Labor Law I - Case Digests

Labor Law I: Labor Standards Part I - Introduction to Labor Law 1. Brief History of Labor and Labor Legislations 2. Classification of Labor Legislation 3. Legal Framework of Labor Legislations / Sources of Rights of Labor and Employment Police Power of the State St. Luke’s Medical Center Employees Foundation – AFW vs. NLRC G.R. No. 162053 ST. LUKE'S MEDICAL CENTER EMPLOYEE'S ASSOCIATION-AFW (SLMCEA-AFW) AND MARIBEL S. SANTOS vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC) AND ST. LUKE'S MEDICAL CENTER, INC. March 7, 2007 Facts: Maribel S. Santos has been working for St. Luke's Medical Center for almost eight years. On 1992, Republic Act No. 7431 known as the Radiologic Technology Act of 1992 was passed. R.A. 7431 requires individuals who work as radiologists or x-ray technologists in the Philippines to acquire a legal certificate of registration from the Board of Radiologic Technology. Upon the law’s passage, St. Luke's Medical Center notified all its employees practicing Radiologic Technology to comply with the law’s requirements. Its notice also warned employees that their failure to comply with the requirements would result to their transfer to an area which doesn’t require a license, that is if there are still available slots. Santos, despite receiving several notices failed to comply and was notified by St. Luke's Medical Center that she will be compelled to retire if they are left with no other available positions for her in the hospital. Not only did Santos refuse the offer to retire, but she also was unqualified for any other vacant positions in the hospital. She also failed the board examination, afterwards. The events that transpired caused St. Luke's Medical Center to issue Santos with a notice of separation. Santos, who found her employer’s action unfair, filed a case against her employer for illegal dismissal, non-payment of salaries, allowances, and other monetary benefits. The Labor Arbiter ruled in favour of Santos. Santos, however, was dissatisfied with the decision and filed an appeal before the National Labor 1 | Labor Standards - Case Digests

Relations Commission which agreed with the Labor Arbiter’s decision. The National Labor Relations Commission denied Santos’ motion for reconsideration. This motivated Santos to file a petition before the Court of Appeals which agrred with the Commission’s decision. Thus, the petitioners filed a petition before the Supreme Court. Issue: Whether or not Santos was illegally dismissed by her employer on the basis of her inability to secure a certificate of registration from the Board of Radiologic Technology. Held: No. Section 2 of R.A. 7431 states: “It is the policy of the State to upgrade the practice of radiologic technology in the Philippines for the purpose of protecting the public from the hazards posed by radiation as well as to ensure safe and proper diagnosis, treatment and research through the application of machines and/or equipment using radiation.” One of the state’s inherent powers is police power. Through the state’s police power, it can lay down some regulations in order to improve the health, morals, educations, good order, safety or general welfare of the people. The state is justified in prescribing the specific requirements for xray technicians and/or any other professions connected with the health and safety of its citizens. Santos, being a practitioner in the medical field, must follow the law and cannot come above the law and override public interest. Collective Bargaining Agreements (CBA) DOLE Philippines vs. Pawis ng Makabayang Obrero G.R. No. 146650 DOLE PHILIPPINES, INC., petitioner vs. PAWIS NG MAKABAYANG OBRERO (PAMAO-NFL) January 13, 2003 Facts: Dole Philippines Inc. and Pawis ng Makabayang Obrero entered into a collective bargaining agreement which was supposed to last for five years. The collective bargaining agreement provides that Dole will give its employees a meal allowance of 10.00 pesos who will render actual overtime work for at least 2 hours, not exceeding 25.00 pesos after 3 hours of actual overtime work. Despite the agreement pertained in the collective bargaining agreement , some of Dole’s departments granted free meals after exactly three hours while other departments only give free meals after employees have rendered more than 3 hours of actual overtime work. Both parties decided 2 | Labor Standards - Case Digests

to submit the dispute to voluntary arbitration. The arbitrator ruled in favour of Pawis ng Makabayang Obrero, prompting Dole to file a motion for reconsideration, but was denied. After going to the Court of Appeals to seek a more favourable decision, the petitioners filed. Thus, it filed a petition for review before the Supreme Court. Issue: Whether or not a Dole employee is entitled to free meal after rendering three hours of actual overtime work. Held: Yes. The collective bargaining agreement, containing the intent of both parties, clearly states that free meal is granted to a Dole employee who renders exactly or no less than three hours of overtime work, and not only after more than three hours of overtime work. Exercise of management prerogative is not unlimited but subject to the limitations found in law, a collective bargaining agreement or the general principles of fair play and justice. The CBA is the norm of conduct between petitioner and private respondent and compliance therewith is mandated by the express policy of the law.

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Chapter I – General Provisions 4. 5. 6. 7.

Name of Decree – Labor Code Article 1 Date of Effectivity – Labor Code Article 2 Declarations of Policy – Labor Code Article 3 Construction of Labor Code – Labor Code Article 4

Interpretation of Labor Law, Rationale and Intent Abella vs. NLRC G.R. No. 71818 ROSALINA PEREZ/HDA. DANAO-RAMONA vs. THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, ROMEO QUITCO AND RICARDO DIONELE, SR. July 20, 1987 Facts: On June 27, 1960 the petitioner, Rosalina Perez Abella leased a farm land known as Hacienda Danao-Ramona, for a period of ten (10) years. She opted to extend the leased contract for another ten (10) years. During the existence of the lease, she employed the private respondents Ricardo Dionele, Sr., and Romeo Quitco. Upon the expiration of her leasehold rights, petitioner dismissed private respondents and turned over the hacienda to the owners thereof on October 5, 1981, who continued the management, cultivation and operation of the farm. On November 20, 1981, private respondents filed a complaint against the petitioner at the Ministry of Labor and Employment, Bacolod City District Office, for overtime pay, illegal dismissal and reinstatement with backwages. After the parties had presented their respective evidence, the Labor Arbiter ruled that the dismissal is warranted by the cessation of business, but granted the private respondents separation pay. Petitioner appealed. The National Labor Relations Commission affirmed the decision

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and dismissed the appeal for lack of merit. Petitioner filed a Motion for Reconsideration, but the same was denied. Hence, the present petition. Issue: Whether or not private respondents are entitled to separation pay. Held: Yes. Article 284 of the Labor Code, as amended by B.P. Blg. 130, is the law applicable in this case. The purpose of Article 284, as amended, is obvious – the protection of the workers whose employment is terminated because of the closure of establishment and reduction of personnel. Without said law, employees like private respondents in the case at bar will lose the benefits to which they are entitled – for the thirty three years of service in the case of Dionele, and fourteen years in the case of Quitco. Although they were absorbed by the new management of the hacienda, in the absence of any showing that the latter has assumed the responsibilities of the former employer, they will be considered as new employees and the years of service behind them would amount to nothing. It is well-settled that in the implementation and interpretation of the provisions of the Labor Code and its implementing regulations, the workingman's welfare should be the primordial and paramount consideration. It is the kind of interpretation which gives meaning and substance to the liberal and compassionate spirit of the law as provided for in Article 4 of the New Labor Code which states that "all doubts in the implementation and interpretation of the provisions of this Code including its implementing rules and regulations shall be resolved in favor of labor." The policy is to extend the applicability of the decree to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection to labor. The instant petition is hereby dismissed and decision of the Labor Arbiter and the resolution of the Ministry of Labor and Employment are hereby affirmed. Manaya vs. Alabang Country Club G.R. No. 168988 FERNANDO G. MANAYA vs. ALABANG COUNTRY CLUB INCORPORATED June 19, 2007

Facts: Petitioner alleged that on 21 August 1989, he was initially hired by the respondent as a maintenance helper receiving a salary of P198 per day. He was later designated as company electrician. He continued to 5 | Labor Standards - Case Digests

work for the respondent until 22 August 1998 when the latter, through its Engineering and Maintenance Department Manager, Engr. Ronnie B. de la Cruz, informed him that his services were no longer required by the company. Petitioner alleged that he was forcibly and illegally dismissed without cause and without due process on August 22, 1998. Hence, he filed a Complaint before the Labor Arbiter. He claimed that he had not committed any infraction of company policies or rules and that he was not paid his service incentive leave pay, holiday pay and 13th month pay. He further asserted that with his more or less nine years of service with the respondent, he had become a regular employee. He, therefore, demanded his reinstatement without loss of seniority rights with full backwages and all monetary benefits due him.

In its Answer, respondent denied that petitioner was its employee. It countered by saying that petitioner was employed by First Staffing Network Corporation (FSNC), with which respondent had an existing Memorandum of Agreement dated 21 August 1989. Thus, by virtue of a legitimate job contracting, petitioner, as an employee of FSNC, came to work with respondent, first, as a maintenance helper, and subsequently as an electrician. Respondent prayed for the dismissal of the complaint insisting that petitioner had no cause of action against it.

The Labor Arbiter held the complainant Fernando G. Manaya is found to be a regular employee of respondent Alabang Country Club, Inc. His dismissal from the service having been effected without just and valid cause and without the due observance of due process is hereby declared illegal. Consequently, respondent Alabang Country Club, Inc. is hereby ordered to reinstate complainant to his former position without loss of seniority rights and other benefits appurtenant thereto with full backwages. Furthermore, respondent Alabang Country Club, Inc. and First Staffing Network Corporation are hereby ordered to pay complainant, jointly and severally the service incentive leave, 13th month pay and attorney’s fees of the 10% of the total monetary award. Respondent filed an Appeal with the NLRC which dismissed the same. The NLRC held that the appeal from the Decision of November 20, 2000 is dismissed for failure to perfect appeal within the statutory period of appeal. The Decision is now final and executory.

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The NLRC found that respondent’s counsel of record Atty. Angelina A. Mailon of Monsod, Valencia and Associates received a copy of the Labor Arbiter’s Decision on or before 11 December 2000 as shown by the postal stamp or registry return card. Said counsel did not file a withdrawal of appearance. Instead, a Memorandum of Appeal dated 26 December 2000 was filed by the respondent’s new counsel, Atty. Arizala of Tierra and Associates Law Office. Reckoned from 11 December 2000, the date of receipt of the Decision by respondent’s previous counsel, the filing of the Memorandum of Appeal by its new counsel on 26 December 2000 was clearly made beyond the reglementary period. The NLRC held that the failure to perfect an appeal within the statutory period is not only mandatory but jurisdictional. The appeal having been belatedly filed, the Decision of the Labor Arbiter had become final and executory.

Respondent filed a Motion for Reconsideration, which the NLRC denied the same. Respondent filed a Petition for Certiorari under Rule 65 of the Rules of Court before the Court of Appeals. In a Decision, the Court of Appeals granted the petition and ordered the NLRC to give due course to respondent’s appeal of the Labor Arbiter’s Decision. Petitioner filed a Motion for Reconsideration which was denied by the Court of Appeals in a Resolution dated 21 July 2005. Not to be dissuaded, petitioner filed the instant petition before this Court.

Issue: Whether or not the court of appeals committed an error when it ordered the NLRC to give due course to the appeal of respondent Alabang Country Club, incorporated even if the said appeal was filed beyond the reglementary period of ten (10) days for perfecting an appeal.

Held: Yes. Remarkably, in highly exceptional instances, we have allowed the relaxing of the rules on the application of the reglementary periods of appeal. We pronounced in those cases that technicality should not be allowed to stand in the way of equitably and completely resolving the rights and obligations of the parties. In all these, the Court allowed liberal interpretation given the extraordinary circumstances that justify a deviation from an otherwise stringent rule. Clearly, emphasized in these cases is that the policy of liberal interpretation is qualified by the requirement that there must be exceptional circumstances to allow the relaxation of the rules.

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The rules, particularly the requirements for perfecting an appeal within the reglementary period specified in the law, must be strictly followed as they are considered indispensable interdictions against needless delays and for orderly discharge of judicial business. Furthermore, the perfection of an appeal in the manner and within the period permitted by law is not only mandatory but also jurisdictional and the failure to perfect the appeal renders the judgment of the court final and executory. Just as a losing party has the right to file an appeal within the prescribed period, the winning party also has the correlative right to enjoy the finality of the resolution of his/her case.

In this particular case, we adhere to the strict interpretation of the rule. In the case of Bunagan v. Sentinel we declared that:

That the perfection of an appeal within the statutory or reglementary period is not only mandatory, but jurisdictional, and failure to do so renders the questioned decision final and executory and deprives the appellate court of jurisdiction to alter the final judgment, much less to entertain the appeal. The underlying purpose of this principle is to prevent needless delay, a circumstance which would allow the employer to wear out the efforts and meager resources of the worker to the point that the latter is constrained to settle for less than what is due him. This Court has declared that although the NLRC is not bound by the technical rules of procedure and is allowed to be liberal in the interpretation of the rules in deciding labor cases, such liberality should not be applied where it would render futile the very purpose for which the principle of liberality is adopted. The liberal interpretation stems from the mandate that the workingman’s welfare should be the primordial and paramount consideration. We see no reason in this case to waive the rules on the perfection of appeal.

This Court has repeatedly ruled that delay in the settlement of labor cases cannot be countenanced. Not only does it involve the survival of an employee and his loved ones who are dependent on him for food, shelter, clothing, medicine and education; it also wears down the meager resources of the workers to the point that, not infrequently, they either give up or compromise for less than what is due them. Without doubt, to allow the appeal of the respondent as what the Court of Appeals had done and remand the case to the NLRC would only result in delay to the detriment of the petitioner. 8 | Labor Standards - Case Digests

Nothing is more settled in our jurisprudence than the rule that when the conflicting interest of loan and capital are weighed on the scales of social justice, the heavier influence of the latter must be counter-balanced by the sympathy and compassion the law must accord the under-privileged worker. Clemente vs. GSIS G.R. No. L-47521 CAROLINA CLEMENTE vs. GOVERNMENT SERVICE INSURANCE SYSTEM (GSIS), DEPARTMENT OF HEALTH (DAGUPAN CITY) AND EMPLOYEE’S COMPENSATION COMMISSION July 31, 1987 Facts: Petitioner’s husband, Pedro Clemente, was for ten (10) years a janitor in the Department of Health (Dagupan City), assigned at the Ilocos Norte Skin Clinic, Laoag City. On November 14, 1976, Pedro Clemente died of uremia due to nephritis. GSIS denied the claim of benefits because they found the cause of death not an occupational disease. Petitioner requested for reconsideration of the GSIS’ decision, contending that the ailments of her husband were contracted in the course of his employment and were aggravated by the nature of his work, as he was exposed to persons suffering with different skin diseases. The Employee’s Compensation Commission affirmed the GSIS’ decision stating that Pedro’s ailments were not listed as an occupational disease. The GSIS concurs with the views of the respondent Commission. However, it argues that it should be dropped as a party respondent in this case. Issue: Whether or not the petitioner can claim death benefits from GSIS. Held: Yes. Carolina Clemente may claim benefits from the GSIS. The GSIS maintains that Pedro had the diseases even before his employment with the Department of Health. The fallacy in this theory lies in the failure to explain how a sick person was able to enter the government service more than ten years before he became too ill to work and at a time when aggravation of a disease was compensable. There is no evidence that Mr. Clemente was hired inspite of having and existing disease liable to become worse. When there are two or more possible explanations regarding an issue of compensability that which forms the claimant must be chosen. Colgate Palmolive Philippines, Inc. vs. Ople G.R. No. 73681 COLGATE PALMOLIVE PHILIPPINES, INC. vs. 9 | Labor Standards - Case Digests

HON. BLAS OPLE, AND COLGATE PALMOLIVE SALES UNION June 30, 1988 Facts: The respondent union filed a notice of strike with the Bureau of Labor Relations on ground of unfair labor practice consisting of alleged refusal to bargain, dismissal of union officers/members, and coercing employees to retract their membership with the union and restraining non-union members from joining the union. The petitioner pointed out that Mejia, Sayson and Reynante’s suspension and eventual dismissal from the company were due to violation of company rules and are therefore carried out pursuant to the inherent right and prerogative of the management. In addition, petitioner contends that the union is not the certified agent of the company salesmen. In fact, according to petitioner, majority of salesmen not in favor of the notice of strike. he Minister, Blas Ople, rendered a decision which found no merit in the union’s complaint. He also found that the three salesmen are not without fault, therefore, the company has grounds to dismiss the salesmen. But despite that, he ordered the reinstatement of the three on the ground that the employees were first offenders. In addition, the Minister directly certified the union as the collective bargaining agent for the sales force in petitioner company. Petitioner filed a motion for reconsideration. Issues: Whether or not the Minister committed grave abuse of discretion when he directly certified the union, and whether or not the same happened when he ordered the reinstatement of the salesmen. Held: Yes. The Minister committed grave abuse of discretion in both cases contended in the petitioner’s motion for reconsideration. The procedure of a representation case is outlined in the Labor Code. When the Minister directly certified the Union, he in fact disregarded this procedure and its legal requirements. There was therefore failure to determine with legal certainty whether the union indeed enjoyed majority representation. Regarding the employees, reinstatement is simply incompatible with a finding of guilt. Where the totality of the evidence was sufficient to warrant the dismissal of the employees, the law warrants their dismissal without making any distinction between a first offender and a habitual delinquent. The Minister is duly mandated to equally protect and respect not only the labor or worker’s side but also the management and/or employer’s side. As stated in the case of San Miguel Brewery vs. National Labor Union, an employer cannot legally be compelled to continue with the employment of a person who admittedly was guilty of misfeasance or malfeasance towards his employer, and whose continuance in the service of the latter is patently inimical to his interest. Nicario vs. NLRC, et al.

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G.R. No. 125340 EMELITA NICARIO vs. NATIONAL LABOR RELATIONS COMMISSION, MANCAO SUPERMARKET, INC. AND/OR MANAGER, ANTONIO MANCAO September 17, 1998 Facts: Petitioner, Emelita Nicario, was employed with respondent company Mancao Supermarket, on June 6, 1986 as a salesgirl and was later on promoted as sales supervisor. However, private respondent terminated her services on February 7, 1989. A complaint for illegal dismissal with prayer for backwages, wage differential, service incentive leave pay, overtime pay, 13th month pay and unpaid wages was filed by petitioner before the National Labor Relations Commission, Sub-Regional Arbitration Branch X in Butuan City. On July 25, 1989, Labor Arbiter Amado M. Solamo dismissed the complaint for lack of merit. Petitioner appealed to the National Labor Relations Commission (NLRC), Fifth Division, Cagayan de Oro City. In a resolution dated July 25, 1989, the NLRC set aside the labor arbiters decision for lack of due process. It ruled that since petitioner assailed her supposed signatures appearing on the payrolls presented by the company as a forgery, the labor arbiter should not have merely depended on the xerox copies of the payrolls, as submitted in evidence by the private respondent but ordered a formal hearing on the issue. Thus, the Commission ordered the case remanded to the arbitration branch for appropriate proceedings. In a decision dated May 23, 1994, Labor Arbiter Macaraig-Guillen awarded petitioners claims for unpaid service incentive leave pay, 13 th month pay, overtime pay and rest day pay for the entire period of her employment, but dismissed her claims for holiday premium pay and unpaid salaries from February 3 to 5, 1989. Not satisfied with the decision, private respondent appealed to the NLRC, and in a resolution dated August 16, 1995, the Commission affirmed in toto Labor Arbiter Macaraig-Guillens decision. Private respondent then filed a motion for reconsideration. In a resolution dated December 21, 1995, public respondent NLRC modified its earlier resolution by deleting the award for overtime pay and ruling that private respondent Antonio Mancao is not jointly and severally liable with Mancao Supermarket to pay petitioner the monetary award adjudged. Issue: Whether or not public respondent NLRC erred in ruling that petitioner is not entitled to overtime pay. Held: The Court, in previously evaluating the evidentiary value of daily time records, especially those which show uniform entries with regard to the hours of work rendered by an employee, has ruled that such unvarying recording of a daily time record is improbable and contrary to 11 | L a b o r S t a n d a r d s - C a s e D i g e s t s

human experience. It is impossible for an employee to arrive at the workplace and leave at exactly the same time, day in day out. The uniformity and regularity of the entries are badges of untruthfulness and as such indices of dubiety. The observations made by the Solicitor General regarding the unreliability of the daily time records would therefore seem more convincing. On the other hand, respondent company failed to present substantial evidence, other than the disputed DTRs, to prove that petitioner indeed worked for only eight hours a day. It is a well-settled doctrine, that if doubts exist between the evidence presented by the employer and the employee, the scales of justice must be tilted in favor of the latter. It is a time-honored rule that in controversies between a laborer and his master, doubts reasonably arising from the evidence or in the interpretation of agreements and writing should be resolved in the formers favor. The policy is to extend the doctrine to a greater number of employees who can avail of the benefits under the law, which is in consonance with the avowed policy of the State to give maximum aid and protection of labor. This rule should be applied in the case at bar, especially since the evidence presented by the private respondent company is not convincing. Accordingly, we uphold the finding that petitioner rendered overtime work, entitling her to overtime pay. Interpretation of Employment Contract St. Theresa’s School of Novaliches Foundation, et al. vs. NLRC G.R. No. 122955 ST. THERESA'S SCHOOL OF NOVALICHES FOUNDATION and ADORACION ROXAS vs. NATIONAL LABOR RELATIONS COMMISSION and ESTHER REYES April 15, 1998 Facts: Petitioner Adoracion Roxas is the president of St. Theresas School of Novaliches Foundation. She hired private respondent, Esther Reyes, on a contract basis, for the period from June 1, 1991 to March 31, 1992. However, private respondent commenced work on May 2, 1991. During the said period of employment, private respondent became ill. She went on a leave of absence from February 17 to 21 and from February 24 to 28, 1992, such leave of absence having been duly approved by petitioner Roxas. On March 2, 1992, private respondent reported for work, but she only stayed in her place of work from 6:48 to 9:38 a.m. Thereafter, she never returned. For what reason did private respondent stop working. Petitioners theorize that the private respondent abandoned her work. On the other hand, the latter maintains that she was replaced. When she went back to work on February 20, 1992, she found 12 | L a b o r S t a n d a r d s - C a s e D i g e s t s

out that her table, chair, and other belongings were moved to a corner of their office, and she was replaced by Annie Roxas, daughter of petitioner Adoracion Roxas. She tried to contact her employer but the latter could not be found within the school premises. On March 25, 1992, petitioners sent private respondent a letter by registered mail, informing her that her contract, due to expire on March 31, 1992, would not be renewed. Prior thereto, or on March 3, 1992, to be precise, the private respondent instituted NLRC NCR Case No. 00-0301481-92 against the herein petitioners for unfair labor practice based on harassment, illegal dismissal, 13th month pay, allowances, removal of desk and chair form place of work, and refusal to communicate, moral and exemplary damages. The Labor Arbiter rendered a decision declaring the complainant’s dismissal from the service illegal. Petitioners appealed the aforesaid decision to the NLRC whereby it reversed and set aside the Labor Arbiter’s decision and rendered another decision declaring the separation of Esther Reyes from service legal and valid. Issue: Whether or not the employment contract is valid. Held: Yes. Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period provided the same is entered into by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstance vitiating consent. It does not necessarily follow that where the duties of the employee consist of activities usually necessary or desirable in the usual business of the employer, the parties are forbidden from agreeing on a period of time for the performance of such activities. There is thus nothing essentially contradictory between a definite period of employment and the nature of the employees’ duties. It goes without saying that contracts of employment govern the relationship of the parties. In this case, private respondents contract provided for a fixed term of nine (9) months, from June 1, 1991 to March 31, 1992. Such stipulation, not being contrary to law, morals, good customs, public order and public policy, is valid, binding and must be respected. Technical Rules Not Binding – Labor Code Article 221 Bantolino, et al. vs. Coca Cola Bottlers Philippines G.R. No. 153660 PRUDENCIO BANTOLINO, NESTOR ROMERO, NILO ESPINA, EDDIE LADICA, ARMAN QUELING, ROLANDO NIETO, RICARDO BARTOLOME, ELUVER GARCIA, EDUARDO GARCIA and NELSON

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MANALASTAS vs. COCA-COLA BOTTLERS PHILS., INC. June 10, 2003 Facts: On 15 February 1995 sixty-two (62) employees of respondent Coca-Cola Bottlers, Inc., and its officers, Lipercon Services, Inc., Peoples Specialist Services, Inc., and Interim Services, Inc., filed a complaint against respondents for unfair labor practice through illegal dismissal, violation of their security of tenure and the perpetuation of the Cabo System. They thus prayed for reinstatement with full back wages, and the declaration of their regular employment status. For failure to prosecute as they failed to either attend the scheduled mandatory conferences or submit their respective affidavits, the claims of fifty-two (52) complainantemployees were dismissed. Thereafter, Labor Arbiter Jose De Vera conducted clarificatory hearings to elicit information from the ten (10) remaining complainants (petitioners herein) relative to their alleged employment with respondent firm. On 29 May 1998 Labor Arbiter Jose De Vera rendered a decision ordering respondent company to reinstate complainants to their former positions with all the rights, privileges and benefits due regular employees, and to pay their full back wages which, with the exception of Prudencio Bantolino whose back wages must be computed upon proof of his dismissal as of 31 May 1998, already amounted to an aggregate of P1,810,244.00. On appeal, the NLRC sustained the finding of the Labor Arbiter that there was indeed an employer-employee relationship between the complainants and respondent company when it affirmed in toto the latter’s decision. Respondent Coca-Cola Bottlers appealed to the Court of Appeals which, although affirming the finding of the NLRC that an employer-employee relationship existed between the contending parties, nonetheless agreed with respondent that the affidavits of some of the complainants, namely, Prudencio Bantolino, Nestor Romero, Nilo Espina, Ricardo Bartolome, Eluver Garcia, Eduardo Garcia and Nelson Manalastas, should not have been given probative value for their failure to affirm the contents thereof and to undergo cross-examination. As a consequence, the appellate court dismissed their complaints for lack of sufficient evidence. In the same Decision however, complainants Eddie Ladica, Arman Queling and Rolando Nieto were declared regular employees since they were the only ones subjected to cross-examination. Issue: Whether or not the Court of Appeals erred in giving weight to respondent’s claim of failure to cross-examine the petitioners? Held: Yes. Administrative bodies like the NLRC are not bound by the technical niceties of law and procedure and the rules obtaining in courts of law. Indeed, the Revised Rules of Court and prevailing jurisprudence may 14 | L a b o r S t a n d a r d s - C a s e D i g e s t s

be given only stringent application, i.e., by analogy or in a suppletory character and effect. The submission by respondent, citing People v. Sorrel, that an affidavit not testified to in a trial, is mere hearsay evidence and has no real evidentiary value, cannot find relevance in the present case considering that a criminal prosecution requires a quantum of evidence different from that of an administrative proceeding. Under the Rules of the Commission, the Labor Arbiter is given the discretion to determine the necessity of a formal trial or hearing. Hence, trial-type hearings are not even required as the cases may be decided based on verified position papers, with supporting documents and their affidavits. Pfizer Inc., et al. vs. Galan G.R. No. 143389 PFIZER INC., MA. ANGELICA B. LLEANDER and SANDRA WEBB vs. EDWIN V. GALAN May 25, 2001 Facts: Respondent Edwin V. Galan was an employee of petitioner Pfizer, Inc., a drug manufacturer. He was initially hired in August 1982 as a professional sales representative, commonly known as a medical representative. He was a recipient of several company awards, which eventually resulted in his promotion as District Manager for Mindanao in 1996. He continued to reap more awards as he exceeded sales targets. In September 1997, respondent was recalled to Manila to meet with his superiors. In the meeting, the sales manager of Pfizer, Inc., issued a memorandum requiring him to explain his alleged unauthorized use of, and questionable expense claims made on, the company vehicle, as well as the doubtful liquidation of his cash advance of US$5,000 for a recent official trip to Indonesia. After the submission of his explanation, a formal hearing on the charges was set. In the meantime, respondent was placed under preventive suspension and was advised to seek legal assistance. On October 1998, after the conclusion of the hearing, respondent received a notice of termination signed by Pfizers co-petitioner Ma. Angelica B. Lleander. The cause for his dismissal was loss of trust and confidence. Respondent then filed a complaint for illegal dismissal against petitioners before the National Labor Relations Commission (NLRC) Regional Arbitration Branch No. 9 in Zamboanga City. He demanded his reinstatement or separation pay; the payment of back wages, thirteenthmonth pay, and bonuses; the reimbursement of expenses and incentives; and the payment of moral and exemplary damages and attorneys fees. Sandra Webb and Ma. Angelica Lleander were impleaded as respondents in their capacities as Country Manager and Employee Resources Director, respectively, of Pfizer, Inc. 15 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Labor Arbiter Rhett Julius Plagata declared that respondent was illegally dismissed and ordered Pfizer, Inc., to pay him back wages, separation pay, thirteenth month pay, incentives and bonuses, reimbursement of expenses and attorneys fees. Respondents monetary award totalled P2,052,013.50. Petitioners appealed from the decision to the NLRC in Cagayan de Oro City where it affirmed the decision of the Labor Arbiter. Petitioners also filed with the Court of Appeals but was their motion for reconsideration was denied. Hence, the petition. Issue: Whether or not the Court of Appeals erred in dismissing the appeal for being filed beyond the reglementary period. Held: In Systems Factors Corporation v. NLRC, the Court declared that the amendment introduced under A.M. No. 00-2-03-SC is procedural or remedial in character, as it does not create new or remove vested rights, but only operates in furtherance of the remedy or confirmation of rights already existing. It is settled that procedural laws may be given retroactive effect to actions pending and undetermined at the time of their passage, there being no vested rights in the rules of procedure. Thus, the said amendment may be given a retroactive effect. Thus, by virtue of the retroactive effect of the amendment of Section 4, Rule 65 of the 1997 Rules of Civil Procedure introduced by our Resolution in A.M. No. 00-2-03-SC, which allows the filing of a petition for certiorari within sixty days from notice of the denial of a motion for reconsideration, the filing of petitioners petition before the Court of Appeals was on time. Indeed, there is no dispute that their petition was filed on the sixtieth day from notice of the denial of their motion for reconsideration. 8. Rule Making Power – Labor Code Article 5 Limitations Sonza vs. ABS-CBN Broadcasting Corporation G.R. No. 138051 JOSE Y. SONZA vs. ABS-CBN BROADCASTING CORPORATION June 10, 2004 Facts: In May 1994, respondent ABS-CBN Broadcasting Corporation (ABSCBN) signed an Agreement (Agreement) with the Mel and Jay Management and Development Corporation (MJMDC). ABS-CBN was 16 | L a b o r S t a n d a r d s - C a s e D i g e s t s

represented by its corporate officers while MJMDC was represented by SONZA, as President and General Manager, and Carmela Tiangco (TIANGCO), as EVP and Treasurer. On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment, National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the Employees Stock Option Plan (ESOP). ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the parties. SONZA filed an Opposition to the motion on 19 July 1996. Meanwhile, ABS-CBN continued to remit SONZA’s monthly talent fees through his account at PCIBank, Quezon Avenue Branch, Quezon City. In July 1996, ABS-CBN opened a new account with the same bank where ABS-CBN deposited SONZAs talent fees and other payments due him under the Agreement. The Labor Arbiter rendered his decision dismissing the petition for lack of jurisdiction. SONZA appealed to the NLRC. On 24 February 1998, the NLRC rendered a Decision affirming the Labor Arbiters decision. SONZA filed a motion for reconsideration, which the NLRC denied in its Resolution dated 3 July 1998. On 6 October 1998, SONZA filed a special civil action for certiorari before the Court of Appeals assailing the decision and resolution of the NLRC. On 26 March 1999, the Court of Appeals rendered a Decision dismissing the case. Hence, this petition. Issues: 1. Whether or not an employer-employee relationship exists between the parties. 2. Whether or not Sonza can be considered as a regular employee. Held: 1. No. Case law has consistently held that the elements of an employeremployee relationship are: (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 last element, the so-called control test, is the most important element. Selection and Engagement of Employee Independent contractors often present themselves to possess unique skills, expertise or talent to distinguish them from ordinary employees. The specific selection and hiring of SONZA, because of his unique skills, talent and celebrity status not possessed by ordinary employees, is a circumstance indicative, but not conclusive, of an independent contractual relationship. If SONZA did not possess such unique skills, talent and celebrity status, ABS-CBN would not have entered

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into the Agreement with SONZA but would have hired him through its personnel department just like any other employee. Payment of Wages ABS-CBN agreed to pay SONZA such huge talent fees precisely because of SONZAs unique skills, talent and celebrity status not possessed by ordinary employees. Obviously, SONZA acting alone possessed enough bargaining power to demand and receive such huge talent fees for his services. The power to bargain talent fees way above the salary scales of ordinary employees is a circumstance indicative, but not conclusive, of an independent contractual relationship. Power of Dismissal During the life of the Agreement, ABS-CBN agreed to pay SONZAs talent fees as long as AGENT and Jay Sonza shall faithfully and completely perform each condition of this Agreement. Even if it suffered severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay SONZAs talent fees during the life of the Agreement. This circumstance indicates an independent contractual relationship between SONZA and ABS-CBN. Power of Control The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry This practice is not designed to control the means and methods of work of the talent, but simply to protect the investment of the broadcast station. The broadcast station normally spends substantial amounts of money, time and effort in building up its talents as well as the programs they appear in and thus expects that said talents remain exclusive with the station for a commensurate period of time.Normally, a much higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In short, the huge talent fees partially compensates for exclusivity, as in the present case. 2. Applying the control test to the present case, the Court held that SONZA is not an employee but an independent contractor. The control test is the most important test our courts apply in distinguishing an employee from an independent contractor. This test is based on the extent of control the hirer exercises over a worker. The greater the supervision and control the hirer exercises, the more likely the worker is deemed an employee. The converse holds true as well the less control the hirer exercises, the more likely the worker is considered an independent contractor. In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an employee of the former. In this case, SONZA failed to show that these rules controlled his performance. The Court finds that these general rules are merely guidelines towards the achievement of the mutually desired result, which are top-rating television and radio programs that comply with standards of the industry. 9. Applicability – Labor Code Article 6 18 | L a b o r S t a n d a r d s - C a s e D i g e s t s

National Service Corp. vs. NLRC G.R. No. L-69870 NATIONAL SERVICE CORPORATION (NASECO) AND ARTURO L. PEREZ vs. THE HONORABLE THIRD DIVISION, NATIONAL LABOR RELATIONS COMMISSION, MINISTRY OF LABOR AND EMPLOYMENT, MANILA AND EUGENIA C. CREDO November 29, 1988

G.R. No. 70295 EUGENIA C. CREDO vs. NATIONAL LABOR RELATIONS COMMISSION, NATIONAL SERVICES CORPORATION AND ARTURO L. PEREZ November 29, 1988 Facts: Eugenia C. Credo was an employee of the National Service Corporation (NASECO), a domestic corporation which provides security guards as well as messengerial, janitorial and other similar manpower services to the Philippine National Bank (PNB) and its agencies. She was first employed with NASECO as a lady guard on 18 July 1975. Through the years, she was promoted to Clerk Typist, then Personnel Clerk until she became Chief of Property and Records, on 10 March 1980. Sometime before 7 November 1983, Credo was administratively charged by Sisinio S. Lloren, Manager of Finance and Special Project and Evaluation Department of NASECO, stemming from her non-compliance with Lloren's memorandum, dated 11 October 1983, regarding certain entry procedures in the company's Statement of Billings Adjustment. Said charges alleged that Credo "did not comply with Lloren's instructions to place some corrections/additional remarks in the Statement of Billings Adjustment; and when [Credo] was called by Lloren to his office to explain further the said instructions, [Credo] showed resentment and behaved in a scandalous manner by shouting and uttering remarks of disrespect in the presence of her co-employees." On 7 November 1983, Credo was called to meet Arturo L. Perez, then Acting General Manager of NASECO, to explain her side before Perez and NASECO's Committee on Personnel Affairs in connection with the administrative charges filed against her. After said meeting, on the same 19 | L a b o r S t a n d a r d s - C a s e D i g e s t s

date, Credo was placed on "Forced Leave" status for 1 5 days. Before the expiration of said 15-day leave, Credo filed a complaint for placing her on forced leave, without due process. She also filed a supplemental complaint for illegal dismissal in alleging absence of just or authorized cause for her dismissal and lack of opportunity to be heard. The labor arbiter rendered a decision, dismissing Credo's complaint, and directing NASECO to pay Credo separation pay equivalent to one half month's pay for every year of service. Both parties appealed which was denied by the NLRC. Hence, the present recourse. Issue: Whether reinstatement.

or

not

NLRC

has

jurisdiction

to

order

Credo's

Held: Under the 1973 Constitution, it was provided that: The civil service embraces every branch, agency, subdivision, and instrumentality of the Government, including every government-owned or controlled corporation. On the other hand, the 1987 Constitution provides that: The civil service embraces all branches, subdivisions, instrumentalities, and agencies of the Government, including government-owned or controlled corporations with original charter. Thus, the situations sought to be avoided by the 1973 Constitution and expressed by the Court in the National Housing appear relegated to relative insignificance by the 1987 Constitutional provision that the Civil Service embraces governmentowned or controlled corporations with original charter; and, therefore, by clear implication, the Civil Service does not include government-owned or controlled corporations which are organized as subsidiaries of government-owned or controlled corporations under the general corporation law. On the premise that it is the 1987 Constitution that governs the instant case because it is the Constitution in place at the time of decision thereof, the NLRC has jurisdiction to accord relief to the parties. As an admitted subsidiary of the NIDC, in turn a subsidiary of the PNB, the NASECO is a government-owned or controlled corporation without original charter. Juco vs. NLRC and National Housing Corp. G.R. No. 98107 BENJAMIN C. JUCO vs. NATIONAL LABOR RELATIONS COMMISSION and NATIONAL HOUSING CORPORATION August 18, 1997 Facts: Juco was an employee of the NHA. He filed a complaint for illegal dismissal w/ MOLE but his case was dismissed by the labor arbiter on the 20 | L a b o r S t a n d a r d s - C a s e D i g e s t s

ground that the NHA is a govt-owned corp. and jurisdiction over its employees is vested in the CSC. On appeal, the NLRC reversed the decision and remanded the case to the labor arbiter for further proceedings. NHA in turn appealed to the SC. Issue: Whether or not the employees of the National Housing Corporation, a government-owned and/or controlled corporation without original charter, covered by the Labor Code or by laws and regulations governing the civil service. Held: Sec. 11, Art XII-B of the Constitution specifically provides: "The Civil Service embraces every branch, agency, subdivision and instrumentality of the Government, including every government owned and controlled corporation. The inclusion of government-owned and/or controlled corporation within the embrace of the civil service shows a deliberate effort at the framers to plug an earlier loophole which allowed government-owned and/or controlled corporation to avoid the full consequences of the civil service system. All offices and firms of the government are covered. This constitutional provision has been implemented by statute PD 807 is unequivocal that personnel of government-owned and/or controlled corporation belong to the civil service and subject to civil service requirements. "Every" means each one of a group, without exception. This case refers to a government-owned and/or controlled corporation. It does not cover cases involving private firms taken over by the government in foreclosure or similar proceedings. For purposes of coverage in the Civil Service, employees of governmentowned and/or controlled corporation whether created by special law or formed as subsidiaries are covered by the Civil Service Law, not the Labor Code, and the fact that private corporations owned or controlled by the government may be created by special charter does not mean that such corps. not created by special law are not covered by the Civil Service. The infirmity of the respondent’s position lies in its permitting the circumvention or emasculation of Sec. 1, Art. XII-B [now Art IX, B, Sec. 2 (1)] of the Constitution. It would be possible for a regular ministry of government to create a host of subsidiary corporation under the Corp. Code funded by a willing legislature. A government-owned corp. could create several subsidiary corps. These subsidiary corporations would enjoy the best of two worlds. Their officials and employees would be privileged individuals, free from the strict accountability required by the Civil Service Dec. and the regulations of the COA. Their incomes would not be subject to the competitive restraint in the open market nor to the terms and conditions of civil service employment. Conceivably, all government-owned and/or controlled corporations could be created, no longer by special charters, but through incorporation under the general law. The Constitutional amendment including such corporation

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in the embrace of the civil service would cease to have application. Certainly, such a situation cannot be allowed. Austria vs. NLRC G.R. No. 124382 PASTOR DIONISIO V. AUSTRIA vs. HON. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), CEBU CITY, CENTRAL PHILIPPINE UNION MISSION CORPORATION OF THE SEVENTH-DAY ADVENTISTS, ELDER HECTOR V. GAYARES, PASTORS REUBEN MORALDE, OSCAR L. ALOLOR, WILLIAM U. DONATO, JOEL WALES, ELY SACAY, GIDEON BUHAT, ISACHAR GARSULA, ELISEO DOBLE, PORFIRIO BALACY, DAVID RODRIGO, LORETO MAYPA, MR. RUFO GASAPO, MR. EUFRONIO IBESATE, MRS. TESSIE BALACY, MR. ZOSIMO KARA-AN, and MR. ELEUTERIO LOBITANA August 16, 1999 Facts: Pastor Dionisio Austria has been serving as a pastor for Seventh Day Adventist, a religious corporation under Philippine Law, for 28 years. His services was later terminated and was asked by the religious corporations’ treasurer to take responsibility for the 15,078.10 worth of church tithe’s offerings which was collected by his wife, Thelma Austria. Austria claimed that he should not be made accountable for the loss since the authorization for his wife to collect the tithes came from Pastor Gideon Buhat and Mr. Eufronio Ibesate since the petitioner was indisposed during that time. The fact-finding committee created to investigate the anomaly found that Austria misappropriated denominational funds, made a willful breach of trust, performed serious misconduct, did gross and habitual neglect of duties, and committed an offense against the person of employer’s duly authorized representative as grounds for termination of services. Austria, then, filed a complaint before the Labor Arbiter for illegal dismissal, claiming for backwages, damages and other emoluments. The Labor Arbiter favoured Austria. The Seventh Day Adventist, however, appealed to the National Labor Relations Commission which vacated the decision and entered the decision of dismissal of the case for want of merit. Austria filed a motion for reconsideration where in the National Labor Relations Commission reinstated the Labor Arbiter’s Decision. The Seventh Day Adventist followed with their own motion of reconsideration, claiming that the Labor Arbiter had no jurisdiction and there is a constitutional provision which separated the church and state since the 22 | L a b o r S t a n d a r d s - C a s e D i g e s t s

case is an ecclesiastical affair. The National Labor Relations Commission reversed its decision again, pushing Austria to file this petition before the Supreme Court. Issue: Whether or not Pastor Dionisio Austria’s termination of services is an ecclesiastical affair and such involves the separation of church and state. Held: No. The grounds invoked for petitioner’s dismissal, namely: misappropriation of denominational funds, willful breach of trust, serious misconduct, gross and habitual neglect of duties and commission of an offense against the person of his employer’s duly authorized representative, are all based on Article 282 of the Labor Code which enumerates the just causes for termination of employment. By this alone, it is palpable that the reason for petitioner’s dismissal from the service is not religious in nature. Coupled with this is the act of the SDA in furnishing NLRC with a copy of petitioner’s letter of termination. As aptly stated by the OSG, this again is an eloquent admission by private respondents that NLRC has jurisdiction over the case. Aside from these, SDA admitted in a certification issued by its officer, Mr. Ibesate, that petitioner has been its employee for twenty-eight (28) years. SDA even registered petitioner with the Social Security System (SSS) as its employee. As a matter of fact, the worker’s records of petitioner have been submitted by private respondents as part of their exhibits. From all of these it is clear that when the SDA terminated the services of petitioner, it was merely exercising its management prerogative to fire an employee which it believes to be unfit for the job. As such, the State, through the Labor Arbiter and the NLRC, has the right to take cognizance of the case and to determine whether the SDA, as employer, rightfully exercised its management prerogative to dismiss an employee. This is in consonance with the mandate of the Constitution to afford full protection to labor. Under the Labor Code, the provision which governs the dismissal of employees, is comprehensive enough to include religious corporations, such as the SDA, in its coverage. Article 278 of the Labor Code on postemployment states that “the provisions of this Title shall apply to all establishments or undertakings, whether for profit or not. Obviously, the cited article does not make any exception in favor of a religious corporation. This is made more evident by the fact that the Rules Implementing the Labor Code, particularly, Section 1, Rule 1, Book VI on the Termination of Employment and Retirement, categorically includes religious institutions in the coverage of the law.

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Chapter II – Concept of Employer-Employee Relationship 10. Statutory Definitions – Labor Code Articles 97 (a,b,c), 167 (f,g), 212 (e,f) Elements of Employer-Employee Relationship Ruga vs. NLRC G.R. No. L-72654-61 ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN vs. NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES and/or ARSENIO DE GUZMAN January 22, 1990 Facts: De Guzman Fishing Enterprises is a company which engaged in fishing transactions along the port and offices at Camaligan, Camarines Sur. Alipio R. Ruga, along with other petitioners were fishermen-crew and 24 | L a b o r S t a n d a r d s - C a s e D i g e s t s

members of the vessel 7/B Sandyman II, owned and operated by De Guzman Fishing Enterprises. Ruga and his colleagues were paid on percentage commission basis in cash by the company’s cashier in which an agreed rate wherein petitioners will receive an amount based on the success of the fishing trip. One day, Ruga and his colleagues were surprised when their employer, Jorge De Guzman, instructed them to participate in an investigation after there were reports that Ruga and his colleagues sold part of their catch to someone else. De Guzman’s claims were denied by the petitioners. The petitioners argue that De Guzman’s act was due to their forming of a labor union and their membership in the Defenders of Industrial Agricultural Labor Organizations and General Workers Union. No charges were filed against Ruga and his colleagues as the investigation resulted with no conclusive findings. Despite this, the petitioners were disallowed by their employer to resume work. This pushed the petitioners to file a complaint before the Ministry of Labor and Employment on the grounds of illegal dismissal and non-payment of their 13th month pay and emergency cost of living and service incentive pay. The Labor Arbiter dismissed the complaints, stating that there exists no employer-employee relationship. The National Labor Relations Commission affirmed the Labor Arbiters’ decision, causing the petitioners to file a petition before the Supreme Court. Issue: Whether or not Ruga and his colleagues fall under the category of employer-employee relationship. Ruling: Yes. 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. The employment relation arises from contract of hire, express or implied. In the absence of hiring, no actual employeremployee relation could exist. The right-of-control test where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end. Perpetual Help Credit vs. Faburada, et al. G.R. No. 121948 PERPETUAL HELP CREDIT COOPERATIVE, INC vs. BENEDICTO FABURADA, SISINITA VILLAR, IMELDA TAMAYO, HAROLD CATIPAY, and the NATIONAL LABOR RELATIONS COMMISSION, Fourth Division, Cebu City October 8, 2001

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Facts: On January 3, 1990, Benedicto Faburada, Sisinita Vilar, Imelda Tamayo and Harold Catipay, private respondents, filed a complaint against the Perpetual Help Credit Cooperative, Inc. (PHCCI), petitioner, with the Arbitration Branch, Department of Labor and Employment (DOLE), Dumaguete City, for illegal dismissal, premium pay on holidays and rest days, separation pay, wage differential, moral damages, and attorney's fees. Forthwith, petitioner PHCCI filed a motion to dismiss the complaint on the ground that there is no employer-employee relationship between them as private respondents are all members and co-owners of the cooperative. Furthermore, private respondents have not exhausted the remedies provided in the cooperative by-laws. On September 3, 1990, petitioner filed a supplemental motion to dismiss alleging that Article 121 of R.A. No. 6939, otherwise known as the Cooperative Development Authority Law which took effect on March 26, 1990, requires conciliation or mediation within the cooperative before a resort to judicial proceeding. On the same date, the Labor Arbiter denied petitioner's motion to dismiss, holding that the case is impressed with employer-employee relationship and that the law on cooperatives is subservient to the Labor Code. On November 23, 1993, the Labor Arbiter rendered a decision, the dispositive portion of which reads: WHEREFORE, premises considered, judgment is hereby rendered declaring complainants illegally dismissed, thus respondent is directed to pay Complainants backwages computed from the time they were illegally dismissed up to the actual reinstatement but subject to the three year backwages rule, separation pay for one month for every year of service since reinstatement is evidently not feasible anymore, to pay complainants 13th month pay, wage differentials and Ten Percent (10%) attorney's fees from the aggregate monetary award. However, complainant Benedicto Faburada shall only be awarded what are due him in proportion to the nine and a half months that he had served the respondent, he being a part-time employee. All other claims are hereby dismissed for lack of merit. The computation of the foregoing awards is hereto attached and forms an integral part of this decision." On appeal, the NLRC affirmed the Labor Arbiter's decision. Hence, this petition by the PHCCI. Issue: Whether or not there is employer-employee relationship between PHCCI and respondents. Held: Yes, there is. In determining the existence of an employer-employee relationship, the following elements are considered: (1 ) the selection and engagement of the worker or the power to hire; (2) the power to dismiss; 26 | L a b o r S t a n d a r d s - C a s e D i g e s t s

(3) the payment of wages by whatever means; and (4) the power to control the worker's conduct, with the latter assuming primacy in the overall consideration. No particular form of proof is required to prove the existence of an employer-employee relationship. Any competent and relevant evidence may show the relationship.2 The above elements are present here. Petitioner PHCCI, through Mr. Edilberto Lantaca, Jr., its Manager, hired private respondents to work for it. They worked regularly on regular working hours, were assigned specific duties, were paid regular wages and made to accomplish daily time records just like any other regular employee. They worked under the supervision of the cooperative manager. But unfortunately, they were dismissed. Chavez vs. NLRC G.R. No. 146530 PEDRO CHAVEZ vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and ALVIN LEE, Plant Manager January 17, 2005 Facts: The respondent company engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent company’s plant manager, his (the petitioner’s) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so. On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month pay, among others. The case was docketed as NLRC Case No. RAB-III-02-6181-95. The respondents, for their part, denied the existence of an employeremployee relationship between the respondent company and the petitioner. They averred that the petitioner was an independent contractor as evidenced by the contract of service which he and the respondent company entered into. After the parties had filed their respective pleadings, the Labor Arbiter rendered the Decision dated February 3, 1997, finding the respondents guilty of illegal dismissal. The Labor Arbiter declared that the petitioner was a regular employee of the respondent company as he was performing 27 | L a b o r S t a n d a r d s - C a s e D i g e s t s

a service that was necessary and desirable to the latter’s business. Moreover, it was noted that the petitioner had discharged his duties as truck driver for the respondent company for a continuous and uninterrupted period of more than ten years. Issue: Whether or not employer-employee relationship exists between petitioner and respondent. Held: We rule in the affirmative. 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. All the four elements are present in this case. 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 employment for work done or to be done, or for service rendered or to be rendered." That the petitioner was paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not. In this case, it cannot be gainsaid that the petitioner received compensation from the respondent company for the services that he rendered to the latter. Moreover, under the Rules Implementing the Labor Code, every employer is required to pay his employees by means of payroll. The payroll should show, among other things, the employee’s rate of pay, deductions made, and the amount actually paid to the employee. Interestingly, the respondents did not present the payroll to support their claim that the petitioner was not their employee, raising speculations whether this omission proves that its presentation would be adverse to their case. Third. The respondents’ 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.

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Fourth. As earlier opined, of the four elements of the employer-employee relationship, the "control test" is the most important. 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. 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. Their right of control was manifested by the following attendant circumstances: 1. The truck driven by the petitioner belonged to respondent company; 2. There was an express instruction from the respondents that the truck shall be used exclusively to deliver respondent company’s goods; 3. Respondents directed the petitioner, after completion of each delivery, to park the truck in either of two specific places only, to wit: at its office in Metro Manila at 2320 Osmeña Street, Makati City or at BEPZ, Mariveles, Bataan; and 4. Respondents determined how, where and when the petitioner would perform his task by issuing to him gate passes and routing slips. a. The routing slips indicated on the column REMARKS, the chronological order and priority of delivery such as 1st drop, 2nd drop, 3rd drop, etc. This meant that the petitioner had to deliver the same according to the order of priority indicated therein. b. The routing slips, likewise, showed whether the goods were to be delivered urgently or not by the word RUSH printed thereon. c. The routing slips also indicated the exact time as to when the goods were to be delivered to the customers as, for example, the words "tomorrow morning" was written on slip no. 2776. These circumstances, to the Court’s mind, prove that the respondents exercised control over the means and methods by which the petitioner accomplished his work as truck driver of the respondent company.

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Francisco vs. NLRC, 500 SCRA 690 (2006) G.R. No. 170087 ANGELINA FRANCISCO, vs. NATIONAL LABOR RELATIONS COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO, DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and RAMON ESCUETA August 31, 2006 Facts: In 1995, petitioner was hired by Kasei Corporation during its incorporation stage. She was designated as Accountant and Corporate Secretary and was assigned to handle all the accounting needs of the company. She was also designated as Liaison Officer to the City of Makati to secure business permits, construction permits and other licenses for the initial operation of the company. In 1996, petitioner was designated Acting Manager. In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. 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. Since she was no longer paid her salary, petitioner did not report for work and filed an action for constructive dismissal before the labor arbiter. The Labor Arbiter found that petitioner was illegally dismissed. On April 15, 2003, the NLRC affirmed with modification the Decision of the Labor Arbiter. On appeal, the Court of Appeals reversed the NLRC decision. Issue: Whether or not employer-employee relationship exists between petitioner and respondent. Held: Yes, there is. In certain cases the control test is not sufficient to give a com plete picture of the relationship between the parties, owing to the complexity of such a relationship where several positions have been held by the worker. The better approach would therefore be to adopt a twotiered test involving: (1) the putative employer’s power to control the employee with respect to the means and methods by which the work is to be accomplished; and (2) the underlying economic realities of the activity or relationship. Thus, the determination of the relationship between employer and employee depends upon the circumstances of the whole economic activity, 22 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 30 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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. 23 The proper standard of economic dependence is whether the worker is dependent on the alleged employer for his continued employment in that line of business. 24 In the United States, the touchstone of economic reality in analyzing possible employment relationships for purposes of the Federal Labor Standards Act is dependency. 25By analogy, the benchmark of economic reality in analyzing possible employment relationships for purposes of the Labor Code ought to be the economic dependence of the worker on his employer. Under the broader economic reality test, the petitioner can likewise be said to be an employee of respondent corporation because she had served the company for six years before her dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses and allowances, as well as deductions and Social Security contributions from August 1, 1999 to December 18, 2000. 26 When petitioner was designated General Manager, respondent corporation made a report to the SSS signed by Irene Ballesteros. Petitioner’s membership in the SSS as manifested by a copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-employee relationship between petitioner and respondent corporation. It is therefore apparent that petitioner is economically dependent on respondent corporation for her continued employment in the latter’s line of business. Television and Production Exponents, Inc. vs. Servaña G.R. No. 167648 TELEVISION AND PRODUCTION EXPONENTS, INC. and/or ANTONIO P. TUVIERA vs. ROBERTO C. SERVAÑA January 28, 2008 Facts: He alleged that he was first connected with Agro-Commercial Security Agency but was later on absorbed by TAPE as a regular company guard. On 2 March 2000, respondent received a memorandum informing him of his impending dismissal on account of TAPE’s decision to contract the services of a professional security agency. At the time of his termination, respondent was receiving a monthly salary of P6,000.00. In a motion to dismiss which was treated as its position paper, TAPE countered that the labor arbiter had no jurisdiction over the case in the absence of an employer-employee relationship between the parties. TAPE made the following assertions: (1) that respondent was initially employed as a security guard for Radio Philippines Network (RPN-9); (2) that he was 31 | L a b o r S t a n d a r d s - C a s e D i g e s t s

tasked to assist TAPE during its live productions, specifically, to control the crowd; (3) that when RPN-9 severed its relationship with the security agency, TAPE engaged respondent’s services, as part of the support group and thus a talent, to provide security service to production staff, stars and guests of "Eat Bulaga!" as well as to control the audience during the oneand-a-half hour noontime program; (4) that it was agreed that complainant would render his services until such time that respondent company shall have engaged the services of a professional security agency; (5) that in 1995, when his contract with RPN-9 expired, respondent was retained as a talent and a member of the support group, until such time that TAPE shall have engaged the services of a professional security agency; (6) that respondent was not prevented from seeking other employment, whether or not related to security services, before or after attending to his "Eat Bulaga!" functions; (7) that sometime in late 1999, TAPE started negotiations for the engagement of a professional security agency, the Sun Shield Security Agency; and (8) that on 2 March 2000, TAPE issued memoranda to all talents, whose functions would be rendered redundant by the engagement of the security agency, informing them of the management’s decision to terminate their services. On 29 June 2001, Labor Arbiter Daisy G. Cauton-Barcelona declared respondent to be a regular employee of TAPE. On appeal, the National Labor Relations Commission (NLRC) in a Decision8 dated 22 April 2002 reversed the Labor Arbiter and considered respondent a mere program employee. Reversing the decision of the NLRC, the Court of Appeals found respondent to be a regular employee. Issue: Whether or not employer-employee relationship exists between petitioner an respondent. Held: Yes, there is. Jurisprudence is abound with cases that recite the factors to be considered in determining the existence of employeremployee 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 with respect to the means and method by which the work is to be accomplished. The most important factor involves 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. In concluding that respondent was an employee of TAPE, the Court of Appeals applied the "four-fold test" in this wise: First. The selection and hiring of petitioner was done by private respondents. In fact, private respondents themselves admitted having engaged the services of petitioner only in 1995 after TAPE severed its relations with RPN Channel 9. By informing petitioner through the Memorandum dated 2 March 2000, that his services will be terminated as soon as the services of 32 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the newly hired security agency begins, private respondents in effect acknowledged petitioner to be their employee. For the right to hire and fire is another important element of the employer-employee relationship. Second. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. Payment as admitted by private respondents was given by them on a monthly basis at a rate of P5,444.44. Third. Of the four elements of the employer-employee relationship, the "control test" is the most important. The bundy cards representing the time petitioner had reported for work are evident proofs of private respondents’ control over petitioner more particularly with the time he is required to report for work during the noontime program of "Eat Bulaga!" If it were not so, petitioner would be free to report for work anytime even not during the noontime program of "Eat Bulaga!" from 11:30 a.m. to 1:00 p.m. and still gets his compensation for being a "talent." Precisely, he is being paid for being the security of "Eat Bulaga!" during the abovementioned period. The daily time cards of petitioner are not just for mere record purposes as claimed by private respondents. It is a form of control by the management of private respondent TAPE. TAPE relies on Policy Instruction No. 40, issued by the Department of Labor, in classifying respondent as a program employee and equating him to be an independent contractor. Policy Instruction No. 40 defines program employees as those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three (3) days from its consummation. TAPE failed to adduce any evidence to prove that it complied with the requirements laid down in the policy instruction. It did not even present its contract with respondent. Neither did it comply with the contractregistration requirement. 11. Independent Contractor and Labor-Only Contractor – Labor Code Articles 106, 107, 109; D.O. No. 18-02, S 2002 Requirements for Independent Contractor 33 | L a b o r S t a n d a r d s - C a s e D i g e s t s

San Miguel Corp. vs. NLRC G.R. No. 147566 SAN MIGUEL CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION and RAFAEL MALIKSI December 6, 2006 Facts: On 16 October 1990, Rafael M. Maliksi filed a complaint against the San Miguel Corporation-Magnolia Division, herein referred to as SMC and Philippine Software Services and Education Center herein referred to as PHILSSEC to compel the said respondents to recognize him as a regular employee. He amended the complaint on 12 November 1990 to include the charge of illegal dismissal because his services were terminated on 31 October 1990. The complainant’s employment record indicates that he rendered service with Lipercon Services from 1 April 1981 to February 1982 as budget head assigned to SMC-Beer Division, then from July 1983 to April 1985 with Skillpower, Inc., as accounting clerk assigned to SMC-Magnolia Division, then from October 1988 to 1989 also with Skillpower, Inc. as acting clerk assigned to SMC-Magnolia Finance, and from October 1989 to 31 October 1990 with PHILSSEC assigned to Magnolia Finance as accounting clerk. The complainant considered himself as an employee of SMC-Magnolia. Lipercon Services, Skillpower, Inc. and PHILSSEC are labor-only contractors and any one of which had never been his employer. His dismissal, according to him, was in retaliation for his filing of the complaint for regularization in service. His dismissal was illegal there being no just cause for the action. He was not accorded due process neither was his dismissal reported to the Department of Labor and Employment. The Labor Arbiter declared Maliksi a regular employee of PHILSSEC and absolved SMC from liability. In turn, in a decision dated January 26, 1998, the NLRC reversed that of the Labor Arbiter by declaring Maliksi a regular employee of the petitioner and ordering the latter to reinstate him without loss of seniority rights and with full benefits. The CA concluded that on account of his past employment contracts with SMC under Lipercon and Skillpower, Maliksi was already a regular employee of SMC when he entered into SMC’s computerization project as part of the PHILSSEC project complement. Issue: Whether or not Maliksi is an independent contractor of petitioner. Held: We DENY. The Court takes judicial notice of the fact that Lipercon and Skillpower were declared to be labor-only contractors, providing as they do manpower services to the public for a fee. The existence of an employer-employee relationship is factual and we give due deference to the factual findings of both the NLRC and the CA that an employeremployee relationship existed between SMC (or its subsidiaries) and 34 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Maliksi. Indeed, having served SMC for an aggregate period of more than three (3) years through employment contracts with these two labor contractors, Maliksi should be considered as SMC’s regular employee. The hard fact is that he was hired and re-hired by SMC to perform administrative and clerical work that was necessary to SMC’s business on a daily basis. In Bustamante v. National Labor Relations Commission, we ruled: In the case at bar, petitioners were employed at various periods from 1985 to 1989 for the same kind of work they were hired to perform in September 1989. Both the labor arbiter and the respondent NLRC agree that petitioners were employees engaged to perform activities necessary in the usual business of the employer. As laborers, harvesters or sprayers in an agricultural establishment which produces high grade bananas, petitioners’ tasks are indispensable to the year-round operations of respondent company. This belies the theory of respondent company that the employment of petitioners was terminated due to the expiration of their probationary period in June 1990. If at all significant, the contract for probationary employment was utilized by respondent company as a chicanery to deny petitioners their status as regular employees and to evade paying them the benefits attached to such status. Some of the petitioners were hired as far back as 1985, although the hiring was not continuous.They were hired and re-hired in a span of from two to four years to do the same type of work which conclusively shows the necessity of petitioners’ service to the respondent company’s business. Petitioners have, therefore, become regular employees after performing activities which are necessary in the usual business of their employer. But, even assuming that the activities of petitioners in respondent company’s plantation were not necessary or desirable to its business, we affirm the public respondent’s finding that all of the complainants (petitioners) have rendered non-continuous or broken service for more than one (1) year and are consequently considered regular employees. We do not sustain public respondent’s theory that private respondent should not be made to compensate petitioners for backwages because its termination of their employment was not made in bad faith. The act of hiring and re-hiring the petitioners over a period of time without considering them as regular employees evidences bad faith on the part of private respondent. The public respondent made a finding to this effect when it stated that the subsequent re-hiring of petitioners on a probationary status "clearly appears to be a convenient subterfuge on the part of management to prevent complainants (petitioners) from becoming regular employees." (Emphasis supplied)

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As to the petitioner’s second assigned error, we hold that there is no need to resolve the present case under the principle that all doubts should be resolved in favor of the workingman. The perceived doubt does not obtain in the first place. We understand Maliksi’s desperation in making his point clear to SMC, which unduly refuses to acknowledge his status as a regular employee. Instead, he was juggled from one employment contract to another in a continuous bid to circumvent labor laws. The act of hiring and re-hiring workers over a period of time without considering them as regular employees evidences bad faith on the part of the employer. Where, from the circumstances, it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, the policy, agreement or practice should be struck down as contrary to public policy, morals, good customs or public order. In point of law, any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall be liable for the damage. LIKHA-PMPB vs. Burlingame Corp. G.R. No. 162833 LAKAS SA INDUSTRIYA NG KAPATIRANG HALIGI NG ALYANSAPINAGBUKLOD NG MANGGAGAWANG PROMO NG BURLINGAME vs. BURLINGAME CORPORATION June 15, 2007 Facts: A petition for certification was filed by Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame before the Department of Labor and Employment. The filing of certification meant Lakas sa Industriya ng Kapatirang Haligi ng AlyansaPinagbuklod ng Manggagawang Promo ng Burlingame’s aim to represent all rank and file employees of the respondent, which counts to 70 all in all. The petitioner seeks to be recognized by the employer, Burlingame Corporation, as a collective bargaining agent or the alternative, that a certification/consent election be held among regular rank and file employees. The respondent filed a motion for the petition’s dismissal, arguing that the members of LIKHA-PMPB form no employer-employee relationship with them. The company also argues that the members of LIKHA-PMPB are actually employees of F. Garil Manpower Services, a duly licensed local employment agency. Renato Panungo, the med-ariter, dismissed the petition, stating that there lacks an employee-employer relationship. The decision forced LIKHA-PMPB to file a appeal before the Secretary of Labor and Employment. The Secretary decided in favour of the petitioner. The company appealed to 36 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the Court of Appeals which reversed the Secretary’s decision. The petitioner filed a motion of reconsideration before the same court, but was denied. Thus, this petition before the Supreme Court. Issue: Whether or not the members of Lakas sa Industriya ng Kapatirang Haligi ng Alyansa-Pinagbuklod ng Manggagawang Promo ng Burlingame form an employee-employer relationship with Burlingame Corporation because they’re employees of F. Garil Manpower Services, an independent contractor. Held: Yes. Employee-employer relationship does exist. Job contracting is permissible only if the following conditions are met: 1) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and 2) 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 the business. Under this circumstance, there is no doubt that F. Garil was engaged in labor-only contracting, and as such, is considered merely an agent of Burlingame. In labor-only contracting, the law creates an employeremployee relationship to prevent a circumvention of labor laws. The contractor is considered merely an agent of the principal employer and the latter is responsible to the employees of the labor-only contractor as if such employees had been directly employed by the principal employer. Since F. Garil is a labor-only contractor, the workers it supplied should be considered as employees of Burlingame in the eyes of the law. Aliviado, et al. vs. Procter & Gamble Philippines and PROMM-GEM, Inc. G.R. No. 160506 JOEB M. ALIVIADO, ARTHUR CORPUZ, ERIC ALIVIADO, et al. vs. PROCTER & GAMBLE PHILS., INC., and PROMM-GEM INC. June 6, 2011

Facts: Aliviado and co-petitioners worked as merchandisers for Procter & Gamble. They had employment contracts with either Promm-Gem or SAPS for more or less five months at a time. Their work entails being assigned at different outlets, supermarkets, and stores where they handled all the products of Procter & Gamble. They receive their wages from Promm-Gem or SAPS. SAPS and Promm-Gem imposed disciplinary measures on merchandisers who commit habitual absenteeism, dishonesty, or changing day-off without prior notice. Procter & Gamble, meanwhile, manufactures and produces different consumer and health products, 37 | L a b o r S t a n d a r d s - C a s e D i g e s t s

which it sells on a wholesale basis to various supermarkets and distributors. Procter and Gamble entered into a contract with Promm-Gem and SAPS for the promotion and merchandising of its products. The petitioners filed a complaint against Procter & Gamble for regularization, service incentive leave pay and other benefits with damages. It was later amended after their dismissal from work. The Labor Arbiter, however, dismissed the complaint for lack of merit and ruled that no employer-employee relationship between petitioners and Procter & Gamble. The four-fold test, when applied, seems to not apply at this instance, the Labor Arbiter ruled. It was also found that Promm-Gem and SAPS were legitimate independent job contractors. An appeal was filed before the National Labor Relations Commission which ruled in favour of Procter & Gamble. A motion for reconsideration was subsequently filed, but was denied. When the petitioners filed a petition before the Court of Appeals, it was denied. Thus, this petition before the Supreme Court. Issue: Whether or not Promm-Gem and SAPS are labor-only contractors. Held: No. Promm-Gem cannot be considered as a labor-only contractor. It is a legitimate independent contractor. The law and its implementing rules allow contracting arrangements for the performance of specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities, regardless of whether such activity is peripheral or core in nature. However, in order for such outsourcing to be valid, it must be made to an independent contractor because the current labor rules expressly prohibit labor-only contracting. To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. Desirable – Unnecessary Coca Cola Bottlers Philippines, Inc. vs. NLRC G.R. No. 120466 COCA COLA BOTTLERS PHILS., INC. vs. NATIONAL LABOR RELATIONS COMMISSION and RAMON B. CANONICATO May 17, 1999 38 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: Coca-Cola entered into a contract of janitorial services with Bacolod Janitorial Services (BJS) stipulating that Coca-Cola desires to engage the services of BJS, as an independent contractor, to perform and provide for the maintenance, sanitation, and cleaning services. Every year thereafter a service contract was entered into between the parties under similar terms and conditions. Canonicato was hired by Coca Cola as a casual employee and assigned him to the bottling crew as a substitute for absent employees. A year after, Coca-Cola terminated Canonicato’s casual employment. Later that year, the latter was re-hired, but this time as a painter in contractual projects which lasted from 15-30 days. Thereafter, Canonicato was hired by BJS as a janitor and assigned him to Coca-Cola considering his familiarity with its premises but his services were again terminated a year later. Based on the information that Coca-Cola employed previous BJS employees who filed a complaint against the company for regularization pursuant to a compromise agreement, Canonicato filed the same before the Labor Arbiter. Without notifying BJS, Canonicato no longer reported for work and sent his sister, Rowena, to claim his salary on his behalf. BJS released his salary but advised Rowena to tell him to report for work. Canonicato met with the proprietress of BJS which offered him other assignments in other firms but Canonicato refused. He amended his complaint citing in addition as grounds for his complaint – illegal dismissal and underpayment of wages. BJS sent him a letter advising him to report for work within 3 days, otherwise, it’ll be considered as if he abandoned his job. The Labor Arbiter ruled that there was no employer-employee relationship between Coca-Cola and Canonicato because BJS was Canonicato’s real employer; BJS was a legitimate job contractor, hence, any liability of Coca Cola as to Canonicato’s salary or wage differentials was solidary with BJS; Coca-Cola and BJS must jointly and severally pay Canonicato his wage differentials. Other claims were dismissed on the ground of lack of employer-employee relationship. The NLRC rejected on appeal the decision of the Labor Arbiter on the ground that the janitorial services of Canonicato were found to be necessary or desirable in the usual business or trade of Coca-Cola. Issue: Whether or not janitorial services of Canonicato were necessary and desirable in the usual trade and business of Coca-Cola. Held: It was held that at the outset of the disposition of the NLRC that janitorial services are necessary and desirable to the trade or business of Coca-Cola. However, it is inconsistent in the court’s ruling in Kimberly Independent Labor Union v. Drilon where it took judicial notice of the practice adopted in several government and private institutions and industries of hiring janitorial services on an independent contractor basis. Hence, court ruled that although janitorial services may be considered 39 | L a b o r S t a n d a r d s - C a s e D i g e s t s

directly related to the principal business of an employer, as with every business, we deemed them unnecessary in the conduct of the employer’s principal business. Labor Contractor Only; Requisites and Prohibition Manila Water Co., Inc. vs. Pena G.R. No. 158255 MANILA WATER COMPANY, INC. vs. HERMINIO D. PENA, ESTEBAN B. BALDOZA, JORGE D. CANONIGO, JR., IKE S. DELFIN, RIZALINO M. INTAL, REY T. MANLEGRO, JOHN L. MARTEJA, MARLON B. MORADA, ALLAN D. ESPINA, EDUARDO ONG, AGNESIO D. QUEBRAL, EDMUNDO B. VICTA, VICTOR C. ZAFARALLA, EDILBERTO C. PINGUL and FEDERICO M. RIVERA July 8, 2004 Facts: Manila Water Company, Inc. is one of the two private concessionaires contracted by the Metropolitan Waterworks and Sewerage System (MWSS) to manage the water distribution system in the East Zone of Metro Manila, pursuant to Republic Act No. 8041, otherwise known as the National Water Crisis Act of 1995. Under the Concession Agreement, MWC undertook to absorb former employees of the MWSS whose names and positions were in the list furnished by the latter, while the employment of those not in the list was terminated on the day MWC took over the operation of the East Zone, Private respondents, being contractual collectors of the MWSS, were among the 121 employees not included in the list; nevertheless, MWC engaged their services without written contract from August 1, 1997 to August 31, 1997. Thereafter, on September 1, 1997, they signed a three-month contract to perform collection services for eight branches of MWC in the East Zone. Before the end of the three-month contract, the 121 collectors incorporated the Association Collectors Group, Inc. (ACGI), which was contracted by MWC to collect charges for the Balara Branch. Subsequently, most of the 121 collectors were asked by MWC to transfer to the First Classic Courier Services, a newly registered corporation. Only private respondents herein remained with ACGI. MWC continued to transact with ACGI to do its collection needs until February 8, 1999, when it terminated its contract with ACGI. Private respondents filed a complaint for illegal dismissal and money claims against MWC, contending that they were its employees as all the methods and procedures of their collections were controlled by the latter. On the other hand, MWC asserts that private respondents were employees 40 | L a b o r S t a n d a r d s - C a s e D i g e s t s

of ACGI, an independent contractor. It maintained that it had no control and supervision over private respondents manner of performing their work except as to the results. Thus, it did not have an employer-employee relationship with the private respondents, but only a service contractorclient relationship with ACGI. Labor Arbiter Carpio rendered a decision finding the dismissal of private respondents illegal. He held that private respondents were regular employees of MWC not only because the tasks performed by them were controlled by it but, also, the tasks were obviously necessary and desirable to MWC’s principal business. Both parties appealed to the NLRC, which reversed the decision of the Labor Arbiter. Private respondents filed a petition for certiorari with the Court of Appeals, contending that the NLRC acted with grave abuse of discretion amounting to lack or excess of jurisdiction when it reversed the decision of the Labor Arbiter. The Court of Appeals reversed the decision of the NLRC and reinstated with modification the decision of the Labor Arbiter. It held that MWC deliberately prevented the creation of an employment relationship with the private respondents; and that ACGI was not an independent contractor. It likewise denied petitioners motion for reconsideration. Issue: Whether or not ACGI is an independent contractor or a labor only contractor. Held: The ACGI is a labor only contractor. Therefore, private respondents were considered employees of petitioner. Under Section 5, Department Order No. 18-02, Rules Implementing Articles 106-109 of the Labor Code, a labor-only contractor is one where the contractor recruits, supplies or places workers to perform job, work or service for a principal, and any of the following elements is present: (i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or (ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. The requisites were all present in the case of ACGI: they have no substantial capitalization and they did not carry on an independent business or undertake the performance of its service contract according to its manner and method. In labor-only contracting, the contractor is merely an agent of the principal employer. Effect of Finding San Miguel Corporation vs. Aballa G.R. No. 149011

