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CASE FACTS/ISSUE/HELD DOCTRINE

ELEMENTS OF EMPLOYER – EMPLOYEE RELATIONSHIP


C.F. Sharp & Co. Inc. Wilfredo Agustin and Hernando Minimo applied with C.F. An employment contract, like any other contract, is perfected at the
v. Pioneer Insurance & Sharp for the job opening for sandblasters and painters in a moment:
Surety news ad. Upon submission of requirements, a Contract of - the parties come to agree upon its terms
Employment was executed, with a basic salary of - concur in the essential elements (consent of the parties,
PERFECTION v. $400/month. After a month, they were yet to be deployed so object certain which is the subject matter of the contract,
CONSUMMATION OF they requested for the release of their documents. and cause of the obligation).
EMPLOYMENT The object of the contract is the service to be rendered by
CONTRACT POEA: guilty of unlawful withholding of travel documents and respondents.
suspended license of C.F. Sharp
RTC: there was a perfected contract and C.F. violated The commencement of an EER must be treated separately
CA: no perfected contract but C.F. liable for damages from perfection of employment contract. The perfection occurred
when petitioner and respondent agreed on the object and the cause
SC: perfected employment of contract & terms and conditions. Commencement would have taken place
EMPLOYEE had they been deployed. Respondents are entitled to rights arising
vs. from the perfected Contract of Employment, such as right to demand
RECRUITMENT performance. Failure to deploy constitutes breach of contract,
AGENCY thereby entitling them to damages.

Exemplary damages may be awarded when a wrongful act is


accompanied by bad faith. C.F Sharp acted in bad faith when it
arbitrarily imposed condition that document will be releases upon
signing of quitclaim.

*C.F. Sharp - employment contract is consensual in nature


*employment agreement = employment relationship (FLJ)
*C.F Sharp was not an employee vs. employer; it was an agent vs.
employee
*if there was an agreement of employment, there is already an EER
(FLJ)
*In the bar, the question of EER is always hidden in a different labor
issue (i.e is he entitled to overtime pay? You have to determine first
whether or not he is an employee
*Control test is the most important, but it is not the only test. The
power of control MUST NOT ONLY BE AT THE END RESULT, BUT
ALSO TO THE MEANS AND METHODS.

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


*employee vs. independent contractor (employee is paid wages, IC
is paid admin fees; both are terminable). They are the same but the
only line that separates them is the power of control.

Jao v. BCC Products BCC Products Sales Inc. and its president, Terrance Ty, The control test, under which the person for whom the
Sales, Inc. employed Charlie Jao as comptroller. A month after, he was services are rendered reserves the right to direct not only the
barred from entering the premises of BCC. He filed a end to be achieved but also the means for reaching such end
CONTROL TEST compliant for illegal dismissal, reinstatement with full is generally relied on by the courts.
backwages.
The existence of an employer-employee relationship is a question of
SC: NO EER. Jao worked in BCC as representative of fact.
COMPTROLLER Sobien Food Corporation (SFC), major creditor and supplier
FOR ANOTHER of BCC. He acted for the benefit and in the interest of SFC GENERAL RULE: The Court is not a trier of facts; a re-examination
COMPANY
more than BCC. of factual findings cannot be done.
EXCEPTION: The Court may look into factual issues in labor cases
when the factual findings of the Labor Arbiter, the NLRC, and the CA
are conflicting.

Tenazas v. R. Villegas Tenazas, Francisco, and Endraca filed for illegal dismissal In labor cases (like administrative and quasi-judicial), the quantum
Taxi Transport against R. Villegas Taxi Transport and Romualdo Villegas. of proof necessary is substantial evidence.

QUANTUM OF Tenazas – his taxi unit was sideswiped by another vehicle. There is no hard and fast rule designed to establish elements of
EVIDENCE IN LABOR Upon reporting the incident, he was allegedly scolded and EER. Any competent and relevant evidence may be admitted (IDs,
CASES told to leave because he was fired. cash vouchers, SSS registration, appointment letters, payrolls,
employment contracts).
STRAINED Francisco – averred that his dismissal was brought about by
RELATIONS the company’s unfounded suspicion hat he was organizing a An illegally dismissed employee is entitled to two reliefs:
DOCTRINE labor union. BACKWAGES AND REINSTATEMENT. They are separate and
distinct. In instances where reinstatement is no longer feasible
Endraca – fired for not being able to meet his boundary for because of strained relations between the employee and the
the day. employer, separation pay is granted. An illegally dismissed
TAXI DRIVERS
employee is entitled to either reinstatement, if viable, or
R: Tenazas unit needs overhaul and was advised to wait until separation pay if reinstatement is no longer viable, and
further notice; Endraca was a spare driver; Francisco was not backwages.
their employee
The normal consequences of respondents’ illegal dismissal, then,
are reinstatement without loss of seniority rights, and payment of

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


SC: Tenazas and Endraca, employees and entitled to backwages computed from the time compensation was withheld up
reinstatement, not separation pay. Francisco not an to the date of actual reinstatement. Where reinstatement is no
employee longer viable as an option, separation pay equivalent to one (1)
month salary for every year of service should be awarded as an
alternative. The payment of separation pay is in addition to payment
of backwages.

STRAINED RELATIONS DOCTRINE – it should be proven that it is


likely that if reinstated, an atmosphere of antipathy and antagonism
would be generated as to adversely affect the efficiency and
productivity of the employee concerned.

Manila Hotel Corp. v. MHICL is a corporation duly organized and existing under the Under the rule forum non conveniens, a Philippine court or agency
NLRC laws of Hing Kong. MHC is an incorporator of MHICL, owning may assume jurisdiction over the case if it chooses to do so
50% of its capital stock. By virtue of a “management provided:
JURISDICTION OF agreement” with the Palace Hotel (Wang Fu Company 1) the Philippine court is one to which the parties may
NLRC and LA Limited), MHICL trained the personnel and staff of the Palace conveniently resort to
Hotel at Beijing, China. 2) the Philippine court is in a position to make an intelligent
FORUM NON decision as to the law and facts
CONVENIENS While employed in Mazoon Printing Press in Oman, Marcelo 3) the Philippine court has or is likely to have power to enforce
Santos received a letter from General Manage of Palace its decision
Hotel offering him same position as printer, with higher 4) All incidents of the case, from the time of the recruitment to
salary. June 4, 1988 employment contract stated that it will employment to dismissal occurred outside the Philippines.
commence in Sept. 1, 1988 for a period of 2 years. In 1989,
Santos was given 1-month notice of his release from Labor Arbiters have exclusive and original jurisdiction:
employment. 1) unfair labor practices
2) termination disputes
SC: NLRC has no jurisdiction. 3) if accompanied with claim for reinstatement, wages, pay
rates, hours of work, and other terms and conditions of
The main aspects of the case transpired in two foreign employment
jurisdictions and the case involves purely foreign elements. 4) claims for actual, moral, exemplary, and other forms of
MHICL not liable because it signed the employment contract damages arising from EER
as “mere witness.” NO EER between MHICL and Santos. 5) all other claims arising from EER, except compensation,
Palace hotel has EER with Santos. SSS, Medicare, and maternity benefits. NLRC shall have
exclusive appellate jurisdiction over cases decided by Labor
Arbiter.

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Jo v. NLRC Peter Mejila worked as a barber on a piece-rate basis at The power of control refers to the existence of the power and
Dina’s Barber Shop/Windfield Barber Shop/Cesar’s Palace not necessarily to the actual exercise thereof. It is not
ABANDONMENT Barbershop. He was later on designated as private caretaker essential for the employer to actually supervise the
of the shop (addt’l honorarium of 1/3 of net income of shop). performance of duties of the employee; it is enough that the
Sometime in 1993, he turned over the duplicate keys and employer has the right to wield that power.
took all his belongings and began working as a regular
BARBER barber at Goldilocks Barbershop. He filed for a complaint for To constitute abandonment, there must be :
illegal dismissal. 1) concurrence of the intention to abandon; and
2) some overt acts from which it may be inferred that the
SC: Abandoned. He even bragged his plan to quit job. employee concerned has no more interest in working.
There must be a clear, deliberate, and unjustified refusal to
resume employment and a clear intention to sever the EER.

*What if control test exists, but the three other elements are absent?
No EER. The Court said “most important,” not the “only important.”
*So who’s the real employer? The real employer is the one who
complies with all the four. If we go to the labor contracting, it’s the
one who controls. The security agency will just be agent of the
employer.
*Theoretical question of whether it can be split? NO.

Canlubang Security Canlubang Automotive Resources Corporation (CARCO) had RIGHT-OF-CONTROL TEST – where the person for whom the
Agency Corp v. NLRC a security service contract with Canlubang Security Agency services are performed reserves a right to control not only the end to
(CSA) whereby the latter agreed to secure, guard, and be achieved but also the means to be used in reaching such as end.
RIGHT OF CONTROL protect CARCO’s properties and interest. Arsenio Bartolay, Express stipulation between CSA and CARCO.
TEST et. al filed a complaint for illegal termination against CSA and
CARCO, but later on file an MTD against CSA. It is the agency that recruits, hires, and assigns the work of its
watchmen.
SC: Contract of security service between CSA and *Written agreements are only first layers of defense. It will not
CARCO provides that, “the guards are employees of the dismiss the case outright because the Court will look into its actual
agency and NOT that of the client company. implementation.
*There was a quitclaim in this case but SC said that it was
erroneous? It is a question of fact BUT it is also a question of law.
*CSA was still held liable because the quitclaim was an erroneous
presumption and thus void.
*Court frowns upon quitclaims in employment contracts/issues
*Control does not have to be actual. Even if it shitty, it’s still control.

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Villamaria, Jr. v. CA Oscar Villamaria Jr was the owner of Villamaria Motors – The existence of an EER did not depend on how worker was paid
engaged in assembling passenger jeepneys with a public but on the presence or absence of control over the means and
BOUNDARY SYSTEM utility franchise to operate the Baclaran-Sucat route. Then he method of the employee’s work. The fact that the “boundary”
retained only nine, four operated by employing drivers on a represented installment payments of the purchase price on the
JURISDICTION OF LA “boundary basis.” jeepney did not remove the parties’ EER.
AND NLRC
Bustamante remitted 450/day as boundary and kept the For cases to be under the jurisdiction of LA and NLRC, the
DUAL residue as his compensation. In 1997, Villamaria verbally indispensable requisite is the existence of EER. The
RELATIONSHIP: agreed to sell the jeepney to Bustamante under “boundary- jurisdiction of LA and NLRC is limited to disputes arising from
VENDOR-VENDEE hulog” scheme. They agreed (Kasunduan) that if bustamante an EER.
AND EMPLOYER- failed to pay the boundary-hulog for 3 days, Villamaria would
EMPLOYEE hold on to the vehicle until Bustamante paid his arrears. The boundary system is a scheme by an owner/operator engaged
Failure to remit for a week would render their agreement in transporting passengers as a common carrier to primarily govern
ceased and Bustamante has to return the vehicle to the compensation of the driver, that is, the latter’s daily earnings are
Villamaria. He was even prohibited from driving the vehicle remitted to the owner/operator less the excess of the boundary
JEEPNEY DRIVER w/o prior authority. Bustamante failed to pay the registration which represents the driver’s compensation. The owner/operator
fees, but he was still allowed to drive. Then he failed to pay exercises control and supervision over the driver.
his boundary-hulog so the vehicle was ceased. He filed for
illegal dismissal. The fact that the driver does not receive fixed wages but only the
excess of the “boundary” given to the owner/operator is not sufficient
Villamaria argued that relationship is vendor-vendee to change the relationship between them. What is primordial is
relationship. Bustamante maintained that he remained an that owner/operator retained control over the conduct of the
employee because he was engaged to perform activities, driver.
which were necessary or desirable to Villamaria’s trade or
business. Well-settled is the rule that the employer has the burden of
proving that the dismissal of an employee is for a just cause.
SC: DUAL RELATIONSHIP; EER AND VENDOR-VENDEE The failure of the employer to discharge this burden means that the
RELATIONSHIP dismissal is not justified and that the employee is entitled to
reinstatement and backwages.

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Philippine Global Ricardo De Vera, a physician offered his service to PhilCom, The power to terminate the parties’ relationship was mutually vested
Communications v. De proposing his plan of works required of a practitioner in on both. Absent is the element of control, whereby the employer has
Vera industrial medicine for a period of one year. For the next two reserved the right to control the employee not only as to the result of
years, extension was only made verbally. In 1996, Philcom the work done but also as to the means and methods by which the
RETAINERSHIP sent a letter advising him of the termination of the same is to be accomplished.
CONTRACT retainership contract because management decided that it’d Art. 280:
be more practical to provide medical service to its employees Regular employee – engaged to perform in the usual business or
through accredited hospitals. De Vera filed a complaint for trade of the employe
illegal dismissal. Project employee – fixed for a specific project or undertaking the
DOCTOR completion or termination of which has been determined at the time
SC: NO EER; independent contractor; of the engagement of the employee; work is seasonal in nature
It was De Vera himself who sets the parameters of what his
duties would be in offering his services to PhilCom. It did not Any agreement may provide that one party shall render services for
have control over the schedule of De Vera as it is the latter and in behalf of another, no matter how necessary for the latter’s
who is proposing his own schedule and asking to be paid for business, even without being hired as an employee – independent
the same. He was never included in payroll; no SSS contractor.
deductions.
*If you’re a doctor/employee, you cannot be an employee because
they cannot control your work? NO. Employer can still set
parameters as to how you conduct your work. Because even if
employer is non-lawyer, he can still be under the control of the
employer.

Chavez v. NLRC Pedro Chavez is employed by Supreme Packaging WAGES – remuneration or earnings, however designated, capable
(manufacturing cartons and other packaging materials) as of being expressed in terms of money, whether fixed or ascertained
truck driver, delivering Supreme’s products from its factory in on a time, task, piece, or commission basis, or other method of
TRUCK DRIVER Mariveles to various customers in Manila. (He can only park calculating the same, which is payable by an employer to an
WITH SPECIFIC in Makati and Bataan) employee under a written or unwritten contract of employment for
INSTRUCTIONS ON work done or to be done, or for service rendered or to be rendered.
DELIVERY Chavez wanted to avail of the benefits that regular
AND employees were receiving (OT pay, nightshift differential, and Under the Rules Implementing the Labor Code, every employer is
th
13 -month). Later, he filed a complaint for regularization in required to pay his employees by means of payroll.
the Regional Arbitration, but he was terminated before case
could be heard. He filed for illegal dismissal, unfair labor INDEPENDENT CONTRACTOR – One who carries on a distinct
practice, and non-payment of overtime pay. Supreme and independent business and undertakes to perform the job, work,
averred that Chavez was an independent contractor. or service on its own account and under its own responsibility
according to its own manner and method, free from the control and

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Supreme: Chavez has sole control over the means and direction of the principal in all matters connected with the
methods by which his work is accomplished. He paid the performance of the work except as to the results thereof.
wages of his helpers and exercised control over them.
TWO FACTORS IN ABANDONMENT:
SC: EER. Illegally dismissed. All four elements are present in 1) Failure to report for work or absence without valid or
the case. justifiable reason
1) Supreme engaged the services of the petitioner w/o 2) Clear intention to sever EER
the intervention of third party
2) Chavez was paid on a per trip basis but that does not Negligence, to warrant removal from service, should not
make him an IC merely be GROSS but also HABITUAL.
3) Power to dismiss was inherent when he was
dismissed
4) He did not even own the truck. He was given specific
instructions when it comes to the chronological order
and order of priority of delivery.

Francisco v. NLRC Angelina Francisco was hired by Kasei Corp during In addition to the standard of right-of-control, the existing economic
incorporation as Accountant and Corporate Secretary. She conditions prevailing between the parties, like the inclusion of the
TWO-TIERED TEST: was also designated as Liaison Officer to Makati City to employee in the payrolls, can help in determining the existence of
CONTROL TEST AND secure business permits, construction permits, and other EER.
ECONOMIC licenses for initial operation of company. Then designated as
DEPENDENCY TEST Acting Manager. She was replaced by Liza Fuentes and she There are instances when, aside from the employer’s power to
alleged that she was required to sign a prepared resolution control the employee with respect to the means and methods by
for her replacement but she was assured that she is still which the work is to be accomplished, economic realities of the
connected with Kasei; reduced her salary employment relations help provide a comprehensive analysis
of the true classification of the individual. The better approach
ACTING MANAGER Kasei said that she has no daily time record; never interfered would therefore be to adopt a two-tiered test involving:
REDUCED SALARY with her work; did not go through the usual procedure of 1) the putative employer’s power to control the employee with
selection. Her consultancy depended solely upon the will of respect to the means and methods by which the work is to
the management and her services as a “technical consultant” be accomplished
were only temporary and dependent on the needs of the 2) the underlying economic realities of the activity or
corp. relationship

SC: EER The proper standard of economic dependence is whether the


worker is dependent on the alleged employer for his continued
employment (as a means of livelihood) in that line of business.
The determination of the relationship between employer and

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


employee depends upon the circumstances of the whole
economic activity:
1) extent to which the services performed are an integral part
of the employer’s business
2) extent of the worker’s investment in equipment and facilities
3) nature and degree of control exercised by the employer
4) worker’s opportunity for profit and loss
5) the amount of initiative, skill, judgment or foresight required
6) permanency and duration of the relationship between the
worker and the employer
7) degree of dependency of the worker upon the employer for
his continued employment in that line of business

CONSTRUCTIVE DISMISSAL – involuntary resignation resulting in


cessation of work resorted to when continued employment becomes
impossible, unreasonable or unlikely; when there is demotion in rank
or a diminution in pay; or when a clear discrimination, insensibility or
disdain by an employer becomes unbearable to an employee.

*In such instances when Court is genuinely confused whether


individual is employee or not, the test of the control test is the
economic reality/dependency test.
*Which would prevail? Control test or economic reality? What if it
fails control test and passes economic dependency? Control test.
Economic reality shall be applied only when there is confusion as to
the existence of control.

Orozco v. Fifth PDI engaged the services of Wilhelmina Orozco for its The significant factor in determining the relationship of the parties is
Division CA weekly Lifestyle column. She religiously submitted her work, the presence or absence of supervisory authority to control the
except for her 6-month New York sting wherein she still sent method and the details of performance of the service being
EXTENT OF several articles. She was told that her column will not be rendered, and the degree to which the principal may intervene to
CONTROL published anymore because her column failed to improve exercise such control.
and superficially poorly written. She filed a complaint for
PHIL. DAILY illegal dismissal, backwages. The test is whether the employer controls or has reserved the
INQUIRER right to control the employee, not only as to the work done, but
COLUMNIST SC: NO EER. The terms of works were arbitrarily also as to the means and methods by which the same is
decided upon by PDI. accomplished.

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Orozco has not shown that PDI dictated how she was to write The main determinant therefore is whether the rules set by the
or produce her articles, only space allocation. But her employer are meant to control not just the results of the work but
creativity, manner, and style are not controlled. also the means and method to be used by the hired party in order to
The control was only to the finished products of her efforts. achieve such results.
Economic Reality Test applied: Her main occupation is not
that of a columnist, but a women’s rights advocate. She also NO EER where a person who works for another perform his job
contributes articles to other publications. - more or less at his own pleasure,
- in the manner he sees fit,
- not subject to the definite hours or conditions of work
- compensated according to the result of his efforts and not
the amount

SSS v. CA Margarita Tana, widow of the late Ignacio Tana, alleged that EMPLOYEE:
her husband was an employee of Conchita Ayalde as a - any person who performs services for an employer
DEFINITION OF farmhand in 2 sugarcane plantations she owned (La Carlota). - which either or both mental and physical efforts are used
EMPLOYEE He regularly received minimum wage, SSS contributions and and
medicare were deducted from his wages. SSS revealed that - who receives compensation for such services
neither Ayalde nor her administrator, Maghari, was registered
as members-employers of SSS. Ayalde belied Tana’s No particular form of evidence is required to prove the existence of
FARMHAND accusations and said that Tana was an IC, intermittently EER. Any competent and relevant evidence to prove the relationship
EMPLOYEE hired to plow, harrow, or burrow. may be admitted.

