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Labor Standards Case Digest (Midterm)

(1) Work in the glass factory was neither regular nor continuous,
depending wholly on the volume of bottles manufactured to
BROTHERHOOD" LABOR UNITY MOVEMENT OF THE PHILS, be loaded and unloaded, as well as the business activity of
et. Al. the company. Work did not necessarily mean a full eight (8)
vs. hour day for the petitioners. However, work,at times,
HON. RONALDO B. ZAMORA, PRESIDENTIAL ASSISTANT FOR exceeded the eight (8) hour day and necessitated work on
LEGAL AFFAIRS, OFFICE OF THE PRESIDENT, et. Al. Sundays and holidays. For this, they were neither paid
G.R. No. L-48645 January 7, 1987 [147 SCRA 49] overtime nor compensation for work on Sundays and
On July 11, 1969, BLUM filed a complaint with CIR, charging The petitioners worked exclusive at the SMC plant, never
San Miguel Corporation, and its officers of unfair labor having been assigned to other companies or departments of
practice as set forth in Section 4 (a), sub-sections (1) and SMC plant, even when the volume of work was at its
(4) of RA No. 875 and of Legal dismissal. It was alleged minimum. When any of the glass furnaces suffered a
that respondents ordered the individual complainants to breakdown, making a shutdown necessary, the petitioners
disaffiliate from the complainant union; and that work was temporarily suspended. Thereafter, the petitioners
management dismissed the individual complainants when would return to work at the glass plant.
they insisted on their union membership.
Sometime in January, 1969, the petitioner workers —
Complainants answered that they are not and have numbering 140 organized and affiliated themselves with the
never been employees of respondent company but petitioner union and engaged in union activities. Believing
employees of the independent contractor; that themselves entitled to overtime and holiday pay, the
respondent company has never had control over the means petitioners pressed management, airing other grievances
and methods followed by the independent contractor who such as being paid below the minimum wage law, inhuman
enjoyed full authority to hire and control said employees; and treatment, being forced to borrow at usurious rates of
that the individual complainants are barred by estoppel from interest and to buy raffle tickets, coerced by withholding their
asserting that they are employees of respondent company. salaries, and salary deductions made without their consent.
However, their gripes and grievances were not heeded by the
The dispute was taken over by the NRC with the decreed
abolition of the CIR and the hearing of the case intransferably
commenced on September 8, 1975. On February 20, 1969, all the petitioners were dismissed
from their jobs and, thereafter, denied entrance to
respondent company's glass factory despite their regularly
On February 9, 1976, LA Nestor C. Lim found for
reporting for work. A complaint for illegal dismissal and unfair
complainants which was concurred in by the NLRC in a
labor practice was filed by the petitioners.
decision dated June 28, 1976. The amount of backwages
awarded, however, was reduced by NLRC to the equivalent of
one (1) year salary. On February 6, 1969, the petitioner union filed a notice of
strike with the Bureau of Labor Relations in connection with
the dismissal of some of its members who were allegedly
On appeal, the Secretary set aside the NLRC ruling, stressing
castigated for their union membership and warned that
the absence of an employer-employee relationship as borne
should they persist in continuing with their union activities
out by the records of the case.
they would be dismissed from their jobs. Several conciliation
conferences were scheduled in order to thresh out their
Petitioners strongly argue that there exists an employer- differences, On February 12, 1969, union member Rogelio
employee relationship between them and the respondent Dipad was dismissed from work. At the scheduled conference
company and that they were dismissed for unionism, an act on February 19, 1969, the complainant union through its
constituting unfair labor practice "for which respondents must officers headed by National President Artemio Portugal Sr.,
be made to answer." presented a letter to the respondent company containing
proposals and/or labor demands together with a request for
That petitioners are workers who have been employed at the recognition and collective bargaining.
San Miguel Parola Glass Factory since 1961, averaging about
seven (7) years of service at the time of their termination. San Miguel refused to bargain with the petitioner union
They worked as "cargadores" or "pahinante" at the SMC Plant alleging that the workers are not their employees.
loading, unloading, piling or palleting empty bottles and
woosen shells to and from company trucks and warehouses. ISSUE:
At times, they accompanied the company trucks on their Whether an employer-employee relationship exists in a
delivery routes. certain situation continues to bedevil the courts

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Labor Standards Case Digest (Midterm)

HELD: YES labor contractor had such right of control or much less had
In determining the existence of an employer-employee been there to supervise or deal with the petitioners.
relationship, the elements that are generally considered are
the following: The petitioners were dismissed allegedly because of the
(a) the selection and engagement of the shutdown of the glass manufacturing plant. Respondent
employee; company would have us believe that this was a case of
(b) the payment of wages; retrenchment due to the closure or cessation of operations of
(c) the power of dismissal; and the establishment or undertaking. But such is not the case
(d) the employer's power to control the here. The respondent's shutdown was merely temporary, one
employee with respect to the means and of its furnaces needing repair. Operations continued after
methods by which the work is to be such repairs, but the petitioners had already been refused
accomplished. It is the called "control test" entry to the premises and dismissed from respondent's
that is the most important element service. New workers manned their positions. It is apparent
that the closure of respondent's warehouse was merely a
ploy to get rid of the petitioners, who were then agitating the
Applying the above criteria, the evidence strongly indicates
respondent company for benefits, reforms and collective
the existence of an employer-employee relationship between bargaining as a union. There is no showing that petitioners
petitioner workers and respondent San Miguel Corporation. had been remiss in their obligations and inefficient in their
The respondent asserts that the petitioners are employees of jobs to warrant their separation.
the Guaranteed Labor Contractor, an independent labor
contracting firm. As to the charge of unfair labor practice because of SMC's
refusal to bargain with the petitioners, it is clear that the
The existence of an independent contractor
respondent company had an existing collective bargaining
relationship is generally established by the following
agreement with the IBM union which is the recognized
collective bargaining representative at the respondent's glass
 "whether or not the contractor is carrying on
an independent business;
 the nature and extent of the work; the skill
required; the term and duration of the There being a recognized bargaining representative of all
relationship; employees at the company's glass plant, the petitioners
 the right to assign the performance of a cannot merely form a union and demand bargaining. The
Labor Code provides the proper procedure for the recognition
specified piece of work;
 the control and supervision of the work to of unions as sole bargaining representatives. This must be
another; followed.
 the employer's power with respect to the
hiring, firing and payment of the contractor's
 the control of the premises;
 the duty to supply the premises tools,
appliances, materials and labor; and
 the mode, manner and terms of payment"
(56 CJS Master and Servant, Sec. 3(2), 46;
See also 27 AM. Jur. Independent Contractor,
Sec. 5, 485 and Annex 75 ALR 7260727)

None of the above criteria exists in the case at bar.

Documentary evidence presented by the petitioners establish

respondent SMC's right to impose disciplinary measures for
violations or infractions of its rules and regulations as well as
its right to recommend transfers and dismissals of the piece
workers. The inter-office memoranda submitted in evidence
prove the company's control over the petitioners. That
respondent SMC has the power to recommend penalties or
dismissal of the piece workers, even as to Abner Bungay who
is alleged by SMC to be a representative of the alleged labor
contractor, is the strongest indication of respondent
company's right of control over the petitioners as direct
employer. There is no evidence to show that the alleged

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Labor Standards Case Digest (Midterm)

general, The Court has relied in the so-called control test,

(2) SEVILLA V. COURT OF APPEALS ―where the person for whom the services are performed
160 SCRA 171SARMIENTO, J. reserves a right to control not only the end to be achieved
but also the means to be used in reaching such end.
Mrs. Segundina Noguera leased her premises located at The records will show that the petitioner, Lina Sevilla, was
Ermita, Manila to Tourist World Service, Inc. (TWSI), not subject to control by theprivate respondent Tourist World
represented by Eliseo Canilao, for the latter’s use as branch Service, Inc., either as to the result to the means used in
office. In the said contract Mrs. Lina Sevilla held herself connection therewith. In the first place, under the contract of
solidarily liable with TWSI for the prompt payment of the lease covering the Tourist Worlds Ermita office, she had
monthly rental agreed on. bound herself in solidum as and for rental payments. A true
employee cannot be made to part with his own money in
When the branch office was opened, the same was run by pursuance of his employer’s business, or otherwise, assume
petitioner Mrs. Sevilla, who was designated as branch any liability thereof. In that event, the parties must be bound
manager by TWSI. For any fare bought in on the efforts of by some other relation, but certainly not employment. In the
Mrs. Sevilla,, 4% was to go her and 3% was to be withheld second place, when the branch office was opened, the same
by TWSI was run by Mrs. Sevilla payable to TWSI. Thus it cannot
besaid that she was under the control of TWSI ―as to the
In November 1961, TWSI was allegedly informed that Mrs. means used‖. She obviously relied on her own capabilities.
Sevilla was connected with a rival travel firm. Since the
branch office was losing, TWSI considered closing it down. It is further admitted that Mrs. Sevilla was not in the
The firm’s board of directors issued two resolutions; the first company’s payroll. For her efforts, she retained 4% in
abolishing the office of manager of the Ermita Branch Office commissions from airline bookings, the remaining 3% going
and the second, authorizing the corporate secretary to to TWSI. Unlike an employee then, who earns a fixed salary
receive the property of TWSI in said branch. usually, Mrs. Sevilla earned compensation in fluctuating
amounts depending on her booking successes.
In January 1962, the lease contract to use the premises as
branch office was terminated. In June 1962, the Corporate The fact that Sevilla had been designated ―branch manager‖
Secretary went over to the office to comply with the mandate does not make her, ergo, TWSI’s employee. Employment is
of the resolutions. Finding the premises locked and unable to determined by the right of control test and certain economic
contact Mrs. Sevilla, he padlocked the premises to protect the parameters. Titles are weak indicators.
interests of TWSI
However, there is no joint venture or partnership between
As such, petitioners Spouses Sevilla filed a complaint against TWSI and Mrs. Sevilla, either. The Court is of the opinion that
respondents TWSI,Canilao and Noguera, praying for the relationship of said parties is one that of a principal and
mandatory preliminary injunction. Petitioners claim that Mrs. an agent. But unlike simple grants of a power of attorney, the
Sevilla’s relationship with TWSI was one of joint business agency that the Court hereby declares to be compatible with
venture and not one of employment. the intent of the parties cannot be revoked at will. The
reason is that it is an agency coupled with an interest. Thus,
In its answer, TWSI contend that Mrs. Sevilla was its TWSI is held liable for damages for its unwarranted
employee and as such was designated manager. revocation of the contract of agency.

The trial court held for the private respondents. It ruled that
TWSI, being the true lessee, has the privilege to terminate
the lease and padlock the premises. It also held that Mrs.
Sevilla was a mere employee of TWSI and that she was
bound by the act of her employer.

The Court of Appeals affirmed said decision, Hence, the

instant petition.

Whether or not there is an employer-employee relationship
between TWSI and Mrs. Sevilla.

There is no employer-employee relationship between TWSI
and Mrs. Sevilla. There has been no uniform test to
determine the existence of an employer-employee relation. In

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Labor Standards Case Digest (Midterm)



Rodito Nasayao claimed that sometime in May 1974, he was
appointed plant manager of Continental Marble with an
alleged compensation of P3,000.00 a month or 25% of the
monthly net income of the company, whichever is greater.

When the company failed to pay his salary for the months of
May, June and July1974, Nasayao filed a complaint with

Continental Marble denied that Rodito Nasayao was its

employee. They claimed that the undertaking agreed by the
parties was a joint venture, a sort of partnership,wherein
Nasayao was to keep the machinery in good working
condition and in return,he would get the contracts from end-
users for the installation of marble products, in which the
company would not interfere.

In addition, Nasayao was to receive an amount equivalent to

25% of the net profits that the petitioner corporation would
realize, should there be any. Since there had been no profits
during said period, private respondent was not entitled to any

Whether or not the private respondent Nasayao was
employed as plant manager of petitioner Continental Marble

There was nothing in the record which would support the
claim of Rodito Nasayao thathe was an employee of the
petitioner corporation. He was not included in the
companypayroll nor in the list of company employees
furnished by the Social Security System.Most of all the
element of control is lacking.It appears that the petitioner
had no control over the conduct of Rodito Nasayao in
theperformance of his work. He decided for himself on what
was to be done and worked at hisown pleasure. He was not
subject to indefinite hours or conditions of work and in turn
wascompensated according to the results of his on effort. He
has a free hand in running thecompany and its business, so
much so, that the petitioner did not know until very later
thatNasayao collected old accounts receivables, not covered
by their agreement, which heconverted to his personal usee
has a free hand in running thecompany and its business, so
much so, that the petitioner did not know until very later
thatNasayao collected old accounts receivables, not covered
by their agreement, which heconverted to his personal use

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Labor Standards Case Digest (Midterm)

(4) [G.R. No. 84484 November 15, 1989] insurer and insured but also to the internal affairs of the
INSULAR LIFE ASSURANCE CO., LTD. vs. NLRC and insurance company. Rules and regulations governing the
MELECIO BASIAO conduct of the business are provided for in the Insurance
Code and enforced by the Insurance Commissioner. It is,
FACTS: therefore, usual and expected for an insurance company to
Since 1968, respondent Basiao has been an agent for promulgate a set of rules to guide its commission agents in
petitioner company, and is authorized to solicit within the selling its policies that they may not run afoul of the law and
Philippines applications for insurance policies and annuities in what it requires or prohibits. Of such a character are the rules
accordance with the existing rules and regulations of the which prescribe the qualifications of persons who may be
company. In return, he would receive compensation, in the insured, subject insurance applications to processing and
form of commissions. Some four years later, in April 1972, approval by the Company, and also reserve to the Company
the parties entered into another contract - an Agency the determination of the premiums to be paid and the
Manager's Contract - and to implement his end of it Basiao schedules of payment. None of these really invades the
organized an agency or office to which he gave the name M. agent's contractual prerogative to adopt his own selling
Basiao and Associates, while concurrently fulfilling his methods or to sell insurance at his own time and
commitments under the first contract with the Company. In convenience, hence cannot justifiably be said to establish an
May, 1979, the Company terminated the Agency Manager's employer-employee relationship between him and the
Contract. After vainly seeking a reconsideration, Basiao sued company.
the Company in a civil The respondents limit themselves to pointing out that
Basiao's contract with the Company bound him to observe
action and this, he was later to claim, prompted the latter to and conform to such rules and regulations as the latter might
terminate also his engagement under the first contract and to from time to time prescribe. No showing has been made that
stop payment of his commissions starting April 1, any such rules or regulations were in fact promulgated, much
1980.Basiao thereafter filed with the then Ministry of Labor a less that any rules existed or were issued which effectively
complaint against the Company and its president. The controlled or restricted his choice of methods - or the
complaint sought to recover commissions allegedly unpaid methods themselves - of selling insurance. Absent such
thereunder, plus attorney's fees. The respondents disputed showing, the Court will not speculate that any exceptions or
the Ministry's jurisdiction over Basiao's claim, asserting that qualifications were imposed on the express provision of the
he was not the Company's employee, but an independent contract leaving Basiao "... free to exercise his own judgment
contractor. as to the time, place and means of soliciting insurance.

