SSS Employees Association v Court of Appeals
Chester Cabalza recommends his visitors to please
read the original & full text of the case cited. Xie
xie!
SOCIAL SECURITY SYSTEM EMPLOYEES
ASSOCIATION (SSSEA), DIONISION T. BAYLON,
RAMON MODESTO, JUANITO MADURA, REUBEN
ZAMORA, VIRGILIO DE ALDAY, SERGIO ARANETA,
PLACIDO AGUSTIN, VIRGILIO MAGPAYO,
petitioner,
vs.
THE COURT OF APPEALS, SOCIAL SECURITY
SYSTEM (SSS), HON. CEZAR C. PERALEJO, RTC,
BRANCH 98, QUEZON CITY, respondents.
G.R. No. 85279
July 28, 1989
Facts:
On June 11, 1987, the SSS filed with the Regional
Trial Court of Quezon City a complaint for
damages with a prayer for a writ of preliminary
injunction against petitioners, alleging that on
June 9, 1987, the officers and members of SSSEA
staged an illegal strike and baricaded the
entrances to the SSS Building, preventing non-
striking employees from reporting for work and
SSS members from transacting business with the
SSS; that the strike was reported to the Public
Sector Labor - Management Council, which
ordered the strikers to return to work; that the
strikers refused to return to work; and that the
SSS suffered damages as a result of the strike. The
complaint prayed that a writ of preliminary
injunction be issued to enjoin the strike and that
the strikers be ordered to return to work; that the
defendants (petitioners herein) be ordered to pay
damages; and that the strike be declared illegal.
It appears that the SSSEA went on strike after the
SSS failed to act on the union's demands, which
included: implementation of the provisions of the
old SSS-SSSEA collective bargaining agreement
(CBA) on check-off of union dues; payment of
accrued overtime pay, night differential pay and
holiday pay; conversion of temporary or
contractual employees with six (6) months or
more of service into regular and permanent
employees and their entitlement to the same
salaries, allowances and benefits given to other
regular employees of the SSS; and payment of the
children's allowance of P30.00, and after the SSS
deducted certain amounts from the salaries of the
employees and allegedly committed acts of
discrimination and unfair labor practices.
Issue:
Whether or not employees of the Social Security
System (SSS) have the right to strike.
Held:
The 1987 Constitution, in the Article on Social
Justice and Human Rights, provides that the State
"shall guarantee the rights of all workers to self-
organization, collective bargaining and
negotiations, and peaceful concerted activities,
including the right to strike in accordance with
law" [Art. XIII, Sec. 31].
Resort to the intent of the framers of the organic
law becomes helpful in understanding the
meaning of these provisions. A reading of the
proceedings of the Constitutional Commission that
drafted the 1987 Constitution would show that in
recognizing the right of government employees to
organize, the commissioners intended to limit the
right to the formation of unions or associations
only, without including the right to strike.
Considering that under the 1987 Constitution "the
civil service embraces all branches, subdivisions,
instrumentalities, and agencies of the
Government, including government-owned or
controlled corporations with original charters"
[Art. IX(B), Sec. .2(l) see also Sec. 1 of E.O. No. 180
where the employees in the civil service are
denominated as "government employees"] and
that the SSS is one such government-controlled
corporation with an original charter, having been
created under R.A. No. 1161, its employees are
part of the civil service [NASECO v. NLRC, G.R. Nos.
69870 & 70295, November 24,1988] and are
covered by the Civil Service Commission's
memorandum prohibiting strikes. This being the
case, the strike staged by the employees of the
SSS was illegal.
LUMANTA V NLRC
Luz Lumanta with 54 other retrenched employees, filed
a complaint for unpaid retrenchment or separation pay
against private Food Terminal, Inc. (“FTI”) with the
Department of Labor and Employment.
The complaint was later amended to include charges of
underpayment of wages and non-payment of
emergency cost of living allowances (ECOLA).
FTI moved to dismiss the complaint on the ground
of lack of jurisdiction.
It argued that being a government-owned and
controlled corporation, its employees are governed by
the Civil Service Law not by the Labor Code, and that
claims arising from employment fall within the
jurisdiction of the Civil Service Commission and not the
Department of Labor and Employment.
The petitioners opposed the Motion to Dismiss
contending that:
Although FTI is a corporation owned and controlled by
the government, it has still the marks of a private
corporation:
it directly hires its employees without seeking approval
from the Civil Service Commission and its personnel
are covered by the Social Security System and not the
Government Service Insurance System.
Petitioners also argued that being a government-owned
and controlled corporation without original charter,
private respondent FTI clearly falls outside the scope of
the civil service as marked out in Section 2 (1), Article
IX of the 1987 Constitution.
ISSUE: Whether or not a labor law claim against a
government-owned and controlled corporation, such as
private respondent FTI, falls within the jurisdiction of the
Department of Labor and Employment
HELD:
Labor Arbiter Isabel P. Oritiguerra issued an Order,
the dispositive part of which read:
“On account of the above findings the instant case is
governed by the Civil Service Law. The case at bar
lies outside the jurisdictional competence of this Office.
DISMISSED for lack of jurisdiction of this Office to hear
and decide the case.
NLRC: affirmed on appeal the order of the Labor
Arbiter and dismissed the petitioners’ appeal for lack of
merit.
SC:
The Court, in National Service Corporation (NASECO)
v. National Labor Relations Commission, quoting
extensively from the deliberations of the 1986
Constitutional Commission in respect of the intent and
meaning of the new phrase “with original charter,” in
effect held that government-owned and controlled
corporations with original charter refer to corporations
chartered by special law as distinguished from
corporations organized under our general incorporation
statute—the Corporation Code. In NASECO, the
company involved had been organized under the
general incorporation statute and was a subsidiary of
the National Investment Development Corporation
(NIDC) which in turn was a subsidiary of the Philippine
National Bank, a bank chartered by a special statute.
Thus, government-owned or controlled corporations like
NASECO are effectively excluded from the scope of the
Civil Service.
