORE THAN 1 YEAR
HELD
 In Mercado vs NLRC, the SC ruled that
seasonal workers do not become regular
employees by the mere fact that they have
rendered at least one year of service,
whether continuous or broken, because the
proviso in the second paragraph of Article
280 demarcates as "CASUAL" EMPLOYEES, all
other employees who do not fall under the
definition of the preceding paragraph.
o Seasonal workers are NOT casual
employees
o In the Mercado case, the facts were
the workers were engaged to do
agricultural work; after which they
would be free to render service to
other farms who need their services
 In contrast, in the case of Hacienda
Fatima, the workers performed SAME tasks
every season for several years
o Thus, they were considered regular
employees for their respective
tasks
o Even though they do not work for
one whole year but only for the
duration of the season
o The diff: they are called to work
when in season and laid off
TEMPORARILY but not separated
 Merely on leave until re-
employed
 In the case, the SC gave credence to the
findings of NLRC as affirmed by the CA
o That it did not remand the case bec
it opted to appreciate the merits
based on available doc is not GAD;
it was a judgment call
o The quantum of evidence required of
NLRC is only substantial evidence
since quasi-judicial
 FINDINGS: even the LA found that the
workers were regular (although dismissed
it bec the position papers failed to
alleged illegal dismissal)
 NLRC and CA held them to be regular
seasonal workers having worked for more
than one year, whether continuous or
broken in petitioner's hacienda.
o Decision of NLRC having expertise
accorded by the SC in this case not
only with respect but with finality
CONCLUSION: Regular Seasonal Workers bec
findings of quasi-judicial being expert
2. Hacienda Bino/Hortencia Starke v. Cuenca,
April 15, 2005
FACTS: 76 workers (out of 220) of Had Bino
(owned by Starke) performs cultivation, planting
of cane points, fertilization, watering,
weeding, harvesting, and loading of harvested
sugarcanes to cargo trucks.
 During off-milling season, Starke issued
an Order or Notice:
o Please bear in mind that all those
who signed in favor of CARP are
expressing their desire to get out
of employment on their own
volition.
o Those who did not sign for CARP
will be given employment
 The 76 workers regarded the notice as
their termination thus filed an illegal
dismissal case with money claims
o Alleged that they are regular and
permanent workers
o Dismissed not for just cause but
for applying as beneficiaries under
CARP
 Starke said bec of classification of its
land (some industrial, commercial and
residential), there was little work
already and it was off-season
o THAT THEY WERE ONLY SEASONAL THUS
EMPLOYMENT LEGALLY ENDS UPON
COMPLETION OF THE PROJECT OR SEASON
o That she issued the notice to give
preference to those who supported
the re-classification
o Also, the workers refused to go to
work
30
LA: Illegally dismissed employees, it is not enough that they
NLRC: affirmed perform work or services that are seasonal
CA: affirmed in nature. They must have been employed
 Stare decisis re status of sugar workers only for the duration of one season.
does not apply here (as held in Mercado, o In this case, although work was
they are held NOT regular and permanent seasonal, no proof that they were
farm workers bec workers work for a hired for the duration of one
definite period bec the land was small; in season only.
this case, it was 236 ha) o In fact, payroll says they were
o Mercado deviates but not abandon GR hired since 1991
that sugar workers are regular and
permanent 3. Universal Robina Sugar Milling Corp. v.
Acibo
ISSUE: Are the workers seasonal employees? – NO. FACTS: Universal Robina is engaged in sugar cane
Held: milling business
There’s no stare decisis  Employee-complainants here were hired as
 doctrine of stare decisis, when a court drivers, crane operators, bucket hookers,
has laid down a principle of law as welders, mechanics, laboratory attendants
applicable to a certain state of facts, it and aides, steel workers, laborers,
will adhere to that principle and apply it carpenters and masons, among others.
to all future cases in which the facts are o Contract: for 1 month OR for a
substantially the same. given season
o Repeatedly hired them for same
 Facts different from Mercado
duties and signed new contracts
Mercado This case
when re-hired
work only for a the enormity of the
definite period for a size of the sugar  Workers filed complaint for regularization
farm worker, after hacienda of and receive benefits under CBA
which they offer petitioner, with an LA: dismissed; only seasonal or project
their services to area of two hundred employees
other farm owners, thirty-six (236)  not at all directly related to the
considering the area hectares, simply do latter’s main operations
in question being not allow for  cannot be regularized; employment
comparatively small, private respondents coterminous with completion of each
comprising of to render work only project
seventeen and a half for a definite NLRC: reversed; regular employees
(17½) hectares of period.  UNAB-UTOB
land, such that the  Repeatedly hired
planting of rice and CA: affirmed; regular although seasonal
sugar cane thereon  TEST: reasonable connection between a
could not possibly particular activity performed by the
entail a whole year employee vis-à-vis the usual trade or
operation. business of the employer.
 performed petitioners did not
 Tasks were necessary if not indispensable
different present any
evidence that the  Employed for at least 1 year; repeatedly
phases of
respondents were hired
agricultural
work in a required to perform
given year. certain phases of Universal’s Petition
 Free to work agricultural work  Contractual or project/seasonal
for other farm for a definite  engaged for a fixed and predetermined
owners “not period of time duration of, on the average, one (1) month
hired at a time that coincides with a particular
regularly and phase of the company’s business operations
repeatedly for or sugar milling season.
the same  employment legally ends upon the end of
phase/s of the predetermined period;
agricultural
work, but on ISSUE: are the workers seasonal employees? – NO.
and off for regular seasonal employees
any single
phase thereof.” HELD:

 TEST: reasonable connection between the
particular activity performed by the
employee in relation to the usual trade or
business of the employer.
 DOCTRINE: For respondents to be excluded
from those classified as regular
THREE CLASSES OF WORKERS UNDER 280
1. REGULAR
a. has been engaged to perform
activities which are usually
necessary or desirable in the usual
business or trade of the employer
31
 TEST: reasonable connection
b. Exn: casual whose employment lasted
for more than 1 year
2. PROJECT/SEASONAL
- the employment has been fixed for a
specific project or undertaking whose
completion or termination has been
determined at the time of the
engagement of the employee
PROJECT REQUISITES:
A. designation of a specific
project or undertaking for
which the employee is hired
B. clear determination of the
completion or termination
of the project at the time
of the employee’s
engagement
- Unlike regular, length of time is not
controlling
- in fact, last for more than a year,
depending on the needs or
circumstances of the project.
- EXN: rehiring may serve as a badge of
regular employment when the activities
performed by the purported "project"
employee are necessary and
indispensable to the usual business or
trade of the employer = REGULAR
SEASONAL REQUISITES
A. the employee must be performing
work or services that are
seasonal in nature
B. he had been employed for the
duration of the season
- exn: continuously and repeatedly hired
to perform the same tasks or
activities for several seasons or even
after the cessation of the season,
this length of time may likewise serve
as badge of regular employment =
REGULAR
o called to work from time to time
and are only temporarily laid
off during the off season
o merely on leave until re-
employed
3. CASUAL
4. CONTRACTUAL OR FIXED TERM – Brent vs
Zamora
 In this case, they are regular seasonal
workers:
1. perform various tasks that did not at
all pertain to any specific phase of
URSUMCO’s strict milling operations
that would ultimately cease upon
completion of a particular phase in
the milling of sugar – their duties
were regularly and habitually needed;
not for production of sugarcane
o thus, this is necessary and
desirable
2. regularly and repeatedly hired to
perform the same tasks year after year
o Not working for whole year but
only for duration of the milling
season BUT called to work from
time to time
3. No proof that workers worked elsewhere
after their completion of tasks with
Universal
 But since REGULAR SEASONAL, not
automatically covered by CBA since it is
for regular employees only; Thus, CBA
benefits awarded are deleted
4. Gapayao v. Fulo, June 13, 2013
FACTS: worker-deceased Fulo died of acute renal
failure secondary ot 1st degree burn 70%
electrocution while doing repairs at the
residence and business establishment of Gapayao
 Gapayao extended help due to Christian
beliefs
 Fule wido waived right and desisted from
filing any crirminal or civil action
 Parties entered into a Compromise
Agreement
o P40k to heir
o Release Gapayao from any claims
 Thereafter, widow claimed for social
security benefits with SSS but learned
that deceased was not registered
o Widow insisted that husband was
employed from 1983 until death in
1997 = 14 years
 laborer in the agricultural
landholdings, a harvester in
the abaca plantation, and a
repairman/utility worker in
several business
establishments owned by
petitioner
 Pakyaw workers are employees
 Control delegated to
caretaker
 Work essential to
harvest
 Ever stopped working
for him; even in
bakery and grocery
o SSS conducted field investigation:
 Fulo was an employee ON AN
EXTRA BASIS of Gapayao with
compensation of P5 to P60
 Not only for farm but also
house repairs
o Thus, SSS demanded Gapayao to pay
SSS constributions
 When refused, SSS required
Gapayao to present
documentary and teti
evidence
SSC: Fulo was an employee working for 9 months a
year
CA: affirmed
ISSUE: Is there an EER? – YES.
Are Pakyaw workers regular employees? – YES.
Held:
Farm workers may be considered regular seasonal
employees.
32
  Farm workers generally fall under the
definition of seasonal employees
 seasonal employees may be considered as
regular employees
 REGULAR SEASONAL EMPLOYEES ARE THOSE
CALLED TO WORK FROM TIME TO TIME
o during the off season, they are
temporarily laid off
o regular bec of nature of job and
NOT length of time they have worked
 TEST: reasonable connection between the
particular activity they perform and the
usual trade or business of the employer
o usually necessary or desirable in
the usual business or trade of the
employer
o repeated and continuing need for
its performance as sufficient
evidence of the necessity if not
indispensability of that activity
to the business
o HENCE, THE EMPLOYMENT IS ALSO
CONSIDERED REGULAR, BUT ONLY WITH
RESPECT TO SUCH ACTIVITY AND WHILE
SUCH ACTIVITY EXISTS.
 FACTS USED IN THIS CASE:
1. Working on petitioner’s land by harvesting
abaca and coconut, processing copra, and
clearing weeds
o was continuous in the sense that it
was done for more than one
harvesting season
2. other tasks: a helper in the bakery,
grocery, hardware, and piggery – all owned
by petitioner
o even during the off season, the
deceased was still in the employ of
petitioner.
3. COMPROMISE AGREEMENT EXECUTED
o he was described as the employer of
the deceased
o this was freely entered by him

PAKYAW WORKERS ARE REGULAR EMPLOYEES, PROVIDED

THEY ARE SUBJECT TO THE CONTROL OF PETITIONER

 In this case, petitioner wielded control

over the deceased in the discharge of his
functions

CONCLUSION: since there’s EER deceased has right

of an employee covered by the Social Security
Act

33
Teachers and Professors
1. Magis Young Achievers’ Learning Center v.
Manalo
FACTS: 2002, Manalo was hired as teacher and
acting principal with P15k salary in Magis
 March 29, 2003, he wrote a resignation
letter due to personal and family reasons
 March 31, she received a letter re cost-
cutting scheme to be imposed by the
school, one of which is abolishing the
position of Principal thus her contract
won’t be renewed
 April, Manalo instituted a complaint for
illegal dismissal and non-payment of
benefits
o That abolition of the position not
one of valid grounds to terminate
employment
 LC requires 30 day notice to
DOLE and employee
 Magis said she was legally terminated
o She was on one-year probation and
it has lapsed but failed to meet
criteria pursuant to DECS Manual
that only 75 full-time teachers who
rendered 3 satisfactory service
shall be considered permanent
LA: dismissed complaint
 Not dismissed but resigned
NLRC: reversed; ordered reinstatement
CA: affirmed NLRC decision
ISSUE: Is Manalo a permanent employee thus
illegally terminated? – PROBATIONARY BUT
ILLEGALLY DISMISSED
HELD:
 EMPLOYEES MAY BE ON PROBATION BUT
o This is legit management
prerogative
o But while there is no law
regulating the min limit, there is
a MAX “trial period”
 Art 281: shall not exceed 6
months from the date
employee started working
 EXN: apprenticeship
agreement
 Terminate: failure to meet
REASONABLE standards made
known at the start of
employment
o The limit in 281 DOES NOT apply to
all classes
o Academic personnel in private are
governed by the 1992 Manual of
Regulations for Private Schools:
 Elementary and secondary -
not more than 3 consecutive
years
 Tertiary – 6 consecutive
regular semester or 9
consecutive trimesters
o DOLE-DECS-CHED-TESDA Order: counted
in terms of school years and not
calendar years
 REASON FOR DIFFERENT RULE (Escudero vs OP)
o 6-mo probation is just the GR
o As held in Labajo vs Alejandro, the
period in the Manual is the MAX and
may be permanent in less than 3
years
o The rule in the Manual has not
changed since
 REQUISITES:
1. Full-time teacher
2. 3 year service
3. Satisfactory service
 Req of valid probationary employment:
specify the term of effectivity; failure
may mean contract is binding for 3 full
year probationary period
 VALID CAUSE FOR TERMINATION:
1. Causes provided by law
2. End of every yearly contract within
the three-year period and does not
meet reasonable standard
 Thus, in the case at bar, Manalo has not
yet achieved permanent or regular status
o Her position as Acting Principal is
just temporary
 Revocable at will
 RE RESIGNATION
o SC agrees with CA that it is
invalid bec either no acceptance by
the school or not made voluntarily
 RE CONTENTIOUS PROVISION IN THE CONTRACT
o Doubt as to period of the
employment
 Manalo: period in blank
 Magis: valid for one year
(April 2002 to March 2003)
o Using civil code, doubts to be
construed against the party who
drafted it
o But the handwriting in Magis’s copy
is different from the handwriting
filed up by the other
o Thus, there is no period in the
contract
 RE ISSUE OF ILLEGAL DISMISSAL
o Since there is no period in
contract, the three-year
probationary period governs
o During this period, employee may
only be terminated if there’s
competent proof that her
performance was unsatisfactory;
otherwise, entitled to continue for
3 years
 Deemed renewed for 2 school
years
 So yes, there’s illegal
dismissal
2.St. Mary’s University v. CA, March 8,
2005
FACTS: DONELO started as a teacher on
contractual basis in St. Mary’s in 1992
 In 1995, he was issued an appointment as
Assistant Professor I then promoted to III
 He taught until school year 1999-2000 bec
school discontinued to give him teaching
assignments
34
  Thus, he filed a complaint for illegal
dismissal
 St. Mary countered saying he is a part-
time instructor only
o Never attained full time status
since did not carry a load of at
least 18 units for 3 consecutive
years
o Also, he was under investigation
for giving grades to students who
did not attend classes but he never
responded here
LA: legally dismissed bec never attained full
time status pursuant to Manual
NLRC: reversed LA rulilng
CA: Affirmed NLRC
ISSUE: Has Donelo attained permanent status? –
HELD: Manual provides requites to be regular
teacher
 REQUISITES TO BE FULL-TIME
1. At least min academic qualifications
prescribed by the Departmnet
2. Paid monthly or hourly based on
regular teaching load
3. Total working day of not more than 8
hours a day devoted to the school
4. No other remunerative occupation
elsewhere that will conflict with
working hours in the school
5. Not teaching full-time in any other
educ institution
 DECS orders provide that regular full-time
load is between 15 and 24 units; Part time
is not more than 12 units
 In this case, Donelo has GENERALLY have
less than 12; also teaches elsewhere from
1993 to 1996
 Thus, he did not acquire permanent status;
can be terminated; twin-notice rule not
applicable since not regular or permanent
 RE RIGHTS OF PART-TIME EMPLOYEES
o Could not be terminated without
just cause before the end of agreed
period
o Only after the expiration of agreed
term can he be terminated unless
renewed
 In this case, no contract presented but
judicial notice applied: generally on a
per semester or term basis
CONCLUSION: Illegally dismissed although part-
time
3. Mercado v. AMA Computer College, April
13, 2010
FACTS: PETITIONERS MERCADO ET AL were faculty
members of AMA; started teaching May 25, 1998
 Contract: non-tenured
 Based on new screening guidelines:
maintained based on extensive teaching
experience, capability, potential;
 entitled to salary increases IF guidelines
achieved
 failed to meet passing rating thus not
given salary increase
 Thus, Petitioners filed case for
underpayment of wages
 Sept 7, 2000 -- Pending this, they
received memo saying their contract has
expired and not renewed; effective 30 days
from notice for not passing the
Performance Appraisal System for Teachers
(PAST) and other requirements
 Complaint amended to include illegal
dismissal
LA: Illegally dismissed
NLRC: affirmed LA decision
 The New Guidelines cannot be imposed
midway the effectivity of the contract of
the probationary employees
 Any standard must be made before start of
employment
CA: reversed; not regular thus optional for AMA
not to renew
 AMA has inherent right to upgrade
standards
ISSUE: Can new standards be imposed midway? –
YES.
HELD:
 RULE ON EMPLOYMENT ON PROBATIOARY STATUS
o May be terminated for a just cause
when he fails to qualify in
accordance with reasonable standard
made known at the time of his
engagement
o If allowed to work after period, he
is considered regular employee
o Only when contract is renewed after
the third year does he become
regular (pursuant to Manual)
o Period must be stipulated;
otherwise, considered for 3 full
probationary period
 ACADEMIC FREEDOM
1. Who may teach
2. Who may be taught
3. How lessons shall be taught
4. Who may be admitted to study
o Thus, the new guidelines are valid
o It is the prerogative of school to
set high standards of efficiency
 TERM UNDER THE CONTRACT IN THIS CASE
o Term-to-term basis
o Total of 2 years and three months
when notice of termination was
given
FIXED-TERM PROBATIONARY
Period agreed upon Period based on
agreement OR max 6
months (or 3 years
for teachers)
Employment up to Not automatically
said period only terminated; but
(expires on its comply with
own) requisites to be
valid non-renewal
 During probation, employer must also base
its probationary standards in conformity
with the probationary rules: reasonable
and communicated
 NEW GUIDELINES ARE VALID BUT
35
 o They were not introduced as
evidence and no proof how they were
applied to the teachers
o Thus, the “just cause” was not
supported hence the termination is
illegal
CONCLUSION: there is inherent right to impose
upgraded standard but present it in court to
justify “just and reasonable standards” for non-
renewal of probationary employees
4. Colegio del Santisimo Rosario v. Rojo,
September 4, 2013
FACTS: Colegiio hired high school teacher Rojo
on probationary basis from 1992 to 1995 (three
terms)
 In 1995, school decided not to renew his
contract
 Thus, Rojo filed a case for illegal
dismissal
o That he served for 3 consecutive
terms thus regular status attained
 Colegio said he was not dismissed; his
contract just expired and not renewed
LA: illegally dismissed
 Three years mean 3 10 months, not 12
NLRC: affirmed LA decision
CA: affirmed
ISSUE: is a teacher on probationary status
automatically becomes a regular after rendering
service for 3 consecutive school years? – YES.
HELD: At the end of this third year, the
employer may now decide whether to extend a
permanent appointment to the employee, primarily
on the basis of the employee having met the
reasonable standards of competence and
efficiency set by the employer. For the entire
duration of this three-year period, the teacher
remains under probation.
 Can only be terminated for a just cause or
when he fails to qualify in accordance
with reasonable standards made known to
him at the time of his engagement
 SEC 93 of the 1992 Manual:
o Full-time teachers who have
satisfactorily completed their
probationary period shall be
considered regular or permanent.
o no vested right to a permanent
appointment shall accrue until the
employee has completed the
prerequisite three-year period
necessary for the acquisition of a
permanent status. [However, it must
be emphasized that] mere rendition
of service for three consecutive
years does not automatically ripen
into a permanent appointment. It is
also necessary that the employee be
a:
1. full-time teacher, and
2. the services he rendered are
satisfactory.”
o If the termination is brought about
by the completion of a contract or
phase thereof, or by failure of an
employee to meet the standards of
the employer in the case of
probationary employment, it shall
be sufficient that a written notice
is served the employee, within a
reasonable time from the effective
date of termination.
o As a matter of due process,
teachers on probationary
employment, just like all
probationary employees, have the
right to know whether they have met
the standards against which their
performance was evaluated. Should
they fail, they also have the right
to know the reasons therefor
o absent any showing of
unsatisfactory performance on the
part of respondent, it can be
presumed that his performance was
satisfactory, especially taking
into consideration the fact that
even while he was still more than a
year into his probationary
employment, he was already
designated Prefect of Discipline
o he uncovered incidence of drug use
in the school thus a great
contribution = satisfactory service
5. Son v. University of Sto. Tomas, April
18, 2018
FACTS: Professors Son et al are full time
professors at UST CFAD and Philosophy and
members of the Faculty Union with CBA
 they were hired 2005/2004 on probationary
status
 under the CBA, a tenured Faculty is:
o rendered 6 consecutive semesters
with 15 or more units
o Master’s degree required but may
obtain within 5 semesters; if not,
he shall be separated at the end of
the fifth semester BUT if he is
made to serve even without the
master’s degree, he shall be deemed
to have attained tenure
 DECS and CHED Memo on Min Faculty
Qualifications
o For Undergraduate Program:
 Holder of professional
license
 At least bachelor’s degree
 However, in specific fields
where there is dearth of
holders of Master's degree,
or a holder of a
professional license
requiring at least a
bachelor's degree may be
qualified to teach.
 In this case, Petitioners did not have
master’s degree but hired by UST on the
condition that they shall obtain it within
the prescribed period
 Petitioners enrolled but were unable to
finish BUT were allowed to continue to
teach beyond the period
36
  In 2010, CHED issued a Memo re strict
implementation of minimum qualification
requirements particularly the Master’s
degree and licensure requirements
 Thus, UST wrote petitioners saying they
are ceasing to employ them for failure to
comply
o Petitioners did not reply thinking
they are protected by the CBA
provision
o Then, they received a
termination/thank you letter
 Thus, they filed a case for illegal
dismissal
LA: Illegally dismissed
NLRC: Affirmed LA decision
CA: reversed
 CBA provision is valid insofar as not
contrary to law
o Must be ready in conjunction with
statutory and admin regulations
ISSUE: Have the professors attained regular
status? – NO.
HELD: Master’s Degree requirement valid
 DECS issued the master’s requirement in
1992
 CBA made in 2006 thus violative of the
1992 Revised Manual
 Thus, both parties are in violation of the
law; in pari delicto
 Private educational institutions must
still supplementarily refer to the
prevailing standards, qualifications, and
conditions set by the appropriate
government agencies
REQUIREMENTS FOR FULL-TIME STATUS:
1. Probationary Period:
a. Elementary, Secondary: 3
consecutive years
b. Tertiary: 6 consecutive regular
semesters or 9 consecutive regular
trimesters
Deemed Regular if rendered work beyond
period
2. Minimum Qualifications:
a. Master’s Degree – major fields
b. Appropriate Professional License
for at least a bachelor’s degree –
for professional courses
3. Full Time Status
a. Minimum academic qualification
otherwise, part-time only
PETITIONERS ARE NOT FULL TIME
 minimum requirement is neither subject to
the prerogative of the school nor to the
agreement between the parties. For all
intents and purposes, this qualification
must be deemed impliedly written in the
employment contracts
Conditional Employment Contract
6. Sagun v. ANZ Global Services and
Operations (Manila), Inc.
FACTS: ENRIQUE SAGUN was employed at HSBC Hong
Kong when he applied as Payments and Cash
Processing Lead at ANZ in Manila
 He passed the interview and was offered
the position of Customer Service Officer,
Payments and Cash Resolution which he
accepted
 In the contract was the Pre-employment
screening and ongoing screening clause
o Undergo police record check prior
to commencing work
o Employment is conditional subject
to:
 Police record compatible
 Other required background
check
 Holding all necessary visas,
immigration requirements
 If not satisfactory, ANZ may
choose not to commence your
employment or end your
employment immediately
 Sagun tendered his resignation with HSBC
and transmitted pre-employment doc reqs
with ANZ
 But ANZ informed him that job offer was
withdrawn on the ground of MATERIAL
INCONSISTENCIES in his declared
information and document, particularly at
Siemens:
1. Only Level 1 not Level 2 Technical
Support Representative
2. Terminated not resigned
 Thus, Sagun instituted Illegal Dismissal
case claiming that employment contract has
already been perfected
LA: DISMISSED; no perfected employment contract
NLRC: Affirmed LA decision
CA: affirmed
ISSUE: was there a perfected employment
contract? – YES BUT with suspensive condition
HELD:
 Perfection of a Contract – at the moment
the parties come to agree upon its terms
and conditions, and thereafter, concur in
the essential elements thereof
 In this case, there was a perfected
contract but contained several conditions
such as: "satisfactory completion of any
checks;” his employment depended on the
outcome of his background check
(SUSPENSIVE CONDITION)
o every future and uncertain event
upon which an obligation or
provision is made to depend. It is
a future and uncertain event upon
which the acquisition or resolution
of rights is made to depend by
those who execute the juridical
act.
o its effectivity shall take place
only if and when the event which
constitutes the condition happens
or is fulfilled
37
1987 Constitution, Article XIII, Section 3
Section 3. The State shall afford full
protection to labor, local and overseas,
organized and unorganized, and promote full
employment and equality of employment
opportunities for all.
It shall guarantee the rights of all workers to
self-organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law. They shall be entitled to security of
tenure, humane conditions of work, and a living
wage. They shall also participate in policy and
decision-making processes affecting their rights
and benefits as may be provided by law.
The State shall promote the principle of shared
responsibility between workers and employers and
the preferential use of voluntary modes in
settling disputes, including conciliation, and
shall enforce their mutual compliance therewith
to foster industrial peace.
The State shall regulate the relations between
workers and employers, recognizing the right of
labor to its just share in the fruits of
production and the right of enterprises to
reasonable returns to investments, and to
expansion and growth.
Labor Code: Articles 218, 290 (as amended by
R.A. 10395)
A. Concept and Definition
Labor Code: Articles 97-98
Omnibus Rules: Book III, Rule VII, Sections 2-9
SECTION 2. Effectivity. — The Act takes effect
on July 1, 1989, 15 days following its complete
publication in two newspapers of general
circulation on June 15, 1989 pursuant to Section
15 thereof.cralaw
SECTION 3. Amount of Minimum Wage Increase. —
Effective July 1, 1989, the daily statutory
minimum wage rates of covered workers and
employees shall be increased as follows:
a) P25.00 for those in the National Capital
Region;
b) P25.00 for those outside the National Capital
Region, except for the following:
P20.00 for those in plantation agricultural
enterprises with an annual gross sales of less
than P5 million in the fiscal year immediately
preceding the effectivity of the Act;
P15.00 for those in the following enterprises:
1. Non-plantation agriculture
2. Cottage/handicraft
3. Retail/Service regularly employing not more
than 10 workers
4. Business enterprises with a capitalization of
not more than P500,000 and employing not more
than 20 workers.cralaw
SECTION 4. When Wage Increase Due Other Workers.
— a) All workers and employees who, prior to
July 1, 1989, were already receiving a basic
wage above the statutory minimum wage rates
provided under Republic Act 6640 but not over
P100.00 per day shall receive a wage increase
equivalent to that provided in the preceding
Section.cralaw
b) Those receiving not more than the following
monthly basic wage rates prior to July 1, 1989
shall be deemed covered by the preceding
subsection:
(i) P3,257.50 — where the workers and employees
work everyday, including premium payments for
Sundays or rest days, special days and regular
holidays.cralaw
(ii) P3,041.67 — where the workers and employees
do not work but considered paid on rest days,
special days and regular holidays.cralaw
(iii) P2,616.67 — where the workers and
employees do not work and are not considered
paid on Sundays or rest days.cralaw
(iv) P2,183.33 — where the workers and employees
do not work and are not considered paid on
Saturdays and Sundays or rest days.cralaw
c) Workers and employees who, prior to July 1,
1989, were receiving a basic wage of more than
P100.00 per day or its monthly equivalent, are
not by law entitled to the wage increase
provided under the Act. They may however,
receive wage increases through the correction of
wage distortions in accordance with Section 16,
Chapter I of these Rules.cralaw
SECTION 5. Daily Statutory Minimum Wage Rates. —
The daily minimum wage rates of workers and
employees shall be as follows:
Sector/Industry Under Under
R. A. 6640 R. A. 6727
(Effective (Effective
Dec. 14, July 1,
1987) 1989)
A. NATIONAL CAPITAL REGION
Non-Agriculture P64.00
P89.00
Agriculture
Plantation 54.00 79.00
Non-Plantation 43.50 68.50
Cottage/Handicraft
Employing more than 30
workers 52.00 77.00
Employing not more than
38
30 workers 50.00 75.00 employing not more than 20 workers
Non-Agriculture 64.00 79.00
Private Hospitals
With bed capacity of more Agriculture Plantation
than 100 64.00 89.00 Products Other than Sugar 54.00
69.00
With bed capacity of 100
or less 60.00 85.00 Sugar 48.50 63.50

