ARTICLES 1-6

Title Brief Facts (2-3 sentences only) SC Ruling Doctrine

Estrellita Salazar v. Philippine
Duplicators, Inc.
Petitioner Estrellita Salazar became
Sales Representative of Philippine
Duplicators, Inc. under the direct
supervision of respondent Leonora
Fontanilla. On November 23, 1998,
respondent Fontanilla went over the
three (3) accounts of Salazar, namely,
ICLARM, Bengson Law Office, and
D.M. Consunji, Inc., afterwhich,
Fontanilla asked Salazar whether she
went to the aforementioned clients, and
Salazar answered in the affirmative as
reflected in her Daily Sales Report
(DSR) given to Fontanilla. However,
respondent Fontanilla told Salazar that
upon verification, the said clients
alleged that they neither knew nor met
the latter.
Petitioner was dismissed for a just The constitutional policy to provide
and valid cause. full protection to labor is not meant to
be a sword to oppress employers. The
There were two mails sent to Salazar commitment under the fundamental
through registered mail; a hearing or law is that the cause of labor does not
conference is set to enable the prevent us from sustaining the
employee to respond to the charge employer when the law is clearly on
and adduce evidence; she received a its side.
copy of the March 8, 1999 

termination letter by registered mail
which she received on March 23,
1999, or at the latest, on September
1, 1999 when she got a copy of
respondent's Position Paper where
the letter was appended as Annex
"F."

The union president gave her a copy of

a memorandum charging her of
falsification. Thereafter, she did not
report to work anymore and readily
filed a complaint for illegal dismissal
against the respondents.
Zenaida Paz v. Northern Tobacco
Redrying Co., Inc., et al.
NTRCI hired Zenaida Paz (Paz)
sometime in 1974 as a seasonal sorter,
paid P185.00 daily. NTRCI regularly
re-hired her every tobacco season since
then. She signed a seasonal job
contract at the start of her employment
and a pro-forma application letter
prepared by NTRCI in order to qualify
for the next season. On May 18, 2003,
Paz was 63 years old when NTRCI
informed her that she was considered
retired under company policy. A year
later, NTRCI told her she would
receive P12,000.00 as retirement pay.
Paz, with two other complainants, filed
a Complaint for illegal dismissal
against NTRCI on March 4, 2004. .
She amended her Complaint on April
27, 2004 into a Complaint for payment
of retirement benefits, damages, and
attorney’s fees as P12,000.00 seemed
inadequate for her 29 years of service.
Petitioner Paz’s amendment of her Retirement is voluntary such that an
Complaint was not fatal to her cause employee who was considered retired
of action for illegal dismissal. before retirement age is illegally
dismissed.
First, petitioner Paz never
abandoned her argument that she had
not reached the compulsory
retirement age of 65 pursuant to
Article 287, as amended, when
respondent NTRCI made her retire
on May 18, 2003.
Second, the National Labor
Relations Commission found that
respondent NTRCI failed to prove a
valid company retirement policy, yet
it required its workers to retire after
they had reached the age of 60. The
Court of Appeals also discussed that
while respondent NTRCI produced
guidelines on its retirement policy for
seasonal employees, it never
submitted a copy of its Collective
Bargaining Agreement and even
alleged in its Position Paper that none
existed.
Petitioner Paz was only 63 years old
on May 18, 2003 with two more
years remaining before she would
reach the compulsory retirement age
of 65.
Central Pangasinan Electric
Cooperative Inc. v. NLRC
Private respondent Lito Cagampan was
the Acting Power Use Coordinator of
petitioner
Central Pangasinan Electric
Cooperative, Inc. (CENPELCO). Upon
investigation, it appeared that
Cagampan knowingly entered into an
unauthorized contract
for the installation of a transformer, and
that he was not authorized to accept
payment. Cagampan filed a complaint
for illegal dismissal, praying for
payment of backwages and
damages, and reinstatement.
Lito Cagampan is not entitled to
separation pay since he was
dismissed for gross
misconduct and acts of dishonesty. It
contends that separation pay or
financial assistance is not
awarded to employees lawfully
dismissed for serious misconduct or
for cause reflecting on his moral
character. The NLRC did not gravely
abuse its discretion in awarding the
benefits of compassionate
justice. It ratiocinated that
considering his long years of service,
it did not necessarily follow that no
award of separation pay could be
made if there was no illegal
dismissal.
Separation pay shall be allowed only
in those instances where the employee
is validly dismissed for causes other
than serious misconduct or those
reflecting on his moral character.—
Section 7, Rule I, Book VI of the
Omnibus Rules Implementing the
Labor Code provides that when the
employee is dismissed for any of the
just causes under Article 282 of the
Labor Code, he shall not be entitled to
termination pay without prejudice to
applicable collective bargaining
agreement or voluntary employer
policy or practice. Separation pay
shall be allowed only in those
instances where the employee is
validly dismissed for causes other
than serious misconduct or those
reflecting on his moral character.
Separation pay in such case is granted
to stand as a “measure of social
justice.” If the cause for the
termination of employment cannot be
considered as one of mere inefficiency
or incompetence but an act that
constitutes an utter disregard for the
interest of the employer or a palpable
breach of trust in him, the grant by the
Court of separation benefits is hardly
justifiable.
Hocheng Philippines Corporation v.
Farrales
Milan, et. al. v. NLRC
There was a report that a motorcycle
helmet of a certain employee was
stolen at the parking lot within the
company’s premises. The CCTV
showed that it was Farrales who took
the missing helmet from a parked
motorcycle. The HPC issued a Notice
of Termination to Farrales dismissing
him for violation of the HPC Code of
Discipline, which provides that
"stealing from the company, its
employees and officials, or from its
contractors, visitors or clients," is akin
to serious misconduct and fraud or
willful breach by the employee of the
trust reposed in him by his employer or
duly authorized representative, which
are just causes for termination of
employment under Article 282 of the
Labor Code.
As Solid Mills’ employees, petitioners
Milan, et al. and their families were
allowed to occupy SMI Village, a
property owned by respondent Solid
Mills. According to Solid Mills, this
was “out of liberality and for the
convenience of its employees . . . and
on the condition that the employees . . .
would vacate the premises anytime the
Company deems fit.” Subsequently,
petitioners were informed that Solid
Mills would cease its operations due to
serious business losses. As a
consequence, petitioners were no
longer allowed to report for work. They
were required to sign a memorandum
of agreement with release and
quitclaim before their vacation and sick
leave benefits, 13th month pay, and
separation pay would be released.
Where there is no showing of a clear, Article 4 of the Labor Code mandates
valid and legal cause for termination that all doubts in the implementation
of employment, the law considers the and interpretation of the provisions
case a matter of illegal dismissal. If thereof shall be resolved in favor of
doubts exist between the evidence labor.
presented by the employer and that of
the employee, the scales of justice " To b e l a w f u l , t h e c a u s e f o r
must be tilted in favor of the latter. termination must be a serious and
The employer must affirmatively grave malfeasance to justify the
show rationally adequate evidence deprivation of a means of livelihood.
that the dismissal was for a justifiable This is merely in keeping with the
cause. Respondent is not guilty of spirit of our Constitution and laws
theft on the ground that the which lean over backwards in favor
circumstances presented showed that of the working class, and mandate
the he only mistook the helmet as the that every doubt must be resolved
one belonging to his neighbor Eric, in their favor."
the same helmet he only intended to
borrow.
An employer is allowed to withhold The employer is authorized to
terminal pay and benefits pending the withhold wages for debts due.
employee’s return of its properties.
The return of the property owned by
their employer Solid Mills became an
obligation or liability on the part of
the employees when the employer-
employee relationship ceased. Thus,
respondent Solid Mills has the right
to withhold petitioners’ wages and
benefits because of this existing debt
or liability.
Racelis v. United Philippine Lines,
Inc.
Petitioner, as the surviving spouse of
Rodolfo L. Racelis, initiated a claim for
death benefits. However, her claim was
denied by the employer on the ground
that the death was not work-related.
Previously, Rodolfo L. Racelis was
recruited and hired by respondent. After
complying with the required pre-
employment medical examination
where he was declared fit to work,
On his last employment, Rodolfo
experienced severe pain in his ears and
high blood pressure causing him to
collapse while in the performance of
his duties. He consulted a doctor in
Argentina and was medically
repatriated. Upon arrival in Manila, he
was immediately brought to Medical
City, Pasig City, where he was seen by
a company-designated physician, and
was diagnosed to be suffering from
Brainstem (pontine) Cavernous
Malformation. He underwent surgery
twice for the said ailment but
developed complications and died on
March 2, 2008.
The death of the seafarer is evidently The beneficiaries of a deceased
work-related. “While it is true that seafarer may be able to claim death
Brainstem (pontine) Cavernous benefits for as long as they are able to
Malformation is not listed as an establish that (a) the seafarer’s death
occupational disease under Section is work-related, and (b) such death
32-A of the 2000 POEA-SEC, had occurred during the term of his
Section 20 (B) (4) of the same employment contract.
explicitly provides that ‘[t[he
liabilities of the employer when the
seafarer suffers work-related injury
or illness during the term of his
contract are as follows: (t)hose
illnesses not listed in Section 32 of
this Contract are disputably
presumed as work related.’ In other
words, the 2000 POEA-SEC ‘has
created a disputable presumption in
favor of compensability[,] saying that
those illnesses not listed in Section
32 are disputably presumed as work-
related. This means that even if the
illness is not listed under Section 32-
A of the POEA-SEC as an
occupational disease or illness, it will
still be presumed as work-related,
and it becomes incumbent on the
employer to overcome the
presumption.’ This presumption
should be overturned only when the
employer’s refutation is found to be
supported by substantial evidence,
which, as traditionally defined is
“such relevant evidence as a
reasonable mind might accept as
sufficient to support a conclusion.”
 PAL v. NLRC PAL revised its Code of Discipline and
circulated it among its employees for
immediate implementation which
subjected some employees to discipline
measures. Because of the
implementation, PALEA filed a
complaint to the NLRC for unfair labor
practice.
Torres v. Rural Bank of San Juan, Inc. RBSJI's Human Resources Department
recommended the Torres's termination
from employment. Torres filed a
complaint for illegal dismissal, illegal
deduction, non-payment of service
incentive, leave pay and retirement
benefits. For their part, the respondents
maintained that Torres was validly
dismissed for loss of trust and
confidence precipitated by his
unauthorized issuance of a financial
accountability clearance sans audit to a
resigned employee.
Yes, formulation of the Code of
Discipline among employees is a
shared responsibility between Er
and Ee. 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.
Employer has the right to dismiss an
employee by reason of willful breach
of the trust and confidence reposed in
him. To temper the exercise of such
prerogative and to reconcile the same
with the employee's Constitutional
guarantee of security of tenure, the
law imposes the burden of proof
upon the employer to show that the
dismissal of the employee is for just
cause failing which would mean that
the dismissal is not justified. Proof
beyond reasonable doubt is not
necessary but the factual basis for the
dismissal must be clearly and
convincingly established.
It is the declared policy of the State,
“(d) To promote the enlightenment of
workers concerning their rights and
obligations...as employees.” This was,
of course, amplified by Republic Act
No. 6715 when it decreed the
“participation of workers in decision
and policy making processes affecting
their rights, duties and welfare.”
before validity can be accorded to a
dismissal premised on loss of trust and
confidence, two requisites must
concur, viz: (1) the employee
concerned must be holding a position
of trust; and (2) the loss of trust must
be based on willful... breach of trust
founded on clearly established facts.
 Songco v. NLRC Zuellig filed an application to terminate
the services of Songco et al. on the
ground of retrenchment due to financial
losses. The CBA between Zuellig and
the Union of Songco et al. contained
the provision that “any employee who
is separated from employment due to
old age, sickness, death or permanent
lay-off, not due to the fault of said
employee, shall receive from the
company a retirement gratuity in an
amount equivalent to one month’s
salary per year of service.” Issue is
whether or not earned sales
commissions and allowances should be
included in the monthly salary for
purposes of computation of separation
pay.
Insular Bank of Asia and America
Employees’ Union v. Inciong
YES, earned sales commissions The final consideration is, in carrying
and allowances should be included. out and interpreting the Labor Code's
In the case of Santos v. NLRC, et al., provisions and its implementing
it was ruled that "in the computation regulations, the workingman's welfare
of backwages and separation pay, should be the primordial and
account must be taken not only of the paramount consideration.
basic salary of petitioner but also of
her transportation and emergency
living allowances."
Inasmuch as the words "wages",
"pay" and "salary" have the same
meaning, and commission is included
in the definition of "wage", the
logical conclusion, therefore, is, in
the computation of the separation pay
of Songco et al., their salary base
should include also their earned sales
commissions. The commissions were
in the form of incentives or
encouragement, so that Songco et al.
would be inspired to put a little more
industry on the jobs particularly
assigned to them, still these
commissions are direct
remunerations for services rendered
which contributed to the increase of
income of Zuellig.
Brotherhood Labor Unity Movement
of the Ph., et al. v. Zamora, et. al.
Lapanday Agricultural Development
Corp. v. CA
BLUM filed a complaint with the now
defunct Court of Industrial Relations,
charging San Miguel Corporation, and
the following officers: Enrique
Camahort, Federico Ofiate Feliciano
Arceo, Melencio Eugenia Jr., Ernesto
Villanueva, Antonio Bocaling and
Godofredo Cueto of unfair labor
practice as set forth in RA 875 and of
Legal dismissal. It was alleged that
respondents ordered the individual
complainants to disaffiliate from the
complainant union; and that
management dismissed the individual
complainants when they insisted on
their union membership.
Respondents moved for the dismissal
of the complaint on the grounds that the
complainants are not and have never
been employees of respondent
company but employees of the
independent contractor; respondent
company has never had control over the
means and methods followed by the
independent contractor who enjoyed
full authority to hire and control said
employees; and that the individual
complainants are barred by estoppel
from asserting that they are employees
of respondent company.
The records fail to show that a large
commercial outfit, such as the SMC,
entered into mere oral agreements of
employment or labor contracting
where the same would involve
considerable expenses and dealings
with a large number of workers over
a long period of time. Despite
respondent company’;s allegations
not an iota of evidence was offered to
prove the same or its particulars.
Such failure makes respondent
SMC’s stand subject to serious
doubts.
Moreover, the fact that for an average
of 7 years, each of the petitioners had
worked continuously and exclusively
for the respondent company’s
shipping and warehousing
department. Considering the length
of time that the petitioners have
worked with the respondent
company, there is justification to
conclude that they were engaged to
perform activities necessary or
desirable in the usual business or
trade of the respondent, and the
petitioners are, therefore regular
employees.
In determining the existence of an
employer-employee relationship, the
elements that are generally considered
are the following:
(a) the selection and engagement of
the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employer's power to control
the employee with respect to the
means and methods by which the
work is to be accomplished. It is
called "control test" that is the most
important element.
The power of dismissal by the
employer was evident when the
petitioners had already been refused
entry to the premises. That SMC has
the power to recommend penalties or
dismissal is the strongest indication of
the company’s right of control over
the workers as direct employer.
 Viaña v. Al-Lagadan and Piga
Meteoro v. Creative Creatures, Inc
Viana owned the fishing sailboat
"Magkapatid which collided with the
USS "Tingles", a vessel of the U.S.
Navy. Alejandro AlLagadan, a member
of the crew, disappeared and died.
Workmen’s Compensation Commission
ordered Viana to pay the respondents.
Petitioner said, however, that this case
does not fall within the purview of Act
No. 3428, because Alejandro Al-
Lagadan was, at the time of his death,
industrial partner, not his employee.
Creative Creatures inc. is engaged in
the business of providing set designs
and set construction services for
television exhibitions and the like.
Petitioners were hired by respondent on
various dates as artists, carpenters and
welders.
Petitioner filed a complaint before
DOLE for nonpayment of 13th month
pay, premium pay, service incentive
leave pay and other benefits and illegal
and/or unauthorized deductions from
salaries against respondent.
In determining the existence of
employer- employee relationship, the
following elements are generally
considered, namely:
(1) the selection and engagement of
the employee; (2) the payment of
wages; (3) The power of dismissal;
and (4) The power to control the
employees’ conduct — although the
latter is the most important element
(35 Am. Jur. 445) *
The report contained that the patron
selects and engages the crew, and
also, that the members thereof are
subject to his control and may be
dismissed by him.
The following elements constitute the
reliable yardstick to determine such
relationship: (a) the selection and
engagement of the employee; (b) the
payment of wages; (c) the power of
dismissal; and (d) the employer's
power to control the employee's
conduct.
elements of ER-EE relationship are
generally considered, namely:
(1) the selection and engagement of
the employee; (2) the payment of
wages; (3) The power of dismissal;
and (4) The power to control the
employees’ conduct — although the
latter is the most important element
There is no hard and fast rule
designed to establish the aforesaid
elements. Any competent and relevant
evidence to prove the relationship
may be admitted. The most important
index of an employer-employee
relationship is the so-called "control
test," that is, whether the employer
controls or has reserved the right to
control the employee, not only as to
the result of the work to be done, but
also as to the means and methods by
which the same is to be accomplished.
SSS v. CA In a petition before the SSC, Margarita
Tana, widow of the late Ignacio Tana,
Sr., alleged that her husband was an
employee of Conchita Ayalde as a
farmhand in the two (2) sugarcane
plantations Ayalde owned. She further
alleged that Ignacio, Sr. worked
continuously six (6) days a week, four
(4) weeks a month, and for twelve (12)
months every year between January
1961 to April 1979. For his labor,
Ignacio, Sr. allegedly received a regular
salary according to the minimum wage
prevailing at the time and throughout
the given period, social security
contributions, as well as medicare and
employees compensation premiums
were deducted from his wages. It was
only after his death that Margarita
discovered that Ignacio, Sr. was never
reported for coverage, nor were his
contributions/premiums remitted to the
Social Security System (SSS).