Letter of Instruction No. 1013, included Food
Terminal, Inc. in the category of “government-owned or
controlled corporations.” Since then, FTI served as the
marketing arm of the National Grains Authority (now
known as the National Food Authority). The pleadings
show that FTI was previously a privately owned
enterprise, created and organized under the general
incorporation law, with the corporate name “Greater
Manila Food Terminal Market, Inc.”
The record does not indicate the precise amount of the
capital stock of FTI that is owned by the government;
the petitioners’ claim, and this has not been disputed,
that FTI is not hundred percent (100%) government-
owned and that
shareholders.
We conclude that because respondent FTI is
government-owned and controlled corporation without
original charter, it is the Department of Labor and
Employment, and not the Civil Service Commission,
which has jurisdiction over the dispute arising from
employment of the petitioners with private respondent
FTI, and that consequently, the terms and conditions of
such employment are governed by the Labor Code and
not by the Civil Service Rules and Regulations.
PAPER INDUSTRIES CORP VS LAGUESMA
Topic: Managerial Employees
FACTS:
Petitioner Paper Industries Corporation of the
Philippines is engaged in the manufacture of
paper and timber products
PICOP-Bislig instituted a Petition for Certification
Election to determine the sole and exclusive
bargaining agent of the supervisory and technical
staff employees of PICOP for collective bargaining
agreement (CBA) purposes.
Initial hearing was set. Paper Industries Corp failed
to file any comment or position paper.
Meanwhile, private respondents Federation of
Free Workers (FFW) and Associated Labor Union
(ALU) filed their respective petitions for
intervention.
An Order was issued granting the petitions for
interventions of the FFW and ALU. Another Order
issued on the same day set the holding of a
certification election among PICOP's supervisory
and technical staff employees in with four choices,
namely: (1) PICOP Bislig Union; (2) FFW; (3) ALU;
and (4) no union.
Paper Industries Corp appealed the Order which
set the holding of the certification election
contending that the Med-Arbiter committed grave
abuse of discretion in deciding the case without
giving the corporation the opportunity to file its
comments/answer, and that PICOP-Bislig Union
had no personality to file the petition for
certification election.
PICOP questioned and objected to the inclusion
of some section heads and supervisors in the list
of voters whose positions it averred were
reclassified as managerial employees in the light
of the reorganization effected by it.
PICOP’s contention: the company was divided
into four (4) main business groups, namely: Paper
Products Business, Timber Products Business,
Forest Resource Business and Support Services
Business. A vice- president or assistant vice-
president heads each of these business groups.
A division manager heads the divisions comprising
each business group. A department
manager heads the departments comprising each
division. Section heads and supervisors, now
called section managers and unit managers, head
the sections and independent units, respectively,
comprising each department. PICOP advanced the
view that considering the alleged present
authority of these section managers and unit
managers to hire and fire, they are classified as
managerial employees, and hence, ineligible to
form or join any labor organization.
Med-Arbiter ruling: supervisors and section heads
of the petitioner are managerial employees and
therefore excluded from the list of voters for
purposes of certification election.
DOLE Under Sec Laguesma: issued an order
declaring that the subject supervisors and section
heads are supervisory employees eligible to vote
in the certification election.
ISSUE: W/N the positions Section Heads and
Supervisors, who have been designated as Section
Managers and Unit Managers, were converted to
managerial employees under the decentralization
and reorganization program
RULING: No, they are not managerial employees
RATIO: A thorough dissection of the job
description of the concerned supervisory
employees and section heads indisputably show
that they are not actually managerial but only
supervisory employees since they do not lay down
company policies. PICOP's contention that the
subject section heads and unit managers exercise
the authority to hire and fire is ambiguous and
quite misleading for the reason that any authority
they exercise is not supreme but merely advisory
in character. Theirs is not a final determination of
the company policies inasmuch as any action
taken by them on matters relative to hiring,
promotion, transfer, suspension and termination
of employees is still subject to confirmation and
approval by their respective superior. Thus, where
such power, which is in effect recommendatory in
character, is subject to evaluation, review and
final action by the department heads and other
higher executives of the company, the same,
although present, is not effective and not an
exercise of independent judgment as required by
law.
DISPOSITIVE: Under Sec. Laguesma was correct.
The members of the labor unions won.
DOCTRINE: Managerial employees are ranked as
Top Managers, Middle Managers and First Line
Managers. Top and Middle Managers have the
authority to devise, implement and control
strategic and operational policies while the task of
First-Line Managers is simply to ensure that such
policies are carried out by the rank-and- file
employees of an organization. Under this
distinction, "managerial employees" therefore fall
in two (2) categories, namely, the "managers" per
se composed of Top and Middle Managers, and
the "supervisors" composed of First-Line
Managers. Thus, the mere fact that an employee
is designated manager" does not ipso facto make
him one. Designation should be reconciled with
the actual job description of the employee, for it is
the job description that determines the nature of
employment.
National Sugar Refineries Corp v NLRC (220 SCRA
452) 1993
It is the submission of petitioner that while the
members of respondent union, as supervisors,
may not be occupying managerial positions, they
are clearly officers or members of the managerial
staff because they meet all the conditions
prescribed by law and, hence, they are not
entitled to overtime, rest day and supervisory
employees under Article 212 (m) should be made
to apply only to the provisions on Labor Relations,
while the right of said employees to the
questioned benefits should be considered in the
light of the meaning of a managerial employee
and of the officers or members of the managerial
staff, as contemplated under Article 82 of the
Code and Section 2, Rule I Book III of the
implementing rules.
1)         In other words, for purposes of forming
and joining unions, certification elections,
collective bargaining, and so forth, the union
members are supervisory employees.
2)         In terms of working conditions and rest
periods and entitlement to the questioned
benefits, however, they are officers or members
of the managerial staff, hence they are not
entitled thereto.
 
Paper Industries Corporation of the Philippines v.
