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Articles 82-95: Conditions of Employment

Employee-Employer Relationship

Brotherhood Labor Unity Movement of the Phil. v. Zamora

Facts:
The petitioners are workers who have been employed at the San Miguel Parola Glass Factory
as pahinantes or kargadors for almost seven years. They worked exclusively at the SMC
plant, never having been assigned to other companies or departments of San Miguel Corp,
even when the volume of work was at its minimum. Their work was neither regular nor
continuous, depending on the volume of bottles to be loaded and unloaded, as well as the
business activity of the company. However, work exceeded the eight-hour day and
sometimes, necessitated work on Sundays and holidays. -for this, they were neither paid
overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor
Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay. They pressed
the SMC management to hear their grievances. BLUM filed a notice of strike with the Bureau
of Labor Relations in connection with the dismissal of some of its members. San Miguel
refused to bargain with the union alleging that the workers are not their employees but the
employees of an independent labor contracting firm, Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass factory
despite their regularly reporting for work. A complaint was filed for illegal dismissal and
unfair labor practices.
Issue:
Whether or not there was employer-employee (ER-EE)relationship between the workers and
San Miguel Corp.
Held:
YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was
used by the Supreme Court. These are:

The selection and engagement of the employee

Payment of wages

Power of dismissal

Control Test- the employers power to control the employee with respect to the means
and methods by which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral agreements of
employment with the workers. Considering the length of time that the petitioners have
worked with the company, there is justification to conclude that they were engaged to
perform activities necessary in the usual business or trade. Despite past shutdowns of the
glass plant, the workers promptly returned to their jobs. The term of the petitioners
employment appears indefinite and the continuity and habituality of the petitioners work
bolsters the claim of an employee status.
As for the payment of the workers wages, the contention that the independent contractors
were paid a lump sum representing only the salaries the workers where entitled to have no
merit. The amount paid by San Miguel to the contracting firm is no business expense or
capital outlay of the latter. What the contractor receives is a percentage from the total
earnings of all the workers plus an additional amount from the earnings of each individual
worker.
The power of dismissal by the employer was evident when the petitioners had already been
refused entry to the premises. It is apparent that the closure of the warehouse was a ploy to
get rid of the petitioners, who were then agitating the company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the companys control over the
workers. That San Miguel has the power to recommend penalties or dismissal is the
strongest indication of the companys right of control over the workers as direct employer.
TABAS VS. CALIFORNIA MANUFACTURING INCGR NO. 806680, JANUARY 26, 1989
FACTS
1.Petitioners were the employees of Livi Manpower Services. They were assigned tothe
respondent pursuant to a manpower supply agreement as promotionalmerchandisers.2.It
was provided in the agreement that: 1) California would have no control orsupervision over
the workers as to how they perform or accomplish their work, 2) Liviis an independent
contractor and that it has the sole responsibility of complying withall the existing as well as
future laws, rules and regulations pertinent to employmentof labor, 3) the assignment to
California was seasonal and contractual, and 4)payroll, including COLA and holiday pay
shall be delivered Livi at Californiaspremises.3.Petitioners were made to sign 6-month
employment contracts which were renewedfor the same period. Unlike regular employees of
California, they did not receivefringe benefits and bonuses and were paid only a daily
allowance.4.Petitioners contend that they have become regular employees of
California.Subsequent to their claim for regularization, California no longer re-hired them.
Livi,on the other hand, claims the workers as its employees and that it is an

independentcontractor.5.Labor Arbiter found that no employer-employee relationship

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existed. The NLRCaffirmed the ruling.
ISSUE
Is there an employer-employee relationship between California and the petitioners?
HELD
YES. The existence of an employer-employee relationship is a question of law and cannotbe
made subject to agreement. The stipulations in the manpower supply agreement will
noterase either partys obligations as an employer.Livi is a labor-only contractor,
notwithstanding the provisions in the agreement. The natureof ones business is not
determined by self-serving appellations but by test provided bystatute and the prevailing
case law.Californias contention that the workers are not performing activities which are
directlyrelated to its general business of manufacturing is untenable. The promotion or sale
ofproducts, including the task of occasional price tagging, is an integral part of
themanufacturing business. Livi as a placement agency had simply supplied the
manpowernecessary for California to carry out its merchandising activities, using the latters
premisesand equipment. Merchandising is likewise not a specific project because it is an
activityrelated to the day-to-day operations of California.Based on Article 106 of the Labor
Code, the labor-only contractor is considered merely anagent of the employer and liability
must be shouldered by either one or by both.Petitioners are ordered reinstated as regular
employees.
Sevilla vs. CA
FACTS:
A contract by and between Noguera and Tourist World Service (TWS), represented by
Canilao, wherein TWSleased the premises belonging to Noguera as branch office of TWS.
When the branch office was opened, it was runby appellant Sevilla payable to TWS by any
airline for any fare brought in on the efforts of Mrs. Sevilla, 4% was togo to Sevilla and 3%
was to be withheld by the TWS.Later, TWS was informed that Sevilla was connected with
rival firm, and since the branch office was losing, TWS considered closing down its office.On
January 3, 1962, the contract with appellee for the use of the branch office premises was
terminatedand while the effectivity thereof was January 31, 1962, the appellees no longer
used it. Because of this, Canilao, thesecretary of TWS, went over to the branch office, and
finding the premises locked, he padlocked the premises.When neither appellant Sevilla nor
any of his employees could enter, a complaint was filed by the appellantsagainst the
appellees. TWS insisted that Sevilla was a mere employee, being the branch manager of
its branch office and thatshe had no say on the lease executed with the private respondent,
Noguera.
ISSUE:
W/N ER-EE relationship exists between Sevilla and TWS
HELD:
The records show that petitioner, Sevilla, was not subject to control by the private
respondent TWS. In thefirst place, under the contract of lease, she had bound herself in
solidum as and for rental payments, anarrangement that would belie claims of a masterservant relationship. That does not make her an employee of TWS,since a true employee
cannot be made to part with his own money in pursuance of his employers business,
orotherwise, assume any liability thereof.In the second place, when the branch office was
opened, the same was run by the appellant Sevilla payableto TWS by any airline for any fare
brought in on the effort of Sevilla. Thus, it cannot be said that Sevilla was underthe control
of TWS. Sevilla in pursuing the business, relied on her own capabilities.It is further admitted
that Sevilla was not in the companys payroll. For her efforts, she retained 4% incommissions
from airline bookings, the remaining 3% going to TWS. Unlike an employee, who earns a
fixed salary,she earned compensation in fluctuating amount depending on her booking
successes. The fact that Sevilla had been designated branch manager does not make her
a TWS employee. Itappears that Sevilla is a bona fide travel agent herself, and she acquired
an interest in the business entrusted toher. She also had assumed personal obligation for the
operation thereof, holding herself solidary liable for thepayment of rentals.Wherefore, TWS
and Canilao are jointly and severally liable to indemnify the petitioner, Sevilla.
G.R. No. L-43825 May 9, 1988
CONTINENTAL MARBLE CORP. and FELIPE DAVID, petitioner, vs.NATIONAL LABOR
RELATIONS COMMISSION (NLRC); ARBITRATOR JOSE T. COLLADO and RODITO
NASAYAO, respondents.
PADILLA, J.:
FACTS:
Rodito Nasayao claimed that he was appointed plant manager of the corporation and
receiving a compensation of P3,000.00, a month or 25% of the monthly net income of the

company, which ever is greater, when the company failed to give his salary for the months
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of May, June and July Nasayo filed a complaint with the NLRC.
Continental Marble Corp., denied the claim of Rodito Nasayao, that the latter was not an
employee of the company, an undertaking agreed upon by the parties as joint venture, a
sort of partnership, wherein Rodito Nasayao was to keep the machinery in good working
condition and, in return, he would get the contracts from end-users for the installation of
marble products, in which the company would not interfere. In addition, private respondent
Nasayao was to receive an amount equivalent to 25% of the net profits that the corporation
will earn, should there be any.
The case was submitted for voluntary arbitration and the parties selected Jose T. Collado as
voluntary arbitrator. In the course of the proceeding, Continental Marble Corp., challenged
the arbitrator's capacity to try and decide the case fairly and judiciously and asked him to
desist from further hearing the case. But, the respondent arbitrator refused. Later a
judgement was rendered in favor of Rodito Nasayao.
Upon receipt of the decision, Continental Marble Corp., appealed to the National Labor
Relations Commission on grounds that the labor arbiter gravely abused his discretion in
persisting to hear and decide the case notwithstanding petitioners' request for him to desist
therefrom: and that the appealed decision is not supported by evidence.
Rodito Nasayao filed a motion to dismiss the appeal on the ground that the decision of the
voluntary arbitrator is final, unappealable, and immediately executory; and a motion for the
issuance of a writ of execution. The Commission, dismissed the appeal on the ground that
the decision appealed from is final, unappealable and immediately executory. Continental
Marble Corp., seek to annul and set aside the decision.
ISSUE:
Whether or not there exist an employee-employer relationship between Rodito Nasayao and
Continental Marble Corp.?
HELD:
No. The court relied on the so -called "control test" that is the most important element, 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.
In the instant case, it appears that the petitioners had no control over the conduct of Rodito
Nasayao in the performance of his work. He decided for himself on what was to be done and
worked at his own pleasure. He was not subject to definite hours or conditions of work and,
in turn, was compensated according to the results of his own effort. He had a free hand in
running the company and its business.
The Court has accorded great respect for, and finality to, findings of fact of a voluntary
arbitrator and administrative agencies which have acquired expertise in their respective
fields, like the Labor Department and the National Labor Relations Commission, their
findings of fact and the conclusions drawn therefrom have to be supported by substantial
evidence.
In that instant case, the finding of the voluntary arbitrator that Rodito Nasayao was an
employee of the petitioner corporation is not supported by the evidence or by the law.
The court find the version of the petitioners to be more plausible and in accord with human
nature and the ordinary course of things. As pointed out by the petitioners, it was illogical for
them to hire the private respondent Rodito Nasayao as plant manager with a monthly salary
of P3,000.00, an amount which they could ill-afford to pay, considering that the business
was losing, at the time he was hired, and that they were about to close shop in a few
months' time.
Besides, there is nothing in the record which would support the claim of Rodito Nasayao
that he was an employee of the petitioner corporation. He was not included in the company
payroll, nor in the list of company employees furnished the Social Security System.
Most of all, the element of control is lacking. Absent the power to control the employee with
respect to the means and methods by which his work was to be accomplished, there was no
employer- employee relationship between the parties. Hence, there is no basis for an award
of unpaid salaries or wages to Rodito Nasayao
Case Title: ENCYCLOPAEDIA BRITANNICA (PHILIPPINES), INC., vs.
NLRC
G.R. No.: 87098 Date:
November 4, 1996 Petitioner(s): Encyclopedia
Britanica (Philippines), Inc. Respondent (s): NLRC, Labor Arbiter Teodorico Rogelio
and Benjamin Limjoco Ponente: Torres, Jr., J.:
Facts:
Benjamin Limjoco was a sales division manager of Encyclopedia Britanica. Limjoco has his
own agents on which he receives commission out of their sales. Limjoco and petitioner
Britanica agreed however that office expenses will be deducted from his commission. On
June 14 1974, Limjoco resigned to pursue his own business. On October 30, 1975 he filed a
complaint against petitioner Encyclopedia Britannica with the Department of Labor and
Employment, claiming for non-payment of separation pay and other benefits, and also for
illegal deduction from his sales commissions.
Petitioner argued that respondent is not its employee but an independent dealer who
received commission there from. Respondent insisted his claim that he was indeed an
employee of respondent company assigned at the sales department earning an average

monthly income of P4, 000.00 as his sales commission. He further claimed that he was
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under the supervision of the petitioner's officials who issued to him and his other personnel,
memoranda, guidelines on company policies, instructions and other orders. Petitioner
argued that it had no control and supervision over the complainant as to the manner and
means he conducted his business operations. The latter did not even report to the office of
the petitioner and did not observe fixed office hours. Consequently, there was no employeremployee relationship.
The Labor Arbiter decided in favor of respondent Limjoco, later affirmed by the NLRC, hence
this petition.
Issue:
Whether or not respondent Limjoco is and employee of petitioner Encyclopedia Britanica.
Held:
The court held that respondent Limjoco is not an employee of Encyclopedia Britanica. He
was merely an agent or independent dealer of the company.
In determining the existence of an employer-employee relationship the following elements
must be present: 1) selection and engagement of the employee; 2) payment of wages; 3)
power of dismissal; and 4) the power to control the employee's conduct. Of the above,
control of employee's conduct is commonly regarded as the most crucial and determinative
indicator of the presence or absence of an employer- employee relationship. Although the
company issued memoranda to respondent does not sufficiently prove that indeed the
company has control over Limjoco. In fact it only issued such memoranda merely to set up
guidelines and policies which the sales managers follow and impose on their respective
agents. The issuance of such memoranda was done by the petitioner only to notify the
respondent and other sales manager of the company's policies and procedures.
Nevertheless, private respondent Limjoco and the other agents were free to conduct and
promote their sales operations. Furthermore, the fixing of the price by petitioner was only for
the purpose of uniformity, but never the less respondent is free to conduct his own
marketing operations. Finally, respondent was absolutely free to conduct his work and
indulge in other means of livelihood, wherein fact at that time he was also a director and
later president of the Farmer's Rural Bank. If he was indeed an employee of petitioner it
could have barred him from indulging in other employment or demanded his full time
devotion to the company.
Case Title:DY KEH BEN vs. INTERNATIONAL LABOR and MARINE UNION
OF THE PHILIPPINES, ET AL. G.R. No.: L-32245 Date:
May 25, 1979
Petitioner(s): Dy Keh Beng Respondent(s): NLRC, et. al. Ponente: De Castro, J.:
Facts:
A charge of unfair labor practice was filed against Dy Keh Beng, proprietor of a basket
factory, for discriminatory acts within the meaning of Section 4(a), sub-paragraph (1) and
(4). Republic Act No. 875, by dismissing on September 28 and 29, 1960, respectively, Carlos
N. Solano and Ricardo Tudla for their union activities.
Petitioner contended that he did not know Tudla while Solano was not his employee. He said
that Solano would only appear to the establishment when there is work which he did on
pakyaw basis, each work being under separate contact. Moreover, Dy Keh Beng countered
with a special defense of simple extortion committed by the head of the labor union,
Bienvenido Onayan. Petitioner further contended that without satisfying the control test
there can be no employer-employee relationship.
The hearing examiners report which was affirmed in toto by the CIR found that indeed there
was employer-employee relationship between petitioner and respondents. Solano and Tudla
became employees of Dy Keh Beng from May 2, 1953 and July 15, 1955, respectively, and
that except in the event of illness, their work with the establishment was continuous
although their services were compensated on piece basis.
Issue:
Whether or not there existed an employee employer relation between petitioner Dy Keh
Beng and the respondents Solano and Tudla .
Held:
Contrary to the petitioners contention that the control test is not sufficiently satisfied, the
court found that indeed petition exercise control over respondents. It should be borne in
mind that the control test calls merely for the existence of the right to control the manner of
doing the work, not the actual exercise of the right. Considering the finding by the Hearing
Examiner that the establishment of Dy Keh Beng is "engaged in the manufacture of baskets
known as kaing, it is natural to expect that those working under Dy would have to observe,
among others, Dy's requirements of size and quality of the kaing. Some control would
necessarily be exercised by Dy as the making of the kaing would be subject to Dy's
specifications. Since the work on the baskets is done at Dy's establishments, it can be
inferred that the proprietor Dy could easily exercise control on the men he employed. As to
the contention that Solano was not an employee since he only worked on pakyaw basis, the
court adopted the finding of the court examiner that payment by the piece is just a method
of compensation and does not define the essence of the relation. The court also noted the
opinion of Justices Perfecto, concurring with Chief Justice Ricardo Paras who penned the
decision in "Sunrise Coconut Products Co. v. Court of Industrial Relations" (83 Phil..518, 523),
who stated that "Judicial notice of the fact that the so- called "pakyaw" system mentioned in
this case as generally practiced in our country, is, in fact, a labor contract -between
employers and employees, between capitalists and laborers."