SC: EER. Tana cannot be an IC because:


- He was not engaged in a distinct occupation or
business
- He was not independently engaged in the
farming/plowing
- He has been working exclusively for Ayalde for 18
years

Tongko v. The 2008 SC decision: EER between Manulife and Gregorio Generally, the determinative element is the control exercised
Manufacturers Life Tongko and latter was illegally dismissed over the one rendering service. The employer controls the
Insurance Co. Inc. employee both in the results and in the means and manner of
(Manulife) 1977: Career Agent’s Agreement – “Agent is an achieving this result. The principal in agency relationship, on
independent contractor and no EER is created and ay be the other hand, also has the prerogative to exercise control
CONTROL IN EER v. terminated for any breach.” over the agent in undertaking the assigned task based on the

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


CONTROL IN 1983: Unit Manager à Branch Manager à Regional Sales parameters outlined in the pertinent laws.
PRINCIPAL-AGENT Manager
RELATIONSHIP BUT Tongko consistently declared himself as self-employed Guidelines indicative of Labor Law “control” should not merely relate
in his income tax returns (business income). Manulife to the mutually desirable result intended by the contractual
withheld 10% tax on earnings. relationship; they must have the nature of dictating the means or
LEAD INSURANCE 2001 first letter: concerns on his performance as an agent methods to be employed in attaining the result, or of fixing the
AGENT 2001 second letter: terminated Tongko’s services. methodology and of binding or restricting the party hired to the use
Tongko filed a complaint for illegal dismissal and alleged that of these means.
he has a regular compensation, exclusive of commissions
and bonuses. Dissenting:
Manulife: He has no fixed wage or salary; paid commissions CARPIO-MORALES: An agent may be an employee at the same
of varying amounts, computed based on premium; pointed time. Even in the absence of a subsequent management contract.
out Tongko’s declarations in his ITR. Control on Tongko was evident on the memo which said that “it
reserves right to impose improvement.”
SC 2008: EER – “If evidence exists showing that the VELASCO: It should be resolved in favor of labor. A stipulation in an
company promulgated rules or regulations that effectively agreement can be ignored as and when it is utilized to deprive the
controlled or restricted an insurance agent’s choice of employee of his security of tenure.
methods or the methods themselves in selling insurance,
EER is present.” Manulife filed MR. *Can a person be both an agent and employee? YES. But this is not
SC 2010: REVERSED. NO EER. Tongko essentially the case here RAW.
remained as an insurance, but through recognition from
Manulife to use othe ragents, he could be labeled as “lead
agent”

An agency relationship prevails in the insurance


industry for the purpose of selling insurance.

Singer Sewing Singer Sewing Machine Company-Singer Machine Collectors COLLECTION AGENCY AGREEMENT – defines the relationship
Machine Company v. Union Baguio filed a direct certification as the sole and between the Company and each of the union members who signed
Drilon exclusive bargaining agent of all collectors of the company. a contract.
The Company opposed the petition mainly on the ground that
EXTENT OF the union members are actually not employees but are IC as
CONTROL evidenced by the collection agency agreement, which they
signed.
UNION OF SC: NO EER.
COLLECTING
AGENTS

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


The Agreement:
- Confirms the status of collecting agent as
independent contractor (explicitly described)
- Provisions permit him to perform collection services
for the company without being subject to the control
of the latter except only as to the result of the work.
- Standard receipt and report forms are intended to
facilitate order in office procedures.
- The Company take control ONLY over the amount of
collection (just results)

Mafinco Trading Corp. Cosmos Factoy (Malabon, Rizal) appointed Mafinco Trading FACTORS TO CONSIDER IN IC:
v. Ople Corp. as it sole distributor of Cosmos soft drinks in Manila – - whether contractor is carrying on an independent business
contract between Repomanta and Moralde and Mafinco to - work is part of employer’s business; nature & extent of work
PEDDLING “buy and sell.” Contract will remain in force for 1-yr unless - term and duration of relationship
CONTRACT sooner terminated by either party upon 5 days’ notice to the - right to assign performance of work
other. - power to terminate relationship

Peddling Contract: “drive the truck furnished to him by


MAFINCO; should he employ drivers/helpers, such will be
under his direction and responsibility.” Contract was later on
terminated.

CIR and NLRC: NO EER


DOLE Sec: EER – A person who possesses no capital or
money of his own to pay his obligations to his workers but
relies entirely upon the contract price to be paid by the
company, falls short of the requisites necessary for an IC.
DOLE Committee: NO EER
- Selection of peddlers who will buy and sell Cosmos
products is left entirely between the parties and not
sole prerogative of only one party
- Dealer’s Discount is not in the nature of wages
because not paid periodically and it varies monthly
- Hiring and Firing is a prerogative of the Peddlers and
not Cosmos nor Mafinco. There was no compulsion
to report to work.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


- Mafinco provides for the truck BUT peddlers sell
products according to their own methods.
SC: NO EER

Besa v. Trajano Kaisahan ng Manggagawang Pilipino (KAMPIL), a legitimate It is important in the determination of who shall be included in a
labor union duly registered with DOLE filed a Petition for proposed bargaining unit because it was sine qua non. The
Certifiication Election. Besa (Besa’s Custombuilt Shoes) fundamental and essential condition that a bargaining unit be
SHOESHINER v. opposed and alleged that there is no EER. composed of employees. Failure to establish this juridical
PIECE WORKER relationship between the union members and the employer affects
If shoeshiners are not employees, the petition for certification the legality of the union itself.
election must be dismissed because of failure to comply with
mandatory requirement that 30% of employees must support The shoe shiner is distinct from a piece worker because while
the petition (must have majority valid votes) the latter is paid for work accomplished, he does not
contribute anything to the capital of the employer. The
SC: NO EER. Shoeshiners not employees. employer pays the wages of the piece worker. The shoeshiner
is paid directly by customer. The shoeshiner can take his share
of proceeds everyday if he wanted to or weekly.

Tan v. Lagrama Leovigildo Lagrama is a painter, making ad billboards and Payment by result is a method of compensation and does not define
murals for motion pictures shown at Empress, Supreme, and the essence of the relation. It is a method of computing
Crown Theatre for more than 10 yrs. Rolando Tan is the compensation, not a basis for determining the existence or absence
president of Supreme Theater Corp and GM of Crown and of EER.
Empire. Lagrama was summoned one day, scolded for
PAINTER OF
AD BILLBOARDS “urinating” in his work area and was fired. Lagrama filed a The primary standard for determining regular employment is
complaint for illegal dismissal. the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or
SC: EER. business of the employer.
- Tan engaged the services of Lagrama w/o
intervention of third party. Bureau of Working Conditions classifies workers paid by results:
- Performed his work under the control and 1) Those whose time and performance is supervised by the
supervision of Tan employer. Involves the element of control and supervisions
- There is reasonable relation to the job of Lagrama over the manner the work is to be performed.
painting billboards to let people know what movie is 2) Those whose time and performance is unsupervised by the
shown in the movie theater employer.

*NOTE: FLJ asked as to take note of Footnote #18 in the additional


case, Aurora Land v. NLRC. “It should be borne in mind that the

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


power of control refers merely to the existence of the power and not
to the actual exercise thereof. It is not essential for the employer to
actually supervise the performance of duties of the employee; it is
enough that the former has a right to wield the power.”

REGULAR v. CASUAL v. SEASONAL v. PROBATIONARY v. FIXED-TERM


Peninsula Manila v. A 24-hour clinic in Peninsula Manila is operating with 3 An employment is deemed regular when the activities performed by
Alipio regular nurses; Alipio is a reliever nurse for 4 yrs. She asked the employee are usually necessary or desirable in the usual
th th
for her 13 month pay in 1997. She was given her 13 month business of the employer. Any employee who has rendered at least
pay for 1997, but not for 1993-1996. 1-yr of service, even though intermittent, is deemed regular with
REGULAR respect to the activity performed.
EMPLOYEE BY When asked regarding her payslip vouchers, she told her Regular employees enjoy security of tenure.
NATURE OF WORK that she made copies of them because Manila Pen does not
give her copies. She was subsequently dismissed for Valid dismissal:
obtaining her own payslips and allegedly serious misconduct. 1) For any causes mentioned inArt. 282 (serious misconduct or
She filed a complaint for illegal dismissal and payment of her willful disobedience, gross and habitual neglect, Fraud or
th
past 13 month pay benefits. willful breach, commission of a crime or offense
RELIEVER 2) Employee must be given opportunity to be heard and
NURSE SC: illegally dismissed defend himself.
FOR 4 YRS Misconduct - forbidden act or dereliction of duty

*status of employment – regular; can it be both kinds? No. she fell


under the first category. She is regular because of the nature of her
work, since day 1. The other category is for casual employees.

Kimberly-Clark v. KILUSAN-OLALIA is the new union. They challenged the Workers become regular employees, by operation of law,
DOLE Sec. incumbency of UKCEO by filing a petition for certification which is one year after they were employed. While the actual
election. The latter won by a margin of 20 votes so regularization entails mechanical act of issuing regular appointment
KILUSAN-OLALIA challenged the 64 ballots of allegedly papers, the status of regular employment attaches to the casual
REGULAR “casual workers.” Later on a MOLE Order was issued stating workers on the day immediately after the end of his first year of
EMPLOYEE BY that the casual workers, excluding janitorial, have attained service.
PERIOD regular status.
So the reckoning point is his hiring date.
What is the reckoning point in determining who among the
casual employees are entitled to regularization?
St. Mary’s University Marcelo Danelo was teaching in the school from 1992-1995. Full-time teachers who have satisfactorily completed their
v. CA He was not given a teaching assignment in 1999-2000. probationary period shall be considered regular or permanent. The

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Defense alleges that Danelo merely part-time because aside probationary period shall not be more than 6 consecutive regular
from 3 semesters, he only teaches less than 18 units. semesters of satisfactory service for those in the tertiary level.
TEACHERS
SC: Except for four non-consecutive terms, respondent For a private school teacher to acquire permanent status:
generally carried a load of twelve units or less from 1992 to 1) full-time
PART-TIME
1999. There is also no evidence that he performed other 2) rendered 3 consecutive years of service
TEACHERS
functions for the school when not teaching. Since there is no 3) service has been satisfactory
showing that respondent worked on a full-time basis for at DECS: 15-24 units, full time. Part-time, 12 units.
least three years, he could not have acquired a permanent
A part-time employee does not attain permanent status no
status
mater how long he has served in the school. His services could
be terminated by the school without being held liable for illegal
dismissal. Two-notice dismissal rule cannot be invoked.

The school could not lawfully terminate a part-timer before the end
of the agreed period without just cause. But once the period,
semester, or term ends, there is no obligation on the part of the
school to renew the contract of employment for the next period,
semester, or term.

*Are the rules in the previous two cases not applicable in this case?
While there is a general test of whether necessary or desirable, it is
not applicable in the case of teachers, because what is applicable
here is the test of their load.
*Normally, employees claim regular employment and employers
deny. Why? Regular employees enjoy security of tenure.
*How do you reconcile? You don’t.
*First kind of regular employee – regular employee because of
nature of work (usually necessary or desirable); security of tenure
from the moment of hiring
Second kind – regular employee because of the length of time even
though work may only be incidental to the trade or business;
security of tenure only upon regularization.
*regular employee with respect to the activity? If the business is
barbershop, the regular employees are the barbers (usually
necessary or desirable); if the barbershop has a garden and
engaged the services of a gardener – casual employee, even if he is

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


not there the business wil continue. But if he is employed,
continuous or broken, as a gardener à regular casual. Therefore,
barbers are regular by nature of work (dismissed only for authorized
cause). Gardener can be terminated only for just and authorized
cause. Owner cannot hire someone else because it’s his work.
*if the activity ceases, there will be a valid cause to terminate. If
nagkaroon ng toxic that requires a different set of skill, hindi mo
pwede irequire yung employer to employ you.

Robinsons Galleria v. Ranchez was a probationary employee for 5 mos as a There is probationary employment when the employee upon his
Ranchez cashier. 2 weeks after, she reported loss of 20,000 in the engagement is made to undergo a trial period during which the
company locker. Although she owed the responsibility, an employer determines his fitness to qualify for regular employment
PROBATIONARY information for Qualified Theft was filed against her. She was based on reasonable standards made known to him at the time of
EMPLOYEE also strip-searched and stayed in jail for two weeks. She filed engagement.
a complaint for illegal dismissal and damages
A probationary employee, like a regular employee, enjoys security of
R: She wasn’t dismissed yet when she filed complaint. Strip tenure. However, in cases of probationary employment, aside from
PROBATIONARY search was just investigation. just or authorized causes of termination, an additional ground is
CASHIER provided under Article 281 of the Labor Code, i.e., the probationary
SC: Robinsons failed to accord her substantive and employee may also be terminated for failure to qualify as a regular
procedural due process. She was constructively dismissed It employee in accordance with reasonable standards made known by
was unreasonable to charge her with abandonment when the employer to the employee at the time of the engagement.
she didn’t return to work after being jailed.

Ranchez was a probationary employee at the time she was Valid dismissal:
constructively dismissed by petitioners, she is entitled to 1) just cause
separation pay and backwages. the backwages that should 2) authorized cause
be awarded to respondent shall be reckoned from the time of 3) fails to qualify as regular employee based on standards
her constructive dismissal until the date of the termination of known to her
her employment. The lapse of her probationary
employment without her appointment as a regular Where no standards are made known to an employee at the time,
employee of petitioner Supermarket effectively severed he shall be deemed as regular employee
the employer-employee relationship between the
parties. The due process requirements under the Labor Code are mandatory
and may not be supplanted by police investigation or court
proceedings. The criminal aspect of the case is considered
independent of the administrative aspect. They are mandated to

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


conduct their own separate investigation, and to accord the
employee every opportunity to defend himself.

*The employer must prove that the employee agreed and justifiable
reasons.
*Can probationary period be extended? Yes, if employer wants to
give one more chance or longer period to prove himself or if
technical in nature and the nature of work requires specific set of
skills or training.
*4 self-descriptive – maid, cook, driver, messenger
*How do you count 1 year? It has to be 365 days (general). But
there are instances when SC said after such lapse of time, even if
sum is not 365 days, considered the individual regular?

Canadian Dalangin was hired as Immigration and Legal Manager, The essence of a probationary period of employment fundamentally
Opportunities v. screening clients’ applications for immigration to Canada to lies in the purpose or objective of both the employer and the
Dalangin Jr. ensure that they are in accordance with Canadian and PH employee during the period. While the employer observes the
laws. Just a month after, he was terminated for being “unfit: fitness, propriety and efficiency of a probationer to ascertain whether
PROBATIONARY and “unqualified” because of utter disregard to company he is qualified for permanent employment, the latter seeks to prove
PERIOD policies and lack of concern for company’s interest for failing to the former that he has the qualifications to meet the reasonable
to attend the required Values Formation Seminar. He filed for standards for permanent employment.
illegal dismissal claiming that he was not afforded a
reasonable time to defend himself before he was dismissed.

Defense claims that he was advised that he was under


STUBBORN probation for six months and his employment could be
MANAGER terminated should he fail to meet the standards to qualify him
as a regular employee. CA did not believe that the employee
can be evaluated In just a month.

SC: Validly dismissed. The company’s finding that Dalangin


failed to meet its standards for regular employment was
supported by substantial evidence. However, The notice
served on him did not give him a reasonable time, from the
effective date of his separation, as required by the rules. He
was dismissed on the very day the notice was given to him.
But this is not enough to invalidate termination.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Aliling v. Feliciano Wide Wide World Express Corporation offered to employ Article 282 of the Labor Code considers any of the following acts or
Aliling as Account Executive in the Seafreight Sales. Offer omission on the part of the employee as just cause or ground for
came with a 6-month probation period. Performance shall be terminating employment:
REASONABLE made as basis for confirmation to regular status. But he was - Serious misconduct or willful disobedience by the employee
STANDARDS asked to handle a different department and later expressed of the lawful orders of his employer or representative in
NOT MADE KNOWN dissatisfaction with his performance. Filed illegal dismissal connection with his work;
TO EMPLOYEE because he was forced to resign. - Gross and habitual neglect by the employee of his duties;
- Fraud or willful breach by the employee of the trust reposed
WWWEC claims that said dismissal is due to non- in him by his employer or duly authorized representative;
satisfactory performance; that employment contract provides - Commission of a crime or offense by the employee against
that “upon the effectivity of your probation, you and your the person of his employer or any immediate member of his
immediate superior are required to jointly define your family or his duly authorized representatives; and
objectives…your performance shall be reviewed on the 3rd - Other causes analogous to the foregoing.
month to assess your competence and work attitude. Failure
to meet the job requirements during the probation stage Failure to observe prescribed standards of work, or to fulfill
means that your services may be terminated without prior reasonable work assignments due to inefficiency may constitute just
notice and without recourse to separation pay.” cause for dismissal. Such inefficiency is understood to mean failure
to attain work goals or work quotas, either by failing to complete the
SC: He was not informed of the reasonable standards by same within the allotted reasonable period, or by producing
which his probationary employment was to be judged. unsatisfactory results. This management prerogative of requiring
WWEC did not make known the reasonable standards under standards may be availed of so long as they are exercised in good
which he will qualify as a regular employee at the time of his faith for the advancement of the employer’s interest.
engagement. Hence, he was deemed to have been hired
from day one as a regular employee. While probationary employees do not enjoy permanent status, they
enjoy the constitutional protection of security of tenure. They can
only be terminated for cause or when they otherwise fail to meet the
reasonable standards made known to them by the employer at the
time of their engagement.

Carvajal v. Luzon Mylene Carvajal was employed as a trainee-teller by Luzon In all cases of probationary employment, the employer shall make
Development Bank Dev‘t Bank under a 6-month probationary employment. Later, known to the employee the standards under which she will qualify
Bank sent her a Memorandum directing her to explain in as a regular employee at the time of his engagement. Where no
REASONABLE writing why she should not be subjected to disciplinary action standards are made known to the employee at that time, he shall be
STANDARDS OF for “chronic tardiness” (8 times). She was later informed that deemed as regular employee.
COMMON her employment was terminated effective a month after
KNOWLEDGE employment for reasons: not an effective frontliner, A probationary employee, like a regular employee, enjoys a security
mistakenly cleared a check, tardiness, absenteeism, of tenure.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


shortage. She complained for illegal dismissal.
Punctuality is a reasonable standard imposed on every employee,
CA: reversed; Carvajal not entitled to backwages because whether in government or private sector. Satisfactory performance is
she was rightfully dismissed for failure to meet the and should be one of the basic standards for regularization.
employment standards.
SC: Not regular. At the time of her engagement, she was *Exceptions to the rule that employer is required to make reasonable
informed in writing of the standards necessary to qualify her standards known
as a regular employee. *mere inefficiency is not an enough ground to terminate a regular
employee; has to be gross and habitual

Abbott Laboratories v. Alcaraz was employed as Regulatory Affairs Manager on a An employer is deemed to have made known the standards that
Alcaraz (2013) probationary basis. With his organizational chart and job would qualify a probationary employee to be a regular employee
description of Alcaraz’s work. She was also briefed on her when it has exerted reasonable efforts to apprise the employee of
duties and responsibilities during orientation. She was also what he is expected to do or accomplish during the trial period of
sent an e-mail, which contained an explanation of procedure probation. The exception is when the job is self-descriptive in
for evaluating the performance of probationary employees. nature, or instance in the case of maids, cooks, drivers, or
The standard procedure of evaluation involves two reviews: messengers.
first on the third month and second on the fifth month from
date of employment. She was later called to a meeting and Adequate performance of one’s duties is, by and of itself, an
she was informed that she failed to meet the regularization inherent and implied standard for a probationary employee to be
standards for the position of Regulatory Affairs Manager. She regularized; assessment of adequate performance is in the nature of
was requested to tender her resignation, else they be forced management prerogative which when reasonably exercised, should
to terminate her services. be respected.

The usual two-notice rule does not govern in the termination of a


probationary employee for reason of failure to meet regularization
standards; it shall be sufficient that a written notice is served within a
reasonable time from the effective date of termination. Once an
employer established an express personnel policy and the
employee continues to work while the policy remains in effect, the
policy is deemed an implied contract for so long as it remains in
effect. If the employer unilaterally changes the policy, the terms of
the implied contracts are also thereby changed.

*Abbott case: two-dismissal case does not apply (SC).


*The correct rule settled: If you’re probationary and reason for
termination is failure to meet standards, only one notice will suffice.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


PERO DAPAT MAY AT LEAST ONE-DAY ALLOWANCE. Kasi dito,
pinaalis the same day the notice was served. However, if you
terminate the employee because of just cause or authorized cause,
two-notice must apply.

Abbott Laboratories v. There was no effort at all was ever made for the conduct of The performance standards to be met are the employer’s specific
Alcaraz (Brion, an assessment or evaluation of the respondent’s expectations of how the probationary employee should perform.
dissenting) performance. There was no evidence of any performance Knowledge of duties and responsibilities is different from the
standard furnished the respondent so that the ponencia could measure of how these duties and responsibilities should be
only deduce the existence of performance standards from its delivered. Not only must there be express performance standards,
assumptions and stretched realizations. there must be effective communication.