Laguesma (330 SCRA 295) 2000
HELD: United Pepsi cola ruling was adopted here: 
“Managerial employees are ranked as Top
managers, Middle managers and First Line
Managers. Top and Middle Managers have the
authority to devise, implement and control
strategic and operational policies while the task of
First-Line Managers is simply to ensure that such
policies are carried out by the rank-and-file
employees of an organization.
Under this distinction, “managerial employees”
therefore fall in two (2) categories, namely,
--          the “managers” per se composed of Top
and Middle Managers, and the
--          “supervisors” composed of First-Line
Managers.
Thus, the mere fact that an employee is
designated “manager” does not ipso facto make
him one. Designation should be reconciled with
the actual job description of the employee, for it is
the JOB DESCRIPTION that determines the nature
of employment.”
“In this case, a thorough dissection of the job
description of the concerned supervisory
employees and section heads indisputably show
that they are NOT actually managerial employees
BUT ONLY supervisory employees SINCE THEY DO
NOT LAY DOWN COMPANY POLICIES.”
“PICOP’s contention that the subject section
heads and managers exercise the authority to hire
and fire is ambiguous and quiet misleading for the
reason that any authority they exercise is NOT
SUPREME but merely ADVISORY in character.
Theirs is not a FINAL DETERMINATION of the
company policies inasmuch as any action taken by
them on matters relative to hiring, promotion,
transfer, suspension and termination of
employees is still subject to confirmation and
approval by their respective superior.”
“Thus, where such power, which is in effect
RECOMMENDATORY in character, is SUBJECT TO
EVALUATION, REVIEW, and FINAL ACTION by
department heads and other higher executives of
the company. The same, although present, is not
effective and not an exercise of INDEPENDENT
JUDGMENT as required by law.”
Auto Bus Transport vs Bautista
G.R. No. 156367. May 16, 2005
Facts:
Bautista, a driver-conductor of the Autobus
transport, was dismissed after his failure to pay an
amount demanded by the company for the repair
of the bus damaged in an accident caused by him.
He receives compensation by way of commission
per travel.
Bautista complained for illegal dismissal with
money claims for nonpayment of 13th month pay
and service incentive leave pay against Autobus.
Auto Bus’ Defenses:
1. Bautista’s employment was replete with
offenses involving reckless imprudence,
gross negligence, and dishonesty
supported with copies of letters, memos,
irregularity reports, warrants of arrest;
2. In the exercise of management
prerogative, Bautista was terminated only
after providing for an opportunity to
explain:
Labor Arbiter dismissed the complaint however
awarded Bautista his 13th month pay and service
incentive leave pay.
Auto Bus appealed. NLRC deleted the 13th month
pay award. In the CA, NLRC’s decision was
affirmed.
Issue: Whether or not respondent is entitled to
service incentive leave pay.
Held: Yes.
Under Article 95 of the Labor Code, every
employee who has rendered at least one year or
service shall be entitled to a yearly service
incentive leave of five days with pay. In Section 1,
Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code, the rule shall apply
to all, except… (d) Field personnel and other
employees whose performance is unsupervised by
the employer including those who are engaged on
task or contract basis, purely commission basis, or
those who are paid in a fixed amount for
performing work irrespective of the time
consumed in the performance thereof.
Petitioner’s contention that Bautista is not
entitled to service incentive leave because he is
paid on a purely commission basis must fail. The
phrase following “Field personnel” should not be
construed as a separate classification of
employees but is merely an amplification of the
definition of field personnel defined under the
Labor Code.
Bautista neither falls under the category field
personnel. As defined, field personnel are those
whose performance of service is unsupervised by
the employer, the workplace being away from the
principal place of business and whose hours and
days of work cannot be determined with
reasonable certainty. Bus companies have ways of
determining the hours worked by their drivers and
conductors with reasonable certainty. The courts
have taken judicial notice of the following:
1. Along the routes traveled, there are
inspectors assigned at strategic places who
board the bus to inspect the passengers,
the punched tickets, and the conductor’s
reports;
2. There is a mandatory once-a week car barn
or shop day, where the bus is regularly
checked;
3. The drivers and conductors must be at
specified place and time, as they observe
prompt departure and arrival;
4. At every depot, there is always a
dispatcher whose function is to see to it
that the bus and crew leaves and arrives at
the estimated proper time.
By these reasons, drivers and conductors are
therefore under constant supervision while in the
performance of their work.
Union of Filipino Employees v. vivar
Facts:
On November 8, 1985, respondent Filipro, Inc.
(now Nestle Philippines, Inc.) filed with the
National Labor Relations Commission (NLRC) a
petition for claims of its monthly paid employees
for holiday pay.
Abitrator Vivar: Filipro to pay its monthly paid
employees holiday pay pursuant to Art 94 of Labor
Code, subject to exclusions and limitations in Art
82.
Filipro filed a motion for clarification seeking (1)
the limitation of the award 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.
Arbitrator Vivar: On January 14, 1986, the
respondent arbitrator issued an order declaring
that the effectivity of the holiday pay award shall
retroact to November 1, 1974, the date of
effectivity of the Labor Code. He adjudged,
however, that the company’s sales personnel are
field personnel and, as such, are not entitled to
holiday pay. He likewise ruled that with the grant
of 10 days’ holiday pay, the divisor should be
changed from 251 to 261 and ordered the
reimbursement of overpayment for overtime,
night differential, vacation and sick leave pay due
to the use of 251 days as divisor.
Issues:
1) Whether or not Nestle’s sales personnel are
entitled to holiday pay; and
2) Whether or not, concomitant with the award of
holiday pay, the divisor should be changed from
251 to 261 days and whether or not the previous
use of 251 as divisor resulted in overpayment for
overtime, night differential, vacation and sick
leave pay.
Held:
1.  Sales personnel are not entitled to holiday
pay.
Under Article 82, field personnel are not entitled
to holiday pay. Said article defines field personnel
as “non-agritultural employees who regularly
perform their duties away from the principal place
of business or branch office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty.”
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.