Consequently, she was deprived of the
burial grant and pension benefits
accruing to the heirs of Tana had he
been reported for coverage. Hence,
Margarita prayed that the Commission
issue and order directing Ayalde and
Maghari as her administrator to pay the
premium contributions of Ignacio, Sr.
and report his name for SSS coverage
and the SSS to grant Margarita the
funeral and pension benefits due her.
For her part, Ayalde belied the
allegation that Ignacio, Sr. was her
employee, admitting only that he was
hired intermittently as an independent
contractor to plow, harrow, or burrow
and used his own carabao and other
implements, and he followed his own
schedule of work hours. Ayalde further
alleged that she never exercised control
over the manner by which Ignacio Sr.
The testimonial evidence of the
claimant and her witnesses constitute
positive and credible evidence of the
existence of an employer-employee
relationship between Ignacio, Sr. and
Ayalde. Consequently, Ayalde has
failed to convince the Court that,
indeed, Ignacio, Sr. was not her
employee.
First, while Tana was sometimes
hired as an "arador" or plower for
intermittent periods, he was hired to
d o o t h e r t a s k s i n Ay a l d e ’s
plantations. Ayalde herself admitted
as much, although she minimized the
extent of Tana’s labors. On the other
hand, the claimant and her witnesses
were direct and firm in their
testimonies. Ignacio, Sr. work
continuously except on Sundays.
Secondly, Ayalde made much ado of
her claim that Tana could not be her
employee because she exercised no
control over his work hours and
method of performing his task as
"arador." It is also an admitted fact
that Tana, Jr. used his own carabao
and tools. Thus, she contends that,
applying the "control test," Tana was
not an employee but an independent
contractor. A closer scrutiny of the
records, however, reveals that while
Ayalde herself may not have directly
imposed on Tana the manner and
methods to follow in performing his
tasks, she did exercise control
through her overseer.
Be that as it may, the power of
control refers merely to the existence
of the power. It is not essential for
the employer to actually supervise
the performance of duties of the
employee; it is sufficient that the
The existence of an employer-
employee relationship is ultimately a
question of fact.
The essential elements of an
employer-employee relationship are:
(a) the selection and engagement of
the employee; (b) the payment of
wages; (c) the power of dismissal; and
(d) the power of control with regard to
the means and methods by which the
work is to be accomplished, with the
power of control being the most
determinative factor.
No particular form of evidence is
required to prove the existence of an
employer-employee relationship. Any
competent and relevant evidence to
prove the relationship may be
admitted. For, if only documentary
evidence would be required to show
that relationship, no scheming
employer would ever be brought
before the bar of justice, as no
employer would wish to come out
with any trace of the illegality he has
authored considering that it should
take much weightier proof to
invalidate a written instrument.
Sevilla v. CA On the strength of a contract entered
into on Oct. 19, 1960 by and between
Mrs. Segundina
Noguera, party of the first part; the
Tourist World Service, Inc.,
as party of the second part, and
hereinafter referred to as appellants, the
Tourist World Service, Inc. leased the
premises belonging to the party of the
first part at Mabini St., Manila for the
former use as a branch one. In the said
contract the party of the third part held
herself solidarily liable with the party
of the second part for the prompt
payment of the monthly rental agreed
on. When the branch office was
opened, the same was run by the herein
appellant Lina
O. Sevilla payable to Tourist World
Service Inc. by any airline for any fare
brought in on the efforts of Mrs. Lina
Sevilla, 4% was to go to Lina Sevilla
and 3% was to be withheld by the
Tourist World Service, Inc. On or about
November 24, 1961 the Tourist World
Service, Inc. appears to have been
informed that Lina Sevilla was
connected with a rival firm, the
Philippine Travel Bureau, and, since
the branch office was anyhow losing,
the Tourist World Service considered
closing down its office. This was
firmed up by two resolutions of the
board of directors of Tourist World
Service, Inc., the first abolishing the
office of the
manager and vice-president of the
Tourist World Service, Inc., Ermita
Branch, and the second, authorizing the
corporate secretary to receive the
properties of the Tourist World Service
then located at the said branch office. It
further appears that the contract with
the appellees for the use of the Branch
Office premises was terminated.
Subsequently, however, we have There has been no uniform test to
considered, in addition to the determine the existence of an
standard of right-of-control, the employer-
existing economic conditions employee relation. In general, we
prevailing between the parties, like have relied on the so-called right of
the inclusion of the employee in the control test.
payrolls, in determining the existence However, in addition to the standard
of an employer-employee of right-of-control, the existing
relationship. The records will economic
show that the petitioner, Lina Sevilla, conditions prevailing between the
was not subject to control by the parties, like the inclusion of the
private respondent Tourist World employee in the
Service, Inc., either as to the result of payrolls, in determining the existence
the enterprise or as to the means used of an employer-employee.
in connection therewith. In the first
place, under the contract of lease
covering the Tourist World’s Ermita
office, she had bound herself in
solidum as and for rental payments,
an arrangement that would belie
claims of a master-servant
relationship. True, the respondent
Court would later minimize her
participation in the lease as one of
mere guaranty, that does not make
her an employee of Tourist World,
since in any case, a true employee
cannot be made to part with his
own money in pursuance of his
employer’s business, or otherwise,
assume any liability thereof.
In that event, the parties must be
bound by some other relation, but
certainly not employment.
In the second place, and as found by
the Appellate Court, “[w]hen the
branch office was opened, the same
was run by the herein appellant Lina
O. Sevilla payable to Tourist World
Service, Inc. by any airline for any
fare brought in on the effort of Mrs.
Lina Sevilla.” Under these
circumstances, it cannot be said that
Sevilla was under the control of
Tourist World Service, Inc.
Phil. Global Communications, Inc. v.
De Vera
Petitioner Philippine Global
Communications, Inc. (PhilCom), is a
corporation engaged in the business of
communication services while
respondent Ricardo De Vera is a
phys ician by profes s ion w hom
petitioner enlisted to attend to the
medical needs of its employees. The
parties agreed and formalized
respondent’s proposal in a document
denominated as RETAINERSHIP
CONTRACT and renewed every year.
Years after, Philcom informed De Vera
of its decision to discontinue the latter’s
retainer’s contract with the Company
because management has decided that
it would be more practical to provide
medical services to its employees
through accredited hospitals near the
company premises. De Vera filed a
complaint for illegal dismissal alleging
that that he had been actually employed
by Philcom as its company physician
since 1981 and was dismissed without
due process.
No. There is no Ee-Er Relationship. In determining the existence of an
It was De Vera himself who sets the employer-employee relationship, has
parameters of what his duties would invariably adhered to the four-fold
be in offering his services to test, to wit:
Philcom. Also, from the time he
started to work, he never was
included in its payroll; was never 1 the selection and engagement of the
deducted any contribution for employee;
remittance to the SSS and was in fact
subjected by Philcom to the ten 2 the payment of wages;
percent withholding tax for his
professional fee, matters which are 3 the power of dismissal; and
simply inconsistent with an
employer-employee relationship. 4 the power to control the employee’s
conduct, or the so-called “control
Philcom had no control over the test”, considered to be the most
means and methods by which De important element
Vera went about performing his work
at the company premises. He could
even embark in the private practice
of his profession. In fine, the parties
themselves practically agreed on
every terms and conditions of de
Vera’s engagement, which thereby
negates the element of control in
their relationship.
Jardin v. NLRC Petitioners were drivers of private
respondent, Philjama International Inc.,
a domestic corporation engaged in the
o p e r a t i o n o f " G o o d m a n Ta x i . "
Petitioners used to drive private
respondent's taxicabs every other day
on a 24-hour work schedule under the
boundary system. Under this
arrangement, the petitioners earned an
a v e r a g e o f P 4 0 0 . 0 0 d a i l y.
Nevertheless, private respondent
admittedly regularly deducts from
petitioners, daily earnings the amount
of P30.00 supposedly for the washing
of the taxi units. Believing that the
deduction is illegal, petitioners decided
to form a labor union to protect their
rights and interests.
On the issue of whether or not employer- In a number of cases decided by this
employee relationship exists, admitted is Court, we ruled that the relationship
the fact that complainants are taxi drivers between jeepney owners/operators on one
purely on the "boundary system". Under hand and jeepney drivers on the other
this system the driver takes out his unit
and pays the owner/operator a fee under the boundary system is that of
commonly called "boundary" for the use employer-employee and not of lessor-
of the unit. Now, in the determination the lessee. We explained that in the lease of
existence of employer-employee chattels, the lessor loses complete control
relationship, the Supreme Court in the over the chattel leased although the lessee
case of Sara, et al., vs. Agarrado, et al. cannot be reckless in the use thereof,
(G.R. No. 73199, 26 October 1988) has otherwise he would be responsible for the
applied the following four-fold test: "(1)
the selection and engagement of the damages to the lessor. In the case of
employee; (2) the payment of wages; jeepney owners/operators and jeepney
(3) the power of dismissal; and (4) the drivers, the former exercise supervision
power of control the employees and control over the latter. The
conduct." management of the business is in the
owner's hands. The owner as holder of the
Applying the foregoing parameters to the certificate of public convenience must see
case herein obtaining, it is clear that the
to it that the driver follows the route
respondent does not pay the drivers, the
complainants herein, their wages. prescribed by the franchising authority
Instead, the drivers pay a certain fee for and the rules promulgated as regards its
the use of the vehicle. On the matter of operation. Now, the fact that the drivers
control, the drivers, once they are out do not receive fixed wages but get only
plying their trade, are free to choose that in excess of the so-called "boundary"
whatever manner they conduct their they pay to the owner/operator is not
trade and are beyond the physical control
sufficient to withdraw the relationship
of the owner/operator; they themselves
determine the amount of revenue they between them from that of employer and
would want to earn in a day's driving; employee. We have applied by analogy
and, more significantly aside from the the abovestated doctrine to the
fact that they pay for the gasoline they relationships between bus owner/operator
consume, they likewise shoulder the cost and bus conductor, auto-calesa owner/
of repairs on damages sustained by the operator and driver, and recently between
vehicles they are driving.
taxi owners/operators and taxi drivers.
Hence, petitioners are undoubtedly
employees of private respondent because
as taxi drivers they perform activities
which are usually necessary or desirable
in the usual business or trade of their
employer.
Chavez v. NLRC The respondent company is in the
business of manufacturing cartons and
other packaging materials for export
and distribution, they employed chavez
as their truck driver whose task is to
deliver the company’s products to its
customers. The respondent furnished
petitioner with a truck that all deliveries
were made in accordance with the
routing slips issued by the respondent
company indicating the order, time and
urgency of delivery.
When respondent expressed his desire
to avail the benefits that a regular
employee was receiving such as OT
Pay, NSD pay, and 13th month,
respondent terminated the services of
petitioner.
Yes, there was an employee- The elements to determine the
employer relationship. existence of an employment
First. Undeniably, it was the relationship are: (1) the selection and
respondents who engaged the engagement of the employee; (2) the
services of the petitioner without the payment of wages; (3) the power of
intervention of a third party. dismissal; and (4) the employer’s
Second, That the petitioner was paid power to control the employee’s
on a per trip basis is not significant. conduct. The most important element
This is merely a method of is the employer’s control of the
computing compensation and not a employee’s conduct, not only as to the
basis for determining the existence or result of the work to be done, but also
absence of employer-employee as to the means and methods to
relationship. accomplish it.
Third. The respondents’ power to
dismiss the petitioner was inherent in
the fact that they engaged the
services of the petitioner as truck
driver.
Fourth, Although the respondents
denied that they exercised control
over the manner and methods by
which the petitioner accomplished
his work, a careful review of the
records shows that the latter
performed his work as truck driver
under the respondents’ supervision
and control.
Tan v. Lagrama On October 17, 1998, private respondent
Lagrama was summoned by Tan and
upbraided: Nangihi na naman ka sulod sa
imong drawinganan. (You again urinated
inside your work area.) When Lagrama
asked what Tan was saying, Tan told him,
Ayaw daghang estorya. Dili ko gusto nga
mo-drawing ka pa. Guikan karon, wala nay
drawing. Gawas. (Dont say anything
further. I dont want you to draw anymore.
From now on, no more drawing. Get out.)
Lagrama denied the charge against him. He
claimed that he was not the only one who
entered the drawing area and that, even if
the charge was true, it was a minor
infraction to warrant his dismissal.
However, everytime he spoke, Tan shouted
Gawas (Get out), leaving him with no other
choice but to leave the premises.
The primary standard for determining In determining whether there is an
regular employment is the reasonable employer-employee relationship, we have
connection between the particular applied a four-fold test, to wit: (1)
activity performed by the employee in whether the alleged employer has the
relation to the usual trade or business of power of selection and engagement of
the employer. In this case, there is such a employees; (2) whether he has control of
connection between the job of Lagrama the employee with respect to the means
painting billboards and murals and the and methods by which work is to be
business of petitioner. To let the people accomplished; (3) whether he has the
know what movie was to be shown in a power to dismiss; and (4) whether the
movie theater requires billboards. employee was paid wages. These elements
Petitioner in fact admits that the of the employer-employee relationship are
billboards are important to his business. present in this case.
The fact that Lagrama was not reported
as an employee to the SSS is not
conclusive on the question of whether he
was an employee of petitioner.21
Otherwise, an employer would be
rewarded for his failure or even neglect
to perform his obligation. Neither does
the fact that Lagrama painted for other
persons affect or alter his employment
relationship with petitioner. That he did
so only during weekends has not been
denied by petitioner. On the other hand,
Samuel Villalba, for whom Lagrama had
rendered service, admitted in a sworn
statement that he was told by Lagrama
that the latter worked for petitioner.
Lagrama had been employed by
petitioner since 1988. Under the law,
therefore, he is deemed a regular
employee and is thus entitled to security
of tenure, as provided in Art. 279 of
Labor Code
Maraguinot v. NLRC Petitioners Maraguinot and Enero
maintains that they were employed as a
member of the
filming crew. In May 1992, petitioners
sought the assistance of their
supervisor, Mrs. Alejandria Cesario, to
facilitate their request that private
respondents adjust their salary in
accordance with the minimum
wage law. Mrs. Cesario informed
petitioners that Mr. Vic del Rosario
would agree to
increase their salary only if they signed
a blank employment contract. Both
petitioners refused to
sign, respondents forced Enero to go on
leave. However, when he reported to
work, respondent
refused to take him back.
Petitioners cannot be considered as
project employees of associate
producers who,
in turn, act as independent
contractors. It is settled that the
contracting out of labor is allowed
only in
case of job contracting. According to
Sec. 8 rule 8 book 3 of the Omnibus
Rules Implementing the
Labor Code such is only permissible
when (1) The contractor carries on an
independent business
and undertakes the contract work on
his own account under his own
responsibility according to his
own manner and method free from
the control and direction of his
employer or principal in all matters
connected with the performance of
the work except as to the results
thereof and (2) The contractor
has substantial capital or investment
in the form of tools, equipment,
machineries, work premises,
and other materials which are
necessary in the conduct of his
business. In the case associate
producers do not have the equipment;
in fact, it is VIVA itself who supplies
the movie-making
equipment. The associate producers
of VIVA cannot be considered labor-
only contractors as they
did not supply, recruit nor hire the
workers.
The employer-employee relationship
between peti tioners and VIVA can
further be established by the “control
test”; Elements to determine the
existence of an employment
relationship.—The employer-
employee relationship between
petitioners and VIVA can further be
established by the “control test.”
While four elements are usually
considered in determining the
existence of an employment
relationship, namely: (a) the selection
and engagement of the employee; (b)
the payment of wages; (c) the power
of dismissal; and (d) the employer’s
power to control the employee’s
conduct, the most important element
is the employer’s control of the
employee’s conduct, not only as to the
result of the work to be done but also
as to the means and methods to
accomplish the same. These four
elements are present here.
Air Material Wing Savings and Loan
Association, Inc. v. NLRC
Vallum Security Services v. NLRC, et.
al.
Cosmopolitan Funeral Homes, Inc. v.
Maalat
Luis Salas was appointed as notarial
and legal counsel for Air Materiel
Wings Savings and Loan Association
(AMWSLAI). AMWSLAI issued an
order reminding Salas of the
approaching termination of his
services. This made Salas file a
complaint against AMWSLAI however
the latter assailed that there was no
employer-employee relationship
between it and Salas.
Cosmopolitan Funeral Homes, Inc.
engaged the services of Noli Maalat as
“supervisor” and was paid on a
commission basis of 3.5%. Maalat was
dismissed by CFHI which led Maalat
filing a complaint for illegal dismissal
and non-payment of commissions.
Labor Arbiter rendered the decision
that the dismissal was illegal but NLRC
reversed the decision.
The terms and conditions set out in
the letter-contract entered into by the
parties on January 23, 1987, clearly
show that Salas was an employee of
the petitioner. His selection as the
company counsel was done by the
board of directors in one of its
regular meetings. The petitioner paid
him a monthly compensation/
retainer's fee for his services. Though
his appointment was for a fixed term
of three years, the petitioner reserved
its power of dismissal for cause or as
it might deem necessary for its
interest and protection. No less
i m p o r t a n t l y, A M W S L A I a l s o
exercised its power of control over
Salas by defining his duties and
functions as its legal counsel
Yes, there exists an Er-Ee
relationship between the parties.
The fact that the petitioner imposed
and applied its rule prohibiting
superiors from engaging in other
funeral business which it considered
inimical to company interests proves
that it had the right of control and
actually exercised its control over the
private respondent. In other words,
Maalat worked exclusively for the
petitioner.
The elements of an employer-
employee relationship are: (1)
selection and engagement of the
employee; (2) payment of wages; (3)
power of dismissal; and (4)
employer's own power to control
employee's conduct. The existence of
such a relationship is essentially a
factual question.
In determining whether a person who
performs work for another is the
latter’s employee or an independent
contractor, the prevailing test is the
“right of control” test. Under this test,
an employer-employee relationship
exists where the person for whom the
services are performed reserves the
right to control not only the end to be
achieved, but also the manner and
means to be used in reaching that end.
Insular Life Assurance Co., Ltd. v.
NLRC
Tokyo v. Manulife
Sonza v. ABS-CBN Broadcasting
Corp.
