Labor Standards Case Digest

PART 2- GENERAL PROVISIONS that it was a mistake or an error, supported only by an affidavit of
CONSTRUCTION IN FAVOR OF LABOR its manufacturing group head portions.
In cases involving money claims of employees, the employer has the
ARCO METAL vs. SAMAHAN (2008) burden of proving that the employees did receive the wages and benefits
and that the same were paid in accordance with law. Indeed, if AMP wants
FACTS: to prove that it merely erred in giving full benefits, it could have easily
Arco Metal Products is engaged in manufacture of metal products, presented other proofs, such as the names of other employees who did
whereas Samahan ng mga Manggagawa sa Arco Metal-NAFLU is the labor not fully serve for one year and thus were given prorated benefits.
union of AMP’s rank & file employees.
Sometime Dec ’03: AMP paid the 13th month pay, bonus & leave DUTY FREE PH SERVICES vs. TRIA (2013)
encashment of 3 union members in amounts proportional to the service
they actually rendered in a year – less than a full 12mos. Employees were: FACTS:
Rante Lamadrid, Alberto Gamban, Rodelio Collantes. DFPS is a manpower agency that provides personnel to DFP.
Samahan protested the prorated scheme, claiming that on several 16 Mar ’89: Manolo Tria was employed by DFPS & was seconded to
occasions AMP did not prorate the payment of same benefits to 7 DFP as Warehouse Supervisor.
employees who had not served for full 12mos. Alleged that prorated In an Audit Report, it was revealed that 1,020 packs of Marlboro
payment violates the rule against diminution of benefits under Art. 100 of bearing Merchandise Code #020101 under WRR #36-04032 were not
Labor Code. Thus, filed complaint before Natl Conciliation & Mediation included in the condemnation proceedings held on 27 Dec ’96. Also there
Board. were glaring discrepancies in the related documents w/c indicate a
Voluntary Arbitrator Mangabat ruled in favor of AMP. Found that the malicious attempt to conceal an anomalous irregularity. Found out that
giving of the benefits in full, irrespective of actual service rendered w/in Request for Condemnation have been fabricated & all signatories therein –
1yr has not ripened into a practice. That giving in full was a mere error. Stockkeeper Ed Garcia, DIU Supervisor Catherino Bero & Constantino Cruz
Interpreted phrase “for each year of service” found in CBA provisions to – were held accountable for irregular loss.
mean that an employee must have rendered 1yr of service to be entitled Further investigation revealed that subject merchandise was illegally
to full benefits. brought out of warehouse & it was made to appear that in all docu
Samahan filed petition for review, imputing error to Mangabat’s prepared, said goods were legally condemned. Garcia implicated Tria &
conclusion. CA ruled that CBA did not intend to foreclose application of two others, claiming that he was unaware of the illegality of the transaction
prorated payments of leave benefits to covered employees. Ruled that the because he was only obeying orders of his superiors & that it was Tria who
contested benefits be paid to the employees in full, irrespective of actual ordered him to look for a van for the supposed direct condemnation.
service w/in a year. Discipline Committee requested Tria to submit written reply re the
AMP moved for reconsideration. Motion was denied. findings in Audit Report & allegations of Garcia. Garcia denied
participation but admitted that he instructed Garcia to look for a van for
ISSUE: 1) WON the intent of CBA provisions is to grant full benefits the purpose of transferring the damaged merchandise from main
regardless of service actually rendered by an employee to the company warehouse to proper warehouse for damages goods.
2) WON prorated payment of the said benefits constitutes diminution of 27 Aug ’98: DFPDC issued Joint Resolution finding Tria guilty of
benefits under Article 100 of the Labor Code dishonesty for his direct participation & for loss of trust & confidence, with
forfeiture of all rights & privileges due them except earned salaries & leave
HELD: credits.
1) Affirmative. CBA provisions read: 18 Sep: DFPS sent Tria a memorandum terminating his employment.
ARTICLE XIV - VACATION LEAVE Aggrieved, Tria filed complaint for illegal dismissal & for payment of
Section 1. Employees/workers covered by this agreement backwages, attys fees & damages.
who have rendered at least one (1) year of service shall be 31 May ’99: LA rendered decision, finding Tria to have been illegally
entitled to 16 days vacation leave with pay for each year of dismissed. NLRC affirmed.
service. xxx
ARTICLE XV - SICK LEAVE ISSUE: 1) WON there was employer-employee relationship between DFPS
Section 1. Employees/workers covered by this agreement & Tria
who have rendered at least one (1) year of service shall be 2) WON Tria was illegally dismissed
entitled to 16 days of sick leave with pay for each year of service.
xxx HELD:
ARTICLE XVI – EMERGENCY LEAVE, ETC. 1) Affirmative. DFPS only raised the issue in its petition for certiorari
Section 2. Employees/workers covered by this agreement before CA, alleging that DFP is Tria’s direct employer. However, it must be
who have rendered at least 1 yr of service shall be entitled to 7 noted that in DFPS’ Position Paper, it highlighted Tria’s involvement in the
days of Paternity Leave with pay. xxx alleged fake condemnation & as such, this was a just case for terminating
No doubt that in order to be entitled to the full monetization of 16 an employee. Also in it’s Appeal, DFPS insisted there was basis for
days of vacation and sick leave, one must have rendered at least 1yr of termination of Tria’s employment. Nowhere in said pleadings did DFPS
service. deny the existence of such relationship. Rather, the line of its defense
2) Affirmative. Any benefit and supplement being enjoyed by impliedly admitted said relationship. Estopped.
employees cannot be reduced, diminished, discontinued or eliminated by 2) Affirmative. DFPS dismissed Tria from employment based on the
the employer. The principle of non-diminution of benefits is founded on recommendation of DFPDC holding him guilty of dishonesty for his direct
the Constitutional mandate to "protect the rights of workers and promote participation in the "fake condemnation" and "pilferage" of missing 1,020
their welfare” & “to afford labor full protection. Marlboro Pack of 5cigs. He was implicated by his co-employees who
Article 4 LC which states that “all doubts in the implementation and pointed to the former as the one who ordered the other suspects to look
interpretation of this Code, including its implementing rules and for a vehicle that would be used to transport the subject cigarettes. This,
regulations shall be rendered in favor of labor.” according to DFPDC, was odd and strange. With this act alone and by
Right of employees to benefits which were voluntarily given by the reason of his position, DFPDC concluded, & affirmed by DFPS, that Tria
employer and which ripened into company practice is recognized. If that definitely had knowledge of the "fake condemnation." However, DFPDC’s
act which was favorable to the employees though not conforming to law conclusions are not supported by clear and convincing evidence to
had thus ripened into a practice, it could not be withdrawn, reduced, warrant the dismissal.
diminished, discontinued or eliminated. In illegal dismissal cases, employer is burdened to prove just cause for
In years 1992-94, 1999, 2002 and 2003, AMP had adopted a policy of terminating the employment of its employee with clear and convincing
freely, voluntarily and consistently granting full benefits to its employees evidence. This principle is designed to give flesh and blood to the guaranty
regardless of the length of service rendered. True, there were only a total of security of tenure granted by the Constitution to employees under the
of 7 employees who benefited from such practice, but it was an Labor Code.
established practice nonetheless. Jurisprudence has not laid down any DFPS failed to submit clear and convincing evidence of Tria’s direct
rule specifying a minimum number of years within which a company participation in the alleged fake condemnation proceedings. To be sure,
practice must be exercised in order to constitute voluntary company unsubstantiated suspicions, accusations, and conclusions of employers do
practice. AMP cannot shirk away from its responsibility by merely claiming not provide for legal justification for dismissal.
 Labor Standards Case Digest
In case of doubt, such cases should be resolved in favor of possess the necessary authority or license gives the impression of
labor, pursuant to the social justice policy of labor laws and the having the ability to send a worker abroad.
Constitution. Complainants categorically stated that Sps. Reichl told them they
would provide them overseas employment & promised they would be able
RECRUITMENT AND PLACEMENT OF WORKERS to leave the country on specified date. Defense has not shown any ill
motive for these witnesses to falsely testify against Reichls if it were not
PEOPLE vs. HERNANDEZ (2002) true. The minor lapses in their testimonies do not impair their credibility,
especially since they corroborate each other on the material points.
FACTS: Moreover, it was shown that Karl signed a document where he
Narcisa Hernandez testimony: Francisco Hernandez introduced her to promised to refund the payments given by complainants for the
Sps. Reichl at residence of Hilarion Matira in Batangas. Also saw other processing of their papers. Karl cannot be forced by Francisco to sign said
applicants there. Sps. Reichl told her that they could find her a job as DH document. No showing, whether in his testimony or in that of his wife, that
in Italy. But required her to pay P150k for processing of papers & travel complainants threatened to harm them if he did not sign the document.
documents. Paid it in 3 installments. Francisco issued her receipt for 1st & Karl is an educated man and cannot be said that he did not understand
2nd but not for 3rd installment. She was scheduled to leave on 17 Dec ’92 the contents of the paper he was signing. When he affixed his signature
but was not able to. Karl Reichl explained she would get her transit visa to thereon, he in effect acknowledged his obligation to ensure the departure
Italy in Austria but cannot leave yet because hotels were fully booked of complainants and to provide them gainful employment abroad.
because Christmas. Rescheduled on 5 Jan ’93 but still did not happen. Admission made by Reichls that they promised to obtain Austrian
She went to Manila several times to obtain visa from Austrian Embassy & visas for complainants does not negate the fact that they also promised to
Karl assured her she would be able to leave. But only empty promises. She procure for them overseas employment. Also admitted that complainants
asked for refund but they agreed in writing, signed by Karl, promising to paid P50k each. This is an acknowledgment that accused-appellants
ensure their departure by April otherwise, refund. received payments from the complainants not only for securing visas but
Leonora Perez testimony: Jul ’92, sister Analiza introduced her to also for their placement abroad.
Francisco, who convinced her to apply for job in Italy. She accepted offer & Argument that they did not commit illegal recruitment in large scale
was told to prepare P150k for processing of papers. Aug ’92, she met Sps. (by cumulating the individual informations filed by complainants): each
Reichl. She handed her payment of P50k & was told to wait for 3wks information was filed by only one complainant. Hence, Reichls cannot be
before she could leace. After 3wks, Francisco invited her to Matira’s house convicted for illegal recruitment committed in large scale based on several
& was informed that their departure would be postponed to 17 Dec. When informations filed by only one complainant.
date came, still unable to leave. Went to Sps. Reichl to demand refund but When LC speaks of illegal recruitment committed against 3/more
had said agreement instead. persons individually or as a group, it must be understood as referring to
Charito Balmes, Melanie Bautista, Estela Abel de Manalo all had same the number of complainants in each case who are complainants therein,
stories. Filed 8 informations for syndicated & large scale illegal otherwise, prosecutions for single crimes of illegal recruitment can be
recruitment & 8 informations for estafa against Sps. Reichl and Francisco. cummulated to make out a case of large-scale illegal recruitment. In other
Defense interposed denial & alibi. words, a conviction for large-scale illegal recruitment must be based on a
Reichl’s defense: Karl (Austrian) claimed he entered PH on 29 Jul ’92 finding in each case of illegal recruitment of 3/more persons whether
to explore business opportunities in connection w/ import & export of beer individually or as a group.
& sugar. Returned to Vienna on 19 Sep ’92. Said he met Francisco However, this does not serve to lower penalty imposed. Charge was
through Jimmy Pineda around Aug, who was allegedly looking for not only for illegal recruitment committed in large scale but also for IR
European equipment to be used for quarrying operation of his friend. committed by syndicate. Shown that Sps. Reichl and Francisco Hernandez
However, Karl advised Francisco to instead look for 2nd-hand equipment conspired with each other in convincing complainants to apply for an
from Taiwan or Japan. Never met him until he left for Vienna. Returned to overseas job and giving them the guaranty that they would be hired as
PH on 21 Oct ’92. Francisco allegedly approached him & sought his help DHs although they were not licensed to do so. Thus, liable for IR
in securing Austrian visas for his relatives but Karl refused, telling him he committed by a syndicate.
was planning to stay permanently in PH. Francisco invited him to Prosecution also proved the guilt of accused for crime of estafa. A
Sombrero Island and there he met the complainants. Again asked if he person who is convicted of illegal recruitment may, in addition, be
could help obtain Austrian visa but refused. Denied any knowledge about convicted of estafa under Art. 315(2) of RPC provided the elements of
Francisco’s recruitment activities. Signed document under duress. estafa are present.
TC found Sps. Reichl & Francisco guilty of 1 count of illegal
recruitment & 6 counts of estafa. Not guilty of syndicated & large-scale PEOPLE vs. LALLI (2011)
illegal recruitment.
FACTS:
ISSUE: WON Sps. Reichl & Francisco Hernandez are guilty of illegal 3 Jun ’05, pm: Lolita Sagadsad met Ronnie Aringoy & Rachel Aringoy
recruitment Canete. Rachel asked if she is interested in working in Malaysia. Said she
is so she gave her number to Ronnie.
HELD: 4 Jun, 7am: Lolita received text from Ronnie inviting her to go to
Affirmative. latter’s house. Ronnie brought Lolita to the house of his sister. Lolita
Art. 38 LC defines illegal recruitment as "any recruitment activities, inquired what job is available & was told she will work as restaurant
including the prohibited practices enumerated under Art. 34 to be entertainer. All that was needed was a passport. She will be paid 500
undertaken by non-licensees or non-holders of authority." The term Malaysian ringgits, equivalent to P7k. However, Lolita said she did not have
"recruitment and placement" refers to any act of canvassing, enlisting, passport but Ronnie said they will look for passport so she could leave
contracting, transporting, utilizing, hiring or procuring workers, including immediately. Lolita informed him her sister Marife had a passport. Told
referrals, contract services, promising or advertising for employment, Lolita that she will leave for Malaysia on 6 Jun & they will go to Hadja
locally or abroad, whether for profit or not, provided that any person or Jarma Lalli who will bring her to Malaysia.
entity which, in any manner, offers or promises for a fee employment to 5 Jun, 6pm: Ronnie & Rachel arrived at Lolita’s house & asked if she
two or more persons shall be deemed engaged in recruitment and already has passport. Lolita borrowed her sister’s passport. They
placement. The law imposes a higher penalty when the illegal recruitment proceeded to Tumaga & went to Lalli’s house. Lolita handed her passport
is committed by a syndicate or in large scale. Illegal recruitment is to Lalli. Was told that there is no problem because they have connection
deemed committed by a syndicate if carried out by a group of 3/more with DFA & Marife’s picture in passport will be substituted with Lolita’s
persons conspiring and/or confederating with one another in carrying out picture. Nestor Relampagos was introduced as their financier who will
any unlawful or illegal transaction, enterprise or scheme. It is deemed accompany them to Malaysia.
committed in large scale if committed against 3/more persons 6 Jun, 2pm: Lolita went to Zambo wharf, where she met Lalli, Ronnie,
individually or as group. & 2 other women. Ronnie gave Lolita her boat ticket for vessel M/V Mary
Prosecution was able to prove beyond reasonable doubt that Reichls Joy bound for Sandakan, Malaysia, passport in name of Marife but with
engaged in activities that fall within definition of recruitment and Lolita’s picture, & P1k cash. They boarded but Ronnie did not go with
placement. The evidence on record shows that they promised overseas them.
employment to complainants and required them to prepare the necessary 7 Jun: they arrived at port of Sandakan. They boarded van for KK & at
documents and to pay the placement fee, although they did not have any the hotel, Relampagos introduced to them a Chinese Malay called “Boss”
license to do so. There is illegal recruitment when one who does not as their employer. After looking at them, “Boss” brought them to a
 Labor Standards Case Digest
restaurant nearby. When there, a Filipina woman working there employment to two or more persons shall be deemed engaged in
told them they will work as prostitutes so they went back to hotel & said recruitment and placement."
they do not like to work as prostis. After 5 mins, another person called Given the broad definition of recruitment and placement, even the
“boss” arrived & they were fetched by a van & brought to Pipen Club mere act of referring someone for placement abroad can be considered
owned by “Boss Awa”. At the club, they were told they owe the club R2k recruitment. Such act of referral, in connivance with someone without the
as payment for amount given by club to Lalli & they will pay by requisite authority or POEA license, constitutes illegal recruitment. Simply,
entertaining customers. illegal recruitment is committed by persons who, w/o authority from
They were forced to work as entertainer at Pipen Club. Number 60 government, give the impression that they have the power to send workers
was pinned on Lolita & she got her first customer. She was given a small abroad for employment purposes.
pink paper & was instructed to keep it. (Yellow paper for overnight The three elements of syndicated illegal recruitment are present in
services.) Customer brought Lolita to a hotel. Blah blah… this case, in particular: (1) the accused have no valid license or authority
9 Jul: Lolita was able to contact by cellphone her sister Janet who is required by law to enable them to lawfully engage in the recruitment and
staying at Sipangkot Felda. She was married to Said Abubakar, Indonesian, placement of workers; (2) the accused engaged in this activity of
working as a driver in factory. Lolita told Janet of her predicament. Janet recruitment and placement by actually recruiting, deploying and
told her to wait because her husband will fetch her. That evening, Janet’s transporting Lolita to Malaysia; and (3) illegal recruitment was committed
husband fetched Lolita. She stayed at her sister’s house until 22 Jul; by three persons (Aringoy, Lalli and Relampagos), conspiring and
boarded speedboat to Sibuto, Tawi-Tawi. confederating with one another.
24 Jul: she looked for Ronnie. Ronnie denied having any involvement Aringoy claims and admits that he only referred Lolita to Lalli for job
in what happened to her. opportunities to Malaysia. Such act of referring, whether for profit or not,
Lolita filed complaint. RTC & CA found Lalli, Relampagos, Aringoy in connivance with someone without a POEA license, is already considered
guilty BRD of illegal recruitment & trafficking in persons. illegal recruitment, given the broad definition of recruitment and
placement in the Labor Code.
ISSUE: WON the accused are guilty of illegal recruitment Aringoy, however, claims there is no conspiracy – denies knowing
Relampagos. Under Art. 8 RPC, there is conspiracy "when two or more
persons come to an agreement concerning the commission of a felony
HELD: and decide to commit it."