Retail/Service Private Hospitals 60.00 75.00

Employing more than 15
workers 64.00 89.00 Retail/Service
Cities w/ population of more
Employing 11 to 15 than 150,000
workers 60.00 85.00
Employing more than
Employing not more than 15 workers 64.00
10 workers 43.00 68.00 79.00

B. OUTSIDE NATIONAL CAPITAL REGION Employing 11 to 15 workers 60.00

75.00
Non-Agriculture 64.00 89.00
Municipalities and Cities
Agriculture w/ population of not more
Plantation with annual gross than 150,000
sales of P5M or more 54.00
79.00 Employing more than 10
workers 60.00 75.00
Plantation with annual gross
sales of less than P5M 54.00 SECTION 6. Suggested Formula in Determining the
74.00 Equivalent Monthly Statutory Minimum Wage Rates.
— Without prejudice to existing company
Non-plantation 43.50 58.50 practices, agreements or policies, the following
formula may be used as guides in determining the
Cottage/Handicraft equivalent monthly statutory minimum wage rates:
Employing more than
30 workers 52.00 67.00 a) For those who are required to work everyday
including Sundays or rest days, special days and
Employing not more regular holidays:
than 30 workers 50.00 65.00
Equivalent Applicable daily wage rate (ADR) x
Private Hospitals 60.00 85.00 390.90 days

Retail/Service Monthly = ———————————————————

Cities w/ population of more
than 150,000 Rate (EMR) 12

Employing more than Where 390.90 days =

15 workers 64.00 89.00
302 days Ordinary working days
Employing 11 to 15 workers 60.00 85.00
20 days 10 regular holidays x 200%
Employing not more than
10 workers 43.00 58.00 66.30 days 51 rest days x 130%

Sugar Mills 2.60 days 2 special days x 130%

Agriculture 390.90 days Total equivalent number of days.

Plantation w/ annual gross b) For those who do not work but considered paid
sales of P5M or more 48.50 73.50 on rest days, special days and regular holidays:

Plantation w/ annual gross ADR x 365 days

sales of less than P5M 48.50 68.50
EMR = ————————
Non-plantation 43.50 58.50
12
Business Enterprises w/ Capitalization
of not more than P500,000 and Where 365 days =
39