Moreover, the requirement that “actual hours of
work in the field cannot be determined with
reasonable certainty” must be read in conjunction
with Rule IV, Book III of the Implementing Rules
which provides:
Rule IV Holidays with Pay
Sec. 1. Coverage — This rule shall apply to all
employees except:
xxx xxx xxx
(e) Field personnel and other employees whose
time and performance is unsupervised by the
employer . . . (Emphasis supplied)
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.
2. The divisor in computing the award of holiday
pay should still be 251 days.
While in that case the issue was whether or not
salesmen were entitled to overtime pay, the same
rationale for their exclusion as field personnel
from holiday pay benefits also applies.
The petitioner union also assails the respondent
arbitrator’s ruling that, concomitant with the
award of holiday pay, the divisor should be
changed from 251 to 261 days to include the
additional 10 holidays and the employees should
reimburse the amounts overpaid by Filipro due to
the use of 251 days’ divisor.
The 251 working days divisor is the result of
subtracting all Saturdays, Sundays and the ten (10)
legal holidays from the total number of calendar
days in a year. If the employees are already paid
for all non-working days, the divisor should be 365
and not 251.
In the petitioner’s case, its computation of daily
ratio since September 1, 1980, is as follows:
monthly rate x 12 months / 251 days
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.
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 for computing the 10 unpaid holidays.
The respondent arbitrator’s order to change the
divisor from 251 to 261 days would result in a
lower daily rate which is violative of the
prohibition on non-diminution of benefits found in
Article 100 of the Labor Code. To maintain the
same daily rate if the divisor is adjusted to 261
days, then the dividend, which represents the
employee’s annual salary, should correspondingly
be increased to incorporate the holiday pay.
To illustrate, if prior to the grant of holiday pay,
the employee’s annual salary is P25,100, then
dividing such figure by 251 days, his daily rate is
P100.00 After the payment of 10 days’ holiday
pay, his annual salary already includes holiday pay
and totals P26,100 (P25,100 + 1,000). Dividing this
by 261 days, the daily rate is still P100.00. There is
thus no merit in respondent Nestle’s claim of
overpayment of overtime and night differential
pay and sick and vacation leave benefits, the
computation of which are all based on the daily
rate, since the daily rate is still the same before
and after the grant of holiday pay.
SC Decision:
The Court thereby resolves that the grant of
holiday pay be effective, not from the date of
promulgation of the Chartered Bank case nor from
the date of effectivity of the Labor Code, but from
October 23, 1984, the date of promulgation of
the IBAA case (Insular Bank of Asia and America
Employees’ Union (IBAAEU) v. Inciong, where the
court declared that Sec 2, Rule IV, Book III of IRR
which excluded monthly paid employees from
holiday pay benefits, are null and void).
WHEREFORE, the order of the voluntary arbitrator
in hereby MODIFIED. The divisor to be used in
computing holiday pay shall be 251 days. The
holiday pay as above directed shall be computed
from October 23, 1984. In all other respects, the
order of the respondent arbitrator is hereby
AFFIRMED.
San Miguel Brewer, Inc. vs. Democratic Labor
Organization, et al.
GR No. L-18353
July 31. 1963
EN BANC | Bautista, J.
Prologue (Principle): The Eight-Hour Labor Law only
applies to employees who are paid on a monthly or daily
basis. Employees who are paid on a piece-work basis
are EXCLUDED.
FACTS:
- Respondent Democratic Labor Assoc. filed a
manifestation claiming for the following against petitioner
SMB: overtime pay, night-shift differential pay, attorney’s
fees. Separation pay, and sick and vacation leave
compensation.
- Judge Bautista ruled that those working outside the
company’s premises are entitled to overtime
compensation, hence, the Eight-Hour Labor Law applies
to them.
- Petitioner filed for an M.R. before the CIR. It was
denied
HENCE THE PETITION
Issue: Whether the Eight-Hour Labor Law applies to
respondent workers.
Held: No
Ratio Decidendi: The Eight-Hour Labor Law only applies
to an employee who is paid on a monthly or daily basis.
This law has no application to employees paid on a
piece-work basis. CIR is wrong to apply the law to the
piece-work employees. According to a ruling by DOLE
on Dec. 9, 1957, field sales personnel receiving monthly
salaries (such as the respondents in this case) are not
subject to the Eight-Hour Labor Law (although they are
paid on a monthly basis, their commission shall be
considered as payment for extra time he renders in
excess of 8 hours).
Additional Issue: Are the claimants who are watchmen
and security guards entitled to extra pay for work done
on Sundays and Holidays?
COURT: They are entitled to such pay as per Comm.
Act No. 444. They shall be entitled to + 25% of their
regular salary.
PETITION: GRANTED: Decision of the CIR, SET
ASIDE.
[Prepared by: Emil Angelo C. Martinez for exclusive use
of Block 3, Labor Standards]
Mercidar Fishing Corporation vs. NLRC, G.R. No.
112574. October 8, 1998; 297 SCRA 440
Posted by Pius Morados on November 10, 2011
(Labor Standards – Fishermen are not  field
personnels, Article 82)
Facts: Private respondent employed as a
“bodegero” or ship’s quartermaster complained of
being constructively dismissed by petitioner
corporation when the latter refused him
assignments aboard its boats after he had
reported to work. The Larbor Arbiter rendered a
decision ordering petitioner corporation to
reinstate complainant with back wages, pay him
his 13th month pay and incentive leave. Petitioner
claims that it cannot be held liable for service
incentive leave pay by fishermen in its employ as
the latter supposedly are “field personnel” and
thus not entitled to such pay under the Labor
Code.
Article 82 of the Labor Code provides among
others that “field personnel” shall refer to non-
agricultural employees who regularly perform
their duties away from the principal place of
business or branch of office of the employer and
whose actual hours of work in the field cannot be
determined with reasonable certainty.
Issue: WON fishermen are considered field
personnel.
Held: No. Although fishermen perform non-
agricultural work away from their employer’s
business offices, the fact remains that throughout
the duration of their work they are under the
effective control and supervision of the employer
through the vessel’s patron or master.