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SAN MIGUEL CORPORATION vs. PROSPERO A. ABALLA, BONNY J. ABARING, EDWIN M. ADLA-ON, ALVIN C. ALCALDE, CELANIO D. ARROLLADO, EDDIE A. ARROLLADO, et al., and the COURT OF APPEALS June 28, 2005 Facts: Petitioner San Miguel Corporation (SMC) and Sunflower MultiPurpose Cooperative (Sunflower) entered into a one-year Contract of Services commencing on January 1, 1993, to be renewed on a month to month basis until terminated by either party. Pursuant to the contract, Sunflower engaged private respondents to, as they did, render services at SMC’s Bacolod Shrimp Processing Plant at Sta. Fe, Bacolod City. The contract was deemed renewed by the parties every month after its expiration on January 1, 1994 and private respondents continued to perform their tasks until September 11, 1995. In July 1995, private respondents filed a complaint before the NLRC praying to be declared as regular employees of SMC, with claims for recovery of all benefits and privileges enjoyed by SMC rank and file employees. Private respondents subsequently filed on September 25, 1995 an Amended Complaint4 to include illegal dismissal as additional cause of action following SMC’s closure of its Bacolod Shrimp Processing Plant on September 15, 19955 which resulted in the termination of their services. By Decision of September 23, 1997, Labor Arbiter Drilon dismissed private respondents’ complaint for lack of merit. Private respondents appealed to the NLRC. By Decision of December 29, 1998, the NLRC dismissed the appeal for lack of merit, it finding that third party respondent Sunflower was an independent contractor in light of its observation that "[i]n all the activities of private respondents, they were under the actual direction, control and supervision of third party respondent Sunflower, as well as the payment of wages, and power of dismissal. Private respondents filed a petition for certiorari before the Court of Appeals (CA) after NLRC denied its Motion for Reconsideration. By Decision of February 7, 2001, the appellate court reversed the NLRC decision and accordingly found the private respondents as employees of SMC ordering the latter to pay the respondents, among others, separation pay with full backwages and other benefits or monetary benefits given to regular SMC employees. SMC’s Motion for Reconsideration having been denied for lack of merit by Resolution of July 11, 2001, it comes before this Court via the present petition for review on certiorari. Issue: Whether or not respondents are employees of SMC in view of Sunflower acting as labor-only contractor. Held: Yes. Section 5. Prohibition against labor-only contracting. Labor-only contracting is hereby declared prohibited. For this purpose, labor-only contracting shall refer to an arrangement where the contractor or 42 | L a b o r S t a n d a r d s - C a s e D i g e s t s

subcontractor merely recruits, supplies or places workers to perform a job, work or service for a principal, and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal, or ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee. What appears is that Sunflower does not have substantial capitalization or investment in the form of tools, equipment, machineries, work premises and other materials to qualify it as an independent contractor. Sunflower, during the existence of its service contract with respondent SMC, did not own a single machinery, equipment, or working tool used in the processing plant. Everything was owned and provided by respondent SMC. The lot, the building, and working facilities are owned by respondent SMC. The machineries and equipments like washer machine, oven or cooking machine, sizer machine, freezer, storage, and chilling tanks, push carts, hydraulic jack, tables, and chairs were all owned by respondent SMC. All the boxes, trays, molding pan used in the processing are also owned by respondent SMC. The gloves and boots used by the complainants were also owned by respondent SMC. Even the mops, electric floor cleaners, brush, hose, soaps, floor waxes, chlorine, liquid stain removers, Lysol and the like used by the complainants assigned as cleaners were all owned and provided by respondent SMC. Furthermore, Sunflower did not carry on an independent business or undertake the performance of its service contract according to its own manner and method, free from the control and supervision of its principal, SMC, its apparent role having been merely to recruit persons to work for SMC. With regard to finding of facts, the general rule, no doubt, is that findings of facts of an administrative agency which has acquired expertise in the particular field of its endeavor are accorded great weight on appeal. The rule is not absolute and admits of certain well-recognized exceptions, however. Thus, when the findings of fact of the labor arbiter and the NLRC are not supported by substantial evidence or their judgment was based on a misapprehension of facts, the appellate court may make an independent evaluation of the facts of the case. That there has been substantial compliance with the requirement on verification of position papers under Section 3, Rule V of the 1990 NLRC Rules of Procedure is not difficult to appreciate in light of the provision of Section 7, Rule V of the 1990 NLRC Rules, now Section 9, Rule V of the 1999 NLRC Rules which reads: Section 7. Nature of Proceedings. The proceedings before a Labor Arbiter shall be non-litigious in nature. Subject to the requirements of due process, the technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto. The Labor Arbiter may 43 | L a b o r S t a n d a r d s - C a s e D i g e s t s

avail himself of all reasonable means to ascertain the facts of the controversy speedily, including ocular inspection and examination of wellinformed persons. Liability of Indirect Employer Eparwa Security and Janitorial Services, Inc. vs. Liceo de Cagayan University G.R. No. 150402 EPARWA SECURITY AND JANITORIAL SERVICES, INC. vs. LICEO DE CAGAYAN UNIVERSITY November 28, 2006

Facts: On 1 December 1997, Eparwa and LDCU, through their representatives, entered into a Contract for Security Services. On 21 December 1998, 11 security guards whom Eparwa assigned to LDCU from 1 December 1997 to 30 November 1998 filed a complaint before the NLRC in Cagayan de Oro City against both Eparwa and LDCU for underpayment of salary, legal holiday pay, 13th month pay, rest day, service incentive leave, night shift differential, overtime pay, and payment for attorney’s fees. In its decision, the Labor Arbiter found that the security guards are entitled to wage differentials and premium for holiday and rest day work. The Labor Arbiter held Eparwa and LDCU solidarily liable pursuant to Article 109 of the Labor Code. Eparwa filed an appeal before the NLRC. For its part, Eparwa questioned its liability for the security guards’ claims and the awarded cross-claim amounts. In a Resolution, the NLRC declared that although Eparwa and LDCU are solidarily liable to the security guards for the monetary award, LDCU alone is ultimately liable. LDCU filed a petition for certiorari before the appellate where LDCU’s petition was granted and the Labor Arbiter’s decision was reinstated. The appellate court also allowed LDCU to claim reimbursement from Eparwa. Eparwa filed a motion for reconsideration of the appellate court’s decision. Eparwa stressed that jurisprudence is consistent in ruling that the ultimate liability for the payment of the monetary award rests with LDCU alone. The appellate court denied Eparwa’s motion for reconsideration for lack of merit. Hence, this petition. Issue: Whether or not LDCU alone is ultimately liable to the security guards for the wage differentials and premium for holiday and rest day pay. Held: Articles 106, 107 and 109 of the Labor Code read:

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Art. 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latter’s subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor may, by appropriate regulations, restrict or prohibit the contracting out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is labor-only contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such persons are performing activities which are directly related to the principal business of the employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. Article 107. Indirect employer. The provisions of the immediately preceding Article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent contractor for the performance of any work, task, job or project. Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil liability under this Chapter, they shall be considered as direct employers. This Court’s ruling in Eagle Security Agency, Inc. v. NLRC, squarely applies to the present case. In Eagle, we ruled that: This joint and several liability of the contractor and the principal is mandated by the Labor Code to assure compliance of the provisions therein including the statutory minimum wage [Article 99, Labor Code]. The contractor is made liable by virtue of his status as direct employer. 45 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The principal, on the other hand, is made the indirect employer of the contractors employees for purposes of paying the employees their wages should the contractor be unable to pay them. This joint and several liability facilitates, if not guarantees, payment of the workers performance of any work, task, job or project, thus giving the workers ample protection as mandated by the 1987 Constitution In the case at bar, it is beyond dispute that the security guards are the employees of EAGLE. That they were assigned to guard the premises of PTSI pursuant to the latter’s contract with EAGLE and that neither of these two entities paid their wage and allowance increases under the subject wage orders are also admitted. Thus, the application of the aforecited provisions of the Labor Code on joint and several liability of the principal and contractor is appropriate. In view of the foregoing, the security guards should claim the amount of the increases from EAGLE. Under the Labor Code, in case the agency fails to pay them the amounts claimed, PTSI should be held solidarily liable with EAGLE (Articles 106,107 and 109). Should EAGLE pay, it can claim an adjustment from PTSI for an increase in consideration to cover the increases payable to the security guards. However, in the instant case, the contract for security services had already expired without being amended consonant with the Wage Orders. It is also apparent from a reading of a record that EAGLE does not now demand from PTSI any adjustment in the contract price and its main concern is freeing itself from liability. Given these peculiar circumstances, if PTSI pays the security guards, it cannot claim reimbursement from EAGLE. But in case it is EAGLE that pays them, the latter can claim reimbursement from PTSI in lieu of an adjustment, considering that the contract, had expired and had not been renewed. For the security guards, the actual source of the payment of their wage differentials and premium for holiday and rest day work does not matter as long as they are paid. This is the import of Eparwa and LDCUs solidary liability. Creditors, such as the security guards, may collect from anyone of the solidary debtors. Solidary liability does not mean that, as between themselves, two solidary debtors are liable for only half of the payment. LDCUs ultimate liability comes into play because of the expiration of the Contract for Security Services. There is no privity of contract between the security guards and LDCU, but LDCUs liability to the security guards remains because of Articles 106, 107 and 109 of the Labor Code. Eparwa is already precluded from asking LDCU for an adjustment in the contract price because of the expiration of the contract, but Eparwa’s liability to the security guards remains because of their employer-employee relationship. In lieu of an adjustment in the contract price, Eparwa may claim reimbursement from LDCU for any payment it may make to the security guards. However, LDCU cannot claim any 46 | L a b o r S t a n d a r d s - C a s e D i g e s t s

reimbursement from Eparwa for any payment it may make to the security guards.

Chapter III – Kinds of Employment/ Employee Classification 12. Regular, Casual Employment and Probationary Employment – Labor Code Articles 280, 281 By Nature of employee is necessary or EVEN if there

Work – An employment is deemed regular when an engaged to perform activities which are usually desirable to the business or trade of an employer is a written or oral agreement to the contrary.

Hacienda Fatima vs. National Federation of Sugarcan Workers Food and General Trade

G.R. No. 149440 HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA vs. NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE January 28, 2003

Facts: After National Federation of Sugarcane Workers-Food and General Trade was certified as the collective bargaining representative to Hacienda Fatima, the petitioner refuse to enter into a collective bargaining agreement with it. The members of the union were not given work for more than a month. The union, feeling aggrieved, staged a strike which was subsequently settled after they entered into an agreement with the employer-company. Hacienda Fatima, reneged on its commitment to bargain collectively, claiming that the labourers failed to load some wagons. The employer even used private armed guards to prevent the organizers from entering the premises. Again, no work assignments were given to complainants, thus, forcing the union to stage a strike. The two parties entered into conciliation and another memorandum of agreement was signed. Again, the petitioner reneged on its commitment. The labourers, then, filed a complaint. The National Labor Relations Commission ruled in favour of the respondents. The Court of Appeals ruled in the same way after an appeal was filed by the petitioner. Thus, this petition before the Supreme Court.

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Issue: Whether or not the seasonal employees have become regular employees. Held: Yes. For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable. The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. The fact that respondents do not work continuously for one whole year but only for the duration of the season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during off-season are not separated from service in said period, but merely considered on leave until re-employed. Association of Trade Unions (AU) vs. Abella G.R. No. 100518 ASSOCIATION OF TRADE UNIONS (ATU), RODOLFO MONTECLARO and EDGAR JUESAN vs. HON. COMMISSIONERS OSCAR N. ABELLA, MUSIB N. BUAT, LEON GONZAGA JR., ALGON ENGINEERING CONSTRUCTION CORP., ALEX GONZALES and EDITHA YAP January 24, 2000

Facts: Algon Engineering Construction Corp. is engaged with the government in doing road construction. Between the years 1968 to 1989, the company employed the petitioners. In 1989, the company’s workers 48 | L a b o r S t a n d a r d s - C a s e D i g e s t s

joined petitioner union as members. When the union filed a petition for certification election with the Labor Department, the company opposed the petition. The company claims that the workers were project employees and therefore not qualified to form part of the rank and file collective bargaining unit. The petition for certification election was then dismissed. After making an appeal, the Secretary of Labor and Employment ruled in favour of the union and reversed the earlier decision and ordered the immediate holding of a certification election. Meanwhile, the national president of petitioner union sent a demand letter to respondent company, seeking the payment of wage differentials to some affected union members. Petitioner union and the concerned workers filed a complaint for payment of wage differentials and other benefits before the Department of Labor and Employment. Subsequently, the workers, whose contracts have expred after the completion of four projects, were terminated by the company. The terminated employees, however, claim that their dismissal was due to their participation in the union activities. Both the Labor Arbiter and National Labor Relations Commission ruled that the union’s strike was illegal and their termination was valid. The aggrived workers filed with the Regional Arbitration Branch of the National Labor Relations Commission their individual complaints against private respondent. The Labor Arbiter decided that there was indeed an illegal dismissal, but was not entitled to the awards prayed for. Both parties sought appeal to the National Labor Relations Commission which modified the earlier decision. It held that the labor arbiter erred in not resolving the issue of underpayment of wages because not all of the original complainants filed the same money claims with the labor department. Thus, it awarded monetary benefits to qualified workers Issue: Whether or not petitioners are regular employees. Held: No. Regular employees are those who have been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer even if the parties enter into an agreement stating otherwise. In contrast, project employees are those whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. The contracts of employment of the petitioners attest to the fact that they had been hired for specific projects, and their employment was coterminous with the completion of the project for which they had been hired. Said contracts expressly provide that the workers' tenure of employment would depend on the duration of any phase of the project or the completion of the awarded government construction projects in any of 49 | L a b o r S t a n d a r d s - C a s e D i g e s t s

their planned phases. Further, petitioners were informed in advance that said project or undertaking for which they were hired would end on a stated or determinable date. Besides, public respondent noted that respondent company regularly submitted reports of termination of services of project workers to the regional office of the labor department as required under Policy Instruction No. 20. This compliance with the reportorial requirement confirms that petitioners were project employees. Considering that petitioners were project employees, whose nature of employment they were fully informed about, at the time of their engagement, related to a specific project, work or undertaking, their employment legally ended upon completion of said project. The termination of their employment could not be regarded as illegal dismissal. ABS-CBN Broadcasting Corp. vs. Nazareno G.R. No. 164156 ABS-CBN BROADCASTING CORPORATION vs. MARLYN NAZARENO, MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN September 26, 2006 Facts: ABS-CBN employed respondents Nazareno, Gezon, Deiparine, and Lerasan as production assistants (PAS) on different dates. They were assigned at the news and public affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4, 000. They were issued ABS-CBN employees’ identification cards and were required to work for a minimum of eight hours a day, including Sundays and holidays. The respondents filed a Complaint for Recognition of Regular Employment Status. They insisted that they belonged to a work pool from which ABS CBN chose persons to be given specific assignments at its discretion, and were thus under it direct supervision and control regardless of nomenclature. For its part, ABS-CBN alleged in its position paper that the respondents were Pas who basically assists in the conduct of a particular program ran by an anchor or talent. They are considered in the industry as “program employees” in that, as distinguished from regular or station employees, they are basically engaged by the station for a particular or specific program broadcasted by the radio station. The Labor Arbiter ruled that the respondents were regular employees. The NLRC ruled that respondents were entitled to the benefits under the CBA because they were regular employees who contributed to the profits of ABS-CBN through their labor. The Court of Appeals ruled that respondents are not mere project employees, but regular employees who perform tasks necessary and 50 | L a b o r S t a n d a r d s - C a s e D i g e s t s

desirable in the usual trade of petitioner and not just its project employees. Issue: Whether or not respondents are regular employees of ABS-CBN. Held: The respondents are regular employees of ABS-CBN. The fact that respondents received pre-agreed “talent fees” instead of salaries, that they did not observe the required office hours, and that they were permitted to join other productions during their free time are not conclusive of the nature of employment. Respondents cannot be considered talents because they are not actors or actresses or radio specialists or mere clerks or utility employees. They are regular employees who perform several different duties under the control and direction of ABS-CBN executives and supervisors. In Universal Robina Corporation v. Catapang, the Court reiterated the test in determining whether one is a regular employee: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exist. Brent School, Inc. vs. Zamora G.R. No. L-48494 BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE vs. RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO R. ALEGRE February 5, 1990 Facts: Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its existence, five years from July 18, 1971 to July 17, 1976. Subsequent subsidiary reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. Some three months before the expiration of the stipulated period, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services 51 | L a b o r S t a n d a r d s - C a s e D i g e s t s

effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." A month or so later, Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract." However, at the investigation conducted by a Labor Conciliator of said report of termination of his services, Alegre, protested the announced termination of his employment. He argued that although his contract did stipulate that the same would terminate on July 17, 1976, since his services were necessary and desirable in the usual business of his employer, and his employment had lasted for five years, he had acquired the status of a regular employee and could not be removed except for valid cause. The Regional Director considered Brent School's report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. The Director pronounced "the ground relied upon by the Brent in terminating the services of Alegre . . . (as) not sanctioned by P.D. 442," as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. The latter sustained the ruling of the Regional Director. Brent appealed to the Office of the President but it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and expiration of the employment contract was not one of the just causes provided in the Labor Code for termination of services. Hence this petition by Brent. Issue: Whether or not the termination of Alegre’s contract of employment was valid. Held: Alegre’s contract of employment was lawfully terminated by reason of expiration of agreed term of period. Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied. When the employment contract was signed between Brent School and Alegre on July18, 1971, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof. Stipulations for a term were explicitly recognized as valid by the SC. In Biboso v. Victorias Milling Co., Inc., which involved teachers in a private school as regards whom, the following pronouncement was made: "What is decisive 52 | L a b o r S t a n d a r d s - C a s e D i g e s t s

is that petitioners (teachers) were well aware all the time that their tenure was for a limited duration. Upon its termination, both parties to the employment relationship were free to renew it or to let it lapse." The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. Indeed, the Code did not come into effect until November 1, 1974, some three years after the perfection of the employment contract, and rights and obligations thereunder had arisen and been mutually observed and enforced. At that time, i.e., before the advent of the Labor Code, there was no doubt whatever about the validity of term employment. It was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Basically, this statute provided that— in cases of employment, without a definite period, in a commercial, industrial, or agricultural establishment or enterprise, the employer or the employee may terminate at any time the employment with just cause; or without just cause in the case of an employee by serving written notice on the employer at least one month in advance, or in the case of an employer, by serving such notice to the employee at least one month in advance or one-half month for every year of service of the employee, whichever is longer, a fraction of at least six months being considered as one whole year. The employer, upon whom no such notice was served in case of termination of employment without just cause, may hold the employee liable for damages. The employee, upon whom no such notice was served in case of termination of employment without just cause, shall be entitled to compensation from the date of termination of his employment in an amount equivalent to his salaries or wages corresponding to the required period of notice. Art. 280. Regular and casual employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An employment shall be deemed to be casual if it is not covered by the preceding paragraph: Provided, That any employee who has rendered at least one year of service, 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. 53 | L a b o r S t a n d a r d s - C a s e D i g e s t s

There can of course be no quarrel with the proposition that where from the circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial security by the employee, they should be struck down or disregarded as contrary to public policy, morals, etc. But where no such intent to circumvent the law is shown, or stated otherwise, where the reason for the law does not exist. Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Columbus Philippines Bus Corp. vs. NLRC G.R. Nos. 114858-59 COLUMBUS PHILIPPINES BUS CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION, ZENAIDA DOMASIG and ROMAN DOMASIG September 7, 2001 Facts: Columbus Philippines Bus Corporation is engaged in the business of operating passenger buses. Since the start of its operations in 1990, it has maintained a list of drivers and conductors who rendered service in its bus units allegedly on a first come first served basis and compensated purely on commission. The drivers and conductors/conductress worked for about ten (10) to fifteen (15) days a month and were allegedly not required to work everyday. Roman and Zenaida Domasig, were employed as a driver and a bus conductress, respectively, under Columbus Bus Corporation. Due to poor labor practice involving 19-20 hour shifts, illegal deductions, and issues with security of tenure, petitioners started to encourage other workers to sign a Sama-Samang Pahayag from the National Federation of Labor for 54 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the creation of a union. In their affidavits, the Spouses Domasig recalled not being allowed to board their buses and being illegally dismissed after having known of their signature campaign and for refusing to take back their signatures to start a union. Respondents then filed a case for unfair labor practice, illegal dismissal, illegal deductions from salary, and nonpayment of service incentive leave pay and 13th month pay. Labor Arbiter found for the respondents and ordered petitioner to reinstate them to their former positions as driver and bus conductress without loss of seniority rights and with back pay. Petitioner appealed to NLRC which affirmed the decision of the Labor Arbiter. CPBC challenged both Decisions on the ground that private respondents were not regular employees as they were compensated purely on a commission basis, their services were rendered on a first-come-first-served basis, and they only worked for only about 10-15 days and only when they felt to do so. Issue: Whether or not private respondents were regular employees of the petitioner company. Held: The court held that they were regular employees and affirmed the Decision of the NLRC. In determining whether an employee is regular or not, the activities he performed must be in relation to the usual business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. Considering the work of the respondents, they were regular employees. Without their services, the petitioner risked the operation and management of its business of providing transportation services. Singer Sewing Machine Company vs. Drilon G.R. No. 91307 SINGER SEWING MACHINE COMPANY vs. HON. FRANKLIN M. DRILON, MED-ARBITER FELIX B. CHAGUILE, JR., and SINGER MACHINE COLLECTORS UNION-BAGUIO (SIMACUB) January 24, 1991 Facts: The respondent union filed a petition for direct certification as the sole and exclusive bargaining agent of all collectors of the Singer Sewing Machine Company, Baguio City branch. Petitioner opposed the petition on the ground that the union members were not employees of their company. Both the Med-Arbiter and the Secretary of Labor found for the respondents and granted the petition for certification election. Petitioner then filed the current action.

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Issue: Whether or not there existed an employer-employee relationship between the petitioner company and the respondents.

Held: No, there’s is no employer-employee relationship between the petitioners and the respondents. The court reversed and set aside the Resolution and Order. The present case mainly calls for the application of the control test, which if not satisfied, would lead us to conclude that no employer-employee relationship exists. Hence, if the union members are not employees, no right to organize for purposes of bargaining, nor to be certified as such bargaining agent can ever be recognized. In determining whether an employer-employee relationship exists, the following elements must be present: "(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 employee's conduct — although the latter is the most important element.” The nature of the relationship between a company and its collecting agents depends on the circumstances of each particular relationship. Not all collecting agents are employees and neither are all collecting agents’ independent contractors. The collectors could fall under either category depending on the facts of each case. The Agreement confirms the status of the collecting agent in this case as an independent contractor not only because he is explicitly described as such but also because the provisions permit him to perform collection services for the company without being subject to the control of the latter except only as to the result of his work. After a careful analysis of the contents of the agreement, we rule in favor of the petitioner. The requirement that collection agents utilize only receipt forms and report forms issued by the Company and that reports shall be submitted at least once a week is not necessarily an indication of control over the means by which the job of collection is to be performed. The agreement itself specifically explains that receipt forms shall be used for the purpose of avoiding a co-mingling of personal funds of the agent with the money collected on behalf of the Company. Likewise, the use of standard report forms as well as the regular time within which to submit a report of collection are intended to facilitate order in office procedures. Even if the report requirements are to be called control measures, any control is only with respect to the end result of the collection since the requirements regulate the things to be done after the performance of the collection job or the rendition of the service. The Court finds the contention of the respondents that the union members are employees under Article 280 of the Labor Code to have no basis. The definition that regular employees are those who perform activities which are desirable and necessary for the business of the employer is not determinative in this case. Any agreement may provide that one party 56 | L a b o r S t a n d a r d s - C a s e D i g e s t s

shall render services for and in behalf of another for a consideration (no matter how necessary for the latter's business) even without being hired as an employee. This is precisely true in the case of an independent contractorship as well as in an agency agreement. The Court agrees with the petitioner's argument that Article 280 is not the yardstick for determining the existence of an employment relationship because it merely distinguishes between two kinds of employees, i.e., regular employees and casual employees, for purposes of determining the right of an employee to certain benefits, to join or form a union, or to security of tenure. Article 280 does not apply where the existence of an employment relationship is in dispute. Sonza vs. ABS-CBN Broadcasting Corp., G. R. No. 1380051 (June 10, 2004) as against Dumpit Murillo vs. C.A., G.R. No. 164652 (June 8, 2007) G.R. No. 164652 THELMA DUMPIT-MURILLO vs. COURT OF APPEALS, ASSOCIATED BROADCASTING COMPANY, JOSE JAVIER AND EDWARD TAN June 8, 2007 Facts: Associated Broadcasting Company (ABC) hired petitioner Thelma Dumpit Murillo as a newscaster and co-anchor for Balitang-Balita, an early evening news program. The contract was for a period of three months. It was renewed under various subsequent contracts. In addition, petitioner’s services were engaged for the program Live on Five. After four years of repeated renewals, petitioner talent contract expired. Two weeks after the expiration of the last contract, petitioner sent a letter that she was still interested in renewing her contract, subject to a salary increase. Thereafter, petitioner stopped reporting for work. Subsequently, she sent a demand letter to ABC for reinstatement to her former position and claim for unpaid wages and other monetary benefits. ABC replied that a check covering petitioners had been processed for the unpaid wages but refused to pay the other claim. Petitioner filed a complaint for illegal constructive dismissal, non-payment of salaries and other benefits and she also demanded for damages. The Labor Arbiter dismissed the complaint. On appeal the NLRC reversed the Labor Arbiter’s decision holding that an employer-employee relationship existed between petitioners and ABC; that the talent contract was void; that the petitioner was a regular employee illegally dismissed. ABC filed a Motion for reconsideration but was denied. ABC elevated the case to CA. CA ruled that NLRC committed grave abuse of discretion, and reversed the decision of the NLRC, saying

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that the petitioner was a fixed term employee and not a regular employee. Issue: Whether or not petitioner is a regular employee of ABC. Held: Petitioner was a regular employee under contemplation of law. The practice of having fixed term contracts in the industry does not make all talent contracts valid and compliant with labor laws. The assertion that a talent contract exists does not necessarily prevent a regular employment status. Requisites for regularity of the performance of petitioners have been met in the instant case. Petitioner’s work was necessary or desirable in the usual business or trade of the employer. Further, the Sonza case is not applicable. In Sonza, the television station did not instruct Sonza how to perform his job. How Sonza delivered his lines, appeared on television, and sounded on radio were outside the television stations control. Sonza had a free hand on what to say or discuss in his shows provided he did not attack the television station or its interests. Clearly, the television station did not exercise control over the means and methods of the performance of Sonzas work. In the case at bar, ABC had control over the performance of petitioners work. Noteworthy too, is the comparatively low P28,000 monthly pay of petitioner vis the P300,000 a month salary of Sonza, that all the more bolsters the conclusion that petitioner was not in the same situation as Sonza. In Manila Water Company, Inc. v. Pena, we said that the elements to determine the existence of an employment relationship are: (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 most important element is the employer’s control of the employees’ conduct, not only as to the result of the work to be done, but also as to the means and methods to accomplish it. The duties of petitioner as enumerated in her employment contract indicate that ABC had control over the work of petitioner. Aside from control, ABC also dictated the work assignments and payment of petitioner’s wages. ABC also had power to dismiss her. All these being present, clearly, there existed an employment relationship between petitioner and ABC. Concerning regular employment, the law provides for two kinds of employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employee. In other words, regular status arises from either the nature of work of the employee or the duration of his employment. In Benares v. Pancho, we very succinctly said The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee vis--vis the usual trade or business of the employer. This connection can be determined by considering the nature of the work performed and its 58 | L a b o r S t a n d a r d s - C a s e D i g e s t s

relation to the scheme of the particular business or trade in its entirety. If the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. In our view, the requisites for regularity of employment have been met in the instant case. Gleaned from the description of the scope of services aforementioned, petitioners work was necessary or desirable in the usual business or trade of the employer. ABS-CBN Broadcasting Corporation vs. Marquez G.R. No. 167638 ABS-CBN Broadcasting Corporation vs. Henrie Marquez, et al. June 22, 2005 Facts: Petitioner hired the services of respondents on various dates starting December, 1994 to undertake the production in the Cebuano dialect of television serial programs for petitioner's week-day afternoon time slots in Cebu. The television-series did so well that several more were subsequently produced. The production groups were continuously engaged to film succeeding programs to replace the concluded ones. On June 15, 1999, respondents addressed a letter to petitioner asking for a 25% increase in their weekly budget, but the same was denied by petitioner's AVP for the Visayas Cluster, Ma. Luisa L. Ascalon. Instead, respondents were informed of the termination of their services effective August 13, 1999. Respondents filed with the Regional Arbitration Branch (RAB) at Region VII of the Department of Labor and Employment their consolidated complaint for illegal dismissal; illegal deduction; non-payment of overtime and holiday pay; premium pay for holiday, rest day and night shift differential; non-payment of 13th month pay, service incentive leave, separation pay, backwages; and attorney's fees. Subsequently, the Executive Labor Arbiter of RAB VII rendered a decision in favor of respondents and ordered petitioner to pay to them their money claims. However, on petitioner's appeal, the NLRC'S reversed the decision of the Labor Arbiter. Respondents moved for a reconsideration but their motion was denied by the NLRC's 4th Division in its resolution of July 30, 2003. From there, respondents went to the Court of Appeals via a petition for certiorari, imputing grave abuse of discretion on the part of the NLRC in setting aside the Labor Arbiter's findings and in ruling that they were hired as 59 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contractual or project employees, i.e. as "talents" engaged for specific projects, under the special work arrangements with the petitioner, and in upholding the legality of their dismissal. Respondents asserted that they are petitioner's regular employees and emphasized the fact of their continuous work after each tele-series program and the very nature of their work, which is "necessary and desirable" to the business or trade of their employer. They also averred that the application of the "four-fold test" in labor laws clearly shows the existence of an employer-employee relationship between the parties. Issue: Whether or not the respondents are regular employees of the petitioner. Held: In applying the "four-fold test" to determine the existence of an employer-employee relationship between the parties, the Court of Appeals viewed respondents as regular employees of petitioner and not independent contractors. Respondents' employment with petitioner passed the "four-fold test" on employer-employee relations, namely: (1) the selection and engagement of the employee, or the power to hire; (2) the payment of wages; (3) the power to dismiss; and (4) the power to control the employee. Petitioner never denied having engaged the services of respondents. Neither did it controvert the fact that respondents received their pay from petitioner twice a month thru automated teller machines (ATM) and respondents were issued payslips bearing petitioner's corporate name on the heading. The payment of wages clearly rests upon petitioner. While a weekly budget is given and the directors are ostensibly given a free hand on how to spend the same subject only to petitioner's budgetary limitation, the hard reality is that such payments were done by the petitioner itself. As correctly observed by the Labor Arbiter, the elements of control and supervision over the respondents were evident. Petitioner employed production supervisors who monitored and saw to it that the filming of the series shall be finished within a time-frame and the production output to conform to petitioner's standards. These were bolstered by various memoranda issued by petitioner relative to production work-approval of filming and editing schedule, new assignments of production crew and reminders to tele-series directors and editors regarding the standard policy on editing services. Respondents have to follow company rules in the work done in company premises. An overseer, in the person of an executive producer, is assigned by petitioner over each production crew to make sure that the end result is acceptable to petitioner, and the executive producer can dictate the work to be redone. Petitioner also has control in the assignments of crew members and can thus re-assign or transfer any of them to another production group, thereby belying petitioner's contention that the directors are the ones that 60 | L a b o r S t a n d a r d s - C a s e D i g e s t s

control the whole production. All these, taken together, unmistakably show petitioner's power of control over respondents' work. Anent the power of dismissal and suspension, it cannot be denied that petitioner exercised such. The records clearly show that petitioner sanctioned disciplinary measures on some of the respondents for some infraction of company rules thru disciplinary measures on erring employees. For sure, respondent Orlando Carillo was suspended for one week by his production head on January 25, 1999 for failure to edit an episode which was to be sent to petitioner's Zamboanga station for airing. Additionally, the fact that petitioner itself provided the production equipment such as video cameras, lights, microphone and TV monitors, largely discounts petitioner's claim that respondents were independent contractors. It may be so that respondents were assigned to a particular tele-series. However, petitioner can and did immediately reassign them to a new production upon completion of a previous one. Hence, they were continuously employed, the tele-series being a regular feature in petitioner's network programs. Petitioner's continuous engagement of respondents from one production after another, for more than five years, made the latter part of petitioner's workpool who cannot be separated from the service without cause as they are considered regular. A project employee or a member of a workpool may acquire the status of a regular employee when the following concur: there is continuous rehiring of project employees even after the cessation of the project; and the tasks performed by the alleged "project employee" are vital, necessary, and indispensable to the usual business or trade of his employer. It cannot be denied that the services of respondents as members of a crew in the production of a tele-series are undoubtedly connected with the business of the petitioner. This Court has held that the primary standard in determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of his employer. Here, the activity performed by respondents is, without doubt, vital to petitioner's trade or business. Consolidated Broadcasting System, Inc. vs. Oberio G.R. No. 168424 CONSOLIDATED BROADCASTING SYSTEM, INC. vs. DANNY OBERIO, ELNA DE PEDRO, LUISITO VILLAMOR, WILMA SUGATON, RUFO DEITA, JR., EMILY DE GUZMAN, CAROLINE LADRILLO, JOSE ROBERTO REGALADO, ROSEBEL NARCISO & ANANITA TANGETE June 8, 2007 61 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: Respondents alleged that they were employed as drama talents by DYWB-Bombo Radyo, a radio station owned and operated by petitioner Consolidated Broadcasting System, Inc. They reported for work daily for six days in a week and were required to record their drama production in advance. Some of them were employed by petitioner since 1974, while the latest one was hired in 1997. Sometime in August 1998, petitioner reduced the number of its drama productions from 14 to 11, but was opposed by respondents. After the negotiations failed, the latter sought the intervention of the Department of Labor and Employment (DOLE), which on November 12, 1998, conducted through its Regional Office, an inspection of DWYB station. The results thereof revealed that petitioner is guilty of violation of labor standard laws, such as underpayment of wages, 13th month pay, non-payment of service incentive leave pay, and non-coverage of respondents under the Social Security System. Vexed by the respondents’ complaint, petitioner allegedly pressured and intimidated respondents. Oberio and Delta were suspended for minor lapses and the payment of their salaries were purportedly delayed. Eventually, on February 3, 1999, pending the outcome of the inspection case with the Regional Director, respondents were barred by petitioner from reporting for work; thus, the former claimed constructive dismissal. On October 12, 1999, respondents filed a case for illegal dismissal, underpayment/non-payment of wages and benefits plus damages against petitioner. On April 10, 2000, the Labor Arbiter dismissed the case without prejudice while waiting for the decision of the Secretary of Labor on the same issue of the existence of an employer-employee relationship between petitioner and respondents. On appeal to the NLRC, respondents raised the issue of employer-employee relationship and submitted the following to prove the existence of such relationship. On December 5, 2001, the NLRC rendered a decision holding that respondents were regular employees of petitioner who were illegally dismissed by the latter. Hence, petitioner filed the instant recourse. Issue: Whether or not respondents were regular employees of petitioner. Held: Yes. The engagement of respondents for a period ranging from 2 to 25 years and the fact that their drama programs were aired not only in Bacolod City but also in the sister stations of DYWB in the Visayas and Mindanao areas, undoubtedly show that their work is necessary and indispensable to the usual business or trade of petitioner. The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business. Thus, even assuming that respondents were initially hired as project/contractual 62 | L a b o r S t a n d a r d s - C a s e D i g e s t s

employees who were paid per drama or per project/contract, the engagement of their services for 2 to 25 years justify their classification as regular employees, their services being deemed indispensable to the business of petitioner. In ABS-CBN v. Marquez, the Court held that the failure of the employer to produce the contract mandated by Policy Instruction No. 40 is indicative that the so called talents or project workers are in reality, regular employees. Thus Policy Instruction No. 40 pertinently provides: Program employees are those whose skills, talents or services are engaged by the station for a particular or specific program or undertaking and who are not required to observe normal working hours such that on some days they work for less than eight (8) hours and on other days beyond the normal work hours observed by station employees and are allowed to enter into employment contracts with other persons, stations, advertising agencies or sponsoring companies. The engagement of program employees, including those hired by advertising or sponsoring companies, shall be under a written contract specifying, among other things, the nature of the work to be performed, rates of pay, and the programs in which they will work. The contract shall be duly registered by the station with the Broadcast Media Council within three days from its consummation. Ironically, however, petitioner failed to adduce an iota proof that the requirements for program employment were even complied with by it. It is basic that project or contractual employees are appraised of the project they will work under a written contract, specifying, inter alia, the nature of work to be performed and the rates of pay and the program in which they will work. Sadly, however, no such written contract was ever presented by the petitioner. And because none was presented, we have every reason to surmise that no such written contract was ever accomplished by the parties, thereby belying petitioner’s posture. Hence, the court ruled that absence of the contract mandated by Policy Instruction No. 40 is an indication that employee is a regular employee. Orazco vs. The Fifth Division of the Honorable Court of Appeals G.R. No. 155207 63 | L a b o r S t a n d a r d s - C a s e D i g e s t s

WILHELMINA S. OROZCO vs. THE FIFTH DIVISION OF THE HONORABLE COURT OF APPEALS, PHILIPPINE DAILY INQUIRER, and LETICIA JIMENEZ MAGSANOC August 13, 2008

Facts: Wilhelmina S. Orozco writes for the Lifestyle Section of Philippine Daily Inquirer weekly. Orozco submits her articles, except when she went to NY City which lasted for six months. She also received compensation for every column that was published. The day came when Orozco was informed by her editor, Logarta, that the newspaper will stop publishing her columns for no reason at all and advised her to talk to the editor-inchief. When Orozco talked to Magsanoc, the editor-in-chief, Magsanoc told her that it was the newspaper’s chairperson who wanted to stop the publication of her column. So, Orozco spoke to Apostol, the chairperson, who told her that Magsanoc informed her that the Lifestyle section had already many columnists. The newspaper said that the action aims to improve the Lifestyle section. After a perusal of Orozco’s articles, they found that her column failed to improve, continued to be superficially and poorly written, and failed to meet the high standards of the newspaper. Orozco, then, filed a complaint for illegal dismissal. The Labor Arbiter favored. Orozco in its ruling. On appeal, the National Labor Relations Commission dismissed the appeal and affirmed the Labor Arbiter’s decision. The Court of Appeals, on the other hand, set aside the National Labor Relations Commission’s decision and dismissed Orozco’s complaint. Issue: Whether or not Wilhelmina Orozco is an employee of Philippine Daily Inquirer. Held: No. Though PDI issued guidelines for the petitioner to follow in the course of writing her columns, careful examination reveals that the factors enumerated by the petitioner are inherent conditions in running a newspaper. In other words, the so-called control as to time, space, and discipline are dictated by the very nature of the newspaper business itself. Aside from the constraints presented by the space allocation of her column, there were no restraints on her creativity. Petitioner was free to write her column in the manner and style she was accustomed to and to use whatever research method she deemed suitable for her purpose. The apparent limitation that she had to write only on subjects that befitted the Lifestyle section did not translate to control, but was simply a logical consequence of the fact that her column appeared in that section and therefore had to cater to the preference of the readers of that section. Although petitioner had a weekly deadline to meet, she was not precluded from submitting her column ahead of time or from submitting columns to be published at a later time. More importantly, respondents did not dictate upon petitioner the subject matter of her columns, but only imposed the 64 | L a b o r S t a n d a r d s - C a s e D i g e s t s

general guideline that the article should conform to the standards of the newspaper and the general tone of the particular section. Where a person who works for another performs his job more or less at his own pleasure, in the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the result of his efforts and not the amount thereof, no employer-employee relationship exists. By Period of Service – An employee is considered regular when an employee has rendered at least one (1) year, whether continuous or broken, on such activity in which he is employed and his employment shall continue while such activity exists. Audion Electric Co., Inc. vs. NLRC G.R. No. 106648 AUDIO ELECTRIC CO., INC. vs. NATIONAL LABOR RELATIONS COMMISSION and NICOLAS MADOLID June 17, 1999 Facts: Private respondent, Nicolas Madolid, was employed for thirteen (13) years by respondent Audion Electric Company (“Audion”) as fabricator and continuously rendered service assigned in different offices or projects as helper electrician, stockman and timekeeper. Sometime later, Madolid received a letter informing him that he will be considered terminated after the turnover of materials, including respondents' tools and equipment. Complainant alleged that he was dismissed without justifiable cause and due process and that his dismissal was done in bad faith which renders the dismissal illegal. Thus, he claimed that he is entitled to reinstatement with full back wages, moral and exemplary damages, overtime pay, project allowance, minimum wage increase adjustment, proportionate 13th month pay and attorney's fees. Audion moved for the dismissal of the case on the ground that there was no illegal dismissal, since the employment contract signed by complainant with respondent is co-terminus with the project. The Labor Arbiter ruled in favor of Madolid and ordered Audion to 1) reinstate Madolid to his former position with full back wages from the date of his dismissal up to the signing of the decision without loss of seniority rights; and 2) to pay Madolid’s overtime, project allowances, minimum wage increase adjustment, proportionate 13th month pay, moral and exemplary damages, and attorney's fees equivalent to 10% of the total award of complainant. Audion appealed to the NLRC, which dismissed the same. The motion for reconsideration was also denied.

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Issue: Whether or not the parties have an employer-employee relationship, and, if so, whether or not the respondent is legally terminated. Held: Yes, there is an employer-employee relationship. Well-settled is the rule that the findings of the NLRC, affirming those of the Labor Arbiter are entitled to great weight and will not be disturbed, except when there is grave abuse of discretion, are practically conclusive on the Court. It is only when the NLRC's findings are bereft of any substantial support from the records that the Court may step in and proceed to make its own independent evaluation of the facts. Private respondent's employment status was established by the Certification of Employment issued by petitioner which certified that private respondent is a bonafide employee of the petitioner. It is also held that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. The decision of the NLRC is affirmed with the modification that the awards of moral and exemplary damages and attorney's fees are deleted. Universal Robina Corporation vs. Catapang G.R. No. 164736 UNIVERSAL ROBINA CORPORATION and/or RANDY GREGORIO vs. BENITO CATAPANG, CARLOS ARARAO, ALVIN ALCANTARA, RESTY ALCORAN, REYNALDO ARARAO, JUAN ARISTADO, LITO CABRERA, ONOFRE CASANO, BEN CERVAS, JOSEPH CHUIDIAN, IRENEO COMENDADOR, ANGELITO CONCHADA, RICHARD CORONADO, ELMER HILING, RAMON JOYOSA, JOSE LORIA, JR., VICTORIANO LORIA, RUEL MARIKIT, RODERICK PANG-AO, QUIRINO PLATERO, PABLITO REDONDO, RAMIL ROXAS, RESTY SALAZAR, NOEL TRINIDAD, FELICISIMO VARELA, BALTAZAR VILLANUEVA, ELPIDIO VILLANUEVA, JOEL VILLANUEVA, JONATHAN VILLANUEVA, and JAIME VILLEGAS October 14, 2005 Facts: The individual respondents were hired by the petitioner company on various dates from 1991 to 1993 to work at its duck farm in Barangay Sto. Tomas, Calauan, Laguna. The respondents were hired under an employment contract which provided for a five-month period. After the expiration of the said employment contracts, the petitioner company would renew them and re-employ the respondents. This practice continued until sometime in 1996, when the petitioners informed the respondents that they were no longer renewing their employment contracts. In October 1996, the respondents filed separate complaints for illegal dismissal, reinstatement, backwages, damages and attorney’s fees against the petitioners. The complaints were later consolidated. On March 66 | L a b o r S t a n d a r d s - C a s e D i g e s t s

30, 1999, after due proceedings, the Labor Arbiter declared that they have been illegally dismissed. On November 22, 2000, the NLRC affirmed the decision of the Labor Arbiter with the modification that the award of attorney’s fees was reduced to 10% of the total monetary award. On August 21, 2003, the CA denied the petition for lack of merit. The CA held that after rendering more than one year of continuous service, the respondents became regular employees of the petitioners by operation of law. Issue: Whether or not the respondents were regularized by the lapse one year from the date of their employment. Held: Yes, they are. In any case, we find that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents as regular employees of the petitioner company. In Abasolo v. National Labor Relations Commission, the Court reiterated the test in determining whether one is a regular employee: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists It is obvious that the said five-month contract of employment was used by petitioners as a convenient subterfuge to prevent private respondents from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees’ security of tenure in their jobs. Petitioners’ act of repeatedly and continuously hiring private respondents in a span of … 3 to 5 years to do the same kind of work negates their contention that private respondents were hired for a specific project or undertaking only. Abesco Construction and Development Corp. vs. Ramirez G.R. No. 141168

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ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and MR. OSCAR BANZON, General Manager vs. ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA, REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA and GARY DISON April 10, 2006 Facts: Respondents were hired on different dates from 1976 to 1992 either as laborers, road roller operators, painters or drivers. In 1997, respondents filed two separate complaints1 for illegal dismissal against the company and its General Manager, Oscar Banzon, before the Labor Arbiter (LA). Petitioners allegedly dismissed them without a valid reason and without due process of law. The complaints also included claims for non-payment of the 13th month pay, five days' service incentive leave pay, premium pay for holidays and rest days, and moral and exemplary damages. The LA later on ordered the consolidation of the two complaints. Petitioners denied liability to respondents and countered that respondents were "project employees" since their services were necessary only when the company had projects to be completed. Petitioners argued that, being project employees, respondents' employment was coterminous with the project to which they were assigned. They were not regular employees who enjoyed security of tenure and entitlement to separation pay upon termination from work. After trial, the LA declared respondents as regular employees because they belonged to a "work pool" from which the company drew workers for assignment to different projects, at its discretion. Petitioners appealed to the National Labor Relations Commission (NLRC) which affirmed the LA's decision. The CA dismissed petitioners' appeal. Petitioners filed a motion for reconsideration but it was dismissed by the CA. Issue: Whether or not respondent is a regular employee. Held: We rule that respondents were regular employees. However, we take exception to the reasons cited by the LA (which both the NLRC and the CA affirmed) in considering respondents as regular employees and not as project employees. Contrary to the disquisitions of the LA, employees (like respondents) who work under different project employment contracts for several years do not automatically become regular employees; they can remain as project employees regardless of the number of years they work.7 Length of service is not a controlling factor in determining the nature of one's employment. Moreover, employees who are members of a "work pool" from which a company (like petitioner corporation) draws workers for deployment to its different projects do not become regular employees by reason of that fact alone. The Court has enunciated in some cases 9 that members of a "work 68 | L a b o r S t a n d a r d s - C a s e D i g e s t s

pool" can either be project employees or regular employees.The principal test for determining whether employees are "project employees" or "regular employees" is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed, is defined in an employment agreement and is made clear to the employees at the time of hiring. In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latter's work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, we are constrained to declare them as regular employees. Furthermore, petitioners cannot belatedly argue that respondents continue to be their employees (so as to escape liability for illegal dismissal). Before the LA, petitioners staunchly postured that respondents were only "project employees" whose employment tenure was coterminous with the projects they were assigned to. However, before the CA, they took a different stance by insisting that respondents continued to be their employees. Petitioners' inconsistent and conflicting positions on their true relation with respondents make it all the more evident that the latter were indeed their regular employees. Nature of Probationary Employment Philippine Federation of Credit Cooperatives, Inc. vs. NLRC G.R. No. 121071 PHIL. FEDERATION OF CREDIT COOPERATIVES, INC, (PFCCI) and FR. BENEDICTO JAYOMA vs. NATIONAL LABOR RELATIONS COMMISSION (First Division) and VICTORIA ABRIL December 11, 1998 Facts: Sometime in September 1982, private respondent Victoria Abril was employed by petitioner as Junior Auditor/Field Examiner and thereafter held positions in different capacities to wit. Upon her return sometime in November 1989, however, she discovered that a certain Vangie Santos had been permanently appointed to her former position. She, nevertheless, accepted the position of Regional Field Officer as evidenced by a contract which stipulated, among other things, that respondent's employment status shall be probationary for a period of six (6) months. Said period having elapsed, respondent was allowed to work until PFCCI presented to her another employment contract for a period of one year commencing on January 2, 1991 until December 31, 1991, after which period, her employment was terminated. In a complaint for illegal dismissal filed by respondent against PFCCI on April 1, 1992, Labor Arbiter Cornelio L. Linsangan rendered a decision on 69 | L a b o r S t a n d a r d s - C a s e D i g e s t s

March 10, 1993 dismissing the same for lack of merit but ordered PFCCI to reimburse her. On appeal, however, the said decision was reversed by the National Labor Relations Commission (NLRC), which directs petitioner to reinstate complainant to her position last held, or to an equivalent position if such is no longer feasible, with full backwages. Issue: Whether or not April is a regular employee. Held: We find no merit in the petition. As defined in the case ofInternational Catholic Migration v. NLRC, "a probationary employee is one who is on trial by an employer during which the employer determines whether or not he is qualified for permanent employment. A probationary employment is made to afford the employer an opportunity to observe the fitness of a probationer while at work, and to ascertain whether he will become a proper and efficient employee." Probationary employees, notwithstanding their limited tenure, are also entitled to security of tenure. Thus, except for just cause as provided by law, or under the employment contract, a probationary employee cannot be terminated. The contention that respondent could either be classified as a casual or contractual employee is utterly misplaced; thus, it is imperative for the Court to elucidate on the kinds of employment recognized in this jurisdiction. The pertinent provision of the Labor Code, as amended, states: Art. 280. Regular and casual employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 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. This provision of law comprehends three kinds of employees: (a) regular employees or those whose work is necessary or desirable to the usual business of the employer; (b) project employees or those whose 70 | L a b o r S t a n d a r d s - C a s e D i g e s t s

employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season; and (c) casual employees or those who are neither regular nor project employees. After a careful scrutiny of the subject contract, we arrive at the conclusion that there was no grave abuse of discretion on the part of the NLRC and, thus, affirm the finding that respondent has become a regular employee entitled to security of tenure guaranteed under the Constitution and labor laws. Regardless of the designation petitioner may have conferred upon respondent's employment status, it is, however, uncontroverted that the latter, having completed the probationary period and allowed to work thereafter, became a regular employee who may be dismissed only for just or authorized causes under Articles 282, 283 and 284 of the Labor Code, as amended. Therefore, the dismissal, premised on the alleged expiration of the contract, is illegal and entitles respondent to the reliefs prayed for. Computation of the six (6) Month Probationary Period Cals Poultry Supply Corp. vs. Roco G.R. No. 150660 CALS POULTRY SUPPLY CORPORATION and DANILO YAP vs. ALFREDO ROCO and CANDELARIA ROCO July 30, 2002 Facts: On March 15, 1984, CALS hired Alfredo Roco as its driver. On May 16, 1995, it hired Candelaria Roco, another sister, as helper,3 also at its chicken dressing plant on a probationary basis. On March 5, 1996, Alfredo Roco and Candelaria Roco filed a complaint for illegal dismissal against CALS and Danilo Yap alleging that Alfredo and Candelaria were illegally dismissed on January 20, 1996 and November 5, 1996, respectively. According to Alfredo Roco, he was dismissed on January 20, 1996 when he refused to accept P30,000.00 being offered to him by CALS' lawyer, Atty. Myra Cristela A. Yngcong, in exchange for his executing a letter of voluntary resignation. On the part of Candelaria Roco, she averred that she was terminated without cause from her job as helper after serving more than six (6) months as probationary employee. The Labor Arbiter on April 16, 1998, issued a decision dismissing the complaints.The National Labor Relations Commission (NLRC), in a decision promulgated on January 17, 2000, affirmed the judgment of the Labor Arbiter. On appeal,the appellate court set aside the NLRC's decision and ordered reinstatement of Alfredo and Candelaria Roco to their former positions without loss of seniority of rights and benefits. In holding that Alfredo Roco

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did not abandon his employment, but was illegally dismissed, the Court of Appeals ratiocinated: xxx (P)etitioner Alfredo can not be said to have abandoned his employment. The failure of Alfredo to report for work was justified under the circumstances. The positive assertion of petitioner that when he reported for work on January 20, 1996, he was told that his services were already terminated is more convincing than the mere denial of respondent Danilo Yap. Petitioner Alfredo's failure to inquire from private respondent as to the cause of his dismissal should not be taken against him. It should be noted that when the secretary of respondent Danilo Yap conveyed the order of dismissal, Alfredo took steps to verify the same from the company's Chief Maintenance Officer Rolando Sibugan who confirmed said order. The filing of the illegal dismissal case against CALS by petitioner Alfredo negates the charge of abandonment. Private respondent failed to show that Alfredo clearly and unequivocably performed overt acts to sever the employer-employee relationship. In the instant case, private respondent failed to present as evidence such notice despite every company's standard policy to record and file every transaction including notices of termination. CALS' contention that the letter of Rolando Sibugan inquiring from Alfredo whether he still had intention of resuming work is a manifestation of its willingness to reinstate the latter to his former position, thereby negating any intention on its part to dismiss Alfredo, is not well-taken. The fact that the employer later made an offer to re-employ Alfredo did not cure the vice of his earlier arbitrary dismissal. The wrong had been committed and the harm done. Notably, it was only after the complaint had been filed that CALS, in a belated gesture of good will, sought to invite Alfredo back to work. CALS' sincerity is suspect. Its offer of reinstatement is doubtful since the same could not have been made if Alfredo had not complained against it. Whether the offer was sincere or not, the same could not correct the earlier illegal dismissal of Alfredo. It must be borne in mind that CALS' offer to reinstate Alfredo was obviously an attempt to escape liability from having illegally terminated the latter's services. Hence, CALS incurred liability under the Labor Code from the moment Alfredo was illegally dismissed, and the liability was not abated as a result of CALS' offer to reinstate. In ruling in favor of Candelaria Roco, the appellate court held that when her employment was terminated on November 15, 1995 (she was hired on May 16, 1995), it was four (4) days after she ceased to be a probationary employee and became a regular employee within the ambit of Article 281 of the Labor Code, which provides:

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ART. 281. Probationary employment. - Probationary employment shall not exceed six months from the date the employee started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee who is allowed to work after a probationary period shall be considered a regular employee. Issue: Whether or not Candelaria was terminated beyond the 6-month probationary period. Held: From the facts established, we are of the view that Alfredo Roco has not established convincingly that he was dismissed. No notice of termination was given to him by CALS. There is no proof at all, except his self-serving assertion, that he was prevented from working after the end of his leave of absence on January 18, 1996. In fact, CALS notified him in a letter dated March 12, 1996 to resume his work. Both the Labor Arbiter and the NLRC found that Alfredo, as well as Candelaria Roco, was not dismissed. Their findings of fact are entitled to great weight. With respect to Candelaria Roco, there is no dispute that she was employed on probationary basis. She was hired on May 16, 1995 and her services were terminated on November 15, 1995 due to poor work performance. She did not measure up to the work standards on the dressing of chicken. The Labor Arbiter sustained CALS in terminating her employment. The NLRC affirmed the Labor Arbiter's ruling. The Court of Appeals did not disagree with the NLRC's finding that Candelaria was dismissed because she did not qualify as a regular employee in accordance with the reasonable standards made known by the company to her at the time of her employment CALS argues that the Court of Appeals' computation of the 6-month probationary period is erroneous as the termination of Candelaria's services on November 15, 1995 was exactly on the last day of the 6month period. We agree with CALS' contention as upheld by both the Labor Arbiter and the NLRC that Candelaria's services was terminated within and not beyond the 6-month probationary period. In Cebu Royal v. Deputy Minister of Labor,13 our computation of the 6-month probationary period is reckoned from the date of appointment up to the same calendar date of the 6th month following. Thus, we held: The original findings were contained in a one-page order reciting simply that 'complainant was employed on a probationary period of employment for six (6) months. After said period, he underwent 73 | L a b o r S t a n d a r d s - C a s e D i g e s t s

medical examination for qualification as regular employee but the results showed that he is suffering from PTB minimal. Consequently, he was informed of the termination of his employment by respondent.' The order then concluded that the termination was 'justified.' As there is no mention of the basis of the above order, we may assume it was the temporary payroll authority submitted by the petitioner showing that the private respondent was employed on probation on February 16, 1978. Even supposing that it is not selfserving, we find nevertheless that it is self-defeating. The six-month period of probation started from the said date of appointment and so ended on August 17, 1978, but it is not shown that the private respondent's employment also ended then; on the contrary, he continued working as usual. Under Article 282 of the Labor Code, 'an employee who is allowed to work after a probationary period shall be considered a regular employee.'' Hence, Pilones was already on permanent status when he was dismissed on August 21, 1978, or four days after he ceased to be a probationer. Application of Article 13 of the Civil Code in the computation of the six month probationary period. Mitsubishi Motors Philippines Corp. vs. Chrysler Philippines Labor Union G.R. No. 148738 MITSUBISHI MOTORS PHILIPPINES CORPORATION vs. CHRYSLER PHILIPPINES LABOR UNION and NELSON PARAS June 29, 2004 Facts: Nelson Paras was first employed by MMPC as a shuttle bus driver on March 19, 1976. He resigned on June 16, 1982. He applied for and was hired as a diesel mechanic and heavy equipment operator in Saudi Arabia from 1982 to 1993. When he returned to the Philippines, he was re-hired as a welder-fabricator at the MMPC tooling shop from October 3, 1994 to October 31, 1994.2 On October 29, 1994, his contract was renewed from November 1, 1994 up to March 3, 1995. Sometime in May of 1996, Paras was re-hired on a probationary basis as a manufacturing trainee at the Plant Engineering Maintenance Department. He and the new and re-hired employees were given an orientation on May 15, 19964 respecting company rules and Paras started reporting for work on May 27, 1996. Paras was evaluated and received an average rating. Later, Lacambacal informed Paras that based on his performance rating, he would be regularized. However, the Department and Division Managers, A.C. Velando and H.T. Victoria, including Mr. Dante Ong,10reviewed the performance evaluation made on Paras. They unanimously agreed, along with Paras’ immediate supervisors, that the performance of Paras was unsatisfactory. On November 3, 1997, the Voluntary Arbitrator (VA) rendered a decision finding the dismissal of Paras 74 | L a b o r S t a n d a r d s - C a s e D i g e s t s

valid for his failure to pass the probationary standards of MMPC. In a Decision promulgated on September 13, 2000, the CA reversed the ruling of the Voluntary Arbitrator. Issue: Whether or not respondent Paras was already a regular employee on November 26, 1996. Held: Yes, he was. Indeed, an employer, in the exercise of its management prerogative, may hire an employee on a probationary basis in order to determine his fitness to perform work.29 Under Article 281 of the Labor Code, the employer must inform the employee of the standards for which his employment may be considered for regularization. Such probationary period, unless covered by an apprenticeship agreement, shall not exceed six (6) months from the date the employee started working. The employee’s services may be terminated for just cause or for his failure to qualify as a regular employee based on reasonable standards made known to him. Respondent Paras was employed as a management trainee on a probationary basis. During the orientation conducted on May 15, 1996, he was apprised of the standards upon which his regularization would be based. He reported for work on May 27, 1996. As per the company’s policy, the probationary period was from three (3) months to a maximum of six (6) months. Applying Article 13 of the Civil Code, the probationary period of six (6) months consists of one hundred eighty (180) days. This is in conformity with paragraph one, Article 13 of the Civil Code, which provides that the months which are not designated by their names shall be understood as consisting of thirty (30) days each. The number of months in the probationary period, six (6), should then be multiplied by the number of days within a month, thirty (30); hence, the period of one hundred eighty (180) days. As clearly provided for in the last paragraph of Article 13, in computing a period, the first day shall be excluded and the last day included. Thus, the one hundred eighty (180) days commenced on May 27, 1996, and ended on November 23, 1996. The termination letter dated November 25, 1996 was served on respondent Paras only at 3:00 a.m. of November 26, 1996. He was, by then, already a regular employee of the petitioner under Article 281 of the Labor Code. Extension of Probationary Period Relaxed by the Supreme Court Mariwasa Manufacturing, Inc. vs. Leogardo G.R. No. 74246

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MARIWASA MANUFACTURING, INC., and ANGEL T. DAZO vs. HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of Ministry of Labor and Employment judgment, and JOAQUIN A. DEQUILA January 26, 1989 Facts: Private respondent Joaquin A. Dequila (or Dequilla) was hired on probation by petitioner Mariwasa Manufacturing, Inc. (hereafter, Mariwasa only) as a general utility worker on January 10, 1979. Upon the expiration of the probationary period of six months, Dequila was informed by his employer that his work had proved unsatisfactory and had failed to meet the required standards. To give him a chance to improve his performance and qualify for regular employment, instead of dispensing with his service then and there, with his written consent Mariwasa extended his probation period for another three months from July 10 to October 9, 1979. His performance, however, did not improve and on that account Mariwasa terminated his employment at the end of the extended period. Dequila thereupon filed with the Ministry of Labor against Mariwasa and its Vice-President for Administration, Angel T. Dazo, a complaint for illegal dismissal and violation of Presidential Decrees Nos. 928 and 1389. His complaint was dismissed after hearing by Director Francisco L. Estrella, Director of the Ministry's National Capital Region. On appeal to the Office of the Minister, however, said disposition was reversed. Respondent Deputy Minister Vicente Leogardo, Jr. held that Dequila was already a regular employee at the time of his dismissal. Issue: Whether or not employer and employee may by agreement extend the probationary period of employment beyond the six months. Held: Yes, they may.The petition, as well as the parties' comments subsequently submitted all underscore the fact that the threshold issue here is, as first above stated, the legal one of whether employer and employee may by agreement extend the probationary period of employment beyond the six months prescribed in Art. 282 of the Labor Code. For aught that appears of record, the extension of Dequila's probation was ex gratia, an act of liberality on the part of his employer affording him a second chance to make good after having initially failed to prove his worth as an employee. Such an act cannot now unjustly be turned against said employer's account to compel it to keep on its payroll one who could not perform according to its work standards. The law, surely, was never meant to produce such an inequitable result. By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy protecting the employee and the security of his tenure is served by prescribing voluntary agreements 76 | L a b o r S t a n d a r d s - C a s e D i g e s t s

which, by reasonably extending the period of probation, actually improve and further a probationary employee's prospects of demonstrating his fitness for regular employment. Repetitive Probationary Period Villanueva vs. NLRC G.R. No. 127448 September 10, 1998 JUANITO VILLANUEVA vs. NATIONAL LABOR RELATIONS COMMISSION, (Second Division) HON. COMMISSIONERS: ROGELIO AYALA, RAUL T. AQUINO, INNODATA PHILS. INC. / INNODATA PROCESSING CORP. and TODD SOLOMON Facts: Petitioner Juanito M. Villanueva started working with respondent Innodata Philippines, Inc.,/Innodata Processing Corporation as an "abstractor" with a daily salary of P180. Pettitioner worked for respondent from Feb. 21, 1994, until Aug. 21, 1995, separated then was rehired from 13 March 1995 to 15 August 1995, with a lesser pay of P164.10 per day. On 13 August 1995, the petitioner was again separated from the respondent company also on account of "end of contract."This prompted the petitioner to file a complaint against the respondent company and its president, Todd Solomon, for illegal dismissal with prayer for moral and exemplary damages and attorney's fees. In his 21 May 1996 Decision, Labor Arbiter Manuel R. Caday held that the petitioner was a regular employee. On appeal, respondent NLRC reversed the Labor Arbiter's decision and upheld the validity of petitioner's separation from the respondent company on the ground that his employment contract was for a fixed period.

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Issue: Whether or not petitioner is regular employee despite his fixed period contract with respondent. Held: We resolve the issue in the affirmative. We agree with the OSG that the contract cannot be strictly construed as one for a fixed term. For one, while the first paragraph of Section 2 spoke of the contract's duration to be "one" year, it was in fact, for one year and six months because it was to commence on 21 February 1994 and terminate on 21 August I995. For another, while the second paragraph specified the first six-month period of employment, 21 February to 21 August 1994, as "contractual," the third sentence of that paragraph granted the petitioner regular employment status should he "continue his employment beyond August 21, 1994, . . . upon demonstration of sufficient skill in terms of his ability to meet the standards" set by the respondent company. It is clear that the first six months was in reality the "probation period" under Article 281 of the Labor Code, since petitioner would become a regular employee if the employment would continue beyond that period upon demonstration of sufficient skill in accord with the standards set by the respondent corporation. The Labor Arbiter found that as an abstractor, the petitioner was engaged in "processing, encoding of data, precoding, editing, proofreading and scoring, all of which activities are deemed necessary and desirable in the usual business of respondent company." The employment then was "regular" under the first paragraph of Article 280 of the Labor Code, which reads: Art. 280. Regular and casual employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. The termination of petitioner's employment contract on 21 February 1995, as well as the subsequent issuance on 13 March 1995 of a "new" contract for five months as "data encoder," was a devious, but crude, attempt to circumvent petitioner's right to security of tenure as a regular employee guaranteed by Article 279 of the Labor Code. Hence, the so-called "end of contract" on 21 February 1995 amounted to a dismissal without any valid cause.