Bernate v. PBA
Insular life entered into a contract with
Basiao, who was authorized to solicit
for insurance policies and annuities for
the company. They entered into an
Agency Manager’s Contract, later
terminated by Insular Life. Issue of
whether or not an employer-employee
relationship existed.
Complainants were invited to join the
PBA as referees and they were made to
sign contracts on a year-to-year basis.
Bernarte received a letter that his
contract would not be renewed citing
his unsatisfactory performance.
Respondents aver that the complainants
entered into contracts of retainer with
the PBA
NO, there was no employer-
employee relationship. The Court,
therefore, rules that under the
contract invoked by him, Basiao was
not an employee of the petitioner, but
a commission agent, an independent
contractor whose claim for unpaid
commissions should have been
litigated in an ordinary civil action.
The Labor Arbiter erred in taking
cognizance of, and adjudicating, said
claim, being without jurisdiction to
do so, as did the respondent NLRC in
affirming the Arbiter's decision. This
conclusion renders it unnecessary
and premature to consider Basiao's
claim for commissions on its merits.
Petitioner was not illegally
dismissed. The all-important element
of control is lacking in this case,
making petitioner an independent
contractor and not an employee of
respondents. The Court agrees with
respondents that once in the playing
court, the referees exercise their own
independent judgment, based on the
rules of the game, as to when and how
a call or decision is to be made. The
referees decide whether an infraction
was committed, and the PBA cannot
overrule them once the decision is
made on the playing court. The
referees are the only, absolute, and
final authority on the playing court.
The very nature of petitioner’s job of
officiating a professional basketball
game undoubtedly calls for freedom of
control by respondents.
In determining the existence of
employer-employee relationship, the
following elements are generally
considered, namely: (1) the selection
and engagement of the employee; (2)
the payment of wages; (3) the power
of dismissal; and (4) the power to
control the employees' conduct -
although the latter is the most
important element.
To determine the existence of an
employer-employee relationship,
case law has consistently applied
the four-fold test, to wit: (a) the
selection and engagement of the
employee; (b) the payment of
wages; (c) the power of dismissal;
and (d) the employer’s power to
control the employee on the means
and methods by which the work is
accomplished. The so-called
"control test" is the most important
indicator of the presence or absence
of an employer-employee
relationship.
\
Orozco v. CA In March 1990, PDI engaged the
services of petitioner to write a weekly
column for its Lifestyle section. She
religiously submitted her articles every
week, except for a six-month stint in
New York City when she, nonetheless,
sent several articles through mail. She
received compensation of P250.00 –
later increased to P300.00 – for every
column published.
On November 7, 1992, petitioner’s
column appeared in the PDI for the last
time. Petitioner claims that her then
editor, Ms. Lita T. Logarta, told her that
respondent Leticia Jimenez Magsanoc,
PDI Editor in Chief, wanted to stop
publishing her column for no reason at
all and advised petitioner to talk to
Magsanoc herself. Petitioner narrates
that when she talked to Magsanoc, the
latter informed her that it was PDI
Chairperson Eugenia Apostol who had
asked to stop publication of her
column, but that in a telephone
conversation with Apostol, the latter
said that Magsanoc informed her
(Apostol) that the Lifestyle section
already had many columnists.
On the other hand, PDI claims that in
June 1991, Magsanoc met with the
Lifestyle section editor to discuss how
to improve said section. They agreed to
cut down the number of columnists by
keeping only those whose columns
were well-written, with regular
feedback and following. In their
judgment, petitioner’s column failed to
improve, continued to be superficially
and poorly written, and failed to meet
the high standards of the newspaper. Petitioner’s main occupation is not as
Hence, they decided to terminate a columnist for respondent but as a
petitioner’s column. women’s rights advocate working in
various women’s organizations.
The Supreme Court ruled for the
respondents. The existence of an
employer-employee relationship is
essentially a question of fact. Factual
findings of quasi-judicial agencies
like the NLRC are generally
accorded respect and finality if
supported by substantial evidence. It
is true that petitioner herself admitted
that she "was not, and [had] never
been considered respondent’s
employee because the terms of works
were arbitrarily decided upon by the
r e s p o n d e n t . " H o w e v e r, t h e
employment status of a person is
defined and prescribed by law and
not by what the parties say it should
be.
The SC agrees with the observations
of the Office of the Solicitor General
that the Inquirer is the publisher of a
newspaper of general circulation
which is widely read throughout the
country. As such, public interest
dictates that every article appearing
in the newspaper should subscribe to
the standards set by the Inquirer, with
its thousands of readers in mind. It is
not, therefore, unusual for the
Inquirer to control what would be
published in the newspaper. What is
important is the fact that such control
pertains only to the end result, i.e.,
the submitted articles. The Inquirer
has no control over Orozco as to the
means or method used by her in the
preparation of her articles. The
articles are done by herself without
any intervention from the Inquirer.
"four-fold test" to determine whether
there exists an employer-employee
relationship between parties.
The four elements of an employment
relationship are:
(a) the selection and engagement of
the employee;
(b) the payment of wages;
(c) the power of dismissal; an
(d) the employer’s power to control
the employee’s conduct.
Aside from the control test, the
Supreme Court has also used the
economic reality test. The economic
realities prevailing within the activity
or between the parties are examined,
taking into consideration the totality
of circumstances surrounding the true
nature of the relationship between the
parties. This is especially appropriate
when, as in this case, there is no
written agreement or contract on
which to base the relationship. In our
jurisdiction, the benchmark of
economic reality in analyzing possible
employment relationships for
purposes of applying the Labor Code
ought to be the economic dependence
of the worker on his employer.
FUJI TELEVISION NETWORK,
INC., vs ARLENE S. ESPIRITU
Arlene was engaged by Fuji as a news
correspondent/producer "tasked to
report Philippine news to Fuji through
its Manila Bureau field office."
Arlene’s employment contract initially
provided for a term of one (1) year but
was successively renewed on a yearly
basis with salary adjustment upon
every renewal; diagnosed with cancer
Art. 280 of LC Regular and casual It is the burden of the employer to
employment. The provisions of prove that a person whose services it
written agreement to the contrary pays for is an independent contractor
notwithstanding and regardless of the rather than a regular employee with or
oral agreement of the parties, an without a fixed term. That a person
employment shall be deemed to be has a disease does not per se entitle
regular where the employee has been the employer to terminate his or her
engaged to perform activities which services. Termination is the last resort.
are usually necessary or desirable in At the very least, a competent public
the usual business or trade of the health authority must certify that the
employer, except where the disease cannot be cured within six ( 6)
employment has been fixed for a months, even with appropriate
specific project or undertaking the treatment.
completion or termination of which
has been determined at the time of
the engagement of the employee or
where the work or services to be
performed is seasonal in nature and
the employment is for the duration of
the season. An employment shall be
deemed to be casual if it is not
covered by the preceding paragraph;
Provided, That, any employee who
has rendered at least one year of
service, whether such service is
continuous or broken, SHALL BE
CONSIDERED A REGULAR
EMPLOYEE with respect to the
activity in which he is employed and
his employment shall continue while
such activity exists.
Phil. Global Communications v. De
Vera
Petitioner Philippine Global
Communications, Inc. (PhilCom), is a
corporation engaged in the
business of communication services
and allied activities, while respondent
Ricardo De Vera is a
phys ician by profes s ion w hom
petitioner enlisted to attend to the
medical needs of its employees. At the
crux of the controversy is Dr. De Vera’s
status vis a vis petitioner when the
latter terminated his engagement. The
parties agreed and formalized
respondent’s proposal in a document
denominated as RETAINERSHIP
CONTRACT which will be for a period
of one year subject to renewal, it being
made clear therein that respondent will
cover "the retainership the
Company previously had with
Dr. K. Eulau “and that respondent”;
retainer fee’ will be at P4,000.00 a
month. Said contract was
renewed yearly. 5 The retainership
arrangement went on from 1981 to
1994 with changes in the retainer’s fee.
However, for the years 1995 and 1996,
renewal of the contract was only made
verbally.
The turning point in the parties’
relationship surfaced in December 1996
when Philcom, thru a letter bearing on
the subject boldly written as
“TERMINATION — RETAINERSHIP
CONTRACT”,
informed De Vera of its decision to
discontinue the latter’s “retainer’s
contract with the Company effective at
the close of business hours of
December 31, 1996” because
management has decided that it would
be more practical to provide medical
services to its employees through
accredited hospitals near the company
premises.
There is no employer-employee In a long line of decisions, the Court,
relationship exists between petitioner in determining the existence of an
and respondent. Applying the four- employer-employee relationship, has
fold test to this case, we initially find invariably adhered to the four-fold
that it was respondent himself who test, to wit: [1] the
sets the parameters of what his duties selection and engagement of the
would be in offering his services to employee; [2] the payment of wages;
petitioner. This is [3] the power of dismissal; and [4] the
borne by no less than his 15 May power to control the employee’s
1981 letter Significantly, the conduct, or the so-
foregoing letter was substantially the called “control test”, considered to be
basis of the labor arbiter’s finding the most important element.
that there existed no employer-
employee relationship between
petitioner and respondent.
The labor arbiter added the indicia,
not disputed by respondent, that from
the time he started
to work with petitioner, he never was
included in its payroll; was never
deducted any contribution for
remittance to the Social Security
System (SSS); and was in fact
subjected by petitioner to the ten
(10%) percent withholding tax for his
professional fee, in accordance with
the National Internal Revenue Code,
matters which are simply inconsistent
with an employer-
employee relationship. Clearly, the
elements of an employer-employee
relationship are wanting in this case.
We may add that the records are
replete with evidence showing that
respondent had to bill petitioner for
his monthly professional fees. It
simply runs against the grain of
common experience to imagine that
an ordinary employee has yet to bill
his employer to receive his salary.
We note, too, that the power to
terminate the parties’ relationship
was mutually vested on both. Either
may terminate the arrangement at
will, with or without cause. Finally,
Religious of the Virgin Mary v. NLRC Colegio de San Pascual Baylon
(CDSPB) is a religious educational
institution owned by the Diocese of
Malolos, Bulacan, which operates two
high school departments (the Boys' and
the Girls' departments) in Bulacan.
Yes. CDSPB is the employer. The
Agreement shows that petitioner
entered into the same not as an
independent contractor but, as it
claims, a manager or administrator of
the school.
The power of control is the most
decisive factor in determining the
existence of an employer-employee
relationship.

CDSPB, represented by the Bishop of Control and supervision over the

Malolos, entered into an Agreement
with petitioner Religious of the Virgin
Mary (RVM), a religious congregation,
whereby the latter was designated to
"run, administer and operate the
[CDSPB] Girls' Department. April 10,
1987, the Bishop of Malolos pre-
terminated the Agreement. As a result,
petitioner moved out of the school
premises, and CDSPB, through the
Bishop of Malolos and his
representatives, took over the
administration of the Girls' Department.
The teaching and non-teaching
personnel hired by petitioner for school
year 1986-1987 continued to render
services even after the Agreement was
terminated, but they were not paid their
salaries for the month of May 1987.
Hence, they filed a complaint for
unpaid salaries with the NLRC-
Regional Arbitration Branch III,
naming CDSPB and petitioner as
respondents.
school's operations remained in the
hands of the Diocese of Malolos,
owner of CDSPB, represented by the
Parish Priest of Obando, Bulacan,
who acted as school director which
was shown in the memorandum. This
memorandum leaves no room for
doubt that CDSPB, as represented by
the director, exercised absolute
control and supervision over the
school's administration. Under it, the
authority to hire, discipline and
terminate the employment of
personnel is vested in the director, as
academic and administrative head of
the school.
Leonardo v. CA BALTEL hired Emelita Leonardo,
Conrado Bargamento, Emelita Nuñez,
Rodolfo Graban, and Roberto Graban
("petitioners") for various positions in
the company.BALTEL and DIGITEL
entered into a management contract, in
which DIGITEL was to provide
personnel, consultancy and technical
expertise in the management,
administration, and operation of
BALTEL’s telephone service.
1994, BALTEL informed the NTC that it
would cease to operate because it was
no longer in a financial position to
continue its operations. BALTEL
assigned to DIGITEL its buildings and
other improvements as partial payment
of BALTEL’s obligation to DIGITEL.
In this case, DIGITEL undoubtedly has
the power of control. However,
DIGITEL’s exercise of the power of
control necessarily flows from the
exercise of its responsibilities under the
management contract which includes
providing for personnel, consultancy and
technical expertise in the management,
administration, and operation of the
telephone system. Thus, the control test
has no application in this case.
To determine the existence of an
employer-employee relationship, the
Court has to resolve who has the power to
select the employees, who pays for their
wages, who has the power to dismiss
them, and who exercises control in the
methods and the results by which the
work is accomplished. The most
important element of an employer-
employee relationship is the control test.
Under the control test, there is an
employer-employee relationship when the
person for whom the services are
performed reserves the right to control not
only the end achieved but also the manner
and means used to achieve that end.
Francisco v. NLRC In 1996, petitioner was designated
Acting Manager. As Acting Manager,
petitioner was assigned to handle
recruitment of all employees and
perform management administration
functions; represent the company in all
dealings with government agencies,
especially with the (BIR), (SSS) and in
the city government of Makati; and to
administer all other matters pertaining
to the operation of Kasei Restaurant
which is owned and operated by Kasei
Corporation.
In January 2001, petitioner was
replaced by Liza R. Fuentes as
Manager. Petitioner alleged that she
was required to sign a prepared
resolution for her replacement but she
was assured that she would still be
connected with Kasei Corporation. On
October 15, 2001, petitioner asked for
her salary from Acedo and the rest of
the officers but she was informed that
she is no longer connected with the
company.
Petitioner is an employee of
respondent Kasei Corporation. She
was selected and engaged by the
company for compensation, and is
economically dependent upon
respondent for her continued
employment in that line of business.
Her main job function involved
accounting and tax services rendered
to respondent corporation on a
regular basis over an indefinite
period of engagement. Respondent
corporation hired and engaged
petitioner for compensation, with the
power to dismiss her for cause. More
importantly, respondent corporation
had the power to control petitioner
with the means and methods by
which the work is to be
accomplished.
The determination of the relationship
between employer and employee
depends upon the circumstances of the
whole economic activity, such as: (1)
the extent to which the services
performed are an integral part of the
employer's business; (2) the extent of
the worker's investment in equipment
and facilities; (3) the nature and
degree of control exercised by the
employer; (4) the worker's opportunity
for profit and loss; (5) the amount of
initiative, skill, judgment or foresight
required for the success of the claimed
independent enterprise; (6) the
permanency and duration of the
relationship between the worker and
the employer; and (7) the degree of
dependency of the worker upon the
employer for his continued
employment in that line of business.
 Matling v. Coros After his dismissal by Matling as its Vice
President for Finance and Administration,
the respondent filed on August 10, 2000 a
complaint for illegal suspension and illegal
dismissal against Matling and some of its
corporate officers (petitioners) in the
NLRC, Sub-Regional Arbitration Branch
XII, Iligan City. The petitioners moved to
dismiss the complaint, raising the ground,
among others, that the complaint pertained
to the jurisdiction of the Securities and
Exchange Commission (SEC) due to the
controversy being intracorporate inasmuch
as the respondent was a member of
Matling’s Board of Directors aside from
being its Vice-President for Finance and
Administration prior to his termination.
The respondent opposed the petitioners’
motion to dismiss, insisting that his status
as a member of Matling’s Board of Thus, the creation of an office pursuant
Directors was doubtful, considering that he to or under a By-Law enabling provision
had not been formally elected as such
WPP Marketing Communications,
Inc., et al. v. Galera
Conformably with Section 25, a position
The criteria for distinguishing between
must be expressly mentioned in the By-
corporate officers who may be ousted
Laws in order to be considered as afrom office at will, on one hand, and
corporate office. ordinary corporate employees who may
only be terminated for just cause, on the
Section 25 of the Corporation Code other hand, do not depend on the nature
provides: of the services performed, but on the
manner of creation of the office.
Section 25. Corporate officers, quorum.--
Immediately after their election, the directors
of a corporation must formally organize by
the election of a president, who shall be a
director, a treasurer who may or may not be
a director, a secretary who shall be a resident
and citizen of the Philippines, and such
other officers as may be provided for in
the by-laws. Any two (2) or more positions
may be held concurrently by the same
person, except that no one shall act as
president and secretary or as president and
treasurer at the same time.
is not enough to make a position a
corporate office.
In this case, respondent was appointed
vice president for nationwide expansion
by Malonzo, petitioner ’'s general
manager, not by the board of directors of
petitioner. It was also Malonzo who
determined the compensation package of
respondent. Thus, respondent was an
employee, not a "corporate officer." The
CA was therefore correct in ruling that
jurisdiction over the case was properly
with the NLRC, not the SEC (now the
RTC).
Espino v. NLRC Leslie Espino was the Executive Vice
President-Chief Operating Officer of
respondent PAL. His services were
terminated by the Board of Directors of
PAL as a result of the findings of the
panels created by President Corazon
Aquino to investigate the charges filed
against him. Petitioner filed the instant
petition for certiorari contending
mainly that it is the NLRC and not SEC
which has jurisdiction to hear the
illegal dismissal case he filed against
PAL as it involves the termination of a
regular and permanent employee and
the issues in the dispute involved
The fact that petitioner sought
payment of his backwages, other
benefits, as well as moral and
exemplary damages and attorney's
fees in his complaint for illegal
dismissal will not operate to prevent
the SEC from exercising its
jurisdiction. While the affirmative
reliefs and monetary claims sought
by petitioner in his complaint may, at
first glance, mislead one into placing
the case under the jurisdiction of the
Labor Arbiter, a closer examination
reveals that they are actually part of
the perquisites of his elective
position; hence, intimately linked
with his relations with the
corporation.
in intra-corporate matters, such as
those affecting the corporation, its
directors, trustees, officers and
shareholders, the issue of
consequential damages may just as
well be resolved and adjudicated by
the SEC. Undoubtedly, it is still within
the competence and expertise of the
SEC to resolve all matters arising
from or closely connected with all
intra-corporate disputes.