302 days Ordinary working days
51 days Rest days
10 days Regular holidays
2 days Special days
365 days Total equivalent number of days
c) For those who do not work and are not
considered paid on Sundays or rest days:
ADR x 314 days
EMR = ———————
12
Where 314 days =
302 days Ordinary working days
10 days Regular holidays
2 days Special days (If considered
paid; If actually worked,
this is equivalent to 2.6 days)
314 days Total equivalent number of days
d) For those who do not work and are not
considered paid on Saturdays or rest days:
ADR x 262 days
EMR = ———————
12
Where 262 days =
250 days Ordinary working days
10 days Regular holidays
2 days Special days (If considered paid; If
actually
worked, this is equivalent to 2.6 days)
262 days Total equivalent number of days
Note: For workers whose rest days fall on
Sundays, the number of rest days in a year is
reduced from 52 to 51 days, the last Sunday of
August being a regular holiday under Executive
Order No. 201. For purposes of computation, said
holiday, although still a rest day for them, is
included in the ten regular holidays. For
workers whose rest days do not fall on Sundays,
the number of rest days is 52 days, as there are
52 weeks in a year.
Nothing herein shall be considered as
authorizing the reduction of benefits granted
under existing agreements or employer
practices/policies.cralaw
SECTION 7. Basis of Minimum Wages Rates. — The
statutory minimum wage rules prescribed under
the Act shall be for the normal working hours,
which shall not exceed eight hours work a
day.cralaw
SECTION 8. Creditable Wage Increase. —
a) No wage increase shall be credited as
compliance with the increases prescribed under
the Act unless expressly provided under
collective bargaining agreements; and, such wage
increase was granted not earlier than April 1,
1989 but not later than July 1, 1989. Where the
wage increase granted is less than the
prescribed increase under the Act, the employer
shall pay the difference.cralaw
b) Anniversary wage increase provided in
collective agreements, merit wage increase, and
those resulting from the regularization or
promotion of employees shall not be credited as
compliance thereto.cralaw
SECTION 9. Workers Paid by Results. —
a) All workers paid by results, including those
who are paid on piecework, takay, pakyaw, or
task basis, shall receive not less than the
applicable statutory minimum wage rates
prescribed under the Act for the normal working
hours which shall not exceed eight hours work a
day, or a proportion thereof for work of less
than the normal working hours.cralaw
The adjusted minimum wage rates for workers paid
by results shall be computed in accordance with
the following steps:
1) Amount of increase in AMW - Previous AMW x
100 = % Increase;
2) Existing rate/piece x % increase = increase
in rate/piece;
3) Existing rate/piece + increase in rate/piece
= Adjusted rate/piece.cralaw
Where AMW is the applicable minimum wage
rate.cralaw
b) The wage rates of workers who are paid by
results shall continue to be established in
accordance with Article 101 of the Labor Code,
as amended and its implementing
regulations.cralaw
7. Tan v. Lagrama, August 15, 2002
FACTS: LAGRAMA was employed as pinter, making ad
billboards and mural for motion pictures by Tan,
owner of Crown and Empire Theater for more than
10 years
 Lagrama was summoned in 1998 for peeing at
work station; fired “get out of my sight”
40
  Lagrama denied this saying he was not the
only one who entered the area; mere minor
infraction
 Thus, complaint for illegal dismissal
filed
 Tan said no, he was an independent
contractor paid on a fixed piece-work
basis = “no mural, no pay”
LA: illegally dismissed
NLRC: reversed
CA: reversed; there was control
ISSUE: Was Lagrama paid wages?
HELD: USING THE FOUR-FOLD TEST:
1. SELECTION AND ENGAGEMENT
2. POWER TO TERMINATE
- Fired him when Lagrama urinated
3. CONTROL
- Worked at a designated area inside the
theater
- Rules on prohibition against urinating
in work area
- Control is not only on the desirable
result but also in the means and
method
4. PAY WAGES
- That Lagrama worked for Tan on a fixed
piece-work basis is of no moment.
Payment by result is a method of
compensation and does not define the
essence of the relation: IT IS THE
METHOD OF COMPUTING COMPENSATION not
basis w/n there’s EER
- IRR provides employees must be paid
thru payroll
- The fact that there’s no SSS
contribution does not mean no EER per
se
 There is no abandonment of work either
 Finding all four requisites, there is EER
RE ILLEGAL DISMISSAL CASE:
 Since regular employee, can only be
terminated by just cause
 Prohibition on urinating is a valid ground
BUT the same was not proved in this case
that indeed he urinated
CONCLUSION: ILLEGALLY DIMISSED
8. Philippine Spring Water Resources v.
Mahilum
FACTS: Mahilum was hired as VP for Sales and
Marketing by Philippine Spring Water with
monthly salary of P15k plus .25% commission for
every cash on delivery and another .25% on new
accounts
 In Christmas 2004, Mahilum was held as
over-all chairman of the affairs; thus, he
called ground for program of action and
budget plan
 But some visitors arrived; they discussed
sensitive legal issues relative to PH
Spring’s water drilling inside the plant
over the protest of nearby residents
 On rescheduled day, the program was
conducted without Mahilum’s presence; task
delegated to Evangelista, VP for Admin and
Finance
 On the event proper, he was not seen bec
there was some visitors of the company
 During the program, Lua was furious bec he
was not recognized and thus did not
deliver his inauguration speech – that
they deemed the speech “optional”
 The next day, Mahilum ordered to explain
to Lua; asked to submit written
explanation then consequently suspended
 He was later terminated
 Mahilum thus filed a case for illegal
dismissal
LA: dismissed; quitclaim was executed barring
him to question dismissal thus estopped; made
voluntarily
NLRC: reversed;
 Quitclaim did not bar him to institute
complaint
 Illegally dismissed
CA: reversed NLRC
 Quitclaim valid
CA MR: reversed earlier CA decision
ISSUE: is Mahilum entitled to the award of .25%
commission on sales fom Feb 2005 up to
termination of case?
HELD:
STATUS OF EMPLOYMENT:
 He was a regular employee; he was on
probationary status but already rendered 8
months of service
 Thus, he was illegally dismissed
o Behavior was not tantamount to
serious misconduct nor willful
disobedience
o It was mere inadvertence and
mistaken belief that he had
properly delegated the details of
the program
o Also, designation did not form part
of his duty
MONETARY CLAIMS
 Since illegally dismissed, entitled:
1. Reinstatement or
PAYMENT OF SEPARATION PAY – if
strained relationship; AND
2. Backwages – computed from time of
dismissal up to finality of the
decision
PROPRIETY OF AWARDING COMISSIONS AND DAMAGES
 .25% IS PART OF HIS BACKWAGES
 Backwages are granted for earnings lost
due to their illegal dismissal from work
 Reparation
 OUTSTANDING FEATURE: the degree of
assuredness to an employee that he would
have had them as earnings had he not been
illegally terminated from his employment
 based on earnings which the employee would
have obtained, either by virtue of a
lawful decree or order, as in the case of
a wage increase under a wage order, or by
rightful expectation, as in the case of
one’s salary or wage.
 determination of whether or not a
commission forms part of the basic salary
41
 depends upon the circumstances or
conditions for its payments
o commissions earned by salesmen form
part of their basic salary --
salesmen’s commissions are not
overtime payments, nor profit-
sharing payments nor any other
fringe benefit, but a portion of
the salary structure
o ON THE OTHER HAND, commissions paid
to or received by medical
representatives were excluded from
the term basic salary because these
were paid to the medical
representatives and rank-and-file
employees as productivity bonuses,
which were generally tied to the
productivity, or capacity for
revenue production, of a
corporation and such bonuses
closely resemble profit-sharing
payments and had no clear direct or
necessary relation to the amount of
work actually done by each
individual employee.
 Test: if forms part of basic salary,
commission is included
 In this case, the commission is based on
the monthly sales and cash payments in the
nature of OVERRIDING COMMISSIONS and not
sales commission
o It partook the nature of profit-
sharing based on quota
o Thus, no direct or necessary
relation to the amount of work he
actually performed
DOCTRINE: when is commission included in
backwages? When it forms part of employee’s basic
salary only
9. Mabeza v. NLRC, April 18, 1997
FACTS: MABEZA was employed by Hotel Supreme
Baguio
 Alleged that she and co-workers signed
compliance with min wage and other labor
standard provisions of law:
o “no complaints and paid accordingly
and treated well”
o This affidavit was signed by Mabeza
refised to go to the City
Prosecutor to swear to the veracity
and contents’ but the affidavits
were submitted to DOLE
 For refusing to swear, she was ordered to
turn over keys and remove her belongings;
she went on LOA but was advised to
continue her unofficial LOA
 Thus, filed a case for illegal dismissal
and alleged underpayment of wages
LA: dismissed
 Termination valid for loss of confidence
 Stole 1 piece of bedsheet, thermos and 2
towels
 In fact, theft and perjury cases filed
against her
NLRC: AFFIRMED
CA:
ISSUE: Was there illegal dismissal? – YES.
HELD:
in termination cases the employer bears the
burden of proof to show that the dismissal is
for just cause, the failure of which would mean
that the dismissal is not justified and the
employee is entitled to reinstatement.
 Allegation without proof that employee
“abandoned” her job is not enough to
constitute “just cause”
 Abandonment requisites:
1. Lack of intention to work
2. Presence of overt acts signifying
employee’s intent not to work
LOSS OF CONFIDENCE NOT SUBSTATITATED
 It took Hotel some time before instituting
the claim
 It was made after employee exposed it of
its scheme to avoid obligations under
Labor Code
 Thus, this constitutes unfair labor
practice
WHAT CONSTITUTE VALID MONEY CLAIMS:
Are meals, lodging and electric, water
consumption part? – NO.
1. Customarily furnished by the trade
2. Deductible facilities must be voluntarily
accepted in writing by the employee
3. Facilities must be charged at fair and
reasonable value
 These requisites not met in this instant
case
 Employer failed to present any company
policy that shows that meal and lodging
are part of the salary
 These were not facilities but supplements
– benefit or privilege granted
 Thus, clearly underpaid
 Given this, employee is entitled to
receive deficiency of the minimum wage as
part of the backwages
B. Wage-Fixing
Labor Code: Articles 99, 101, 120-127
Republic Act No. 6727 June 9, 1989
AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION
BY ESTABLISHING THE MECHANISM AND PROPER
STANDARDS THEREFOR, AMENDING FOR THE PURPOSE
ARTICLE 99 OF, AND INCORPORATING ARTICLES 120,
121, 122, 123, 124, 126 AND 127
INTO, PRESIDENTIAL DECREE NO. 442, AS AMENDED,
OTHERWISE KNOWN AS THE LABOR CODE OF THE
PHILIPPINES, FIXING NEW WAGE RATES, PROVIDING
WAGE INCENTIVES FOR INDUSTRIAL DISPERSAL TO THE
COUNTRYSIDE, AND FOR OTHER PURPOSES
Art. 99. Regional Minimum Wages. — The minimum
wage rates for agricultural and non-agricultural
employees and workers in each and every region
of the country shall be those prescribed by the
42
Regional Tripartite Wages and Productivity
Boards."
Section 4. (a) Upon the effectivity of this Act,
the statutory minimum wage rates of all workers
and employees in the private sector, whether
agricultural or non-agricultural, shall be
increased by twenty-five pesos (P25.00) per day,
except that workers and employees in plantation
agricultural enterprises outside of the National
Capital Region (NCR) with an annual gross sales
of less than five million pesos (P5,000,000.00)
in the preceding year shall be paid an increase
of twenty pesos (P20.00), and except further
that workers and employees of cottage/handicraft
industries, non-plantation agricultural
enterprises, retail/service establishments
regularly employing not more than ten (10)
workers, and business enterprises with a
capitalization of not more than five hundred
thousand pesos (P500,000.00) and employing not
more than twenty (20) employees, which are
located or operating outside the NCR, shall be
paid only an increase of fifteen pesos (P15.00):
Provided, That those already receiving above the
minimum wage rates up to one hundred pesos
(P100.00) shall also receive an increase of
twenty-five pesos (P25.00) per day, except that
the workers and employees mentioned in the first
exception clause of this Section shall also be
paid only an increase of twenty pesos (P20.00),
and except further that those employees
enumerated in the second exception clause of
this Section shall also be paid an increase of
fifteen pesos (P15.00): Provided, further, That
the appropriate Regional Board is hereby
authorized to grant additional increases to the
workers and employees mentioned in the exception
clauses of this Section if, on the basis of its
determination pursuant to Article 124 of the
Labor Code such increases are necessary.
(b) The increase of twenty-five pesos (P25.00)
prescribed under this Section shall apply to all
workers and employees entitled to the same in
private educational institutions as soon as they
have increased or are granted authority to
increase their tuition fees during school year
1989-1990. Otherwise, such increase shall be so
applicable not later than the opening of the
next school year beginning 1990.
(c) Exempted from the provisions of this Act are
household or domestic helpers and persons
employed in the personal service of another,
including family drivers.
Retail/service establishments regularly
employing not more than ten (10) workers may be
exempted from the applicability of this Act upon
application with and as determined by the
appropriate Regional Board in accordance with
the applicable rules and regulations issued by
the Commission. Whenever an application for
exemption has been duly filed with the
appropriate Regional Board, action on any
complaint for alleged non-compliance with this
Act shall be deferred pending resolution of the
application for exemption by the appropriate
Regional Board.
In the event that applications for exemptions
are not granted, employees shall receive the
appropriate compensation due them as provided
for by this Act plus interest of one per cent
(1%) per month retroactive to the effectivity of
this Act.
(d) If expressly provided for and agreed upon in
the collective bargaining agreements, all
increases in the daily basic wage rates granted
by the employers three (3) months before the
effectivity of this Act shall be credited as
compliance with the increases in the wage rates
prescribed herein, provided that, where such
increases are less than the prescribed increases
in the wage rates under this Act, the employer
shall pay the difference. Such increases shall
not include anniversary wage increases, merit
wage increases and those resulting from the
regularization or promotion of employees.
Where the application of the increases in the
wage rates under this Section results in
distortions as defined under existing laws in
the wage structure within an establishment and
gives rise to a dispute therein, such dispute
shall first be settled voluntarily between the
parties and in the event of a deadlock, the same
shall be finally resolved through compulsory
arbitration by the regional branches of the
National Labor Relations Commission (NLRC)
having jurisdiction over the workplace.
It shall be mandatory for the NLRC to conduct
continuous hearings and decide any dispute
arising under this Section within twenty (20)
calendar days from the time said dispute is
formally submitted to it for arbitration. The
pendency of a dispute arising from a wage
distortion shall not in any way delay the
applicability of the increase in the wage rates
prescribed under this Section.
RA 8188
SECTION 1. Section 12 of Republic Act Numbered
Sixty-seven hundred twenty-seven is hereby
amended to read to as follows:
“Sec. 12. Any person, corporation, trust, firm,
partnership, association or entity which refuses
or fails to pay any of the prescribed increases
or adjustments in the wage rates made in
accordance with this Act shall be punished by a
fine not less than Twenty-five thousand pesos
(P25,000) nor more One hundred thousand pesos
(P100,000) or imprisonment of not less than two
(2) years nor more than four (4) years, or both
such fine and imprisonment at the discretion of
the court: Provided, That any person convicted
under this Act shall not be entitled to the
benefits provided for under the Probation Law.
43
“The employer concerned shall be ordered to pay
an amount equivalent to double the unpaid
benefits owing to the employees: Provided, That
payment of indemnity shall not absolve the
employer from the criminal liability imposable
under this Act. “If the violation is committed by
a corporation, trust or firm, partnership,
association or any other entity, the penalty of
imprisonment shall be imposed upon the entity’s
responsible officers, including, but not limited
to, the president, vicepresident, chief
executive officer, general manager, managing
director or partner.”
Republic Act No. 9178 November 13, 2002
AN ACT TO PROMOTE THE ESTABLISHMENT OF BARANGAY
MICRO BUSINESS ENTERPRISES (BMBEs), PROVIDING
INCENTIVES AND BENEFITS THEREFOR, AND FOR OTHER
PURPOSES.
INCENTIVES AND BENEFITS
Section 7. Exemption from Taxes and Fees – All
BMBEs shall be exempt from tax for income
arising from the operations of the enterprise.
The LGUs are encouraged either to reduce the
amount of local taxes, fees and charges imposed
or to exempt BMBEs from local taxes, fees and
charges.
Section 8. Exemption from the Coverage of the
Minimum Wage Law – The BMBEs shall be exempt from
the coverage of the Minimum Wage
Law: Provided, That all employees covered under
this Act shall be entitled to the same benefits
given to any regular employee such as social
security and healthcare benefits.
NWPC Guidelines No. 2, Series of 2012,
Guidelines on the Implementation of the Two-
Tiered Wage System
Two-Tiered Wage System - refers to a pay system
consisting of:
l. minimum wage; and
2. incentive pay based on productivity
improvement and gainsharing.
- The second tier shall consist of productivity
bonuses and incentives based on agreement
between workers and management.
- ADVISORY
Wage Order No. NCR-20
10. David v. Macasio, July 2, 2014
FACTS: MACASIO filed a labor case against David
(Yiels Hog Dealer) for non-payment of overtime
pay, holiday, 13th month
 He was working as butcher
o Salary increased to P700 from 2005
 David said he was on “pakyaw” or task
basis thus not entitled to benefits
claimed
LA: dismissed complaint; pakyaw basis
NLRC: affirmed
CA: reversed
 Yes, pakyaw basis but entitled to claims
MACASIO’S POSITION
 P700 was his daily wage and there’s EER
ISSUE: Is Macasio entitled to the claims?
HELD:
 First of all, the “pakyaw” basis is not
indicative of EER but merely a mode of
calculating wages only
o Being pakyaw, not applicable yung
straight-hour work
 Second, there’s EER using the four-fold
test
ON ENTITLEMENT TO BENEFIT CLAIMS
 PD 851 AND ART 82 OF ITS IRR exempts
pakyaw workers from holiday, SIL and 13th
month pay
 But CA used Serrano vs Severino Transit
saying that exemption only applies if
pakyaw worker is a field personnel
IS MACASIO A FIELD PERSONNEL?
 "Field personnel" shall refer to non-
agricultural employees who regularly
perform their duties away from the
principal place of business or branch
office of the employer and whose actual
hours of work in the field cannot be
determined with reasonable certainty.
 Right to holiday pay – entitled to daily
wage except if retail and service
establishment employee rendering less than
10 hours of work
 Service incentive – if rendered 1 year
already, allowed to 5 days a year of leave
with pay
o EXCEPT: Field Personnel or those
unsupervised by employer including
those on task or contract basis
GR: all are entitled
EXN: those expressly exempted:
 Filed personnel
 employees whose time and performance is
unsupervised by the employer
 those who are engaged on task or
contract basis
 Note that unlike Article 82 of the Labor
Code, the IRR on holiday and SIL pay do
not exclude employees "engaged on task
basis" as a separate and distinct category
from employees classified as "field
personnel." Rather, these employees are
altogether merged into one classification
of exempted employees.
 The discrepancy is resolved by Cebu
Institute vs Ople: those engaged on task
or contractual basis:
o petitioner's teaching personnel
cannot be deemed field personnel
which refers "to non-agricultural
employees who regularly perform
their duties away from the
44
 principal place of business or
branch office of the employer and
whose actual hours of work in the
field cannot be determined with
reasonable certainty.
o Thus, entitled
 RULE: merely a pakyaw employee does not
automatically exclude them; they must be
field personnel
 Thus, in this case, NLRC committed GAD in
dismissing employee’s complaint without
first determining if he’s a field
personnel or not
MACASIO IS NOT A FIELD PERSONNEL
Thus, entitled to Holiday Pay and 13th month pay
 Regularly performed his duties at the
principal place of business
 Actual hours of work can be determined
with reasonable certainty
 David supervised his time and performance
duties
11. Nasipit Lumber Co. v. NWPC, April 27,
1998
FACTS: Region X Tripartite Wage And Productivity
Board issued Wage Order No. RX-01 increasing min
wage in Northern Mindanao:
 Then Supplemental Wage Order was issued:
o Upon the effectivity of the
original Wage Order RX-01, all
workers and employees in the
private sector in Region X already
receiving wages above the statutory
minimum wage rates up to one
hundred and twenty pesos (P120.00)
per day shall also receive an
increase of P13, P11, P9 per day,
as provided for under Wage Order
No. RX-01
 Contention: Sec 3 (2) of Guidelines No. 3
(determination of distressed applicant-
firm)
o Establishment belonging to
distressed industry - an
establishment that is engaged in an
industry that is distressed due to
conditions beyond its control as
may be determined by the Board in
consultation with DTI and NWPC
 Petitioners as engaged in logging industry
claim to be distressed due to worldwide
recession, etc
 Oppositors said they are not bec their
capitalization has not been impaired by
25%
 Citing liquidity problems and business
decline in the wood-processing industry,
the RTWPB approved the applicants' joint
application for exemption Oppositors
appealed before the NWPC
 NWPC affirmed the ALCO’s application but
reversed the application for exemption by
NALCO and PWC
o Not valid bec no approval by the
Commission
o That under Sec. 1. Application For
Exemption. Whenever a wage order
provides for exemption,
applications thereto shall be filed
with the appropriate Board which
shall process the same, subject to
guidelines issued by the
Commission.
o It is the commissioner that has
power to determine w/n qualified
for the exemption:
 When accumulated losses at end of the
period under review have impaired by at
least 25 percent the:
ISSUE: Is the approval of NWPC required? – YES.
HELD
Power to Prescribe Guidelines Lodged in the
NWPC, Not in the RTWPB
 ART 121 LC provides the powers and
functions of NWPC
o (c) Prescribe rules
o (d) review regional wage level set
by RTWPB
 While the RTWPB has the power to issue
wage orders under Article 122 (b) of the
Labor Code, such orders are subject to the
guidelines prescribed by the NWPC
 Also, NWPC has power to provide exemptions
o the NWPC authorized the RTWPB to
issue exemptions from wage orders,
but subject to its review and
approval
o Since the NWPC never assented to
Guideline No. 3 of the RTWPB, the
said guideline is inoperative and
cannot be used by the latter in
deciding or acting on petitioners'
application for exemption
The Insertion in Guideline No. 3 of "Distressed
Industry" as a Criterion for Exemption Void
 Thus no vested rights granted to companies
Denial of application not arbitrary
 Companies were not able to prove to have
capital impairment of at least 25% in the
last full accounting period preceding the
application
DOCTRINE: The Labor Code, as amended by RA 6727
(the Wage Rationalization Act), grants the
National Wages and Productivity Commission
(NWPC) the power to prescribe rules and
guidelines for the determination of appropriate
wages in the country. Hence, "guidelines" issued
by the Regional Tripartite Wages and
Productivity Boards (RTWPB) without the approval
of or, worse, contrary to those promulgated by
the NWPC are ineffectual, void and cannot be the
source of rights and privileges
12. ECOP v. NWPC, RTWPB-NCR and TUCP,
September 24, 1991
FACTS: ECOP is questioning the validity of a
Wage Order issued by RTWB-NCR
 The said Wage Order increased the minimum
wage by P17 daily in NCR
45
  Order is assailed as it grants an “across employees receiving a certain
the board” wage increases to workers denominated salary ceiling. In
already being paid more than existing min other words, workers already being
wage rate (up to P125 a day) paid more than the existing minimum
 Alleged that this preempts collective wage (up to a certain amount stated
bargaining in the Wage Order) are also to be
given a wage increase
ISSUE: was the order valid? – YES. 
HELD 13. Metropolitan Bank and Trust Company v.
NWPC
 Valid delegation: Congress may delegate
FACTS: RTWPB Region II issued Wage Order
the power to fix rates provided that, as
granting an across the board wage increase of
in all delegations cases, Congress leaves
P15/day
sufficient standards
Wage Minimum Wage  Banker’s Council for Personnel Management
paid to any employee it means more than seeks exemption from the coverage since it
shall mean the setting a floor wage was already paying the prevailing min wage
remuneration or to upgrade existing in NCR
earnings, however wages, as ECOP takes  Application denied saying BCPM is covered
designated, capable of it to mean. "Minimum by Order
being expressed in wages" underlies the  Thus, BPCM questioned the validity of the
terms of money, effort of the State, Wage Order
whether fixed or as Republic Act No. ISSUE: is the wage order valid?
ascertained on a time, 6727 expresses it, "to Is BCPM covered?
task, piece, or promote productivity-
commission basis, or improvement and gain- HELD:
other method of sharing measures to VALID ACT
calculating the same, ensure a decent  It was in the nature of subordinate
which is payable by an standard of living for legislation
employer to an the workers and their  In this case, the RTWPB did not issue a
employee under a families; to guarantee floor-wage nor salary-ceiling but an
written or unwritten the rights of labor to across the board wage increase
contract of employment its just share in the  In doing so, the RTWPB exceeded its
for work done or to be fruits of production; authority by extending the coverage of the
done, or for services to enhance employment Wage Order to wage earners receiving more
rendered or to be generation in the than the prevailing minimum wage rate,
rendered and includes countryside through without a denominated salary ceiling
the fair and industry dispersal;
 Thus, it granted additional benefits not
reasonable value, as and to allow business
contemplated by R.A. No. 6727
determined by the and industry
Secretary of Labor, of reasonable returns on 
board, lodging, or investment, expansion CONCLUSION: Section 1 of Wage Order No. R02-03
other facilities and growth," 25 and as issued on October 17, 1995 by the Regional
customarily formatted the Constitution Tripartite Wages and Productivity Board for