Abbott Laboratories v. SC Resolution: It is not the probationary employee’s job The employer cannot bear out in exacting detail at the beginning of
Alcaraz (2014) description but the adequate performance of his duties and the engagement what he deems as “quality work” especially since
responsibilities, which constitutes the inherent and implied the probationary employee has yet to submit the required output. In
EXCEPTION TO standard for regularization. The determination of “adequate the ultimate analysis, the communication of performance standards
STANDARDS performance” is not measurable by quantitative specification. should be perceived within the context of the nature of the
REQUIRED TO BE It is also hinged on the qualitative assessment of the probationary employee’s duties and responsibilities.
MADE KNOWN employee’s work; by its nature, this largely rests on the
reasonable exercise of the employer’s management *Abbott (exceptions): he is manager, and that you have informed
SELF-DESCRIPTIVE prerogative. him of his responsibilities
JOBS *General rules on reasonable standards: has to be given at the time
of engagement
REGULATORY *exception: self-descriptive, maid, cooks, driver, messengers
AFFAIRS
*Brion: Agrees that there is an exception. But this case is a manager
MANAGER
2nd Abbott: even managers, lawyers, artists, journalists

Filipinas Pre- Roger Puente was initially hired as an installer, then Without a valid cause, the employment of project employees cannot
fabricated v. Puente promoted to mobile crane operator. His work was not be terminated prior to expiration. Otherwise, they shall be entitled to
dependent on the completion or termination of any project; reinstatement with full back wages. However, if the project or work is
PROJECT continuous and without interruption for the past 10 yrs. He completed during the pendency of the ensuing suit for illegal
EMPLOYEE was then dismissed from his employment allegedly because dismissal, the employees shall be entitled only to full back wages
he was a project employee. from the date of the termination of their employment until the actual
10 YEARS completion.
PROJECT SC: The contracts of employment of Puente attest to the fact
EMPLOYEE
that he was hired for specific projects. His employment was Indicators of project employment (either one or more):
coterminous with the completion of the projects for which he 1) Duration of the specific/identified undertaking for which the

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


had been hired. Those contracts expressly provided that his worker is engaged is reasonably determinable.
tenure of employment depended on the duration of any 2) Such duration is defined in an employment agreement and
phase of the project or on the completion of the construction is made clear to the employee at the time of hiring
projects. 3) The work/service performed by the employee is in
connection with the particular project for which he is
The fact that he was employed in Filsystems for 10 years did engaged.
not ipso facto make him a regular employee. The mere 4) The employee while not employed and awaiting
rehiring of respondent on a project-to-project basis did not engagement, is free to offer his services to any other
confer upon him regular employment status. employer.
5) The termination of his employment in the particular project
Filipinas Pre-fabricated regularly submitted to the labor is reported to DOLE within 30 days following the date of
department reports of the termination of services of project separation from work.
workers. 6) An undertaking in the employment contract by the employer
to pay completion bonus to the project employee as
Although the employment contract did not state a particular practiced by most construction companies.
date, it did specify that the termination of the parties’
employment relationship was to be on a “day certain” – day A “day” is understood to be that which must necessarily come,
when the phase f work termed “Lifting & Hauling of Materials” although is may not be known exactly when. This means that where
for the “World Finance Plaza” project would be completed. the final completion of a project or phase thereof in fact
determinable and the expected completion is made known to the
HOWEVER, with regard specifically to the last employment employee, such project employee may not be considered regular.
contract executed by the parties, he was working at the site
of the World Finance Plaza project. There was no proof that
the project was already completed when he was terminated.
He is entitled to reinstatement with full back wages. However,
if the project was completed during the pendency of this
case, he is only entitled to the equivalent of his salaries and
other employment benefits.

Gadia v. Sykes Asia Sykes Asia is a corporation engaged in BPO. In 2003, Alltel A project employee is assigned to a project which begins and ends
Communications contracted Sykes to accommodate the at determined or determinable times. The services of employees
PROJECT needs and demands of its clients for its postpaid and prepaid who are hired as “project-based employees” may be lawfully
EMPLOYEE v. services. Sykes Asia hired Gadia et. al as customer terminated at the completion of the project.
REGULAR representatives, team leaders, and trainers for Alltel Project.
EMPLOYEE When Alltel terminated its contract with Sykes, Sykes sent The principal test for determining whether particular employees are
end-of-life notices to Gadia et. al, informing them of their properly characterized as “project-based” as distinguished from
dismissal from employment due to termination of contract. “regular” is whether or not the employees were assigned to carry out

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


They filed for complaints for illegal dismissal. a “specific project” or undertaking,” the duration (and scope) of
which were specified at the time they were engaged for that project.
SC: Project employees hired exclusively for Alltel Project

Omni Hauling Services Omni Hauling Services was awarded a 1-year service Employers claiming that their workers are project employees should
v. Bernardo Bon contract by the local government of Quezon City to provide not only prove that the duration and scope of the employment was
garbage hauling service. Omni hired respondents as garbage specified at the time they were engaged, but also that there was
truck drivers and paleros who were then paid on a per trip indeed a project.
basis. Thy were required to sign employment contracts which
provided that they will be “rehired” only for the duration of the Even though the absence of a written contract does not by itself
same period. However, respondents refused to sign, claiming grant regular status to respondents, such a contract is evidence that
that they were regular employees since they were engaged respondents were informed of the duration and scope of their work
to perform activities which were necessary and desirable to and their status as project employees; where no other evidence was
Omni’s usual business or trade. offered, the absence of the employment contracts raises a serious
question of whether the employees were properly informed of their
SC: Regular employees by operation of law. Records are employment status as project employees at the time of their
bereft of any evidence to show that respondents were engagement.
made to sign employment contracts explicitly stating
that they were going to be hired as project employees.
Neither is petitioners’ allegation that respondents were
duly apprised of the project-based nature of their
employment. The logical conclusion is that respondents
were not clearly and knowingly informed of their
employment status. The presumption of regular
employment should be accorded in their favor.

Hacienda Bino v. Hacienda Bino is a 236-hectare sugar plantation located at To be excluded from those classified as regular employees, it
Cuenca Brgy. Orong, Kabankalan City, Negros Occidental. 76 is not enough that they perform work or services that are
respondents were part of the workforce performing various seasonal in nature. They must have been employed only for
GENERAL RULE FOR works such as cultivation, planting, fertilization, weeding, the duration of the season.
SEASONAL harvesting. During off-milling season, they received a Notice
EMPLOYEES which says that all those who signed in favor of CARP are
expressing their desire to get out of employment on their own
volition. Regarded as termination of their employment, they
filed a case for illegal dismissal. Petitioner insists that they
are mere seasonal employees and stare decisis applies from
the case of Mercado.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


SC: The area of the hacienda simply does not allow for
respondents to work for a definite period only.

The primary standard for determining regular employment is


the reasonable connection between the particular activity
performed by the employee in relation to the usual trade or
business of the employer. There is no doubt that the
respondents were performing work necessary and desirable
in the usual trade or business of an employer. Hence, they
can properly be classified as regular employees.

*Mercado Sr. v. NLRC Mercado et al were agricultural workers utilized by Aurora The second paragraph of Art. 280 demarcates as “casual
Cruz in all the agricultural phases of work on 7 ½ hectares of employees,” all other employees who do not fall under the definition
EXCEPTION TO rice land and 10 hectares of sugar land. They were allegedly of the preceding paragraph. The proviso, in said second paragraph,
REGULAR illegally dismissed from employment. deems as regular employees those “casual employees” who have
SEASONAL rendered at least one year of service regardless of the fact that such
Cruz averred that she engaged their services but only to do a service may be continuous or broken.
particular phase of agricultural work necessary in rice
production and/or sugar can production, after which they The second paragraph in Art. 280 was not designed to stifle small-
would be free to render services to other farm owners who scale businesses nor to oppress agricultural land owners to further
need their services. the interest of laborers, agricultural or industrial. The provision is
applicable only to employees who are deemed “casuals” but not to
SC: They are only required to perform phases of agricultural “project” employees.
work for a definite period, after which their services are
available to any farm owner, such that the planting of rice
and sugar cane thereon could not possibly entail a whole
year operation. Although Cruz constantly availed herself of
the petitioners’ services from year to year, it was clear from
the facts therein that they were not in her regular employ.
Petitioners therein performed different phases of agricultural
work in a given year. However, during that period, they were
free to work for other farm owners, and in fact they did. In
other words, they worked for respondent, but were
nevertheless free to contract their services with other farm
owners.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


*Universal Robina v. URSUMCO is engaged in the sugar cane milling business. At The length of time (or the continuous rehiring of the employee even
Acibo the start of their respective engagements, Acibo et al signed after the cessation of the project) may serve as a badge of regular
employment contracts for a period on 1 month or for a given employment when the activities performed by the purported project
SUMMARY OF ALL season. They are repeatedly hired and for every employee are necessary and indispensable to the usual business or
KINDS OF engagement, required the latter to sign new employment trade of the employer.
EMPLOYEES contracts for the same duration. The filed a complaint for
regularization. Seasonal employees:
- performs work or services that are seasonal in nature
SC: REGULAR SEASONAL EMPLOYEES: - employed for the duration of the season.
SUGAR CANE - made to perform various tasks that did not at all
MILLERS pertain to any specific phase of strict milling Hence, when the seasonal workers are continuously and repeatedly
EMPLOYED operations that would ultimately cease upon hired to perform the same tasks or activities for several season or
EVERY MONTH completion of a particular phase even after the cessation of the season, this length of time may
- regularly and repeatedly hired to perform the same likewise serve as badge of regular employment.
tasks year after year
- they did not seek employment elsewhere When called to work from time to time and are only temporarily
*NOTE: FLJ said if you laid off during the off-season, the law does not consider the
want a summary of all separated form the service during the off-season period.
kinds of employees,
read this case The nature of the employment depends on the nature of the
activities to be performed by the employee, considering the nature of
the employer’s business, the duration and scope to be done, and
even the length of time of the performance and its continues
existence.

Brent School v. Doroteo Alege was engaged as athletic director by Brent Article 302 of the Code of Commerce: “In cases in which the
Zamora School. The contract fixed a specific term for its existence for contract of employment does not have a fixed period, any of the
5 years. 3 months before expiration, Alegre was given a parties may terminate it, notifying the other one month in advance.
FIXED-TERM notice advising him of the termination of his services. The Civil Code provided that there was no prohibition against term- or
EMPLOYMENT stated ground for termination was “completion of contract, fixed-period employment.
expiration of the definite period of employment.” He filed for
illegal dismissal, alleging that although his contract did The decisive determinant in term employment should not be the
stipulate a fixed-term, his services were necessary and activities that the employee is called upon to perform, but the day
desirable in the usual business of his employer. certain agreed upon by the parties for the commencement and
termination of their employment relationship, a day certain being
SC: Stipulations for a term were explicitly recognized as valid understood to be “that which must necessarily come, although it
by this Court. may not be known when.”

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


PERIOD – A time of definite length; a space of time which has an
influence on an obligation as a result of a juridical act, and either
suspends its demandableness or produces its extinguishment.

FIXED-TERM: overseas employment contracts, dean, principal, and


their administrative offices.

A fixed period of employment was:


- agreed upon knowingly and voluntarily by the parties,
- without any force, duress or improper pressure being
brought to bear upon the employee, and
- absent any other circumstances vitiating his consent, or
- where it satisfactorily appears that the employer and
employee dealt with each other on more or less equal terms
with no moral dominance being exercised by employer over
employee

Poseidon Fishing v. Poseidon Fishing (deep-sea fishing industry) employed If from the circumstances it is apparent that periods have been
NLRC Jimmy Estoquia as Chief Mate. Then Boat Captain to Radio imposed to preclude acquisition of tenurial security by the employee,
Operator. One day, he failed to record a 7:25 am call in one they should be disregarded for being contrary to public policy.
WHEN FIXED of the logbooks, but immediately corrected when he noticed
PERIOD IS USED TO it. He was scolded and was later discharged. He filed a The act of hiring and re-hiring in various capacities is a mere gambit
CIRCUMVENT THE complain for illegal dismissal. employed by petitioner to thwart the tenurial protection of employee.
LAW Such pattern of re-hiring and the recurring need for his services are
SC: the agreement has such an objective to frustrate the testament to the necessity and indispensability of services of
security of tenure of Eustoquia. He worked for 12 years and employee to Poseidon’s business or trade.
was repeatedly hired as part of the boat’s crew and acted in
different capacities.

Fonterra v. Largado Fonterra sent Zytron a letter terminating its promotions Fixed-term employment contracts are not limited, as they are under
contract. Fonterra then entered into an agreement for the present Labor Code, to those by nature seasonal or for specific
manpower supply with A.C. Sicat Marketing and Promotional projects with predetermined dates of completion; they also include
Services. Desirous of continuing their work as TMRs, those to which the parties by free choice have assigned a specific
respondents submitted their job applications with A.C. Sicat, date of termination. The determining factor of such contracts is not
which hired them for a term of five (5) months. When the duty of the employee but the day certain agreed upon by the
respondents’ 5-month contracts with A.C. Sicat were about to parties for the commencement and termination of the employment
expire, they allegedly sought renewal thereof, but were relationship.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


allegedly refused. This prompted respondents to file
complaints for illegal dismissal

SC: They were fixed-term employees. Whether or not Zytron


is a legitimate job contractor immaterial to the resolution of
the illegal dismissal issue for one reason: We find that
respondents voluntarily terminated their employment with
Zytron. They were the ones who refused to renew their
contracts with Zytron, and the NLRC’s finding that they
themselves acquiesced to their transfer to A.C. Sicat. They
were no longer interested in continuing their employment with
Zytron. Their voluntary refusal to renew their contracts was
brought about by their desire to continue their assignment in
Fonterra which could not happen in view of the conclusion of
Zytron’s contract with Fonterra.

OKS Design Tech OKS DesignTech, Inc. hired Mary Jane Caccam as an An employee is said to be under a fixed-term employment when he
accountant under a Contract of Employment for a Fixed is hired under a contract which specifies that the employment will
Period from January 21, 2008 to June 21, 2008. Thereafter, last only for a definite period.
the contract was renewed for the period June 22, 2008 to
June 21, 2009. On June 8, 2009, respondent received a The following are indicators under which fixed-term employment
letter dated June 6, 2009 signed by the Company Manager, could not be construed as a circumvention of the law on security of
informing her of the expiration of her contract on June 21, tenure:
2009. She filed a complaint for illegal dismissal. 1) The fixed period of employment was knowingly and
voluntarily agreed upon by the parties without any force,
SC: There is no showing that the subject contracts were used duress, or improper pressure being brought to bear upon
as subterfuge to deny respondent of her security of tenure. the employee and absent any other circumstances vitiating
There was no ambiguity in the said contracts when it his consent; or
stipulated that the employee may be terminated if he “fails to 2) It satisfactorily appears that the employer and the employee
meet the reasonable standards made known to him.” While dealt with each other on more or less equal terms with no
such provision would commonly appear in a probationary moral dominance exercised by the former or the latter.
contract pursuant to Article 295 of the Labor Code, its
inclusion in the fixed-period contracts in this case never gave Even if an employee is engaged to perform activities that are
rise to an implied probationary employment status, for which necessary or desirable in the usual trade or business of the
she was to be evaluated by the company under certain employer, the same does not preclude the fixing of employment for
regularization standards during a specified trial period, simply a definite period.
because respondent was never employed on a probationary

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


basis. Labor Code does not proscribe or prohibit an employment contract
with a fixed period provided the same is entered into by the parties,
without any force, duress or improper pressure being brought to
bear upon the employee and absent any other circumstance vitiating
consent.

CONTRACTING AND SUB-CONTRACTING


Sonza v. ABS-CBN Referred to in the Agreement as “AGENT,” MJMDC agreed 1) Selection and engagement - Independent contractors often
to provide SONZA’s services exclusively to ABS-CBN as present themselves to possess unique skills, expertise or
talent for radio and television. ABS-CBN agreed to pay for talent to distinguish them from ordinary employees. The
BILATERAL SONZA’s services a monthly talent fee of P310,000 for the specific selection and hiring of SONZA, because of his
RELATIONSHIP first year and P317,000 for the second and third year of the unique skills, talent and celebrity status not possessed by
BETWEEN Agreement. ABS-CBN would pay the talent fees on the 10th ordinary employees, is a circumstance indicative, but not
INDEPENDENT and 25th days of the month. In 1996, Sonza irrevocably conclusive, of an independent contractual relationship. If
CONTRACTOR AND resigned from all his shows in ABS-CBN. Sonza filed a SONZA did not possess such unique skills, talent and
PRINCIPAL complaint for non-payment of salaries, separation pay, celebrity status, ABS-CBN would not have entered into the
service incentive leave. ABS-CBN filed a Motion to Dismiss Agreement with SONZA but would have hired him through
on the ground that no employer-employee relationship its personnel department just like any other employee
existed between the parties. Meanwhile, ABS-CBN continued 2) Payment of Wages - All the talent fees and benefits paid to
to remit SONZA’s monthly talent fees through his account. SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBN’s employee, there
SC: A radio broadcast specialist who works under minimal would be no need for the parties to stipulate on benefits.
supervision is an independent contractor. Whatever benefits SONZA enjoyed arose from contract and
1) Selection and engagement - ABS-CBN engaged not because of an employer-employee relationship.
SONZA’s services to co-host its television and radio 3) Power of dismissal - ABS-CBN adhered to its undertaking in
programs because of SONZA’s peculiar skills, the Agreement to continue paying SONZA’s talent fees
talent and celebrity status. during the remaining life of the Agreement even if ABS-CBN
2) Payment of Wages - ABS-CBN directly paid cancelled SONZA’s programs through no fault of SONZA.
SONZA his monthly talent fees with no part of his 4) Power of Control - ABS-CBN could not dictate the contents
fees going to MJMDC. His wages are so huge and of SONZA’s script. However, the Agreement prohibited
out of the ordinary hat they indicate more an IC SONZA from criticizing in his shows ABS-CBN or its
relationship rather than an EER. interests. SONZA had a free hand on what to say or discuss
3) Power of Dismissal - Either party may terminate in his shows provided he did not attack ABS-CBN or its
their relationship. SONZA failed to show that ABS- interests. ABS-CBN did not instruct SONZA how to perform
CBN could terminate his services on grounds other his job. ABS-CBN merely reserved the right to modify the
than breach of contract, such as retrenchment to program format and air- time schedule for more effective
prevent losses as provided under labor laws. programming.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


4) Power of Control - SONZA is not an employee but
an independent contractor. The control test is the In a labor-only contract, there are three parties involved:
most important test our courts apply in 1) the “labor-only” contractor;
distinguishing an employee from an independent 2) the employee who is ostensibly under the employ of the
contractor. ABS-CBN could not terminate or “labor-only” contractor; and
discipline SONZA even if the means and methods 3) the principal who is deemed the real employer.
of performance of his work—how he delivered his Under this scheme, the “labor-only” contractor is the agent of the
lines and appeared on television—did not meet principal. The law makes the principal responsible to the employees
ABS-CBN’s approval. of the “labor-only contractor” as if the principal itself directly hired or
employed the employees. These circumstances are not present in
this case.

Fuji Television v. In 2005, Arlene S. Espiritu was engaged by Fuji Television That a person has a disease does not per se entitle the employer to
Espiritu Network, Inc. as a news correspondent/producer “tasked to terminate his or her services. Termination is the last resort. At the
report Philippine news to Fuji through its Manila Bureau field very least, a competent public health authority must certify that the
ANOTHER KIND OF office.” Arlene’s employment contract initially provided for a disease cannot be cured within six (6) months, even with
INDEPENDENT term of one (1) year but was successively renewed on a appropriate treatment.
CONTRACTOR yearly basis with salary adjustment upon every renewal.
In view of the “distinct and independent business” of independent
Arlene was diagnosed with lung cancer. She informed Fuji contractors, no employer-employee relationship exists between
about her condition. In turn, the Chief of News Agency of Fuji independent contractors and their principals.
informed Arlene “that the company will have a problem
renewing her contract” since it would be difficult for her to DO 18-A defines a contractor as having “an arrangement whereby a
perform her job. She “insisted that she was still fit to work as principal agrees to put out or farm out with a contractor the
certified by her attending physician.”Arlene and Fuji signed a performance or completion of a specific job, work or service within a
nonrenewal contract on May 5, 2009 where it was stipulated definite or predetermined period, regardless of whether such job,
that her contract would no longer be renewed after its work or service is to be performed or completed within or outside the
expiration on May 31, 2009. Arlene affixed her signature on premises of the principal.”
the nonrenewal contract with the initials “U.P.” for “under
protest.” She filed a complaint for illegal dismissal. This department order also states that there is a trilateral
relationship in legitimate job contracting and subcontracting
SC: She is a regular employee with a fixed-term contract. arrangements among the principal, contractor, and employees of the
She was not contracted on account of any peculiar ability, contractor. There is no employer-employee relationship between the
special talent, or skill. The fact that everything used by Arlene contractor and principal who engages the contractor’s services, but
in her work was owned by Fuji negated the idea of job there is an employer-employee relationship between the contractor
contracting. Her contract also indicated that Fuji had control and workers hired to accomplish the work for the principal.
over her work because she was required to work for eight (8)

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


hours from Monday to Friday, although on flexible time. An Jurisprudence has recognized another kind of independent
employee can be a regular employee with a fixed-term contractor: individuals with unique skills and talents that set
contract. The law does not preclude the possibility that a them apart from ordinary employees. There is no trilateral
regular employee may opt to have a fixed-term contract for relationship in this case because the independent contractor
valid reasons. Where an employee’s contract had been himself or herself performs the work for the principal. In other
continuously extended or renewed to the same position, with words, the relationship is bilateral. In these cases, the workers
the same duties and remained in the employ without any were found to be independent contractors because of their
interruption, then such employee is a regular employee. unique skills and talents and the lack of control over the
means and methods in the performance of their work.