Maraguinot vs. NLCR, Del Rosario & Viva Films
Chester Cabalza recommends his visitors to please
read the original & full text of the case cited. Xie
xie!
ALEJANDRO MARAGUINOT, JR. AND PAUILINO
ENERO v. NLRC, VIC DEL ROSARIO, VIVA FILMS
GR No. 120969
Facts:
Maraguinot and Enero were separately hired by
Vic Del Rosario under Viva Films as part of the
filming crew. Sometime in May 1992, sought the
assistance of their supervisor to facilitate their
request that their salary be adjusted in
accordance with the minimum wage law.
On June 1992, Mrs. Cesario, their supervisor, told
them that Mr. Vic Del Rosario would agree to their
request only if they sign a blank employment
contract. Petitioners refused to sign such
document. After which, the Mr. Enero was forced
to go on leave on the same month and refused to
take him back when he reported for work. Mr.
Maraguinot on the other hand was dropped from
the payroll but was returned days after. He was
again asked to sign a blank employment contract
but when he refused, he was terminated.
Consequently, the petitioners sued for illegal
dismissal before the Labor Arbiter. The private
respondents claim the following: (a) that VIVA
FILMS is the trade name of VIVA PRODUCTIONS,
INC. and that it was primarily engaged in the
distribution & exhibition of movies- but not then
making of movies; (b) That they hire contractors
called “producers” who act as independent
contractors as that of Vic Del Rosario; and (c) As
such, there is no employee-employer relation
between petitioners and private respondents.
The Labor Arbiter held that the complainants are
employees of the private respondents. That the
producers are not independent contractor but
should be considered as labor-only contractors
and as such act as mere agent of the real
employer. Thus, the said employees are illegally
dismissed.
The private respondents appealed to the NLRC
which reversed the decision of the Labor Arbiter
declaring that the complainants were project
employees due to the ff. reasons: (a)
Complainants were hired for specific movie
projects and their employment was co-terminus
with each movie project; (b)The work is
dependent on the availability of projects. As a
result, the total working hours logged extremely
varied; (c) The extremely irregular working days
and hours of complainants work explains the lump
sum payment for their service; and (d) The
respondents alleged that the complainants are not
prohibited from working with other movie
companies whenever they are not working for the
independent movie producers engaged by the
respondents.
A motion for reconsideration was filed by the
complainants but was denied by NLRC. In effect,
they filed an instant petition claiming that NLRC
committed a grave abuse of discretion in: (a)
Finding that petitioners were project employees;
(b) Ruling that petitioners were not illegally
dismissed; and (c) Reversing the decision of the
Labor Arbiter.
In the instant case, the petitioners allege that the
NLRC acted in total disregard of evidence material
or decisive of the controversy.
Issues:
(a) W/N there exist an employee- employer
relationship between the petitioners and the
private respondents.
(b) W/N the private respondents are engaged in
the business of making movies.
(c) W/N the producer is a job contractor.
Held:
There exist an employee- employer relationship
between the petitioners and the private
respondents because of the ff. reasons that
nowhere in the appointment slip does it appear
that it was the producer who hired the crew
members. Moreover, it was VIVA’s corporate
name appearing on heading of the slip. It can
likewise be said that it was VIVA who paid for the
petitioners’ salaries.
Respondents also admit that the petitioners were
part of a work pool wherein they attained the
status of regular employees because of the ff.
requisites: (a) There is a continuous rehiring of
project employees even after cessation of a
project; (b) The tasks performed by the alleged
“project employees” are vital, necessary and
indispensable to the usual business or trade of the
employer; and (c) However, the length of time
which the employees are continually re-hired is
not controlling but merely serves as a badge of
regular employment.
Since the producer and the crew members are
employees of VIVA and that these employees’
works deal with the making of movies. It can be
said that VIVA is engaged of making movies and
not on the mere distribution of such.
The producer is not a job contractor because of
the ff. reasons: (Sec. Rule VII, Book III of the
Omnibus Rules Implementing the Labor Code.)
a. A 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. The said producer has a fix time frame
and budget to make the movies.
b. The contractor should have substantial capital
and materials necessary to conduct his business.
The said producer, Del Rosario, does not have his
own tools, equipment, machinery, work premises
and other materials to make motion pictures. Such
materials were provided by VIVA.
It can be said that the producers are labor-only
contractors. Under Article 106 of the Labor Code
(reworded) where the contractor does not have
the requisites as that of the job contractors.
Tan vs. Lagrama
G.R. No. 151228, August 15, 2002
Facts
 Lagrama works for Tan as painter of
billboards and murals for the motion pictures
shown at the theaters managed by Tan for
more than 10years
 Lagrama was dismissed for having urinated
in his working area
 Lagrama filed a complaint for illegal
dismissal and non payment of benefits
 Tan asserted that Lagrama was an
independent contractor as he was paid in
piece-work basis
Issue
W/N Lagrama is an independent contractor or an
employee of Tan?
Ruling
Lagrama is an employee not an independent
contractor
Applying Four Fold Test
A. Power of Control - Evidence shows that
the Lagrama performed his work as painter
and under the supervision and control of
Tan.
1. Lagrama worked in a
designated work area inside
the theater of Tan for the use
of which petitioner prescribed
rules, which rules included
the observance of cleanliness
and hygeine and prohibition
against urinating in the work
area and any other place
other than rest rooms and
2. Tan's control over Lagrama's
work extended not only the
use of work area but also the
result of Lagrama;s work and
the manner and means by
which the work was to be
accomplished
3. Lagrama is not an
independent contractor
because he did not enjoy
independence and freedom
from the control and
supervision of Tan and he
was subjected to Tan's control
over the means and methods
by which his work is to be
performed and accomplished
         B. Payment of Wages
1. Lagrama worked for Tan on a fixed piece
work basis is of no moment. Payment by
result is a method of compensation and does
not define the essence of the relation.