by the employer to the expresses it, to Region II, Tuguegarao, Cagayan is
employee. "Fair and affirm "labor as a declared VALID insofar as the mandated increase
reasonable value" primary social applies to employees earning the prevailing
shall not include any economic force." 26 As minimum wage rate at the time of the passage of
profit to the employer the Court indicated, the Wage Order and VOID with respect to its
or to any person the statute would have application to employees receiving more than the
affiliated with the no need for a board if prevailing minimum wage rate at the time of the
employer. the question were passage of the Wage Order
simply "how much." The
State is concerned, in 14. NWPC and RTWP v. APL, March 12, 2014
addition, that wages FACTS: RTWPB–NCR issued Wage Order No. NCR–07 on
are not distributed October 14, 1999 imposing an increase of
unevenly, and more P25.50/day on the wages of all private sector
important, that social workers and employees in the NCR and pegging the
justice is subserved minimum wage rate in the NCR at P223.50/day
 However, Section 2 and Section 9 of Wage
 there are two ways of fixing the minimum Order No. NCR–07 exempted certain sectors
wage: the "floor-wage" method and the and industries from its coverage
"salary-ceiling" method: o SEC 1: COVERED ESTABLISHMENTS
o "floor-wage" method involves the o SEC 9: exemption upon application:
fixing of a determinate amount to  Distressed
be added to the prevailing  Exporters including indirect
statutory minimum wage rates exporters with at least 50%
o "salary-ceiling" method, the wage export sales and with
adjustment was to be applied to forward contracts with their
46
 foreign buyers/principals
entered into on or twelve
(12) months before the date
of publication of this Order
may be exempt during the
lifetime of said contract
but not to exceed twelve
(12) months from the
effectivity of this Order
 Due to exemption in the increase, APL and
TNMR filed an appeal that the exemption
was expanded
NWPC: valid provisions
 Took into consideration the Asian Economic
Turmoil
CA: reversed
 did not include the power to grant
additional exemptions from the adjusted
minimum wage
ISSUE: was the provision on exemption valid? –
YES.
HELD:
Guideline provides how to determine exemption in
addition to those expressly mentioned:
(1) assist establishments experiencing temporary
difficulties due to losses maintain the
financial viability of their businesses and
continued employment of their workers;
(2) encourage the establishment of new
businesses and the creation of more jobs,
particularly in areas outside the National
Capital Region and Export Processing Zones, in
line with the policy on industry dispersal; and
(3) ease the burden of micro establishments,
particularly in the retail and service sector,
that have a limited capacity to pay.
 Exemptible categories outside of the
abovementioned list may be allowed only if
they are in accord with the rationale for
exemption reflected
CRITERIA FOR EXEMPTION
GR: 4 expressed categories:
1. Distressed establishments
2. New business enterprises (NBEs)
3. Retail/Service establishments employing
not more than ten (10) workers
4. Establishments adversely affected by
natural calamities
EXN: Grant further exemptions based on
(1) in accord with the rationale for
exemption;
(2) reviewed/approved by the NWPC; and
(3) upon review, the RTWPB issuing the wage
order must submit a strong and justifiable
reason or reasons for the inclusion of
such category. It is the compliance with
the second requisite that is at issue here
EXEMPTIONS REVIEWED BY NWPC
 The wage orders issued by the RTWPBs could
be reviewed by the NWPC motu proprio or
upon appeal
15. Philippine Geothermal, Inc. Employees
Union v. Chevron Geothermal Phils.
Holdings, Inc.
FACTS: Union and Chevron executed a CBA
effective from Nov 1, 2007 until Oct. 31, 2012
 Wage Increase:
o Effective Nov. 1, 2007, P260,000.00
- lump sum payment for the 1st year
of this agreement (taxable).
- Effective Nov. 1, 2008, across
the board increase on the monthly
salary in the amount of P1,500.00.
- Effective Nov. 1, 2009, across
the board increase on the monthly
salary in the amount of P1,500.00.
o Increase based on year regularized
 Union sent a letter to company claiming
that the provision is not being properly
implemented and may result to salary
distortion
 Company denies salary distortion and
claimed that renumeration is based on
“similar values for similar jobs”
o employees in similarly-valued jobs
would have similar salary rates
 Dispute brought before Voluntary
Arbitration for alleged contravention of
CBA provisions
 That 2 employees were given salary
increase despite not attaining regular
status
VA: ruled in favor of Chevron
CA: affirmed
ISSUE: was the increase violative of the CBA
provision? – NO.
HELD
Increase is valid:
 As claimed by Chevron, increase was due to
the increase in the hiring rates at the
time these employees were hired, and not
due to CBA
There is no wage distortion
 ELEMENTS OF WAGE DISTORTION:
(1) an existing hierarchy of positions
with corresponding salary rates;
(2) a significant change in the salary
rate of a lower pay class without a
concomitant increase in the salary
rate of a higher one;
(3) the elimination of the distinction
between the two levels; and
(4) the existence of the distortion in
the same region of the country
 The apparent increase in Lanao and
Cordovales' salaries as compared to the
other company workers who also have the
same salary/pay grade with them should not
be interpreted to mean that they were
given a premature increase. rather, it was
because when they were hired by respondent
in 2009, when the hiring rates were
relatively higher as compared to those of
the previous years.
OTHER EMPLOYEES NOT ENTITLED TO INCREASE PER SE
 The provision of in 124 re actions taken
to “resolve wage distortion” not
applicable
47
  If given effect, it’ll tie the hands of
employers
 It is management prerogative
CONCLUSION: NO WAGE DISTORTION
Wage Distortion
16. Metropolitan Bank & Trust Company
Employees Union-ALU-TUCP v. NLRC,
September 10, 1993
FACTS: Bank entered into a CBA with MBTCEU
graning a month P900 wage increase in 1989; P600
in 1990 and P200 in 1991
 A month later, RA 6727 was enacted: Sec 4:
o A. P25 inc per day provided that
those already receiving min wage up
to P100 shall also receive P25 wage
increase
o D. If expressly provided for and
agreed upon in the collective
bargaining agreements, all
increases in the daily basic wage
rates granted by the employers
three (3) months before the
effectivity of this Act shall be
credited as compliance with the
increases in the wage rates
prescribed herein, provided that,
where such increases are less than
the prescribed increases in the
wage rates under this Act, the
employer shall pay the difference.
Such increase shall not include
anniversary wage increases, merit
wage increase and those resulting
from the regularization or
promotion of employees
 Pursuant to this, Bank gave P25 increase
or P750 to its probationary employees and
those already regular but whose daily rate
was P100 and below but not those with more
than P100
ISSUE: whether or not the implementation by the
Metropolitan Bank and Trust Company of Republic
Act No. 6727, mandating an increase in pay of
P25 per day for certain employees in the private
sector, created a distortion that would require
an adjustment under said law in the wages of the
latter’s other various groups of employees – YES.
HELD:
Wage Distortion under RA 6727 IRR
 Wage Distortion means a situation where an
increase in prescribed wage rates results
in the elimination or severe contraction
of intentional quantitative differences in
wage or salary rates between and among
employee groups in an establishment as to
effectively obliterate the distinctions
embodied in such wage structure based on
skills, length of service, or other
logical bases of differentiation.
 Question of fact
 In this case, majority of NLRC members
agree that there is wage distortion but
differ as to the extent
 In mandating an adjustment, the law did
not require that there be an elimination
or total abrogation of quantitative wage
or salary differences; a severe
contraction thereof is enough. As has been
aptly observed by Presiding Commissioner
Edna Bonto-Perez in her dissenting
opinion, the contraction between personnel
groupings comes close to eighty-three
(83%), which cannot, by any stretch of
imagination, be considered less than
severe.
o DISSENT: Minimum Wage = % x
Prescribed = Distortion
 We find the formula suggested then by
Commissioner Bonto-Perez, which has also
been the standard considered by the
regional Tripartite Wages and Productivity
Commission for the correction of pay scale
structures in cases of wage distortion, to
well be the appropriate measure to balance
the respective contentions of the parties
in this instance. We also view it as being
just and equitable
CONCLUSION: there’s wage distortion based on the
formula
17. Prubankers Association v. Prudential
Bank
FACTS: in 1993, RTWPB Region V issued a Wage
Order providing for a COLA to workers in private
sector:
 Rendered at least 3 months P17.50, P15.50
and P10 in certain regions
 Another Wage Order was issued in Region
VII ordering the integration of such COLA
into the basic pay of all workers
 Association was then granted P17.50 in
Naga and P150 per month but not applicabe
to those outside the region
 Thus, Association called for meeting to
resolve the alleged wage distortion
CA: No wage distortion
ISSUE: whether or not a wage distortion resulted
from respondent’s implementation of the said Wage
Orders? – NO.
HELD: there is no wage distortion in covered
branches
 In the said branches, there was an
increase in the salary rates of all pay
classes.
 Furthermore, the hierarchy of positions
based on skills, length of service and
other logical bases of differentiation was
preserved
 a disparity in wages between employees
holding similar positions but in different
regions does not constitute wage
distortion as contemplated by law.
o a wage distortion arises when a
wage order engenders wage parity
between employees in different
rungs of the organizational ladder
of the same establishment. It bears
emphasis that wage distortion
involves a parity in the salary
48
 rates of different pay classes
which, as a result, eliminates the
distinction between the different
ranks in the same region
RA 6727 ALLOWS DIFFENT REGIONAL WAGES
 a disparity in wages between employees
with similar positions in different
regions is necessarily expected
 varying in each region of the country are
controlling factors such as the cost of
living; supply and demand of basic goods,
services and necessities; and the
purchasing power of the peso.
DOCTRINE: Wage distortion presupposes an
increase in the compensation of the lower ranks
in an office hierarchy without a corresponding
raise for higher-tiered employees in the same
region of the country, resulting in the
elimination or the severe diminution of the
distinction between the two groups. Such
distortion does not arise when a wage order
gives employees in one branch of a bank higher
compensation than that given to their
counterparts in other regions occupying the same
pay scale, who are not covered by said wage
order. In short, the implementation of wage
orders in one region but not in others does not
in itself necessarily result in wage distortion
18. Bankard Employees Union-Workers
Alliance Trade Unions v. NLRC,
February 17, 2004
FACTS: Bankard classifies its employees by
levels
 The approved New Salary Scale was made
retroactive to make its rate competitive
in the industry
o Level I and V – P1000
o Level II, III, IV – P900
 Adjustment applicable to those with min
rates
 This move drew the Union to press for the
increase in the salary of its old, regular
employees
 Bankard said no, it has no obligation to
grant across the board increase
o Level is not on the basis of length
of servie
 Notice of Strike denied; issue not
stikeable
ISSUE: was there a wage distortion in not
applying increase to old employees?
HELD
Elements of Wage Distortion:
(1.) An existing hierarchy of positions with
corresponding salary rates;
(2) A significant change in the salary rate of a
lower pay class without a concomitant increase
in the salary rate of a higher one;
- This is wanting thin this case
- While seniority may be a factor in
determining the wages of employees, it
cannot be made the sole basis in cases
where the nature of their work differs
- Scheme of classification of employees for
compensation is a matter of management
judgment and discretion
(3) The elimination of the distinction between
the two levels;
- Also wanting
- to Our mind said gap is not significant as
to obliterate or result in severe
contraction of the intentional quantitative
differences in the salary rates between the
employee group
- as mentioned, the classification is based
on rank and not on seniority
(4) The existence of the distortion in the same
region of the country.
 Also, the distortion is not due to
prescribed law or wage order
o If the compulsory mandate under
Article 124 to correct wage
distortion is applied to voluntary
and unilateral increases by the
employer in fixing hiring rates
which is inherently a business
judgment prerogative, then the
hands of the employer would be
completely tied even in cases where
an increase in wages of a
particular group is justified due
to a re-evaluation of the high
productivity of a particular group,
or as in the present case, the need
to increase the competitiveness of
Bankards hiring rate
DOCTRINE: The mere factual existence of wage
distortion does not, however, ipso facto result to
an obligation to rectify it, absent a law or
other source of obligation which requires its
rectification.
C. Payment of Wages
Labor Code: Articles 102-105, 112-119 (check
Art. 259 – Agency Fees, in relation to Art. 112)
Omnibus Rules: Book III, Rule VIII
RULE VIII
Payment of Wages
SECTION 1. Manner of wage payment. — As
a general rule, wages shall be paid in
legal tender and the use of tokens,
promissory notes, vouchers, coupons, or
any other form alleged to represent legal
tender is absolutely prohibited even when
expressly requested by the
employee.cralaw
SECTION 2. Payment by check. — Payment
of wages by bank checks, postal checks or
money orders is allowed where such manner
of wage payment is customary on the date
of the effectivity of the Code, where it
is so stipulated in a collective
agreement, or where all of the following
conditions are met:
49
(a) There is a bank or other facility for
encashment within a radius of one (1)
kilometer from the workplace;
(b) The employer or any of his agents or
representatives does not receive any
pecuniary benefit directly or indirectly
from the arrangement;
(c) The employees are given reasonable
time during banking hours to withdraw
their wages from the bank which time
shall be considered as compensable hours
worked if done during working hours; and
(d) The payment by check is with the
written consent of the employees
concerned if there is no collective
agreement authorizing the payment of
wages by bank checks.cralaw
SECTION 3. Time of payment. — (a) Wages
shall be paid not less than once every
two (2) weeks or twice a month at
intervals not exceeding sixteen (16)
days, unless payment cannot be made with
such regularity due to force majeure or
circumstances beyond the employer's
control in which case the employer shall
pay the wages immediately after such
force majeure or circumstances have
ceased.cralaw
(b) In case of payment of wages by
results involving work which cannot be
finished in two (2) weeks, payment shall
be made at intervals not exceeding
sixteen days in proportion to the amount
of work completed. Final settlement shall
be made immediately upon completion of
the work.cralaw
SECTION 4. Place of payment. — As a
general rule, the place of payment shall
be at or near the place of undertaking.
Payment in a place other than the work
place shall be permissible only under the
following circumstances:
(a) When payment cannot be effected at or
near the place of work by reason of the
deterioration of peace and order
conditions, or by reason of actual or
impending emergencies caused by fire,
flood, epidemic or other calamity
rendering payment thereat impossible;
(b) When the employer provides free
transportation to the employees back and
forth; and
(c) Under any other analogous
circumstances; Provided, That the time
spent by the employees in collecting
their wages shall be considered as
compensable hours worked;
(d) No employer shall pay his employees
in any bar, night or day club, drinking
establishment, massage clinic, dance
hall, or other similar places or in
places where games are played with stakes
of money or things representing money
except in the case of persons employed in
said places.cralaw
SECTION 5. Direct payment of wages. —
Payment of wages shall be made direct to
the employee entitled thereto except in
the following cases:
(a) Where the employer is authorized in
writing by the employee to pay his wages
to a member of his family;
(b) Where payment to another person of
any part of the employee's wages is
authorized by existing law, including
payments for the insurance premiums of
the employee and union dues where the
right to check-off has been recognized by
the employer in accordance with a
collective agreement or authorized in
writing by the individual employees
concerned; or
(c) In case of death of the employee as
provided in the succeeding Section.cralaw
SECTION 6. Wages of deceased employee. —
The payment of the wages of a deceased
employee shall be made to his heirs
without the necessity of intestate
proceedings. When the heirs are of age,
they shall execute an affidavit attesting
to their relationship to the deceased and
the fact that they are his heirs to the
exclusion of all other persons. In case
any of the heirs is a minor, such
affidavit shall be executed in his behalf
by his natural guardian or next of kin.
Upon presentation of the affidavit to the
employer, he shall make payment to the
heirs as representative of the Secretary
of Labor and Employment.cralaw
SECTION 7. Civil liability of employer
and contractors. — Every employer or
indirect employer shall be jointly and
severally liable with his contractor or
sub-contractor for the unpaid wages of
the employees of the latter. Such
employer or indirect employer may require
the contractor or sub-contractor to
furnish a bond equal to the cost of labor
under contract on condition that the bond
will answer for the wages due the
employees should the contractor or
subcontractor, as the case may be, fail
to pay the same.cralaw
SECTION 8. Job Contracting. — There is
job contracting permissible under the
Code if the following conditions are met:
(a) The contractor carries on an
independent business and undertakes the
contract work on his own account under
50
his own responsibility according to his
own manner and method, free from the
control and direction of his employer or
principal in all matters connected with
the performance of the work except as to
the results thereof; and
(b) The contractor has substantial
capital or investment in the form of
tools, equipment, machineries, work
premises, and other materials which are
necessary in the conduct of his
business.cralaw
SECTION 9. Labor-only contracting. — (a)
Any person who undertakes to supply
workers to an employer shall be deemed to
be engaged in labor-only contracting
where such person:
(1) Does not have substantial capital or
investment in the form of tools,
equipment, machineries, work premises and
other materials; and
(2) The workers recruited and placed by
such person are performing activities
which are directly related to the
principal business or operations of the
employer in which workers are habitually
employed.cralaw
(b) Labor-only contracting as defined
herein is hereby prohibited and the
person acting as contractor shall be
considered merely as an agent or
intermediary of the employer who shall be
responsible to the workers in the same
manner and extent as if the latter were
directly employed by him.cralaw
(c) For cases not falling under this
Rule, the Secretary of Labor and
Employment shall determine through
appropriate orders whether or not the
contracting out of labor is permissible
in the light of the circumstances of each
case and after considering the operating
needs of the employer and the rights of
the workers involved. In such case, he
may prescribe conditions and restrictions
to insure the protection and welfare of
the workers.cralaw
SECTION 10. Payment of wages in case of
bankruptcy. — Unpaid wages earned by the
employees before the declaration of
bankruptcy or judicial liquidation of the
employer's business shall be given first
preference and shall be paid in full
before other creditors may establish any
claim to a share in the assets of the
employer.cralaw
SECTION 11. Attorney's fees. —
Attorney's fees in any judicial or
administrative proceedings for the
recovery of wages shall not exceed 10
percent of the amount awarded. The fees
may be deducted from the total amount due
the winning party.cralaw
SECTION 12. Non-interference in disposal
of wages. — No employer shall limit or
otherwise interfere with the freedom of
any employee to dispose of his wages and
no employer shall in any manner oblige
any of his employees to patronize any
store or avail of the services offered by
any person.cralaw
SECTION 13. Wages deduction. —
Deductions from the wages of the
employees may be made by the employer in
any of the following cases:
(a) When the deductions are authorized by
law, including deductions for the
insurance premiums advanced by the
employer in behalf of the employee as
well as union dues where the right to
check-off has been recognized by the
employer or authorized in writing by the
individual employee himself.cralaw
(b) When the deductions are with the
written authorization of the employees
for payment to the third person and the
employer agrees to do so; Provided, That
the latter does not receive any pecuniary
benefit, directly or indirectly, from the
transaction.cralaw
SECTION 14. Deduction for loss or damage.
— Where the employer is engaged in a
trade, occupation or business where the
practice of making deductions or
requiring deposits is recognized to
answer for the reimbursement of loss or
damage to tools, materials, or equipment
supplied by the employer to the employee,
the employer may make wage deductions or
require the employees to make deposits
from which deductions shall be made,
subject to the following conditions:
(a) That the employee concerned is
clearly shown to be responsible for the
loss or damage;
(b) That the employee is given reasonable
opportunity to show cause why deduction
should not be made;
(c) That the amount of such deduction is
fair and reasonable and shall not exceed
the actual loss or damage; and
(d) That the deduction from the wages of
the employee does not exceed 20 percent
of the employee's wages in a week.
19. SHS Perforated Materials v. Diaz,
October 13, 2010 (compare with Milan
v. NLRC, February 4, 2015)
FACTS: MASANGKAY ET AL are employees of Solid
Mills represented by the National federation of
Labor Unions (NAFLU), CBA Agent
51
  Employees and their families are allowed
to occupy SMI Village, a property of Solid
Mills out of liberality and for
convenience provided they are to vacate
anytime the Company deems fit
 Then Solid Mills informed employees that
it will cease operation due to serious
business losses
 Closure was recognized by NAFLU thru memo;
memo provided schedule of monetary
benefits
 Solid Mills filed with DOLE its
termination report
 Solid Mills sent notice to employees to
vacate SMI Vill
 Employees were required to sign a MOA with
release and quitclaim before their
benefits et al are to be released
o Those who signed agreed to vacate
o Petitioners herein refused to sugn
the documents and demanded to be
paid their benefits and separation
pay
 Thus, they filed case for withholding of
money benefits
o Solid Mills said complaint is
premature since they have not yet
vacated the village
LA: ordered Solid Mills to pay
NLRC: affirmed LA decision
 But held in abeyance the release of
benefits for Masangkay et al until they
turn over the property
 Failure to vacate justifies the
withholding of their benefits
CA: affirmed NLRC
ISSUE: whether Payment of the monetary claims of
petitioners should be held in abeyance pending
compliance of their accountabilities to
respondent solid mills by turning over the
subject lots they respectively occupy at SMI
village – YES.
HELD:
Institution of clearance procedures has legal
bases
 Requiring clearance before the release of
last payments to the employee is a
standard procedure among employers,
whether public or private
 Clearance procedures are instituted to
ensure that the properties, real or
personal, belonging to the employer but
are in the possession of the separated
employee, are returned to the employer
before the employee’s departure
CLEARANCE PROCEDURE IS THE EXEPTION TO THE RULE
 GR: wages may not be withheld and benefits
may not be diminished
 EXN: pursuant to clearance procedure
o CC Article 1706. Withholding of the
wages, except for a debt due, shall
not be made by the employer
o “Debt” in this case refers to any
obligation due from the employee to
the employer. Includes any
accountability
THE PRIVILEGE WAS ANCHORED ON THE EER
 The return of the property’s possession
became an obligation or liability on the
part of the employees when the employer-
employee relationship ceased
 respondent Solid Mills has the right to
withhold petitioners’ wages and benefits
because of this existing debt or liability
20. Commando Security v. NLRC, July 20,
1992
FACTS: Respondent Decierdo was a security guard
since 1981
 In 1987, Commando entred into a contract
to provide guarding services to Alsons
until 1988
 Then the properties administration head of
ALSONS requested for a periodic
reshuffling of guards
 Thus, recall order was served to Devierdo
– Report to HQ
 Then, he was assigned to Pacific Oil
Company – but Deceirdo refused to accept
assignment
 On the effectivity date of the Detail
Order, Decierdo filed a complaint for
illegal dismissal and monetary claims
LA: Company ordered to pay
NLRC: affirmed
ISSUE: is Desierdo entitled to the separation
pay?
NO NEED TO ASCERTAIN PERIOD TO GO BACK TO WORK
 He abandoned his work
 Thus, claim for separation pay rightfully
NOT granted
DUE PROCESS AFFORDED
 Full blown trial rightfully dispensed with
bec no necessity pursuant to Sec 3 on the
Revised Rules of NLRC – just submit
position papers; NLRC will then determine
whether there is a need for a formal
hearing
o all that respondent had to do was
present its payrolls and other
records which it is required to
keep and maintain and it could
already be determined on the face
thereof if complainant’s monetary
claims had actually been paid or no
o complainant’s entitlements were
computed by the Corporate Auditing
Examiner on the basis of
respondent’s records which was
secured by virtue of a subpoena
duces tecum
HOWEVER, DESEIRDO ENTITLED NOT TO HAVE 25%
DEDUCTION IN HIS SALARY
 this provision was found to iniquitous
hence null
 it is based on petitioner’s share in
procuring job placement for him
 courts the duty to be ever vigilant in
protecting the rights of workers who are
52
 placed in a contractually disadvantaged
position and who sign waivers or
provisions contrary to law and public
policy
 It goes without saying that respondent may
not deduct its so-called ‘share’ from the
salaries of its guards without the
latter’s express consent and if such
deductions are not allowed by law. This is
notwithstanding any previous agreement or
understanding between them. Any such
agreement or contract is void ab initio
being contrary to law and public policy