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Notably, the respondent company prepared the contract of employment. It was a contract of adhesion, and petitioner had only to adhere to it by signing it. Its terms should be construed strictly against the party who prepared it. Any ambiguity therein must be resolved against the respondent company, especially because under Article 1702 of the Civil Code, in case of doubt, all labor contracts shall be construed in favor of the laborer. We cannot allow the respondent company to construe otherwise what appears to be clear from the wordings of the contract. The interpretation which the respondent company seeks to wiggle out is wholly unacceptable, as it would result in a violation of petitioner's right to security of tenure guaranteed in Section 3 of Article XIII of the Constitution and in Articles 279 and 281 of the Labor Code. Stipulation in Employment Probationary Period

Contract

Fixing

the

Period

of

Innodata Philippines, Inc. vs. Quejada Lopez G.R. No. 162839 INNODATA PHILIPPINES, INC. vs. JOCELYN L. QUEJADA-LOPEZ and ESTELLA G. NATIVIDAD-PASCUAL October 12, 2006 Facts: Estrella G. Natividad and Jocelyn L. Quejada were employed as formatters by Innodata Philippines, Inc., a company engaged in the encoding/data conversion business. Both were employed from 1997 to 1998. They both believe that their job was necessary and desirable to the usual business of the company which is data processing/conversion and that their employment is regular pursuant to Article 280 of the Labor Code. The two, then, filed a complaint for illegal dismissal and for damages as well as for attorney’s fees against Innodata Phils., Incorporated. The Labor Arbiter ruled in favour of Estella G. Natividad and Jocelyn Quejada, stating that they have been illegally dismissed by Innodata Philippines Incorporated and Innodata Processing Corporation. An appeal was filed by Innodata to the National Labor Relations Commission which reversed and set aside the Labor Arbiter’s decision, declaring that the contract was for a fixed term and therefore, the dismissal at the end of their one year term agreed upon was valid. A motion for reconsideration was filed, but was denied. The Court of Appeals ruled that respondents were regular employees in accordance with Section 280 of the Labor Code. It said that the fixed-term contract prepared by petitioner was a crude attempt to circumvent respondents’ right to security of tenure. Thus, Innodata filed this petition. 79 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not Innodata’s fixed period contracts are valid. Held: No. The contract of employment constituted between Innodata and the complainants failed to comply with the standards set by law and by this Court. A contract of employment is impressed with public interest. For this reason, provisions of applicable statutes are deemed written into the contract. Hence, the parties are not at liberty to insulate themselves and their relationships from the impact of labor laws and regulations by simply contracting with each other.” Moreover, in case of doubt, the terms of a contract should be construed in favor of labor. Exception to Probationary Period Exceeding Six Month Period Buiser vs. Hon. Leogardo G.R. No. L-63316 ILUMINADA VER BUISER, MA. CECILIA RILLOACUÑA and MA. MERCEDES P. INTENGAN vs. HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the Ministry of Labor & Employment, and GENERAL TELEPHONE DIRECTORY, CO. July 31, 1984 Facts: Iluminada Ver Buiser, Ma. Cecilia Rilloacuña, and Ma. Mercedes P. Intengan were employed by General Telephone Directory Company as sales representatives and charged with the duty of soliciting advertisements for inclusion in a telephone directory. Records show that Buiser and Intengan entered into an employment contract on probationary status with General Telephone Directory Company, a corporation engaged in the business of publication and circulation of the directory of the Philippine Long Distance Telephone Company. Their contract stipulated that they will work on a probationary status for a period of eighteen (18) months. It is understood that darung the probationary period of employment, the Employee may be terminated at the pleasure of the company without the necessity of giving notice of termination or the payment of termination pay. They were also given prescribed sales quotas to be accomplished or met by the petitioners. Because of their failure to achieve the required quota, the petitioners were dismissed from the service by the private respondent. This motivated the petitioners to file with the Ministry of Labor and Employment, a complaint for illegal dismissal with claims for backwages, earned commissions and other benefits. The Regional Director dismissed the complaints of the petitioners. The petitioners sought for a 80 | L a b o r S t a n d a r d s - C a s e D i g e s t s

reconsideration of the decision, but was treated as an appeal to the Minister of Labor. Leogardo, the Deputy Minister of Ministry of Labor, affirmed the Regional Director's Order wherein it ruled that the petitioners have not attained permanent status since private respondent was justified in requiring a longer period of probation, and that the termination of petitioners' services was valid since the latter failed to meet their sales quotas. Thus, this petition before the Supreme Court. Issue: Whether or not there was an error in ruling that the probationary employment of petitioners herein is eighteen (18) months instead of the mandated six (6) months under the Labor Code, and in consequently further ruling that petitioners are not entitled to security of tenure while under said probation for 18 months. Held: Generally, the probationary period of employment is limited to six (6) months. The exception to this general rule is when the parties to an employment contract may agree otherwise, such as when the same is established by company policy or when the same is required by the nature of work to be performed by the employee. In the latter case, there is recognition of the exercise of managerial prerogatives in requiring a longer period of probationary employment, such as in the present case where the probationary period was set for eighteen (18) months, i.e. from May, 1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of work such as selling, or when the job requires certain qualifications, skills, experience or training. In the case at bar, it is shown that private respondent Company needs at least eighteen (18) months to determine the character and selling capabilities of the petitioners as sales representatives. The Company is engaged in advertisement and publication in the Yellow Pages of the PLDT Telephone Directories. Publication of solicited ads are only made a year after the sale has been made and only then will the company be able to evaluate the efficiency, conduct, and selling ability of its sales representatives, the evaluation being based on the published ads. Moreover, an eighteen-month probationary period is recognized by the Labor Union in the private respondent company, which is Article V of the Collective Bargaining Agreement. x x x And as indicated earlier, the very contracts of employment signed and acquiesced to by the petitioners specifically indicate that “the company hereby employs the employee as telephone sales representative on a probationary status for a period of eighteen (18) months, i.e. from May 1980 to October 1981, inclusive.” This stipulation is not contrary to law, morals and public policy. Probationary period for Apprentices Nitto Enterprises vs. NLRC G.R. No. 114337 81 | L a b o r S t a n d a r d s - C a s e D i g e s t s

NITTO ENTERPRISES vs. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI September 29, 1995

Facts: Petitioner Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship agreement for a period of six (6) months from May 28, 1990 to November 28, 1990 with a daily wage rate of P66.75 which was 75% of the applicable minimum wage. At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital. Later that same day, after office hours, private respondent entered a workshop within the office premises which was not his work station. There, he operated one of the power press machines without authority and in the process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of private respondent. The following day, Roberto Capili was asked to resign in a letter . On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in consideration of the sum of P1,912.79. Three days after, private respondent formally filed before the NLRC Arbitration Branch, National Capital Region a complaint for illegal dismissal and payment of other monetary benefits. The Labor Arbiter rendered his decision finding the termination of private respondent as valid and dismissing the money claim for lack of merit upon which was reversed by the NLRC. Petitioner filed a motion for reconsideration but the same was denied. Hence, the instant petition. Issue: Whether or not public respondent NLRC erred in holding that private respondent is not an apprentice. Held: Article 61 of the Labor Code provides: Contents of apprenticeship agreement. — Apprenticeship agreements, including the main rates of apprentices, shall conform to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship.

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In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and Employment. However, the apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was signed. Based on the evidence, petitioner did not comply with the requirements of the law. It is mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment. Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into. The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship. Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. Requirements for Regularization of Private School Teachers Chang Kai Shek School vs. C.A. G.R. No. L-58028 CHIANG KAI SHEK SCHOOL vs. COURT OF APPEALS and FAUSTINA FRANCO OH April 18, 1989 Facts: An unpleasant surprise awaited Fausta F. Oh when she reported for work at the Chiang Kai Shek School in Sorsogon on the first week of July, 1968. She was told she had no assignment for the next semester. Oh was shocked. She had been teaching in the school since 1932 for a continuous period of almost 33 years. And now, out of the blue, and for no apparent or given reason, this abrupt dismissal. Oh sued. She demanded separation pay, social security benefits, salary differentials, maternity benefits and moral and exemplary damages. The Court of First Instance of Sorsogon dismissed the complaint. On appeal, its decision was set aside by the respondent court, which held the school suable and liable while absolving 83 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the other defendants. The motion for reconsideration having been denied, the school then came to this Court in this petition for review on certiorari. Issue: Whether or not Oh had become a permanent employee of the school and entitled to security of tenure at the time of her dismissal. Held: The petitioner says the private respondent had not been illegally dismissed because her teaching contract was on a yearly basis and the school was not required to rehire her in 1968. The argument is that her services were terminable at the end of each year at the discretion of the school. Significantly, no explanation was given by the petitioner, and no advance notice either, of her relief after teaching year in and year out for all of thirty-two years, the private respondent was simply told she could not teach any more. The Court holds, after considering the particular circumstance of Oh's employment that she had become a permanent employee of the school and entitled to security of tenure at the time of her dismissal. Since no cause was shown and established at an appropriate hearing, and the notice then required by law had not been given, such dismissal was invalid. Espiritu Santo Parochial School vs. NLRC G.R. No. 82325 ESPIRITU SANTO PAROCHIAL SCHOOL, SISTER MARY MARTINEZ, and SISTER MA. ENCARNACION DE LOS SANTOS vs. NATIONAL LABOR RELATIONS COMMISSION, ESPIRITU SANTO PAROCHIAL SCHOOL FACULTY ASSOCIATION, EVANGELINE LOPEZ, CONSTANCIA TEMPONGKO MARISSA, MARTIN BRAVO, EDITHA ESPIRITU, VIVIAN CAPATI and CORAZON HADAP September 26, 1989 Facts: The said seven individual private respondents were hired by the petitioner-school on a probationary basis on June 1, 1984, whereupon, sometime between April 1 and 15, 1985 their services were terminated. On May 8, 1985, they charged the petitioner-school with unfair labor practice and illegal dismissal. They likewise asked for damages. The labor arbiter ruled in favor of the respondents. The school appealed to the National Labor Relations Commission, but the decision of the labor arbiter was affirmed on February 29, 1988 except for the charge of unfair labor practice which was dismissed for insufficiency of evidence.

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Issue: Whether or not the individual complainants were lawfully dismissed when respondents failed to hire them. Held: There is no dispute that the individual complainants were probationary employees pursuant to the policy enunciated by the Bureau of Private Schools extending the probationary employment of teachers to three (3) years. The mentioned policy, however, did not repeal or render inoperative Article 282 of the Labor Code, as amended which provides that: The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known to the employee at the time of his engagement.

There was no clear evidence that the individual complainants were terminated either for a just cause or that they have failed to qualify as regular employees in accordance with the standards set by respondent school made known to the former at the time of hiring. In fact, it is shown that the individual complainants were issued individual certifications of employment and whose performance ratings ranged from 85% to 90%. It is not denied that the complainants were hired as probationary teachers, but the reason for their termination should nevertheless be for a valid cause or causes. It must be clearly shown that they have failed to meet certain standards or criteria made known to them beforehand. It cannot be said that they failed to meet respondents' standards because of their high marks of performance. Hence, the Court see no valid reason for the school not to re-hire them, except, of course, for some reasons known only to the school authorities but which they did not make known to herein complainants. 13. Project Employment – Labor Code Article 280, 1 st paragraph; Section 5(a), Rule I, Book IV, Implementing Rules and Regulations as amended by Rule IV, as amended by Article IV, Department Order No. 19, Series of 1993 amending Policy Instruction No. 20 (Guidelines Governing the Workers in the Construction Industry) Definition and Nature of Project Employment Hanjin Heavy Industries & Construction Co. vs. Ibañez G.R. No. 170181

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HANJIN HEAVY INDUSTRIES AND CONSTRUCTION CO. LTD., HAK KON KIM and/or JHUNIE ADAJAR vs. FELICITO IBAÑEZ, ALIGWAS CAROLINO, ELMER GACULA, ENRIQUE DAGOTDOT AND RUEL CALDA June 26, 2008 Facts: Petitioner HANJIN is a foreign company duly registered with the Securities and Exchange Commission to engage in the construction business in the Philippines. Petitioners Hak Kon Kim and Jhunie Adajar were employed as Project Director and Supervisor, respectively, by HANJIN. On 11 April 2002, respondents Felicito Ibañez, Aligwas Carolino, Elmer Gacula, Enrique Dagotdot, Ruel Calda, and four other co-workers filed a complaint before the NLRC for illegal dismissal with prayer for reinstatement and full backwages against petitioners. In their Position Paper, respondents alleged that HANJIN hired them for various positions on different dates. Respondents stated that their tasks were usual and necessary or desirable in the usual business or trade of HANJIN. Respondents additionally averred that they were employed as members of a work pool from which HANJIN draws the workers to be dispatched to its various construction projects; with the exception of Ruel Calda, who as a warehouseman was required to work in HANJIN's main office. On 15 April 2002, Hanjin dismissed respondents from employment. Respondents claimed that at the time of their dismissal, HANJIN had several construction projects that were still in progress, such as Metro Rail Transit (MRT) II and MRT III, and continued to hire employees to fill the positions vacated by the respondents. Petitioners denied the respondents' allegations. They maintained that respondents were hired as project employees for the construction of the LRT/MRT Line 2 Package 2 and 3 Project. HANJIN and respondents purportedly executed contracts of employment, in which it was clearly stipulated that the respondents were to be hired as project employees for a period of only three months, but that the contracts may be renewed. However, petitioners failed to furnish the Labor Arbiter a copy of said contracts of employment. The Labor Arbiter found merit in the respondents' complaint and declared that they were regular employees who had been dismissed without just and valid causes and without due process. Petitioners filed an appeal before the NLRC. The NLRC reversed the Labor Arbiter's Decision dated 30 April 2003, and pronounced that the respondents were project employees who were legally terminated from employment. On appeal, the Court of Appeals reversed the NLRC Decision. Issue: Whether or not respondents were regular or project employees. Held:The principal test for determining whether particular employees are properly characterized as "project employees" as distinguished from 86 | L a b o r S t a n d a r d s - C a s e D i g e s t s

"regular employees" is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. In a number of cases, the Court has held that the length of service or the re-hiring of construction workers on a project-to-project basis does not confer upon them regular employment status, since their re-hiring is only a natural consequence of the fact that experienced construction workers are preferred. Employees who are hired for carrying out a separate job, distinct from the other undertakings of the company, the scope and duration of which has been determined and made known to the employees at the time of the employment, are properly treated as project employees and their services may be lawfully terminated upon the completion of a project. Should the terms of their employment fail to comply with this standard, they cannot be considered project employees. In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latters' work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, the Court were constrained to declare them as regular employees. Indicators of Project Employment, Section 22, D.O. No. 19 Series of 1993 Cocomangas Hotel Beach Resort vs. Visca G.R. No. 167045 COCOMANGAS HOTEL BEACH RESORT and/or SUSAN MUNRO vs. FEDERICO F. VISCA, JOHNNY G. BAREDO, RONALD Q. TIBUS, RICHARD G. VISCA and RAFFIE G. VISCA August 29, 2008 Facts: The present controversy stemmed from five individual complaints for illegal dismissal filed on June 15, 1999 by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus, Richard G. Visca and Raffie G. Visca (respondents) against CocomangasHotel Beach Resort and/or its owner-manager, Susan Munro (petitioners) before the National Labor Relations Commission in Kalibo, Aklan. In their consolidated Position Paper, respondents alleged that they were regular employees of petitioners. Petitioners denied any employer-employee relationship with respondents and countered that respondent Visca was an independent contractor who was called upon from time to time when some repairs in the resort facilities were needed and the other respondents were selected and hired by him. 87 | L a b o r S t a n d a r d s - C a s e D i g e s t s

On June 30, 2000, the Labor Arbiter rendered a Decision[ dismissing the complaint, holding that respondent Visca was an independent contractor and the other respondents were hired by him to help him with his contracted works at the resort; that there was no illegal dismissal but completion of projects; that respondents were project workers, not regular employees. Respondents filed an appeal with the NLRC. The NLRC rendered a Decision in favor of the respondents. Petitioners then filed a Motion for Reconsideration, arguing that respondents were project employees. The NLRC made a complete turnabout from its original decision and issued a Resolution dismissing the complaint, holding that respondents were not regular employees but project employees, hired for a short period of time to do some repair jobs in petitioners' resort business. Respondents then filed a Petition for Certiorari with the CA. The CA rendered its assailed Decision where it that held respondents were regular employees, not project workers, since in the years that petitioners repeatedly hired respondents' services, the former failed to set, even once, specific periods when the employment relationship would be terminated; that the repeated hiring of respondents established that the services rendered by them were necessary and desirable to petitioners' resort business; at the least, respondents were regular seasonal employees, hired depending on the tourist season and when the need arose in maintaining petitioners' resort for the benefit of guests. Issue: Whether or not respondents regular employees or project employees. Held: A project employee is one whose "employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season." Before an employee hired on a per-project basis can be dismissed, a report must be made to the nearest employment office, of the termination of the services of the workers every time completes a project, pursuant to Policy Instruction No. 20. In the present case, respondents cannot be classified as project employees, since they worked continuously for petitioners from three to twelve years without any mention of a project to which they were specifically assigned. While they had designations as foreman, carpenter and mason, they performed work other than carpentry or masonry. They were tasked with the maintenance and repair of the furniture, motor boats, cottages, and windbreakers and other resort facilities. There is likewise no evidence of the project employment contracts covering respondents' alleged periods of employment. More importantly, there is no evidence that petitioners reported the termination of respondents' supposed project employment to the DOLE as project employees. 88 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Department Order No. 19, as well as the old Policy Instructions No. 20, requires employers to submit a report of an employee’s termination to the nearest public employment office every time his employment is terminated due to a completion of a project. Petitioners' failure to file termination reports is an indication that the respondents were not project employees but regular employees. The Employment contract is only signed by the president and the manager but not the employee concerned. Abesco Construction and Development Corp. vs. Ramirez G.R. No. 141168 ABESCO CONSTRUCTION AND DEVELOPMENT CORPORATION and MR. OSCAR BANZON, General Manager vs. ALBERTO RAMIREZ, BERNARDO DIWA, MANUEL LOYOLA, REYNALDO P. ACODESIN, ALEXANDER BAUTISTA, EDGAR TAJONERA and GARY DISON April 10, 2006 Facts: Petitioner company was engaged in a construction business where respondents were hired on different dates from 1976 to 1992 either as laborers, road roller operators, painters or drivers. In 1997, respondents filed two separate complaints for illegal dismissal against the company and its General Manager, Oscar Banzon, before the Labor Arbiter. Petitioners allegedly dismissed them without a valid reason and without due process of law. The complaints also included claims for non-payment of the 13th month pay, five days service incentive leave pay, premium pay for holidays and rest days, and moral and exemplary damages. The LA later on ordered the consolidation of the two complaints. After trial, the LA ruled in favor of the respondents. Petitioners appealed to the National Labor Relations Commission (NLRC) which affirmed the LA’s decision. Subsequently, petitioners filed a petition for review in the Court of Appeals (CA) arguing that they were not liable for illegal dismissal since respondents services were merely put on hold until the resumption of their business operations. They also averred that they had paid respondents their full wages and benefits as provided by law, hence, the latter had no more right to further benefits. The CA was not convinced and dismissed petitioners appeal, hence, the petition. Issue: Whether employees.

respondents

were

project

employees

or

regular

Held: The Court ruled that respondents were regular employees. The principal test for determining whether employees are project employees 89 | L a b o r S t a n d a r d s - C a s e D i g e s t s

or regular employees is whether they are assigned to carry out a specific project or undertaking, the duration and scope of which are specified at the time they are engaged for that project. Such duration, as well as the particular work/service to be performed is defined in an employment agreement and is made clear to the employees at the time of hiring. In this case, petitioners did not have that kind of agreement with respondents. Neither did they inform respondents of the nature of the latter’s work at the time of hiring. Hence, for failure of petitioners to substantiate their claim that respondents were project employees, the Court is constrained to declare them as regular employees. The employment contract is only signed by the president and the manager but not the employee concerned Raycor Aircontrol System, Inc. vs. NLRC G.R. No. 114290 RAYCOR AIRCONTROL SYSTEMS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION and ROLANDO LAYA, et al. September 9, 1996 Facts: Petitioner's sole line of business is installing airconditioning systems in the buildings of its clients. He hired private respondents who worked in various capacities as tinsmith, leadman, aircon mechanic, installer, welder and painter. Private respondents insisted that they had been regular employees all along, but petitioner maintained that they were project employees who were assigned to work on specific projects of petitioner, and that the nature of petitioner's business – mere installation (not manufacturing) of aircon systems and equipment in buildings of its clients – prevented petitioner from hiring private respondents as regular employees. As found by the Labor Arbiter, their average length of service with petitioner exceeded one year, with some ranging from two, six, or ten years. Private respondents filed a case in NLRC for regularization, which was dismissed for want of cause of action. Consequently, they were served with uniformly-worded notices of "Termination of Employment" by petitioner citing their present business status, which terminations were to be effective the day following the date of receipt of the notices. Private respondents then averred that had been given their walking papers after they refused to sign a "Contract Employment" providing for, among others, a fixed period of employment which "automatically terminates without necessity of further notice" or even earlier at petitioner's sole discretion. Hence, they filed a case of illegal dismissal. The Labor Arbiter dismissed the complaints for lack of merit citing that 90 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the complainants were project employees assigned to work on specific projects involving the installation of air-conditioning units as covered by contracts between their employer and the latter's clients. The NLRC reversed the Labor Arbiter's decision and found private respondents had been regular employees illegally dismissed, and stated that they belonged to a work pool from which the respondent company drew its manpower requirements. Issue: Whether or not private respondents were project employees or regular employees, and whether or not they were legally dismissed. Held: The Court held that there was no solid evidence to decide the case either way. Therefore, considering that in illegal dismissal cases, the employer always has the burden of proof, and considering that the law mandates that all doubts, uncertainties, ambiguities and insufficiencies be resolved in favor of labor, it ruled against petitioner and in favor of private respondents. Consent must be knowingly and voluntarily, and without force, duress or improper pressure Caramol vs. NLRC, G.R. No. 102973, 225 SCRA 582 G.R. No. 102973 ROGELIO CARAMOL vs. NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF and PACIFIC CO. OF MANILA, INC. August 24, 1993 Facts: Rogelio Caramol was hired by respondent Atlantic Gulf and Pacific Co. of Manila, Inc., (ATLANTIC GULF), on a "project-to-project" basis but whose employment was renewed forty-four (44) times by the latter filed a complaint against the Labor Arbiter for unfair labor practice which the Labor Arbiter decided favourably. However, the decision was reversed and set aside by the National Labor Relations Commission (NLRC). The NLRC found that Caramol is a project employee falling under the exception of Art. 280 of the Labor Code. Caramol now assails NLRC’s decision through this petition before the Supreme Court. Issue: Whether or not Rogelio Caramol is a seasonal or a regular employee. Held: There is no question that stipulation on employment contract providing for a fixed period of employment such as “project-to-project” contract is valid provided the period was agreed upon knowingly and 91 | L a b o r S t a n d a r d s - C a s e D i g e s t s

voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. However, where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good custom or public order. However, with the successive contracts of employment where petitioner continued to perform the same kind of work, i.e., as rigger throughout his period of employment, it is clearly manifest that petitioner’s tasks were usually necessary or desirable in the usual business or trade of private respondent. There can therefore be no escape from the conclusion that petitioner is a regular employee of private respondent ATLANTIC GULF. Exception to Article 280, a fixed period of employment, a day certain; Requisites Brent School, Inc. vs. Zamora G.R. No. L-48494 BRENT SCHOOL, INC., AND REV. GABRIEL DIMACHE vs. RONALDO ZAMORA, THE PRESIDENTIAL ASSISTANT FOR LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, AND DOROTEO R. ALEGRE February 5, 1990 Facts: Private respondent Doroteo R. Alegre was engaged as athletic director by petitioner Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. On April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The stated ground for the termination was "completion of contract, expiration of the definite period of employment." Although protesting the announced termination stating that his services were necessary and desirable in the usual business of his employer, and his employment lasted for 5 years – therefore he had acquired the status of regular employee – Alegre accepted the amount of P3,177.71, and signed a receipt therefor containing the phrase, "in full payment of services for the period May 16, to July 17, 1976 as full payment of contract." 92 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The Regional Director considered Brent School's report as an application for clearance to terminate employment (not a report of termination), and accepting the recommendation of the Labor Conciliator, refused to give such clearance and instead required the reinstatement of Alegre, as a "permanent employee," to his former position without loss of seniority rights and with full back wages. Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. The latter sustained the Regional Director. Brent appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit and affirmed the Labor Secretary's decision, ruling that Alegre was a permanent employee who could not be dismissed except for just cause, and expiration of the employment contract was not one of the just causes provided in the Labor Code for termination of services. Issue: Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or employment for a term. Held: No. Respondent Alegre's contract of employment with Brent School having lawfully terminated with and by reason of the expiration of the agreed term of period thereof, he is declared not entitled to reinstatement. The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. At that time, the validity of term employment was impliedly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, it was the Code of Commerce (Article 302) which governed employment without a fixed period, and also implicitly acknowledged the propriety of employment with a fixed period. The Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30, 1950, itself deals with obligations with a period. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom. It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration thereof Stipulations for a term were explicitly recognized as valid by this Court. The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (PD 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time. Article 320 originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." 93 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Article 320, dealing with "Probationary and fixed period employment," was altered by eliminating the reference to persons "employed with a fixed period," and was renumbered (becoming Article 271). As it is evident that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts. Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied. Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be "that which must necessarily come, although it may not be known when." Seasonal employment, and employment for a particular project are merely instances employment in which a period, where not expressly set down, necessarily implied. Absence of a provision in the contract of employment of specific project or undertaking. Price vs. Innodata Philippines/ Innodata Corp. G.R. No. 178505 CHERRY J. PRICE, STEPHANIE G. DOMINGO, AND LOLITA ARBILERA vs.

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INNODATA PHILS. INC.,/INNODATA CORPORATION, LEO RABANG, AND JANE NAVARETTE September 30, 2008 Facts: Innodata Philippines Inc. was a domestic corporation engaged in the data encoding and data conversion business. Cherry Price, Stephanie Domingo, and Lolita Arbilera (petitioners) were employed as formatters by Innodata. They entered into a contract denominated as a “Contract of Employment for a Fixed Period” stipulating that the contract shall be for a period of one year (February 16, 1999 to February 16, 2000). During their employment, petitioners were assigned to handle jobs for various clients of Innodata and once they finished the job for one client, they were immediately assigned to do a new job for another client. On February 16, 2009, the Human Resource Manager of Innodata wrote to petitioners informing them of their last day of work (February 16, 2000). According to Innodata, this was due to the end of their contract. Petitioners then filed a complaint for illegal dismissal claiming that they should be considered regular employees since their positions as formatters were necessary and desirable to the usual business of Innodata as an encoding, conversion and data processing company. They also invoked the decisions in Villanueva v. NLRC and Servidad v. NLRC in which the Court already purportedly ruled that “the nature if employment at Innodata is regular.” They were also neither considered project employees since their employment was not coterminous with any project or undertaking. On the other hand, respondents contended that Innodata was engaged in the business of data processing, type-setting, indexing and abstracting for its foreign clients and the bulk of the work was data processing, which involved data encoding, which half of its employees did. Due to the wide range of services, Innodata was constrained to hire new employees for a fixed period not more than one year like the petitioners whose contracts of employment were for a limited period only. Moreover, they claimed that the petitioners were estopped since they entered into the contracts knowingly and voluntarily. The Labor Arbiter held that as formatters, petitioners occupied jobs that were necessary, desirable and indispensable to the data processing and encoding business and should be considered regular employees who were entitled to security of tenure. NLRC, on appeal, reversed finding that petitioners were not regular employees but fixed-term employees as stipulated in their contracts. CA affirmed the NLRC ruling. Issue: Whether or not petitioners were hired by Innodata under valid fixed-term employment contracts. Held: No. Thus, they were illegally dismissed. The Court found that there were no valid fixed-term employment contracts, and petitioners were regular employees of Innodata who could not dismiss them except for just or authorized cause. The employment status of a person is defined and 95 | L a b o r S t a n d a r d s - C a s e D i g e s t s

prescribed by law and not by what the parties say it should be. Based on Art. 280, the following employees are accorded regular status: (1) those who are engaged to perform activities which are necessary or desirable in the usual business or trade of the employer, regardless of the length of their employment; and (2) those who were initially hired as casual employees, but have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. Petitioners belong to the first type. The applicable test to determine whether an employment should be considered regular or nonregular is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employee. In this case, petitioners were employed as formatters while the primary business of Innodata is encoding. The formatting of the data entered into the computers is an essential part of the process of data encoding. Formatting organizes the data encoded, making it easier to understand for the clients and/or the intended users, and therefore necessary and desirable in the business or trade of Innodata. However, it is also true that while certain forms of employment require the performance of usual or desirable functions and exceed one year, these do not necessarily result in regular employment under Article 280 of the Labor Code. Under the Civil Code, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with predetermined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. A fixed-term employment is valid only under certain circumstances, and where, from the circumstances, it is apparent that the period was imposed to preclude the acquisition of tenurial security by the employee, then it should be struck down as being contrary to law, morals, good customs, public order and public policy. The terms of the contracts of employment of the petitioners were found to be meant only to circumvent petitioner’s right of tenure and are therefore valid. This is supported by the fact that the contracts were not only ambiguous but also appeared to be tampered with. Petitioners alleged and the contracts themselves state that the petitioners were employed on February 17, 1999. However, respondents asserted before the Labor Arbiter that the contracts were effective only on September 6, 1999. While they submitted employment contracts with September 6, 1999 as beginning of date of effectivity, in one of them, the original date, February 16, 1999,was merely crossed out and replaced with September 6. The alterations were very obvious and have not initialed by the petitioners to indicate their assent to the same. If the contracts were truly fixed-term contracts, then a change in the term or period agreed upon is material and would already constitute a novation of the original contract.

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Innodata further contends that petitioners were project employees whose employment ceased at the end of the specific project or undertaking. This is devoid of merit. In Philex Mining Corp v. NLRC, “project employees” are those hired: (1) for a specific project or undertaking, and wherein (2) the completion or termination of such project has been determined at the time of the engagement of the employee. The employment contracts did not mention what specific project or undertaking petitioners were hired for. The conclusion by the Court of Appeals that petitioners were hired for the Earthweb project is not supported by any evidence on record. More importantly, there is also a dearth of evidence that such project or undertaking had already been completed or terminated to justify the dismissal of petitioners. In fact, petitioners did not work on just one project, but continuously worked for a series of projects for various clients. Petitioners, being regular employees, are entitled to security of tenure. No notice that employees were appraised of the nature of employment, the specific projects or any phase thereof. Chua vs. Court of Appeals G.R. No. 125837 REYNALDO CANO CHUA, DOING BUSINESS UNDER THE NAME & STYLE PRIME MOVER CONSTRUCTION DEVELOPMENT vs. COURT OF APPEALS, SOCIAL SECURITY COMMISSION, SOCIAL SECURITY SYSTEM, ANDRES PAGUIO, PABLO CANALE, RUEL PANGAN, AURELIO PAGUIO, ROLANDO TRINIDAD, ROMEO TAPANG, AND CARLOS MALIWAT October 6, 2004 Facts: Private respondents were employees of the petitioner assigned in his various construction projects continuously in different capacities and the periods indicated with the correspondent basic salaries. Respondents then filed a petition with the SSC for SSS coverage and contributions claiming they were all regular employees of the petitioner. The respondents then alleged that petitioner dismissed all of them without justifiable grounds and without notice. Petitioner argues that the respondents were project employees and that such employees were not entitled to coverage under the Social Security Act. SSC declared that the private respondents were petitioner’s regular employees. The Court of Appeals also declared that the respondents were all regular employees since the various projects of employment lasts for at least one year and that their work was necessary and desirable to petitioner’s business. Issue: Whether or not the private respondents were petitioner’s regular employees.

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Held: Yes. The private respondents were petitioner’s regular employees. Such relationship can be easily determined by the application of the “control test” and such will hold true that they were petitioner’s regular employees since the petitioner having control over the results of the work done, as well as the means and methods by which the same were accomplished. The petitioner cannot claim that the respondents were merely project employees. It is not enough that an employee is hired for a specific project or phase of work, there must also be a determination of, or a clear agreement on, the completion or termination of the project at the time the employee was engaged if the objectives of Article 280 of the Labor Code are to be achieved. Petitioner was unable to show that private respondents were appraised of the nature of their employment, the specific projects themselves or any phase thereof undertaken by petitioner and for which private respondents were hired, thus petitioner failed to substantially give evidence that the private respondents were his projects employee only. Elements before a project employee attains a status of regular employment. Maraguianot Jr. vs. NLRC G.R. No. 120969 ALEJANDRO MARAGUINOT, JR. AND PAULINO ENERO vs. NATIONAL LABOR RELATIONS COMMISSION (SECOND DIVISION) COMPOSED OF PRESIDING COMMISSIONER RAUL T. AQUINO, COMMISSIONER ROGELIO I. RAYALA AND COMMISSIONER VICTORIANO R. CALAYCAY (PONENTE), VIC DEL ROSARIO AND VIVA FILMS January 22, 1998 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 98 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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: Whether or not the petitioners were illegally dismissed. Held: Yes. Private respondents contend that petitioners were project employees whose employment was automatically terminated with the completion of their respective projects. Petitioners assert that they were regular employees who were illegally dismissed. It may not be ignored, however, that private respondents expressly admitted that petitioners were part of a work pool, and while petitioners were initially hired possibly as project employees, they had attained the status of regular employees in view if VIVA's conduct. A project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after cessation of a project; and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer. However, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment. 99 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Work Pool Employment, Policy Instruction No. 20 Tomas Lao Construction vs. NLRC G.R. No. 116781 TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS AND JAMES DEVELOPERS PHILIPPINES, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA, SR., ROBERTO LABENDIA, NARCISO ADAN, FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO BISNAR, CIPRIANO BERNALES, ANGEL MABULAY, SR., LEO SURIGAO, AND ROQUE MORILLO September 05, 1997 Facts: The respondents were alleging that they were hired for various periods as construction workers in different capacities. Within the periods of their respective employments, they alternatively worked for petitioners Tomas Lao Corporation (TLC), Thomas and James Developers (T&J), and LVM Construction Corporation (LVM), the three entities comprising a business conglomerate exclusively controlled and managed by members of the Lao family. TLC, T&J and LVM are engaged in the construction of public roads and bridges. Under joint venture agreements they shared not only tools and equipment but they each one would allow the utilization of their employees by the other two. With this arrangement, workers were transferred whenever necessary to on-going projects of the same company or of the others, or were hired after the completion of the project or project phase to which they were assigned. Sometime in 1989, Andres Lao, managing Director of LVM and President of T&J, issued a memorandum requiring all workers and company personnel to sign employment contract forms and clearances which were issued on July 1, 1989 but antedated January 10, 1989. These were to be used allegedly for audit purposes pursuant to a joint venture agreement between LVM and T&J. To ensure compliance with the directive, the company ordered the withholding of the salary of any employee who refused to sign. Quite notably, the contracts expressly described the construction workers as project employees whose employments were for a definite period, i.e., upon the expiration of the contract period or the completion of the project for which the workers was hired. Except for Florencio Gomez, all private respondents refused to sign contending that this scheme was designed by their employer to downgrade their status from regular employee to mere project employees. Resultantly, their salaries were withheld. They were also required to explain why their services should not be terminated for violating company rules and warned that failure to satisfactorily explain would be construed as “disinterest” in continued employment with the company. Since the workers stood firm in their refusal to comply with the directives, their services were terminated.

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The Labor Arbiter dismissed the complaints finding that private respondents were project employees whose employments could be terminated upon completion of the projects or project phase for which they were hired. The NLRC reversed on appeal the Labor Arbiter’s decision and found the private respondents were regular employees who were dismissed without just cause and denied due process. The petitioners contend that respondents have no valid cause to complain about their employment contracts since these documents merely formalized their status as project employees. They cite Policy Instruction No. 20 of the Department of Labor which defines project employees as those employed in connection with a particular construction project, adding that the ruling in Sandoval Shipyards vs. NLRC applies squarely to the instant case because there the Court declared that the employment of project employees is co-terminus with the completion of the project regardless of the number of projects in which they have worked. And as their employment is one for a definite period, they are not entitled to separation pay nor is their employer required to obtain clearance from the Secretary of Labor in connection with their termination. Petitioners thus agree that their dismissal from the service of private respondents was legal since the projects from which they were hired had already been completed. Issue: Whether or not the NLRC erred in classifying the employees as regular employees instead of project employees. Held: No. The principal test in determining whether particular employees are project employees, as distinguished from regular employees, is whether the project employees are assigned to carry out “specific project or undertaking”, the duration and scope of which are specified at the time the employees are engaged for the project. While length of time may not be a controlling test for project employment, it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual business or trade of the employers. In the case at bar, respondents had already gone through the status of project employees. But their employments became non-coterminous with specific projects when they started to be continuously re-hired due to the demands of petitioner’s business and were re-engaged for many more projects without interruption. The denial by petitioners of the existence of a workpool in the company because their projects were not continuous is amply belied by petitioners themselves. A workpool may exist although the workers in the pool do not receive salaries and are free to seek other employment during temporary breaks in the business, provided that the worker shall be available when called to report for a project. Although primarily applicable to regular or seasonal workers, this set-up can likewise be applied to project workers insofar as the effect of temporary cessation of work is concerned. This is 101 | L a b o r S t a n d a r d s - C a s e D i g e s t s

beneficial to both the employer and employee for it prevents the unjust situation of “coddling labor at the expense of capital” and at the same time enables the workers to attain the status of regular employee. Moreover, if private respondents were indeed employed as project employees, petitioners should have submitted a report of termination to the nearest public employment office every time their employment was terminated due to completion of each construction project. Policy No. 20 is explicit that the employers of project employees are exempted from the clearance requirement but not from the submission of termination report. It is one of the indicators of project employment according to Department Order No. 19. Application of work pool in the business of data encoding Imbuido vs. NLRC G.R. No. 114734 VIVIAN Y. IMBUIDO vs. NATIONAL LABOR RELATIONS COMMISSION, INTERNATIONAL INFORMATION SERVICES, INC., AND GABRIEL LIBRANDO March 31, 2000 Facts: Petitioner was employed as a data encoder by private respondent International Information Services, Inc., a domestic corporation engaged in the business of data encoding and keypunching, from August 26, 1988 until October 18, 1991 when her services were terminated. From August 26, 1988 until October 18, 1991, petitioner entered into thirteen (13) separate employment contracts with private respondent, each contract lasting only for a period of three (3) months. Aside from the basic hourly rate, specific job contract number and period of employment, each contract contains the following terms and conditions: "a. This Contract is for a specific project/job contract only and shall be effective for the period covered as above-mentioned unless sooner terminated when the job contract is completed earlier or withdrawn by client, or when employee is dismissed for just and lawful causes provided by law. The happening of any of these events will automatically terminate this contract of employment”. In her position paper dated August 3, 1992 and filed before Labor Arbiter Raul T. Aquino, petitioner alleged that her employment was terminated not due to the alleged low volume of work but because she "signed a petition for certification election among the rank and file employees of respondents," thus charging private respondent with committing unfair labor practices. Petitioner further complained of non-payment of service incentive leave benefits and underpayment of 13th month pay. On the other hand, private respondent, in its position paper filed on July 16, 1992, maintained that it had valid reasons to terminate petitioner’s 102 | L a b o r S t a n d a r d s - C a s e D i g e s t s

employment and disclaimed any knowledge of the existence or formation of a union among its rank-and-file employees at the time petitioner’s services were terminated. Private respondent stressed that its business "relies heavily on companies availing of its services. Its retention by client companies with particular emphasis on data encoding is on a project to project basis," usually lasting for a period of "two (2) to five (5) months." Private respondent further argued that petitioner’s employment was for a "specific project with a specified period of engagement." According to private respondent, "the certainty of the expiration of complainant’s engagement has been determined at the time of their (sic) engagement (until 27 November 1991) or when the project is earlier completed or when the client withdraws," as provided in the contract. "The happening of the second event (completion of the project) has materialized, thus, her contract of employment is deemed terminated per the Brent School ruling." Finally, private respondent averred that petitioner’s "claims for non-payment of overtime time (sic) and service incentive leave (pay) are without factual and legal basis." Issue: Whether or not Petitioner was a "regular employee," not a "project employee" as found by public respondent NLRC. Held: Yes. In the instant case, petitioner was engaged to perform activities which were usually necessary or desirable in the usual business or trade of the employer, as admittedly, petitioner worked as a data encoder for private respondent, a corporation engaged in the business of data encoding and keypunching, and her employment was fixed for a specific project or undertaking the completion or termination of which had been determined at the time of her engagement, as may be observed from the series of employment contracts between petitioner and private respondent, all of which contained a designation of the specific job contract and a specific period of employment. However, even as we concur with the NLRC’s findings that petitioner is a project employee, we have reached a different conclusion. In the recent case of Maraguinot, Jr. vs. NLRC, we held that "(a) project employee or a member of a work pool may acquire the status of a regular employee when the following concur: 1) There is a continuous rehiring of project employees even after [the] cessation of a project; and 2) The tasks performed by the alleged "project employee" are vital, necessary and indispensable to the usual business or trade of the employer." The evidence on record reveals that petitioner was employed by private respondent as a data encoder, performing activities which are usually necessary or desirable in the usual business or trade of her employer, continuously for a period of more than three (3) years, from August 26, 1988 to October 18, 1991 and contracted for a total of thirteen (13) successive projects. We have previously ruled that "(h)owever, the length of time during which the employee was continuously re-hired is not controlling, but merely serves as a badge of regular employment." Based

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on the foregoing, we conclude that petitioner has attained the status of a regular employee of private respondent. Project that is within the regular trade or business of the employer Magcalas vs. NLRC G.R. No. 100333 HILARIO MAGCALAS, PROSPERO MARINDA, CELSO GAMALO, EPIFANIO OMEGA, VIRGILIO CAMPOS, ANTONIO LLAGAS, BERNARD BENDANILLO, SHALDYAUTENCIO, CIRIACO REYES, JUANITO DE LEON, EDMUNDO GUZMAN, ALFREDO SANTOS, BENEDICTO DAGCUTAN, NORBIE LOPENA, ISMAEL ALONZO, ELMER BALETA, GENITO DALMERO, and CESAR LEDESMA vs. NATIONAL LABOR RELATIONS COMMISSION and KOPPEL, INC. March 13, 1997 Facts: The petitioners alleged that they were all regular employees of the respondent company Koppel, Inc., since they rendered continuous services in various capacities, ranging from leadman, tinsmith, tradeshelper to general clerk. Moreover, they also averred that they were dismissed without prior notice and investigation, and that their dismissals were effected for no other cause than their persistent demands for payment of money claims as mandated by law. On the other hand, the respondents interposed the defense of contract/project employment, i.e., the complainants herein were among the contract employees hired by the respondent to install the air-conditioning equipment at the Asian Development Bank and Interbank projects. Hence, with the completion of their task in their respective installation projects, the employment of the complainants expired as they had no more work to do. The labor arbiter held that such termination constituted illegal dismissal, thus the petitioners were entitled to reinstatement, backwages, and attorney’s fees. Public respondent NLRC, however, reversed the decision of the labor arbiter. Issue: Whether or not (a) the petitioners were regular employees, and (b) their termination and/or cessation of their employments were justified Held: The Court ruled in the affirmative for both issues, and reversed and set aside the decision of the NLRC. The Court found that the public respondent did not sufficiently indicate the evidentiary basis for its reversal of the labor arbiter's decision. After citing provisions in the collective bargaining agreement (CBA) concerning contract workers and Policy Instruction No. 20, public respondent correctly stated that petitioners were performing work necessary or desirable in the usual 104 | L a b o r S t a n d a r d s - C a s e D i g e s t s

business of private respondent. From this undisputed fact, the NLRC jumped to strange and strained inferences. First, it held that the employment of the petitioners was subject to fixed terms. It then leapt to the non-sequitur conclusion that petitioners were project employees. Going further, it held that they were entitled to separation pay, overlooking that under the very law it invoked, "project employees are not entitled to termination pay." This convolution of facts and law cannot reverse the decision of the labor arbiter which is grounded on documentary evidence submitted by the parties. In addition, private respondent did not even allege, much less did it seek to prove, that petitioners had been hired on a project-to-project basis during the entire length of their employment. Rather, it merely sought to establish that petitioners had been hired to install the air-conditioning equipment at Asian Development Bank and Interbank and that they were legally dismissed upon the conclusion of these projects. Private respondent did not even traverse, and public respondent did not controvert, the labor arbiter's finding that petitioners were continuously employed without interruption, from the date of their hiring up to the date of their dismissal, in spite of the alleged completion of the so-called projects in which they had been hired. As regular employees, petitioners' employment cannot be terminated at the whim of the employer. For a dismissal of an employee to be valid, two requisites must be met: (1) the employee is afforded due process; and (2) the dismissal is for a valid cause. The services of petitioners were purportedly terminated at the end of the ADB and Interbank projects, but this could not have been a valid cause for they were regular and not project employees. As a consequence of their illegal termination, petitioners were entitled to reinstatement and backwages in accordance with the Labor Code. The backwages however were to be computed only for three years from the date of their dismissal without deduction or qualification. Where the illegal dismissal transpired before the effectivity of RA 6715, or before March 21, 1989, the award of backwages in favor of the dismissed employees is limited to three (3) years without deduction or qualification. Project not within the regular trade or business of the employer Villa vs. NLRC G.R. No. 117043 FELIX VILLA, ALIBANGBANG, IRENEO; ALIBANGBANG, EFREN; et al. (All members of NSCWA with Felix Villa as president, representing Petitioners) vs. NATIONAL LABOR RELATIONS COMMISSION, Fifth Division and NATIONAL STEEL CORPORATION 105 | L a b o r S t a n d a r d s - C a s e D i g e s t s

January 14, 1998 Facts: One of the major projects of the private respondent National Steel Corporation (NSC) was the billet steelmaking plant. To produce the billets, the plant would initially use 100% scrap as its raw materials. Eventually, NSC would "build a Direct Reduced Iron (DRI) plant in line with its expansion program and integration program." Upon the availability of DRI, "the raw materials feed mix will eventually be 20 per cent scrap and 80 per cent DRI." In line with its program to use 100% scrap, the NSC ventured into a shipbreaking operation. Under this operation, ships/vessels at sea would be cut up into large chunks and brought to land to be cut further into smaller sizes. However, due to scarcity of vessels/ships for salvaging, the higher costs of operation and the unsuitability of raw materials, this experimental project was stopped after four or five ships had been chopped. When the project was completely phased out, the laborers hired for said project were terminated. Prior to the phasing out of the project, the National Steel Corporation Employees Association Southern Philippines Federation of Labor (NSCEA-SPFL) filed a notice of strike, and charged the NSC with unfair labor practices consisting of (a) wage discrimination, (b) interference with the employees' right to self-organization, (c) nonregularization of contractual employees, (d) illegal termination of employees, (e) nonpayment of wage/benefit differentials, and (f) nonrecognition of NSCEA-SPFL as the sole bargaining representative of the company. The then Ministry of Labor and Employment exercising jurisdiction over the case, issued a return-to-work order. In due course, then Labor Minister dismissed the complaint of NSCEA-SPFL. The petitioners filed for a motion for reconsideration, but the same was denied. Hence, they filed a petition to the Supreme Court. The Court affirmed the order of the public respondent assuming jurisdiction of the labor dispute, upon a showing that the petitioner was engaged in a pioneer enterprise affected with public interest and involving its 5,000 employees and their dependents, and more so since both parties had manifested their concurrence with the intervention of the Department of Labor in settlement of the said dispute. However, since there were a number of factual questions that had to be threshed out, the Court resolved to set aside the dismissal of the complaint and to remand the case to the NLRC for a formal hearing on the factual issues raised in the petition. The NLRC ruled that the greater majority of the individual complainants were 'contractual' or 'casual employees.' By the very nature of their employment or job, they cannot be considered as regular employees of respondent company by virtue of Article 280 of the Labor Code, as amended, excepting the few who are either made to work or perform functions along or side by side with the regular employees, such as those assigned at the Billeting Mill or production line departments, or made to perform ground maintenance jobs as well as those performing

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administrative and finance support services who may seemingly deserve to be regularized. The National Steel Corporation Workers Association, a break-away group from the NSCEA-SPFL filed a motion for reconsideration of the NLRC Decision, assailing the same for its incompleteness and failure to resolve the case with finality. However, the NLRC denied the same. Issue: Whether or not workers contracted as project employees may be considered as regular employees on account of their performance of duties inherent in the business of the employer. Held: No. The petition was denied. The Court upheld its reliance on the factual findings the NLRC. Contracts for project employment are valid under the law. By entering into such a contract, an employee is deemed to understand that his employment is coterminous with the project. He may not expect to be employed continuously beyond the completion of the project. However, the law requires that, upon completion of the project, the employer must present proof of termination of the services of the project employees at the nearest public employment office. However, if the employees' services are extended long after the supposed project had been completed, the employees are removed from the scope of project employees and they shall be considered regular employees. The Court reiterated its ruling in Palomares v. NLRC, wherein the Court stated that, "The fact that petitioners were required to render services necessary or desirable in the operation of NSC's business for a specified duration did not in any way impair the validity of their contracts of employment which stipulated a fixed duration therefor." Thus, the fact that petitioners worked for NSC under different project employment contracts for several years cannot be made a basis to consider them as regular employees, for they remain project employees regardless of the number of projects in which they have worked. Length of service is not the controlling determinant of the employment tenure of a project employee. Definition of “Specific Project or Undertaking” Tucor Industries, Inc. vs. NLRC G.R. Nos. 96608-09 TUCOR INDUSTRIES, INC., AND PATRICK BOLL vs. NATIONAL LABOR RELATIONS COMMISSION, FLORENCIO BASCO, REGINO DAYRIT, FLORANIO GARCIA, JESUS CANLAS, ABEL DAVID, REYNALDO INFANTE, EDISON TAPANG, LARRY ENRIQUEZ, REY SALALILA, AND PACIFICO C. DIZON May 20, 1991 Facts: Petitioner is a corporation principally engaged in the moving and storage of various goods owned by military personnel residing within the 107 | L a b o r S t a n d a r d s - C a s e D i g e s t s

United States military facilities in the Philippines. On various dates herein private respondents were hired as packers, drivers and utilitymen/carpenters. They signed uniform company-prepared master employment contracts. In a memorandum-letter, the Chief of Traffic Management of Clark Air Base reminded all agents, including petitioner of the base policy that "(E)mployees who already have passes in their possession and who fail the polygraph . . ." administered by an acknowledged security company will be required to return their passes. On the same day petitioner terminated the employment of private respondents by sending them separate identical notices of termination informing the respondents that after an intensive and extensive investigation conducted as a result of numerous reports of missing items from shipments, their Base Pass was not cleared by the American Authorities and for this reason, the Company could no longer avail of their services. It must be noted that all of private respondents had continuously been employed by petitioner for more than a year before the services were terminated. On August 2, 1989, private respondents, except Pacifico Dizon, filed a complaint for illegal dismissal against petitioner with the Regional Arbitration Branch No. 5 of the National Labor Relations Commission (NLRC) in San Fernando, Pampanga, Private respondent Dizon filed a complaint later. The case was heard and the parties submitted their respective position papers On August 7, 1989, the Executive Labor Arbiter rendered a decision against Tucor Industries, ordering the same to pay backwages and to reinstate the complainants. Petitioners appealed to NLRC but it was dismissed and the decision of the Labor Arbiter was affirmed. A motion of reconsideration was filed but was later denied. Hence, this petition for certiorari. Issue: Whether or not the respondents were regular employees and were illegally dismissed. Held: Yes. Article 280 of the Labor Code, as amended, provides as follows: Art. 280. Regular and casual employment.—The provisions of a written agreement to the contrary notwithstanding and regardless of the oral agreements of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer except where the employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. An examination of the contract of employment does not show that private respondents were hired for a "specific project or undertaking" nor was the completion or termination of the alleged project for which private respondents were hired determined at the start of the employment. The 108 | L a b o r S t a n d a r d s - C a s e D i g e s t s

term "specific project or undertaking" under Article 280 of the Labor Code contemplates an activity which was commonly or habitually performed or such type of work which is not done on a daily basis but only for a specific duration of time or until the completion of the project. The services employed are thus necessary or desirable in the employer's usual business only for the period of time it takes to complete the project. Without the performance of such services on a regular basis, the employer's main business is not expected to grind to a halt. In the case at bar, private respondents were assigned to do carpentry work, packing and driving, activities which are usually necessary and desirable in petitioners' usual business and which thus had to be done on a regular basis. The fact that private respondents had rendered more than one year of service at the time of their dismissal overturns the petitioner's allegation that private respondents were hired for a specific or a fixed undertaking for a limited period of time. The company-prepared master employment contracts placed the private respondents at the mercy of those who crafted the said contract. The work of the private respondents is hardly "specific" or "seasonal." Such is one instance under the Code "where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business." At any rate, inasmuch as private respondents were engaged in the activities which are usual and necessary in usual business or trade of petitioner company, they are regular employees entitled to security of tenure, the provision of the written agreement to the contrary notwithstanding. Their dismissal without just cause in this case and without appropriate investigation is certainly illegal. The absence of a definite duration for the projects leads to no other conclusion than that the employment is regular. PNOC-Energy Development Corp. vs. NLRC G.R. No. 169353 PNOC-ENERGY DEVELOPMENT CORPORATION, SOUTHERN NEGROS GEOTHERMAL PROJECT vs. NATIONAL LABOR RELATIONS COMMISSION, PNOC-EDC, SNGPEUASSOCIATED LABOR UNIONS – TUCP, LEONORA A. TORRES, ALEJANDRO B. TABAÑERA, JR., ARNEL T. AMOR, ROSELA S. CALIMPONG, WILSON D. NUAY, AND ROBERTO S. RENZAL April 13, 2007 Facts: Petitioner PNOC-Energy Development Corporation is a government-owned and controlled corporation engaged in the exploration, development, and utilization of energy. It undertakes several projects in areas where geothermal energy has been discovered. To augment its manpower requirement occasioned by the increased activities in the development of PAL II, petitioner hired the respondent employees in the Administration and Maintenance Section. The termination/expiration of their respective employment were specified in their initial employment 109 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contracts, which, however, were renewed and extended on their respective expiry dates. On May 29, 1998, petitioner submitted reports to the Department of Labor and Employment (DOLE) Regional Sub-Branch No. VII in Dumaguete City, stating that six of its employees were being terminated. Petitioner thereafter furnished the employees uniformly worded notices of termination, stating that they were being terminated from employment effective June 30, 1998 due to the substantial completion of the civil works phase of PAL II. On October 29, 1998, the six employees, herein respondents, filed before the National Labor Relations Commission (NLRC) a complaint for illegal dismissal against petitioner. Aside from reinstatement, respondents sought the payment of backwages, salary differential, collective bargaining agreement benefits, damages and attorney’s fees. Respondents averred that they had rendered continuous and satisfactory services from the dates of their respective employment until illegally dismissed on June 30, 1998. Respondents further contended that their dismissal from employment was a clear case of union busting for they had previously sought union membership and actually filed a notice of strike. For its part, petitioner asseverated that respondents were contractual employees; as such, they cannot claim to have been illegally dismissed because upon the expiration of the term of the contract or the completion of the project, their employer-employee relationship also ended. The Labor Arbiter rendered judgment dismissing the complaint for lack of legal and factual basis. The Labor Arbiter ruled that respondents were not dismissed from work; the employer-employee relationship between the parties was severed upon the expiration of the respective contracts of respondents and the completion of the projects concerned. Not satisfied, respondents interposed an appeal to the NLRC which rendered judgment reversing the decision of the Labor Arbiter. It ordered to reinstate the complainants, except Rosela Calimpong whose claim was dismissed for lack of merit, to pay each backwages and attorney’s fees. The NLRC ratiocinated that respondents were regular non-project employees for having worked for more than one year in positions that required them to perform activities necessary and desirable in the normal business or trade of petitioner. The NLRC further ruled that the employment contracts of respondents were not for a specific project or for a fixed period. Respondents filed a motion for reconsideration, which the NLRC denied. Aggrieved, petitioner filed a petition for certiorari before the CA seeking to have the NLRC decision reversed. It claimed that respondents were engaged for one definite phase of petitioner’s geothermal project, the execution and implementation of the civil works portion of the Fluid Collection and Disposal System (FCDS) and Associated Work Projects. Petitioner averred that at the time of respondents’ termination, the projects had already been substantially if not fully completed. The CA 110 | L a b o r S t a n d a r d s - C a s e D i g e s t s

dismissed the petition. The CA ruled that respondents were performing activities necessary and desirable in the normal operations of the business of petitioner. The appellate court explained that the repeated re-hiring and the continuing need for the services of the project employees over a span of time had made them regular employees. The motion for reconsideration filed by petitioner was denied by the CA. Issue: Whether or not the respondents were project employees. Held: No. Article 280 of the Labor Code of the Philippines states that an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. The principal test for determining whether particular employees are properly characterized as "project employees," as distinguished from "regular employees," is whether or not the project employees were assigned to carry out a "specific project or undertaking," the duration and scope of which were specified at the time the employees were engaged for that project. However, petitioner failed to substantiate its claim that respondents were hired merely as project employees. A perusal of the records of the case reveals that the supposed specific project or undertaking of petitioner was not satisfactorily identified in the contracts of respondents. Unmistakably, the alleged projects stated in the employment contracts were either too vague or imprecise to be considered as the "specific undertaking" contemplated by law. Petitioner’s act of repeatedly and continuously hiring respondents to do the same kind of work belies its contention that respondents were hired for a specific project or undertaking. The absence of a definite duration for the project/s has led the Court to conclude that respondents are, in fact, regular employees. Lack of evidence to prove that employment is project Olongapo Maintenance Services, Inc. vs. Chamnegco G.R. No. 156146 OLONGAPO MAINTENANCE SERVICES, INC. vs. EDGARDO B. CHANTENGCO, SALVACION S. ANIGAN, POLICARPIO S. ANIGAN, AND 68 OTHERS June 21, 2007 Facts: OMSI is a corporation engaged in the business of providing janitorial and maintenance services to various clients, including government-owned and controlled corporations. On various dates beginning 1986, OMSI hired the respondents as janitors, grass cutters, and 111 | L a b o r S t a n d a r d s - C a s e D i g e s t s

degreasers, and assigned them at the Ninoy Aquino International Airport (NAIA). On January 14, 1999, OMSI terminated respondents' employment. Claiming termination without just cause and non-payment of labor standard benefits, respondents filed a complaint for illegal dismissal, underpayment of wages, and non-payment of holiday and service incentive leave pays, with prayer for payment of separation pay, against OMSI.

For its part, OMSI denied the allegations in the complaint. It averred that when Manila International Airport Authority (MIAA) awarded to OMSI the service contracts for the airport, OMSI hired respondents as janitors, cleaners, and degreasers to do the services under the contracts. OMSI informed the respondents that they were hired for the MIAA project and their employments were coterminous with the contracts. As project employees, they were not dismissed from work but their employments ceased when the MIAA contracts were not renewed upon their expiration. The termination of respondents’ employment cannot, thus, be considered illegal. The Labor Arbiter dismissed the complaints. On the other hand, the NLRC, upon appeal, modified the ruling, holding that the respondents were regular and not project employees. OMSI sought reconsideration of the ruling, but the NLRC denied the motion. Petitioner went up to the Court of Appeals via a petition for certiorari, imputing grave abuse of discretion to the NLRC for reversing the factual findings and the decision of the Labor Arbiter. However, the Court of Appeals dismissed the petition. The appellate court agreed with the NLRC that the continuous rehiring of respondents, who performed tasks necessary and desirable in the usual business of OMSI, was a clear indication that they were regular, not project employees. The court added that OMSI failed to establish that respondents’ employment had been fixed for a specific project or undertaking, the completion or termination of which had been determined at the time of their engagement or hiring. Neither had it shown that respondents were informed of the duration and scope of their work when they were hired. Furthermore, OMSI did not submit to the Department of Labor and Employment (DOLE) reports of termination of the respondents, thereby bolstering respondents’ claim of regular employment. OMSI filed a motion for reconsideration, but the Court of Appeals denied. Issue: Whether or not the respondents were regular employees.

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Held: Yes. The principal test in determining whether an employee is a project employee is whether he/she is assigned to carry out a "specific project or undertaking," the duration and scope of which are specified at the time the employee is engaged in the project, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season. A true project employee should be assigned to a project which begins and ends at determined or determinable times, and be informed thereof at the time of hiring. In the instant case, the record is bereft of proof that the respondents’ engagement as project employees has been predetermined, as required by law. We agree with the Court of Appeals that OMSI did not provide convincing evidence that respondents were informed that they were to be assigned to a "specific project or undertaking" when OMSI hired them. Notably, the employment contracts for the specific project signed by the respondents were never presented. All that OMSI submitted in the proceedings a quo are the service contracts between OMSI and the MIAA. Clearly, OMSI utterly failed to establish by substantial evidence that, indeed, respondents were project employees and their employment was coterminous with the MIAA contract. In termination cases, the burden of proof rests on the employer to show that the dismissal is for a just cause. Thus, employers who hire project employees are mandated to state and, once its veracity is challenged, to prove the actual basis for the latter's dismissal. Unfortunately for OMSI, it failed to discharge the burden. All that we have is OMSI’s self-serving assertion that the respondents were hired as project employees. Worker hired on a phase project can be dismissed on completion of such phase project and not coterminous with the completion of the whole project; termination of phase project Saberola vs. Suarez G.R. No. 151227 GREGORIO S. SABEROLA vs. RONALD SUAREZ, AND RAYMUNDO LIRASAN, JR. July 14, 2008 Facts: Petitioner is the owner and manager of G.S. Saberola Electrical Services, a firm engaged in the construction business specializing in installing electrical devices in subdivision homes and in commercial and non-commercial buildings. Respondents were employed by petitioner as electricians. They worked from Monday to Saturday and, occasionally, on Sundays, with a daily wage of P110.00. Respondent Ronald Suarez (Suarez) was employed by petitioner from February 1995 until October 1997; while respondent Raymundo Lirasan, Jr. (Lirasan) worked from 113 | L a b o r S t a n d a r d s - C a s e D i g e s t s

February 1995 until September 1997. Respondent Lirasan alleged that he was dismissed without cause and due process. He was merely informed by petitioner that his services were no longer needed without any explanation why he was terminated. Both respondents claimed that they received compensation below the minimum wage. They were given a fixed rate of P110.00 while the mandated minimum wage was P135.00, per Wage Order No. 5 issued by the Regional Tripartite and Productivity Board of Region XI. They also alleged that they did not receive 13th month pay for the entire period of their employment. Both likewise claimed payment of overtime and service incentive leave. In his defense, petitioner averred that respondents were part-time project employees and were employed only when there were electrical jobs to be done in a particular housing unit contracted by petitioner. He maintained that the services of respondents as project employees were coterminous with each project. As project employees, the time of rendition of their services was not fixed. Thus, there was no practical way of determining the appropriate compensation of the value of respondents’ accomplishment, as their work assignment varied depending on the needs of a specific project. The Labor Arbiter rendered a Decision dismissing the complaint for lack of merit, ruling that respondents were project employees and were not entitled to their monetary claims. On appeal, the National Labor Relations Commission (NLRC) affirmed with modification the findings of the Labor Arbiter. It maintained that respondents were project employees of petitioner. However, it declared that respondent Suarez was illegally dismissed from employment. It also awarded the monetary claims of respondents. Petitioner filed a motion for reconsideration which was denied. Petitioner filed a petition for certiorari under Rule 65 of the Rules of Court before the CA but was later denied. Issue: Whether or not respondent Suarez was illegally terminated. Held: Yes. Petitioner, as an electrical contractor, depends for his business on the contracts that he is able to obtain from real estate developers and builders of buildings. Thus, the work provided by petitioner depends on the availability of such contracts or projects. The duration of the employment of his work force is not permanent but coterminous with the projects to which the workers are assigned. Viewed in this context, the respondents are considered as project employees of petitioner. Indeed, the status of respondents as project employees was upheld by the Court of Appeals based on the findings of facts of the Labor Arbiter and the NLRC. However, respondents, even if working as project employees, enjoy security of tenure. Section 3, Article XIII, of the Constitution guarantees the right of workers to security of tenure, and because of this, an employee may only be terminated for just or authorized causes that must 114 | L a b o r S t a n d a r d s - C a s e D i g e s t s

comply with the due process requirements mandated by law. In Archbuild Masters and Construction, Inc. v. NLRC, we held that the employment of a project worker hired for a specific phase of a construction project is understood to be coterminous with the completion of such phase and not upon the accomplishment of the whole project. Nonetheless, when a project employee is dismissed, such dismissal must still comply with the substantive and procedural requirements of due process. In this regard, we hold that respondent Suarez was illegally terminated by petitioner. A project employee must be furnished a written notice of his impending dismissal and must be given the opportunity to dispute the legality of his removal. In termination cases, the burden of proof rests on the employer to show that the dismissal was for a just or authorized cause. Employers who hire project employees are mandated to state and prove the actual basis for the employee’s dismissal once its veracity is challenged. Petitioner failed to present any evidence to disprove the claim of illegal dismissal. It was uncontested that the last work of the respondents with petitioner’s company was the electrical installation in some housing units at the Ciudad Esperanza Housing Project. No evidence was presented by petitioner to show the termination of the project which would justify the cessation of the work of respondents. Neither was there proof that petitioner complied with the substantive and procedural requirements of due process. Project to Project Basis of Employment Sandoval Shipyard, Inc. vs. NLRC G.R. No. L-65689 SANDOVAL SHIPYARDS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, ROGELIO DIAMANTE, MANUEL PACRES, ROLANDO CERVALES, DIONISIO CERVALES, AND MACARIO SAPUTALO May 31, 1985 G.R. No. L-66119 SANDOVAL SHIPYARDS, INC. vs. VICENTE LEOGARDO, JR., DEPUTY MINISTER OF LABOR AND EMPLOYMENT, DANILO DELA CRUZ, AND 16 OTHERS May 31, 1985 Facts: Sandoval Shipyards, Inc. has been engaged in the building and repair of vessels. It contends that each vessel is a separate project and that the employment of the workers is terminated with the completion of each project. The workers contend otherwise. They claim to be regular

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workers and that the termination of one project does not mean the end of their employment since they can be assigned to unfinished projects.

In G.R. No. 65689, Rogelio Diamante, Manuel Pacres, Macario Saputalo, Rolando Cervales and Dionisio Cervales were assigned to the construction of the LCT Catarman, Project No. 7511. After three months of work, the project was completed on July 26, 1979. The five workers were served a termination notice. The termination was reported to the Ministry of Labor on August 3, 1979. They filed a complaint for illegal dismissal. The National Labor Relations Commission affirmed the decision of the Labor Arbiter ordering the reinstatement of the five complainants with backwages. In G.R. No. 66119, respondents Danilo de la Cruz, et al., 17 in all, were assigned to work in Project No. 7901 for the construction of a tanker ordered by Mobil Oil Philippines, Inc. There were 55 workers in that project. The tanker was launched on January 31, 1980. Upon the yard manager's recommendation, the personnel manager of Sandoval Shipyards terminated the services of the welders, helpers and construction workers effective February 4, 1980. The termination was duly reported to the Ministry of Labor and Employment.

Three days later, or on February 7, twenty-seven out of the 55 workers were hired for a new project. The 27 included four of the 17 respondents who filed a complaint for illegal dismissal on February 6. After hearing, the Director of the Ministry's Capital Region ordered the reinstatement of the complainants. The Deputy Minister of Labor affirmed that order.

Issue: Whether or not the respondents were regular employees.

Held: No. We hold that private respondents were project employees whose work was coterminous with the project for which they were hired. Project employees, as distinguished from regular or non-project employees, are mentioned in section 281 of the Labor Code as those "where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee."

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Policy Instructions No. 20 of the Secretary of Labor, which was issued to stabilize employer-employee relations in the construction industry, provides that project employees are those employed in connection with a particular construction project. Non-project (regular) employees are those employed by a construction company without reference to any particular project. Project employees are not entitled to termination pay if they are terminated as a result of the completion of the project or any phase thereof in which they are employed, regardless of the number of projects in which they have been employed by a particular construction company. Moreover, the company is not required to obtain clearance from the Secretary of Labor in connection with such termination.