ISSUE: "The Court, therefore, rules that under the contract invoked
Whether or not there exist an employer-employee by him, Basiao was not an employee of the petitioner, but a
relationship between Basiao and Insular Life. commission agent, an independent contractor whose claim
for unpaid commissions should have been litigated in an
HELD: ordinary civil action. NLRC Decision set aside.
The SC ruled in favor of Insular Life.

Not every form of control that the hiring party reserves to

himself over the conduct of the party hired in relation to the
services rendered may be accorded the effect of establishing
an employer-employee relationship between them in the legal
or technical sense of the term. A line must be drawn
somewhere, if the recognized distinction between an
employee and an individual contractor is not to vanish

Logically, the line should be drawn between rules that merely

serve as guidelines towards the achievement of the mutually
desired result without dictating the means or methods to be
employed in attaining it, and those that control or fix the
methodology and bind or restrict the party hired to the use of
such means. The first, which aim only to promote the result,
create no employer-employee relationship unlike the second,
which address both the result and the means used to achieve
it. The distinction acquires particular relevance in the case of
an enterprise affected with public interest, as is the business
of insurance, and is on that account subject to regulation by
the State with respect, not only to the relations between

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Labor Standards Case Digest (Midterm)

(5)JARDIN V. NLRC done but also as to the means and methods by which the
326 SCRA 299 same is to be accomplished. Otherwise, no such relationship
QUISUMBING, J. exists. In a number of cases decided by this Court, we ruled
that the relationship between jeepney owners/operators on
FACTS: one hand and jeepney drivers on the other under the
Petitioners were drivers of respondent Philjama International boundary system is that of employer-employee and not of
Inc., a domestic corporation engaged in the operation of lessor-lessee. We explained that in the lease of chattels, the
"Goodman Taxi." Petitioners used to drive private lessor loses complete control over the chattel leased although
respondent's taxicabs every other day on a 24-hour work the lessee cannot be reckless in the use thereof, otherwise he
schedule under the boundary system. would be responsible for the damages to the lessor. In the
case of jeepney owners/operators and jeepney drivers, the
The petitioners earned an average of P400.00 daily from former exercise supervision and control over the latter. The
which respondent regularly deducts the amount of P30.00 management of the business is in the owner's hands. The
supposedly for the washing of the taxi units. owner as holder of the certificate of public convenience must
see to it that the driver follows the route prescribed by the
Believing that the deduction is illegal, petitioners decided to franchising authority and the rules promulgated as regards its
form a labor union to protect their rights and interests. operation. Now, the fact that the drivers do not receive fixed
wages but get only that in excess of the so-called "boundary"
Upon learning about the plan of petitioners, private they pay to the owner/operator is not sufficient to withdraw
respondent refused to let petitioners drive their taxicabs the relationship between them from that of employer and
when they reported for work on August 6, 1991, and on employee. We have applied by analogy the above-stated
succeeding days. doctrine to the relationships between bus owner/operator
and bus conductor, auto-calesa owner/operator and driver,
Petitioners suspected that they were singled out because and recently between taxi owners/operators and taxi drivers.
they were the leaders and active members of the proposed Hence, petitioners are undoubtedly employees of private
union. Aggrieved, petitioners filed with the labor arbiter a respondent because as taxi drivers they perform activities
complaint against private respondent for unfair labor practice, which are usually necessary or desirable in the usual business
illegal dismissal and illegal deduction of washing fees. or trade of their employer

The labor arbiter dismissed said complaint for lack of merit.

On appeal, the NLRC reversed and set aside the judgment of

the labor arbiter. The labor tribunal declared that petitioners
are employees of private respondent, and, as such, their
dismissal must be for just cause and after due process.

Private respondent's second motion for reconsideration was

granted and said court ruled that it lacks jurisdiction over the
case as petitioners and private respondent have no employer-
employee relationship. Expectedly, petitioners sought
reconsideration of the labor tribunal's latest decision which
was denied.

Hence, the instant petition.

Whether or not employer-employee relationship exists
between the petitioners and respondent Philjama
International, Inc.

In the determination the existence of employer-employee
relationship, the Supreme Court has applied the following
four-fold test: '(1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of
dismissal; and (4) the power of control the employees
conduct.' Under the control test, an employer-employee
relationship exists if the 'employer' has reserved the right to
control the 'employee' not only as to the result of the work

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Labor Standards Case Digest (Midterm)

(6) [G.R. No. 64948 September 27, 1994]


A petition for certification was filed with the Labor Relations
Division of the Ministry of Labor by PTCCEA in behalf of the
caddies of petitioners. The petition was resolved in favor of
the caddies. The same union later filed for SSS coverage but
the Social Security Commission denied them for absence of
employee employer relationship.

Whether or not persons rendering caddying services for
members of golf clubs and their guests in said club’s courses
or premises are the employees of such clubs and therefore
within the compulsory coverage of the SSS.

The caddies are not employees for the following reasons:

-rules and regulations are permissible means to impose order

where the caddies are allowed to pursue their profession
within the club’s premises
-they do not observe a particular working hour and are not at
the call of the club
-the club has no measure of control over the incidents of the
caddies’ work and compensation
-the group rotation system is only an assurance that the work
is distributed fairly.

Decision of the CA reversed and set aside

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Labor Standards Case Digest (Midterm)

(7) DY KEH BENG vs.INTERNATIONAL LABOR and MARINE other and recognition by them of the right of one to
UNION OF THE PHILIPPINES, ET AL., order and control the other in the performance of the
G.R. No. L-32245 May 25, 1979 work and to direct the manner and method of its
Petitioner, Dy Keh Beng, proprietor of basket factory, was The CIR found that there existed an employee-employer
charged with ULP for discriminatory acts defined under Sec relationship between Dy Keh Beng and complainants Tudla
4(a), subparagraph (1 & 4), R.A. No. 875 by dismissing on and Solano, although Solano was admitted to have worked
September 28-29, 1960, respectively, Carlos N. Solano and on piece basis.
Ricardo Tudla for their union activities.
Hence, this petition for certiorari.
After PI was conducted, a case was filed in the CIR for in
behalf of the ILMUP and two of its members, Solano and ISSUE: Whether or not an employee employer relation
Tudla.Dy Keh Beng contended that he did not know Tudla existed between petitioner Dy Keh Beng and the respondents
and that Solano was not his employee because the latter Solano and Tudla.
came tothe establishment only when there was work which
he did on pakiaw basis. According to Dy Keh Beng, Solano HELD:
was no this employee for the following reasons: The SC also noted the decision of Justice Paras in the case of
³Sunrise Coconut Products Co. Vs. CIR (83 Phil 518,
(1) Solano never stayed long enough at Dy’s 523)that³judicial notice of the fact that the so-called
establishment; "pakyaw" system mentioned in this case as generally
(2) Solano had to leave as soon as he was practiced in our country, is, in fact, a labor contract -between
through with the order given him by Dy; employers and employees, between capitalists and laborers.
(3) When there were no orders needing his ´
services there was nothing for him to do;
(4) When orders came to the shop that his With regard to the control test the SC said that ³It should be
regular workers could not fill it was then that borne in mind that the control test calls merely for the
Dy went to his address in Caloocan and existence of the right to control the manner of doing the
fetched him for these orders; and work, not the actual exercise of the right.´ Considering the
(5) Solano's work with Dy's establishment finding by the Hearing Examiner that the establishment of Dy
was not continuous. Keh Beng is "engaged in the manufacture of baskets known
as kaing , it is natural to expect that those working under Dy
According to petitioner, these facts show that respondents would have to observe, among others, Dy's requirements of
Solano and Tudla are only piece workers, not employees size and quality of the kaing . Some control would necessarily
under Republic Act 875, where an employee is referred to as be exercised by Dy as the making of the kaing would be
shall include any employee and shag not be limited to the subjectto Dy's specifications. Parenthetically, since the work
employee of a particular employer unless the act explicitly on the baskets is done at Dy's establishments, it can be
states otherwise and shall include any individual whose work inferred that the proprietor Dy could easily exercise control
has ceased as a consequence of, or in connection with any on the men he employed.
current labor dispute or because of any ulp and who has not
obtained any other substantially equivalent and regular The petition was dismissed. The Court affirmed the decision
employment. while an employer includes any person acting in of the CIR
the interest of an employer, directly or indirectly but shall not
include any labor organization (otherwise than when acting
as an employer) or anyone acting in the capacity of officer or
agent of such labor organization.

Petitioner also contends that the private respondents "did not

meet the control test in the fight of the ... definition of the
terms employer and employee, because there was no
evidence to show that petitioner had the right to direct the
manner and method of respondent's work. He points to the
case of Madrigal Shipping Co., Inc. v. Nieves Baens del Rosario, et al.
,L-13130, October 31, 1959, where the Court ruled that:

The test ... of the existence of employee and

employer relationship is whether there is an
understanding between the parties that one is to
render personal services to or for the benefit of the

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Labor Standards Case Digest (Midterm)

(8) [G.R. No. 138051 June 10, 2004] perform each condition of this Agreement." Even if it
JOSE Y. SONZA vs. ABS-CBN BROADCASTING suffered severe business losses, ABS-CBN could not
CORPORATION retrench SONZA because ABS-CBN remained obligated
to pay SONZA’s talent fees during the life of the
FACTS: Agreement.
In May 1994, ABS-CBN signed an agreement with Mel & Jay (d) The employer’s power to control the employee on
Management and Development Corp for a radio and the means and methods by which the work is
television program. ABS-CBN agreed to pay for SONZA’s accomplished - The control test is the most
services a monthly talent fee of P310,000 for the first year important test. This test is based on the extent of
and P317,000 for the second and third year of the control the hirer exercises over a worker. The greater
Agreement. ABS-CBN would pay the talent fees on the 10th the supervision and control the hirer exercises, the more
and 25th days of the month. likely the worker is deemed an employee. The converse
holds true as well – the less control the hirer exercises,
On April 1996, Sonza wrote a letter to ABS-CBN President the more likely the worker is considered an independent
Eugenio Lopez III about a recent event concerning his contractor.
programs and career, and that the said violation of the
company has breached the agreement, thus, the notice of First, ABS-CBN engaged SONZA’s services specifically to
rescission of Agreement was sent. co-host the "Mel & Jay" programs. ABS-CBN did not
assign any other work to SONZA. To perform his work,
At the end of the same month, Sonza filed a complaint SONZA only needed his skills and talent. How SONZA
against ABS-CBN before the DOLE for non-payment of delivered his lines, appeared on television, and sounded
salaries, separation pay, service incentive leave pay, 13th on radio were outside ABS-CBN’s control. SONZA did not
month pay, signing bonus, travel allowance and amounts due have to render eight hours of work per day. The
under the Employees Stock Option Plan (ESOP) which was Agreement required SONZA to attend only rehearsals
opposed by ABS-CBN on the ground there was no employer- and tapings of the shows, as well as pre- and post-
employee relationship existed between the parties. production staff meetings. ABS-CBN could not dictate
the contents of SONZA’s script. However, the Agreement
ISSUE: prohibited SONZA from criticizing in his shows ABS-CBN
WON Sonza was an employee or independent contractor? or its interests. The clear implication is that SONZA had
a free hand on what to say or discuss in his shows
HELD: provided he did not attack ABS-CBN or its interests.
There was no employer-employee relationship that existed,
but that of an independent contractor. Second, The Agreement stipulates that SONZA shall
Case law has consistently held that the elements of an abide with the rules and standards of performance
employer-employee relationship are: "covering talents" of ABS-CBN. The Agreement does
not require SONZA to comply with the rules and
(a) The selection and engagement of the employee - standards of performance prescribed for employees of
ABS-CBN engaged SONZA’s services to co-host its ABS-CBN. The code of conduct imposed on SONZA
television and radio programs because of SONZA’s under the Agreement refers to the "Television and Radio
peculiar skills, talent and celebrity status. The specific Code of the Kapisanan ng mga Broadcaster sa Pilipinas
selection and hiring of SONZA, because of his unique (KBP), which has been adopted by the COMPANY (ABS-
skills, talent and celebrity status not possessed CBN) as its Code of Ethics." The KBP code applies to
by ordinary employees, is a circumstance indicative, broadcasters, not to employees of radio and television
but not conclusive, of an independent contractual stations. Broadcasters are not necessarily employees of
relationship. radio and television stations. Clearly, the rules and
(b) The payment of wages - ABS-CBN directly paid standards of performance referred to in the Agreement
SONZA his monthly talent fees with no part of his fees are those applicable to talents and not to employees of
going to MJMDC. All the talent fees and benefits paid to ABS-CBN.
SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBN’s employee, there Lastly, being an exclusive talent does not by itself mean
would be no need for the parties to stipulate on benefits that SONZA is an employee of ABS-CBN. Even an
such as "SSS, Medicare, x x x and 13th month pay" independent contractor can validly provide his services
which the law automatically incorporates into every exclusively to the hiring party. In the broadcast industry,
employer-employee contract. exclusivity is not necessarily the same as control. The
(c) The power of dismissal - For violation of any hiring of exclusive talents is a widespread and accepted
provision of the Agreement, either party may terminate practice in the entertainment industry. This practice is
their relationship. During the life of the Agreement, ABS- not designed to control the means and methods of work
CBN agreed to pay SONZA’s talent fees as long as of the talent, but simply to protect the investment of the
"AGENT and Jay Sonza shall faithfully and completely broadcast station. The broadcast station normally

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spends substantial amounts of money, time and effort

"in building up its talents as well as the programs they
appear in and thus expects that said talents remain
exclusive with the station for a commensurate period of
time." Normally, a much higher fee is paid to talents
who agree to work exclusively for a particular radio or
television station. In short, the huge talent fees partially
compensates for exclusivity.