21. Mabeza v. NLRC, April 18, 1997

(repeated case)

53
PRESIDENTIAL DECREE No. 851 December 16,
1976
REQUIRING ALL EMPLOYERS TO PAY THEIR EMPLOYEES A
13th-MONTH PAY
WHEREAS, it is necessary to further protect the
level of real wages from the ravage of worldwide
inflation;
WHEREAS, there has been no increase in the legal
minimum wage rates since 1970;
WHEREAS, the Christmas season is an opportune
time for society to show its concern for the
plight of the working masses so they may
properly celebrate Christmas and New Year.
NOW, THEREFORE, I, FERDINAND E. MARCOS, by
virtue of the powers vested in me by the
Constitution, do hereby decree as follows:
Section 1. All employers are hereby required to
pay all their employees receiving a basic salary
of not more than P1,000 a month, regardless of
the nature of their employment, a 13th-month pay
not later than December 24 of every year.
Section 2. Employers already paying their
employees a 13th-month pay or its equivalent are
not covered by this Decree.
Section 3. This Decree shall take effect
immediately.
Done in the City of Manila, this 16th day of
December 1975.
RULES AND REGULATIONS IMPLEMENTING PRESIDENTIAL
DECREE NO. 851
By virtue of the powers vested in me by law, the
following rules and regulations implementing
Presidential Decree No. 851 are hereby issued
for the guidance of all concerned.
Section 1. Payment of 13-month Pay All employers
covered by Presidential Decree No. 851,
hereinafter referred to as the "Decree", shall
pay to all their employees receiving a basic
salary of not more than P1,000 a month a
thirteenth-month pay not later than December 24
of every year.
Section 2. Definition of certain terms As used in
this issuance.
(a) "Thirteenth-moth pay" shall mean one
twelfth (1/12) of the basic salary of an
employee within a calendar year;
(b) "Basic salary" shall include all
remunerations or earnings paid by an
employer to an employee for services
rendered but may not include cost-of-
living allowances granted pursuant to
Presidential Decree No. 525 or Letter of
Instructions No. 174, profit-sharing
payments, and all allowances and monetary
benefits which are not considered or
integrated as part of the regular or basic
salary of the employee at the time of the
promulgation of the Decree on December 16,
1975.
Section 3. Employers covered The Decree shall
apply to all employers except to:
(a) Distressed employers, such as (1)
those which are currently incurring
substantial losses or (2) in the case of
non-profit institutions and organizations,
where their income, whether from
donations, contributions, grants and other
earnings from any source, has consistently
declined by more than forty (40%) percent
of their normal income for the last two
(2) years, subject to the provision of
Section 7 of this issuance;
(b) The Government and any of its
political subdivisions, including
government-owned and controlled
corporations, except those corporations
operating essentially as private
subsidiaries of the Government;
(c) Employers already paying their
employees 13-month pay or more in a
calendar year of its equivalent at the
time of this issuance;
(d) Employers of household helpers and
persons in the personal service of another
in relation to such workers; and
(e) Employers of those who are paid on
purely commission, boundary, or task
basis, and those who are paid a fixed
amount for performing a 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 be covered
by this issuance insofar as such workers
are concerned.
As used herein, workers paid on piece-rate basis
shall refer to 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.
54
The term "its equivalent" as used in paragraph The report shall conform substantially with the
c) hereof shall include Christmas bonus, mid- following form:
year bonus, profit-sharing payments and other
cash bonuses amounting to not less than 1/12th REPORT ON COMPLIANCE WITH PD NO. 851
of the basic salary but shall not include cash
and stock dividends, cost of living allowances
and all other allowances regularly enjoyed by 1. Name of establishment
the employee, as well as non-monetary benefits.
Where an employer pays less than 1/12th of the 2. Address
employees basic salary, the employer shall pay
the difference.
3. Principal product or business

Section 4. Employees covered Except as provided 4. Total employment

in Section 3 of this issuance, all employees of
covered employers shall be entitled to benefit
provided under the Decree who are receiving not 5. Total number of workers benefited
more than P1,000 a month, regardless of their
position, designation or employment status, and 6. Amount granted per employee
irrespective of the method by which their wages
are paid, provided that they have worked for at
7. Total amount of benefits granted
least one month during the calendar year.

8. Name, position and tel. no. of person

Section 5. Option of covered employers A covered
employer may pay one-half of the 13th-month pay
required by the Decree before the opening of the
regular school year and the other half on or
before the 24th day of December of every year.
In any establishment where a union has been
recognized or certified as the collective
bargaining agent of the employees therein, the
periodicity or frequency of payment of the 13th
month pay may be the subject of agreement.
Nothing herein shall prevent employers from
giving the benefits provided in the Decree to
their employees who are receiving more than One
Thousand (P1,000) Pesos a month or benefits
higher than those provided by the Decree.
giving information
Section 9. Adjudication of claims Non-payment of
the thirteenth-month pay provided by the Decree
and these rules shall be treated as money claims
cases and shall be processed in accordance with
the Rules Implementing the Labor Code of the
Philippines and the Rules of the National Labor
Relations Commission.
Section 10. Prohibition against reduction or
elimination of benefits Nothing herein shall be
construed to authorize any employer to
eliminate, or diminish in any way, supplements,
or other employee benefits or favorable practice
being enjoyed by the employee at the time of
promulgation of this issuance.

Section 6. Special feature of benefit The

benefits granted under this issuance shall not
be credited as part of the regular wage of the
employees for purposes of determining overtime
and premium pay, fringe benefits, as well as
premium contributions to the State Insurance
Fund, social security, medicare and private
welfare and retirement plans.
Section 11. Transitory Provision These rules and
regulations shall take effect immediately and
for purposes of the 13-month pay for 1975, the
same shall apply only to those who are employees
as of December 16, 1975.
Manila, Philippines, 22 December 1975.

Section 7. Exemption of Distressed employers

Distressed employers shall qualify for exemption
from the requirement of the Decree upon prior
authorization by the Secretary of Labor.
Petitions for exemptions may be filed within the
nearest regional office having jurisdiction over SUPPLEMENTARY RULES AND REGULATIONS IMPLEMENTING
the employer not later than January 15, 1976. P.D. NO. 851
The regional offices shall transmit the
petitions to the Secretary of Labor within 24
hours from receipt thereof. To insure uniformity in the interpretation,
application and enforcement of the provisions of
P.D. No. 851 and its implementing regulations,
Section 8. Report of compliance Every covered the following clarifications are hereby made for
employer shall make a report of his compliance the information and guidance of all concerned:
with the Decree to the nearest regional labor
office not later than January 15 of each year.
1. Contractors and Subcontractors,
including Security and Watchman Agencies,

55
 are exempt for the year 1975 subject to
the following conditions:
(a) that the contracts of such
enterprises were entered into
before December 16, 1975;
(b) that such enterprises have
complied with all labor standards
laws during the year;
(c) that the contract cannot really
accomodate 13-month pay or its
equivalent; and
(d) that the contract does not
provide for cost escalation clause.
This exemption is without prejudice on the
part of the workers to negotiate with
their employers or to seek payment thereof
by filing appropriate complaints with the
Regional Offices of the Department of
Labor.
2. Private school teachers, including
faculty members of colleges and
universities, are entitled to 1/12 of
their annual basic pay regardless of the
number of months they teach or are paid
within a year.
3. New establishments operating for less
than one year are not covered except
subsidiaries or branches of foreign and
domestic corporations.
4. Overtime pay, earnings and other
remunerations which are not part of the
basic salary shall not be included in the
computation of the 13-month pay.
5. In view of the lack of sufficient time
for the dissemination of the provisions of
P.D. No. 851 and its Rules and the
unavailability of adequate cash flow due
to the long holiday season, compliance and
reporting of compliance with this Decree
are hereby extended up to March 31, 1976
except in private schools where compliance
for 1975 may be made not later than 30
June 1976.
6. Nothing herein shall sanction the
withdrawal or diminution of any
compensation, benefits or any supplements
being enjoyed by the employees on the
effective date of this issuance.
REVISED GUIDELINES ON THE IMPLEMENTATION OF THE
13TH MONTH PAY LAW.
1. Removal of Salary Ceiling.
On August 13, 1986, President Corazon C.
Aquino issued Memorandum Order No. 28
which provides as
follows:chanroblesvirtuallawlibrary
"Section 1 of Presidential Decree No. 851
is hereby modified to the extent that all
employers are hereby required to pay all
their rank-and-file employees a 13th
month pay not later than December 24 of
every year." chan robles virtual law
library
Before its modification by the aforecited
Memorandum Order, P.D. No. 851 excludes
from entitlement to the 13th month pay
those employees who were receiving a
basic salary of more than P1,000.00 a
month. With the removal of the salary
ceiling of P1,000.00, all rank and file
employees are now entitled to a 13th
month pay regardless of the amount of
basic salary that they receive in a month
if their employers are not otherwise
exempted from the application of P.D. No.
851. Such employees are entitled to the
benefit regardless of their designation
or employment status, and irrespective of
the method by which their wages are paid,
provided that they have worked for at
least one (1) month during a calendar
year.
2. Exempted Employers.
The following employers are still not
covered by P.D. No.
851:chanroblesvirtuallawlibrary
a. The Government and any of its
political subdivisions, including
government-owned and controlled
corporations, excepts those corporations
operating essentially as private
subsidiaries of the Government;
b. Employers already paying their
employees a 13th month pay or more in a
calendar year or its equivalent at the
time of this issuance;
c. Employers of household helpers and
persons in the personal service of
another in relation to such workers; and
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.
As used herein, workers paid on piece-
rate basis shall refer to 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.
56