Affirmative. Lolita would not have been able to go to Malaysia if not for the
Lalli denies having met Lolita prior to their meeting on board the concerted efforts of Aringoy, Lalli and Relampagos. First, it was Aringoy
vessel; meeting was purely coincidental. Lalli admits that, even if she met who knew Lolita. It was Aringoy who referred Lolita to Lalli. Second, Lolita
Relampagos, Lolita and their companions only on that day on board M/V would not have been able to go to Malaysia if Lalli had not purchased
Mary Joy, she allowed these people to ride with her in Malaysia using the Lolita’s boat ticket to Malaysia. Lalli’s claim that she only goes to Malaysia
van driven by the friend of Lalli’s son-in-law. Lastly, Lalli claims that she to visit her daughter and son-in-law does not explain the fact why she
often goes to Malaysia to visit her daughter and son-in-law. However, this bought the boat tickets of the other women passengers going to Malaysia.
does not explain why Lalli purchased boat tickets, not only for herself, but In fact, it appears strange that Lalli visited Malaysia 9 times in a span of 1
for the other women passengers going to Malaysia. From Mar ‘04 to Jun yr and 3mos (March 2004 to June 2005) just to visit her daughter and
‘05, Lalli traveled to Malaysia no less than 9 times. Even the ticketing clerk son-in-law. In Malaysia, it was Relampagos who introduced Lolita and her
testified that Lalli bought tickets not only for herself but also for other companions to a Chinese Malay called "Boss" as their first employer.
women. Relampagos brought Lolita and the girls on board a van to Sangawan
Assuming for the sake of argument, that Lolita previously worked in a China Labuan, where they stayed in a room for one night.
Karaoke Bar and Massage Parlor and that she had four children from Clear that through the concerted efforts of Aringoy, Lalli and
different men, such facts cannot constitute exempting or mitigating Relampagos, Lolita was recruited and deployed to Malaysia to work as a
circumstances to relieve the accused from their criminal liabilities. It does prostitute. Each of the accused played a pivotal role in perpetrating the
not change the fact that the accused recruited Lolita to work in Malaysia crime of illegal recruitment, and evinced a joint common purpose and
without the requisite POEA license, thus constituting the crime of illegal design, concerted action and community of interest. Hence, conspiracy.
recruitment. Worse, the accused deceived her by saying that her work in
Malaysia would be as restaurant entertainer, when in fact, Lolita would be THE POEA – RULES GOVERNING RECRUITMENT
working as a prostitute, thus, constituting the crime of trafficking. Disciplinary Action cases against Land-Based Overseas Workers & their
Sec 6, RA 8042: illegal recruitment shall mean any act of canvassing, Employers of Seafarers
enlisting, contracting, transporting, utilizing, hiring, or procuring workers
and includes referring, contact services, promising or advertising for ASIAN CENTER vs. NLRC (1998)
employment abroad, whether for profit or not, when undertaken by a non-
licensee or non-holder of authority contemplated under Art. 13(f) of PD FACTS:
442, as amended, aka Labor Code of the PH. Asian Center for Career & Employment System & Services, Inc. hired
Art. 13(f) of PD 442: “Authority" means a document issued by the Ibno Mediales to work as mason in Jeddah, Saudi Arabia with monthly
Department of Labor authorizing a person or association to engage in salary of 1,200 Saudi Riyals. Term of contract was 2 yrs – 28 Feb ’95 to
recruitment and placement activities as a private recruitment entity. 28 Feb ’97.
It is clear that a person or entity engaged in recruitment and 26 May ’96: Mediales applied with ACCESS for vacation leave with pay
placement activities without the requisite authority from the DOLE, (he earned for working more than a year). Application for leave was
whether for profit or not, is engaged in illegal recruitment. POEA, an granted. But while en route to PH, co-workers informed him that he has
agency under DOLE created by EO 797 to take over the duties of the been dismissed from service. Turned out to be true.
Overseas Employment Development Board, issues the authority to recruit 17 Jun: Mediales filed complaint with LA for illegal dismissal, non-
under the Labor Code. payment of overtime pay, refund of transpo fare, illegal deductions, non-
Elements of syndicated illegal recruitment: payment of 13th month pay & salary for unexpired portion of employment
1. the offender undertakes either any activity within the meaning contract.
of "recruitment and placement" defined under Art. 13(b), or 17 Mar ’97: LA found ACCESS guilty of illegal dismissal, ordered it to
any of the prohibited practices enumerated under Art. 34 of pay SR13,200 to Mediales (in the dispositive portion). However in the body
the Labor Code; of his decision, LA applied Sec. 10 RA 8042 & the law relative to
2. he has no valid license or authority required by law to enable protection of Filipino overseas-workers & computed Mediales’ salary for
one to lawfully engage in recruitment and placement of unexpired portion of his contract as SR1,200 x 3mos = SR3,600.
workers; and NLRC affirmed. ACCESS moved for reconsideration with respect to
3. the illegal recruitment is committed by a group of 3 or more award of SR13,200, invoking Sec. 10 RA 8042. Urged that its liability is
persons conspiring or confederating with one another only SR3,600. NLRC denied motion, ruling that RA 8042 does not apply as
Art. 13(b) LC: recruitment and placement as "any act of canvassing, Mediales’ employment which started Feb ’95 occurred prior to its
enlisting, contracting, transporting, utilizing, hiring or procuring workers, effectivity on 15 Jul ’95.
and includes referrals, contract services, promising or advertising for
employment, locally or abroad, whether for profit or not, provided, that any ISSUE: WON ACCESS is liable only for the 3mos of Mediales’ basic salary
person or entity which, in any manner, offers or promises for a fee, pursuant to Sec. 10 RA 8042, despite the 8mos unexpired portion of his
contract
 Labor Standards Case Digest
other benefits arising out of [overseas] employment" fall within
HELD: the POEA's original and exclusive jurisdiction.
Affirmative. Mediales’ illegal dismissal from service is no longer Sec. 1, Rule II, Book I of POEA Rules and Regulations also provides:
disputed. Mediales’ cause of action did not accrue on the date of his date Overseas Employment means employment of a worker outside the
of his employment on 28 Feb ’95. Rather, it arose only from the time he Philippines, including employment on board vessels plying international
was illegally dismissed by ACCESS from service in June ’96. Thus, RA waters, covered by a valid employment contract. Contract Worker means
8042 which took effect a year earlier in July ’95 applies. any person working or who has worked overseas under a valid
Sec. 10, RA 8042: a worker dismissed from overseas employment employment contract and shall include seamen.
without just, valid or authorized cause is entitled to his salary for the The statute and the relevant regulations refer to employment of
unexpired portion of his employment contract or for 3 mos for every year Filipino workers overseas, i.e., outside the Philippines. The statute and
of the unexpired term, whichever is less. regulations do not limit their coverage to non-Filipino employers. Filipinos
The unexpired portion of Mediales’ employment contract is 8mos. He working overseas share the same risks and burdens whether their
should therefore be paid his basic salary corresponding to 3mos or a total employers be Filipino or foreign.
of SR3,600. Neither party disputes that Manuel Zaragoza, at the time of his death,
Noted that same computation was made by LA in the body of his was covered by an existing contract of employment with ESL and that the
decision but despite, LA awarded SR13,200 in the dispositive portion. GR deceased was at that time employed as a seaman. Record shows that ESL
is that where there is a conflict between the dispositive portion (fallo) and submitted its shipping articles to POEA for processing, formalization and
the body of the decision, the fallo controls. However, where the inevitable approval, apparently in recognition of POEA’s regulatory authority over
conclusion from the body of the decision is so clear as to show that there overseas employment under EO 797. This strongly suggests that ESL must
was a mistake in the dispositive portion, the body of the decision will have regarded itself as engaged in such employment, otherwise, it would
prevail. Award of higher amount was clearly an error. not have found it necessary or useful to submit its shipping articles to the
Anent award of attorneys fees in favor of Mediales: Art. 2208 CC POEA.
allows attorneys fees to be awarded when its claimant is compelled to Hence, POEA has original and exclusive jurisdiction.
litigate with third persons or to incur expenses to protect his interest by 2) In assessing such amount, POEA relied upon Memo Circular #71
reason of an unjustified act or omission of the party for whom it is sought. (effective 1 December 1981) issued by the now defunct National Seamen
Also when there is sufficient showing of bad faith. LC on the other hand, Board. ESL argue that the Memo collides with public law principle of non-
fixes the attorneys fees that may be recovered in an amount which should delegation of legislative power. And that, assuming its validity, its
not exceed 10% of the total amount of wages awarded. provisions (specifically para. 1) do not cover ESL. Arguments do not
ACCESS’ bad faith in dismissing Mediales is manifest. He was made to persuade.
believe that he would be temporarily leaving Jeddah for a 30-day vacation Memo Circular #71 was issued in a valid exercise by the NSB of it’s
leave with pay. However, while on board the plane back to PH, his co- power & duty to secure the best possible terms of employment for
employees told him that he has been dismissed from his job as he was contract seamen workers and to secure compliance therewith.
given only a one-way plane ticket by ACCESS. True enough, Mediales was Record shows that the vessel was registered in the Republic of
not allowed to return to his jobsite in Jeddah after his vacation leave. Thus, Panama. ESL had in fact paid taxes to the Panamanian government in ’78-
he was compelled to file an action for illegal dismissal. Hence, entitled to ’79 and ’81-’83 presumably because M/V Eastern Meteor was during
award of attorneys fees. those years operating under a valid Panamanian navigation license.
Appears that at the time of the death of Manuel Zaragoza, Eastern Meteor
EASTERN SHIPPING LINES vs. POEA (1989) was both foreign-owned and foreign-registered on one hand and upon the
other band, simultaneously registered in the Philippines.
FACTS: Interpreting Sec. D of Memo Circular #71, it appears clear that para. 1
Manuel Zaragoza had been employee of ESL for several years as covers Philippine seamen working in foreign-registered ships while para. 2
engineer on board several of ESL’s vessels since 1973. At time of his death applies to Philippine seamen working on Philippine-registered vessels. The
on 18 Sep ’83, Manuel Zaragoza was in Kakogawa, Japan serving as Chief parenthetical phrase "except foreign-owned vessels bareboat-chartered to
Engineer of M/V Eastern Meteor. Death Certificate was issued, stating his a Philippine shipping company" in para. 2 precisely covers the situation of
death had been caused by myocardial infraction. the Eastern Meteor, that is, a foreign-owned vessel registered in a foreign
17 Dec ’85: Manuel’s widow, Ma. Lourdes Zaragoza, filed with POEA a country (Panama), with a second registration in the Philippines. Such a
formal complaint against ESL, after it allegedly refused to act favorably on vessel is excepted from coverage by para. 2, and hence covered by para. 1
her claim for gratuity arising from Manuel’s death. Also alleged that M/V instead.
Eastern Meteor was registered with Ministerio de Hacienda y Tesoro of It is well- known that foreign-owned and foreign-registered vessels
Republic of Panama at the time of her husband’s death, she was entitled have frequently also secured Philippine registration where the interest or
to receive death benefits of P100k as provided under Memo Circular #71 convenience of the owners dictated such second or dual registration. The
issued 18 Nov ’81. effect of the parenthetical phrase in para. 2 is, as already indicated, to
Eastern alleged that no cause of action existed against it as company bring such dual-registered vessel within the scope not of para. 2, but of
because it had already paid Mrs. Zaragoza a cash benefit of P12k for para. 1.
husband’s death & P5k for funeral expenses. Also alleged that M/V The fact that POEA MC #6 (Series of 1986) in upgrading death
Eastern Meteor is also considered a vessel of PH registry. Assailed the benefits (P250,000.00 for master and chief engineers) specified that such
jurisdiction of POEA over the complaint, asserting that the company is not upgraded benefits "shall be applicable to all Filipino seamen on board any
engaged in ‘overseas employment’ even as it admits that its vessel are ocean-going vessel provided the cause of action occurs on 1 Mar ’86 and
ocean-going vessels. thereafter" suggests to us the correctness of our above reading of NSB MC
19 Mar ’87: POEA rendered decision, requiring ESL to pay Mrs. #71.
Zaragoza P88k as unpaid balance of benefits. The underlying regulatory policy is that Filipino seamen working on
ocean-going vessels should receive the same wages and benefits, without
ISSUE: 1) WON ESL is not an ‘overseas employer’ hence, Mrs. Zaragoza’s regard to the nationality or nationalities of the vessels on which they serve.
claim for death benefits should be filed with SSS, not POEA POEA correctly held Mrs. Zaragoza is entitled to the benefits given to
2) Amount of death benefits Mrs. Zaragoza is entitled to? Philippine seamen under the provisions of Sec. D, para. 1 of NSB MC #71,
i.e. (1) P100,000.00 death benefit, and in addition, (2) death and related
HELD: benefits.
Negative. EO 797 (promulgated 1 May ’82) applies here. It abolished
the former National Seamen Board & created PH Overseas Employment EASTERN MEDITERRANEAN MARITIME vs. SURIO (2012)
Administration.
Sec. 4(a) of EO 797 expressly provides that the POEA "shall have FACTS:
original and exclusive jurisdiction over all cases, including money claims, Respondents were former crewmembers of MT Seadance, vessel
involving employer-employee relations arising out of or by virtue of any owned by EMML, & manned & operated by Agemar Manning Agency.
law or contract involving Filipino workers for overseas employment, While respondents were still on board the vessel, they experienced
including seamen.” This provision is clarified substantially in the Rules delays in payment of their wages & in the remittance of allotments, & were
and Regulations on Overseas Employment issued by the POEA, Sec. 1(d), not paid for extra work & extra overtime work. Complained about vessel’s
Rule 1, Book VI of which provides that "claims for death, disability and inadequate equipment & about failure of EMML to heed their repeated
requests for improvement of working conditions.
 Labor Standards Case Digest
19 Dec ’93: MT Seadance docked at port of Brofjorden,
Sweden to discharge oil. Representatives of International Transport NATIONAL SEAMEN BOARD
Federation boarded the vessel & found the wages of respondents to be
below prevailing rates. Negotiations resulted in payment by the vessel WALLEM PH SHIPPING vs. MINISTER OF LABOR
owner of wage differentials & immediate repatriation of respondents to
PH. FACTS:
23 Dec: EMML & AMA filed against the newly-repatriated respondents Sometime May ’75: Caunca, Cabrera, Garcia, Ojeda & Pagwagan were
a complaint for disciplinary action based on creach of discipline & for hired by Wallem to work as seamen for period of 10mos on board M/V
reimbursement of wage increases in the Workers Assistance & Adjudicate Woermann Sanaga, Dutch vessel owned & operated by Wallem’s European
Office of POEA. principals.
During pendency, RA 8042 (Migrant Workers & Overseas Filipino Act While employment contracts were still in force, they were dismissed by
of 1995) took effect on 15 Jul ’95. Sec. 10 of RA 8042 vested original and Wallem & were discharged from the ship on charges that they instigated
exclusive jurisdiction over all money claims arising out of employer- the ITF to demand the application of worldwide ITF seamen’s rates to their
employee relationships involving overseas Filipino workers in the LAs. crew.
Jurisdiction over such claims was previously exercised by POEA under the 27 Oct ’75: they were repatriated to PH & upon arrival, they instituted
POEA Rules and Regulations of 1991. complaint against Wallem for illegal dismissal & recovery of wages & other
23 Mar ’96: POEA dismissed complaint. benefits corresponding to 5mos unexpired period.
2 Aug: EMML & AMA filed partial appeal in NLRC, maintaining that Facts presented in their joint affidavit:
respondents should be administratively sanctioned for their conduct while While in Rotterdam, representative of ITF boarded their vessel &
there were on board. talked with Ship’s Captain. Ff day, reps of ITF returned & was followed
21 Mar ’97: NLRC dismissed appeal for lack of jurisdiction. EMML & by Mr. Ogle, Company’s Administrative Manager, to see Captain.
AMA moved for reconsideration but NLRC denied. Around 7pm, all crew members were called where ITF reps informed
them that they just entered into ‘Special Agreement’ with Wallem. New
ISSUE: WON NLRC has jurisdiction to review on appeal cases decided by salary rates was agreed upon & that they were going to be paid their
POEA on matters pertaining to disciplinary actions against respondents salary differentials in view of new rates. They received their salary
differentials based on new rates. While in Port Dubai, they were not
HELD: receiving their pay since Captain refused to implement the worldwide
Negative. Although Sec. 10, RA 8042 transferred the original and rates & insisted on paying them the Far East Rate.
exclusive jurisdiction to hear and decide money claims involving overseas 22 Oct ’75: Mr. Nacional, Operation Manager, arrived in Dubai &
Filipino workers from the POEA to LAs, the law did not remove from the boarded their ship. Called all crew members & explained that
POEA the original and exclusive jurisdiction to hear and decide all Company cannot accept worldwide rate. The ‘Special Agreement’
disciplinary action cases and other special cases administrative in signed by Mr. Ogle in behalf of Company is a scrap of paper. This was
character involving such workers. put to a vote. Only 2 voted for FE rates. Mr. Nacional left & returned,
The obvious intent of RA 8042 was to have POEA focus its efforts in threatening that he has received cable from Home Office that if they
resolving all administrative matters affecting and involving such workers. do not accept FE Rate, their services will be terminated & crew will be
This intent was even expressly recognized in the Omnibus Rules and changed. They decided to accept FE rates. Mr. Nacional made them
Regulations Implementing the Migrant Workers and Overseas Filipinos Act sign a document. Complainants were not able to sign because they
of 1995 promulgated on 29 Feb ’96. were on work schedules that time. Their services were terminated,
Disciplinary action cases and other special cases shall be filed with the despite having been promised by Mr. Nacional that they were not
POEA Adjudication Office. Therefore, NLRC had no appellate jurisdiction to blacklisted. When they arrived in Manila, they went to Wallem & saw
review the decision of the POEA in disciplinary cases involving overseas Mr. Nacional who informed them they were not blacklisted but Mr.
contract workers. Mckenzie, Admin Manager, informed they are. They asked for their
Retroactive application: Although, as a rule, all laws are prospective leave pay but were not given unless $100 be deducted. They agreed.
unless the contrary is expressly provided or unless the law is procedural or 14 Mar ’77: Officer of Secretariat found the respondents to have
curative in nature, there is no serious question about the retroactive violated their contract of employment when they accepted salary rates
applicability of RA 8042 to the appeal of the POEA’s decision on EMML’s different from their contract verified & approved by NSB. Also ruled that
disciplinary action against respondents. In a way, RA 8042 was a Wallem violated contract when its reps signed the Special Agreement.
procedural law due to its providing or omitting guidelines on appeal. Hence, both are in pari delicto. Thus, dismissed for lack of merit. But
(Procedural law prescribes rules & forms of procedure in order that courts Wallem was ordered to pay leave pay.
may able to administer justice.) Respondents filed motion for reconsideration with Board. Modified.