Private respondent Sinclita Candida Under Rule XIII, Section l(b), Book The mere fact that the househelper or
was employed by petitioner Apex 3 of the Labor Code, as amended, the domestic servant is working within
Mining Company, Inc. to perform term “house helper” as used herein is the premises of the business of the
laundry services at its staff house.; synonymous to the term “domestic employer and in relation to or in
During work, she met an accident. servant” and shall refer to any
person, whether male or female, who connection with its business, as in its
As a result of the accident she was not renders services in and about the staffhouses for its guest or even for its
able to continue with her work. She employer’s home and which services officers and employees, warrants the
was permitted to go on leave for are usually necessary or desirable for conclusion that such househelper or
medication. De la Rosa offered her the the maintenance and enjoyment domestic servant is and should be
amount of P 2,000.00 which was thereof, and ministers exclusively to considered as a regular employee of
eventually increased to P5,000.00 to the personal comfort and enjoyment the employer and not as a mere family
persuade her to quit her job, but she of the employer’s family. The
refused the offer and preferred to return definition cannot be interpreted to househelper or domestic servant as
to work. Petitioner did not allow her to include house helper or laundry contemplated in Rule XIII, Section
return to work and dismissed her on women working in staffhouses of a l(b), Book 3 of the Labor Code, as
February 4, 1988. company, like private respondent amended.
who attends to the needs of the
company’s guest and other persons
availing of said facilities. The mere
fact that the house helper or domestic
servant is working within the
premises of the business of the
employer and in relation to or in
connection with its business, as in its
staffhouses for its guest or even for
its officers and employees, warrants
the conclusion that such house helper
or domestic servant is and should be
considered as a regular employee.
Okol v. Slimmers World International R e s p o n d e n t S l i m m e r s Wo r l d
International operating under the name
Behavior Modifications, Inc. (Slimmers
World) employed petitioner Leslie
Okol (Okol) as a management trainee
on 15 June 1992. She rose up the ranks
to become Head Office Manager and
then Director and Vice President from
1996 until her dismissal on 22
September 1999. On 28 July 1999,
prior to Okol's dismissal, Slimmers
World preventively suspended Okol.
The suspension arose from the seizure
by the Bureau of Customs of seven
Precor elliptical machines and seven
Precor treadmills belonging to or
consigned to Slimmers World.
ARTICLES 82-90
The question of remuneration A corporate officer’s dismissal is
involving stockholder and officer, not always a corporate act, or an intra-
a mere employee, is not a simple corporate controversy which arises
labor problem but a matter that between a stockholder and
comes within the area of corporate corporation.
affairs and management and is
a corporate controversy i n
contemplation of Corporate
Code. The determination of the
rights of a director and corporate
officer dismissed from his
employment as well as the
corresponding liability of a
corporation, if any, is an intra-
corporate dispute subject to the
jurisdiction of the regular courts.
 LRTA v. Venus, Jr.
Clientlogic Philippines, Inc. v. Castro
To provide the commuting public with
an efficient and dependable light rail
transit system, LRTA, after a bidding
process, entered into a (10)-year
Agreement for the Management and
Operation of the Metro Manila Light
Rail Transit System from 1984 until
1994 with METRO.
METRO hired employees which
included the private respondents. It
then entered into a collective
bargaining agreement with PIGLAS-
METRO.
PIGLAS-METRO, due to a deadlock,
filed a Notice of Strike which caused to
the complete deactivation of operations
of the entire light rail transit system.
Private respondents failed to return to
work. Thus, they were considered
dismissed from employment.
Benedict Castro was employed at
SITEL as a “Coach” but was then
transferred to the Dot Green Account.
He noticed that some of the call center
agents would make excuses to go to the
medical clinic, to verify that they were
not using the clinic as an alibi, he sent
an email requesting for the details of
the agent’s medical consultations.
SITEL posted a notice for vacancy for
his position after he was sent a notice to
explain why he should not be
penalized. This prompted him to file a
complaint for illegal dismissal and non
payment of various pays and attorney’s
fees.
1) LRTA is not subject to
jurisdiction of DOLE and
provisions of Labor Code
s i n c e t h e L R TA i s a
government-owned and
controlled corporation with
an original charter; hence,
should be governed only by
civil service rules of the
CSC.
2) M E T R O i s u n d e r t h e
jurisdiction of DOLE and
provisions of LC since it was
originally organized under
the Corporation Code.
Moreover, it has no original
charter.
3) There was illegal dismissal
in the case of the respondents
since could not have defied
the return-to-work order of
the Secretary of Labor
simply because they were
dismissed immediately, even
before they could obey the
said order.
No, he is not a member of the
managerial staff of SITEL. As a
coach or team supervisor,
respondent’s main duty was to deal
with customer complaints which
could not be handled or solved by
call center agents. If the members of
his team could not meet the needs of
a customer, they passed the
customer’s call to respondent. This
job description does not indicate that
respondent can exercise the power
and prerogatives equivalent to
managerial actions which require
customary is of independent
judgment.
1) Sec. 2 (1), Art. IX —B, 1987
Constitution provides that the
CSC covers all branches,
subdivisions, agencies, and
instrumentalities of the Govt,
including GOCCSs with
original charters.
Those which were formed
otherwise are under the
jurisdiction of the DOLE and
provisions of the LC.
2) For abandonment to constitute
a valid cause for termination
of employment, there must be
a deliberate, unjustified
refusal of the employee to
resume his employment. This
refusal must be clearly
established. The Court has
ruled that mere absence is not
sufficient; it must be
accompanied by overt acts
unerringly pointing to the fact
that the employee simply does
not want to work anymore.
Article 212 (m) of the Labor Code
defines a managerial employee as
“one who is vested with powers or
prerogatives to lay down and execute
management policies and/or
hire,transfer, suspend, lay-off, recall,
discharge, assign or discipline
employees, or to effectively
recommend such managerial actions.
M+W Zander Philippines, Inc. v. Notice of Termination was
Castro received by respondent informing her
that her services as Administration
Manager and Executive Assistant to the
General Manager of M+W Zander are
terminated effective the same day. The
respondent was found liable for "willful
breach of trust and confidence in using
[her] authority and/or influence as
Administrative Manager of M+W
Zander Philippines over [her]
subordinate to stage a ‘no work day’
last February 1, 2002, which in turn
disrupted vital operations in the
Company."
Peñaranda v. BPC Sometime in June 1999, Peñaranda was
hired as Foreman/Boiler Head/Shift
Engineer of Baganga Plywood
Corporation (BPC) to take charge of
the operations and maintenance of its
steam plant boiler. In May 2001, he
filed a complaint for illegal dismissal
with money claims against BPC and its
general manager, Hudson Chua, before
the NLRC. Peñaranda claims that he
was terminated without due process
and valid grounds.
respondent was illegally dismissed Though respondent’s position is
by petitioner M+W Zander. The sole designated as the Administration
ground for respondent’s termination Manager of M+W Zander, it does not
by petitioners is "willful breach of automatically mean that she occupies
trust and confidence in using [her] a position of trust and confidence. It is
authority and/or influence as not the job title but the actual work
Administrative Manager of that the employee performs that
ZANDER over [her] subordinate to determines whether he or she occupies
stage a ‘no work day’ last February 1, a position of trust and confidence.
2002
NO, Peñaranda is not entitled to Managerial employees and members
overtime pay and premium pay. of the managerial staff are exempted
Article 82 of the Labor Code from the provisions of the Labor Code
exempts managerial employees from on labor standards.
the coverage of labor standards.
Labor standards provide the working
conditions of employees, including
entitlement to overtime pay and
premium pay for working on rest
days. Under this provision,
managerial employees are "those
whose primary duty consists of the
management of the establishment in
which they are employed or of a
department or subdivision."
Peñaranda supervised the
engineering section of the steam
plant boiler. His work involved
overseeing the operation of the
machines and the performance of the
workers in the engineering section.
This work necessarily required the
use of discretion and independent
judgment to ensure the proper
functioning of the steam plant boiler.
As supervisor, Peñaranda is deemed
a member of the managerial staff.
Dela Cruz v. NLRC Petitioner Dela Cruz charged private
respondent with unfair labor practice,
illegal dismissal, non-payment of
overtime pay, legal holiday pay,
premium pay for holiday, and rest day
and non-payment of wages or
commission and separation pay
Dela Cruz acted as a chief patron,
although an unlicensed one. He was
tasked to take complete charge and
command of the vessel and perform the
responsibilities and duties of a ship
captain.
On the issue of back wages Article 82 of the Labor Code posits
The award of back wages resulting that a managerial employee is
from illegal dismissal of an employee excluded from the coverage of the law
is a substantive right and the failure regards conditions of employment
to claim back wages in a complaint which include hours of work, weekly
for illegal dismissal has been held to rest periods, holidays, service
be a mere procedural lapse which incentive leaves and service charges.
cannot defeat a right granted under
substantive law.
On the issue of separation pay and
reinstatement
By expressly asking for separation
pay, he is deemed to have opted for
separation pay in lieu of
reinstatement. A separation pay is
awarded as an alternative to
reinstatement.
On the issue of other monetary
claims
Dela Cruz, being an employee who
falls squarely within the category of
officers or members of a managerial
staff, is exempted from payment of
overtime pay, premium pay for
holidays, and rest days, and service
incentive leave pay.
Association of Marine Officers and
Seamen of Reyes and Lim Co. v.
Laquesma
National Sugar Refineries
Corporation v. NLRC
Labor Congress of the Philippines v.
NLRC
Petitioner union claims that the
positions major patron, minor patron,
chief mate and chief engineer are not
managerial employees but rank and
file, and hence these employees would
be eligible to form part of the union and
take part in the certification election.
Petitioner contends that the marine
officers in question must possess the
power to lay down and formulate
management policies aside from just
executing such policies. Said marine
officers do not have this power because
they merely navigate the bay and rivers
of Pasig and Bataan hauling LPGs.
The positions of major patron, minor
patron, chief mate, and chief
engineer are managerial. The
functions which these officers
discharge pertain to the navigation of
the vessel. Even if there are advanced
communications equipment on board,
the importance of the position of the
officers in assessing risks and
evaluating the vessel's situation
remains indisputable. The exercise
of discretion and judgment in
directing a ship's course is as much
managerial in nature as decisions
arrived at in the confines of the
more conventional board room or
executive office.
The functions which these officers
discharge pertain to the navigation of
the vessel. Even if there are advanced
communications equipment on board,
the importance of the position of the
officers in assessing risks and
evaluating the vessel's situation
remains indisputable. The exercise of
discretion and judgment in directing a
ship's course is as much managerial in
nature as decisions arrived at in the
confines of the more conventional
board room or executive office.
Lambo v. NLRC Petitioners Avelino Lambo and Vicente
Belocura were employed as tailors by
private respondents J.C. Tailor Shop
and/or Johnny Co on September 10,
1985 and March 3, 1985, respectively.
They worked from 8:00 a.m. to 7:00
p.m. daily, including Sundays and
holidays. As in the case of the other
100 employees of private respondents,
petitioners were paid on a piece-work
basis, according to the style of suits
they made. Regardless of the number of
pieces they finished in a day, they were
each given a daily pay of at least
P64.00.
On January 17, 1989, petitioners filed a
complaint against private respondents
for illegal dismissal and sought
recovery of overtime pay, holiday pay,
premium pay on holiday and rest day,
service incentive leave pay, separation
pay, 13th month pay, and attorneys fees.
(1) YES. Petitioners were
employees of J.C. TAILOR
SHOP and/or JOHNNY CO.
In this case, private respondents
exercised control over the work of
petitioners. As tailors, petitioners
worked in the companys premises
from 8:00 a.m. to 7:00 p.m. daily,
including Sundays and holidays. The
mere fact that they were paid on a
piece-rate basis does not negate their
status as regular employees of private
respondents. The term wage is
broadly defined in Art. 97 of the
Labor Code as remuneration or
earnings, capable of being expressed
in terms of money whether fixed or
ascertained on a time, task, piece or
commission basis. Payment by the
piece is just a method of
compensation and does not define the
essence of the relations. Nor does the
fact that petitioners are not covered
by the SSS affect the employer-
employee relationship.
Indeed, the following factors show
that petitioners, although piece-rate
workers, were regular employees of
private respondents: (1) within the
contemplation of Art. 280 of the
Labor Code, their work as tailors was
necessary or desirable in the usual
business of private respondents,
which is engaged in the tailoring
business; (2) petitioners worked for
private respondents throughout the
year, their employment not being
dependent on a specific project or
season; and, (3) petitioners worked
for private respondents for more than
one year.
(2) YES. Petitioners are entitled of
monetary claims and benefits.
WORKERS PAID BY RESULT AS
EMPLOYEES
There are two categories of employees
paid by results:
(1) t h o s e w h o s e t i m e a n d
performance are supervised by
the employer. (Here, there is an
element of control and
supervision over the manner as
to how the work is to be
performed. A piece-rate worker
belongs to this category
especially if he performs his
work in the company premises.);
and
(2) t h o s e w h o s e t i m e a n d
performance are unsupervised.
(Here, the employer’s control is
over the result of the work.
Workers on pakyao and takay
basis belong to this group.) Both
classes of workers are paid per
unit accomplished. Piece-rate
payment is generally practiced in
garment factories where work is
done in the company premises,
while payment on pakyao and
takay basis is commonly
observed in the agricultural
industry, such as in sugar
plantations where the work is
performed in bulk or in volumes
difficult to quantify.
Auto Bus Transport Systems, Inc. v.
Bautista
Since 24 May 1995, respondent
Antonio Bautista has been employed by
petitioner Auto Bus Transport Systems,
Inc. (Autobus), as driver-conductor
with travel routes Manila-Tuguegarao
via Baguio, Baguio-Tuguegarao via
Manila and Manila-Tabuk via Baguio.
Respondent was paid on commission
basis, seven percent (7%) of the total
gross income per travel, on a twice a
month basis.
On 03 January 2000, while respondent
was driving Autobus No. 114 along Sta.
Fe, Nueva Vizcaya, the bus he was
driving accidentally bumped the rear
portion of Autobus No. 124, as the
latter vehicle suddenly stopped at a
sharp curve without giving any
warning. Respondent averred that the
accident happened because he was
compelled by the management to go
back to Roxas, Isabela, although he had
not slept for almost twenty-four (24)
hours, as he had just arrived in Manila
from Roxas, Isabela. Respondent
further alleged that he was not allowed
to work until he fully paid the amount
of P75,551.50, representing thirty
percent (30%) of the cost of repair of
the damaged buses and that despite
respondent’s pleas for reconsideration,
the same was ignored by management.
After a month, management sent him a
letter of termination. Thus, on 02
February 2000, respondent instituted a
Complaint for Illegal Dismissal with
Money Claims for nonpayment of 13th
month pay and service incentive leave
pay against Autobus.
The respondent is entitled to service The definition of a “field personnel” is
incentive leave. Respondent is not a not merely concerned with the
field personnel but a regular location where the employee regularly
employee who performs tasks usually performs his duties but also with the
necessary and desirable to the usual fact that the employee’s performance
trade of petitioner ’s business. is unsupervised by the employer. Field
Accordingly, respondent is entitled to personnel are those who regularly
the grant of service incentive leave. perform their duties away from the
The grant of service incentive leave principal place of business of the
has been delimited by the employer and whose actual hours of
Implementing Rules and Regulations work in the field cannot be determined
of the Labor Code to apply only to with reasonable certainty. Thus, in
those employees not explicitly order to conclude whether an
excluded by Section 1 of Rule V. employee is a field employee, it is
According to the Implementing also necessary to ascertain if actual
Rules, Service Incentive Leave shall hours of work in the field can be
not apply to employees classified as determined with reasonable certainty
“field personnel.” The phrase “other by the employer. In so doing, an
employees whose performance is inquiry must be made as to whether or
unsupervised by the employer” must n o t t h e e m p l o y e e ’s t i m e a n d
not be understood as a separate performance are constantly supervised
classification of employees to which by the employer.
service incentive leave shall not be
granted. Rather, it serves as an
amplification of the interpretation of
the definition of field personnel
under the Labor Code as those
“whose actual hours of work in the
field cannot be determined with
reasonable certainty.” The same is
true with respect to the phrase “those
who are engaged on task or contract
basis, purely commission Basis.”
Said phrase should be related with
“field personnel” applying the rule
on ejusdem generis that general and
unlimited terms are restrained and
limited by the particular terms that
they follow. Hence, employees
engaged on task or contract basis or
paid on purely commission basis are
not automatically exempted from the
grant of service incentive leave,
unless, they fall under the
classification of field personnel.
 San Miguel Brewery, Inc. v.
Democratic Labor Organization
The Democratic Labor Association
filed a complaint against the San
Miguel Brewery, Inc., embodying 12
demands for the betterment of the
conditions of employment of its
members. The company filed its answer
to the complaint specifically denying its
material averments and answering the
demands point by point.
The company asked for the dismissal of
the complaint. During the hearing, the
union manifested its desire to confine
its claim to its demands for overtime,
night-shift differential pay, and
attorney's fees, although it was allowed
to present evidence on service rendered
during Sundays and holidays, or on its
claim for additional separation pay and
sick and vacation leave compensation.
NO. Field sales personnel are entitled Overtime compensation is an
to the benefits of the Eight-Hour additional pay for work or service
Labor Law. rendered in excess if 8 hours a day by
an employee, and if the employee is
The Court ruled that where after the already given extra compensation for
morning roll call the outside or field labor performed in excess of 8 hours a
sales personnel leave the plant of the day, he is not covered by the law
company to go on their respective
sales routes and they do not have a
daily time record but the sales routes
are so planned that they can be
completed within 8 hours at most,
and they receive monthly salaries and
sales commission in variable
amounts, so that they are made to
work beyond the required eight hours
similar to piece work, “pakiao”, or
commission basis regardless of the
time employed, and the employees’
participation depends on their
industry, it is held that the Eight –
Hour Labor Law has no application
to said outside or field sales
personnel and that they are not
entitled to overtime compensation
It is contended that since the
employees concerned are paid a
commission on the sales they make
outside of the required 8 hours
besides the fixed salary that is paid to
them. If the employee is already
given extra compensation for labor
performed in excess of 8 hours a day,
he is not covered by the law.