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(9) required to report (for work) at any time; they do not have to
INVESTMENT PLANNING CORP. OF THE PHILIPPINES devote their time exclusively to or work solely for petitioner;
vs. the time and the effort they spend in their work depend
SOCIAL SECURITY SYSTEM entirely upon their own will and initiative; they are not
G.R. No. L-19124 November 18, 1967 required to account for their time nor submit a record of their
MAKALINTAL, J.: activities; they shoulder their own selling expenses as well as
transportation; and they are paid their commission based on
FACTS: a certain percentage of their sales." The record also reveals
Petitioner is a domestic corporation engaged in business that the commission earned by an agent on his sales is
management and the sale of securities. It has two classes of directly deducted by him from the amount he receives from
agents who sell its investment plans: (1) salaried employees the investor and turns over to the company the amount
who keep definite hours and work under the control and invested after such deduction is made. The majority of the
supervision of the company; and (2) registered agents are regularly employed elsewhere — either in the
representatives who work on commission basis. government or in private enterprises.

On August 27, 1960 petitioner, through counsel, applied to ISSUE:

respondent Social Security Commission for exemption of its Whether petitioner's registered representatives are
so-called registered representatives from the compulsory employees within the meaning of the Social Security Act (R.A.
coverage of the Social Security Act. The application was No. 1161 as amended)?
denied in a letter signed by the Secretary to the Commission
on January 16, 1961. HELD: NO
Of the three requirements under Section 8 (d) of the Social
Section 8 (d) thereof defines the term "employee" — for Security Act it is admitted that the first is present in
respect of the agents whose status is in question. They
purposes of the Act — as "any person who performs services
exert both mental and physical efforts in the performance of
for an 'employer' in which either or both mental and physical
their services. The compensation they receive, however, is
efforts are used and who receives compensation for such not necessarily for those efforts but rather for the results
services, where there is, employer-employee relationship." thereof, that is, for actual sales that they make. This point is
(As amended by Sec.4, R.A. No. 2658). relevant in the determination of whether or not the third
requisite is also present, namely, the existence of employer-
These representatives are in reality commission agents. The
employee relationship. Petitioner points out that in effect
uncontradicted testimony of petitioner's lone witness, who such compensation is paid not by it but by the investor, as
was its assistant sales director, is that these agents are shown by the basis on which the amount of the commission
recruited and trained by him particularly for the job of is fixed and the manner in which it is collected.
selling "'Filipinos Mutual Fund" shares, made to
undergo a test after such training and, if successful, are Petitioner submits that its commission agents, engaged under
given license to practice by the Securities and Exchange the terms and conditions already enumerated, are not
Commission. They then execute an agreement with petitioner employees but independent contractors, as defined in Article
with respect to the sale of FMF shares to the general public. 1713 of the Civil Code, which provides:

Among the features of said agreement which respondent

Art. 1713. By the contract for a piece of work the
Commission considered pertinent to the issue are: contractor binds himself to execute a piece of work
(a) an agent is paid compensation for services in the for the employer, in consideration of a certain price
or compensation. The contractor may either employ
form of commission;
only his labor or skill, or also furnish the material.
(b) in the event of death or resignation he or his
legal representative shall be paid the balance of the We are convinced from the facts that the work of petitioner's
commission corresponding to him; agents or registered representatives more nearly
approximates that of an independent contractor than
(c) he is subject to a set of rules and regulations that of an employee. The latter is paid for the labor he
governing the performance of his duties under the performs, that is, for the acts of which such labor consists;
agreement; the former is paid for the result thereof.

(d) he is required to put up a performance bond; and Even if an agent of petitioner should devote all of his time
and effort trying to sell its investment plans would not
(e) his services may be terminated for certain causes.
necessarily be entitled to compensation therefor. His right to
At the same time the Commission found from the evidence compensation depends upon and is measured by the tangible
and so stated in its resolution that the agents "are not results he produces.

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The specific question of when there is "employer-employee

relationship" for purposes of the Social Security Act has not
yet been settled in this jurisdiction by any decision of this
Court. But in other connections wherein the term is used the
test that has been generally applied is the so-called control
test, that is, whether the "employer" controls or has
reserved the right to control the "employee" not only
as to the result of the work to be done but also as to
the means and methods by which the same is to be

Considering the similarity between the definition of

"employee" in the Federal Social Security Act (U.S.) as
amended and its definitions in our own Social Security Act,
and considering further that the local statute is admittedly
patterned after that of the United States, the decisions of
American courts on the matter before us may well be
accorded persuasive force. The logic of the situation indeed
dictates that where the element of control is absent; where a
person who works for another does so more or less at his
own pleasure and is not subject to definite hours or
conditions of work, and in turn is compensated according to
the result of his efforts and not the amount thereof, we
should not find that the relationship of employer and
employee exists.

We have examined the contract form between petitioner and

its registered representatives and found nothing therein
which would indicate that the latter are under the control of
the former in respect of the means and methods they employ
in the performance of their work. The fact that for certain
specified causes the relationship may be terminated (e.g .,
failure to meet the annual quota of sales, inability to make
any sales production during a six-month period, conduct
detrimental to petitioner, etc.) does not mean that such
control exists, for the causes of termination thus specified
have no relation to the means and methods of work that are
ordinarily required of or imposed upon employees.

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(10) National Sugar Refinery Corp vs NLRC (1993) under Article 212(m), Book V of the Labor Code on Labor
220 SCRA 452 Relations, which reads: ―'Managerial employee' is one who is
Facts: vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-
Private respondent union represents the former supervisors off, recall, discharged, assign or discipline employees.
of the NASUREFCO Batangas Sugar Refinery, namely, the Supervisory employees are those who, in the interest of the
Technical Assistant to the Refinery Operations Manager, Shift employer effectively recommend such managerial actions if
Sugar Warehouse Supervisor, Senior Financial/Budget the exercise of such authority is not merely routinary or
Analyst, General Accountant, Cost Accountant, Sugar clerical in nature but requires the use of independent
Accountant, Junior Financial/Budget Analyst, Shift Boiler judgment. All employees not falling within any of those above
Supervisor,, Shift Operations Chemist, Shift Electrical definitions are considered rank-and-file employees of this
Supervisor, General Services Supervisor, Instrumentation Book."
Supervisor, Community Development Officer, Employment
and Training Supervisor, Assistant Safety and Security Article 82 of the Labor Code states: ―The provisions of this
Officer, Head and Personnel Services, Head Nurse, Property title shall apply to employees in all establishments and
Warehouse Supervisor, Head of Inventory Control Section, undertakings whether for profit or not, but not to government
Shift Process Supervisor, Day Maintenance Supervisor and employees, managerial employees, field personnel, members
Motorpool Supervisor. of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of
On June 1, 1988, petitioner implemented a Job Evaluation another, and workers who are paid by results as determined
(JE) Program affecting all employees, from rank-and-file to by the Secretary of Labor in Appropriate regulations.‖
department heads which was designed to rationalized the
duties and functions of all positions, reestablish levels of As used herein, 'managerial employees' refer to those whose
responsibility, and recognize both wage and operational primary duty consists of the management of the
structures. Jobs were ranked according to effort, establishment in which they are employed or of a department
responsibility, training and working conditions and relative or subdivision thereof, and to other officers or members of
worth of the job. As a result, all positions were re-evaluated, the managerial staff.
and all employees including the members of respondent
Sec. 2. Exemption. — The provisions of this rule
union were granted salary adjustments and increases in
shall not apply to the following persons if they qualify
benefits commensurate to their actual duties and functions. for exemption under the condition set forth herein:
Two years after the implementation of the JE Program,
specifically on June 20, 1990, the members of herein (b) Managerial employees, if they meet all of the
respondent union filed a complainant with the executive labor following conditions, namely:
arbiter for non-payment of overtime, rest day and holiday 1) Their primary duty consists of the
pay allegedly in violation of Article 100 of the Labor Code. management of the establishment in
which they are employed or of a
Issue: department or subdivision thereof:
WON the members of respondent union are entitled to
2) They customarily and regularly direct
overtime, rest day and holiday pay. the work of two or more employees

HELD: NO 3) They have the authority to hire or fire

other employees of lower rank; or
The members of the union are not entitled to overtime, rest their suggestions and
and holiday pay since they fall within the classification of recommendations as to the hiring and
managerial employees which makes them a part of the firing and as to the promotion or any
exempted employees. other change of status of other
employees are given particular
It must of necessity be ascertained first whether or not the weight.
union members, as supervisory employees, are to be (c) Officers or members of a managerial staff if they
considered as officers or members of the managerial staff perform the following duties and responsibilities:
who are exempt from the coverage of Article 82 of the Labor 1) The primary duty consists of the
Code. performance of work directly related
to management policies of their
It is not disputed that the members of respondent union are employer;
supervisory employees, as defined employees, as defined

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Labor Standards Case Digest (Midterm)

2) Customarily and regularly exercise includes employee shifting scheduled and

discretion and independent manning complement;
c) decision making by providing relevant
3) (i) Regularly and directly assist a information data and other inputs;
proprietor or a managerial employee
whose primary duty consists of the d) attaining the company's set goals and
management of the establishment in objectives by giving his full support;
which he is employed or subdivision
thereof; or e) selecting the appropriate man to handle
(ii) execute under general supervision work the job in the department; and
along specialized or technical lines requiring
special training, experience, or knowledge; or f) preparing annual departmental budget;
(iii) execute under general supervision 2) observes, follows and implements company
special assignments and tasks; policies at all times and recommends disciplinary
(4) Who do not devote more 20 percent of their action on erring subordinates;
hours worked in a work-week to activities
which are not directly and closely related to 3) trains and guides subordinates on how to assume
the performance of the work described in responsibilities and become more productive;
paragraphs (1), (2), and above."
They are clearly officers or members of the managerial staff 4) conducts semi-annual performance evaluation of
because they meet all the conditions prescribed by law and, his subordinates and recommends necessary action
hence, they are not entitled to overtime, rest day and for their development/advancement;
supervisory employees under Article 212 (m) should be made
to apply only to the provisions on Labor Relations, while the 5) represents the superintendent or the department
right of said employees to the questioned benefits should be when appointed and authorized by the former;
considered in the light of the meaning of a managerial
6) coordinates and communicates with other inter
employee and of the officers or members of the managerial
and intra department supervisors when necessary;
staff, as contemplated under Article 82 of the Code and
Section 2, Rule I Book III of the implementing rules. 7) recommends disciplinary actions/promotions;
In other words, for purposes of forming and joining unions,
8) recommends measures to improve work methods,
certification elections, collective bargaining, and so forth, the
equipment performance, quality of service and
union members are supervisory employees. In terms of working conditions;
working conditions and rest periods and entitlement to the
questioned benefits, however, they are officers or members 9) sees to it that safety rules and regulations and
of the managerial staff, hence they are not entitled thereto. procedure and are implemented and followed by all
NASUREFCO employees, recommends revisions or
The union members will readily show that these supervisory modifications to said rules when deemed necessary,
employees are under the direct supervision of their respective and initiates and prepares reports for any observed
department superintendents and that generally they assist abnormality within the refinery;
the latter in planning, organizing, staffing, directing,
controlling communicating and in making decisions in 10) supervises the activities of all personnel under
attaining the company's set goals and objectives. These him and goes to it that instructions to subordinates
supervisory employees are likewise responsible for the are properly implemented; and
effective and efficient operation of their respective
departments. 11) performs other related tasks as may be assigned
by his immediate superior.
More specifically, their duties and functions include, among
others, the following operations whereby the employee:
From the foregoing, it is apparent that the members of
1) assists the department superintendent in the respondent union discharge duties and responsibilities which
following: ineluctably qualify them as officers or members of the
a) planning of systems and procedures managerial staff, as defined in Section 2, Rule I Book III of
relative to department activities; the aforestated Rules to Implement the Labor Code, viz.:

b) organizing and scheduling of work

activities of the department, which

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Labor Standards Case Digest (Midterm)

1) their primary duty consists of the performance of

work directly related to management policies of their

2) they customarily and regularly exercise discretion and

independent judgment;

3) they regularly and directly assist the managerial

employee whose primary duty consist of the
management of a department of the establishment in
which they are employed

4) they execute, under general supervision, work along

specialized or technical lines requiring special
training, experience, or knowledge;

5) they execute, under general supervision, special

assignments and tasks; and

6) they do not devote more than 20% of their hours

worked in a work-week to activities which are not
directly and clearly related to the performance of
their work hereinbefore described.

Under the facts obtaining in this case, The Court is

constrained to agree with petitioner that the union members
should be considered as officers and members of the
managerial staff and are, therefore, exempt from the
coverage of Article 82.

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(11) Autobus Transport System vs Bautista (2005) explicitly excluded by Section 1 of Rule V. According to the
G.R. 156364 Implementing Rules, Service Incentive Leave shall not apply
Facts: to employees classified as "field personnel."