2. Tat Lagrama was not reported as an
employee to the SSS is not conclusive, on the
question whether he was an employee,
otherwise Tan would be rewarded for his
failure or even neglect to perform his
obligation.
    C. Power of Dismissal – by Tan stating that he
had the right to fire Lagrama, Tan in effect
acknowledged Lagrama to be his employee
    D. Power of Selection and Engagement of
Employees – Tan engaged the services of Lagrama
without the intervention of third party
Chavez vs NLRC, Supreme Packaging Inc, and
Alvin Lee
GR No. 146530 January 17, 2005
Facts:
 The respondent company, Supreme
Packaging Inc., is in the business of
manufacturing cartons and other
packaging materials for export and
distribution.
 The petitioner, Pedro Chavez, was a truck
driver (from October 25, 1984) tasked to
deliver the respondent company’s
products to its various 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.
 On 1992, the petitioner expressed his
desire to avail the benefits that a regular
employee were receiving such as overtime
pay, nightshift differential pay, and
13th month pay, among others but nothing
was complied.
 On February 20, 1995, petitioner filed a
complaint for regularization with the
Regional Arbitration Branch No. III of NLRC
in San Fernando, Pampanga. Before the
case could be heard, respondent
terminated the services of the petitioner.
 Hence, the petitioner filed an amended
complaint for illegal dismissal, unfair labor
practice and non-payment of overtime
pay, nightshift differential, and 13th month
pay, among others.
Issue: Whether there exists an employer-
employee relationship?
Held:
 Yes an employer-employee do exist. The
elements to determine the existence of an
employment relationship are: (1) the
selection and engagement of the
employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the
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
it. First. Undeniably, it was the
respondents who engaged the services of
the petitioner without the intervention of
a third party. Second. Wages are defined
as “remuneration or earnings, however
designated, capable of being expressed in
terms of money, whether fixed or
ascertained on a time, task, piece or
commission basis, or other method of
calculating the same, which is payable by
an employer to an employee under a
written or unwritten contract of
FACTS: Private respondent Dr. Fabros was employed as flight
surgeon at petitioner company. He was assigned at the PAL
Medical Clinic and was on duty from 4:00 in the afternoon until
12:00 midnight.
On Feb.17, 1994, at around 7:00 in the evening, Dr. FAbros left
the clinic to have his dinner at his residence, which was abou t5- panicked and brought the patient to the hospital without
minute drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its
employeeshad suffered a heart attack. The nurse on duty, Mr.
Eusebio, called private respondent at home to inform him of
the emergency. The patient arrived at the clinic at 7:50 in the
evening and Mr. Eusebio immediately rushed him to the
hospital. When Dr. Fabros reached the clinic at around 7:51 in
the evening, Mr. Eusebio had already left with the patient to
the hospital. The patient died the following day.
employment for work done or to be done,
or for service rendered or to be rendered.
The petitioner is paid on a per trip basis is
not significant. This is merely a method of
computing compensation. Third. The
respondent’s power to dismiss the
petitioner was inherent in the fact that
they engaged the services of the petitioner
as truck driver. They exercised this power
by terminating the petitioner’s services
albeit in the guise of severance of
contractual relation due allegedly to the
latter’s breach of his contractual
obligation. Fourth. Compared to an
employee, an independent contractor is
one who carries on a distinct and
independent business and undertakes to
perform the job, work or service on its own
account and under its own responsibility
according to its own manner and method,
free from the control and direction of the
principal in all matters connected with the
performance of the work except as to the
results thereof. Hence while an
independent contractor enjoys
independence and freedom from the
control and supervision of his principal. An
employee is subject to the employer’s
power to control the means and methods
by which the employee’s work is to be
performed and accomplished. A careful
review of the records shows that the latter
performed his work under the
respondents’ supervision and control. The
existence of an employer-employee
relationship cannot be negated by
expressly repudiating it in a contract and
providing therein that the employee is an
independent contractor when the facts
clearly show otherwise. Employment
status is defined by law and not by what
the parties say it should be.
PHILIPPINE AIRLINES vs. NLRC et al G.R. No. 132805
Upon learning about the incident, PAL Medical Director ordered
the Chief Flight Surgeon to conduct an investigation. In his
explanation, Dr. Fabros asserted that he was entitled to a thirty-
minute meal break; that he immediately left his residence upon
being informed by Mr. Eusebio about the emergency and he
arrived at the clinic a few minutes later; that Mr. Eusebio
waiting for him.
Finding private respondent’s explanation unacceptable, the
management charged private respondent with abandonment of
post while on duty. He denied that he abandoned his post on
February 17, 1994. He said that he only left the clinic to have his
dinner at home. In fact, he returned to the clinic at 7:51 in the
evening upon being informed of the emergency.
After evaluating the charge as well as the answer of private
respondent, he was given a suspension for three months
effective December 16, 1994.Private respondent filed a
complaint for illegal suspension against petitioner.On July 16,
1996, the Labor Arbiter rendered a decision declaring the
suspension of private respondent illegal. It also ordered
petitioner to pay private respondent the amount equivalent to
all the benefits he should have received during his period of
suspension plus P500,000.00 moral damages.
ISSUE:
1. WON the nullifying of the 3-month suspension by the
NLRC erroneous.