The term "its equivalent" as used on
paragraph (b) hereof shall include
Christmas bonus, mid-year bonus, cash
bonuses and other payments amounting to
not less than 1/12 of the basic salary
but shall not include cash and stock
dividends, cost of living allowances and
all other allowances regularly enjoyed by
the employee, as well as non-monetary
benefits. Where an employer pays less
than required 1/12th of the employees
basic salary, the employer shall pay the
difference. chan robles virtual law
library
3. Who are Rank-and File Employees.
The Labor Code distinguishes a rank-and-
file employee from a managerial employee.
It provides that a managerial employee is
one who is vested with powers of
prerogatives to lay down and execute
management policies and/or to hire,
transfer, suspend, lay-off, recall
discharge, assign or discipline
employees, or to effectively recommend
such managerial actions. All employees
not falling within this definition are
considered rank-and-file employees.
The above distinction shall be used as
guide for the purpose of determining who
are rank-and-file employees entitled to
the mandated 13th month pay.
4. Amount and payment of 13th Month Pay
(a) Minimum of the Amount. — The
minimum 13th month pay required by law
shall not be less than one-twelfth of the
total basic salary earned by an employee
within a calendar year. For the year
1987, the computation of the 13th month
pay shall include the cost of living
allowances (COLA) integrated into the
basic salary of a covered employee
pursuant to Executive Order 178.
E.O. No. 178 provides, among other
things, that the P9.00 of the daily COLA
of P17.00 for non-agricultural workers
shall be integrated into the basic pay of
covered employees effective 1 May 1987,
and the remaining P8.00 effective 1
October 1987. For establishments with
less than 30 employees and paid-up
capital of P500,000 or less, the
integration of COLAs shall be as follows:
P4.50 effective on 1 May 1987; P4.50 on 1
October 1987; and P8.00 effective 1
January 1988. Thus, in the computation of
the 13th month pay for 1987, the COLAs
integrated into the basic pay shall be
included as of the date of their
integration.
Where the total P17.00 daily COLA was
integrated effective 1 May 1987 or
earlier the inclusion of said COLA as
part of the of the basic pay for the
purpose of computing the 13th month pay
shall be reckoned from the date of actual
integration.
The "basic salary" of an employee for the
purpose of computing the 13th month pay
shall include all remunerations or
earning paid by this employer for
services rendered but does not include
allowances and monetary benefits which
are not considered or integrated as part
of the regular or basic salary, such as
the cash equivalent of unused vacation
and sick leave credits, overtime,
premium, night differential and holiday
pay, and cost-of-living allowances.
However, these salary-related benefits
should be included as part of the basic
salary in the computation of the 13th
month pay if by individual or collective
agreement, company practice or policy,
the same are treated as part of the basic
salary of the employees.
(b) Time of Payment. — The required
13th month pay shall be paid not later
than December 24 of each year. An
employer, however, may give to his
employees one half (½) of the required
13th month pay before the opening of the
regular school year and the other half on
before the 24th of December of every
year. The frequency of payment of this
monetary benefit may be the subject of
agreement between the employer and the
recognized/collective bargaining agent of
the employees.
5. 13th Month Pay for Certain Types of
Employees.
(a) Employees Paid by Results. —
Employees who are paid on piece work
basis are by law entitled to the 13th
month pay.
Employees who are paid a fixed or
guaranteed wage plus commission are also
entitled to the mandated 13th month pay,
based on their total earnings during the
calendar year, i.e., on both their fixed
or guaranteed wage and commission.
(b) Those with Multiple Employers. —
Government employees working part time in
a private enterprise, including private
educational institutions, as well as
employees working in two or more private
firms, whether on full or part time
basis, are entitled to the required 13th
month pay from all their private
employers regardless of their total
earnings from each or all their
employers. chan robles virtual law
library
(c) Private School Teachers. — Private
57
 school teachers, including faculty
members of universities and colleges, are
entitled to the required 13th month pay,
regardless of the number of months they
teach or are paid within a year, if they
have rendered service for at least one
(1) month within a year.
6. 13th Month Pay of Resigned or
Separated Employee.
An employee who has resigned or whose
services were terminated at any time
before the time for payment of the 13th
month pay is entitled to this monetary
benefit in proportion to the length of
time he worked during the year, reckoned
from the time he started working during
the calendar year up to the time of his
resignation or termination from the
service. Thus, if he worked only from
January up to September his proportionate
13th month pay should be equivalent of
1/12 his total basic salary he earned
during that period.
The payment of the 13th month pay may be
demanded by the employee upon the
cessation of employer-employee
relationship. This is consistent with the
principle of equity that as the employer
can require the employee to clear himself
of all liabilities and property
accountability, so can the employee
demand the payment of all benefits due
him upon the termination of the
relationship.
7. Non-inclusion in Regular Wage.
The mandated 13th month pay need not be
credited as part of regular wage of
employees for purposes of determining
overtime and premium pays, fringe
benefits insurance fund, Social Security,
Medicare and private retirement plans.
8. Prohibitions against reduction or
elimination of benefits. chan robles
virtual law library
Nothing herein shall be construed to authorize
any employer to eliminate, or diminish in any
way, supplements, or other employee benefits or
favorable practice being enjoyed by the employee
at the time of promulgation of this issuance.
CASES:
22. National Federation of Sugar Workers
v. Ovejera, May 31, 1982
FACTS: NFSW is the bargaining agent of Central
Azucarera (CAC) rank and file employees
 Under the CBA, Bonuses are granted to
parties such as Christmas bonus, milling
bonus, and amelioration bonus
o Christmas and Milling are 1.5
months’ salary
 Then NFSW compelled the payment of 13th
month bonus pursuant to PD 851 on top of
CBA bonuses – strike held
o Then they entered into a compromise
agreement to wait for the SC w/n
the 13th month pay is separate and
distinct from the bonuses already
given
 Marcopper Mining vs Ople
 The prayer was to annul a
decision by the Labor Deputy
Minister granting 13th month
pay to Marcopper employees
in addition to mid-year and
Christmas bonuses under a
CBA
 This was dismissed with the
vote of 7 Justices
 MR denied
 After the Marcopper decision became final,
NFSW renewed its demand for 13th month
pay; CAC refused
o Strike held again
o This was declared illegal
 Then Union Filed an Injunction against the
execution of the Marcopper case saying it
violates fundamental rights
ISSUE: Whether under Presidential Decree 851
(13th Month Pay Law), CAC is obliged to give its
workers a 13th month salary in addition to
Christmas, milling and amelioration bonuses, the
aggregate of which admittedly exceeds by far the
disputed 13th month pay – YES
HELD:
PD 851 was issued by Marcos mandating that:
 all employers are hereby required to pay
all their employees receiving a basic
salary of not more than P1,000 a month,
regardless of the nature of their
employment, a 13th month pay not later
than December 24 of every year
 EXEMPTED: Employers already paying their
employees a 13th month pay or its
equivalent . . .
 As seen, the PD grants additional income
but not to all bec if on top of already
given, it will be seen as 14th, 15th etc
“ITS EQUIVALENT” (as interpreted by MOLE)
 Shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other
cash bonuses amounting to not less than
1/12th of the basic salary but shall not
include cash and stock dividends, cost of
living allowances and all other allowances
regularly enjoyed by the employee, as well
as non-monetary benefits. Where an
employer pays less than 1/12th of the
employee’s basic salary, the employer
shall pay the difference.
MARCOPPER CASE
 When CBA was entered, the Marcopper case
was still pending with the MR
 The MR was only denied (main case
affirmed) by only FIVE justices
58
  The Marcopper decision is therefore a
Court decision but without the necessary
eight voted to be doctrinal.
 The Marcopper decision is therefore a
Court decision but without the necessary
eight voted to be doctrinal.
 his being so, it cannot be said that the
Marcopper decision "clearly held" that
the" employer is liable to pay the 13th
month pay separate and distinct from the
bonuses already given," within the meaning
of the NFSW-CAC compromise agreement
FERNANDO DISSENT ON 13TH MONTH PAY
 Marcopper main case was not doctrinal but
there was no dissent
 Thus, employers liable to pay 13th month
on top
ABAD CONCURRING
 In Marcopper, the payment of bonuses under
the CBA was contingent upon the
realization of profits.
23. Dole Philippines v. Leogardo, October
23, 1982
FACTS: STANFILCO merged with DOLE entered into a
CBA with Associated Labor Union for 3 years
(1975-1978)
 Under the CBA, Bonus shall be:
o Year-end productivity bonus = 10
days of his basic daily wage if 80%
or more of the average total banana
production for 2 preceding calendar
years with the current year’s
estimate is attained
o This is exclusive to any bonus
which the Company may be presently
giving or may give in the future
 80% production level attained in 1975 thus
they were paid the stipulated year end
bonus in 1975
 Then, PD 851 took effect
o “Its equivalent” Pay 1 and ½ of
basic salary
 Or difference if less than
1.5 salary
 Thus, Stanfilco paid the difference bet
the year end and the 13th month provided
ISSUE: is this the proper payment of the bonus?
– YES. Year end is party of the 13th month pay
HELD:
 PD 851 only applies to those earning
salary less than P1k
o Intent was to grant an additional
income in the form of a 13th month
pay to employees not already
receiving the same.
 In this case, it becomes clear that the
year-end productivity bonus granted by
petitioner to private respondents pursuant
to their CBA is, in legal contemplation,
an integral part of their 13th month pay,
notwithstanding its conditional nature.
o Company was current in paying only
the difference between said bonus
and 1/12th of the worker’s yearly
basic salary
24. Universal Corn Products v. NLRC,
August 21, 1987
FACTS: Universal Corn Products Workers Union
entered into a CBA with the company (3 years:
1971-1974) providing:
 The COMPANY agrees to grant all regular
workers within the bargaining unit, with
at least one (1) year of continuous
service, a Christmas bonus equivalent to
the regular wages for seven (7) working
days, effective December, 1972. The bonus
shall be given to the workers on the
second week of December.
 In the event that the service of a worker
is not continuous due to factory shutdown,
machine breakdown or prolonged absences or
leaves, the Christmas bonus shall be
prorated in accordance with the length of
services that worker concerned has served
during the year.
 CBA not renewed but entered into an
addendum in 1979
 The NEW CBA did not dealt with the
Christmas Bonus but only salary increases
o Company said Christmas bonus was
expressly excluded bec of issuance
of PD 851 on DEC 16, 1975
 The Union members when to LA for alleged
failure of company to pay the seven-day
Christmas bonus for 1975-1978 pursuant to
the 1972 CBA
ISSUE: is the bonus in the CBA different from
the 13th month pay in PD 851? – YES.
HELD: The intention is clear therefore that the
bonus provided in the CBA was meant to be in
addition to the legal requirement.
 A bonus under the CBA is an obligation
created by the contract between the
management and workers while the 13th
month pay is mandated by the law
 we consider the seven-day bonus here
demanded "to be in addition to the legal
requirement.
 As held in the case of VALENZUELA, this
case gives the Christmas Bonus to workers
with “at least 1 year of continuous
service” --- a requirement not in the PD
INTERVENING YEARS
 Under the 1972 CBA, when CBA is not
renewed, it shall remain in force until a
new agreement is executed
 Thus, when the new agreement was silent on
the 7-day bonus should not prevent the
workers to demand its claim
25. San Miguel Corporation v. Inciong,
February 24, 1981
FACTS: IN 1977, Cagayan Coca-Cola Free Workers
Union filed a complaint against SMC for alleged
failure or refusal to include in the computation
59
of the 13th month pay such items as sick,
vacation or maternity leaves
 DOLE regional office ruled in that case
and ordered SMC to pay the difference of
whatever earnings and the amount actually
received as 13th month pay excluding
overtime premium and emergency cost of
living allowance
 MOLE affirmed the Regional Office decision
o such gross basic salary includes:
(1) regular salary or wage; (2)
payments for sick, vacation and
maternity leaves; (3) premium for
work performed on rest days or
holidays; (4) holiday pay for
worked or unworked regular holiday;
and (5) emergency allowance if
given in the form of a wage
adjustment."
ISSUE: whether or not in the computation of the
13th-month pay under Presidential Decree 851,
payments for sick, vacation or maternity leaves,
premium for work done on rest days and special
holidays, including pay for regular holidays and
night differentials should be considered. – NO.
HELD: BASIS FOR THE 13TH MONTH PAY
 Under Presidential Decree 851 and its
implementing rules, the basic salary of an
employee is used as the basis in the
determination of his 13th-month pay.
o Any compensations or remunerations
which are deemed not part of the
basic pay is excluded as basis in
the computation of the mandatory
bonus
o DEEMED NOT PART OF SALARY:
a) Cost-of-living allowances
granted pursuant to Presidential
Decree 525 and Letter of
Instructions No. 174;
- Fringe Benefits not included
b) Profit sharing payments;.
c) All allowances and monetary
benefits which are not considered
or integrated as part of the
regular basic salary of the
employee at the time of the
promulgation of the Decree on
December 16, 1975.
o Supplementary Rules and Regulations
of the IRR of PD 851 excluded
overtime pay, earnings and other
renumerations
 This dissipated all clouds
of doubts as to what are
excluded from the basic
salary
 As provided in the LC, overtime pay is
computed based on the regular wage –
HENCE, IT IS ADDITIONAL
 The same is true for Premium for Special
Holiday which is 30% on top of regular
salary
26. Philippine Duplicators v. NLRC,
February 15, 1995
FACTS: IN 1993, SC Affirmed a decision ordering
Phililppine Duplicator Inc to pay its employees
13th month pay computed on the basis of their
fixed wages PLUS SALES COMISSIONS
 Now, Duplicator files an MR that the
earlier decision is null and void pursuant
to the ruling in Boie-Takeda
o In that Boie Takeda, it was held
that the Revised Guidelines of the
Sec. of Labor is null and void
ISSUE: is the decision in Boie Takeda applicable
here? – NO.
 No Stare Decisis since there are different
factual situations
 In this case, the Third Division found
that there is no question that the sales
commission earned by the salesmen who make
or close a sale of duplicating machines
distributed by petitioner corporation,
constitute part of the compensation or
remuneration paid to salesmen for serving
as salesmen, and hence as part of the
'wage'
o the sales commissions received by
every duplicating machine sold
constituted part of the basic
compensation or remuneration of the
salesmen of Philippine Duplicators
for doing their job.
o correctly, that the sales
commissions were an integral part
of the basic salary structure of
Philippine Duplicators' employees-
salesmen
o NOT overtime, profit-sharing, or
fringe benefit
 Unlike in Boie Takeda, commission was
excluded bec these were paid to medical
representatives and rank and file
employees as PRODUCTIVITY BONUSES
o Thus, additional monetary benefits
o If an employer cannot be compelled
to pay a productivity bonus to his
employees, it should follow that
such productivity bonus, when
given, should not be deemed to fall
within the "basic salary" of
employees when the time comes to
compute their 13th month pay
o “commissions” used in this case is
not the same as “sales commission”
used in Duplicators
o Medical Reps are not salesmen
o profit-sharing payments, are
properly excluded from the ambit of
the term "basic salary" for
purposes of computing the 13th
month pay due to the employees.
Productivity Sales Commissions
Bonuses
EXCLUDED INCLUDED
60
 generally tied to intimately related employee at the time of the promulgation of the
the productivity or to or directly Decree on December 16, 1975.chanrobles virtual
profit generation proportional to the lawlibrary
of the employer extent or energy of
corporation an employee's SEC. 3. Employers covered. — . . . (The law
endeavors applies) to all employers except to:chanrob1es
virtual 1aw library
not directly paid upon the
dependent on the specific results c) Employers already paying their employees a
extent on achieved by a 13-month pay or more in a calendar year or its
individual employee salesman-employee equivalent at the time of this issuance;a
exerts himself
something extra for a percentage of the e) Employers of those who are paid on purely
which no specific sales closed by a commission, boundary, or task basis, and those
additional services salesman and who are paid a fixed amount for performing a
are rendered by any operates as an specific work, irrespective of the time consumed
particular employee integral part of in the performance thereof, except where the
and hence not such salesman's workers are paid on piece-rate basis in which
legally demandable, basic pay case the employer shall be covered by this
absent a issuance insofar as such workers are concerned.
contractual
undertaking to pay The term "its equivalent" as used in paragraph
it (c) shall include Christmas bonus, mid-year
bonus, profit-sharing payments and other cash
CONCLUSION: This Motion is denied; sales bonuses amounting to not less than 1/12th of the
commission included in the basic salary of basic salary but shall not include cash and
Duplicator employees stock dividends, cost of living allowances and
all other allowances regularly enjoyed by the
employee, as well as non-monetary benefits.
Where an employer pays less than 1/12th of the
employee’s basic salary, the employer shall pay
27. Boie-Takeda Chemicals v. Dela Serna the difference
FACTS:
Sections 1 and 2 of Presidential Decree No. 851, Supplementary Rules and Regulations Implementing
the Thirteenth Month Pay Law, read as P.D. 851 were subsequently issued by Minister
follows:chanrob1es virtual 1aw library Ople which inter alia set out items of
compensation not included in the computation of
SEC. 1. All employers are hereby required to pay the 13th month pay, viz.:chanrob1es virtual 1aw
all their employees receiving basic salary of library
not more than P1,000.00 a month, regardless of
the nature of the employment, a 13th month pay SEC. 4. Overtime pay, earnings and other
not later than December 24 of every year. remunerations which are not part of the basic
salary shall not be included in the computation
Sec. 2. Employers already paying their employees of the 13th month pay.chanrobles.com:cralaw:red
a 13th month pay or its equivalent are not
covered by this Decree. On August 13, 1986, President Corazon C. Aquino
promulgated Memorandum Order No. 28, which
The Rules and Regulations Implementing P.D. 851 contained a single provision modifying
promulgated by then Labor Minister Blas Ople on Presidential Decree No. 851 by removing the
December 22, 1975 contained the following salary ceiling of P1,000.00 a month set by the
relevant provisions relative to the concept of latter, as follows:chanrob1es virtual 1aw
"thirteenth month pay" and the employers library
exempted from giving it, to wit:.
Section 1 of Presidential Decree No. 851 is
SEC. 2. Definition of certain terms. — . . . hereby modified to the extent that all employers
are hereby required to pay all their rank-and-
a) "Thirteenth month pay" shall mean one twelfth file employees a 13th month pay not later than
(1/12) of the basic salary of an employee within December 24, of every year.
a calendar year;
In 1987, a Revised Guidelines on the IRR was
b) "Basic Salary" shall include all promulgated
remunerations or earnings paid by an employer to
an employee for services rendered but may not 4. Amount and payment of 13th Month Pay.
include cost-of-living allowances granted The basic salary of an employee for the purpose
pursuant to Presidential Decree No. 525 or of computing the 13th month pay shall include
Letter of Instructions No. 174, profit-sharing all remunerations or earnings paid by his
payments, and all allowances and monetary employer for services rendered but does not
benefits which are not considered or integrated include allowances and monetary benefits which
as part of the regular or basic salary of the are not considered or integrated as part of the
61
regular or basic salary, such as the cash second paragraph of Section 5 (a) of the
equivalent of unused vacation and sick leave Revised Guidelines on the Implementation
credits, overtime, premium, night differential of the 13th Month Pay Law unduly expanded
and holiday pay, and cost-of-living allowances. the concept of "basic salary" as defined
However, these salary-related benefits should be in P.D. 851.
included as part of the basic salary in the
computation of the 13th month pay if by
individual or collective agreement, company
practice or policy, the same are treated as part
of the basic salary of the employees.ch

5. 13th Month Pay for Certain Types of

Employees.
(a) Employees Paid by Results. — Employees who
are paid on piece work basis are by law entitled
to the 13th month pay.
Employees who are paid a fixed or guaranteed
wage plus commission are also entitled to the
mandated 13th month pay based on their total
earnings during the calendar year, i.e., on both
their fixed or guaranteed wage and commission.

 A routine inspection was conducted on

Boie-Takeda and found that the company was
not including the commissions earned by
its medical representatives in the
 In this case Boie-Takeda wrote DOLE
contesting the Notice of Inspection
Results and claimed that the “commission”
paid to Medical Reps are not part of the
REGULAR salary thus excluded
o “If no sales is (sic) made under
the effort of a particular
representative, there is no
commission during the period when
no sale was transacted, so that
commissions are not and cannot be
legally defined as regular in
nature.”
 Similar routine Inspection conducted with
Philippine Fuji Xerox
o That there is an underpayment of
the 13th month of 62 employees
 Thus, both challenge the validity of
Drilon’s Interpretation

ISSUE: should this commission be included in the

13th Month?
HELD:
MEMO ORDER NO. 28
 Sec 1 removed the P1k salary ceiling
SUPPLEMENTAL RULES AND REGULATIONS IMPLEMENTING
PD
 As such they are deemed not part of the
basic salary and shall not be considered
in the computation of the 13th-month pay

BASIC SALARY
 "basic salary" is to be understood in its
common, generally-accepted meaning
 we construed the term in its generic sense
to refer to all types of "direct
remunerations for services rendered,
including commissions
 In including commissions in the
computation of the 13th month pay, the

62
 28. Philippine Agricultural Commercial and
Industrial Workers Union v. NLRC
FACTS: Petitioner Union filed a complaint
against Vallacar Transit for underpayment of 13th
month pay of drivers and conductors
 They said that although they were on
“purely commission basis” the CBA provides
that there are entitled to the basic
minimum wage
 In response, Vallacar said the
complainants are not entitled pursuant to
Sec 2 Art 14 of CBA:
o expressly provided that "drivers
and conductors paid on a purely
commission are not legally entitled
to 13th month pay."
LA: dismissed the complaint
NLRC: affirmed
ISSUE: are they entitled to 13th month pay? –
YES.
HELD:
on December 16, 1975, P.D. 851, otherwise
known as the "13th Month Pay" Law, was
promulgated. The same prescribed payment of
13th month pay in the following terms:
Sec. 1. All employers are hereby
required to pay all their employees
receiving a basic salary of not more than
P1,000.00 a month, regardless of the
nature of the employment, a 13th month
pay not later than December 24 of every
year.
Sec. 2. Employers already paying their
employees a 13th month pay or its
equivalent are not covered by this
Decree.
The Rules and Regulations Implementing P.D.
No. 851, issued by the then Secretary of Labor
and Employment on December 22, 1975, defined
the following basic terms:
xxx xxx xxx
(a) 13th month pay shall mean one-
twelfth (1/12) of the basic salary of an
employee within a calendar year;
(b) basic salary shall include all
remunerations or earnings paid by an
employer to an employer for services
rendered, but may not include cost of
living allowances granted pursuant to
Presidential Decree No. 525 or Letter of
Instructions No. 174, profitsharing
payments, and all allowances and
monetary benefits which are not
considered or integrated as part of the
regular or basic salary of the employee
at the time of the promulgation of the
Decree on December 16, 1975.
xxx xxx xxx
On August 13, 1986, President Corazon C.
Aquino, exercising both executive and
legislative authority, issued Memorandum Order
No. 28 which provided as follows:
xxx xxx xxx
Sec.1. of Presidential Decree No. 851 is
hereby modified to the extent that all
employers are hereby required to pay all
their rank-and-file employees a 13th
month pay not later than December 24 of
every year.
xxx xxx xxx
In connection with and in implementation of
Memorandum Order No. 28, the then Minister of
Labor and Employment issued MOLE Explanatory
Bulletin No. 86-12 on November 24, 1986. Item
No. 5 (a) of the said issuance read:
xxx xxx xxx
Employees who are paid a fixed
or guaranteed wage plus commission are
also entitled to the mandated 13th month
pay, based on their total earning(s)
during the calendar year, i.e., on both
their fixed and guaranteed wage and
commission.
 Rule: every employee receiving a
commission in addition to a fixed or
guaranteed wage or salary, is entitled to
a 13th month pay. (GUARANTEED WAGE)
o Doesn’t matter if wage with
commission or commission with
guaranteed wage
 MOLE EXPLANATORY BULLETIN
86-12
 In this case, entitled to 13th month bec
although they have commission, it is
admitted that they are AUTOMATICALLY
entitled to basic min pay mandated by law
IN CASE THEIR COMISSION IS LESS THAN THE
MIN FOR 8 HOURS
 The CBA provision is interpreted narrowly
and against mandated by law
 Computation:
o Min wage – if commission less than
statutory min
o Commission – if over the statutory
min
o = 1.5 of their total earnings
during the calendar year
29. Ariel L. David v. Macasio, July 2,
2014
63
FACTS: MACASIO filed a complaint against David
doing business as Yiels Hog dealer for non-
payment of 13th month, other pay
 Hog dealer since 2005 on pakyaw basis

ISSUE: entitled to 13th month pay?