Engaged in contracting electrical services depending on the availability of project works Cartagenas vs. Romago Elecric Co., Inc. G.R. No. 82973 MARIO CARTAGENAS, JESUS N. MIRABALLES, VICTOR C. MONSOD AND VICENTE BARROA vs. ROMAGO ELECTRIC COMPANY, INC., NATIONAL LABOR RELATIONS COMMISSION September 15, 1989 Facts: Respondent Romago is a general contractor engaged in contracting and sub-contracting of specific building construction projects or undertaking such as electrical, mechanical and civil engineering aspects in the repair of buildings and from other kindred services. Individual complainants are employed by the respondent in connection with particular construction projects. Effective July 12,1986, individual complainants and Lawrence Deguit were temporarily laid-off by virtue of a memorandum issued by the respondent. In said memorandum they were also informed that a meeting regarding the resumption of operation will be held on July 16, 1986 and that they will be notified as to when they will resume work. On July 28, 1986, complainants filed the instant case for illegal dismissal but before the respondent could receive a copy of the complaint and the notification and summons issued by the NLRC National Capital Region (actually received only on August 22, 1986, page 4, records) individual complainants re-applied with the respondent and were assigned to work with its project at Robinson-EDSA. In hiring the herein complainants to be assigned to a particular project they have to fill up an employment application form and are subjected to a pre-hiring examination. If evaluated to be qualified they sign at the end portion of their employment application form that their employment is for a fixed period of time only. 117 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The NLRC held that the complainants were project employees. The fact that the complainants worked for the respondent under different project employment contracts for so many years could not be made a basis to consider them as regular employees for they remain project employees regardless of the number of projects in which they have worked. Issue: Whether or not they were regular employees. Held: No. As an electrical contractor, the private respondent depends for its business on the contracts it is able to obtain from real estate developers and builders of buildings. Since its work depends on the availability of such contracts or "projects," necessarily the duration of the employment of its work force is not permanent but co-terminus with the projects to which they are assigned and from whose payrolls they are paid. It would be extremely burdensome for their employer who, like them, depends on the availability of projects, if it would have to carry them as permanent employees and pay them wages even if there are no projects for them to work on. We hold, therefore, that the NLRC did not abuse its discretion in finding, based on substantial evidence in the records, that the petitioners are only project workers of the private respondent. Repeated rehiring of project to project employment Samson vs. NLRC G.R. No. 113166 ISMAEL SAMSON vs. NATIONAL LABOR RELATIONS COMMISSION and ATLANTIC GULF AND PACIFIC CO., MANILA, INC. February 1, 1996 Facts: Petitioner has been employed with private respondent Atlantic Gulf and Pacific Co., Manila, Inc. (AG & P) in the latter’s various construction projects since April, 1965, in the course of which employment he worked essentially as a rigger, from laborer to rigger foreman. From 1977 up to 1985, he was assigned to overseas projects of AG & P, particularly in Kuwait and Saudi Arabia. On November 5, 1989, petitioner filed a complaint for the conversion of his employment status from project employee to regular employee, which complaint was later amended to include claims for underpayment, nonpayment of premium pay for holiday and rest day, refund of reserve fund, and 10% thereof as attorneys fees. Petitioner alleged therein that on the 118 | L a b o r S t a n d a r d s - C a s e D i g e s t s

basis of his considerable and continuous length of service with AG & P. he should already be considered a regular employee and, therefore, entitled to the benefits and privileges appurtenant thereto. The labor arbiter, in a decision declared that petitioner should be considered a regular employee. On appeal, public respondent NLRC reversed the decision of the labor arbiter and dismissed the complaint for lack of merit. Issue: Whether or not petitioner is a regular or project employee. Held: The petitioner is a regular employee. It is not disputed that petitioner had been working for private respondent for approximately twenty-eight (28) years as of the adjudication of his plaint by respondent NLRC, and that his project-to-project employment was renewed several times. With the successive contracts of employment wherein petitioner continued to perform virtually the same kind of work, i.e., as rigger, throughout his period of employment, it is manifest that petitioner’s assigned tasks were usually necessary or desirable in the usual business or trade of private respondent. The repeated re-hiring and continuing need for his services are sufficient evidence of the necessity and indispensability of such services to private respondents business or trade. Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs or public order. As observed by the Solicitor General, the record of this case discloses, as part of petitioners position paper, a certification duly issued by private respondent clearly showing that the formers services were engaged by private respondent on a continuing basis since 1965. The certification indubitably indicates that after a particular project has been accomplished, petitioner would be re-hired immediately the following day save for a gap of one (1) day to one (1) week from the last project to the succeeding one. There can, therefore, be no escape from the conclusion that petitioner is a regular employee of private respondent. The length of service of project employees is not the controlling factor. D.M. Consunji, Inc.vs. NLRC G.R. No. 116572 D. M. CONSUNJI, INC. vs. NATIONAL LABOR RELATIONS COMMISSION (FOURTH DIVISION), and ALEXANDER AGRAVIADOR, JOVENCIO MENDREZ, FELIPE BARCELONA, CONCORCIOLASPUÑA and ROGELIO DIAZ

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December 18, 2000 Facts: Alexander Agraviador, Jovencio Mendrez, Felipe Barcelona, Concorciola Spuña, and Rogelio Diaz were hired by petitioner as project employees to work on its Cebu Super Block Project in Cebu City. Their separate but identical contracts state that they were hired as project employees for an estimated period. Agraviador and his colleagues were surprised when their services were terminated allegedly without regard to the date of termination as specified in their contracts of employment. D.M. Consunji Inc. reported the termination of their services to the nearest Regional Office of the Department of Labor alleging that the term of the contracts of employment had expired. Agraviador and fellow aggrieved colleagues then filed their respective complaints for illegal dismissal. The Labor Arbiter found the dismissal of the private respondents without just cause and ordering petitioner to reinstate them to their former positions without loss of benefits and seniority rights and to pay them their backwages. The Labor Arbiter alsoconcluded that the contracts of employment of the private respondents should not be honored because they were made more for breach rather than for observance. The National Labor Relations Commission affirmed the decision of the Labor Arbiter. It ruled that the employment period need not reach six months in order that the private respondents attain the status of regular employees citing Article 280 of the Labor Code. It agreed with the Labor Arbiter that the private respondents could not be considered contract workers because they worked even after the expiration of their contracts of employment. Dissatisfied with the decision, the petitioner appealed to the Supreme Court. Issue: Whether or not the private respondents were project employees. Held: The length of service of a project employee is not the controlling test of employment tenure but whether or not the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee. Project employee is one whose employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. At the time of the termination of the private respondents’ employment, the respective periods or terms of employment of private respondents Felipe Barcelona, Consorcio Laspuna and Rogelio Diaz had already expired. The fact that they were allowed to work for weeks after the expiration of their contracts would not necessarily show that petitioner had dishonored the contracts. Indeed, some phases of the project may not have been completed after 120 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the estimated one month period and that their services were still necessary. Rehiring of the employees on a project to project basis does not ipso facto make their employment regular. Cioco vs. C.E. Construction Corp. G. R. No. 156748 ISAAC CIOCO, JR., REBIE A. MERCADO, BENITO V. GALVADORES, CECILIO SOLVER, CARMELO JUANZO, BENJAMIN BAYSA, and RODRIGO NAPOLES vs. C. E. CONSTRUCTION CORPORATION and/or JOHNNY TAN September 8, 2004 G.R. No. 156896 C. E. CONSTRUCTION CORPORATION vs. ISAAC CIOCO, JR., REBIE A. MERCADO, BENITO V. GALVADORES, CECILIO SOLVER, CARMELO JUANZO, BENJAMIN BAYSA, and RODRIGO NAPOLES September 8, 2004 Facts: Isaac Cioco, Jr., Rebie A. Mercado, Benito V. Galvadores, Cecilio Solver, Carmelo Juanzo, Benjamin Baysa, and Rodrigo Napoles (WORKERS) were hired by C.E. Construction Corporation (COMPANY), a domestic corporation engaged in the construction business and managed by its owner-president, Mr. Johnny Tan. They were hired as carpenters and laborers in various construction projects from 1990 to 1999, the latest of which was the GTI Tower in Makati. Prior to the start of every project, the WORKERS signed individual employment contracts. Sometime in May and June 1999, the WORKERS, along with sixty-six (66) others, were terminated by the COMPANY on the ground of completion of the phases of the GTI Tower project for which they had been hired. Alleging that they were regular employees, the WORKERS filed complaints for illegal dismissal with the Arbitration Branch of the NLRC. Claims for underpaid wages and unpaid overtime pay, premium for holiday and rest days, service incentive leave pay, night shift differential, and 13 thmonth pay were likewise demanded. On April 17, 2000, the Labor Arbiter rendered judgment in favor of the COMPANY. The NLRC affirmed the Labor Arbiter’s decision on appeal. 121 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the WORKERS were regular or project employees. Held: The Court held that the fact that the WORKERS have been employed with the COMPANY for several years on various projects, the longest being nine (9) years, did not automatically make them regular employees considering that the definition of regular employment in Article 280 of the Labor Code, makes specific exception with respect to project employment. The re-hiring of petitioners on a project-to-project basis did not confer upon them regular employment status. The practice was dictated by the practical consideration that experienced construction workers are more preferred. It did not change their status as project employees. Employees were rehired on interval basis. Caseres vs. Universal Robina Sugar Milling Corp. G.R.No. 159343 PEDY CASERES and ANDITO PAEL vs. UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) and/or RESIDENT MANAGER RENE CABATE September 28, 2007 Facts: Universal Robina Sugar Milling Corporation (respondent) is a corporation engaged in the cane sugar milling business. Pedy Caseres (petitioner Caseres) started working for respondent in 1989, while Andito Pael (petitioner Pael) in 1993. At the start of their respective employments, they were made to sign a Contract of Employment for Specific Project or Undertaking. Petitioners' contracts were renewed from time to time, until May 1999 when they were informed that their contracts will not be renewed anymore. Petitioners filed a complaint for illegal dismissal, regularization, incentive leave pay, 13th month pay, damages and attorney’s fees. In a Decision dated August 24, 1999, the Labor Arbiter dismissed the complaint for not being substantiated with clear and convincing evidence. The National Labor Relations Commission affirmed the LA's dismissal, and the Court of Appeals dismissed the petition filed before it. Issue: Whether or not the petitioners are employees not regular employees of respondents.

seasonal/project/term

Held: The fact that petitioners were constantly re-hired does not ipso facto establish that they became regular employees. Their respective 122 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contracts with respondent show that there were intervals in their employment. In petitioner Caseres' case, while his employment lasted from August 1989 to May 1999, the duration of his employment ranged from one day to several months at a time, and such successive employments were not continuous. With regard to petitioner Pael, his employment never lasted for more than a month at a time. These support the conclusion that they were indeed project employees, and since their work depended on the availability of such contracts or projects, necessarily the employment of respondents work force was not permanent but co-terminous with the projects to which they were assigned and from whose payrolls they were paid. Moreover, even if petitioners were repeatedly and successively re-hired, still it did not qualify them as regular employees, as length of service is not the controlling determinant of the employment tenure of a project employee, but whether the employment has been fixed for a specific project or undertaking, its completion has been determined at the time of the engagement of the employee. Further, the proviso in Article 280, stating that an employee who has rendered service for at least one (1) year shall be considered a regular employee, pertains to casual employees and not to project employees. Accordingly, petitioners cannot complain of illegal dismissal inasmuch as the completion of the contract or phase thereof for which they have been engaged automatically terminates their employment. Repeated extension employment regular.

of

employment

contracts

make

the

Tomas Lao Construction vs. NLRC G.R. No. 116781 TOMAS LAO CONSTRUCTION, LVM CONSTRUCTION CORPORATION, THOMAS and JAMES DEVELOPERS (PHIL.), INC. vs. NATIONAL LABOR RELATIONS COMMISSION, MARIO O. LABENDIA, SR., ROBERTO LABENDIA, NARCISO ADAN, FLORENCIO GOMEZ, ERNESTO BAGATSOLON, SALVADOR BABON, PATERNO BISNAR, CIRPRIANO BERNALES, ANGEL MABUHAY, SR., LEO SURIGAO, and ROQUE MORILLO September 5, 1997 Facts: From October to December 1990 private respondents individually filed complaints for illegal dismissal against petitioners with the National Labor Relations Commission in Tacloban City. Alleging that they were hired for various periods as construction workers in different capacities they described their contractual terms. Within the periods of their respective 123 | L a b o r S t a n d a r d s - C a s e D i g e s t s

employments, they alternately worked for petitioners Tomas Lao Corporation (TLC), Thomas and James Developers (T&J) and LVM Construction Corporation (LVM), altogether informally referred to as the Lao Group of Companies, the three (3) entities comprising a business conglomerate exclusively controlled and managed by members of the Lao family. TLC, T&J and LVM are engaged in the construction of public roads and bridges. Under joint venture agreements they entered into among each other, they would undertake their projects either simultaneously or successively so that, whenever necessary, they would lease tools and equipment to one another. Each one would also allow the utilization of their employees by the other two (2). With this arrangement, workers were transferred whenever necessary to on-going projects of the same company or of the others, or were rehired after the completion of the project or project phase to which they were assigned. Soon after, however, TLC ceased its operations while T&J and LVM stayed on. Sometime in 1989 Andres Lao, Managing Director of LVM and President of T&J, issued a memorandum requiring all workers and company personnel to sign employment contract forms and clearances which were issued on 1 July 1989 but antedated 10 January 1989. These were to be used allegedly for audit purposes pursuant to a joint venture agreement between LVM and T&J. To ensure compliance with the directive, the company ordered the withholding of the salary of any employee who refused to sign. Quite notably, the contracts expressly described the construction workers as project employees whose employments were for a definite period, i.e., upon the expiration of the contract period or the completion of the project for which the workers was hired. Except for Florencio Gomez all private respondents refused to sign contending that this scheme was designed by their employer to downgrade their status from regular employees to mere project employees. Resultantly, their salaries were withheld. They were also required to explain why their services should not be terminated for violating company rules and warned that failure to satisfactorily explain would be construed as disinterest in continued employment with the company. Since the workers stood firm in their refusal to comply with the directives their services were terminated. NLRC RAB VIII dismissed the complaints lodged before it. The decision of Labor Arbiter was reversed on appeal by the Fourth Division of the National Labor Relations Commission of Cebu City which found that private respondents were regular employees who were dismissed without just cause and denied due process. Issue: Whether or not the NLRC erred in classifying the employees as regular instead of project employees.

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Held: While it may be allowed that in the instant case the workers were initially hired for specific projects or undertakings of the company and hence can be classified as project employees, the repeated re-hiring and the continuing need for their services over a long span of time (the shortest, at seven [7] years) have undeniably made them regular employees. Thus, we held that where the employment of project employees is extended long after the supposed project has been finished, the employees are removed from the scope of project employees and considered regular employees. While length of time may not be a controlling test for project employment, it can be a strong factor in determining whether the employee was hired for a specific undertaking or in fact tasked to perform functions which are vital, necessary and indispensable to the usual business or trade of the employer. In the case at bar, private respondents had already gone through the status of project employees. But their employments became non-coterminous with specific projects when they started to be continuously re-hired due to the demands of petitioners business and were re-engaged for many more projects without interruption. 14. Seasonal Employment – Labor Code Article 280; Section 5, Rule I, Book IV, Implementing Rules Seasonal workers do not become regular employees even after one year of service. Mercado vs. NLRC G.R. No. 79869 FORTUNATO MERCADO, SR., ROSA MERCADO, FORTUNATO MERCADO, JR., ANTONIO MERCADO, JOSE CABRAL, LUCIA MERCADO, ASUNCION GUEVARA, ANITA MERCADO, MARINA MERCADO, JULIANA CABRAL, GUADALUPE PAGUIO, BRIGIDA ALCANTARA, EMERLITA MERCADO, ROMEO GUEVARA, ROMEO MERCADO and LEON SANTILLAN vs. NATIONAL LABOR RELATIONS COMMISSION (NLRC), THIRD DIVISION; LABOR ARBITER LUCIANO AQUINO, RAB-III; AURORA L. CRUZ; SPOUSES FRANCISCO DE BORJA and LETICIA DE BORJA; and STO. NIÑO REALTY, INCORPORATED September 5, 1991 Facts: Petitioners alleged in their complaint that they were agricultural workers utilized by private respondents in all the agricultural phases of work on the 7 1/2 hectares of ace land and 10 hectares of sugar land 125 | L a b o r S t a n d a r d s - C a s e D i g e s t s

owned by the latter; that Fortunato Mercado, Sr. and Leon Santillan worked in the farm of private respondents since 1949, Fortunato Mercado, Jr. and Antonio Mercado since 1972 and the rest of the petitioners since 1960 up to April 1979, when they were all allegedly dismissed from their employment. Private respondent Aurora Cruz in her answer to petitioners' complaint denied that said petitioners were her regular employees and instead averred that she engaged their services, through Spouses Fortunato Mercado, Sr. and Rosa Mercado, their "mandarols", that is, persons who take charge in supplying the number of workers needed by owners of various farms, but only to do a particular phase of agricultural work necessary in rice production and/or sugar cane production, after which they would be free to render services to other farm owners who need their services. The other private respondents denied having any relationship whatsoever with the petitioners and state that they were merely registered owners of the land in question included as correspondents in this case. Issue: Whether or not petitioners are regular and permanent farm workers. Held: A project employee has been defined to be one whose employment has been fixed for a specific project or undertaking, the completion or termination of which has been determined at the time of the engagement of the employee, or where the work or service to be performed is seasonal in nature and the employment is for the duration of the season as in the present case. The second paragraph of Art. 280 demarcates as "casual" employees, all other employees who do not fan under the definition of the preceding paragraph. The proviso, in said second paragraph, deems as regular employees those "casual" employees who have rendered at least one year of service regardless of the fact that such service may be continuous or broken. Clearly, therefore, petitioners being project employees, or, to use the correct term, seasonal employees, their employment legally ends upon completion of the project or the season. The termination of their employment cannot and should not constitute an illegal dismissal. Seasonal workers become regular employees after one year of service. Tacloban Sagkahan Rice and Corn Mills, Co. vs. NLRC G.R. No. 73806 TACLOBAN SAGKAHAN RICE and CORN MILLS, CO., and/or TAN CHENG PIAN (alias PIANA), Owner vs. 126 | L a b o r S t a n d a r d s - C a s e D i g e s t s

THE HONORABLE NATIONAL LABOR RELATIONS COMMISSION, SECOND DIVISION, THE HONORABLE EXECUTIVE LABOR ARBITER, REGIONAL ARBITRATION BRANCH NO. VIII, NATIONAL LABOR RELATIONS COMMISSION, TACLOBAN CITY, and, CARLITO CODILAN, MAXIMO DOCENA, TEOFILO TRANGRIA, EUGENIO GO, and, REYNALDO TULIN March 21, 1990 Facts: It appears that private respondents, before their termination on July 25, 1983, were all regular employees of petitioners. Carlito Codilan and Maximo Docena started working in 1958; Eugenio Go in 1961; Teofilo Trangria in 1968; and Reynaldo Tulin in 1977. On July 25, 1983, petitioner Tan Cheng Pian alias "Piana" told private respondents "to look for another job" without giving any reason. Private respondents thus filed their complaint for illegal dismissal with the Regional Office, NLRC at Tacloban City on August 23, 1983. At the hearing of September 28, 1983, private respondents, who had been employed elsewhere, demanded payment of separation pay instead of seeking reinstatement. After submission of private respondents' joint affidavit and petitioners' position paper, Executive Labor Arbiter' Armando Polintan rendered the Decision of April 11, 1984 ordering petitioners to pay private respondents their separation pay as specifically indicated in the said decision. Petitioners appealed the above decision to the respondent Commission which dismissed the appeal and affirmed the decision in its Resolution of December 28, 1984. Petitioners moved for reconsideration of the aforesaid resolution which the NLRC denied in the questioned Resolution of September 20, 1985. Hence, this petition for certiorari. Issue: Whether or not private respondents can be considered as regular employees. Held: Art. 280. — Regular and Casual Employment. — The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season. 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, 127 | L a b o r S t a n d a r d s - C a s e D i g e s t s

shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such actually exists. The evidence on record has established that private respondents Carlito Codilan and Maximo Docena had been working for petitioners for 25 years, respondent Eugenio Go for 22 years, respondent Teofilo Trangria for 15 years and respondent Reynaldo Tulin for 6 years. Aside from their lengthy service, it should be noted that private respondents' employment was not fixed for a specific project or undertaking the completion or termination of which has been determined at the time of their appointment or hiring. Likewise, it must be borne in mind that petitioners never rebutted private respondents' claim that they performed activities usually necessary or desirable in the usual business of the former.

Furthermore, the services performed or to be performed by private respondents are not seasonal in nature. While it may be true that the harvest of palay is seasonal, the milling operation which is the main business of petitioners are not seasonal. The fact is that big rice mills such as the one owned by petitioners continue to operate and do business throughout the year even if there are only two or three harvest seasons within the year. It is a common practice among farmers and rice dealers to store their palay and to have the same milled as the need arises. Thus, the milling operations have no let-up.

Finally, considering the number of years that they have worked for petitioners (the lowest is 6 years), private respondents have long attained the status of regular employees as defined under Art. 280 of the Labor Code. Requisites in order that seasonal employment may be regular employment Hacienda Fatima vs. National Federation of Sugarcane Workers- Food and General Trade G.R. No. 149440 HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE SEGURA vs. 128 | L a b o r S t a n d a r d s - C a s e D i g e s t s

NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE January 28, 2003 Facts: When complainant union was certified as the collective bargaining representative in the certification elections, respondents under the pretext that the result was on appeal, refused to sit down with the union for the purpose of entering into a collective bargaining agreement. Moreover, the workers including complainants herein were not given work for more than one month. In protest, complainants staged a strike which was however settled upon the signing of a Memorandum of Agreement. However, alleging that complainants failed to load the fifteen wagons, respondents reneged on its commitment to sit down and bargain collectively. Instead, respondent employed all means including the use of private armed guards to prevent the organizers from entering the premises. Moreover, starting September 1991, respondents did not any more give work assignments to the complainants forcing the union to stage a strike on January 2, 1992. But due to the conciliation efforts by the DOLE, another Memorandum of Agreement was signed by the complainants and respondents. When respondents again reneged on its commitment, complainants filed the present complaint.

Issue: Whether or not the Court of Appeals erred in holding that respondents, admittedly seasonal workers, were regular employees, contrary to the clear provisions of Article 280 of the Labor Code, which categorically state that seasonal employees are not covered by the definition of regular employees under paragraph 1, nor covered under paragraph 2 which refers exclusively to casual employees who have served for at least one year. Held: Article 280 of the Labor Code, as amended, states: Art. 280. Regular and Casual Employment. - The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed is seasonal in nature and the employment is for the duration of the season.

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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 exist.

For respondents to be excluded from those classified as regular employees, it is not enough that they perform work or services that are seasonal in nature. They must have also been employed only for the duration of one season. The evidence proves the existence of the first, but not of the second, condition. The fact that respondents -- with the exception of Luisa Rombo, Ramona Rombo, Bobong Abriga and Boboy Silva -- repeatedly worked as sugarcane workers for petitioners for several years is not denied by the latter. Evidently, petitioners employed respondents for more than one season. Therefore, the general rule of regular employment is applicable.

The test of whether or not an employee is a regular employee has been laid down in De Leon v. NLRC, in which this Court held: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual trade or business of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists.

Where there is no showing of clear, valid and legal cause for the termination of employment, the law considers the matter a case of illegal dismissal and the burden is on the employer to prove that the termination was for a valid and authorized cause. In the case at bar, petitioners failed to prove any such cause for the dismissal of respondents who, as discussed above, are regular employees. 130 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Abasolo vs. NLRC G.R. No. 118475 ELVIRA ABASOLO, ANTONIO ABAY, PURIFICACION ABAY, CATALINA ABELLERA, DANIEL ABELLERA, ELSIE ABELLERA, LOURDES ADUSE, et al. vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER RICARDO N. OLAIREZ, LA UNION TOBACCO REDRYING CORPORATION and SEE LIN CHAN November 29, 2000 Facts: La Union Tobacco Redrying Corporation (LUTORCO), which is owned by See Lin Chan, is engaged in the business of buying, selling, redrying and processing of tobacco leaves and its by-products. Elvira Abasolo and co-workers have been under the employ of LUTORCO for several years until their employment with LUTORCO was abruptly interrupted when Compania General de Tabaccos de Filipinas (also known as TABACALERA) took over LUTORCO’s tobacco operations. New signboards were posted indicating a change of ownership and petitioners were then asked by LUTORCO to file their respective applications for employment with TABACALERA. Petitioners were caught unaware of the sudden change of ownership and its effect on the status of their employment, though it was alleged that TABACALERA would assume and respect the seniority rights of the petitioners. The employees instituted before the National Labor Relations Commission a complaint on the ground that there was a termination of their employment due to the closure of LUTORCO as a result of the sale and turnover to TABACALERA. The Labor Arbiter dismissed the complaint for lack of merit. The petitioners then appealed the decision of the Labor Arbiter to NLRC. The National Labor Relations Commission affirmed the dismissal of the consolidated complaints. A motion for reconsideration was also filed, but it was futile. Petitioners now files a petition before the Supreme Court, questioning the decision. Issue: Whether or not the petitioners are regular or seasonal workers. Held: The primary standard of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of the work performed and its relation to the scheme of the particular business or trade in its entirety. Also if the 131 | L a b o r S t a n d a r d s - C a s e D i g e s t s

employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity, and while such activity exists. Thus, the nature of one’s employment does not depend solely on the will or word of the employer. Nor on the procedure for hiring and the manner of designating the employee, but on the nature of the activities to be performed by the employee, considering the employer’s nature of business and the duration and scope of work to be done. In the case at bar, while it may appear that the work of petitioners is seasonal, inasmuch as petitioners have served the company for many years, some for over 20 years, performing services necessary and indispensable to LUTORCO’s business, serve as badges of regular employment. Moreover, the fact that petitioners do not work continuously for one whole year but only for the duration of the tobacco season does not detract from considering them in regular employment since in a litany of cases this Court has already settled that seasonal workers who are called to work from time to time and are temporarily laid off during offseason are not separated from service in said period, but are merely considered on leave until re-employed. 15. Casual Employment – Labor Code Article 280; Section 5(b), Rule 1, Book IV (Amended by Article IV, D.O. No. 10 Series of 1997) Casual employee needs no appointment paper to be a regular employee after one year of service. Kimberly Clark Philippines vs. Secretary of Labor G.R. No. 156668 KIMBERLY-CLARK (PHILS.), INC. vs. SECRETARY OF LABOR, AMBROCIO GRAVADOR, ENRICO PILI, PAQUITO GILBUENA, ROBERTO DEL MUNDO, ALMARIO ROMINQUIT, et al. November 23, 2007 Facts: A Collective Bargaining Agreement was executed by and between Kimberly-Clark (Phils.), Inc., (Kimberly), a Philippine-registered corporation engaged in the manufacture, distribution, sale and exportation of paper products, and United Kimberly-Clark Employees Union-Philippine Transport and General Workers’ Organization (UKCEO-PTGWO) expired. The KILUSAN-OLALIA, then a newly-formed labor organization, challenged the 132 | L a b o r S t a n d a r d s - C a s e D i g e s t s

incumbency of UKCEO-PTGWO, by filing a petition for certification election with the Department of Labor and Employment. A certification election was subsequently conducted with UKCEO-PTGWO winning over KILUSANOLALIA. The then Ministry of Labor and Employment issued an order that the casual workers not performing janitorial and yard maintenance services had attained regular status on even date. UKCEO-PTGWO was then declared as the exclusive bargaining representative of Kimberly’s employees, having garnered the highest number of votes in the certification election. KILUSAN-OLALIA filed with the Supreme Court a petition assailing the order of the Ministry with prayer for a temporary restraining order. During the pendency of the case, Kimberly dismissed from service several employees and refused to heed the workers’ grievances, impelling KILUSAN-OLALIA to stage a strike on May 17, 1987. Kimberly filed an injunction case with the National Labor Relations Commission (NLRC), which prompted the latter to issue temporary restraining orders (TRO’s). Eventually, the pending case was decided ordering the opening and counting of the 64 challenged votes, and that the union with the highest number of votes be thereafter declared as the duly elected certified bargaining representative of the regular employees of KIMBERLY. It also ordered KIMBERLY to pay the workers who have been regularized. The KILUSAN-OLALIA and 76 individual complainants filed a motion for execution with the DOLE (formerly MOLE). The DOLE considered as physically impossible, and moot and academic the opening and counting of the 64 challenged ballots because they could no longer be located despite diligent efforts, and KILUSAN-OLALIA no longer actively participated when the company went through another CBA cycle. The Bureau of Working Conditions then submitted its report finding 47 out of the 76 complainants as entitled to be regularized. Kimberly filed a motion for reconsideration of the DOLE Order as well as the BWC Report, but it was denied. Kimberly filed a petition before the appellate court, but it was again dismissed. Hence, Kimberly filed a petition before the Supreme Court. Issue: Whether or not the workers became regular by operation of law, without the need for appointment papers. Held: Owing to their length of service with the company, these workers became regular employees, by operation of law, one year after they were employed by KIMBERLY through RANK. While the actual regularization of these employees entails the mechanical act of issuing regular appointment papers and compliance with such other operating procedures as may be adopted by the employer, it is more in keeping with the intent and spirit of the law to rule that the status of regular employment attaches to the casual worker on the day immediately after the end of his first year of service. To rule otherwise, and to instead make their 133 | L a b o r S t a n d a r d s - C a s e D i g e s t s

regularization dependent on the happening of some contingency or the fulfillment of certain requirements, is to impose a burden on the employee which is not sanctioned by law. The law thus provides for two kinds of regular employees, namely: (1) those who are engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer; and (2) those who have rendered at least one year of service, whether continuous or broken, with respect to the activity in which they are employed. The individual petitioners herein who have been adjudged to be regular employees fall under the second category. These are the mechanics, electricians, machinists, machine shop helpers, warehouse helpers, painters, carpenters, pipefitters and masons. It is not disputed that these workers have been in the employ of Kimberly for more than one year at the time of the filing of the petition for certification election by KILUSANOLALIA. Repeated rehiring of casual employees makes him a regular employee. Tan vs. Lagrama G.R. No. 151228 ROLANDO Y. TAN vs. LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF APPEALS August 15, 2002 Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and the general manager of Crown and Empire Theaters in Butuan City. Private respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the motion pictures shown at the Empress, Supreme, and Crown Theaters for more than 10 years, from September 1, 1988 to October 17, 1998. On October 17, 1998, private respondent Lagrama was summoned by Tan and complaimed about the latter’s behavior. Lagrama filed a complaint with the Sub-Regional Arbitration Branch No. X of the National Labor Relations Commission (NLRC) in Butuan City. He alleged that he had been illegally dismissed and sought reinvestigation and payment of 13th month pay, service incentive leave pay, salary differential, and damages. Labor Arbiter Rogelio P. Legaspi directed the parties to file their position papers. On June 17, 1999, he rendered a decision declaring respondent’s dismissal as illegal. Petitioner Rolando Tan appealed to the NLRC Fifth Division, Cagayan de Oro City, which, on June 30, 2000, rendered a decision4 finding Lagrama to be an independent contractor, and for this reason reversing the decision of the Labor Arbiter. Respondent Lagrama filed a motion for reconsideration, but it was denied for lack of merit. Accordingly, on May 31, 2001, the Court of Appeals rendered a decision reinstating Labor Arbiter Legaspi’s decision. 134 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not an employer-employee relationship existed between petitioner and private respondent. Held: In determining whether there is an employer-employee relationship, we have applied a "four-fold test," to wit: (1) whether the alleged employer has the power of selection and engagement of employees; (2) whether he has control of the employee with respect to the means and methods by which work is to be accomplished; (3) whether he has the power to dismiss; and (4) whether the employee was paid wages.7 These elements of the employer-employee relationship are present in this case. First. The existence in this case of the first element is undisputed. It was petitioner who engaged the services of Lagrama without the intervention of a third party. It is the existence of the second element, the power of control, that requires discussion here. In the case at bar, albeit petitioner Tan claims that private respondent Lagrama was an independent contractor and never his employee, the evidence shows that the latter performed his work as painter under the supervision and control of petitioner. Lagrama worked in a designated work area inside the Crown Theater of petitioner, for the use of which petitioner prescribed rules. The rules included the observance of cleanliness and hygiene and a prohibition against urinating in the work area and any place other than the toilet or the rest rooms.9 Petitioner's control over Lagrama's work extended not only to the use of the work area, but also to the result of Lagrama's work, and the manner and means by which the work was to be accomplished. Second. That petitioner had the right to hire and fire was admitted by him in his position paper submitted to the NLRC, the pertinent portions of which stated: Complainant did not know how to use the available comfort rooms or toilets in and about his work premises. He was urinating right at the place where he was working when it was so easy for him, as everybody else did and had he only wanted to, to go to the comfort rooms. But no, the complainant had to make a virtual urinal out of his work place! The place then stunk to high heavens, naturally, to the consternation of respondents and everyone who could smell the malodor. Given such circumstances, the respondents had every right, nay all the compelling reason, to fire him from his painting job upon discovery and his admission of such acts. Nonetheless, though thoroughly scolded, he was not fired. It was he who stopped to paint for respondents.

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By stating that he had the right to fire Lagrama, petitioner in effect acknowledged Lagrama to be his employee. For the right to hire and fire is another important element of the employer-employee relationship.13 Indeed, the fact that, as petitioner himself said, he waited for Lagrama to report for work but the latter simply stopped reporting for work reinforces the conviction that Lagrama was indeed an employee of petitioner. For only an employee can nurture such an expectancy, the frustration of which, unless satisfactorily explained, can bring about some disciplinary action on the part of the employer. Third. Payment of wages is one of the four factors to be considered in determining the existence of employer-employee relation. 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 employment for work done or to be done, or for services rendered or to be rendered." That Lagrama worked for Tan on a fixed piece-work basis is of no moment. Payment by result is a method of compensation and does not define the essence of the relation. It is a method of computing compensation, not a basis for determining the existence or absence of employer-employee relationship. One may be paid on the basis of results or time expended on the work, and may or may not acquire an employment status, depending on whether the elements of an employer-employee relationship are present or not. The primary standard for determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer.19 In this case, there is such a connection between the job of Lagrama painting billboards and murals and the business of petitioner. To let the people know what movie was to be shown in a movie theater requires billboards. Petitioner in fact admits that the billboards are important to his business. 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: ART. 279. Security of Tenure. — In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. This Court has held that if the employee has been performing the job for at least one year, even if not continuously but intermittently, the repeated 136 | L a b o r S t a n d a r d s - C a s e D i g e s t s

and continuing need for its performance is sufficient evidence of the necessity, if not indispensability, of that activity to the business of his employer. Hence, the employment is also considered regular, although with respect only to such activity, and while such activity exists. 16.

Fixed Term Employment

Brent School, Inc. vs. Zamora and Alegre G.R. No. L-48494 BRENT SCHOOL, INC., and REV. GABRIEL DIMACHE vs. RONALDO ZAMORA, the Presidential Assistant for Legal Affairs, Office of the President, and DOROTEO R. ALEGRE February 5, 1990 Facts: The root of the controversy at bar is an employment contract in virtue of which Doroteo R. Alegre was engaged as athletic director by Brent School, Inc. at a yearly compensation of P20,000.00. The contract fixed a specific term for its existence, five (5) years, i.e., from July 18, 1971, the date of execution of the agreement, to July 17, 1976. Subsequent subsidiary agreements dated March 15, 1973, August 28, 1973, and September 14, 1974 reiterated the same terms and conditions, including the expiry date, as those contained in the original contract of July 18, 1971. Some three months before the expiration of the stipulated period, or more precisely on April 20,1976, Alegre was given a copy of the report filed by Brent School with the Department of Labor advising of the termination of his services effective on July 16, 1976. The Director pronounced "the ground relied upon by the respondent (Brent) in terminating the services of the complainant (Alegre) . . . (as) not sanctioned by P.D. 442," and, quite oddly, as prohibited by Circular No. 8, series of 1969, of the Bureau of Private Schools. Brent School filed a motion for reconsideration. The Regional Director denied the motion and forwarded the case to the Secretary of Labor for review. The latter sustained the Regional Director. Brent appealed to the Office of the President. Again it was rebuffed. That Office dismissed its appeal for lack of merit. Issue: Whether or not the provisions of the Labor Code, as amended, have anathematized "fixed period employment" or employment for a term. Held: The employment contract between Brent School and Alegre was executed on July 18, 1971, at a time when the Labor Code of the Philippines (P.D. 442) had not yet been promulgated. The validity of term employment was impliedly but nonetheless clearly recognized by the Termination Pay Law, R.A. 1052, as amended by R.A. 1787. Prior, thereto, 137 | L a b o r S t a n d a r d s - C a s e D i g e s t s

it was the Code of Commerce which governed employment without a fixed period. Now, the Civil Code of the Philippines, which was approved on June 18, 1949 and became effective on August 30,1950, itself deals with obligations with a period. No prohibition against term-or fixed-period employment is contained in any of its articles or is otherwise deducible therefrom. It is plain then that when the employment contract was signed between Brent School and Alegre, it was perfectly legitimate for them to include in it a stipulation fixing the duration explicitly recognized as valid by this Court. The status of legitimacy continued to be enjoyed by fixed-period employment contracts under the Labor Code (Presidential Decree No. 442), which went into effect on November 1, 1974. The Code contained explicit references to fixed period employment, or employment with a fixed or definite period. Nevertheless, obscuration of the principle of licitness of term employment began to take place at about this time Article 320, entitled "Probationary and fixed period employment," originally stated that the "termination of employment of probationary employees and those employed WITH A FIXED PERIOD shall be subject to such regulations as the Secretary of Labor may prescribe." Article 321 prescribed the just causes for which an employer could terminate "an employment without a definite period." And Article 319 undertook to define "employment without a fixed period." There is, on the other hand, the Civil Code, which has always recognized, and continues to recognize, the validity and propriety of contracts and obligations with a fixed or definite period, and imposes no restraints on the freedom of the parties to fix the duration of a contract, whatever its object, be it specie, goods or services, except the general admonition against stipulations contrary to law, morals, good customs, public order or public policy. Under the Civil Code, therefore, and as a general proposition, fixed-term employment contracts are not limited, as they are under the present Labor Code, to those by nature seasonal or for specific projects with pre-determined dates of completion; they also include those to which the parties by free choice have assigned a specific date of termination. As it is evident from even only the three examples already given that Article 280 of the Labor Code, under a narrow and literal interpretation, not only fails to exhaust the gamut of employment contracts to which the lack of a fixed period would be an anomaly, but would also appear to restrict, without reasonable distinctions, the right of an employee to freely stipulate with his employer the duration of his engagement, it logically follows that such a literal interpretation should be eschewed or avoided. The law must be given a reasonable interpretation, to preclude absurdity in its application. Outlawing the whole concept of term employment and subverting to boot the principle of freedom of contract to remedy the evil of employer's using it 138 | L a b o r S t a n d a r d s - C a s e D i g e s t s

as a means to prevent their employees from obtaining security of tenure is like cutting off the nose to spite the face or, more relevantly, curing a headache by lopping off the head. Such interpretation puts the seal on Bibiso upon the effect of the expiry of an agreed period of employment as still good rule—a rule reaffirmed in the recent case of Escudero vs. Office of the President (G.R. No. 57822, April 26, 1989) where, in the fairly analogous case of a teacher being served by her school a notice of termination following the expiration of the last of three successive fixed-term employment contracts, the Court held: Reyes (the teacher's) argument is not persuasive. It loses sight of the fact that her employment was probationary, contractual in nature, and one with a definitive period. At the expiration of the period stipulated in the contract, her appointment was deemed terminated and the letter informing her of the nonrenewal of her contract is not a condition sine qua non before Reyes may be deemed to have ceased in the employ of petitioner UST. The notice is a mere reminder that Reyes' contract of employment was due to expire and that the contract would no longer be renewed. It is not a letter of termination. The interpretation that the notice is only a reminder is consistent with the court's finding in Labajo supra. Paraphrasing Escudero, respondent Alegre's employment was terminated upon the expiration of his last contract with Brent School on July 16, 1976 without the necessity of any notice. The advance written advice given the Department of Labor with copy to said petitioner was a mere reminder of the impending expiration of his contract, not a letter of termination, nor an application for clearance to terminate which needed the approval of the Department of Labor to make the termination of his services effective. In any case, such clearance should properly have been given, not denied. Requisites for a valid fixed term contract of employment PNOC vs NLRC G.R. No. 97747 March 31, 1993 PHILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION/FRANCIS PALAFOX vs. NATIONAL LABOR RELATIONS COMMISSION and FRANCISCO MATA March 31, 1993

Facts: On November 11, 1980, petitioners hired private respondent Francisco Mata as Service Driver on a daily wage of P39.74. Assigned to 139 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the PNOC-EDA Bacon-Manito Geothermal Project in Bonga, Sorsogon, Sorsogon, he worked there until September 1, 1985. On this day, his employment was terminated through a letter advice dated September 1, 1985, signed by his supervisor, B.B. Balista, allegedly for "contract expiration" (Exh "A", p. 10, Records), even when the project was still a continuing one. On November 8, 1985, private respondent complained of illegal dismissal, and accused petitioners of withholding his backwages, overtime pay, and separation pay (p. 1, Records). A dismissal of the complaint was sought on jurisdictional ground, petitioner company asserting that it is a government-owned and controlled corporation, hence, its employees must be governed by the Civil Service Law and not by the Labor Code, and citing National Housing Corporation v. Benjamin Juco and the NLRC (134 SCRA 176). On February 26, 1987, Labor Arbiter Voltaire A. Balitaan dismissed the complaint for lack of jurisdiction. On appeal to public respondent, however, the First Division, on September 16, 1988, set aside the Labor Arbiter's decision, assumed jurisdiction over the case, and directed the Arbitration Branch to conduct further proceedings. Petitioners maintained that private respondent was a project employee whose employment was for a definite period and coterminous with the project for which he was hired. It was for this reason that his employment was terminated. Finding for private respondent, Executive Labor Arbiter Vito C. Bose's Decision of August 23, 1990, held finding respondent company guilty of illegal dismissal and ordering the same to pay complainant.

Issue: Whether or not respondent is a regular employee.

Held: No, they are not. Petitioners claim that the fixed contract of employment which private respondent entered into was read, translated to, comprehended and voluntarily accepted by him. No evidence was presented to prove improper pressure or undue influence when he entered, perfected and consummated said contract. And even if private respondent's services were necessary and desirable in petitioner's business, nevertheless private respondent's term was limited, citing as authority Brent School v. Zamora. Much can be learned from the leading case of Brent School v. Zamora, supra. In this case, the Court analyzed the development of Article 280 from its first version as Article 319 and its amendments under PD 850 and BP 130 and made the following observation:

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Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless thus limited in its purview. the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences.

As can be gleaned from the said case, the two guidelines, by which fixed contracts of employments can be said NOT to circumvent security of tenure, are either: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or: 2. It satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former on the latter.

Does petitioner's fixed contract of employment with private respondent satisfy any of the guidelines above stated? Yes, it does. A careful examination of the last Employment Contract signed by respondent Mata 141 | L a b o r S t a n d a r d s - C a s e D i g e s t s

shows that he indeed signed the same. 5 In fact petitioners claim that all the previous employment contracts were also translated for the benefit of private respondent, and it was only when he understood the same that he signed said contracts. As per Guideline No. 1, given the circumstances behind private respondent Mata's employment, private respondent is a project employee. As explained by petitioners in their memorandum:

[I]t must be clarified that the Bacon-Manito Geothermal Project is one big "project consisting of several phases, namely the exploration, development and operation stages. Mata was employed in connection with the well-completion project which was part of the exploration stage. Said wellcompletion which follows a drilling operation is now finished and completed. The other projects in the development stage are still on-going but the project for which Mata's services were required is now complete and terminated. . .

Paraphrasing Rada v. NLRC, it is clear that private respondent Mata is a project employee considering that he does not belong to a "work pool" from which petitioner PNOC would draw workers for assignment to other projects at its discretion. It is likewise apparent from the facts of the case that private respondent Mata was utilized only for one particular project, the well-completion project which was part of the exploration stage of the PNOC Bacon-Manito Geothermal Project. Hence, private respondent Mata can be dismissed upon the termination of the projects as there would be no need for his services. We should not expect petitioner to continue on hiring private respondent in the other phases of the project when his services will no longer be needed. Duties (need not) are usually necessary or desirable in the employer’s usual business or trade. AMA Computer College Parañaque vs. Austria G.R. No. 164078 AMA COMPUTER COLLEGE, PARAÑAQUE, and/or AMABLE C. AGUILUZ IX, President, MRS. CELESTE BANSALE, School Director, MS. SOCORRO, MR. PATRICK AZANZA, GRACE BERANIA and MAJAL JACOB vs. ROLANDO A. AUSTRIA November 23, 2007

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Facts: Petitioner AMA Computer College, Parañaque (AMA) is an educational institution duly organized under the laws of the Philippines. The rest of the petitioners are principal officers of AMA. Respondent Rolando A. Austria4(respondent) was hired by AMA on probationary employment as a college dean on April 24, 2000.5 On August 22, 2000, respondent’s appointment as dean was confirmed by AMA’s Officer-inCharge (OIC), Academic Affairs. In the event that Mr. Austria gives up the Dean position or fails to meet the standards of the (sic) based on the evaluation of his immediate superior, he shall be considered for a faculty position and the appointee agrees that he shall lose the transportation allowance he enjoys as Dean and be entitled to his faculty rate. Sometime in August 2000, respondent was charged with violating AMA’s Employees’ Conduct and Discipline provided in its Orientation Handbook (Handbook). This resulted to the loss of trust and confidence in your credibility as a company officer holding a highly sensitive position. In view of this, your services as Dean of AMA Parañaque is hereby terminated effective immediately. You are hereby instructed to report to the branch HR Personnel for further instructions.1avvphi1 Please bear in mind that as a company policy you are required to accomplish your clearance and turn over all documents and responsibilities to the appropriate officers. You are barred from entering the company premises unless with clearance from the HRD. On October 27, 2000, respondent filed a Complaint for Illegal Dismissal, Illegal Suspension, Non-Payment of Salary and 13th Month Pay with prayer for Damages and Attorney's Fees against AMA and the rest of the petitioners. Trial on the merits ensued. In his Decision dated December 6, 2000, the Labor Arbiter held that petitioners accorded respondent due process. On March 31, 2003, the NLRC, in its Decision, found merit in respondent's appeal. The NLRC opined that the petitioners did not contravene respondent's allegation that he had attained regular status after serving the three (3)-month probationary period required under the Handbook. On March 29, 2004, the CA held that based on the Handbook and on respondent's appointment, it can be inferred that respondent was a regular employee, and as such, his employment can only be terminated for any of the causes provided under Article 28 of the Labor Code and after observance of the requirements of due process. Issue: Whether or not an employee an employee hired for a fixed term may do duties necessary for an employer’s business. Held: We agree. We held that Article 280 of the Labor Code does not proscribe or prohibit an employment contract with a fixed period. Even if the duties of the employee consist of activities necessary or desirable in the usual business of the employer, the parties are free to agree on a fixed period of time for the performance of such activities. There is nothing essentially contradictory between a definite period of employment and the nature of the employee’s duties. 143 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Thus, this Court's ruling in Brent School, Inc. v. Zamora is instructive: The question immediately provoked. . . is whether or not a voluntary agreement on a fixed term or period would be valid where the employee "has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer." The definition seems non sequitur. From the premise — that the duties of an employee entail "activities which are usually necessary or desirable in the usual business or trade of the employer" — the conclusion does not necessarily follow that the employer and employee should be forbidden to stipulate any period of time for the performance of those activities. There is nothing essentially contradictory between a definite period of an employment contract and the nature of the employee's duties set down in that contract as being "usually necessary or desirable in the usual business or trade of the employer." The concept of the employee's duties as being "usually necessary or desirable in the usual business or trade of the employer" is not synonymous with or identical to employment with a fixed term. Logically, the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon by the parties for the commencement and termination of their employment relationship, a day certain being understood to be "that which must necessarily come, although it may not be known when." Seasonal employment, and employment for a particular project are merely instances of employment in which a period, where not expressly set down, is necessarily implied. The instant case involves respondent's position as dean, and comes within the purview of the Brent School doctrine. First. The letter of appointment was clear. Respondent was confirmed as Dean of AMA College, Parañaque, effective from April 17, 2000 to September 17, 2000. In numerous cases decided by this Court, we had taken notice, that by way of practice and tradition, the position of dean is normally an employment for a fixed term. Although it does not appear on record─ and neither was it alleged by any of the parties─ that respondent, other than holding the position of dean, concurrently occupied a teaching position, it can be deduced from the last paragraph of said letter that the respondent shall be considered for a faculty position in the event he gives up his deanship or fails to meet AMA's standards. Such provision reasonably serves the intention set forth in Brent School that the deanship may be rotated among the other members of the faculty. Second. The fact that respondent did not sign the letter of appointment is of no moment. We held in Brent School, to wit: Accordingly, and since the entire purpose behind the development of legislation culminating in the present Article 280 of the Labor Code clearly appears to have been, as already observed, to prevent circumvention of 144 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the employee's right to be secure in his tenure, the clause in said article indiscriminately and completely ruling out all written or oral agreements conflicting with the concept of regular employment as defined therein should be construed to refer to the substantive evil that the Code itself has singled out: agreements entered into precisely to circumvent security of tenure. It should have no application to instances where a fixed period of employment was agreed upon knowingly and voluntarily by the parties, without any force, duress or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent, or where it satisfactorily appears that the employer and employee dealt with each other on more or less equal terms with no moral dominance whatever being exercised by the former over the latter. Unless, thus, limited in its purview, the law would be made to apply to purposes other than those explicitly stated by its framers; it thus becomes pointless and arbitrary, unjust in its effects and apt to lead to absurd and unintended consequences. The fact that respondent voluntarily accepted the employment, assumed the position, and performed the functions of dean is clear indication that he knowingly and voluntarily consented to the terms and conditions of the appointment, including the fixed period of his deanship. Other than the handwritten notes made in the letter of appointment, no evidence was ever presented to show that respondent’s consent was vitiated, or that respondent objected to the said appointment or to any of its conditions. Furthermore, in his status as dean, there can be no valid inference that he was shackled by any form of moral dominance exercised by AMA and the rest of the petitioners. Pantranco North Express, Inc. vs. NLRC G.R. No. 106654 PANTRANCO NORTH EXPRESS, INC., and/or ABELARDO DE LEON vs. NATIONAL LABOR RELATIONS COMMISSION, Second Division, and RODOLFO PERONILA December 16, 1994 Facts: It appears on the record that sometime in 1971, private respondent Peronila was employed as a driver of Pantranco North Express, Inc. In 1973, Peronila was administratively investigated by the corporation for his absence from work of more than two and one-half months without leave. According to an investigation report of petitioners' area manager, dated March 10, 1973, Peronila claimed that he went on absence without leave from his work from November 1, 1972 up to February 16, 1973 which was date of the investigation, or one hundred seven calendar days continuously, because "he went to Cotabato, Mindanao to visit his dead grandfather during the period of his unofficial absence." In an order dated March 20, 1973, Mediator-Factfinder Loreto V. Poblete of the National Relations Commission, Regional Office No. II in Tuguegarao, 145 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Cagayan, affirmed the dismissal made by petitioner. Fifteen years after such termination of his employment, Peronila was then again hired as a driver, but on a contractual basis for a fixed period of one month. Barely fifteen days from such employment as a contractual driver, or on April 20, 1988, private respondent was involved in a vehicular mishap in Nueva Vizcaya wherein the bus he was driving hit another vehicle. After an administrative investigation conducted by petitioner corporation, Peronila was found guilty thereof, hence his employment contract was terminated and was no longer renewed thereafter. Labor Arbiter Patricio P. Libo-on dismissed the case on February 12, 1991, ruling that "(a)lthough as a driver, his services (are) usual and necessary to the business of the respondent, yet it is also true that complainant's case falls within one of the exceptions. When he was rehired, it was clear to him that he would be working only for one (1) month. . . . Apparently, the reason for this is to fill or to stop-gap the requirements of the employe(r)/respondent during the period (when) he was rehired, and which it foresees to ease up in May 1988." On appeal, public respondent NLRC declared that the dismissal was illegal. Issue: Whether or not the employment contract which stipulates that there is no employer-employee relationship between petitioner and Peronila is valid. Held: Yes, it is valid. We are persuaded to hold that the re-employment of Peronila as a contractual bus driver was merely an act of generosity on the part of petitioner. Although we have ruled in a number of cases applying Article 280 of the Labor Code that when the activities performed by the employee are usually necessary or desirable in the usual trade of the employer, the employment is deemed regular notwithstanding a contrary agreement, there are exceptions to this rule especially if circumstances peculiar to the case warrant a departure therefrom. The petitioner had validly dismissed Peronila long before he entered into the contested employment contract. It was Peronila who earnestly pleaded with petitioner to give him a second chance. The re-hiring of private respondent was out of compassion and not because the petitioner was impressed with the credentials of Peronila. Peronila's previous violations of company rules explains the reluctant attitude to the petitioner in re-hiring him. When the bus driven by Peronila figured in a road mishap, that incident finally prompted petitioner to sever any further relationship with said private respondent. In upholding the validity of a contract of employment with fixed or specific period in a number of cases, we explained therein that the decisive determinant in term employment should not be the activities that the employee is called upon to perform, but the day certain agreed upon the 146 | L a b o r S t a n d a r d s - C a s e D i g e s t s

parties for the commencement and termination of their employment relationship, a day certain being understood to be that which must necessarily come, although it may not be known when. . . . This ruling is only in consonance with Article 280 of the Labor Code." In the present dispute, the services of respondent Peronila had been validly terminated by petitioner, when the latter absented himself without official leave, fifteen years before he was re-hired as a contractual driver for just one month. Definitely, his re-hiring cannot be construed to mean that Peronila reacquired his former permanent status. Fixed term employment for less than six months same with probationary employment. Caparoso vs. NLRC G.R. No. 155505 EMILIO M. CAPAROSO and JOEVE P. QUINDIPAN vs. COURT OF APPEALS, NATIONAL LABOR RELATIONS COMMISSION, COMPOSITE ENTERPRISES INCORPORATED, and EDITH TAN February 15, 2007

Facts: Composite Enterprises Incorporated is engaged in the distribution and supply of confectioneries to various retail establishments within the Philippines. Emilio M. Caparoso and Joeve P. Quindipan were Composite’s deliverymen. Caparoso and Quindipan were dismissed from the service. They filed a consolidated position paper before the Labor Arbiter charging Composite and its Personnel Manager, Edith Tan, with illegal dismissal. The Labor Arbiter ruled that the petitioners are regular employees of respondents. It was ruled that by the very nature of respondents’ business and the nature of petitioners’ services, there is no doubt as to the employment status of petitioners. Composite appealed to the National Labor Relations Commission which set aside the Labor Arbiter’s Decision and dismissed the petitioners’ complaint for illegal dismissal. The NLRC ruled that the mere fact that the employees’ duties are necessary or desirable in the business or trade of the employer does not mean that they are forbidden from stipulating the period of employment. The NLRC held that petitioners’ contracts of employment are valid and binding between the contracting parties and shall be considered as the law between them. The NLRC ruled that petitioners are bound by their employment contracts. The petitioners filed a motion for reconsideration. The Commission denied the motion. Hence, the petitioners filed a petition for certiorari before the Court of Appeals, which dismissed the petition and affirmed the 147 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Commission’s resolution. This prompted the petitioners to file a motion for reconsideration, but it was again denied. Thus, a petition before the Supreme Court was filed. Issue: Whether or not Caparoso and Quindipan are regular employees. Held: Under Article 280 of the Labor Code, a regular employee is (1) one who is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, or (2) a casual employee who has rendered at least one year of service, whether continuous or broken, with respect to the activity in which he is employed. However, even if an employee is engaged to perform activities that are necessary or desirable in the usual trade or business of the employer, it does not preclude the fixing of employment for a definite period. The Court thus laid down the criteria under which fixed-term employment could not be said to be in circumvention of the law on security of tenure, thus: 1. The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2. It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. Employee’s employment contract on a five month period Pure Foods Corp. vs. NLRC G.R. No. 122653 PURE FOODS CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION, RODOLFO CORDOVA, VIOLETA CRUSIS, ET AL. December 12, 1997 Facts: Rodolfo Cordova, Violeta Crusis, and their colleagues were hired by Pure Foods Corporation to work for a fixed period of five months at its tuna cannery plant in Tambler, General Santos City. After the expiration of their respective contracts, their services were terminated. Cordova and her colleagues filed before the National Labor Relations Commission a complaint for illegal dismissal against Pure Foods Corporation and its plant manager, Marciano Aganon. The labor arbiter dismissed the complaint on the ground that the private respondents were mere contractual workers, and not regular employees; hence, they could not avail of the law on security of tenure. This prompted Cordova and Crusis to appeal the decision to the National Labor Relations Commission. The NLRC affirmed the labor arbiter's decision. But, upon 148 | L a b o r S t a n d a r d s - C a s e D i g e s t s

their filing of motion for reconsideration, the NLRC rendered another decision vacating and setting aside its earlier decision and holding that the private respondent and their co-complainants were regular employees. It declared that the contract of employment for five months was a "clandestine scheme employed by the petitioner to stifle private respondents' right to security of tenure" and should therefore be struck down and disregarded for being contrary to law, public policy, and morals. Hence, their dismissal on account of the expiration of their respective contracts was illegal. Having been denied, the petitioner came to the Supreme Court. Issue: Whether or not the contracts entered into by the parties were intended to circumvent the constitutional guarantee on security of tenure. Held: The five-month period specified in private respondents’ employment contracts having been imposed precisely to circumvent the constitutional guarantee on security of tenure should, therefore, be struck down or disregarded as contrary to public policy or morals. To uphold the contractual arrangement between the petitioner and the private respondents would, in effect, permit the former to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees’ security of tenure in their jobs. The criteria under which term employment cannot be said to be in circumvention of the law on security of tenure: 1) The fixed period of employment was knowingly and voluntarily agreed upon by the parties without any force, duress, or improper pressure being brought to bear upon the employee and absent any other circumstances vitiating his consent; or 2) It satisfactorily appears that the employer and the employee dealt with each other on more or less equal terms with no moral dominance exercised by the former or the latter. The scheme of an employer in hiring workers on a uniformly fixed contract basis and replacing them upon the expiration of their contracts with other workers on the same employment status was apparently designed to prevent the “casual” employees from attaining the status of a regular employee. Universal Robina Corp. vs. Catapang G.R. No. 164736 UNIVERSAL ROBINA CORPORATION and/or RANDY GREGORIO vs. BENITO CATAPANG, CARLOS ARARAO, ALVIN ALCANTARA, RESTY ALCORAN, REYNALDO ARARAO, JUAN ARISTADO, LITO CABRERA, ONOFRE CASANO and 22 OTHERS October 14, 2005

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Facts: Universal Robina Corporation is a corporation duly organized and existing under the Philippine laws, while petitioner Randy Gregorio is the manager of the URC’S duck farm in Laguna. The individual respondents were hired by URC on various dates from 1991 to 1993 to work at its duck farm. The respondents were hired under an employment contract which provided for a five-month period. After the expiration of the said employment contracts, URC would renew them and re-employ the respondents. This practice continued until sometime in 1996, when URC informed the respondents that they were no longer renewing their employment contracts. The respondents filed separate complaints for illegal dismissal, reinstatement, backwages, damages and attorney’s fees against URC. The Labor Arbiter rendered a decision in favor of the respondents declaring that they have indeed been illegally dismissed from their employment. Accordingly, respondents are hereby ordered to reinstate individual complainants to their former positions without loss of seniority rights. URC filed an Appeal Memorandum with the NLRC on the ground that the LA erred in ruling that the respondents are their (URC) regular employees. Aggrieved, URC filed a petition for certiorari with the Court of Appeals (CA). The CA denied the petition for lack of merit. The CA held that after rendering more than one year of continuous service, the respondents became regular employees of the petitioners by operation of law. Moreover, URC’S used the five-month contract of employment as a convenient subterfuge to prevent the respondents from becoming regular employees and such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. URC’s act of repeatedly and continuously hiring the respondents in a span of three to five years to do the same kind of work negates their assertion that the respondents were hired for a specific project or undertaking only. URC submit that the respondents are not regular employees. They aver that it is of no moment that the respondents have rendered service for more than a year since they were covered by the five-month individual contracts to which they duly acquiesced. URC contend that they were free to terminate the services of the respondents at the expiration of their individual contracts. URC asserts that the respondents’ contracts of employment were not intended to circumvent security of tenure. They point out that the respondents knowingly and voluntarily agreed to sign the contracts without the petitioners having exercised any undue advantage over them. Moreover, there is no evidence showing that the petitioners exerted moral dominance on the respondents. The respondents aver that they acquired the status as regular employees after rendering one year of service to the petitioner company. They contend that the contracts providing for a fixed period of employment should be struck down as contrary to public policy, morals, good customs

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or public order as it was designed to preclude the acquisition of tenurial security. Issue: Whether or not the CA erred when it ruled that the respondents attained the status of regular employment after the lapse of one year from the date of their employment. Held: In any case, we find that the CA, the NLRC and the Labor Arbiter correctly categorized the respondents as regular employees of the petitioner company. In Abasolo v. National Labor Relations Commission, the Court reiterated the test in determining whether one is a regular employee: The primary standard, therefore, of determining regular employment is the reasonable connection between the particular activity performed by the employee in relation to the usual trade or business of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. The connection can be determined by considering the nature of work performed and its relation to the scheme of the particular business or trade in its entirety. Also, if the employee has been performing the job for at least a year, even if the performance is not continuous and merely intermittent, the law deems repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is considered regular, but only with respect to such activity and while such activity exists. Thus, we quote with approval the following excerpt from the decision of the CA: It is obvious that the said five-month contract of employment was used by petitioners as a convenient subterfuge to prevent private respondents from becoming regular employees. Such contractual arrangement should be struck down or disregarded as contrary to public policy or morals. To uphold the same would, in effect, permit petitioners to avoid hiring permanent or regular employees by simply hiring them on a temporary or casual basis, thereby violating the employees’ security of tenure in their jobs. Petitioners act of repeatedly and continuously hiring private respondents in a span of 3 to 5 years to do the same kind of work negates their contention that private respondents were hired for a specific project or undertaking only. Employees allowed to work after the fixed period of employment becomes regular Viernes vs. NLRC

G.R. No. 108405 151 | L a b o r S t a n d a r d s - C a s e D i g e s t s

JAIME D. VIERNES, CARLOS R. GARCIA, BERNARD BUSTILLO, DANILO C. BALANAG, FERDINAND DELLA, EDWARD A. ABELLERA, ALEXANDER ABANAG, DOMINGO ASIA, FRANCISCO BAYUGA, ARTHUR M. ORIBELLO, BUENAVENTURA DE GUZMAN, JR., ROBERT A. ORDOÑO, BERNARD V. JULARBAL, IGNACIO C. ALINGBAS and LEODEL N. SORIANO vs. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), and BENGUET ELECTRIC COOPERATIVE, INC. (BENECO) April 4, 2003

Facts: These are consolidated cases for illegal dismissal, underpayment of wages and claim for indemnity pay against Benguet Electric Cooperative, Inc. (BENECO) represented by its Acting Gen. Manager, Versoza. Complainants services as meter readers were contracted for hardly a months duration, or from October 8 to 31, 1990. The said term notwithstanding, the complainants were allowed to work beyond October 31, 1990, or until January 2, 1991. On January 3, 1991, they were each served their identical notices of termination dated December 29, 1990. On the same date, the complainants filed separate complaints for illegal dismissal. And following the amendment of said complaints, they submitted their joint position paper. It is the contention of the complainants that they were not apprentices but regular employees whose services were illegally and unjustly terminated in a manner that was whimsical and capricious. On the other hand, the respondent invokes Article 283 of the Labor Code in defense of the questioned dismissal. The Labor Arbiter rendered its decision dismissing the complaints filed by the complainants for lack of merit. However, in view of the offer of the respondent to enter into another temporary employment contract with the complainants, the respondent is directed to so extend such contract to each complainant, with the exception of Jaime Viernes. BENECO is also ordered to pay complainants the amount representing underpayment of their wages and to extend to Viernes an appointment as regular employee for the position of meter reader, the job he held prior to his termination, and to pay him indemnity. The case was appealed to the CA which modified the decision of the LA by declaring complainants dismissal illegal, thus ordering their reinstatement to their former position as meter readers or to any equivalent position with payment of backwages limited to one year and deleting the award of indemnity and attorneys fees. The case was elevated to the SC. Hence, this petition. Issue: Whether or not the respondent NLRC committed grave abuse of discretion in ordering the reinstatement of petitioners to their former 152 | L a b o r S t a n d a r d s - C a s e D i g e s t s

position as meter readers on probationary status in spite of its finding that they are regular employees under Article 280 of the Labor Code. Held: The court sustained petitioners claim that they should be reinstated to their former position as meter readers, not on a probationary status, but as regular employees. Reinstatement means restoration to a state or condition from which one had been removed or separated. In case of probationary employment, Article 281 of the Labor Code requires the employer to make known to his employee at the time of the latters engagement of the reasonable standards under which he may qualify as a regular employee. A review of the records shows that petitioners have never been probationary employees. There is nothing in the letter of appointment, to indicate that their employment as meter readers was on a probationary basis. It was not shown that petitioners were informed by the private respondent, at the time of the latter’s employment, of the reasonable standards under which they could qualify as regular employees. Instead, petitioners were initially engaged to perform their job for a limited duration, their employment being fixed for a definite period, from October 8 to 31, 1990. The principle we have enunciated in Brent School v. Zamora, applies only with respect to fixed term employments. While it is true that petitioners were initially employed on a fixed term basis as their employment contracts were only for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in the same capacity as meter readers without the benefit of a new contract or agreement or without the term of their employment being fixed anew. After October 31, 1990, the employment of petitioners is no longer on a fixed term basis. The complexion of the employment relationship of petitioners and private respondent is thereby totally changed. Petitioners have attained the status of regular employees. The fact that the petitioners were allowed to continue working after the expiration of their employment contract is evidence of the necessity and desirability of their service to private respondents business. Employees allowed to work for more than one year becomes regular. Megascope General Services vs. NLRC G.R. No. 109224 MEGASCOPE GENERAL SERVICES vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ARIEL C. SANTOS, ERLINDA ARAOJO, LILING C. ARAGO, LUZ P. BALENA, 153 | L a b o r S t a n d a r d s - C a s e D i g e s t s

ADELA R. BAUTISTA, GEMENA D. CANTA, VICTORINA S. COLLENA, ELISA H. DE GUZMAN, YOLANDA J. GOB, JULING R. GOB, FRANCISCO N. GUMARO, LOURDES P. MANALO, ROSALINA O. RAMIREZ, RODRIGO O. RAMIREZ, VENTURA RAMOS, REYNALDO MAGTANONG, AURELIA M. SAN JOSE, NESTOR SERIL, LUIS TUTOL and GENER J. DEL ROSARIO June 19, 1997

Facts: Megascope General Services is a sole proprietorship engaged in contracting out general services. It entered into a landscaping contract with the System and Structures, Inc. (SSI) which subcontracted the construction of the National Power Corporation Housing Village in Bagac, Bataan. In hiring laborers, petitioner would give them work from five (5) to ten (10) days as the need arose and there were periodical gaps in the hiring of employees. Between February 15, 1977 and January 1, 1989, it contracted the services of nineteen (19) private respondents as gardeners, helpers and maintenance workers. They were deployed at the National Power Corporation (NPC) except for Gener J. del Rosario whose employment ended on April 30, 1989, the work of the other workers ceased on January 31,1991. At the time, Nestor Seril and Gener J. del Rosario were receiving P 65.00 a day; Reynaldo Magtanong, P 56.00 a day, and the rest, P54.00 a day.

Consequently, private respondents filed before the Labor Arbiter of Pampanga a complaint for illegal dismissal, underpayment of salaries, nonpaymentof five-day service incentive leave credits and holiday pay against MGS and Andres M. David.

MGS and David countered that private respondents were hired for a definite period of employment, the commencement and termination of which were already known to them; that the two-year period stipulated in the private respondents' contract with NPC had expired; that it was the NPC which requested MGS and David for an extension on a monthly basis of the employment of some of the private respondents; and that the reason for the termination of private respondents' employment was the termination itself of MGS’s contract with NPC.

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Labor Arbiter Ariel C. Santos promulgated his decision finding that, by the nature of their employment, private respondents were "usually contractual employees." Nonetheless, he opined, in view of the length of their service, that private respondents had attained the status of "regular contractual employees" who, pursuant to Policy Instruction No. 20 issued by then Labor Secretary Blas Ople, "cannot just be terminated after the expiration of a contract in an area to where they are assigned without paying them the corresponding separation pay from the time they have served respondent's company. MGS and David appealed to the NLRC which affirmed the LA’s decision.

Issue: Whether or not employees allowed to work for more than 1 year are considered regular employee. Held: It’s a well-settled rule that the yardstick in the determination of the existence of an employer-employee relationship consists of these four (4) elements: (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 employee's conduct. All these elements are present in this case. Private respondents were selected and hired by MGS which assigned them to the NPC housing village in Bagac and Bataan. They drew their salaries from MGS which eventually dismissed them. MGS's control over private respondents was manifest in its power to assign and pull them out of clients at its own discretion. It is enough that the former has the right to wield the power.

The existence of an employer-employee relationship in the case at bar was established, not merely by the allegations and assertions of private respondents, but also by MGS’s own admission that "complainants had been respondent's employees assigned at the National Power Corporation in its housing Villages situated at Bagac and Bataan as gardeners under Megascope Lawn and Garden Maintenance contract with NPC.”

On whether or not private respondents were regular employees of petitioner, it is undeniable that private respondents had been performing activities which were necessary or desirable in the usual trade or business of petitioner. Their services as gardeners, helpers and maintenance workers were continuously availed of by petitioner in the conduct of its 155 | L a b o r S t a n d a r d s - C a s e D i g e s t s

business as supplier of such services to clients. Thus, even if there were a contrary agreement between the parties, if the worker has worked for more than a year and there is a reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer, an employer-employee relationship is deemed to exist between the parties. Granting arguendo that private respondents were initially contractual employees, by the sheer length of service they had rendered for MGS, they had been converted into regular employees by virtue of the provision in the second paragraph of Art. 280 since they all served petitioner's client for more than a year.

Thus, in Baguio Country Club Corporation v. NLRC, the Court said: “if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity if not indispensability of that activity to the business. Hence, the employment is also considered regular but only with respect to such activity and while such activity exists. Agusan del Norte Electric Coop., Inc. vs. Cagampang and Garzon G.R. No. 167627 AGUSAN DEL NORTE ELECTRIC COOPERATIVE, INC. and HORACIO T. SANTOS vs. JOEL CAGAMPANG and GLENN GARZON October 10, 2008 Facts: Respondents Joel Cagampang and Glenn Garzon started working as linemen for petitioner Agusan del Norte Electric Cooperative, Inc. (ANECO) on October 1, 1990, under an employment contract which was for a period not exceeding three months. They were both allegedly required to work eight hours a day and sometimes on Sundays, getting a daily salary of P122.00. When the contract expired, the two were laid-off for one to five days and then ordered to report back to work but on the basis of job orders. After several renewals of their job contracts in the form of job orders for similar employment periods of about three months each, the said contracts eventually expired on April 31, 1998 and July 30, 1999. Respondents' 156 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contracts were no longer renewed, resulting in their loss of employment. Thus, on January 11, 2001, respondents filed an illegal dismissal case against petitioners before the LA. They prayed for payment of backwages, salary differential, allowances, premium for alleged work during holidays and rest days, service incentive leave, and separation pay. LA ruled that there was illegal dismissal. However, NLRC reversed the LA’s decision. CA however set aside NLRC’s decision. Issue: Whether or not Cagampang and Garzon are regular employees/workers of the petitioner. Held: SC denied the petition. It held that respondents Cagampang and Garzon are deemed regular workers, and as such were illegally dismissed. There is no dispute that the respondents' work as linemen was necessary or desirable in the usual business of ANECO. Additionally, the respondents have been performing the job for at least one year. The law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability, of that activity to the business. As held in Integrated Contractor and Plumbing Works, Inc. v. National Labor Relations Commission: The test to determine whether employment is regular or not is the reasonable connection between the particular activity performed by the employee in relation to the usual business or trade of the employer. Also, if the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business. While length of time may not be the controlling test for project employment, it is vital in determining if the employee was hired for a specific undertaking or tasked to perform functions vital, necessary and indispensable to the usual business or trade of the employer. Here, private respondent had been a project employee several times over. His employment ceased to be coterminous with specific projects when he was repeatedly re-hired due to the demands of petitioners business. Where from the circumstances it is apparent that periods have been imposed to preclude the acquisition of tenurial security by the employee, they should be struck down as contrary to public policy, morals, good customs or public order. Respondents in the present case being regular employees, ANECO as the employer had the burden of proof to show that the respondents’ termination was for a just cause. Unfortunately, however, what petitioners did was merely to refuse, without justifiable reason, to renew respondents work contracts for the performance of what would otherwise be regular jobs in relation to the trade or business of the former. Such conduct dismally falls short of the requirements of our labor laws regarding dismissals. No twin notices of termination were issued to the employees, hence the employer did not observe due process in 157 | L a b o r S t a n d a r d s - C a s e D i g e s t s

dismissing them from their employment. Their dismissals were patently illegal. Thus court considered respondents as regular employees. Successive renewals becomes regular

of

fixed

period

employment

contract

Philips Semiconductors vs. Fadriquela G.R. No. 141717 PHILIPS SEMICONDUCTORS (PHILS.), INC. vs. ELOISA FADRIQUELA April 14, 2004 Facts: Philips Semiconductors (Phils.), Inc. is a domestic corporation engaged in the production and assembly of semiconductors such as power devices, RF modules, CATV modules, RF and metal transistors and glass diods. It caters to domestic and foreign corporations that manufacture computers, telecommunications equipment and cars. Aside from contractual employees, the petitioner employed 1,029 regular workers. The employees were subjected to periodic performance appraisal based on output, quality, attendance and work attitude. One was required to obtain a performance rating of at least 3.0 for the period covered by the performance appraisal to maintain good standing as an employee. On May 8, 1992, respondent Eloisa Fadriquela executed a Contract of Employment with the petitioner in which she was hired as a production operator with a daily salary of P118. Her initial contract was for a period of three months up to August 8, 1992, but was extended for two months when she garnered a performance rating of 3.15. Her contract was again renewed for two months or up to December 16, 1992, when she received a performance rating of 3.8. After the expiration of her third contract, it was extended anew, for three months, that is, from January 4, 1993 to April 4, 1993. After garnering a performance rating of 3.4, the respondent’s contract was extended for another three months, that is, from April 5, 1993 to June 4, 1993. However, she incurred five absences in the month of April, three absences in the month of May and four absences in the month of June. Her line supervisor, Shirley Velayo, asked the respondent why she incurred the said absences. The latter failed to explain her side. The respondent was warned that if she offered no valid justification for her absences, Velayo would have no other recourse but to recommend the non-renewal of her contract. Fadriquela still failed to respond, as a consequence of which her performance rating declined to 2.8. Velayo recommended to the petitioner that the respondent’s employment be terminated due to habitual

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absenteeism, in accordance with the Company Rules and Regulations. Thus, the respondent’s contract of employment was no longer renewed. Issue: Whether or not the respondent was still a contractual employee of the petitioner as of June 4, 1993. Held: The two kinds of regular employees under the law are (1) those engaged to perform activities which are necessary or desirable in the usual business or trade of the employer; and (2) those casual employees who have rendered at least one year of service, whether continuous or broken, with respect to the activities in which they are employed. The primary standard to determine a regular employment is the reasonable connection between the particular activity performed by the employee in relation to the business or trade of the employer. The test is whether the former is usually necessary or desirable in the usual business or trade of the employer. If the employee has been performing the job for at least one year, even if the performance is not continuous or merely intermittent, the law deems the repeated and continuing need for its performance as sufficient evidence of the necessity, if not indispensability of that activity to the business of the employer. Hence, the employment is also considered regular, but only with respect to such activity and while such activity exists. The law does not provide the qualification that the employee must first be issued a regular appointment or must be declared as such before he can acquire a regular employee status. In this case, the respondent was employed by the petitioner on May 8, 1992 as production operator. She was assigned to wire building at the transistor division. There is no dispute that the work of the respondent was necessary or desirable in the business or trade of the petitioner. She remained under the employ of the petitioner without any interruption since May 8, 1992 to June 4, 1993 or for one (1) year and twenty-eight (28) days. The original contract of employment had been extended or renewed for four times, to the same position, with the same chores. Such a continuing need for the services of the respondent is sufficient evidence of the necessity and indispensability of her services to the petitioner’s business. By operation of law, then, the respondent had attained the regular status of her employment with the petitioner, and is thus entitled to security of tenure as provided for in Article 279 of the Labor Code.

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Chapter IV – Special Group of Workers/ Employees 16.