TAPE v. Servaña Servaña was initially a security guard for RPN-9 and was Bundy cards are evident proofs of TAPE’s control; required to report
tasked to assist TAPE from 1987-2000. He used to be an for work during noontime program (definite work hours).
employee of Agro-Commercial Security, but when the latter
severed its relations with RPN 9, Servaña was absorbed by An identification card is usually provided not just as a security
TAPE and was detailed in Broadway Centrum for the Eat measure but to mainly identify the holder as a bona fide employee of
Bulaga show. the firm who issues it.

TAPE’s defense was he was retained as talent and his


wages are actually pre-agreed talent fees; program
employees work for less than 8 hours for some days and
beyond normal work hours on other days.

Selection – TAPE absorbed him


Wages – monthly basis
Control – bundy cards
Dismissal – authorized cause (engagement of professional
security agency); requires payment of separation pay

Semblante v. CA Semblante was hired as masiador (calls and takes bets rom Referees and bet-takers need to have the kind of expertise that is
gamecock owners and other bettors) and Pilar as characteristic of the game to interpret messages conveyed by mere
sentenciador (oversees the proper gadding of fighting cocks, gestures. They are akin to independent contractors who possess
determines the fighting cocks’ physical condition and unique skills, expertise, and talent to distinguish from ordinary
capabilities). Work starts at 1 pm and ends at 12mn or until employees.
early hours of the morning. They were issued ids. But one
day, they were prohibited to enter. Filed a complaint for *Talents – another class of independent contractors; the extent of
illegal dismissal. control is only to the result of their work. (Also, there is only bilateral
relationship).

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Defense was they go to other cockpits when they have free *When should you use the standards set by DO 18-A? Only when
time; they are also issued IDs only to indicate that they are there is trilateral relationship; when there is bilateral only, use the
free from entrance fees. four-fold test.
*If the contracting party is a mere individual, the better test is four-
Selection –Loot sps has no part in their selection and fold test.
engagement; no separate individual contract
Wags – Arriba (percentage deducted from total bets)
Control – free from direction and control of respondents
Dismissal – no power to do so

Aliviado v. P&G Aliviado et. al all individually signed employment contracts Grave misconduct must be performed with wrongful intent. Loss of
with either Promm-Gem or SAPS for periods of more or less trust and confidence must be based on willful breach of trust –
five months a time. They were assigned at different outlets, intentionally, knowingly, and purposely without justifiable excuse.
supermarkets and stores where they handled all the products Moreover, the employee must hold a position invested with trust and
of P&G. They filed a complaint for regularization against confidence.
P&G. Later on, they were served termination letters for grave
misconduct and breach of trust for assailing the integrity and *True or False? If the contractor does not have substantial capital,
independence of the Company (Promm-Gem); alleged the arrangement is LOC? False. The contractor might have
employees were terminated verbally upon receipt of substantial investments (different from capital) AND must satisfy the
termination of Agreement with P&G (SAPS). element of performing activities directly related to the business of
principal.
SC: *Substantial investments – machinery, tools, equipment (as
Promm- Gem: independent contractor; ACS of 1M; PUC of opposed to 3M paid-up capital)
500,000; assets at combined 1.1M; has own warehouse and *Why was it important that there was only one client? It’s a badge of
office space LOC cause it looks like you don’t have an independent business and
your sole purpose is to supply workers.
SAPS: LOC; no substantial capital (31K); terminated *To be a legitimate contractor, do all elements in Section 4 need to
employees upon initiation of P&G; no other clients and has concur? The contractor or principal is only required to prove that
no intention to look for clients your are NOT a labor-only contractor.

Coca-Cola Bottlers v. Ricky Dela Cruz filed for regularization against Coca—Cola The contract between the principal and the contractor is not
Dela Cruz Bottles. They are route helpers assigned to work in Coca- the final word on how the contracted workers relate to the
Cola’s trucks. They go from sales offices or plants to principal and the purported contractor; the relationship must
customer outlets like sari-sari stores, restaurants, groceries, be tested on the basis of how they actually operate.
supermarkets. They were hired either directly by Coca-Cola
or its contractors (Peerless & Excellent Partners The nature of the work performed must be viewed from a
Cooperative), but no benefits and privileges like regular sales perspective of the business or trade in its entirety and not only in a

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


force. confined scope. The contracted personnel who served as route
helpers were really engaged in functions directly related to the
Defense was contractors are independent and paid a overall business of the petitioner. Sale and distribution were in fact
stipulated fee; they have control over route helpers; that work not the purported contractors’ independent, discrete, and separable
of loading and unloading manufactured softdrinks is not part activities, but were component parts of sales and distribution
of manufacturing process which is the main business of operations that the company controlled in its soft drinks business.
Coca-Cola
*In the manufacturing business, those who are performing the
SC: Necessary party issue: In labor contracting, there is distribution are performing necessary and desirable to the business?
really no contracting and no contractor; there is only the Depends on the business model. Because there is a different model
employer’s representative who gathers and supplies people where only the manufacturing is part of the business and they sell it
for the employer; labor –contracting is therefore a misnomer. to an exclusive distributor and then it’s the distributor who
These purported contractors are mere representatives of the distributes.
principal/employer

Petron v. Caberte Caberte et al were hired to work at Petron’s Bacolod Bulk The law presumes a contractor to be a labor-only contractor and the
Plant in San Patricio, Bacolod City, Negros Occidental as employees are not expected to prove the negative fact that the
LPG/Gasul fillers, maintenance crew, warehousemen, utility contractor is a labor-only contractor. Thus, it is not the employees
workers and tanker receiving crew of Petron. ABC entered but Petron which bears the burden of establishing that ABC is not a
into a Contract for Services and Contract for LPG Assistance labor-only contractor but legitimate independent contractor. Where
Services to provide utility and maintenance services to the principal is the one claiming that the contractor is a
Petron. They filed a complaint for illegal dismissal, legitimate contractor, the burden of proving the supposed
underpayment of wages and allowances. status of the contractor rests on the principal.

Defense was they cannot be allowed to work beyond the


contract period with ABC.

SC: Petron only submitted audited financial statements for


the years 1992, 1993, and 1994, not the years when it was
contracted by Petron (1996-1999).

Temic v. Temic Union Warehouse department are divided into four sections – Contracting out of work is an employer proprietary right in the
receiving, raw materials warehouse, indirect warehouse, and exercise of its inherent management prerogative. It has a right to
finished goods. Their functions are interrelated. By practice, enter into the forwarding agreements, but these agreements should
Temic contracts out some of the work in the warehouse be limited to forwarding services; the petitioner failed to present
department to three independent contractors. clear and convincing proof of the delineation of functions and duties

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


between company and forwarder employees.
The outsourcing arrangement gave rise to a union grievance Outsourcing is a legitimate activity when we held that a company
on the issues of the cope and coverage of the CBU, can determine in its best judgment whether it should contract out a
specifically to the question of “whether or not the functions of part of its work for as long as the employer is motivated by good
the forwarders’ employees are functions being performed by faith; the contracting is not for purposes of circumventing the
the regular rank-and-file employees covered by the law; and does not involve or be the result of malicious or
bargaining unit.” The union thus demanded that these arbitrary action.
employees be absorbed into the petitioner’s regular
employee force and be given positions within the bargaining *What if the contracting out of work results to the termination of
unit. regular employees, will it be invalid? Depends if done in good faith
because if it is, then it is NOT a prohibited act. What is prohibited in
SC: The forwarders’ employees and their positions were not DO 18-A is if done in bad faith.
part of the appropriate bargaining unit “as already
constituted.

New Golden City New Golden City Builders & Dev’t Corp – engaged in the The test to determine the existence of independent
Builders v. CA construction business – entered into a construction contract contractorship is whether one claiming to be an independent
with Prince David Dev’t Corp for the construction of a 17- contractor has contracted to do the work according to his own
store office and residential condominium building along methods and without being subject to the control of the
Katipunan Road. New Golden engaged he services of Nilo employer, except only to the results of the work.
Layno Builders to do the specialized “concrete works, form
works, and steel rebars works.” After the completion of the
phase for which Nilo Layno builders was contracted, the *Do you have to be registered with PCAB so DO 18-A won’t be
workers filed a complaint for unfair labor practice, illegal applied? Yes.
dismissal, etc.

SC: Nilo Layno Builders is a duly licensed labor contractor


carrying on an independent business for a specialized work
that involves the use of some particular, unusual and peculiar
skills and expertise, like concrete works, form works and
steel rebars works. Liable only for payment of service
incentive leave and 13th month pay of the private
complainants during the time they were working at
petitioners’ Prince David Project, NOT for separation pay.

Alilin v. Petron Corp Petron is a domestic corporation engaged in the oil business. While the jobs performed by petitioners may be menial and
It owns several bulk plants in the country for receiving, mechanical, they are nevertheless necessary and related to

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


storing and distributin its petroleum products. Romualdo Petron’s business operations. If not for these tasks, Petron’s
Gindang Contractor started recruiting laborers for fielding to products will not reach the consumers in their proper state.
Petron’s Mandaue Bulk Plant. Petron and RDG entered into a
Contract for Services from 2000-20002 whereby RDG A contractor is presumed to be a LOC, unless it proves that it
undertook janitorial, maintenance, tanker receiving, has the substantial capital, investment, tools and the like.
packaging and other utility services in its Mandaue Bulk However, where the principal is the one claiming that the
Plant. Workers filed a complaint for illegal dismissal, contactor is a legitimate contractor, the burden of proving the
underpayment of wages when they were barred from supposed status of the contractor rests on the principal.
continuing services.

SC: Petron failed to discharge the burden of proving that


RDG is a legitimate contractor. Hence, the presumption that
RDG is a LOC stands. RDG was only financially qualified as
a legitimate contractor in 2000.

ALPS Transportation Elpidio Rodriguez was previously employed as a bus For a dismissal to be valid, the rule is that the employer must
v. Rodriguez conductor. He entered into an employment contract with comply with both substantive and procedural due pro­cess
Contact Tours Manpower (Contact Tours) and was assigned requirements.
to work with petitioner bus company, ALPS Transportation.
Rodriguez was found to have committed irregularities when The presumption is that a contractor is a labor-only contractor
he had collected bus fares without issuing corresponding unless he overcomes the burden of proving that it has substantial
52
tickets to passengers. The report was annotated with the capital, investment, tools, and the like.” While ALPS Transportation
word “Terminate.” is not the contractor itself, since it is invoking Contact Tours’ status
Rodriguez without receiving any written notice of termination. as a legitimate job contractor in order to avoid liability, it bears the
He went back to the bus company a number of times, but it burden of proving that Contact Tours is an independent contractor.
refused to readmit him.
*It’s important to know who the supervisor and manager so they can
SC: Rodriguez was illegally dismissed. ALPS failed to prove communicate their instructions through them or the Service
that the dismissal was due to a just cause. Agreements should have KPIs (Key Performance Indicators) so the
principal need not give instructions to the employees.

Rosewood Processing All complainants were employed as security guards. They Should the contractor fail to pay the wages of its employees in
Inc v. NLRC filed a complaint for illegal dismissal was filed against accordance with law, the indirect employer (the petitioner in this
Veterans Philippines Scout Security Agency; Rosewood case), is jointly and severally liable with the contractor, but such
Processing was impleaded as third-party respondent. responsibility should be understood to be limited to the extent of the
work performed under the contract, in the same manner and extent
that he is liable to the employees directly employed by him. So long

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


as the work, task, job or project has been performed for petitioner’s
benefit or on its behalf, the liability accrues for such period even if,
later on, the employees are eventually transferred or reassigned
elsewhere.

The indirect employer’s liability to the contractor’s employees


extends only to the period during which they were working for
the petitioner, and the fact that they were reassigned to
another principal necessarily ends such responsibility.

LOC Liability of Principal:


- Principal is liable to all damages as if they are its employees
- Principal is real employer
- Those persons will be treated as its employees (entitled to
same amount of wages and benefits)
Legitimate extent of liability of principal: - QUALIFIED
- principal is liable only to the salary differentials (106)
- if monetary claim is not punitive in nature, principal is
solidarily liable
- if claims are punitive in nature, SC will ask plaintiff to prove
that there is conspiracy to hold the principal liable
Can principal claim from agent/LOC? Yes, because of breach of
warranty. All protections given by the law are from the perspective of
the employee.

Meralco Industrial MIESCOR is a client of Ofelia P. Landrito General Services Art. 109 provides that, “every employer or indirect employer shall be
Engineering Services (OPLGS), a business firm engaged in providing and held responsible with his contractor or subcontractor for any
Corp (MIESCOR) v. rendering general services, such as janitorial and violation of any provision of this Code.”
NLRC maintenance work to its clients. They executed a contract
whereby the latter would supply the petitioner janitorial Article 107 defines an indirect employer as “any person, partnership,
services, which include labor, materials, tools and equipment, association or corporation which, not being an employer, contracts
as well as supervision of its assigned employees, at with an independent contractor for the performance of any work,
petitioner’s Rockwell Thermal Plant in Makati City. The task, job or project.”
workers lodged a Complaint for illegal deduction, Article 106 provides that, “In the event that the contractor or
underpayment, etc., They were then pulled out from their subcontractor fails to pay the wages of his employees in accordance
work at the Thermal Plant so they amended their Complaint with this Code, the employer shall be jointly and severally liable with
to include the charge of illegal dismissal and impleaded his contractor or subcontractor to such employees to the extent of

33

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


OPLGS. the work performed under the contract, in the same manner and
extent that he is liable to employees directly employed by him.”
OLGPS submits that MIESCOR, being the principal, was
solidarily liable with the private respondents for failure to Taken together, an indirect employer (as defined by Article
make an adjustment on the wages of the complainants. 107) can only be held solidarily liable with the independent
contractor or subcontractor (as provided under Article 109) in
NLRC: MIESCOR is solidarily liable with OLGPS on the the event that the latter fails to pay the wages of its employees
judgment awards on the underpayment and on the non- (as described in Article 106).
payment of the overtime pay. The principal, on the other
hand, is made the indirect employer of the contractor-
agency’s employees for purposes of paying the employees
their wages should the contractor-agency be unable to pay
them. This joint and several liability facilitates, if not
guarantees, payment of the workers performance of any
work, task, job or project, thus giving the workers ample
protection as mandated by the 1987 Constitution.

SC: While it is true that the petitioner was the indirect


employer of the complainants, it cannot be held liable in the
same way as the employer in every respect. The petitioner
may be considered an indirect employer only for purposes of
unpaid wages. In the present case, there is no allegation,
much less proof presented, that the petitioner conspired with
private respondents in the illegal dismissal of the latter’s
employees; hence, it cannot be held liable for the same.

Polyfoam-RGC v. Concepcion filed for a complaint for illegal dismissal. He Labor-only contracting, a prohibited act, is an arrangement where
Concepcion alleged that he was hired as a “packer” by Polyfoam as an the contractor or subcontractor merely recruits, supplies or places
“all-around” factory worker and served as such for almost six workers to perform a job, work or service for a principal.
years. Sometime in 2000, he allegedly discovered that his
time card was not in the rack and was later informed by the The test of independent contractorship is “whether one claiming to
security guard that he could no longer punch his time card. be an independent contractor has contracted to do the work
When he protested to his supervisor, the latter allegedly told according to his own methods and without being subject to the
him that the management decided to dismiss him due to an control of the employer, except only as to the results of the work.”
infraction of a company rule.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Defense was he was not an employee of Polyfoam-RGC but
by PAGES, a legitimate job contractor who provided
manpower needs for Polyfoam.

SC: illegally dismissed; PAGES is LOC. Gramaje failed to


present audited financial statements, a copy of purported
contract with Polyfoam. Gramaje was not registered with
DOLE as a private recruitment agency.
1) Gramaje has no substantial capital or investment.
They weren’t able to prove that equipment and
machineries used in the performance of contracted
job are owned by Gramaje.
2) Gramaje did not carry on an independent business or
undertake the performance of its service contract
according to its own manner and method, free from
the control and supervision of its principal, Polyfoam,
its apparent role having been merely to recruit
persons to work for Polyfoam.

Vigilla v. Philippine PCCr is a non-stock educational institution, while the In legitimate job contracting, the law creates an employer-employee
College of Criminology petitioners were janitors, janitresses and supervisor under relationship for a limited purpose, i.e., to ensure that the employees
the supervision and control of Atty. Florante A. Seril, PCCr’s are paid their wages. The principal employer becomes jointly and
WHEN QUITCLAIMS Senior Vice President for Administration. The petitioners severally liable with the job contractor only for the payment of the
ARE VALID were made to understand, upon application with respondent employees’ wages whenever the contractor fails to pay the same.
school, that they were under MBMSI where Atty. Seril is also Other than that, the principal employer is not responsible for any
the President and General Manager. claim made by the employees.

Sometime in 2008, PCCr discovered that the Certificate of On the other hand, in labor-only contracting, the statute creates an
Incorporation of MBMSI had been revoked so it terminated employer-employee relationship for a comprehensive purpose: to
the school’s relationship with MBMSI, resulting in the prevent a circumvention of labor laws. The contractor is considered
dismissal of the employees or maintenance personnel under merely an agent of the principal employer and the latter is
MBMSI. The dismissed employees, led by their supervisor, responsible to the employees of the labor-only contractor as if such
Benigno Vigilla filed their respective complaints for illegal employees had been directly employed by the principal employer.
dismissal. They alleged that PCCr is their real employer The principal employer therefore becomes solidarily liable with the
because it had direct control over MBMSI’s operations and labor-only contractor for all the rightful claims of the employees.
there was really no contract between the two, selection and
hiring of employees were undertaken by PCCr.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Defense submitted documents which show that compalinants
executed releases, waivers, and quitclaims in favor of
MBMSI.

W/n claims against PCCr were amicably settled by virtue of


the releases, waivers, and quitclaims which they had
executed in favor of MBMSI.

SC: The genuineness and due execution of the releases,


waivers, and quitclaims were never at issue. It was only after
the NLRC’s declaration that the claims of petitioners had
been settled amicably by virtue of the releases, waivers and
quitclaims, that petitioners denied having executed any of
these instruments. Petitioners were really paid their
separation pay and had executed releases, waivers and
quitclaims in return. The executed releases, waivers and
quitclaims are valid and binding notwithstanding the
revocation of MBMSI’s Certificate of Incorporation. The
revocation does not result in the termination of its liabilities.

MBMSI is a LOC, but PCCr’s solidary liability was already


expunged by virtue of the releases, waivers and quitclaims
executed by each of the petitioners in favor of MBMSI
pursuant to Article 1217 of the Civil Code which provides that
“payment made by one of the solidary debtors extinguishes
the obligation.”

Diamond Farms v. DFI owns an 800-hectare banana plantation in Davao. RA As a general rule, a contract is presumed to be a labor-only
SPFL, DARBMUPCO, 6657 mandates that commercial farms be subject to contractor, unless such contractor overcomes the burden of proving
Volter Lopez, et. al compulsory acquisition and distribution. DAR granted DFI a that it has the substantial capital, investment, tolls, and the like.
deferment privilege to continue agricultural operations until
1998. Because of adverse marketing problems, DFI recalled SC: DFI is the principal. It hired the individual contractors who in turn
DFI’s deferment privilege. DFI then offered to give up its hired their own men to work in the 698.88 hectares land of
rights and interest in the original plantation by Voluntary Offer DARBMUPCO as well as in the managed area in the plantation.
to Sell. Out of 800 hectares, DAR approved disposition of
689.88 hectares, the remaining 200 hectares were retained DARBMUPCO did not have anything to do with the hiring,
by DFI. Awarded plantation was turned over to qualified supervision and payment of the wages of the workers-respondents

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


beneficiaries which later organized to be DARBMUOPCO. thru the contractors-respondents. DFI cannot argue that
DARBMUPCO is the principal of the respondent contractors
DARBMUPCO and DFI executed a Supplemental to because it the latter owns the awarded plantation where
Memorandum Agreement wherein DFI shall take care of the respondent-contractors and respondent-workers were working; and
labor cost arising form the packaging operation, cable therefore DARBMUPCO is the ultimate beneficiary of the
maintenance, irrigation pump, etc. DFI engaged the services employment of the respondent-workers that DARBMUPCO owns the
of the respondent-contractors, who in turn recruited awarded plantation where the respondent-contractors and
respondent-workers. respondent-workers were working is immaterial. DFI, as the
principal, hired the respondent-contractors and the latter, in turn,
SPFL fled a petition for certification election on behalf of 400 engaged the services f the respondent-workers.
workers “jointly employed by DFO and DARBMUPCO.”