CA HELD: yes. labor law provisions, when read

together with the Serrano ruling, exempt those
engaged on "pakyaw" or task basis only if they
qualify as "field personnel.”
 The question is w/n Macasia is a field
personnel or
 Pakyaw basis but not a field personnel
SC HELD:
 IRR of Labor Code limited the grant of
service incentives:
o did not include “field personnel”
or those whose performance is
unsupervised by employer; whose
actual hours of work in the field
cannot be determined with
REASONABLE CERTAINTY
INCLUDING Those engaged on task or
contract basis, purely commission
basis
 the presence (or absence) of employer
supervision as regards the worker’s time
and performance is the key: if the worker
is simply engaged on pakyaw or task basis,
then the general rule is that he is
entitled to a holiday pay and SIL pay
unless exempted from the exceptions
specifically provided under Article 94
(holiday pay) and Article95 (SIL pay) of
the Labor Code
MACASIO NOT A FIELD PERSONNEL
 works at place of business; actual hours
of work determined with reasonable
certainty
 As with holiday and SIL pay, 13th month
pay benefits generally cover all
employees; an employee must be one of
those expressly enumerated to be
exempted.
 CA DECISION REVERSED

64
E. Service Charge
Labor Code: Article 96
Article 96. Service charges.
CASE: All service charges collected by hotels,
restaurants and similar establishments
RULE: It shall be distributed at the rate of:
• 85% for all covered employees and
• 15% for management.
CASE: The share of the employees
RULE: It shall be equally distributed among
them. In case
the service charge is abolished, the share of
the covered
employees shall be considered integrated in
their wages.
Omnibus Rules: Book III, Rule VI
RULE VI
Service Charges
SECTION 1. Coverage. — This rule shall apply
only to establishments collecting service
charges such as hotels, restaurants, lodging
houses, night clubs, cocktail lounge, massage
clinics, bars, casinos and gambling houses,
and similar enterprises, including those
entities operating primarily as private
subsidiaries of the Government.cralaw
SECTION 2. Employees covered. — This rule
shall apply to all employees of covered
employers, regardless of their positions,
designations or employment status, and
irrespective of the method by which their
wages are paid except to managerial employees.
As used herein, a "managerial employee" shall
mean 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 or to effectively
recommend such managerial actions. All
employees not falling within this definition
shall be considered rank-and-file
employees.cralaw
SECTION 3. Distribution of service charges. —
All service charges collected by covered
employers shall be distributed at the rate of
85% for the employees and 15% for the
management. The 85% shall be distributed
equally among the covered employees. The 15%
shall be for the disposition by management to
answer for losses and breakages and
distribution to managerial employees at the
discretion of the management in the latter
case.cralaw
SECTION 4. Frequency of distribution. — The
shares referred to herein shall be distributed
and paid to the employees not less than once
every two (2) weeks or twice a month at
intervals not exceeding sixteen (16)
days.cralaw
SECTION 5. Integration of service charges. —
In case the service charges is abolished the
share of covered employees shall be considered
integrated in their wages. The basis of the
amount to be integrated shall be the average
monthly share of each employee for the past
twelve (12) months immediately preceding the
abolition of withdrawal of such charges.cralaw
SECTION 6. Relation to agreements. — Nothing
in this Rule shall prevent the employer and
his employees from entering into any agreement
with terms more favorable to the employees
than those provided herein, or be used to
diminish any benefit granted to the employees
under existing laws, agreement and voluntary
employer practice.cralaw
SECTION 7. This rule shall be without
prejudice to existing, future collective
bargaining agreements.cralaw
Nothing in this rule shall be construed to
justify the reduction or diminution of any
benefit being enjoyed by any employee at the
time of effectivity of this rule.
F. Non-Diminution
Labor Code: Article 100
Article 100. Prohibition against elimination
or diminution
of benefits.
Nothing in this Book shall be construed to
eliminate or in
any way diminish:
• supplements, or
• other employee benefits
being enjoyed at the time of promulgation of
this Code.
CASES:
1. Royal Plant Workers Union v. Coca Cola
Bottlers, April 15, 2013
Facts: Coca Cola (manufacture, sale and
distribution of softdrinks)
 20 bottling operators are members of the
Union
o Two shifts: 8am to 5; 5-finish
o Shift has rotation of work time and
break time
o Bottling Line 2 operators were
provided chairs in 1974; Line 1 in
1988
 But in 2008, this was
removed
 "I Operate, I Maintain, I
Clean" program
 Avoid sleeping; move around
to clean
o This became an issue
 Failed to reach amicable
settlement
Arbitration: Removal of Chair not valid
 It had ripened into a benefit; could not
be reduced
 While removal was in good faith,
allegation of sleeping on duty was not
proven
CA: reversed
 Removal within management prerogatives
 Valid coz chair not necessary for the
exigency of work or would expose them to
some hazards
ISSUE: was the removal of the bottling operators’
chairs from CCBPI’s production/manufacturing
65
lines a valid exercise of a management
prerogative? – YES.
Is the chair a “benefit” embraced by Art 100 thus
cannot be taken? – NO.
HELD:
NO VIOLATION OF ART 100
 Such benefits or privileges form part of
the employees’ wage, salary or
compensation making them enforceable
obligations.
 article speaks of non-diminution of
supplements and other employee benefits
o Supplements arc privileges given to
an employee which constitute as
extra remuneration besides his or
her basic ordinary earnings and
wages
o ONLY THOSE SUSCEPTIBLE OF MONETARY
CONSIDERATIONS
A Valid Exercise of Management Prerogative
 CCBPI removed the operators’ chairs
pursuant to a national directive and in
line with its "I Operate, I Maintain, I
Clean" program, launched to enable the
Union to perform their duties and
responsibilities more efficiently
o Chairs not removed indiscriminately
 In exchange, they were compensated with:
a) a reduction of the operating hours of
the bottling operators from a two-and-one-
half (2 ½)-hour rotation period to a one-
and-a-half (1 ½) hour rotation period;
and
b) an increase of the break period from 15
to 30 minutes between rotations.
 It was done in good faith: promote work
efficiency
NO LABOR LAW VIOLATION
 Did not expose them to safety and health
hazards
 Actually, moving around benefits them
(health, death)
o Prolonged sitting may result to
cramps, fatigue
o Sedentary employees also face
gradual deterioration in health
NO CBA PROVISION VIOLATED
 Actually, Sec 2 states that any voluntary
benefits and privileges not agreed do not
create an obligation
2. Sevilla Trading Co. v. Semana, April 28,
2004
FACTS: SEVILLA COMPANY added in the base pay of
its employee for computation of 13th month pay:
overtime premium, legal holiday, night premium,
etc pay
 Sevilla said this happened bec it
entrusted the preparation of payroll to
its office staff so when they used
computerized system, it discovered the
inclusion of the non-basic pay and other
benefits
o Hence, it excluded the other
benefits previously given
 Super Union was not happy
o Diminution of employee benefits
 Parties failed to resolve issue
VA: Union won.
ISSUE: was the re-computation a diminution of
benefits? – YES.
HELD:
 Claim of mistake in computation
unmeritorious
o Impossible to find out about it in
1999 only
o The submitted docs of the company
did not include explanation on why
it included such pay
 The payment of COLA before the CBA in 1982
and in compliance with Wage Orders 1 to 5
are voluntary act of the company which
cannot now be unilaterally withdrawn
o It was practiced over a long period
of time and consistent and
deliberate
 TEST: Company KNOWING FULLY WELL that such
pay are not covered by law but continued
giving the same
 FRINGE BENEFITS (not included in base for
13th month pay): COLA, Profit sharing
payments and Others not included in basic
pay
 When petitioner Sevilla Trading still
included over the years non-basic benefits
of its employees, such as maternity leave
pay, cash equivalent of unused vacation
and sick leave, among others in the
computation of the 13th-month pay, this
may only be construed as a voluntary act
on its part. Putting the blame on the
petitioners payroll personnel is
inexcusable
 The considerable length of time the
questioned items had been included by
petitioner indicates a unilateral and
voluntary act on its part, sufficient in
itself to negate any claim of mistake.
 LENGTH OF TIME = varies from case to case
o TEST: so long it ripened into
company practice or policy 
cannot unilaterally withdraw
 In this case, it has been done for 2 years
= already a voluntary employer practice
subject to Art 100
3. Arco Metal Products v. Samahan ng mga
Manggagawa sa Arco-Metal-NAFLU, May 14,
2008
FACTS: In an earlier case, it was decided that
13th month pay, vacation leave and sick leave
conversion to cash shall be paid in full to
Union members REGARDLESS of actual years of
service rendered in a year
 In 2003, Company paid PRORATED benefits to
3 Union Members who rendered less than 12
months of service
 Members protested the prorated scheme
o Several years ago, it did not
prorate the same benefits to 2
employees
66
 o Such prorate is diminution of
benefits
VA: giving full payment for less than 12 months
of service did not ripen into a practice
CA: reversed; pay full regardless of actual
service rendered in a year
ISSUE: Is the prorated pay a violation of Art
100? – yes.
HELD: CBA provides to be entitled:
 Vacation Leave – at least one year of
service
 Sick Leave – at least one year of service
 Emergency Leave
 CBA provides that to be entitled to the
full monetization, one must have rendered
at least one year of service
BUT PAYMENT IN FULL TO 7 OTHERS CONSTITUTES
VOLUNTARY EMPLOYER PRACTICE – not a mistake
 employer had freely and continuously
included in the computation of the 13th
month pay those items that were expressly
excluded by the law, we held that the act
which was favorable to the employees
though not conforming to law had thus
ripened into a practice and could not be
withdrawn, reduced, diminished,
discontinued or eliminated.
 In the years 1992, 1993, 1994, 1999, 2002
and 2003, petitioner had adopted a policy
of freely, voluntarily and consistently
granting full benefits to its employees
regardless of the length of service
rendered. True, there were only a total of
seven employees who benefited from such a
practice, but it was an established
practice nonetheless.
 In cases involving money claims of
employees, the employer has the burden of
proving that the employees did receive the
wages and benefits and that the same were
paid in accordance with law
o In this case, Company did not
present proofs of other employees
similarly situated but did not
receive prorated pay
4. Globe Mackay Cable v. NLRC, June 29, 1988
FACTS: Wage Order No. 6 took effect increasing
COLA
 Company complied by multiplying the P3
increase by 22 which is the number of
working days
 Union protested saying it should be 30
days
o It has been the company practice
that it should cover 30 days thus
cannot be unilaterally changed
LA: ruled in favor of company; only 22 days
NLRC: reversed; guilty of illegal deductions
ISSUE: Should it be x 22 or 30? – 22
HELD
 Implementing Rules of the Wage Order
provides that COLA is mandated only for
the days that the employees are paid their
basic wage, even if said days are unworked
o MEANING, on days that employees are
not paid their basic wage, payment
of COLA is not mandated
o No Pay, No COLA
 Thus, for monthly paid employees, if their
monthly salary covers all the days in a
month, they are deemed paid their basic
wage for all those days
 In the case at bar, CBA provides that
monthly basic pay is computed on the basis
of 5 days a week or 22 days a month
 It has been consistently used by the
company, the 22 days
5. Insular Hotel Employees Union v.
Waterfront Insular Hotel Davao, September
22, 2010
FACTS: COMPANY submitted to DOLE a Notice of
Suspension of Operations for 6 months due to
severe and serious business losses
 That if company cannot resume work within
6 months, it will still pay the employees
their benefits legally due
 Union wrote company that they are willing
to work with them just to keep their jobs
even adjust economic benefits
o That those in service for 25 years
be paid retirement benefits and
then put their length of service to
zero without loss of status of
employment with min hiring rate
o 1) Suspension of [the] CBA for ten
years, No strike no lock-out shall
be enforced.
o 2) Pay all the employees their
benefits due, and put the length of
service to zero with a minimum
hiring rate. Payment of benefits
may be on a staggered basis or as
available.
o 3) Night premium and holiday pays
shall be according to law. Overtime
hours rendered shall be offsetted
as practiced.
o 4) Reduce the sick leaves and
vacation leaves to 15 days/15days.
o 5) Emergency leave and birthday off
are hereby waived.
o 6) Duty meal allowance is fixed at
P30.00 only. No more midnight
snacks and double meal allowance.
The cook drinks be stopped as
practiced.
o 7) We will shoulder 50% of the
group health insurance and family
medical allowance be reduced to
1,500.00 instead of 3,000.00.
o 8) The practice of bringing home
our uniforms for laundry be
continued.
o 9) Fixed manning shall be
implemented, the rest of manpower
requirements maybe sourced thru WAP
and casual hiring. Manpower for
fixed manning shall be 145 rank-
and-file union members.
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 o 10) Union will cooperate fully on
strict implementation of house
rules in order to attain desired
productivity and discipline. The
union will not tolerate problem
members.
o 11) The union in its desire to be
of utmost service would adopt
multi-tasking for the hotel to be
more competitive.
 It is understood that with the suspension
of the CBA renegotiations, the same
existing CBA shall be adopted and that all
provisions therein shall remain enforced
except for those mentioned in this
proposal. These agreements supersede CBA
 Then a Manifesto was submitted to
concretize the proposals
 The company downsized
 Then they entered into a MOA
 Then signed a Reconfirmation of Employment
 2001, Hotel resumed operations
 2002, Joves and Planas filed a Notice of
Mediation for Diminution of wages and
other benefits to unlawful MOA – employees
signed it in individual capacity not as
union thus void; it was only NFL
VA: NFL proper party
VA MR: MOA invalid since contrary to law and
public policy
CA: reversed; MOA valid
ISSUE: was the MOA valid and not contrary to Art
100? – YES.
HELD: Individual union members HAVE the capacity
to enter MOA
 CBA: only Union is authorized to bring
dispute before VA
 BUT!!! The Federation which the Union is
affiliated has standing but in the
capacity of an Agent of the Union
 THUS, VA HAS NO JURISDICTION
BUT MOA IS VALID FOR THE CONTINUANCE OF
OPERATIONS
 Even so, Court tilt the balance of justice
to labor
 Thus, it upheld the MOA valid bec it will
avoid prejudice to the employees
o Bec at that time, Company was in
financial distress
ON DIMINUTION
 the prohibition against elimination or
diminution of benefits set out in Article
100 of the Labor Code is specifically
concerned with benefits already enjoyed at
the time of the promulgation of the Labor
Code. Article 100 does not, in other
words, purport to apply to situations
arising after the promulgation date of the
Labor Code
 Even assuming arguendo that Article 100
applies to the case at bar, this Court
agrees with respondent that the same does
not prohibit a union from offering and
agreeing to reduce wages and benefits of
the employees
o THEY HAVE RIGHT TO SUSPEND CBA
o PAL-PALEA is applicable
 Promote industrial peace
 In th case at bar, while the terms of the
MOA undoubtedly reduced the salaries and
certain benefits previously enjoyed by the
members of the Union, it cannot escape
this Court's attention that it was the
execution of the MOA which paved the way
for the re-opening of the hotel,
notwithstanding its financial distress.
More importantly, the execution of the MOA
allowed respondents to keep their jobs. It
would certainly be iniquitous for the
members of the Union to sign new contracts
prompting the re-opening of the hotel only
to later on renege on their agreement on
the fact of the non-ratification of the
MOA.
o ROJAS WAS PROPERLY AUTHORIZED TO
NEGOTIATE WITH THE COMPANY
6. Asis v. Minister of Labor, March 15, 1989
FACTS: ATTY. ASIS is the in house legal cousel
of Central Azucarera then later concurrently
appointed as Head of Manpower and Services
Department
 In addition to his salary, he was given
other fringe benefits such as monthly
ration of 200 liters of gas, LPG
 Then this was revoked 5 years after due to
cost reduction measure
 So he filed a complaint for the
restoration
 Then Central issued a Memo ordaining his
relief
 Hence, he theorized he was already
dismissed, illegally
DOLE: valid cost reduction measure
ISSUE: was the revocation of the monthly ration
illegal? – NO.
HELD: revocation is valid due to occasion forced
by the circumstance
 Monthly ration is not part of his basic
salary
 It was not found in any management payroll
vouchers
 Also, Central reimbursed him for actual
consumption of fuel during period of
suspension
7. American Wire and Cable Daily Rated
Employees Union v. American Wire and
Cable, April 29, 2005
FACTS: AMERICAN WIRE has two unions: Monthly-
Rated and Daily- Rated Unions
 The two Unions filed a case for diminution
of benefits:
o Service award, Premium pay,
Christmas party
o That the grant of these benefits
was a customary practice that can
no longer be unilaterally withdrawn
by private respondent without the
tacit consent of the petitioner.
 Company said no, it has not ripened into
practice thus not demandable right
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VA: Company NOT guilty under Art 100
CA: Affirmed VA
ISSUE: was Art 100 violated? – NO.
HELD: the money given by the company are in the
form of BONUSES given our of company’s generosity
 The grant of the same was management
prerogative
 For a bonus to be enforceable, it must
have been promised by the employer and
expressly agreed upon by the parties, or
it must have had a fixed amount31 and had
been a long and regular practice on the
part of the employer
 The benefits/entitlements in question were
never subjects of any express agreement
between the parties.
o Never incorporated in the CBA
o Not in fixed amount
o Not given since time immemorial
since Union failed to adduce
evidence that it has been a regular
practice
o To force company to pay them is to
penalize it for past generosity
G. Worker Preference
Labor Code: Article 110
Article 110. Worker preference in case of
bankruptcy
CASE: In the event of bankruptcy or
liquidation of an employer’s business
RULE: His workers shall ENJOY FIRST
PREFERENCE as regards their wages and other
monetary claims, any provisions of law to
the contrary notwithstanding.
CASE: Unpaid wages and monetary claims
• claims of the government and
• other creditors may be paid.
8. Development Bank of the Philippines v.
Labor Arbiter, March 8, 1989
FACTS: RMC WAS BANKRUPT
 DBP claim that Art 110 does not apply to
company where there was extrajudicial
foreclosure
 When the property of Riverside Mills Corp
was levied, NLRC awarded pay to workers
 BUT pending this, DBP obtained Writ of
Possession of the said property pursuant
to an extrajudicial foreclosure
o It was bought by the bank in a
public auction
o It was subsequently leased to
Egret, Rosario and General Textile
Mills
LA: Employees of RMC have preference for unpaid
wages and other benefits over the property
ISSUE: In extra-judicial proceeding, do workers
have preference over creditors? – NO.
HELD: NO PREFERENCE WHEN THERE’S DECLARATION OF
BUNKRUPTCY OR JUDICIAL LIQUIDATION
 It is quite clear from the provisions that
a declaration of bankruptcy or a judicial
liquidation must be present before the
worker's preference may be enforced.
 Article 110 must not be viewed in
isolation and must always be reckoned with
the provisions of the Civil Code
 THERE IS A NECESSITY OF JUDICIAL
ADJUDICATION
 The case filed by DBP is for the
collection of money
 LA erred when it ruled that unpaid workers
have preference absent judicial
adjudication
NECESSITY OF PROCEEDING
 Constructive notice to all claimants
 For a fair and binding adjudication
instead of piece meal settlement
9. Development Bank of the Philippines v.
Secretary,
FACTS: The earlier case with RMC involves
complaint for illegal dismissal, unfair labor
practice etc
 Workers won and sheriff was directed to
collect P1.2M from RMC or if unable,
execute the writ by selling its properties
not exempt from execution
 Writ was returned unserved bec premises
were padlocked and foreclosed by DBP
 DOLE said workers have preference over
creditors
ISSUE: Does DBP have preference? – YES.
HELD: It is clear from the wording of the law
that the preferential right accorded to
employees and workers under Article 110 may be
invoked only during bankruptcy or judicial
liquidation proceedings against the employer
 The rationale for making the application
of Article 110 of the Labor Code
contingent upon the institution of
bankruptcy or judicial liquidation
proceedings against the employer is
premised upon the very nature of a
preferential right of credit.
 Indubitably, the preferential right of
credit attains significance only after the
properties of the debtor have been
inventoried and liquidated, and the claims
held by his various creditors have been
established
 bankruptcy, insolvency and general
judicial liquidation proceedings provide
the only proper venue for the enforcement
of a creditor’s preferential right such as
that established in Article 110 of the
Labor Code, for these are in rem
proceedings binding against the whole
world where all persons having any
interest in the assets of the debtor
GIVING BACK FORECLOSED ASSET VIOLATES WRIT OF
EXEC
 It was validly extrajudicially foreclosed
and RMC failed to redeemed it
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  Article 110 of the Labor Code establishes  The amendment expands worker preference to
is not a lien, but a preference of credit cover not only unpaid wages but also other
in favor of employees monetary claims to which even claims of
 Moreover, a preference does not exist in the Government must be deemed subordinate.
any effective way prior to, and apart  Notably, the terms "declaration" of
from, the institution of these bankruptcy or "judicial" liquidation have
proceedings, for it is only then that the been eliminated
legal provisions on concurrence and AMENDMENT DID NOT DO AWAY WITH THE DECLARATION
preference of credits begin to apply 1. Article 110 of the Labor Code, in
determining the reach of its terms, cannot
10. Development Bank of the Philippines v. be viewed in isolation. MUST STILL BE READ
NLRC, March 19, 1990 (including dissenting IN CONNECTION WITH CC
opinion) 2. There must be harmonization of laws
FACTS: LIRAG property mortgaged to DBP 3. In the event of insolvency, a principal
 Complaining workers (union members) were objective should be to effect an equitable
terminated on the ground of retrenchment distribution of the insolvent’s property
 Then LIRAG ceased to operate among his creditors. To accomplish this
 Illegal Dismissal case was instituted and there must first be some proceeding
claim for monetary benefits and pay 4. A distinction should be made between a
demanded preference of credit and a lien
o PREFENCE - applies only to claims
 LA ordered LIRAG to pay complainants;
which do not attach to specific
order became final and executory
properties
 Writ of Execution for that case was issued o LIEN - creates a charge on a
on the same day DBP extrajudicially particular property
foreclosed the mortgage
 ART 110 recognizes preference and not lien
o Thus, Writ of Execution returned
5. The DBP anchors its claims on a mortgage
unsatisfied
credit. A mortgage directly and
 LA granted Writ of Garnishment and immediately subjects the property upon
directed DBP to remit proceeds of the which it is imposed
foreclosed property
 It creates a real right which is
enforceable against the whole world
ISSUE: Did NLRC commit GAD for affirming LA’s
 IT IS A LIEN, NOT PREFERENCE
grant of Writ of Garnishment? – YES.
6. Assuming arguendo that amendment gives
Does the Amendment of PD 442 by the Labor Code
preference to unpaid workers, it has no
remove requisite of bankruptcy declaration or
retroactive effect
judicial liquidation? – NO.
 It is impairment of contract
HELD: It is quite clear from the provisions that
CONCLUSION the right to preference given to
a declaration of bankruptcy or a judicial
workers under Article 110 of the Labor Code
liquidation must be present before the worker’s cannot exist in any effective way prior to the
preference may be enforced time of its presentation in distribution
 LABOR CODE AMENDED PD 442 proceedings
PD 442 Labor Code
"Article 110. Worker Article 110. Worker DISSENT:
preference in case of preference in case of 1. CRUZ -- I was convinced that it was the
bankruptcy. — In the bankruptcy. — In the intention of the legislature to give
event of bankruptcy or event of bankruptcy or absolute preference to the workers’ claims
liquidation of an liquidation of an pursuant to the social justice policy.
employer’s business, employer’s business, Social Justice is not a mere catchphrase
his workers shall his workers shall 2. PADILLA – LIRAG’S only asset was mortgaged
enjoy first preference enjoy first preference to DBP
as regards wages due as regards their - It ceased operation in 1983 but Labor Code
them for services unpaid wages and other was approved in 1989
rendered during the monetary claims, any
- Under the system of preferences in the
period prior to the provision of law to
Civil Code, only taxes enjoy absolute
bankruptcy or the contrary
preference
liquidation, any notwithstanding. Such
provision to the unpaid wages and - With the amendment of Article 110 of the
contrary monetary claims shall Labor Code by Republic Act 6715, a three-
notwithstanding. be paid in full before tier order of preference is established
Unpaid wages shall be the claims of the wherein unpaid wages and other monetary
paid in full before Government and other claims of workers enjoy absolute
other creditors may creditors may be paid. preference over all other claims,
establish any claim to including those of the Government, in
a share in the assets cases where a debtor-employer is unable to
of the employer." pay in full all his obligations.
- The absolute preference given to monetary
claims of workers, to which claims of the
70
 Government, i.e., taxes, are now
subordinated, manifests the clear and
deliberate intent of our lawmaker to put
flesh and blood into the expressed
Constitutional policy of protecting the
rights of workers and promoting their
welfare
NO NEED FOR LIQUIDATION PROCEEDING
1. Nowhere is it stated in the present law
and its new implementing rule that a prior
declaration of bankruptcy or judicial
liquidation is a condition sine qua non to
the operation of Article 110.
- the phrase declaration of bankruptcy or
judicial liquidation of the employer’s
business WAS DELETED
2. a proceeding in rem, by its nature, seeks
to bar any other person who claims any
interest in the property or right subject
of the suit. it appears that such a
proceeding is essential only where the
credits are concurring and enjoy no
preference over one another, but not when
the law accords to one of the credits
absolute priority and undisputed supremacy
3. SARMIENTO – joins Padilla in his dissent
- Preference of unpaid workers is mandated
not just by the Labor Code but by the
Constitution itself
- ART. 1702. In case of doubt, all labor
legislation and all labor contracts shall
be construed in favor of the safety and
decent living for the laborer
H. Attorney’s Fees
Labor Code: Article 111
CASE: Unlawful withholding of wages
RULE: The culpable party may be assessed
attorney’s fees equivalent to 10% of the
amount of wages recovered.
WORKING CONDITIONS
A. Management Prerogative
- right of the employer to regulate all
aspects of employment, such as the freedom
to prescribe work assignments, working
methods, processes to be followed,
regulation regarding transfer of
employees, supervision of their work, lay-
off and discipline, and dismissal and
recall of work, presupposing the existence
of employer-employee relationship
CASES:
11. San Miguel Brewery Sales v. Ople, February
8, 1989
FACTS: SMC AND PTGWO Union entered into a CBA:
 "Art. IV, Section 1. Employees within the
appropriate bargaining unit shall be
entitled to a basic monthly compensation
plus commission based on their respective
sales."
 1979, Company introduced “Complementary
Distribution System” (CDS)
o whereby its beer products were
offered for sale directly to
wholesalers through San Miguel’s
sales offices.
 Union protested this saying it is contrary
to existing marketing scheme whereby the
Route Salesmen were assigned specific
territories within which to sell their
stocks of beer, and wholesalers had to buy
beer products from them, not from the
company
o Violates Sec 1 Art IV of the CBA
bec it would reduce take home pay
of salesmen and truck helpers;
company will be competing with them
LA: ruled in favor of SMC; Notice of Strike
dismissed
ISSUE: Is the CDS valid? – YES.
HELD: the CDS is a valid exercise of management
prerogatives
 Except as limited by special laws, an
employer is free to regulate, according to
his own discretion and judgment, all
aspects of employment, including hiring,
work assignments, working methods, time,
place and manner of work, tools to be
used, processes to be followed,
supervision of workers, working
regulations, transfer of employees, work
supervision, lay-off of workers and the
discipline, dismissal and recall of work
 Company may adopt or devise means designed
towards increasing its profits
 So long as a company’s management
prerogatives are exercised in good faith
for the advancement of the employer’s
interest and not for the purpose of
defeating or circumventing the rights of
the employees under special laws or under
valid agreements, this Court will uphold
them
 San Miguel Corporation’s offer to
compensate the members of its sales force
who will be adversely affected by the
implementation of the CDS, by paying them
a so-called "back adjustment commission"
to make up for the commissions they might
lose as a result of the CDS, proves the
company’s good faith and lack of intention
to bust their union
12. PT & T v. NLRC, May 23, 1997
FACTS: Grace de Guzman was hired by PT&T as
Supernumerary Project Worker for position of
Tenorio who went on maternity leave
 Under Reliever Agreement, her employment
was to be immediately terminated upon
expiration of agreed period
 But upon expiration, her services were
engaged again for other employees who went
on leave
 Then was once again asked to be employed
for probationary period of up to 150 days
o For this contract, she indicated in
the job application form that she
was single although contracted
marriage a few months earlier
71
  Then it appears she made the same
representation in two successive reliever
agreements
 Branch supervisor learned about this and
issued a Memo asking her to explain the
discrepancy
o She was remined of the company
policy of not accepting married
women for employment
 In reply, she said she was not aware of
such policy; that she never hid her
marital status
 Thus, she filed Illegal Dismissal case
LA: De Guzman attained regular status thus
illegally dismissed
NLRC: affirmed
 In the case at bar, petitioners policy of
not accepting or considering as
disqualified from work any woman worker
who contracts marriage runs afoul of the
test of, and the right against,
discrimination, afforded all women workers
by our labor laws and by no less than the
Constitution. Contrary to petitioners
assertion that it dismissed private
respondent from employment on account of
her dishonesty, the record discloses
clearly that her ties with the company
were dissolved principally because of the
companys policy that married women are not
qualified for employment in PT&T, and not
merely because of her supposed acts of
dishonesty.
ISSUE: Is the company policy valid? – NO.
HELD:
 De Guzman at the time of termination was
already a regular employee
 The termination would have been valid if
effected during her probationary period
POLICY VIOLATES ART 136 OF LABOR CODE
Article 134 [136]. Stipulation against
marriage.
An employer SHALL NOT
 require as a condition of
employment or continuation of
employment that a woman
employee shall not get married
 stipulate expressly or tacitly
that upon getting married, a woman
employee shall be deemed resigned
or separated, or
 to actually dismiss, discharge,
discriminate or otherwise
prejudice a woman employee merely
by reason of her marriage.
 Such policy, even prior to the approval of
the Labor Code, was declared invalid by PD
148 or the Women and Child Labor Law
 True, Article 132 enjoins the Secretary of
Labor to establish standards that will
ensure the safety and health of women
employees and in appropriate cases shall
by regulation require employers to
determine appropriate minimum standards
for termination in special occupations,
such as those of flight attendants, but
that is precisely the factor that
militates against the policy of
respondent. The standards have not yet
been established as set forth in the first
paragraph, nor has the Secretary of Labor
issued any regulation affecting flight
attendants
 Article 135 that speaks of non-
discrimination on the employment of women
 Under American jurisprudence, job
requirements which establish employer
preference or conditions relating to the
marital status of an employee are
categorized as a sex-plus discrimination
where it is imposed on one sex and not on
the other
 where the employer discriminates against
married women, but not against married
men, the variable is sex and the
discrimination is unlawful
 Petitioners policy is not only in
derogation of the provisions of Article
136 of the Labor Code on the right of a
woman to be free from any kind of
stipulation against marriage in connection
with her employment, but it likewise
assaults good morals and public policy,
tending as it does to deprive a woman of
the freedom to choose her status, a
privilege that by all accounts inheres in
the individual as an intangible and
inalienable right
 Parenthetically, the Civil Code provisions
on the contract of labor state that the
relations between the parties, that is, of
capital and labor, are not merely
contractual, impressed as they are with so
much public interest that the same should
yield to the common good
13. Ernesto G. Ymbong v. ABS CBN, March 9,
2012
FACTS: YMBONG started working with ABS in Cebu
as TV talent, co-anchoring Hoy Gising and TV
Patrol Cebu; extended to radio; then voice
talent and director and scriptwriter
 Then in 1996, ABS issued a Policy of
Employees Seeking Public Office
Any employee who intends to run for any
public office position, must file his/her
letter of resignation, at least thirty
(30) days prior to the official filing of
the certificate of candidacy either for
national or local election.
x x x
Further, any employee who intends to join a
political group/party or even with no political
affiliation but who intends to openly and
aggressively campaign for a candidate or group
of candidates (e.g. publicly speaking/endorsing
candidate, recruiting campaign workers,
etc.) must file a request for leave of absence
subject to management’s approval. For this
particular reason, the employee should file the
leave request at least thirty (30) days prior to
the start of the planned leave period.
72
  Pursuant to this Policy and the coming
1998 Election, Cebu Station Manager issued
a Memo:
“Please be informed that per company
policy, any employee/talent who wants to
run for any position in the coming
election will have to file a leave of
absence the moment he/she files his/her
certificate of candidacy.”
 But upon checking, it should have been
suspension, and not LOA
 Ymbong informed Luzon (Station Manager)
that he will take a leave; but another
employee, Patalinghug (also running) was
considered resigned
 Both Ymbong and Patalinghug lost in the
1998 elections
 They both tried to come back to ABS but
was refused due to the company policy
o That their employment automatically
terminated when they ran for a
local government position
 Ymbong said he only took LOA; thus upon
expiration, he reported back as a regular
talent and in fact continued to receive
his salary
 They both filed illegal dismissal case
LA: illegally dismissed
NLRC: affirmed LA decision
CA: revered
 Pursuant to the policy, they were deemed
resigned
ISSUE: was the policy valid? – YES.
HELD
 Although §11(b) of R.A. No. 6646 does not
require mass media commentators and
announcers such as private respondent to
resign from their radio or TV stations but
only to go on leave for the duration of
the campaign period, we think that the
company may nevertheless validly require
them to resign as a matter of policy. In
this case, the policy is justified on the
following grounds:
1. Working for the government and the
company at the same time is clearly
disadvantageous and prejudicial to the
rights and interest not only of the
company but the public as well
- They’ll be working for two employers
- In case of loses, their impartiality is
suspect thus eroding the confidence and
trust of the listening public
2. We have consistently held that so long
as a company’s management prerogatives
are exercised in good faith for the
advancement of the employer’s interest
and not for the purpose of defeating
or circumventing the rights of the
employees under special laws or under
valid agreements, this Court will
uphold them.
- In this case, the rationale of ABS was to
uphold credibility and objectivity
3. Policy No. HR-ER-016 was not
superseded by the March 25, 1998
Memorandum (Luzon’s)
- Memorandum issued by Luzon which only
requires employees to go on leave if they
intend to run for any elective position is
in absolute contradiction with Policy No.
HR-ER-016 issued by the ABS-CBN Head
Office in Manila which requires the
resignation, not only the filing of a
leave of absence, of any employee who
intends to run for public office
- Luzon issued Memo beyond scope of
authority thus void
4. Ymbong is deemed resigned when he ran
for councilor
- He was separated from ABS-CBN not because
he was dismissed but because he resigned.
- In addition, we do not subscribe to
Ymbong’s claim that he was not in a
position to know which of the two
issuances was correct. Ymbong most likely
than not, is fully aware that the
subsisting policy is Policy No. HR-ER-016
and not the March 25, 1998 Memorandum and
it was for this reason that
14. Goya v. Goya Employees Union, January 21,
2013
FACTS: IN 2004, Goya hired contractual employees
from PESO to perform temporary and occasional
services
 Thus, Goya Union filed Request for
Grievance Conference bec such move was in
violation of CBA
o Not a management prerogative
o That CBA laid down categories of
employees since 1970s
o That contracting such workers would
weaken Union’s stance and that they
will be the one working in case of
an Actual Strike
VA: dismissed Union’s charge
 CBA allows company to hire contractual
employees who will perform occasional and
seasonal work directly connected with the
regular operations but it should hire
casual employees instead of outsourcing
from PESO
CA: affirmed
 the engagement of PESO is not in keeping
with the intent and spirit of the CBA
 PESO contractual employees do not fall
within the enumerated categories of
employees stated in the CBA of the
parties; thus, it should have employed
casual instead of engaging PESO
While case is pending, Corporation shortened its
corporate existence
ISSUE: Is this a valid management prerogative? –
NO.
HELD: the hiring of contractual employees from
PESO was not in keeping with the intent and
spirit of the CBA.
73
  This management prerogative of contracting
out services, however, is not without
limitation. In contracting out services,
the management must be motivated by good
faith and the contracting out should not
be resorted to circumvent the law or must
not have been the result of malicious
arbitrary actions
 A collective bargaining agreement is the
law between the parties
o negotiated contract between a
legitimate labor organization and
the employer concerning wages,
hours of work and all other terms
and conditions of employment in a
bargaining unit
 In this case, Section 4, Article I (on
categories of employees) of the CBA
between the Company and the Union must be
read in conjunction with its Section 1,
Article III (on union security). Both are
interconnected and must be given full
force and effect
15. Tabuk Multipurpose Cooperative, Inc. v.
Duclan, March 14, 2016
FACTS: TAMPCO is engaged in the business
 In 2002, TAMPCO introduced Special
Investment Loans (SILs) to its members and
prospective borrowers.
o Among those who availed themselves
of the SILs were Brenda Falgui
(Falgui) and Juliet Kotoken
(Kotoken).
 2003, the TAMPCO BOD issued Board Action
(BA) No. 28 which limited the grant of
SILs to P5 million and instructed
management to collect outstanding loans
and thus reduce the amount of loans
granted to allowable levels.
o Bec there was a report that they
allowed before a loan for one
individual amounting to P14 M
 Despite this, Falgui (P6.6M) and Kotoken