Overseas Workers

Prohibited Business Agencies and Entities, Articles 16, 18, 25, 26; 2002 POEA Rules and Regulations, Part I, Rule II, Section 2 Hornales vs. NLRC G.R. No. 118943 MARIO HORNALES vs. THE NATIONAL LABOR RELATIONS COMMISSION, JOSE CAYANAN AND JEAC INTERNATIONAL MANAGEMENT CONTRACTOR SERVICES September 10, 2001 Facts: Mario Hornales filed with POEA a complaint for non-payment of wages and recovery of damages against JEAC International Management & Contractor Services (JEAC) and its owner, Jose Cayanan. As JEAC’s surety, Country Bankers Insurance Corporation (Country Bankers) was later on impleaded by Hornales. The complaint alleged that Cayanan through JEAC sent Hornales, together with other Filipinos, to Singapore. At their departure, they were advised that someone would meet them in 160 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Singapore. True enough, they were welcomed by Victor Lim, the owner of Step-Up Employment Agency. He informed them that they would be working as fishermen with a monthly salary of US $200.00 each. Thereafter, they boarded Ruey Horn #3, a vessel owned by Min Fu Fishery Co. Ltd. of Taiwan. On board the vessel, Hornales was subjected to inhumane work conditions, like inadequate supply of food and water, maltreatment by the ship captain, and lack of medical attendance. He was also required to work for twenty-two hours a day without pay. Hornales, together with other Filipino workers, left the vessel while it was docketed in Mauritius Island because they’re unable to bear the situation. Hornales returned to the Philippines. Upon his return, he asked Cayanan to pay his salaries. Instead of doing so, they required him to surrender his passport promising that they would procure another job for him. Later, Cayanan gave him the amount of P500.00 Cayanan filed an answer claiming that, Hornales and Victor Lim and Min Fee Fishery Co. Ltd are all total strangers to them. They even offered in evidence the Joint Affidavit of 2 of Hornales’ co-workers in Singapore, stating that while they were in Singapore, Hornales admitted to them that he did not apply in any agency in the Philippines; that he came to Singapore merely as a tourist; and that, he applied directly and personally with Step-Up Agency to which such statements were corroborated through a certification issued by Step-Up Agency. Hornales filed a Supplemental Affidavit claiming that he was not a total stranger to JEAC, and as a matter of fact, he knew Cayanan for a long time already. The POEA rendered a decision in favor of Hornales. JEAC, Cayanan and Traveller’s Insurance Corp. were ordered to jointly and severally pay Hornales. On appeal, NLRC vacated the decision of the POEA and dismissed Hornales’ complaint mainly on the ground that there was no employer-employee relationship between the parties. Hornales’ filed a petition for certiorari on the ground that the NLRC committed a grave abuse of discretion in vacating the decision of the POEA. He avers that Cayanan was the one who deployed him to Singapore to work as fisherman and that, NLRCs conclusion that respondent JEAC was a mere travel agency and petitioner, a mere tourist, has no basis in fact and in law. JEAC maintained their position that the NLRC did not commit grave abuse of discretion when it set aside the decision of the POEA, since Hornales failed to show any POEA record or document to prove that they deployed him to work in Singapore. Neither did he present a Special Power of Attorney to prove that Step-Up Agency authorized JEAC to recruit and deploy contract workers in its behalf. The Solicitor General joins Hornales in assailing the decision of the NLRC as baseless and erroneous.

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Issue: Whether or not JEAC violates the POEA Rules and can be held liable against Hornales. Held: Notwithstanding the foregoing, it must be emphasized that the proceedings before the POEA is non-litigious in nature. The technicalities of law and procedure and the rules obtaining in the courts of law shall not strictly apply thereto and a hearing officer may avail himself of all reasonable means to ascertain the facts of the case. The scale of evidence must tilt in favor of petitioner. We cannot give credence to Cayanan’s contentions that Hornales is a total stranger to them and that MIN Fee Fishery Co. Ltd. is not its principal, neither do we believe that Cayanan do not know Mr. Victor Lim who met Hornales in Singapore. Cayanan’s position paper belies his contentions. How could he write to a certain Step-Up Employment Agency in Singapore, Hornales’ employer, when the latter is not even mentioned in his complaint? We wonder where Cayanan got the name of this employer if the same is really not known to them. It is very unlikely for Hornales to proceed to Singapore as a tourist without knowing anybody at the site and just to apply for work. Had there not been previous arrangements with Cayanan, it is not all possible for Hornales to land on a job in Singapore because he is only a tourist. Cayanan had to resort to this misrepresentation of allowing its recruits to leave as tourist because it is a service contractor and it is not authorized to deploy fishermen. Cayanan further argued that they cannot be held liable by Hornales because no employment contract between him and Step-Up Agency had been approved by the POEA. They also claim that the absence of a Special Power of Attorney and an Affidavit of Responsibility, as required under Sections 1 and 2, Rule 1, Book III of the POEA Rules and Regulations only proves that they did not deploy Hornales to Singapore. Their argument is far from persuasive. Surely, they cannot expect us to utilize their non-compliance with the POEA Rules and Regulations as a basis in absolving them. To do so would be tantamount to giving premium to acts done in violation of established rules. At most, private respondents act of deploying Hornales to Singapore without complying with the POEA requirements only made them susceptible to cancellation or suspension of license as provided by Section 2, Rule I, Book VI of POEA Rules and Regulations: Section 2. Grounds for suspension/cancellation of license. m. Deploying workers whose employment and travel documents were not processed by the Administration; n. Deploying workers workers or seafarers to vessels or principals not accredited by the Administration; 162 | L a b o r S t a n d a r d s - C a s e D i g e s t s

But of course, such violations should be threshed out in a proper administrative proceeding for suspension or cancellation of license. The court uphold POEAs Decision holding Cayanan and Travelers Insurance Corporation jointly and severally liable to petitioner. Section 2 (e), Rule V, Book I of the Omnibus Rules Implementing the Labor Code requires a private employment agency to assume all responsibilities for the implementation of the contract of employment of an overseas worker.This provision is substantially reiterated in Section 1 (f) (3) of Rule II, Book II of the POEA Rules and Regulations which provides: Section 1. Requirements for Issuance of License Every applicant for license to operate a private employment agency or manning agency shall submit a written application together with the following requirements: f) A verified undertaking stating that the applicant: (3) Shall assume joint and solidary liability with the employer which may arise in connection with the implementation of the contract, including but not limited to payment of wages, health and disability compensation and repatriation. The court reinstated the decision of the POEA subject to the modification. Illegal Recruitment – Labor Code Articles 34, 38; R.A. No. 8042, Sections 6-12 as amended People vs. Dujua G.R. Nos. 149014-16 PEOPLE OF THE PHILIPPINES vs. ROSE DUJUA (at large); EDITHA S. SING (at large); GUILLERMO "WILLY" SAMSON (at large); RAMON SAMSON DUJUA, RAMON SAMSON DUJUA February 5, 2004

Facts: Ramon Dujua, his mother Rose, his aunt, Editha Singh, and his uncle, Guillermo Samson were charged with Illegal Recruitment in large scale. Only Ramon was arrested. Four testified against Ramon Dujua. They were also charged with separate counts of Estafa. In the alleged information filed by the complainants against Dujua, et al, all of them said that they were promised employment abroad upon payment of fees but they were not actually deployed. Apparently, all of the complainants were able to give Dujua money for placement fees and other fee asked from them in exchange for the possibility to work abroad. Of the four accused, 163 | L a b o r S t a n d a r d s - C a s e D i g e s t s

only Ramon Dujua was arrested and arraigned. His mother, aunt and uncle remain at large. Ramon entered a plea of not guilty to each of the charges, whereupon trial commenced. While the Information for illegal recruitment named several persons as having been promised jobs by the accused, only four of them testified. Issue: Whether or not illegal recruitment in large scale was committed by Ramon Dujua, et al. Held: All three elements in committing Illegal Recruitment have been established beyond reasonable doubt to wit: (1) the accused engages in acts of recruitment and placement of workers defined under Article 13(b) or in any prohibited activities under Art. 34 of the Labor Code; (2) the accused has not complied with the guidelines issued by the Secretary of Labor and Employment, particularly with respect to the securing of a license or an authority to recruit and deploy workers, either locally or overseas; and (3) the accused commits the unlawful acts against three or more persons, individually or as a group.

First, the testimonies of the complaining witnesses satisfactorily prove that appellant promised them employment and assured them placement overseas. Complainants were firm and categorical. All of them positively identified appellant as the person who recruited them for employment abroad. Their testimonies dovetail each other on material points. There is no adequate showing that any of them was impelled by any ill motive to testify against appellant. Their testimonies were straightforward, credible and convincing. As against the positive and categorical testimonies of the three complainants, appellants’ mere denials cannot prevail. It is irrelevant whether or not complainants’ claims are supported by receipts. The absence of receipts in a case for illegal recruitment does not warrant the acquittal of the appellant and is not fatal to the prosecution’s case. As long as the prosecution is able to establish through credible testimonial evidence that the appellant has engaged in Illegal Recruitment, a conviction for the offense can very well be justified.

Second, appellant did not have any license or authority to recruit persons for overseas work, as shown by the Certification issued by the POEA. Neither did his employer, the World Pack Travel and Tours, possess such license or authority.

Third, it bears clarifying that although Romulo Portos was named as among those recruited by appellant the evidence reveals that Romulo 164 | L a b o r S t a n d a r d s - C a s e D i g e s t s

withdrew his application in lieu of which his wife Melodea Villanueva applied for placement with appellant. Villanueva, however, is not named as one of appellants victims.

Nevertheless, it has been alleged and proven that appellant undertook the recruitment of not less than three persons, namely, Cabus, Caluten and Perlas. People vs. Domingo G.R. No. 181475 PEOPLE OF THE PHILIPPINES vs. LARRY "LAURO" DOMINGO April 7, 2009 Facts: Lauro Domingo was charged with the crime of illegal recruitment pursuant to Article 38 in relation to Articles 34 and 39 of the Labor Code. In the information filed against Domingo it was alleged that on or about November 1999 to January 2000, Domingo, being a non-licensee or nonholder of authority from the DOLE to recruit and/ or place workers under local or overseas employment, undertake illegal recruitment, placement or deployment of the 23 complainants. In the informations for 23 counts of Estafa, it was alleged that Domingo falsely represented himself that he has power and capacity to recruit and employ workers in Saipan and could facilitate necessary papers in connection therewith if given the necessary amount, and by means of deceit inveigled Manzo to give P14, 000 (which the latter gave and delivered to Domingo) which Domingo misappropriated himself to the damage and prejudice of Manzo. It was verified with the DOLE that Domingo wasn’t a licensed recruiter. Out of the 23 complainants, only 5 (Cambay, Ondra, Aguilar, Vivas, and Cabigao) of them testified. Thereafter, Cabigao recanted his testimony averring that the one who actually recruited him was Gimeno and not Domingo and that they only agreed among themselves to file a case against Domingo because Gimeno was nowhere to be found. Domingo denied all accusations against him claiming that he was a driver hired by Gimeno whom he met at a bus bound for Manila. It was Gimeno who undertook the recruitment activities. Domingo likewise presented complainants Espiritu and Castillo who corroborated his claim that it was Gimeno who actually recruited them. The trial court found Domingo guilty beyond reasonable doubt of Illegal Recruitment (Large Scale) and of 2 counts of Estafa. On appeal to the CA, Domingo maintained that the trial court erred in finding him guilty beyond reasonable doubt on the basis that there were no receipts shown to prove 165 | L a b o r S t a n d a r d s - C a s e D i g e s t s

payment and he faulted trial court for failing to give credit to Cabigao’s retraction. Issue: Whether or not Domingo is guilty of Illegal Recruitment in Large Scale and Estafa. Held: The court affirmed the decision of the CA in finding Domingo guilty of Illegal recruitment and Estafa. With respect to the receipts questioned by Domingo, the court held that the non-presentation of the receipts had no bearing on his culpability in light of the assertions of the witnesses that it was Domingo who recruited them. As for Cabigao’s recantation, the court held that mere retraction by a prosecution witness doesn’t necessarily vitiate his original testimony and that, in any event, the prosecution had proven beyond reasonable doubt that at least 3 were illegally recruited by the accused. The term recruitment is defined under Article 13 (b) of the Labor Code, it refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring worker, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. Provided, that any person or entity which, in any manner, offers or promises fir a fee employment to 2 or more persons shall be deemed engage in recruitment and placement. On the other hand, Article 38, paragraph (a) of the labor code provides: Art. 38 Illegal Recruitment - (a) Any recruitment activities, including the prohibited practices enumerated under Article 34 of this Code, to be undertaken by non-licensees or non-holders of authority shall be deemed illegal and punishable under Article 39 of this Code. The Ministry of Labor (now DOLE) or any law enforcement officer may initiate complaints under this Article. (b) Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage and shall be penalized in accordance with Article 39 hereof. Illegal Recruitment is deemed committed by a syndicate or in large scale if carried out by a group of 3 or more persons conspiring and/or confederating with one another in carrying out any unlawful or illegal transaction, enterprise or scheme defined under the 1 st par. hereof. Illegal Recruitment is deemed committed in large scale if committed against 3 or more persons individually or as a group. From the foregoing provisions, it is clear that any recruitment activities to be undertaken by non-licensee or non-holder of authority shall be deemed illegal and punishable under Article 39 of the Labor Code. The court finds that the prosecution ably discharged its onus of proving guilt beyond reasonable doubt of the crimes charged against Domingo. People vs. Gallo

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G.R. No. 187730 PEOPLE OF THE PHILIPPINES vs. RODOLFO GALLO y GADOT, Accused-Appellant, FIDES PACARDO y JUNGCO and PILAR MANTA y DUNGO June 29, 2010 Facts: Gallo, et al. were charged with syndicated illegal recruitment and 18 counts of estafa committed against 18 complainants. However, records reveal that cases filed against Gallo, Pacardo, Manta for syndicated illegal recruitment and estafa proceeded to trial due to the fact that the said accused remained at large. Further, other cases filed against said accused were provisionally dismissed upon their motion for failure to appear and testify during trial. After trial, Pacardo and Manta were acquitted for insufficiency of evidence. Likewise, Gallo was acquitted for cases file against him by Guantero and Sare. However, he was found guilty beyond reasonable doubt in the criminal case filed by Dela Caza for syndicated illegal recruitment and estafa. Thus, appeal concerns solely on Gallo’s conviction for syndicated illegal recruitment and estafa. That on or about November 2000 and December 2001, Gallo, et al. represented themselves to have the capacity to contract, enlist and transport Filipino workers for employment abroad. They were able to acquire payments from the complainants for supposed placement and other fees but without valid reasons and without fault of the said complainants failed to deploy them and failed to reimburse expenses incurred by the said complainants with their documentation and processing for purposes of their deployment. When arraigned, Gallo pleaded not guilty to all charges. The pre-trial was terminated and trial ensued. The trial court found Gallo guilty beyond reasonable doubt of the crime of Illegal Recruitment committed a syndicate. On appeal to the CA, it held that the totality of the prosecution’s evidence showed that Gallo, et al. engaged in the recruitment of Dela Caza. Issue: Whether or not Gallo is authorized to contract, enlist, recruit and place workers abroad for employment. Held: The court disagree with Gallo’s averment that he cannot be held criminally liable for illegal recruitment because he was neither an officer nor an employee of MPM Agency. Further, the court stated that to commit syndicated illegal recruitment, 3 elements must be established: (1) the offender undertakes either any activity within the meaning of recruitment and placement under Art. 13 (b), or any of the prohibited practices enumerated under Art. 34 of the Labor Code; (2) he has no valid license or authority required by law to enable one to lawfully engage in recruitment 167 | L a b o r S t a n d a r d s - C a s e D i g e s t s

and placement of workers; and (3) the illegal recruitment is committed by a group of 3 or more persons conspiring or confederating with one another. When illegal recruitment is committed by a syndicate or in a large scale if it is committed against 3 or more persons individually or as a group, it’s considered an offense involving economic sabotage. Under Art. 13(b) of the Labor Code, recruitment and placement refers to any act of canvassing, enlisting, contracting, transporting, utilizing, hiring or procuring workers, and includes referrals, contract services, promising or advertising for employment, locally or abroad, whether for profit or not. After a thorough review of the records, the prosecution was able to establish the elements of the offense sufficiently. The evidence readily reveals that MPM Agency was never licensed by the POEA to recruit workers for overseas employment. Even with a license, however, illegal recruitment could still be committed under Section 6 of Republic Act No. 8042 (R.A. 8042), otherwise known as the Migrants and Overseas Filipinos Act of 1995: Sec. 6. Definition. For purposes of this Act, illegal recruitment shall mean any act of canvassing, enlisting, contracting, transporting, utilizing, hiring, or procuring workers and includes referring, contract services, promising or advertising for employment abroad, whether for profit or not, when undertaken by a non-licensee or non-holder of authority contemplated under Article 13(f) of Presidential Decree No. 442, as amended, otherwise known as the Labor Code of the Philippines: Provided, That any such nonlicensee or non-holder who, in any manner, offers or promises for a fee employment abroad to two or more persons shall be deemed so engaged. It shall, likewise, include the following act, whether committed by any person, whether a non-licensee, non-holder, licensee or holder of authority: (a) To charge or accept directly or indirectly any amount greater than that specified in the schedule of allowable fees prescribed by the Secretary of Labor and Employment, or to make a worker pay any amount greater than that actually received by him as a loan or advance; (l) Failure to actually deploy without valid reason as determined by the Department of Labor and Employment; and (m) Failure to reimburse expenses incurred by the worker in connection with his documentation and processing for purposes of deployment and processing for purposes of deployment, in cases where the deployment does not actually take place without the workers fault. Illegal recruitment when committed by a syndicate or in large scale shall be considered an offense involving economic sabotage. Illegal recruitment is deemed committed by a syndicate if carried out by a group of three (3) or more persons conspiring or confederating with one another. It is deemed committed in large scale if committed against three 168 | L a b o r S t a n d a r d s - C a s e D i g e s t s

(3) or more persons individually or as a group. The persons criminally liable for the above offenses are the principals, accomplices and accessories. In case of juridical persons, the officers having control, management or direction of their business shall be liable. In the instant case, Gallo committed the acts enumerated in Sec. 6 of R.A. 8042. Testimonial evidence presented by the prosecution clearly shows that, in consideration of a promise of foreign employment, Gallo received the amount of Php 45,000.00 from Dela Caza. When Gallo made misrepresentations concerning the agency’s purported power and authority to recruit for overseas employment, and in the process, collected money in the guise of placement fees, the former clearly committed acts constitutive of illegal recruitment. The Court finds the existence of a conspiracy between Gallo and the other persons in the agency who are currently at large, resulting in the commission of the crime of syndicated illegal recruitment. In this case, it cannot be denied that Gallo together with Mardeolyn and the rest of the officers and employees of MPM Agency participated in a network of deception. Verily, the active involvement of each in the recruitment scam was directed at one single purpose to divest complainants with their money on the pretext of guaranteed employment abroad. Without a doubt, the nature and extent of the actions of Gallo, as well as with the other persons in MPM Agency clearly show unity of action towards a common undertaking. Hence, conspiracy is evidently present. Salazar vs. Achacoso G.R. 81510 HORTENCIA SALAZAR vs. HON. TOMAS D. ACHACOSO, ADMINISTRATOR OF THE PHILIPPINE OVERSEAS EMPLOYMENT ADMINISTRATION, AND FERDIE MARQUEZ March 14, 1990 Facts: Rosalie Tesoro charged petitioner Hortencia Salazar for illegal recruitment before the Philippine Overseas Employment Administration (POEA). Rosalie claims that upon arriving from Japan, Hortencia took her PECC Card on the premise that Hortencia would find her another booking in Japan. Nine months passed and there is still no booking. Rosalie transferred to another agency but Hortencia would not give her PECC Card. The POAE ordered Hortencia to appear before the POEA Anti-Illegal Recruitment Unit. That same day, public respondent Administrator Tomas D. Achacoso issued a Closure and Seizure order against Hortencia, having ascertained that the petitioner had no license to operate a recruitment agency. Subsequently, a POEA group, assisted by Mandaluyong policemen 169 | L a b o r S t a n d a r d s - C a s e D i g e s t s

and mediamen, proceeded to the residence of Hortencia to implement the Closure and Seizure Order. There it was found that petitioner was operating Hannalie Dance Studio. Inside the studio, the team chanced upon 12 talent performers – practicing a dance number and saw about 20 more waiting outside, The team confiscated assorted costumes, which were duly receipted for by Mrs. Asuncio Maguelan and witnessed by Mrs. Flora Salazar. Because of this event, Hortencia filed a letter with the POEA requesting that the personal properties seized at her residence be immediately returned. The petitioner contends that she has not been given any prior notice or hearing, hence the Closure and Seizure Order violated “due process of law” guaranteed under Section 1, Article III, of the Philippine Constitution. She also avers that POEA’s actions violate Section 2, Article III of the Philippine Constitution which guarantees right of the people “to be secure in their persons, houses, papers, and effects against unreasonable searches and seizures of whatever nature and for any purpose.” Issue: Whether or not the Philippine Overseas Employment Administration (or the Secretary of Labor) may validly issue warrants of search and seizure (or arrest) under Article 38 of the Labor Code. Held: No. Under the new Constitution, “No search warrant or warrant of arrest shall issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched and the persons or things to be seized”. The Closure and Seizure Order was based on Article 38 of the Labor Code. The Supreme Court held, “We reiterate that the Secretary of Labor, not being a judge, may no longer issue search or arrest warrants. Hence, the authorities must go through the judicial process. To that extent, we declare Article 38, paragraph (c), of the Labor Code, unconstitutional and of no force and effect… The power of the President to order the arrest of aliens for deportation is, obviously, exceptional. It (the power to order arrests) cannot be made to extend to other cases, like the one at bar. Under the Constitution, it is the sole domain of the courts.” Furthermore, the search and seizure order was in the nature of a general warrant. The court held that the warrant is null and void, because it must identify specifically the things to be seized. Therefore, Article 38, paragraph (c) of the Labor Code is declared unconstitutional and null and void. The respondents are ordered to return all materials seized as a result of the implementation of Search and Seizure Order No. 1205. Labor Arbiter over Money Claims – R.A. No. 8042, Section 10, as amended Flourish Maritime Shipping vs. Almanzor, 568 SCRA 713 (2008) (NOTE: Serrano vs. Gallant Maritime Services, Inc., 582 SCRA 254 (2009) – The clause “or for three months for every year of the unexpired term,

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whichever is less” is unconstitutional for being violative of the equal protection clause.) G.R. No. 177948 FLOURISH MARITIME SHIPPING and LOLITA UY vs. DONATO A. ALMANZOR March 14, 2008 Facts: Donato Almanzor entered into a 2-year contract with Flourish Maritime Shipping as a fisherman. It was stipulated in the said agreement that he will receive a monthly salary of NT15, 840.00 with free meals and accommodation. Almanzor was deployed to Taiwan as part of the crew of the fishing vessel “FV Tsang Cheng 6” but he was surprised that were only 5 crew members on board and that he had to pay his meals and accommodation contrary to the stipulation in the contract. While on board, the master of the vessel gave orders to Almanzor but he was not able to understand the orders, thus, he was hit in the right dorsal part of his body. He asked for medical assistance from Lolita Uy, the manning agency owner of FMS. While the vessel was docketed at the Taipei port, Almanzor was informed that he will be repatriated. When he arrived in the Philippines, he reported to UY and was given medical assistance, declaring the former fit to work. Uy promised Almanzor that he will be redeployed but it turned out that it was possible because of his age. Almanzor filed a complaint for illegal dismissal and for payment of the unexpired term of his employment contract as well as damages and attorneys fees. This was opposed by Uy saying that it was Almanzor who voluntarily resigned. Further, Uy sought the dismissal of the complaint for failure to comply with the grievance machinery and arbitration clause in the contract. The Labor Arbiter ruled in favor of Almanzor which was affirmed by the NLRC, it ordered that FMS and Wang Yung Chin be jointly and solidarily liable to pay Almanzor the amount of NT15,840 times 6 months or a total of NT95,040. The case was appealed to the Court of Appeals which affirmed the decisions of both the Labor Arbiter and the NLRC but with modification that the monetary award be increased in accordance to Section 10 of RA 8042. Both the LA and the NLRC Board of Commissioners awarded such amount equivalent to Almanzor’s salary for 6 months (3 months for every year of the unexpired term) considering the latter’s employment contract covered a 2-year period and was dismissed from employment after only 26 days of actual work. According to the CA, since Almanzor actually worked for 26 days and was thereafter dismissed. The unexpired portion of the contract is 1 year, 11 171 | L a b o r S t a n d a r d s - C a s e D i g e s t s

months and 4 days. For the unexpired 2nd year, the court awarded 3 months of salary. With regard to the 11 months, and 4 days of the 1 st year, the CA refused to apply the 3-month rule. Issue: Whether or not Almanzor was illegally dismissed from employment and if so, to determine the correct award of compensation due him. Held: Section 10 of R.A. 8042 provides: In case of termination of overseas employment without just, valid and authorized cause as defined by law or contract, the worker shall be entitled to the full reimbursement of his placement fee with interest at 12% per annum, plus his salaries for the unexpired portion of his employment contract or for 3 months for every year of the unexpired term, whichever is less. The Court affirmed the decision of the CA with the modification that the monetary award to be paid to Almanzor shall be the amount set forth by the Labor Arbiter which was affirmed by the NLRC. It added that the correct interpretation of the above-mentioned provision was settled in the case of Marsaman Manning Agency Inc. v. NLRC where the court held that the choice of which amount to award an illegally dismissed overseas contract worker, i.e., whether his salaries for the unexpired portion of his employment contract, or 3 months salary for every year of the unexpired term, whichever is less, comes into play when the employment contract concerned has a term of at least 1 year or more. The employment contract involved in the case covers a 2-year period but the overseas contract worker actually worked for only 26 days prior to his illegal dismissal. Thus, the 3-month rule applies. The SC didn’t agree with the CA’s ruling that Almanzor should be paid his salaries for 14 months and 4 days. Record show that his actual employment lasted only for 26 days. Considering the aforementioned provision, the contract covers a 2-year period. Hence, Almanzor is entitled to 6 months salary. Alien Employment Coverage, Exemption – Labor Code Article 40; D.O. No. 97-09, Sections 1,2 Almodiel vs. NLRC G.R. No. 100641 FARLE P. ALMODIEL vs. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), RAYTHEON PHILS., INC. June 14, 1993 Facts: Farle Almodiel is a CPA who was hired by Raytheon Philippines, Inc. as Cost Accounting Manager through John Clements Consultants, Inc. with 172 | L a b o r S t a n d a r d s - C a s e D i g e s t s

a starting salary of P18,000. Before his employment with Raytheon, he worked as accounts executive of Integrated Microelectronics, Inc. He started as a probationary or temporary employee of Raytheon. As Cost Accounting Manager, his major duties were: 1.) Plan, coordinate, carry out year and physical inventory; 2.) Formulate and issue out hard copies of Standard Product costing and other cost/pricing analysis if needed and required and 3.) Set up written Cost Accounting System for the whole company. After a few months, he was given a regularization increase of P1,600 a month. Not long thereafter, his salary was increased to P21,600 a month. Almodiel recommended and submitted a Cost Accounting/ Finance Reorganization, affecting the whole finance group but the same was disapproved by the Controller. The latter was assured by the Controller that should his position or department which was apparently a one-man department with no staff becomes untenable or unable to deliver the needed service due to manpower constraint, he would be given a 3 year advance notice. When the standard cost accounting system was installed and used at the Raytheon plants and subsidiaries worldwide which was adopted and installed in the Philippine operations, the services of a Cost Accounting Manager allegedly entailed only the submission of periodic reports that would use computerized forms prescribed and designed by the international head office of the Raytheon Company. Thereafter, Almodiel was summoned by his immediate boss, Rolando Estrada and was told of the abolition of his position on the ground of redundancy. He pleaded to defer the management’s decision or to transfer him to another department but the decision became final and was conveyed to the DOLE. Almodiel filed a complaint for illegal dismissal against Estrada. The Labor Arbiter ruled in favor of Almodiel declaring that his termination on the ground of redundancy was without legal and factual basis, thus, ordering Raytheon to reinstate Almodiel former position without loss of seniority rights and other benefits plus damages. Raytheon appealed the LA’s decision to the NLRC which reversed the former’s decision and directed that they (Raytheon) pay Almodiel P100,000 as separation pay/ financial assistance. Almodiel claimed that the functions of his position were absorbed by the Payroll/Mis/Finance Department under the management of Ang Tan Chai, a resident alien without any working permit from the DOLE as required by law. Granting that his department has to be declared redundant, he claims that he should have been the Manager of the Payroll/Mis/Finance Department since he has the qualities for the said position. He claims that he’s better qualified than Ang Tan Chai. However, Raytheon insists that 173 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Almodiel’s functions as Cost Accounting Manager had not been absorbed by Ang Tan Chai, a permanent resident born in this country. It claims to have established that Ang Tan Chai didn’t displace Almodiel or absorb his functions and duties as they were occupying different and distinct positions requiring different sets of expertise. The case was elevated to the SC. Issue: 1.) Whether or not Almodiel was validly dismissed on the ground of redundancy. 2.) Whether or not a resident alien without a working permit authorized by DOLE is allowed to occupy a position in a Philippine Corporation. Held: 1.) The court ruled that the governing provision on the termination of an employee’s services because of redundancy is Art. 283 of the Labor Code. In the case at bar, there was no dispute that Almodiel was duly advised a month before his termination on the ground of redundancy in a written notice by his immediate superior. He was issued a check of P54, 863 representing separation pay but because of his refusal to accept said pay, it was sent to him through registered mail. The DOLE was served a copy of the notice of termination of Almodiel. Further, it’s a well-settled rule that labor laws don’t authorize interference with the employer’s judgment in the conduct of business. The determination of the qualification and fitness of workers for hiring, firing, promotion or reassignment are exclusive prerogatives of management. The Labor Code and its IRR do not vest in the Labor Arbiters nor in the different divisions of the NLRC managerial authority. The employer is free to determine, using his own sound discretion and business judgment, all elements of employment, “from hiring to firing” except in cases of unlawful discrimination or those by which may be provided by law. There’s none in the instant case. Hence, the court found no abuse of grave discretion on the part of the NLRC in reversing and annulling LA’s decision and that on the contrary, the termination of Almodiel was anchored on a valid and authorized cause under Art. 283. 2.)

Likewise destitute of merit is petitioner's imputation of unlawful discrimination when Raytheon caused corollary functions appertaining to cost accounting to be absorbed by Danny Ang Tan Chai, a resident alien without a working permit. Article 40 of the Labor Code which requires employment permit refers to non-resident aliens. The employment permit is required for entry into the country for employment purposes and is issued after determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. Since Ang Tan Chai is a resident alien, he does not fall within the ambit of the provision. Conditions for Grant of Permit/ Denial – D.O. No. 97-09, Sections 3, 4, 5, 6, 10 174 | L a b o r S t a n d a r d s - C a s e D i g e s t s

General Milling Corporation vs. Torres G.R. No. 93666 GENERAL MILLING CORPORATION and EARL TIMOTHY CONE vs. HON. RUBEN D. TORRES, in his capacity as Secretary of Labor and Employment, HON. BIENVENIDO E. LAGUESMA, in his capacity as Acting Secretary of Labor and Employment, and BASKETBALL COACHES ASSOCIATION OF THE PHILIPPINES April 22, 1991 Facts: The National Capital Region of the Department of Labor and Employment issued Alien Employment Permit in favor of petitioner Earl Timothy Cone, a United States citizen, as sports consultant and assistant coach for petitioner General Milling Corporation ("GMC"). GMC and Cone entered into a contract of employment whereby the latter undertook to coach GMC's basketball team. The Board of Special Inquiry of the Commission on Immigration and Deportation approved Cone's application for a change of admission status from temporary visitor to pre-arranged employee. A month after, GMC requested for the renewal of Cone's alien employment permit. GMC also requested that it be allowed to employ Cone as fullfledged coach. DOLE Regional Director Piezas granted the request. An Alien Employment Permit was issued valid until December 25, 1990. The Basketball Coaches Association of the Philippines ("BCAP") appealed the issuance of said alien employment permit to the DOLE who, then, issued a decision ordering cancellation of Cone's employment permit on the ground that there was no showing that there is no person in the Philippines who is competent, able and willing to perform the services required nor that the hiring of petitioner Cone would redound to the national interest. GMC filed a Motion for Reconsideration and two (2) Supplemental Motions for Reconsideration but said Motions were denied by Acting Secretary of Labor Laguesma. Issue: 1.) Whether or not the Secretary of Labor gravely abused his discretion when he revoked petitioner Cone's alien employment permit; and 2.) Whether or not Section 6 (c), Rule XIV, Book I of the Omnibus Rules Implementing the Labor Code is null and void as it is in violation of the enabling law as the Labor Code does not empower respondent Secretary to determine if the employment of an alien would redound to national interest.

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Held: With regard to the first issue, the Court considers that petitioners have failed to show any grave abuse of discretion or any act without or in excess of jurisdiction on the part of respondent Secretary of Labor in rendering his decision, revoking petitioner Cone's Alien Employment Permit. Petitioner GMC's claim that hiring of a foreign coach is an employer's prerogative has no legal basis at all. Under Article 40 of the Labor Code, an employer seeking employment of an alien must first obtain an employment permit from the Department of Labor. Petitioner GMC's right to choose whom to employ is, of course, limited by the statutory requirement of an alien employment permit. The provisions of the Labor Code and its Implementing Rules and Regulations requiring alien employment permits were in existence long before petitioners entered into their contract of employment. It is firmly settled that provisions of applicable laws, especially provisions relating to matters affected with public policy, are deemed written into contracts. Private parties cannot constitutionally contract away the otherwise applicable provisions of law. In short, the Department of Labor is the agency vested with jurisdiction to determine the question of availability of local workers. The constitutional validity of legal provisions granting such jurisdiction and authority and requiring proof of non-availability of local nationals able to carry out the duties of the position involved, cannot be seriously questioned. Petitioners apparently also questioned the validity of the Implementing Rules and Regulations, specifically Section 6 (c), Rule XIV, Book I of the Implementing Rules, as imposing a condition not found in the Labor Code itself. Section 6 (c), Rule XIV, Book I of the Implementing Rules, provides as follows: Section 6. Issuance of Employment Permit –– the Secretary of Labor may issue an employment permit to the applicant based on: a) Compliance by the applicant and his employer with the requirements of Section 2 hereof; b) Report of the Bureau Director as to the availability or non-availability of any person in the Philippines who is competent and willing to do the job for which the services of the applicant are desired. (c) His assessment as to whether or not the employment of the applicant will redound to the national interest; (d) Admissibility of the alien as certified by the Commission on Immigration and Deportation; (e) The recommendation of the Board of Investments or other appropriate government agencies if the applicant will be employed in preferred areas of investments or in accordance with the imperative of economic development; Article 40 of the Labor Code reads as follows:

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Art. 40. Employment per unit of non-resident aliens. –– Any alien seeking admission to the Philippines for employment purposes and any domestic or foreign employer who desires to engage an alien for employment in the Philippines shall obtain an employment permit from the Department of Labor. The employment permit may be issued to a non-resident alien or to the applicant employer after a determination of the non-availability of a person in the Philippines who is competent, able and willing at the time of application to perform the services for which the alien is desired. For an enterprise registered in preferred areas of investments, said employment permit may be issued upon recommendation of the government agency charged with the supervision of said registered enterprise. e) To regulate the employment of aliens, including the establishment of a registration and/or work permit system; 17.

Apprentice/ Learners/ Persons with Disabilities

Allowed Employment/ Requirements Program Approval – Labor Code Article 60 Nitto Enterprises vs. NLRC G.R. No. 114337 NITTO ENTERPRISES vs. NATIONAL LABOR RELATIONS COMMISSION and ROBERTO CAPILI September 29, 1995 Facts: Nitto Enterprises, a company engaged in the sale of glass and aluminum products, hired Roberto Capili sometime in May 1990 as an apprentice machinist, molder and core maker as evidenced by an apprenticeship agreement for a period of 6 months with a daily wage rate of P66.75 which was 75% of the applicable minimum wage. At around 1:00 p.m. of August 2, 1990, Roberto Capili who was handling a piece of glass which he was working on, accidentally hit and injured the leg of an office secretary who was treated at a nearby hospital. Later that same day, after office hours, private respondent entered a workshop within the office premises which was not his work station. There, he operated one of the power press machines without authority and in the process injured his left thumb. Petitioner spent the amount of P1,023.04 to cover the medication of private respondent. The following day, Roberto Capili was asked to resign. On August 3, 1990 private respondent executed a Quitclaim and Release in favor of petitioner for and in consideration of the 177 | L a b o r S t a n d a r d s - C a s e D i g e s t s

sum of P1,912.79. Three days after, private respondent formally filed before the NLRC NCR a complaint for illegal dismissal and payment of other monetary benefits. The Labor Arbiter rendered his decision finding the termination of private respondent as valid and dismissing the money claim for lack of merit. Labor Arbiter gave two reasons for ruling that the dismissal of Roberto Capilian was valid. First, private respondent who was hired as an apprentice violated the terms of their agreement when he acted with gross negligence resulting in the injury not only to himself but also to his fellow worker. Second, private respondent had shown that "he does not have the proper attitude in employment particularly the handling of machines without authority and proper training. On appeal, the NLRC issued an order reversing the decision of the Labor Arbiter and directed to reinstate complainant to his work last performed and pay backwages computed from the time his wages were withheld up to the time he is actually reinstated. The NLRC declared that private respondent was a regular employee of petitioner by ruling that the complainant was correct since the apprenticeship agreement was filed with the Department of Labor only on June 7, 1990 could be validly used by the Labor Arbiter as basis to conclude that the complainant was hired by respondent as a plain "apprentice" on May 28, 1990. Clearly, therefore, the complainant was a regular employee of Nitto Enterprises pursuant to Article 280 of the Labor Code, as early as May 28, 1990, who thus enjoyed the security of tenure guaranteed in Section 3, Article XIII of 1987 Constitution. The complainant being illegal dismissed (among others) it then behooves upon respondent to prove that the dismissal of complainant was for a valid cause. Absent such proof, NLRC cannot but rule that the complainant was illegally dismissed. On January 28, 1994, Labor Arbiter Libo-on called for a conference at which only private respondent's representative was present. On April 22, 1994, a Writ of Execution was issued to effect the reinstatement of herein to his work last performed or at the option of the respondent by payroll reinstatement and to collect the amount of P122,690.85 representing his backwages as called for in the dispositive portion, and turn over such amount to this Office for proper disposition. Petitioner filed a motion for reconsideration but the same was denied. Hence, the instant petition — for certiorari. Issue: Whether or not respondent NLRC committed grave abuse of discretion in holding the private respondent was not an apprentice. Held: The law is clear on this matter. Article 61 of the Labor Code provides: Contents of apprenticeship agreement. — Apprenticeship agreements, including the main rates of apprentices, shall 178 | L a b o r S t a n d a r d s - C a s e D i g e s t s

conform to the rules issued by the Minister of Labor and Employment. The period of apprenticeship shall not exceed six months. Apprenticeship agreements providing for wage rates below the legal minimum wage, which in no case shall start below 75% per cent of the applicable minimum wage, may be entered into only in accordance with apprenticeship program duly approved by the Minister of Labor and Employment. The Ministry shall develop standard model programs of apprenticeship.

In the case at bench, the apprenticeship agreement between petitioner and private respondent was executed on May 28, 1990 allegedly employing the latter as an apprentice in the trade of "care maker/molder." On the same date, an apprenticeship program was prepared by petitioner and submitted to the Department of Labor and Employment. However, the apprenticeship Agreement was filed only on June 7, 1990. Notwithstanding the absence of approval by the Department of Labor and Employment, the apprenticeship agreement was enforced the day it was signed.

Based on the evidence before us, petitioner did not comply with the requirements of the law. It is mandated that apprenticeship agreements entered into by the employer and apprentice shall be entered only in accordance with the apprenticeship program duly approved by the Minister of Labor and Employment. Prior approval by the Department of Labor and Employment of the proposed apprenticeship program is, therefore, a condition sine quo non before an apprenticeship agreement can be validly entered into. The act of filing the proposed apprenticeship program with the Department of Labor and Employment is a preliminary step towards its final approval and does not instantaneously give rise to an employer-apprentice relationship. Article 57 of the Labor Code provides that the State aims to "establish a national apprenticeship program through the participation of employers, workers and government and nongovernment agencies" and "to establish apprenticeship standards for the protection of apprentices." To translate such objectives into existence, prior approval of the DOLE to any apprenticeship program has to be secured as a condition sine qua non before any such apprenticeship agreement can be fully enforced. The role of the DOLE in apprenticeship programs and agreements cannot be debased. Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. 179 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Rights and Privileges – R.A. No. 7277, Sections 5, 6, 7 Bernardo vs. NLRC & FEBTC

G.R. No. 122917 MARITES BERNARDO, ELVIRA GO DIAMANTE, REBECCA E. DAVID, DAVID P. PASCUAL, RAQUEL ESTILLER, ALBERT HALLARE, EDMUND M. CORTEZ, JOSELITO O. AGDON GEORGE P. LIGUTAN JR., CELSO M. YAZAR, ALEX G. CORPUZ, RONALD M. DELFIN, ROWENA M. TABAQUERO, et al. vs. NATIONAL LABOR RELATIONS COMMISSION and FAR EAST BANK AND TRUST COMPANY July 12, 1999 Facts: Complainants are deaf-mutes who were hired on various periods from 1988 to 1993 by respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly worded agreement called Employment Contract for Handicapped Workers. Disclaiming that complainants were regular employees, respondent Far East Bank and Trust Company maintained that complainants who are a special class of workers the hearing impaired employees were hired temporarily under a special employment arrangement which was a result of overtures made by some civic and political personalities to the respondent Bank; that complainants were hired due to “pakiusap” which must be considered in the light of the context of the respondent Banks corporate philosophy as well as its career and working environment which is to maintain and strengthen a corps of professionals trained and qualified officers and regular employees who are baccalaureate degree holders from excellent schools which is an unbending policy in the hiring of regular employees; that in addition to this, training continues so that the regular employee grows in the corporate ladder; that the idea of hiring handicapped workers was acceptable to them only on a special arrangement basis; that it adopted the special program to help tide over a group of handicapped workers such as deaf-mutes like the complainants who could do manual work for the respondent Bank; that the task of counting and sorting of bills which was being performed by tellers could be assigned to deaf-mutes; that the counting and sorting of money are tellering works which were always logically and naturally part and parcel of the tellers normal functions; that from the beginning there have been no separate items in the respondent Bank plantilla for sorters or counters; that the tellers themselves already did the sorting and counting chore as a regular feature and integral part of their duties; that through the “pakiusap” of Arturo Borjal, the tellers were relieved of this task of counting and sorting bills in favor of deaf-mutes without creating new positions as there is no position either in the 180 | L a b o r S t a n d a r d s - C a s e D i g e s t s

respondent or in any other bank in the Philippines which deals with purely counting and sorting of bills in banking operations. The Labor Arbiter and, on appeal, the NLRC ruled against herein petitioners. In affirming the ruling of the Labor Arbiter that herein petitioners could not be deemed regular employees under Article 280 of the Labor Code, as amended, Respondent Commission ratiocinated as follows: We agree that Art. 280 is not controlling herein. We give due credence to the conclusion that complainants were hired as an accommodation to the recommendation of civic oriented personalities whose employments were covered by xxx Employment Contracts with special provisions on duration of contract as specified under Art. 80. Hence, as correctly held by the Labor Arbiter a quo, the terms of the contract shall be the law between the parties. Petitioners maintain that they should be considered regular employees, because their task as money sorters and counters was necessary and desirable to the business of respondent bank. They further allege that their contracts served merely to preclude the application of Article 280 and to bar them from becoming regular employees. Private respondent, on the other hand, submits that petitioners were hired only as special workers and should not in any way be considered as part of the regular complement of the Bank. Rather, they were special workers under Article 80 of the Labor Code. Private respondent contends that it never solicited the services of petitioners, whose employment was merely an accommodation in response to the requests of government officials and civic-minded citizens. They were told from the start, with the assistance of government representatives that they could not become regular employees because there were no plantilla positions for money sorters, whose task used to be performed by tellers. Their contracts were renewed several times, not because of need but merely for humanitarian reasons. Respondent submits that as of the present, the special position that was created for the petitioners no longer exists in private respondent bank, after the latter had decided not to renew anymore their special employment contracts. The NLRC also declared that the Magna Carta for Disabled Persons was not applicable, considering the prevailing circumstances/milieu of the case. Issue: 1.) Whether or not the NLRC committed grave abuse of discretion in holding that the petitioners - money sorters and counters working in a bank - were not regular employees. 2.) Whether or not the NLRC committed grave abuse of discretion in not applying the provisions of the Magna Carta for the Disabled (Republic Act No. 7277), on proscription against discrimination against disabled persons.

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Held: The petition is meritorious. However, only the employees, who worked for more than six months and whose contracts were renewed are deemed regular. Hence, their dismissal from employment was illegal. The facts, viewed in light of the Labor Code and the Magna Carta for Disabled Persons, indubitably show that the petitioners, except sixteen of them, should be deemed regular employees. As such, they have acquired legal rights that this Court is duty-bound to protect and uphold, not as a matter of compassion but as a consequence of law and justice. The uniform employment contracts of the petitioners stipulated that they shall be trained for a period of one month, after which the employer shall determine whether or not they should be allowed to finish the 6-month term of the contract. Furthermore, the employer may terminate the contract at any time for a just and reasonable cause. Unless renewed in writing by the employer, the contract shall automatically expire at the end of the term. According to private respondent, the employment contracts were prepared in accordance with Article 80 of the Labor Code, which provides: ART. 80. Employment agreement. Any employer who employs handicapped workers shall enter into an employment agreement with them, which agreement shall include: (a) The names and addresses of the handicapped workers to be employed; (b) The rate to be paid the handicapped workers which shall be not less than seventy five (75%) per cent of the applicable legal minimum wage; (c) The duration of employment period; and (d) The work to be performed by handicapped workers. The stipulations in the employment contracts indubitably conform with the aforecited provision. Succeeding events and the enactment of RA No. 7277 (the Magna Carta for Disabled Persons), however, justify the application of Article 280 of the Labor Code. Respondent bank entered into the aforesaid contract with a total of 56 handicapped workers and renewed the contracts of 37 of them. In fact, two of them worked from 1988 to 1993. Verily, the renewal of the contracts of the handicapped workers and the hiring of others lead to the conclusion that their tasks were beneficial and necessary to the bank. More important, these facts show that they were qualified to perform the responsibilities of their positions. In other words, their disability did not render them unqualified or unfit for the tasks assigned to them. In this light, the Magna Carta for Disabled Persons mandates that a qualified disabled employee should be given the same terms and conditions of employment as a qualified able-bodied person. Section 5 of the Magna Carta provides: 182 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Section 5. Equal Opportunity for Employment. No disabled person shall be denied access to opportunities for suitable employment. A qualified disabled employee shall be subject to the same terms and conditions of employment and the same compensation, privileges, benefits, fringe benefits, incentives or allowances as a qualified able bodied person. The fact that the employees were qualified disabled persons necessarily removes the employment contracts from the ambit of Article 80. Since the Magna Carta accords them the rights of qualified able-bodied persons, they are thus covered by Article 280 of the Labor Code, which provides: As regular employees, the twenty-seven petitioners are entitled to security of tenure; that is, their services may be terminated only for a just or authorized cause. Because respondent failed to show such cause, these twenty-seven petitioners are deemed illegally dismissed and therefore entitled to back wages and reinstatement without loss of seniority rights and other privileges, Considering the allegation of respondent that the job of money sorting is no longer available because it has been assigned back to the tellers to whom it originally belonged, petitioners are hereby awarded separation pay in lieu of reinstatement. Because the other sixteen worked only for six months, they are not deemed regular employees and hence not entitled to the same benefits. 18. Women Workers – Labor Code Articles 130-138; Omnibus Rules, Book III, Rule XII, Section 1; Philippine Constitution Articles II, Section 1, XIII, Section 14; Women in Development and National Building Act (R.A. No. 7192); Anti-Sexual Harassment Act of 1995 (R..A. No. 7877); Anti-Violence Against Women and Their Children Act of 2004 (R.A. 9262); The Magna Carta of Women (R.A. No. 9710) Women under the Constitution – Philippine Constitution Articles II, Section 14, XIII, Section 14 Philippine Association of Service Exporters vs. Drilon G.R. No. 81958 PHILIPPINE ASSOCIATION OF SERVICE EXPORTERS, INC. vs. HON. FRANKLIN M. DRILON as Secretary of Labor and Employment, and TOMAS D. ACHACOSO, as Administrator of the Philippine Overseas Employment Administration June 30, 1988 Facts: The petitioner, Philippine Association of Service Exporters, Inc. (PASEI, for short), a firm "engaged principally in the recruitment of Filipino workers, male and female, for overseas placement," challenges the Constitutional validity of Department Order No. 1, Series of 1988, of the Department of Labor and Employment, in the character of "GUIDELINES 183 | L a b o r S t a n d a r d s - C a s e D i g e s t s

GOVERNING THE TEMPORARY SUSPENSION OF DEPLOYMENT OF FILIPINO DOMESTIC AND HOUSEHOLD WORKERS." Specifically, the measure is assailed for "discrimination against males or females;" that it "does not apply to all Filipino workers but only to domestic helpers and females with similar skills," and that it is violative of the right to travel. In its supplement to the petition, PASEI invokes Section 3, of Article XIII, of the Constitution, providing for worker participation "in policy and decisionmaking processes affecting their rights and benefits as may be provided by law." On May 25, 1988, the Solicitor General, on behalf of the respondents Secretary of Labor and Administrator of the Philippine Overseas Employment Administration, filed a Comment informing the Court that on March 8, 1988, the respondent Labor Secretary lifted the deployment ban in the states of Iraq, Jordan, Qatar, Canada, Hongkong, United States, Italy, Norway, Austria, and Switzerland. In submitting the validity of the challenged "guidelines," the Solicitor General invokes the police power of the Philippine State. Issue: Whether or not Department Order No. 1 is valid under the Constitution Held: In the light of the foregoing, the petition must be dismissed. As a general rule, official acts enjoy a presumed vahdity. In the absence of clear and convincing evidence to the contrary, the presumption logically stands. The petitioner has shown no satisfactory reason why the contested measure should be nullified. There is no question that Department Order No. 1 applies only to "female contract workers," but it does not thereby make an undue discrimination between the sexes. It is well-settled that "equality before the law" under the Constitution does not import a perfect Identity of rights among all men and women. It admits of classifications, provided that (1) such classifications rest on substantial distinctions; (2) they are germane to the purposes of the law; (3) they are not confined to existing conditions; and (4) they apply equally to all members of the same class. The Court is satisfied that the classification made-the preference for female workers — rests on substantial distinctions. As a matter of judicial notice, the Court is well aware of the unhappy plight that has befallen our female labor force abroad, especially domestic servants, amid exploitative working conditions marked by, in not a few cases, physical and personal abuse. The sordid tales of maltreatment suffered by migrant Filipina workers, even rape and various forms of torture, confirmed by testimonies of returning workers, are compelling motives for urgent Government action. As precisely the caretaker of Constitutional rights, the Court is called upon to protect victims of exploitation. In fulfilling that duty, the Court sustains the Government's efforts. 184 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The same, however, cannot be said of our male workers. In the first place, there is no evidence that, except perhaps for isolated instances, our men abroad have been afflicted with an Identical predicament. The petitioner has proffered no argument that the Government should act similarly with respect to male workers. The Court, of course, is not impressing some male chauvinistic notion that men are superior to women. What the Court is saying is that it was largely a matter of evidence (that women domestic workers are being ill-treated abroad in massive instances) and not upon some fanciful or arbitrary yardstick that the Government acted in this case. It is evidence capable indeed of unquestionable demonstration and evidence this Court accepts. The Court cannot, however, say the same thing as far as men are concerned. There is simply no evidence to justify such an inference. Suffice it to state, then, that insofar as classifications are concerned, this Court is content that distinctions are borne by the evidence. Discrimination in this case is justified. There is likewise no doubt that such a classification is germane to the purpose behind the measure. Unquestionably, it is the avowed objective of Department Order No. 1 to "enhance the protection for Filipino female overseas workers" this Court has no quarrel that in the midst of the terrible mistreatment Filipina workers have suffered abroad, a ban on deployment will be for their own good and welfare. The Order does not narrowly apply to existing conditions. Rather, it is intended to apply indefinitely so long as those conditions exist. This is clear from the Order itself, meaning to say that should the authorities arrive at a means impressed with a greater degree of permanency, the ban shall be lifted. As a stop-gap measure, it is possessed of a necessary malleability, depending on the circumstances of each case. Neither is there merit in the contention that Department Order No. 1 constitutes an invalid exercise of legislative power. It is true that police power is the domain of the legislature, but it does not mean that such an authority may not be lawfully delegated. As we have mentioned, the Labor Code itself vests the Department of Labor and Employment with rulemaking powers in the enforcement whereof. The petitioners's reliance on the Constitutional guaranty of worker participation "in policy and decision-making processes affecting their rights and benefits" is not well-taken. The right granted by this provision, again, must submit to the demands and necessities of the State's power of regulation. The Constitution declares that: Sec. 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. 185 | L a b o r S t a n d a r d s - C a s e D i g e s t s

"Protection to labor" does not signify the promotion of employment alone. What concerns the Constitution more paramountly is that such an employment be above all, decent, just, and humane. It is bad enough that the country has to send its sons and daughters to strange lands because it cannot satisfy their employment needs at home. Under these circumstances, the Government is duty-bound to insure that our toiling expatriates have adequate protection, personally and economically, while away from home. In this case, the Government has evidence, an evidence the petitioner cannot seriously dispute, of the lack or inadequacy of such protection, and as part of its duty, it has precisely ordered an indefinite ban on deployment. The Court finds furthermore that the Government has not indiscriminately made use of its authority. It is not contested that it has in fact removed the prohibition with respect to certain countries as manifested by the Solicitor General. Philippine Telegraph and Telephone Company vs. NLRC G.R. No. 118978 PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN May 23, 1997 Facts: Grace de Guzman was initially hired by petitioner as a reliever, specifically as a "Supernumerary Project Worker," for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent's services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated. On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier, that is, on May 26, 1991. It now appears that private respondent had made the same representation in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was reminded about the company's policy of not accepting married women for employment. 186 | L a b o r S t a n d a r d s - C a s e D i g e s t s

In her reply letter dated January 17, 1992, private respondent stated that she was not aware of PT&T's policy regarding married women at the time. Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio City. On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter’s decision dated April 29, 1994. Issue: Whether or not ptitioner’s policy against marriage is valid. Held: No, it is not valid. The Constitution, cognizant of the disparity in rights between men and women in almost all phases of social and political life, provides a gamut of protective provisions. To cite a few of the primordial ones, Section 14, Article II on the Declaration of Principles and State Policies, expressly recognizes the role of women in nation-building and commands the State to ensure, at all times, the fundamental equality before the law of women and men. Corollary thereto, Section 3 of Article XIII (the progenitor whereof dates back to both the 1935 and 1973 Constitution) pointedly requires the State to afford full protection to labor and to promote full employment and equality of employment opportunities for all, including an assurance of entitlement to tenurial security of all workers. Similarly, Section 14 of Article XIII mandates that the State shall protect working women through provisions for opportunities that would enable them to reach their full potential. In the case at bar, petitioner's policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Contrary to petitioner's assertion that it dismissed private respondent from employment on account of her dishonesty, the record discloses clearly that her ties with the company were dissolved principally because of the company's policy that married women are not qualified for employment in PT & T, and not merely because of her supposed acts of dishonesty. That it was so can easily be seen from the memorandum sent to private respondent by Delia M. Oficial, the branch supervisor of the company, with the reminder, in the words of the latter, that "you're fully aware that the company is not accepting married women employee (sic), as it was verbally instructed to you." Again, in the termination notice sent to her by the same branch supervisor, private respondent was made to understand 187 | L a b o r S t a n d a r d s - C a s e D i g e s t s

that her severance from the service was not only by reason of her concealment of her married status but, over and on top of that, was her violation of the company's policy against marriage ("and even told you that married women employees are not applicable [sic] or accepted in our company.") Parenthetically, this seems to be the curious reason why it was made to appear in the initiatory pleadings that petitioner was represented in this case only by its said supervisor and not by its highest ranking officers who would otherwise be solidarily liable with the corporation. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT & T. The Labor Code state, in no uncertain terms, as follows: Art. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. Further, it is not relevant that the rule is not directed against all women but just against married women. And, where the employer discriminates against married women, but not against married men, the variable is sex and the discrimination is unlawful. Upon the other hand, a requirement that a woman employee must remain unmarried could be justified as a "bona fide occupational qualification," or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both male and female flight attendants, was regarded as unlawful since the restriction was not related to the job performance of the flight attendants. Petitioner's policy is not only in derogation of the provisions of Article 136 of the Labor Code on the right of a woman to be free from any kind of stipulation against marriage in connection with her employment, but it likewise assaults good morals and public policy, tending as it does to deprive a woman of the freedom to choose her status, a privilege that by all accounts inheres in the individual as an intangible and inalienable right. Hence, while it is true that the parties to a contract may establish any agreements, terms, and conditions that they may deem convenient, the same should not be contrary to law, morals, good customs, public order, or public policy. Carried to its logical consequences, it may even be said that petitioner's policy against legitimate marital bonds would encourage illicit or common-law relations and subvert the sacrament of marriage. Stipulation Against Marriage – Labor Code Article 136 188 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Philippine Telegraph and Telephone Company vs. NLRC G.R. No. 118978 PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY vs. NATIONAL LABOR RELATIONS COMMISSION and GRACE DE GUZMAN May 23, 1997 Facts: Grace de Guzman was initially hired by petitioner as a reliever, specifically as a "Supernumerary Project Worker," for a fixed period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went on maternity leave. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19, 1991 to August 8, 1991, private respondent's services as reliever were again engaged by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave during both periods. After August 8, 1991, and pursuant to their Reliever Agreement, her services were terminated. On September 2, 1991, private respondent was once more asked to join petitioner company as a probationary employee, the probationary period to cover 150 days. In the job application form that was furnished her to be filled up for the purpose, she indicated in the portion for civil status therein that she was single although she had contracted marriage a few months earlier, that is, on May 26, 1991. It now appears that private respondent had made the same representation in the two successive reliever agreements which she signed on June 10, 1991 and July 8, 1991. When petitioner supposedly learned about the same later, its branch supervisor in Baguio City, Delia M. Oficial, sent to private respondent a memorandum dated January 15, 1992 requiring her to explain the discrepancy. In that memorandum, she was reminded about the company's policy of not accepting married women for employment. In her reply letter dated January 17, 1992, private respondent stated that she was not aware of PT&T's policy regarding married women at the time. Private respondent was dismissed from the company effective January 29, 1992, which she readily contested by initiating a complaint for illegal dismissal, coupled with a claim for non-payment of cost of living allowances (COLA), before the Regional Arbitration Branch of the National Labor Relations Commission in Baguio City. On November 23, 1993, Labor Arbiter Irenarco R. Rimando handed down a decision declaring that private respondent, who had already gained the status of a regular employee, was illegally dismissed by petitioner. On appeal to the National Labor Relations Commission (NLRC), said public respondent upheld the labor arbiter’s decision dated April 29, 1994. Issue: Whether or not petitioner’s policy against marriage is valid.

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Held: No, it is not valid. The government, to repeat, abhors any stipulation or policy in the nature of that adopted by petitioner PT & T. The Labor Code state, in no uncertain terms, as follows: Art. 136. Stipulation against marriage. — It shall be unlawful for an employer to require as a condition of employment or continuation of employment that a woman shall not get married, or to stipulate expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee merely by reason of marriage. It would be worthwhile to reflect upon and adopt here the rationalization in Zialcita, et al. vs. Philippine Air Lines, a decision that emanated from the Office of the President. There, a policy of Philippine Air Lines requiring that prospective flight attendants must be single and that they will be automatically separated from the service once they marry was declared void, it being violative of the clear mandate in Article 136 of the Labor Code with regard to discrimination against married women. The judgment of the Court of Appeals in Gualberto, et al. vs. Marinduque Mining & Industrial Corporation considered as void a policy of the same nature. In said case, respondent, in dismissing from the service the complainant, invoked a policy of the firm to consider female employees in the project it was undertaking as separated the moment they get married due to lack of facilities for married women. Respondent further claimed that complainant was employed in the project with an oral understanding that her services would be terminated when she gets married. Branding the policy of the employer as an example of "discriminatory chauvinism" tantamount to denying equal employment opportunities to women simply on account of their sex, the appellate court struck down said employer policy as unlawful in view of its repugnance to the Civil Code, Presidential Decree No. 148 and the Constitution. Further, it is not relevant that the rule is not directed against all women but just against married women. And, where the employer discriminates against married women, but not against married men, the variable is sex and the discrimination is unlawful. Upon the other hand, a requirement that a woman employee must remain unmarried could be justified as a "bona fide occupational qualification," or BFOQ, where the particular requirements of the job would justify the same, but not on the ground of a general principle, such as the desirability of spreading work in the workplace. A requirement of that nature would be valid provided it reflects an inherent quality reasonably necessary for satisfactory job performance. Thus, in one case, a no-marriage rule applicable to both male and female flight attendants, was regarded as unlawful since the restriction was not related to the job performance of the flight attendants. Duncan Association of Detailman – PTGWO vs. GlaxoWellcome Philippines 190 | L a b o r S t a n d a r d s - C a s e D i g e s t s

G.R. No. 162994 DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON vs. GLAXO WELLCOME PHILIPPINES, INC September 17, 2004 Facts: Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as medical representative on October 24, 1995, after Tecson had undergone training and orientation. Thereafter, Tecson signed a contract of employment which stipulates, among others, that he agrees to study and abide by existing company rules; to disclose to management any existing or future relationship by consanguinity or affinity with co-employees or employees of competing drug companies and should management find that such relationship poses a possible conflict of interest, to resign from the company. If management perceives a conflict of interest or a potential conflict between such relationship and the employee’s employment with the company, the management and the employee will explore the possibility of a "transfer to another department in a non-counterchecking position" or preparation for employment outside the company after six months. Tecson was initially assigned to market Glaxo’s products in the Camarines Sur-Camarines Norte sales area. Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astra’s Branch Coordinator in Albay. Even before they got married, Tecson received several reminders from his District Manager regarding the conflict of interest which his relationship with Bettsy might engender. In January 1999, Tecson’s superiors informed him that his marriage to Bettsy gave rise to a conflict of interest. Tecson’s superiors reminded him that he and Bettsy should decide which one of them would resign from their jobs, although they told him that they wanted to retain him as much as possible because he was performing his job well. In November 1999, Glaxo transferred Tecson to the Butuan CitySurigao City-Agusan del Sur sales area. Tecson asked Glaxo to reconsider its decision, but his request was denied. Because the parties failed to resolve the issue at the grievance machinery level, they submitted the matter for voluntary arbitration. Glaxo offered Tecson a separation pay of one-half (½) month pay for every year of service, or a total of P50,000.00 but he declined the offer. On November 15, 2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on relationships between its employees and persons employed with competitor companies, and affirming Glaxo’s right to transfer Tecson to another sales territory.

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On May 19, 2003, the Court of Appeals promulgated its Decision denying the Petition for Review. Issue: Whether or not Glaxo’s policy prohibiting its employees from marrying an employee of a competitor company is valid. Held: Yes, it is valid. No reversible error can be ascribed to the Court of Appeals when it ruled that Glaxo’s policy prohibiting an employee from having a relationship with an employee of a competitor company is a valid exercise of management prerogative. Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and other confidential programs and information from competitors, especially so that it and Astra are rival companies in the highly competitive pharmaceutical industry. The prohibition against personal or marital relationships with employees of competitor companies upon Glaxo’s employees is reasonable under the circumstances because relationships of that nature might compromise the interests of the company. In laying down the assailed company policy, Glaxo only aims to protect its interests against the possibility that a competitor company will gain access to its secrets and procedures. That Glaxo possesses the right to protect its economic interests cannot be denied. No less than the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect its right to reasonable returns on investments and to expansion and growth. Indeed, while our laws endeavor to give life to the constitutional policy on social justice and the protection of labor, it does not mean that every labor dispute will be decided in favor of the workers. The law also recognizes that management has rights which are also entitled to respect and enforcement in the interest of fair play. In any event, from the wordings of the contractual provision and the policy in its employee handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships between its employees and those of competitor companies. Its employees are free to cultivate relationships with and marry persons of their own choosing. What the company merely seeks to avoid is a conflict of interest between the employee and the company that may arise out of such relationships. As succinctly explained by the appellate court, thus: The policy being questioned is not a policy against marriage. An employee of the company remains free to marry anyone of his or her choosing. The policy is not aimed at restricting a personal prerogative that belongs only to the individual. However, an employee’s personal decision does not detract the employer from exercising management prerogatives to ensure maximum profit and business success. . . The Court of Appeals also correctly noted that the assailed company policy which forms part of respondent’s Employee Code of Conduct and of 192 | L a b o r S t a n d a r d s - C a s e D i g e s t s

its contracts with its employees, such as that signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was aware of that restriction when he signed his employment contract and when he entered into a relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of employment with Glaxo, the stipulations therein have the force of law between them and, thus, should be complied with in good faith." He is therefore estopped from questioning said policy. Sexual Harassment – R.A. No. 7877 Philippine Aelous Automotive United Corporation vs. NLRC G.R. No. 124617 PHILIPPINE AEOLUS AUTO-MOTIVE UNITED CORPORATION and/or FRANCIS CHUA vs. NATIONAL LABOR RELATIONS COMMISSION and ROSALINDA C. CORTEZ April 28, 2000 Facts: Petitioner Philippine Aeolus Automotive United Corporation (PAAUC) is a corporation duly organized and existing under Philippine laws, petitioner Francis Chua is its President while private respondent Rosalinda C. Cortez was a company nurse1 of petitioner corporation until her termination on 7 November 1994. On 5 October 1994 a memorandum was a issued by Ms. Myrna Palomares, Personnel Manager of petitioner corporation, addressed to private respondent Rosalinda C. Cortez requiring her to explain within forty-eight (48) hours why no disciplinary action should be taken against her (a) for throwing a stapler at Plant Manager William Chua, her superior, and uttering invectives against him on 2 August 1994; (b) for losing the amount of P1,488.00 entrusted to her by Plant Manager Chua to be given to Mr. Fang of the CLMC Department on 23 August 1994; and, (c) for asking a co-employee to punch-in her time card thus making it appear that she was in the office in the morning of 6 September 1944 when in fact she was not. The memorandum however was refused by private respondent although it was read to her and discussed with her by a coemployee. She did not also submit the required explanation, so that while her case pending investigation the company placed her under preventive suspension for thirty (30) days effective 9 October 1994 to 7 November 1994. On 20 October 1994, while Cortez was still under preventive suspension, another memorandum was issued by petitioner corporation giving her seventy-two (72) hours to explain why no disciplinary action should be taken against her for allegedly failing to process the ATM applications of her nine (9) co-employees with the Allied Banking Corporation. On 21 October 1994 private respondent also refused to receive the second memorandum although it was read to her by a co-employee. A copy of the 193 | L a b o r S t a n d a r d s - C a s e D i g e s t s

memorandum was also sent by the Personnel Manager to private respondent at her last known address by registered mail. On 3 November 1994 a third memorandum was issued to private respondent, this time informing her of her termination from the service effective 7 November 1994. On 6 December 1994 private respondent filed with the Labor Arbiter a complaint for illegal dismissal, non-payment of annual service incentive leave pay, 13th month pay and damages against PAAUC and its president Francis Chua. On 10 July 1995 the Labor Arbiter rendered a decision holding the termination of Cortez as valid and legal, at the same time dismissing her claim for damages for lack of merit. On appeal to the NLRC, public respondent reversed on 15 February 1996 the decision of the Labor Arbiter and found petitioner corporation guilty of illegal dismissal of private respondent Cortez. The NLRC ordered petitioner PAAUC to reinstate respondent Cortez to her former position with back wages computed from the time of dismissal up to her actual reinstatement. On 11 March 1996 petitioners moved for reconsideration. On 28 March 1996 the motion was denied. Issue: Whether or not respondent should be entitled to exemplary damages. Held: No, she should not be. On the issue of moral and exemplary damages, the NLRC ruled that private respondent was not entitled to recover such damages for her failure to prove that petitioner corporation had been motivated by malice or bad faith or that it acted in a wanton, oppressive or malevolent manner in terminating her services. Public respondent in thus concluding appears baffled why it took private respondent more than four (4) years to expose William Chua's alleged sexual harassment. It reasons out that it would have been more prepared to support her position if her act of throwing the stapler and uttering invectives on William Chua were her immediate reaction to his amorous overtures. In that case, according to public respondent, she would have been justified for such outburst because she would have been merely protecting her womanhood, her person and her rights. We are not persuaded. The gravamen of the offense in sexual harassment is not the violation of the employee's sexuality but the abuse of power by the employer. Any employee, male or female, may rightfully cry "foul" provided the claim is well substantiated. Strictly speaking, there is no time period within which he or she is expected to complain through the proper channels. The time to do so may vary depending upon the needs, circumstances, and more importantly, the emotional threshold of the employee.

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Private respondent admittedly allowed four (4) years to pass before finally coming out with her employer's sexual impositions. Not many women, especially in this country, are made of the stuff that can endure the agony and trauma of a public, even corporate, scandal. If petitioner corporation had not issued the third memorandum that terminated the services of private respondent, we could only speculate how much longer she would keep her silence. Moreover, few persons are privileged indeed to transfer from one employer to another. The dearth of quality employment has become a daily "monster" roaming the streets that one may not be expected to give up one's employment easily but to hang on to it, so to speak, by all tolerable means. Perhaps, to private respondent's mind, for as long as she could outwit her employer's ploys she would continue on her job and consider them as mere occupational hazards. This uneasiness in her place of work thrived in an atmosphere of tolerance for four (4) years, and one could only imagine the prevailing anxiety and resentment, if not bitterness, that beset her all that time. But William Chua faced reality soon enough. Since he had no place in private respondent's heart, so must she have no place in his office. So, he provoked her, harassed her, and finally dislodged her; and for finally venting her pent-up anger for years, he "found" the perfect reason to terminate her. In determining entitlement to moral and exemplary damages, we restate the bases therefor. In moral damages, it suffices to prove that the claimant has suffered anxiety, sleepless nights, besmirched reputation and social humiliation by reason of the act complained of. Exemplary damages, on the other hand, are granted in addition to, inter alia, moral damages "by way of example or correction for the public good" if the employer ''acted in a wanton, fraudulent, reckless, oppressive or malevolent manner." Anxiety was gradual in private respondent's five (5)-year employment. It began when her plant manager showed an obvious partiality for her which went out of hand when he started to make it clear that he would terminate her services if she would not give in to his sexual advances. Sexual harassment is an imposition of misplaced "superiority" which is enough to dampen an employee's spirit in her capacity for advancement. It affects her sense of judgment; it changes her life. If for this alone private respondent should be adequately compensated. Thus, for the anxiety, the seen and unseen hurt that she suffered, petitioners should also be made to pay her moral damages, plus exemplary damages, for the oppressive manner with which petitioners effected her dismissal from the service, and to serve as a forewarning to lecherous officers and employers who take undue advantage of their ascendancy over their employees. Domingo vs. Rayala G.R. No. 155831 MA. LOURDES T. DOMINGO vs. ROGELIO I. RAYALA February 18, 2008 195 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: On November 16, 1998, Ma. Lourdes T. Domingo (Domingo), then Stenographic Reporter III at the NLRC, filed a Complaint for sexual harassment against Rayala before Secretary Bienvenido Laguesma of the Department of Labor and Employment (DOLE). She filed the Complaint for sexual harassment on the basis of Administrative Order No. 250, the Rules and Regulations Implementing RA 7877 in the Department of Labor and Employment. The Committee heard the parties and received their respective evidence. On March 2, 2000, the Committee submitted its report and recommendation to Secretary Laguesma. It found Rayala guilty of the offense charged and recommended the imposition of the minimum penalty provided under AO 250, which it erroneously stated as suspension for six (6) months. Rayala filed a Motion for Reconsideration, which the OP denied in a Resolution dated May 24, 2000. He then filed a Petition for Certiorari and Prohibition with Prayer for Temporary Restraining Order under Rule 65 of the Revised Rules on Civil Procedure before this Court on June 14, 2000.9 However, the same was dismissed in a Resolution dated June 26, 2000 for disregarding the hierarchy of courts. Rayala filed a Motion for Reconsideration. In its Resolution dated September 4, 2000, the Court recalled its June 26 Resolution and referred the petition to the Court of Appeals (CA) for appropriate action. The CA rendered its Decision13 on December 14, 2001. It held that there was sufficient evidence on record to create moral certainty that Rayala committed the acts he was charged with. It also held that Rayala’s dismissal was proper. The CA pointed out that Rayala was dismissed for disgraceful and immoral conduct in violation of RA 6713, the Code of Conduct and Ethical Standards for Public Officials and Employees. Rayala timely filed a Motion for Reconsideration. Justices Vasquez and Tolentino voted to affirm the December 14 Decision. Domingo filed a Petition for Review before this Court, which we denied in our February 19, 2003 Resolution for having a defective verification. She filed a Motion for Reconsideration, which the Court granted; hence, the petition was reinstated. Rayala likewise filed a Petition for Review with this Court essentially arguing that he is not guilty of any act of sexual harassment. Meanwhile, the Republic filed a Motion for Reconsideration of the CA’s October 18, 2002 Resolution. The CA denied the same in its June 3, 2003 Resolution. Issue: Whether or not Rayala commited sexual harassment.