RECRUITMENT AND PLACEMENT


Marsaman Manning Wilfredo T. Cajeras was hired by petitioner MARSAMAN, the A vessel’s log book is prima facie evidence of the facts stated
Agency v. NLRC local manning agent of petitioner DIAMANTIDES, as Chief therein as they are official entries made by a person in the
Cook Steward on the MV Prigipos, owned and operated by performance of a duty required by law.
DIAMANTIDES, for a contract period of ten (10) months, but
less than two (2) months later, or on 28 September 1995, he Sec. 10 of Migrant Workers and Overseas Filipinos Act of 1995
was repatriated to the Philippines allegedly by “mutual provides that:
consent.” He asked for medical attention but after he was “In case of termination of overseas employment without just, valid or
examined, he was handed his record book with the entry of authorized cause as defined by law or contract, the worker shall be
dismissal. He was not apprised for his medical condition – it entitled to the full reimbursement of his placement fee with interest
was just alleged that he’s suffering form paranoia and mental at twelve percent (12%) per annum, plus his salaries for the
health problems. He filed for illegal dismissal and alleged that unexpired portion of the employment contract or for three (3) months
he did not actually sign the Seaman’s Service Record Book. for every year of the unexpired term whichever is less.”

SC: No document exist whereby Capt. Alekos and Cajeras Whether his salaries for the unexpired portion of his employment
reduced to writing their alleged “mutual consent” to the contract or three (3) months’ salary for every year of the unexpired
termination of their employment contract. Instead, petitioners term, whichever is less, comes into play only when the employment
presented the vessel’s Deck Log wherein an entry contract concerned has a term of at least one (1) year or more. This
unilaterally made by Capt. Alekos purported to show that is evident from the words “for every year of the unexpired term.”
private respondent himself asked for his repatriation. The
entry in no way satisfies the requirement of a bilateral
documentation to prove early termination of an overseas
employment contract by mutual consent required by the
Standard Employment Contract.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


*Serrano v. Gallant Antonio Serrano was hired by Gallant Maritime Services, Inc. 1) Sec. 10 of RA 8042 does not violate Section 10, Article III
Maritime Services and Marlow Navigation Co., Ltd. under a POEA-approved 12- of the Constitution. The prohibition is aligned with the
month Contract of Employment under terms and conditions: general principle that laws newly enacted have only a
Chief Officer, $1,400 basic monthly salary and overtime pay prospective operation, and cannot affect acts or contracts
of $700 per month. But he was constrained to accept a already perfected; however, as to laws already in existence,
downgraded employment contract for the position of Second their provisions are read into contracts and deemed a part
Officer with a monthly salary of US$1,000.00, upon the thereof. The law was enacted in the exercise of the police
assurance and representation of respondents that he would power of the State to regulate a business, profession or
be made Chief Officer by the end of April 1998, but it did not calling, particularly the recruitment and deployment of
happened. At the time of his repatriation, he only served 2 OFWs, with the noble end in view of ensuring respect for
months and 7 days. He filed a complaint for constructive the dignity and well-being of OFWs wherever they may be
dismissal. employed.
2) Sec. 10 violates Section 1, Article III, Section 18 Article II,
OSG’s argument: OFWs and local workers differ in terms of and Section 3, Article XIII. Section 18, Article II and Section
the nature of their employment, such that their rights to 3, Article XIII accord all members of the labor sector, without
monetary benefits must necessarily be treated differently. distinction as to place of deployment, full protection of their
While local workers perform their jobs within Philippine rights and welfare. To Filipino workers, the rights
territory, OFWs perform their jobs for foreign employers, over guaranteed under the foregoing constitutional provisions
whom it is difficult for our courts to acquire jurisdiction, or translate to economic security and parity: all monetary
against whom it is almost impossible to enforce judgment benefits should be equally enjoyed by workers of similar
OFWs are contractual employees who can never acquire category, while all monetary obligations should be borne by
regular employment status, unlike local workers who are or them in equal degree; none should be denied the protection
can become regular employees. of the laws which is enjoyed by, or spared the burden
OSG maintain that these peculiarities make for a reasonable imposed on, others in like circumstances.
and valid basis for the differentiated treatment under the
subject clause of the money claims of OFWs who are illegally The subject clause creates a sub-layer of discrimination
dismissed. among OFWs whose contract periods are for more than one
year: those who are illegally dismissed with less than one year
SC: The Court concludes that the subject clause contains a left in their contracts shall be entitled to their salaries for the
suspect classification in that, in the computation of the entire unexpired portion thereof, while those who are illegally
monetary benefits of fixed-term employees who are illegally dismissed with one year or more remaining in their contracts
discharged, it imposes a 3-month cap on the claim of OFWs shall be covered by the subject clause, and their monetary
with an unexpired portion of one year or more in their benefits limited to their salaries for three months only.
contracts, but none on the claims of other OFWs or local
workers with fixed-term employment. The subject clause Salary is the basic wage, exclusive of overtime, leave pay and other
singles out one classification of OFWs and burdens it with a bonuses; whereas overtime pay is compensation for all work
peculiar disadvantage. “performed” in excess of the regular eight hours, and holiday pay is

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


compensation for any work “performed” on designated rest days and
holidays.
35
Pert/CPM Manpower Armando A. Vinuya et. al alleged that the agency Pert/CPM Article 38 of the Labor Code, as amended by R.A. 8042, defined
Exponent Co., Inc. v. Manpower Exponent Co., Inc deployed them to work as “illegal recruitment” to include the following act:
Vinuya aluminum fabricator/installer for the agency’s principal,
Modern Metal Solution in Dubai, UAE. (i) To substitute or alter to the prejudice of the worker, employment
But Modern Metal gave them appointment letters with terms contracts approved and verified by the Department of Labor and
different from those in the employment contracts which they Employment from the time of actual signing thereof by the parties up
signed at the agency’s office in the Philippines and were to and including the period of the expiration of the same without the
approved by POEA (2-year employment, 9 hours a day, approval of the Department of Labor and Employment
salary of 1,350 AED with overtime pay, food allowance, free
and suitable housing (four to a room), free transportation, A constructive dismissal or discharge is “a quitting because
free laundry, and free medical and dental services). They continued employment is rendered impossible, unreasonable or
were shocked to find out what their working and living unlikely, as, an offer involving a demotion in rank and a diminution in
conditions were in Dubai. They were required to work from pay.
6:30 a.m. to 6:30 p.m., with a break of only one hour to one
and a half hours.

Due to these inhumane working conditions, they expressed


their desire to resign, citing personal family problems in fear
of not being paid. They filed a case for illegal dismissal.
Agency countered by saying they voluntarily resigned.

SC: The agency and Modern Metal are guilty of contract


substitution; made the workers suffer substandard working
and living arrangements.

Skippers United Seafarers of MV Wisdom Stars Doza et. al filed a labor case Procedural due process in dismissal cases consists of the twin
Pacific v. Doza against local manning agency Skippers United Pacific, Inc. requirements of notice and hearing.
and its foreign principal, Skippers Maritime Services, Inc.,
Ltd. for unremitted home allotment for the month of The employer must furnish the employee with two written notices
December 1998, salaries for the unexpired portion of their before the termination of employment can be effected:
employment contracts, moral damages, exemplary damages, 1) the first notice apprises the employee of the particular acts
and attorney’s fees. Skippers, on the other hand, answered or omissions for which his dismissal is sought; and
with a claim for reimbursement of De Gracia, Aprosta and 2) the second notice informs the employee of the employer’s
Lata’s repatriation expenses, as well as award of moral decision to dismiss him. Before the issuance of the second

39

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


damages and attorney’s fees. notice, the requirement of a hearing must be complied with
by giving the worker an opportunity to be heard. It is not
Skippers claims that four Filipino seafarers, namely Aprosta, necessary that an actual hearing be conducted.
De Gracia, Lata and Doza, arrived in the master’s cabin and
demanded immediate repatriation because they were not Substantive due process, on the other hand, requires that dismissal
satisfied with the ship. De Gracia, et al. threatened that they by the employer be made under a just or authorized cause under
may become crazy any moment and demanded for all Articles 282 to 284 of the Labor Code.
outstanding payments due to them. This is evidenced by a
telex of Cosmoship MV Wisdom to Skippers. Article 285 of the Labor Code recognizes termination by the
employee of the employment contract by “serving written notice on
SC: the telex message is “a biased and self-serving the employer at least one (1) month in advance.”
document that does not satisfy the requirement of substantial
evidence.” If, indeed, De Gracia, et al. voluntarily pre- Section 8 of POEA Memorandum Circular No. 55, series of 1996,
terminated their contracts, then De Gracia, et al. should have states that the allotment actually constitutes at least eighty percent
submitted their written resignations. Since De Gracia, et (80%) of the seafarer’s salary. Since said memorandum states that
al.’s dismissal was illegal, their repatriation expenses home allotment of seafarers actually constitutes at least eighty
were for the account of Skippers and could not be offset percent (80%) of their salary, home allotment pay is not in the
with the home allotment pay. nature of an extraordinary money or benefit, but should actually be
considered as salary which should be paid for services rendered.
For this reason, such non-remittance of home allotment pay should
be considered as unpaid salaries.

*Sameer Overseas Responding to an ad Sameer Overseas Placement Agency, Employers have the prerogative to impose productivity and quality
Placement Agency v. Inc., published, Joy C. Cabiles, submitted her application for standards at work. They may also impose reasonable rules to
Cabiles a quality control job in Taiwan.Joy’s application was ensure that the employees comply with these standards. Failure to
accepted. Joy was later asked to sign a one-year comply may be a just cause for their dismissal.
employment contract for a monthly salary of NT$15,360.00.
She alleged that Sameer Overseas Agency required her to Management prerogative is recognized in law and in our
pay a placement fee of P70,000.00 when she signed the jurisprudence. This prerogative, however, should not be abused. It is
employment contract; agreeing to work as quality control for “tempered with the employee’s right to security of tenure.”
one year. But she ended up as a cutter in Taiwan. One day, Employees are not stripped of their security of tenure when they
Mr. Huwang from Wacoal informed Joy, without prior notice, move to work in a different jurisdiction. With respect to the rights of
that she was terminated and that “she should immediately overseas Filipino workers, we follow the principle of lex loci
report to their office to get her salary and passport.” She was contractus - the law of the place where the contract is made
asked to “prepare for immediate repatriation. She then filed
for illegal dismissal against Sameer and Wacoal, its principal. The burden of proving that there is just cause for termination is on
the employer. Failure to show that there was valid or just cause for

40

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Defense was she was terminated due to her inefficiency, termination would necessarily mean that the dismissal was illegal.
negligence in her duties, and her failure to comply with the For dismissal to be valid, it must be shown that:
work requirements of her foreign employer; that Wacoal’s 1) the employer has set standards of conduct and
accreditation with petitioner had already been transferred to workmanship against which the employee will be judged;
the Pacific Manpower & Management Services, Inc. and 2) the standards of conduct and workmanship must have been
Sameer was already substituted by the latter. communicated to the employee; and
3) the communication was made at a reasonable time prior to
SC: Sameer Overseas Placement Agency failed to show that the employee’s performance assessment.
there was just cause for causing Joy’s dismissal. The
employer, Wacoal, also failed to accord her due process of A valid dismissal requires both a valid cause and adherence to the
law. By our laws, OFWs may only be terminated for a just or valid procedure of dismissal. The employer is required to give the
authorized cause and after compliance with procedural due charged employee at least two written notices before termination.
process requirements. One of the written notices must inform the employee of the particular
acts that may cause his or her dismissal. The other notice must
The contract of employment in this case was perfected inform] the employee of the employer’s decision. Aside from the
here in the Philippines. Therefore, the Labor Code, its notice requirement, the employee must also be given “an
implementing rules and regulations, and other laws opportunity to be heard.”
affecting labor apply in this case.
Section 15 of Republic Act No. 8042 states that “repatriation of
There was also no showing that respondent was sufficiently the worker and the transport of his personal belongings shall be the
informed of the standards against which her work efficiency primary responsibility of the agency which recruited or deployed the
and performance were judged. The parties’ conflict as to the worker overseas.” The exception is when termination of employment
position held by respondent showed that even the matter as is due solely to the fault of the worker.
basic as the job title was not clear.
The 12% interest per annum only applies to the placement fees but
not the case of salary for the unexpired portion of the employment
contract – these awards are covered by BSP Circular No. 799
because the law does not provide for a specific interest rate that
should apply.

Cadalin v. POEA Complainant-claimants allege that they were recruited by The applicable law in this jurisdiction is that of Philippine law. To
Administrator respondent-appellant AIBC for its accredited foreign enforce the one-year prescriptive period of the Amiri Decree No. 23
principal, Brown & Root, on various dates from 1975 to 1983. of 1976 as regards the claims in question would contravene the
They were all deployed at various projects undertaken by public policy on the protection to labor.
Brown & Root in several countriessuch as Saudi Arabia, 1) The overseas-employment contracts, which were prepared
Libya, United Arab Emirates and Bahrain, and in Indonesia by AIBC and BRII themselves, provided that the laws of the

41

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


and Malaysia. host country became applicable to said contracts if they
offer terms and conditions more favorable than those
In the State of Bahrain, where some of the individual stipulated therein.
complainants were deployed, His Majesty Isa Bin Salman Al 2) Prescribed. Article 291 of the Labor Code of the Philippines
Kaifa, Amir of Bahrain, issued his Amiri Decree No. 23 on provides the prescriptive period for filing “money claims
June 16, 1976, otherwise known as the Labour Law for the arising from employer-employee relations.” The claims in
Private Sector. Relevant provisions are: the cases at bench all arose from the employer-employee
- wage x 1.25 for every extra hour worked and x.15 for relations, which is broader in scope than claims arising from
hours worked from 7pm-7am; 150% if required to a specific law or from the collective bargaining agreement.
work on his rest day 3) A class suit is proper where the subject matter of the
- every year of completed service shall warrant at least controversy is one of common or general interest to many
2 1days of fully paid leave ad at least 28 days after 5 and the parties are so numerous that it is impracticable to
years of service bring them all before the court. While all the claims are for
- The party terminating a contract without giving the benefits granted under the Bahrain law, many of the
required notice shall pay to the other party claimants worked outside Bahrain. Some of the claimants
compensation equivalent to the amount of wages were deployed in Indonesia and Malaysia under different
payable to the worker for the period of such notice or terms and conditions of employment. There was no
the unexpired portion thereof. common or general interest based on the Amiri Decree of
the State of Bahrain, only those who worked in Bahrain shall
1) W/N complainant are entitled to benefits provided by be entitled to file their claims in a class suit.
Amiri Decree 4) NLRC correctly found at least three infractions of the
2) W/N claims have prescribed – 3 yrs (Art. 291, LC) or cardinal rules of administrative due process: namely, (1) the
10 yrs (Art. 1144, CC) failure of the POEA Administrator to consider the evidence
3) W/N cases classify as class suit presented by AIBC and BRII; (2) some findings of fact were
4) W/N proceeding conducted by POEA conformed to not supported by substantial evidence; and (3) some of the
requirements of due process evidence upon which the decision was based were not
5) W/N POEA Administrator erred in dismissing claims disclosed to AIBC and BRII during the hearing.
for unexpired portion of contract, interest earnings, 5) POEA had no jurisdiction over claims of refund and
retirement and savings plan damages; that claimants failed to establish their entitlement
to claims
Claimants are of the view that Article 291 of the Labor Code
of the Philippines, refers only to claims “arising from the
employer’s violation of the employee’s right as provided by
the Labor Code.” They assert that their claims are based on
the violation of their employment contracts, as amended by
the Amiri Decree No. 23 of 1976 and therefore the claims
may be brought within ten years.

42

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Maersk-Filipinas Maersk-Filipinas Crewing, Inc. on behalf of its foreign Employer must present substantial evidence - amount of relevant
Crewing Inc. v. principal, petitioner A.P. Moller Singapore Pte. Ltd. hired evidence which a reasonable mind might accept as adequate to
Avestruz Avestruz as Chief Cook onboard the vessel M/V Nedlloyd justify a conclusion, and not based on mere surmises or conjectures.
Drake for a period of six (6) months, with a basic monthly
salary of US$698.00 in May 2011. On June 22, Captain Insubordination, as a just cause for the dismissal of an employee,
Charles C. Woodward admonished Avestruz because the necessitates the concurrence of at least two requisites:
cover of the garbage bin in the kitchen near the washing area 1) the employee’s assailed conduct must have been willful,
was oily. They had an altercation and later that afternoon, that is, characterized by a wrongful and perverse attitude; 

Woodward summoned Avestruz and Messman Kong to state 2) the order violated must have been reasonable, lawful,
in writing what transpired between the two. He was then made known to the employee, and must pertain to the
informed that he would be dismissed from service. He filed a duties which he had been engaged to discharge 

complaint for illegal dismissal, alleging that there was no
investigation nor hearing before he was dismissed.

Defense alleges that Avestruz failed to perform his duties


properly and that Woodward initiated disciplinary
proceedings and informed Avestruz during the hearing of the
offenses he committed. He was dismissed due to
insubordination and these were evidenced by emails sent by
Woodward.

SC: No just or valid cause for dismissal. The contents of


Captain Woodward’s e-mails do not establish that Avestruz’s
conduct had been willful, or characterized by a wrongful and
perverse attitude. The order by Woodward to put the events
in writing hardly qualifies as a written notice of the charge
against him, nor was it an opportunity for Avestruz to explain
or defend himself.

De la Cruz v. Maersk Elite Shipping A.S. hired petitioner Dante D. de la Cruz as Section 17 of the POEA Revised Standard Employment Terms and
Filipinas third engineer for the vessel M/S Arktis Morning through its Conditions laid down disciplinary measures:
local agency in the Philippines, co-respondent Maersk
Filipinas Crewing Inc. for a period of 9 mos and basic salary The Master shall comply with the following disciplinary procedures
of $1004/mo. He was deployed to Jebel Ali, UAE. In a against an erring seafarer:
logbook entry dated June 18, 1999, chief engineer Normann A. The Master shall furnish the seafarer with a written
Per Nielsen expressed his dissatisfaction over petitioner’s notice containing the following:

43

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


performance. 8 days later he was discharged through 1. Grounds for the charges as listed in Section 31 of
another notice. A provision in the CBA between Elite and its this Contract.
employee provides that the first 60 days of employment shall 2. Date, time and place for a formal investigation of the
be considered probationary period which entitles a shipowner charges against the seafarer concerned.
to terminate contract by giving 14 days of written notice. He B. The Master or his authorized representative shall conduct
filed an illegal dismissal against Maersk. Defense claims that the investigation or hearing, giving the seafarer the
the logbook entry served as its first notice. opportunity to explain or defend himself against the
charges. An entry on the investigation shall be entered into
SC: The logbook entries did not substantially comply with the the ship’s logbook.
first notice, or the written notice of charges/ grounds for C. If, after the investigation or hearing, the Master is convinced
termination. It did not state the particular acts or omissions that imposition of a penalty is justified, the Master shall
for which De la Cruz was charged. The statement “not been issue a written notice of penalty and the reasons for it to the
able to live up to the company’s SMS job description for 3rd seafarer, with copies furnished to the Philippine agent.
Engineer” and that he had “been informed that if he does not
improve his job/working performance within a short time he Seafarers are not covered by the term regular employment. They
will have to be signed off according to CBA Article 1 (7)” was are considered contractual employees whose rights and obligations
couched in terms too general for legal comfort. are governed primarily by the POEA Standard Employment Contract
for Filipino Seamen, the Rules and Regulations Governing Overseas
Employment, and, R.A. NO. 8042 or The Migrant Workers and
Overseas Filipinos Act of 1995. Even the POEA Standard
Employment Contract itself mandates that in no case shall a
contract of employment concerning seamen exceed 12 months. It is
an accepted maritime industry practice that the employment of
seafarers is for a fixed period only.