(P3.5M) were allowed loan above the
ceiling
o Falgui foled for insolvency
o Katoken failed to pay her loan
 Thus, investigation conducted
o CEO Rev. Sarmiento did not deny
charge against him “mea culpa,” he
said
 Resolution of the Board
o Cashier Duclan – immediate
suspension without pay
o Second suspension for release of
cash to SIL recipient without first
accomplishing the corresponding
loan note which is contrary to
policy – suspended until collection
 Unable to collect from borrowers, they
were dismissed from employment
 Thus, Duclan filed illegal dismissal case
ISSUE: Was the Policy effecting her dismissal
valid? – YES.
HELD
 Under Article 282 of the Labor Code, the
employer may terminate the services of its
employee for the latter's serious
misconduct or willful disobedience of its
or its representative's lawful orders.
(a) the conduct of the employee
must be willful or intentional; and
(b) the order the employee violated
must have been reasonable, lawful,
made known to the employee, and
must pertain to the duties that he
had been engaged to discharge.
o WILFULL – attended by a wrongful
and perverse mental attitude
rendering the employee's act
inconsistent with proper
subordination
 The persistent refusal of the employee to
obey the employer's lawful order amounts
to willful disobedience
 Disobedience, to be a just cause for
termination, must be willful or
intentional, willfulness being
characterized by a wrongful and perverse
mental attitude rendering the employee's
act inconsistent with proper subordination
 A willful or intentional disobedience of
such rule, order or instruction justifies
dismissal only where such rule, order or
instruction is
(1) reasonable and lawful,
(2) sufficiently known to the employee,
and
(3) connected with the duties which the
employee has been engaged to discharge."
 As TAMPCO Cashier, respondent was, among
her other designated functions and duties,
responsible and accountable for all
disbursements of cooperative funds and the
coordination of delinquency control and
collection activities
 despite issuance of BA Nos. 28 and 55,
respondent and the other officers of the
cooperative including its former General
Manager, continued to approve and release
SILs to borrowers
 Grant of Loan to Falgui and Kotoken after
BOD issued BA Nos. 28 and 55 was willfully
and repeatedly defied a necessary and
reasonable and lawful directive
o placed the resources of the
cooperative - the hard-earned
savings of its members - in a
precarious state as a result of the
inability to collect the loans
owing to the borrowers' insolvency
or refusal to honor their
obligations
o it was gross insubordination
 Due process in dismissing observed
(1) the first apprises the employee
of the particular acts or omissions
for which his dismissal is sought;
and
(2) the second informs the employee
of the employer's decision to
dismiss him
74
BUT THE DEICISION TO LET GM RETIRE THAN FIRE IS
VALID MANAGEMENT PREROGATIVE
 the cooperative chose not to waive its
right to discipline and punish her; this
is its privilege as the holder of such
right
16. Central Azucarera de Bais v. Heirs of
Apostol
FACTS: Apostol was an employee of CAB for 20
years
 Initially hired as a Motor Pool Over-all
Repairs Supervisor
 As pre-requisite, he was allowed to stay
at the company house as long as he is a
CAB employees
 But it was found that he was using company
house and equipment to repair privately
owned vehicles
o This was in violation of Rule 9 of
CAB’s Rules of Discipline: for
Utilizing material or equipment of
the Company, including power for
doing private work without
permission
 He was ordered to explain within 24 hours
and while this is so, he was preventively
suspended
 Then he was terminated
LA: not illegally dismissed
NLRC: reversed. Illegally dismissed
CA: affirmed NLRC
ISSUE: Was the company policy valid? – YES.
whether or not the respondent's act, which is
violative of CAB's rules and regulations,
warrants the imposition of the ultimate penalty
of dismissal – YES.
HELD
 Court accedes to the uniform findings of
the Labor Arbiter, NLRC, and CA that the
respondent did indeed violate company
rules and regulations when he used company
equipment and materials for his personal
vehicles
 employers have a right to impose a penalty
of dismissal on supervisors or personnel
occupying positions of responsibility on
the basis of loss of trust and confidence
o More so, in the case of supervisors
or personnel occupying positions of
responsibility, loss of trust,
justifies termination of
employment.
o This situation holds where a person
is entrusted with confidence on
delicate matters, such as the
custody, handling, or care and
protection of the employer's
property.
 REQUISITES TO VALID DISMISSAL FOR LOSS OF
TRUST AND CONFIDENCE
(1) the employee concerned must be holding
a position of trust and confidence; and
(2) there must be an act that would
justify the loss of trust and confidence
(3) such loss of trust relates to the
employee's performance of duties
 HE WAS VALIDLY TERMINATED
B. Coverage
Labor Code: Article 82
Labor standards provide the working conditions
of employees, including entitlement to overtime
pay and premium pay for working on rest days
Article 82. Coverage.
RULE: The provisions of this Title
shall apply to employees in all
establishments and undertakings
whether for profit or not
EXCEPTION:
 Government employees
 Managerial employees
 Field personnel
 Members of the family of the
employer who are dependent on him
for support
 Domestic helpers
 Persons in the personal service of
another, AND
 Workers who are paid by results as
determined by the Secretary of
Labor in appropriate regulations.
[DEFINITION] - "Managerial employees" -
Those whose primary duty consists of the
management of the establishment in which
they are employed or of a department or
subdivision thereof, and to other officers
or members of the managerial staff.
[DEFINITION] - "Field personnel" - Non-
agricultural employees who regularly
perform their duties away from the
principal place of business or branch
office of the employer and whose actual
hours of work in the field cannot be
determined with reasonable certainty.
Omnibus Rules: Book III, Rule I, Sections 1-2
Hours of Work
SECTION 1. General statement on coverage. —
The provisions of this Rule shall apply to all
employees in all establishments and
undertakings, whether operated for profit or
not, except to those specifically exempted
under Section 2 hereof.cralaw
SECTION 2. Exemption. — The provisions of this
Rule shall not apply to the following persons
if they qualify for exemption under the
conditions set forth herein:
(a) Government employees whether employed by
the National Government or any of its
political subdivision, including those
employed in government-owned and/or controlled
corporations;
(b) Managerial employees, if they meet all of
the following conditions:
(1) Their primary duty consists of the
management of the establishment in which they
75
 are employed or of a department or sub- reestablish levels of
division thereof.cralaw responsibility, and recognize both
(2) They customarily and regularly direct the wage and operational structures
work of two or more employees therein.cralaw o As a result, all positions were re-
(3) They have the authority to hire or fire evaluated, and all employees
employees of lower rank; or their suggestions including the members of respondent
and recommendations as to hiring and firing union were granted salary
and as to the promotion or any other change of adjustments and increases in
status of other employees, are given benefits commensurate to their
particular weight.cralaw actual duties and functions
(c) Officers or members of a managerial staff  Before, they were treated in the same
if they perform the following duties and manner as rank and file employees thus
responsibilities: paid overtime, rest day and holiday pay
(1) The primary duty consists of the  With the JE Program, member respondent
performance of work directly related to were re-classified for compensation and
management policies of their employer; benefits; there was an increase in basic
(2) Customarily and regularly exercise pay; union members now enjoy wide gap in
discretion and independent judgment; and basic pay; longevity pay was increased;
(3) (i) Regularly and directly assist a entitled to COLA; granted allowance for
proprietor or a managerial employee whose rest day/holiday work
primary duty consists of the management of the  Then in 1990, union members filed a
establishment in which he is employed or complaint for non-payment of overtime,
subdivision thereof; or (ii) execute under rest day and holiday pay
general supervision work along specialized or LA: Company ordered to pay
technical lines requiring special training,
experience, or knowledge; or (iii) execute,  That given the long period of time that it
under general supervision, special assignments was granted, it ripened into a contractual
and tasks; and obligation
(4) Who do not devote more than 20 percent of NLRC: affirmed LA
their hours worked in a work week to  Member-complainants are not occupying
activities which are not directly and closely managerial positions thus entitled to
related to the performance of the work overtime, rest day, holiday pay
described in paragraphs (1), (2) and (3)
above.cralaw ISSUE: are herein complainant entitled to the
(d) Domestic servants and persons in the monetary claims? – NO.
personal service of another if they perform HELD: members of respondent union are
such services in the employer's home which are supervisory employees, as defined employees, as
usually necessary or desirable for the defined under Article 212(m)
maintenance and enjoyment thereof, or minister Article 212(m) ART 82 AND SEC 2 OF
to the personal comfort, convenience, or (COMPANY) RULE 1 BOOK III OF
safety of the employer as well as the members OMINUBUS RULES
of his employer's household.cralaw (EMPLOYEES’)
(e) Workers who are paid by results, including "(m) 'Managerial "Art. 82 Coverage. —
those who are paid on piece-work, "takay," employee' is one who The provisions of this
"pakiao" or task basis, and other non-time is vested with powers title shall apply to
work if their output rates are in accordance or prerogatives to lay employees in all
with the standards prescribed under Section 8, down and execute establishments and
Rule VII, Book Three of these regulations, or management policies undertakings whether
where such rates have been fixed by the and/or to hire, for profit or not, but
Secretary of Labor and Employment in transfer, suspend, not to government
accordance with the aforesaid Section.cralaw lay-off, recall, employees, managerial
(f) Non-agricultural field personnel if they discharged, assign or employees, field
regularly perform their duties away from the discipline employees. personnel, members of
principal or branch office or place of Supervisory employees the family of the
business of the employer and whose actual are those who, in the employer who are
hours of work in the field cannot be interest of the dependent on him for
determined with reasonable certainty.cralaw employer effectively support, domestic
recommend such helpers, persons in
CASES: managerial actions if the personal service
17. National Sugar Refineries Corp. v. NLRC, the exercise of such of another, and
March 24, 1993 authority is not workers who are paid
FACTS: NASUREFCO is owned by the government and merely routinary or by results as
has three sugar refineries in Bukidnon, Iloilo clerical in nature but determined by the
and Batangas requires the use of Secretary of Labor in
 Batangas refinery was privatized in 1992 independent judgment. Appropriate
 In 1988, Company implemented Job All employees not regulations.
Evaluation Program affecting ALL employees falling within any of
o designed to rationalized the duties those above
"As used herein,
and functions of all positions, definitions are
'managerial employees'
76
 considered rank-and- refer to those whose
file employees of this primary duty consists
Book.” of the management of
the establishment in
which they are
employed or of a
department or
subdivision thereof,
and to other officers
or members of the
managerial staff."
EXCEPT: SEC 2 RULE 1
(OMNI)
 A cursory perusal of the Job Value
Contribution Statements 7 of the union
members will readily show that these
supervisory employees are under the direct
supervision of their respective department
superintendents
 From the foregoing, it is apparent that
the members of respondent union discharge
duties and responsibilities which
ineluctably qualify them as officers or
members of the managerial staff, as
defined in Section 2, Rule I Book III
 Under the facts obtaining in this case, we
are constrained to agree with petitioner
that the union members should be
considered as officers and members of the
managerial staff and are, therefore,
exempt from the coverage of Article 82
THUS NOT ENTITLED TO THE PAY
 It is admitted that these union members
are supervisory employees and this is one
instance where the nomenclatures or titles
of their jobs conform with the nature of
their functions
PAY DID NOT RIPEN INTO CONTRACTUAL OBLIGATIO
 Prior to the JE Program, they could not be
categorically classified as members or
officers of the managerial staff
considering that they were then treated
merely on the same level as rank-and-file.
Consequently, the payment thereof could
not be construed as constitutive of
voluntary employer practice, which cannot
be now be unilaterally withdrawn by
petitioner
 It remains undisputed that the
implementation of the JE Program, the
members of private respondent union were
re-classified under levels S-5 S-8 which
were considered under the program as
managerial staff purposes of compensation
and benefits, that they occupied re-
evaluated positions, and that their basic
pay was increased by an average of 50% of
their basic salary prior to the JE
Program. In other words, after the JE
Program there was an ascent in position,
rank and salary. This in essence is a
promotion which is defined as the
advancement from one position to another
with an increase in duties and
responsibilities as authorized by law, and
usually accompanied by an increase in
salary
 Quintessentially, with the promotion of
the union members, they are no longer
entitled to the benefits which attach and
pertain exclusively to their positions.
Entitlement to the benefits provided for
by law requires prior compliance with the
conditions set forth therein. With the
promotion of the members of respondent
union, they occupied positions which no
longer met the requirements imposed by
law.
18. Penaranda v. Banganga Plywood Corp, May 3,
2006
Facts: 1999, PENARANDA was hired by BPC to take
charge of the operations and maintenance of its
steam plant boiler
 2001, she filed a case for illegal
dismissal
o Claims she was a foreman/boiler
head/shift engr
o Was terminated without due process
and not paid overtime, premium,
holiday and rest pay
 Company said her serparatio was valid bec
BPC was on temporary closure due to repair
and heneral maintenance
o That when it reopened, she did no
reapply
o Furthermore, being a managerial
employee he is not entitled to
overtime pay and if ever he
rendered services beyond the normal
hours of work
LA: no illegal dismissal; she was still employed
NLRC: modified; deleted overtime, premium pay
CA: dismissed appeal
ISSUE: is she entitled to overtime and other
monetary benefits claimed? – NO. SHE WAS NOT A
MANAGERIAL EMPLOYEE BUT A MEMBER OF THE
MANAGERIAL STAFF HENCE STILL EXCLUDED
HELD: Article 82 of the Labor Code exempts
managerial employees from the coverage of labor
standards.
 Labor standards provide the working
conditions of employees, including
entitlement to overtime pay and premium
pay for working on rest days
 Based on her functions, particularly items
1, 2, 3, 5 and 7 illustrates that
petitioner 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
 Petitioner supervised the engineering
section of the steam plant boiler. His
work involved overseeing the operation of
the machines and the performance of the
workers in the engineering section. This
work necessarily required the use of
discretion and independent judgment to
ensure the proper functioning of the steam
plant boiler. As supervisor, petitioner is
deemed a member of the managerial staff
77
  MOREOVER, SHE ADMITED SHE WAS A SUPERVISOR
IN HER POSITION PAPER
 The term foreman implies that he was the
representative of management over the
workers and the operation of the
department
 supervisor of the steam plant
 also, the manner by which she was paid,
included in the 10% employees who were
paid on a monthly basis; others were daily
19. San Miguel Brewery, Inc. v. Democratic
Labor Organization, July 31, 1963
FACTS: Democratic Labor Assoc filed a complaint
against San Miguel demanding for the betterment
of the conditions of employment of its members
 Then they confined they complaint to
demand overtime, nigh shift differential
pay, atty’s fees etc
 Presiding Judge held that the 8-hour labor
law applies to the employees working in
the filed or engaged in the sale of
company’s products
o Employees who work at nnight must
also have differentials for work
done
o Additional pay for those who work
on Sundays and holidays
o And application of the Min Wage Law
for workers on pakyaw basis
ISSUE: are the complainants entitled to overtime
pay? – NO.
Does the eight-hour labor law apply to them? –
NO.
HELD: they are sales agents on pakyaw basis
 the Eight-Hour Labor Law only has
application where an employee or laborer
is paid in a monthly or daily basis, or is
paid a monthly or daily compensation, in
which case, if he is made to work beyond
the requisite period of 8 hours, he should
be paid the additional compensation
prescribed by law
 This law has no application when the
employee or laborer is paid on a piece-
work, "pakiao", or commission basis,
regardless of the time employed.
 The philosophy behind this exemption is
that his earnings are in the form of
commission based on the gross receipts of
the day
 THIS IS BEC HE WORKS INDIVIDUALLY
 . In lieu of overtime he ordinarily
receives commissions as extra compensation
RE COMPLAINANTS EARNING ON MONTHLY BASIS
 Even though they work more than 8 hours,
the commission is the extra compensation
they are entitled to
 Commission depends on the volume of this
sales
20. Auto Bus Transport Systems v. Bautista,
May 16, 2005
FACTS: BAUTISTA is a driver-conductor of Autobus
 He is paid on commission basis of the
total gross income per travel on a twice a
month basis
 He figured into an accident
o That it was due to management who
forced him to go back to Roxas even
though he hasn’t slept
o He was then terminated
 Thus, he filed a complaint for illegal
dismissal and money claims
LA: dismissed the complaint but ordered to pay
13th month, etc
NLRC: affirmed but deleted the money claims
awarded such as service incentive leave
ISSUE: is he entitled to service incentive
leave? – YES.
HELD: On commission basis but entitled
 True, Book III, Rule V exempts field
personnel from receiving service incentive
leave provided in Art 95
 But Art 82 defines Field Personnel
o As a general rule, [field
personnel] are those whose
performance of their job/service is
not supervised by the employer or
his representative, the workplace
being away from the principal
office and whose hours and days of
work cannot be determined with
reasonable certainty; hence, they
are paid specific amount for
rendering specific service or
performing specific work. If
required to be at specific places
at specific times, employees
including drivers cannot be said to
be field personnel despite the fact
that they are performing work away
from the principal office of the
employee.
 Those exempt are only those whose actual
hours of work in the field cannot be
determined with reasonable certainty.
 Drivers leave at a certain time, there are
inspectors assigned at specific places,
THEY ARE UNDER CONSTANT SUPERVISION while
in the performance of their work
21. Mercidar Fishing Corp. v. NLRC, October 8,
1998
FACTS: AGAO is employed as bodegero or ships
quartermaster of Mercidar Fishing Corporation
 He filed this illegal dismissal case and
non-payment of five days service incentive
leave
 He alleged that he was sick and was
allowed to go on leave without pay for a
month but when he came back, he was
refused work; certificate of employment
not even given unless he tenders his
resignation
LA: ordered reinstatement
NLRC: affirmed; ordered to pay service incentive
leave
78
ISSUE: Is he categorized as field personnel such
that he is not entitled to the service incentive
leave? – NO. HE IS ENTITLED
HELD: Yes, he works away from the principal
place of business BUT his actual hours of work
is determinable
 It can be determined with reasonable
certainty
 Although they perform non-agricultural
work away from petitioners business
offices, the fact remains that throughout
the duration of their work they are under
the effective control and supervision of
petitioner through the vessels patron or
master
22. Labor Congress of the Philippines v. NLRC,
May 21, 1998
FACTS: COMPLAINANTS were rank and file employees
of Empire Food Products
 They filed this complaint for payment of
money claims
 Then the complainants represented by its
president entered into a MOA with the
company
o Union sent a proposal for
collective bargaining
o Then they filed this complaint
 On underpayment:
o They are piece workers or paid on a
pakyao basis but receive no less
than the mon wage for 8 hours of
work
LA: ruled in favor of the workers
NLRC: remanded
ISSUE: was there underpayment? – YES.
HELD: That petitioner employees are "pakyao" or
piece workers does not imply that they are not
regular employees entitled to reinstatement
 Private respondents, moreover, in
considering petitioners' employment to
have been terminated by abandonment,
violated their rights to security of
tenure and constitutional right to due
process in not even serving them with a
written notice of such termination
 Petitioners are therefore entitled to
reinstatement with full back wages
pursuant to Article 279 of the Labor Code
 That being said, the amount of back wages
to which each petitioner is entitled,
however, cannot be fully settled at this
time. Petitioners, as piece-rate workers
having been paid by the piece, 14 there is
need to determine the varying degrees of
production and days worked by each worker
RE OTHER BENEFITS
 petitioners are so entitled to these
benefits bec they are regular employees
o necessary and desirable
o worked throughout the year
o length of time of service
 mode of payment was “per piece basis” but
their status is regular employees
 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.
23. David v. Macasio, July 2, 2014
FACTS: Macasio filed a complaint against David
(Yiels Hog Dealer)
24. Apex Mining Company, Inc. v. NLRC, April
22, 1991
FACTS: CANDIDA was employed by Apex Mining to
perform launder services a the staff house; she
is paid on a monthly basis
 While working, she accidentally slipped
and hit her back on a stone; she was not
able to continue with her work
o Was permitted to go on leave
o She was offered money and persuaded
to quit
o But she said she preferred to
return to work but she was not
allowed
 Thus, she filed this case
LA: ordered Apex to pay her
NLRC: affirmed
ISSUE: Is the househelper in the staff houses of
an industrial company a domestic helper or a
regular employee of the said firm?
HELD: rule XIII Sec I(b) Book 3 of Labor Code
cannot include househelp or laundrywomen working
in staffhouses of a company
Under Rule XIII, Section l(b), Book 3 of the
Labor Code, as amended, the terms "househelper"
or "domestic servant" are defined as follows:
 The term "househelper" as used herein is
synonymous to the term "domestic servant"
and shall refer to any person, whether
male or female, who renders services in
and about the employer's home and which
services are usually necessary or
desirable for the maintenance and
enjoyment thereof, and ministers
exclusively to the personal comfort and
enjoyment of the employer's family
 Such definition covers family drivers,
domestic servants, laundry women, yayas,
gardeners, houseboys and other similar
househelps
 The criteria is the personal comfort and
enjoyment of the family of the employer in
the home of said employer.
 When employed by a company, they are
employees of the company or employer in
the business concerned entitled to the
privileges of a regular employee
 The mere fact that the househelper or
domestic servant is working within the
premises of the business of the employer
and in relation to or in connection with
its business, as in its staffhouses for
its guest or even for its officers and
employees, warrants the conclusion that
79
 such househelper or domestic servant is
and should be considered as a regular
employee of the employer and not as a mere
family househelper or domestic servant as
contemplated
Labor Code: Articles 83-90
Article 83. Normal hours of work.
CASE: The normal hours of work of any
employee
RULE: It shall NOT EXCEED eight (8) hours a
day.
CASE 1: Health personnel in cities and
municipalities with a population of AT
LEAST 1 M or
CASE 2: Health personnel in hospitals and
clinics with a bed capacity of at least
one hundred (100)
RULE: It shall hold regular office hours
for eight (8) hours a day, for five (5)
days a week, EXCLUSIVE of time for meals,
EXCEPTIONS:
CASE: The exigencies of the service
require that such personnel work for six
(6) days or forty-eight (48) hours
RULE: They shall be entitled to an
additional compensation of at least
thirty percent (30%) of their regular
wage for work on the sixth day.
"health personnel" shall include:
 resident physicians
 nurses
 nutritionists
 dietitians
 pharmacists
 social workers
 laboratory technicians
 paramedical technicians
 psychologists
 midwives
 attendants and
all other hospital or clinic personnel.
Article 84. Hours worked.
CASE: Hours worked shall include
 ALL time during which an employee is
required to be:
o on duty or
o at a prescribed workplace; AND
 ALL time during which an employee is
suffered or permitted to work.
CASE: Rest periods of short duration
during working hours
RULE: It shall be counted as hours worked.
Article 85. Meal periods.
GOVERNING LAW: Subject to such
regulations as the Secretary of Labor
may prescribe
CASE: Time-off for their regular meals.
RULE: It shall not be less than sixty (60)
minutes
Article 86. Night shift differential.
CASE: Work performed between ten
o’clock in the evening and six
o’clock in the morning.
RULE: It shall be paid a night shift
differential of NOT LESS than ten
percent (10%) of his regular wage
Article 87. Overtime work.
RULE: Work may be performed beyond eight
(8) hours a day
the employee is paid for the overtime
work, an additional compensation
equivalent to his regular wage plus at
least twenty-five percent (25%) thereof.
Work performed beyond eight hours on a
holiday or rest day shall be paid an
additional compensation equivalent to the
rate of the first eight hours on a holiday
or rest day plus at least thirty percent
(30%) thereof.
Article 88. Undertime not offset by
overtime.
CASE: Undertime work on any particular day
RULE: It shall NOT BE OFFSET by overtime
work on any other day.
CASE: Permission given to the employee to
go on leave on some other day of the week
RULE: It shall NOT EXEMPT the employer
from paying the additional compensation
required in this Chapter.
Article 89. Emergency overtime work.
RULE: Any employee may be required by
the employer to perform overtime work in
any of the following cases:
CASE 1: When the country is at war
80
CASE 2: When any other national or
local emergency has been declared by:
 the National Assembly OR
 the Chief Executive
CASE 3: When it is necessary to prevent
loss of life or property
CASE 4: When there is an imminent danger
to PUBLIC SAFETY due to an actual or
impending emergency in the locality caused
by:
 serious accidents
 fire
 flood
 typhoon
 earthquake
 epidemic, or
 other disaster or
 calamity;
CASE 4: When there is urgent work to be
performed on:
 machines
 installations, or
 equipment,
in order to avoid serious loss or damage
to the employer or some other cause of
similar nature;
CASE 5: When the work is necessary to
prevent loss or damage to perishable
goods; and
CASE 6: Where the completion or
continuation of the work started before
the eighth hour is necessary to
 prevent serious obstruction or
 prejudice to the business or
operations of the employer.
--
CASE: Any employee required to render
overtime work under this Article
RULE: He shall be paid the additional
compensation required in this Chapter.
Article 90. Computation of additional
compensation.
PURPOSE: Computation of overtime and other
additional remuneration as required by
this Chapter
CASE: The "regular wage" of an employee
RULE: It shall include the cash wage ONLY,
WITHOUT
deduction on account of facilities provided
by the employer.
Omnibus Rules: Book III, Rule I, Sections 3-11,
Rule I-A, Rule II
SECTION 3. Hours worked. — The following shall
be considered as compensable hours worked:
(a) All time during which an employee is
required to be on duty or to be at the
employer's premises or to be at a prescribed
work place; and
(b) All time during which an employee is
suffered or permitted to work.cralaw
SECTION 4. Principles in determining hours
worked. — The following general principles
shall govern in determining whether the time
spent by an employee is considered hours
worked for purposes of this Rule:
(a) All hours are hours worked which the
employee is required to give his employer,
regardless of whether or not such hours are
spent in productive labor or involve physical
or mental exertion.cralaw
(b) An employee need not leave the premises of
the work place in order that his rest period
shall not be counted, it being enough that he
stops working, may rest completely and may
leave his work place, to go elsewhere, whether
within or outside the premises of his work
place.cralaw
(c) If the work performed was necessary, or it
benefited the employer, or the employee could
not abandon his work at the end of his normal
working hours because he had no replacement,
all time spent for such work shall be
considered as hours worked, if the work was
with the knowledge of his employer or
immediate supervisor.cralaw
(d) The time during which an employee is
inactive by reason of interruptions in his
work beyond his control shall be considered
working time either if the imminence of the
resumption of work requires the employee's
presence at the place of work or if the
interval is too brief to be utilized
effectively and gainfully in the employee's
own interest.cralaw
SECTION 5. Waiting time. — (a) Waiting time
spent by an employee shall be considered as
working time if waiting is an integral part of
his work or the employee is required or
engaged by the employer to wait.cralaw
(b) An employee who is required to remain on
call in the employer's premises or so close
thereto that he cannot use the time
effectively and gainfully for his own purpose
shall be considered as working while on call.
An employee who is not required to leave word
at his home or with company officials where he
may be reached is not working while on
call.cralaw
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SECTION 6. Lectures, meetings, training
programs. — Attendance at lectures, meetings,
training programs, and other similar
activities shall not be counted as working
time if all of the following conditions are
met:
(a) Attendance is outside of the employee's
regular working hours;
(b) Attendance is in fact voluntary; and
(c) The employee does not perform any
productive work during such attendance.cralaw
SECTION 7. Meal and Rest Periods. — Every
employer shall give his employees, regardless
of sex, not less than one (1) hour time-off
for regular meals, except in the following
cases when a meal period of not less than
twenty (20) minutes may be given by the
employer provided that such shorter meal
period is credited as compensable hours worked
of the employee:
(a) Where the work is non-manual work in
nature or does not involve strenuous physical
exertion;
(b) Where the establishment regularly operates
not less than sixteen (16) hours a day;
(c) In case of actual or impending emergencies
or there is urgent work to be performed on
machineries, equipment or installations to
avoid serious loss which the employer would
otherwise suffer; and
(d) Where the work is necessary to prevent
serious loss of perishable goods.cralaw
Rest periods or coffee breaks running from
five (5) to twenty (20) minutes shall be
considered as compensable working time.cralaw
SECTION 8. Overtime pay. — Any employee
covered by this Rule who is permitted or
required to work beyond eight (8) hours on
ordinary working days shall be paid an
additional compensation for the overtime work
in the amount equivalent to his regular wage
plus at least twenty-five percent (25%)
thereof.cralaw
SECTION 9. Premium and overtime pay for
holiday and rest day work. — (a) Except
employees referred to under Section 2 of this
Rule, an employee who is permitted or suffered
to work on special holidays or on his
designated rest days not falling on regular
holidays, shall be paid with an additional
compensation as premium pay of not less than
thirty percent (30%) of his regular wage. For
work performed in excess of eight (8) hours on
special holidays and rest days not falling on
regular holidays, an employee shall be paid an
additional compensation for the overtime work
equivalent to his rate for the first eight
hours on a special holiday or rest day plus at
least thirty percent (30%) thereof.cralaw
(b) Employees of public utility enterprises as
well as those employed in non-profit
institutions and organizations shall be
entitled to the premium and overtime pay
provided herein, unless they are specifically
excluded from the coverage of this Rule as
provided in Section 2 hereof.cralaw
(c) The payment of additional compensation for
work performed on regular holidays shall be
governed by Rule IV, Book Three, of these
Rules.cralaw
SECTION 10. Compulsory overtime work. — In any
of the following cases, an employer may
require any of his employees to work beyond
eight (8) hours a day, provided that the
employee required to render overtime work is
paid the additional compensation required by
these regulations:
(a) When the country is at war or when any
other national or local emergency has been
declared by Congress or the Chief Executive;
(b) When overtime work is necessary to prevent
loss of life or property, or in case of
imminent danger to public safety due to actual
or impending emergency in the locality caused
by serious accident, fire, floods, typhoons,
earthquake, epidemic or other disaster or
calamities;
(c) When there is urgent work to be performed
on machines, installations, or equipment, in
order to avoid serious loss or damage to the
employer or some other causes of similar
nature;
(d) When the work is necessary to prevent loss
or damage to perishable goods;
(e) When the completion or continuation of
work started before the 8th hour is necessary
to prevent serious obstruction or prejudice to
the business or operations of the employer; or
(f) When overtime work is necessary to avail
of favorable weather or environmental
conditions where performance or quality of
work is dependent thereon.cralaw
In cases not falling within any of these
enumerated in this Section, no employee may be
made to work beyond eight hours a day against
his will.
RULE I-A
Hours of Work of Hospital and Clinic Personnel
SECTION 1. General statement on coverage. —
This Rule shall apply to:
(a) All hospitals and clinics, including those
with a bed capacity of less than one hundred
(100) which are situated in cities or
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municipalities with a population of one
million or more; and
(b) All hospitals and clinics with a bed
capacity of at least one hundred (100),
irrespective of the size of the population of
the city or municipality where they may be
situated.cralaw
SECTION 2. Hospitals or clinics within the
meaning of this Rule. — The terms "hospitals"
and "clinics" as used in this Rule shall mean
a place devoted primarily to the maintenance
and operation of facilities for the diagnosis,
treatment and care of individuals suffering
from illness, disease, injury, or deformity,
or in need of obstetrical or other medical and
nursing care. Either term shall also be
construed as any institution, building, or
place where there are installed beds, or
cribs, or bassinets for twenty-four (24) hours
use or longer by patients in the treatment of
disease, injuries, deformities, or abnormal
physical and mental states, maternity cases or
sanitorial care; or infirmaries, nurseries,
dispensaries, and such other similar names by
which they may be designated.cralaw
SECTION 3. Determination of bed capacity and
population. — (a) For purposes of determining
the applicability of this Rule, the actual bed
capacity of the hospital or clinic at the time
of such determination shall be considered,
regardless of the actual or bed occupancy. The
bed capacity of hospital or clinic as
determined by the Bureau of Medical Services
pursuant to Republic Act No. 4226, otherwise
known as the Hospital Licensure Act, shall
prima facie be considered as the actual bed
capacity of such hospital or clinic.cralaw
(b) The size of the population of the city or
municipality shall be determined from the
latest official census issued by the Bureau of
the Census and Statistics.cralaw
SECTION 4. Personnel covered by this Rule. —
This Rule applies to all persons employed by
any private or public hospital or clinic
mentioned in Section 1 hereof, and shall
include, but not limited to, resident
physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory
technicians paramedical technicians,
psychologists, midwives, and attendants.cralaw
SECTION 5. Regular working hours. — The
regular working hours of any person covered by
this Rule shall not be more than eight (8)
hours in any one day nor more than forty (40)
hours in any one week.cralaw
For purposes of this Rule a "day" shall mean a
work day of twenty-four (24) consecutive hours
beginning at the same time each calendar year.
A "week" shall mean the work of 168
consecutive hours, or seven consecutive 24-
hour work days, beginning at the same hour and
on the same calendar day each calendar
week.cralaw
SECTION 6. Regular working days. — The regular
working days of covered employees shall not be
more than five days in a work week. The work
week may begin at any hour and on any day,
including Saturday or Sunday, designated by
the employer.cralaw
Employers are not precluded from changing the
time at which the work day or work week
begins, provided that the change is not
intended to evade the requirements of this
Rule.cralaw
SECTION 7. Overtime work. — Where the
exigencies of the service so require as
determined by the employer, any employee
covered by this Rule may be scheduled to work
for more than five (5) days or forty (40)
hours a week, provided that the employee is
paid for the overtime work an additional
compensation equivalent to his regular wage
plus at least thirty percent (30%) thereof,
subject to the provisions of this Book on the
payment of additional compensation for work
performed on special and regular holidays and
on rest days.cralaw
SECTION 8. Hours worked. — In determining the
compensable hours of work of hospital and
clinic personnel covered by this Rule, the
pertinent provisions of Rule 1 of this Book
shall apply.cralaw
SECTION 9. Additional compensation. — Hospital
and clinic personnel covered by this Rule,
with the exception of those employed by the
Government, shall be entitled to an additional
compensation for work performed on regular and
special holidays and rest days as provided in
this Book. Such employees shall also be
entitled to overtime pay for services rendered
in excess of forty hours a week, or in excess
of eight hours a day, whichever will yield the
higher additional compensation to the employee
in the work week.cralaw
SECTION 10. Relation to Rule I. — All
provisions of Rule I of this Book which are
not inconsistent with this Rule shall be
deemed applicable to hospital and clinic
personnel.
RULE II
Night Shift Differential
SECTION 1. Coverage. — This Rule shall apply
to all employees except:
(a) Those of the government and any of its
political subdivisions, including government-
owned and/or controlled corporations;
(b) Those of retail and service establishments
regularly employing not more than five (5)
workers;
83
(c) Domestic helpers and persons in the
personal service of another;

(d) Managerial employees as defined in Book

Three of this Code;

(e) Field personnel and other employees whose

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

SECTION 2. Night shift differential. — An

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

SECTION 3. Additional compensation. — Where an

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

SECTION 4. Additional compensation on

scheduled rest day/special holiday. — An
employee who is required or permitted to work
on the period covered during rest days and/or
special holidays not falling on regular
holidays, shall be paid a compensation
equivalent to his regular wage plus at least
thirty (30%) per cent and an additional amount
of not less than ten (10%) per cent of such
premium pay rate for each hour of work
performed.cralaw

SECTION 5. Additional compensation on regular

holidays. — For work on the period covered
during regular holidays, an employee shall be
entitled to his regular wage during these days
plus an additional compensation of no less
than ten (10%) per cent of such premium rate
for each hour of work performed.cralaw

SECTION 6. Relation to agreements. — Nothing

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

84