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Case Title: Zanotte Shoes vs. NLRC G.R. No.: 100665 Date: February 13, 1995
Petitioner: Zanotte Shoes/Leonardo Lorenzo Respodents: NLRC, Hon. Benigno
Villarente, Joseph Lluz et. al. Ponente: VITUG, J.:
Facts:
Private respondents filed a complaint against petitioner Zanotte Shoes owned by Leonardo
Lorenzo for illegal dismissal and other monetary claim, however later the monetary claims
were dropped with the respondents concentrating on the issue of illegal dismissal.
Respondents alleged that they were dismissed from work when they demanded to the
respondent to make them members of SSS and increase in their pay rates.
Petitioners, in turn, claimed that their business operations were only seasonal, normally
twice a year, one in June (coinciding with the opening of school classes) and another in
December (during the Christmas holidays), when heavy job orders would come in. Private
respondents, according to petitioners, were engaged on purely contractual basis and paid
the rates conformably with their respective agreements.
After the labor Arbiter's investigation, he rendered his findings in favor of the respondents
sustaining the claim that indeed there exists an employer-employee relationship and
ordered also the petitioner to pay respondents their respective separation pay. These
findings were sustained by the NLRC, thus this petition.
Issue:
Whether on not the NLRC erred in sustaining the decision of the Labor arbiter finding the
existence of employer-employee relationship and the award of separation pay.
Held:
Once again the Supreme Court emphasized, that factual findings of the NLRC, particularly
when they coincide with that of the Labor Arbiter, are accorded respect, if not finality, and
will not be disturbed absent any showing that substantial evidence which might otherwise
affect the result of the case has been discarded.
There being no obvious manifestation that the NLRC committed a grave abuse of its
discretion in arriving at its conclusion. In the case at bar, we see no reason for disturbing the
findings of the Labor Arbiter and the NLRC on the existence of an employer-employee
relationship between herein private parties. The work of private respondents is clearly
related to, and in the pursuit of, the principal business activity of petitioners. The critteria
used for determining the existence of an employer-employee relationship, all extant in the
case at bench, include (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 result of the work to be done and to the means and methods by which
the work to be done and to the means and methods by which the work is to be
accomplished. The reckoning point is the existence of the right to control but not the actual
exercise of the right to control.
While the court sustained the finding of the NLRC, it did not however consider the award of
separation pay there being no actual dismissal nor abandonment. Where-in fact petitioner
has insisted his willingness to rehire respondents but they have steadfastly refused the offer.
G.R. No. 111870 June 30, 1994
AIR MATERIAL WING SAVINGS AND LOAN ASSOCIATION, INC., petitioner, vs.
NATIONAL LABOR RELATIONS COMMISSION, et al., respondents.
JUSTICE CRUZ, ponente.
FACTS:
Luis S. Salas was appointed "notarial and legal counsel" for petitioner Air Material Wings
Savings and Loan Association (AMWSLAI) in 1980. AMWSLAI issued order reminding Salas of
the approaching termination of his legal services under their contract. This prompted Salas
to lodge a complaint against AMWSLAI for separation pay, vacation and sick leave benefits,
cost of living allowances, refund of SSS premiums, moral and exemplary damages, payment
of notarial services rendered from February 1, 1980 to March 2, 1990, and attorney's fees.
AMWSLAI moved to dismiss for lack of jurisdiction. It averred that there was no employeremployee relationship between them and that his monetary claims properly fell within the
jurisdiction of the regular courts. Salas opposed the motion and presented documentary
evidence to show that he was indeed an employee of AMWSLAI. AMWSLAI was ordered to
pay Salas his notarial fees from 1987 up to March 2, 1990, and attorney's fee equivalent to
10% of the judgment award. The decision affirmed in toto by the Commission prompted Air
Material Wings Savings and Loan Association (AMWSLAI) to seek relief in the court.
ISSUE:
Whether or not employer-employee relationship exist in the case at bar?
HELD:
Yes. The court held in their decisions that the elements of an employer-employee
relationship are: (1) selection and engagement of the employee; (2) payment of wages; (3)
power of dismissal; and (4) employer's own power to control employee's conduct. The
existence of such a relationship is essentially a factual question. Which can be substantiated
in the present case.
In the case at bar the terms and conditions set out in the letter-contract entered into by the
parties on January 23, 1987, clearly show that Salas was an employee of the petitioner. His
selection as the company counsel was done by the board of directors in one of its regular
meetings. The petitioner paid him a monthly compensation/retainer's fee for his services.
Though his appointment was for a fixed term of three years, the petitioner reserved its

power of dismissal for cause or as it might deem necessary for its interest and protection. No
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less importantly, AMWSLAI also exercised its power of control over Salas by defining his
duties and functions as its legal counsel.
HYDRO
RESOURCES
CONTRACTORS
CORPORATION,
petitioner,
vs.
LABOR ARBITER ADRIAN N. PAGALILAUAN and the NATIONAL LABOR RELATIONS
COMMISSION, public respondents, and ROGELIO A. ABAN,
Facts: Rogelio Aban was hired by petitioner as legal assistant on October 24, 1978. On
September 4, 1980 he received a letter from the petitioner informing him that he will be
terminated on October 4, 1970 allegedly for his failure to perform his duties well. Thereafter,
Aban filed a case for illegal dismissal before the labor arbiter which held that there was
indeed an illegal dismissal. This was affirmed by NLRC.
Issue: Whether there is an employer-employee relationship between petitioner and Aban.
Held: Yes.
The determination of whether there is an employer-employee relationship depends upon
four standards: 1. the manner of selection and engagement of the putative employee; 2. the
mode of payment of wages; 3. the presence or absence of a power of dismissal; and, 4.
presence or absence of a power to control the putative employee's conduct. The right of
control has been held to be the decisive factor.
The four tests were satisfied by the following facts:
Aban was employed by the petitioner to be its Legal Assistant as evidenced by his
appointment paper. The petitioner paid him a basic salary plus living allowance. Thereafter,
Aban was dismissed on his alleged failure to perform his duties well.
Aban worked solely for the petitioner and dealt only with legal matters involving the said
corporation and its employees. He also assisted the Personnel Officer in processing
appointment papers of employees. This latter duty is not an act of a lawyer in the exercise of
his profession but rather a duty for the benefit of the corporation.
Insular Life Assurance Co., Ltd. vs. NLRC
GR No. 119930
Facts: On August 21, 1992, Pantaleon delos Reyes the private respondent and petitioner
entered into an agency contract wherein the former is authorized to solicit within the
Philippines applications for life insurance and annuities for which he would be paid
compensation in the form of commissions. On March 1, 1993, parties entered into another
contract wherein private respondent was appointed as Acting Unit Manager. As such, the
duties and responsibilities of De los Reyes included the recruitment, training, organization
and development within his designated territory of a sufficient number of qualified,
competent and trustworthy underwriters, and to supervise and coordinate the sales efforts
of the underwriters in the active solicitation of new business and in the furtherance of the
agency's assigned goals. It was similarly provided in the management contract that the
relation of the acting unit manager and/or the agents of his unit to the company shall be
that of independent contractor.
Private respondent worked concurrently as agent and Acting Unit Manager until he
was notified by petitioner on November 18, 1993 that his services were terminated effective
December 18, 1993. He filed a complaint for illegal dismissal before the labor arbiter which
dismissed the same for lack of jurisdiction, there being no employer-employee relationship.
On appeal however, NLRC reversed such decision, finding that there is an employeremployee relationship.
Issue: Whether or not NLRC has jurisdiction there being an employer-employee relationship.
Held: Yes.

It has been settled that an insurance agent on commission basis is not an

employee of the insurance company. However, delos Reyes in this case is not simply an
agent but was also appointed as Acting Unit Manager under the Management (Second)
Contract. As such, as found out pursuant to the contract itself, there is an employeremployee relationship applying the four-fold test.

Petitioner contends that private respondent was never required to go through the pre-

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employment procedures and that the probationary employment status was reserved only to
employees of petitioner. However, the provisions of the contract show otherwise. Private
respondent was appointed as Acting Unit Manager only upon the recommendation of the
District Manager. This indicates that private respondent was hired by petitioner because of
the favorable endorsement of its duly authorized officer. The endorsement was based on his
performance as an agent. It can be concluded that the agent phase is a probationary period
for the eventual employment as unit manager.
Petitioner also contends that private respondent was compensated on commission basis.
However the contract provides that delos Reyes is entitled to the free portion of Unit
Development Financing which for all intents and purposes comprised the salary regularly
paid to him by petitioner.
Petitioner also exercised power of dismissal because the contract provides for grounds
thereof and that the private respondent must exclusively work with the company. It was also
found out by NLRC that petitioner indeed exercise control over the private respondent
because he was required to meet certain manpower and production quotas.
Angelina Francisco vs. NLRC
G.R. No. 170087
Facts: In 1995 Francisco was hired by Kasei Corporation during the latter's incorporation
stage. SHe was designated as accountant and corporate secretary and was assigned to
handle all accounting needs of the company. She was also designated as liaison officer to
secure business permits, construction permits etc. Althoug designated as Corp Sec, she was
not entrusted with the corporate documnets; neither did she attend any board meeting nor
required to do so.
In 1996, she was designated as Acting Manager who was assigned to handle recruitment of
all employees and perform management administration function. Thereafter, she was
replaced by Liza Fuentes as manager. She alleged that she was required to sign a prepared
resolution for her placement but she was assured that she would still be connected with
Kasei Corp. However, Kasei Corp reduced her salary by P2,500/month. She did not receive
her midyear bonus and on October 2001, did not receive her salary. She demanded for the
payment thereof but she was informed that she is no longer connected with the company.
Hence she filed an action for constructive dismissal before the labor arbiter (LA).
Petitioner contends that they did not exercise control and supervision over Francisco. She did
not have daily time record and may come and leave the office any time she wanted. And
that her designation as technical consultant depended solely upon the will of the
management and hence her consultancy may be terminated any time. The LA held that
there was an illegal dismissal. This was affirmed by NLRC but was reversed by CA on appeal.
Hence this petition.
Issue: Whether there is an employer-employee relationship.
Held: The control test to determine presence of employer-employee relationship is
sometimes not enough; it is insufficient to give a complete picture of the relationship
between parties, owing to the complexity of such relationship where several positions have
been held by the worker. Economic realities of the employment relations help provide a
comprehensive analysis of the true classification of the individual, whether as employee,
independent contractor, corporate officer or some other capacity.
The better approach would therefore be to adopt a two-tiered test involving: (1) the putative
employers 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.
The determination of the relationship between employer and employee depends upon the
circumstances of the whole economic activity, such as: (1) the extent to which the services
performed are an integral part of the employers business; (2) the extent of the workers
investment in equipment and facilities; (3) the nature and degree of control exercised by the
employer; (4) the workers opportunity for profit and loss; (5) the amount of initiative, skill,
judgment or foresight required for the success of the claimed independent enterprise; (6)
the permanency and duration of the relationship between the worker and the employer; and
(7) the degree of dependency of the worker upon the employer for his continued
employment in that line of business.
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.

Page | 8

By applying the control test, there is no doubt that petitioner is an employee of Kasei
Corporation because she was under the direct control and supervision of Seiji Kamura, the
corporations Technical Consultant. She reported for work regularly and served in various
capacities as Accountant, Liaison Officer, Technical Consultant, Acting Manager and
Corporate Secretary, with substantially the same job functions, that is, rendering accounting
and tax services to the company and performing functions necessary and desirable for the
proper operation of the corporation such as securing business permits and other licenses
over an indefinite period of engagement.
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. Petitioners 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 latters line of business.
Opulencia Ice Plant and Storage vs. NLRC
GR No. L-98368
Facts: Private respondent Manuel Esita worked for 20 years as compressor operator of
Tiongson Ice Plant in San Pablo City. In 1980, he was hired as compressor operator-mechanic
for the ice plants of petitioner Dr. Melchor Opulencia in Tanuan, Batangas and Calamba,
Laguna. He worked initially in Tanuan and in 1986, was transferred to the ice plant in
Calamba, which was then undergoing overhauling, taking the place of compressor operator
Esera, who was relieved because he was already old and weak. For less than a month, Esita
helped in the construction-remodeling of Dr. Opulencia's house.
He was subsequently dismissed by petitioner when he demanded for the correct amount of
wages due him. Consequently, he filed with Sub-Regional Arbitration a complaint for illegal
dismissal, underpayment etc. The Labor Arbiter ruled in favor of Esita. On appeal, NLRC
affirmed the decision with some modification on the amount of award. Hence the present
petition.
Issue: Whether NLRC has jurisdiction (due to alleged lack of employer-employee
relationship).
Held: Yes. There is an employer-employee relationship. Labor arbiters (LAs) and the NLRC
can assume jurisdiction despite the fact that petitioner questioned the existence of such
relationship from the start. If we are to follow the argument of the petitioner that LAs and
NLRC do not have jurisdiction once they question the existence of the relationship, then it
would be easy for unscrupulous employers to avoid the jurisdiction of LAs and NLRC, and
may even evade compliance with labor laws only on bare assertion that an employeremployee relationship does not exist.
Likewise, no particular form of evidence is necessary to prove employer-employee
relationship. Any competent and relevant evidence to prove the relationship may be
admitted. Hence, petitioner's argument that Esita's failure to provide documentary evidence
to prove relationship is fatal, is untenable.

[GR. Nos. 83380-81 November 15, 1989]

MAKATI HABERDASHERY, INC., JORGE LEDESMA and CECILIO G. INOCENCIO,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION, CEFERINA J. DIOSANA (Labor Arbiter,
Department of Labor and Employment, National Capital Region), SANDIGAN NG
MANGGAGAWANG PILIPINO (SANDIGAN)-TUCP and its members, JACINTO
GARCIANO, ALFREDO C. BASCO, VICTORIO Y. LAURETO, ESTER NARVAEZ, EUGENIO
L. ROBLES, BELEN N. VISTA, ALEJANDRO A. ESTRABO, VEVENCIO TIRO, CASIMIRO
ZAPATA, GLORIA ESTRABO, LEONORA MENDOZA, MACARIA G. DIMPAS, MERILYN A.
VIRAY, LILY OPINA, JANET SANGDANG, JOSEFINA ALCOCEBA and MARIA ANGELES,
respondents.
FACTS:
1

Private complainants are working for Makati Haberdashery Inc. as tailors, seamstress,
sewers, basters, and plantsadoras and are paid on a piece-rate basis (except two
petitioners- Maria Angeles and Leonila Serafina who are paid on a monthly basis) and

in addition, they are given a daily allowance of P 3.00 provided they report before
9:30a.m.
Work schedule is 9:30-6 or 7 p.m., Mondays to Saturdays and even on Sundays and
holidays during peak periods.
The Sandigan ng Manggagawang Pilipino, a labor organization of the respondent
workers, filed a complaint for: - underpayment of basic wage and living allowance
-non-payment of holiday pay, overtime work, and service incentive pay
-13th month pay
-benefits provided for under Wage Orders 1-5
While the first case was pending decision, Pelobello left an open package containing
a jusi barong tagalong with salesman Rivera. He was caught and confronted about
this and he explained that this was ordered by Zapata, also a worker, for his
(personal) customer. Zapata allegedly admitted that he copied the design of the
company but later denied ownership of the same.
They were made to explain why no action should be taken against them for accepting
a job order which is prejudicial and in direct competition with the business. However
they did not submit and went on AWOL until the period given for them to explain
expired hence the dismissal.
Illegal dismissal complaint was filed. Labor arbiter declared petitioners guilty of illegal
dismissal and ordered to reinstate Pelobello and Zapata and found petitioners
violating decrees of COLA, service incentive and 13thmonth pay. Commission analyst
was directed to compute the monetary awards which retroacts to three years prior to
filing of case. NLRC affirmed but limited backwages to one year.