GBMLT Manpower Victoria Malinao applied to petitioner for a job as teacher for Either party may terminate a contract even without cause are
Service v. Malinao deployment abroad. She was edorsed as an accounting legitimate if exercised in good faith. Thus, while either party has the
teacher. She then signed a POEA-approved Contract of right to terminate the contract at will, it cannot not act purposely to
Employment for Foreign Academic Personnel. Upon her injure the other.
arrival in Ethiopia, she was informed by the Vice Minister of
the Ministry of Education that her credential would have to be Where a person executing a waiver or quitclaim has done so
re-evaluated because she did not have master’s degree. She voluntarily with a full understanding of its terms and conditions,
was assigned to Alemaya University but she unilaterally coupled with the other person’s payment of credible and reasonable
decided to discontinue teaching the course in cooperative consideration, we have no choice on the matter but to uphold the
accounting that had been assigned to her. She said that transaction as valid and binding.
auditing, not accounting, was her specialization.
“Dire necessity” is an acceptable ground to nullify quitclaims only if

44

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Another memorandum was issued addressed to her stating the consideration is unconscionably low and the employee was
that due to the petition of students, another instructor has tricked into accepting it.
been assigned to her teaching position as professor in
Auditing II because she didn’t handle the course effectively. *Caveat – this is a POEA-approved contract; most probably
She was given a notice that states that “we are obliged to because termination of contract is two way; had it been one way, it
give you this three months advance notice as regards the wouldn’t have been approved
contract termination. In the meantime, however, you are *Normal rule is you can’t terminate an employee without just cause
expected to duly carry the assignment which shall be given
by your Department.”

While waiting for the three-month period to expire,


respondent was offered a post at the Internal Audit
Department by Alemaya University President. She accepted
the job offer but later on rejected and signified her change of
mind. She then filed a complaint for illegal dismissal against
GBMLT as local agency and Alemaya University as foreign
principal.

SC: Malinao not illegally dismissed; quitclaim valid Her


POEA-approved contract states a provision that the contract
may be terminated by either party, at any time and for no
cause by giving three months notice to the other party. The
Contract of Employment may be terminated by either party
for cause or at any time for no cause, as long as a three-
month notice is given to the other party. In the latter case,
respondent shall still be fully engaged and entitled to her
salary and allowances for the three-month period provided in
the notice of termination. Alemaya University opted to take
the “no cause” route in terminating the Contract of
Employment. In this case, the contract provided that the
other party be given a three-month advance notice, a
requirement that Alemaya University complied with.

People v. Panis Four informations were filed on January 9, 1981, in the Court The number of persons dealt with is not an essential ingredient of
of First Instance of Zambales and Olongapo City alleging that the act of recruitment and placement of workers. Any of the acts
Serapio Abug, private respondent herein, “without first mentioned in the basic rule in Article 13(b) will constitute recruitment
securing a license from the Ministry of Labor as a holder of and placement even if only one prospective worker is involved.

45

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


authority to operate a fee-charging employment agency, did
then and there wilfully, unlawfully and criminally operate a The proviso merely lays down a rule of evidence that where a fee is
private fee-charging employment agency by charging fees collected in consideration of a promise or offer of employment to two
and expenses (from) and promising employment in Saudi or more prospective workers, the individual or entity dealing with
Arabia” to four separate individuals named therein, in them shall be deemed to be engaged in the act of recruitment and
violation of Article 16 in relation to Article 39 of the Labor placement. The words “shall be deemed” create that presumption.
Code.
*If you want the presumption to be in your favor, you should
Abug filed a motion to quash on the ground that the allege/prove that you paid a fee and the recruiter recruited two or
informations fdid not charge an offense because he was more people
accused of illegally recruiting only one person in each of the
four informations. Under the proviso in Article 13(b), he
claimed, there would be illegal recruitment only “whenever
two or more persons are in any manner promised or offered
any employment for a fee.”

SC: The proviso was intended neither to impose a condition


on the basic rule nor to provide an exception thereto but
merely to create a presumption. The presumption is that the
individual or entity is engaged in recruitment and placement
whenever he or it is dealing with two or more persons to
whom, in consideration of a fee, an offer or promise of
employment is made in the course of the “canvassing,
enlisting, contracting, transporting, utilizing, hiring or
procuring of workers.”

People v. Goce An information for illegal recruitment committed by a Any recruitment activity, including the prohibited practices
syndicate and in large scale, punishable under Articles 38 enumerated in Article 34 of said Code, undertaken by non-licensees
ECONOMIC and 39 of the Labor Code as amended by Section 1(b) of or non-holders of authority shall be deemed illegal and punishable
SABOTAGE Presidential Decree No. 2018, was filed against spouses Dan under Article 39 thereof.
and Loma Goce and Nelly Agustin.
The same article further provides that illegal recruitment shall be
Complainants have the same story. They met Agustin who considered an offense involving economic sabotage if any of these
told them to go to the office of the placement agency at qualifying circumstances exist:
Nakpil Street, Ermita, Manila where he saw Agustin and met 1) when illegal recruitment is committed by a syndicate, i.e., if
the spouses Dan and Loma Goce, owners of the Clover it is carried out by a group of three or more persons
Placement Agency. They all paid processing fee to Agustin. conspiring and/or confederating with one another; or

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


2) when illegal recruitment is committed in large scale, i.e., if it
Agustin claims that Goce spouses were her neighbors and is committed against three or more persons individually or
that they were licensed recruiters who were able to send her as a group.
son to Saudi Arabia. She claims that all she did was to
introduce the complainants to the Goce sps and it does not
fall within “referrals”

SC: illegal recruiters; Goce sps and Agustin were neither


licensed nor authorized to recruit workers for overseas
employment. There is illegal recruitment when one gives the
impression of having the ability to send a worker abroad. It is
undisputed that appellant gave complainants the distinct
impression that she had the power or ability to send people
abroad for work such that the latter were convinced to give
her the money she demanded in order to be so employed.

Darvin v. CA Macaria Toledo met a Imelda Darvin in the latter’s residence Two elements of simple illegal recruitment:
through the introduction of their common friends. She 1) the person charged with the crime must have undertaken
convinced Toledo that by giving her P150,000.00 (US Visa recruitment activities; and
and airfare), the latter can immediately leave for the United 2) the said person does not have a license or authority to do
states within a week without any appearance before the U.S. so
embassy. After a week, however, she couldn’t find Darvin in
her residence anymore. POEA issued certification stating Procuring a passport, airline tickets and foreign visa for another
that Darvin is neither licensed nor authorized. Agustin claims individual, without more, can hardly qualify as recruitment activities.
that she used to be connected to Dale travel Agency and she Aside from the testimony of private respondent, there is nothing to
was assisting individuals in their passports, visas, and airline show that accused-appellant engaged in recruitment activities.
tickets.

SC: There was no evidence that Toledo was offered a job by


Darvin. She wasn’t given an impression that she was capable
of providing Toledo work abroad.

People v. Gallo Gallo, Pacardo, Manta, Mrtir, and 9 others allegedly recruited To commit syndicated illegal recruitment, three elements must be
many people as factory workers in Korea. They charged and established:
SYNDICATED accepted directly or indirectly amounts as placement fees in 1) the offender undertakes either any activity within the
ILLEGAL connection with their overseas employment, which amounts meaning of “recruitment and placement” defined under
RECRUITMENT are in excess of or greater than those specified in the Article 13(b), or any of the prohibited practices enumerated

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


schedule of allowable fees prescribed by the POEA Board under Art. 34 of the Labor Code;
CONSPIRACY Resolution No. 02, Series 1998, and without valid reasons 2) he has no valid license or authority required by law to
and without the fault of the said complainants failed to enable one to lawfully engage in recruitment and placement
ELEMENTS OF actually deploy them and failed to reimburse the expenses of workers; and
ESTAFA incurred by the said complainants in connection with their 3) the illegal recruitment is committed by a group of three (3) or
documentation and processing for purposes of their more persons conspiring or confederating with one another.
deployment.
When illegal recruitment is committed by a syndicate or in
Dela Caza, one of the complainants, said that he met Gallo large scale, i.e., if it is committed against three (3) or more persons
and others at the office of MPM Agency in Malate, Manila. individually or as a group, it is considered an offense involving
Two (2) weeks after paying MPM Agency, Dela Caza went economic sabotage.
back to the agency’s office in Malate, Manila only to discover
that the office had moved to a new location at Batangas Conspiracy to defraud aspiring overseas contract workers was
Street, Brgy. San Isidro, Makati. He proceeded to the new evident from the acts of the malefactors whose conduct before,
address and found out that the agency was renamed to New during and after the commission of the crime clearly indicated that
Filipino Manpower Development & Services, Inc. At the new they were one in purpose and united in its execution. Direct proof of
office, he talked to Pacardo, Manta, Mardeolyn, Lulu previous agreement to commit a crime is not necessary as it may be
Mendanes and accused-appellant Gallo. He was informed deduced from the mode and manner in which the offense was
that the transfer was done for easy accessibility to clients perpetrated or inferred from the acts of the accused pointing to a
and for the purpose of changing the name of the agency. joint purpose and design, concerted action and community of
interest. As such, all the accused, including accused-appellant, are
Gallo’s defense was he just also applied with MPM Agency equally guilty of the crime of illegal recruitment since in a conspiracy
for deployment to Korea as a factory worker. the act of one is the act of all.

SC: All elements of syndicated illegal recruitment AND estafa The elements of estafa in general are:
were established. 1) that the accused defrauded another
a. by abuse of confidence, or
MPM Agency was never licensed by POEA to recruit workers b. by means of deceit; and
for overseas employment. Gallo made false 2) that damage or prejudice capable of pecuniary estimation is
misrepresentations and promises in assuring them that after caused to the offended party or third person.
they paid the placement fee, jobs in Korea as factory workers
were waiting for them and that they would be deployed soon. Deceit is the false representation of a matter of fact, whether by
words or conduct, by false or misleading allegations, or by
The active involvement of each in the recruitment scam was concealment of that which should have been disclosed; and which
directed at one single purpose – to divest complainants with deceives or is intended to deceive another so that he shall act upon
their money on the pretext of guaranteed employment it, to his legal injury.
abroad.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


People v. Lalli Lolita Sagadsad Plando was asked by Aringoy if she is Section 6 of Republic Act No. 8042 (RA 8042) defines illegal
interested to work in Malaysia as restaurant entertainer. She recruitment, as follows:
agreed and gave her sister’s passport to use as her passport
SYNDICATED (by changing the picture in the passport). Lalli and Illegal recruitment shall mean any act of canvassing, enlisting,
ILLEGAL Relampagos boarded with her going to Kota Kinabalu. When contracting, transporting, utilizing, hiring, or procuring workers and
RECRUITMENT they arrived at the restaurant, they learned that it was a includes referring, contact services, promising or advertising for
prostitution den. Lolita couldn’t do anything; she was forced employment abroad, whether for profit or not, when undertaken
CONSPIRACY to work as entertainer with extra service until she was able to by a non-licensee or non-holder of authority contemplated under
contact her other sister and asked help. She filed a case of Article 13(f) of Presidential Decree No. 442, as amended, otherwise
illegal recruitment and trafficking against Aringoy, Lalli, and known as the Labor Code of the Philippines.
Relampagos.
Illegal recruitment when committed by a syndicate or in large scale
SC: Guilty of illegal recruitment AND trafficking. They shall be considered an offense involving economic sabotage.
recruited Lolita to work in Malaysia without the requisite
POEA license, thus constituting the crime of illegal Illegal recruitment is deemed committed by a syndicate if carried out
recruitment. Worse, the accused deceived her by saying that by a group of three (3) or more persons conspiring or confederating
her work in Malaysia would be as restaurant entertainer, with one another.
when in fact, Lolita would be working as a prostitute, thus,
constituting the crime of trafficking. Article 13(f) of Presidential Decree No. 442:

All three accused conspired and confederated with one “Authority” means a document issued by the Department of Labor
another to illegally recruit Lolita to become a prostitute in authorizing a person or association to engage in recruitment and
Malaysia, it follows that they are also guilty beyond placement activities as a private recruitment entity.
reasonable doubt of the crime of Qualified Trafficking in
Persons committed by a syndicate under RA 9208 because Such act of referral, in connivance with someone without the
the crime of recruitment for prostitution also constitutes requisite authority or POEA license, constitutes illegal recruitment. In
trafficking. its simplest terms, illegal recruitment is committed by persons who,
without authority from the government, give the impression that they
have the power to send workers abroad for employment purposes.

The three elements of syndicated illegal recruitment are present


in this case, in particular:
3) the accused have no valid license or authority required by
law to enable them to lawfully engage in the recruitment and
placement of workers;
4) the accused engaged in this activity of recruitment and
placement by actually recruiting, deploying and transporting

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Lolita to Malaysia; and
5) illegal recruitment was committed by three persons
(Aringoy, Lalli and Relampagos), conspiring and
confederating with one another.

The elements of conspiracy are the following:


1) two or more persons came to an agreement,
2) the agreement concerned the commission of a felony, and
3) the execution of the felony was decided upon.

The conspiracy may be deduced from the mode or manner in which


the crime was perpetrated; it may also be inferred from the acts of
the accused evincing a joint or common purpose and design,
concerted action and community of interest.

Trafficking in Persons—refers to the recruitment, transportation,


transfer or harboring, or receipt of persons with or without the
victim’s consent or knowledge.

People v. Ocden Complainants went to Ocden’s house in Baguio City to apply Article 13(f) of the Labor Code provides that:
for work as factory workers in Italy with monthly salaries of It shall likewise include the following acts, whether committed by any
US$1,200.00. They were required by Ocden to submit their person, whether a non-licensee, non-holder, licensee or holder of
bio-data and passports, pay the placement fee of authority:
P70,000.00, and to undergo medical examination. In
preparation for their flight to Italy, the three proceeded to (m) Failure to reimburse expenses incurred by the worker in
Manila. In Manila, they were introduced by Ocden to Erlinda connection with his documentation and processing for purposes of
Ramos. Ocden and Ramos then accompanied Ferrer, deployment, in cases where the deployment does not actually take
Jennilyn, and Alipio to the airport where they took a flight to place without the worker’s fault. Illegal recruitment when committed
Zamboanga. Ocden explained to Ferrer, Jennilyn, and Alipio by a syndicate or in large scale shall be considered an offense
that they would be transported to Malaysia where their visa involving economic sabotage.
application for Italy would be processed. Sensing that they
were being fooled, Ferrer and Jennilyn decided to get a To prove illegal recruitment, it must be shown that appellant gave
refund of their money, but Ocden was nowhere to be found. complainants the distinct impression that he had the power or ability
They learned later that Ocden was not a licensed recruiter. to send complainants abroad for work such that the latter were
Golidan and her sons were only able to get 60,000 out of the convinced to part with their money in order to be employed.
140,000 that they paid to Ocden. They filed a complaint of
illegal recruitment in large scale and three counts of estafa. The offense of illegal recruitment is malum prohibitum where the

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


SC: Ocden committed illegal recruitment as described in said criminal intent of the accused is not necessary for conviction, while
provision by receiving placement fees from Mana-a, Ferrer, estafa is malum in se where the criminal intent of the accused is
and Golidan’s two sons, Jeffries and Howard, evidenced by crucial for conviction. Conviction for offenses under the Labor Code
receipts Ocden herself issued; and failing to does not bar conviction for offenses punishable by other laws.
reimburse/refund to Mana-a, Ferrer, and Golidan’s two sons Conversely, conviction for estafa under par. 2(a) of Art. 315 of the
the amounts they had paid when they were not able to leave Revised Penal Code does not bar a conviction for illegal recruitment
for Italy, through no fault of their own. under the Labor Code. It follows that one’s acquittal of the crime of
estafa will not necessarily result in his acquittal of the crime of illegal
recruitment in large scale, and vice versa.

The elements of estafa are:


1) that the accused defrauded another by abuse of confidence
or by means of deceit, and
2) that damage or prejudice capable of pecuniary estimation is
caused to the offended party or third person.

People v. Ong Noel Bascanot is an optometrist; he met Benzon Ong and REFERRAL - the act of passing along or forwarding of an applicant
told the former that he had contacts in Taiwan who were for employment after an initial interview of a selected applicant for
looking for workers. He was recruited as a factory worker for employment to a selected employer, placement officer or bureau.
ELEMENTS OF six monhs. He was charged for placement and processing
CRIME OF ILLEGAL fee He never got to Taiwan. When he and other
RECRUITMENT IN complainants sought to inquire about their application, they Illegal recruitment is considered an offense involving economic
LARGE SCALE discovered that Benz Ong no longer held office at the place sabotage if any of these qualifying circumstances exist, namely,
in Session Road. when illegal recruitment is committed by a syndicate, i.e., if it is
carried out by a group of three or more persons conspiring and/or
Benz Ong claims that he merely suggested to them the confederating with one another; or,
opportunity to work overseas but that he never advertised when illegal recruitment is committed in large scale, i.e., if it is
himself as a recruiter. committed against three or more persons individually or as a group.

SC: Benz Ong represented himself to complainants as one The essential elements of the crime of illegal recruitment in
capable of deploying workers abroad and even quoted the large scale are:
alleged salary rates of factory and construction workers in 1) the accused engages in acts of recruitment and placement
Taiwan. He advised Bacasnot to accept a job as a factory of workers defined under Art. 13(b) or in any prohibited
worker first because it would be then easier for him to activities under Art. 34 of the Labor Code;
transfer jobs once he got to Taiwan. Bacasnot paid accused- 2) the accused has not complied with the guidelines issued by
appellant an initial placement fee agreeing to pay the balance the Secretary of Labor and Employment, particularly with
through salary deductions once he was employed. These respect to the securing of a license or an authority to recruit

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


acts of accused-appellant created the distinct impression on and deploy workers, either locally or overseas; and
the eight complainants that he was a recruiter for overseas 3) the accused commits the unlawful acts against three or
employment. There is no question that he was neither more persons, individually or as a group.
licensed nor authorized to recruit workers for overseas
employment. LICENSE - that which is issued by the Department of Labor and
Employment authorizing a person or entity to operate a private
employment agency

AUTHORITY - that issued by the DOLE entitling a person or


association to so engage in recruitment and placement activities as
a private recruitment agency. It is the lack of the necessary license
or authority that renders the recruitment unlawful or criminal.