1. The legality of private respondent’s suspension: Dr. Fabros
left the clinic that night only to have his dinner at his house,
which was only a few minutes’ drive away from the clinic. His
whereabouts were known to the nurse on duty so that he could
be easily reached in case of emergency. Upon being informed of
Mr. Acosta’s condition, private respondent immediately left his
home and returned to the clinic. These facts belie petitioner’s
claim of abandonment. Petitioner argues that being a full-time
employee, private respondent is obliged to stay in the company
premises for not less than eight (8) hours. Hence, he may not
leave the company premises during such time, even to take his
meals. We are not impressed. Art. 83 and 85 of the Labor Code
read: Art. 83. Normal hours of work. — The normal hours of
work of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population
of at least one million (1,000,000) or in hospitals and clinics with
a bed capacity of at least one hundred (100) shall hold regular
office hours for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the exigencies of the
service require that such personnel work for six (6) days or
forty-eight (48) hours, in which case they shall be entitled to an
additional compensation of at least thirty per cent (30%) of
their regular wage for work on the sixth day. For purposes of
this Article, “health personnel” shall include: resident
physicians, nurses, nutritionists, dieticians, pharmacists, social
workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or
clinic personnel. (emphasis supplied) Art. 85. Meal periods. —
Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his
employees not less than sixty (60) minutes time-off for their
regular meals. Sec. 7, Rule I, Book III of the Omnibus Rules
Implementing the Labor Code further states: Sec. 7. Meal and
Rest Periods. — Every employer shall give his employees,
regardless of sex, not less than one (1) hour time-off for regular
PNB V PNB EMPLOYEES ASSOCIATION
115 SCRA 507
July 30, 1982
NATURE
Appeal from decision of the Court of Industrial
Relations (CIR)
FACTS
– PNB and PNB Employees Association (PEMA) had
a dispute regarding the proper computation of
overtime pay. PEMA wanted the cost of living
allowance (granted in 1958) and longevity pay
(granted in 1961) to be included in the
computation. PNB disagreed and the 2 parties
later went before the CIR to resolve the dispute.
– CIR decided in favor of PEMA and held that PNB
should compute the overtime pay of its employees
Petitioner appealed to the NLRC.The NLRC, however, dismissed
the appeal after finding that the decision of the Labor Arbiter is
supported by the facts on record and the law on the matter.
The NLRC likewise denied petitioner’s motion for
reconsideration.
2. WON the awarding of moral damages is proper.
HELD: The petition is PARTIALLY GRANTED. The portion of
the assailed decision awarding moral damages to private
respondent is DELETED. All other aspects of the decision are
AFFIRMED
meals, except in the following cases when a meal period of not
less than twenty (20) minutes may be given by the employer
provided that such shorter meal period is credited as
compensable hours worked of the employee; (a) Where the
work is non-manual work in nature or does not involve
strenuous physical exertion; (b) Where the establishment
regularly operates not less than sixteen hours a day; (c) In cases
of actual or impending emergencies or there is urgent work to
be performed on machineries, equipment or installations to
avoid serious loss which the employer would otherwise suffer;
and (d) Where the work is necessary to prevent serious loss of
perishable goods. Rest periods or coffee breaks running from
five (5) to twenty (20) minutes shall be considered as
compensable working time. Thus, the eight-hour work period
does not include the meal break. Nowhere in the law may it be
inferred that employees must take their meals within the
company premises. Employees are not prohibited from going
out of the premises as long as they return to their posts on
time. Private respondent’s act, therefore, of going home to take
his dinner does not constitute abandonment. 2. The award of
moral damages: Not every employee who is illegally dismissed
or suspended is entitled to damages. As a rule, moral damages
are recoverable only where the dismissal or suspension of the
employee was attended by bad faith or fraud, or constituted an
act oppressive to labor, or was done in a manner contrary to
morals, good customs or public policy In the case at bar, there is
no showing that the management of petitioner company was
moved by some evil motive in suspending private respondent. It
suspended private respondent on an honest, albeit erroneous,
belief that private respondent’s act of leaving the company
premises to take his meal at home constituted abandonment of
post which warrants the penalty of suspension. Under the
circumstances, we hold that private respondent is not entitled
to moral damages.
on the basis of the sum total of the employee’s
basic salary or wage plus cost of living allowance
and longevity pay. The CIR relied on the ruling in
NAWASA v NAWASA Consolidated Unions, which
held that “for purposes of computing overtime
compensation, regular wage includes all payments
which the parties have agreed shall be received
during the work week, including differentiated
payments for working at undesirable times, such
as at night and the board and lodging customarily
furnished the employee.” This prompted PNB to
appeal, hence this case.
ISSUE
 
WON the cost of living allowance and longevity
pay should be
included in the computation of overtime pay as
held by the CIR
 
HELD
NO
Ratio Overtime pay is for extra effort beyond that
contemplated in the employment contract;
additional pay given for any other purpose cannot
be included in the basis for the computation of
overtime pay.
– Absent a specific provision in the CBA, the bases
for the
computation of overtime pay are 2 computations,
namely:
 
1. WON the additional pay is for extra work done
or service
rendered
2. WON the same is intended to be permanent
and regular, not contingent nor temporary as a
given only to remedy a situation which can change
any time.
Reasoning
– Longevity pay cannot be included in the
computation of
overtime pay for the very simple reason that the
contrary is expressly stipulated in the CBA, which
constitutes the law between the parties.
– As regards cost of living allowance, there is
nothing in Commonwealth Act 444 [or “the 8-hour
Labor Law,” now Art. 87 Labor Code] that could
justify PEMA’s posture that it should be added to
the regular wage in computing overtime pay. C.A.
444 prescribes that overtime work shall be paid
“at the same rate as their regular wages or salary,
plus at least 25% additional.” The law did not
define what is a regular wage or salary. What the
law emphasized is that in addition to “regular
wage,” there must be paid an additional 25% of
that “regular wage” to constitute overtime rate of
pay. Parties were thus allowed to agree on what
shall be mutually considered regular pay from or
upon which a 25% premium shall be based and
added to makeup overtime compensation.
– No rule of universal application to other cases
may be justifiably extracted from the NAWASA
case. CIR relies on the part of the NAWASA
decision where the SC cited American decisions
whose legislation on overtime is at variance with
the law in this jurisdiction. The US legislation
considers work in excess of forty hours a week as
overtime; whereas, what is generally considered
overtime in the Philippines is work in excess of the
regular 8 hours a day. It is understandably
material to refer to precedents in the US for
purposes of computing weekly wages under a 40-
hour week rule, since the particular issue involved
in NAWASA is the conversion of prior weekly
regular earnings into daily rates without allowing
diminution or addition.