RA 8042 applies to petitioners’ complaint by virtue of the case being Wallem is liable for breach of contract when it ordered dismissal of
then still pending or undetermined at the time of the law’s passage, there respondents & their subsequent repatriation before expiration of
being no vested rights in rules of procedure. Could not validly insist that employment contract. Stressed that where the contract is for a definite
the reckoning period to ascertain which law or rule should apply was the period, the captain and crew members may not be discharged until after
time when the disciplinary complaint was originally filed in the POEA in the contract shall have been performed. Directed Wallem to pay unexpired
1993. portion of their contracts & leave pay.
RA 8042 and its implementing rules and regulations were already in Wallem sought reconsideration & asked for confrontation with
effect when petitioners took their appeal. A statute that eliminates the right respondents, which resulted in series of conferences conducted by Board.
to appeal and considers the judgment rendered final and unappealable Board issued Order, fixing amount due to respondents at their 3mos
only destroys the right to appeal, but not the right to prosecute an appeal salary equivalent without qualifications or deductions.
that has been perfected prior to its passage, for, at that stage, the right to
appeal has already vested and cannot be impaired. Conversely, an appeal ISSUE: WON Wallem is liable when it ordered the dismissal of
that is perfected when a new statute affecting appellate jurisdiction comes respondents before the expiration of their respective employment
into effect should comply with the provisions of the new law, unless contracts
otherwise provided by the new law. The right to appeal from a decision is
a privilege established by positive laws, which, upon authorizing the taking HELD:
of the appeal, point out the cases in which it is proper to present the Affirmative. No showing that the seamen conspired with the ITF in
appeal, the procedure to be observed, and the courts by which the appeal coercing the ship authorities to grant salary increases, and the Special
is to be proceeded with and resolved. Agreement was signed only by Wallem and ITF without any participation
When RA 8042 withheld the appellate jurisdiction of the NLRC in from the respondents who, accordingly, may not be charged as they were,
respect of cases decided by the POEA, the appellate jurisdiction was by the Secretariat, with violation of their employment contract. The crew
vested in the Secretary of Labor in accordance with his power of members may not be discharged until after the expiration of the contract
supervision and control under Sec. 38(1), Chap. 7, Title II, Book III of the which is for a definite period, and where the crew members are
Revised Administrative Code of 1987. discharged without just cause before the contract shall have been
Hence, petitioners should have appealed the adverse decision of the performed, they shall be entitled to collect from the owner or agent of the
POEA to the Secretary of Labor instead of to the NLRC. vessel their unpaid salaries for the period they were engaged to render the
services.
 Labor Standards Case Digest
No logic in the statement made by the Secretariat's Hearing and including the period of expiration of the same without the
Officer that respondents are liable for breach of their employment Administration's approval.
contracts for accepting salaries higher than their contracted rates. They The basic salary of $1,500 guaranteed to Chavez under the parties'
are not signatories to the Special Agreement, nor was there any showing standard employment contract is in accordance with the minimum
that they instigated the execution thereof. Respondents should not be employment standards with respect to wages set by the POEA. Thus, the
blamed for accepting higher salaries. side agreement which reduced Chavez's basic wage to $750 is null and
It is a basic right of all workingmen to seek greater benefits not only void for violating the POEA's minimum employment standards, and for not
for themselves but for their families as well, and this can be achieved having been approved by the POEA. Indeed, this side agreement is a
through collective bargaining or with the assistance of trade unions. The scheme all too frequently resorted to by unscrupulous employers against
Constitution itself guarantees the promotion of social welfare and our helpless overseas workers who are compelled to agree to satisfy their
protection to labor. basic economic needs.
Records fail to establish clearly the commission of any threat. But The doctrine of laches or "stale demands"' cannot be applied to
even if there had been such a threat, respondents' behavior should not be Chavez. Laches has been defined as the failure or neglect for an
censured because it is but natural for them to employ some means of unreasonable and unexplained length time to do that which, by exercising
pressing their demands for petitioner, who refused to abide with the terms due diligence, could or should have been done earlier. It is based upon
of the Special Agreement, to honor and respect the same. They were only ground of public policy, hence it cannot be worked to defeat justice or to
acting in the exercise of their rights, and to deprive them of their freedom perpetrate fraud and injustice.
of expression is contrary to law and public policy. There is no serious Chavez filed her claim well within the 3-yr prescriptive period for filing
misconduct to speak of in the case at bar which would justify respondents' of money claims set forth in Art. 291 of LC. Where the claim was filed
dismissal just because of their firmness in their demand for the fulfillment within the three-year statutory period, recovery therefore cannot be barred
by Wallem of its obligation it entered into without any coercion, especially by laches. Courts should never apply the doctrine of laches earlier than
on the part of respondents. the expiration of time limited for the commencement of actions at law.
It is Wallem who is guilty of breach of contract when they dismissed Anent solidary liability of Centrum, Times, & Planning Japan:
respondents without just cause and prior to the expiration of the affirmative. Their SEC provided that the employer (Planning) and its local
employment contracts. As the records clearly show, Wallem voluntarily representative (Centrum) shall be jointly & severally responsible. This
entered into the Special Agreement with ITF and by virtue thereof the crew liability also arises from provisions of Sec. 10(a)(2), Rule V, Book I of the
men were actually given their salary differentials in view of the new rates. Omnibus Rules Implementing the Labor Code: “Power of the agency to
sue and be sued jointly and solidarily with the principal or foreign based
employer for any of the violations of the recruitment agreement and the
CHAVEZ vs. BONTO-PEREZ (1995) contracts of employment.”

FACTS: B. REGULATION OF RECRUITMENT AND PLACEMENT ACTIVITIES

1 Dec ’88: Esalyn Chavez, an entertainment dancer, entered into
standard employment contract for overseas Filipino artists and 1. Who are prohibited to recruit
entertainers with Planning Japan, Ltd. through its PH rep, Centrum 2. Citizenship requirement
Placement & Promotions Corp. contract had duration of 2-6mos & Chavez 3. Capitalization
was to be paid $1,500 monthly. 4. Non-transferability of license
5 Dec: POEA approved the contract. Chavez executed the following 5. Bonds
side agreement with Japanese employer through local manager, Jaz
Talents Promotion: Finman vs. Inocencio (1989)
I, ESALYN CHAVEZ, DANCER, do hereby with my own free will
and voluntarily have the honor to authorize your good office to ISSUE: WON Finman may be held liable jointly with Pan Pacific
please deduct the amount of $250 from my contracted monthly
salary of $750 as monthly commission for my Manager, Mr. Jose Pan Pacific Overseas Recruiting Services, Inc. is a private fee-charging,
A. Azucena, Jr. That, my monthly salary (net) is $500. recruitment and employment agency. It posted a surety bond by Finman
16 Dec: Chavez left for Osaka, where she worked for 6mos. General Assurance Corp. & was granted a license to operated by POEA.
14 June ’89: she came back to PH. William Inocencio, Perfecto Palero Jr., Edwin Cardones and Edwin
21 Feb ’91: she instituted case for underpayment of wages with POEA, Hernandez filed with POEA separate complaints against Pan Pacific for
praying for payment of $6k, representing unpaid portion of her basic violation of Articles 32 & 34(a) of LC, & for refund of placement fees paid
salary for 6mos. to Pan Pacific. Alleged that Pan Pacific charged & collected such fees but
Complaint was dismissed, ruling that Chavez was satisfied & did not did not secure them employment.
have any complaint regarding her employment until after almost 2 yrs. POEA Administrator motu proprio impleaded Finman as party
Agency had no knowledge/participation in agreement between Chavez & respondent in its capacity as surety for Pan Pacific.
Jaz Talents & could not be faulted for violation of Standard Employment Finman’s contentions: 1) POEA had no jurisdiction over surety bonds”
Contract. Barred by laches. but Insurance Commission, 2) Finman had not violated said articles &
NLRC upheld this decision. their claim accrued during suspension of Pan Pacific, 3) complainants had
no cause of action against Finman since it was not privy to the
ISSUE: WON the side agreement she entered into with Jaz Talents transactions between them & Pan Pacific, & did no receive any money
superseded and nullified the standard employment contract she entered from them, 4) amounts paid were actually deposits & not placement fees.
into POEA Administrator’s Decision: Finman & Pan Pacific were ordered to
pay jointly & severally complainants’ claim.
HELD: Finman appealed to Secretary of Labor. Upheld POEA Order.
Negative. The managerial commission agreement executed by Chavez
to authorize her Japanese Employer to deduct $250 from her monthly RULING: Affirmative. Finman cannot seriously dispute the direct and
basic salary is void because it is against our existing laws, morals and solidary nature of its obligations under its own surety bond. Under Section
public policy. It cannot supersede the standard employment contract of 1 176 of the Insurance Code, as amended, the liability of a surety in a surety
Dec ‘88 approved by the POEA. In fact, in the SEC, it was stated: Any bond is joint and several with the principal obligor. Finman's bond was
alterations or changes made in any part of this contract without prior approval posted by Pan Pacific in compliance with Article 31.
by POEA shall be null and void. Likewise, Sec. 4, Rule II, Book I of POEA Rules & Regulations provides:
Rule II, Book V and Sec. 2(f), Rule I, Book VI of the 1991 Rules and Section 4. Payment of Fees and Posting of Bonds. — Upon approval of
Regulations Governing Overseas Employment: The SEC shall set the the application by the Minister, the applicant shall pay an annual license
minimum terms and conditions of employment. All employers and principals fee of P6,000.00. It shall also post a cash bond of P100,000.00 and a
shall adopt the SEC in connection with the hiring of workers without prejudice surety bond of P150,000.00 from a bonding company acceptable to the
to their adoption of other terms and conditions of employment over and Administration duly accredited by the Office of the Insurance Commission.
above the minimum standards of the Administration. && Substituting or The bonds shall answer for all valid and legal claims arising from
altering employment contracts and other documents approved and verified by violations of the conditions for the grant and use of the license or authority
the Administration from the time of actual signing thereof by the parties up to and contracts of employment. The bonds shall likewise guarantee
 Labor Standards Case Digest
compliance with the provisions of the Labor Code and its However, the law does not authorize the oppression or self-
implementing rules and regulations relating to recruitment and placement, destruction of the employer. Management prerogative is recognized in law
the rules of the Administration and relevant issuances of the Ministry and and in our jurisprudence. This prerogative should not be abused. Security
all liabilities which the Administration may impose. The surety bonds shall of tenure is guaranteed.
include the condition that notice of garnishment to the principal is notice Lex loci contractus: the law of the place where the contract is made.
to the surety. Art. 282 enumerates the just causes of termination by the employer. To
Pan Pacific violated Art. 32 & Art. 34(a). Hence, both under the Labor show that dismissal resulting from inefficiency in work is valid: 1)
Code & POEA Rules, Pan Pacific had violated at least one of the conditions employer has set standards of conduct and workmanship against which
for the grant and continued use of the recruitment license granted to it. the employee will be judged, 2) standards of conduct and workmanship
POEA Administrator and Secretary of Labor are authorized to require Pan must have been communicated to the employee, 3) communication was
Pacific to refund the placement fees it had charged private respondents made at a reasonable time prior to the employee’s performance
without securing employment for them and to impose the fine of P60k assessment. Hence, Joy is entitled to her salary for the unexpired portion
upon Pan Pacific. If Pan Pacific is liable to private respondents for the of the employment contract. (Three-month rule, whichever is less is
refunds claimed by them and to POEA for the fine of P60k, and if Finman upheld to be unconstitutional.)
is solidarily liable with Pan Pacific under the operative terms of the bond, As to bond: Sec. 10 of the Migrant Workers and Overseas Filipinos Act
it must follow that Finman is liable both to the private respondents and to of 1995 provides that the foreign employer and the local employment
the POEA. agency are jointly and severally liable for money claims including claims
Contention that POEA had no authority to implead Finman: negative. arising out of an employer-employee relationship and/or damages. This
Finman is a party-in-interest in the proceedings private respondents had section also provides that the performance bond filed by the local agency
initiated against Pan Pacific, the principal obligor. Since Pan Pacific had shall be answerable for such money claims or damages if they were
thoughtfully refrained from notifying POEA of its new address and from awarded to the employee.
responding to the complaints, Finman may well be regarded as an The fundamental effect of joint and several liability is that each of the
indispensable party to the proceedings before POEA. Whether Finman was debtors is liable for the entire obligation. A final determination may,
indispensable or merely a proper party, POEA could properly implead it as therefore, be achieved even if only one of the joint and several debtors are
party-respondent either upon the request of the private respondents or as impleaded in an action. Hence, in the case of overseas employment, either
it happened, motu proprio. the local agency or the foreign employer may be sued for all claims arising
Contention that Insurance Commission has jurisdiction: negative. to from the foreign employer’s labor law violations. The provision on joint &
compel POEA and private respondents to go to the Insurance several liability shifts the burden of going after the foreign employer from
Commissioner or to a regular court of law to enforce that bond, would be the overseas worker to the local employment agency. It must be
to collide with the public policy which requires prompt resolution of claims emphasized that the local agency that is held to answer for the overseas
against private recruitment and placement agencies. Cash and surety worker’s money claims is not left without remedy. The law does not
bonds are required by POEA and its predecessor agencies from preclude it from going after the foreign employer for reimbursement of
recruitment and employment companies precisely as a means of ensuring whatever payment it has made to the employee to answer for the money
prompt and effective recourse against such companies when held liable claims against the foreign employer.
for applicants or workers' claims. Clearly that public policy will be Wherefore, Joy Cabiles is entitled to her salary for the unexpired portion
effectively negated if POEA and DOLE were held powerless to compel a of her employment contract at interest of 6% per annum. Sameer is also
surety company to make good on its solidary undertaking in the same ordered to reimburse Cabiles the withheld $3k salary.
quasi-judicial proceeding where the liability of the principal obligor, the
recruitment or employment agency, is determined and fixed and where 6. Fees paid by workers
the surety is given reasonable opportunity to present any defenses it or
the principal obligor may be entitled to set up. Eastern vs. Secretary of Labor (1990)

Sameer vs. Cabiles (2014) ISSUE: WON there was violation of Arts. 32 & 34(a) of Labor Code

ISSUE: WON Sameer may be held liable jointly with Wacoal J&B Manpower Specialist, Inc. filed an application with POEA for license
to engage in business as recruitment agency. It also filed surety bond of
Sameer Overseas Placement Agency, Inc. is a recruitment and P150k by it & Eastern Assurance & Surety Corp. Bond stipulated that: 1) it
placement agency. Joy Cabiles submitted her application for quality was conditioned upon the true and faithful performance and observance
control job in Taiwan, which was accepted. She was asked to sign a 1-yr of J&B of its duties and obligations, 2) liability of EASCO shall not exceed
employment contract for NT$15,360. She alleged that Sameer required P150k, 3) notice to principal is also notice to surety, 4) liability of surety
her to pay P70k as placement fee when she signed. shall expire on 2 Jan ’86 & bond shall be automatically cancelled 10 days
26 Jun ’97: Joy was deployed to work for Taiwan Wacoal, Co. Ltd. after its expiration & EASCO shall not be liable for any claim not
Alleged that in her contract, she agreed to work as quality control but in discovered & presented to it.
Taiwan, she was asked to work as cutter. From Jun ’83 – Dec ’85: 33 persons applied for overseas employment
14 Jul: Mr. Huwang from Wacoal informed Joy, without prior notice, that with J&B. Complainants paid J&B various amounts for fees; receipts
she was terminated & should report to the office to get her salary & signed by Mrs. Bundalian, Executive VP of J&B.
passport. Then, asked to prepare for immediate repatriation. Because of non-deployment, complainants filed action against J&B for
Joy claimed that she was told that from 26 Jun – 14 Jul ’97, she only violation of Arts. 32 & 34(a). However, J&B failed to file answer or appear
earned total of NT$9k. Wacoal deducted $3k for her plane ticket. in hearings.
15 Oct: Joy filed complaint with NLRC, claiming illegal dismissal & EASCO’s Answer: the claims of complainants were not expressly
identified Wacoal as Sameer’s foreign principal. covered by the bond, POEA had no jurisdiction to order forfeiture of bond,
Sameer’s contentions: Joy’s termination was due to her inefficiency, that some claims were paid beyond/prior to the period of effectivity of the
negligence in her duties & failure to comply with the work requirements of bond.
Wacoal. Also claimed it did not ask for P70k as placement fee. Added that POEA Administrator’s Order: in favor of complainants. Their non-
Wacoal’s accreditation with it had already been transferred to Pacific deployment strongly indicates that there was no employment obtained for
Manpower hence, it was already substituted by the latter. them. Hence, violated Arts. 32 & 34(a). EASCO was declared jointly &
Pacific Manpower moved for dismissal – no employer-employee severally liable with J&B to 29 complainants. Also banned J&B from
relationship between them. Hence, outside jurisdiction of Labor Arbiter. participation in overseas employment program forever.
LA dismissed complaint, based on mere allegations. Joy appealed to On appeal, Secretary of Labor modified: J&B and EASCO were jointly &
NLRC. NLRC declared Joy was illegally dismissed. severally liable to refund 19 complainants.
EASCO’s contention: POEA had no adjudicatory jurisdiction over
RULING: Illegaly dismissed. Sameer failed to show that there was just monetary claims because the same did not arise from employer-employee
cause for causing Joy’s dismissal. Wacoal also failed to accord her due relations, that J&B & complainants are in pari delicto for having required
process of law. Indeed, employers have the prerogative to impose payment & for having voluntarily paid, that it should not be held liable for
productivity and quality standards at work. They may also impose claims which accrued prior to or after effectivity of its bond.
reasonable rules to ensure that the employees comply with these
standards. Failure to comply may be a just cause for their dismissal.
 Labor Standards Case Digest
RULING: Affirmative. As found by the POEA, the receipts and sought employment as DH through Trans Action’s employees.
testimonies of complainants, in the absence of controverting evidence Applicants paid placement fees from P1k to P14k but Trans Action failed
substantially establish that respondent charged and collected fees from to deploy them. They demanded refund to no avail. They filed complaints
them in amounts exceeding what is prescribed. Complainants' non- for violation of Arts. 32 & 34(a).
deployment strongly indicates that there was no employment obtained for Trans Action’s contentions: did not receive the amounts allegedly
them. Hence, violation of Arts. 32 and 34(a) is established. The claims of collected from respondents; that their employees were not authorized to
complainants having arisen out of acts of the principal covered under the collect fees. Also cannot be held liable for the money claimed.
surety bond, EASCO is equally liable therefor. Edgar Somes testified that although he was aware that Trans Action
EASCO should not be held liable for claims/payments made to J&B collected fees, respondents insisted that they be allowed to make
before the effectivity of the surety bond is on 2 Jan ’85 well-taken. payments on the assumption that it could hasten their deployment
However, it should be held liable for claims after expiration of the period abroad. Imputed Honorata Manliclic, said she was leaving behind receipts
stipulated in the surety bond. to Aragon. But Manliclic said it was Somes who instructed her to leave
While it may be true that EASCO received notice of the claims after the receipts behind as it was alright to collect fees.