Page | 9
2
3

ISSUE:
1
2

Whether or not there exist an employer-employee relationship between the private

complainants and the petitioner
Whether or not there was a valid termination of employment

HELD:
1

YES. Aside from the four-fold test of employer-employee relationship, the so-called
control testis the most important element. It means the determination of whether
the employer controls or has reserved the right to control the employee not only as
to the result of the work but also as to the means and method by which the same is
to be accomplished.
The facts at bar reveal that the most important element of control is present. As
gleaned from the operations of petitioner, when a customer enters into a contract
with the haberdashery or its proprietor, the latter directs an employee who may be a
tailor, pattern maker, sewer, or plantsadora to take the customers measurements,
and to sew the pants, coat or shirt as specified by the customer. Supervision is
actively manifested in all these aspects- the manner and quality of cutting, sewing
and ironing. Furthermore, it is also evident in the memorandum issued by petitioner
dated May 30, 1981.
YES, termination was valid.
The private respondents blatant disregard of their employers memorandum is
undoubtedly an open defiance to the lawful orders of the latter, a justifiable ground
for termination of employment by the employer expressly provided for in Article 283
(a) as well as clear indication of guilt for the commission of acts inimical to the
interests of the employer, another justifiable ground under the same article par. (c) .

[G.R. No. 113542. February 24, 1998]

CAURDANETAAN PIECE WORKERS UNION, represented by JUANITO P. COSTALES, JR. in his
capacity as union president, petitioner, vs. UNDERSECRETARY BIENVENIDO E. LAGUESMA
and CORFARM GRAINS, INC., respondents.
[G.R. No. 114911. February 24, 1998]
CAURDANETAAN PIECE WORKERS ASSOCIATION as represented by JUANITO P. COSTALES, JR.,
president, petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION, CORFARM GRAINS, INC.
and/or TEODY C. RAPISORA and HERMINIO RABANG, respondents.
FACTS:
This case consists of 2 consolidated cases.

The first case is an appeal from the decision of Laguesma, as Undersecretary of

Labor, in the Petition for
Certification Election filed by petitioner-union.
The Caurdenataan Piece Workers Union is composed of the employees of Corfarm
Grains, Inc. They work as cargadores in the said company and were paid on a piece
rate basis. The said union was organized when some of their benefits were not given
to them. Thus, they filed their petition for certification election. The Med-Arbiter
granted the petition but this decision was reversed, on appeal, by Laguesma saying
that there was no employer-employee relationship existing.
The second case involves a complaint for illegal dismissal against Corfarm. This
arose because those workers who joined the said union were replaced with nonmembers. As to this case, the labor arbiter first ruled in favor of the workers but
subsequently, the NLRC reversed such ruling.

Page | 10
2

ISSUE:
Whether or not there was an employer-employee relationship between the cargadores and
Corfarm
HELD:
YES.
To determine the existence of an employer-employee relation, this Court has consistently
applied the four-fold test which has the following elements: (1) the power to hire, (2) the
payment of wages, (3) the power to dismiss, and (4) the power to control -- the last being
the most important element.
It is undeniable that petitioners members worked as cargadores for private respondent.
They loaded, unloaded and piled sacks of palay from the warehouses to the cargo trucks and
from the cargo trucks to the buyers. This work is directly related, necessary and vital to the
operations of Corfarm. Moreover, Corfarm did not even allege, much less prove, that
petitioners members have substantial capital or investment in the form of tools,
equipment, machineries, and work premises, among others. Furthermore, said respondent
did not contradict petitioners allegation that it paid wages directly to these workers without
the intervention of any third-party independent contractor. It also wielded the power of
dismissal over petitioners. Clearly, the workers are not independent contractors. It does not
matter that the workers also work for other companies because this is just their way of
coping with their daily expenses.
[G.R.

No.

L-72654-61

January

22,

1990]

ALIPIO R. RUGA, JOSE PARMA, ELADIO CALDERON, LAURENTE BAUTU, JAIME

BARBIN, NICANOR FRANCISCO, PHILIP CERVANTES and ELEUTERIO BARBIN,
petitioners,
vs.
NATIONAL LABOR RELATIONS COMMISSION and DE GUZMAN FISHING ENTERPRISES
and/or
ARSENIO
DE
GUZMAN,
respondents
FACTS:
1
2

Petitioners were the fishermen-crew members of 7/B Sandyman II, one of several
fishing vessels owned and operated by private respondent De Guzman Fishing
Enterprises which is primarily engaged in the fishing business.
Petitioners rendered service aboard said fishing vessel in various capacities, as
follows: Alipio Ruga and Jose Parma patron/pilot; Eladio Calderon, chief engineer;
Laurente Bautu, second engineer; Jaime Barbin, master fisherman; Nicanor Francisco,
second fisherman; Philip Cervantes and Eleuterio Barbin, fishermen.
For services rendered in the conduct of private respondent's regular business of
"trawl" fishing, petitioners were paid on percentage commission basis in cash by one
Mrs. Pilar de Guzman, cashier of private respondent. As agreed upon, they received
thirteen percent (13%) of the proceeds of the sale of the fish-catch if the total
proceeds exceeded the cost of crude oil consumed during the fishing trip, otherwise,
they received ten percent (10%) of the total proceeds of the sale. The patron/pilot,
chief engineer and master fisherman received a minimum income of P350.00 per
week while the assistant engineer, second fisherman, and fisherman-winchman
received a minimum income of P260.00 per week.
On September 11, 1983 upon arrival at the fishing port, petitioners were told by Jorge
de Guzman, president of private respondent, to proceed to the police station at
Camaligan, Camarines Sur, for investigation on the report that they sold some of
their fish-catch at midsea to the prejudice of private respondent. Petitioners denied
the charge claiming that the same was a countermove to their having formed a labor

union and becoming members of Defender of Industrial Agricultural Labor

Organizations and General Workers Union (DIALOGWU) on September 3, 1983.
During the investigation, no witnesses were presented to prove the charge against
petitioners, and no criminal charges were formally filed against them.
Notwithstanding, private respondent refused to allow petitioners to return to the
fishing vessel to resume their work on the same day.
Petitioners individually filed their complaints for illegal dismissal and non-payment of
13th month pay, emergency cost of living allowance and service incentive pay.They
uniformly contended that they were arbitrarily dismissed without being given ample
time to look for a new job.

Page | 11
5

ISSUE:
Whether or not the fishermen-crew members of the trawl fishing vessel 7/B Sandyman II are
employees of its owner-operator, De Guzman Fishing Enterprises
HELD:
The relationship between the fishing boat operators and their crew is one of direct employer
and
employee.
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.

From the four (4) elements mentioned, we have generally relied on the so-called right-ofcontrol 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.
The test calls merely for the existence of the right to control the manner of doing the work,
not the actual exercise of the right.
It is undeniable that petitioners members worked as cargadores for private respondent.
They loaded, unloaded and piled sacks of rice palay from the warehouses to the cargo trucks
and from the cargo trucks to the buyers. This work is directly related, necessary and vital to
the operations of Corfarm. Furthermore, said respondent did not contradict petitioners
allegation that it paid wages directly to these workers without the intervention of any thirdparty independent contractor. It also wielded the power of dismissal over petitioners.
Clearly, the workers are not independent contractors.
Article 82: Excluded Employees
Managerial Employees
NATIONAL SUGAR REFINERIES CORP VS NLRC G.R. No. 101761 March 24, 1993
Petitioner(s): NATIONAL SUGAR REFINERIES CORPORATION Respondent(s):
NATIONAL LABOR RELATIONS COMMISSION and NBSR SUPERVISORY UNION,
(PACIWU) TUCP Ponente: J. REGALADO
Facts: Petitioner National Sugar Refineries Corporation, a corporation which is fully owned
and controlled by the Government, operates 3 sugar refineries located at Bukidnon, Iloilo
and Batangas. The Batangas refinery was privatized on April 11, 1992 pursuant to
Proclamation No. 50. On June 1, 1988, petitioner implemented a Job Evaluation (JE) Program
affecting all employees, from rank-and-file to department heads. As a result, all positions
were re-evaluated, and all employees including the members of respondent union were
granted salary adjustments and increases in benefits commensurate to their actual duties
and functions.We glean from the records that for about ten years prior to the JE Program, the
members of respondent union were treated in the same manner as rank-and file employees.
As such, they used to be paid overtime, rest day and holiday pay. With the implementation
of the JE Program, the following adjustments were made: (1) the members of respondent
union were re-classified under levels S-5 to S-8 which are considered managerial staff for
purposes of compensation and benefits; (2) there was an increase in basic pay of the
average of 50% of their basic pay prior to the JE Program, with the union members now
enjoying a wide gap (P1,269.00 per month) in basic pay compared to the highest paid rankand-file employee; (3) longevity pay was increased on top of alignment adjustments; (4)
they were entitled to increased company COLA of P225.00 per month; (5) there was a grant
of P100.00 allowance for rest day/holiday work. Two years after the implementation of the
JE Program, the members of herein respondent union filed a complainant with the executive

labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of
Page | 12
Article 100 of the Labor Code.
Executive Labor Arbiter decided in favour of labor. Respondent National Labor Relations
Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the
members of respondent union are not managerial employees, as defined under Article 212
(m) of the Labor Code and, therefore, they are entitled to overtime, rest day and holiday pay.
Respondent NLRC declared that these supervisory employees are merely exercising
recommendatory powers subject to the evaluation, review and final action by their
department heads; their responsibilities do not require the exercise of discretion and
independent judgment; they do not participate in the formulation of management policies
nor in the hiring or firing of employees; and their main function is to carry out the ready
policies and plans of the corporation.
Issue: Whether supervisory employees, should be considered as officers or members of the
managerial staff, and hence are not entitled to overtime rest day and holiday pay.
Held: A cursory perusal of the Job Value Contribution Statements of the union members will
readily show that these supervisory employees are under the direct supervision of their
respective department superintendents and that generally they assist the latter in planning,
organizing, staffing, directing, controlling communicating and in making decisions in
attaining the company's set goals and objectives. These supervisory employees are likewise
responsible for the effective and efficient operation of their respective departments. More
specifically, their duties and functions include, among others, the following operations
whereby the employee assist the department superintendent, trains and guides
subordinates, recommends disciplinary actions etc.
It is apparent that the members of respondent union discharge duties and responsibilities
which ineluctably qualify them as officers or members of the managerial staff, as defined in
Section 2, Rule I Book III of the aforestated Rules to Implement the Labor Code, viz.: (1) their
primary duty consists of the performance of work directly related to management policies of
their employer; (2) they customarily and regularly exercise discretion and independent
judgment; (3) they regularly and directly assist the managerial employee whose primary
duty consist of the management of a department of the establishment in which they are
employed (4) they execute, under general supervision, work along specialized or technical
lines requiring special training, experience, or knowledge; (5) they execute, under general
supervision, special assignments and tasks; and (6) they do not devote more than 20% of
their hours worked in a work-week to activities which are not directly and clearly related to
the performance of their work hereinbefore described.
Under the facts obtaining in this case, we are constrained to agree with petitioner that the
union members should be considered as officers and members of the managerial staff and
are, therefore, exempt from the coverage of Article 82. Perforce, they are not entitled to
overtime, rest day and holiday.
PENARANDA VS BANGANGA PLYWOOD CORP G.R. No. 159577 May 3, 2006
Petitioner(s): CHARLITO PEARANDA Respondent(s): BAGANGA PLYWOOD
CORPORATION and HUDSON CHUA Ponente: C.J. PANGANIBAN
Facts: In June 1999, Pearanda was hired by Baganga Plywood Corporation, owned by
Hudson Chua, to take charge of the operations and maintenance of its steam plant boiler.
Pearanda was employed as a Foreman/Boiler Head/Shift Engineer. He was tasked to supply
the required and continuous steam to all consuming units at minimum cost, to supervise,
check and monitor manpower workmanship as well as operation of boiler and accessories, to
evaluate performance of machinery and manpower, to train new employees for effective and
safety while working, and to recommend personnel actions such as: promotion, or
disciplinary action. In 2001, BPC shut down due to some repairs and maintenance. BPC did
not technically fire Pearanda but due to the latters insistence, BPC gave him his separation
benefits. BPC subsequently reopened but Pearanda did not reapply. Pearanda now claims
that BPC still needed to pay him his overtime pays and premium pays. The NLRC ruled that
Pearanda is a managerial employee and as such he is not entitled to overtime and
premium pay as stated under the Labor Code. Pearanda appealed. He contends that he is
not a managerial employee.
Issue: Whether Pearanda is entitled to overtime and premium pay.
Held: Though there is an error made by the NLRC in finding Pearanda as a managerial
employee, the Supreme Court still ruled that Pearanda is not entitled to overtime and
premium pay. Pearanda is not a managerial employee. Under the Implementing Rules and
Regulations of the Labor Code, managerial employees are those that perform the following:
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
Page | 13
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.
Pearanda does not meet the above requirements. Pearanda is instead considered as a
managerial staff. Under the Implementing Rules and Regulations of the Labor Code,
managerial staffs are those that perform the following: The primary duty consists of the
performance of work directly related to management policies of the employer;
2) Customarily and regularly exercise discretion and independent judgment; 3) (i) Regularly
and directly assist a proprietor or a managerial employee whose primary duty consists of the
management of the establishment in which he is employed or subdivision thereof; or (ii)
execute under general supervision work along specialized or technical lines requiring special
training, experience, or knowledge; or (iii) execute under general supervision special
assignments and tasks; and 4) who do not devote more than 20 percent of their hours
worked in a workweek to activities which are not directly and closely related to the
performance of the work described in paragraphs (1), (2), and (3) above.
Pearandas function as a shift engineer illustrates that he was a member of the managerial
staff. His duties and responsibilities conform to the definition of a member of a managerial
staff under the Implementing Rules. Pearanda supervised the engineering section of the
steam plant boiler. His work involved overseeing the operation of the machines and the
performance of the workers in the engineering section. This work necessarily required the
use of discretion and independent judgment to ensure the proper functioning of the steam
plant boiler. Further, Pearanda in his position paper admitted that he was a supervisor for
BPC. As supervisor, petitioner is deemed a member of the managerial staff.
AUTO BUS TRANSPORT SYSTEM INC VS BAUTISTA G.R. No. 156367 May 16, 2005
Petitioner(s): AUTO BUS TRANSPORT SYSTEMS, INC Respondent(s): ANTONIO
BAUTISTA Ponente: J.CHICO-NAZARIO
Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport
Systems, Inc. (Autobus), as driver-conductor with travel routes Manila-Tuguegarao via
Baguio, Baguio- Tuguegarao via Manila and Manila-Tabuk via Baguio. Respondent was paid
on commission basis, 7% of the total gross income per travel, on a twice a month basis.
While he was driving he accidentally bumped the rear portion of Autobus No. 124.
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 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. Bautista instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.
Issue: Whether Bautista is entitled to the grant of service incentive leave pay.
Held: Bautista is entitled to Service Incentive Leave. The Supreme Court emphasized that it
does not mean that just because an employee is paid on commission basis he is already
barred to receive service incentive leave pay.
The question actually boils down to whether or not Bautista is a field employee. 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.
As a general rule, field personnel are those whose performance of their job/service is not
supervised by the employer or his representative, the workplace being away from the
principal office and whose hours and days of work cannot be determined with reasonable
certainty; hence, they are paid specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that they are performing work
away from the principal office of the employee.
Certainly, Bautista is not a field employee. He has a specific route to traverse as a bus
driver and that is a specific place that he needs to be at work. There are inspectors hired by
Auto Bus to constantly check him. There are inspectors in bus stops who inspects the
passengers, the punched tickets, and the driver. Therefore he is definitely supervised though
he is away from the Auto Bus main office.