Respondent Antonio Bautista has been employed by The phrase "other employees whose performance is
petitioner Auto Bus Transport Systems, Inc., since May 1995, unsupervised by the employer" must not be understood as a
as driver-conductor with travel routes Manila-Tuguegarao via separate classification of employees to which service
Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via incentive leave shall not be granted. Rather, it serves as an
Baguio. Respondent was paid on commission basis, seven amplification of the interpretation of the definition of field
percent (7%) of the total gross income per travel, on a twice personnel under the Labor Code as those "whose actual
a month basis. hours of work in the field cannot be determined with
reasonable certainty."
On January 2000, while respondent was driving Autobus No.
114 along Sta. Fe, Nueva Vizcaya, the bus he was driving The same is true with respect to the phrase "those who are
accidentally bumped the rear portion of Autobus No. 124, as engaged on task or contract basis, purely commission basis."
the latter vehicle suddenly stopped at a sharp curve without Said phrase should be related with "field personnel," applying
giving any warning. Respondent averred that the accident the rule on ejusdem generis that general and unlimited terms
happened because he was compelled by the management to are restrained and limited by the particular terms that they
go back to Roxas, Isabela, although he had not slept for follow. Hence, employees engaged on task or contract basis
almost twenty-four (24) hours, as he had just arrived in or paid on purely commission basis are not automatically
Manila from Roxas, Isabela. exempted from the grant of service incentive leave, unless,
they fall under the classification of field personnel.
Respondent further alleged that he was not allowed to work
until he fully paid the amount of P75,551.50, representing What must be ascertained in order to resolve the issue of
thirty percent (30%) of the cost of repair of the damaged propriety of the grant of service incentive leave to respondent
buses and that despite respondent's pleas for is whether or not he is a field personnel.
reconsideration, the same was ignored by management. After
According to Article 82 of the Labor Code, "field personnel"
a month, management sent him a letter of termination.
shall refer to non-agricultural employees who regularly
Thus, on 02 February 2000, respondent instituted a
perform their duties away from the principal place of business
Complaint for Illegal Dismissal with Money Claims for
or branch office of the employer and whose actual hours of
nonpayment of 13th month pay and service incentive leave
work in the field cannot be determined with reasonable
pay against Autobus.
certainty. This definition is further elaborated in the Bureau of
Issue: WON respondent is entitled to service incentive leave. Working Conditions (BWC), Advisory Opinion to Philippine
Technical-Clerical Commercial Employees Association 10
Held: The respondent is entitled to service incentive leave. which states that:
The disposition of the issue revolves around the proper As a general rule, field personnel are those whose
interpretation of Article 95 of the Labor Code vis-à-vis Section performance of their job/service is not supervised by the
1(D), Rule V, Book III of the Implementing Rules and employer or his representative, the workplace being away
Regulations of the Labor Code which provides: RIGHT TO from the principal office and whose hours and days of work
SERVICE INCENTIVE LEAVE, (a) Every employee who has cannot be determined with reasonable certainty; hence, they
rendered at least one year of service shall be entitled to a are paid specific amount for rendering specific service or
yearly service incentive leave of five days with pay. performing specific work. If required to be at specific places
Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also at specific times, employees including drivers cannot be said
states that this rule shall apply to all employees except: (d) to be field personnel despite the fact that they are performing
Field personnel and other employees whose work away from the principal office of the employee.
performance is unsupervised by the employer including those At this point, it is necessary to stress that the definition of a
who are engaged on task or contract basis, purely "field personnel" is not merely concerned with the location
commission basis, or those who are paid in a fixed amount where the employee regularly performs his duties but also
for performing work irrespective of the time consumed in the with the fact that the employee's performance is
performance thereof; unsupervised by the employer. As discussed above, field
A careful examination of said provisions of law will result in personnel are those who regularly perform their duties away
the conclusion that the grant of service incentive leave has from the principal place of business of the employer and
been delimited by the Implementing Rules and Regulations of whose actual hours of work in the field cannot be determined
the Labor Code to apply only to those employees not with reasonable certainty. Thus, in order to conclude whether

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Labor Standards Case Digest (Midterm)

an employee is a field employee, it is also necessary to

ascertain if actual hours of work in the field can be
determined with reasonable certainty by the employer. In so
doing, an inquiry must be made as to whether or not the
employee's time and performance are constantly supervised
by the employer. Respondent is not a field personnel but a
regular employee who performs tasks usually necessary and
desirable to the usual trade of petitioner's business.
Accordingly, respondent is entitled to the grant of service
incentive leave.

The clear policy of the Labor Code is to grant service

incentive leave pay to workers in all establishments, subject
to a few exceptions. Section 2, Rule V, Book III of the
Implementing Rules and Regulations provides that "every
employee who has rendered at least one year of service shall
be entitled to a yearly service incentive leave of five days
with pay."

Service incentive leave is a right which accrues to every

employee who has served "within 12 months, whether
continuous or broken reckoned from the date the employee
started working, including authorized absences and paid
regular holidays unless the working days in the establishment
as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case
said period shall be considered as one year." It is also
"commutable to its money equivalent if not used or
exhausted at the end of the year." In other words, an
employee who has served for one year is entitled to it. He
may use it as leave days or he may collect its monetary
value. To limit the award to three years, as the solicitor
general recommends, is to unduly restrict such right.

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(12) [San Juan de Dios Hospital vs NLRC (1997) least to the regular rate‖ ―[f]or work performed in excess of
G.R. 126383 forty hours a week xxx. Policy Instructions No. 54 to our
Facts: mind unduly extended the statute. The Secretary of Labor
Petitioners, rank-and-file employees and members of San moreover erred in invoking the ―spirit and intent‖ of Republic
Juan de Dios Hospital Employees Association sent a 4 page Act No. 5901 and Article 83 of the Labor Code for it is an
letter requesting and pleading for the expeditious elementary rule of statutory construction that when the
implementation and payment by the respondent Hospital of language of the law is clear and unequivocal, the law must be
the ’40 HOURS/5-DAY WORKWEEK’ with compensable weekly taken to mean exactly what it says.
two (2) days off provided for by Republic Act 5901 as clarified
for enforcement by the Secretary of Labor’s Policy
Instructions No. 54 dated April 12, 1988.‖ Respondent
hospital failed to give a favourable response; thus, petitioners
filed a complaint regarding their ―claims for statutory benefits
under the above-cited law and policy issuance‖. The Labor
Arbiter dismissed the complaint which was also confirmed by
NLRC, hence the petition under Rule 65 of the Rules of Court.

Issue: WON Policy Instructions No. 54 issued by then Labor

Secretary Franklin Drilon is valid?

Held: It is invalid.

The Policy Instruction No. 54 relies and purports to

implement Republic Act No. 5901, otherwise known as ―An
Act Prescribing Forty Hours A Week Of Labor For Government
and Private Hospitals Or Clinic Personnel‖, but reliance to this
RA is misplaced since it has long been repealed with the
passage of the Labor Code. Accordingly, only Article 83 of the
Labor Code which appears to have substantially incorporated
or reproduced the basic provisions of Republic Act No. 5901
may support Policy Instructions No. 54 on which the latter’s
validity may be gauged.

What Article 83 merely provides are: (1) the regular office

hour of eight hours a day, five days per week for health
personnel, and (2) where the exigencies of service require
that health personnel work for six days or forty-eight hours
then such health personnel shall be entitled to an additional
compensation of at least thirty percent of their regular wage
for work on the sixth day. There is nothing in the law that
supports then Secretary of Labor’s assertion that ―personnel
in subject hospitals and clinics are entitled to a full weekly
wage for seven (7) days if they have completed the 40-
hour/5-day workweek in any given workweek‖.

Further, petitioners' position is also negated by the very rules

and regulations promulgated by the Bureau of Labor
Standards which implement Republic Act No. 5901. Pertinent
portions of the implementing rules provided in Sections 1,7,
and 15 of the said Act.

If petitioners are entitled to two days off with pay, then there
appears to be no sense at all why Section 15 of the
implementing rules grants additional compensation equivalent
to the regular rate plus at least twenty-five percent thereof
for work performed on Sunday to health personnel, or an
―additional straight-time pay which must be equivalent at

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(14) Sime Darby Pilipinas Inc., vs NLRC (1998) 289



Prior to the present controversy, all company factory workers

in Marikina including members of private respondent union
worked from 7:45 a.m. to 3:45 p.m. with a 30 minute paid
―on call‖ lunch break.

On 14 August 1992 petitioner issued a memorandum to all

factory-based employees advising all its monthly salaried
employees in its Marikina Tire Plant, except those in the
Warehouse and Quality Assurance Department working on
shifts, a change in work schedule effective 14 September
1992 thus –

7:45 A.M. – 4:45 P.M. (Mon to Fri) 7:45

A.M. – 11:45 P.M. (Sat).
Coffee break time will be ten minutes only anytime
9:30 A.M. –10:30 A.M. and 2:30 P.M. –
3:30 P.M.
Lunch break will be between: 12:00 NN –1:00 P.M. (Mon
to Fri).

Excluded from the above schedule are the Warehouse

and QA employees who are on shifting. Their work and
break time schedules will be maintained as it is now.

Since private respondent felt affected adversely by the

change in the work schedule and discontinuance of the 30-
minute paid ―on call‖ lunch break, it filed on behalf of its
members a complaint with the Labor Arbiter for unfair labor
practice, discrimination and evasion of liability pursuant to
the resolution of this Court the Labor Arbiter dismissed the
complaint on the ground that the change in the work
schedule and the elimination of the 30-minute paid lunch
break of the factory workers constituted a valid exercise of
management prerogative and that the new work schedule,
break time and one-hour lunch break did not have the effect
of diminishing the benefits granted to factory workers as the
working time did not exceed eight (8) hours.

Issue: WON the act of management in revising the work

schedule of its employees and discarding their paid lunch
break constitutive of unfair labor practice.

Held: The revision of work schedule is a management

prerogative and does not amount to unfair labor practice in
discarding the paid lunch break.

The right to fix the work schedules of the employees rests

principally on their employer. In the instant case petitioner,
as the employer, cites as reason for the adjustment the
efficient conduct of its business operations and its improved
production. It rationalizes that while the old work schedule
included a 30-minute paid lunch break, the employees could
be called upon to do jobs during that period as they were ―on

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Labor Standards Case Digest (Midterm)

call.‖ Even if denominated as lunch break, this period could

very well be considered as working time because the factory
employees were required to work if necessary and were paid
accordingly for working.

With the new work schedule, the employees are now given a
one-hour lunch break without any interruption from their
employer. For a full one-hour undisturbed lunch break, the
employees can freely and effectively use this hour not only
for eating but also for their rest and comfort which are
conducive to more efficiency and better performance in their
work. Since the employees are no longer required to work
during this one-hour lunch break, there is no more need for
them to be compensated for this period. The Court agrees
with the Labor Arbiter that the new work schedule fully
complies with the daily work period of eight (8) hours without
violating the Labor Code. Besides, the new schedule applies
to all employees in the factory similarly situated whether they
are union members or not.

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(15) Whether the mealtime breaks should be considered working

G.R. No. L-15422 November 30, 1962 The legal working day for any person employed by
REGALA, J.: another shall be of not more than eight hours
daily. When the work is not continuous, the time
FACTS: during which the laborer is not working and can leave
At the National Development Co., a GOCC, there were 4 his working place and can rest completely shall not
shifts of work. be counted. (Sec. 1, Com. Act No. 444, as
amended. Emphasis ours.)
8 a.m. to 4 p.m.,
6 a.m. to 2 p.m; It will be noted that, under the law, the idle time that an
2 p.m. to 10 p.m. employee may spend for resting and during which he
10 p.m. to 6 a.m. may leave the spot or place of work though not the
premises2 of his employer, is not counted as working
In each shift, there was a 1-hour mealtime period, to wit: time only where the work is broken or is not
From (1) 11 a.m. to 12 noon for those working between 6 continuous.
a.m. and 2 p.m. and from (2) 7 p.m. to 8 p.m. for those
working between 2 p.m. and 10 p.m.
The determination as to whether work is continuous or not is
mainly one of fact which We shall not review as long as the
The records disclose that although there was a one-hour same is supported by evidence. (Sec. 15, Com. Act No. 103,
mealtime, petitioner nevertheless credited the workers with as amended, Philippine Newspaper Guild v. Evening News,
eight hours of work for each shift and paid them for the same Inc., 86 Phil. 303).
number of hours. However, since 1953, whenever workers in
one shift were required to continue working until the next
That is why We brushed aside petitioner's contention in one
shift, petitioner instead of crediting them with eight
case that workers who worked under a 6 a.m. to 6 p.m.
hours of overtime work, has been paying them for six
schedule had enough "free time" and therefore should not be
hours only, petitioner that the two hours corresponding to
credited with four hours of overtime and held that the finding
the mealtime periods should not be included in computing
of the CIR "that claimants herein rendered services to the
compensation. On the other hand, respondent National
Company from 6:00 a.m. to 6:00 p.m. including Sundays and
Textile Workers Union whose members are employed at the
holidays, . . . implies either that they were not allowed to
NDC, maintained the opposite view and asked the Court of
leave the spot of their working place, or that they could not
Industrial Relations to order the payment of additional
rest completely" (Luzon Stevedoring Co., Inc. v. Luzon Marine
overtime pay corresponding to the mealtime periods.
Department Union, et al., G.R. No. L-9265, April 29, 1957).

CIR issued an order holding that mealtime should be counted

Indeed, it has been said that no general rule can be laid
in the determination of overtime work and accordingly
down is to what constitutes compensable work, rather the
ordered petitioner to pay P101,407.96 by way of overtime
question is one of fact depending upon particular
circumstances, to be determined by the controverted in
cases. (31 Am. Jurisdiction Sec. 626 pp. 878.)
Thereafter, petitioner appealed to this Court, contending,
first, that the CIR has no jurisdiction over claims for overtime
In this case, the CIR's finding that work in the petitioner
compensation and, secondary that the CIR did not make "a
company was continuous and did not permit employees and
correct appraisal of the facts, in the light of the evidence" in
laborers to rest completely is not without basis in evidence
holding that mealtime periods should be included in overtime
and following our earlier rulings, shall not disturb the same.
work because workers could not leave their places of work
Thus, the CIR found:
and rest completely during those hours.
While it may be correct to say that it is well-high
Here, petitioner does not deny the existence of an employer-
impossible for an employee to work while he is
employee relationship between it and the members of the
eating, yet under Section 1 of Com. Act No. 444 such
union. Neither is there any question that the claim is based
a time for eating can be segregated or deducted from
on the Eight-Hour Labor Law (Com. Act No. 444, as
his work, if the same is continuous and the employee
amended). We therefore rule in favor of the jurisdiction of
can leave his working place rest completely. The time
the CIR over the present claim.
cards show that the work was continuous and
without interruption. There is also the evidence
ISSUE: adduced by the petitioner that the pertinent

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employees can freely leave their working place nor

rest completely. There is furthermore the aspect that
during the period covered the computation the work
was on a 24-hour basis and previously stated divided
into shifts.