10-day expiration period, J&B (EASCO’s principal) was notified/summoned Labor Undersecretary charged Trans Action liable for 28 counts of
prior to the expiration period or before 2 Jan ’86. J&B received the violation of Art. 32 & 5 counts of Art. 34(a). Also cancelled the license of
summons on 24 Jul ’85 with respect to claims of Penarroyo, dela Cruz, Trans Action.
Canti; on 26 Nov ’85 with respect to Garbillons; on 6 Oct ’85 with respect Undersecretary Confesor provisionally lifted cancellation of license. But
to Calayag, Danuco, Domingo, Campena. It is stressed that the surety bond Trans Action’s MR was eventually denied & revoked its license.
provides that notice to the principal is notice to the surety. Also, the Trans Action’s contention: Confesor acted with GAD because it is POEA
contract of a compensated surety is to be interpreted liberally in the which has exclusive & original jurisdiction to hear & decide illegal
interest of the promises and beneficiaries rather than strictly in favor of recruitment cases, including authority to cancel licenses.
the surety.
RULING: Affirmative. The power to suspend or cancel any license or
7. Prohibited practices, liability authority to recruit employees for overseas employment is vested upon
the Secretary of Labor and Employment, as provided under Art. 35.
Cruz vs. NLRC (1991) Secretary of Labor has the power under Art. 35 of the law to apply these
sanctions, as well as the authority, conferred by Art. 36, not only to
ISSUE: "restrict and regulate the recruitment and placement activities of all
agencies," but also to "promulgate rules and regulations to carry out the
Clarita Cruz went abroad pursuant to an employment contract. She objectives and implement the provisions" governing said activities.
agreed to work as DH in Kuwait. However, this proved to be a bitter Pursuant to rule-making power thus granted, the Secretary of Labor gave
disappointment. After completing her 2-yr engagement or on 18 Mar ’88, the POEA, "on its own initiative or upon filing of a complaint or report or
she came back in the Philippines. upon request for investigation by any aggrieved person, authority to
23 Mar: she filed complaint against EMS Manpower & Placement conduct the necessary proceedings for the suspension or cancellation of
Services & its foreign principal, Abdul Karim Al Yahya, for underpayment the license or authority of any agency or entity.”
of her salary & non-payment of her vacation leave. Also claimed she was POEA Administrator was also given the power to "order the dismissal of
charged P7k as placement fee instead of legal maximum of P5k. Alleged the case of the suspension of the license or authority of the respondent
that her foreign employer treated her as a slave & required her to work 18 agency or contractor or recommend to the Minister the cancellation
hrs/day. She was beaten up & suffered facial deformity, head trauma, etc. thereof."
Also she was paid only $120/mo. & her total salaries were given to her 3 The power to suspend or cancel any license or authority to recruit
hrs before her flight back to Mla. employees for overseas employment is concurrently vested with the POEA
EMS’ Answer: Raised defense of settlement as evidenced by Affidavit of and the Secretary of Labor.
Desistance executed by Cruz on 21 Jun ’88.
POEA dismissed complaint. NLRC affirmed. 9. Illegal recruitment – local
Cruz’s contention: the settlement was obtained from her under duress
& false pretenses. She signed Affidavit without assistance of counsel Salazar vs. Achacoso (1990)
because the Atty. Alvarado who assisted her was only a helper of the
OWWA. She signed under the impression that she was agreeing to settle ISSUE: WON POEA/Sec. of Labor may validly issue warrants of search &
only her claim of 1-mo vacation leave. seizure under Art. 38
EMS’ contention: Cruz is bound. She freely & knowingly signed the
document. She was not ignorant but is a high school graduate. 21 Oct ’87: Rosalie Tesoro filed with POEA a sworn statement against
Hortencia Salazar. She alleged that upon her arrival from Japan, she was
RULING: Cruz was not fully aware of the import and consequences of called by Salazar, who demanded her PECC Card. She was told that she
the Affidavit of Desistance when she executed it, allegedly with the would be given a booking in Japan but even after 9 mos, she was not yet
assistance of counsel. Such assistance has not been established. Even deployed. She decided to change companies but Salazar refused to give
assuming that such assistance had been duly given, there is still the her PECC Card.
question of the intrinsic validity of the quitclaim in view of the gross Having ascertained that Salazar had no license to operate a recruitment
disparity between the amount of the settlement and the Cruz's original agency, Administrator Achacoso issued Closure & Seizure Order No. 1205,
claim. It is difficult to believe that Cruz would agree to waive her total ordering the closure of Salazar’s recruitment agency as well as seizure of
claim of P88,840 for the unseemly settlement of only P2,400. And even if the documents & paraphernalia being used as means in committing illegal
she did, waiver would still be null & void as violative of public policy. recruitment.
Contention that EMS is not privy of the contract with Cruz: negative. It 26 Jan ’88: A team, assisted by policemen, was designated to
is well-settled that the local recruiter is solidarily liable with the foreign implement the Order. They proceeded to Salazar’s residence & found that
principal for all damages sustained by the overseas worker in connection she was operating Hannalie Dance Studio. Before entering, they served the
with his contract of employment. Order & Salazar allowed them entry. When she was required to show
Wherefore, Affidavit of Desistance is null & void. Case is remanded to credentials, she was unable to produce. They confiscated assorted
POEA for further proceedings. costumes.
Salazar filed with POEA alleging violation of due process of law, right
8. Suspension and/or cancellation of license or authority against unreasonable searches and seizures, etc.

Trans Action vs. Secretary of Labor (1997) RULING: Negative. Under the 1987 Consti, it is only the judge who may
issue warrants of search and arrest. Secretary of Labor, not being a judge,
ISSUE: WON Secretary of Labor has jurisdiction to cancel or revoke the may no longer issue search or arrest warrants. Hence, the authorities must
license of a private fee-charging employment agency go through the judicial process. To that extent, we declare Art. 38 (c)
unconstitutional and of no force and effect.
From 24 Jul – 9 Sep ’87: Trans Action Overseas Corp. scoured Iloilo City Even assuming the search & seizure order was validly issued, it is in the
for possible recruits for alleged job vacancies in HK. Private respondents nature of a general warrant. A warrant must identify clearly the things to
 Labor Standards Case Digest
be seized, otherwise it is null and void. The Order stated “seizure duly licensed to so engage in such activity, an act embraced
of the documents and paraphernalia being used or intended to be used as within the term "recruitment and placement" prohibited by Art. 38, in
the means of committing illegal recruitment.” relation to Art. 13 and Art. 39. The crime, if perpetrated against at least
History of the provision: Art. 38(c) was entered as amendment by PD three persons, whether individually or as a group, is deemed committed
1920 & 2018 of Pres. Marcos, to PD 1693, in the exercise of his legislative "in large scale" carries the penalty of life imprisonment and a fine of
powers under Amendment 6 of the 1973 Consti. Under the latter, Minister P100k.
of Labor merely exercised power to recommend the arrest and detention Guiang likewise succeeded in defrauding Jose in the sum of P70k &
of any person engaged in illegal recruitment. On 1 May ’84, Marcos Reynaldo of P20,500. These acts have independently transgressed Art.
promulgated PD 1920, giving more teeth to the campaign against illegal 315 RPC.
recruitment. The Minister of Labor is now vested with the power to cause Wherefore, decision of RTC is affirmed.
the arrest and detention of non-licensee & non-holder of authority. Also,
Marcos promulgated PD 2018, giving Labor Minister search & seizure Abaca vs. CA (1998)
powers.
Wherefore, Art. 38(c) is declared unconstitutional & null and void. ISSUE: WON Jose Abaca is guilty of illegal recruitment

10. Illegal recruitment – overseas Jose Abaca was introduced to the complainants by his brothers,
Perferio & Guiding Abaca, whom they knew already. Sometime Nov ’88,
People vs. Guiang (1998) Jose Abaca misrepresented himself to be a licensed recruiter & convinced
them that for a consideration, they could work abroad at Taipei as DH or
ISSUE: WON Guiang is guilty of illegal recruitment factory worker with salary from $300-$500/mo. Jose asked them P14k
each but they requested to pay P6k first. They paid the partial amount at
Reynaldo Jugo’s part: Maclang went to his house & introduced Lourdes the office of Jose Abaca in Five Ace Philippines. Then, they were able to
de Guiang as a recruiter for jobs abroad. He was convinced that she could receive their passports. They were able to pay the aggregate amount of
do something about Jugo’s previous application for a job abroad. She P14k, excluding P1,500 each for passports.
represented that she could work on his travel papers w/in 2 mos & he They were promised to leave on/before Dec ’88 & then anytime in Jan
would be able to woek in Japan as factory worker. Also told Jugo that he ’89. They sensed that they would not leave anymore, they informed Jose’s
only need to produce initial sum of P5k for immediate processing. Jugo brothers & complained about the failure of Jose to send them abroad.
signed application form. Told Jugo that they would advance the P5k. They confronted Jose & demanded refund but Jose merely promised to do
Looked for Jugo but he only had P2,500 with him. Also convinced Jugo to so. They filed complaint with NBI.
look for persons interested to go abroad. Jugo was informed that his Jose Abaca’s version: absolved himself from criminal liability & shifted
passport will be released & he needed to prepare P18k for his plane fare the blame to Mr. Reynaldo Tan to whom he alleges to have remitted the
to Japan. When he paid, he asked for receipt but Guiang replied that “it sums of money he received from complainants. He stated he did not
seems you do not trust me.” 2 week after, Guiang presented him with a recruit them and the truth was he happened to be at the establishment of
passport but upon verification with DFA & Japanese Embassy, it revealed complainants in Calapan and they were able to talk with Janeo sisters who
that it was fake. told them of their problems wherein they were notified to vacate the
Jose Jugo: they were made to fill up application forms after being establishment, and thus asked the accused to assist them in going abroad.
informed that they would be deployed as factory workers in Japan for They Jose told them he was referring them to somebody whom he knows
P70k. Jose paid in installments but was not issued a receipt. He was given are sending people to Taipei. Then two girls also called Jose Abaca & told
a passport & was scheduled to depart but did not pushed through. Upon him they are interested in joining the Janeo sisters & that they came
verification, Japanese Embassy & Bureau of Immigration determined across the calling card of Jose. He admitted that Five Ace is only engaged
passport as fake. in trading & not recruitment agency. He also alleged he was connected
Rosita Jugo: she gave amount of P2,500 upon Guiang’s assurance of a with recruitment agency called WORK Inc.
job placement in Japan as factory worker. But she was not able to leave. Trial court’s decision: Jose Abaca charged guilty of crime of illegal
She asked for refund to no avail. Found that Guiang was not a licensed recruitment. CA affirmed with modification – illegal recruitment on large
recruiter. scale.
While trial was ongoing, Guiang escaped from her jail guard while under
confinement at UST Hospital. She managed to stay out of jail for 1 yr, RULING: Affirmative. The crime of illegal recruitment is committed
when she made arrangements with complainants to pay them amount of when two elements concur, namely: (1) the offender has no valid license
P120k through Maclang. Guiang was apprehended again on Sep ’93 & TC or authority required by law to enable one to lawfully engage in
reopened her case. Guiang presented Affidavit of Desistance, which was recruitment and placement of workers; and (2) he undertakes either any
however repudiated by the Jugos. activity within the meaning of "recruitment and placement" defined under
Lourdes de Guiang’s defense: she was a licensed contractor of a low- Art. 13(b), or any prohibited practices under Art. 34.
cost housing project. Prior thereto, she operated a business LGB Under first element, a nonlicensee or nonholder of authority is any
Enterprises & General Services. She had never been engaged in person, corporation or entity which has not been issued a valid license or
processing of travel documents in recruitment basis. Sometime ’91, authority to engage in recruitment and placement by the Secretary of
Guiang & Maclang went to Nueva Ecija to get harvested rice. When they Labor, or whose license or authority has been suspended, revoked or
were about to return to Manila, Maclang decided to visit his friend canceled by POEA or Secretary. Agents or representatives appointed by a
Reynaldo Jugo. They talked about Jugo’s lost passport & visa. Maclang licensee or a holder of authority but whose appointments are not
asked Guiang if she could help. Guiang said she will try through the help previously authorized by POEA are within the meaning.
of Mr. Salazar, her friend in Jap Embassy. Since Reynaldo had no money, Records show that Jose Abaca is not a licensed recruiter as evidenced
he promised to leave his stainless jeep if she could cause re-issuance of by Certification of POEA. His theory that he has authority to recruit by
his lost passport & visa, subject to redemption. Maclang, then, introduced reason of his position as manager of Pre-Departure Orientation Seminar
Jose & Rosita to Guiang who were interested in applying for tourist visa in Trainor of WORK, Inc., a licensed private recruitment agency is devoid of
Japan. She received P40k for processing but she turned it over to Salazar. merit. The Certification is nothing but an affirmation that he is an officer of
RTC convicted Guiang for illegal recruirment as well as estafa. WORK, Inc. It does not, in any way, prove that he has a license or authority
to undertake recruitment activities. Moreover, his employment with a
RULING: Affirmative. No ill motives for Jugos to impute the crime licensed placement agency does not ipso facto authorize him to recruit
against Guiang. They are not the type of persons who would fabricate and workers. Even assuming that WORK, Inc. had authorized him, by reason of
concoct stories only to prosecute the accused. his position in the company, to recruit workers, still, such authority was not
On the other hand, Guiang has resorted to trickeries, even feigning previously approved by the POEA, as required under Art. 29. Also there is
illness for herself with the connivance of some jail personnel if only to nothing from the record, which would show even by implication that he
escape from the clutches of the law. And finally thru the evil doings of was acting for/in behalf of WORK when he was dealing with complainants.
Alberto Maclang, he coerced and threatened Reynaldo Jugo into signing He gave his calling card and met with complainants at his office.
an Affidavit of Desistance hoping that the Court would dismiss these cases Under the second element, the offender undertakes either any acivity
against Lourdes Bautista Guiang. within the meaning of recruitment and placement. Jose Abaca’s act of (1)
Prosecution established that Guiang did offer to Reynaldo Jugo, Jose representing to the private complainants that he can help them work in
Jugo and Rosita Jugo, overseas employment for a fee without first being Taipei with a monthly salary of $300-$500; (2) requiring them to submit
 Labor Standards Case Digest
their ID pictures, birth certificates and bio-data for their received from complainants has no bearing on his culpability for
employment abroad; (3) demanding from them P12k as processing fee; the complainants have shown through their respective testimonies and
and (4) receiving from them certain amounts for the processing of their affidavits that appellant was involved in the prohibited recruitment. It is
passports and other papers, are all recruitment activities within the immaterial that he ingeniously stated to one of the complainants that he
contemplation of the law. was a member of the PNP and a government employee, hence could not
Wherefore, guilty of illegal recruitment in large scale, sentenced to 4 yrs sign the receipts.
imprisonment & to indemnify complainants P14k with interest. Art. 38 renders illegal all recruitment activities without the necessary
license or authority from POEA. If the illegal recruitment is committed by a
People vs. Yabut (1999) syndicate or in large scale, the Labor Code considers it an offense
involving economic sabotage and imposes a stiffer penalty therefor in
ISSUE: WON Fernando Cortes is guilty of illegal recruitment in large scale accordance with Art. 39.
despite acquittal of crime of estafa The elements of illegal recruitment in large scale are:
1. accused undertakes any recruitment activity defined under Art.
13 Aug ’92: Henry Ilar met Fernando Cortes & live-in-partner Irene 13(b), or any prohibited practice enumerated under Art. 34;
Yabut at their room. Ilar handed them initial downpayment of P10k for 2. he does not have a license or authority to lawfully engage in the
processing of papers & visa for Japan where he was to work as roomboy in recruitment and placement of workers; and,
a hotel. Fernando assured Ilar that he would be able to leave, otherwise his 3. he commits the same against 3/more persons, individually or as a
money would be refunded. Ilar also made additional payments. Then he group.
was made to sign a 1-yr contract but he was not furnished a copy. He was All elements exist. First, complainants have satisfactorily established
scheduled to leave for Japan on 8 Oct ’93 but this date was postponed. that Cortes had actively promised them employment, gave assurance of
His second scheduled date was again cancelled, then resched then their placement overseas, and with Yabut received certain sums as fees
cancelled. When Ilar checked on Yabut, she was no longer in her apartelle therefor. Second, Licensing Division of POEA issued a Certification dated
but Fernando reassured Ilar that he would be able to leave. Ilar went to March 1, 1993 that Jawoh General Merchandising represented by Irene
POEA & POEA issued certification that Yabut was neither licensed nor Yabut and Fernando Cortez are neither licensed nor authorized by the
authorized. POEA to recruit workers for overseas employment. Third, appellant and co-
Reynaldo Claudio: he went to same room to apply for job as hotel accused undertook recruitment of not less than 8 workers —
worker in Japan. Fernando & Irene told him that he could work in Japan complainants herein, who were recruited individually on different
provided he paid the fees. Claudio gave them initial payment of P15k. He occasions. For purposes of illegal recruitment, however, the law makes no
was required to undergo training. Then paid P30k to Irene & another distinction whether the workers were recruited as a group or individually.