– To apply the NAWASA computation would
require a different formula for each and every
employee. It would require reference to and
continued use of individual earnings in the past,
thus multiplying the administrative difficulties of
the Company. It would be cumbersome and
tedious a process to compute overtime pay and
this may again cause delays in payments, which in
turn could lead to serious disputes. To apply this
mode of computation would retard and stifle the
growth of unions themselves as Companies would
be irresistibly drawn into denying, new and
additional fringe benefits, if not those already
existing, for fear of bloating their overhead
expenses through overtime which, by reason of
being unfixed, becomes instead a veritable source
of irritant in labor relations.
**Overtime Pay Rationale Why is a laborer or
employee who works beyond the regular hours of
work entitled to extra compensation called, in this
enlightened time, overtime pay?
Verily, there can be no other reason than that he
is made to work longer than what is
commensurate with his agreed compensation for
the statutorily fixed or voluntarily agreed hours of
labor he is supposed to do. When he thus spends
additional time to his work, the effect upon him is
multi- faceted; he puts in more effort, physical
and/or mental; he is delayed in going home to his
family to enjoy the comforts thereof; he might
have no time for relaxation, amusement or sports;
he might miss important pre-arranged
engagements; etc. It is thus the additional work,
labor or service employed and the adverse effects
just mentioned of his longer stay in his place of
work that justify and are the real reasons for the
extra compensation that is called overtime pay.
**Overtime Pay Definition The additional pay for
service or work rendered or performed in excess
of 8 hours a day by employees or laborers in
employment covered by the 8 hour Labor Law
[C.A. 444, now Art. 87 Labor Code] and not
exempt from its requirements. It is computed by
multiplying the overtime hourly rate by the
number of hours worked in excess of eight.
Disposition decision appealed from is REVERSED
Lagatic v NLRC
Chester Cabalza recommends his visitors to
please read the original & full text of the case
cited. Xie xie!
RIGHT TO PRESCRIBE RULES
ROMEO LAGATIC, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION,
CITYLAND DEVELOPMENT CORPORATION,
STEPHEN ROXAS, JESUS GO, GRACE LIUSON, and
ANDREW LIUSON, respondents
G.R. No. 121004
January 28, 1998
Facts:
Petitioner Romeo Lagatic was employed in May
1986 by Cityland, first as a probationary sales
agent, and later on as a marketing specialist. He
was tasked with soliciting sales for the company,
with the corresponding duties of accepting call-
ins, referrals, and making client calls and cold calls.
Cold calls refer to the practice of prospecting for
clients through the telephone directory. Cityland,
believing that the same is an effective and cost-
efficient method of finding clients, requires all its
marketing specialists to make cold calls. The
number of cold calls depends on the sales
generated by each: more sales mean less cold
calls. Likewise, in order to assess cold calls made
by the sales staff, as well as to determine the
results thereof, Cityland requires the submission
of daily progress reports on the same.
On October 22, 1991, Cityland issued a written
reprimand to petitioner for his failure to submit
cold call reports for September 10, October 1 and
10, 1991. This notwithstanding, petitioner again
failed to submit cold call reports for September 2,
5, 8, 10, 11, 12, 15, 17, 18, 19, 20, 22, and 28, as
well as for October 6, 8, 9, 10, 12, 13 and 14, 1992.
Petitioner was required to explain his inaction,
with a warning that further non-compliance would
result in his termination from the company. In a
reply dated October 18, 1992, petitioner claimed
that the same was an honest omission brought
about by his concentration on other aspects of his
job. Cityland found said excuse inadequate and,
on November 9, 1992, suspended him for three
days, with a similar warning.
Notwithstanding the aforesaid suspension and
warning, petitioner again failed to submit cold call
reports for February 5, 6, 8, 10 and 12, 1993. He
was verbally reminded to submit the same and
was even given up to February 17, 1993 to do so.
Instead of complying with said directive,
petitioner, on February 16, 1993, wrote a note,
"TO HELL WITH COLD CALLS! WHO CARES?" and
exhibited the same to his co-employees. To
worsen matters, he left the same lying on his desk
where everyone could see it.
On February 23, 1993, petitioner received a
memorandum requiring him to explain why
Cityland should not make good its previous
warning for his failure to submit cold call reports,
as well as for issuing the written statement
aforementioned. On February 24, 1993, he sent a
letter-reply alleging that his failure to submit cold
call reports should trot be deemed as gross
insubordination. He denied any knowledge of the
damaging statement, "TO HELL WITH COLD
CALLS!"
Finding petitioner guilty of gross insubordination,
Cityland served a notice of dismissal upon him on
February 26, 1993. Aggrieved by such dismissal,
petitioner filed a complaint against Cityland for
illegal dismissal, illegal deduction, underpayment,
overtime and rest day pay, damages and
attorney's fees. The labor arbiter dismissed the
petition for lack of merit. On appeal, the same was
affirmed by the NLRC; hence the present recourse.
Issue:
W/N NLRC gravely abused its discretion in not
finding that petitioner was illegally dismissed?
Held:
The petition lacks merit.
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.
Employers may, thus, make reasonable rules and
regulations for the government of their
employees, and when employees, with knowledge
of an established rule, enter the service, the rule
becomes a part of the contract of employment. It
is also generally recognized that company policies
and regulations, unless shown to be grossly
oppressive or contrary to law, are generally valid
and binding on the parties and must be complied
with. Corollarily, an employee may be validly
dismissed for violation of a reasonable company
rule or regulation adopted for the conduct of the
company business. An employer cannot rationally
be expected to retain the employment of a person
whose . . . lack of regard for his employer's rules . .
. has so plainly and completely been bared." 5
Petitioner's continued infraction of company
policy requiring cold call reports, as evidenced by
the 28 instances of non-submission of aforesaid
reports, justifies his dismissal.
With the finding that petitioner's dismissal was for
a just and valid cause, his claims for moral and
exemplary damages, as well as attorney's fees,
must fail.
Resolution is AFFIRMED and this petition is hereby
DISMISSED for lack of merit. Costs against
petitioner.
SO ORDERED.