UNION OF FILIPINO EMPLOYEES VS VIVAR G.R. No. 79255 January 20, 1992
Page | 14
Petitioner(s): UNION OF FILIPRO EMPLOYEES (UFE) Respondent(s): BENIGNO
VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL PHILIPPINES,
INC. (formerly FILIPRO, INC.) Ponente: J. GUTIERREZ JR
Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking
a ruling on its rights and obligations respecting claims of its monthly paid employees for
holiday pay in the light of the Court's decision in Chartered Bank Employees Association v.
Ople. Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On
January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid
employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal restrictions as are provided for in the
Code.
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years,
(2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and
medical representatives from the award of the holiday pay, and (3) deduction from the
holiday pay award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. Petitioner UFE answered that the award should be
made effective from the date of effectivity of the Labor Code, that their sales personnel are
not field personnel and are therefore entitled to holiday pay, and that the use of 251 as
divisor is an established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity
of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the
Labor Code. He adjudged, however, that the company's sales personnel are field personnel
and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days'
holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement
of overpayment for overtime, night differential, vacation and sick leave pay due to the use of
251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which
issued a resolution remanding the case to the respondent arbitrator on the ground that it
has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263
of the Labor Code. However, in a letter the respondent arbitrator refused to take cognizance
of the case reasoning that he had no more jurisdiction to continue as arbitrator because he
had resigned from service.
Issue: Whether Nestle's sales personnel are entitled to holiday pay
Held: Under Article 82, field personnel are not entitled to holiday pay. Said article defines
field personnel as "non-agritultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty." The Court finds that the
clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty." The former clause is still within the scope
and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an
employee's actual working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and performance is
constantly supervised by the employer. The respondent arbitrator's order to change the
divisor from 251 to 261 days would result in a lower daily rate which is violative of the
prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain
the same daily rate if the divisor is adjusted to 261 days, then the dividend, which
represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. There is thus no merit in respondent Nestle's claim of
overpayment of overtime and night differential pay and sick and vacation leave benefits, the
computation of which are all based on the daily rate, since the daily rate is still the same
before and after the grant of holiday pay.
Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of
251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Nevertheless, in order to fully
settle the issues, the Court resolved to take up the matter of effectivity of the holiday pay
award raised by Nestle.

Applying the operative factaforementioned doctrine to the case at bar, it is not far-fetched
Page | 15
that Nestle, relying on the implicit validity of the implementing rule and policy instruction
before this Court nullified them, and thinking that it was not obliged to give holiday pay
benefits to its monthly paid employees, may have been moved to grant other concessions to
its employees, especially in the collective bargaining agreement. This possibility is bolstered
by the fact that respondent Nestle's employees are among the highest paid in the industry.
With this consideration, it would be unfair to impose additional burdens on Nestle when the
non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's
fault. The Court thereby resolves that the grant of holiday pay be effective, not from the
date of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor
Code, but from the date of promulgation of the IBAA case.
Case Title: SAN MIGUEL BREWERY, INC. VS. DEMOCRATIC LABOR ORGANIZATION,
ET AL G.R. No.: L 18353 Date: July 31, 1963 Petitioner: San Miguel Brewery,
Inc. Respondent: Democratic Labor Organization, et al. Ponente: J. Bautista
Facts: Petition for review of a decision of the Court of Industrial Relations. Herein
respondent filed complaint the San Miguel Brewery embodying 12 demands for the
betterment of the condition of employment of its members. The union manifested its desire
to confine its claim to its demands for overtime night shift differential pay and attorneys
fees, additional separation pay and sick and vacation leave compensation.
Judge Bautista rendered decision that with regard to overtime compensation, the Eight
Hour Labor law applies to the employees concerned for those working in the field or
engaged in the sale of the companys products outside its premises should be paid the extra
compensation accorded them in addition to the monthly salary and commission by earned
by them, regardless of the meal allowance given to employees who work up to late at night.
Motion for Reconsideration in the industrial court en banc was denied, hence, this petition.
Issue:
Whether or not outside or field sales personnel are entitled to the benefits of the Eight Hour
Labor law?
Held: No. The Court ruled that where after the morning roll call the outside or field sales
personnel leave the plant of the company to go on their respective sales routes and they do
not have a daily time record but the sales routes are so planned that they can be completed
within 8 hours at most, and they receive monthly salaries and sales commission in variable
amounts, so that they are made to work beyond the required eight hours similar to piece
work, pakiao, or commission basis regardless of the time employed, and the employees
participation depends on their industry, it is held that the Eight Hour Labor Law has no
application to said outside or field sales personnel and that they are not entitled to overtime
compensation. The decision of Industrial Court is modified.

Case Title: MANUEL LARA, ET AL. VS. PETRONILO DEL ROSARIO, JR. G.R. No.: L6339 Date: April 20, 1954 Petitioner: Manuel Lara Respondent: Petronilo Del
Rosario, Jr Ponente: J. Montemayor
Facts: Defendant operated a taxi business in which the plaintiffs are employed as
mechanics and drivers. Later on, defendant sold his 25 units to La Mallorca, a transportation
company, without giving said mechanics and drivers 30 days advance notice ant the reason
of losing their jobs because La Mallorca did not want to continue them in their employment.
The petition was filed praying to recover compensation for overtime work rendered beyond
eight hours and on Sundays and Legal holidays and one month salary because the failure of
their former employer to give them notice. The Court dismissed the complaint because the
defendant being engaged in the taxi of transportation business which is a public utility,
came under the exception provided by the eight hour Labor Law; and because plaintiffs did
not work on a salary basis, so they had no fixed or regular salary or remuneration other than
the 20%.
Issue: Whether or not Plaintiffs are entitled to extra compensation for work performed in
excess of eight hours a day, Sunday and holidays included?
Held: No. The Court ruled that a laborer or employee with no fixed salary, wages or
remuneration but receiving compensation for his employer uncertain and variable amount
depending upon the work done or the result of said work irrespective of the amount of time
employed, is not covered by the eight hour Labor Law and is not entitled to extra
compensation should he work in excess of eight hours a day. In the case at bar, it is the
result of their labor, not the labor itself, which determines their commissions. The alleged
termination of services of the plaintiffs by the defendant took place according to the

complaint on September 4, 1950, which was after the repeal of Art. 302 which they invoke. If
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the plaintiffs herein had no fixed salary either by the day, week or month, then computation
of the months salary payable would be impossible. Art. 302 refer to employees receiving
fixed salary. Order appealed is affirmed.
Article 83: Hours of Work
Manila Terminal Company Inc. v. CIR
G.R. No. L-4148, July 16, 1952
Facts: Manila Terminal Company, Inc. hereinafter to be referred as to the petitioner,
undertook the arrastre service in some of the piers in Manilas 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.
The watchmen of the petitioner continued in the service with a number of 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. The private respondent sent a letter to
Department of Labor requesting that the matter of overtime pay be investigated. But
nothing was done by the Dept of Labor. Later on, the petitioner instituted the system of
strict eight-hour shifts. The private respondent 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.
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 Harbor 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.
Judge V. Jimenez Yanson of the Court of Industrial Relations in his decision ordered the
petitioner to pay to its police force but regards to overtime service after the watchmen had
been integrated into the Manila Harbor Police, the has no jurisdiction because it affects the
Bureau of Customs, an instrumentality of the Government having no independent
personality and which cannot be sued without the consent of the State.
The petitioner filed a motion for reconsideration. The Association also filed a motion for
reconsideration in so far its other demands were dismissed. Both resolutions were denied.
The public respondent decision was to pay the private respondents their overtime on regular
days at the regular rate and additional amount of 25 percent, overtime on Sundays and legal
holidays at the regular rate only, and watchmen are not entitled to night differential pay for
past services. The petitioner has filed a present petition for certiorari.
Issues:
a. Whether or not the CIR has no jurisdiction to render a money judgment involving
obligation in arrears.
b. Whether or not the agreement under which its police force were paid certain specific
wages for twelve-hour shifts, included overtime compensation.
c. Whether or not the Association is barred from recovery by estoppel and laches.
d. Whether or not the nullity or invalidity of the employment contract precludes any
recovery by the Association.
e. whether or not the Commonwealth Act No. 444 authorizes recovery of back overtime pay.
Held: The Supreme Court affirmed the appealed decision that the petitioners watchmen
will be entitled to extra compensation only from the dates they respectively entered the
service of the petitioner, hereafter to be duly determined by the Court of Industrial Relations.
On the first issue, the Court of Industrial Relations has no jurisdiction to award a money
judgment was already overruled by this Court on the case of Detective & protective Bureau,
Inc. vs. Court of Industrial Relations and United Employees Welfare Association that
under Commonwealth Act No. 103the Court is empowered to make the order for the purpose
of settling disputes between the employer and employee.
On the second issue, based on the case of Detective & Protective Bureau, Inc. vs. Court of
Industrial Relations and United Employees Welfare Association, the law gives them the right
to extra compensation. And they could not be held to have impliedly waived such extra
compensation, for the obvious reason that could not have expressly waived it.
On the third issue, the principle of estoppel and the laches cannot well be invoked against
the Association. it would be contrary to the spirit of the Eight Hour Labor Law, under which
as already seen, the laborers cannot waive their right to extra compensation. If the principle
of estoppel and laches is to be applied, the employee may be compelled to accomplish the
same thing by mere silence or lapse of time, thereby frustrating the purpose of law by
indirection.
On the fourth issue, the employee in rendering extra service at the request of his employer
has a right to assume that the latter has complied with the requirement of the law, and
therefore has obtained the required permission from the Department of Labor. This was
based on the case ofGotamo Lumber Co. vs. Court of Industrial Relations, wherein both
parties are in pari delicto. Moreover, the Eight-Hour Law, in providing that any

agreement or contract between the employer and the laborer or employee contrary to the
Page | 17
provisions of this Act shall be null avoid ab initio.
On the fifth issue, based on Fair Labor Standards Act of the United States which provides
that any employer who violates the provisions of section 206 and section 207 of this
title shall be liable to the employee or employees affected in the amount of their unpaid
minimum wages or their unpaid overtime compensation as the case may be, a
provision not incorporated in Commonwealth Act No. 444, our Eight-Hour Labor Law.
We cannot agree to the proposition, because 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.
INTERPHIL LABORATORIES EMPLOYEES UNION-FFW, ENRICO GONZALES and MA.
THERESA MONTEJO,Petitioners, v. INTERPHIL LABORATORIES, INC., AND
HONORABLE LEONARDO A. QUISUMBING, SECRETARY OF LABOR AND
EMPLOYMENT, Respondents.
Facts:
Interphil Laboratories Employees Union-FFW is the sole and exclusive bargaining agent of
the rank-and-file employees of Interphil Laboratories, Inc., a company engaged in the
business of manufacturing and packaging pharmaceutical products. They had a Collective
Bargaining Agreement (CBA) effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA the or sometime in February1993, the Vice president for
Human Resources of the respondent company was approached by the union president with
regards to the expiring CBA but the CP for human Resources told the union president that
they will discuss it in a formal meeting. On March 1993, the union again approached and
asked the company regarding the CBA through its officers but received the same reply. The
next day, all the rank and file employees started boycotting their regular work shift schedule
and left their workplaces and also commenced a work slowdown.
On 03 September 1993, respondent company filed with the National Labor Relations
Commission (NLRC) a petition to declare illegal petitioner union's "overtime boycott" and
"work slowdown" which, according to respondent company, amounted to illegal strike.
On 05 September 1995, Labor Arbiter Caday submitted his recommendation to the then
Secretary of Labor Leonardo A. Quisumbing.8 Then Secretary Quisumbing approved and
adopted the report in his Order, dated 13 August 1997, hence: declaring the overtime
boycott and work slowdown as an illegal strike and finding the private respondents guilty of
unfair labor practice and violating the existing CBA. Respondents moved for reconsideration
but was denied.
Issues:
Whether or not the CA committed grave abuse of discretion on the following:
1

when it completely disregarded parol evidence rule in the evaluation and

appreciation of evidenceproferred by the parties;

when it did not declare private respondents act of extending substantial

separation package to almost all involved officers of petitioners union, during the
pendency of the case, as tantamount to condonation;

when it held that the secretary of labor and employment has jurisdiction over a
case which long been filed and pending with the labor arbiter.

Held:
1st issue: The reliance on the parol evidence rule is misplaced. In labor cases pending before
the Commission or the Labor Arbiter, the rules of evidence prevailing in courts of law or
equity are not controlling. Rules of procedure and evidence are not applied in a very rigid
and technical sense in labor cases. Hence, the Labor Arbiter is not precluded from accepting
and evaluating evidence other than, and even contrary to, what is stated in the CBA
The employees are deemed to have waived the eight-hour schedule since they followed,
without any question or complaint, the two-shift schedule while their CBA was still in force

and even prior thereto. The two-shift schedule effectively changed the working hours
Page | 18
stipulated in the CBA. As the employees assented by practice to this arrangement, they
cannot now be heard to claim that the overtime boycott is justified because they were not
obliged to work beyond eight hours.
2nd issue: Respondent company correctly postured that at the time these union officers
obtained their separation benefits, they were still considered employees of the company.
Hence, the company was merely complying with its legal obligations.
3rd issue: It cannot be denied that the issues of "overtime boycott" and "work slowdown"
amounting to illegal strike before Labor Arbiter Caday are intertwined with the labor dispute
before the Labor Secretary. As the appellate court pointed out, the subsequent participation
of petitioner union in the continuation of the hearing was in effect an affirmation of the
jurisdiction of the Secretary of Labor. Also, the Secretary was explicitly granted by Article
263(g) of the Labor Code the authority to assume jurisdiction over a labor dispute causing or
likely to cause a strike or lockout in an industry indispensable to the national interest, and
decide the same accordingly.
Article 84: Hours Worked
Pan American World Airways System Vs. Pan American Employees Association
G.R. No. L-16275 February 23, 1961
Facts:
The employees of Pan American World Airways System alleges that the company does not
provide them of a one-hour break period. The employees were asked to wait in case of any
emergencies while having their break or they will be reprimanded, thus the petition of the
employees to ask the court for a proper compensation from the employers. The employees
allege that the said one-hour break actually constitutes working over time.
Issue:
Whether or not the time given to the employees for break is considered an over time?
Held:
The Industrial Court's order for permanent adoption of a straight 8-hour shift including the
meal period was but a consequence of its finding that the meal hour was not one of
complete rest, but was actually a work hour, since for its duration, the laborers had to be on
ready call. Of course, if the Company practices in this regard should be modified to afford
the mechanics a real rest during that hour (f. ex., by installing an entirely different
emergency crew, or any similar arrangement), then the modification of this part of the
decision may be sought from the Court below. As things now stand, we see no warrant for
altering the decision.
The judgment appealed from is affirmed. Costs against appellant.
Case Title: LUZON STEVEDORING CO., INC., VS. LUZON MARINE DEPARTMENT
UNION AND THE HON. MODESTO CASTILLO, THE HON. JOSE S. BAUTISTA, THE
HON. V. JIMENEZ YANSON and THE HON. JUAN L. LANTING, JUDGE OF THE COURT
OF INDUSTRIAL RELATIONS G.R. No.: L 9265 Date: April 29, 1957 Petitioner:
Luzon Stevedoring Co., Inc. Respondent: Luzon Marine Department Union And The
Hon. Modesto Castillo, The Hon. Jose S. Bautista, The Hon. V. Jimenez Yanson
And The Hon. Juan L. Lanting Ponente: J. Felix
Facts:
Petition for review on certiorari in the resolution of the Court of Industrial
Relations.
Herein respondents filed a petition with the CIR containing the full recognition of the right of
Collective bargaining, close shop and check off. Also, that the work performed in excess of 8
hours be paid an overtime pay of 50 per cent the regular rate of pay, and that work
performed on Sundays and legal holidays be paid double the regular rate of pay. In one of
the hearing of the case, the Court ruled that the employees are only entitled to receive
overtime pay for work rendered in excess of 8 hours on ordinary days including Sundays and
legal holidays. Herein petitioner sought for the reconsideration of the decision only in so far
as it interpreted that the period during which a seaman is aboard a tugboat shall be

considered as working time for the purpose of the 8 hours Labor Law. However, it was
Page | 19
denied. Hence, this petition.
Issue:
Whether or not the definition for hours of work as presently applied to dry land laborers
equally applicable to seaman?
Held:
No. The Court ruled that we do not need to set for seaman a criterion different from that
applied to laborers on land, that the only thing to be done is to determine the meaning and
scope of the term working place. A laborer need not leave the premises of the factory,
shop or boat in order that his period of rest shall not be counted, it being enough that he
cease to work may rest completely and leave or may leave at his will the spot where he
actually stays while working, to go somewhere else, whether within or outside the premises
of said factory, shop or boat. If these requires are complied with, the period of such rest shall
not be counted. Claimants rendered services to the Company from 6am to 6pm including
Sundays and holidays, which implies either that said laborers were not given any recess at
all, or that they were not allowed to leave the spot their working place, or that they could
not rest completely. Resolutions of the Court of Industrial Relations appealed from are
affirmed with costs against petitioner.
Case Title: JULIO N. CAGAMPAN ET AL. VS. NATIONAL LABOR RELATIONS
COMMISSION AND ACE MARITIME AGENCIES, INC. G.R. No.: G.R. No. 85122 - 24
Date: March 22, 1991 Petitioner: Julio N. Cagampan Respondent: NLRC And Ace
Maritime Agencies, Inc. Ponente: J. Paras
Facts:
Petitioners, all seamen, entered into separate contracts of employment with the Golden
Light Ocean Transport, Ltd; through its local agency, the Ace Maritime Agencies, Inc.
Petitioners worked from May 7, 1985 until July 12, 1986. Later, petitioners collectively and /
or individually filed complaints for non payment of overtime pay, vacation pay and
terminal pay against private respondents. They also claimed that they signed a blank
contract. Also, although they agreed to work on board the vessel Rio Colorado managed by
Golden Light Ocean Transport, Ltd., the vessel they really boarded was MV SOIC I managed
by Columbus Navigation. Two (2) petitioners argued that although they were employed as
Ordinary Seaman, they actually performed the work and duties of Able Seaman. Hence, this
petition.
Issue:

Whether or not petitioners should be entitled to overtime pay?