P25k. Amounts he paid totaled P70k, which would allegedly be used for Wherefore, Cortes is guilty of illegal recruitment in large scale &
the processing of the visa, plane ticket expenses, medical tests and sentenced to life imprisonment, as well as to pay fine of P100k &
seminar costs for Claudio and his 2 brothers. He was made to sign a indemnify complainants.
recruitment contract but he was not furnished a copy. He was scheduled
to depart 5 times but did not materialize. People vs. Tan Tiong Meng (1997)
Arnel Diana: he, along with his bro-in-law met Fernando & Irene at their
room. They were assured that they could leave for abroad & asked to pay ISSUE: WON Tan Tiong Meng is guilty of illegal recruitment
P50k for travel documents & POEA papers. He was made to sign
employment contract. He paid the amount on installments. His flight Gavino Asiman & Librado Pozas: Jose Percival Borja informed him that
schedules also did not push through. He asked for return of money but a job recruiter would be at his house in case anyone was interested in an
never refunded. overseas job in Taiwan. Gavino & friend Librado Pozas went to Borja’s
Antonio Bernardo: he entered into employment contract with Irene & house where they met Tan Tiong Meng who told them he could get them
was promised to leave for abroad. jobs as factory workers in Taiwan with salary of P20k. He required them to
Fely Casanova: she met Fernando & Irene who introduced themselves submit their passport, bio-data & high school diploma as well as to pay
as Mr. & Mrs. Madrid. She saw then at their apartelle whenever she made P15k each for placement & processing fees. 2 receipts were issued. They
follow-ups on her papers. Also saw them when they were already in hiding. were assured they could leave 12 days later.
They were talking to other applicants whom they promised to send Neil Mascardo: he met Tan Tiong Meng through Borja. He went to
abroad. Borja’s house to meet Tan Tiong Meng who assured him of getting him
Complainants hauled Irene & Fernando to DOJ, which conducted employment in Taiwan at Rainbow Ship Co., a marble & handicraft factory.
preliminary investigation. They were charged with illegal recruitment in He paid P15k. Was told to leave on 15 Jul ’93. Did not push through,
large scale & 8 counts of estafa. several postponements. He wanted his money back but was told refund
Fernando Cortes’ testimony: admitted that Irene Yabut was his live-in- was not possible since Tan Tiong Meng already sent money to bro-in-law
partner but washed his hands of any participation in her business in Taiwan. Filed complaint for illegal recruitment.
activities. Further insisted that Yabut was not engaged in recruitment of Ricardo Grepo, Lucita Mascardo-Orcullo, Dionisa Latina: all paid P15k
workers for overseas employment but only in the processing of visas. for placement & processing fees.
Denied any knowledge of the SPA executed in his favor by Yabut for the Tan Tiong Meng’s defense: he is a Singaporean national married to
refund of the PAL tickets of several recruits. Claimed that he was not Estelita Oribiana, a Filipino-Chinese. Added that he works as a sales rep for
present at any given time when large sum of money were received by Oribiana Laboratory Supplies, a company owned by his brother-in-law,
Yabut and that he never gave any assurances to complainants regarding which sells laboratory equipment to various schools in Cavite. Alleged that
their departure to Japan. Borja was introduced to him by Malou Lorenzo at the office of their
Trial court decision: acquitted Cortes of 8 counts of estafa but laboratory supplies. Lorenzo allegedly told him that Borja needed his help
convicted him of illegal recruitment in large scale. in processing job applications for abroad. When he talked to Borja, the
Cortes’ contention: the sole person guilty of illegal recruitment in large latter told him that he could help in convincing applicants that they could
scale should be Yabut since she was the only one who signed the receipts work in Taiwan. Borja offered him a P1k commission from the amount
for the amounts received from the complainants. Also, the mere fact that paid by each applicant. Admitted receipt of money but said that all money
he is "romantically linked" with Yabut does not mean he acted in was turned over to Borja after deducting his commission.
conspiracy with her. Borja’s defense: Tan introduced him to Lorenzo. Told him they were
direct recruiters for jobs in Taiwan. When Borja realized that Tan had
RULING: Affirmative. Settled that a person who commits illegal cheated the applicants, he helped set up a trap and had Tan arrested by
recruitment may be charged and convicted separately of illegal his neighbor Tony Guinto, a Cavite City policeman
recruitment under the Labor Code and estafa under par. 2 (a) of Art. 315
RPC. Conviction for offenses under the Labor Code does not bar conviction RULING: Affirmative. Tan’s acts of accepting placement fees from job
for offenses punishable by other laws. It follows that one's acquittal of the applicants and representing to said applicants that he could get them jobs
crime of estafa will not necessarily result in his acquittal of the crime of in Taiwan constitute recruitment and placement. LC prohibits any person
illegal recruitment in large scale, & vice versa. or entity, not authorized by the POEA, from engaging in recruitment and
Fernando’s acts consisting of promises, offers and assurances of placement activities.
employment to complainants fall within the ambit of recruitment and POEA certified that Tan is not authorized to recruit workers for overseas
placement. The fact that he did not issue the receipts for amounts employment hence it is clear that the offense committed against the 6
 Labor Standards Case Digest
complainants is illegal recruitment in large scale. He is likewise fact that Rogelio Tibeb and Jessie Bolinao failed to produce
guilty of 6 separate crimes of estafa. receipts as proof of their payment to accused-appellant does not free the
Contention that it was Borja who employed deceit: negative. All the latter from liability. The absence of receipts cannot defeat a criminal
complainants agreed that it was accused-appellant Tan who assured them prosecution for illegal recruitment. As long as the witnesses can positively
of jobs in Taiwan. The assurances were made intentionally to deceive the show through their respective testimonies that the accused is the one
would-be job applicants to part with their money. involved in prohibited recruitment, he may be convicted of the offense
A person convicted for illegal recruitment under the Labor Code can be despite the absence of receipts.
convicted for violation of RPC provisions on estafa provided the elements Wherefore, Linda Sagaydo is guilty of illegal recruitment & estafa.
of the crime are present: Sentenced to indeterminate penalty of 2 yrs & 4 mos of prision
a) that the accused defrauded another by abuse of confidence or by correccional as minimum to 6 yrs & 1 day of prision mayor as maximum.
means of deceit, and Also sentenced to indeterminate penalty of 4 yrs & 2 mos of prision
b) that damage or prejudice capable of pecuniary estimation is correccional to 8 yrs & 4 mos of prision mayor. Also ordered to indemnify
caused to the offended party or third person. complainants – Gina P15k, Rogelio P39k, Jessie P35k, Naty P38,500
Wherefore, Tan Tiong Meng is guilty of illegal recruitment in large scale without subsidiary imprisonment in case of insolvency.
& 6 counts of estafa.
People vs. Ong (2000)
People vs. Sagaydo (2000)
ISSUE: WON Benz Ong is guilty of illegal recruitment and estafa
ISSUE: WON Linda Sagaydo is guilty of illegal recruitment & estafa
Noel Bacasnot: he is an optometrist. Sep ’93,he met Benz Ong at the
Gina Cleto: she already knew Linda Sagaydo. Sometime Sep ’91, insurance office of Zaldy Galos. Ong represented that he had contacts in
Sagaydo went to Gina’s house & encouraged her to work as factory worker Taiwan, who were looking for factory workers to be paid P15k/mo.
in Korea. Gina asked if she was a licensed recruiter & Sagaydo answered According to Ong, his mother was in Taiwan & could help Bacasnot get a
yes. Sagaydo told Gina to advance P15k for travel papers & passport. Gina job as optometrist with salary of P50k-P80k/mo. Week later, Ong told
paid & was assured to leave for Korea on 6 Jan ’92, provided that Gina Bacasnot to work initially as factory worker for 6 mos. Bacasnot agreed &
pay remaining balance of P30k. She borrowed money & paid P28k to was charged P30k for placement fee – P15k to be paid at once & P15k to
Sagaydo but was informed that her flight was postponed so was advised be deducted from his salary. He was allowed to pay P10k as
to just hold P30k balance until her flight pushed through. 3 months later, downpayment. He was assured that upon completion of papers, he would
Gina demanded return of P15k but Sagaydo merely answered she would leave for Taiwan within 3-4 mos.
process her papers. Gina went to POEA to inquire about Sagaydo & was Ruth Eliw, Sally Kamura, Solidad Malinias: also sought assistance of
informed that she was not licensed/authorized to recruit workers. Ong. Charged P40k as placement fee. Ong later accomplained them to
Rogelio Tibeb: he was informed by Samanillo that Sagaydo was Manila for interview & medical examination at Steadfast Recruitment
engaged in recruitment. He went to Sagaydo’s residence to inquire on the Agency. Instead of taking them to agency, Ong took them to UN Avenue
requirements. Was told he needed to submit 2x2 pictures & passport. Also where 3 Taiwanese national interviewed them & took them to a clinic.
told him to secure P39k as placement fee. Rogelio handed the money but Samuel Bagni, Teofilo Gallao Jr., Paul Esteban, David Joaquin: likewise
was not issued receipt. He waited for months but his flight never pushed swindled. Ong collected various amounts from them.
through. Found out Sagaydo is not licensed. However, Ong never fulfilled his promise. They discovered that Ong no
Naty Pita: Sagaydo recruited her as factory worker in Korea & was longer held office at the place of Marios Restaurant. Apparently, he was
asked to prepare P38,500 for fare & travel documents plus P1,500 for already hiding.
passport. Naty handed the amount & was told she would be leaving for 27 Jun ’94: Eliw chanced upon Ong & was told that Kamura & Malinias
Korea on Jan 6. She met Sagaydo & was informed that she could not leave had passed the interview & medical examination in Manila. He asked Eliw
because she had no visa so Naty asked for refund. Sagaydo instead to pay additional P5k for processing. Instead, Eliw denounced Ong’s
offered her placement in Taiwan & Naty agreed. But Naty did not receive recruitment activities to the NBI. Learned that Ong is not licensed. Ong
any call. Went to POEA; found Sagaydo is not licensed. was caught in an entrapment operation.
Jessie Bolinao: went to house of Sagaydo & gave her P35k as Benz Ong’s defense: admitted having met Bacasnot through Zaldy
placement fee for his employment to Korea as factory worker. But was not Galos. Introduced himself to Bacasnot & that his mother & brother were
able to leave on the scheduled flight because his travel papers had not based in Taiwan. He testified that when complainants sought his help, he
been processed. He constantly followed up but found that Sagaydo is no advised them to go to the POEA but complainants claimed that they do
longer residing in her house. Went to POEA; not licensed. not know anyone at said office. He then offered to scout for a recruitment
Linda Sagaydo’s defense: denied having recruited them. Claimed that agency in Manila. Accompanied complainants to Steadfast Recruitment
they came to her voluntarily after being informed that she was able to Agency in Manila and introduced them to Marilyn Pagsibigan, Marketing
send her 3 sons to Korea. Admitted receiving money from Gina & Naty but Manager of the agency. He came to know about the agency through a
said she used their money to buy their plane tickets. Gina and Naty were friend in Manila, one Ernesto Sy. Denied collecting placement fees, that his
not able to leave because the Korean government imposed a visa signatures on the receipts were forged. Claimed that he was at Gallaos
requirement beginning Jan ’92. When asked why she was not able to Optical Clinic to collect payment for Betamax player which Bacasnot had
refund, she said that she returned the plane tickets to the Tour Master previously ordered.
travel Agency for refund but did not make reimbursements. With respect Trial court decision: convicted Ong of illegal recruitment in large scale
to complainants Jessie Bolinao and Rogelio Tibeb, she denied having & 7 counts of estafa.
received any money from them.
Trial court decision: convicted of illegal recruitment and estafa. RULING: Affirmative. To prove illegal recruitment, it must be shown
that Ong gave complainants the distinct impression that he had the power
RULING: Affirmative. Linda Sagaydo made representations to each of or ability to send complainants abroad for work such that the latter were
the private complainants that she could send them to Korea to work as convinced to part with their money in order to be employed.
factory workers, constituting a promise of employment which amounted to Ong represented himself to complainants as one capable of deploying
recruitment. No denying that she gave the complainants the distinct workers abroad and even quoted the alleged salary rates of factory and
impression that she had the power or ability to send them abroad for work construction workers in Taiwan. He advised Bacasnot to accept a job as a
such that the latter were convinced to part with their money in order to be factory worker first because it would be then easier for him to transfer jobs
employed. As against the positive and categorical testimonies of the once he got to Taiwan. Ong said his mother, who was based in Taiwan,
complainants, mere denials cannot prevail. could help Bacasnot. Bacasnot paid him an initial placement fee agreeing
Sagaydo also did not have authority to recruit for employment abroad, to pay the balance through salary deductions once he was employed. He
per certification issued by the POEA. It is the lack of the necessary license also promised jobs to Eliw and the other complainants. He accompanied
or authority that renders the recruitment unlawful or criminal. Also, she them to Manila so that they could be interviewed and physically examined
engaged in illegal recruitment against 4 persons. at the Steadfast Recruitment Agency with which Ong represented he was
The complainants parted with their money upon the prodding and connected. These acts of Ong created the distinct impression on the eight
enticement of accused-appellant on the false pretense that she had the complainants that he was a recruiter for overseas employment. There is no
capacity to deploy them for employment abroad. In the end, complainants question that he was neither licensed nor authorized to recruit workers for
were neither able to leave for work abroad nor get their money back. The
 Labor Standards Case Digest
overseas employment. Nor is there any question that he dealt C. EMPLOYMENT OF NON-RESIDENT ALIENS
with complainants.
What he claims is that he merely "suggested" to complainants to apply Chuan & Sons vs. CIR (1950)
at the Steadfast Recruitment Agency, which is a recruitment agency. Even
if Ong did no more than "suggest" to complainants where they could apply ISSUE: WON the Order of the CIR is valid and constitutional
for overseas employment, his act constituted "referral". The testimonial
and documentary evidence in the record shows that Ong did more than Dee C. Chuan & Sons, Inc. assails the validity of an order of the Court of
just make referrals. The evidence shows that he made misrepresentations Industrial Relations. The order made upon Chuan & Sons’ request for
to them concerning his authority to recruit for overseas employment and authority to hire “about 12 more laborers from time to time and on a
collected various amounts from them for placement fees. Clearly, he temporary basis," contains the proviso that "the majority of the laborers to
committed acts constitutive of large-scale illegal recruitment. be employed should be native." This petition was filed pending the
Contention that his signatures in the receipts are not his: immaterial. settlement by the court of a labor dispute between Chuan & Sons, and
The presentation of the receipts acknowledging payments is not necessary Kaisahan Ng Mga Manggagawa sa Kahoy sa Pilipinas.
for the successful prosecution of Ong. the absence of receipts in a case for Chuan & Sons alleged that the CIR cannot intervene in questions of
illegal recruitment does not warrant the acquittal of Ong and is not fatal to selection of employees and workers because this will impose
the case of the prosecution. As long as the prosecution is able to establish unconstitutional restrictions. Also alleged that the restrictions of the no. of
through credible testimonial evidence that he has engaged in illegal aliens that may be employed in a business, occupation, trade or
recruitment, a conviction for the offense can very well be justified. profession of any kind, is a denial of the equal protection of the laws.
Elements of estafa are present. Ong misrepresented himself to
complainants as one who can make arrangements for job placements in RULING: Affirmative. The order does not, directly or indirectly,
Taiwan, and by reason of his misrepresentations, false assurances and immediately or remotely, discriminate against Chuan & Sons on account
deceit, complainants were induced to part with their money, thus causing of race or citizenship. The order could have been issued in a case in which
them damage and prejudice. the employer was a Filipino. As a matter of fact, Chuan & Sons insists that
Wherefore, decision of trial court is affirmed. 75% of its shares of stock are held by Filipinos.
Chuan & Sons is not entitled to challenge the constitutionality of a law
People vs. Dionisio (2002) or an order which does not adversely affect it, in behalf of aliens who are
prejudiced thereby. An alien may question the constitutionality of a statute
ISSUE: WON Rowena Dionisio is guilty of illegal recruitment (or court order) only when and so far as it is being, or is about to be,
applied to his disadvantage. The prospective employees whom Chuan &
Aug ’91: Cora Molar enticed Juanita Castillo to apply for overseas Sons may contemplate employing have not come forward to seek redress;
employment at the office of Jovial Trading & Employment Services. their identity has not even been revealed. Clearly Chuan & Sons has no
Castillo went to said office & met Rowena Dionisio & Josefina Mallari. They case in so far as it strives to protect the rights of others, much less others
assured Castillo that they had the right connections & could send her to who are unknown and undetermined.
Saudi Arabia. They demanded P9k as service fee, passport, medical The employer's right to hire labor is not absolute. This privilege of hiring
examination & NBI clearance. and firing is being subjected to restraints today. Statutes are cutting in on
Castillo told them she did not have the money yet, Dionisio said she it. And so does CA 103. The regulations of the hours of labor of employees
could make partial payment of P5k & pay balance later. They collected and of the employment of women and children are familiar examples of
balance at Castillo’s house. They promised to secure her a visa so she the limitation of the employer's right in this regard. The petitioner's
could leave immediately & that a job as governess & DH awaits her. request for permission to employ additional; laborers is an implicit
Castillo repeatedly followed up her application with no result. She went recognition of the correctness of the proposition. The power of the
to POEA where she was informed that Dionisio, Mallari & Jovial Trading legislature to make regulations is subject only to the condition that they
were neither licensed/authorized to recruit workers. should be affected with public interest and reasonable under the
At same time, Juan Carandang, Juanito Castillo, Noel Villanueva & Lito circumstances. The power may be exercised directly by the law-making
Gorospe were likewise recruited to work abroad by Dionisio. Carandang body or delegated by appropriate rules to the courts or administrative
paid P3k as placement fee & additional of P4,500. Carandang was agencies.
informed that he & his other companions were to leave for Middle East on We are of the opinion that the order under consideration meets the test
31 Oct ’91. However, this was postponed to 6 Nov. On that day, they were of reasonableness and public interest. CA 103 has precisely vested the
told their plane tickets have not yet been released. Realizing they were Court of Industrial Relations with authority to intervene in all disputes
being fooled, they went to POEA & found that Dionisio is not licensed. between employees or strikes arising from the difference as regards
Alberto Meeks was also duped by Dionisio. He paid P7k as placement wages, compensation, and other labor conditions which it may take
fee. However, he was not able to go to South Korea as promised & later cognizance of. Thus it has jurisdiction to determine the number of men to
found employment in Saudi Arabia through the efforts of another be laid off during off-seasons. By the same token, the court may specify
recruitment agency. that a certain proportion of the additional laborers to be employed should
be Filipinos, if such condition, in the court's opinion, "is necessary or
RULING: Affirmative. Private complainants were categorical and expedient for the purpose of settling disputes or doing justice to the
unequivocal in their statement that it was Dionisio who separately parties."
recruited them during the same period of time for jobs abroad. Dionisio Without the admonition of the Court, nothing could prevent Chuan &
cannot feign innocence by claiming that it was actually Molar who Sons from hiring purely alien laborers, and there is no gainsaying the fact
promised them overseas jobs, in light of her positive identification as that further conflict or dispute would naturally ensue. To cope with this
private complainants recruiter. Hence, Dionisio’s mere denials cannot contingency, and acting within the powers granted by the organic law, the
prevail over these positive and straightforward testimonies. court, believing in the necessity and expediency of making patent its
Besides, it is inconceivable that private complainants could be mistaken desire to avoid probable and possible further misunderstanding between
in their belief that it was Dionisio who recruited them considering that it the parties, issued the order."
was she who personally talked with them on several occasions and As far as Chuan & Sons is concerned, the requirement that majority of
received the sums of money for which she issued receipts where it was the laborers to be employed should be Filipinos is certainly not arbitrary,
stated that the amount given was for processing and POEA. Moreover, it unreasonable or unjust. The Chuan & Sons’ right to employ labor or to
was held in a number of cases that even the absence of receipts is not make contract with respect thereto is not unreasonably curtailed and its
fatal to the case of the prosecution, for as long as it is clearly established interest is not jeopardized. We take it that the nationality of the additional
through the witnesses respective testimonies, that accused is the one laborers to be taken in is immaterial to Chuan & Sons. In its application
involved in prohibited recruitment. for permission to employ twelve temporary laborers it expressly says that
Wherefore, guilty of illegal recruitment in large scale, life imprisonment, these could be Filipinos or Chinese. On the face of this statement,
fine of P100k, reimburse the amounts received. assuming the same to be sincere, Chuan & Sons’ objection to the
condition imposed by the court would appear to be academic and a trifle.