Union of Filipino Employees v. Vivar, Filipro, Inc. filed a motion for
Jr. clarification seeking (1) the limitation
of the award of holiday pay to three
years, (2) the exclusion of salesmen,
sales representatives, truck drivers,
merchandisers and medical
representatives (hereinafter referred to
as sales personnel) from the award of
the holiday pay, and (3) deduction from
the holiday pay award of overpayment
for overtime, night differential,
vacation and sick leave benefits due to
the use of 251 divisor.
Petitioner UFE answered that the award
should be made effective from the date
of effectivity of the Labor Code, that
their sales personnel are not field
personnel and are therefore entitled to
holiday pay, and that the use of 251 as
divisor is an established employee
benefit which cannot be diminished.
- The Court does not agree.
The law requires that the
actual hours of work in the
field be reasonably
ascertained. The company
has no way of determining
whether or not these sales
personnel, even if they report
to the office before 8:00 a.m.
prior to field work and come
back at 4:30 p.m, really
spend the hours in between
in actual field work.
While contending that such rule
added another element not found in
the law, the petitioner nevertheless
attempted to show that its affected
members are not covered by the
abovementioned rule. The petitioner
asserts that the company's sales
personnel are strictly supervised.
- The divisor assumes an
important role in determining
whether or not holiday pay is
already included in the
monthly paid employee's
salary and in the computation
of his daily rate.
The use of 251 days' divisor by
respondent Filipro indicates that
holiday pay is not yet included in the
employee's salary, otherwise the
divisor should have been 261.
- Contrary to the contention of
the petitioner, the Court finds
that the aforementioned rule
did not add another element to
the Labor Code definition of
field personnel. The clause
"whose time and performance
is unsupervised by the
employer" did not amplify but
merely interpreted and
expounded the clause "whose
actual hours of work in the
field cannot be determined
with reasonable certainty."
The former clause is still
within the scope and purview
of Article 82 which defines
field personnel. Hence, in
deciding whether or not an
employee's actual working
hours in the field can be
determined with reasonable
certainty, query must be made
as to whether or not such
employee's time and
performance is constantly
supervised by the employer.
- It must be stressed that the
daily rate, assuming there are
no intervening salary
increases, is a constant figure
for the purpose of computing
overtime and night differential
pay and commutation of sick
and vacation leave credits.
Necessarily, the daily rate
should also be the same basis
Bislig ng Manggagawa sa Tryco v.
NLRC
Tryco and the petitioners signed NO, Tryco’s decision to transfer its While the law is solicitous of the
separate MOA, providing for a production activities to San Rafael, welfare of employees, it must also
compressed workweek schedule to be Bulacan, regardless of whether it was protect the right of an employer to
implemented in the company effective made pursuant to the letter of the exercise what are clearly management
May 20, 1996. As provided in the Bureau of Animal Industry, was prerogatives. This prerogative extends
MOA, 8:00 a.m. to 6:12 p.m., from within the scope of its inherent rightto the management's right to regulate,
to control and manage its enterprise
Monday to Friday, shall be considered according to its own discretion and
effectively.
as the regular working hours, and no judgment, all aspects of employment,
overtime pay shall be due and payable This prerogative extends to the including the freedom to transfer and
to the employee for work rendered management's right to regulate, reassign employees according to the
during those hours. The MOA according to its own discretion and requirements of its business.
specifically stated that the employee judgment, all aspects of employment,
waives the right to claim overtime pay including the freedom to transfer and
for work rendered after 5:00 p.m. until reassign employees according to the
6:12 p.m. from Monday to Friday requirements of its business.
considering that the compressed
workweek schedule is adopted in lieu When the transfer is not
of the regular workweek schedule unreasonable, or inconvenient, or
which also consists of 46 hours. prejudicial to the employee, and it
does not involve a demotion in rank
However, should an employee be
or diminution of salaries, benefits,
permitted or required to work beyond
and other privileges, the employee
6:12 p.m., such employee shall be may not complain that it amounts to
entitled to overtime pay. a constructive dismissal. However,
Petitioners alleged that the company the employer has the burden of
proving that the transfer of an
acted in bad faith during the CBA
employee is for valid and legitimate
n e g o t i a t i o n s b e c a u s e i t s e n t grounds.
representatives without authority to
bind the company, and this was the No, The union was not deprived of
reason why the negotiations failed. the membership of the petitioners
They added that the management whose work assignments were only
transferred petitioners Lariño, Barte, transferred to another location.
Egera and Aya-ay from Caloocan to
San Rafael, Bulacan to paralyze the
union.
Linton Commercial Co., Inc. v.
Hellera
Luzon Stevedoring Co. v. Luzon
Marine Dept. Union
Linton issued a memorandum
addressed to its employees informing
them of the company's decision to
suspend its operations from 18
December 1997 to 5 January 1998 due
to the currency crisis that affected its
business operations. On 7 January
1997, Linton issued another
memorandum informing them that
effective 12 January 1998, it would
implement a new compressed
workweek of three (3) days on a
rotation basis. In other words, each
worker would be working on a rotation
basis for three working days only
instead for six days a week. On the
same day, Linton submitted an
establishment termination report
concerning the rotation of its workers.
Linton proceeded with the
implementation of the new policy
without waiting for its approval by
DOLE. Aggrieved, sixty-eight (68)
workers (workers) filed a Complaint
for illegal reduction of workdays.
Compressed workweek arrangement Management has the prerogative to
was unjustified and illegal. come up with measures to ensure
profitability or loss minimization.
The Bureau of Working Conditions However, such privilege is not
of the DOLE released a bulletin absolute. Management prerogative
providing for determining when an must be exercised in good faith and
employer can validly reduce the with due regard to the rights of labor.
regular number of working days. The As previously stated, financial losses
said bulletin states that a reduction must be shown before a company can
of the number of regular working validly opt to reduce the work hours
d a y s i s v a l i d w h e r e t h e of its employees.
arrangement is resorted to by the
employer to prevent serious losses
due to causes beyond his control,
such as when there is a substantial
slump in the demand for his goods
or services or when there is lack of
raw materials. Although the bulletin
stands more as a set of directory
guidelines than a binding set of
implementing rules, it has one main
consideration, consistent with the
ruling in Philippine Graphic Arts
Inc., in determining the validity of
reduction of working hours — that
the company was suffering from
losses.
J.P. Hellbronn Co. v. National Labor
Union
A dispute arose between the management
of J. P. Heilbronn Co. and the National
Labor Union. Armando Ocampo and
Protacio Ty, President and Secretary of the
J. P. Heilbronn Employees Association,
attended the conferences and hearings
before the Court of Industrial Relations
(CIR). A motion was filed in the case by
the Labor Union in behalf of Ocampo and
Ty praying the court to order the Company
to pay them the deductions in their salaries
made by the Company on the days or hours
of their absence from their work while
attending the conferences and hearings.
When in case of strikes, and according to
the CIR even if the strike is legal,
strikers may not collect their wages
during the days they did not go to work,
for the same reasons if not more,
laborers who voluntarily absent
themselves from work to attend the
hearing of a case in which they seek to
prove and establish their demands
against the company, the legality and
propriety of which demands is not yet
known, should lose their pay during
the period of such absence from work.
The age-old rule governing the relation
between labor and capital or management
and employee is that of a "fair day's wage
for a fair day's labor." If there is no work
performed by the employee there can be
no wage or pay, unless of course, the
laborer was able, willing and ready to
work but was illegally locked out,
dismissed or suspended. It is hardly fair or
just for an employee or laborer to fight or
litigate against his employer on the
employer's time.

Arica v. NLRC This case stemmed from a complaint
filed against private respondent
Stanfilco for assembly time, moral
damages and attorney’s fees, with the
Regional Arbitration- Davao City. The
Labor Arbiter rendered a decision in
favor of private respondent
STANFILCO, holding that:
“We cannot but agree with
respondent that the
pronouncement in that earlier
case, i.e. the thirty-minute
assembly time long practiced
cannot be considered waiting
time or work time and,
therefore, not compensable, has
become the law of the case
which can no longer be
disturbed without doing
violence to the time-honored
principle of res judicata.”
The 30-minute assembly time The 30-minute assembly time long
practiced by the employees of the practiced and institutionalized by
company, cannot be considered mutual consent of the parties under
“waiting time”, and is therefore not Article IV, Section 3, of the Collective
compensable. It is a deeply-rooted, Bargaining Agreement cannot be
routinary practice of the employees, considered as “waiting time” within
and the proceedings attendant thereto the purview of Section 5, Rule I, Book
are not infected with complexities III of the IRR of Labor Code.
as to deprive the workers the time
to attend to other personal
pursuits.
In short, they are not subject to the
absolute control of the company
during this period, otherwise, their
failure to report in the assembly
time would justify the company to
impose disciplinary measures. The
evidence of the case demonstrates
that the 30-minute assembly time
was not primarily intended for the
interests of the employer, but
ultimately for the employees to
indicate their availability or non-
availability for work during every
working day.
Sime Derby Pilipinas, Inc. v. NLRC
National Development Company v.
CIR
PESALA v. NLRC
There were 4 shifts of work at the
National Development Co., all of
which had 1 hour mealtime period for
the employees. NDC usually credited
the employees with 8 hours of work
regardless of the meal time but since
1953 whenever workers were required
to work until the next shift, they were
only credited 6 hours of work. NDC
stated that the two hours corresponding
to mealtime periods should not be
included while National Textile
Workers Union whose members are
employed at the NDC asked the NLRC
to order the payment of additional
overtime pay corresponding to the
mealtime periods.
Yes, the mealtime breaks should The law states that, “The legal
still be considered as part of working day for any person employed
working time. Under the law, idle by another shall be of not more than
time that an employee may spend for eight hours daily. When the work is
resting and during which he may continuous, the time during which the
leave the spot or place of work laborer is not working and can leave
though not the premises of his his working place and can rest
employer, is not counted as working completely shall not be counted (Sec.
time only where the work is broken 1, Com. Act No. 444, as amended)”.
or is not continuous. In this case, the
CIR’s finding that work in the
petitioner’s company was continuous
and did not permit employer and
laborer to rest completely is not
without basis in evidence and
following our earlier rulings, shall
not disturb the same.
Caltex Regular Employees v. Caltex
(Phils) Inc.
Sometime in August 1986, Caltex
Regular Employees Association
(Union) called Caltex’s attention to
alleged violations by Caltex of Annex
“B” of the 1985 CBA, e.g. non-
payment of night-shift differential, non-
payment of overtime pay and non-
payment at “first day-off rates” for
work performed on a Saturday. Caltex’s
Industrial Relations manager
immediately evaluated the Union’s
claims and accordingly informed it that
differential payments would be timely
implemented. However in the
implementation of re-computed claims,
no differential payment was made with
respect to work performed on the first
2.5 hours on a Saturday.
ARTICLES 91-96
The prohibition against offsetting It is only when an employee has been
undertime one day with overtime required on a Saturday to render work
another day has no application in in excess of the forty (40) hours which
the case at bar. The Court finds the constitute the regular work week that
Union's contention bereft of merit. such employee may be considered as
Overtime work consists of hours performing overtime work on that
worked on a given day in excess of Saturday. We consider that the
the applicable work period, which statutory prohibition against offsetting
here is eight (8) hours. It is not undertime one day with overtime
enough that the hours worked fall on another day has no application in the
disagreeable or inconvenient hours. case at bar.
In order that work may be considered
as overtime work, the hours worked
must be in excess of and in addition
to the eight (8) hours worked during
the prescribed daily work period, or
the forty (40) hours worked during
the regular work week Monday thru
Friday.
In the present case, under the 1985
CBA, hours worked on a Saturday do
not, by that fact alone, necessarily
constitute overtime work
compensable at premium rates of
pay, contrary to the Union's assertion.
These are normal or regular work
hours, compensable at regular rates
of pay, as provided in the 1985 CBA;
under that CBA, Saturday is not a
rest day or a "day off". It is only
when an employee has been required
on a Saturday to render work in
excess of the forty (40) hours which
constitute the regular work week that
such employee may be considered as
performing overtime work on that
Saturday.
Mercury Drug Co., Inc. v. Dayao Nardo Dayao and 70 others filed a
petition against Mercury Drug praying
for their payment of unpaid back wages
for work done on Sunday and legal
holidays with 25% additional
compensation, payment of extra
compensation for work done at night,
among other things.
The Supreme Court finds merit in the Work performed at night should be
claim for the payment of additional paid more than work done at daytime,
compensation for work done on and that if work is done beyond the
Sundays and holidays. While an worker’s regular hours of duty, he
employer may compel his employees should also be paid additional
to perform service on such days, the compensation for overtime work.
law, nevertheless, imposes upon him
the obligation to pay his employees Additional compensation for
at least 25% of their basic regular nighttime work is founded on public
salaries. policy, hence the same cannot be
waived.
Section 4, C. A. No. 444 provides:
No person, firm or corporation,
business establishment or place of
center of labor shall compel an
employee or laborer to work during
Sundays and legal holidays unless he
is paid an additional sum of at least
twenty-five per centum of his regular
remuneration: PROVIDED,
HOWEVER, That this prohibition
shall not apply to public utilities
performing some public service such
as supplying gas, electricity, power,
water, or providing means of
transportation or communication.
The private respondents were at a
disadvantage insofar as the
contractual relationship was
concerned. Workers in our country
do not have the luxury or freedom of
declining job openings or filing
resignations even when some terms
and conditions of employment are
not only onerous and iniquitous but
illegal It is precisely because of this
situation that the framers of the
Constitution embodied the provisions
on social justice (Section 6, Article
II) and protection to labor (Section 9,
Article II) in the Declaration of
Principles and State Policies.
Lagatic v. NLRC Petitioner was employed by Cityland as
probationary officer tasked with
soliciting sales and making client calls
and cold calls. Petitioner failed to
submit cold calls several times.
Cityland served a notice of dismissal to
him after finding that the petitioner is
guilty of gross insubordination. He
filed a complaint against Cityland for
illegal dismissal, illegal deduction,
overtime, and rest day pay.
Petitioner's failure to comply with
Cityland's policy of requiring cold
call reports is clearly willful, given
the 28 instances of his failure to do
so, despite a previous reprimand and
suspension. More than that, his
written statement shows his open
defiance and disobedience to lawful
rules and regulations of the company.
Likewise, said company policy of
requiring cold calls and the
concomitant reports thereon is clearly
reasonable and lawful, sufficiently
k n o w n t o p e t i t i o n e r, a n d i n
connection with the duties which he
had been engaged to discharge.
There is, thus, just cause for his
dismissal.
To constitute a valid dismissal from
employment, two requisites must be
met, namely: (1) the employee must be
afforded due process, and (2) the
dismissal must be for a valid cause. In
the case at bar, petitioner contends
that his failure to submit a few cold
calls does not qualify as willful
disobedience.
Overtime cannot be offset by
undertime, to allow off-setting would
prejudice the worker. He would be
deprived of the additional pay for the
rest day work he has rendered and
which is utilized to offset his
equivalent time off on regular
workdays.

petitioner failed to show his

entitlement to overtime and rest day
pay due, to the lack of sufficient
evidence as to the number of days
and hours when he rendered overtime
and rest day work. Entitlement to
overtime pay must first be
established by proof that said
overtime work was actually
performed, before an employee may
avail of said benefit.
Asian Transmission Corporation v.
CA
The Department of Labor and
Employment (DOLE), through
Undersecretary Cresenciano B.
Trajano, issued an Explanatory Bulletin
dated March 11, 1993 wherein it
clarified, inter alia, that employees are
entitled to 200% of their basic wage on
April 9, 1993, whether unworked,
which[,] apart from being Good Friday
[and, therefore, a legal holiday], is also
Araw ng Kagitingan [which is also a
legal holiday].
! Said bulletin was reproduced
on January 23, 1998, when
April 9, 1998 was both
Maundy Thursday and Araw ng
Kagitingan.
! Despite the explanatory
bulletin, petitioner [Asian
Transmission Corporation]
opted to pay its daily paid
employees only 100% of their
basic pay on April 9, 1998.
Respondent Bisig ng Asian
Transmission Labor Union
(BATLU) protested.
! In accordance with Step 6 of
the grievance procedure of the
Collective Bargaining
Agreement (CBA) existing
between petitioner and
BATLU, the controversy was
submitted for voluntary
arbitration.
! The Office of the Voluntary
Arbitrator rendered a decision
directing petitioner to pay its
covered employees "200% and
not just 100% of their regular
daily wages for the unworked
April 9, 1998 which covers two
regular holidays, namely, Araw
ng Kagitignan and Maundy
Thursday."
1. YES.
Holiday pay is a legislated
benefit enacted as part of the
Constitutional imperative that the
State shall afford protection to labor.
Its purpose is not merely "to prevent
diminution of the monthly income of
the workers on account of work
interruptions. In other words,
although the worker is forced to take
a rest, he earns what he should earn,
that is, his holiday pay." It is also
intended to enable the worker to
participate in the national
celebrations held during the days
identified as with great historical and
cultural significance.
In any event, Art. 4 of the Labor
Code provides that all doubts in the
implementation and interpretation of
its provisions, including its
implementing rules and regulations,
shall be resolved in favor of labor.
For the working man’s welfare
should be the primordial and
paramount consideration.
As reflected above, Art. 94 of the
Labor Code, as amended, affords a
worker the enjoyment of ten paid
regular holidays. The provision is
mandatory, regardless of whether an
employee is paid on a monthly or
daily basis. Unlike a bonus, which is a
management prerogative, holiday pay
is a statutory benefit demandable
under the law. Since a worker is
entitled to the enjoyment of ten paid
regular holidays, the fact that two
holidays fall on the same date should
not operate to reduce to nine the ten-
holiday pay benefits a worker is
entitled to receive.