Held:
No. The Court ruled that entitlement to overtime pay must first be established by proof that
said overtime work was actually performed, before an employee way avail of said benefit.
The contract provision means that the fixed overtime pay 30% would be the basis for
computing the overtime pay if and when overtime work would be rendered. For the
employer to give him overtime pay for extra bonus hours when he might be sleeping or
attending to his personal chores or even just lulling away his time would be extremely unfair
and unreasonable. The criterion is determining whether or not seamen are entitled to
overtime pay is not, whether they were on board and cannot leave the ship beyond the
regular 8 working hours a day, but whether they actually rendered service in excess of said
number of hours. The decision of the NLRC is affirmed with the modification that petitioners
Cagampan and Vicera are awarded their leave pay according to the terms of contract.

Case Title: NATIONAL DEVELOPMENT COMPANY VS. COURT OF INDUSTRIAL

RELATIONS AND NATIONAL TEXTILE WORKERS UNION G.R. No.: L 15422 Date:
November 30, 1962 Petitioner: National Development Company Respondent:
Court Of Industrial Relations And National Textile Workers Union Ponente: J.
Regala
Facts:

Case for review from the Court of Industrial Relations

The National Development Company or government owned and controlled corporation had
four shifts of work. 8am 4pm 6am 2pm 2pm 10pm
10pm 6pm Each shift
had 1 hr meal time period, to wit; from (1) 11am to 12nn for those working between 6am
and 2pm and from (2) 7pm to 8om for those working between 2pm and 10pm.
The records show that although there was a one hour meal time, petitioner nevertheless
credited the workers with 8 hours of work for each shift and paid them for the same number

of hours. Also, whenever workers in one shift were required to continue working until the
Page | 20
next shift, petitioner has been paying them for six hours only, and argued that the 2 hours
corresponding to the mealtime periods should not be included in computing compensation.
Respondents, whose members are employed at the NDC, asked the court of Industrial
Relations to order the payment of additional overtime pay corresponding to the mealtime
periods.
CIR issued an order holding that mealtime should be counted in determining overtime work
and ordered to pay P101, 407.96 by way of overtime compensation. Petitioners filed a
motion for reconsideration but were dismissed by the CIR. Hence, this petition.
Issue: Whether or not on the basis of evidence, the mealtime breaks should be considered
working time?
Held: Yes. The Court ruled that when the work is not continuous, the time which the
laborer is not working place and can rest completely shall not be counted. Claimants herein
rendered services to the Company from 6am 6pm implies either that they were not allowed
to leave the spot of their working place, or that they could not rest completely. The CIRs
finding that work in the petitioner company was continuous and did not permit employees
and laborers to rest completely is not without basis in evidence. The timecards show that the
work was continuous and without interruption breaks should be counted as working time for
purposes of overtime compensation. Order of March 19, 1959 and the resolution of April 27,
1959 are hereby affirmed and the appeal is dismissed.

Case Title: SIME DARBY PILIPINAS, INC. VS. NLRC (2ND DIVISION) AND SIME
DARBY
SALARIED EMPLOYEES ASSOCIATION (ALU-TUCP) G.R. No.: G.R. No.
119205 Date: April 15, 1998 Petitioner: Sime Darby Pilipinas, Inc. Respondent:
NLRC (2nd Division) And Sime Darby Salaried Employees Association (ALU-TUCP)
Ponente: J. Bellosillo
Facts:

Special Civil Action in the Supreme Court. Certiorari.

Petitioner is engaged in the manufacture of automotive tires, tubes and other rubber
products. Private respondent is an association of monthly salaried employees of petitioner at
its Marikina factory. Beforehand, all company factory workers in Marikina including members
of private respondent union worked from 7:45am to 3:45pm with a 30-minute paid on call
lunch break.
Petitioner issued a memorandum to all factory- based employees advising all its monthly
salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality
Assurance Department working on shifts.
Private respondent felt affected adversely by the change in the work schedule and
discontinuance of the 30-minute paid on call lunch break, hence the filling of complaint for
unfair labor practice, discrimination and evasion of liability. The Labor Article dismissed the
complainant on the ground that the change in the work schedule and the elimination of the
30-minute paid lunch break of factory workers constituted a valid exercise of management
prerogative and did not decrease the benefits granted to factory workers as the working
time did not go beyond 8 hours. Hence, this petition.
Issue: Whether or not there was a diminution of benefits when the 30-minute paid lunch
break was eliminated?
Held: The right to fix the work, schedules of the employees rests principally on their
employer. The petitioner cities as reason for the adjustment the efficient conduct of its
business operations and its improved production. Since the employees are no longer
required during this one-hour lunch break, there is no more need for them to be
compensated for this period. The new work schedule fully complies with the daily work
period of eight (8) hours without violating the Labor Code. Also, the new schedule applies to
all employees in the factory similarly situated whether they are union members or not; Even
as the law is solicitous of the welfare of the employees; it must also protect the right of an
employer to exercise what are clearly management prerogatives; Management retains the
prerogative, whenever exigencies of the service so require, to change the working hours of
its employees Petition is granted. The dismissed complaint against petitioner for unfair labor
practice is affirmed.

Case Title: MERCURY DRUG COMPANY INCORPORATED VS. NARDO DAYAO, ET AL.
G.R. No.: L-30452 Date: September 30, 1982 Petitioner: Mercury Drug
Company, Incorporated Respondent: Nardo Dayao Ponente: J. Gutierrez, Jr.

Facts:

Page | 21

Petition for review on certiorari of the decision of the Court of Industrial Relations.
Herein respondent, filed a petition against Mercury Drug Company, Incorporated contenting:
1) payment of their unpaid back wages for work done on Sundays and legal holidays plus
25% additional compensation from date of their employment up to June 30, 1962; 2)
payment of the extra compensation on work done at night; 3) reinstatement of Januario
Referente and Oscar Echalar to their former positions with back salaries; and as against the
respondent union, for its disestablishment and the refund of all monies it had collected from
petitioners.
Mercury Drug is hereby ordered to pay the 69 petitioners another additional sum or
premium equivalent to 25% of their respective basic or regular salaries for nighttime
services rendered from March 20, 1961 up to June 30, 1962. Hence, this petition.
Issue: Whether or not private respondents are entitled for nighttime work premiums
although there is a waiver of said claims and the total absence of evidence there on?
Held:
Yes. Work done at night should be paid more than work done at daytime, and that if that
work is done beyond the workers regular hours of duty, he should also be paid additional
compensation for overtime work; Ruling of C.I.R awarding additional pay for nighttime work
is supported by evidence. No additional evidence was necessary to prove that the private
respondents were entitled to additional compensation for whether or not they were entitled
to the same is a question of law which the respondent court answered correctly. The waiver
rule does not apply in the case at bar. Additional compensation for nighttime work is
founded on public policy; hence the same cannot be waived. Petition is dismissed.

Case Title: NATIONAL SHIPYARDS AND STEEL CORPORATION VS. COURT OF

INDUSTRIAL RELATIONS G.R. No.: L-17068 Date: December 30, 1961
Petitioner: National Shipyards And Steel Corporation Respondent: Court Of
Industrial Relations Ponente: J. Reyes
Facts:
Petition for review by certiorari of the orders of the Court of Industrial relations requiring it to
pay its bargeman, Malondras, an overtime service of 16 hours a day for a period from
January 1, 1954 - December 31, 1956, and from January 1, 1957 to April 30, 1957, inclusive.
NASSOO, engaged in the business of ship building and repair that needs a service of a
bargeman. Bargeman are required to stay in their barges for on call duty, so they are given
living quarters and subsistence allowance of P1.50 per day during the time they are on
board. However, Malondras filed with the Industrial Court a complaint for the payment of
overtime compensation because of his exclusion from the second report of the examiner.
The examiner then submitted an amended report giving Malondras an average of 16
overtime hours a day, and recommending the payment to him of P15, 242.15 as overtime
compensation during the period covered by the report. Hence, this petition.
Issue: Whether or not respondent Malondras is entitled to 16 hours a day overtime pay?
Held:
No. The Court ruled that the correct criterions in determining whether or not sailors are
entitled to overtime pay is not whether they were on board and cannot leave ship beyond
the regular eight working hours a day, but whether they actually rendered service in excess
of said number of hours; In such much as the parties show that the subsistence allowance is
independent of and has nothing to do with whatever additional compensation for overtime
work was due the petitioner, the same should not be deducted from his overtime
compensation. Respondent Malondras should be credited (5) overtime hours instead of (16)
hours a day for the periods covered by the examiners report. Order appealed is affirmed
with modifications.
Case Title: PHILIPPINE NATIONAL BANK V. PHILIPPINE NATIONAL BANK EMPLOYEES
ASSOCIATION (PEMA) AND COURT OF INDUSTRIAL RELATIONS G.R. No.: L-30279
Date: July 30, 1982 Petitioner: Philippine National Bank Respondent: Philippine
National Bank Employees Association (PEMA) And Court Of Industrial Relations
Ponente: J. Barredo
Facts:

Appeal from the decision of the Court of Industrial Relations.

Petitioner allegedly failed to comply with its commitment of organizing a committee on

Page | 22
Personnel Affairs to take change of screening and deliberating on the promotion of
employees covered by a collecting bargaining agreement then in force between the said
parties. In the first and causes of action the respondents Board of Directors approved a
revision of the computation of overtime pay, but since the grant of benefits in question,
without just cause, withdrew said benefits and in spite of repeated demands refused, and
still refuses to reinstate the same up to the present. Petitioner has repeatedly requested
Respondent that the cost of living allowance and longevity pay be taken into account in the
computation of OT pay.
Issue: Whether or not the cost of living allowance and longevity pay should be included in
the computation of overtime pay?
Held: No. The Court ruled that the rationale for overtime pay is thus the additional work,
labor or service employed and the adverse effects of his longer stay in place of work that
justify and is the real reason for the extra compensation for overtime pay; There is presently
a consciousness towards helping our employees by giving of additional allowance in times of
economic uncertainly; The industrial court cannot even in a certified labor dispute impose
upon the parties terms and conditions inconsistent with existing law and jurisprudence;
Longevity pay cannot be included in the computation of overtime pay when the Collective
Bargaining Agreement so stipulates; The basis of computation of overtime pay beyond the
required by law must be the Collective Bargaining Agreement between the parties.

Art. 94: Holiday and Holiday Pays

Case title: JOSE RIZAL COLLEGE VS. NLRC AND NAT/OFFICE WORKERS G.R number:
G.R. No. L-65482 Date: December 1, 1987 Petitioner: Jose Rizal College
Respondent: National Labor Relations Commission and National Alliance of
Teachers/Office Workers Ponente: Paras, J.
Facts: Petitioner is a non-stock, non-profit educational institution. It has three groups of
employees categorized as follows: (a) personnel on monthly basis, who receive their
monthly salary uniformly throughout the year, irrespective of the actual number of working
days in a month without deduction for holidays; (b) personnel on daily basis who are paid on
actual days worked and they received un-worked holiday pay; and (c) collegiate faculty who
are paid on the basis of student contract hour. They sign contracts before the start of the
semester. National Alliance of Teachers and Office Workers filed a complaint against the
college when the latter failed to pay them the required holiday pay. In the ruling of the Labor
Arbiter, it stated that the faculty and personnel of Jose Rizal College who are paid their
salary by the month uniformly in a school year, irrespective of the number of working days
in a month, without deduction for holidays, are presumed to be already paid the 10 paid
legal holidays and are no longer entitled to the separate payment for the said regular
holidays; the personnel of Jose Rizal College who are paid their wages daily are entitles to be
paid the 10 unworked regular holidays according to the pertinent provisions of the Rules and
Regulations Implementing the Labor Code; and, Collegiate faculty of Jose Rizal College who
by contract are paid compensation per student contract hour are not entitled to unworked
holiday pay considering that these regular holidays have been excluded in the programming
of the student contract hours. The NLRC modified the Labor Arbiters decision with regards
to the collegiate faculty. NLRC held that collegiate faculty is entitled to holiday pay. Hence,
this petition.
Issue: Whether or not the collegiate faculty according to their contracts is paid per lecture
hour are entitled to unworked holiday pay.
Held: The NLRC rendered a new decision exempting the college from paying hourly paid
faculty members their pay for regular holidays, whether the same be during the regular
semesters of the school year or during semestral, Christmas, or Holy Week vacations but
ordering the said college to pay the faculty members their regular hourly rate on days
declares as special holidays or for some reason classes are called off or shortened for the
hours they are supposed to have taught, whether extensions of class days be ordered or not;
in case of extensions said faculty members shall likewise be paid their hourly rates should
they teach during said extensions. Article 94 of the Labor Code states the right to holiday
pay. Under par. a, every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than 10 workers, and
Section 8, Rule IV, Book III of the IRR states the holiday pay of certain employees in which
under par. a, private school teachers, including faculty members of colleges and universities,
may not be paid for the regular holidays during semestral vacations. They shall, however, be
paid for the regular holidays during Christmas vacations etc.