 Labor Standards Case Digest
General Milling vs. Torres (1991) Almodiel vs. NLRC (1993)

ISSUE: WON hiring of a foreign employee is an employer’s prerogative ISSUE: WON there was unlawful discrimination when Raytheon caused
corollary functions relating to cost accounting to be absorbed by Danny
1 May ’89: NCR of DOLE issued Alien Employment Permit No. M-0689- Ang Tan Chai, a resident alien without working permit
3-535 in favor of Earl Timothy Cone, US citizen, as sports consultant &
assistant coach for General Milling Corp. Farle Almodiel is a certified public accountant who was hired on Oct ’87
27 Dec ’89: GMC & Cone entered into a contract of employment as Cost Accounting Manager of Raytheon Philippines, Inc. through a
whereby the latter undertook to coach GMC's basketball team. reputable placement firm, John Clements Consultants, Inc. with starting
15 Jan ’90: Board of Special Inquiry of the Commission on Immigration monthly salary of P18k. Before said employment, he was the Accounts
and Deportation approved Cone's application for a change of admission Executive of Integrated Microelectronics, Inc. for several years. He left this
status from temporary visitor to pre-arranged employee. job in view of the career offered by Raytheon.
9 Feb: GMC requested renewal of Cone's alien employment permit. also His major duties were: (1) plan, coordinate and carry out year and
requested that it be allowed to employ Cone as full-fledged coach. The physical inventory; (2) formulate and issue out hard copies of Standard
DOLE Regional Director, Luna Piezas, granted the request. Product costing and other cost/pricing analysis if needed and required
18 Feb: Alien Employment Permit No. M-02903-881, valid until 25 Dec and (3) set up the written Cost Accounting System for the whole company.
1990, was issued. After a few months, he was given a regularization increase of P1,600/mo.
Basketball Coaches Assoc. of the Ph. appealed the issuance of said alien Thereafter, his salary was increased to P21,600/mo.
employment permit to Secretary of Labor. The latter ordered the 17 Aug ’88: he recommended and submitted a Cost
cancellation of Cone's employment permit on the ground that there was Accounting/Finance Reorganization, affecting the whole finance group but
no showing that there is no person in the Philippines who is competent, the same was disapproved by the Controller. However, he was assured by
able and willing to perform the services required nor that the hiring of the Controller that should his position or department which was
Cone would redound to the national interest. apparently a one-man department with no staff becomes untenable or
GMC filed MR but was denied. unable to deliver the needed service due to manpower constraint, he
GMC’s contention: hiring of a foreign coach is an employer's would be given a 3-year advance notice.
prerogative. Also, that Sec. 6(c), Rule XIV, Book I of the Omnibus Rules is In the meantime, the standard cost accounting system was installed
null and void as it is in violation of the enabling law as the Labor Code and used at the Raytheon plants and subsidiaries worldwide. It was
does not empower Secretary to determine if the employment of an alien likewise adopted and installed in the Philippine operations. Consequently,
would redound to national interest. the services of a Cost Accounting Manager allegedly entailed only the
submission of periodic reports that would use computerized forms
RULING: Negative. Art. 40 LC provides that an employer seeking prescribed and designed by the international head office of the Raytheon
employment of an alien must first obtain an employment permit from the Company in California, USA.
Department of Labor. GMC's right to choose whom to employ is limited by 27 Jan ’89: Almodiel was summoned by his immediate boss and in the
the statutory requirement of an alien employment permit. presence of IRD Manager, Mr. Rolando Estrada, he was told of the abolition
GMC will not find solace in the equal protection clause of the of his position on the ground of redundancy. He was told this was already
Constitution. No comparison can be made between Cone and Mr. Norman final & had been conveyed to DOLE. Almodiel filed complaint for illegal
Black as the latter is "a long time resident of the country," and thus, not dismissal.
subject to the provisions of Art. 40, which apply only to "non-resident LA’s decision: Almodiel’s termination on the ground of redundancy is
aliens." In any case, the term "non-resident alien" and its opposite highly irregular and without legal and factual basis. Reinstatement.
"resident alien," here must be given their technical connotation under our NLRC’s decision: Reversed. Ordered Raytheon to pay separation fee.
law on immigration.
Neither can GMC validly claim that implementation of Secretary's Almodiel’s contentions: the functions of his position were absorbed by
decision would amount to an impairment of the obligations of contracts. the Payroll/Mis/Finance Department under the management of Danny
The provisions of the Labor Code and its Implementing Rules and Ang Tan Chai, a resident alien without any working permit from DOLE as
Regulations requiring alien employment permits were in existence long required by law. Granting that his department has to be declared
before GMC & Cone entered into their contract of employment. redundant, he claims that he should have been the Manager of the
Contention that Secretary of Labor should have conceded to the Payroll/Mis/Finance Department which handled general accounting,
findings of Commission on Immigration & Deportation: no merit. The payroll and encoding. As a BS Accounting graduate, a CPA with MBA units,
Labor Code itself specifically empowers respondent Secretary to make a 21 yrs of work experience, and a natural born Filipino, he claims that he is
determination as to the availability of the services of a "person in the better qualified than Ang Tan Chai, a BS Industrial Engineer, hired merely
Philippines who is competent, able and willing at the time of application to as a Systems Analyst Programmer or its equivalent in early 1987,
perform the services for which an alien is desired." The Department of promoted as MIS Manager only during the middle part of 1988 and a
Labor is the agency vested with jurisdiction to determine the question of resident alien.
availability of local workers. Raytheon’s arguments: Almodiel's functions as Cost Accounting
Contention that Sec 6(c), Rule XIV, Bk I of Implementing Rules is null & Manager had not been absorbed by Ang Tan Chai, a permanent resident
void: negative. GMC apparently suggest that Secretary of Labor is not born in this country. It claims that Ang Tan Chai did not displace Almodiel
authorized to take into account the question of whether or not or absorb his functions and duties as they were occupying entirely
employment of an alien applicant would "redound to the national interest" different and distinct positions requiring different sets of expertise or
because Art. 40 does not explicitly refer to such assessment. However, the qualifications and discharging functions altogether different and foreign
second paragraph of Art. 40 says: "the employment permit may be issued from that of petitioner's abolished position.
to a non-resident alien or to the applicant employer after a determination Whether petitioner's functions as Cost Accounting Manager have been
of the non-availability of a person in the Philippines who is competent, dispensed with or merely absorbed by another is however immaterial. For
able and willing at the time of application to perform the services for even conceding that the functions of Almodiel's position were merely
which the alien is desired." The permissive language employed in the transferred, no malice or bad faith can be imputed from said act.
Labor Code indicates that the authority granted involves the exercise of
discretion on the part of the issuing authority. In the second place, Art. 12 RULING: Negative. Art. 40 which requires employment permit refers to
of the Labor Code sets forth a statement of objectives that the Secretary of non-resident aliens. The employment permit is required for entry into the
Labor should, and indeed must, take into account in exercising his country for employment purposes and is issued after determination of the
authority and jurisdiction granted by the Labor Code… (Paragraphs a, c, d, non-availability of a person in the Philippines who is competent, able and
e). willing at the time of application to perform the services for which the
Moreover, assuming that an alien employment permit has in fact been alien is desired. Since Ang Tan Chai is a resident alien, he does not fall
issued to Cone, the basis of the reversal by the Secretary of Labor of his within the ambit of the provision.
earlier decision does not appear in the record. If such reversal is based on Contention that Almodiel is better qualified: no merit. Note that Ang Tan
some view of constitutional law or labor law different from those here set Chai was promoted to the position during the middle part of 1988 or
out, then such employment permit, if one has been issued, would appear before the abolition of Almodiel's position in early 1989. Further, an
open to serious legal objections. objection founded on the ground that one has better credentials over the
appointee is frowned upon so long as the latter possesses the minimum
 Labor Standards Case Digest
qualifications for the position. Since Almodiel does not allege that Capili is a regular employee, citing Arts. 61, 57, 280. The law
Ang Tan Chai does not qualify for the position, the Court cannot substitute mandated that apprenticeship agreements entered into by the employer
its discretion and judgment for that which is clearly and exclusively and apprentice shall be entered only in accordance with the
management prerogative apprenticeship program duly approved by DOLE. Prior approval by DOLE
Other ruling: Termination of an employee's services because of of the proposed apprenticeship program is, therefore, a condition sine quo
redundancy is governed by Art. 283. Almodiel was duly advised, 1 month non before an apprenticeship agreement can be validly entered into.
before, of the termination of his employment on the ground of redundancy The act of filing the proposed apprenticeship program with the DOLE is
in a written notice by his immediate superior, Mrs. Magdalena Lopez. He a preliminary step towards its final approval and does not instantaneously
was issued a check for P54,863 representing separation pay but in view of give rise to an employer-apprentice relationship.
his refusal to acknowledge the notice and the check, they were sent to him Apprenticeship agreement between Nitto & Capili was executed on 28
thru registered mail. DOLE was served a copy of the notice of termination May ‘90 allegedly employing Capili as an apprentice in the trade of "care
of petitioner in accordance with the pertinent provisions of the Labor Code maker/molder." On the same date, an apprenticeship program was
and the implementing rules. prepared by Nitto and submitted to DOLE. However, the apprenticeship
Redundancy exists where the services of an employee are in excess of agreement was filed only on 7 Jun ‘90. Notwithstanding the absence of
what is reasonably demanded by the actual requirements of the approval by the DOLE, the apprenticeship agreement was enforced the
enterprise. The characterization of an employee's services as no longer day it was signed.
necessary or sustainable, and therefore, properly terminable, was an Therefore, Nitto did not comply with the requirements of the law. Since
exercise of business judgment on the part of the employer. The wisdom or the apprenticeship agreement between Nitto & Capili has no force and
soundness of such characterization or decision was not subject to effect in the absence of a valid apprenticeship program duly approved by
discretionary review on the part of the Labor Arbiter nor of the NLRC so the DOLE, Capili's assertion that he was hired not as an apprentice but as
long, of course, as violation of law or merely arbitrary and malicious action a delivery boy ("kargador/pahinante") deserves credence. He should rightly
is not shown. be considered as a regular employee.
Indeed, an employer has no legal obligation to keep more employees As to contention that Capili was validly dismissed: negative. the twin
than are necessary for the operation of its business. Almodiel does not requirements of due process, substantive and procedural, must be
dispute the fact that a cost accounting system was installed and used at complied with, before valid dismissal exists. Without which, the dismissal
Raytheon subsidiaries and plants worldwide; and that the functions of his becomes void.
position involve the submission of periodic reports utilizing computerized The employer shall afford the worker ample opportunity to be heard
forms designed and prescribed by the head office with the installation of and to defend himself with the assistance of his representative, if he so
said accounting system. The fact that the functions of a position were desires. Ample opportunity connotes every kind of assistance that
simply added to the duties of another does not affect the legitimacy of the management must accord the employee to enable him to prepare
employer's right to abolish a position when done in the normal exercise of adequately for his defense including legal representation.
its prerogative to adopt sound business practices in the management of its However, Capili filed a case of illegal dismissal only 3 days after he was
affairs. made to sign the Quitclaim, a clear indication that such resignation was
Considering further that Almodiel herein held a position which was not voluntary and deliberate. He further asserted that Nitto "strong-armed"
definitely managerial in character, Raytheon had a broad latitude of him into signing the aforementioned resignation letter and quitclaim
discretion in abolishing his position. An employer has a much wider without explaining to him the contents thereof. Nitto made it clear to him
discretion in terminating employment relationship of managerial that anyway, he did not have a choice.
personnel compared to rank and file employees. The reason is that officers Affirmed NLRC’s decision.
in such key positions perform not only functions which by nature require
the employer's full trust and confidence but also functions that spell the Century Canning vs. CA (2007)
success or failure of an enterprise.
ISSUE: WON Gloria Palad was an apprentice
APPRENTICESHIP AGREEMENT
15 Jul ’97: Century Canning Corp hired Gloria Palad as “fish cleaner” at
Nitto vs. NLRC (1995) Century’s tuna & sardines factory.
17 Jul: Palad signed an apprenticeship agreement. She received an
ISSUE: WON Roberto Capili was an apprentice apprentice allowance of P138.75 daily.
25 Jul: Century submitted its apprenticeship program for approval to
May ’90: Nitto, a company engaged in sale of glass & aluminum TESDA of DOLE.
products, hired Roberto Capili as an apprentice machinist, molder, and 26 Sep: TESDA approved Century’s apprenticeship program.
core maker as evidenced by an apprenticeship agreement for a period of 15 Nov: a performance evaluation was conducted, where Palad was
6 mos from 28 May ’90 – 28 Nov ’90 with daily wage rate of P66.75 (75% given a rating of NI (needs improvement) since she scored only 27.75%
of the applicable minimum wage). based on a 100% performance indicator. Also, because Palad incurred
2 Aug, 1pm: Capili, who was handling a piece of glass, accidentally hit numerous tardiness & absences.
and injured the leg of an office secretary who was treated after. 22 Nov: Century issued a termination notice to Palad, informing her of
Later, after office hours: Capili entered a workshop within the office her termination effective at the close of business hours of 28 Nov ’97.
premises which was not his work station. He operated one of the power Palad filed a complaint for illegal dismissal, underpayment of wages, &
press machines without authority and injured his left thumb. Nitto spent non-payment of pro-rated 13th month pay for year ’97.
P1,023.04 to cover the medication of Capili. LA’s Decision: Dismissed for lack of merit but ordered Century to pay
3 Aug: Capili was asked to resign. He executed a Quitclaim and Release Palad her last salary & pro-rated 13th month pay.
in favor of Nitto for P1,912.79. NLRC’s Decision: Affirmed but ordered Century to pay Palad’s
6 Aug: Capili filed a complaint for illegal dismissal & payment of other backwages for 2 mos in amount of P7,176.
monetary benefits before NLRC. CA’s Decision: Set aside. Dismissal was illegal, ordered Century to pay
LA Decision: Found the termination of Capili as valid & dismissed his Palad her underpayment in wages, reinstatement of Palad. Apprenticeship
money claims. Ruled that Capili was hired as an apprentice & he violated agreement which Palad signed was not valid & binding because it was
the terms of their agreement when he acted with gross negligence executed more than 2 mos before TESDA approved Century’s
resulting in injuries. Capili does not have the proper attitude in apprenticeship program. Century failed to show that Palad was properly
employment particularly the handling of machines. apprised of the required standard of performance.
NLRC Decision: Reversed LA. Capili was a regular employee. He cannot
be considered an apprentice since no apprenticeship program had yet As to approval of apprenticeship program: Labor Code defines an
been filed and approved at the time the agreement was executed. Writ of apprentice as a worker who is covered by a written apprenticeship
execution was issued, ordering reinstatement of Capili & payment of his agreement with an employer. (Cited Arts. 60, 61, Nitto case)
P122,690.85 backwages. RA 7796, which created TESDA, has transferred the authority over
apprenticeship programs from Bureau of Local Employment of DOLE to
Nitto’s Arguments: Mere signing of the apprenticeship agreement the TESDA. The law emphasized TESDA’s approval of the apprenticeship
already established an employer-apprentice relationship. program as a pre-requisite for the hiring of apprentices.
 Labor Standards Case Digest
The apprenticeship agreement was entered into between the pedestrian, Potenciano Kapunan who was walking in his lane in
parties before Century filed its apprenticeship program with TESDA for the direction against vehicular traffic, and hit him.
approval. Century and Palad executed the apprenticeship agreement on In the case of Filamer vs. CA, SC ruled that Filamer is not liable for the
17 Jul ‘97 wherein it was stated that the training would start on same date injuries caused by Funtecha on the grounds that the latter was not an
and would end approximately in Dec ‘97. On 25 Jul ‘97, Century authorized driver for whose acts Filamer shall be directly and primarily
submitted for approval its apprenticeship program, which TESDA answerable. Funtecha was merely a working scholar & is not considered
subsequently approved. Clearly, the apprenticeship agreement was an employee of Filamer.
enforced even before TESDA approved Century’s apprenticeship program. Heirs of Potenciano Kapunan’s Arguments: the circumstances obtaining
Thus, the apprenticeship agreement is void because it lacked prior in the present case call for the application of Art. 2180 CC since Funtecha
approval from the TESDA. is no doubt an employee of Filamer. Funtecha was performing an act in
The TESDA’s approval of the employer’s apprenticeship program is furtherance of the interest & for the benefit of Filamer. Also, Funtecha
required before the employer is allowed to hire apprentices. Prior approval allegedly did not steal the school jeep nor use it for a joy ride without the
from the TESDA is necessary to ensure that only employers in the highly knowledge of the school authorities.
technical industries may employ apprentices and only in apprenticeable
occupations. Thus, under RA 7796, employers can only hire apprentices SC reconsiders its previous decision, applying CC provisions & ordered
for apprenticeable occupations which must be officially endorsed by a payment of P20k liability in Zenith Insurance Corp policy, P10k moral
tripartite body and approved for apprenticeship by the TESDA. This is to damages, P4k litigation & actual expenses, & P3k attorney’s fees.
ensure the protection of apprentices and to obviate possible abuses by Driving the vehicle to and from the house of the school president where
prospective employers who may want to take advantage of the lower wage both Allan and Funtecha reside is an act in furtherance of the interest of
rates. Filamer. Allan's job demands that he drive home the school jeep so he can
DO 68-04, issued on 18 Aug 2004, provided for the guidelines in the use it to fetch students in the morning of the next school day. Indubitable
implementation of the Apprenticeship & Employment Program of the govt, that the school president had knowledge that the jeep was routinely driven
which specifically states that no enterprise shall be allowed to hire home for the said purpose. Moreover, it is not improbable that the school
apprentices unless its apprenticeship program is registered and approved by president also had knowledge of Funtecha's possession of a student
TESDA. driver's license and his desire to undergo driving lessons during the time
Since Palad is not considered an apprentice because the apprenticeship that he was not in his classrooms.
agreement was enforced before the TESDA’s approval of Century’s In learning how to drive while taking the vehicle home in the direction of
apprenticeship program, Palad is deemed a regular employee performing Allan's house, Funtecha definitely was not having a joy ride. Funtecha was
the job of a "fish cleaner." Clearly, the job of a "fish cleaner" is necessary in not driving for the purpose of his enjoyment or for a "frolic of his own" but
Century’s business as a tuna and sardines factory. ultimately, for the service for which the jeep was intended by Filamer.