It is elementary, under the rules of
statutory construction, that when the
language of the law is clear and
unequivocal, the law must be taken to
mean exactly what it says. In the case
at bar, there is nothing in the law
which provides or indicates that the
entitlement to ten days of holiday pay
shall be reduced to nine when two
holidays fall on the same day.
San Miguel Corp. v. CA DOLE conducted a routine inspection
in the premises of San Miguel
Corporation (SMC) in Sta. Filomena,
Iligan City where, it was discovered
that there was underpayment by SMC
of regular Muslim holiday pay to its
employees.
SMC contested the findings and
DOLE conducted summary hearings
yet SMC failed to submit proof that it
was paying regular Muslim holiday pay
to its employees. Hence, Director of
DOLE Iligan District Office issued a
compliance order directing SMC to
consider Muslim holidays as regular
holidays and to pay both its Muslim
and non-Muslim employees holiday
pay within thirty (30) days from the
receipt of the order.
1.) Muslim holidays are There should be no distinction
provided under Articles 169 between Muslims and non-Muslims
and 170, Title I, Book V, of as regards payment of benefits for
Presidential Decree No. Muslim holidays. Wages and other
1083,8 otherwise known as emoluments granted by law to the
the Code of Muslim Personal working man are determined on the
Laws, which states: basis of the criteria laid down by
Art. 169. Official Muslim holidays. - The laws and certainly not on the basis
following are hereby recognized as legal of the workers faith or religion.
Muslim holidays:
(a) Amun Jadīd (New Year), which falls
on the first day of the first lunar month
of Muharram;
(b) Maulid-un-Nabī (Birthday of the
Prophet Muhammad), which falls on the
twelfth day of the third lunar month of
Rabi-ul-Awwal;
(c) Lailatul Isrā Wal Mirāj (Nocturnal
Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-
seventh day of the seventh lunar month
of Rajab;
(d) Īd-ul-Fitr (Hari Raya Puasa), which
falls on the first day of the tenth lunar
month of Shawwal, commemorating the
end of the fasting season; and
(e) Īd-ūl-Adhā (Hari Raya Haji),which
falls on the tenth day of the twelfth lunar
month of Dhūl-Hijja.
Art. 170. Provinces and cities where
officially observed. - (1) Muslim
holidays shall be officially observed in
the Provinces of Basilan, Lanao del
Norte, Lanao del Sur, Maguindanao,
North Cotabato, Iligan, Marawi,
Pagadian, and Zamboanga and in such
other Muslim provinces and cities as
may hereafter be created;
(2) Upon proclamation by the President
of the Philippines, Muslim holidays may
also be officially observed in other
provinces and cities.
The foregoing provisions should be
read in conjunction with Article 94 of
the Labor Code, which provides:
Art. 94. Right to holiday pay. -
Union of Filipino Employees v. Vivar,
Jr.
 Wellington Investment and The case arose from a routine
Manufacturing Corp. v. Trajano, et al. inspection conducted by a Labor
Enforcement Officer of the Wellington
Flour Mills. The officer drew up a
report in which he set forth his finding
of non-payment of regular holidays
falling on a Sunday for monthly-paid
employees.
Wellington sought reconsideration of
the Labor Inspector's report. It argued
that "the monthly salary of the
company's monthly-salaried employees
already includes holiday pay for all
regular holidays . . . (and hence) there
is no legal basis for the finding of
alleged non-payment of regular
holidays falling on a Sunday." It
expounded on this thesis in a position
paper subsequently submitted to the
Regional Director, asserting that it pays
its monthly-paid employees a fixed
monthly compensation "using the 314
factor which undeniably covers and
already includes payment for all the
working days in a month as well as all
the 10 unworked regular holidays
within a year."
Wellington's arguments failed to
persuade the Regional Director who
ruled that "when a regular holiday falls
on a Sunday, an extra or additional
working day is created and the
employer has the obligation to pay the
employees for the extra day except the
last Sunday of August since the
payment for the said holiday is already
included in the 314 factor," and
accordingly directed Wellington to pay
xxx In Wellington's case, there seems REGULAR HOLIDAYS ON A
to be no question that at the time of SUNDAY
the inspection conducted by the There is no law which orders the
Labor Enforcement Officer on payment of an extra working day
August 6, 1991, it was and had been whenever a regular holiday falls on a
paying its employees "a salary of not Sunday (full text ng case)
less than the statutory or established
minimum wage," and that the FULL MONTHLY SALARY
monthly salary thus paid was "not . . . That (the full monthly) salary is due
and payable regardless of the
less than the statutory minimum declaration of any special holiday in
wage multiplied by 365 days divided the entire country or a particular place
by twelve,". There is, in other words, therein, or any fortuitous cause
no issue that to this extent, precluding work on any particular day
Wellington complied with the or days (such as transportation strikes,
minimum norm laid down by law. riots, or typhoons or other natural
calamities), or cause not imputable to
Apparently the monthly salary was the worker (galing sa ppt. ni sir)
fixed by Wellington to provide for Note: Guys yung sa full text ng case
compensation for every working day ang issue about extra payment for
of the year including the holidays employees receiving fixed monthly
specified by law — and excluding compensation if magfall ng Sunday
only Sundays. In fixing the salary, yung holiday pero yung nilagay ni sir
Wellington used what it calls the sa ppt niya yung about sa monthly
"314 factor;" that is to say, it simply salary so nilagay ko nalang both
concept. In this case kasi fixed yung
deducted 51 Sundays from the 365 monthly compensation ng
days normally comprising a year and employees. Ang computation is 314
used the difference, 314, as basis for days included na yung regular
determining the monthly salary. The holiday. Please feel free to comment
monthly salary thus fixed actually or correct if ever may na-miss man
covers payment for 314 days of the ako (bukod kay crush! Chos! hehe)
year, including regular and special Thank you. Aja sa prelims natin mga
behbeh! :) - ate aR
holidays, as well as days when no
work is done by reason of fortuitous
cause, as above specified, or causes
not attributable to the employees.
The Labor Officer who conducted
the routine inspection of Wellington
discovered that in certain years, two
or three regular holidays had fallen
Leyte IV Electric Cooperative, Inc. v.
LEYECO IV Employees Union-ALU
On April 6, 1998, Leyte IV Electric
Cooperative, Inc. (petitioner) and
Leyeco IV Employees Union-ALU
(respondent) entered into a Collective
Bargaining Agreement (CBA) 3
covering petitioner rank-and-file
employees, for a period
of Ave (5) years effective January 1,
1998. On June 7, 2000, respondent,
through its Regional Vice-President,
Vicente P. Casilan, sent a letter to
petitioner demanding holiday pay for
all employees, as provided for in the
CBA. On June 20, 2000, petitioner,
through its legal counsel, sent a letter-
reply to Casilan, explaining that after
perusing all available pay slips, it found
that it had paid all employees all the
holiday pays enumerated in the CBA.
After exhausting the procedures of the
grievance machinery, the parties agreed
to submit the issues of the
interpretation and implementation of
Section 2, Article VIII of the CBA on
the payment of holiday pay, for
arbitration of the National Conciliation
and Mediation Board (NCMB),
Regional Office No. VIII in Tacloban
City. 6 The parties were
required to submit their respective
position papers, after which the dispute
was submitted for decision.
While admitting in its Position Paper
that the employees were paid all of the
days of the month even if there was no
work, respondent alleged that it is not
prevented from making separate
demands for the payment of regular
holidays concomitant with the
provisions of the CBA, with its
supporting documents consisting of a
letter demanding payment of holiday
pay, petitioner’s reply thereto and
respondent’s rejoinder, a computation
in the amount of P1,054,393.07 for
The Voluntary Arbitrator gravely The use of a divisor that was less than
abused its discretion in giving a strict 365 days cannot make the employer
or literal interpretation of automatically liable for underpayment
the CBA provisions that the holiday of holiday pay.
pay be reflected in the payroll slips.
Such literal interpretation ignores the
admission of
respondent in its Position Paper that
the employees were paid all the days
of the month even if not worked. In
light of such admission, petitioner’s
submission of its 360 divisor in the
computation of employees’ salaries
gains significance. In Union of
Filipro Employees v. Vivar, Jr. the
Court held that “[t]he divisor
assumes an important role in
determining whether or not holiday
pay is already included in the
monthly paid employee’s salary and
in the
computation of his daily rate”.
In Odango v. National Labor
Relations Commission, the Court
ruled that the use of a divisor that
was less than 365 days cannot make
the employer automatically liable for
underpayment of holiday pay. In said
case, the employees
were required to work only from
Monday to Friday and half of
Saturday. Thus, the minimum
allowable divisor is 287, which is the
result of 365 days, less 52 Sundays
and less 26 Saturdays (or 52 half
Saturdays). Any divisor
below 287 days meant that the
employees were deprived of their
holiday pay for some or all of the ten
legal holidays. The 304-day divisor
used by the employer was clearly
above the minimum of 287 days. In
this case, the employees are required
to work only from Monday to Friday.
Thus, the minimum allowable divisor
Producers Bank v. NLRC The present petition originated from a No. There is no diminution of The reduction of the divisor to 303
complaint filed by private respondent benefits. was done for the sole purpose of
on 11 February 1988 with the, National increasing the employees' overtime
Labor Relations Commission (NLRC), Article 94 of the Labor Code pay, and was not meant to exclude
provides that every worker shall be holiday pay from the monthly salary
charging petitioner with diminution of of petitioner's employees. In fact, it
benefits, non-compliance with Wage paid his regular daily wage during
regular holidays and that the was expressly stated in the inter-office
Order No. 6 and non-payment of memorandum – also referred to by
holiday pay. employer may require an employee private respondent in its pleadings -
to work on any holiday but such that the divisor of 314 will still be
Producers Bank of the Philippines, a e m p l o y e e s h a l l b e p a i d a used in the computation for cash
banking institution, has been providing compensation equivalent to twice his conversion and in the determination of
several benefits to its employees. regular rate. In this case, the Labor the daily rate
Among the benefits it had been
regularly giving is a mid-year bonus The divisor used by petitioner in
arriving at the employees' daily rate
equivalent to an employee's one-month
basic pay and a Christmas bonus for the purpose of computing salary-
equivalent to an employee's one whole related benefits is 314.
month salary
Corollarily, the Acting Conservator
also approved the increase of meal
When P.D. 851, the law granting a 13th
month pay, took effect, the basic pay allowance from P25.00 to P30.00 for
previously being given as part of the a minimum of four (4) hours of work
Christmas bonus was applied as for Saturdays.
compliance to it (P.D. 851), the
Proceeding from the unambiguous
allowances remained as Christmas
terms of the above quoted
bonus.
memorandum, the Labor Arbiter
observed that the reduction of the
Bank continued giving one month basic
pay as mid-year bonus, one month divisor to 303 was for the sole
basic pay as 13th month pay but the purpose of increasing the employees'
Christmas bonus was no longer based overtime pay and was not meant to
replace the use of 314 as the divisor
on the allowance but on the basic pay
of the employees which is higher. In the in the computation of the daily rate
early part of 1984, the bank was placed for salary-related benefits.
under conservatorship but it still
Private respondent admits that, prior
provided the traditional mid-year
to 18 August 1986, petitioner used a
bonus.
divisor of 314 in arriving at the daily
By virtue of an alleged Monetary Board wage rate of monthly-salaried
Resolution No. 1566, the bank only employees. Private respondent also
concedes that the divisor was
JRC v. NLRC Unable to receive their corresponding Petitioner, although a non-profit It is readily apparent that the declared
holiday pay, as claimed, from 1975 to institution is under obligation to give
purpose of the holiday pay which is
1977, private respondent National pay even on unworked regular the prevention of diminution of the
Alliance of Teachers and Office holidays to hourly paid faculty monthly income of the employees on
Workers (NATOW) in behalf of the members subject to the terms and account of work interruptions is
faculty and personnel of Jose Rizal conditions provided for therein. defeated when a regular class day is
College filed with the Ministry of cancelled on account of a special
Labor a complaint against the college We believe that the aforementioned public holiday and class hours are
for said alleged non-payment of implementing rule is not justified by held on another working day to make
holiday pay. Due to the failure of the the provisions of the law which after up for time lost in the school calendar.
parties to settle their differences on all is silent with respect to faculty Otherwise stated, the faculty member,
conciliation, the case was certified for members paid by the hour who although forced to take a rest, does not
compulsory arbitration. because of their teaching contracts earn what he should earn on that day.
are obliged to work and consent to be Be it noted that when a special public
The Labor Arbiter rendered a decision: paid only for work actually done holiday is declared, the faculty
(except when an emergency or a member paid by the hour is deprived
1. The faculty and personnel of the fortuitous event or a national need of expected income, and it does not
respondent Jose Rizal College who are calls for the declaration of special matter that the school calendar is
paid their salary by the month holidays). Regular holidays specified extended in view of the days or hours
uniformly in a school year, irrespective as such by law are known to both lost, for their income that could be
of the number of working days in a school and faculty members as no earned from other sources is lost
month, without deduction for holidays, class days;" certainly the latter do not during the extended days. Similarly,
are presumed to be already paid the 10 expect payment for said unworked when classes are called off or
paid legal holidays and are no longer days, and this was clearly in their shortened on account of typhoons,
entitled to separate payment for the said minds when they entered into the floods, rallies, and the like, these
regular holidays; teaching contracts. faculty members must likewise be
paid, whether or not extensions are
2. The personnel of the respondent Jose On the other hand, both the law and ordered.
Rizal College who are paid their wages the Implementing Rules governing
daily are entitled to be paid the 10 holiday pay are silent as to payment
unworked regular holidays according to on Special Public Holidays.
the pertinent provisions of the Rules
and Regulations Implementing the
Labor Code;

3. Collegiate faculty of the respondent

Jose Rizal College who by contract are
paid compensation per student contract
hour are not entitled to unworked
regular holiday pay considering that
these regular holidays have been
Sugue v. Triumph International (Phils) Sugue and Valderrama filed a
Inc. complaint with the NLRC against
Triumph for payment of money claims
arising from allegedly unpaid vacation
and sick leave credits, birthday leave
and 14th month pay for the period
1999-2000. Thereafter, the application
of both Sugue and Valderrama were
subjected to various conditions. Sugue
complained that the conditions imposed
upon her constitute harrassment and
discrimination, thus, prompting her to
file a complaint with the NLRC for
constructive dismissal. Valderrama’s
case is similar to that of Sugue.
Triumph did not act with The law also recognizes the right of
discrimination, insensibility or the employer to expect from its
disdain towards Sugue and workers not only good performance,
Valderrama, which foreclosed any adequate work and diligence, but also
choice on their part except to forego good conduct and loyalty. The
their continued employment. Having employer may not be compelled to
failed to substantiate their claim of continue to employ such persons
constructive dismissal, Sugue and whose continuance in the service will
Valderrama should be deemed to patently be inimical to his interests.
have abandoned their work, thus,
their dismissal is warranted. For
abandonment to be a valid ground for
dismissal, two elements must then be
satisfied: (1) the failure to report for
work or absence without valid or
justifiable reason; and (2) a clear
intention to sever the employer-
employee relationship. The second
element is the more determinative
factor and must be evinced by overt
acts.The abovementioned elements
are present in the instant case. First,
Sugue and Valderrama’s failure to
report for work was without
justifiable reason. As earlier
discussed, their allegation of
discrimination and harassment lacks
factual basis, thus, under the
circumstances, we find their absences
to be unjustified and without any
valid reason. Second, their overt act
of writing letters informing Triumph
that they considered themselves
constructively dismissed was a clear
manifestation of their intention to
desist from their employment. Too,
their defiance and disregard of the
memorandum sent by Triumph
requiring them to explain their
unauthorized absences demonstrated
a clear intention on their part to sever
their employer-employee
relationship. This is particularly true
with Valderrama who, even before
unilaterally terminating his
Rodriguez v. Park N Ride, Inc.
Mabeza v. NLRC
Our Haus Realty Development
Corporation v. Parian
Norma, a hotel employee, alleged
underpayment of wages, non-payment
of holiday pay, service incentive leave
pay, 13 th month pay, night shift
differential and other benefits.
Respondent Peter Ng claimed that the
reason the monetary benefits received
by petitioner between 1981 to 1987
were less than minimum wage was
because petitioner did not factor in the
meals, lodging, electric consumption
and water she received during the
period in her computations.
On May 2010, the petitioner company
experienced financial distress and had
to suspend some of its construction
projects to alleviate its condition. The
respondents were among those who
were affected who were asked to take
vacation leaves.
Eventually, these laborers were asked
to report back to work but instead of
doing so, they filed with the LA a
complaint for underpayment of their
daily wages claiming that except for
Tenedero, their wages were below the
minimum rates prescribed in the
following wage orders from 2007 to
2010. They also claimed that Our Haus
failed to pay them their holiday,
Service Incentive Leave (SIL), 13th
month and overtime pays.
The food and lodging, or the
electricity and water consumed by
the petitioner were not facilities but
supplements. A benefit or privilege
granted to an employee for the
convenience of the employer is not a
facility. The criterion in making a
distinction between the two not so
much lies in the kind (food, lodging)
but the purpose. Considering,
therefore, that hotel workers are
required to work different shifts and
are expected to be available at
various odd hours, their ready
availability is a necessary matter in
the operations of a small hotel, such
as the private respondent's hotel.
The Court ruled that there is no
substantial distinction between
deducting and charging a facility’s
value from the employee’s wage; the
legal requirements for creditability
apply to both. Herein petitioner’s
argument is a vain attempt to
circumvent the minimum wage law
by trying to create a distinction
where none exists because in reality,
deduction and charging both operate
to lessen the actual take-home pay of
an employee.
Granting that meals and lodging were
provided and indeed constituted
facilities, such facilities could not be
deducted without the employer
complying first with certain legal
requirements. Without satisfying these
requirements, the employer simply
cannot deduct the value from the
employee's wages. First, proof must
be shown that such facilities are
customarily furnished by the trade.