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Held: Yes, Rayala committed the acts complained of – and was guilty of sexual harassment – is, therefore, the common factual finding of not just one, but three independent bodies: the Committee, the OP and the CA. It should be remembered that when supported by substantial evidence, factual findings made by quasi-judicial and administrative bodies are accorded great respect and even finality by the courts. The principle, therefore, dictates that such findings should bind us. He insists, however, that these acts do not constitute sexual harassment, because Domingo did not allege in her complaint that there was a demand, request, or requirement of a sexual favor as a condition for her continued employment or for her promotion to a higher position. Rayala urges us to apply to his case our ruling in Aquino v. Acosta. We find respondent’s insistence unconvincing. Basic in the law of public officers is the three-fold liability rule, which states that the wrongful acts or omissions of a public officer may give rise to civil, criminal and administrative liability. An action for each can proceed independently of the others. This rule applies with full force to sexual harassment. The law penalizing sexual harassment in our jurisdiction is RA 7877. Section 3 thereof defines work-related sexual harassment in this wise: Sec. 3. Work, Education or Training-related Sexual Harassment Defined. – Work, education or training-related sexual harassment is committed by an employer, manager, supervisor, agent of the employer, teacher, instructor, professor, coach, trainor, or any other person who, having authority, influence or moral ascendancy over another in a work or training or education environment, demands, requests or otherwise requires any sexual favor from the other, regardless of whether the demand, request or requirement for submission is accepted by the object of said Act. (a) In a work-related or employment environment, sexual harassment is committed when: (1) The sexual favor is made as a condition in the hiring or in the employment, re-employment or continued employment of said individual, or in granting said individual favorable compensation, terms, conditions, promotions, or privileges; or the refusal to grant the sexual favor results in limiting, segregating or classifying the employee which in a way would discriminate, deprive or diminish employment opportunities or otherwise adversely affect said employee; (2) The above acts would impair the employee’s rights or privileges under existing labor laws; or (3) The above acts would result in an intimidating, hostile, or offensive environment for the employee.

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This section, in relation to Section 7 on penalties, defines the criminal aspect of the unlawful act of sexual harassment. The same section, in relation to Section 6, authorizes the institution of an independent civil action for damages and other affirmative relief. Section 4, also in relation to Section 3, governs the procedure for administrative cases, viz.: Sec. 4. Duty of the Employer or Head of Office in a Work-related, Education or Training Environment. – It shall be the duty of the employer or the head of the work-related, educational or training environment or institution, to prevent or deter the commission of acts of sexual harassment and to provide the procedures for the resolution, settlement or prosecution of acts of sexual harassment. Towards this end, the employer or head of office shall: (a) Promulgate appropriate rules and regulations in consultation with and jointly approved by the employees or students or trainees, through their duly designated representatives, prescribing the procedure for the investigation or sexual harassment cases and the administrative sanctions therefor. Administrative sanctions shall not be a bar to prosecution in the proper courts for unlawful acts of sexual harassment. The said rules and regulations issued pursuant to this section (a) shall include, among others, guidelines on proper decorum in the workplace and educational or training institutions. (b) Create a committee on decorum and investigation of cases on sexual harassment. The committee shall conduct meetings, as the case may be, with other officers and employees, teachers, instructors, professors, coaches, trainors and students or trainees to increase understanding and prevent incidents of sexual harassment. It shall also conduct the investigation of the alleged cases constituting sexual harassment. In the case of a work-related environment, the committee shall be composed of at least one (1) representative each from the management, the union, if any, the employees from the supervisory rank, and from the rank and file employees. In the case of the educational or training institution, the committee shall be composed of at least one (1) representative from the administration, the trainors, teachers, instructors, professors or coaches and students or trainees, as the case maybe. The employer or head of office, educational or training institution shall disseminate or post a copy of this Act for the information of all concerned. The CA, thus, correctly ruled that Rayala’s culpability is not to be determined solely on the basis of Section 3, RA 7877, because he is 198 | L a b o r S t a n d a r d s - C a s e D i g e s t s

charged with the administrative offense, not the criminal infraction, of sexual harassment. It should be enough that the CA, along with the Investigating Committee and the Office of the President, found substantial evidence to support the administrative charge. Yet, even if we were to test Rayala’s acts strictly by the standards set in Section 3, RA 7877, he would still be administratively liable. It is true that this provision calls for a "demand, request or requirement of a sexual favor." But it is not necessary that the demand, request or requirement of a sexual favor be articulated in a categorical oral or written statement. It may be discerned, with equal certitude, from the acts of the offender. Holding and squeezing Domingo’s shoulders, running his fingers across her neck and tickling her ear, having inappropriate conversations with her, giving her money allegedly for school expenses with a promise of future privileges, and making statements with unmistakable sexual overtones – all these acts of Rayala resound with deafening clarity the unspoken request for a sexual favor. Likewise, contrary to Rayala’s claim, it is not essential that the demand, request or requirement be made as a condition for continued employment or for promotion to a higher position. It is enough that the respondent’s acts result in creating an intimidating, hostile or offensive environment for the employee.45 That the acts of Rayala generated an intimidating and hostile environment for Domingo is clearly shown by the common factual finding of the Investigating Committee, the OP and the CA that Domingo reported the matter to an officemate and, after the last incident, filed for a leave of absence and requested transfer to another unit. 19. Minors – Labor Code 139-140; Omnibus Rules, Book III, Rule XII, Sections 2-3; Special Protection of Children Act of 2003 (R.A. No. 7610, as amended by R.A. No. 9231); D.O. 65-04; ILO Convention Nos. 130 and 182 (1999); ILO Recommendation No. 190 20. Househelpers/ Caregivers/ Homeworkers – Labor Articles 141-152; Omnibus Rules, Book III, Rule XIII Non-Household Work Apex Mining Co. vs. NLRC G.R. No. 94951 APEX MINING COMPANY, INC. vs. NATIONAL LABOR RELATIONS COMMISSION and SINCLITICA CANDIDO April 22, 1991 Facts: Private respondent Sinclita Candida was employed by petitioner Apex Mining Company, Inc. on May 18, 1973 to perform laundry services 199 | L a b o r S t a n d a r d s - C a s e D i g e s t s

at its staff house located at Masara, Maco, Davao del Norte. In the beginning, she was paid on a piece rate basis. However, on January 17, 1982, she was paid on a monthly basis at P250.00 a month which was ultimately increased to P575.00 a month. On December 18, 1987, while she was attending to her assigned task and she was hanging her laundry, she accidentally slipped and hit her back on a stone. She reported the accident to her immediate supervisor Mila de la Rosa and to the personnel officer, Florendo D. Asirit. As a result of the accident she was not able to continue with her work. She was permitted to go on leave for medication. De la Rosa offered her the amount of P 2,000.00 which was eventually increased to P5,000.00 to persuade her to quit her job, but she refused the offer and preferred to return to work. Petitioner did not allow her to return to work and dismissed her on February 4, 1988. On March 11, 1988, private respondent filed a request for assistance with the Department of Labor and Employment. After the parties submitted their position papers as required by the labor arbiter assigned to the case on August 24, 1988 the latter rendered a decision to direct petitioner to pay total of FIFTY FIVE THOUSAND ONE HUNDRED SIXTY ONE PESOS AND 42/100 (P55,161.42). Not satisfied therewith, petitioner appealed to the public respondent National Labor Relations Commission (NLRC), wherein in due course a decision was rendered by the Fifth Division thereof on July 20, 1989 dismissing the appeal for lack of merit and affirming the appealed decision. A motion for reconsideration thereof was denied in a resolution of the NLRC dated June 29, 1990. Issue: Whether or not a househelper in the staff houses of an industrial company a domestic helper or a regular employee of the said firm. Held: The household helper should be treated as a regular employee. Under Rule XIII, Section l(b), Book 3 of the Labor Code, as amended, the terms "househelper" or "domestic servant" are defined as follows: The term "househelper" as used herein is synonymous to the term "domestic servant" and shall refer to any person, whether male or female, who renders services in and about the employer's home and which services are usually necessary or desirable for the maintenance and enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the employer's family. The foregoing definition clearly contemplates such househelper or domestic servant who is employed in the employer's home to minister exclusively to the personal comfort and enjoyment of the employer's family. Such definition covers family drivers, domestic servants, laundry women, yayas, gardeners, houseboys and other similar househelps. 200 | L a b o r S t a n d a r d s - C a s e D i g e s t s

The definition cannot be interpreted to include househelp or laundrywomen working in staffhouses of a company, like petitioner who attends to the needs of the company's guest and other persons availing of said facilities. By the same token, it cannot be considered to extend to then driver, houseboy, or gardener exclusively working in the company, the staffhouses and its premises. They may not be considered as within the meaning of a "househelper" or "domestic servant" as above-defined by law. The criteria is the personal comfort and enjoyment of the family of the employer in the home of said employer. While it may be true that the nature of the work of a househelper, domestic servant or laundrywoman in a home or in a company staffhouse may be similar in nature, the difference in their circumstances is that in the former instance they are actually serving the family while in the latter case, whether it is a corporation or a single proprietorship engaged in business or industry or any other agricultural or similar pursuit, service is being rendered in the staffhouses or within the premises of the business of the employer. In such instance, they are employees of the company or employer in the business concerned entitled to the privileges of a regular employee. Petitioner contends that it is only when the househelper or domestic servant is assigned to certain aspects of the business of the employer that such househelper or domestic servant may be considered as such as employee. The Court finds no merit in making any such distinction. The mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as amended.

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Chapter V – Conditions of Employment 21. Conditions of Work – Labor Code Articles 82-90; Omnibus Rules, Book III, Rules I, IA, II Regulations/ Rationale Manila Terminal Co. Inc. vs CIR G.R. No. L-4148 MANILA TERMINAL COMPANY, INC. vs. THE COURT OF INDUSTRIAL RELATIONS and MANILA TERMINAL RELIEF AND MUTUAL AID ASSOCIATION July 16, 1952

Facts: On September 1, 1945, the Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner, undertook the arrastre service in some of the piers in Manila's Port Area at the request and under the control of the United States Army. The petitioner hired some thirty men as watchmen on twelve-hour shifts at a compensation of P3 per day for the day shift and P6 per day for the night shift. On February 1, 1946, the petitioner began the postwar operation of the arrastre service at the present at the request and under the control of the Bureau of Customs, by virtue of a contract entered into with the Philippine Government. The watchmen of the petitioner continued in the service with a number of 202 | L a b o r S t a n d a r d s - C a s e D i g e s t s

substitutions and additions, their salaries having been raised during the month of February to P4 per day for the day shift and P6.25 per day for the nightshift. On March 28, 1947, Dominador Jimenez, a member of the Manila Terminal Relief and Mutual Aid Association, sent a letter to the Department of Labor, requesting that the matter of overtime pay be investigated, but nothing was done by the Department. On April 29, 1947, Victorino Magno Cruz and five other employees, also member of the Manila Transit Mutual Aid Association, filed a 5-point demand with the Department of Labor, including overtime pay, but the Department again filed to do anything about the matter. On May 27, 1947, the petitioner instituted the system of strict eight-hour shifts. On June 19, 1947, the Manila Port Terminal Police Association, not registered in accordance with the provisions of Commonwealth Act No. 213, filed a petition with the Court of Industrial Relations. On July 16, 1947, the Manila Terminal Relief and Mutual Aid Association was organized for the first time, having been granted certificate No. 375 by the Department of Labor. On July 28, 1947, Manila Terminal Relief and Mutual Aid Association filed an amended petition with the Court of Industrial Relations praying, among others, that the petitioner be ordered to pay its watchmen or police force overtime pay from the commencement of their employment. On May 9, 1949, by virtue of Customs Administrative Order No. 81 and Executive Order No. 228 of the President of the Philippines, the entire police force of the petitioner was consolidated with the Manila Harvor Police of the Customs Patrol Service, a Government agency under the exclusive control of the Commissioner of Customs and the Secretary of Finance The Manila Terminal Relief and Mutual Aid Association will hereafter be referred to as the Association. The Court of Industrial Relations rendered a decision dismissing other demands of the Association for lack of jurisdiction but ordered the petitioner to pay to its police force. The petitioner filed a motion for reconsideration but was dismissed. Hence, the present petition. Issue: Whether or not the agreement under which its police force were paid certain specific wages for twelve-hour shifts, included overtime compensation. Held: Sections 3 and 5 of Commonwealth Act 444 expressly provides for the payment of extra compensation in cases where overtime services are required, with the result that the employees or laborers are entitled to collect such extra compensation for past overtime work. To hold otherwise would be to allow an employer to violate the law by simply, as in this case, failing to provide for and pay overtime compensation. The point is stressed that the payment of the claim of the Association for overtime pay covering a period of almost two years may lead to the financial ruin of the petitioner, to the detriment of its employees themselves. It is significant, however, that not all the petitioner's watchmen would receive back overtime pay for the whole period specified 203 | L a b o r S t a n d a r d s - C a s e D i g e s t s

in the appealed decision, since the record shows that the great majority of the watchmen were admitted in 1946 and 1947, and even 1948 and 1949. At any rate, we are constrained to sustain the claim of the Association as a matter of simple justice, consistent with the spirit and purpose of the Eight-Hour Labor Law. The petitioner, in the first place, was required to comply with the law and should therefore be made liable for the consequences of its violation. It is high time that all employers were warned that the public is interested in the strict enforcement of the Eight-Hour Labor Law. This was designed not only to safeguard the health and welfare of the laborer or employee, but in a way to minimize unemployment by forcing employers, in cases where more than 8-hour operation is necessary, to utilize different shifts of laborers or employees working only for eight hours each. Managerial Employees – Labor Code Article 82; Book III, Rule I, Section 2(b,c) Asia Pacific Christerning, Inc. vs. Farolan G.R. No.151370 ASIA PACIFIC CHARTERING (PHILS.) INC. vs. MARIA LINDA R. FAROLAN December 4, 2002 Facts: Petitioner Asia Pacific Chartering (Phils.) Inc. is tasked with the selling of passenger and cargo spaces for Scandinavian Airlines System. Petitioner Asia, through its Vice President Catalino Bondoc, offered Respondent Maria Linda R. Farolan the sales manager position to which Farolan accepted. Upon Vice President Bondoc’s request, Farolan submitted a detailed report attributing the drop of sales revenue to market forces beyond her control. Consequently, Asia directed Roberto Zozobrado to implement solutions. Zozobrado informally took over Farolan’s marketing and sales responsibilities but she continued to receive her salary. Asia claims that the increase in sales revenue was due to Zozobrado’s management. Asia then sent a letter of termination to Farolan on the ground of loss of confidence, forcing Farolan to file a complaint for illegal dismissal. The Labor Arbiter found that the dismissal was illegal for lack of just cause, however, such decision was reversed by the National Labor Relations Commission stating that the termination of employment due to loss of confidence is within management prerogative. On appeal, the Court of Appeals upheld the labor arbiter’s decision. Hence, the filing of this petition.

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Issue: Whether or not an employer has the management prerogative to replace sales manager whom it has reasonable grounds to believe cannot effectively discharge the duties demanded by such position. Held: No. As enunciated in Samson vs. NLRC, “before one may be properly considered a managerial employee, all of the following conditions must be met: 1. Their primary duty consist of the management of the establishment in which they are employed or of a department or subdivision thereof; 2. They customarily and regularly direct the work of two or more employees therein; 3. They have the authority to hire and fire other employees of lower rank; or their suggestions and recommendations as to hiring and firing and as to promotion and any other change of status of other employees are given particular weight.” It is not disputed that Farolan’s job description, and the terms and conditions of her employment with the exception of her salary and allowances were never reduced to writing. The absence of a written job description or prescribed work standards, however leaves the Court in the dark. Even assuming, however, that respondent was a managerial employee, the stated ground for her dismissal must be based on a wilful breach and founded on clearly established facts. Charlito Peñaranda vs. Baganga Plywood Corp. G.R. No. 159577 CHARLITO PEÑARANDA vs. BAGANGA PLYWOOD CORPORATION and HUDSON CHUA May 3, 2006 Facts: Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001, Peñaranda filed a Complaint for illegal dismissal with money claims against BPC and its general manager, Hudson Chua, before the NLRC. After the parties failed to settle amicably, the labor arbiter directed the parties to file their position papers and submit supporting documents. Their respective allegations are summarized by the labor arbiter as follows: "[Peñaranda] through counsel in his position paper alleges that he was employed by respondent [Baganga] on March 15, 1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until he was illegally terminated on December 19, 2000. Further, [he] alleges that his services [were] terminated without the benefit of due process and valid 205 | L a b o r S t a n d a r d s - C a s e D i g e s t s

grounds in accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during holidays/rest days, night shift differentials and finally claims for payment of damages and attorney’s fees having been forced to litigate the present complaint. The labor arbiter ruled that there was no illegal dismissal and that petitioner’s Complaint was premature because he was still employed by BPC Respondents filed an appeal to the NLRC, which deleted the award of overtime pay and premium pay for working on rest days. According to the Commission, petitioner was not entitled to these awards because he was a managerial employee. The CA dismissed Peñaranda’s Petition for Certiorari and denied reconsideration on the ground that petitioner still failed to submit the pleadings filed before the NLRC. Hence this Petition. Issue: Whether or not Peñaranda is a regular employee entitled to monetary benefits under Article 82 of the Labor Code. Held: The Implementing Rules of the Labor Code state that managerial employees are those who meet the following conditions: "(1) Their primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof; (2) They customarily and regularly direct the work of two or more employees therein; (3) They have the authority to hire or fire other employees of lower rank; or their suggestions and recommendations as to the hiring and firing and as to the promotion or any other change of status of other employees are given particular weight." The Court managerial managerial standards. managerial standards.

disagrees with the NLRC’s finding that petitioner was a employee. However, petitioner was a member of the staff, which also takes him out of the coverage of labor Like managerial employees, officers and members of the staff are not entitled to the provisions of law on labor

Field Personnel – Labor Code Article 82; Book III, Rule I, Section 2(l) Merdicar Fishhing Corp. vs. NLRC G.R. No. 112574 MERCIDAR FISHING CORPORATION represented by its President DOMINGO B. NAVAL vs. NATIONAL LABOR RELATIONS COMMISSION and FERMIN AGAO, JR. October 8, 1998

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Facts: Private respondent alleged that he had been sick and thus allowed to go on leave without pay for one month from April 28, 1990 but that when he reported to work at the end of such period with a health clearance, he was told to come back another time as he could not be reinstated immediately. Thereafter, petitioner refused to give him work. For this reason, private respondent asked for a certificate of employment from petitioner on September 6, 1990. However, when he came back for the certificate on September 10, petitioner refused to issue the certificate unless he submitted his resignation. Since private respondent refused to submit such letter unless he was given separation pay, petitioner prevented him from entering the premises. Petitioner, on the other hand, alleged that it was private respondent who actually abandoned his work. It claimed that the latter failed to report for work after his leave had expired and was, in fact, absent without leave for three months until August 28, 1998. Petitioner further claims that, nonetheless, it assigned private respondent to another vessel, but the latter was left behind on September 1, 1990. Thereafter, private respondent asked for a certificate of employment on September 6 on the pretext that he was applying to another fishing company. On September 10, 1990, he refused to get the certificate and resign unless he was given separation pay. On February 18, 1992, Labor Arbiter Arthur L. Amansec rendered a decision in favor of the private respondent. Petitioner appealed to the NLRC which, on August 30, 1993, dismissed the appeal for lack of merit. The NLRC dismissed petitioners claim 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. The NLRC likewise denied petitioner’s motion for reconsideration of its decision in its order dated October 25, 1993. Hence, this petition. Issue: Whether or not the fishing crew members, like Fermin Agao, Jr., cannot be classified as field personnel under Article 82 of the Labor Code. Held: As provided by Art. 82 of the Labor Code, Field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Petitioner argues essentially that since the work of private respondent is performed away from its principal place of business, it has no way of verifying his actual hours of work on the vessel. It contends that private respondent and other fishermen in its employ should be classified as field personnel who have no statutory right to service incentive leave pay.

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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. In contrast, in the case at bar, during the entire course of their fishing voyage, fishermen employed by petitioner have no choice but to remain on board its vessel. Although they perform non-agricultural work away from petitioners business offices, the fact remains that throughout the duration of their work they are under the effective control and supervision of petitioner through the vessels patron or master as the NLRC correctly held. Auto Bus Transport Systems, Inc. vs. Bautista G.R. No. 156367 AUTO BUS TRANSPORT SYSTEMS, INC. vs. ANTONIO BAUTISTA May 16, 2005

Facts: 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, BaguioTuguegarao 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 respondents 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 Labor Arbiter dismissed the complaint. Not satisfied with the decision, petitioner appealed the decision to the NLRC which affirmed the Labor Arbiter’s decision. Hence, the instant petition. 208 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not respondent is a field personnel. Held: According to Article 82 of the Labor Code, field personnel shall refer to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. At this point, it is necessary to stress that the definition of a field personnel is not merely concerned with the location where the employee regularly performs his duties but also with the fact that the employee’s performance is unsupervised by the employer. As discussed above, field personnel are those who regularly perform their duties away from the principal place of business of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Thus, in order to conclude whether an employee is a field employee, it is also necessary to ascertain if actual hours of work in the field can be determined with reasonable certainty by the employer. In so doing, an inquiry must be made as to whether or not the employee’s time and performance are constantly supervised by the employer. Therefore, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioners business. Piece Workers – Book III, Rule I, Section 2(e) Labor Congress vs. NLRC G.R. No. 123938 LABOR CONGRESS OF THE PHILIPPINES (LCP) FOR AND IN BEHALF OF ITS MEMBERS vs. NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, ITS PROPRIETOR/PRESIDENT & MANAGER, MR. GONZALO KEHYENG AND MRS. EVELYN KEHYENG May 21, 1998 Facts: The 99 persons named as petitioners in this proceeding were rankand-file employees of respondent Empire Food Products, which hired them on various dates. Petitioners filed against private respondents a complaint for payment of money claim[s] and for violation of labor standard[s] laws. They also filed a petition for direct certification of petitioner Labor Congress of the Philippines as their bargaining representative. On October 23, 1990, petitioners represented by LCP President Benigno B. Navarro, Sr. and private respondents Gonzalo Kehyeng and Evelyn Kehyeng in behalf of Empire Food Products, Inc. entered into a Memorandum of Agreement which was approved by the Mediator Arbiter 209 | L a b o r S t a n d a r d s - C a s e D i g e s t s

and certified LCP as the sole and exclusive bargaining agent among the rank-and-file employees of Empire Food Products for purposes of collective bargaining with respect to wages, hours of work and other terms and conditions of employment. On January 23, 1991, petitioners filed a complaint. After the submission by the parties of their respective position papers and presentation of testimonial evidence, Labor Arbiter Ariel C. Santos absolved private respondents of the charges of unfair labor practice, union busting, violation of the memorandum of agreement, underpayment of wages and denied petitioners prayer for actual, moral and exemplary damages. Labor Arbiter Santos, however, directed the reinstatement of the individual complainants. On appeal, the National Labor Relations Commission vacated the Decision dated April 14, 1972 [sic] and remanded the case to the Labor Arbiter for further proceedings. On appeal, the NLRC, in its Resolution dated 29 March 1995, affirmed in toto the decision of Labor Arbiter Santos. Their motion for reconsideration having been denied by the NLRC in its Resolution of 31 October 1995, petitioners filed the instant special civil action. Issue: Whether or not piece rate workers are regular employees which are entitled to benefits. Held: No. Three (3) factors lead the Court to conclude that petitioners, although piece-rate workers, were regular employees of private respondents. First, as to the nature of petitioners tasks, their job of repacking snack food was necessary or desirable in the usual business of private respondents, who were engaged in the manufacture and selling of such food products; second, petitioners worked for private respondents throughout the year, their employment not having been dependent on a specific project or season; and third, the length of time that petitioners worked for private respondents. Thus, while petitioners mode of compensation was on a per piece basis, the status and nature of their employment was that of regular employees. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, field personnel and other employees whose time and performance is unsupervised by the employer, including those who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for performing work irrespective of the time consumed in the performance thereof. Plainly, petitioners as piece-rate workers do not fall within this group. As mentioned earlier, not only did petitioners labor under the control of private respondents as their employer, likewise did petitioners toil throughout the year with the fulfillment of their quota as supposed basis for compensation.

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The Revised Guidelines as well as the Rules and Regulations identify those workers who fall under the piece-rate category as those who are paid a standard amount for every piece or unit of work produced that is more or less regularly replicated, without regard to the time spent in producing the same. Regular Meal Period (One Hour) – Labor Code Article 85; Book III, Rule I, Section 7, Paragraph 1 Philippine Airlines, Inc. vs. NLRC G.R. No. 132805 PHILIPPINE AIRLINES, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR. HERMINIO A. FABROS February 2, 1999 Facts: Private respondent was employed as flight surgeon at petitioner company. He was assigned at the PAL Medical Clinic at Nichols and was on duty from 4:00 in the afternoon until 12:00 midnight. On February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his residence, which was about fiveminute drive away. A few minutes later, the clinic received an emergency call from the PAL Cargo Services. One of its employees, Mr. Manuel Acosta, had suffered a heart attack. The nurse on duty, Mr. Merlino 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 private respondent reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with the patient. Mr. Acosta died the following day. Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight Surgeon, in turn, required private respondent to explain why no disciplinary sanction should be taken against him. In his explanation, private respondent 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 panicked and brought the patient to the hospital without waiting for him. Finding private respondent’s explanation unacceptable, the management charged private respondent with abandonment of post while on duty. He was given ten days to submit a written answer to the administrative charge. Private respondent filed a complaint for illegal suspension against petitioner. 211 | L a b o r S t a n d a r d s - C a s e D i g e s t s

On July 16, 1996, Labor Arbiter Romulus A. Protasio rendered a decision declaring the suspension of private respondent illegal. 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 petitioners motion for reconsideration. Issue: Whether or not the public respondents acted without or in excess of their jurisdiction and with grave abuse of discretion in nullifying the 3month suspension of private respondent. Held: The facts do not support petitioners allegation that private respondent abandoned his post on the evening of February 17, 1994. Private respondent 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. Acostas condition, private respondent immediately left his home and returned to the clinic. These facts belie petitioners claim of abandonment. Articles 83 and 85 of the Labor Code provides that 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 respondents act, therefore, of going home to take his dinner does not constitute abandonment. Waiting Time – Book III, Rule I, Section 5(a) Arica vs. NLRC G.R. No. 78210 TEOFILO ARICA, DANILO BERNABE, MELQUIADES DOHINO, ABONDIO OMERTA, GIL TANGIHAN, SAMUEL LABAJO, NESTOR NORBE, RODOLFO CONCEPCION, RICARDO RICHA, RODOLFO NENO, ALBERTO BALATRO, BENJAMIN JUMAMOY, FERMIN DAAROL, JOVENAL ENRIQUEZ, OSCAR BASAL, RAMON ACENA, JAIME BUGTAY, AND 561 OTHERS, HEREIN REPRESENTED BY KORONADO B. APUZEN vs. NATIONAL LABOR RELATIONS COMMISSION, HONORABLE FRANKLIN DRILON, HONORABLE CONRADO B. MAGLAYA, HONORABLE ROSARIO B. ENCARNACION, AND STANDARD (PHILIPPINES) FRUIT CORPORATION (STANFILCO) February 28, 1989 Facts: Petitioners contend that the preliminary activities as workers of Stanfilco in the assembly area is compensable as working time (from 5:30 212 | L a b o r S t a n d a r d s - C a s e D i g e s t s

– 6:00 in the evening) since these preliminary activities are necessarily and primarily for private respondents benefit. The preliminary activities include: 1. Roll call and getting their individual work assignments from the foreman 2. Laborer’s Daily Accomplishment Report of the day 3. They go to the stock room to get their working materials, tools and equipments 4. They travel to the field with their tools and materials. The Labor Arbiter held in favor of Stanfilco that in an earlier case, the 30minute assembly time long practiced cannot be considered waiting time or working time, and, therefore, not compensable, has become the law of the case which can no longer be distributed without doing violence to the time honored principle of res judicata. The NLRC upheld the decision of the Labor Arbiter’s decision. Issue: Whether or not the 30-minute activity of the petitioners before the scheduled working time is compensable under the Labor Code. Held: No. As has been decided in the previous case charged by the associated Labor Union vs. Stanfilco, the Minister of Labor held, “The 30minute assembly time long practiced and institutionalized by mutual consent of the parties under Article IV, Section 3 of the CBA cannot be considered as waiting time within the purview of Section 5, Rule I, Book III of the Rules and Regulations Implementing the Labor Code. Furthermore, the 30-minute assembly time is deeply-rooted, routinary practice of the employees of the employees and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not 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 30-minute assembly time has not primarily intended for the interest of the employer but ultimately for the employees to indicate their availability or non-availability for work during every working day. Inactive Due to Work Interruptions – Book III, Rule I, Section 4 (d) University of Pangasinan Faculty Union vs. University of Pangasinan G.R. No. L-63122 UNIVERSITY OF PANGASINAN FACULTY UNION vs. UNIVERSITY OF PANGASINAN AND NATIONAL LABOR RELATIONS COMMISSION February 20, 1984

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Facts: Petitioner is a labor union composed of faculty members of the respondent University of Pangasinan, an educational institution duly organized and existing by virtue of the laws of the Philippines. On December 18, 1981, the petitioner, through its President, Miss Consuelo Abad, filed a complaint against the private respondent with the Arbitration Branch of the NLRC, Dagupan District Office, Dagupan City. The complaint seeks: (a) the payment of Emergency Cost of Living Allowances (ECOLA) for November 7 to December 5, 1981, a semestral break; (b) salary increases from the sixty (60%) percent of the incremental proceeds of increased tuition fees; and (c) payment of salaries for suspended extra loads. The petitioner’s members are full-time professors, instructors, and teachers of respondent University. The teachers in the college level teach for a normal duration of ten (10) months a school year, divided into two (2) semesters of five (5) months each, excluding the two (2) months summer vacation. These teachers are paid their salaries on a regular monthly basis. In November and December, 1981, the petitioner’s members were fully paid their regular monthly salaries. However, from November 7 to December 5, during the semestral break, they were not paid their ECOLA. The private respondent claims that the teachers are not entitled thereto because the semestral break is not an integral part of the school year and there being no actual services rendered by the teachers during said period, the principle of "No work, no pay" applies. Issue: Whether or not petitioner’s members are entitled to ECOLA during the semestral break from November 7 to December 5, 1981 of the 198182 school year. Held: Yes.The various Presidential Decrees on ECOLAs to wit: PD’s 1614, 1634, 1678 and 1713, provide on "Allowances of Fulltime Employees . . ." that "Employees shall be paid in full the required monthly allowance regardless of the number of their regular working days if they incur no absences during the month. If they incur absences without pay, the amounts corresponding to the absences may be deducted from the monthly allowance . . ." ; and on "Leave of Absence Without Pay", that "All covered employees shall be entitled to the allowance provided herein when they are on leave of absence with pay." It is beyond dispute that the petitioner’s members are full-time employees receiving their monthly salaries irrespective of the number of working days or teaching hours in a month. However, they find themselves in a most peculiar situation whereby they are forced to go on leave during semestral breaks. These semestral breaks are in the nature of work interruptions beyond the employees’ control. The duration of the semestral break varies from year to year dependent on a variety of circumstances affecting at times only the private respondent but at other times all educational institutions in the country. As such, these breaks 214 | L a b o r S t a n d a r d s - C a s e D i g e s t s

cannot be considered as absences within the meaning of the law for which deductions may be made from monthly allowances. The "No work, no pay" principle does not apply in the instant case. The petitioner’s members received their regular salaries during this period. It is clear from the aforequoted provision of law that it contemplates a "no work" situation where the employees voluntarily absent themselves. Petitioners, in the case at bar, certainly do not, ad voluntatem, absent themselves during semestral breaks. Rather, they are constrained to take mandatory leave from work. For this they cannot be faulted nor can they be begrudged that which is due them under the law. To a certain extent, the private respondent can specify dates when no classes would be held. Surely, it was not the intention of the framers of the law to allow employers to withhold employee benefits by the simple expedient of unilaterally imposing "no work" days and consequently avoiding compliance with the mandate of the law for those days. Respondent’s contention that "the fact of receiving a salary alone should not be the basis of receiving ECOLA", is, likewise, without merit. Particular attention is brought to the Implementing Rules and Regulations of Wage Order No. 1 to wit. SECTION

5.

Allowance

for

Unworked

Days.

—

"a) All covered employees whether paid on a monthly or daily basis shall be entitled to their daily living allowance when they are paid their basic wage." This provision, at once refutes the above contention. It is evident that the intention of the law is to grant ECOLA upon the payment of basic wages. Hence, we have the principle of "No pay, no ECOLA" the converse of which finds application in the case at bar. Petitioners cannot be considered to be on leave without pay so as not to be entitled to ECOLA, for, as earlier stated, the petitioners were paid their wages in full for the months of November and December of 1981, notwithstanding the intervening semestral break. This, in itself, is a tacit recognition of the rather unusual state of affairs in which teachers find themselves. Although said to be on forced leave, professors and teachers are, nevertheless, burdened with the task of working during a period of time supposedly available for rest and private matters. There are papers to correct, students to evaluate, deadlines to meet, and periods within which to submit grading reports. Although they may be considered by the respondent to be on leave, the semestral break could not be used effectively for the teacher’s own purposes for the nature of a teacher’s job imposes upon him further duties which must be done during the said period of time. Learning is a never ending process. Teachers and professors must keep abreast of developments all the time. Teachers cannot also wait for the opening of the next semester to begin their work. Arduous preparation is necessary for the delicate task of educating our children. Teaching involves not only an application of skill and an imparting of knowledge, but a responsibility 215 | L a b o r S t a n d a r d s - C a s e D i g e s t s

which entails self-dedication and sacrifice. The task of teaching ends not with the perceptible efforts of the petitioner’s members but goes beyond the classroom: a continuum where only the visible labor is relieved by academic intermissions. It would be most unfair for the private respondent to consider these teachers as employees on leave without pay to suit its purposes and, yet, in the meantime, continue availing of their services as they prepare for the next semester or complete all of the last semester’s requirements. Furthermore, we may also by analogy apply the principle enunciated in the Omnibus Rules Implementing the Labor Code to wit: 1aw library Sec. 4. Principles in Determining Hours Worked. — The following general principles shall govern in determining whether the time spent by an employee is considered hours worked for purposes of this Rule: "(d) The time during which an employee is inactive by reason of interruptions in his work beyond his control shall be considered time either if the imminence of the resumption of work requires the employee’s presence at the place of work or if the interval is too brief to be utilized effectively and gainfully in the employee’s own interest." The petitioner’s members in the case at bar, are exactly in such a situation. The semestral break scheduled is an interruption beyond petitioner’s control and it cannot be used "effectively nor gainfully in the employee’s interest’. Thus, the semestral break may also be considered as "hours worked." For this, the teachers are paid regular salaries and, for this, they should be entitled to ECOLA. Not only do the teachers continue to work during this short recess but much less do they cease to live for which the cost of living allowance is intended. The legal principles of "No work, no pay; No pay, no ECOLA" must necessarily give way to the purpose of the law to augment the income of employees to enable them to cope with the harsh living conditions brought about by inflation; and to protect employees and their wages against the ravages brought by these conditions. Significantly, it is the commitment of the State to protect labor and to provide means by which the difficulties faced by the working force may best be alleviated. To submit to the respondents’ interpretation of the no work, no pay policy is to defeat this noble purpose. The Constitution and the law mandate otherwise. Travel Time Rada vs. NLRC G.R. No. 96078 HILARIO RADA vs. NATIONAL LABOR RELATIONS COMMISSION AND PHILNOR CONSULTANTS AND PLANNERS, INC. January 9, 1992

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Facts: In 1977, Rada was contracted by Philnor Consultants and Planners, Inc as a driver. He was assigned to a specific project in Manila. The contract he signed was for 2.3 years. His task was to drive employees to the project from 7am to 4pm. He was allowed to bring home the company vehicle in order to provide a timely transportation service to the other project workers. The project he was assigned to was not completed as scheduled hence, since he has a satisfactory record, he was re-contracted for an additional 10months. After 10 months the project was not yet completed. Several contracts thereafter were made until the project was finished in1985.At the completion of the project, Rada was terminated as his employment was co-terminous with the project. He later sued Philnorfor for non-payment of separation pay and overtime pay. He said he is entitled to be paid overtime pay because he uses extra time to get to the project site from his home and from the project site to his home every day – in total, he spends an average of 3 hours overtime everyday. Issue: Whether or not Rada is entitled to overtime pay. Held: Yes. Rada is entitled to overtime pay. The fact that he picks up employees of Philnor at certain specified points along EDSA in going to the project site and drops them off at the same points on his way back from the field office going home to Marikina, Metro Manila is not merely incidental to Rada's job as a driver. On the contrary, said transportation arrangement had been adopted, not so much for the convenience of the employees, but primarily for the benefit of Philnor. As embodied in Philnor’s memorandum, they allowed their drivers to bring home their transport vehicles in order for them to provide a timely transport service and to avoid delay – not really so that the drivers could enjoy the benefits of the company vehicles nor for them to save on fare. Private respondent does not hesitate to admit that it is usually the project driver who is tasked with picking up or dropping off his fellow employees. Proof thereof is the undisputed fact that when petitioner is absent, another driver is supposed to replace him and drive the vehicle and likewise pick up and/or drop off the other employees at the designated points on EDSA. If driving these employees to and from the project site is not really part of petitioner's job, then there would have been no need to find a replacement driver to fetch these employees. But since the assigned task of fetching and delivering employees is indispensable and consequently mandatory, then the time required of and used by petitioner in going from his residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as averaging three hours each working day, should be paid as overtime work. Quintessentially, petitioner should be given overtime pay for the three excess hours of work performed during working days from January, 1983 to December, 1985. Proof of Work/ Employer Obligation

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Social Security System vs. Court of Appeals G.R. No. 100388 SOCIAL SECURITY SYSTEM vs. THE COURT OF APPEALS AND CONCHITA AYALDE December 14, 2000 Facts: In a petition before the Social Security Commission, Margarita Tana, widow of the late Ignacio Tana, Sr., alleged that her husband was, before his demise, an employee of Conchita Ayalde as a farmhand in the two (2) sugarcane plantations she owned (and leased from the University of the Philippines. She further alleged that Tana 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, Tana allegedly received a regular salary according to the minimum wage prevailing at the time. She further alleged that throughout the given period, social security contributions, as well as medicare and employees compensation premiums were deducted from Tana’s wages. It was only after his death that Margarita discovered that Tana 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. The SSS, in a petition-in-intervention, revealed that neither Hda. B-70 nor respondents Ayalde and Maghari were registered membersemployers of the SSS, and consequently, Ignacio Tana, Sr. was never registered as a member-employee. Likewise, SSS records reflected that there was no way of verifying whether the alleged premium contributions were remitted since the respondents were not registered membersemployers. For her part, respondent Ayalde belied the allegation that Ignacio Tana, Sr. was her employee, admitting only that he was hired intermittently as an independent contractor to plow, harrow, or burrow Hda. No. Audit B-15-M. Tana 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 Tana performed his work as an independent contractor.

The Social Security Commission finds that the late Ignacio Tana was employed by respondent Conchita Ayalde from January 1961 to March 1979 with a salary based on the Minimum Wage prevailing during his employment. Not having reported the petitioner’s husband for coverage with the SSS, respondent Conchita Ayalde is, therefore, liable for the 218 | L a b o r S t a n d a r d s - C a s e D i g e s t s

payment of damages equivalent to the death benefits in the amount of P7,067.40 plus the amount of P750.00 representing funeral benefit or a total of P7,817.40. Further, the SSS is ordered to pay to the petitioner her accrued pension covering the period after the 5-year guaranteed period corresponding to the employer’s liability.

Respondent Ayalde filed a motion for reconsideration which the Commission denied. Not satisfied with the Commission’s ruling, Ayalde appealed to the Court of Appeals. The Court of Appeals rendered judgment in favor of respondent-appellant Conchita Ayalde and dismissed the claim of petitioner Margarita Tan. The SSS, as intervenor-appellee, filed a Motion for Reconsideration, which was denied.

Issue: Whether or not an agricultural laborer who was hired on "pakyaw" basis can be considered an employee entitled to compulsory coverage and corresponding benefits under the Social Security Law.

Held: The mandatory coverage under the SSS Law (Republic Act No. 1161, as amended by PD 1202 and PD 1636) is premised on the existence of an employer-employee relationship, and Section 8(d) defines an "employee" as "any person who performs services for an employer in which either or both mental and physical efforts are used and who receives compensation for such services where there is an employeremployee relationship." Claimant Margarita Tana and her corroborating witnesses testified that her husband was paid daily wages "per quincena" as well as on "pakyaw" basis. Ayalde, on the other hand, insists that Tana was paid solely on "pakyaw" basis. To support her claim, she presented payrolls covering the period January of 1974 to January of 1976; and November of 1978 to May of 1979. A careful perusal of the records readily show that the exhibits offered are not complete, and are but a mere sampling of payrolls. While the names of the supposed laborers appear therein, their signatures are nowhere to be found. In light of her incomplete documentary evidence, Ayalde’s denial that Tana was her employee in Hda. B-70 or Hda. B-15-M must fail. The witnesses did not waver in their assertion that while Tana was hired by Ayalde as an "arador" on "pakyaw" basis, he was also paid a daily wage which Ayalde’s overseer disbursed every fifteen (15) days. It is also undisputed that they were made to acknowledge receipt of their wages by signing on sheets of ruled paper, which are different from those presented by Ayalde as documentary evidence. In fine, we find that the testimonies of Margarita 219 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Tana, Agaton Libawas and Aurelio Tana prevail over the incomplete and inconsistent documentary evidence of Ayalde. The testimonial evidence of the claimant and her witnesses constitute positive and credible evidence of the existence of an employer-employee relationship between Tana and Ayalde. As the employer, the latter is duty-bound to keep faithful and complete records of her business affairs, not the least of which would be the salaries of the workers. And yet, the documents presented have been selective, few and incomplete in substance and content. Consequently, Ayalde has failed to convince us that, indeed, Tana was not her employee.

There is substantial testimonial evidence to prove that Tana was paid a daily wage, and he worked continuously for most part of the year, even while he was also occasionally called on to plow the soil on a "pakyaw" basis. As a farm laborer who has worked exclusively for Ayalde for eighteen (18) years, Tana should be entitled to compulsory coverage under the Social Security Law, whether his service was continuous or broken. Ayalde failed to counter these positive assertions. Even on the assumption that there were no deductions, the fact remains that Tana was and should have been covered under the Social Security Law. The circumstances of his employment place him outside the ambit of the exception provided in Section 8(j) of Republic Act No. 1611, as amended by Section 4 of R.A. 2658. Additional Compensation – Labor Code Article 86; Book III, Rule II, Sections 2-5 Shell Company vs. National Labor Union G.R. No. L-1309 THE SHELL COMPANY OF PHILIPPINE ISLANDS, LIMITED vs. NATIONAL LABOR UNION July 26, 1948 Facts: National Labor Union instituted this action to ask for 50% additional compensation for the employees of Shell Company who work at night to attend to the foreign planes landing and taking off (at night), to supply petrol and lubricants, and perform other duties. Court of Industrial Relations held that The Shell Company pay its workers working at night an additional compensation of 50% over their salaries by working during daytime. Shell argues that there is no legal provision empowering CIR to order payment of additional compensation to workers who work at night, and that Act No. 44 relieved the employer of such obligation as it is provided in the Act where it made compulsory the “overtime” (additional 220 | L a b o r S t a n d a r d s - C a s e D i g e s t s

compensation) pay for work rendered beyond 8 hours, and such cases do not include the work at night. NLU argues decision of the CIR is part of its broad and effective powers as granted by Commonwealth Act No. 103 – the charter of the Industrial Relations Court, and the Act No. 444 has no Application to this case because it is referring only to particular and maximum working day permitted I industrial establishments – the 8-hour day. Issue: Whether or not those who work at night are entitled to 50% additional compensation. Held: Yes. The Court discussed a lot of issues about the pernicious effect of working at night justifying the award of additional 50% to the compensation of affected workers, affirming the decision of CIR. The case against nightwork, then, may be said to rest upon several grounds. In the first place, there are the remotely injurious effects of permanent nightwork manifested in the later years of the worker’s life. Of more immediate importance to the average worker is the disarrangement of his social life, including the recreational activities of his leisure hours and the ordinary associations of normal family relations. From and economic point of view, nightwork is to be discouraged because of its adverse effect upon efficiency and output. A moral argument against nightwork in the case of women is that the night shift forces the workers to go to and from the factory in darkness. Recent experiences of industrial nations have added much to the evidence against the continuation of nightwork, except in extraordinary circumstances and avoidable emergencies. The immediate prohibition of nightwork for all laborers is hardly practicable; its discontinuance in the case of women employees is unquestionably desirable. “The night was made for rest and sleep and not for work” is a common saying among wage-earning people, and many of them dream of an industrial order in which there will be no night shift. Holidays Coverage/Exclusion – Labor Code Article 94 (a) Mantrade/FMMC Division Employees and Workers Union vs. Bacungan G.R. No. L-48437 MANTRADE/FMMC DIVISION EMPLOYEES AND WORKERS UNION, REPRESENTED BY PHILIPPINE SOCIAL SECURITY LABOR UNION – TUCP vs. ARBITRATOR FROILAN M. BACUNGAN AND MANTRADE DEVELOPMENT CORPORATION September 30, 1986 Facts: This is a petition for Certiorari and Mandamus filed by petitioner against arbitrator Froilan M. Bacungan and Mantrade Development Corporation arising from the decision of respondent arbitrator, ruling that Mantrade Development Corporation is not under legal obligation to pay 221 | L a b o r S t a n d a r d s - C a s e D i g e s t s

holiday pay (as provided for in Article 94 of the Labor Code in the third official Department of Labor edition) to its monthly paid employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage, and this rule is applicable not only as of March 2, 1976 but as of November 1, 1974. Petitioner questions the validity of the pertinent section of the Rules and Regulations Implementing the Labor Code as amended on which respondent arbitrator based his decision. In denying petitioner’s claim for holiday pay, respondent arbitrator stated that although monthly salaried employees are not among those excluded from receiving such additional pay under Article 94 of the Labor Code of the Philippines, they appear to be excluded under Sec. 2, Rule IV, Book III of the Rules and Regulations which states “ “Employees who are uniformly paid by the month, irrespective of the number of working days therein, with a salary of not less than the statutory or established minimum wage shall be presumed to be paid for all days in the month whether worked or not.” Respondent arbitrator further opined that respondent corporation does not have any legal obligation to grant its monthly salaried employees holiday pay, unless it is argued that the pertinent section of the Rules and Regulations implementing Section 94 of the Labor Code is not in conformity with the law, and thus, without force and effect. Issue: Whether or not Mantrade Development Corporation is not under legal obligation to pay holiday pay to its monthly paid employees. Held: No. Section 2, Rule IV, Book III of the implementing rules and Policy Instruction No. 9, issued by the then Secretary of Labor are null and void since in the guise of clarifying the Labor Code’s provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion. The questioned Sec. 2, Rule IV, Book III of the Integrated Rules and the Secretary’s Policy Instruction No. 9 add another excluded group, namely ‘employees who are uniformly paid by the month.’ While the additional exclusion is only in the form of a presumption that all monthly paid employees have already been paid holiday pay, it constitutes a taking away or a deprivation which must be in the law if it is to be valid. An administrative interpretation which diminishes the benefits of labor more than what the statute delimits or withholds is obviously ultra vires. Therefore, respondent corporation is ordered to grant holiday pay to its monthly salaried employees. Divisor as Factor Trans-Asia Philippines Employees Association vs. NLRC G.R. No. 118289 TRANS-ASIA PHILIPPINES EMPLOYEES ASSOCIATION (TAPEA) AND ARNEL GALVEZ vs.

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NATIONAL LABOR RELATIONS COMMISSION, (PHILIPPINES) AND ERNESTO S. DE CASTRO December 13, 1999

TRANS-ASIA

Facts: On 7 July 1988, Trans-Asia Philippines Employees Association (TAPEA), the duly-recognized collective bargaining agent of the monthlypaid rank-and-file employees of Trans-Asia (Phils.), entered into a Collective Bargaining Agreement ("CBA") with their employer. The CBA, which was to be effective from 1 April 1988 up to 31 March 1991, provided for, among others, the payment of holiday pay with a stipulation that if an employee is permitted to work on a legal holiday, the said employee will receive a salary equivalent to 200% of the regular daily wage plus a 60% premium pay. Despite the conclusion of the CBA, however, an issue was still left unresolved with regard to the claim of TAPEA for payment of holiday pay covering the period from January of 1985 up to December of 1987. Since the parties were not able to arrive at an amicable settlement despite the conciliation meetings, TAPEA, led by its President, petitioner Arnie Galvez, filed a complaint before the labor arbiter, on 18 August 1988, for the payment of their holiday pay in arrears. On 18 September 1988, petitioners amended their complaint to include the payment of holiday pay for the duration of the recently concluded CBA (from 1988 to 1991), unfair labor practice, damages and attorney's fees.

In their Position Paper, petitioners contended that their claim for holiday pay in arrears is based on the non-inclusion of the same in their monthly pay. With regard to the pre-condition for the payment of holiday pay stated in the Employees' Manual and the absence of a stipulation on holiday pay in the employees' appointment papers, Trans-Asia asserted that the above circumstances are not indicative of its non-payment of holiday pay since it has always honored the labor law provisions on holiday pay by incorporating the same in the payment of the monthly salaries of its employees. In support of this claim, Trans-Asia pointed out that it has long been the standing practice of the company to use the divisor of "286" days in computing for its employees' overtime pay and daily rate deductions for absences.

Trans-Asia further clarified that the "286" days divisor already takes into account the ten (10) regular holidays in a year since it only subtracts from the 365 calendar days the unworked and unpaid 52 Sundays and 26 Saturdays (employees are required to work half-day during Saturdays).

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The Labor Arbiter held a decision against the petitioners, finding that in the absence of such agreement, the Supreme Court in said Chartered Bank Case took into consideration existing practices in the bank in resolving the issue, such as employment by the bank of a divisor of 251 days which is the result of subtracting all Saturdays, Sundays and the ten (10) legal holidays from the total number of calendar days in a year. Further, the Court took note of the fact that the bank used conflicting or different divisors in computing salary-related benefits as well as the employees' absence from work. In the case at bar, not only did the CBA between the complainants and respondents herein provides (sic) that the ten (10) legal holidays are recognized by the Company as full holiday with pay. What is more, there can be no doubt that since 1977 up to the execution of the CBA, the Trans-Asia, unlike that obtaining in the Chartered Bank Case, never used conflicting or different divisors but consistently employed the divisor of 286 days, which as earlier pointed out, was arrived at by subtracting only the unworked 52 Sundays and the 26 half-day-worked Saturdays from the total number of days in a year. The consistency in the established practice of the Trans-Asia, which incidentally is not disputed by complainants, did not give rise to any doubt which could have been resolved in favor of complainants. The NLRC dismissed the petitioners’ appeal as well as the motion for reconsideration, affirming the decision of the Labor Arbiter.

Issue: Whether or not the NLRC erred in ruling for Trans-Asia in using the 286 days divisor.

Held: No. Trans-Asia's inclusion of holiday pay in petitioners' monthly salary is clearly established by its consistent use of the divisor of "286" days in the computation of its employees' benefits and deductions. The use by Trans-Asia of the "286" days divisor was never disputed by petitioners. A simple application of mathematics would reveal that the ten (10) legal holidays in a year are already accounted for with the use of the said divisor. As explained by Trans-Asia, if one is to deduct the unworked 52 Sundays and 26 Saturdays (derived by dividing 52 Saturdays in half since petitioners are required to work half-day on Saturdays) from the 365 calendar days in a year, the resulting divisor would be 286 days (should actually be 287 days). Since the ten (10) legal holidays were never included in subtracting the unworked and unpaid days in a calendar year, the only logical conclusion would be that the payment for holiday pay is already incorporated into the said divisor. Thus, when viewed against this very convincing piece of evidence, the arguments put forward by petitioners to support their claim of non-payment of holiday pay, i.e., the 224 | L a b o r S t a n d a r d s - C a s e D i g e s t s

pre-condition stated in the Employees' Manual for entitlement to holiday pay, the absence of a stipulation in the employees' appointment papers for the inclusion of holiday pay in their monthly salary, the stipulation in the CBA recognizing the entitlement of the petitioners to holiday pay with a concomitant provision for the granting of an "allegedly" very generous holiday pay rate, would appear to be merely inferences and suppositions which, in the apropos words of the labor arbiter, "paled in the face of the prevailing company practices and circumstances abovestated." Nevertheless, petitioners' cause is not entirely lost. The Court notes that there is a need to adjust the divisor used by Trans-Asia to 287 days, instead of only 286 days, in order to properly account for the entirety of regular holidays and special days in a year as prescribed by Executive Order No. 203 in relation to Section 6 of the Rules Implementing Republic Act 6727. According to these, the proper divisor that should be used for a situation wherein the employees do not work and are not considered paid on Saturdays and Sundays or rest days is 262 days. In the present case, since the employees of Trans-Asia are required to work half-day on Saturdays, 26 days should be added to the divisor of 262 days, thus, resulting to 288 days. However, due to the fact that the rest days of petitioners fall on a Sunday, the number of unworked but paid legal holidays should be reduced to nine (9), instead of ten (10), since one legal holiday under E.O. No. 203 always falls on the last Sunday of August, National Heroes Day. Thus, the divisor that should be used in the present case should be 287 days. Trans-Asia is hereby ordered to adjust its divisor to 287 days and pay the resulting holiday pay in arrears brought about by this adjustment starting from 30 June 1987, the date of effectivity of E.O. No. 203. Sunday – Labor Code Article 93(a), 2 nd sentence; Book III, Rule III, Section 2 Wellington Investment, Inc. vs. Trajano G.R. No. 114698 WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION vs. CRESENCIANO B. TRAJANO, UNDERSECRETARY OF LABOR AND EMPLOYMENT, ELMER ABADILLA AND 34 OTHERS July 03, 1995 Facts: A routine inspection was conducted by a Labor Enforcement Officer on August 06, 1991 in the Wellington Flour Mills, owned and operated by Wellington Investment and Manufacturing Corporation. The officer drew up a report which set forth his finding of “non-payment of regular holidays falling on a Sunday for monthly-paid employees”.

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Wellington sought reconsideration, arguing that the monthly salary of the company’s monthly-paid 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 asserts that it pays its monthly-paid employees a fixed monthly compensation using the 314 factor. It simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as the basis for determining the monthly salary. The monthly salary thus fixed actually covers payment for 314 days of the year, including regular and special holidays, as well as days when no work is done by reason of fortuitous cause, as above specified, or causes not attributable to the employees. The Regional Director ruled against Wellington, directing it to pay its employees 4 extra working days, equivalent of the regular holidays falling on a Sunday. Wellington filed a motion for reconsideration. Its motion was treated as an appeal and was acted on by the Undersecretary which affirmed the decision of the Regional Director, ad commanded Wellington to pay its employees additional working days resulting from regular holidays falling on Sundays in 1988, 1989, and 1990. Wellington moved for reconsideration but was rebuffed. Issue: Whether or not a monthly-paid employee, receiving a fixed monthly compensation, is entitled to an additional pay aside from his usual pay, whenever a regular holiday falls on a Sunday. Held: No. There is no provision of law requiring an employee to make such adjustments in the monthly salary rate set by him to take account of legal holidays falling on Sundays in a given year, or, contrary to the legal provisions bearing on the point, otherwise to reckon a year at more than 365 days. As earlier mentioned, what the law requires of employers opting to pay by the month is to assure that “the monthly minimum wage shall not be less than the statutory minimum wage multiplied by 365 days divided by 12” and “to pay that salary for all days in the month whether worked or not” and “irrespective of the number of working days therein”. The legal provisions governing monthly compensation are evidently intended precisely to avoid re-computations and alterations in salary on account of the contingencies just mentioned which, by the way, are routinely made between employer and employees when the wages are paid on daily basis. Muslim Holiday – Labor Code Articles 169-172; P.D. No. 1083; R.A. No. 9492 San Miguel Coproration vs. Court of Appeals G.R. No. 146775 SAN MIGUEL CORPORATION vs.

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THE HONORABLE COURT OF APPEALS, HON. UNDERSECRETARY JOSE M. ESPAÑOL, JR., HON. CRESENCIANO B. TRAJANO, HON. REGIONAL DIRECTOR ALLAN M. MACARAYA January 30, 2002 Facts: On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan District Office, conducted a routine inspection in the premises of San Miguel Corporation (SMC) in Sta. Filomena, Iligan City. In the course of the inspection, it was discovered that there was underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a copy of the inspection result to SMC and it was received by and explained to its personnel officer Elena dela Puerta. 1 SMC contested the findings and DOLE conducted summary hearings on 19 November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees. Hence, Alan M. Macaraya, Director IV of DOLE Iligan District Office issued a compliance order, dated 17 December 1993, directing SMC to consider Muslim holidays as regular holidays and to pay both its Muslim and nonMuslim employees holiday pay within thirty (30) days from the receipt of the order.

SMC appealed to the DOLE main office in Manila but its appeal was dismissed for having been filed late. The dismissal of the appeal for late filing was later on reconsidered in the order of 17 July 1998 after it was found that the appeal was filed within the reglementary period. However, the appeal was still dismissed for lack of merit and the order of Director Macaraya was affirmed. SMC went to this Court for relief via a petition for certiorari, which this Court referred to the Court of Appeals. The CA modified the payment of Muslim holiday pay from 200% to 150% of the employer’s salary. Hence, this petition.

Issue: Whether or not the CA erred in affirming the Director’s order to consider Muslim Holidays as regular holidays and to pay both Muslim and non-Muslim employees on such holidays.

Held: No. 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, 227 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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. (a) Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers; (b) The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; x x x.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "(t)he provisions of this Code shall be applicable only to Muslims x x x." However, there should be no distinction between Muslims and non-Muslims as regards payment of benefits for Muslim holidays. The Court of Appeals did not err in sustaining Undersecretary Español who stated: Assuming arguendo that the respondent’s position is correct, then by the same token, Muslims throughout the Philippines are also not entitled to holiday pays on Christian holidays declared by law as regular holidays. We must remind the respondent-appellant that wages and other emoluments granted by law to the working man are determined on the basis of the criteria laid down by laws and certainly not on the basis of the worker’s faith or religion.

At any rate, Article 3(3) of Presidential Decree No. 1083 also declares that "x x x nothing herein shall be construed to operate to the prejudice of a non-Muslim." In addition, the 1999 Handbook on Workers’ Statutory Benefits, approved by then DOLE Secretary Bienvenido E. Laguesma on 14 December 1999 categorically stated:

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Considering that all private corporations, offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not report for work on the days designated by law as Muslim holidays. Service Incentive Leave Coverage/ Exclusions – Labor Code Article 95(a,b); Book III, Rule V, Section 1 Makati Haberdashery, Inc. vs. NLRC G.R. Nos. 83380-81 MAKATI HABERDASHERY, INC., JORGE LEDESMA AND CECILIO G. INOCENCIO vs. NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA, SANDIGAN NG MANGGAGAWANG PILIPINO – TUCP AND ITS MEMBERS, JACINTO GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO AND 14 OTHERS November 15, 1989 Facts: Individual complainants, private respondents herein, have been working for petitioner Makati Haberdashery, Inc. as tailors, seamstress, sewers, basters (manlililip) and "plantsadoras". They are paid on a piecerate basis except Maria Angeles and Leonila Serafina who are paid on a monthly basis. In addition to their piece-rate, they are given a daily allowance of three (P 3.00) pesos provided they report for work before 9:30 a.m. everyday.

Private respondents are required to work from or before 9:30 a.m. up to 6:00 or 7:00 p.m. from Monday to Saturday and during peak periods even on Sundays and holidays.

On July 20, 1984, the Sandigan ng Manggagawang Pilipino, a labor organization of the respondent workers, filed a for (a) underpayment of the basic wage; (b) underpayment of living allowance; (c) non-payment of overtime work; (d) non-payment of holiday pay; (e) non-payment of service incentive pay; (f) 13th month pay; and (g) benefits provided for under Wage Orders Nos. 1, 2, 3, 4 and 5.

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The Labor Arbiter found the Haberdashery to have violated the decrees on the cost of living allowance, service incentive leave pay and the 13th Month Pay. In view thereof, the economic analyst of the Commission is directed to compute the monetary awards due each complainant based on the available records of the respondents retroactive as of three years prior to the filing of the instant case. The NLRC affirmed the Labor Arbiter’s decision.

Issue: Whether or not the workers are entitled to monetary claims.

Held: Yes. As a consequence of their status as regular employees of the petitioners, they can claim cost of living allowance. Private respondents are also entitled to claim their 13th Month Pay under Section 3(e) of the Rules and Regulations Implementing P.D. No. 85.

On the other hand, while private respondents are entitled to Minimum Wage, COLA and 13th Month Pay, they are not entitled to service incentive leave pay because as piece-rate workers being paid at a fixed amount for performing work irrespective of time consumed in the performance thereof, they fall under one of the exceptions stated in Section 1(d), Rule V, Implementing Regulations, Book III, Labor Code. For the same reason private respondents cannot also claim holiday pay (Section 1(e), Rule IV, Implementing Regulations, Book III, Labor Code). Labor Congress vs. NLRC G. R. No. 123938 LABOR CONGRESS OF THE PHILIPPINES (LCP) FOR AND IN BEHALF OF ITS MEMBERS vs. NATIONAL LABOR RELATIONS COMMISSION, EMPIRE FOOD PRODUCTS, ITS PROPRIETOR/PRESIDENT & MANAGER, MR. GONZALO KEHYENG AND MRS. EVELYN KEHYENG May 21, 1998 Facts: The 99 persons as private petitioners in the proceeding represented by the LCP were rank-and-file employees of private respondent Empire Food Products, a food and fruit processing company, hired on various dates. Ocampo, et al, filed against Empire and NLRC complaint for payment of money claims and for violation of Labor Standards laws. Alongside this, they also filed a petition for direct certification for the Labor Congress to be their bargaining representative. 230 | L a b o r S t a n d a r d s - C a s e D i g e s t s

On October 23, 1990, petitioners, represented by LCP, and private respondents Gonzalo and Evelyn Kehyeng enetered into a Memorandum of Agreement (1) recognizing LCP as sole and exclusive bargaining agent and representative for all rank-and-file employees of the Empire Food Products regarding “wages, hours of work, and other terms and conditions of employment”, (2) agreeing to resolve the issues in the NLRC complaint during the Collective Bargaining Agreement and (3) agreeing for the proper adjustment of wages, withdrawal of case from the Calendar of the NLRC, and non-interference or any ULP act. On October 24, 1990, the Mediator Arbiter approved the memorandum and certified LCP as the sole and exclusive bargaining agent for the rank-and-file employees of Empire. On November 1990, LCP President Navarro submitted to Empire a proposal for collective bargaining. However, on January 1991, the private petitioners Ana Marie, et al, filed a complaint for unfair labor practices via illegal lockout and dismissal, union-busting through harassment, threats and interference to the right for self-organization, violation of the October 23, 1990 memorandum, underpayment of wages, and actual, moral and exemplary damages. The Labor Arbiter absolved Empire for ULP, union busting, violation of the memorandum of agreement, underpayment of wages and denied the petitioners’ prayer for damages. But it ordered reinstatement of complainants, due to the fact that Empire did not keep its payroll records as per requirement of the DOLE. The decision was appealed to the NLRC. It remanded the case to the Labor Arbiter for further proceedings due to overlooking “the testimonies of some of the individual complainants”. The Labor Arbiter then found that the complainants failed to present with definiteness and clarity the particular act or acts constitutive of unfair labor practice. Upon appeal, the NLRC affirmed the Labor Arbiter’s decision. Issue: Whether or not the petitioners are entitled to Labor Standard Benefits, considering their status as piece rate workers. Held: Yes. The Court considered the employees as regular employees despite their status as “pakyao”or piece workers, according them benefits such as holiday pay, premium pay, 13 th month pay, and service incentive leave, having found the nature of their tasks necessary and desirable in the usual business of Empire Foods. The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as nighttime pay, holiday pay, service incentive leave and 13 th month pay. However, petitioners as piece rate workers do not fall within this group. Not only did the employees labor under the control of Empire, the employees also worked throughout the year to fulfill their quota as basis for compensation”. Computation and Liability

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Sentinel Security Agency, Inc. vs. NLRC G.R. No. 122468 SENTINEL SECURITY AGENCY, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, ADRIANO CABANO, JR., VERONICO C. ZAMBO, HELCIAS ARROYO, RUSTICO ANDOY, AND MAXIMO ORTIZ November 16, 1998 G.R. No. 122716 PHILIPPINE AMERICAN LIFE INSURANCE COMPANY vs. NATIONAL LABOR RELATIONS COMMISSION, VERONICO ZAMBO, HELCIAS ARROYO, ADRIANO CABANO, MAXIMO ORTIZ, AND RUSTICO ANDOY November 16, 1998 Facts: Petitioner Client a clarification of its own liability. That the complainants' illegal dismissal was the sole responsibility of the Agency was clearly stated by the Court in the assailed Decision, which we quote “There was no suspension of operation, business or undertaking, bona fide or not, that would have justified placing the complainants off-detail and making them wait for a period of six months. . . . The only logical conclusion from the foregoing discussion is that the Agency illegally dismissed the complainants. Hence, as a necessary consequence, the complainants are entitled to . . . back wages…” Relevant to this controversy is the recent pronouncement of the Court in Rosewood v. National Labor Relations Commission “An order to pay back wages and separation pay is invested with a punitive character, such that an indirect employer should not be made liable without a finding that it had committed or conspired in the illegal dismissal.”

Issue: Whether or not the Client should pay back wages, separation pay and service incentive leave pay.

Held: For back wages and separation pay, no. For service incentive leave pay, yes. The Client was not responsible for the illegal dismissal of the complainants and, thus, not liable for the payment of back wages and separation pay. However, the Decision did not completely exonerate the Client which, as an indirect employer, is solidarily liable with Petitioner Agency for the complainants' unpaid service incentive leave, pursuant to Articles 106, 107 and 109 of the Code. As clarified by the Court in Rosewood: “Under these cited provisions of the Labor Code should the 232 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contractor fail to pay the wages of its employees in accordance with law, the indirect employer (the petitioner in this case), is jointly and severally liable with the contractor, but such responsibility should be understood to be limited to the extent of the work performed under the contract, in the same manner and extent that he is liable to the employees directly employed by him. This liability of petitioner covers the payment of the workers' performance of any work, task, job or project. So long as the work, task, job or project has been performed for petitioner's benefit or on its behalf, the liability accrues for such period even if, later on, the employees are eventually transferred or reassigned elsewhere.” Auto Bus Transport Systems, Inc. vs. Bautista G.R. No. 156367 AUTO BUS TRANSPORT SYSTEMS, INC. vs. ANTONIO BAUTISTA May 16, 2005 Facts: Antonio Bautista was employed by Auto Bus Transport Systems, Inc. in May 1995. He was assigned to the Isabela-Manila route and he was paid by commission (7% of gross income per travel for twice a month). In January 2000, while he was driving his bus, he bumped another bus owned by Auto Bus. He claimed he accidentally bumped the bus as he was so tired and that he has not slept for more than 24 hours because Auto Bus required him to return to Isabela immediately after arriving at Manila. Damages were computed and 30% or P75,551.50 of it was being charged to Bautista. Bautista refused payment. Auto Bus terminated Bautista after due hearing as part of Auto Bus’ management prerogative. Bautista sued Auto Bus for illegal dismissal. The Labor Arbiter Monroe Tabingan dismissed Bautista’s petition but ruled that Bautista is entitled to P78,1117.87 13th month pay payments and P13,788.05 for his unpaid service incentive leave pay. The case was appealed before the National Labor Relations Commission. NLRC modified the LA’s ruling. It deleted the award for 13th Month pay. The Court of Appeals affirmed the NLRC. Auto Bus averred that Bautista is a commissioned employee and if that is not reason enough that Bautista is also a field personnel, hence, he is not entitled to a service incentive leave. They invoke Booki III, Rule V of the Implementing Rules which provides for the coverage of service incentive leave pay and which excludes “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.” 233 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not Bautista is entitled to Service Incentive Leave. If he is, up to what amount of service incentive leave pay is he entitled to? Held: Yes. 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. However, respondent is not a field personnel but a regular employee who performs tasks usually necessary and desirable to the usual trade of petitioner’s business. The driver was under constant supervision while in the performance of this work. Accordingly, respondent is entitled to the grant of service incentive leave.

The question now that must be addressed is up to what amount of service incentive leave pay respondent is entitled to. The response to this query inevitably leads us to the correlative issue of whether or not the three (3)year prescriptive period under Article 291 of the Labor Code is applicable to respondent’s claim of service incentive leave pay. By virtue of the decision in Fernandez v. NLRC, it can be conscientiously deduced that the cause of action of an entitled employee to claim his service incentive leave pay accrues from the moment the employer refuses to remunerate its monetary equivalent if the employee did not make use of said leave credits but instead chose to avail of its commutation. Accordingly, if the employee wishes to accumulate his leave credits and opts for its commutation upon his resignation or separation from employment, his cause of action to claim the whole amount of his accumulated service incentive leave shall arise when the employer fails to pay such amount at the time of his resignation or separation from employment.

Applying Article 291 of the Labor Code in light of this peculiarity of the service incentive leave, we can conclude that the three (3)-year prescriptive period commences, not at the end of the year when the employee becomes entitled to the commutation of his service incentive leave, but from the time when the employer refuses to pay its monetary equivalent after demand of commutation or upon termination of the employee’s services, as the case may be.