Under these provisions, the faculty members are entitled for un-worked holiday pay.
Page | 23
However, the law is silent with respect to the faculty members paid by the hour who
because of their teachings contracts are obliged to work and consent to be paid only for
work actually done. Regular holidays specified as such by law are known to both school and
faculty members as no class days, certainly the latter do not expect payment for said unworked days, and thus this was clearly in their minds when they entered into the teaching
contract.
UNION OF FILIPINO EMPLOYEES VS VIVAR G.R. No. 79255 January 20, 1992
Petitioner(s): UNION OF FILIPRO EMPLOYEES (UFE) Respondent(s): BENIGNO
VIVAR, JR., NATIONAL LABOR RELATIONS COMMISSION and NESTL PHILIPPINES,
INC. (formerly FILIPRO, INC.) Ponente: J. GUTIERREZ JR
Facts: On November 8, 1985, respondent Filipro, Inc. (now Nestle Philippines, Inc.) filed
with the National Labor Relations Commission (NLRC) a petition for declaratory relief seeking
a ruling on its rights and obligations respecting claims of its monthly paid employees for
holiday pay in the light of the Court's decision in Chartered Bank Employees Association v.
Ople. Both Filipro and the Union of Filipino Employees (UFE) agreed to submit the case for
voluntary arbitration and appointed respondent Benigno Vivar, Jr. as voluntary arbitrator. On
January 2, 1980, Arbitrator Vivar rendered a decision directing Filipro to pay its monthly paid
employees holiday pay pursuant to Article 94 of the Code, subject only to the exclusions and
limitations specified in Article 82 and such other legal restrictions as are provided for in the
Code.
Filipro filed a motion for clarification seeking (1) the limitation of the award to three years,
(2) the exclusion of salesmen, sales representatives, truck drivers, merchandisers and
medical representatives from the award of the holiday pay, and (3) deduction from the
holiday pay award of overpayment for overtime, night differential, vacation and sick leave
benefits due to the use of 251 divisor. Petitioner UFE answered that the award should be
made effective from the date of effectivity of the Labor Code, that their sales personnel are
not field personnel and are therefore entitled to holiday pay, and that the use of 251 as
divisor is an established employee benefit which cannot be diminished.
On January 14, 1986, the respondent arbitrator issued an order declaring that the effectivity
of the holiday pay award shall retroact to November 1, 1974, the date of effectivity of the
Labor Code. He adjudged, however, that the company's sales personnel are field personnel
and, as such, are not entitled to holiday pay. He likewise ruled that with the grant of 10 days'
holiday pay, the divisor should be changed from 251 to 261 and ordered the reimbursement
of overpayment for overtime, night differential, vacation and sick leave pay due to the use of
251 days as divisor.
Both Nestle and UFE filed their respective motions for partial reconsideration. Respondent
Arbitrator treated the two motions as appeals and forwarded the case to the NLRC which
issued a resolution remanding the case to the respondent arbitrator on the ground that it
has no jurisdiction to review decisions in voluntary arbitration cases pursuant to Article 263
of the Labor Code. However, in a letter the respondent arbitrator refused to take cognizance
of the case reasoning that he had no more jurisdiction to continue as arbitrator because he
had resigned from service.
Issue: Whether Nestle's sales personnel are entitled to holiday pay
Held: Under Article 82, field personnel are not entitled to holiday pay. Said article defines
field personnel as "non-agritultural employees who regularly perform their duties away from
the principal place of business or branch office of the employer and whose actual hours of
work in the field cannot be determined with reasonable certainty." The Court finds that the
clause "whose time and performance is unsupervised by the employer" did not amplify but
merely interpreted and expounded the clause "whose actual hours of work in the field
cannot be determined with reasonable certainty." The former clause is still within the scope
and purview of Article 82 which defines field personnel. Hence, in deciding whether or not an
employee's actual working hours in the field can be determined with reasonable certainty,
query must be made as to whether or not such employee's time and performance is
constantly supervised by the employer. The respondent arbitrator's order to change the
divisor from 251 to 261 days would result in a lower daily rate which is violative of the
prohibition on non-diminution of benefits found in Article 100 of the Labor Code. To maintain
the same daily rate if the divisor is adjusted to 261 days, then the dividend, which
represents the employee's annual salary, should correspondingly be increased to
incorporate the holiday pay. There is thus no merit in respondent Nestle's claim of
overpayment of overtime and night differential pay and sick and vacation leave benefits, the
computation of which are all based on the daily rate, since the daily rate is still the same
before and after the grant of holiday pay.

Respondent Nestle's invocation of solutio indebiti, or payment by mistake, due to its use of
Page | 24
251 days as divisor must fail in light of the Labor Code mandate that "all doubts in the
implementation and interpretation of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor." (Article 4). Nevertheless, in order to fully
settle the issues, the Court resolved to take up the matter of effectivity of the holiday pay
award raised by Nestle.
Applying the operative factaforementioned doctrine to the case at bar, it is not far-fetched
that Nestle, relying on the implicit validity of the implementing rule and policy instruction
before this Court nullified them, and thinking that it was not obliged to give holiday pay
benefits to its monthly paid employees, may have been moved to grant other concessions to
its employees, especially in the collective bargaining agreement. This possibility is bolstered
by the fact that respondent Nestle's employees are among the highest paid in the industry.
With this consideration, it would be unfair to impose additional burdens on Nestle when the
non-payment of the holiday benefits up to 1984 was not in any way attributed to Nestle's
fault. The Court thereby resolves that the grant of holiday pay be effective, not from the
date of promulgation of the Chartered Bank case nor from the date of effectivity of the Labor
Code, but from the date of promulgation of the IBAA case.

Case title: WELLINGTON INVESTMENT AND MANUFACTURING CORPORATION VS.

CRESENCIANO B. TRAJANO, ELMER ABADILLA AND 34 OTHERS G.R. number: G.R.
No. 114698 Date: July 3, 1995 Petitioner: Wellington Investment and
Manufacturing Corporation Respondent: Cresenciano B. Trajano, Under-Secretary
of Labor and Employment, Elmer Abadilla, and 34 others Ponente: Narvasa, C.J.
Facts: By virtue of the routine inspection conducted by a Labor Enforcement Officer,
Wellington Flour Mills owned by the petitioner-company was found non-payment of regular
holidays falling on a Sunday for monthly-paid employees. Wellington argued that the
monthly-paid employees already includes holiday pay for all regular holidays and there is no
legal basis for the finding of alleged non-payment of regular holidays falling on a Sunday. It
further contends that it pays its monthly paid employees a fixed monthly compensation
using the 314 factor which undeniably covers and already includes payment for all the
working days in a month as well as all the 10 un-worked regular holidays within a year. The
Regional Director ordered the petitioner to pay the employees additional compensation
corresponding to 4 extra working days. However, the petitioner argued that the company,
using the 314 factor already gave complete payment of all compensation due to its
workers. Petitioner appealed and was acted on by the respondent Undersecretary. But still,
Regional Directors decision was affirmed. Hence, this petition. Issue: Whether or not a
monthly-paid employees, receiving a fixed monthly compensation, is entitled to an
additional pay aside from his usual holiday pay whenever a regular holiday falls on a Sunday.
Held: Regional Directors decision, affirmed by the Undersecretary, is nullified and set aside.
Every worker should be paid his regular daily wage during regular holidays; except in retail
and service establishments regularly employing less than 10 workers, even if the worker
does not work on these regular holidays. The Wellington had been paying its employees a
salary of not less than the statutory minimum wage and that the monthly salary, thus, paid
was not less than the statutory minimum wage multiplied by 365 days divided by 12.
Apparently the monthly salary was fixed by Wellington to provide for compensation for every
working day of the year including holidays specified by law and excluding only Sundays.
Wellington leaves no day unaccounted for, it is paying for all the days of a year with the
exception only of 51 Sundays.

Case title: NICANOR M. BALTAZAR VS. SAN MIGUEL BREWERY, INC. G.R. number:
G.R. No. L-23076 Date: February 27, 1969 Petitioner: Nicanor M. Baltazar
Respondent: San Miguel Brewery, Inc. Ponente: Dizon, J.
Facts: The petitioner is the salesman-in-charge of San Miguel Brewery, Inc. in Dagupan
warehouse with a monthly pay of P240.00, P5.00 per diem and a commission of P0.75 per
case sold. On October 9, 1956, 8 days after Baltazar was appointed as the salesman-incharge, the regular employees in Dagupan warehouse went on strike because of unjust
treatment. Baltazar was recalled to appellants Manila Office on the 13th of October, 1956
upon the order of his superior and conduct an investigation. The investigation found that the
employees grievances were well founded. The next day, the strikers returned to their work
voluntarily. On October 15, the petitioner was informed that he was not to return to Dagupan
anymore but he still reported to work at the main office from October 16 to November 2,
1956 waiting for assignment. From November 3 to December 19 on the same year, he
absented himself from work without consent from his superiors and without advising them or
anybody else of the reason for his prolonged absence. He was dismissed from work because

of petitioners unauthorized absence and if the company would consider its health, welfare
Page | 25
and retirement plan requiring sick leave, still the petitioner did inexcusable actions since sick
leave, to be considered authorized and excusable, must be certified to by the company
physician and the appellant-company informed that Baltazar was dismissed effective
November 30, 1956. Baltazar initiated a complaint which the trial court ruled that Baltazars
dismissal was justified but, however, ordering San Miguel Brewery Inc. to pay Baltazar one
month separation pay, plus the cash value of 6 months accumulated sick leave. Issue:
Whether or not the petitioner is entitled to one month separation pay and the cash value of
6 months accumulated sick leave. Held: No, the petitioner is not entitled to one month
separation pay and the cash value of 6 months accumulated sick leave. Under the Marcaida
vs. Philippine Education Company 53 O.G. No. 23, RA 1052 makes reference to termination
of employment, instead of dismissal, to exclude employees separated from the service for
causes attributable to their own fault. It is limited in its operation, to cases of employment
without definite period. When the employment is for a fixed duration, the employer may
terminate it even before the expiration of a stipulated period, should there be a substantial
breach of obligations by the employee; in which event the latter is not entitles to advance
notice or separation pay. it would patently, be absurd to grant a right thereto to an employee
guilty of the same breach of obligation, when the employment is without a definite period,
as if he were entitled to greater protection than employees engaged for a fixed duration. In
connection with the question of whether or not petitioner is entitled to the cash value of 6
months accumulated sick leave, it appears that while under the last paragraph of Article 5 of
appellants Rules and Regulations of Health, Welfare and Retirement Plan, unused sick leave
may be accumulated up to a maximum of 6 months, the same is not commutable or payable
in cash upon the employees option.

Case title: DAVAO INTEGRATED PORT STEVEDORING SERVICES VS. RUBEN V.

ABARQUEZ AND THE ASSOCIATION OF TRADE UNIONS (ATUTUCP) G.R. number:
G.R. No. 102132 Date: March 19, 1993 Petitioner: Libron, Gaspar and Associates
Respondent: Bansalan B. Metilla for Association of Trade Unions (ATUTUCP)
Facts: The petitioner and the private respondent entered into a Collective Bargaining
Agreement (CBA) which, under Sections 1 and 3 of Article VIII, provides for sick leave with
pay benefits each year to its employees who have rendered at least one year of service with
the company. Under Section 1, Article VIII, the company agrees to grant 15 days sick leave
with pay each year to every regular non-intermittent worker who already rendered at least
one year of service with the company. However, such sick leave can only be enjoyed upon
certification by a company designated physician, and if the same is not enjoyed within one
year period of the current year, any unenjoyed portion thereof, shall be converted to cash
and shall be paid at the end of the said one year period. And provided however, that only
those regular workers of the company whose work are not intermittent, are entitled to the
sick leave privilege. On the other hand, under Section 3 of the said article, it provides that all
intermittent workers of the company who are members of the Regular Labor Pool shall be
entitled to vacation and sick leaves per year of service with pay with the basis of the number
of hours rendered including overtime. During the effectivity of the CBA until three months of
its renewal with a total of 3 years and 9 months, all the field workers of petitioner who are
members of the regular labor pool and the present regular extra labor pool who had
rendered at least 750 hours to 1,500 hours were extended sick leave with pay benefits.
Every unenjoyed portion thereof at the end of the current year was converted to cash and
paid at the end of the said one- year period. However, the commutation of unenjoyed
portion of the sick leave was withdrawn when the petitioner-company had a new assistant
manager. It stopped the payment of its cash equivalent on the ground that they are not
entitled to the said benefits under the 1989 CBA, particularly Sections 1 and 3. The Union
brought the matter to NCMB and the parties mutually designated Ruben Abarquez, Jr. to act
as voluntary arbitrator. He ruled that Davao Integrated Port Stevedoring Corporation should
grant and extend sick leave privilege of the commutation of the unenjoyed portion of the
sick leave of all the intermittent field workers who are members of the regular labor pool and
the present extra pool in accordance with the CBA. The petitioner-company disagreed with
the ruling. Hence, this petition. Issue: Whether or not intermittent field workers who are
members of the regular labor pool and the present extra pool in accordance with the CBA
are entitled to the commutation of the unenjoyed portion of the sick leave.
Held: The petition is denied. A CBA, as used in Article 252 of the Labor Code, is a contract
executed upon request of either the employer or the exclusive bargaining representative
incorporating the agreement reached after the negotiations with respect to wages, hours of
work and all other terms and conditions of employment, including proposals for adjusting
any grievances or questions arising such agreement. It is unreasonable for the petitioner to
isolate Section 1 of Article VIII of the 1989 CBA from the other related section on sick leave
with pay benefits. The manner they were deprive of the privilege previously recognized and

extended to them by the petitioner is not only tainted with arbitrariness but likewise
Page | 26
discriminatory in nature. Petitioner is of mistaken notion that since the privilege of
commutation or conversion to cash of the unenjoyed portion of the sick leave with pay
benefits is found in Section 1, Article VIII, only the regular non-intermittent workers and no
other can avail of the said privilege because of the proviso found in the last paragraph
thereof. Public respondents correctly observed that the parties to the CBA clearly intended
the same sick leave privilege to be accorded the intermittent workers in the same way that
they are both given the same treatment with respect to vacation leaves non-commutable
and non-cummulative. If they are treated equally with respect to vacation leave privilege,
with more reason should they be on par with each other with respect to sick leave benefits.
Besides, if the intention is otherwise, during its negotiations, why did not the parties
expressly stipulate in the 1989 CBA that regular intermittent workers are not entitled to
commutation of the unenjoyed portion of their sick leave with pay benefits? There had been
no grave abuse of discretion by public respondent in issuing the decision. Moreover, his
interpretation of Sections 1 and 3, Article VIII of the 1989 CBA cannot be faulted and is
absolutely correct.
Case title: DONALD KWOK VS. PHILIPPINE CARPET MANUFACTURING
CORPORATION G.R. number: G.R. No. 149252 Date: April 28, 2005 Petitioner:
Donald Kwok Respondent: Philippine Carpet Manufacturing Corporation Ponente:
Callejo, Sr., J.
Facts: Donald Kwok and his father-in-law, Patricio L. Lim, along with some other
stockholders, established the Philippine Carpet Manufacturing Company in 1965. The
petitioner retired 36 years later and upon retirement, he claimed the cash equivalent of
what he believed to be his accumulated vacation and sick leave credits during the entire
length of his service with the company, which the total amount reached P7, 080, 546.00 plus
interest. The respondent corporation refused to accede to the petitioners demand claiming
that the latter is not entitled to it. The petitioner filed a complaint before the NLRC. He
claimed that Lim made a verbal promise to give him unlimited sick leave and vacation leave
benefits and its cash conversion upon his retirement or resignation without the need for
application therefor. The respondent denied all of these and claimed that petitioners
demand was without legal basis. It was further pointed out that as per Memorandum dated
November 6, 1981, only regular employees and managerial and confidential employees
falling under Category I were entitled to vacation and sick leave credits. The petitioner,
whose position did not fall under Category I was not entitled to the benefits under the said
memorandum. Labor Arbiter ruled in favor of the petitioner. The corporation was directed to
pay the petitioner the amount he was demanding plus interest and 10% attorneys fees. The
corporation appealed the decision and the NLRC reversed the decision of the Labor Arbiter.
the petitioner appealed the NLRCs decision to the CA but the CA affirmed the NLRCs
decision. Hence, this petition. Issue: Whether or not the petitioner is entitled, based on the
documentary and testimonial evidence on record, to the cash value of his vacation and sick
leave credits in the total amount of P7, 080, 546.00.
Held: The petition is denied. The petitioner failed to convince the Court that the actual
findings of the CA were arbitrary. Contracts entered into by a corporate officer or obligations
or prestations assumed by such officer for and in behalf of such corporation are binding on
the said corporation only if such ofiicer acted within the scope of his authority or if such
officer exceeded the limits of his authority, the corporation has ratified such contracts. In the
present case, the petitioner relied principally on his testimony to prove that Lim made a
verbal promise to give him vacation and sick leave credits, as well as the privilege of
converting the same into cash upon retirement. The Court agrees that those who belong to
the upper corporate echelons would have more privileges. However, the Court cannot
presume the existence of such privileges. The petitioner was burdened to prove not only the
existence of such benefits but also that he is entitled to the same, especially considering
that such privileges are not inherent to the positions occupied by the petitioner in the
respondent corporation. In a testimonial evidence, the petitioner is aware that he is not
covered of the Memorandum granting the PCMC employees the conversion of their unused
vacation and sick leaves into cash. Even assuming that the petitioner is included among the
regular employees referred in the memorandum, there is no evidence that he complied with
the cut-off dates for the filing of the cash conversion of vacation and sick leaves. This being
so, the petitioners money claim have already been barred by the three-year prescriptive
period under Article 291 of the Labor Code. Additional to that, there is no proof that
petitioner has filed vacation and sick leaves with the companys personnel department.
Without a record of petitioners absences, there is no way to determine the actual number of
leave credits he is entitled to. The amount which the petitioner is demanding is baseless.
Regarding the verbal promise that Lim made to the petitioner, the promise cannot bind the
company in the absence of any Board resolution to that effect. The personal act of the
company president cannot bind the corporation.