Second, the provision of deductible
facilities must be voluntarily accepted
in writing by the employee. Finally,
facilities must be charged at fair and
reasonable value.
In reality, deduction and charging both
operate to lessen the actual take-home
pay of an employee; they are two
sides of the same coin. In both, the
employee receives a lessened amount
because supposedly, the facility’s
value, which is part of his wage, had
already been paid to him in kind. As
there is no substantial distinction
between the two, the requirements set
by law must apply to both.
International School Alliance (ISAE)
v. Hon. Leonardo Quisumbing
International School, Inc., pursuant to
PD 732, is a domestic educational
institution established primarily for
dependents of foreign diplomatic
personnel and other temporary
residents. The School hires both foreign
and local teachers as members of its
faculty, classifying the same into two:
(1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain
benefits not accorded local-hires. These
include housing, transportation,
shipping costs, taxes, and home leave
travel allowance. Foreign-hires are also
paid a salary rate 25% more than local-
hires. The School justifies the
d i ff e r e n c e o n t w o " s i g n i f i c a n t
economic disadvantages" foreign-hires
have to endure, namely: (a) the
"dislocation factor" and (b) limited
tenure. ISAE, "a legitimate labor union
and the CB representative of all faculty
members" of the School, contested the
difference in salary rates between
foreign and local-hires in a CBA
negotiation. They failed to come to an
agreement and ISAE filed a notice of
strike. DOLE Acting Secretary ruled in
favor of the school while DOLE
Secretary denied their MR.
If an employer accords employees While the Court recognizes the need
the same position and rank, the of the School to attract foreign-hires,
presumption is that these employees salaries should not be used as an
perform equal work. This enticement to the prejudice of local-
presumption is borne by logic and hires. The local-hires perform the
human experience. If the employer same services as foreignhires and they
pays one employee less than the rest,ought to be paid the same salaries as
it is not for that employee to explain
the latter. For the same reason, the
why he receives less or why the "dislocation factor" and the foreign-
others receive more. That would be hires' limited tenure also cannot serve
adding insult to injury. The employeras valid bases for the distinction in
has discriminated against that salary rates. The disloca-on factor and
employee; it is for the employer to limited tenure affecting foreign-hires
explain why the employee is treated are adequately compensated by certain
unfairly. benefits accorded them which are not
enjoyed by local-hires, such as
The employer has failed to discharge housing, transporta-on, shipping costs,
this burden and prove that foreign- t a x e s a n d h o m e l e a v e t r a v e l
hires perform 25% more efficiently allowances.
or effectively than the local-hires.
Both groups have similar functions
and responsibilities, which they
perform under similar working
conditions.
The School cannot invoke the need to
entice foreign-hires to leave their
domicile to rationalize the distinction
in salary rates without violating the
principle of equal work for equal pay.
ECOP v. NWPC Regional Board of the National Capital
Region issued Wage Order No.
NCR-01 which increased the minimum
wage, later on NCR01-A amended the
first Order. ECOP assails the board’s
grant of an “across-the-board” wage
increase to workers already being paid
more than existing minimum wage
rates (P 125.00 a day) as an alleged
excess of authority, and alleges that
under RA 6727, the boards may only
prescribe minimum wages, not
determine salary ceilings.
Yes, the wage order is valid. The
Court is not convinced that the
Regional Board of the National
Capital Region, in decreeing an
across-the-board hike, performed an
unlawful act of legislation. It is true
that wage-fixing, like rate-fixing,
constitutes an act of Congress; it is
also true however that Congress may
delegate the power to fix rates
provided that, as in all delegations
cases, Congress leaves sufficient
standards.
“Minimum wages” underlies the effort
of the State, as RA 6727 expresses it,
“ to promote productivity-
improvement and gain-sharing
measures to ensure a decent standard
of living for the workers and their
families; to guarantee the rights of
labor to its just share in the fruits of
production; to enhance employment
generation in the countryside through
industry dispersal; and to allow
business and industry reasonable
returns on investment, expansion and
growth,”
Tiangco v. Leogardo, Jr. The respondents filed a
complaint against the Tiangcos with the
Ministry of Labor and Employment for
non-payment of their legal holiday pay
and service incentive leave pay, as well
as underpayment of their emergency
cost of living allowances which used to
be paid in full irrespective of their
working days, but which were reduced
e f f e c t i v e F e b r u a r y, 1 9 8 0 , i n
contravention of Article 100 of the new
Labor Code which prohibits the
elimination or diminution of existing
benefits.
The Deputy Minister of Labor and Employees who work part-time for
Employment correctly ruled that, each of several employers are entitled
since the petitioners had been paying only to a reduced emergency cost of
the private respondents a fixed living allowance (COLA) from each
monthly emergency allowance since employer.
November, 1976 up to February,
1980, as a mattter of practice and/or
verbal agreement between the
petitioners and the private
respondents, the discontinuance of
the practice and/or agreement
unilaterally by the petitioners
contravened the provisions of the
Labor Code, particularly Article 100
thereof which prohibits the
elimination or diminution of existing
benefits.
Section 15 of the Rules on P.D. 525
and Section 16 pf the Rules on P.D.
1123 also prohibits the diminution of
any benefit granted to the employees
under existing laws, agreements and
voluntary employer practice.
The decision of the Deputy Minister
of Labor was modified, taking into
consideration that the respondent
employees are employed by different
individuals with varying
capitalization.
Philippine Overseas Drilling and Oil Mariano Melendres tendered his
Development Corporation v. Ministry irrevocable resignation as Chief
of Labor
Kamaya Point Hotel v. NLRC
Geologist from PODODC, effective
one month from said date. He had been
employed for 10 years. He inquired
whether any action had been taken on
his resignation and claiming separation
pay and other benefits which were
extended to other employees who has
earlier resigned.
Director of Bureau of Labor Relations
issued an order directing the company
to pay Melendres one month pay for
every year of service as termination
benefit as per company policy.
PODODC opposed because Melendres
had voluntarily resigned and no
company policy for such.
Private respondents were employed by
Kamaya Point Hotel as crew. Due to
the company’s profitability, the
management granted a 14th month pay
to its employees. The hotel closed its
business later on.
Private respondents filed a complaint
against Kamaya Point Hotel for illegal
suspension, violation of the CBA, and
non-payment of the 14th month pay.
Records show, however, that the case
was submitted for decision on the sole
issue of alleged non-payment of the
14th month pay.
Having found that there was a
company policy to that effect, the
Director correctly held that Melenres
was legally entitled to a separation
benefit, notwithstanding voluntary
resignation.
The Supreme Court held that there is An employer may not be obliged to
no law that mandates the payment of assume a “double burden” of paying
the 14th month pay. Only the 13th the 13th month pay in addition to
month pay is mandated under bonuses or other benefits aside from
Presidential Decree 851. Thus, the employee’s basic salaries or
having enjoyed the additional income wages.
in the form of the 13th month pay,
private respondents’ insistence on the An employer may not be obliged to
14th month pay for the year 1982 is assume the onerous burden of
already an unwarranted expansion of granting bonuses or other benefits
the liberality of the law. aside from the employee’s basic
salaries or wages in addition to the
Furthermore, as gleamed from the required 13th month pay.
CBA between management and the
union, there is no stipulation as to
extra remuneration showing that such
benefit is entirely contingent or
dependent on the profitability of the
company’s operations. The 14th
month pay is a gratuity to which the
recipient has no right to make a
demand.
Apex Mining Co v. NLRC Respondent Sandigan ng
Manggagawang Pilipino filed before
the Labor Arbiter a claim for
Emergency Cost of Living Allowance
("ECOLA") differential alleging that
Apex had paid its employees in its
Maco, Davao del Norte operations an
aggregate cumulative daily ECOLA of
only P15.00 which was P2.00 below
the cumulative minimum ECOLA of
P17.00 established under Wage Order
No. 6; and that petitioner had belatedly
granted the additional P2.00. Apex
denied having failed to comply with
Wage Order No. 6, contending that it
had incorporated the alleged P2.00
deficiency into the basic salary of its
employees.
Arco v. SAMARM-NAFLU
Both Wage Order No. 5 and Wage The creditability provisions in Wage
Order No. 6 expressly allowed the Orders No. 5 & 6 are grounded on
crediting of increases in wages or public policy to encourage employers
allowances granted under collective to grant wage and allowance increases
bargaining agreements towards to their employers higher than the
compliance with increases in ECOLA minimum rates of increases prescribed
requirements prescribed by those by the statute or administrative
Wage Orders. regulation.
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. Section 6 of the Rules
Implementing Wage Order No. 6
relates to "supplements and other
benefits" which employees are
already "enjoying without cost at the
time of the effectivity of [Wage]
Order [No. 6]." Such benefits which
employees are already enjoying
"without cost" could not, under
Section 6, suddenly be ascribed
monetary value so as to offset or
diminish increases in the minimum
wage rates prescribed by statute.
Clearly, once more, Section 6 does
not relate to the problem at hand.
 WESLEYAN UNIVERSITY- Petitioner Wesleyan University- The practice of giving two retirement A Collective Bargaining Agreement
PHILIPPINES, vs. Philippines is a non-stock, non-profit benefits to petitioner’s employees is (CBA) is a contract entered into by an
WESLEYAN UNIVERSITY- educational institution duly organized supported by substantial evidence. employer and a legitimate labor
PHILIPPINES FACULTY and and existing under the laws of the organization concerning the terms and
STAFF ASSOCIATION Philippines. Based on the affidavits, petitioner has conditions of employment. Like any
been giving two retirement benefits other contract, it has the force of law
Respondent Wesleyan University- as early as 1997. Petitioner failed to between the parties and, thus, should
Philippines Faculty and Staff present any evidence to refute the be complied with in good faith.
Association, on the other hand, is a veracity of these affidavits. Unilateral changes or suspensions in
duly registered labor organization the implementation of the provisions
acting as the sole and exclusive The retired employees of petitioner of the CBA, therefore, cannot be
bargaining agent of all rank-and-file have nothing to lose or gain in this allowed without the consent of both
faculty and staff employees of case as they have already received parties.
petitioner. their retirement benefits. Thus, they
have no reason to perjure themselves.
Obviously, the only reason they
executed those affidavits is to bring Petitioner cannot, without the
The parties signed a 5-year CBA out the truth. As we see it then, their consent of respondent, eliminate the
effective June 1, 2003 until May 31, affidavits, corroborated by the two-retirement policy and
2008. affidavits of incumbent employees, implement a one-retirement policy
are more than sufficient to show that as this would violate the rule on
On August 16, 2005, petitioner issued a the granting of two retirement non-diminution of benefits.
Memorandum providing guidelines on benefits to retiring employees had
the implementation of vacation and already ripened into a consistent and
sick leave credits as well as vacation deliberate practice.
leave commutation. The Non-Diminution Rule found in
Besides, any doubt in the Article 10039 of the Labor Code
interpretation of the provisions of explicitly prohibits employers from
the CBA should be resolved in favor eliminating or reducing the benefits
Petitioner argues that there is only one of respondent. In fact, petitioner’s received by their employees. This
retirement plan as the CBA Retirement assertion is negated by the rule, however, applies only if the
Plan and the PERAA Plan are one and benefit is based on an express
announcement it made during the
the same maintaining that there is no LMC Meeting regarding its plan of policy, a written contract, or has
established company practice or policy implementing a "one-retirement ripened into a practice. To be
of giving two retirement benefits to its plan." For if it were true that considered a practice, it must be
employees.
petitioner was already implementing consistently and deliberately made
a one-retirement policy, there would by the employer over a long period
The petitioner insists that these were of time.
have been no need for such
done by mere oversight or mistake as
announcement. Equally damaging is
there is no Board Resolution
the letter-memorandum45 dated May An exception to the rule is when
authorizing their release and since these
Atok Big Wedge CO. Inc. v. Atok-big
Wedge Mutual Benefit
Sevilla Trading Co. v. Semana For two to three years prior to 1999,
petitioner Sevilla Trading Company
( S e v i l l a Tr a d i n g ) a d o m e s t i c
corporation engaged in trading
business, organized and existing under
Philippine laws, added to the base
figure, in its computation of the 13th-
month pay of its employees, the
amount of other benefits received by
the employees which are beyond the
basic pay.
Petitioner claimed that it entrusted the
preparation of the payroll to its office
staff, including the computation and
payment of the 13th-month pay and
other benefits. When it changed its
person in charge of the payroll in the
process of computerizing its payroll,
and after audit was conducted, it
allegedly discovered the error of
including non-basic pay or other
benefits in the base figure used in the
computation of the 13th-month pay of
its employees. It cited the Rules and
Regulations Implementing P.D. No.
851 (13th-Month Pay Law), effective
December 22, 1975, Sec. 2(b).
Now excluded from the base figure
used in the computation of the 13th-
month pay are the following: (a)
Overtime premium for regular
overtime, legal and special holidays;
(b) Legal holiday pay, premium pay for
special holidays; (c) Night premium;
(d) Bereavement leave pay; (e) Union
leave pay; (f) Maternity leave pay; (g)
Paternity leave pay; (h) Company
vacation and sick leave pay; and (i)
Cash conversion of unused vacation/ There is no reason for any mistake in
sick leave.
The Suprem Court find the decision Any benefit and supplement being
of A.V.A. Semana to be sound, valid, enjoyed by the employees cannot be
and in accord with law and reduced, diminished, discontinued or
jurisprudence. eliminated by the employer, by virtue
of Sec. 10 of the Rules and
A.V.A. Semana is correct in holding Regulations Implementing P.D. No.
that petitioner’s stance of mistake or 851, and Art. 100 of the Labor Code
error in the computation of the of the Philippines which prohibit the
thirteenth month pay is diminution or elimination by the
employer of the employees’ existing
u n m e r i t o r i o u s . P e t i t i o n e r ’s
submission of financial statements benefits.
every year requires the services of a
certified public accountant to audit
its finances. It is quite impossible to
suggest that they have discovered the
alleged error in the payroll only in
1999. This implies that in previous
years it does not know its cost of
labor and operations. This is merely
basic cost accounting. Also,
petitioner failed to adduce any other
relevant evidence to support its
contention. Aside from its bare claim
of mistake or error in the
computation of the thirteenth month
pay, petitioner merely appended to its
petition a copy of the 1997-2002
CBA and an alleged "corrected"
computation of the 13th-month pay.
There was no explanation whatsoever
why its inclusion of non-basic
benefits in the base figure in the
computation of their 13th-month pay
in the prior years was made by
mistake, despite the clarity of statute
and jurisprudence at that time.
the construction or application of the
law. When petitioner Sevilla Trading
Royal Plant Workers Union v. Coca-
Cola Bottlers Philippines, Inc. - Cebu
Plant
Petitioner Coca-Cola Bottlers
Philippines, Inc. (CCBPI) is a domestic
corporation engaged in the
manufacture, sale and distribution of
softdrink products. It has several
bottling plants all over the country, one
of which is located in Cebu City. Under
the employ of each bottling plant are
bottling operators. In the case of the
plant in Cebu City, there
are 20 bottling operators who work for
its Bottling Line 1 while there are
12-14 bottling operators who man its
Bottling Line 2. All of them are male
and they are members of herein
respondent Royal Plant Workers Union
(ROPWU). The bottling operators work
in two shifts. In September 2008 and
up to the present, the rotation has
changed and bottling operators are now
given a 30-minute break after one and
one half (1 1/2) hours of work. In 1974,
the bottling operators of then Bottling
Line 2 were provided with chairs upon
their request. In 1988, the bottling
operators of then Bottling Line 1
followed suit and asked to be provided
also with chairs. Their request was
likewise granted. Sometime in
September 2008, the chairs provided
for the operators were removed
pursuant to a national directive of
petitioner. This directive is in line with
the “I Operate, I Maintain, I Clean”
program of
petitioner for bottling operators,
wherein every bottling operator is
given the responsibility to keep the
machinery and equipment assigned to
him clean and safe. The program
reinforces the task of bottling operators
to constantly move about in the
performance of their duties and
responsibilities. With this task of
moving constantly to check on the
The removal of the bottling The operators’ chairs cannot be
operators’ chairs from CCBPI’s considered as one of the employee
production/manufacturing lines a benefits covered in Article 100 of the
valid exercise of management Labor Code. In the Court’s view, the
prerogative. The Court has held that term “benefits” mentioned in the non-
management is free to regulate, diminution rule refers to monetary
according to its own discretion and benefits or privileges given to the
judgment, all employee with monetary equivalents.
aspects of employment, including Such benefits or privileges form part
hiring, work assignments, working of the employees’ wage, salary or
methods, time, place, and manner of compensation making them
work, processes to be followed, enforceable obligations.
supervision of workers, working
regulations, transfer of employees,
work supervision,
lay-off of workers, and discipline,
dismissal and recall of workers. The
exercise of management prerogative,
however, is not absolute as it must be
exercised in good faith and with due
regard to the rights of labor. In the
present controversy, it cannot be
denied that 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. The
chairs were not removed
indiscriminately. They were carefully
studied with due regard to the
welfare of the members of the Union.
The removal of the chairs was
compensated by: a) a reduction of the
operating hours of the bottling
operators from a two-and-one-half (2
1/2)-hour rotation period to a one-
and-a-half (1 1/2) hour rotation
period; and b) an increase of the
break period from 15 to 30 minutes
between rotations. Apparently, the
decision to remove the chairs was
done with good intentions as CCBPI
Supreme Steel Corp. v. NMS-IND-
APL
Republic Planters Bank v. NLRC
Petitioner Supreme Steel Pipe
Corporation is a domestic corporation
engaged in the business of
manufacturing steel pipes for domestic
and foreign markets. Respondent
Nagkakaisang Manggagawa ng
Supreme Independent Union is the
certified bargaining agent of petitioner's
rank-and-file employees.
On July 27, 2005, respondent filed a
notice of strike with the National
Conciliation and Mediation Board
(NCMB) on the ground that petitioner
violated certain provisions of the CBA.
The parties failed to settle their dispute.
Consequently, the Secretary of Labor
certified the case to the NLRC for
compulsory arbitration pursuant to
Article 263(g) of the Labor Code.