From these facts, the CIR correctly concluded that work in

petitioner company was continuous and therefore the
mealtime breaks should be counted as working time for
purposes of overtime compensation.

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(16) LUZON STEVEDORING Co. v. Luzon Marine shop or boat in order that his period of rest shall not be
department Union counted, it being enough that he ceases to work, may rest
101 SCRA 257 completely and leave or may leave at his will the spot where
FELIX, J. he actually stays while working, to go somewhere else,
whether within or outside the premises of said factory, shop
FACTS or boat. If these requisites are complied with, the period of
On June 21, 1948, Luzon Marine Department Union filed a such rest shall not be counted
petition with the Court of Industrial Relations containing
several demands against Luzon Stevedoring Co., Inc.

While the case was still pending, the union declared a strike
which was declared illegal by the Court,

The union filed a ―Constancia‖ with the Court of Industrial

Relations praying that the unresolved demands of the union
in their original petition be granted.

Among the union’s demands is that work performed beyond

eight hours be paid overtime pay of 50% the regular pay rate
and that work performed on Sundays and legal holidays be
paid double the regular rate pay.

The trial Judge found that the employees worked from 6:00
AM to 6:00 PM daily and for work performed in excess of 8
hours, the employees were given overtime pay ofP4.00 for
officers, patrons and radio operators and P2.00 for the rest of
the crew.

The counsel for the union filed a motion for reconsideration

praying that the decision be modified so as to declare and
rule that the members of the Union who had rendered
services from 6:00 AM to 6:00 PM were entitled to 4 hours
overtime pay and that whatever little time allotted to the
taking of their meal should not be deducted from the four
hours of overtime rendered by said employees.

Luzon Stevedoring also sought for the reconsideration of the

decision only insofar as it interpreted that the period during
which the seaman is aboard a tugboat shall be considered as
working time for the purpose of the 8-hour law.

Is the definition for ―hours of work‖ as presently applied to
dryland laborers equally applicable to seamen?

Section 1 of the Commonwealth Act 444 provides that the
legal working day for any person employed by another shall
not be more than 8 hours daily. When work is not
continuous, the time during which the laborer is not working
and can leave his working place and can rest completely,
shall not be counted.

For the purposes of this case, the Court need not set aside
for seamen a criterion different from that applied to laborers
on land, for under the provisions of the law, the only thing to
be done is to determine the meaning and scope of the word
―working place‖ used therein. As the Court understand this
term, a laborer need not leave the premises of the factory,

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Labor Standards Case Digest (Midterm)

(17) working methods, time, place and manner of work,

SAN MIGUEL BREWERY SALES FORCE UNION tools to be used, processes to be
(PTGWO) followed, supervision of workers, working
vs. regulations, transfer of employees, work supervision,
HON. BLAS F. OPLE, as Minister of Labor and SAN lay-off of workers and the discipline, dismissal and
MIGUEL CORPORATION recall of work. ... (NLU vs. Insular La Yebana Co., 2
G.R. No. L-53515 February 8, 1989 SCRA 924; Republic Savings Bank vs. CIR 21 SCRA
GRIÑO-AQUINO, J.: 226, 235.) (Perfecto V. Hernandez, Labor Relations
FACTS: Law, 1985 Ed., p. 44.) (Emphasis ours.)
On April 17, 1978, a CBA (effective on May 1, 1978 until
January 31, 1981) was entered into by petitioner San Miguel Every business enterprise endeavors to increase its profits. In
Corporation Sales Force Union (PTGWO), and the private the process, it may adopt or devise means designed towards
respondent, San Miguel Corporation, Section 1, of Article IV that goal. In Abbott Laboratories vs. NLRC, 154 SCRA 713,
of which provided as follows: We ruled:

Art. IV, Section 1. Employees within the ... Even as the law is solicitous of the welfare
appropriate bargaining unit shall be entitled of the employees, it must also protect the
to a basic monthly compensation plus right of an employer to exercise what are
commission based on their respective sales. clearly management prerogatives. The
(p. 6, Annex A; p. 113, Rollo.) free will of management to conduct its own
business affairs to achieve its purpose cannot
In September 1979, the company introduced a marketing be denied.
scheme known as the "Complementary Distribution
System" (CDS) whereby its beer products were offered for So long as a company's management prerogatives are
sale directly to wholesalers through San Miguel's sales offices. exercised in good faith for the advancement of the
employer's interest and not for the purpose of
The labor union (herein petitioner) filed a complaint for defeating or circumventing the rights of the
unfair labor practice in the Ministry of Labor, with a employees under special laws or under valid agreements,
notice of strike on the ground that the CDS was contrary this Court will uphold them. San Miguel Corporation's offer to
to the existing marketing scheme whereby the Route compensate the members of its sales force who will be
Salesmen were assigned specific territories within which to adversely affected by the implementation of the CDS by
sell their stocks of beer, and wholesalers had to buy beer paying them a so-called "back adjustment commission" to
products from them, not from the company. It was alleged make up for the commissions they might lose as a result of
that the new marketing scheme violates Section 1, Article IV the CDS proves the company's good faith and lack of
of the CBA because the introduction of the CDS would reduce intention to bust their union.
the take-home pay of the salesmen and their truck helpers
for the company would be unfairly competing with them.

The Minister of Labor dismissed the notice of strike filed by

the petitioner, San Miguel Brewery Sales Force Union-
PTGWO. Management however is hereby ordered to pay an
additional 3 months back adjustment commissions over and
above the adjusted commission under the complementary
distribution system.

(1) Whether the CDS violates the CBA? NO

(2) whether it is an indirect way of busting the union? NO

Public respondent was correct in holding that the CDS is a
valid exercise of management prerogatives:

Except as limited by special laws, an employer

is free to regulate, according to his own
discretion and judgment, all aspects of
employment, including hiring, work assignments,
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Labor Standards Case Digest (Midterm)

(18) Mercidar Fishing Corp., vs NLRC (1998) G.R.


Private respondent had been employed as a "bodegero" or

ship's quartermaster on February 12, 1988. He complained
that he had been constructively dismissed by petitioner when
the latter refused him assignments aboard its boats after he
had reported to work on May 28, 1990.

Private respondent alleged that he had been sick and thus

allowed to go on leave without pay for one month from April
28, 1990 but that when he reported to work at the end of
such period with a health clearance, he was told to come
back another time as he could not be reinstated immediately.
Thereafter, petitioner refused to give him work. For this
reason, private respondent asked for a certificate of
employment from petitioner on September 6, 1990. However,
when he came back for the certificate on September 10,
petitioner refused to issue the certificate unless he submitted
his resignation. Since private respondent refused to submit
such letter unless he was given separation pay, petitioner
prevented him from entering the premises.

Issue: WON the fishing crew members are considered field

personnel who have no statutory right to service incentive
leave pay.

Held: Fishing crew are still entitled to service incentive leave.

Art. 82 of the Labor Code provides: ―The provisions

of this title [Working Conditions and Rest Periods]
shall apply to employees in all establishments and
undertakings whether for profit or not, but not to
government employees, field personnel, members of
the family of the employer who are dependent on
him for support, domestic helpers, persons in the
personal service of another, and workers who are
paid by results as determined by the Secretary of
Labor in appropriate regulations.‖

"Field personnel" shall refer to non-agricultural employees

who regularly perform their duties away from the principal
place of business or branch office of the employer and whose
actual hours of work in the field cannot be determined with
reasonable certainty.

In contrast, in the case at bar, during the entire course of

their fishing voyage, fishermen employed by petitioner have
no choice but to remain on board its vessel. Although they
perform non-agricultural work away from petitioner's
business offices, the fact remains that throughout the
duration of their work they are under the effective control
and supervision of petitioner through the vessel's patron or

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(19) Whether the claim of the plaintiffs-appellants for overtime

MANUEL LARA, ET AL. compensation under the 8-Hour Labor Law has valid support?
G.R. No. L-6339 April 20, 1954 For purposes of reference we are reproducing the pertinent
MONTEMAYOR, J.: provisions of the Eight-Hour Labor Law,

SECTION 1. The legal working day for any person
In 1950 defendant Petronilo del Rosario, Jr., owner of 25 taxi employed by another shall not be more than eight
cabs or cars, operated a taxi business under the name of hours daily. When the work is not continuous, the
"Waval Taxi." He employed among others 3 mechanics and time during which the laborer is not working and can
49 chauffeurs or drivers, the latter having worked for periods leave his working place and can rest completely shall
ranging from 2 to 37 months. not be counted.
On September 4, 1950, without giving said mechanics and
SEC. 2. This Act shall apply to all persons employed
chauffeurs 30 days advance notice, Del Rosario sold his 25
in any industry or occupation, whether public or
units or cabs to La Mallorca, a transportation company, as a
private, with the exception of farm laborers, laborers
result of which, according to the mechanics and chauffeurs
who prefer to be paid on piece work basis, domestic
above-mentioned they lost their jobs because the La Mallorca
servants and persons in the personal service of
failed to continue them in their employment. They brought
another and members of the family of the employer
this action against Del Rosario to recover compensation
working for him.
for overtime work rendered beyond 8 hours and on
Sundays and legal holidays, and one month salary
(mesada) provided for in Article 302 of the Code of SEC. 3. Work may be performed beyond eight hours
Commerce because the failure of their former employer to a day in case of actual or impending emergencies,
give them one month notice. caused by serious accidents, fire flood, typhoon,
earthquakes, epidemic, or other disaster or calamity
Subsequently, the 3 mechanics unconditionally withdrew their in order to prevent loss of life and property or
claims. So only the 49 drivers remained as plaintiffs. After imminent danger to public safety; or in case of
trial the complaint was dismissed. Plaintiffs appealed to the urgent work to be performed on the machines,
CA equipment, or installations in order to avoid a serious
loss which the employer would otherwise suffer, or
some other just cause of a similar nature; but in all
The parties are agreed that the plaintiffs as chauffeurs
cases the laborers and the employees shall be
received no fixed compensation based on the hours or the
entitled to receive compensation for the overtime
period of time that they worked. Rather, they were paid on
work performed at the same rate as their regular
the commission basis, that is to say, each driver received
wages or salary, plus at least twenty-five per centum
20% of the gross returns or earnings from the operation of
his taxi cab. Plaintiffs claim that as a rule, each drive
operated a taxi 12 hours a day with gross earnings ranging
from P20 to P25, receiving therefrom the corresponding 20% In case of national emergency the Government is
share ranging from P4 to P5, and that in some cases, empowered to establish rules and regulations for the
especially during Saturdays, Sundays, and holidays when a operation of the plants and factories and to
driver worked 24 hours a day he grossed from P40 to P50, determine the wages to be paid the laborers.
thereby receiving a share of from P8 to P10 for the period of
twenty-four hours. SEC. 4. No person, firm, or corporation, business
establishment or place or center of work shall compel
The reason given by the trial court in dismissing the an employee or laborer to work during Sundays and
complaint is that the defendant being engaged in the taxi or legal holidays, unless he is paid an additional sum of
transportation business which is a public utility, came under at least twenty-five per centum of his regular
the exception provided by the 8-Hour Labor Law (CA No. remuneration: Provided however, That this
444); and because plaintiffs did not work on a salary basis, prohibition shall not apply to public utilities
that is to say, they had no fixed or regular salary or performing some public service such as supplying
remuneration other than the 20 per cent of their gross gas, electricity, power, water, or providing means of
earnings "their situation was therefore practically similar to transportation or communication.
piece workers and hence, outside the ambit of article 302 of
the Code of Commerce."
Under Section 4, as a public utility, the defendant could
ISSUE: have his chauffeurs work on Sundays and legal holidays

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Labor Standards Case Digest (Midterm)

without paying them an additional sum of at least 25 per cent

of their regular remuneration: but that with reference only to
work performed on Sundays and holidays. If the work done
on such days exceeds 8 hours a day, then the Eight-Hour
Labor Law would operate, provided of course that plaintiffs
came under Section 2 of the said law. So that the question
to be decided here is whether or not plaintiffs are entitled to
extra compensation for work performed in excess of 8 hours
a day, Sundays and holidays included.

It will be noticed that the last part of section 3 of CA 444

provides for extra compensation for over-time work "at the
same rate as their regular wages or salary, plus at
least 25 per centum additional'" and that section 2 of
the same act excludes application thereof laborers who
preferred to be on piece work basis.

This connotes that a laborer or employee with no fixed

salary, wages or remuneration but receiving as
compensation from his employer uncertain and
variable amount depending upon the work done or
the result of said work (piece work) irrespective of
the amount of time employed, is not covered by the
Eight-Hour Labor Law and is not entitled to extra
compensation should he work in excess of 8 hours a
day. And this seems to be the condition of employment of
the plaintiffs.

The Wage Administration Service of the Department of Labor

in its Interpretative Bulletin No. 2 dated May 28, 1953, under
"Overtime Compensation," in section 3 thereof entitled
Coverage, says:

The provisions of this bulletin on overtime

compensation shall apply to all persons employed in
any industry or occupation, whether public or private,
with the exception of farm laborers, non-
agricultural laborers or employees who are
paid on piece work, contract, pakiao, task
or commission basis, domestic servants and persons
in the personal service of another and members of
the family of the employer working for him.

Thus, it is clear that the claim of the plaintiffs-appellants for

overtime compensation under the Eight-Hour Labor Law has
no valid support.