LABOR WORKING CONDITIONS


Peñaranda v. Charlito Peñaranda was hired as an employee of Baganga Like managerial employees, officers and members of the
Baganga Plywood Plywood Corporation (BPC) to take charge of the operations managerial staff are not entitled to the provisions of law on labor
Corp. and maintenance of its steam plant boiler. In May 2001, standards.32 The IRR of the Labor Code define members of a
Peñaranda filed a Complaint for illegal dismissal with money managerial staff as those with the following duties and
claims (overtime, premium – holiday and rest day, and night responsibilities:
MANAGERIAL STAFF shift) against BPC. Defense claims that first, Peñaranda was 1. The primary duty consists of the performance of work
EXCLUDED a managerial employee and second, BPC was on temporary directly related to management policies of the employer;
closure due to repair and general maintenance and it applied 2. Customarily and regularly exercise discretion and
for clearance with DOLE to shut down and to dismiss independent judgment:
employees. When BPC partially reopened in January 2001, (i) Regularly and directly assist a proprietor or a
he failed to reapply & opted to sever employment when he managerial employee whose primary duty consists of
asked for separation benefits. the management of the establishment in which he is
employed or subdivision thereof; or
SC: He is a member of the managerial staff, which also takes (ii) Execute under general supervision work along
him out of the coverage of labor standards. His duties and specialized or technical lines requiring special
responsibilities conform to the definition of a member of a training, experience, or knowledge; or
managerial staff under the Implementing Rules. He (iii) Execute under general supervision special
supervises the engineering section of the steam plant boiler assignments and tasks; and
and oversees the operation of the machines and the 3. 
Who do not devote more than 20 percent of their hours
performance of the workers in the engineering section. He worked in a workweek to activities which are not directly
uses discretion and independent judgment to ensure the and closely related to the performance of the work
proper functioning of the steam plant boiler. Foreman described in paragraphs (1), (2), and (3) above.
implies that he was the representative of management

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


over the workers and the operation of the department.
Auto Bus Transport Since 24 May 1995, respondent Antonio Bautista has been Employees engaged on task or contract basis or paid on purely
Systems v. Bautista employed by Auto Bus Transport Systems, Inc. as driver- commission basis are not automatically exempted from the grant of
conductor with travel routes Manila-Tuguegarao via Baguio, service incentive leave, unless, they fall under the classification of
Baguio- Tuguegarao via Manila and Manila-Tabuk via field personnel.
DRIVER IS IN Baguio. He was paid on commission basis, seven percent
CONSTANT (7%) of the total gross income per travel, on a twice a month GENERAL RULE: Field personnel are those whose performance of
SUPERVISION basis. One day, the bus he was driving bumped the rear their job/service is not supervised by the employer or his
portion of Autobus No. 124. He was then not allowed to work representative, the workplace being away from the principal office
until he fully paid the amount for repair and damage and and whose hours and days of work cannot be determined with
FIELD PERSONNEL despite his plead to the management, he was later on reasonable certainty; hence, they are paid specific amount for
NOT BASED ON terminated. He instituted a complaint for Illegal Dismissal with rendering specific service or performing specific work. If required to
MODE OF PAYMENT Money Claims for nonpayment of 13th month pay and be at specific places at specific times, employees including
service incentive leave pay against Autobus. drivers cannot be said to be field personnel despite the fact
PRESCRIPTIVE that they are performing work away from the principal office of
PERIOD 2 YEARS SC: What must be ascertained in order to resolve the issue the employee.
STARTS FROM of propriety of the grant of service incentive leave to
REFUSAL TO PAY respondent is whether or not he is a field personnel, not The definition of a “field personnel” is not merely concerned with the
whether he is paid on a purely commission basis. location where the employee regularly performs his duties but also
with the fact that the employee’s performance is unsupervised by
There are its inspectors assigned at strategic places who the employer. Thus, in order to conclude whether an employee is a
board the bus and inspect the passengers, the punched field employee, it is also necessary to ascertain if actual hours of
tickets, and the conductor’s reports. There is also the work in the field can be determined with reasonable certainty by the
mandatory once-a-week car barn or shop day, where the bus employer. In so doing, an inquiry must be made as to whether or not
is regularly checked as to its mechanical, electrical, and the employee’s time and performance are constantly supervised by
hydraulic aspects, whether or not there are problems thereon the employer.
as reported by the driver and/or conductor. The driver was
therefore under constant supervision while in the In the case of service incentive leave, the employee may choose to
performance of this work. He cannot be considered a either use his leave credits or commute it to its monetary equivalent
field personnel. He is not a field personnel but a regular if not exhausted at the end of the year. Furthermore, if the employee
employee who performs tasks usually necessary and entitled to service incentive leave does not use or commute the
desirable to the usual trade of petitioner’s business and same, he is entitled upon his resignation or separation from work to
therefore entitled to the grant of SIL. the commutation of his accrued service incentive leave. The cause
of action of an entitled employee to claim his service incentive leave
Bautista had not made use of his service incentive leave nor pay accrues from the moment the employer refuses to remunerate
demanded for its commutation until his employment was its monetary equivalent if the employee did not make use of said
terminated by petitioner. Neither did petitioner compensate leave credits but instead chose to avail of its commutation. The

53

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


his accumulated service incentive leave pay at the time of his three (3)-year prescriptive period commences, not at the end of the
dismissal. It was only upon his filing of a complaint for illegal year when the employee becomes entitled to the commutation of his
dismissal, one month from the time of his dismissal, that service incentive leave, but from the time when the employer
respondent demanded from his former employer refuses to pay its monetary equivalent after demand of commutation
commutation of his accumulated leave credits. His cause of or upon termination of the employee’s services.
action to claim the payment of his accumulated service
incentive leave thus accrued from the time when his
employer dismissed him and failed to pay his accumulated
leave credits.

David v. Macasio Macasio had been working as a butcher for David since Art. 97(6). WAGES – remuneration or earnings, however
1995. He claimed that David exercised effective control and designated, capable of being expressed in terms of money, whether
BUTCHER supervision over his work, pointing out that David: (1) set the fixed or ascertained on a time, task, piece, or commission basis, or
work day, reporting time and hogs to be chopped, as well as other method of calculating the same, which is payable by an
EMPLOYEE PAID BY the manner by which he was to perform his work; (2) daily employer to an employee under a written or unwritten contract of
RESULT paid his salary of P700.00, which was increased from employment for work done or to be done, or for services rendered or
P600.00 in 2007, P500.00 in 2006 and P400.00 in 2005; and to be rendered.
(3) approved and disapproved his leaves. In January 2009,
Macasio filed before a complaint against petitioner Ariel L. GENERAL RULE: Holiday and SIL pay provisions cover all
David, doing business under the name and style “Yiels Hog employees. To be excluded from their coverage, an employee must
Dealer,” for nonpayment of overtime pay, holiday pay and be one of those that these provisions expressly exempt, strictly in
13th month pay. He also claimed payment for service accordance with the exemption.
incentive leave (SIL).
EXEMPTION under IRR: Field personnel and other employees
David’s defense was he hired Macasio as a butcher or whose time and performance is unsupervised by the employer
chopper on “pakyaw” or task basis who is, therefore, not including those who are engaged on task or contract basis. Unlike
entitled to overtime pay, holiday pay and 13th month pay Article 82 of the Labor Code, the IRR on holiday and SIL pay do
pursuant to the IRR. not exclude employees “engaged on task basis” as a separate and
distinct category from employees classified as “field personnel.”
SC: Macasio is an employee of David. Regardless of the total Rather, these employees are altogether merged into one
hours that he spent at the workplace or of the total number of classification of exempted employees.
the hogs assigned to him for chopping, Macasio would
receive the fixed amount of P700.00 once he had completed The payment of an employee on task or pakyaw basis alone is
his task. Engagement on “pakyaw” or task basis does not insufficient to exclude one from the coverage of SIL and
determine the parties’ relationship as it is simply a method of holiday pay. They are exempted from the coverage of Title I
pay computation. (including the holiday and SIL pay) only if they qualify as “field
personnel.” The IRR therefore validly qualifies and limits the general

54

DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


Macasio does not fall under the definition of “field personnel.” exclusion of “workers paid by results” found in Article 82 from the
The CA’s finding in this regard is supported by the coverage of holiday and SIL pay.
established facts of this case: first, Macasio regularly
performed his duties at David’s principal place of business; GENERAL RULE: If the worker is simply engaged on pakyaw or
second, his actual hours of work could be determined with task basis, then he is entitled to a holiday pay and SIL pay unless
reasonable certainty; and third, David supervised his time exempted from the exceptions specifically provided under Article 94
and performance of duties. Since Macasio cannot be (holiday pay) and Article 95 (SIL pay) of the Labor Code.
considered a “field personnel,” then he is not exempted from
the grant of holiday, SIL pay even as he was engaged on EXCEPTION: If the worker engaged on pakyaw or task basis also
“pakyaw” or task basis. falls within the meaning of “field personnel” under the law, then he is
not entitled to these monetary benefits.
th
BUT he is not entitled to 13 month pay. Sec. 3(e) of P.D.
No. 851, employers of those who are paid on task basis, and .*T/F: ALL benefits under Title I shall mean that workers paid by
those who are paid a fixed amount for performing a specific results must always be field personnel
work, irrespective of the time consumed in the performance False. Look at p. 298 for benefits payable to piece-rate workers.
thereof are exempted.

Labor Congress of the The 99 persons named as petitioners in this proceeding were PIECE-RATE WORKERS - Those workers who fall under the piece-
PH v. NLRC rank-and-file employees of respondent Empire Food rate category as those who are paid a standard amount for every
Products; they filed against private respondents a complaint piece or unit of work produced that is more or less regularly
for payment of money claims and for violation of labor replicated, without regard to the time spent in producing the same.
standards laws. They entered into a MOA with Empire Food
Products, agreeing, among others that Management of the As to the other benefits, namely, holiday pay, premium pay, 13th
Empire Food Products shall make the proper adjustment of month pay and service incentive leave which the labor arbiter failed
the Employees Wages within fifteen (15) days from the to rule on but which petitioners prayed for in their complaint,
signing of this Agreement and further agreed to register all petitioners are so entitled to these benefits. Although piece-rate
the employees with the SSS. After the submission, LA workers, were regular employees of private respondents.
absolved Empire of the charges of unfair labor practice, 1) Their job of repacking snack food was necessary or
union busting, violation of MOA, underpayment of wages. desirable in the usual business of private respondents, who
However, he later on directed the reinstatement of the were engaged in the manufacture and selling of such food
complaints for violation of not maintaining payroll subject to products;
inspection and visitation of DOLE. 2) They worked for private respondents throughout the year,
their employment not having been dependent on a specific
Empire’s defense was that the complainant workers refused project or season;
and failed to report for work, hence guilty of abandoning their
post without permission from respondents. As a result of
complainants’ failure to report for work, the cheese curls

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


ready for repacking were all spoiled to the prejudice of
respondents. That claims for underpayment of wages were
without basis as complainants were admittedly “pakiao”
workers and paid on the basis of their output subject to the
lone limitation that the payment conformed to the minimum
wage rate for an eight-hour workday;

SC: The failure to work for one day, which resulted in the
spoilage of cheese curls does not amount to abandonment of
work. In fact two (2) days after the reported abandonment of
work or on January 23, 1991, petitioners filed a complaint for,
among others, unfair labor practice, illegal lockout and/or
illegal dismissal. Therefore, entitled with full backwages.

PAL v. NLRC Dr. Herminio Fabros was employed as flight surgeon. He was The eight-hour work period does not include the meal break.
assigned at the PAL Medical Clinic at Nichols and was on Nowhere in the law may it be inferred that employees must take
duty from 4:00 in the afternoon until 12:00 midnight. On their meals within the company premises. Employees are not
February 17, 1994, at around 7:00 in the evening, private prohibited from going out of the premises as long as they return to
respondent left the clinic to have his dinner at his residence, their posts on time.
which was about five-minute drive away. A few minutes later,
the clinic received an emergency call from the PAL Cargo
Services. One of its employees, Mr. Manuel Acosta, had
suffered a heart attack. The nurse on duty, Mr. Merlino
Eusebio, called private respondent at home to inform him of
the emergency. The patient arrived at the clinic at 7:50 in the
evening and Mr. Eusebio immediately rushed him to the
hospital. When Fabros reached the clinic at around 7:51 in
the evening, Mr. Eusebio had already left with the patient. Mr.
Acosta died the following day.

Dr. Fabros asserted that he was entitled to a thirty-minute


meal break; that he immediately left his residence upon being
informed by Mr. Eusebio about the emergency and he arrived
at the clinic a few minutes later; that Mr. Eusebio panicked
and brought the patient to the hospital without waiting for
him.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


SC: Private respondent’s act of going home to take his dinner
does not constitute abandonment.

Arica v. NLRC Petitioner workers filed a complaint for assembly time from The thirty (30)-minute assembly time long practiced and
5:30 to 6:00 to be considered as waiting time or work time institutionalized by mutual consent of the parties under Article IV,
and should be compensable since these preliminary activities Section 3, of the Collective Bargaining Agreement cannot be
are necessarily and primarily for the company’s benefit. considered as ‘waiting time’ within the purview of Section 5, Rule
I, Book III of the Rules and Regulations Implementing the Labor
These preliminary activities of the workers are as follows: Code. Furthermore, the thirty (30)-minute assembly is a deeply-
(a) 
First there is the roll call. This is followed by getting rooted, routinary practice of the employees, and the proceedings
their individual work assignments from the foreman. attendant thereto are not infected with complexities as to deprive the
(b) Thereafter, they are individually required to workers the time to attend to other personal pursuits.
accomplish the Laborer’s Daily Accomplishment
Report during which they are often made to explain The thirty (30)-minute assembly time was not primarily intended for
about their reported accomplishment the following the interests of the employer, but ultimately for the employees to
day. indicate their availability or non-availability for work during every
(c) Then they go to the stockroom to get the working working day.
materials, tools and equipment.
(d) Lastly, they travel to the field bringing with them their *Note that in the dissenting opinion, when the time cannot be used
tools, equipment and materials. to pursue personal things, the time should be considered
compensable.

Rada v. NLRC Hilario Rada’s initial employment as a driver with Philnor AS TO ENTITLEMENT TO OVERTIME COMPENSATION:
under a 'Contract of Employment for a Definite Period' dated
July 7, 1977. The contract provides that the employer does He picks up employees of Philnor at certain specified points along
not have a continuing need for the services of the Employee EDSA in going to the project site and drops them off at the same
beyond the termination date of this contract and that the points on his way back from the field office going home to Marikina,
Employee's services shall automatically, and without notice, Metro Manila is not merely incidental to petitioner's job as a driver.
terminate upon the completion of the above specified phase His transportation arrangement had been adopted primarily for the
of the project; and that it is further understood that the benefit of the employer. Proof thereof is the undisputed fact that
engagement of his/her services is co-terminus with the same when petitioner is absent, another driver is supposed to replace him
and not with the whole project or other phases thereof. and drive the vehicle and likewise pick up and/or drop off the other
employees at the designated points on EDSA. If driving these
The project was not ye finished when the first contract of employees to and from the project site is not really part of
employment expired in 1979 so it was extended beyond the petitioner's job, then there would have been no need to find a
original period of 2.3 years. A second contract of employment replacement driver to fetch these employees.
w/ definite period of 10 months but the project was then

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


again unfinished so a third contract for 19 months was This work is indispensable and consequently mandatory, then
signed. It was not extended any further because Petitioner the time required of and used by petitioner in going from his
had no more work to do in the project. Rada applied for residence to the field office and back, that is, from 5:30 A.M. to 7:00
Personnel Clearance with Philnor acknowledging receipt of A.M. and from 4:00 P.M. to around 6:00 P.M., which the labor arbiter
the amount of P3,796.20 representing conversion to cash of rounded off as averaging three hours each working day, should be
unused leave credits and financial assistance. Petitioner also paid as overtime work.
released Respondent from all obligations and/or claims in a
Release, Waiver and Quitclaim. He then filed for a complaint
of non-payment of separation pay and overtime pay.

Defense was he was not illegally terminated since the project


for which he was hired was completed; that he was hired
under three distinct contracts of employment.

SC: Project employee whose work was coterminous with the


project for which they were hired. Even if he was hired as a
driver for 8 years, the services he rendered were only for a
particular project. His termination was valid by reason of the
completion of the project and expiration f employment
contract. BUT he is entitled to overtime compensation.

R.B. Michael Press v. Nicasio Galit was employed by petitioner R.B. Michael Press WAIVER - a voluntary and intentional relinquishment or
Galit as an offset machine operator, whose work schedule was abandonment of a known legal right or privilege; to be valid and
from 8:00 a.m. to 5:00 p.m., Mondays to Saturdays, and he effective must be couched in clear and unequivocal terms which
was paid PhP 230 a day. During his employment, Galit was leave no doubt as to the intention of a party to give up a right or
tardy for a total of 190 times, totaling to 6,117 minutes, and benefit which legally pertains to him.
was absent without leave for a total of nine and a half days.
One day, he was ordered to render overtime service in order For willful disobedience to be a valid cause for dismissal, these two
to comply with a job order deadline, but he refused to do so. elements must concur:
When he was asked to report in the afternoon, he received a 1) The employee’s assailed conduct must have been willful,
memorandum for a warning for dismissal/notice of hearing. that is, characterized by a wrongful and perverse attitude;
He was then terminated from employment, given his two-day and
salary and termination letter. He subsequently filed a 2) The order violated must have been reasonable, lawful,
complaint for illegal dismissal and money claims. made known to the employee, and must pertain to the
duties which he had been engaged to discharge.
SC: Galit’s habitual tardiness cannot be considered
condoned. The management prerogative to discipline

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employees and impose punishment is a legal right which Art. 89(c): EMERGENCY OVERTIME WORK
cannot, as a general rule, be impliedly waived. Any employee may be required by the employer to perform overtime
work in any of the following cases:
Petitioners’ order for respondent to render overtime service
to meet a production deadline complies with the second (c) When there is urgent work to be performed on machines,
requisite. Art. 89 of the Labor Code empowers the employer installations, or equipment, in order to avoid serious loss or damage
to legally compel his employees to perform overtime work to the employer or some other cause of similar nature;
against their will to prevent serious loss or damage. R.B.
Michael Press’ business is a printing press whose production
schedule is sometimes flexible and varying. It is only
reasonable that workers are sometimes asked to render
overtime work in order to meet production deadlines. Galit
unjustifiably refused to render overtime work despite a valid
order to do and despite the knowledge that there is a
production deadline that needs to be met.

Caltex Regular MACLU entered into a CBA with Caltex effective midnight of Overtime work consists of hours worked on a given day in excess of
Employees at Manila December 21, 1988. Sometime in August 1986, the Union the applicable work period, which here is eight (8) hours. It is not
Office v. Caltex called Caltex’s attention to alleged violations by Caltex of enough that the hours worked fall on disagreeable or inconvenient
Philippines Inc. Annex “B” of the 1985 CBA, e.g. non-payment of night-shift hours. In order that work may be considered as overtime work, the
differential, non-payment of overtime pay and non-payment hours worked must be in excess of and in addition to the eight (8)
at “first day-off rates” for work performed on a Saturday. hours worked during the prescribed daily work period, or the forty
Caltex’s Industrial Relations manager immediately evaluated (40) hours worked during the regular work week Monday thru Friday.
petitioner’s claims and accordingly informed petitioner Union
that differential payments would be timely implemented. In Under the CBA, hours worked on a Saturday do not, by that fact
the implementation of the re-computed claims, however, no alone, necessarily constitute overtime work compensable at
differential payment was made with respect to work premium rates of pay, contrary to petitioner’s assertion. It is only
performed on the first 2 1/2 hours on a Saturday. The Union when an employee has been required on a Saturday to render work
instituted a complaint for unfair labor practice against Caltex in excess of the forty (40) hours which constitute the regular work
alleging violation of CBA and short-changing its employees week that such employee may be considered as performing
when Caltex compensated work performed on the first 2 1/2 overtime work on that Saturday. The statutory prohibition against
hours of Saturday, an employees’ day of rest, at regular offsetting undertime one day with overtime another day has no
rates, when it should be paying at “day of rest” or “day off” application in the case at bar.
rates.
*FLJ said to note rule on offsetting overtime.
Caltex’s defense was Saturday was never designated as a
day of rest, much less a “dayoff”. It maintained that the 1985

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CBA provided only 1 day of rest for employees at the Manila Art. 88. Undertime not offset by overtime — Undertime work on any
Office, as well as employees similarly situated at the Legazpi particular day shall not be offset by overtime work on any other day.
and Marinduque Bulk Depots. This day of rest, according to Permission given to the employee to go on leave on some other day
Caltex, was Sunday. of the week shall not exempt the employer from paying the
SC: The intention of the parties to the 1985 CBA was to additional compensation required in this Chapter.”
provide the employees with only one (1) day of rest. The
plain and ordinary meaning of the language of Article III is
that Caltex and the Union had agreed to pay “day of rest”
rates for work performed on “an employee’s one day of rest.”
Moreover, “First Day-off rates” and “Second Day-off rates”
are applicable only to employees stationed at the refinery
and associated facilities like depots and terminals which
must be in constant twenty-four (24) hours a day, seven (7)
days a week, operation, hence necessitating the continuous
presence of operations personnel.

Union of Filpro Filipro filed a motion for clarification seeking: In deciding whether or not an employee's actual working hours in
Employees v. Vivar Jr. (1) the limitation of the award to three years, the field can be determined with reasonable certainty, query must
(2) the exclusion of salesmen, sales representatives, be made as to whether or not such employee's time and
truck drivers, merchandisers and medical performance is constantly supervised by the employer.
representatives (referred to as sales personnel)
from the award of the holiday pay; and The criteria for granting incentive bonus are:
(3) deduction from the holiday pay award of (1) attaining or exceeding sales volume based on sales
overpayment for overtime, night differential, target;
vacation and sick leave benefits due to the change (2) good collection performance;
of the divisor in the computation benefits from 251 (3) proper compliance with good market hygiene;
to 261 days. (4) good merchandising work;
(5) minimal market returns and
SC: Sales personnel are field personnel. The law requires (6) proper truck maintenance.
that the actual hours of work in the field be reasonably
ascertained. The company has no way of determining The above criteria indicate that these sales personnel are given
whether or not these sales personnel, even if they report to incentive bonuses precisely because of the difficulty in measuring
the office before 8:00 a.m. prior to field work and come back their actual hours of field work. These employees are evaluated by
at 4:30 p.m., really spend the hours in between in actual field the result of their work and not by the actual hours of field work
work. The clause "whose time and performance is which are hardly susceptible to determination.
unsupervised by the employer" did not amplify but merely
interpreted and expounded the clause "whose actual hours of

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


work in the field cannot be determined with reasonable The divisor assumes an important role in determining whether
certainty." or not holiday pay is already included in the monthly paid
employee's salary and in the computation of his daily rate.
The use of 251 days' divisor by respondent Filipro indicates
that holiday pay is not yet included in the employee's salary, The daily rate, assuming there are no intervening salary increases,
otherwise the divisor should have been 261. Changing the is a constant figure for the purpose of computing overtime and night
divisor to 261 would result in a lower daily rate which is differential pay and commutation of sick and vacation leave credits.
violative of the prohibition on non-diminution of
benefits.