Respondent alleged eleven CBA
violations, enumerated as follows: (1)
denial to four employees of the CBA-
provided wage increase, (2)
contracting-out labor, (3) failure to
provide shuttle service, (4) refusal to
answer for medical expenses incurred
by three employees, (5) failure to
comply with time-off provision, (6)
visitors free access to company
premises, (7) failure to comply with
reporting time-off provision, (8)
dismissal of an employee supposedly
due to disease, (9) denial of paternity
leave benefit to two employees, (10)
discrimination and harassment, and
(11) non-implementation of COLA in
Wage Order Nos. RBIII-10 and 11
No. There is no diminution of
benefits.
There is also no basis in enjoining
petitioner to implement Wage Order
No. RBIII-11 across the board.
Similarly, no proof was presented
showing that the implementation of
wage orders across the board has
ripened into a company practice. In
the same way that we required
petitioner to prove the existence of a
company practice when it alleged the
same as defense, at this instance, we
also require respondent to show
proof of the company practice as it is
now the party claiming its existence.
Absent any proof of specific,
repetitive conduct that might
constitute evidence of the practice,
we cannot give credence to
respondent's claim. The isolated act
of implementing a wage order across
the board can hardly be considered a
company practice,71 more so when
such implementation was
erroneously made.
The implementation of the COLA
under Wage Order No. RBIII-10
across the board, which only lasted for
less than a year, cannot be considered
as having been practiced "over a long
period of time." While it is true that
jurisprudence has not laid down any
rule requiring a specific minimum
number of years in order for a practice
to be considered as a voluntary act of
t h e e m p l o y e r, u n d e r e x i s t i n g
jurisprudence on this matter, an act
carried out within less than a year
would certainly not qualify as such.
Hence, the withdrawal of the COLA
Wage Order No. RBIII-10 from the
salaries of non-minimum wage
earners did not amount to a
"diminution of benefits" under the
law.
Globe Mackay Cable and Radio Corp. Wage Order No. 6, which took effect
v. NLRC on 30 October 1984, increased the cost-
of-living allowance of non-agricultural
workers in the private sector. Petitioner
corporation complied with the said
Wage Order by paying its monthly-paid
employees the mandated P3.00 per day
COLA. However, in computing said
COLA, Petitioner Corporation
multiplied the P 3.00 daily COLA by
22 days, which is the number of
working days in the company.
Respondent Union disagreed with the
computation of the monthly COLA
claiming that the daily COLA rate of
P3.00 should be multiplied by 30 days
to arrive at the monthly COLA rate.
The union alleged furthermore that
prior to the effectivity of Wage Order
No. 6, Petitioner Corporation had been
computing and paying the monthly
COLA on the basis of thirty (30) days
per month and that this constituted an
employer practice, which should not be
unilaterally withdrawn.
The Union filed a complaint against
Petitioner Corporation, its President, F.
White, and Vice-President, J. Santiago,
for illegal deduction, underpayment,
unpaid allowances, and violation of
Wage Order No. 6. Petitioners White
and Santiago were sought to be held
personally liable for the money claims
thus demanded.
Section 5. Allowance for Unworked ART. 100. Prohibition against
Days. elimination or diminution of
benefits.--Nothing in this Book shall
All covered employees shall be be construed to eliminate or in any
entitled to their daily living way diminish supplements, or other
allowance during the days that they employee benefits being enjoyed at the
are paid their basic wage, even if time of promulgation of this Code.
unworked. (Emphasis supplied)
The primordial consideration,
therefore, for entitlement to COLA is
that basic wage is being paid. In
other words, the payment of COLA is
mandated only for the days that the
employees are paid their basic wage,
even if said days are unworked. So
that, on the days that employees are
not paid their basic wage, the
payment of COLA is not mandated.
Applied to monthly-paid employees
if their monthly salary covers all the
days in a month, they are deemed
paid their basic wages for all those
days and they should be entitled to
their COLA on those days "even if
unworked," as the NLRC had opined.
Peculiar to this case, however, is the
circumstance that pursuant to the
Collective Bargaining Agreement
(CBA) between Petitioner
Corporation and Respondent Union,
the monthly basic pay is computed
on the basis of five (5) days a week,
or twenty two (22) days a month. The
CBA is the law between the parties
and, if not acceptable, can be the
subject of future re-negotiation.
2) Payment in full by Petitioner
Corporation of the COLA before the
execution of the CBA in 1982 and in
compliance with Wage Orders Nos. 1
(26 March 1981) to 5 (11 June 1984),
 Gan v. Galderma On February 9, 2001, petitioner Nelson B.
Gan (Gan) was hired by Galderma as
Product Manager for its Consumer
Products Division to handle the marketing
o f C B P L . Wi t h h i s s a t i s f a c t o r y
performance during the first year, Gan was
acknowledged and rewarded by Galderma
through positive performance appraisal,
salary and benefits increases, and informal
notations on his marketing reports
Three months passed, on July 25, 2002,
Gan filed a Complaint for illegal
constructive dismissal, full backwages,
separation pay, damages, attorneys fees,
and cost of suit against respondents
Galderma and Veneracion.
North Davao Mining Corp. v. NLRC
Gan was not constructively dismissed. The test of constructive dismissal is
whether a reasonable person in the
To begin with, constructive dismissal is employee's position would have felt
defined as quitting or cessation of work compelled to give up his employment/
because continued employment is position under the circumstances
rendered impossible, unreasonable or
unlikely; when there is a demotion in
rank or a diminution of pay and other
benefits. It exists if an act of clear
discrimination, insensibility, or disdain
by an employer becomes so unbearable
on the part of the employee that it could
foreclose any choice by him except to
forego his continued employment. There
is involuntary resignation due to the
harsh, hostile, and unfavorable
conditions set by the employer. The test
of constructive dismissal is whether a
reasonable person in the employee's
position would have felt compelled to
give up his employment/position under
the circumstances
On the other hand, "resignation is the
voluntary act of an employee who is in a
situation where one believes that
personal reasons cannot be sacrificed in
favor of the exigency of the service, and
one has no other choice but to dissociate
oneself from employment.
Since Gan submitted a resignation letter,
it is incumbent upon him to prove with
clear, positive, and convincing evidence
that his resignation was not voluntary but
was actually a case of constructive
dismissal; that it is a product of coercion
or intimidation.
 Aguanza v. Asian Terminal
Netlink Computer Incorporated v.
Delmo
Aguanza, a crane operator alleged
diminution of pay. The lower court held
that the fixed overtime of 16 hours, out-
of-port allowance and meal allowance
previously granted to Aguanza were
merely supplements or employment
benefits given under a certain
condition, i.e., if Aguanza will be
temporarily assigned out-of-port. It is
not fixed and is contingent or
dependent of Aguanza's out-of-port
reassignment. Hence, it is not made
part of the wage or compensation.
In 1991, Netlink hired Eric Delmo as
account manager tasked to canvass and
source clients and convince them to
purchase the products and services of
Netlink. Delmo worked in the field most of
the time. He and his fellow account
managers were not required to accomplish
time cards to record their personal presence
in the office. Delmo was able to generate
sales worth of P35m, more or less, from
which he earned commissions amounting to
almost P993,558.89 and $7,588.30. Later
on Netlink issued several memoranda
detailing his supposed infractions of the
company’s attendance policy. Despite the
memoranda, Delmo continued to generate
huge sales for Netlink. Despite Delmo’s
sales performance he was illegally and
unjustly dismissed. NLRC and CA ruled in
favor of Delmo.
The circumstances of the case made The transfer of an employee may
no mention of the salary structure in constitute constructive dismissal
case Bismark IV being assigned "when continued employment is
work outside of Bataan; however, we rendered impossible, unreasonable or
surmise that it would not be any unlikely; when there is a demotion in
different from the salary structure rank and/or a diminution in pay; or
applied for work done out-of- when a clear discrimination,
port.We, thus, agree with the insensibility or disdain by an
appellate court when they stated that employer becomes unbearable to the
the fixed overtime of 16 hours, out- employee."
of-port allowance and meal
allowance previously granted to
Aguanza were merely supplements or
employment benefits given on
condition that Aguanza's assignment
was out-of-port.The fixed overtime
and allowances were not part of
Aguanza's basic salary.Aguanza's
basic salary was not reduced; hence,
there was no violation of the rule
against diminution of pay.
There was no written contract ARTICLE 102. Forms of Payment.
between Netlink and Delmo • No employer shall pay the wages of
s t i p u l a t i n g t h a t t h e l a t t e r ’s an employee by means of promissory
commissions would be paid in US notes, vouchers, coupons, tokens, -
dollars. The absence of the ckets, chits or any object other than
contractual stipulation legal tender, even when expressly
notwithstanding, Netlink was still requested by the employee.
liable to pay Delmo in US dollars
because the practice of paying its
sales agents in US dollars for their
US dollar-denominated sales had
become a company policy.
Republic v. Peralta The Republic of the Philippines seeks the
review on certiorari of Civil Case No.
108395 entitled “In the Matter of Voluntary
I n s o l v e n c y o f Q u a l i t y To b a c c o
Corporation, Petitioner”. RTC held that
claims of the Unions for separation pay of
their respective members embodied in final
awards by the NLRC were to be preferred
over the claims of the Bureau of Customs
and BIR on the ground of Article 110 of the
Labor Code. OSG seeks reversal and
argues Article 110 does not apply to
separation pay but instead speaks of wages.
Yes, separation pay is included in the Termination or separation pay is
term “wages”. In Philippine reasonably regarded as forming part of the
Commercial and Industrial Bank (PCIB) remuneration or other money benefits
vs. National Mines and Allied Workers accruing to employees or workers by
Union, the Solicitor General took a reason of their having previously rendered
different view and there urged that the services to their employer; as such, they
term “wages” under Article 110 of the fall within the scope of “renumeration or
Labor Code may be regarded as earnings for services rendered to be
embracing within its scope severance rendered.”
pay or termination or separation pay.In
PCIB, this Court agreed with the position
advanced by the OSG. We see no reason
for overturning this particular position.
We continue to believe that, for the
specific purpose of Article 110 and in the
context of insolvency, termination or
separation pay is reasonably regarded as
forming part of the remuneration or other
money benefits accruing to employees or
workers by reason of their having
previously rendered services to their
employer; as such, they fall within the
scope of “remuneration or earnings for
services rendered or to be rendered.”
DBP v. NLRC Joselito Albay, one of the
employees dismissed filed a complaint
before the National Labor Relations
Commission (NLRC) against LIRAG
for illegal dismissal (Case No.
2-2090-82). LAND, on behalf of 180
dismissed members, also filed a
Complaint against LIRAG seeking
separation pay, 13th month pay,
gratuity pay, sick leave and vacation
leave pay and emergency allowance
(Case No. 3-2581-82). These two cases
were consolidated and jointly heard by
the NLRC. Said complainants have
since been joined by supervisors and
managers.
Because of its impact on the A preference of credit bestows upon
entire system of credit, Article 110 of the preferred creditor an advantage of
the Labor Code cannot be viewed in having his credit satisfied first ahead
isolation but must be read in relation of other claims which may be
to the Civil Code scheme on established against the debtor.
classification and preference of Logically, it becomes material only
credits. when the properties and assets of the
debtors are insufficient to pay his
In the event of insolvency, a debts in full
principal objective should be to
effect an equitable distribution of the
insolvent's property among his
creditors. To accomplish this there
must first be some proceeding where
notice to all of the insolvents's
creditors may be given and where the
claims of preferred creditors may be
bindingly adjudicated (De Barretto
vs. Villanueva, No. L-14938,
December 29, 1962, 6 SCRA 928).
A distinction should be made
between a preference of credit and a
lien. A preference applies only to
claims which do not attach to specific
properties. A lien creates a charge on
a particular property. The right of
first preference as regards unpaid
wages recognized by Article 110
does not constitute a lien on the
property of the insolvent debtor in
favor of workers. It is but a
preference of credit in their favor, a
preference in application. It is a
method adopted to determine and
specify the order in which credits
should be paid in the final
distribution of the proceeds of the
insolvent's assets. It is a right to a
first preference in the discharge of
the funds of the judgment debtor.
The DBP anchors its claim
on a mortgage credit. A mortgage
directly and immediately subjects the
Deoferio v. Intel Technology
Philippines, INC.
Deoferio employed by Intel, then
reassigned to US. Repatriated after
being confined for major depression
with psychosis.
He underwent a series of medical and
psychiatric treatment at Intel’s expense.
After several consultations, Dr. Lee
(consultant psychiatrist at PGH) issued
a report concluding that Deoferio’s
psychotic symptoms are not curable
within a period of six months and will
negatively affect his work and social
relations with his co-workers.
Deoferio filed for illegal dismissal.
Intel had authorized cause to dismiss
Deoferio from employment. The
present case involves termination due
to disease, authorized cause under
Article 284 of the Labor Code.
Deoferio not entitled to salary
differential, backwages, separation
pay. Deoferio's claim for salary
differential is already barred by
prescription. Under Article 291 of the
Labor Code, all money claims arising
from employer-employee relations
shall be filed within three years from
the time the cause of action accrued.
In the current case, more than four
years have elapsed from the pre-
termination of his assignment to the
United States until the filing of his
complaint against the respondents.
The Court sees no point in further
discussing this matter. His claim for
backwages, separation pay, moral
and exemplary damages, as well as
attorney's fees must also necessarily
fail as a consequence of the Court’s
finding that his dismissal was for an
authorized cause and that the
respondents acted in good faith when
they terminated his services.
Milan v. NLRC Employees Milan, et al. were previously The Supreme Court held that An employer is allowed to withhold
allowed to occupy SMI Village a property requiring clearance before the release terminal pay and benefits pending the
that was owned by Solid Mills, which was of last payments to the employee is a employee’s return of its properties.
“out of liberality and for the convenience of
standard procedure among
its employees and on the condition that theemployers. Clearance procedures are
employees would vacate the premises
anytime the Company deems fit.” instituted to ensure that the properties
belonging to the employer but are in
Solid Mills ceased its operations due to the possession of the separated
serious business losses. They subsequently employee are returned.
asked their employees to sign a
memorandum of agreement with release As a general rule, employers are
and quitclaim before their vacation and sickprohibited from withholding wages
leave benefits, 13th month pay, and and the Labor COde also prohibits
separation pay would be released. Those the elimination or diminution of
who signed the memorandum of agreement benefits. However, the return of the
were considered to have agreed to vacate property owned by their employer
SMI Village and to the demolition of the
constructed houses as a condition for the Solid Mills became an obligation or
release of their termination benefits and liability on the part of the employee
separation pay. when the employer-employee
relationship ceased. Thus, respondent
Petitioners refused to sign the documents Solid Mills has the right to withhold
and demanded to be paid. Hence, their petitioners’ wages and benefits
complaint before the Labor Arbiter alleging because of this existing debt or
non-payment. liability
 Portillo v. Lietz, Inc. Portillo was hired by the respondent under There is no causal connection Article 113 of the Civil Code prohibits
the condition that “Portillo will not between the petitioner employees’ wage deductions except in three
e n g a g e i n a n y o t h e r g a i n f u l claim for unpaid wages and the circumstances: (a) in cases where the
employment by yourself or with any respondent employers’ claim for worker is insured with his consent by the
other company either directly or damages for the alleged "Goodwill employer, and the deduction is to
indirectly without written consent of Clause" violation. Portillo’s claim for recompense the employer for the amount
paid by him as premium on the insurance;
[Lietz Inc.]”. Three (3) years thereafter, unpaid salaries did not have anything (b) for union dues, in cases where the
Portillo resigned from Lietz Inc. to do with her alleged violation of the right of the worker or his union to check-
During her exit interview, Portillo employment contract as, in fact, her off has been recognized by the employer
declared that she intended to engage separation from employment is not or authorized in writing by the individual
in business—a rice dealership, selling "rooted" in the alleged contractual worker concerned; and (c) in cases where
rice in wholesale. Portillo’s demands violation. She resigned from her the employer is authorized by law or
from Lietz Inc. for the payment of her employment. She was not dismissed. regulations issued by the Secretary of
remaining salaries and commissions Portillo’s entitlement to the unpaid Labor
went unheeded. Respondent claim that salaries is not even contested. Indeed,
Portillo’s money claims should be Lietz Inc.’s argument about legal
offset for her alleged breach of the compensation necessarily admits that
Goodwill Clause in her employment it owes the money claimed by
contract. Portillo.

The application of compensation in

this case is effectively barred by
Article 113 of the Labor COde which
prohibits wage deduction except in
three instances.
Bluer than Blue Joint Venture v.
Esteban
Almario v. PAL Almario was hired by respondent,
Philippine Airlines, Inc. (PAL), as a Boeing
747 Systems Engineer.
On April 28, 1995, Almario, then about 39
years of age and a Boeing 737 (B-737)
First Officer at PAL, successfully bid for
the higher position of Airbus 300 (A-300)
First Officer. Since said higher position
required additional training, he underwent,
at PAL’s expense, more than five months of
training consisting of ground schooling in
Manila and flight simulation in Melbourne,
Australia.
After completing the training course,
Almario served as A-300 First Officer of
PAL, but after eight months of service as
such or on September 16, 1996, he tendered
his resignation, for "personal reasons”.
The company seeks reimbursment alleging
that the Company invested heavily on his
professional training in the estimated
amount of PHP786,713.00 on the basis that
he continue to serve the Company for a
definite period of time which is
approximately three (3) years or thirty-six
(36) months.
PAL invested for the training of Almario Courts will not allow one party to
to enable him to acquire a higher level of enrich himself at the expense of
s k i l l , p r o f i c i e n c y, o r t e c h n i c a l
competence so that he could efficiently another.
discharge the position of A-300 First
Officer. Given that, PAL expected to
recover the training costs by availing of
Almario’s services for at least three
years. The expectation of PAL was not
fully realized, however, due to Almario’s
resignation after only eight months of
service following the completion of his
training course. He cannot, therefore,
refuse to reimburse the costs of training
without violating the principle of unjust
enrichment.