As to the month pay (mesada) under article 302 of the Code

of Commerce, article 2270 of the new Civil Code (Republic
Act 386) appears to have repealed said Article 302 when it
repealed the provisions of the Code of Commerce governing

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Labor Standards Case Digest (Midterm)

G.R. No. L-26844 September 30, 1969 his regular remuneration: Provided, however, That
this prohibition shall not apply to public utilities
FELIPE DE LEON, BALDOMERO SALVADOR, performing some public service such as supplying
MARTINIANO EVANGELISTA, VICENTE PANLAQUI, gas, electricity, power, water, or providing means
CASTOR TUASON, FRANCISCO GONZALO, ENRIQUE of transportation or communication.
RUBEN ICBAN, ABONDINO ISIP, LUIS P. ISIP, The issue which the petitioners here pose is not one of
DIOSDADO P. GONZALES, MAXIMO PAULE, novel perception. In Manalo vs. Pampanga Sugar
FAUSTINO DIMATULAC, MATEO BAUTISTA, Development Company, Inc., L-26776, June 30, 1969, this
WILFREDO AYCARDO, HORACIO OCAMPO, FABIAN Court disposed of a similar contention, thus:
GALANG, petitioners, The law is plain and unambiguous. It directs
vs. payment for work done not exceeding eight hours
PAMPANGA SUGAR DEVELOPMENT COMPANY, during Sundays and legal holidays by an employee
INC., respondent. or laborer not falling under the exception "an
additional sum of at least twenty-five per centum of
Juan C. Limin for petitioners. his regular remuneration." And we already said in
Carlos, Madarang, Carballo and Valdez for respondent. one case that "(t)he minimum legal additional
compensation for work on Sundays and legal
holidays is — 25% of the laborer's regular
CASTRO, J.: remuneration." Thus, if said employee or laborer
regularly receives P6 a day for an eight-hour work
Review on certiorari of the resolution dated October 14, on an ordinary day and he is made to work for
1966 of the Court of Industrial Relations (CIR) dismissing eight hours on Sunday or legal holiday, he is
the petitioners' complaint in case 38-V. entitled to his base pay of P6 plus P1.50 (25% of
P6), or a total of P7.50. His premium pay is P1.50,
the "twenty-five per centum of his regular
The respondent Pampanga Sugar Development Company
remuneration of P6. It does not include his base
(PASUDECO) operates a sugar central at San Fernando,
pay of P6. He gets that P6 for an eight-hour work
Pampanga. The petitioners, 21 all told, were its security
performed any day. And he gets the extra P1.50 if
guards required to work eight hours a day, seven days a
such eight-hour work is rendered on a Sunday or
week. On November 28, 1961 the petitioners filed with the
legal holiday. This is the most logical and
CIR a complaint seeking payment to them of premium or
reasonable import of the law. The CIR did not err
differential pay in the total amount P49,581.79, plus
in following it.
attorney's fees of P3,000 and costs of suit. Upon the
finding that the "petitioners were paid their monthly
salaries plus 25% additional compensation for work on The same signification is, contrary to petitioners'
Sundays and Holidays as provided for by law and that contention, given to the term "premium pay" by the
work on said days is one of the terms and conditions of Department of Labor, as may be gleaned from the
their employment as security guards." CIR Judge Joaquin following formula it devised in determining the daily
M. Salvador dismissed the case. Acting on the petitioners' wage of monthly-salaried employees, except those
motion for reconsideration, the court en banc affirmed employed by public utilities, working the whole
Judge Salvador's order. Hence this appeal. year round, including Sundays and legal holidays:

The petitioners' claim, in essence, is that under the Monthly salary multiplied by 12 (months) equals
authority of section 4 of Commonwealth Act 444 as yearly salary; yearly salary divided by 380.5 (days)
amended (Eight-Hour Labor Law), for a Sunday or legal equals daily wage. 1aw phîl.nèt

holiday work of not more than eight hours, each of them is

entitled to his monthly salary and his premium or The figure 380.5 above is the sum of the 303
differential compensation, i.e., his wage for the said ordinary days of the year and the 62 Sundays, and
Sunday or legal holiday plus at least 25% thereof. legal holidays of the same year and 15.5 (25% of
62). Stated otherwise, the last figure 15.5 is the
Sec. 4 of C.A. 444, as amended, reads: difference between 380.5 (theoretically, the
number of days worked by the employee in one
year) and 365 days (the actual number of days in a
No person, firm, or corporation, business
year). It is, in short, the equivalent in days of the
establishment or place or center of labor shall
employee's 25% premium pay for 52 Sundays and
compel an employee or laborer to work during
10 legal holidays in one year. The premium pay is
Sundays and legal holidays, unless he is paid an
not, therefore, 125% as petitioners want us to
additional sum of at least twenty-five per centum of

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Labor Standards Case Digest (Midterm)

believe. Thus, if the employee's daily wage is P6, respect to the other petitioners) of the petitioner Felipe de
his total premium pay for one year is P93 (P6 Leon:
times 15.5). Computed in another way, with the
same daily wage, his premium pay for one Sunday Period of employment for which
or legal holiday is P1.50 (25% of P6); multiplying claim is based January 1, 1946 to
P1.50 by 62 (the number of Sundays and legal October 31, 1957
holidays in one year), we get the same amount of
P93. This is the amount of premium pay to which Salary per month
he is entitled in one year in addition to his fixed from January 1, 1946
yearly salary. to December 31,
1950 P95.00
Petitioners postulate that the monthly salary or, for Number of Sundays
that matter, the yearly salary applies only to the and Holidays from
ordinary working days and does not take into January 1, 1946 to
account the Sundays and legal holidays found in a December 31, 1950 300
given calendar month or year.
Rate per day plus
The position thus taken by petitioners-appellants, 25% P3.95
that they are entitled to 125% premium, or extra 300 Sundays and
pay, for work done in each Sunday and holiday, Holidays multiplied by
would only apply if it is shown that the monthly or P3.95 rate per each
yearly salaries stipulated are intended to cover Sunday and Holiday P1,185.00
work on ordinary working days only or where the
nature or conditions of employment do not require
From the particular precise statement, "Rate per day plus
work on Sundays and holidays. But where, in
25% - P3.95," 2 it follows that the regular rate per ordinary
agreeing to the monthly or yearly stipend, the
day is P3.1666, which is 1/30th of the monthly salary of
parties knew, or had reason to know, that the work
P95. This means that in computing the daily wage, each of
would be continuous, without interruption on
the petitioners divided his monthly salary by 30, the
Sundays and holidays, then the wage earner
average number of days in a month, which includes
would only be entitled to the 25% supplement (or
Sundays and legal holidays. This is an effective admission,
extra pay) provided by section 4 of the Eight-Hour
or at least demonstrates awareness on the part of the
Labor law, as the regular monthly or yearly wage
petitioners, that their monthly salaries covered work not
already covered the work done on Sundays and
only on ordinary days but also on Sundays and legal
holidays. 3 The allegation, "300 Sundays and holidays
multiplied by P3.95 rate per each Sunday and Holiday —
The import of the law and the decision in Manalo is that for P1,185.00," is correct. However, it must be remembered
work on Sundays and legal holidays, the employer must that of the amount of P1,185, the sum of P948 had already
pay the employee: (1) his regular remuneration, or 100%; been paid to De Leon as part of his salary for the five-year
and (2) an additional sum of at least 25% of the regular period from January 1, 1946 to December 31, 1950.
remuneration, which is called the "premium pay." In other
words, the pay for Sundays and legal holidays is 125% of
The only question remaining is whether the 25% premium
the pay for ordinary days, but only the excess of 25% is
pay has also been paid. In the order of Judge Salvador,
premium pay. With respect to employees paid on a
affirmed by the court en banc, there is a finding that the
monthly basis, the first 100% (of the 125%), corresponding
"petitioners were paid their monthly salaries plus 25%
to the regular remuneration, may or may not be included in
additional compensation for work on Sundays and
the monthly salary. If it is, then the employee is entitled to
holidays." The factual findings of the trial judge, unaltered
collect only the premium of 25%. If it is not, then the
or unmodified by the court en banc, cannot be reviewed by
employee has a right to receive the entire 125%.
this Court. 4 The findings of fact of the CIR are conclusive
on this Court, where they are supported by substantial
The question that thus emerges is whether the petitioners' evidence, and the lower court has not acted with grave
monthly salaries already cover the 100% regular abuse of discretion in reaching them. 5
remuneration for Sundays and legal holidays. 1
ACCORDINGLY, the judgment a quo dismissing the
From the allegations in paragraph 3 of the petitioners' complaint is affirmed. No pronouncement as to costs
complaint it can be clearly inferred that such regular
remuneration of 100% is already encompassed in the
petitioners' monthly salaries. We hereunder quote the
itemization of the claim (which is essentially the same in

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1. Yes. According to various Presidential Decrees on
GRN L-63122 February 20, 1984 ECOLAs “Allowances of Fulltime Employees . . .”
that “Employees shall be paid in full the required
FACTS: monthly allowance regardless of the number of
their regular working days if they incur no
absences during the month. If they incur absences
Petitioner is a labor union composed of faculty members of
without pay, the amounts corresponding to the
the respondent University of Pangasinan, an educational
absences may be deducted from the monthly
institution duly organized and existing by virtue of the laws
allowance . . .”; and on “Leave of Absence Without
of the Philippines.
Pay”, that “All covered employees shall be entitled
to the allowance provided herein when they are on
Th petitioner filed a complaint against the private leave of absence with pay.”
respondent with the Arbitration Branch of the NLRC-
Dagupan City seeking: (a) the payment of Emergency
The petitioner’s members are full-time employees
Cost of Living Allowances (ECOLA) for November 7 to
receiving their monthly salaries irrespective of the number
December 5, 1981, a semestral break; (b) salary increases
of working days or teaching hours in a month. However,
from the 60% of the incremental proceeds of increased
they find themselves in a situation where they are forced to
tuition fees; and (c) payment of salaries for suspended
go on leave during semestral breaks. These semestral
extra loads.
breaks are in the nature of work interruptions beyond the
employees’ control. As such, these breaks cannot be
The petitioner’s members are full-time professors, considered as absences within the meaning of the law for
instructors, and teachers of respondent University. The which deductions may be made from monthly allowances.
teachers in the college level teach for a normal duration of The ―No work, no pay‖ principle does not apply in the
10 months a school year, divided into 2 semesters of 5 instant case. The petitioner’s members received their
months each, excluding the 2 months summer vacation. regular salaries during this period. It is clear from the
These teachers are paid their salaries on a regular provision of law that it contemplates a ―no work‖ situation
monthly basis. where the employees voluntarily absent themselves.
Petitioners, in the case at bar, do not voluntarily absent
During the semestral break (Nov. 7- Dec. 5, 1981), they themselves during semestral breaks. Rather, they are
were not paid their ECOLA. The private respondent claims constrained to take mandatory leave from work. For this
that the teachers are not entitled thereto because the they cannot be faulted nor can they be begrudged that
semestral break is not an integral part of the school year which is due them under the law.
and there being no actual services rendered by the
teachers during said period, the principle of ―No work, no The intention of the law is to grant ECOLA upon the
pay‖ applies. payment of basic wages. Hence, we have the principle of
―No pay, no ECOLA‖ the converse of which finds
During the same school year (1981-1982), the private application in the case at bar. Petitioners cannot be
respondent was authorized by the Ministry of Education considered to be on leave without pay so as not to be
and Culture to collect, from its students a 15% increase of entitled to ECOLA, for, as earlier stated, the petitioners
tuition fees. Petitioner’s members demanded a salary were paid their wages in full for the months of November
increase effective the first semester of said schoolyear to and December of 1981, notwithstanding the intervening
be taken from the 60% percent incremental proceeds of semestral break.
the said increased tuition fees as mandated by the PD
451. Private respondent refused. Although said to be on forced leave, professors and
teachers are, nevertheless, burdened with the task of
ISSUES: working during a period of time supposedly available for
rest and private matters. There are papers to correct,
1. WON PETITIONER’S MEMBERS ARE ENTITLED students to evaluate, deadlines to meet, and periods within
TO ECOLA DURING THE SEMESTRAL BREAK which to submit grading reports. Although they may be

Compiled by Cesnee Tan Page 30

Labor Standards Case Digest (Midterm)

considered by the respondent to be on leave, the semestal investments. Framers of the law intended this portion
break could not be used effectively for the teacher’s own (return on investments) of the increases in tuition fees to
purposes for the nature of a teacher’s job imposes upon be a general fund to cover up for the university’s
him further duties which must be done during the said miscellaneous expenses.
period of time. Arduous preparation is necessary for the
delicate task of educating our children. Teaching involves Petition for certiorari is GRANTED.
not only an application of skill and an imparting of
knowledge, but a responsibility which entails self
dedication and sacrifice. It would be unfair for the private
respondent to consider these teachers as employees on
leave without pay to suit its purposes and, yet, in the
meantime, continue availing of their services as they
prepare for the next semester or complete all of the last
semester’s requirements.

Thus, the semestral break may also be considered as

―hours worked.‖ For this, the teachers are paid regular
salaries and, for this, they should be entitled to ECOLA.
The purpose of the law is to augment the income of
employees to enable them to cope with the harsh living
conditions brought about by inflation; and to protect
employees and their wages against the ravages brought
by these conditions

2. With regard to the second issue, under Section 3

of Presidential Decree 451, “no increase in tuition
or other school fees or charges shall be approved
60% of the proceeds is allocated for increase in
salaries or wages of the members of the faculty
and all other employees of the school concerned,
and the balance for institutional development,
student assistance and extension services, and
return to investments: Provided, That in no case
shall the return to investments exceed twelve
(12%) per centum of the incremental proceeds; . .

Such allowances must be taken in resources of the school

not derived from tuition fees.

If the school happen to have no other resources to grant

allowances and benefits, either mandated by law or
secured by collective bargaining, such allowances and
benefits should be charged against the return to
investments referred.

The law is clear. The 60% incremental proceeds from the

tuition increase are to be devoted entirely to wage or
salary increases which means increases in basic salary.
The law cannot be construed to include allowances which
are benefits over and above the basic salaries of the
employees. To charge such benefits to the 60%
incremental proceeds would be to reduce the increase in
basic salary provided by law.