Trans-Asia Phils TAPEA entered into a CBA effective April 1, 1988 up to SC: Trans-Asia’s inclusion of holiday pay in petitioner’s monthly
Employees March 31, 1991. with Trans-Asia providing payment of salary is clearly established by its consistent use of the divisor of
Association v. NLRC holiday pay with a stipulation that if an employee is permitted “286” days in the computation of its employees’ benefits and
to work on a legal holiday, the said employee will receive a deductions. The ten (10) legal holidays in a year are already
salary equivalent to 200% of the regular daily wage plus a accounted for with the use of the said divisor.
60% premium pay. The issue was on the payment of holiday
from January 1985 to December 1987.

Trans-Asia asserted that the Employees’ Manual which


provides for a pre-condition for payment of holiday pay is not
indicative of its non-payment of holiday pay since it has
always honored the labor law provisions on holiday pay by
incorporating the same in the payment of the monthly
salaries of its employees. It pointed out that it has long been
the standing practice of the company to use the divisor of
“286” days in computing for its employees’ overtime pay and
daily rate deductions for absences; that the “286” days
divisor already takes into account the ten (10) regular
holidays in a year since it only subtracts from the 365
calendar days the unworked and unpaid 52 Sundays and 26
Saturdays.

PNCC Workers’ PSTMSDWO and PNCC Skyway Corp. entered into a In the grant of vacation leave privileges to an employee, the
Organization v. PNCC Collective Bargaining Agreement (CBA) incorporating the employer is given the leeway to impose conditions on the
Skyway Corporation terms and conditions of their agreement which included entitlement to and commutation of the same, as the grant of
vacation leave and expenses for security license provisions. vacation leave is not a standard of law, but a prerogative of

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


The article on vacation leave provides that, “the company management. It is a mere concession or act of grace of the
shall schedule the vacation leave of employees during the employer and not a matter of right on the part of the employee.
year taking into consideration the request of preference of Thus, it is well within the power and authority of an employer to
the employees.” The article on security license provides that, impose certain conditions, as it deems fit, on the grant of vacation
“All expenses of security guard in securing/renewing their leaves, such as having the option to schedule the same.
licenses shall be for their personal account.”
The vacation leave privilege was not intended to serve as additional
The workers insisted that the union members have the right salary, but as a non-monetary benefit. To give the employees the
to schedule their leaves and that the unilateral scheduling of option not to consume it with the aim of converting it to cash at the
vacation leave was done to avoid monetization of their end of the year would defeat the very purpose of vacation leave.
vacation leave; that the expenses for required in-service
training be shouldered by PNCC.

SC: CBA provides that the scheduling of vacation leave


SHALL be the option of employer. PNCC should shoulder the
in-training expenses of security guards.

Phil. Hoteliers Inc v. NOV 2001 - Wage Order no. 9 of the NCR took effect, which SC: The increased salaries of the employees should be used as
National Union of grants 30php ECOLA to employees receiving daily wage bases for determining whether they were entitled to ECOLA under
Workers in Hotel, rates from 260-290. The Union then sent to the DOLE a letter W.O. No. 9. Hence, workers and employees receiving daily wages
Restaurant and Allied reporting the non-compliance of Dusit Hotel, while there was of more than Php290 were no longer entitled to ECOLA. As to
Industries. an on-going compulsory arbitration before NLRC due to a receipt of service charges, they cannot constitute substantial
bargaining deadlock between the Union and Dusit Hotel. compliance with the prescribed payment in ECOLA. Hotel
employees have a right to their share in the service charges
22 OCT 2002 – DOLE ordered Dusit to pay 144 employees collected by Dusit Thani.
to pay ECOLA accdg to W.O. 9.

Dusit’s defense: 9 OCT 2002 – NLRC resolved the


bargaining deadlock and awarding salary increases to hotel
employees retroactive to 1 JAN 2001 and 1 JAN 2002.
Union asserts that the wage increases granted by NLRC
should not be deemed as compliance with W.O. No. 9.

Whether the hotel employees were still entitled to ECOLA


granted by W.O. No. 9 despite the increases in their salaries,
retroactive 1 January 2001, ordered by NLRC in a Decision
dated 9 October 2002.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


WAGES
Songco v. NLRC Zuellig filed with DOLE an application seeking clearance to Art. 97(6). WAGES – remuneration or earnings, however
terminate services of Songoc et. al allegedly on the ground of designated, capable of being expressed in terms of money, whether
SALES COMMISSION retrenchment due to financial losses. They first contested fixed or ascertained on a time, task, piece, or commission basis, or
AS PART OF their dismissal but later on conceded and just demanded that other method of calculating the same, which is payable by an
SEPARATION PAY their sales commission and allowances be included in their employer to an employee under a written or unwritten contract of
monthly salary for the purpose of computation of their employment for work done or to be done, or for services rendered or
separation pay. to be rendered.

SC: Yes, allowances and sales commission are included. Art. Salary means a recompense or consideration made to a person for
97(f) by itself is explicit that commission is included in the his pains or industry in another man’s business. Commission is the
definition of the term “wage.” Art. 283 (pay or salary) and Art. recompense, compensation or reward of an agent, salesman,
97 (wage) generally refer to one and the same thing – reward executor, trustees, receiver, factor, broker, or bailee, when the
or recompense for services performed. same is calculated as a percentage on the amount of his
transactions on the profit of the principal.
As to commissions, they were in the form of incentives or
encouragement, so that the petitioners would be inspired to
put a little more industry on the jobs particularly assigned to
them, still these commissions are direct remunerations for
services rendered. The commissions in this case were
earned by actual market transactions attributable to
petitioners.

Millares v. NLRC Aper Industries Corp. of the Phil (PICOP) undertook a Art. 97(6). WAGES – remuneration or earnings, however
retrenchment program and terminated the services of 116 designated, capable of being expressed in terms of money, whether
ALLOWANCES petitioners all occupying positions of technical staff, section fixed or ascertained on a time, task, piece, or commission basis, or
SHOULD BE manager, department manager, division manager, and vice other method of calculating the same, which is payable by an
REGULARLY GIVEN president. They received received separation pay computed employer to an employee under a written or unwritten contract of
TO BE CONSIDERED at the rate of one (1) month basic pay for every year of employment for work done or to be done, or for services rendered or
PART OF THE service. Believing however that the allowances they allegedly to be rendered and includes the fair and reasonable value, as
WAGES regularly received on a monthly basis during their determined by the Secretary of Labor, of board, lodging, or other
employment should have been included in the computation facilities customarily furnished by the employer to the employee.
thereof they lodged a complaint for separation pay
differentials. FACILITIES - articles or services for the benefit of the employee or
his family but excluding tools of the trade or articles or service
1. Staff/ manager’s Allowance – free housing facilities primarily for the benefit of the employer or necessary to the conduct
to supervisory and managerial employees assigned of the employer’s business.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


in Bislig. The allowance ceases whenever a vacancy
occurs in the company’s housing facilities. In determining whether a privilege is a facility, the criterion is not so
2. Transportation Allowance – for those who use their much its kind but its purpose. That the assailed allowances were for
own vehicles in the performance of their duties; the benefit and convenience of respondent company was supported
conditional grant, such that when the conditions no by the circumstance that they were not subjected to withholding tax.
longer obtain, the privilege is discontinued.
3. Bislig Allowance – allowance given to those assigned Separation pay when awarded to an illegally dismissed employee in
in Bislig on account of the hostile environment. lieu of reinstatement or to a retrenched employee should be
computed based not only on the basic salary but also on the regular
SC: The subject allowances were temporarily, not regularly, allowances that the employee had been receiving.
received by petitioners; their continuous enjoyment of the
disputed allowances was based on contingencies the
occurrence of which wrote finis to such enjoyment. The
dsputed allowances were not regularly received by
petitioners.

SLL Int’l Cables v. Lopez, Cañete, and Zuñiga were hired as apprentice or GENERAL RULE: A party who alleges payment of wages as a
NLRC trainee cable/linemen. They were then engaged as project defense has the burden of proving it. The burden of proving
employees 4 times, the last project not being completed due payment of monetary claims rests on the employer who has the
FACILITIES v. to economic problems. The company was constrained to cut pertinent personnel files, payrolls, records, remittances, and other
SUPPLEMENTS down the overtime work of the workers even after their similar documents – which will show that overtime, differentials,
insistence . This prompted them to leave work and went service incentive leave and other claims of workers have been paid
home, then they filed a complaint for illegal dismissal, non- – are not in the possession of the worker but in the custody and
payment of wages., and other money claims. absolute control of the employer.

Defense claims hat they were not illegally dismissed because An employer may provide subsidized meals and snacks to his
they were merely project employees. They further alleged employees provided that the subsidy shall not be less than 30%
that food allowance of Php63/day as well as allowance for of the fair and reasonable value of such facilities. The employer
lodging, transpo, electricity, water, and snacks should be may deduct from the wages of the employees not more than 70%
added to their basic pay and hence results to a higher wage of the value of the meals and sacks enjoyed by the latter,
than the minimum prescribed in Rizal & Manila. provided that such deduction is with the written authorization of the
employees concerned.
SC: They were regular employees but they were not illegally
dismissed; they abandoned work. They are underpaid. They Before the value of the facilities can be deducted from the
are entitled to minimum wage whether or not they are regular employees’ wages, the following requisites must all concur:
employees. SLL failed to present any company policy or 1) Proof must be shown that such facilities are customarily
guideline showing that provisions fro meals and lodging were furnished by the trade

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


part of the employees’ written authorization, much less show 2) The provisions of deductible facilities must be voluntarily
how they arrived at their valuations. Moreover, the items accepted in writing by the employee
provided were given freely by SLL for the purpose of 3) Facilities must be charged at fair and reasonable value.
maintaining the efficiency and health of its workers while they
were working at their respective projects. SUPPLEMENTS – extra renumeration or special privileges or
benefits given to or received by the laborers over and above their
ordinary earnings or wages.

FACILITIES – items of expense necessary for the laborer’s and his


family’s existence and subsistence so that by express provision of
law, they form part of thee wage and when furnished by the
employer are deductible therefrom, since if they are not so
furnished, the laborer would spend and pay for them just the same.

Our Haus Realty v. Our Haus – a construction company – experienced financial Before the value of the facilities can be deducted from the
Parian distress. To alleviate its condition, Our Haus suspended employees’ wages, the following requisites must all concur:
some of its construction projects and asked the affected 1) Proof must be shown that such facilities are
workers, including the respondents, to take vacation leaves. customarily furnished by the trade
Eventually, the respondents were asked to report back to a) The existence of a company policy or guideline showing
work but instead of doing so, they filed with the LA a that provisions for a facility were designated as part of
complaint for underpayment of their daily wages. In addition, the employees’ salaries.
they allege tat Our Haus never presented proof that they b) The existence of an industry-wide practice of furnishing
agreed in writing with deductions of facilities, and instead of the benefits in question among enterprises engaged in
deducting the allowed maximum of 70% of the facilities, they the same line of business.
withheld the full value. 2) The provisions of deductible facilities must be
voluntarily accepted in writing by the employee – A
Our Haus’ defense was that aside from paying the monetary facility may only be deducted from the wage if the employer
51
amount of the respondents’ wages, Our Haus also was authorized in writing by the concerned employee. As
subsidized their meals (3 times a day), and gave them free it diminishes the take-home pay of an employee, the
lodging near the construction project they were assigned to. deduction must be with his express consent.
3) Facilities must be charged at fair and reasonable value.
SC: Deduction and charging both operate to lessen the - The valuation of a facility must be supported by relevant
actual take-home pay of an employee. documents such as receipts and company records for it to
1. Records reveal that the board and lodging were be considered as fair and reasonable.
given on a per project basis and not consistently
enjoyed by the rest of Our Haus’ employees. PURPOSE TEST – If a benefit or privilege granted to the employee
Moreover, peculiar to the construction business are is clearly for the employer’s convenience, it will not be considered as

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


the occupational safety and health (OSH) services a facility but a supplement. If it is primarily for the employee’s gain,
which the law itself mandates employers to provide then the benefit is a facility; if its provision is mainly for the
to their workers. They are required to provide employer’s advantage, then it is a supplement. Substantial
suitable living accommodation for workers, and as consideration must be given to the nature of the employer’s
may be applicable, for their families business in relation to the character or type of work performed
by the employees involved.
SUPPLEMENTS – paid to the employees on top of their basic pay
and are free of charge.

American Wire American Wire Employees Union (Monthly paid and Daily BONUS – An amount granted and paid to an employee for his
Employees Union v. paid) filed an action for voluntary arbitration because industry and loyalty which contributed to the success of the
American Union American Wire, without valid cause, suddenly and unilaterally employer’s business and made possible the realization of profits. It
withdrew and denied certain benefits and entitlements which is an act of generosity granted by an enlightened employer to spur
they have long enjoyed: Service Award, 35% premium pay the employee to greater efforts for the success of the business and
for work rendered on Holy Monday, Holy Tuesday, Holy realization of bigger profits. The granting of a bonus is a
Wednesday, and December 23, 26, 27 and 29; Christmas management prerogative, something given in addition to what is
Party; and Promotional Increase. ordinarily received by or strictly due the recipient. Thus, a bonus is
not a demandable and enforceable obligation, except when it is
SC: The benefits/entitlements subjects of the instant case are made part of the wage, salary or compensation of the
all bonuses which were given by the private respondent out employee.
of its generosity and munificence. The additional 35%
premium pay for work done during selected days of the Holy For a bonus to be enforceable, it must have been promised by the
Week and Christmas season, the holding of Christmas employer and expressly agreed upon by the parties, or it must have
parties with raffle, and the cash incentives given together had a fixed amount and had been a long and regular practice on the
with the service awards are all in excess of what the law part of the employer. To be considered a “regular practice,” the
requires each employer to give its employees. To hold that giving of the bonus should have been done over a long period
an employer should be forced to distribute bonuses which it of time, and must be shown to have been consistent and
granted out of kindness is to penalize him for his past deliberate.
generosity.
*Note that for some, when a bonus has been given for 2 years, it’s
already considered as regular practice.
TSPIC Corp v. TSPIC 1999 – TSPIC and Union entered into a CBA for years 2000 Diminution of benefits is the unilateral withdrawal by the employer of
Employees’ Union to 2004. The CBA included a provision on yearly salary benefits already enjoyed by the employees.
increases starting January 2000 until January 20002.
DIMINUTION OF 1) Effective January 1, 2000 – all employees on regular There is diminution of benefits when it is shown that:
BENEFITS status on or before such date - 10% 1) the grant or benefit is founded on a policy or has ripened
2) Effective January 1, 2001 – all employees on regular into a practice over a long period;

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


status on or before such date – 12% 2) the practice is consistent and deliberate;
3) Effective January 1, 2002 - all employees on regular 3) the practice is not due to error in the construction or
status on or before such date – 11% application of a doubtful or difficult question of law; and
The wage/salary increases for the years 2001 and 2002 shall 4) the diminution or discontinuance is done unilaterally by the
be deemed inclusive of the mandated minimum wage employer.
increases under future Wage Orders, that may be issued
after Wage Order No. NCR07, and shall be considered as
correction of any wage distortion that may have been brought
about by the said future Wage Orders. Thus the wage/salary
increases in 2001 and 2002 shall be deemed as
compliance to future wage orders after Wage Order No.
NCR-07.

January 1, 2000 – First group (9 employees) who were


already regular employees received increase in their salary
October 6, 2000 – W.O. No. 8 was issued, raising the
minimum wage from Php223.50 to Php250.
- Second group (17 employees) who were
probationary employees received the increase
Last quarter of 2000 – second group became regular
employees
- received 25% of 10% of their salaries as granted
under the provision on regularization increase under
Article X, Sec. 2 of the CBA.
January 1, 2001 – TSPIC implemented the new wage rates
as mandated by the CBA.
- As a result, the first group who were senior to the
second group received less wages.
January 19, 2001 - TSPIC’s HR department notified both
groups of employees that due to an error in the automated
payroll system, they were overpaid and the overpayment
would be deducted from their salaries in a staggered basis,
starting February 2001. TSPIC explained that the correction
of the erroneous computation was based on the crediting
provision of Sec. 1, Art. X of the CBA.

The Union, asserted that there was no error and the

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


deduction of the alleged overpayment from employees
constituted diminution of pay. TSPIC maintains that the
formula proposed by the Union, adopted by the arbitrator and
affirmed by the CA, was flawed, inasmuch as it completely
disregarded the “crediting provision” contained in the last
paragraph of Sec. 1, Art. X of the CBA.

SC: The wage/salary increases for the years 2001 and 2002
shall be deemed inclusive of the mandated minimum wage
increases under future wage orders, that may be issued after
WO No. 7, and shall be considered as correction of the wage
distortions that may be brought about by the said future wage
orders. TSPIC granted the salary increases under the
condition that any wage order that may be subsequently
issued shall be credited against the previously granted
increase.

Lepanto Ceramics v. In December 1998, Lepanto Ceramic gave a Php3,000 BONUS - gratuity or act of liberality of the giver. It is something
Lepanto Ceramic bonus to its employees. In 1999, the company and the Union given in addition to what is ordinarily received by or strictly due the
Employees Union entered into a CBA. The Christmas bonus was one of the recipient. A bonus is granted and paid to an employee for his
enumerated “existing benefit, practice of traditional rights” industry and loyalty which contributed to the success of the
WHEN DOES BONUS which “shall remain in full force and effect.” In the succeeding employer’s business and made possible the realization of profits.
BECOME AN years, 1999, 2000 and 2001, the bonus was not in cash.
OBLIGATION Instead, petitioner gave each of the members of respondent GENERAL RULE: A bonus is not a demandable and enforceable
Association Tile Redemption Certificates equivalent to obligation. For a bonus to be enforceable, it must have been
P3,000.00. In 2002, Lepanto Ceramics gave a year-end cash promised by the employer and expressly agreed upon by the
benefit of Six Hundred Pesos (P600.00) and offered a cash parties.
advance to interested employees equivalent to one (1) month
salary payable in one year. The respondent Association Business losses are a feeble ground for to repudiate obligation
objected to the P600.00 cash benefit and argued that this under the CBA. The rule is settled that any benefit and supplement
was in violation of the CBA it executed with the petitioner. being enjoyed by the employees cannot be reduced, diminished,
Lepanto contends that the complaint for nonpayment of the discontinued or eliminated by the employer. The principle of non-
2002 Christmas bonus had no basis as the same was not a diminution of benefits is founded on the constitutional mandate to
demandable and enforceable obligation. It argued that the protect the rights of workers and to promote their welfare and to
giving of extra compensation was based on the company’s afford labor full protection.
available resources for a given year and the workers are not
entitled to a bonus if the company does not make profits.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER


SC: Given that the bonus in this case is integrated in the
CBA, the same partakes the nature of a demandable
obligation. Verily, by virtue of its incorporation in the CBA, the
Christmas bonus due to respondent Association has become
more than just an act of generosity on the part of the
petitioner but a contractual obligation it has undertaken.

Eastern The company plans to defer payment of the 2003 14th, 15th GENERAL RULE: The grant of a bonus is basically a management
Telecommunications and 16th month bonuses sometime in April 2004. The prerogative which cannot be forced upon the employer who may not
v. Easter Telecom company’s main ground in postponing the payment of be obliged to assume the onerous burden of granting bonuses or
Employees Union bonuses is due to allege continuing deterioration of other benefits aside from the employee’s basic salaries or wages. A
company’s financial position which started in the year 2000. bonus is a gratuity or act of liberality of the giver which the recipient
However, ETPI while postponing payment of bonuses has no right to demand as a matter of right.
sometime in April 2004, such payment would also be subject
to availability of funds. EXCEPTION: A bonus becomes a demandable or enforceable
obligation when it is made part of the wage or salary or
ETEU alleges that ETPI had consistently and voluntarily compensation of the employee.
been giving out 14th month bonus during the month of April,
and 15th and 16th month bonuses every December of each To be considered a “regular practice,” however, the giving of the
year to its employees from 1975 to 2002, even when it did bonus should have been done over a long period of time, and must
not realize any net profits; that the payment of these be shown to have been consistent and deliberate. The test or
monetary benefits had ripened into a company practice which rationale of this rule on long practice requires an indubitable
could no longer be unilaterally withdrawn by ETPI. showing that the employer agreed to continue giving the benefits
knowing fully well that said employees are not covered by the law
SC: A reading of the above provision reveals that the same requiring payment thereof.
provides for the giving of 14th, 15th and 16th month bonuses
without qualification. There were no conditions specified in
the CBA Side Agreements for the grant of the benefits
contrary to the claim of ETPI that the same is justified only
when there are profits earned by the company. Payment of
the bonuses was not related to the profitability of business
operations.

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DIMAANDAL, AHB | LABOR I - 3C | ATTY. JAVIER

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