As to dismissal of Palad: illegal. Arts. 279 & 277(b) provided for two The act of Funtecha in taking over the steering wheel was one done for
requisites for a valid dismissal – it must be for a just or authorized cause, and in behalf of his employer for which act Filamer cannot deny any
and the employee must be afforded an opportunity to be heard & to responsibility by arguing that it was done beyond the scope of his
defend. janitorial duties. The clause "within the scope of their assigned tasks" for
LA held that Palad’s termination was because of her habitual purposes of raising the presumption of liability of an employer, includes
absenteeism & poor efficiency of performance. This conclusion was based any act done by an employee, in furtherance of the interests of the
mainly on the performance evaluation allegedly conducted by Century. employer or for the account of the employer at the time of the infliction of
However, Palad alleges she had no knowledge of the performance the injury or damage. Even if somehow, the employee driving the vehicle
evaluation conducted and that she was not even informed of the result of derived some benefit from the act, the existence of a presumptive liability
the alleged performance evaluation. Palad also claims she did not receive of the employer is determined by answering the question of whether or
a notice of dismissal, nor was she given the chance to explain. According not the servant was at the time of the accident performing any act in
to Century, Palad did not receive the termination notice because Palad furtherance of his master's business.
allegedly stopped reporting for work after being informed of the result of Sec. 14, Rule X, Bk III of IRR provides guidelines on the manner by
the evaluation. which the powers of the Labor Secretary shall be exercised; on what
However, under Art. 227, the employer has the burden of proving that records should be kept; maintained and preserved; on payroll; and on the
the termination was for valid & authorized cause. Century failed to exclusion of working scholars from, and inclusion of resident physicians in
substantiate its claim that Palad was terminated for valid reasons. Failed the employment coverage as far as compliance with the substantive labor
to prove the authenticity of the performance evaluation which petitioner provisions on working conditions, rest periods, and wages, is concerned. It
claims to have conducted on Palad, where Palad received a performance is merely a guide to the enforcement of the substantive law on labor. It is
rating of only 27.75%. Failed to show that Palad was apprised of the not decisive law in a civil suit for damages instituted by an injured person
performance standards set by Century. Therefore, Palad was not accorded during a vehicular accident against a working student of a school and
due process. Even if Century did conduct a performance evaluation on against the school itself.
Palad, Century failed to warn Palad of her alleged poor performance. Present case does not deal with a labor dispute on conditions of
Affirmed CA’s decision. employment between an alleged employee and an alleged employer. It
invokes a claim brought by one for damages for injury caused by the
APPRENTICES WITHOUT COMPENSATION patently negligent acts of a person, against both doer-employee and his
employer. Hence, the reliance on the implementing rule on labor to
Filamer vs. IAC (1992) disregard the primary liability of an employer under Art. 2180 CC is
misplaced. An implementing rule on labor cannot be used by an
ISSUE: WON Filamer may be held liable for Funtecha’s negligence employer as a shield to avoid liability under the substantive provisions of
the Civil Code.
Funtecha was a working student. He was a part-time janitor and a There exists in the present case an extra-contractual obligation arising
scholar of Filamer Christian Institute. He was, in relation to the school, an from the negligence or reckless imprudence of a person "whose acts or
employee even if he was assigned to clean the school premises for only 2 omissions are imputable, by a legal fiction, to other(s) who are in a
hrs in the morning of each school day. position to exercise an absolute or limited control over (him)."
Since Funtecha had a student driver’s license, he requested the driver, Funtecha is an employee of Filamer. He need not have an official
Allan Masa, to take over the vehicle while Masa was on his way home one appointment for a driver's position in order that Filamer may be held
afternoon. (Note: the place where Allan lives is also the house of his father, responsible for his grossly negligent act, it being sufficient that the act of
the school president, Agustin Masa & also the house where Funtecha was driving at the time of the incident was for the benefit of Filamer. Hence,
allowed free board while he was a student of Filamer.) the fact that Funtecha was not the school driver or was not acting within
Masa turned over the vehicle to Funtecha only after driving down a the scope of his janitorial duties does not relieve Filamer of the burden of
road, negotiating a sharp dangerous curb, & viewing that the road was rebutting the presumption juris tantum that there was negligence on its
clear. However, a fast moving truck with glaring lights nearly hit them so part either in the selection of a servant/employee, or in the supervision
that they had to swerve to the right to avoid a collision. Upon swerving, over him.
they heard a sound as if something had bumped against their vehicle but Supervision includes the formulation of suitable rules and regulations
they did not stop to check. Turned out, a Pinoy jeep swerved towards the for the guidance of its employees and the issuance of proper instructions
intended for the protection of the public and persons with whom the
employer has relations through his employees. An employer is expected to
 Labor Standards Case Digest
impose upon its employees the necessary discipline called for in determine whether or not they should be allowed to finish the 6-
the performance of any act indispensable to the business and beneficial to month term of the contract. Furthermore, the employer may terminate the
their employer. contract at any time for a just and reasonable cause. Unless renewed in
Filamer has not shown that it has set forth such rules and guidelines as writing by the employer, the contract shall automatically expire at the end
would prohibit any one of its employees from taking control over its of the term.
vehicles if one is not the official driver or prohibiting the driver and son of According to FEB, the employment contracts were prepared in
the Filamer president from authorizing another employee to drive the accordance with Art. 80. The stipulations in the employment contracts
school vehicle. Also failed to prove that it had imposed sanctions or indubitably conform with the aforecited provision. Succeeding events and
warned its employees against the use of its vehicles by persons other than the enactment of RA No. 7277, however, justify the application of Art. 280
the driver. of Labor Code.
Therefore, Filamer has an obligation to pay damages for injury arising FEB entered into the aforesaid contract with a total of 56 handicapped
from the unskilled manner by which Funtecha drove the vehicle. The workers and renewed the contracts of 37 of them. Verily, the renewal of
liability of the employer is, under Art. 2180, primary and solidary. the contracts of the handicapped workers and the hiring of others lead to
However, the employer shall have recourse against the negligent employee the conclusion that their tasks were beneficial and necessary to the bank.
for whatever damages are paid to the heirs of Kapunan. Moreover, they were qualified to perform the responsibilities of their
positions. In other words, their disability did not render them unqualified
HANDICAPPED WORKERS or unfit for the tasks assigned to them.
Magna Carta for Disabled Persons mandates that a qualified disabled
Bernardo vs. NLRC (1999) employee should be given the same terms and conditions of employment
as a qualified able-bodied person, citing Sec. 5.
ISSUE: WON the deaf-mute complainants were regular employees of FEB The fact that the employees were qualified disabled persons necessarily
removes the employment contracts from the ambit of Art. 80. Since the
43 complainants are deaf-mutes who were hired on various period from Magna Carte affords them rights of qualified able-bodied persons, they are
’88-’93 by Far East Bank as money sorters & counters through a covered by Art. 280 LC.
uniformly worded agreement called “Employment Contract for Handicapped Test of whether an employee is regular: The primary standard,
Workers.” The agreement provided, among others: therefore, of determining regular employment is the reasonable
§ Employee shall undergo a training period of 1mo, after which the connection between the particular activity performed by the employee in
Bank shall determine WON he/she should be allowed to finish the relation to the usual trade or business of the employer. The test is whether
remaining term of his contract the former is usually necessary or desirable in the usual business or trade
§ Employee shall be entitled to initial compensation of P118/day of the employer. The connection can be determined by considering the
§ Regular work sched of employee shall be 5 days/week, 8 hrs/day & nature of the work performed and its relation to the scheme of the
may also be required to perform OT work particular business or trade in its entirety. Also if the employee has been
§ Employee shall be entitled to benefits – 13th month pay, 5-day performing the job for at least one year, even if the performance is not
incentive leave, SSS premium payment continuous and merely intermittent. Hence, the employment is considered
§ Employee acknowledges the fact that he/she had been employed regular, but only with respect to such activity, and while such activity
under a special employment program of Bank, for which the exists.
standard hiring reqs of Bank were not applied Without a doubt, the task of counting and sorting bills is necessary and
§ Employee acknowledges & accepts the fact that terms & conditions desirable to the business of respondent bank. With the exception of
of employment generally observed by the Bank with respect to sixteen of them, petitioners performed these tasks for more than six
Bank’s regular employee are not applicable to the Employee & that months.
terms & conditions of Employee’s employment with Bank shall be The contract signed by petitioners is akin to a probationary
governed solely by this Contract employment, during which the bank determined the employees' fitness for
§ Employment Contract shall be for 6 months the job. When the bank renewed the contract after the lapse of the six-
month probationary period, the employees thereby became regular
FEB’s Arguments: complainants were hired only as "special workers employees. As regular employees, the twenty-seven petitioners are entitled
and should not in any way be considered as part of the regular to security of tenure. They are deemed illegally dismissed and therefore
complement of the Bank." Rather, they were "special" workers under Art. entitled to back wages and reinstatement without loss of seniority rights
80 LC. It never solicited the services of complainants, whose employment and other privileges.
was merely an "accommodation" in response to the requests of Considering the allegation of FEB that the job of money sorting is no
government officials and civic-minded citizens. They were told from the longer available because it has been assigned back to the tellers to whom
start, "with the assistance of government representatives," that they could it originally belonged, petitioners are hereby awarded separation pay in
not become regular employees because there were no plantilla positions lieu of reinstatement.
for "money sorters," whose task used to be performed by tellers. Their Applicability of Brent ruling, in which the Court upheld the validity of
contracts were renewed several times, not because of need "but merely for an employment contract with a fixed term. FEB argued that the parties
humanitarian reasons." Also, as of the present, the "special position" that entered into the contract on equal footing. They even had an advantage
was created for complainants no longer exists in FEB, after the latter had because they were backed by DSWD Sec. Pardo & Rep. Borjal.
decided not to renew anymore their special employment contracts. It was Negative. The term limit in the contract was premised on the fact that
only through the "pakiusap" of Arturo Borjal that the tellers were relieved of the petitioners were disabled, and that the bank had to determine their
this task of counting and sorting bills in favor of deaf-mutes without fitness for the position. Indeed, its validity is based on Art. 80 of the Labor
creating new positions as there is no position either in FEB or in any other Code. But as noted earlier, petitioners proved themselves to be qualified
bank in the Philippines which deals with purely counting and sorting of disabled persons who, under the Magna Carta for Disabled Persons, are
bills in banking operations. entitled to terms and conditions of employment enjoyed by qualified able-
NLRC’s Decision: against the complainants. They could not be deemed bodied individuals; hence, Article 80 does not apply because petitioners
regular employees. are qualified for their positions. The validation of the limit imposed on
their contracts, imposed by reason of their disability, was a glaring
instance of the very mischief sought to be addressed by the new law.
Complainants’ Arguments: they should considered regular employees Moreover, it must be emphasized that a contract of employment is
because their task as money sorters & counters was necessary & desirable impressed with public interest. Clearly, the agreement of the parties
to the business of FEB. regarding the period of employment cannot prevail over the provisions of
the Magna Carta for Disabled Persons, which mandate that petitioners
Only the employees, who worked for more than 6 mos and whose must be treated as qualified able-bodied employees.
contracts were renewed are deemed regular. Hence, their dismissal from As to contention that BSP required that cash be turned over during
employment was illegal. They have acquired legal rights that this Court is 8am-5pm & that FEB resorted to nighttime sorting & counting & this
duty-bound to protect and uphold, not as a matter of compassion but as a could not be done by petitioners because it would be very risky for them
consequence of law and justice. to travel at night: Travelling at night involves risks to handicapped and
The uniform employment contracts of complainants stipulated that they able-bodied persons alike. This excuse cannot justify the termination of
shall be trained for a period of one month, after which the employer shall their employment.
 Labor Standards Case Digest
As to contention that petitioners were merely 19 Feb: BLUM through Natl Pres. Artemio Portugal Sr.
“accommodated” employees: This fact does not change the nature of presented a letter to SMC containing proposals & labor demands with
their employment. An employee is regular because of the nature of work request for recognition & collective bargaining. SMC refused to bargain,
and the length of service, not because of the mode or even the reason for alleging that workers are not their employees.
hiring them. 20 Feb: all petitioners were dismissed from their jobs & were denied
As to contention that FEB did not go out of its way to recruit entrance to SMC Factory despite their regularly reporting for work.
petitioners & that its plantilla did not contain their positions: the
determination of whether employment is casual or regular does not Elements of employer-employee relationship: (a) the selection and
depend on the will or word of the employer, and the procedure of hiring . . engagement of the employee; (b) the payment of wages; (c) the power of
. but on the nature of the activities performed by the employee, and to dismissal; and (d) the employer's power to control the employee with
some extent, the length of performance and its continued existence. respect to the means and methods by which the work is to be
As to contention that petitioners were informed from the start that accomplished – “control test”, which is the most important element.
they could not become regular employees: well-settled rule is that the Affirmative. SMC asserts that petitioners are employees of Guaranteed
character of employment is determined not by stipulations in the contract, Labor Contractor but facts & evidence negate this claim.
but by the nature of the work performed. Otherwise, no employee can The existence of an independent contractor relationship is generally
become regular by the simple expedient of incorporating this condition in established by the following criteria: "whether or not the contractor is
the contract of employment. carrying on an independent business; the nature and extent of the work;
The decisive determinant in "term employment" should not be the the skill required; the term and duration of the relationship; the right to
activities that the employee is called upon to perform but the day certain assign the performance of a specified piece of work; the control and
agreed upon the parties for the commencement and termination of their supervision of the work to another; the employer's power with respect to
employment relationship. the hiring, firing and payment of the contractor's workers; the control of
Therefore, FEB was ordered to pay back wages & separation pay to the premises; the duty to supply the premises tools, appliances, materials
each of the 27 petitioners. and labor; and the mode, manner and terms of payment". None exists in
this case.
CONDITIONS OF EMPLOYMENT There was no written contract to specify the performance of a specified
A. Working Condition and Rest Periods piece of work, the nature & extent of the work & the term & duration of the
relationship. Records fail to show that a large commercial outfit, such as
BROTHERHOOD vs. ZAMORA (1987) MSC, entered into mere oral agreements of employment or labor
contracting where the same would involve considerable expenses and
ISSUE: WON an employer-employee relationship exists between dealings with a large number of workers over a long period of time.
petitioners (members of Brotherhood Labor Unit Movement of the PH) For an average of 7 years, each of the petitioners had worked
and San Miguel Corporation continuously & exclusively for SMC’s shipping & warehousing department.
Considering this length of time, there is justification to conclude that they
11 Jul ’69: BLUM filed a complaint charging SMC & its officers of unfair were engaged to perform activities necessary or desirable in the usual
labor practice set forth in Sec. 4(a), sub-sections 1 & 4 of RA 875 & of business or trade of SMC, and the petitioners are, therefore regular
illegal dismissal. They alleged that respondents ordered them to disaffiliate employees.
from the union, & that management dismissed the complainants when Despite past shutdowns of the glass plant for repairs, the petitioners,
they insisted on their union membership. promptly returned to their jobs, never having been replaced, or assigned
On their part, respondents moved for dismissal, alleging that elsewhere until the present controversy arose. The term of the petitioners'
complainants are not & have never been employees of SMC but of the employment appears indefinite. The continuity and habituality of
independent contractor. SMC never had control over the means & petitioners' work bolsters their claim of employee status vis-a-vis
methods followed by the independent contractor & that complaints are respondent company.
barred by estoppel from asserting that they are employees of SMC. Even under the assumption that a contract of employment had indeed
Unrebutted evidence: petitioners are workers employed at San Miguel been executed between SMC and the alleged labor contractor, SMC's case
Parola Glass Factory since ’61. Worked as “cargadores” or “pahinante” at will, nevertheless, fail, citing Sec. 8, Rule VIII, Book III, IRR.