Law provides that 60% of tuition fee increase should go to

wage increases and 40% to institutional developments,
student assistance, extension services, and return on

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Labor Standards Case Digest (Midterm)

[G.R. No. L-65482. December 1, 1987.] docketed as Case No. RO4-10-81-72. Due to the failure of
the parties to settle their differences on conciliation, the
JOSE RIZAL COLLEGE, Petitioner, v. NATIONAL case was certified for compulsory arbitration where it was
LABOR RELATIONS COMMISSION AND NATIONAL docketed as RB-IV-23037-78 (Rollo, pp. 155-156).
WORKERS, Respondents. After the parties had submitted their respective position
papers, the Labor Arbiter ** rendered a decision on
February 5, 1979, the dispositive portion of which

DECISION "WHEREFORE, judgment is hereby rendered as

follows:chanrob1es virtual 1aw library

1. The faculty and personnel of the respondent Jose Rizal

College who are paid their salary by the month uniformly in
a school year, irrespective of the number of working days
PARAS, J.: in a month, without deduction for holidays, are presumed
to be already paid the 10 paid legal holidays and are no
longer entitled to separate payment for the said regular

This is a petition for certiorari with prayer for the issuance 2. The personnel of the respondent Jose Rizal College
of a writ of preliminary injunction, seeking the annulment of who are paid their wages daily are entitled to be paid the
the decision of the National Labor Relations Commission * 10 unworked regular holidays according to the pertinent
in NLRC Case No. RB-IV-23037-78 (Case No. R4-1-1081- provisions of the Rules and Regulations Implementing the
71) entitled "National Alliance of Teachers and Office Labor Code;
Workers and Juan E. Estacio, Jaime Medina, Et. Al. v.
Jose Rizal College" modifying the decision of the Labor 3. Collegiate faculty of the respondent Jose Rizal College
Arbiter as who by contract are paid compensation per student
contract hour are not entitled to unworked regular holiday
"WHEREFORE, in view of the foregoing considerations, pay considering that these regular holidays have been
the decision appealed from is MODIFIED, in the sense that excluded in the programming of the student contact
teaching personnel paid by the hour are hereby declared hours." (Rollo, pp. 26-27)
to be entitled to holiday pay.
On appeal, respondent National Labor Relations
"SO ORDERED."cralaw virtua1aw library Commission in a decision promulgated on June 2, 1982,
modified the decision appealed from, in the sense that
The factual background of this case which is undisputed is teaching personnel paid by the hour are declared to be
as follows:chanrob1es virtual 1aw library entitled to holiday pay (Rollo, p. 33).

Petitioner is a non-stock, non-profit educational institution Hence, this petition.

duly organized and existing under the laws of the
Philippines. It has three groups of employees categorized The sole issue in this case is whether or not the school
as follows: (a) personnel on monthly basis, who receive faculty who according to their contracts are paid per
their monthly salary uniformly throughout the year, lecture hour are entitled to unworked holiday
irrespective of the actual number of working days in a : virtual law library
month without deduction for holidays; (b) personnel on
daily basis who are paid on actual days worked and they Labor Arbiter Julio Andres, Jr. found that faculty and
receive unworked holiday pay and (c) collegiate faculty personnel employed by petitioner who are paid their
who are paid on the basis of student contract hour. Before salaries monthly, are uniformly paid throughout the school
the start of the semester they sign contracts with the year regardless of working days, hence their holiday pay
college undertaking to meet their classes as per schedule. are included therein while the daily paid employees are
renumerated for work performed during holidays per
Unable to receive their corresponding holiday pay, as affidavit of petitioner’s treasurer (Rollo, pp. 72-73).
claimed, from 1975 to 1977, private respondent National
Alliance of Teachers and Office Workers (NATOW) in There appears to be no problem therefore as to the first
behalf of the faculty and personnel of Jose Rizal College two classes or categories of petitioner’s workers.
filed with the Ministry of Labor a complaint against the
college for said alleged non-payment of holiday pay, The problem, however, lies with its faculty members, who

Compiled by Cesnee Tan Page 32

Labor Standards Case Digest (Midterm)

are paid on an hourly basis, for while the Labor Arbiter library
sustains the view that said instructors and professors are
not entitled to holiday pay, his decision was modified by and in the Implementing Rules and Regulations, Rule IV,
the National Labor Relations Commission holding the Book III, which
contrary. Otherwise stated, on appeal the NLRC ruled that
teaching personnel paid by the hour are declared to be "SEC. 8. Holiday pay of certain employees. — (a) Private
entitled to holiday pay. school teachers, including faculty members of colleges
and universities, may not be paid for the regular holidays
Petitioner maintains the position among others, that it is during semestral vacations. They shall, however, be paid
not covered by Book V of the Labor Code on Labor for the regular holidays during Christmas vacations. . . .
Relations considering that it is a non-profit institution and
that its hourly paid faculty members are paid on a Under the foregoing provisions, apparently, the petitioner,
"contract" basis because they are required to hold classes although a non-profit institution is under obligation to give
for a particular number of hours. In the programming of pay even on unworked regular holidays to hourly paid
these student contract hours, legal holidays are excluded faculty members subject to the terms and conditions
and labelled in the schedule as "no class day." On the provided for therein.
other hand, if a regular week day is declared a holiday, the
school calendar is extended to compensate for that day. We believe that the aforementioned implementing rule is
Thus petitioner argues that the advent of any of the legal not justified by the provisions of the law which after all is
holidays within the semester will not affect the faculty’s silent with respect to faculty members paid by the hour
salary because this day is not included in their schedule who because of their teaching contracts are obliged to
while the calendar is extended to compensate for special work and consent to be paid only for work actually done
holidays. Thus the programmed number of lecture hours is (except when an emergency or a fortuitous event or a
not diminished (Rollo, pp. 157-158). national need calls for the declaration of special holidays).
Regular holidays specified as such by law are known to
The Solicitor General on the other hand, argues that under both school and faculty members as "no class days;"
Article 94 of the Labor Code (P.D. No. 442 as amended), certainly the latter do not expect payment for said
holiday pay applies to all employees except those in retail unworked days, and this was clearly in their minds when
and service establishments. To deprive therefore they entered into the teaching contracts.
employees paid at an hourly rate of unworked holiday pay
is contrary to the policy considerations underlying such On the other hand, both the law and the Implementing
presidential enactment, and its precursor, the Blue Sunday Rules governing holiday pay are silent as to payment on
Law (Republic Act No. 946) apart from the constitutional Special Public
mandate to grant greater rights to labor (Constitution,
Article II, Section 9). (Rollo, pp. 76-77). It is readily apparent that the declared purpose of the
holiday pay which is the prevention of diminution of the
In addition, respondent National Labor Relations monthly income of the employees on account of work
Commission in its decision promulgated on June 2, 1982, interruptions is defeated when a regular class day is
ruled that the purpose of a holiday pay is obvious; that is to cancelled on account of a special public holiday and class
prevent diminution of the monthly income of the workers hours are held on another working day to make up for time
on account of work interruptions. In other words, although lost in the school calendar. Otherwise stated, the faculty
the worker is forced to take a rest, he earns what he member, although forced to take a rest, does not earn
should earn. That is his holiday pay. It is no excuse what he should earn on that day. Be it noted that when a
therefore that the school calendar is extended whenever special public holiday is declared, the faculty member paid
holidays occur, because such happens only in cases of by the hour is deprived of expected income, and it does
special holidays (Rollo, p. 32). not matter that the school calendar is extended in view of
the days or hours lost, for their income that could be
Subject holiday pay is provided for in the Labor Code earned from other sources is lost during the extended
(Presidential Decree No. 442, as amended), which days. Similarly, when classes are called off or shortened
reads:chanrobles virtual lawlibrary on account of typhoons, floods, rallies, and the like, these
faculty members must likewise be paid, whether or not
"Art. 94. Right to holiday pay — (a) Every worker shall be extensions are ordered.
paid his regular daily wage during regular holidays, except
in retail and service establishments regularly employing Petitioner alleges that it was deprived of due process as it
less than ten (10) workers; was not notified of the appeal made to the NLRC against
the decision of the labor arbiter.
(b) The employer may require an employee to work on any
holiday but such employee shall be paid a compensation The Court has already set forth what is now known as the
equivalent to twice his regular rate; . . ."cralaw virtua1aw "cardinal primary" requirements of due process in

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Labor Standards Case Digest (Midterm)

administrative proceedings, to wit:" (1) the right to a

hearing which includes the right to present one’s case and
submit evidence in support thereof; (2) the tribunal must
consider the evidence presented; (3) the decision must
have something to support itself; (4) the evidence must be
substantial, and substantial evidence means such
evidence as a reasonable mind might accept as adequate
to support a conclusion; (5) the decision must be based on
the evidence presented at the hearing, or at least
contained in the record and disclosed to the parties
affected; (6) the tribunal or body of any of its judges must
act on its or his own independent consideration of the law
and facts of the controversy, and not simply accept the
views of a subordinate; (7) the board or body should in all
controversial questions, render its decisions in such
manner that the parties to the proceeding can know the
various issues involved, and the reason for the decision
rendered." (Doruelo v. Commission on Elections, 133
SCRA 382 [1984]).

The records show petitioner JRC was amply heard and

represented in the instant proceedings. It submitted its
position paper before the Labor Arbiter and the NLRC and
even filed a motion for reconsideration of the decision of
the latter, as well as an "Urgent Motion for Hearing En
Banc" (Rollo, p. 175). Thus, petitioner’s claim of lack of
due process is unfounded.

PREMISES CONSIDERED, the decision of respondent

National Labor Relations Commission is hereby set aside,
and a new one is hereby

(a) exempting petitioner from paying hourly paid faculty

members their pay for regular holidays, whether the same
be during the regular semesters of the school year or
during semestral, Christmas, or Holy Week vacations;

(b) but ordering petitioner to pay said faculty members

their regular hourly rate on days declared as special
holidays or for some reason classes are called off or
shortened for the hours they are supposed to have taught,
whether extensions of class days be ordered or not; in
case of extensions said faculty members shall likewise be
paid their hourly rates should they teach during said


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Labor Standards Case Digest (Midterm)

Wellington Investment vs Trajano


G.R. No. 114698 July 3, 1995

Wellington Investment vs Trajano


Upon an inspection of the Wellington Flour Mills, owned

and operated by petitioner, the latter was accused of non-
payment of regular holidays falling on a Sunday for
monthly-paid employees.

Petitioner’s Arguments:

1. Monthly salary of the monthly-paid employees

already includes holiday pay for all the regular
2. To pay for the extra days (regular holidays on a
Sunday), as compelled by the Order of the DOLE,
it is in effect being compelled to pay for alleged
extra working days.

DOLE’s Contentions:

1. Regular holidays falling on Sundays have

precluded the enjoyment by the employees of a
non-working day and the employees consequently
have to work for additional days.
2. When a regular holiday falls on a Sunday, an extra
or additional working day is created and the
employer has the obligation to pay its employees
for the extra day.

Issue: Whether or not a monthly-paid employee is entitled

to an additional pay aside from his usual holiday pay,
whenever a regular holiday falls on a Sunday.



To agree with DOLE’s theory would increase the number

of days in a year, instead of 365 days, as basis for
computation of salary for monthly-paid employees. There
is no provision of law requiring employers to make
adjustments in the monthly salary rate set by them to take
account of the legal holiday falling on Sundays or to
reckon a year at more than 365 days.

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Labor Standards Case Digest (Midterm)

Topic: Coverage; exclusions of Holiday pay/Premium (a) Every worker shall be paid his regular daily wage
pay during regular holidays, except in retail and service
establishments regularly employing less than 10 workers.
Title: Insular Bank v. Inciong, G.R. No. L-52415,
October 23, 1984 (b) The term "holiday" as used in this chapter, shall
include: New Year's Day, Maundy Thursday, Good Friday,
the ninth of April the first of May, the twelfth of June, the
Doctrine: it is clear that monthly paid employees are not fourth of July, the thirtieth of November, the twenty-fifth
excluded from the benefits of holiday pay. and the thirtieth of December and the day designated by
law for holding a general election.

xxx xxx xxx

This conclusion is deduced from the fact that the daily rate
of pay of the bank employees was computed in the past
with the unworked regular holidays as excluded for
purposes of determining the deductible amount for
― However, the implementing rules on holiday pay
absences incurred Thus, if the employer uses the factor
promulgated by the then Secretary of Labor excludes
303 days as a divisor in determining the daily rate of
monthly paid employees from the said benefits by
monthly paid employee, this gives rise to a presumption
inserting, under Rule IV, Book Ill of the implementing rules,
that the monthly rate does not include payments for
Section 2, which provides that: "employees who are
unworked regular holidays. The use of the factor 303
uniformly paid by the month, irrespective of the number of
indicates the number of ordinary working days in a year
working days therein, with a salary of not less than the
(which normally has 365 calendar days), excluding the 52
statutory or established minimum wage shall be presumed
Sundays and the 10 regular holidays. The use of 251 as a
to be paid for all days in the month whether worked or not.
factor (365 calendar days less 52 Saturdays, 52 Sundays,
and 10 regular holidays) gives rise likewise to the same
presumption that the unworked Saturdays, Sundays and
regular holidays are unpaid. This being the case, it is not
amiss to state with certainty that the instant claim for
xxx wages on regular unworked holidays is found to be tenable
and meritorious.

WHEREFORE, judgment is hereby rendered:

In view of the foregoing, Section 2, Rule IV, Book III of the
Rules to implement the Labor Code and Policy instruction (a) xxx xxxx xxx
No. 9 issued by the then Secretary of Labor must be
declared null and void. Accordingly, public respondent (b) Ordering respondent to pay wages to all its employees
Deputy Minister of Labor Amado G. Inciong had no basis for all regular h(olidays since November 1, 1974 (pp. 97-
at all to deny the members of petitioner union their regular 99, rec., underscoring supplied). Respondent bank did not
holiday pay as directed by the Labor Code. appeal from the said decision. Instead, it complied with the
order of Arbiter Ricarte T. Soriano by paying their holiday
pay up to and including January, 1976.

Facts: On August 25, 1975, Labor Arbiter Ricarte T.