22. Minimum Wages and Wage Fixing Machinery – Labor Code Articles 97-119; Omnibus Rules, Book III, Rules VII-VIII

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Coverage – Labor Code Article 97 (b,c,e), 98; Book III, Rule VII, Section 3 Philippine Fisheries Development Authority vs NLRC G.R. No. 94825 PHILIPPINE FISHERIES DEVELOPMENT AUTHORITY vs. NATIONAL LABOR RELATIONS COMMISSION, ODIN SECURITY AGENCY, AS REPRESENTATIVE OF ITS SECURITY GUARDS September 04, 1992 Facts: The petitioner is a government-owned or controlled corporation created by P.D. No. 977. On November 11, 1985, it entered into a contract with the Odin Security Agency for security services of its Iloilo Fishing Port Complex in Iloilo City. The contract provides that the schedule of compensation includes among others, the minimum wage (Wage Order No.5), rest day pay, night differential, incentive leave pay, 13 th month pay, emergency cost of living allowance, 4% contractor’s tax, operational expenses and overhead. On October 24, 1987, and during the effectivity of the said Security Agreement, the private respondent requested the petitioner to adjust the contract rate in view of the implementation of Wage Order No. 6 which took effect on November 1, 1984. Requests for adjustment of the contract price were reiterated on January 14, 1988 and February 19, 1988 but were ignored by the petitioner. Thus on June 7, 1988, the private respondent filed with the Office of the Sub-Regional Arbitrator in Region VI, Iloilo City a complaint for unpaid amount of re-adjustment rate under Wage Order No. 6 together with wage salary differentials arising from the integration of the cost of living allowance under Wage Order No. 1, 2, 3 and 5 pursuant to Executive Order No. 178 plus the amount of P25,000.00 as attorney’s fees and cost of litigation. The Labor Arbiter dismissed the complaint stating that the petitioner’s being a government-owned or controlled corporation would place it under the scope and jurisdiction of the Civil Service Commission and not within the ambit of the NLRC. Upon appeal, the NLRC set aside the order and granted reliefs to private respondent. A motion for reconsideration was filed but was denied. Issue: Whether or not the NLRC erred in setting aside the decision of the Labor Arbiter which states that the case is not within NLRC’s jurisdiction. Held: No. The petitioner is a government-owned or controlled corporation with a special charter. This places it under the scope of the civil service. However, the guards are not employees of the petitioner. The contract of services explicitly states that the security guards are not considered employees of the petitioner. There being no employer-employee relationship between the petitioner and the security guards, the 235 | L a b o r S t a n d a r d s - C a s e D i g e s t s

jurisdiction of the Civil Service Commission may not be invoked in this case. The contract entered into by the petitioner which is merely job contracting makes the petitioner an indirect employer. The issue, therefore, is whether or not an indirect employer is bound by the rulings of the NLRC. Notwithstanding that the petitioner is a government agency, its liabilities, which are joint and solidary with that of the contractor, are provided in Articles 106, 107 and 109 of the Labor Code. This places the petitioner’s liabilities under the scope of the NLRC. Moreover, Book Three, Title II on Wages specifically provides that the term "employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the Government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporation and institutions as well as non-profit private institutions, or organizations. The NLRC, therefore, did not commit grave abuse of discretion in assuming jurisdiction to set aside the Order of dismissal by the Labor Arbiter. Definition – Labor Code Article 97(f) Chavez vs. NLRC G.R. No. 146530 PEDRO CHAVEZ vs. NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. AND ALVIN LEE 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. It engaged the services of the petitioner, Pedro Chavez, as truck driver on October 25, 1984. Sometime in 1992, the petitioner expressed to respondent Alvin Lee, respondent company’s plant manager, his (the petitioner’s) desire to avail himself of the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay, and 13th month pay, among others. Although he promised to extend these benefits to the petitioner, respondent Lee failed to actually do so. On February 20, 1995, the petitioner filed a complaint for regularization with the Regional Arbitration Branch No. III of the NLRC in San Fernando, Pampanga. Before the case could be heard, respondent company terminated the services of the petitioner. Consequently, on May 236 | L a b o r S t a n d a r d s - C a s e D i g e s t s

25, 1995, the petitioner filed an amended complaint against the respondents for illegal dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, 13th month pay, among others. The respondents, for their part, denied the existence of an employeremployee relationship between the respondent company and the petitioner. They averred that the petitioner was an independent contractor. The respondents insisted that the petitioner had the sole control over the means and methods by which his work was accomplished. He paid the wages of his helpers and exercised control over them.

The Labor Arbiter found the respondents guilty of illegal dismissal because the petitioner was a regular employee of the respondent company as he was performing a service that was necessary and desirable to the latter’s business. Moreover, it was noted that the petitioner had discharged his duties as truck driver for the respondent company for a continuous and uninterrupted period of more than ten years. The respondents were ordered to pay backwages, separation pay, 13 th month pay and service incentive leave pay. The respondents appealed to NLRC but it was dismissed as the Commission affirmed the decision of the Labor Arbiter. However, upon motion for reconsideration, the NLRC reversed its earlier decision holding that no employer-employee relationship existed between the respondent and petitioner. Upon appeal, the CA upheld the Labor Arbiter’s decision. But on motion for reconsideration by the respondents, the CA made a compelete turn-around, upholding the contract of service between the petitioner and the respondent company. The fact that the petitioner had been with the respondent company for more than ten years was, according to the CA, of no moment because his status was determined not by the length of service but by the contract of service.

Issue: Whether or not there existed an employer-employee relationship between the respondent company and the petitioner.

Held: Yes. 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. All the four elements are present in this case. 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 237 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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 employment for work done or to be done, or for service rendered or to be rendered." That the petitioner was paid on a per trip basis is not significant. This is merely a method of computing compensation and not a basis for determining the existence or absence of employer-employee relationship. 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, the element of control has been proven by evidence. No Work, No Pay Aklan Electric Corporation vs. NLRC G.R. No. 121439 AKLAN ELECTRIC COOPERATIVE INCORPORATED (AKELCO) vs. NATIONAL LABOR RELATIONS COMMISSION, RODOLFO M. RETISO AND 165 OTHERS January 25, 2000

Facts: On January 22, 1991, by way of a resolution of the Board of Directors of AKELCO, it allowed the temporary holding of office at Amon Theater, Kalibo, Aklan upon the recommendation of Atty. Leovigildo Mationg, then project supervisor, on the ground that the office at Lezo, Aklan was dangerous and unsafe. Majority of the employees including the herein complainants, continued to report for work at Lezo, Aklan and were paid of their salaries. The complainants claimed that transfer of office from Lezo, Aklan to Kalibo, Aklan was illegal because it failed to comply with the legal requirements under P.D. 269, thus the they remained and continued to work at the Lezo Office until they were illegally locked out therefrom by the respondents. Despite the illegal lock out however, complainants continued to report daily to the location of the Lezo Office, prepared to continue in the performance of their regular duties. Complainants who continuously reported for work at Lezo, Aklan were not paid their salaries from June 1992 up to March 18, 1993.

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Labor Arbiter dismissed the complaints. NLRC reversed and set aside the Labor Arbiter’s decision and ruling that private respondents are entitled to unpaid wages.

Issue: Whether or not NLRC committed grave abuse of discretion amounting to excess or want of jurisdiction when it reversed the finding of the Labor Arbiter that private respondent refused to work under the lawful orders of the petitioner AKELCO management; hence they are covered by the "no work, no pay" principle and are thus not entitled to the claim for unpaid wages from June 16, 1992 to March 18, 1993.

Held: Yes. We hold that public respondent erred in merely relying on the computations of compensable services submitted by private respondents. There must be competent proof such as time cards or office records to show that they actually rendered compensable service during the stated period to entitle them to wages. It has been established that the petitioner's business office was transferred to Kalibo and all its equipments, records and facilities were transferred thereat and that it conducted its official business in Kalibo during the period in question. It was incumbent upon private respondents to prove that they indeed rendered services for petitioner, which they failed to do.

The age-old rule governing the relation between labor and capital, or management and employee of a "fair day's wage for a fair day's labor" remains as the basic factor in determining employees' wages. If there is no work performed by the employee there can be no wage or pay unless, of course, the laborer was able, willing and ready to work but was illegally locked out, suspended or dismissed, or otherwise illegally prevented from working, a situation which we find is not present in the instant case. It would neither be fair nor just to allow private respondents to recover something they have not earned and could not have earned because they did not render services at the Kalibo office during the stated period. Sugue vs. Triumph International G.R. No. 164804 VIRGINIA A. SUGUE AND THE HEIRS OF RENATO S. VALDERRAMA vs. TRIUMPH INTERNATIONAL (PHILS.), INC. January 30, 2009 239 | L a b o r S t a n d a r d s - C a s e D i g e s t s

G.R. No. 164784 TRIUMPH INTERNATIONAL (PHILS.), INC. vs. VIRGINIA A. SUGUE AND THE HEIRS OF RENATO S. VALDERRAMA January 30, 2009 Facts: Triumph hired Sugue in May 1990 as its Assistant Manager for Marketing and was subsequently promoted to Marketing Services Manager with a monthly salary of P82,500.00. On the other hand, Valderrama was hired in April 1993 as Direct Sales Manager with a monthly salary of P121,000.00. On June 1, 2000, Sugue and Valderrama filed a 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.

On June 19, 2000, Sugue and Valderrama personally attended the preliminary conference of the said case. The following day, Triumph’s Personnel Manager, Ralph Funtila, issued separate memoranda to Sugue and Valderrama requiring them to inform the office of the General Manager of their whereabouts on June 19, 2000 from 9:06 a.m. to 11:15 a.m. They replied that they attended the aforementioned preliminary conference. Triumph charged the one-half day utilized by Sugue and Valderrama in attending the NLRC hearing on June 19, 2000 to their vacation leave credits. Valderrama wrote the company a letter stating that he considered himself constructively dismissed due to the unreasonable pressures and harassments he suffered the past months which prevented him from effectively exercising his tasks as Direct Sales Manager. Subsequently, Triumph issued a memorandum requiring Valderrama to explain, under pain of dismissal, his continued absences without official leave. Valderrama failed to respond, thus, Triumph decided to terminate Valderrama’s employment for abandonment of work. Meanwhile, Sugue also wrote the company stating that she considers herself constructively dismissed. Then, she received a memorandum instructing her to report to Mr. Efren Temblique, who was appointed OIC for Marketing as a result of a reorganization prompted by Valderrama’s continued absences. Sugue claimed that such act by Triumph was an outright demotion considering that Mr. Temblique was her former assistant. Triumph required Sugue to explain why she should not be terminated for continued absences without official leave. Sugue failed to comply, thus, her employment was terminated for abandonment of work. Prior to the actual termination of their employment by Triumph, Sugue and Valderrama filed a complaint for constructive dismissal against Triumph. Labor Arbiter Salimathar Nambi rendered a decision, declaring that Sugue and Valderrama were 240 | L a b o r S t a n d a r d s - C a s e D i g e s t s

constructively dismissed. Triumph was ordered to pay separation pay, backwages and damages.

Aggrieved, Triumph filed an appeal with the NLRC, which granted the appeal and reversed the ruling of Labor Arbiter Nambi. Not satisfied with the NLRC decision, Sugue and Valderrama elevated the matter to the CA by way of a petition for certiorari. While the matter was pending with the CA, Valderrama passed away and notice of his death was filed by his counsel. The CA set aside the decision of the NLRC and reinstated the Labor Arbiter’s decision. Triumph’s subsequent motion for reconsideration as well as the motion for partial reconsideration filed by Sugue and the heirs of Valderrama were both denied by the appellate court. Hence, the parties filed the present consolidated petitions. Issue: Whether or not Triumph correctly deducted their half-day absence attending the NLRC hearing on June 19, 2000 from their vacation leave credit.

Held: Yes. We can conceive of no reason to ascribe bad faith or malice to Triumph for charging to the leave credits of Sugue and Valderrama the half-day that they spent in attending the preliminary conference of the case they instituted against Triumph. It is fair and reasonable for Triumph to do so considering that Sugue and Valderrama did not perform work for one-half day on June 19, 2000. Indeed, we find it surprising that Sugue and Valderrama would even have the temerity to contend that the hours they spent in attending the hearing were compensable time. As the NLRC correctly pointed out, as early as the case of J.B. Heilbronn Co. v. National Labor Union, this Court held that: “When the 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 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. 241 | L a b o r S t a n d a r d s - C a s e D i g e s t s

In a case where a laborer absents himself from work because of a strike or to attend a conference or hearing in a case or incident between him and his employer, he might seek reimbursement of his wages from his union which had declared the strike or filed the case in the industrial court. Or, in the present case, he might have his absence from his work charged against his vacation leave.” Equal Pay for Work of Equal Value – ILO Convention 100 (1951) International School alliance of Education vs. Quisumbing G.R. No. 128845 INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs. HON. LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND EMPLOYMENT; HON. CRESENCIANO B. TRAJANO, ACTING SECRETARY OF LABOR AND EMPLOYMENT; DR. BRIAN MACCAULEY, SUPERINTENDENT OF INTERNATIONAL SCHOOLMANILA, INTENRATIONAL SCHOOL, INC. June 01, 2000 Facts: The International School Manila (ISM), under Presidential Decree 732, is a domestic educational institution established primarily for dependents of foreign diplomatic personnel and other temporary residents. To enable the School to continue carrying out its educational program and improve its standard of instruction, Section 2(c) of the same decree authorizes the School to employ its own teaching and management personnel selected by it either locally or abroad, from Philippine or other nationalities, such personnel being exempt from otherwise applicable laws and regulations attending their employment, except laws that have been or will be enacted for the protection of employees. The local-hires union of the ISM were crying foul over the disparity in wages that they got compared to that of their foreign teaching counterparts. The School grants foreign-hires certain benefits to the foreign hires such as housing, transportation, and 25% more pay than locals under the theory of (a) the "dislocation factor" and (b) limited tenure. The first was grounded on leaving his home country, the second was on the lack of tenure when he returns home. The negotiations between the school and the union caused a deadlock between the parties. The DOLE resolved in favor of the school, while DOLE Secretary Quisumbing denied the union’s motion for reconsideration He said, “The Union cannot also invoke the equal protection clause to justify its claim of parity. It is an established principle of constitutional law that the guarantee of equal protection of the laws is not violated by legislation or private covenants based on reasonable classification. A classification is reasonable if it is based on substantial distinctions and apply to all members of the same class. Verily, there is a substantial distinction 242 | L a b o r S t a n d a r d s - C a s e D i g e s t s

between foreign hires and local hires, the former enjoying only a limited tenure, having no amenities of their own in the Philippines and have to be given a good compensation package in order to attract them to join the teaching faculty of the School.” The union appealed to the Supreme Court. The petitioner called the hiring system discriminatory and racist. The school alleged that some local hires were in fact of foreign origin. They were paid local salaries. Issue: Whether or not the School’s system of compensation is violative of the principle of “equal pay for equal work”. Held: Yes. The Constitution also directs the State to promote "equality of employment opportunities for all." Similarly, the Labor Code provides that the State shall "ensure equal work opportunities regardless of sex, race or creed. Article 248 declares it an unfair labor practice for an employer to discriminate in regard to wages in order to encourage or discourage membership in any labor organization. In this jurisdiction, there is the term “equal pay for equal work”, pertaining to persons being paid with equal salaries and have similar skills and similar conditions. There was no evidence here that foreign-hires perform 25% more efficiently or effectively than the local-hires. For the same reason, the "dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are adequately compensated by certain benefits accorded them which are not enjoyed by local-hires, such as housing, transportation, shipping costs, taxes and home leave travel allowances. Persons who work with substantially equal qualifications, skill, effort and responsibility, under similar conditions, should paid similar salaries. If an employer accords employees the same position and rank, the presumption is that these employees perform equal work. This presumption is borne by logic and human experience. If the employer has discriminated against an employee, it is for the employer to explain why the employee is treated unfairly. This rule applies to the School, notwithstanding its international character. Form Agreement for Compensation of Services – Labor Code Article 97(f) Arms Taxi vs. NLRC G.R. No. 104523 ARMS TAXI AND/OR DOROTHEA TANONGON vs. NATIONAL LABOR RELATIONS, AND LUDIVICO CULLA March 08, 1993 243 | L a b o r S t a n d a r d s - C a s e D i g e s t s

G.R. No. 104526 LUDIVICO CULLA vs. NATIONAL LABOR RELATIONS COMMISSION, HON. LABOR ARBITER, SPOUSES NORBERTO TANONGON AND DOROTHEA TANONGON AND/OR ARMS TAXI, AND AIDA DELA CRUZ Facts: The spouses Tanongon own and operate taxicabs under the names of “Arms Taxi” and “Lin-lin Taxi”. However, the taxicabs are registered under the “kabit system”in the name of Aida dela Cruz who holds a certificate of public convenience to operate a taxicab service. In the early 1980, Culla was hired by the Tanongon spouses to work as mechanic, shop manager, garage caretaker, dispatches and liaison man in their taxi business, at a monthly salary of P5,000 plus commission on the daily or monthly gross income of the business in addition to the payment of his Social Security System (SSS) premium. On June 11, 1986, without Culla’s consent, the Tanongon spouses asked one of their taxi drivers to force open his quarters in the Tanongon compound in Cainta, Rizal. They removed his personal belongings and brought them to his residence in Sta. Ana, Manila. Culla filed with the arbitration branch of the then Ministry of Labor and Employment, a complaint alleging that his ejectment from his living quarters and dismissal from employment were illegal because there was no prior investigation or written notice of the charges against him. His dismissal was allegedly due to his demands “for payment of the benefits, percentage and privileges, and premium to the SSS”. He prayed for reinstatement with backwages, plus his commission of 15% of the gross income of the taxi business with legal interest plus damages. In their position paper, the Tanongon spouses denied that they were the operators of the Arms Taxi and Lin-lin Taxi. They denied the existence of employer-employee relationship between them and Culla as they averred that Arms Taxi is owned and operated by Aida dela Cruz and the ownership of Lin-Lin Taxi has not been transferred to them. On the other hand, dela Cruz denied that she hired Culla and averred at the most, Culla could be considered as an independent contractor paid on a piece-work basis and therefore, he was not entitled to regular benefits, much less to the alleged 15% commission. The Labor Arbiter found for Culla, declaring that Culla was and employee of the Tanongon spouses, that Culla was illegally dismissed and that Aida dela Cruz should be considered an indirect employer of Culla. However, he denied Culla’s claim for 15% commission on the gross earnings of the taxi business as Culla failed “to substantially prove the same by precise, concrete and convincing evidence”. The agreement on the commission “should have been in writing, note or memorandum, and subscribed by the parties, to be enforceable”. Furthermore, Culla was not entitled to the 13th month pay under P.D. No. 851 and to overtime pay, for time was not of the essence in his kind of employment. The parties appealed to the NLRC. 244 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the payment to him of P5,000 a month for his service was in partial fulfillment of Tanongon’s promise to pay him a 15% commission, removing said requirement from coverage of the Statue of Frauds. Held: No. Culla’s reference to the Statute of Frauds under Article 1403, paragraph 2 of the Civil Code is misplaced. An agreement for compensation of service rendered is not one of the contracts mentioned in 1403 which must be in writing to be enforceable by action. The payment of a P5,000 monthly salary to the petitioner for his services may not be considered as partial compliance by his employers with the alleged agreement to pay him a commission or percentage of the daily earnings of their taxi business because, as correctly pointed out by the Solicitor General, a salary is different from a commission. While a salary is a fixed compensation for regular work or for continuous service rendered over a period of time, a commission is a percentage or allowance made to a factor or agent for transacting business for another. Thus, before invoking the exception to the Statute of Frauds, petitioner should have proven that he had received a commission, or a part of it, in the past. Furthermore, as aptly noted by the NLRC, if it were true that there had been an agreement regarding the payment of a 15% commission to him, the petitioner would not have waited almost 6 years to claim it. Considerable delay in asserting one’s right is strongly persuasive of the lack of merit of one’s own claim. Determination of Compliance with Minimum Wage Iran vs. NLRC G.R. No. 121927 ANTONIO W. IRAN (doing business under the name and style of Tones Iran Enterprises) vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), GODOFREDO O. PETRALBA, MORENO CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS BANDILAO, EDWIN MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M. COLINA April 22, 1998 Facts: Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof. Petitioner hired private respondents Godofredo Petralba, Moreno 245 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Cadalso, Celso Labiaga and Fernando Colina as drivers/salesmen while private respondents Pepito Tecson, Apolinario Gimena, Jesus Bandilao, Edwin Martin and Diosdado Gonzalgo were hired as truck helpers. Drivers/salesmen drove petitioners delivery trucks and promoted, sold and delivered softdrinks to various outlets in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the different outlets covered by the driver/salesmen. Sometime in June 1991, petitioner, while conducting an audit of his operations, discovered cash shortages and irregularities allegedly committed by private respondents. Pending the investigation of irregularities and settlement of the cash shortages, petitioner required private respondents to report for work everyday. They were not allowed, however, to go on their respective routes. A few days thereafter, despite aforesaid order, private respondents stopped reporting for work, prompting petitioner to conclude that the former had abandoned their employment. Consequently, petitioner terminated their services. He also filed on November 7, 1991, a complaint for estafa against private respondents. On the other hand, private respondents, on December 5, 1991, filed complaints against petitioner for illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages and attorneys fees. The labor arbiter found that petitioner had validly terminated private respondents, there being just cause for the latters dismissal. Nevertheless, he also ruled that petitioner had not complied with minimum wage requirements in compensating private respondents, and had failed to pay private respondents their 13 th month pay. NLRC affirmed private respondent’s dismissal. Hence, the petition. Issue: Whether or not commissions are included in determining compliance with the minimum wage requirement. Held: Art. 97(f) Wage paid to any employee shall mean the 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 employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor, of board, lodging, or other facilities customarily furnished by the employer to the employee. This definition explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to 246 | L a b o r S t a n d a r d s - C a s e D i g e s t s

them, still these commissions are direct remunerations for services rendered. In fact, commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesman’s wage or salary. Thus, the commissions earned by private respondents in selling softdrinks constitute part of the compensation or remuneration paid to drivers/salesmen and truck helpers for serving as such, and hence, must be considered part of the wages paid them. Likewise, there is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employee’s remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law. Facilities and Supplements/ Allowances Millares vs NLRC & PCIOP G.R. No. 122827 LIDUVINO M. MILLARES, J. CAPISTRANO CORDITA, SHIRLEY P. UY, et al. vs. NATIONAL LABOR RELATIONS COMMISSION, (FIFTH DIVISION) and PAPER INDUSTRIES CORPORATION OF THE PHILIPPINES (PICOP) March 29, 1999 Facts: Petitioners numbering one hundred sixteen (116) occupied the positions of Technical Staff, Unit Manager, Section Manager, Department Manager, Division Manager and Vice President in the mill site of respondent Paper Industries Corporation of the Philippines (PICOP) in Bislig, Surigao del Sur. In 1992 PICOP suffered a major financial setback allegedly brought about by the joint impact of restrictive government regulations on logging and the economic crisis. To avert further losses, it undertook a retrenchment program and terminated the services of petitioners. Accordingly, petitioners received separation pay computed at the rate of one (1) month basic pay for every year of service. Believing however that the allowances they allegedly regularly received on a monthly basis during their employment should have been included in the computation thereof they lodged a complaint for separation pay differentials.

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Applying Art.,97, par. (f), of the Labor Code which defines if wage," the Executive Labor Arbiter opined that the subject allowances, being customarily furnished by respondent PICOP and regularly received by petitioners, formed part of the latter's wages. Resolving the controversy from another angle, on the strength of the ruling in Santos v. NLRC and Soriano v. NLRC that in the computation of separation pay account should be taken not just of the basic salary but also of the regular allowances that the employee had been receiving, he concluded that the allowances should be included in petitioners' base pay. Thus respondent PICOP was ordered on 28 April 1994 to pay petitioners Four Million Four Hundred Eighty-One Thousand Pesos (P4,481,000.00) representing separation pay differentials plus ten per cent (10%) thereof as attorney's fees. The National Labor Relations did not share the view of the Executive Labor Arbiter. On 7 October 1994 it set aside the assailed decision by decreeing that the allowances did not form part of the salary base used in computing separation pay. Issue: Whether or not petitioner’s allowances are included in the definition of "facilities" in Article 97, par. (f), of the Labor Code. Held: "Customary" is founded on long-established and constant practice connoting regularity. The receipt of an allowance on a monthly basis does not ipso facto characterize it as regular and forming part of salary because the nature of the grant is a factor worth considering. On the other hand, the transportation allowance is in the form of advances for actual transportation expenses subject to liquidation x x x given only to employees who have personal cars. The Bislig allowance is given to Division Managers and corporate officers assigned in Bislig, Surigao del Norte. Once the officer is transferred outside Bislig, the allowance stops. The Court added that in the availment of the transportation allowance, respondent PICOP set another requirement that the personal cars be used by the employees in the performance of their duties. When the conditions for availment ceased to exist, the allowance reached the cutoff point. The finding of the NLRC along the same line likewise merits concurrence, i.e., petitioners' continuous enjoyment of the disputed allowances was based on contingencies the occurrence of which wrote finis to such enjoyment. Although it is quite easy to comprehend "board" and "lodging," it is not so with "facilities." Thus Sec. 5, Rule VII, Book III, of the Rules Implementing the Labor Code gives meaning to the term as including articles or services for the benefit of the employee or his family but excluding tools of the trade or articles or service primarily for the benefit of the employer or necessary to the conduct of the employer's business. The Staff /Manager's allowance may fall under "lodging" but the transportation and Bislig allowances are not embraced in "facilities" on the main consideration that they are granted as well as the Staff/Manager's allowance for respondent 248 | L a b o r S t a n d a r d s - C a s e D i g e s t s

PICOP's benefit and convenience, i.e., to insure that petitioners render quality performance. In determining whether a privilege is a facility, the criterion is not so much its kind but its purpose. Cash Wage/ Commission Songco vs. NLRC G.R. No. L-50999 JOSE SONGCO, ROMEO CIPRES, and AMANCIO MANUEL vs. NATIONAL LABOR RELATIONS COMMISSION (FIRST DIVISION), LABOR ARBITER FLAVIO AGUAS, and F.E. ZUELLIG (M), INC. March 23, 1990 Facts: Private respondent F.E. Zuellig (M), Inc., (hereinafter referred to as Zuellig) filed with the Department of Labor (Regional Office No. 4) an application seeking clearance to terminate the services of petitioners Jose Songco, Romeo Cipres, and Amancio Manuel (hereinafter referred to as petitioners) allegedly on the ground of retrenchment due to financial losses. This application was seasonably opposed by petitioners alleging that the company is not suffering from any losses. They alleged further that they are being dismissed because of their membership in the union. At the last hearing of the case, however, petitioners manifested that they are no longer contesting their dismissal. The parties then agreed that the sole issue to be resolved is the basis of the separation pay due to petitioners. Petitioners, who were in the sales force of Zuellig received monthly salaries of at least P40,000. In addition, they received commissions for every sale they made. On June 26,1978, the Labor Arbiter rendered a decision, ordering to pay the complainants separation pay equivalent to their one month salary (exclusive of commissions, allowances, etc.) for every year of service that they have worked with the company. The appeal by petitioners to the National Labor Relations Commission was dismissed for lack of merit. Hence, the present petition. Issue: Whether or not earned sales commissions and allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay. Held: Insofar as the issue of whether or not allowances should be included in the monthly salary of petitioners for the purpose of computation of their separation pay is concerned, this has been settled in the case of Santos v. NLRC, et al., G.R. No. 76721, September 21, 1987, 154 SCRA 166, where We ruled that "in the computation of backwages and separation pay, account must be taken not only of the basic salary of 249 | L a b o r S t a n d a r d s - C a s e D i g e s t s

petitioner but allowances."

also

of

her

transportation

and

emergency

living

Article 97(f) by itself is explicit that commission is included in the definition of the term "wage". It has been repeatedly declared by the courts that where the law speaks in clear and categorical language, there is no room for interpretation or construction; there is only room for application. A plain and unambiguous statute speaks for itself, and any attempt to make it clearer is vain labor and tends only to obscurity. However, it may be argued that if We correlate Article 97(f) with Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, there appears to be an ambiguity. Upon the other hand, the provisions of Section 10, Rule 1, Book VI of the implementing rules in conjunction with Articles 273 and 274 (sic) of the Code specifically states that the basis of the termination pay due to one who is sought to be legally separated from the service is 'his latest salary rates. Even Articles 273 and 274 (sic) invariably use 'monthly pay or monthly salary'. The above terms found in those Articles and the particular Rules were intentionally used to express the intent of the framers of the law that for purposes of separation pay they mean to be specifically referring to salary only. Each particular benefit provided in the Code and other Decrees on Labor has its own pecularities and nuances and should be interpreted in that light. Thus, for a specific provision, a specific meaning is attached to simplify matters that may arise there from. The general guidelines in (sic) the formation of specific rules for particular purpose. Thus, that what should be controlling in matters concerning termination pay should be the specific provisions of both Book VI of the Code and the Rules. At any rate, settled is the rule that in matters of conflict between the general provision of law and that of a particular- or specific provision, the latter should prevail. Boie Takeda vs. De La Serna G.R. No. 92174 BOIE-TAKEDA CHEMICALS, INC. vs. HON. DIONISIO DE LA SERNA, Acting Secretary of the Department of Labor and Employment December 10, 1993

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G.R. No. L-102552 PHILIPPINE FUJI XEROX CORP. vs. CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor and Employment, and PHILIPPINE FUJI XEROX EMPLOYEES UNION December 10, 1993 Facts: A routine inspection was conducted on May 2, 1989 in the premises of petitioner Boie-Takeda Chemicals, Inc. by Labor and Development Officer Reynaldo B. Ramos under Inspection Authority No. 4-209-89. Finding that Boie-Takeda had not been including the commissions earned by its medical representatives in the computation of their 13th month pay, Ramos served a Notice of Inspection Results on Boie-Takeda through its president, Mr. Benito Araneta, requiring BoieTakeda within ten (10) calendar days from notice to effect restitution or correction of "the underpayment of 13th month pay for the year(s) 1986, 1987 and 1988 of Med Rep (Revised Guidelines on the Implementation of 13th month pay # 5) in the total amount of P558,810.89." Boie-Takeda wrote the Labor Department contesting the Notice of Inspection Results. Regional Director Luna C. Piezas directed Boie-Takeda to appear before his Office on June 9 and 16, 1989. On the appointed dates, however, and despite due notice, no one appeared for Boie-Takeda, and the matter had perforce to be resolved on the basis of the evidence at hand. On July 24, 1989, Director Piezas issued an Order directing BoieTakeda to pay itsmedical representatives and its managers the total amount of FIVE HUNDRED SIXTY FIVE THOUSAND SEVEN HUNDRED FORTY SIX AND FORTY SEVEN CENTAVOS (P565,746.47) representing underpayment of thirteenth (13th) month pay for the years 1986, 1987, and 1988. A motion for reconsideration was seasonably filed by BoieTakeda with the Labor Secretary who affirmed the July 24, 1989 Order with modification. Issue: Whether or not the respondent labor officials in computing the thirteen month pay committed "grave abuse of discretion amounting to lack of jurisdiction". Held: In remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the "basic salary" for this is what the employee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional pay, which this Court has made clear do not form part of the "basic salary."

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Respondents would do well to distinguish this case from Songco vs. National Labor Relations Commission, supra, upon which they rely so heavily. What was involved therein was the term "salary" without the restrictive adjective "basic". Thus, in said case, the Court construed the term in its generic sense to refer to all types of "direct remunerations for services rendered," including commissions. In the same case, the Court also took judicial notice of the fact "that some salesmen do not receive any basic salary but depend on commissions and allowances or commissions alone, although an employer-employee relationship exists," which statement is quite significant in that it speaks of a "basic salary" apart and distinct from "commissions" and "allowances". Instead of supporting respondents' stand, it would appear that Songco itself recognizes that commissions are not part of "basic salary." In including commissions in the computation of the 13th month pay, the second paragraph of Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law unduly expanded the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that implementing rules cannot add to or detract from the provisions of the law it is designed to implement. Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law they are intended to carry into effect. They cannot widen its scope. An administrative agency cannot amend an act of Congress. Philippine Duplicators vs. NLRC G.R. No. 110068 PHILIPPINE DUPLICATORS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS February 15, 1995

Facts: On 17 January 1994, petitioner Duplicators filed (a) a Motion for Leave to Admit Second Motion for Reconsideration and (b) a Second Motion for Reconsideration. This time, petitioner invoked the decision handed down by this Court, through its Second Division, on 10 December 1993 in the two (2) consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B.Trajano, in G.R. Nos. 92174 and 102552, respectively. In its decision, the Second Division inter alia declared null and void the second paragraph of Section 5 (a) of the Revised Guidelines issued by then Secretary of Labor Drilon. Petitioner submits that the decision in the Duplicators case should now be considered as having been 252 | L a b o r S t a n d a r d s - C a s e D i g e s t s

abandoned or reversed by the Boie-Takeda decision, considering that the latter went "directly opposite and contrary to" the conclusion reached in the former. Petitioner prays that the decision rendered in Duplicators be set aside and another be entered directing the dismissal of the money claims of private respondent Philippine Duplicators' Employees' Union. Issue: Whether or not private respondent employees were entitled to 13th month computed on the basis of their fixed wages plus sales commissions. Held: If an employer cannot be compelled to pay a productivity bonus to his employees, it should follow that such productivity bonus, when given, should not be deemed to fall within the "basic salary" of employees when the time comes to compute their 13th month pay. The Court observed that the third item excluded from the term "basic salary" is cast in open ended and apparently circular terms: "other remunerations which are not part of the basic salary." However, what particular types of earnings and remuneration are or are not properly included or integrated in the basic salary are questions to be resolved on a case to case basis, in the light of the specific and detailed facts of each case. In principle, where these earnings and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing payments, they are properly excluded in computing the 13th month pay. However, sales commissions which are effectively an integral portion of the basic salary structure of an employee, shall be included in determining his 13th month pay. The Court recognized that both productivity bonuses and sales commissions may have an incentive effect. But there is reason to distinguish one from the other here. Productivity bonuses are generally tied to the productivity or profit generation of the employer corporation. Productivity bonuses are not directly dependent on the extent an individual employee exerts himself. A productivity bonus is something extra for which no specific additional services are rendered by any particular employee and hence not legally demandable, absent a contractual undertaking to pay it. Sales commissions, on the other hand, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an employee's endeavors. Commissions are paid upon the specific results achieved by a salesmanemployee. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay. Finally, the statement of the Second Division in Boie-Takeda declaring null and void the second paragraph of Section 5(a) of the Revised Guidelines Implementing the 13th Month Pay issued by former Labor Secretary Drilon, is properly understood as holding that that second paragraph provides no legal basis for including within the term "commission" there used additional payments to employees which are, as a matter of fact, in 253 | L a b o r S t a n d a r d s - C a s e D i g e s t s

the nature of profit-sharing payments or bonuses. If and to the extent that such second paragraph is so interpreted and applied, it must be regarded as invalid as having been issued in excess of the statutory authority of the Secretary of Labor. That same second paragraph however, correctly recognizes that commissions, like those paid in Duplicators, may constitute part of the basic salary structure of salesmen and hence should be included in determining the 13th month pay; to this extent, the second paragraph is and remains valid. Gratuity, Salary, and Wages; Differences Plastic Town Center Corporation vs. NLRC G.R. No. 81176 PLASTIC TOWN CENTER CORPORATION vs. NATIONAL LABOR RELATIONS COMMISSION AND NAGKAKAISANG LAKAS NG MANGGAGAWA (NLM)-KATIPUNAN April 19, 1989 Facts: On September 7,1984, the respondent Nagkakaisang Lakas ng Manggagawa (NLM)-Katipunan filed a complaint dated August 30, 1984. Complainant sustains the view that a month salary pertains to salary for 30 days, citing the provision of the Civil Code on the matter. On August 30, 1987, the respondent labor union appealed to the National Labor Relations Commission. The NLRC reversed the questioned decision and ordered the respondent to grant Pl.00 increase for July 1, 1984 and the equivalent of thirty days salary in gratuity pay, as required by its CBA with the complainants. The motion for reconsideration of said decision was denied on December 7, 1987. Hence, this petition. Issue: Whether or not the one month salary for daily paid workers should be computed on the basis of twenty-six (26) days and not thirty (30) days since daily wage workers do not work every day of the month including Sundays and holidays. Held: No. The Court finds no abuse of discretion on the part of the NLRC in granting gratuity pay equivalent to one month or 30 days salary. From the foregoing, gratuity pay is therefore, not intended to pay a worker for actual services rendered. It is a money benefit given to the workers whose purpose is "to reward employees or laborers, who have rendered satisfactory and efficient service to the company." (Sec. 2, CBA) While it may be enforced once it forms part of a contractual undertaking, the grant of such benefit is not mandatory so as to be considered a part of labor standard law unlike the salary, cost of living allowances, holiday pay, 254 | L a b o r S t a n d a r d s - C a s e D i g e s t s

leave benefits, etc., which are covered by the Labor Code. Nowhere has it ever been stated that gratuity pay should be based on the actual number of days worked over the period of years forming its basis. We see no point in counting the number of days worked over a ten-year period to determine the meaning of "two and one- half months' gratuity." The Civil Code also provides that when months are not designated by name, a month is understood to be thirty (30) days. The provision applies under the circumstances of this case. Effect on Benefits Davao Fruits Corporation vs. Associated Labor Union G.R. No. 85073 DAVAO FRUITS CORPORATION vs. ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rankand-file workers/employees of DAVAO FRUITS CORPORATION and NATIONAL LABOR RELATIONS COMMISSION August 24, 1993 Facts: On December 28, 1982 respondent Associated Labor Unions (ALU), for and in behalf of all the rank-and-file workers and employees of petitioner, filed a complaint (NLRC Case No. 1791-MC-XI-82) before the Ministry of Labor and Employment, Regional Arbitration Branch XI, Davao City, against petitioner, for "Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the thirteenth month pay for 1982. A decision was rendered on March 7, 1984 by Labor Arbiter Pedro C. Ramos, in favor of respondent ALU. Petitioner appealed the decision of the Labor Arbiter to the NLRC, which affirmed the said decision accordingly dismissed the appeal for lack of merit. Hence, the present petition. Issue: Whether or not in the computation of the thirteenth month pay given by employers to their employees under P.D. No. 851, payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays may be excluded in the computation and payment thereof, regardless of long-standing company practice.

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Held: Clearly, the term "basic salary" includes renumerations or earnings paid by the employer to employee, but excludes cost-of-living allowances, profit-sharing payments, and all allowances and monetary benefits which have not been considered as part of the basic salary of the employee as of December 16, 1975. The exclusion of cost-of-living allowances and profit sharing payments shows the intention to strip "basic salary" of payments which are otherwise considered as "fringe" benefits. This intention is emphasized in the catch all phrase "all allowances and monetary benefits which are not considered or integrated as part of the basic salary." Basic salary, therefore does not merely exclude the benefits expressly mentioned but all payments which may be in the form of "fringe" benefits or allowances. In fact, the Supplementary Rules and Regulations Implementing P.D. No. 851 are very emphatic in declaring that overtime pay, earnings and other remunerations shall be excluded in computing the thirteenth month pay. In other words, whatever compensation an employee receives for an eight-hour work daily or the daily wage rate in the basic salary. Any compensation or remuneration other than the daily wage rate is excluded. It follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of determining the thirteen month pay. Regional Tripartite Wages and Productivity Board – R.A. No. 6727, Section 3; Labor Code Article 122, 126 Nasipit Lumber Company, Inc. vs. NLRC G.R. No. 54424 NASIPIT LUMBER COMPANY, INC. vs. NATIONAL LABOR RELATIONS COMMISSION, EXECUTIVE LABOR ARBITER ILDEFONSO G. AGBUYA and JUANITO COLLADO August 31, 1989 Facts: On October 20, 1990, the Region X [Tripartite Wages and Productivity] Board issued Wage Order No. RX-01; Subsequently, a supplementary Wage Order No. RX-01-A was issued by the Board. Upon the effectivity of the original Wage Order RX-01, all workers and employees in the private sector in Region X already receiving wages above the statutory minimum wage rates up to one hundred and twenty pesos (P120.00) per day shall also receive an increase of P13, P11, P9 per day, as provided for under Wage Order No. RX-01;

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Applicants/appellees Nasipit Lumber Company, Inc. (NALCO), Philippine Wallboard Corporation (PWC), and Anakan Lumber Company (ALCO), claiming to be separate and distinct from each other but for expediency and practical purposes, jointly filed an application for exemption from the above-mentioned Wage Orders as distressed establishments under Guidelines No. 3, issued by the herein Board on November 26, 1990, specifically Sec. 3(2); Applicants/appellees aver that they are engaged in logging and integrated wood processing industry but are distressed due to conditions beyond their control. On the other hand, oppositor/appellant Unions jointly opposed the application for exemption on the ground that said companies are not distressed establishments since their capitalization has not been impaired by 25%. Dissatisfied with the RTWPBs Decision, the private respondents lodged an appeal with the NWPC, which affirmed ALCOs application but reversed the applications of herein petitioners, NALCO and PWC. Hence, this recourse. Issue: Whether or not a guideline issued by an RTWPB without the approval of or, worse, contrary to the guidelines promulgated by the NWPC valid. Held: To allow RTWPB Guideline No. 3 to take effect without the approval of the NWPC is to arrogate unto RTWPB a power vested in the NWPC by Article 121 of the Labor Code, as amended by RA 6727. The Court will not countenance this naked usurpation of authority. It is a hornbook doctrine that the issuance of an administrative rule or regulation must be in harmony with the enabling law. If a discrepancy occurs between the basic law and an implementing rule or regulation, it is the former that prevails. This is so because the law cannot be broadened by a mere administrative issuance. It is axiomatic that [a]n administrative agency cannot amend an act of Congress. Article 122 (e) of the Labor Code cannot be construed to enable the RTWPB to decide applications for exemption on the basis of its own guidelines which were not reviewed and approved by the NWPC, for the simple reason that a statutory grant of powers should not be extended by implication beyond what may be necessary for their just and reasonable execution. Official powers cannot be merely assumed by administrative officers, nor can they be created by the courts in the exercise of their judicial functions. There is no basis for petitioners claim that their vested rights were prejudiced by the NWPCs alleged retroactive application of its own rules which were issued on February 25, 1991 and took effect on March 18, 1991. Such claim cannot stand because Guideline No. 3, as previously discussed and as correctly concluded by the NWPC, was not valid and, thus, cannot be a source of a right; much less, a vested one. Salary-Ceiling Method

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Employers Confederation of the Philippines vs. Secretary of Labor and Employment G.R. No. 96169 EMPLOYERS CONFEDERATION OF THE PHILIPPINES vs. NATIONAL WAGES AND PRODUCTIVITY COMMISSION AND REGIONAL TRIPARTITE WAGES AND PRODUCTIVITY BOARD-NCR, TRADE UNION CONGRESS OF THE PHILIPPINES September 24, 1991

Facts: On October 15, 1990, the Regional Board of the National Capital Region issued Wage Order No. NCR-01, increasing the minimum wage by P17.00 daily in the National Capital Region. The Trade Union Congress of the Philippines (TUCP) moved for reconsideration; so did the Personnel Management Association of the Philippines (PMAP). 5ECOP opposed. On October 23, 1990, the Board issued Wage Order No. NCR-01-A amending Wage Order No. NCR-01; ECOP appealed to the National Wages and Productivity Commission. On November 6, 1990, the Commission promulgated an Order, dismissing the appeal for lack of merit. On November 14, 1990, the Commission denied reconsideration. Issue: Whether or not Wage Order No. NCR-01-A providing for new wage rates, as well as authorizing various Regional Tripartite Wages and Productivity Boards to prescribe minimum wage rates for all workers in the various regions, and for a National Wages and Productivity Commission to review, among other functions, wage levels determined by the boards is valid. Held: The Supreme Court held that Republic Act No. 6727 was intended to rationalize wages, first, by providing for full-time boards to police wages round-the-clock, and second, by giving the boards enough powers to achieve this objective. The Court is of the opinion that Congress meant the boards to be creative in resolving the annual question of wages without labor and management knocking on the legislature's door at every turn. The Court's opinion is that if Republic No. 6727 intended the boards alone to set floor wages, the Act would have no need for a board but an accountant to keep track of the latest consumer price index, or better, would have Congress done it as the need arises, as the legislature, prior to the Act, has done so for years. The fact of the matter is that the Act sought a "thinking" group of men and women bound by statutory standards. 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-firing, like rate-fixing, 258 | L a b o r S t a n d a r d s - C a s e D i g e s t s

constitutes an act 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. As this Court has indicated, it is impressed that the above-quoted standards are sufficient, and in the light of the floor-wage method's failure, the Court believes that the Commission correctly upheld the Regional Board of the National Capital Region. Validity Cagayan Sugar Milling Company vs. Secretary of Labor and Employment G.R. No. 128399 CAGAYAN SUGAR MILLING COMPANY vs. SECRETARY OF LABOR AND EMPLOYMENT, DIRECTOR RICARDO S. MARTINEZ, SR., and CARSUMCO EMPLOYEES UNION January 15, 1998 Facts: Regional Wage Order No. RO2-02 was issued by RTWPB on November 1993. On September 1994, labor inspectors from DOLE Regional Office examined the books of Cagayan Sugar Milling Company (CSMC) to determine its compliance with the said wage order and found out that did not implement it across the board increase. DOLE Regional Director ruled that CSMC indeed violated the said order. CSMC, dissatisfied with ruling, appealed to Labor Secretary Quisumbing. On the same date, RTWPB issued Wage Order No. RO20-02-A amending the former wage order. Issue: Whether or not Wage Order No. RO20-02-A is valid. Held: No. The Court held that Wage Order No. RO20-02-A is indeed null and void since it did not undergo the correct procedure of how a wage order is to be issued. Any Wage Order shall only take effect after 15 days from its complete publication in at least one general circulation on the region and undergo public hearings and consultations and giving notice to any party that has interest or will be affected by such wage order. And, CSMC was found to have complied with Wage RO2-02. Wage Distortion Prubankers Association vs. Prudential Bank & Trust Company G.R. No. 131247

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PRUBANKERS ASSOCIATION vs. PRUDENTIAL BANK & TRUST COMPANY January 25, 1999 Facts: On November 18, 1993, the Regional Tripartite Wages and Productivity Board of Region V issued Wage Order No. RB 05-03 which provided for a Cost of Living Allowance (COLA) to workers in the private sector who ha[d] rendered service for at least three (3) months before its effectivity, and for the same period [t]hereafter, in the following categories: SEVENTEEN PESOS AND FIFTY CENTAVOS (P17.50) in the cities of Naga and Legaspi; FIFTEEN PESOS AND FIFTY CENTAVOS (P15.50) in the municipalities of Tabaco, Daraga, Pili and the city of Iriga; and TEN PESOS (P10.00) for all other areas in the Bicol Region. Subsequently on November 23, 1993, the Regional Tripartite Wages and Productivity Board of Region VII issued Wage Order No. RB VII-03, which directed the integration of the COLA mandated pursuant to Wage Order No. RO VII-02-A into the basic pay of all workers. It also established an increase in the minimum wage rates for all workers and employees in the private sector as follows: by Ten Pesos (P10.00) in the cities of Cebu, Mandaue and Lapulapu; Five Pesos (P5.00) in the municipalities of Compostela, Liloan, Consolacion, Cordova, Talisay, Minglanilla, Naga and the cities of Davao, Toledo, Dumaguete, Bais, Canlaon, and Tagbilaran. The petitioner then granted a COLA of P17.50 to its employees at its Naga Branch, the only branch covered by Wage Order No. RB 5-03, and integrated the P150.00 per month COLA into the basic pay of its rank-andfile employees at its Cebu, Mabolo and P. del Rosario branches, the branches covered by Wage Order No. RB VII-03. On June 7, 1994, respondent Prubankers Association wrote the petitioner requesting that the Labor Management Committee be immediately convened to discuss and resolve the alleged wage distortion created in the salary structure upon the implementation of the said wage orders. Respondent Association then demanded in the Labor Management Committee meetings that the petitioner extend the application of the wage orders to its employees outside Regions V and VII, claiming that the regional implementation of the said orders created a wage distortion in the wage rates of petitioners employees nationwide. As the grievance could not be settled in the said meetings, the parties agreed to submit the matter to voluntary arbitration. The Arbitration Committee formed for that purpose was composed of the following: public respondent Froilan M. Bacungan as Chairman, with Attys. Domingo T. Anonuevo and Emerico O. de Guzman as members. The issue presented before the Committee was whether or not the banks separate and regional implementation of Wage Order No. 5-03 at its Naga Branch and Wage Order No. VII-03 at its Cebu, Mabolo and P. del Rosario branches, created a wage distortion in the bank 260 | L a b o r S t a n d a r d s - C a s e D i g e s t s

nationwide. The Arbitration Committee on June 18, 1996 rendered the questioned decision. Issue: Whether or not a wage distortion resulted from respondent’s implementation of the aforecited Wage Orders. Held: The statutory definition of wage distortion is found in Article 124 of the Labor Code, as amended by Republic Act No. 6727. Elaborating on this statutory definition, the Court ruled: Wage distortion presupposes a classification of positions and ranking of these positions at various levels. One visualizes a hierarchy of positions with corresponding ranks basically in terms of wages and other emoluments. Where a significant change occurs at the lowest level of positions in terms of basic wage without a corresponding change in the other level in the hierarchy of positions, negating as a result thereof the distinction between one level of position from the next higher level, and resulting in a parity between the lowest level and the next higher level or rank, between new entrants and old hires, there exists a wage distortion. xxx. The concept of wage distortion assumes an existing grouping or classification of employees which establishes distinctions among such employees on some relevant or legitimate basis. This classification is reflected in a differing wage rate for each of the existing classes of employees. Wage distortion involves four elements: 1. An existing hierarchy of positions with corresponding salary rates 2. A significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one 3. The elimination of the distinction between the two levels 4. The existence of the distortion in the same region of the country. In the present case, it is clear that no wage distortion resulted when respondent implemented the subject Wage Orders in the covered branches. In the said branches, there was an increase in the salary rates of all pay classes. Furthermore, the hierarchy of positions based on skills, length of service and other logical bases of differentiation was preserved. In other words, the quantitative difference in compensation between different pay classes remained the same in all branches in the affected region. Put differently, the distinction between Pay Class 1 and Pay Class 2, for example, was not eliminated as a result of the implementation of the two Wage Orders in the said region. Hence, it cannot be said that there was a wage distortion. Bankard Employees Union G.R. No. 140689

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BANKARD EMPLOYEES UNION-WORKERS ALLIANCE TRADE UNIONS vs. NATIONAL LABOR RELATIONS COMMISSION and BANKARD, INC. February 17, 2004

Facts: Bankard, Inc. (Bankard) classifies its employees by levels, to wit: Level I, Level II, Level III, Level IV, and Level V. On May 28, 1993, its Board of Directors approved a New Salary Scale, made retroactive to April 1, 1993, for the purpose of making its hiring rate competitive in the industrys labor market. The New Salary Scale increased the hiring rates of new employees, to wit: Levels I and V by one thousand pesos (P1,000.00), and Levels II, III and IV by nine hundred pesos (P900.00). Accordingly, the salaries of employees who fell below the new minimum rates were also adjusted to reach such rates under their levels. Bankards move drew the Bankard Employees Union-WATU (petitioner), the duly certified exclusive bargaining agent of the regular rank and file employees of Bankard, to press for the increase in the salary of its old, regular employees. Bankard took the position, however, that there was no obligation on the part of the management to grant to all its employees the same increase in an across-the-board manner. As the continued request of petitioner for increase in the wages and salaries of Bankards regular employees remained unheeded, it filed a Notice of Strike on August 26, 1993 on the ground of discrimination and other acts of Unfair Labor Practice (ULP). A director of the National Conciliation and Mediation Board treated the Notice of Strike as a Preventive Mediation Case based on a finding that the issues therein were not strikeable. Petitioner filed another Notice of Strike on October 8, 1993 on the grounds of refusal to bargain, discrimination, and other acts of ULP - union busting. The strike was averted, however, when the dispute was certified by the Secretary of Labor and Employment for compulsory arbitration. The NLRC dismissed the case for lack of merit. Petitioners motion for reconsideration of the dismissal of the case was also denied. Petitioner thereupon filed a petition for certiorari. Issue: Whether or not the unilateral adoption by an employer of an upgraded salary scale that increased the hiring rates of new employees without increasing the salary rates of old employees resulted in wage distortion within the contemplation of Article 124 of the Labor Code. Held: The Court held that wage distortion does not exist in this case as all the elements were not met. There are four elements of wage distortion namely: (1) An existing hierarchy of positions with corresponding salary 262 | L a b o r S t a n d a r d s - C a s e D i g e s t s

rates, (2) a significant change in the salary rate of a lower pay class without a concomitant increase in the salary rate of a higher one, (3) the elimination of the distinction between the two levels and (4) the existence of the distortion in the same region of the country. In this case, the employees of Bankard have been “historically” classified into levels (I-V), and not on the basis of their length of service. New employees are automatically placed under any of these levels upon their entry. This is the wage structure formulated by Bankard, a recognized management prerogative which Bankard Union may not encroach upon by creating their own independent classification (ie, based on newly hired and old employees) to use as a basis for demanding an across-the-board salary increase. According to established jurisprudence, the formulation of a wage structure through the classification of employees is a matter of management judgment and discretion. Based on the wage structure, there is no hierarchy of positions between the newly hired and regular employees of Bankard since it is a structure which is based on level, not seniority. The first element of wage distortion is therefore lacking. Second, the third element of wage distortion i.e. the elimination of the distinction between the two levels is also missing. Even if there was indeed a resulting decrease in the wage gap between the salary of the old and new employees, the gap was held to be insignificant as to result in severe contraction of the intentional quantitative differences in the salary rates between the employee group as the classification under the wage structure is based on rank, and not seniority. Form of Payment – Labor Code Article 102; Civil Code Article 1705; Book III, Rule VIII, Sections 1,2 Congson vs. NLRC G.R. No. 114250 DOMINICO C. CONGSON vs. NATIONAL LABOR RELATIONS COMMISSION, NOE BARGO, ROGER HIMENO, RAYMUNDO BADAGOS, PATRICIO SALVADOR, SR., NEHIL BARGO, JOEL MENDOZA, and EMMANUEL CALIXIHAN April 5, 1995 Facts: Petitioner is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates by petition'er as regular piece-rate workers. They were uniformly paid at a rate of P1.00 per tuna weighing thirty (30) to eighty (80) kilos per movement, that is — from the fishing boats down to petitioner's storage plant at a load/unload cycle of work until the tuna catch reached its final shipment/destination. They did the work of unloading tuna from fishing boats to truck haulers; unloading 263 | L a b o r S t a n d a r d s - C a s e D i g e s t s

them again at petitioner's cold storage plant for filing, storing, cleaning, and maintenance; and finally loading the processed tuna for shipment. They worked seven (7) days a week. During the first week of June 1990, petitioner notified his workers of his proposal to reduce the rate-per-tuna movement due to the scarcity of tuna. Private respondents resisted petitioner's proposed rate reduction. When they reported for work the next day, they were informed that they had been replaced by a new set of workers, When they requested for a dialogue with the management, they were instructed to wait for further notice. They waited for the notice of dialogue for a full week but in vain. On 15 June 1990, private respondents filed a case against petitioner before the NLRC Sub-Regional Arbitration. On 2 July 1990, private respondents filed another case against petitioner, containing an additional claim for separation pay should their complaint for constructive dismissal be upheld. Labor Arbiter held that petitioner indeed constructively dismissed the respondents. On appeal, NLRC ruled that the petitioner was guilty of illegal dismissal. Hence this petition. Issue: Whether or not the mode of payment used by the petitioner is accepted and what the law mandates. Held: Article 102 of the Labor Code provides that: No employer shall pay the wages of an employee by means of, promissory notes, vouchers, coupons, tokens tickets, chits, or any object other than legal tender,even when expressly requested by the employee. Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is necessary as specified in appropriate regulations to be issued by the Secretary of Labor or as stipulated in a collective bargaining agreement. Undoubtedly, petitioner's practice of paying the private respondents the minimum wage by means of legal tender combined with tuna liver and intestines runs counter to the above cited provision of the Labor Code. The fact that said method of paying the minimum wage was not only agreed upon by both parties in the employment agreement but even expressly requested by private respondents, does not shield petitioner. Article 102 of the Labor Code is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted to pay wages informs other than legal tender, that is, by checks or money order, is when the circumstances prescribed in the second paragraph of Article 102 are present Direct Payment of Wages – Labor Code Article 105, Sections 5, 6 Bermiso vs. Escaño Inc. G.R. No. L-11606 264 | L a b o r S t a n d a r d s - C a s e D i g e s t s

EUFROCIO BERMISO, ET AL. vs. HIJOS DE F. ESCAÑO, INC., ET AL. February 28, 1959 Facts: Petitioners originally numbering 45 and formerly composing the Democratic Labor Association and the Katubsanan sa Mamumuo instituted this action before the Court of Industrial Relations on August 5, 1952, praying for reinstatement with back wages, direct payment of wages to the laborers instead of through the union, payment of accrued overtime pay and wage differentials, prohibition from carrying load in excess of 50 kilos, minimum daily wage of P5.00, vacation and sick leave, free hospitalization, accident insurance, free choice of labor union and grievance committee. Of the original petitioners only five continued to take interest in the action, the other having desisted therefrom. After hearing the Court of Industrial Relations ordered the reinstatement of the said five laborers to their former work and positions in the Sabay group. The court held that insofar as the stevedores loading and unloading its vessels are concerned, the Hijos de F. Escaño is an employer of the petitioners. With respect, however, to the arrastre service, it held that the question is beyond the scope of the relationship between it and the petitioners. After a review of the testimonies given by the petitioners and those given on behalf of the respondents, the court below also found that the claimants failed to establish any reasonable basis for all their claims except that for their reinstatement and, therefore, denied them for lack of merit. As to the reinstatement of the 5 petitioners, namely, of Eufrocio Bermiso, Fotunato Geteso, Constancio Olaco, Laureano Amistoso and Vicente Tuyogan, to their former work and positions in the Sabay group; their claim for back wages were denied. With respect to the direct payment of wages to the laborers, the court found that there was no reason for changing the practice of apportioning the wages for their joint labor and sharing therein, because of the 150 members only 5 were dissatisfied. Issue: Whether or not the decision violates the law ondirect payment of wages. Held: The law relied upon by them is Section 10, par. (b) of Republic Act No. 602, which provides as follows: SEC. 10. (b) Wages, including wages which may be paid retroactively for whatever reason, shall be paid directly to the employee to whom they are due, except: (1) In cases where the employee is insured with his consent by the employer, the latter shall entitled to deduct from the wage of the employee the amount paid by the employer for premiums on the insurance; 265 | L a b o r S t a n d a r d s - C a s e D i g e s t s

(2) In cases of force majeure rendering such payments impossible; and (3) In cases where the right of the employee or his union to checkoff has been recognized by the employer or authorized in writing by the individual employees concerned. There is no question that the work of stevedoring was undertaken by the laborers, not in their individual capacities, but as a group. The contract to perform the service was made by the leader of the group, for and on behalf of the latter, not for each and every one of them individually. For the sake of convenience it was necessary that the group must be large enough to be able to perform the task of loading and unloading in as short time as possible. As the group undertook to render service for vessels other than those of the Hijos de F. Escaño, it was absolutely necessary that some sort of leadership be instituted in the group to determine which of the members will work for one vessel and which for another. Leadership is also essential to obtain work for the group as employers naturally prefer to deal with a leader of a group than with each member individually. Leadership was, therefore, essential not only to secure work for the group but to arrange the laborers who are to perform the service. The leadership must be paid for and it was not shown that the head of the groups got the lion's share of the cost of the service rendered. Under the circumstances we are not prepared to say that the provision of law on direct payment of wages has been violated. The lower court did not find sufficient evidence to show that racketeering was employed by the leaders. If any existed the remedy can not be found in this court; it is for the group or organize into a closely knitted union which would secure the privileges that the selves who would not exploit them. Lastly, the respondent Hijos de F. Escaño did not pay for the stevedoring charges. These were collected by the group from the shippers themselves, without the intervention of the respondent Escaño. How can the court order the latter to pay the charges to the group or its members, when the charges were collected by the latter from the shippers, in accordance with the practice of the group itself? We also fine no ground for requiring the respondent Hijos de F. Escaño to pay back wages. The latter respondent did not deal with the petitioners individually, entering into a contract of employment with them. Said respondent dealt with the group thru its leaders. If the group, thru its leaders, did not allow the petitioners to work and share in the price paid therefor, the one responsible is not the respondent Escaño but the leader thru whom the group itself made the contract for work and apportioned the time of work for each member and the pay therefor. Again as stated above, the remedy must be sought not in the tribunals of the country but in the laborers themselves who should organized and thru such organization as they may establish, as envisioned by the Industrial Peace Act, secure the privileges demanded.

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Wage Deduction – Labor Code Article 113; Book III, Rule VIII, Section 10 Apodaca vs. NLRC G.R. No. 80039 ERNESTO M. APODACA vs. NATIONAL LABOR RELATIONS COMMISSION, JOSE M. MIRASOL and INTRANS PHILS., INC. April 18, 1989 Facts: Petitioner was employed in respondent corporation. On August 28, 1985, respondent Jose M. Mirasol persuaded petitioner to subscribe to 1,500 shares of respondent corporation at P100.00 per share or a total of P150,000.00. He made an initial payment of P37,500.00. On September 1, 1975, petitioner was appointed President and General Manager of the respondent corporation. However, on January 2, 1986, he resigned. On December 19, 1986, petitioner instituted with the NLRC a complaint against private respondents for the payment of his unpaid wages, his cost of living allowance, the balance of his gasoline and representation expenses and his bonus compensation for 1986. Petitioner and private respondents submitted their position papers to the labor arbiter. Private respondents admitted that there is due to petitioner the amount of P17,060.07 but this was applied to the unpaid balance of his subscription in the amount of P95,439.93. Petitioner questioned the set-off alleging that there was no call or notice for the payment of the unpaid subscription and that, accordingly, the alleged obligation is not enforceable. In a decision dated April 28, 1987, the labor arbiter sustained the claim of petitioner for P17,060.07 on the ground that the employer has no right to withhold payment of wages already earned under Article 103 of the Labor Code. Upon the appeal of the private respondents to public respondent NLRC, the decision of the labor arbiter was reversed in a decision dated September 18, 1987. The NLRC held that a stockholder who fails to pay his unpaid subscription on call becomes a debtor of the corporation and that the set-off of said obligation against the wages and others due to petitioner is not contrary to law, morals and public policy. Issue: Whether or not an obligation arising therefrom be offset against a money claim of an employee against the employer. Held: No, it cannot be used to offset the obligation. Assuming arguendo that the NLRC may exercise jurisdiction over the said subject matter under the circumstances of this case, the unpaid subscriptions are not due and payable until a call is made by the corporation for payment. Private respondents have not presented a resolution of the board of directors of respondent corporation calling for the payment of the unpaid

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subscriptions. It does not even appear that a notice of such call has been sent to petitioner by the respondent corporation. What the records show is that the respondent corporation deducted the amount due to petitioner from the amount receivable from him for the unpaid subscriptions. 3 No doubt such set-off was without lawful basis, if not premature. As there was no notice or call for the payment of unpaid subscriptions, the same is not yet due and payable. Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off against the wages and other benefits due petitioner. Article 113 of the Labor Code allows such a deduction from the wages of the employees by the employer, only in three instances, to wit: ART. 113. Wage Deduction. — No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: (a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. Genesis Transport Service, Inc. vs. UMMGT & Taroy G.R. No. 182114 GENESIS TRANSPORT SERVICE, INC. and RELY L. JALBUNA vs. UNYON NG MALAYANG MANGGAGAWA NG GENESIS TRANSPORT (UMMGT), and JUAN TAROY April 5, 2010 Facts: Respondent Juan Taroy was hired on February 2, 1992 by petitioner Genesis Transport Service, Inc. (Genesis Transport) as driver on commission basis at 9% of the gross revenue per trip. On May 10, 2002, Taroy was, after due notice and hearing, terminated from employment after an accident on April 20, 2002 where he was deemed to have been driving recklessly. Taroy thus filed on June 7, 2002 a complaint 1 for illegal dismissal and payment of service incentive leave pay, claiming that he was singled out for termination because of his union activities, other drivers who had met accidents not having been dismissed from employment. Taroy later amended2 his complaint to implead his herein co-respondent Unyon ng Malayang Manggagawa ng Genesis Transport (the union) as 268 | L a b o r S t a n d a r d s - C a s e D i g e s t s

complainant and add as grounds of his cause of action unfair labor practice (ULP), reimbursement of illegal deductions on tollgate fees, and payment of service incentive leave pay. Respecting the claim for refund of illegal deductions, Taroy alleged that in 1997, petitioner started deducting from his weekly earnings an amount ranging from P160 to P900 representing toll fees, without his consent and written authorization as required under Article 113 of the Labor Code and contrary to company practice; and that deductions were also taken from the bus conductor’s earnings to thus result to double deduction. By Decision9 of June 30, 2004, the Labor Arbiter found that Genesis Transport discharged the burden of proof that Taroy’s dismissal was on a valid cause. As to the charge of ULP, the Labor Arbiter ruled that the respondent union failed to prove that Taroy’s dismissal was due to his union membership and/or activities. With respect to Taroy’s claim for refund, however, the Labor Arbiter ruled in his favor for if, as contended by Genesis Transport, tollgate fees form part of overhead expense, why were not expenses for fuel and maintenance also charged to overhead expense. The Labor Arbiter thus concluded that "it would appear that the tollgate fees are deducted from the gross revenues and not from the salaries of drivers and conductors, but certainly the deduction thereof diminishes the take home pay of the employees." Thus, the Labor Arbiter ordered petitioner to refund to complainant the underpayment/differential due him as a result of the deduction of the tollgate fees from the gross receipts. By Resolution of December 29, 2005, the NLRC affirmed the Labor Arbiter’s decision with modification. It deleted the award to Taroy of attorney’s fees. The parties filed their respective motions for reconsideration which were denied. On respondents’ appeal, the Court of Appeals reinstated the Labor Arbiter’s order for petitioners to refund Taroy "the underpayment." Issue: Whether or not tollgate fees count as a valid form deduction. Held: No, it is not.Absent proof that the NLRC cases cited by petitioners have attained finality, the Court may not consider them to constitute res judicata on petitioners’ claim for refund of the "underpayment" due Taroy. Neither may the Court take judicial notice of petitioners’ claim that the deduction of tollgate fees from the gross earnings of drivers is an accepted and long-standing practice in the transportation industry. Expertravel & Tours, Inc. v. Court of Appeals10 instructs: Generally speaking, matters of judicial notice have three material requisites: (1) the matter must be one of common and general knowledge; (2) it must be well and authoritatively settled and not doubtful or uncertain; and (3) it must be known to be within the limits of the jurisdiction of the court. The principal guide in determining what facts may 269 | L a b o r S t a n d a r d s - C a s e D i g e s t s

be assumed to be judicially known is that of notoriety. Hence, it can be said that judicial notice is limited to facts evidenced by public records and facts of general notoriety. Moreover, a judicially noticed fact must be one not subject to a reasonable dispute in that it is either: (1) generally known within the territorial jurisdiction of the trial court; or (2) capable of accurate and ready determination by resorting to sources whose accuracy cannot reasonably be questionable. Things of "common knowledge," of which courts take judicial matters coming to the knowledge of men generally in the course of the ordinary experiences of life, or they may be matters which are generally accepted by mankind as true and are capable of ready and unquestioned demonstration. Thus, facts which are universally known, and which may be found in encyclopedias, dictionaries or other publications, are judicially noticed, provided, they are of such universal notoriety and so generally understood that they may be regarded as forming part of the common knowledge of every person. As the common knowledge of man ranges far and wide, a wide variety of particular facts have been judicially noticed as being matters of common knowledge. But a court cannot take judicial notice of any fact which, in part, is dependent on the existence or nonexistence of a fact of which the court has no constructive knowledge. None of the material requisites for the Court to take judicial notice of a particular matter was established by petitioners. Albeit the amounts representing tollgate fees were deducted from gross revenues and not directly from Taroy’s commissions, the labor tribunal and the appellate court correctly held that the withholding of those amounts reduced the amount from which Taroy’s 9% commission would be computed. Such a computation not only marks a change in the method of payment of wages, resulting in a diminution of Taroy’s wages in violation of Article 113 vis-à-vis Article 100 of the Labor Code, as amended. It need not be underlined that without Taroy’s written consent or authorization, the deduction is considered illegal. Besides, the invocation of the rule on "company practice" is generally used with respect to the grant of additional benefits to employees, not on issues involving diminution of benefits. Requirement to Make Deposits for Loss of Damage – Labor Code Articles 114, 115; Book III, Rule VIII, Section 11 Dentech Manufacturing Corporation vs. NLRC G.R. No. 81477 DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA in his capacity as General Manager vs. NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO, JUANITO TAJAN, JR. and JOEL TORNO 270 | L a b o r S t a n d a r d s - C a s e D i g e s t s