Page | 27
Art. 97: Wages and Salary
Case title: JOSE SONGCO VS. NLRC (FIRST DIVISION) G.R. number: G.R. No. L50999 Date: March 23, 1990 Petitioner: Jose Songco, Romeo Cipres and Amancio
Manuel Respondent: National Labor Relations Commission (First Division), Labor
Arbiter Flavio Aguas, and F.E. Zuellig (M), Inc. Ponente: Medialdea, J.
Facts: Zuellig (M) Inc. filed with the Department of Labor (Regional Office No. 4) a
clearance to terminate the services of petitioners Jose Songco, Romeo Cipres and Amancio
Manuel due to alleged financial losses. However, the petitioners argued that the company is
not suffering any losses and the real reason for their termination was their membership in
the union. At the last hearing of the case, the petitioner manifested that they no longer
contesting their dismissal, however, they argued that they should be granted a separation
pay. Each of the petitioners was receiving a monthly salary of P40, 000.00 plus commissions
for every sale they made. Under the CBA entered by the Zuellig Inc. and the petitioners, in
Article XIV, Section 1(a), Any employee, who is separated from employment due to old age,
sickness, death or permanent lay-off not due to the fault of said employee shall receive from
the company a retirement gratuity in an amount equivalent to one months salary per year
of service. One month of salary as used in this paragraph shall be deemed equivalent to the
salary at date of retirement; years of service shall be deemed equivalent to total service
credits, a fraction of at least six months being considered one year, including probationary
employment. Other basis for petitioners contention are Article 284 of the Labor Code with
regards to reduction of personnel and Sections 9(b) and 10 of Rule 1, Book VI of the Rules
Implementing the Labor Code. The Labor Arbiter rendered his decision directing the
company 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 petitioners appealed to the NLRC but it was denied. Petitioner Romeo
Cipres filed a Notice of Voluntary Abandonment and Withdrawal of petition contending that
he had received, to his full and complete satisfaction, his separation pay. Hence, this
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: The petition is granted. Petitioners contention that in arriving at the correct and legal
amount of separation pay due to them, whether under the Labor Code or the CBA, their
basic salary, earned sales commissions and allowances should be added together. Insofar as
whether the 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 vs. NLRC, 76721, in the computation of backwages and separation pay,
account must be taken not only of the basic salary of petitioner but also of her
transportation and emergency living allowances. In the issue of whether commission should
be included in the computation of their separation pay, it is proper to define first
commission. Blacks Law Dictionary defined commission as the recompensed, compensation
or reward of an agent, salesman, executor, trustees, 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 the commission are part of
petitioners wage and salary. Some salesmen do not receive any basic salary but depend on
commission and allowances or commissions alone, are part of petitioners wage and salary.
Some salesman do not received any basic salary but depend on commission and allowances
or commissions alone, although an employer-employee relationship exist. In Soriano v. NLRC,
it is ruled then that, the commissions also claimed by petitioner (override commission plus
net deposit incentive) are not properly includible in such base figure since such commissions
must be earned by actual market transactions attributable to petitioner. Applying this by
analogy, since the commissions in the present case were earned by actual market
transactions attributable to petitioners, these should be included in their separation pay. In
the computation thereof, what should be taken into account is the average commissions
earned during their last year of employment.

Case title: ALIPIO R. RUGA ET AL. VS. NLRC G.R. number: G.R. No. L-72654-61
Date: January 22, 1990 Petitioner: Alipio R. Ruga, Jose Parma, Eladio Calderon,
Laurente Bautu, Jaime Barbin, Nicanor Francisco, Philip Cervantes and Eleuterio
Barbin Respondent: National Labor Relations Commission and De Guzman Fishing
Enterprises and/or Arsenio de Guzman Ponente: Fernan, J.

Facts: The petitioners were the fishermen-crew members of 7/B Sandyman II, one of
Page | 28
several fishing vessels owned by the De Guzman Fishing Enterprises which is primarily in the
fishing business with port and office at Camarines Sur. On September 11, 1983, petitioners
were told to proceed to the police station for investigation on the report that they sold some
of their fish-catch at midsea. The petitioners denied the charge claiming that the allegation
was a countermove because of the formation of their union. The complaint was dismissed
because there were no witnesses that would support the companys allegation. The
petitioners, however, were not allowed to return to the fishing vessel to resume their work
on that same day. Each of the them filed a complaints for illegal dismissal and non-payment
of 13th month pay, emergency cost-of-living allowance and service incentive pay with the
Ministry (now DOLE). The company denied the petitioners being their employees, further
contending that they were only engaged in a joint venture. The Labor Arbiter rendered a
joint decision dismissing all the complaint of the petitioners. Petitioners appealed the case to
the NLRC which affirmed the Labor Arbiters decision that a joint fishing venture and not
employer-employee relationship exist between the private respondent and the petitioners.
Hence, this petition.
Issue: Whether or not the fishermen-crew members of the trawl fishing vessel 7/B
Sandyman II are employees of its owner-operator, De Guzman Fishing Enterprise, and if so,
whether or not they were illegally dismissed from their employment.
Held: The petitioners were illegally dismissed from their employment. In determining the
existence of 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 employers power to control the employee with
respect to the means and methods by which the work is to be accomplished. The
employment arises from contract of hire, express or implied. In the absence of hiring, no
employer-employee relationship could exist. Records show in the instant case that
petitioners were directly hired by the general manager of the company and its operations
manager. Petitioner Alipio Ruga was hired on September 29, 1974 as patron/captain of the
fishing vessels; Eladio Calderon started as mechanic on April 16, 1968 until he was promoted
as chief engineer of the fishing vessel; Jose Pama was employed on September 29, 1974 as
assistant engineer; Jaime Barbin started as a pilot of the motor boat until he was transferred
as a master fisherman to the fishing vessel 7/B Sandyman II; Philip Cervantes was hired as
winchman on August 1, 1972 while Eleuterio Barbin was hired as winchman on April 15,
1976. While tenure or length of employment is not considered as the test of employment,
nevertheless the hiring of petitioners to perform work which is necessary or desirable in the
usual business or trade of private respondent for a period of 8-15 years since 1968 qualify
them as regular employees within the meaning of Article 281 of the Labor Code as they were
indeed engaged to perform activities usually necessary or desirable in the usual fishing
business or occupation of private respondent. The virtual dismissal of petitioners from their
employment was characterized by undue haste when less extreme measures consistent with
the requirements of due process should have been first exhausted. In that sense, the
dismissal of petitioners was tainted with illegality.

Case title: STATE MARINE CORPORATION VS. CEBU SEAMENS ASSOCIATION G.R.
number: G.R. No. L-12444 Date: February 28, 1963 Petitioner: State Marine
Corporation and Royal Line, Inc. Respondent: Cebu Seamens Association
Ponente: Paredes, J.
Facts: The petitioners were engaged in the business of marine coastwise transportation.
They had a CBA with the Cebu Seamens Association. On September 12, 1952, the
respondent union filed a complaint against the petitioners alleging that the officers and men
working on board the petitioners vessels have not been paid their sick leave, vacation leave
and overtime pay; that the petitioners threatened then to accept the reduction of salaries,
observed by other shipowners; that after the Minimum Wage Law had taken effect, the
petitioners required their employees on board their vessels, to pay the sum of P0.40 for
every meal, while the masters and officers were required to pay their meals and that
because the captain had refused to yield to the general reduction of salaries, the petitioners
dismissed the captain. The petitioner, on their defense, stated that they have suffered a
financial losses in the operation of their vessels and there is no law which provides for the
payment of sick leave or vacation leave to employees of private firms; that with regards to
their overtime pay, they have always observed the Eight-hour labor Law and that overtime
does not apply to those who provide means of transportation. The decision ruled in favor of
the respondent union. Hence, this petition.
Issue: Whether or not the required meals which the petitioner company deducted from the
salary of the employees is considered as facilities, and not supplements.

Held: Supplements constitute extra remuneration or special privileges or benefits given to

Page | 29
or received by the laborers over and above their ordinary earnings or wages. Facilities, on
the other hand, are items of expense necessary for the laborers and his familys existence
and subsistence so that by express provisions of law, they form part of the wage and when
furnished by the employer are deductible therefrom, since if they are not so furnished, the
laborer would spend and pay them just the same. It is argued that the food or meal given to
the deck officers, marine engineers and unlicensed crew members in question, were mere
facilities which should be deducted from wages, and not supplements which, according to
Section 19 of the Minimum Wage Law, should not be deducted from such wages. It was
found out that the meals were freely given to crew members prior to the effectivity of the
Minimum Wage Law while they were on the high seas not as part of their wages but as a
necessary matter in the maintenance of the health and efficiency of the crew members
during the voyage. The deductions therein made for the meals given after August 4, 1951,
should be returned to them, and the operator of the coastwise vessels should continue
giving the benefits. Wherefore, the petition is dismissed, finding out that the meals or food
in question are not facilities but supplements.
Case title: NORMA MABEZA VS. NLRC G.R. number: G.R. No. 118506 Date: April
18, 1997 Petitioner: Norma Mabeza Respondent: National Labor Relations
Commission and Peter Ng/Hotel Supreme Ponente: Kapunan, J.
Facts: Petitioner Norma Mabeza and her co-employees at the Hotel Supreme in Baguio City
were asked by the hotels management to sign an instrument attesting to the latters
compliance with minimum wage and other labor standard provision. The instrument provides
that they have no complaints against the management of the Hotel Supreme as they are
paid accordingly and that they are treated well. The petitioner signed the affidavit but
refused to go to the Citys Prosecutors Office to confirm the veracity and contents of the
affidavit as instructed by management. That same day, as she refused to go to the City
Prosecutors Office, she was ordered by the hotel management to turn over the keys to her
living quarters and to remove her belongings to the hotels premises. She then filed a leave
of absence which was denied by her employer. She attempted to return to work but the
hotels cashier told her that she should not report to work and instead continue with her
unofficial leave of absence. Three days after her attempt to return to work, she filed a
complaint against the management for illegal dismissal before the Arbitration Branch of the
NLRC in Baguio City. In addition to that, she alleged underpayment of wages, non-payment
of holiday pay, service incentive leave pay, 13th month pay, night differential and other
benefits. Peter Ng, in their Answer, argued that her unauthorized leave of absence from work
is the ground for her dismissal. He even maintained that her alleged of underpayment and
non-payment of benefits had no legal basis. He raises a new ground of loss of confidence,
which was supported by his filing of criminal case for the alleged qualified theft of the
petitioner. The Labor Arbiter ruled in favor of the hotel management on the ground of loss of
confidence. She appealed to the NLRC which affirmed the Labor Arbiters decision. Hence,
this petition.
Issue: Whether or not the dismissal by the private respondent of petitioner constitutes an
unfair labor practice.
Held: The NLRCs decision is reversed. The pivotal question in any case where unfair labor
practice on the part of the employer is alleged is whether or not the employer has exerted
pressure, in the form of restraint, interference or coercion, against his employees right to
institute concerted action for better terms and conditions of employment. Without doubt, the
act of compelling employees to sign an instrument indicating that the employer observed
labor standard provisions of the law when he might not have, together with the act of
terminating or coercing those who refuse to cooperate with the employees scheme
constitutes unfair labor practice. The labor arbiters contention that the reason for the
monetary benefits received by the petitioner between 1981 to 1987 were less than the
minimum wage was because petitioner did not factor in the meals, lodging, electric
consumption and water she received during the period of computations. Granting that meals
and lodging were provided and indeed constituted facilities, such facilities could not be
deducted without the employer complying first with certain legal requirements. Without
satisfying these requirements, the employer simply cannot deduct the value from the
employees ages. First, proof must be shown that such facilities are customarily furnished by
the trade. Second, the provision of deductible facilities must be voluntary accepted in
writing by the employee. Finally, facilities must be charged at fair and reasonable value.
These requirements were not met in the instant case. Private respondent failed to present
any company policy to show that the meal and lodging are part of the salary. He also failed
to provide proof of the employees written authorization and he failed to show how he
arrived at the valuations. More significantly, the food and lodging, or electricity and water
consumed by the petitioner were not facilities but supplements. A benefit or privilege
granted to an employee for the convenience of the employer is not a facility. The criterion in

making a distinction between the two not so much lies in the kind but the purpose.
Page | 30
Considering, therefore, that hotel workers are required to work on different shifts and are
expected to be available at various odd hours, their ready availability is a necessary matter
in the operations of a small hotel, such as the private respondents hotel.
Case title: PHILIPPINE AIRLINES, INC. VS. NLRC G.R. number: G.R. No. 55159 Date:
December 22, 1989 Petitioner: Philippine Airlines Inc. Respondent: National Labor
Relations Commission and Armando Dolina Ponente: Cortes, J.
Facts: Armando Dolino was admitted to the PAL Aviation School for training as a pilot. The
training agreement bound PAL to provide regular and permanent employment to Dolina
upon the completion of the training course. Dolina completed the course and he was issued
a license as Commercial Pilot and PAL extended him a temporary appointment for 6 months
for Limited First Officer. When his appointment was due to expire, he fell short of the
required time and to enable him to complete the requirement, his employment was
extended for another 6 months which appointment was described as permanent. When hes
appointment was due to expire again, he was still short of the minimum flying time
requirement and he was extended again. On the third extension of his appointed, he
completed the flying time requirements. Pending his physical examination, hes employment
was extended again. When Dolina took a psychological examination, his adaptability rating
was found unacceptable. The Board then decided that Dolina is not qualified for regular
employment in the Company. PAL filed a clearance application for Dolinas termination and
in the meantime, Dolina was placed under preventive suspension. However, the Department
of Labor lifted the preventive suspension and ordered petitioner to reinstate Dolina to his
former position with full backwages. PAL appealed the case and the decision was reversed.
PAL removed Dolina from its payroll and claiming that it was no longer obliged to return
Dolina from its payroll since the decision of the Labor Arbiter was a final resolution of the
case by arbitration. Dolina appealed to the NLRC which the latter dismissed the clearance
application of PAL. Dolina must be restored to the payroll and paid for his salaries from the
date he was dropped from the PALs payroll. Hence, this petition.
Issue: Whether or not the NLRC committed grave abuse of discretion in holding that private
respondent Dolina was entitled to his salaries from the time he was dropped from PALs
payroll until this case is finally resolved.
Held: The decision requiring the petitioner to restore private respondent to its payroll and
ordering the payment of his salaries from the time he was dropped from PALs payroll until
this case is finally resolved is null and void. In lieu of reinstatement and the payment of his
backwages, private respondent was included in the petitioners payroll; effective from the
time he was preventively suspended until final resolution of the case by arbitration, without
having to perform any work for the petitioner. In entering into agreement, the parties could
not have intended to include in the clause final resolution of the case by arbitration the
whole adjudicatory process, including appeal. For it were so, even proceedings on certiorari
before this court would be embraced by the term arbitration and private respondent will
continue to receive monthly salary without rendering any service to the petitioner regardless
of the outcome of the proceedings before the Labor Arbiter, for as long as one of the parties
appeal to the NLRC and until the case is finally resolved by this court. This is absolutely in
contrast with the principle of Fair Days Wage for a Fair Days Labor. The court holds that
respondents NLRCs order for the continued payment of Dolinas salaries from he was
dropped from the PALs payroll until the case is finally resolved is contrary to law and
established jurisprudence and the NLRC acted in excess of its jurisdiction in issuing the
assailed order.