Soriano rendered a decision in the above-entitled case,
granting petitioner's complaint for payment of holiday pay. On December 16, 1975, Presidential Decree No. 850 was
Pertinent portions of the decision read: têñ.£îhqw⣠promulgated amending, among others, the provisions of
the Labor Code on the right to holiday pay to read as
xxx xxx xxx follows:

The records disclosed that employees of respondent bank

were not paid their wages on unworked regular holidays as
mandated by the Code, particularly Article 208, to Art. 94. Right to holiday pay. — (a) Every worker shall be
wit: têñ.£îhqw⣠paid his regular daily wages during regular holidays,
except in retail and service establishments regularly
Art. 208. Right to holiday pay. employing less than ten (10) workers.

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Labor Standards Case Digest (Midterm)

respondent Amado G. Inciong with abuse of discretion

amounting to lack or excess of jurisdiction.
Accordingly, LATER on by authority of Article 5 of the
same Code, the Department of Labor (now Ministry of
Labor) promulgated the rules and regulations for the
implementation of holidays with pay. Sec. 2.Status of ISSUE: whether or not Section 2, Rule IV, Book III of the
employees paid by the month. — Employees who are implementing rules and Policy Instruction No. 9 issued by
uniformly paid by the month, irrespective of the number of the then Secretary of Labor are null and void since in the
working days therein, with a salary of not less than the guise of clarifying the Labor Code's provisions on holiday
statutory or established minimum wage shall be presumed pay, they in effect amended them by enlarging the scope
to be paid for all days in the month whether worked or not. of their exclusion

RULING: YES. WE agree with the petitioner's contention

that Section 2, Rule IV, Book III of the implementing rules
Subsequently, Policy Instruction No. 9 was issued by the and Policy Instruction No. 9 issued by the then Secretary
then Secretary of Labor (now Minister) interpreting the of Labor are null and void since in the guise of clarifying
above-quoted rule, STATING THAT: the Labor Code's provisions on holiday pay, they in effect
amended them by enlarging the scope of their exclusion.
―The ten (10) paid legal holidays law, to start with, is
intended to benefit principally daily employees. In the case Article 94 of the Labor Code, as amended by P.D. 850,
of monthly, only those whose monthly salary did not yet provides:
include payment for the ten (10) paid legal holidays are
entitled to the benefit.‖ THIS policy has been fully clarified Art. 94. Right to holiday pay. — (a) Every worker shall be
to eliminate controversies on the entitlement of monthly paid his regular daily wage during regular holidays, except
paid employees, The new determining rule is this: If the in retail and service establishments regularly employing
monthly paid employee is receiving not less than P240, the less than ten (10) workers. ...
maximum monthly minimum wage, and his monthly pay is
uniform from January to December, he is presumed to be The coverage and scope of exclusion of the Labor Code's
already paid the ten (10) paid legal holidays. However, if holiday pay provisions is spelled out under Article 82
deductions are made from his monthly salary on account thereof which reads: têñ.£îhqwâ£
of holidays in months where they occur, then he is still
entitled to the ten (10) paid legal holidays. ..."
Art. 82. Coverage. — The provision of this Title shall apply
to employees in all establishments and undertakings,
whether for profit or not, but not to government employees,
managerial employees, field personnel members of the
Respondent bank, by reason of the above rule, stopped family of the employer who are dependent on him for
the payment of holiday pay to its employees. Hence, support domestic helpers, persons in the personal service
petitioner secured a writ of execution to enforce the of another, and workers who are paid by results as
arbiter's decision of August 25, 1975, whereby the determined by the Secretary of Labor in appropriate
respondent bank was ordered to pay its employees their regulations.
daily wage for the unworked regular holidays. BUT Labor
Arbiter Ricarte T. Soriano, instead of issuing a writ of From the above-cited provisions, it is clear that
execution, issued an order enjoining the respondent bank monthly paid employees are not excluded from the
to continue paying its employees their regular holiday pay benefits of holiday pay. However, the implementing rules
due to the reason that since the decision had been on holiday pay promulgated by the then Secretary of Labor
partially implemented by the respondent bank, appeal from excludes monthly paid employees from the said benefits
the said decision is no longer available. by inserting, under Rule IV, Book Ill of the implementing
rules, Section 2, which provides that: "employees who are
uniformly paid by the month, irrespective of the number of
working days therein, with a salary of not less than the
NLRC set aside Labor Arbiter Ricarte T. Soriano's order statutory or established minimum wage shall be presumed
AND MANDATED THE issuance of the proper writ of to be paid for all days in the month whether worked or not.
execution. THE Office of the Minister of Labor, through "
Deputy Minister Amado G. Inciong, issued an order,
SETTING ASIDE THE NLRC RESOLUTION and a new Public respondent insists that "(T)he rules
judgment promulgated dismissing the instant case for lack implementing P. D. 850 and Policy Instruction No. 9 were
of merit. Hence, this petition for certiorari charging public issued to clarify the policy in the implementation of the ten
(10) paid legal holidays. As interpreted, 'unworked' legal

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Labor Standards Case Digest (Midterm)

holidays are deemed paid insofar as monthly paid

employees are concerned if (a) they are receiving not less
than the statutory minimum wage, (b) their monthly pay is
uniform from January to December, and (c) no deduction
is made from their monthly salary on account of holidays in
months where they occur. As explained in Policy
Instruction No, 9, 'The ten (10) paid legal holidays law, to
start with, is intended to benefit principally daily paid
employees. In case of monthly, only those whose monthly
salary did not yet include payment for the ten (10) paid
legal holidays are entitled to the benefit' " (pp. 340-341,
rec.). This contention is incorrect.

In the case at bar, the provisions of the Labor

Code on the entitlement to the benefits of holiday pay
are clear and explicit - it provides for both the
coverage of and exclusion from the benefits. In Policy
Instruction No. 9, the then Secretary of Labor went as far
as to categorically state that the benefit is principally
intended for daily paid employees, when the law clearly
states that every worker shall be paid their regular holiday
pay. This is a flagrant violation of the mandatory directive
of Article 4 of the Labor Code, which states that "All doubts
in the implementation and interpretation of the provisions
of this Code, including its implementing rules and
regulations, shall be resolved in favor of labor."



Compiled by Cesnee Tan Page 38

Labor Standards Case Digest (Midterm)

Davao Integrated Port Stevedoring Services v. The employer cannot

Abarquez unilaterally withdraw the existing privilege of commutation
or conversion to cash, given to the said workers and as
G.R. No. 102132 also noted that the employer had in fact granted and paid
said cash equivalent of the unused portion of the sick
March 19, 1993 leave benefits to some intermittent workers. Well-settled is
it that the said privilege of commutation or conversion to
cash, being an existing benefit, the petitioner may not
diminish such benefits. Under the circumstances, these
may be deemed to have ripened into company practice or
Facts: policy which cannot be peremptorily withdrawn.

Petitioner Davao Integrated Port Stevedoring Services

(petitioner-company) and private respondent ATU-TUCP,
entered into a collective bargaining agreement (CBA) on
October 16, 1985. Under sections 1 and 3, Article VIII
thereof, sick leave with pay benefits shall be provided for
employees who have rendered at least one (1) year of
service with the company. During the effectivity of the CBA
until three (3) months after its renewal on April 15, 1989, or
until July 1989 (a total of three (3) years and nine (9)
months), all the field workers of petitioner who are
members of the regular labor pool and the present regular
extra labor pool who had rendered at least 750 hours up to
1,500 hours were extended sick leave with pay benefits.
Any unused portion thereof at the end of the current year
was converted to cash and paid at the end of the said one-
year period pursuant to Sections 1 and 3, Article VIII of the
CBA. The commutation of the unused portion of the sick
leave with pay benefits of the intermittent workers or its
conversion to cash was, however, discontinued or
withdrawn when the petitioner hired a new assistant
manager, Mr. Benjamin Marzo who stopped the payment
of its cash equivalent on the ground that they are not
entitled to the said benefits under Sections 1 and 3 of the
1989 CBA. The union alleges that the discontinuation of
the benefits being granted would violate the principle in
labor laws that benefits already extended shall not be
taken away and that it would result in discrimination
between the non-intermittent and the intermittent workers
of the petitioner-company.


Whether or not the benefits given by the petitioner have

not yet ripened into an established company practice and
can therefore be withdrawn.


No, the benefits given by the petitioner to its

employees have already ripened into an established
company practice and therefore cannot be withdrawn.

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Labor Standards Case Digest (Midterm)

G.R. No. L-23076 February 27, 1969 dismissed for cause effective November 30 of the same
NICANOR M. BALTAZAR, plaintiff-appellee,
vs. Four months later, or more specifically on May 2, 1957,
SAN MIGUEL BREWERY, INC., defendant-appellant. Baltazar commenced the present action. After trial upon
the issues arising from the parties' pleadings, the trial court
Jose P. Osorio for plaintiff-appellee. ruled that Baltazar's dismissal was justified, and, as a
Ponce Enrile, Siguion Reyna, Montecillo and Belo for consequence, dismissed his complaint. For insufficiency of
defendant-appellant. evidence, the court also dismissed appellant's
counterclaim. But despite the dismissal of Baltazar's
DIZON, J.: complaint and the finding that his dismissal from
employment was for cause, the trial court ordered
appellant to pay him one month separation pay, plus the
Appeal taken by San Miguel Brewery, Inc. to reverse the
cash value of six months accumulated sick leave. So We
decision of the Court of First Instance of Manila in Civil
are now urged to reverse this portion of the decision upon
Case No. 32478 ordering it to pay appellee Nicanor M.
the following grounds:
Baltazar the total amount of P1,680.00 representing his
separation pay of one (1) month and the money value —
at the rate of P240.00 monthly — of six months I. The trial court erred in requiring the defendant appellant
accumulated sick leave he was entitled to. to pay separation pay after having found and declared as
an established fact that the dismissal of plaintiff-appellee
was fully justified.
It appears that Baltazar was appointed salesman-in-
charge of appellant's Dagupan warehouse on October 1,
1955 with a basic monthly pay of P240.00, P5.00 per diem II. The trial court erred in awarding plaintiff-appellee the
and a commission of P.075 per case sold. money equivalent of an "accumulated sick leave of six (6)
months as terminal leave" despite its express findings to
the effect that (1) sick leave benefits under defendant-
On October 9, 1956 sixteen regular workers at appellant's
appellant's health, welfare and retirement plan may be
Dagupan warehouse went on a strike. For the purpose of
enjoyed only if and when the sickness is certified to by the
relieving the tension prevailing at the place — because it
company physician — a requirement which was admittedly
was alleged that the unfair treatment dispensed to the
not complied with, and (2) said benefits are "non-
employees by Baltazar was the cause of the strike —
commutative and may not therefore be commuted to
Baltazar was recalled to appellant's Manila office on
October 13 of the same year upon recommendation of its
sales supervisor and industrial relations officer, who found
out, after a personal investigation, that the employees' The trial court found that appellee's absence for forty-eight
grievance was well founded. The day following Baltazar's successive days was without permission or authority of his
recall to Manila the strikers returned to work voluntarily. superiors and, as a result, ruled that it was sufficient cause
for his dismissal in accordance with the rules and
regulations of his employer. This must be deemed final,
When Baltazar reported at appellant's main office in
because Baltazar did not appeal.
Manila on October 15, 1956, the latter's sales supervisor
informed him that he was not to return to Dagupan
anymore. Thereafter, he reported for work at the main It is settled in this jurisdiction that one not employed for a
office aforesaid from October 16, 1956 until November 2 of definite period is not entitled to one-month notice or to
the same year, apparently without being given any specific one-month salary in lieu thereof if his dismissal was for
work or assignment. From November 3, 1956 up to cause (Republic Act No. 1052; Marcaida vs. Philippine
December 19 of the same year, or a period of more than Education Company, 53 O.G. No. 23, p. 8559). In the
one and one-half months, he absented himself from work Marcaida case this Court, speaking through the now Chief
without prior authority from his superiors and without Justice Roberto Concepcion, said the following:
advising them or anybody else of the reason for his
prolonged absence. For this reason, pursuant firstly, to Republic Act No. 1052 makes reference to termination of
existing rules and regulations considering ten unexcused employment, instead of dismissal, precisely to exclude
or unauthorized absences within a calendar year as employees separated from the service for causes
sufficient ground for an outright dismissal from attributable to their own fault.
employment, and secondly, the provisions of appellant's
health, welfare and retirement plan requiring that sick Again, Republic Act No. 1052 is limited in its operation, to
leave, to be considered authorized or excusable, must be cases of employment without definite period. When the
certified to by the company physician, appellant, by a letter employment is for a fixed duration, the employer may
dated December 31, 1956, informed Baltazar that he was terminate it even before the expiration of the stipulated
period, should there be a substantial breach of his

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Labor Standards Case Digest (Midterm)

obligations by the employee; (Articles 1169, 1191 and

1198, Civil Code of the Philippines; Pabalan vs. Velez, 22
Phil. 29; Gonzales vs. Haberer 47 Phil. 380; Hodges vs.
Granada, 59 Phil. 429; De la Cruz vs. Legaspi, 51 Off.
Gaz. 6212) in which event the latter is not entitled to
advance notice or separation pay. It would, patently, be
absurd to grant a right thereto to an employee guilty of the
same breach of obligation, when the employment is
without a definite period, as if he were entitled to greater
protection than employees engaged for a fixed duration,
.... It is doubtful whether Congress could validly require the
employer to give the separation pay in question if the
employment were terminated due to the fault of the
employee. Indeed, the imposition of said obligation, under
such conditions, would expose Republic Act No. 1052 to
the charge that it would constitute an unreasonable
restraint upon the liberty of the employer, and a
deprivation of his property without due process of law.

We rule therefore that appellee is not entitled to one month

separation pay.

In connection with the question of whether or not appellee

is entitled to the cash value of six months accumulated
sick leave, it appears that while under the last paragraph
of Article 5 of appellant's Rules and Regulations of the
Health, Welfare and Retirement Plan (Exhibit, 3), unused
sick leave may be accumulated up to a maximum of six
months, the same is not commutable or payable in cash
upon the employee's option.

In our view, the only meaning and import of said rule and
regulation is that if an employee does not choose to enjoy
his yearly sick leave of thirty days, he may accumulate
such sick leave up to a maximum of six months and enjoy
this six months sick leave at the end of the sixth year but
may not commute it to cash.

WHEREFORE, the appealed decision is hereby reversed,

without special pronouncement as to costs. It is so

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