April 19, 1989 Facts: Private respondents Benjamin Marbella, Armando Torno, Juanito Tajan, Jr. and Joel Torno are members of the Confederation of Citizens Labor Union, a labor organization registered with the Department of Labor and Employment. They used to be the employees of the petitioner firm, working therein as welders, upholsterers and painters. They were already employed with the company when it was still a sole proprietorship. They were dismissed from the firm beginning February 14, 1985. On June 26, 1985, the private respondents filed a Complaint with the arbitration branch of the respondent National Labor Relations Commission (NLRC) against the petitioners for, among others, illegal dismissal and violation of Presidential Decree No. 851. They were originally joined by another employee, one Raymundo Labarda, who later withdrew his Complaint. At first, they only sought the payment of their 13th month pay under Presidential Decree No. 851 as well as their separation pay, and the refund of the cash bond they filed with the company at the start of their employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and service incentive leave pay, and separation pay in the event that they are not reinstated. It is alleged in the Complaint and Position Paper accompanying the same that they were dismissed from the firm for pursuing union activities. The petitioners also argued that the private respondents are not entitled to a 13th month pay. They maintained that each of the private respondents receive a total monthly compensation of more that Pl,000.00 and that under Section 1 of Presidential Decree No. 851, such employees are not entitled to receive a 13th month pay. The petitioners likewise alleged that the company is in bad financial shape and that pursuant to Section 3 of the Decree, the firm is exempted from complying with the provisions of the Decree. A hearing was conducted to allow the parties to further ventilate their views. Thereafter, the labor arbiter assigned to the case rendered a Decision dated January 28, 1987, ordering the reinstatement of complainants. We also find respondent's contention for exemption in the payment of (the) 13th month pay as without validity (sic). The ceiling of P1,000.00 a month in the matter of 13th month pay has been removed and complainants are entitled to receive from respondents at least the unprescribed 13th month pay for the last three years based on their uncontroverted pleadings. This order includes the money value of the service incentive leave pay of complainants and the cash bond. In a Resolution dated November 4,1987, the Third Division of the NLRC affirmed the Decision of the labor arbiter. Issue: Whether or not the private respondents are entitled to the refund of the cash bond. 271 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Held: Yes, they are. The refund of the cash bond filed by the private respondents is in order. Article 114 of the Labor Code prohibits an employer from requiting his employees to file a cash bond or to make deposits, subject to certain exceptions, to witArt. 114. Deposits for loss or damage.- No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations. The petitioners have not satisfactorily disputed the applicability of this provision of the Labor Code to the case at bar. Considering further that the petitioners failed to show that the company is authorized by law to require the private respondents to file the cash bond in question, the refund thereof is in order. The allegation of the petitioners to the effect that the proceeds of the cash bond had already been given to a certain carinderia to pay for the accounts of the private respondents therein does not merit serious consideration. As correctly observed by the Solicitor General, no evidence or receipt has been shown to prove such payment. Accordingly, the Court is not convinced that the respondent National Labor Relations Commission committed a grave abuse of discretion amounting to loss of jurisdiction in affirming the Decision of the labor arbiter. Five J Taxi vs. NLRC G.R. No. 111474 FIVE J TAXI and/or JUAN S. ARMAMENTO vs. NATIONAL LABOR RELATIONS COMMISSION, DOMINGO MALDIGAN and GILBERTO SABSALON August 22, 1994 Facts: Private respondents Domingo Maldigan and Gilberto Sabsalon were hired by the petitioners as taxi drivers 2 and, as such, they worked for 4 days weekly on a 24-hour shifting schedule. Aside from the daily "boundary" of P700.00 for air-conditioned taxi or P450.00 for non-airconditioned taxi, they were also required to pay P20.00 for car washing, and to further make a P15.00 deposit to answer for any deficiency in their "boundary," for every actual working day. In less than 4 months after Maldigan was hired as an extra driver by the petitioners, he already failed to report for work for unknown reasons. Later, petitioners learned that he was working for "Mine of Gold" Taxi 272 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Company. With respect to Sabsalon, while driving a taxicab of petitioners on September 6, 1983, he was held up by his armed passenger who took all his money and thereafter stabbed him. He was hospitalized and after his discharge, he went to his home province to recuperate. Sometime in 1989, Maldigan requested petitioners for the reimbursement of his daily cash deposits for 2 years, but herein petitioners told him that not a single centavo was left of his deposits as these were not even enough to cover the amount spent for the repairs of the taxi he was driving. This was allegedly the practice adopted by petitioners to recoup the expenses incurred in the repair of their taxicab units. When Maldigan insisted on the refund of his deposit, petitioners terminated his services. Sabsalon, on his part, claimed that his termination from employment was effected when he refused to pay for the washing of his taxi seat covers. On November 27, 1991, private respondents filed a complaint with the Manila Arbitration Office of the National Labor Relations Commission charging petitioners with illegal dismissal and illegal deductions. That complaint was dismissed, the labor arbiter holding that it took private respondents two years to file the same and such unreasonable delay was not consistent with the natural reaction of a person who claimed to be unjustly treated, hence the filing of the case could be interpreted as a mere afterthought. Respondent NLRC concurred in said findings, with the observation that private respondents failed to controvert the evidence showing that Maldigan was employed by "Mine of Gold" Taxi Company from February 10, 1987 to December 10, 1990; that Sabsalon abandoned his taxicab on September 1, 1990; and that they voluntarily left their jobs for similar employment with other taxi operators. It, accordingly, affirmed the ruling of the labor arbiter that private respondents' services were not illegally terminated. It, however, modified the decision of the labor arbiter by ordering petitioners to pay private respondents the awards. Issue: Whether or not Maldigan is entitled to refund the accumulated deposits. Held: Yes, they can. Respondent NLRC held that the P15.00 daily deposits made by respondents to defray any shortage in their "boundary" is covered by the general prohibition in Article 114 of the Labor Code against requiring employees to make deposits, and that there is no showing that the Secretary of Labor has recognized the same as a "practice" in the taxi industry. Consequently, the deposits made were illegal and the respondents must be refunded therefor. Article 114 of the Labor Code provides as follows: Art. 114. Deposits for loss or damage. — No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to 273 | L a b o r S t a n d a r d s - C a s e D i g e s t s

tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations. It can be deduced therefrom that the said article provides the rule on deposits for loss or damage to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his "boundary." Also, when private respondents stopped working for petitioners, the alleged purpose for which petitioners required such unauthorized deposits no longer existed. In other case, any balance due to private respondents after proper accounting must be returned to them with legal interest. With respect to Maldigan's deposits, nothing was mentioned questioning the same even in the present petition. We accordingly agree with the recommendation of the Solicitor General that since the evidence shows that he had not withdrawn the same, he should be reimbursed the amount of his accumulated cash deposits. Keeping of Employee’s Records inn a Place Other that the Workplace (Prohibited) – Book III, Rule X, Section 11 South Motorists Enterpises vs Tosoc G.R. No. 87449 SOUTH MOTORISTS ENTERPRISES vs. ROQUE TOSOC, ET AL., and HON. SECRETARY OF LABOR AND EMPLOYMENT January 23, 1990 Facts: Sometime in January of 1983, complaints for non-payment of emergency cost of living allowances were filed by 46 workers, Tosoc, et als., against SOUTH MOTORISTS before the Naga City District Office of Regional Office No. 5 of the then Ministry of Labor. On 10 January 1983 a Special Order was issued by the District Labor Officer directing its Labor Regulation Officers to conduct an inspection and verification of SOUTH MOTORISTS' employment records. On the date of the inspection and verification, SOUTH MOTORISTS was unable to present its employment records on the allegation that they had been sent to the main office in Manila. The case was then set for conference on 25 January 1983 but had to be reset to 8 February 1983 upon the request of SOUTH MOTORISTS to enable it to present all the employment records on such date. On 16 February 1983, SOUTH MOTORISTS again requested for a resetting to 3 March 1983 because of

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the alleged voluminous records it had to locate and its desire to submit a memorandum regarding complainants' claims. On 7 March 1983, the assigned Labor Regulation Officers submitted an Inspection Report on the basis of which an Order dated 14 April 1983 was issued by Labor Officer Domingo Reyes directing SOUTH MOTORISTS to pay Tosoc, et als., the total amount of One Hundred Eighty Four Thousand Six Hundred Eighty Nine and 12/100 Pesos (P184,689.12) representing the latter's corresponding emergency cost of living allowances. SOUTH MOTORISTS moved for reconsideration of the Order, which was denied. On 11 July 1988, the Secretary of Labor and Employment affirmed the appealed Order. On 28 July 1988, SOUTH MOTORISTS moved for reconsideration but this proved unsuccessful. A Second Motion for Reconsideration was filed, which was likewise denied in an Order dated 7 March 1989. Issue: Whether or not the Secretary of Labor and Employment erred in affirming the award based on a mere Inspection Report Held: No, he did not err. We see no reason for SOUTH MOTORISTS to complain as it was afforded ample opportunity to present its side. It failed to present employment records giving as an excuse that they were sent to the main office in Manila, in violation of Section 11 of Rule X, Book II of the Omnibus Rules Implementing the Labor Code providing that: All employment records of the employees of the employer shall be kept and maintained in or about the premises of the workplace. The premises of a workplace shall be understood to mean the main or branch office or establishment, if any, depending., upon where the employees are regularly assigned. The keeping of the employee's records in another place is prohibited. Garnishment/ Execution – Civil Code Article 1708 Gaa vs. Court of Appeals, 140 SCRA 304 (1985) G.R. No. L-44169 ROSARIO A. GAA vs. THE HONORABLE COURT OF APPEALS, EUROPHIL INDUSTRIES CORPORATION, and CESAR R. ROXAS, Deputy Sheriff of Manila December 3, 1985 Facts: It appears that respondent Europhil Industries Corporation was formerly one of the tenants in Trinity Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building administrator. On December 12, 1973, Europhil Industries commenced an action (Civil Case No. 92744) in the Court of First Instance of Manila for damages against 275 | L a b o r S t a n d a r d s - C a s e D i g e s t s

petitioner "for having perpetrated certain acts that Europhil Industries considered a trespass upon its rights, namely, cutting of its electricity, and removing its name from the building directory and gate passes of its officials and employees" (p. 87 Rollo). On June 28, 1974, said court rendered judgment in favor of respondent Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual damages, P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs. The said decision having become final and executory, a writ of garnishment was issued pursuant to which Deputy Sheriff Cesar A. Roxas on August 1, 1975 served a Notice of Garnishment upon El Grande Hotel, where petitioner was then employed, garnishing her "salary, commission and/or remuneration." Petitioner then filed with the Court of First Instance of Manila a motion to lift said garnishment on the ground that her "salaries, commission and, or remuneration are exempted from execution under Article 1708 of the New Civil Code. Said motion was denied by the lower Court in an order dated November 7, 1975. A motion for reconsideration of said order was likewise denied, and on January 26, 1976 petitioner filed with the Court of Appeals a petition for certiorari against filed with the Court of Appeals a petition for certiorari against said order of November 7, 1975. On March 30, 1976, the Court of Appeals dismissed the petition for certiorari. In dismissing the petition, the Court of Appeals held that petitioner is not a mere laborer as contemplated under Article 1708 as the term laborer does not apply to one who holds a managerial or supervisory position like that of petitioner, but only to those "laborers occupying the lower strata." It also held that the term "wages" means the pay given" as hire or reward to artisans, mechanics, domestics or menial servants, and laborers employed in manufactories, agriculture, mines, and other manual occupation and usually employed to distinguish the sums paid to persons hired to perform manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season," citing 67 C.J. 285, which is the ordinary acceptation of the said term, and that "wages" in Spanish is "jornal" and one who receives a wage is a "jornalero." Issue: Whether or not petitioner is a laborer. Held: No, he is not. Article 1708 of the New Civil Code which reads as follows: ART. 1708. The laborer's wage shall not be subject to execution or attachment, except for debts incurred for food, shelter, clothing and medical attendance. It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a responsibly place employee," of El Grande Hotel, "responsible for planning, directing, controlling, and coordinating the activities of all housekeeping personnel" (p. 95, Rollo) so as to ensure the 276 | L a b o r S t a n d a r d s - C a s e D i g e s t s

cleanliness, maintenance and orderliness of all guest rooms, function rooms, public areas, and the surroundings of the hotel. Considering the importance of petitioner's function in El Grande Hotel, it is undeniable that petitioner is occupying a position equivalent to that of a managerial or supervisory position. In its broadest sense, the word "laborer" includes everyone who performs any kind of mental or physical labor, but as commonly and customarily used and understood, it only applies to one engaged in some form of manual or physical labor. That is the sense in which the courts generally apply the term as applied in exemption acts, since persons of that class usually look to the reward of a day's labor for immediate or present support and so are more in need of the exemption than are other. Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what are to be exempted from attachment and execution. The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the term wages " indicates considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important service (35 Am. Jur. 496). We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. Petitioner Rosario A. Gaa is definitely not within that class. We find, therefore, and so hold that the Trial Court did not err in denying in its order of November 7, 1975 the motion of petitioner to lift the notice of garnishment against her salaries, commission and other remuneration from El Grande Hotel since said salaries, Commission and other remuneration due her from the El Grande Hotel do not constitute wages due a laborer which, under Article 1708 of the Civil Code, are not subject to execution or attachment. Work Preference in the Event of Bankruptcy – Labor Code Article 110; Book III, Rule VIII, Section 7; Civil Code Articles 1207, 2241(6), 2242(3), 2244(2), 2246, 2248, 2250 Republic vs. Peralta G.R. No. L-56568

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REPUBLIC OF THE PHILIPPINES, represented by the Bureau of Customs and the Bureau of Internal Revenue vs. HONORABLE E.L. PERALTA, PRESIDING JUDGE OF THE COURT OF FIRST INSTANCE OF MANILA, BRANCH XVII, QUALITY TABACCO CORPORATION, FRANCISCO, FEDERACION OBRERO DE LA INDUSTRIA TABAQUERA Y OTROS TRABAJADORES DE FILIPINAS (FOITAF) USTC EMPLOYEES ASSOCIATION WORKERS UNIONPTGWO May 20, 1987 Facts: In the voluntary insolvency proceedings commenced in May 1977 by private respondent Quality Tobacco Corporation (the "Insolvent"), the following claims of creditors were filed. In its questioned Order of 17 November 1980, the trial court held that the above-enumerated claims of USTC and FOITAF (hereafter collectively referred to as the "Unions") for separation pay of their respective members embodied in final awards of the National Labor Relations Commission were to be preferred over the claims of the Bureau of Customs and the Bureau of Internal Revenue. The trial court, in so ruling, relied primarily upon Article 110 of the Labor Code which reads thus: Article 110. Worker preference in case of bankruptcy — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards wages due them for services rendered during the period prior to the bankruptcy or liquidation, any provision of law to the contrary notwithstanding. Union paid wages shall be paid in full before other creditors may establish any claim to a share in the assets of the employer. The Solicitor General, in seeking the reversal of the questioned Orders, argues that Article 110 of the Labor Code is not applicable as it speaks of "wages," a term which he asserts does not include the separation pay claimed by the Unions. "Separation pay," the Solicitor General contends, is given to a laborer for a separation from employment computed on the basis of the number of years the laborer was employed by the employer; it is a form of penalty or damage against the employer in favor of the employee for the latter's dismissal or separation from service. Issue: Whether or not Article 110 would affect the complete scheme of classification, concurrence and preference of credits in insolvency set out in the Civil Code. Held: Yes, it does. We come to the question of what impact Article 110 of the Labor Code has had upon the complete scheme of classification, concurrence and preference of credits in insolvency set out in the Civil Code. We believe and so hold that Article 110 of the Labor Code did not sweep away the overriding preference accorded under the scheme of the Civil Code to tax claims of the government or any subdivision thereof which constitute a lien upon properties of the Insolvent. It is frequently 278 | L a b o r S t a n d a r d s - C a s e D i g e s t s

said that taxes are the very lifeblood of government. The effective collection of taxes is a task of highest importance for the sovereign. It is critical indeed for its own survival. It follows that language of a much higher degree of specificity than that exhibited in Article 110 of the Labor Code is necessary to set aside the intent and purpose of the legislator that shines through the precisely crafted provisions of the Civil Code. It cannot be assumed simpliciter that the legislative authority, by using in Article 110 the words "first preference" and "any provision of law to the contrary notwithstanding" intended to disrupt the elaborate and symmetrical structure set up in the Civil Code. Neither can it be assumed casually that Article 110 intended to subsume the sovereign itself within the term "other creditors" in stating that "unpaid wages shall be paid in full before other creditors may establish any claim to a share in the assets of employer." Insistent considerations of public policy prevent us from giving to "other creditors" a linguistically unlimited scope that would embrace the universe of creditors save only unpaid employees. We, however, do not believe that Article 110 has had no impact at all upon the provisions of the Civil Code. Bearing in mind the overriding precedence given to taxes, duties and fees by the Civil Code and the fact that the Labor Code does not impress any lien on the property of an employer, the use of the phrase "first preference" in Article 110 indicates that what Article 110 intended to modify is the order of preference found in Article 2244, which order relates, as we have seen, to property of the Insolvent that is not burdened with the liens or encumbrances created or recognized by Articles 2241 and 2242. We have noted that Article 2244, number 2, establishes second priority for claims for wages for services rendered by employees or laborers of the Insolvent "for one year preceding the commencement of the proceedings in insolvency." Article 110 of the Labor Code establishes "first preference" for services rendered "during the period prior to the bankruptcy or liquidation, " a period not limited to the year immediately prior to the bankruptcy or liquidation. Thus, very substantial effect may be given to the provisions of Article 110 without grievously distorting the framework established in the Civil Code by holding, as we so hold, that Article 110 of the Labor Code has modified Article 2244 of the Civil Code in two respects: (a) firstly, by removing the one year limitation found in Article 2244, number 2; and (b) secondly, by moving up claims for unpaid wages of laborers or workers of the Insolvent from second priority to first priority in the order of preference established I by Article 2244. Manila Banking Corporation vs. NLRC G.R. No. 107487 THE MANILA BANKING CORPORATION ("Manilabank") and ARNULFO B. AURELLANO in his capacity as Statutory Receiver of Manilabank vs. THE NATIONAL LABOR RELATIONS COMMISSION, VICTOR L. MENDOZA, ET. AL. September 29, 1997 279 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Facts: The antecedents show that on June 5, 1984, petitioner Manila Banking Corporation (Manilabank) was placed under comptrollership by then Central Bank Governor Jose B. Fernandez in view of the bank's financial distress. The decision of the Monetary Board of the Central Bank was based on the findings that the bank was experiencing liquidity problems and had incurred chronic reserve deficiencies against deposit liabilities. In fact, on May 23, 1984, a month before it was placed under comptrollership, Manilabank was prohibited by the Monetary Board from granting new loans and making new investments except investments in government securities with Central Bank support, and from declaring cash or stock dividends. Of even date, private respondents filed a complaint against Manilabank and its statutory receiver with. the arbitration branch of the National Labor Relations Commission (NLRC) claiming entitlement to the following additional benefits alleged to have accrued from 1984 to their effective dates of termination, viz: (a) Wage increases; (b) Christmas bonuses; (c) Mid-year bonuses; (d) Profit sharing; (e) Car and travel plans; (f) Gasoline allowances; (g) Differentials on accrued leaves, retirement and other bonuses; (h) Longevity pay and loyalty pay; (i) Medical, dental and optical benefits; and (j) Uniform allowances. 7 Such claim to entitlement of the foregoing benefits was based on Manilabank's alleged practice, policy and tradition of awarding said benefits. They contended that the policy has ripened into vested property rights in their favor. Manilabank, on its part, alleged that the additional benefits sought are without basis in fact and in law. It argued that the same are conferred by management only when it deems necessary to do so. The award of the said benefits is in the nature of a "management prerogative" which, it contended, can be withheld by management upon a clear showing that the company is not in a position to grant them either because of financial difficulties or circumstances which do not warrant conferment of such benefits. And since it was experiencing financial distress, it claimed that it was in no position to give the benefits sought. On November 14, 1989, Labor Arbiter Felipe Pati rendered his decision ordering Manilabank and its statutory receiver to pay in full all the claims of private respondents amounting to P193,338,212.33, plus 12% interest annually and 10% of the total award as attorney's fees. On November 25, 1989, petitioners Manilabank and the CB statutory receiver appealed to the NLRC and posted an appeal bond in the form of a certification from the Central Bank to the effect that a portion of Manilabank's funds in an amount equal to that of the total award of the labor arbiter, has been reserved and set aside by the Central Bank to answer for the private respondents' claims should they finally be adjudged to be entitled thereto. On September 9, 1992, the NLRC issued a resolution on the merits of the case and, as above-stated, affirmed with slight modifications. 280 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the employees enjoy the first preference in the event of bankruptcy. Held: Yes, they do. With respect to G.R No. 107487, the same is dismissed, the issues raised therein having been rendered moot and academic by the foregoing disquisitions and disposition. Besides, it is beyond dispute that employees indeed enjoy first preference in the event of bankruptcy or liquidation of an employer's business. Art. 110. Worker preference in case of bankruptcy. — In the event of bankruptcy or liquidation of an employer's business, his workers shall enjoy first preference as regards their wages and other monetary claims, any provisions of law to the contrary notwithstanding. Such unpaid wages and monetary claims shall be paid in full before claims of the government and other creditors may be paid. The implications of the amendment were explained in great detail by the Court in Development Bank of the Philippines vs. National Labor Relations Commission, 1 viz: The amendment expands worker preference to cover not only unpaid wages but also other monetary claims to which even claims of the Government must be deemed subordinate. Notably, the terms "declaration" of bankruptcy or "judicial" liquidation have been eliminated. Does this mean then that liquidation proceedings have been done away with? We opine in the negative, upon the following considerations: 1. Because of its impact on the entire system of credit, Article 110 of the Labor Code cannot be viewed in isolation but must be read in relation to the Civil Code scheme on classification and preference of credits. 2. In the same way that the Civil Code provisions on classification of credits and the Insolvency Law have been brought into harmony, so also must the kindred provisions of the Labor Law be made to harmonize with those laws. 3. In the event of insolvency, a 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). The rationale therefore has been expressed in the recent case of DBP vs. Secretary of Labor (G.R. No. 79351, 28 November 1989) 4. A distinction should be made between a preference of credit and a lien. A preference applies only to claims which do no attach to specific properties. A lien creates a charge on a 281 | L a b o r S t a n d a r d s - C a s e D i g e s t s

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. 5. Even if Article 110 and its Implementing Rule, as amended, should be interpreted to mean "absolute preference," the same should be given only prospective effect in line with the cardinal rule that laws shall have no retroactive effect, unless the contrary is provided (Article 4, Civil Code). Thereby, any infringement on the constitutional guarantee on nonimpairment of the obligation of contracts (Section 10, Article III, 1987 Constitution) is also avoided. In point of fact, DBP's mortgage credit antedated by several years the amendatory law, RA No. 6715. To give Article 110 retroactive effect would be to wipe out the mortgage in DBP's favor and expose it to a risk which it sought to protect itself against by requiring a collateral in the form of real property. In fine, the right of preference given to workers under Article 110 of the Labor Code cannot exist in any effective way prior to the time of its presentation in distribution proceedings. It will find application when, in proceedings such as insolvency, such unpaid wages shall be paid in full before the "claims of the Government and other creditors" may be paid. But, for an orderly settlement of a debtor's assets, all creditors must be convened, their claims ascertained and inventoried, and thereafter the preferences determined in the course of judicial proceedings which have for their object the subjection of the property of the debtor to the payment of his debts or other lawful obligations. Wage Recovery/ Jurisdiction – Labor Code Article 128, 129, 217, 111; Book III, Rule X, Sections 1-5 Cirineo Bowling Plaza vs. Gerry Sensing G.R. No. 146572. CIRINEO BOWLING PLAZA, INC. vs. GERRY SENSING, BELEN FERNANDEZ, MIRASOL DIAZ, MARGARITA ABRIL, DARIO BENITEZ, MANUEL BENITEZ, RONILLO TANDOC, EDGAR DIZON, JOVELYN QUINTO, KAREN REMORAN, JENIFFER RINGOR, DEPARTMENT OF LABOR AND EMPLOYMENT and COURT of APPEALS 282 | L a b o r S t a n d a r d s - C a s e D i g e s t s

January 14, 2005

Facts: On November 27, 1995, Eligio Paolo, Jr., an employee of petitioner, filed a letter complaint with the Department of Labor and Employment (DOLE for short), Dagupan District Office, Dagupan City, requesting for the inspection/investigation of petitioner for various labor law violations like underpayment of wages, 13th month pay, non-payment of rest day pay, overtime pay, holiday pay and service incentive leave pay. Pursuant to the visitorial and enforcement powers of the Secretary of Labor and Employment, his duly authorized representative under Article 128 of the Labor Code, as amended, conducted inspections on petitioners establishment the following day. On April 22, 1996, an Order was issued by the DOLE Regional Office, the dispositive portion of which ordered respondent to pay them the total amount of THREE HUNDRED SEVENTY SEVEN THOUSAND FIVE HUNDRED PESOS AND 58/100. (P377,500.58), representing their unpaid/underpaid wages, 13th month pay, holiday premiums, rest day pay and overtime premiums.

On September 12, 1996, DOLE issued its Order stating among others: Records show that respondent, Luisito Cirineo and his representative appeared before this Office during the summary investigation of this instant case but they never once mentioned the issue of separate juridical personalities. Respondent had always been bent on settling the respective claims of all thirteen (13) concerned employees. In the process, however, he acknowledged being their employer. He cannot at this juncture therefore say, that some of the awardees in our ORDER are employees of another business entity. This being the case, we cannot grant his request for indorsement to the NLRC.

WHEREFORE, premises considered, the case of employees Eligio Paolo, Jr. and Lamberto Solano whose respective claims had been settled by respondent is hereby DISMISSED. The ORDER for the payment of the monetary claims of the eleven (11) other cash awardees STANDS. Let execution follow immediately.

On October 21, 1996, DOLE Regional Director Maximo B. Lim issued a writ of execution. However, on March 30, 1999, DOLE Undersecretary Jose 283 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Espaol dismissed the appeal and affirmed the order dated February 7, 1997 of the DOLE Regional Director. Petitioners motion for reconsideration was denied in a Resolution dated April 18, 2000. Petitioner filed a petition for certiorari with prayer for the issuance of temporary restraining order with the CA.

On August 31, 2000, the CA dismissed the petition for failure of petitioner to (1) attach a copy of the letter complaint filed by petitioners employees and the Order dated February 7, 1997 of the DOLE Regional Director and (2) state the material date when the assailed Orders/Resolutions were received pursuant to Section 1 of Rule 65 and Section 3 of Rule 46 of the 1997 Rules of Civil Procedure. Petitioner filed a motion for reconsideration which was also denied by the CA on November 10, 2000, copy of which was received by petitioner on November 24, 2000.

Issue: Whether or not the instant case falls within the jurisdiction of the Regional Director.

Held: Likewise, we sustain the jurisdiction of the DOLE Regional Director. The visitorial and enforcement powers of the DOLE Regional Director to order and enforce compliance with labor standard laws can be exercised even where the individual claim exceeds P5,000.00. While it is true that under Articles 129 and 217 of the Labor Code, the Labor Arbiter has jurisdiction to hear and decide cases where the aggregate money claims of each employee exceeds P5,000.00, said provisions of law do not contemplate nor cover the visitorial and enforcement powers of the Secretary of Labor or his duly authorized representatives. Rather, said powers are defined and set forth in Article 128 of the Labor Code (as amended by R.A. No. 7730) thus:

Art. 128. Visitorial and enforcement power. (a) The Secretary of Labor or his duly authorized representatives, including labor regulation officers, shall have access to employers records and premises at any time of the day or night whenever work is being 284 | L a b o r S t a n d a r d s - C a s e D i g e s t s

undertaken therein, and the right to copy therefrom, to question any employee and investigate any fact, condition or matter which may be necessary to determine violations or which may aid in the enforcement of this Code and of any labor law, wage order or rules and regulations issued pursuant thereto. (b) Notwithstanding the provisions of Articles 129 and 217 of this Code to the contrary, and in cases where the relationship of employer-employee exists, the Secretary of Labor and Employment or his duly authorized representatives shall have the power to issue compliance orders to give effect to the labor standards provisions of this Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. The Secretary or his duly authorized representatives shall issue writs of execution to the appropriate authority for the enforcement of their orders, except in cases where the employer contests the finding of the labor employment and enforcement officer and raises issues supported by documentary proofs which were not considered in the course of inspection.

An order issued by the duly authorized representative of the Secretary of Labor and Employment under this article may be appealed to the latter. In case said order involved a monetary award, an appeal by the employer may be perfected only upon the posting of a cash or surety bond issued by a reputable bonding company duly accredited by the Secretary of Labor and Employment in the amount equivalent to the monetary award in the order appealed from.

The aforequoted provision explicitly excludes from its coverage Articles 129 and 217 of the Labor Code by the phrase (N)otwithstanding the provisions of Articles 129 and 217 of this Code to the contrary . . . thereby retaining and further strengthening the power of the Secretary of Labor or his duly authorized representative to issue compliance orders to give effect to the labor standards provisions of said Code and other labor legislation based on the findings of labor employment and enforcement officers or industrial safety engineers made in the course of inspection. In the case at bar, the Office of respondent Regional Director conducted inspection visits at petitioners establishment on February 9 and 14, 1995 in accordance with the above-mentioned provision of law. In the course of said inspection, several violations of the labor standard provisions of the Labor Code were discovered and reported by Senior Labor Enforcement Officer Eduvigis A. Acero in his Notice of Inspection Results. It was on the 285 | L a b o r S t a n d a r d s - C a s e D i g e s t s

bases of the aforesaid findings (which petitioner did not contest), that respondent Regional Director issued the assailed Order for petitioner to pay private respondents the respective wage differentials due them.

Clearly, as the duly authorized representative of respondent Secretary of Labor, and in the lawful exercise of the Secretarys visitorial and enforcement powers under Article 128 of the Labor Code, respondent Regional Director had jurisdiction to issue his impugned Order. The instant case therefore falls squarely within the coverage of the aforecited amendment as the assailed order was issued to enforce compliance with the provisions of the Code with respect to the payment of proper wages. Hence, petitioners claim of lack of jurisdiction on the part of public respondent is bereft of merit. Balladares, et al. vs. Peak Ventures Corporation G.R. No. 161794 NESTOR J. BALLADARES, ROLDAN L. GUANIZO, ARNULFO E. MERTO, GERONIMO G. GOBUYAN, EDGARDO O. AVILA, and EDUARD F. RAMOS, JR. vs. PEAK VENTURES CORPORATION/ EL TIGRE SECURITY AND INVESTIGATION AGENCY and YANGCO MARKET OWNERS ASSOCIATION/LAO TI SIOK BEE June 16, 2009 Facts: Petitioners Nestor J. Balladares, Roldan L. Guanizo, Arnulfo E. Merto, Geronimo G. Gobuyan, Edgardo O. Avila, and Eduard F. Ramos, Jr. were employed by respondent Peak Ventures Corporation/El Tigre Security and Investigation Agency (Peak Ventures) as security guards and were assigned at the premises of respondent Yangco Market Owners and Administrators Association (YMOAA). They filed a complaint for underpayment of wages against their employer, Peak Ventures, with the Department of Labor and Employment (DOLE). In the Order dated July 21, 1999, Regional Director Maximo Baguyot Lim rendered judgment in favor of petitioners and ruled that the contractor was jointly and severally liable with the principal, pursuant to the law and jurisprudence on the matter. Respondent Peak Ventures filed a Motion for Reconsideration which was denied for lack of merit. Respondent appealed the Order to the Office of the Secretary of Labor positing that the Regional Director committed serious errors in awarding the amount of P1,106,298.00 to petitioners, which it alleged to be quite excessive. On December 7, 2000, respondents appeal was dismissed. A subsequent motion for reconsideration was, likewise, denied by the Secretary of Labor in a Resolution dated September 11, 2001. 286 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not the instant case falls within the jurisdiction of the Regional Director. Held: We uphold the jurisdiction of the DOLE Regional Director. It should be noted that petitioners complaint involved underpayment of wages and other benefits. In order to verify the allegations in the complaint, DOLE conducted an inspection, which yielded proof of violations of labor standards. By the nature of the complaint and from the result of the inspection, the authority of the DOLE, under Article 128, came into play regardless of the monetary value of the claims involved. The extent of this authority and the powers flowing therefrom are defined and set forth in Article 128 of the Labor Code, as amended by R.A. No. 7730. However, if the labor standards case is covered by the exception clause in Article 128 (b) of the Labor Code, then the Regional Director will have to endorse the case to the appropriate Arbitration Branch of the NLRC. In order to divest the Regional Director or his representatives of jurisdiction, the following elements must be present: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. The rules also provide that the employer shall raise such objections during the hearing of the case or at any time after receipt of the notice of inspection results. In this case, the Regional Director validly assumed jurisdiction over the money claims of private respondents even if the claims exceeded P5,000 because such jurisdiction was exercised in accordance with Article 128(b) of the Labor Code and the case does not fall under the exception clause. Accordingly, we find no sufficient reason to warrant the certification of the instant case to the Labor Arbiter and divest the Regional Director of jurisdiction. Respondent did not contest the findings of the labor regulations officer. Even during the hearing, respondent never denied that petitioners were not paid correct wages and benefits. This was, in fact, even admitted by respondent in its petition filed before the CA. In its defense, respondent tried to pass the buck to YMOAA, which failed to pay the correct wages pursuant to the wage orders. Considering that the liability of the principal and the contractor is joint and solidary, respondent thereby prayed for a re-computation of the awards it claimed to be quite excessive. In the motion for reconsideration filed before the Regional Director, respondent submitted its own computation of the salary adjustment due petitioners in the amount of P533,220.33 as wage differentials, deducting further the amount of P39,371.52, which was already allegedly received by petitioners, as shown in petitioners sample pay slips and earning cards. 287 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Meteoro, et al. vs. Creative Creatures, Inc. G.R. No. 171275 VICTOR METEORO, ET AL. vs. CREATIVE CREATURES, INC. July 13, 2009 Facts: Respondent is a domestic corporation engaged in the business of producing, providing, or procuring the production of set designs and set construction services for television exhibitions, concerts, theatrical performances, motion pictures and the like. On the other hand, petitioners were hired by respondent on various dates as artists, carpenters and welders. They were tasked to design, create, assemble, set-up and dismantle props, and provide sound effects to respondents various TV programs and movies. Sometime in February and March 1999, petitioners filed their respective complaints for non-payment of night shift differential pay, overtime pay, holiday pay, 13th month pay, premium pay for Sundays and/or rest days, service incentive leave pay, paternity leave pay, educational assistance, rice benefits, and illegal and/or unauthorized deductions from salaries against respondent, before the Department of Labor and Employment (DOLE), National Capital Region (NCR). Their complaints were consolidated and docketed as NCR00-9902-IS-011. In its position paper, respondent argued that the DOLE-NCR had no jurisdiction over the complaint of the petitioners because of the absence of an employer-employee relationship. It added that petitioners were freelance individuals, performing special services with skills and expertise inherently exclusive to them like actors, actresses, directors, producers, and script writers, such that they were treated as special types of workers. Petitioners, on the other hand, averred that they were employees of respondent, as the elements of an employer-employee relationship existed. The Regional Director upheld the DOLE-NCRs jurisdiction to hear and determine cases in violation of labor standards law. On appeal, then DOLE Secretary Patricia A. Sto. Tomas affirmed the findings of the DOLE Regional Director. In upholding the jurisdiction of the DOLE-NCR, she explained that the Secretary of Labor or his duly authorized representative is allowed to use his visitorial and enforcement powers to give effect to labor legislation, regardless of the amount involved, pursuant to Article 128 of the Labor Code, as amended by Republic Act (R.A.) No. 7730. For failure to obtain a favorable decision, respondent elevated the matter to the Court of Appeals in CA-G.R. SP No. 76942. On May 31, 2005, the appellate court rendered the assailed decision void. 288 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Issue: Whether or not said case is within the jurisdiction of the Regional Director. Held: We sustain the appellate courts conclusion that the instant case falls within the exclusive jurisdiction of the NLRC. As it is now worded, and as consistently held in a number of cases, the visitorial and enforcement powers of the Secretary, exercised through his representatives, encompass compliance with all labor standards laws and other labor legislation, regardless of the amount of the claims filed by workers. In order to do away with the jurisdictional limitations imposed by the Servando ruling and to finally settle any lingering doubts on the extent of the visitorial and enforcement powers of the Secretary of Labor and Employment, R.A. 7730 was enacted, amending Article 128 (b) to its present formulation, so as to free it from the jurisdictional restrictions found in Articles 129 and 217. This notwithstanding, the power of the Regional Director to hear and decide the monetary claims of employees is not absolute. The last sentence of Article 128 (b) of the Labor Code, otherwise known as the exception clause, provides an instance when the Regional Director or his representatives may be divested of jurisdiction over a labor standards case. Under prevailing jurisprudence, the so-called exception clause has the following elements, all of which must concur: (a) that the employer contests the findings of the labor regulations officer and raises issues thereon; (b) that in order to resolve such issues, there is a need to examine evidentiary matters; and (c) that such matters are not verifiable in the normal course of inspection. In the present case, the CA aptly applied the exception clause. At the earliest opportunity, respondent registered its objection to the findings of the labor inspector. The labor inspector, in fact, noted in its report that respondent alleged that petitioners were contractual workers and/or independent and talent workers without control or supervision and also supplied with tools and apparatus pertaining to their job. In its position paper, respondent again insisted that petitioners were not its employees. It then questioned the Regional Directors jurisdiction to entertain the matter before it, primarily because of the absence of an employeremployee relationship. 23.

Thirteenth Month Pay

History of the Law 289 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Dentech Manufacturing Corporation vs. NLRC G.R. No. 81477 DENTECH MANUFACTURING CORPORATION and JACINTO LEDESMA in his capacity as General Manager vs. NATIONAL LABOR RELATIONS COMMISSION, CCLU, BENJAMIN MARBELLA, ARMANDO TORNO, JUANITO TAJAN, JR. and JOEL TORNO April 19, 1989 Facts: The herein petitioner Dentech Manufacturing Corporation is a domestic corporation organized under Philippine laws. Before the firm became a corporate entity, it was known as the J.L. Ledesma Enterprises, a sole proprietorship owned by the herein petitioner Jacinto Ledesma. At present, he is the president and general manager of the corporation as well as the owner of the controlling interest thereof. The firm is engaged in the manufacture and sale of dental equipment and supplies.The herein private respondents are members of the Confederation of Citizens Labor Union, a labor organization registered with the Department of Labor and Employment. They used to be the employees of the petitioner firm, working therein as welders, upholsterers and painters. They were already employed with the company when it was still a sole proprietorship. They were dismissed from the firm beginning February 14, 1985. On June 26, 1985, the private respondents filed a Complaint with the arbitration branch of the respondent National Labor Relations Commission (NLRC) against the petitioners for, illegal dismissal and violation of Presidential Decree No. 851. At first, they only sought the payment of their 13th month pay under Presidential Decree No. 851 as well as their separation pay, and the refund of the cash bond they filed with the company at the start of their employment. Later on, they sought their reinstatement as well as the payment of their 13th month pay and service incentive leave pay, and separation pay in the event that they are not reinstated. On the other hand, the petitioners alleged that the private respondents were not dismissed from the firm on account of their union activities. They maintained that the private respondents abandoned their work without informing the company about their reasons for doing so and that, accordingly, the private respondents are not entitled to service incentive leave pay and separation pay. Issue: Whether or not the private respondents are entitled as a matter of right to a 13th month pay. Held: The petitioners reiterate their contention that the private respondents abandoned their work. In support of this claim, they call attention to the alleged testimony of the general manager of the petitioner firm. The petitioners likewise maintain that the company is a financially distressed firm exempted from complying with the provisions of Presidential Decree No. 851. Under Section 3 of the rules and regulations 290 | L a b o r S t a n d a r d s - C a s e D i g e s t s

implementing said Presidential Decree financially distressed employers, i., e., those currently incurring substantial losses, are not covered by the Decree. Section 7 thereof requires, however, that such distressed employers must obtain the prior authorization of the Secretary of Labor and Employment before they may qualify for such exemption. The petitioners have no basis to claim that the company is exempted from complying with the pertinent provisions of the law relating to the payment of 13th month compensation. The refund of the cash bond filed by the private respondents is in order. Article 114 of the Labor Code prohibits an employer from requiting his employees to file a cash bond or to make deposits, subject to certain exceptions, to wit- Art. 114. Deposits for loss or damage.- No employer shall require his worker to make deposits from which deductions shall be made for the reimbursement of loss of or damage to tools, materials, or equipment supplied by the employer, except when the employer is engaged in such trades, occupations or business where the practice of making deductions or requiring deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations. The petitioners have not satisfactorily disputed the applicability of this provision of the Labor Code to the case at bar. Considering further that the petitioners failed to show that the company is authorized by law to require the private respondents to file the cash bond in question, the refund thereof is in order. Coverage Archilles Manufacturing Corporation vs. NLRC

G.R. No. 107225 ARCHILLES MANUFACTURING CORPORATION, ALBERTO YU and ADRIAN YU vs. NATIONAL LABOR RELATIONS COMMISSION, GERONIMO MANUEL, ARNULFO DIAZ, JAIME CARUNUNGAN and BENJAMIN RINDON June 2, 1995 Facts: Archilles Manufacturing Corporation, Alberto Yu and Adrian Yu are the petitioners, the latter two (2) being the Chairman and the VicePresident of ARCHILLES, respectively. Private respondents Geronimo Manuel, Arnulfo Diaz, Jaime Carunungan and Benjamin Rindon were employed by ARCHILLES as laborers in its steel factory located in Barangay Pandayan, Meycauayan, Bulacan, each receiving a daily wage of P96.00. ARCHILLES was maintaining a bunkhouse in the work area which served as resting place for its workers including private respondents. In 1988 a mauling incident nearly took place involving a relative of an employee. As a result ARCHILLES prohibited its workers from bringing any member of their family to the bunkhouse. But despite this prohibition, 291 | L a b o r S t a n d a r d s - C a s e D i g e s t s

private respondents continued to bring their respective families to the bunkhouse, causing annoyance and discomfort to the other workers. This was brought to the attention of ARCHILLES. On 11 May 1990 the management ordered private respondent to remove their families from the bunkhouse and to explain their violation of the company rule. Private respondents remove their families from the premises but failed to report to the management as required; instead, they absented themselves from 14 to 18 May 1990. Consequently, on 18 May 1990, ARCHILLES terminated their employment for abandonment and for violation of the company rule regarding the use of the bunkhouse. Private respondents filed a complaint for illegal dismissal and with public respondent National Labor Relations Commission a motion for the issuance of a writ of execution for their immediate reinstatement, pending appeal, either physically or in the company payroll. On 19 September 1991 ARCHILLES opposed the motion. NLRC reordered ARCHILLES to pay private respondents their "withheld" salaries from 19 September 1991 on the ground that the order of reinstatement of the Labor Arbiter was immediately executory, even pending appeal. Since ARCHILLES in its opposition alleged that actual reinstatement was no longer possible as it would affect the peace and order situation in the steel factory, clearly, ARCHILLES had opted for payroll reinstatement of private respondents. Issue: Whether or not a writ of execution is still necessary to enforce the Labor Arbiter's order of immediate reinstatement of employees who were terminated from service even when pending appeal. Held: Yes. It must be stressed that although the reinstatement aspect of the decision is immediately executory pursuant to Article 223 of the Labor Code, it does not follow that it is self-executory. There must be a writ of execution which may be issued motuproprio or on motion of an interested party. Article 224 of the Labor Code provides: Art. 224. Execution of decisions, orders or awards. — (a) The Secretary of Labor and Employment or any Regional Director, the Commission or any Labor Arbiter, or med-Arbiter or voluntary arbitrator may, motuproprio or on motion of any interested party, issue a writ of execution on a judgment within five (5) years from the date it becomes final and executory. In the absence of an order for the issuance of a writ of execution on the reinstatement aspect of the decision of the Labor Arbiter, the petitioner was under no legal obligation to admit back to work the private respondent under the terms and conditions prevailing prior to her dismissal or, at the petitioner's option, to merely reinstate her in the payroll. An option is a right of election to exercise a privilege, and the option in Article 223 of the Labor code is exclusively granted to the employer. The event that gives rise for its exercise is not the reinstatement decree of the Labor Arbiter, but the writ for its execution commanding the employer to reinstate the employee, while the final act which compels the employer to exercise the option is the service upon it of the writ of execution when, instead of admitting the employee back to his work, the employer chooses to reinstate the employee in the payroll 292 | L a b o r S t a n d a r d s - C a s e D i g e s t s

only. If the employer does not exercise this option, it must forthwith admit the employee back to work, otherwise it may be punished for contempt. Ultra Villa Food Haus vs. Geniston G.R. No. 120473 Ultra Villa Food Haus, and/or Rosie Tio vs. Renato Geniston and National Labor Relations Commission June 23, 1999 Facts: Geniston alleged that he was employed as a “do it all guy” acting as waiter, driver and maintenance man in Ultra Villa Food Haus. His employment spanned from March 1, 1989 until he was dismissed on May 13, 1992. During the elections of May 11, 1992, Geniston acted as a poll watcher for the National Union of Christian Democrats. The counting of votes lasted until 3 p.m. the next day, May 12. He did not report from work on both days on account of his poll-watching. Upon arriving home, Geniston discovered that Tio had phoned his mother that morning and informed the latter that he was dismissed from work. Geniston prayed that the Labor Arbiter order petitioner Tio to pay him overtime pay, premium pay, holiday pay, service incentive leave pay, salary differential, and 13th month pay, as well as damages, and to reinstate him plus backwages. Tio maintained that Geniston was her personal driver, not an employee of the Ultra Villa Food Haus. He was likewise given free meals as well as 13th month pay at the end of the year. The Labor Arbiter found that Genistoon was indeed Tio’s personal driver for if it were true that he was made to perform these functions as a waiter, it would be incongruous with the position of a driver. Therefore, he was not entitled to overtime pay, premium pay, service incentive leave pay and 13th month pay. Upon appeal, the NLRC reversed the decision and ordered petitioner to reinstate Geniston and to pay him backwages, overtime pay, premium pay for holiday and rest days, 13 th month pay, and service incentive leave pay. The NLRC also denied petitioner’s motion, reiterating its earlier ruling that private respondent was an employee of the Ultra Villa Food Haus. Issue: Whether or not private respondent was an employee of Ultra Villa Food Haus and entitled to 13th month pay. Held: No but he is entitled to 13 th month pay. He failed to show evidence that he was employed in the Ultra Villa Food Haus, therefore the Labor Arbiter correctly ruled that he was only Tio’s personal driver. Though his employment is governed by Article 141 of the Labor Code which includes “family drivers” in its coverage, it was, however, silent on the grant of overtime pay, holiday pay, premium pay and service incentive leave to those engaged in the domestic or household service. In addition, Article 82 excludes domestic helpers from the coverage of Book III, Title I of the 293 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Code. Clearly then, petitioner is not obliged by law to grant private respondent any of these benefits. Employing the same line of analysis, it would seem that private respondents is not entitled to 13 th month pay. Nevertheless, we deem it just to award Geniston 13 th month pay in view of Tio’s practice of according Gensiton such benefit. Indeed, petitioner admitted that she gave respondent 13th month pay every December. Basic Wage/Commissions Boie Takeda vs. Dela Serna G.R. No. 92174 BOIE-TAKEDA CHEMICALS, INC. vs. HON. DIONISIO DE LA SERNA, Acting Secretary of the Department of Labor and Employment December 10, 1993

G.R. No. L-102552 PHILIPPINE FUJI XEROX CORP. vs. CRESENCIANO B. TRAJANO, Undersecretary of the Department of Labor and Employment, and PHILIPPINE FUJI XEROX EMPLOYEES UNION December 10, 1993

Facts: A routine inspection was conducted on May 2, 1989 in the premises of petitioner Boie-Takeda Chemicals, Inc. by Labor and Development Officer Reynaldo B. Ramos under Inspection Authority No. 4209-89. Finding that Boie-Takeda had not been including the commissions earned by its medical representatives in the computation of their 13th month pay, Ramos served a Notice of Inspection Results on Boie-Takeda through its president, Mr. Benito Araneta, requiring Boie-Takeda within ten (10) calendar days from notice to effect restitution or correction of "the underpayment of 13th month pay for the year(s) 1986, 1987 and 1988 of Med Rep (Revised Guidelines on the Implementation of 13th month pay # 5) in the total amount of P558,810.89." Boie-Takeda wrote the Labor Department contesting the Notice of Inspection Results, and expressing the view "that the commission paid to our medical representatives are not to be included in the computation of the 13th month pay since the law and its implementing rules speak of REGULAR or BASIC salary and therefore exclude all other remunerations which are not part of the 294 | L a b o r S t a n d a r d s - C a s e D i g e s t s

REGULAR salary." It pointed out that, "If no sales is (sic) made under the effort of a particular representative, there is no commission during the period when no sale was transacted, so that commissions are not and cannot be legally defined as regular in nature." A similar Routine Inspection was conducted in the premises of Philippine Fuji Xerox Corp. on September 7, 1989 pursuant to Routine Inspection Authority No. NCRLSED-RI-494-89. In his Notice of Inspection Results, 6 addressed to the Manager, Mr. Nicolas O. Katigbak, Senior Labor and Employment Officer Nicanor M. Torres noted the following violation committed by Philippine Fuji Xerox Corp., to wit: "Underpayment of 13th month pay of 62 employees, more or less — pursuant to Revised Guidelines on the Implementation of the 13th month pay law for the period covering 1986, 1987 and 1988”. Philippine Fuji Xerox was requested to effect rectification and/or restitution of the noted violation within five (5) working days from notice. In their almost identically-worded petitions, petitioners, through common counsel, attribute grave abuse of discretion to respondent labor officials Hon. Dionisiodela Serna and Undersecretary Cresenciano B. Trajano in issuing the questioned Orders of January 17, 1990 and October 10, 1991, respectively. They maintain that under P. D. 851, the 13th month pay is based solely on basic salary. As defined by the law itself and clarified by the Implementing and Supplementary Rules as well as by the Supreme Court in a long line of decisions, remunerations which do not form part of the basic or regular salary of an employee, such as commissions, should not be considered in the computation of the 13th month pay. Issue: Whether or not commissions form part of basic salary used in the computation of 13th month pay. Held: No, in remunerative schemes consisting of a fixed or guaranteed wage plus commission, the fixed or guaranteed wage is patently the "basic salary" for this is what the employee receives for a standard work period. Commissions are given for extra efforts exerted in consummating sales or other related transactions. They are, as such, additional pay, which this Court has made clear do not form part of the "basic salary." In including commissions in the computation of the 13th month pay, the second paragraph of Section 5 (a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law unduly expanded the concept of "basic salary" as defined in P.D. 851. It is a fundamental rule that implementing rules cannot add to or detract from the provisions of the law it is designed to implement. Administrative regulations adopted under legislative authority by a particular department must be in harmony with the provisions of the law they are intended to carry into effect. They cannot widen its scope. An administrative agency cannot amend an act of Congress. The consolidated petitions are hereby GRANTED. The second paragraph of Section 5(a) of the Revised Guidelines on the Implementation of the 13th Month Pay Law issued on November 16, 1987 by then Labor Secretary Franklin M. Drilon is declared null and void as being violative of the law said Guidelines were issued to implement. 295 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Iran vs. NLRC G.R. No. 121927 ANTONIO W. IRAN (doing business under the name and style of Tones Iran Enterprises) vs. NATIONAL LABOR RELATIONS COMMISSION (Fourth Division), GODOFREDO O. PETRALBA, MORENO CADALSO, PEPITO TECSON, APOLINARIO GOTHONG GEMINA, JESUS BANDILAO, EDWIN MARTIN, CELSO LABIAGA, DIOSDADO GONZALGO, FERNANDO M. COLINA April 22, 1998 Facts: Petitioner Antonio Iran is engaged in softdrinks merchandising and distribution in Mandaue City, Cebu, employing truck drivers who double as salesmen, truck helpers, and non-field personnel in pursuit thereof. Petitioner hired private respondents Petralba, Cadalso, Labiaga and Colina as drivers/salesmen while private respondents Tecson, Gimena, Bandilao, Martin and Gonzalgo were hired as truck helpers. Drivers/salesmen drove petitioner's delivery trucks and promoted, sold and delivered softdrinks to various outlets in Mandaue City. The truck helpers assisted in the delivery of softdrinks to the different outlets covered by the driver/salesmen. As part of their compensation, the driver/salesmen and truck helpers of petitioner received commissions per case of softdrinks sold at the following rates: Salesmen at Ten Centavos (P0.10) per case of Regular softdrinks and Twelve Centavos (P0.12) per case of Family Size softdrinks; Truck Helpers at Eight Centavos (P0.08) per case of Regular softdrinks and Ten Centavos (P0.10) per case of Family Size softdrinks. While conducting an audit of his operations, petitioner discovered cash shortages and irregularities allegedly committed by private respondents. Pending the investigation of irregularities and settlement of the cash shortages, petitioner required private respondents to report for work everyday. They were not allowed, however, to go on their respective routes. A few days thereafter, despite aforesaid order, private respondents stopped reporting for work, prompting petitioner to conclude that the former had abandoned their employment. Consequently, petitioner terminated their services. He also filed a complaint for estafa against private respondents. On the other hand, private respondent filed complaints against petitioner for illegal dismissal, illegal deduction, underpayment of wages, premium pay for holiday and rest day, holiday pay, service incentive leave pay, 13th month pay, allowances, separation pay, recovery of cash bond, damages and attorney's fees. Issue: Whether or not commissions are included in determining compliance with the minimum wage requirement 296 | L a b o r S t a n d a r d s - C a s e D i g e s t s

Held: Commissions are included. The definition in Art 97(f) of the Labor Code explicitly includes commissions as part of wages. While commissions are, indeed, incentives or forms of encouragement to inspire employees to put a little more industry on the jobs particularly assigned to them, still these commissions are direct remunerations for services rendered. In fact, commissions have been defined as the recompense, compensation or reward of an agent, salesman, executor, trustee, receiver, factor, broker or bailee, when the same is calculated as a percentage on the amount of his transactions or on the profit to the principal. The nature of the work of a salesman and the reason for such type of remuneration for services rendered demonstrate clearly that commissions are part of a salesman's wage or salary. Likewise, there is no law mandating that commissions be paid only after the minimum wage has been paid to the employee. Verily, the establishment of a minimum wage only sets a floor below which an employee's remuneration cannot fall, not that commissions are excluded from wages in determining compliance with the minimum wage law. Honda Philippines, Inc. vs. Samahang Malayang Manggagawa sa Honda G.R. No. 145561 HONDA PHILS., INC. vs. SAMAHAN NG MALAYANG MANGGAGAWA SA HONDA June 15, 2005 Facts: The Collective Bargaining Agreement (CBA) between petitioner Honda Philippines, Inc. and respondent union Samahan ng Malayang Manggagawa sa Honda containing provisions on the payment of 13th month and 14th month pay is effective until year 2000. In the latter part of 1998, the parties started renegotiations for the fourth and fifth years of their CBA. When the talks between the parties bogged down, respondent union filed a Notice of Strike on the ground of bargaining deadlock. Thereafter, Honda filed a Notice of Lockout. On May 11, 1999, respondent union filed a second Notice of Strike on the ground of unfair labor practice alleging that Honda illegally contracted out work to the detriment of the workers. Respondent union went on strike and picketed the premises of Honda on May 19, 1999. On November 22, 1999, the management of Honda issued a memorandum announcing its new computation of the 13th and 14th month pay to be granted to all its employees whereby the thirty-one (31)-day long strike shall be considered unworked days for purposes of computing said benefits. As per the company’s new formula, the amount equivalent to 1/12 of the employees’ basic salary shall be deducted from these bonuses, with a commitment however that in the event that the strike is declared legal, Honda shall pay the amount deducted. Respondent union opposed the pro-rated computation of the bonuses in a letter dated November 25, 1999. This issue was submitted 297 | L a b o r S t a n d a r d s - C a s e D i g e s t s

for voluntary arbitration. The Voluntary Arbitrator Herminigildo C. Javen invalidated Honda’s computation. A petition was filed with the Court of Appeals, however, the petition was dismissed for lack of merit. Issue: Whether or not the pro-rated computation of the 13th month pay and the other bonuses in question is valid and lawful. Held: No, the Company’s implementation of pro-rated 13th Month pay, 14th Month pay and Financial Assistance is invalid. Under the Revised Guidelines on the Implementation of the 13th month pay issued on November 16, 1987, the salary ceiling of P1,000.00 under P.D. No. 851 was removed. It further provided that the minimum 13th month pay required by law shall not be less than one-twelfth (1/12) of the total basic salary earned by an employee within a calendar year. The guidelines pertinently provides: The “basic salary” of an employee for the purpose of computing the 13th month pay shall include all remunerations or earnings paid by his employer for services rendered but does not include allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary, such as the cash equivalent of unused vacation and sick leave credits, overtime premium, night differential and holiday pay, and cost-of-living allowances. For employees receiving regular wage, we have interpreted “basic salary” to mean, not the amount actually received by an employee, but 1/12 of their standard monthly wage multiplied by their length of service within a given calendar year. Thus, we exclude from the computation of “basic salary” payments for sick, vacation and maternity leaves, night differentials, regular holiday pay and premiums for work done on rest days and special holidays. The revised guidelines also provided for a pro-ration of this benefit only in cases of resignation or separation from work. As the rules state, under these circumstances, an employee is entitled to a pay in proportion to the length of time he worked during the year, reckoned from the time he started working during the calendar year. The computation of 13th month pay should be based on the length of service and not on the actual wage earned by the worker. In the present case, there being no gap in the service of the workers during the calendar year in question, the computation of the 13th month pay should not be pro-rated but should be given in full. Substitute Payment Framanlis Farms, Inc. vs. NLRC G.R. No. 72616-17 FRAMANLIS FARMS, INC., ELOISA SYCIP and LINCOLN SYCIP vs. HON. MINISTER OF LABOR, MANILA, PAFLU SEPTEMBER CONVENTION, ZOILO ESTANISLAO, EMILIO ANITO, JAIME ARNEJO, CASIMIRO ARRABIS, RENATO BACONADOR, et al.

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March 8, 1989 Facts: In April 1980, eighteen (18) employees of the petitioners filed against their employer, and the other petitioners two labor standard cases which were docketed in the Regional Office of the Ministry of Labor in Bacolod City as FAD Cases Nos. 179180 and 0792-80 ("PAFLU SEPTEMBER CONVENTION VS. FRAMANLIS FARMS"), alleging that in 1977 to 1979 they were not paid emergency cost of living allowance (ECOLA) minimum wage, 13th month pay, holiday pay, and service incentive leave. The Deputy Minister of Labor Vicente Leogardo, Jr., on January 18, 1983 ordered the employer to pay, among others 13th month pay for the years 1978 and 1979 for all complainants. However, the claims for 13th month pay for 1977, as well as for ECOLA under PD Nos. 525 and 1123 shall, pending outcome of respondent's application for exemption therefrom, be held in abeyance." Petitioners admitted that they failed to pay their workers 13th month pay in 1978 and 1979. However, they argued that they substantially complied with the law by giving their workers a yearly bonus and other nonmonetary benefits amounting to not less than 1/12th of their basic salary, in the form of: 1. a weekly subsidy of choice pork meat for only P9.00 per kilo and later increased to P11 per kilo in March 1980, instead of the market price of P10 to P15 per kilo; 2. free choice pork meat in May and December of every year; and 3. free light or electricity. 4. all of which were allegedly "the equivalent" of the 13th month pay. Issue: Whether or not petitioner is exempted from the payment of 13th month pay as it had substantially complied with the requirement by extending yearly bonuses and other benefits in kind and in cash to the complainants, pursuant to Section 3(c) of PD 851 which exempts the employer from paying 13th month pay when its equivalent has already been given. Held: No, the petitioner is not exempted from the payment of 13th month pay as yearly bonus and other nonmonetary benefits are not valid substitute for the payment of 13th month pay. Under Section 3 of PD No. 851, such benefits in the form of food or free electricity, assuming they were given, were not a proper substitute for the 13th month pay required by law. PD 851 provides: Section 3. Employees covered - The Decree shall apply to all employees except to: x xx. x xxxxx The term 'its equivalent' as used in paragraph (c) hereof shall include Christmas bonus, mid-year bonus, profit-sharing payments and other cash bonuses amounting to not less than 1/12 of the basic salary but shall not include cash and stock dividends, cost of living allowances and all other allowances regularly enjoyed by the employee, as well as non-monetary benefits. Where an employer pays less than 1/12 of the employee's basic salary, the employer shall pay the difference." Neither may year-end rewards for loyalty and service be considered in lieu of 13th month pay. Section 10 of the Rules and Regulations Implementing Presidential Decree No. 851 299 | L a b o r S t a n d a r d s - C a s e D i g e s t s

provides: Section 10. Prohibition against reduction or elimination of benefits-Nothing herein shall be construed to authorize any employer to eliminate, or diminish in any way, supplements, or other employee benefits or favorable practice being enjoyed by the employee at the time of promulgation of this issuance." 14th Month Pay Kamaya Point Hotel vs. NLRC G.R. No. 75289 KAMAYA POINT HOTEL vs. NATIONAL LABOR RELATIONS COMMISSION, FEDERATION OF FREE WORKERS and MEMIA QUIAMBAO August 31, 1989

Facts: Respondent Memia Quiambao with thirty others who are members of private respondent Federation of Free Workers (FFW) were employed by petitioner as hotel crew. On the basis of the profitability of the company's business operations, management granted a 14th month pay to its employees starting in 1979. In January 1982, operations ceased to give way to the hotel's conversion into a training center for Libyan scholars. However, due to technical and financing problems, the Libyans preterminated the program on July 7, 1982, and petitioner allegedly suffered losses amounting to P2 million and in the end totally closed its business. Private respondent Federation of Free Workers (FFW), filed with the Ministry of Labor and Employment a complaint against petitioner for illegal suspension, violation of the CBA and non-payment of the 14th month pay. Records however show that the case was submitted for submission on the sole issue of alleged non-payment of the 14th month pay in the year 1982. Labor Arbiter ordered petitioner to pay the 14th month pay to respondents for the year 1982. NLRC affirmed the decision. Issue: Whether or not the 14th Month Pay can be withdrawn without violating article 100 of the Labor Code. Held: It is patently obvious that Article 100 is clearly without applicability. The date of effectivity of the Labor Code is May 1, 1974. In the case at bar, petitioner extended its 14th month pay beginning 1979 until 1981. What is demanded is payment of the 14th month pay for 1982. Indubitably from these facts alone, Article 100 of the Labor Code cannot apply. Moreover, there is no law that mandates the payment of 14th month pay. This is emphasized in the grant of exemption under Presidential Decree 851 (13th Month Pay Law) which states: "Employers already paying their employees a 13th month pay or its equivalent are not covered by this Decree." Necessarily then, only the 13th month pay is 300 | L a b o r S t a n d a r d s - C a s e D i g e s t s

mandated. Verily, a 14th month pay is a misnomer because it is basically a bonus and, therefore, gratuitous in nature. The granting of the 14th month pay is a management prerogative which cannot be forced upon the employer. It is something given in addition to what is ordinarily received by or strictly due the recipient. It is a gratuity to which the recipient has no right to make a demand. Diminution Davao Fruits Corporation vs. Associated Labor Unions G.R. No. 85073 DAVAO FRUITS CORPORATION vs. ASSOCIATED LABOR UNIONS (ALU) for in behalf of all the rankand-file workers/employees of DAVAO FRUITS CORPORATION and NATIONAL LABOR RELATIONS COMMISSION August 24, 1993 Facts: Respondent Associated Labor Unions (ALU), for and in behalf of all the rank-and-file workers and employees of petitioner, filed a complaint before the Ministry of Labor and Employment, against petitioner, for "Payment of the Thirteenth-Month Pay Differentials." Respondent ALU sought to recover from petitioner the thirteenth month pay differential for 1982 of its rank-and-file employees, equivalent to their sick, vacation and maternity leaves, premium for work done on rest days and special holidays, and pay for regular holidays which petitioner, allegedly in disregard of company practice since 1975, excluded from the computation of the thirteenth month pay for 1982. In its answer, petitioner claimed that it erroneously included items subject of the complaint in the computation of the thirteenth month pay for the years prior to 1982, upon a doubtful and difficult question of law namely P.D. 851 and the Supplementary Rules and Regulations issued by DOLE. A decision was rendered in favor of respondent ALU ordering petitioner to pay the 13th month pay differential of their rank and file employees for the year 1982. Issue: Whether or not the inclusion of payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays for the computation of the thirteenth month pay given by employers to their employees under P.D. No. 851 can be excluded after discovery of the contrary practice. Held: Presidential Decree No. 851, promulgated on December 16, 1975, mandates all employers to pay their employees a thirteenth month pay. How this pay shall be computed is set forth in Section 2 of the "Rules and Regulations Implementing Presidential Decree No. 851," thus: SECTION 2. . . . (a) "Thirteenth month pay" shall mean one twelfth (1/12) of the 301 | L a b o r S t a n d a r d s - C a s e D i g e s t s

basic salary of an employee within a calendar year. (b) "Basic Salary" shall include all renumerations or earnings paid by an employer to an employee for services rendered but may not include cost of living allowances, profitsharing payments, and all allowances and monetary benefits which are not considered or integrated as part of the regular or basic salary of the employee at the time of the promulgation of the Decree on December 16, 1975. It follows therefore, that payments for sick, vacation and maternity leaves, premium for work done on rest days special holidays, as well as pay for regular holidays, are likewise excluded in computing the basic salary for the purpose of determining the thirteen month pay. However petitioner computed and paid the thirteenth month pay, without excluding the subject items therein until 1981. From 1975 to 1981, petitioner had freely, voluntarily and continuously included in the computation of its employees' thirteenth month pay, the payments for sick, vacation and maternity leaves, premiums for work done on rest days and special holidays, and pay for regular holidays. The considerable length of time the questioned items had been included by petitioner indicates a unilateral and voluntary act on its part, sufficient in itself to negate any claim of mistake. Company practice favorable to the employees had indeed been established and the payments made pursuant thereto, ripened into benefits enjoyed by them. And any benefit and supplement being enjoyed by the employees cannot be reduced, diminished, discontinued or eliminated by the employer, by virtue of Section 10 of the Rules and Regulations Implementing P.D. No. 851, and Article 100 of the labor of the Philippines, which prohibit the diminution or elimination by the employer of the employees' existing benefits. 24.

Bonus

Nature Philippine Duplicators Inc. vs. NLRC G.R. No. 110068 PHILIPPINE DUPLICATORS, INC. vs. NATIONAL LABOR RELATIONS COMMISSION and PHILIPPINE DUPLICATORS EMPLOYEES UNION-TUPAS February 15, 1995

Facts: A decision was rendered by the Third Division directing Philippine Duplicators to pay its employees their 13th month pay based on their fixed wages plus sales commissions. A first motion for reconsideration was filed by the petitioner. During the pendency of the MoR, another case was decided upon, this time by the second division in the two (2) consolidated cases of Boie-Takeda Chemicals, Inc. vs. Hon. Dionisio de la Serna and Philippine Fuji Xerox Corp. vs. Hon. Cresenciano B. Trajano according to 302 | L a b o r S t a n d a r d s - C a s e D i g e s t s

petitioners, the decision in the latter directly opposes the decision in the former. Because of this, Philippine Duplicators filed for another motion for reconsideration, this time anchoring their assertions to the recently concluded case of Boie-Takeda Chemicals. Issue: Whether or not sales commission shall be considered in the computation of 13th month pay Held: The sales commission earned by the salesmen who make or close a sale of duplicating machines distributed by petitioner corporation, constitute part of the compensation or remuneration paid to salesmen for serving as salesmen, and hence as part of the "wage" or salary of petitioner's salesmen. Indeed, it appears that petitioner pays its salesmen a small fixed or guaranteed wage; the greater part of the salesmen's wages or salaries being composed of the sales or incentive commissions earned on actual sales closed by them. No doubt this particular galary structure was intended for the benefit of the petitioner corporation, on the apparent assumption that thereby its salesmen would be moved to greater enterprise and diligence and close more sales in the expectation of increasing their sales commissions. This, however, does not detract from the character of such commissions as part of the salary or wage paid to each of its salesmen for rendering services to petitioner corporation. In other words, the sales commissions received for every duplicating machine sold constituted part of the basic compensation or remuneration of the salesmen of Philippine Duplicators for doing their job. The portion of the salary structure representing commissions simply comprised an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman. Especially significant here also is the fact that the fixed or guaranteed portion of the wages paid to the Philippine Duplicators' salesmen represented only 15%-30% of an employee's total earnings in a year. Sales commissions, such as those paid in Duplicators, are intimately related to or directly proportional to the extent or energy of an employee's endeavors. Commissions are paid upon the specific results achieved by a salesman-employee. It is a percentage of the sales closed by a salesman and operates as an integral part of such salesman's basic pay. Definition; When Demandable Marcos vs. NLRC G.R. No. 111744 LOURDES G. MARCOS, ALEJANDRO T. ANDRADA, BALTAZARA J. LOPEZ AND VILMA L. CRUZ vs. NATIONAL LABOR RELATIONS COMMISSION and INSULAR LIFE ASSURANCE CO., LTD.

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September 8, 1995 Facts: Petitioners were under the employ of insular life assurance co for more than 20 years, but were dismissed because their positions were declared redundant. They were given benefits upon dismissal, all were either provided by the company or required by the law. Petitioners are claiming that they are entitled to receive their service awards. In the same year of the petitioners’ dismissal, private respondent celebrated its 80th anniversary and granted anniversary bonus equivalent to one (1) month salary only to permanent and probationary employees as of November 15, 1990. On March 26, 1991, respondent company announced the grant of performance bonus to both rank and file employees and supervisory specialist grade and managerial staff equivalent to two (2) months’ salary and 2.75 basic salary, respectively, as of December 30, 1990. The performance bonus, however, would be given only to permanent employees as of March 30, 1991. Petitioners contended that they are likewise entitled to the performance and anniversary bonuses because, at the time the performance bonus was announced to be given, they were only short of two (2) months service to be entitled to the full amount thereof as they had already served the company for ten (10) months prior to the declaration of the grant of said benefit. Also, they lacked only fifteen (15) days to be entitled to the full amount of the anniversary bonus when it was announced to be given to employees as of November 15, 1990. In a decision dated October 8, 1992, the Labor Arbiter ordered respondent company to pay petitioners their service awards, anniversary bonuses and prorated performance bonuses, including ten percent (10%) thereof as attorney's fees. Respondent company appealed to public respondent NLRC claiming grave abuse of discretion committed by the labor arbiter in holding it liable to pay said service award, performance and anniversary bonuses, and in not finding that petitioners were estopped from claiming the same as said benefits had already been given to them and the petitioners have already signed a quitclaim. Issue: Whether or not the petitioners are entitled to the bonuses that they are claiming Held: Under prevailing jurisprudence, the fact that an employee has signed a satisfaction receipt for his claims does not necessarily result in the waiver thereof. A deed of release or quitclaim cannot bar an employee from demanding benefits to which he is legally entitled. A bonus is not a gift or gratuity, but is paid for some services or consideration and is in addition to what would ordinarily be given. The term "bonus" as used in employment contracts, also conveys an idea of something which is gratuitous, or which may be claimed to be gratuitous, over and above the prescribed wage which the employer agrees to pay. While there is a conflict of opinion as to the validity of an agreement to pay additional sums for the performance of that which the promisee is already under obligation to perform, so as to give the latter the right to enforce such promise after performance, the authorities hold that if one enters into a 304 | L a b o r S t a n d a r d s - C a s e D i g e s t s

contract of employment under an agreement that he shall be paid a certain salary by the week or some other stated period and, in addition, a bonus, in case he serves for a specified length of time, there is no reason for refusing to enforce the promise to pay the bonus, if the employee has served during the stipulated time, on the ground that it was a promise of a mere gratuity. This is true if the contract contemplates a continuance of the employment for a definite term, and the promise of the bonus is made at the time the contract is entered into. If no time is fixed for the duration of the contract of employment, but the employee enters upon or continues in service under an offer of a bonus if he remains therein for a certain time, his service, in case he remains for the required time, constitutes an acceptance of the offer of the employer to pay the bonus and, after that acceptance, the offer cannot be withdrawn, but can be enforced by the employee. Business Information Systems and Services, Inc. vs. NLRC G.R. No. 103575 BUSINESSDAY INFORMATION SYSTEMS AND SERVICES, INC., AND RAUL LOCSIN vs. NATIONAL LABOR RELATIONS COMMISSION, NEMESIO MOYA ALFREDO AMANTE, EDWIN BERSAMINA, SAMUEL CUELA, ROMEO DELA CRUZ, MANUEL DE JESUS, SEVERINO DELA CRUZ April 5, 1993

Facts: BSSI was engaged in the manufacture and sale of computer forms. Due to financial reverses, its creditors, the Development Bank of the Philippines (DBP) and the Asset Privatization Trust (APT), took possession of its assets, including a manufacturing plant in Marilao, Bulacan. As a retrenchment measure, some plant employees, including the private respondents, were laid off and were paid separation pay equivalent to one-half (1/2) month pay for every year of service. Upon receipt of their separation pay, the private respondents signed individual releases and quitclaims in favor of BSSI. BSSI retained some employees but after two months discharged them as well but their separation pay is equivalent to a full month's salary for every year of service plus mid-year bonus. Protesting against the discrimination in the payment of their separation benefits, the twenty-seven (27) private respondents filed three (3) separate complaints against the BSSI and Raul Locsin. Petitioner of course denied the unlawful discrimination in the payment of separation benefits. They argued that the first batch of employees was paid "retrenchment" benefits mandated by law, while the remaining employees were granted higher "separation" benefits because their termination was on account of the closure of the business. LaborArbirter ruled in favor of private respondents ordering the petitioner to pay the respondents their

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separation pay differentials and their mid-year bonus. NLRC, upon appeal by petitioner affirmed the Labor Arbiter’s decision. Issue: Whether or not petitioner should also give the mid-year bonuses to their employees. Held: It is settled doctrine that the grant of a bonus is a prerogative, not an obligation, of the employer (Traders Royal Bank vs. NLRC, 189 SCRA 274). The matter of giving a bonus over and above the worker's lawful salaries and allowances is entirely dependent on the financial capability of the employer to give it. The fact that the company's business was no longer profitable (it was in fact moribund) plus the fact that the private respondents did not work up to the middle of the year (they were discharged in May 1988) were valid reasons for not granting them a midyear bonus. Requiring the company to pay a mid-year bonus to them also would in effect penalize the company for its generosity to those workers who remained with the company till the end" of its days. (Traders Royal Bank vs. NLRC, supra.) The award must therefore be deleted. 25.

Employment of Night Workers

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