Case title: SSS vs. SSS Supervisors Union-CUGCO G.R. number: G.R. No. L31831Date: October 23, 1982 Petitioner: Social Security System Respondent: SSS
Supervisors Union-CUGCO and Court of Industrial Relations Ponente: MelencioHerrera, J.
Facts: The members of the respondent Union did not work during the 17-day strike
declared in 1968 by the rank and file Union (the Philippine Association of Free Labor Unions
<PALFU>). The SSS and the PALFU had a disagreement concerning the interpretation of the
provisions of their CBA. The PALFUs decision to strike is the effect of the CIR Order of August
29, 1968 enjoining the parties, for the sake of industrial peace..to maintain the status quothe Union not to declare any strike and the Management not to dismiss nor suspend any of
its employees nor to declare any lock out. The SSS, in that same case, filed an Urgent
Petition to declare the strike illegal. The respondent Union filed a Motion for Intervention in
the said case alleging that it had not participated in the strike; that its members wanted to
report for work but were prevented by the picketers from entering the work premises; that

under the circumstances, they were entitled to their salaries corresponding to the duration
Page | 31
of the strike, which could be deducted from the accrued leave credits of their members.
Issue: Whether or not the members of the respondent Union who admittedly did not work
during the 17- day strike conducted by the PALFU is entitled to their salaries.
Held: According to the doctrine of Fair days wage for a Fair days 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 nor suspended. It
is hardly fair or just for an employee or laborer to fight or litigate against his employer on
the employers time. In this case, the failure to work on the part of the members of the
respondent Union was due to circumstances not attributable to themselves. But neither
should the burden of the economic loss suffered by them be shifted to their employer, the
SSS, which was equally faultless, considering that the situation was not a direct
consequence of the employers lockout or unfair practice. With this, it is fair that they wont
be receiving their salary for those days they did not work.
Case Title: DURABUILT RECAPPING PLANT AND CO. VS NLRC G.R. Number: G.R No.
76746 Date: July 27, 1987 Petitioner: DURABUILT RECAPPING PLANT & COMPANY
and EDUARDO LAO, GENERAL MANAGER Respondents: NATIONAL LABOR
RELATIONS COMMISSION, HON. COMM. RICARDO C. CASTRO, HON. ARBITER
AMELIA M. GULOY, KAPISANAN NG MGA MANGGAGAWA SA DURABUILT and
REYNALDO BODEGAS
Ponente: Gutierrez, Jr., J.
Facts: On July 11, 1983, a complaint for illegal dismissal was filed by respondent Reynaldo
Bodegas, against petitioner Durabuilt, a tire recapping company. In a decision rendered by
the Labor Arbiter, the private respondent was ordered reinstated to his former position with
full back wages, from the time he was terminated up to the time he is actually reinstated,
without loss of seniority rights and benefits accruing to him. The petitioners failed to file a
seasonable appeal and entry of final judgment. The petitioner filed its opposition to the
computation on the ground that it contemplated a straight computation of twenty six (26)
working days in one month when the period covered by the computation was intermittently
interrupted due to frequent brownouts and machine trouble and that respondent Bodegas
had only a total of 250.75 days of attendance in 1982 due to absences. According to the
petitioner, Bodegas is entitled only to the amount of P3,834.05 broken down as follows:
salaries P1,993.00; ECOLA P1,433.50, and 13th month pay P407.55. The Labor
Arbiter denied the opposition to the computation. The petitioner appealed to the NLRC which
affirmed the order of the Labor Arbiter and dismissed the appeal.
Issue: Whether or not the computation of back wages should be based on daily rather than
on monthly pay schedules
Held: The petition is granted. We have held that where the failure of workers to work was
not due to the employer's fault, the burden of economic loss suffered by the employees
should not be shifted to the employer. Each party must bear his own loss. It would neither be
fair nor just to allow respondent to recover something he has not earned and could not have
earned and to further penalize the petitioner company over and above the losses it had
suffered due to lack of raw materials and the energy-saving programs of the government.
The private respondent cannot be allowed to enrich himself at the expense of the petitioner
company. The computation of back wages should be based on daily rather than on monthly
pay schedules where, as in the case at bar, such basis is more realistic and accurate.

Case Title: INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) VS. HON.

LEANDRO QUISUMBING ET. AL. G.R. Number: G.R. No. 128845 Date: June 1, 2000
Petitioner: INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE)
Respondents: HON. LEONARDO A. QUISUMBING in his capacity as the Secretary of
Labor and Employment; HON. CRESENCIANO B. TRAJANO in his capacity as the
Acting Secretary of Labor and Employment; DR. BRIAN MACCAULEY in his capacity
as the Superintendent of International School-Manila; and INTERNATIONAL
SCHOOL, INC. Ponente: Kapunan, J.
Facts: Private respondent International School, Inc. 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 School hires both foreign and local
Page | 32
teachers as members of its faculty, classifying the same into two: (1) foreign-hires and (2)
local-hires. The School grants foreign- hires certain benefits not accorded local-hires. These
include housing, transportation, shipping costs, taxes, and home leave travel allowance.
Foreign-hires are also paid a salary rate twenty-five percent (25%) more than local-hires. The
School justifies the difference on two "significant economic disadvantages" foreign-hires
have to endure, namely: (a) the "dislocation factor" and (b) limited tenure. Petitioner claims
that the point-of-hire classification employed by the School is discriminatory to Filipinos and
that the grant of higher salaries to foreign-hires constitutes racial discrimination. The Acting
Secretary of Labor found that these non-Filipino local-hires received the same benefits as the
Filipino local-hires. The Acting secretary upheld the point-of-hire classification for the
distinction in salary rates. A perusal of the parties' 1992-1995 CBA points us to the
conditions and provisions for salary and professional compensation wherein the parties
agree as follows: All members of the bargaining unit shall be compensated only in
accordance with Appendix C hereof provided that the Superintendent of the School has the
discretion to recruit and hire expatriate teachers from abroad, under terms and conditions
that are consistent with accepted international practice.
Issue: Whether there is difference in salary rates between foreign and local-hires
Held: The petition is given due course. If an employer accords employees the same
position and rank, the presumption is that these employees perform equal work. There is no
evidence here that foreign-hires perform 25% more efficiently or effectively than the localhires. Both groups have similar functions and responsibilities, which they perform under
similar working conditions. The need of the School to attract foreign-hires is recognized,
salaries should not be used as an enticement to the prejudice of local-hires. The local-hires
perform the same services as foreign-hires and they ought to be paid the same salaries as
the latter. 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. The Constitution enjoins the State
to "protect the rights of workers and promote their welfare,", "to afford labor full protection."
The State, therefore, has the right and duty to regulate the relations between labor and
capital. These relations are not merely contractual but are so impressed with public interest
that labor contracts, collective bargaining agreements included, must yield to the common
good. Should such contracts contain stipulations that are contrary to public policy, courts will
not hesitate to strike down these stipulations. In this case, we find the point-of-hire
classification employed by respondent School to justify the distinction in the salary rates of
foreign-hires and local hires to be an invalid classification. There is no reasonable distinction
between the services rendered by foreign-hires and local-hires.

Case Title: CEBU INSTITUTE OF TECHNOLOGY VS. OPLE G.R. Number: G. R. No. L58870 April 15, 1988 Petitioner: CEBU INSTITUTE OF TECHNOLOGY (CIT)
Respondents: HON. BLAS OPLE, in his capacity as Minister, Ministry of Labor and
Employment, JULIUS ABELLA, ARSENIO ABELLANA, RODRIGO ALIWALAS, ZOSIMO
ALMOCERA, GERONIDES ANCOG, GREGORIO ASIA; ROGER BAJARIAS, BERNARDO
BALATAYO, JR., BASILIO CABALLES, DEMOCRITO TEVES, VOLTAIRE DELA CERNA,
ROBERTO CABARRUBIAS, VILMA GOMEZ CHUA, RUBEN GALLITO, EDGARDO
CONCEPCION, VICTOR COQUILLA, JOSE DAKOYKOY, PATERNO WONG, EVELYN
LACAYA, RODRIGO GONZALES, JEOGINA GOZO, MIGUEL CABAL, LES, CONSUELO
JAVELOSA, QUILIANO LASCO, FRANKLIN LAUTA, JUSTINIANA LARGO, RONALD
LICUPA, ALAN MILANO, MARIA MONSANTO, REYNALDO NOYNAY, RAMON
PARADELA, NATALIO PLAZA LUZPURA QUIROGA, NOE RODIS, COSMENIA
SAAVEDRA, LEONARDO SAGARIO,LETICIA SERRA, SIEGFREDO TABANAG, LUCINO
TAMAOSO, DANILO TERANTE, HELEN CALVO TORRES, ERNESTORES SANANAM,
RODRIGO BACALSO, YOLANDA TABLANTE, ROMERO BALATUCAN, CARMELITA
LADOT, PANFILO CANETE, EMMANUEL CHAVEZ, JR., SERGIO GALIDO, ANGEL
COLLERA, ZOSIMO CUNANAN, RENE BURT LLANTO, GIL O VILLANUEVA, DOLORES
VILLONDO, EDWARD YAP, ROWENA VIVARES, DOLBATAYOLA VICENTE DELANTE,
CANDELARIO DE DIOS, JOSE MA. ESTELLA, NECITA TRINIDAD, ROTELLO ILUMBA,
TEODORICO JARAYMUNDO ABSIN, RUDY MANEJA, REYNA RAMOS, ANASTACIA
BLANCO, FELICISIMO DELMUNDO, ELNORA MONTERA, MORRISON MONTESCLAROS,
ELEAZAR PANIAMOGAN, BERNARDO PILAPIL, RODOLFO POL, DEMOSTHENES
REDOBLE, PACHECO ROMERO, DELLO SABANAL, SARAH SALINAS, RENATO
SOLATORIO, EDUARDO TABLANTE, EMMANUEL TAN, FELICISIMO TESALUNA, JOSE
VERALLO, JR., MAGDALENO VERGARA, ESMERALDA ABARQUEZ, MAC ARTHUR
DACUYCUY ACOMPANADA, TRINIDAD ADLAWAN, FE ELIZORDO ALCANTARA,

REOSEBELLA AMPER, ZENAIDA BACALSO, ELISA BADANA, GEORGIA BAS, ERLINDA

Page | 33
BURIAS, ELDEFONSO BURIAS, CORAZON CASENAS, REGINO CASTANEDA, GEORGE
CATADA, CARMENCITA G. CHAVEZ, LORETTA CUNANAN, FLORES DELFIN, TERESITA
ESPINO, ELVIE GALANZA, AMADEA GALELA, TERESITA JUNTILLA, LEONARDA
KAPUNGAN, ADORACION LANAWAN, LINDA LAYAO, GERARDO LAYSON, VIRGILIO
LIBETARIO, RAYMOND PAUL LOGARTA, NORMA LUCERO, ANATOLIA MENDEZ,
ELIODORO MENDEZ, JUDALINE MONTE, ELMA OCAMPO, ESTEFA OLIVARES, GEORGE
ORAIS, CRISPINA PALANG, GRETA PEGARIDO, MELBA QUIACHON, REMEDIOS
QUIROS, VIRGINIA RANCES, EDNA DELOS REYES, VICENTE TAN, EMERGENCIA
ROSELL, JULIETA TATING, MERCIA TECARRO, FELISA VERGARA, WEMINA VILLACIN,
MACRINA YBARSABAL, MILAGROS CATALAN, JULIETA AQUINDE, SONIA ARTIAGA,
MA. TERESITA OBANDO, ASUNCION ABAYAN, ESTHER CA VITLIANA VENERACION,
LEONCIA ABELLAR, REYNITA VILLACARLOS Ponente: Cortes, J.
Facts: Motions for Reconsideration and Clarification in four of these six consolidated cases
decided by the Court on December 18, 1987 were filed and questions not clearly raised as
issues or dealt with in the main petitions but which are necessary for the full resolution of
the cases are presented in the following: I. Fabros Case (G.R. No. 70832) The petitioners
express doubt on the applicability of the three-year period of prescription under the Labor
Code. There is no doubt that the three-year period within which to file actions involving
money claims arise out of an employer-employee relationship fixed by Article 292 of Pres.
Dec. No. 442 (Labor Code), as amended, equally applies to claims for the incremental
proceeds arising from tuition fee increases under Pres. Dec. No. 451. The claims which gave
rise to all these cases are clearly money claims arising from an employer-employee
relationship and thus falls under the coverage of Article 292 of the Labor Code.
II. Biscocho Case (G.R. No. 76521)
This case concerns the award of ten percent (10%) of the backwages payable to all
members of the bargaining unit as negotiation fee which covers attorney's fees. agency fee
and the like. This Court in its December 18, 1987 Decision affirmed this award with the
modification that only members of the bargaining unit should be made to pay this
assessment.
The present source of ambiguity is the basis for compute the ten percent (10%) negotiation
fee. Petitioners and respondent Espiritu Santo Parochial School share the opinion that the
negotiation fee of ten percent (10%) should not be charged against the sixty percent (60%)
incremental proceeds from tuition fee increases on the ground that this is not a bargainable
matter as it has already been fixed by law; hence, only thirty percent (30%) should be
subject to the computation of the ten percent (10%) negotiation fee. The respondent Espiritu
Santo Parochial School Faculty Association takes the contrary view by arguing that the whole
ninety percent (90%) incremental proceeds from tuition fee increases should be the subject
to the computation the ten percent (10%) negotiation fee.
III. Divine Word College Case(G.R. No. 68345)
The original complaint in this case which covered claims for the school years 1979-1980,
1980-1981, 1981-1982 and 1982-1983 was filed on February 17, 1983 before the Regional
Office. Invoking Article 292 of the Labor Code, petitioner school submits that all claims prior
to February 17, 1980 have already prescribed. Artide 292 of the Labor Code expressly
provides that the period within which to file actions for money claims which accrued during
the effectivity of the Labor Code is three (3) years from the accrual of the cause of action.
Money claims which accrued more than three (3) years prior to the filing of the complaint
are barred by prescription. In the instant case, inasmuch as the original complaint was filed
on February 17, 1983, the claims prior to February 17, 1980 have indeed already prescribed.
IV. Far Eastern University Case (G.R. Nos. 69224-25)
The Court notes the Motion for Clarification of Judgment filed by counsel for petitioner Union
as regards the payment of the " transportation allowance" which was held to be an
equivalent an order requiring respondent Far Eastern University to pay its employees who
have been paid such transportation allowance less than one-twelfth (1/2) of the latter's basic
vary, the amount of the difference. A Motion for Issuance of An Order Awarding Attorney's
Lien was filed by petitioner Union's former counsel, Atty. Herminio Z. Florendo. Movant
alleges that pursuant to an agreement with the members of the Union, he filed the
complaint for unpaid holiday pays, underpayment of thirteenth (13th) month pay and for
violation of Pres. Dec. No. 451 with the Department of Labor. The agreement which is
attached to the motion provides that the prosecution of the Union members' claim is on a
contingent fee basis in an amount equivalent to thirty percent (30%) of whatever may be
recovered relative to Id claim. The Labor Arbiter in his March 10, 1980 Order awarded the
Union's claim for payment of legal holiday and thirteenth (13th) month pay but dismissed its

claim under Pres. Dee. No. 451. Atty. Florendo perfected the partial appeal and
Page | 34
memorandum for complainants-appellants with the National Labor Relations Commission.
Pending the appeal, however, another lawyer entered his appearance for the appellant
Union thereby substituting Atty. Florendo.
Issue: Whether or not salary must be excluded in allowances
Held:
In the Biscocho case, (G.R. No. 76521), to CLARIFY the following points:
A. The ten percent (10%) negotiation fee should be computed only on the amount in excess
of the sixty percent (60%) portion allocated for teachers and other school employees under
the law; B. The ten percent (10%) negotiation fee should be computed on the above amount
for the period starting school year 1985-1986 and ending school year 1987-1988.
In the Divine Word College of Legaspi case (G.R. No. 68345), (1) to MODIFY the Court's
Decision of December 18, 1987 so that all claims of private respondents prior to February
17, 1980 shall be considered prescribed; and (2) to ORDER a recomputation of the actual
incremental proceeds received from tuition fee increases.
In the Far Eastern Universitycase (G.R. Nos. 6922425), (1) to MODIFY the Court's Decision of
December 18,1987 so that claims for the school year 1974-1975 shall be considered
prescribed; (2) to CLARIFY that Far Eastern University's remaining liability for the sixty
percent (60%) allotment of the incremental proceeds shall be limited only to the portion of
said sixty percent (60%) which answered for the increases in allowances and other benefits
under Pres. Dec. No. 451; (3) to ORDER respondent Far Eastern University t0 pay its
employees who have been paid the transportation allowance in an amount less than onetwelfth (1/12) of their basic salary, the amount of the difference in thirteenth (13th) month
pay subject to the three-year period of prescription under the Labor Code; (4) to NOTE the
two (2) motions for recording of attorney's lien and to REMAND to the National Labor
Relations Commission the matter of recording attorney's lien and the determination of the
matter of entitlement of Atty. Herminio Z. Florendo to Attorney's fees.