SMC Plant – loading, unloading, piling or palleting empty bottles & wooden Guaranteed and Reliable Labor contractors have neither substantial
shells to & from company trucks & warehouses. capital nor investment to qualify as an independent contractor under the
Petitioners first reported for work to Superintendent-in-Charge law. The premises, tools, equipment and paraphernalia used by the
Camahort. Issued gate passes signed by Camahort & were provided with petitioners in their jobs are admittedly all supplied by SMC. It is only the
tools & equipment used in the loading, unloading, etc. operation. manpower or labor force which the alleged contractors supply, suggesting
Job orders from Camahort à orders transmitted to an asst. OIC à asst. the existence of a "labor only" contracting scheme prohibited by law. Even
informs the warehousemen & checkers regarding the orders à the alleged contractor's office, which consists of a space at SMC’s
warehousemen & checkers relay the orders to the capatazes or group warehouse, table, chair, typewriter and cabinet, are provided for by SMC.
leaders à orders to the workers. Hence, the alleged contractors have no capital outlay involved in the
Work was neither regular nor continuous. Did not mean full 8 hr/day conduct of its business, in the maintenance thereof or in the payment of
but at times, exceeded 8 hr/day & necessitated work on Sundays & its workers' salaries.
holidays. Neither paid overtime nor compensation for work on Sundays & Payment of workers’ wages is a critical factor in determining the
holidays. actuality of an employer-employee relationship whether between SMC and
Petitioners were paid every 10 days on a piece rate basis – according to petitioners or between the alleged independent contractor and petitioners.
the number of cartons & wooden shells they were able load, unload, or In a truly independent contractor-contractee relationship, the fees are paid
pile. Group leader notes down the number/volume of work that each directly to the manpower agency in lump sum without indicating or
worker had accomplished. This is made the basis of a report/statement. implying that the basis of such lump sum is the salary per worker
Final approval is by OIC Camahort. Pay check is given to the group leaders multiplied by the number of workers assigned to the company.
for encashment, distribution, & payment to petitioners. From total The independent contractors were paid a lump sum representing only
earnings of the group, group leader gets a participation or share of 10% + the salaries the workers were entitled to, arrived at by adding the salaries
additional amount from the earnings of each individual. of each worker which depend on the volume of work they had
Jan ’69: petitioners (140) organized & affiliated themselves with BLUM accomplished individually, based on payrolls, reports, or statements
& engaged in union activities. They pressed the management, airing other prepared by the group leaders. The amount paid by SMC to the alleged
grievances such as being paid below the minimum wage law, inhuman independent contractor considers no business expenses or capital outlay
treatment, being forced to borrow at usurious rates of interest and to buy of the latter. Nor is the profit or gain of the alleged contractor in the
raffle tickets, coerced by withholding their salaries, and salary deductions conduct of its business provided for as an amount over and above the
made without their consent. But not heeded. workers' wages. Instead, the alleged contractor receives a percentage from
6 Feb ’69: BLUM filed a notice of strike with Bureau of Labor Relations the total earnings of all the workers plus an additional amount
in connection with the dismissal of some of its members who were corresponding to a percentage of the earnings of each individual worker,
castigated for their union membership. Several conciliation conferences which, perhaps, accounts for the petitioners' charge of unauthorized
were scheduled in order to thresh out their differences. deductions from their salaries by SMC.
12 Feb: Rogelio Dipad was dismissed from work. As to argument that petitioners are not employees as they worked on
piece basis: circumstances must be construed to determine indeed if
 Labor Standards Case Digest
payment by the piece is just a method of compensation and does No uniform test to determine the evidence of employer-
not define the essence of the relation. Firmly establishing SMC's role as employee relation. In general, however, we have the right of control test,
employer is the control exercised by it over the petitioners that is, control "where the person for whom the services are performed reserves a right to
in the means and methods/manner by which petitioners are to go about control not only the end to be achieved but also the means to be used in
their work, as well as in disciplinary measures imposed by it. reaching such end." Subsequently, the existing economic conditions
Because of the nature of petitioners’ work as cargadores, supervision as prevailing between the parties, like the inclusion of the employee in the
to the means & manner of performing the same is non-existent. The mere payrolls were added.
concern of both SMC and the alleged contractor is that the job of having Lina Sevilla was not subject to control by TWS either as to the result of
the bottles and wooden shells brought to and from the warehouse be the enterprise or as to the means used in connection therewith.
done. More evident and pronounced is SMC’s right to control in the First, under the contract of lease covering the TWS Ermita office, she
discipline of petitioners. It was established that SMC has the right to had bound herself in solidum as and for rental payments, an arrangement
impose disciplinary measures for violations or infractions of its rules and that would be like claims of a master-servant relationship. A true employee
regulations as well as its right to recommend transfers and dismissals of cannot be made to part with his own money in pursuance of his
the piece workers. SMC has the power to recommend penalties or employer's business, or otherwise, assume any liability thereof.
dismissal of piece workers. Hence, there is control. Second, when the branch office was opened, the same was run by Lina
As to alleged shutdown of the glass manufacturing plant hence, payable to TWS by any airline for any fare brought in on the efforts of
dismissed: SMC’s shutdown was merely temporary, one of its furnaces Lina. It cannot be said that Sevilla was under the control of TWS "as to the
needing repair. Operations continued after such repairs but petitioners means used." Sevilla obviously relied on her own gifts and capabilities.
were refused entry. It is apparent that the closure of respondent's Also, Sevilla was not in the company's payroll. For her efforts, she
warehouse was merely a ploy to get rid of the petitioners, who were then retained 4% in commissions from airline bookings, the remaining 3%
agitating the respondent company for benefits, reforms and collective going to TWS. Unlike an employee then, who earns a fixed salary usually,
bargaining as a union. There is no showing that petitioners had been she earned compensation in fluctuating amounts depending on her
remiss in their obligations and inefficient in their jobs to warrant their booking successes.
separation. Fact that she has been designated as “branch manager” does not make
As to charge of unfair labor practices: SMC had an existing collective her an employee. Employment is determined by the right-of-control test
bargaining agreement with IBM union, which is the recognized collective and certain economic parameters. But titles are weak indicators.
bargaining representative at SMC’s glass plant. There being a recognized However, the parties had not embarked on a joint venture or
bargaining representative of all employees at the company's glass plant, partnership. Sevilla herself did not recognize the existence of such a
the petitioners cannot merely form a union and demand bargaining. The relation. In her letter of 28 Nov ’61, she expressly concedes to TWS’ right
Labor Code provides the proper procedure for the recognition of unions as to stop the operation of the branch office. In effect, she was accepting
sole bargaining representatives. This must be followed. TWS’ control over the manner in which the business was run. A joint
SMC to reinstate petitioners, with 3 years backwages. Where venture, including a partnership, presupposes generally a of standing
reinstatement in no longer possible, SMC is ordered to pay separation pay between the joint co-venturers or partners, in which each party has an
equivalent to 1 month for every year of service. equal proprietary interest in the capital or property contributed and where
each party exercises equal rights in the conduct of the business. Further,
Sevilla vs. CA (1988) the parties did not hold themselves out as partners. The building itself was
embellished with the electric sign “Tourist World Service, Inc.”
ISSUE: WON Lina Sevilla is an employee of Tourist World Services When Sevilla agreed to man the Ermita branch, she must have done so
pursuant to a contract of agency. The agent renders services "in
19 Oct ’60: Mrs. Segundina Noguera (1st party), Tourist World Services, representation or on behalf of another.” Sevilla solicited airline fares, but
Inc. represented by Mr. Eliseo Canilao (2nd party), & Dr. Carlos Sevilla, Lina she did so for and on behalf of principal, TWS. As compensation, she
Sevilla entered into a contract. Tourist World leased the premises of received 4% of the proceeds in the concept of commissions. Hence, there
Noguera for its use as a branch office. In said contract, Lina Sevilla held is a principal-agent relationship.
herself solidarily liable with Tourist World for the prompt payment of Unlike simple grants of power of attorney, agency cannot be revoked at
monthly rental agreed on. will of the principal. Lina Sevilla is a bona fide travel agent herself, and as
When branch office was opended, the same was run by Lina Sevilla, such, she had acquired an interest in the business entrusted to her.
payable to Tourist World by any airline for any fare brought in on the Moreover, she had assumed a personal obligation for the operation
efforts of Mrs. Sevilla – 4% was to go to Lina Sevilla & 3% was to be thereof, holding herself solidarily liable for the payment of rentals. She
withheld by Tourist World. continued the business, using her own name, after TWS had stopped
24 Nov ’61: Tourist World appears to have been informed that Lina further operations. Her interest, obviously, is not to the commissions she
Sevilla was connected with a rival firm, PH Travel Bureau. Since branch earned as a result of her business transactions, but one that extends to the
office was anyhow losing, Tourist World considered closing down its office. very subject matter of the power of management delegated to her. Hence,
Two resolutions of the BOD were issued – first abolished that office of the Sevilla is entitled to damages.
manager & VP of Tourist World Ermita Branch & second authorized the Wherefore, TWS & Eliseo Canilao are ordered to jointly & severally
corporate secretary to receive the properties of Tourist World. indemnify Lina Sevilla the sum of P25k, P10k moral damages, P10k
3 Jan ’62: contract with Noguera for the use of the Branch Office exemplary damages, P5k nominal/temperate damages.
premises was terminated & while effectivity thereof was 31 Jan, Sevillas no
longer used it. CS Canilao went over to the branch office & found the Domasig vs. NLRC (1996)
premises locked, unable to contact Lina, he padlocked the premises to
protect the interest of Tourist World. ISSUE: WON Domasig is an employee or a commission agent
Lina Sevilla & other employees could not enter the premises. So filed a
complaint against Noguera & Tourist World. Eddie Domasig filed a complaint against Cata Garments Corp, company
Lina’s contentions: a joint business venture was entered into by & engaged in garments business & its owner/manager Otto Ong & Catalina
between her & TWS with offices at Ermita branch office & that she was not Co for illegal dismissal, unpaid commission & other monetary claims.
an employee of TWS to the end that her relationship was one of a joint Alleged that he started working on 6 Jul ’86 as salesman when company
business venture. She alleged that she did not receive any salary from was still named Cato Garments. 3 yrs ago, because of a complaint filed by
TWS, that she earned commissions for her own passengers, her own its workers, it changed its name to Cata Garments.
bookings, her own business, that she shared in the expenses of 29 Aug ’92: Domasig was dismissed with Cata learned that he was
maintaining A. Mabini St. office, that she would be given title of branch being pirated by a rival corporation which offer he refused. Prior to
manager for appearance’s sake only. dismissal, he alleged that he was receiving P1.5k/month plus commission.
TWS’ contention: Lina Sevilla was an employee of TWS as manager. As 3 Sep ’92: Domasig filed complaint.
such, she had no say on the lease executed with Noguera. Cata’s contentions: Domasig is not a regular employee. He is a mere
commission agent who receives commission of P5/pc of article sold at
Negative. If the relation between the parties was in the character of regular price & P2.50/pc sold at bargain price. Domasig received fixed
employer and employee, court has no jurisdiction, labor disputes being allowance of P1.5/month. He had no regular time schedule.
the exclusive domain of CIR, later, the Bureau Of Labor Relations.
 Labor Standards Case Digest
Regular employee. Resolution is vital to the determination of participates in action of major character, financing, amendments,
Domasig’s entitlement to monetary benefits. directs, plans, coordinates & maintains supervision & control, provides for
In a business establishment, an identification card is usually provided & insures proper documentation & notarization, etc.
not only as a security measure but mainly to identify the holder thereof as 26 Jun ’89: 9 lawyers of the bank’s Legal Dept, who were all under
a bona fide employee of the firm that issues it. Together with the cash Sadac, addressed a letter-petition to the Chairman of BOD, accusing
vouchers covering Domasig’s salaries for the months stated proved that he Sadac of abusive conduct, inefficiency, mismanagement, ineffectiveness &
is indeed an employee of Cata Garments. indecisiveness.
The list presented by Cata would even support Domasig’s allegation Sadac responded & manifested an intention to file criminal, civil &
that, aside from a monthly salary of P1,500, he also received commissions administrative charges against the 9 lawyers. Morales called the lawyers to
for his work as a salesman of Cata. a conference in his office in an attempt to resolve their differences.
As to contention that Cata terminated his employment due to the However, this did not amount to much & only resulted in a broad
suspicion: this was not refuted by Cata. Hence, illegal dismissal. commitment of the parties to implement the existing procedures &
It was error for NLRC to remand the case for further proceedings to practices in the Legal Dept. There was heated altercation between Sadac &
determine WON Domasig was Cata’s employee. This would only prolong subordinates.
the final disposition of the complaint. There should be speedy 17 Jul ’89: Banico met with the 9 lawyers. He was warned that if Sadac
administration of justice in labor cases. After all, NLRC & LA have authority were to be retained in his position, lawyers would resign en masse. Banico
under the Labor Code to decide a case based on the position papers and then saw Sadac. Sadac denied the charges against him.
documents submitted without resorting to the technical rules of evidence. 10 Aug ’89: Morales issued a memorandum to Sadac, stating that the
bank is waiting for his vonluntary resignation due to the lack of confidence
Flores vs. Nuestra (1988) in him by his subordinates.
14 Aug: Sadac addressed a letter to Morales, stating that the report of
ISSUE: WON there was an employer-employee relationship Banico contained libelous statements & implementation of the
memorandum would lead to an illegal dismissal. He requested for a full
Herminio & Herminia Flores worked for Fortunato Nuestro in his funeral hearing by BOD so that he could clear his name.
parlor known as Funeraria Nuestro since Jun ’76, as helper-utility man & 17 Aug: Ricardo Romulo, Board VP Chairman, answered Sadac. He
bookkeeper, embalmer, & cashier. stressed that Sadac’s services were not terminated by the Board. It was
7 Oct ’80: Nuestro registered the Floreses with SSS as his employee merely exercising its managerial prerogative to control, conduct its
with monthly salary of P200 each. Thereafter, Herminio was paid business in the manner it deems fit & to regulate the same. That all the
P750/month + P200 monthly allowance while Herminia was paid Board is saying is that it has lost its confidence in Sadac & is awaiting his
P500/month. They were given living quarters right inside the compound of resignation.
the funeral parlor. 28 Aug: Sadac made a request for a full hearing.
30 Oct ’82: Herminio & Nuestro had an altercation, during which 31 Aug: Romulo wrote back, expressing that Sadac is free to remain in
Herminio was physically assaulted by Nuestro & suffered a punctured the employ of the bank even if the bank were to incur tremendous
wound on the lower & an abrasion in the scapular region. Herminio filed expense of continuing to pay his high salary.
an action for slight physical injuries. Herminio & his family, then, was 9 Nov: Sadac filed a complaint for illegal dismissal & damages.
compelled to vacate his living quarters at the funeral parlor & had to seek After learning of this complaint, BOD adopted Resolution 5803,
protection from Integrated National Police of Pilar, Bataan. terminating the services of Sadac in view of his belligerence & the Board’s
15 Nov ’82: Sps. Flores filed complaint against Nuestro for illegal honest belief that relationship between them was one of client & lawyer.
dismissal, underpayment of living allowances, non-payment of five (5) Sadac’s contention: there is employer-employee relationship.
days incentive leave and non-payment of overtime compensation. LA’s Decision: lawyer-client relationship existed.
Nuestro’s contention: no employer-employee relationship. Sps. Flores NLRC’s Decision: Sadac was an employee of bank. Illegal dismissal.
even abandoned their work on 30 Oct ’82.
NLRC’s Decision: there was employer-employee relationship but since Elements of employer-employee relationship: (1) the selection and
Sps. Flores abandoned their work, they are precluded from seeking engagement of the employee; (2) the payment of wages; (3) the power of
reinstatement with backwages. dismissal, and (4) the power to control the employee's conduct, with the
control test generally assuming primacy in the overall consideration.
Affirmative. The fact that Nuestro registered Sps. Flores with SSS is Power of control refers to the existence of the power and not necessarily
proof that they were indeed his employees. The coverage of Social to the actual exercise thereof. It is not essential, in other words, for the
Security Law is predicated on the existence of an employer-employee employer to actually supervise the performance of duties of the employee;
relationship. it is enough that the former has the right to wield the power.
As to issue of abandonment: to constitute abandonment, there must be Affirmative, Sadac is an employee of bank. Morales appointed &
a clear and deliberate intent to discontinue one's employment without any assigned Sadac to the Legal Dept as VP with same salary, privileges &
intention of returning back. Sps. Flores were only compelled to leave the benefits granted by bank to its ranking senior officers. He was not hired as
premises, which they regarded as their home, when Nuestro inflicted a lawyer on retainership basis but as an officer of the bank. He received
physical injuries upon Herminio Flores. Apparently, what they had given monthly salary of P8k, monthly allowance of P4.5k & Christmas bonus.
up was only their place of residence but not their jobs. The immediate Then, position of General Counsel of the bank was created & extended
filing of a complaint for illegal dismissal with a prayer for reinstatement to Sadac. In addition to his duties as VP, Sadac’s duties & responsibilities
shows that spouses were not abandoning their work. were defind as to prove that he was a bank officer working under the
Lastly, where there is a finding of illegal dismissal, the general rule is supervision of the Pres & BOD of bank.
that an employee is entitled to reinstatement and to receive backwages In his more than 8 yrs employment with bank, Sadac was given the
from the date of his dismissal up to the time of his reinstatement. usual payslips to evidence his monthly gross compensation. As employer,
However, in this case, reinstatement is no longer feasible. Any possible the bank withheld the taxes due to BIR from complainant’s salary as
confrontation between the parties in view of their already strained employee. Moreover, the bank enrolled Sadac as its employee under SSS
relationship should be avoided. & Medicare programs. Sadac contributed to the bank’s Employees’
Wherefore, Sps. Flores are entitled to backwages equivalent to 6 Provident Fund.
months pay & cost of living allowances from Oct ’80-82. When the bank changed its payroll accounting system, Sadac was
included as one of the corporate officers. Also, there were further proofs:
Equitable vs. NLRC (1997) 1. Sadac’s monthly attendance was recorded by Chief Security
Officer & reported to OP
ISSUE: WON an employer-employee relationship exists 2. Sadac was authorized by Pres to sign for & in behalf of the bank
contracts covering legal services of lawyers
1 Aug ’81: Ricardo Sadac was appointed as VP for Legal Department of 3. Sadac participated as part of management in annual Management
Equitable Banking Corp. by Pres. Manuel Morales, with monthly salary of Planning Conferencess on objective-setting & long-range planning
P8k + allowance of P4.5k & Christmas bonus worth to a 2-mo salary. 4. Bank extended to Sadac the benefit of a car plan
8 Dec: Sadac was also designated as the bank’s General Counsel. He 5. Since ’82, bank continuously reported & included Sadac as one of
had these functions: provides legal advice to BOD, takes charge of all bank its senior officers in its statements of financial condition as VP
cases arising from bank transactions, insures effective conduct of litigation,
 Labor Standards Case Digest
Rulings in Besa & Asis: no controlling in this case. In both technician of Fuji Xerox into stopping the meter of the machine.
cases, the question of whether or not the parties had an employer- But technician refused. This incident came to the knowledge of Fuji Xerox.
employee relationship was not the focal point of controversy. 31 May ’83: Fuji Xerox reported the matter to Skillpower. Next day,
In Hydro Resources: A lawyer, like any other professional, may very well Skillpower wrote Garado, ordering him to explain. In the meantime, it
be an employee of a private corporation or even of the government. It is suspended him from work. Garado filed complaint for illegal dismissal.
not unusual for a big corporation to hire a staff of lawyers as its in-house LA’s Findings: Garado applied for work to Skillpower. In ’80, he was
counsel, pay them regular salaries, rank them in its table of organization, employed & made to sign a contract. Although he received his salaries
and otherwise treat them like its other officers and employees. regularly from Fuji, it was Skillpower which exercised control & supervision
Since there is an employer-employee relationship, the case is within the over his work. Skillpower had substantial capital & investments in
coverage of LC. Under LC, an employee may be validly dismissed if these machinery, equipment & service vehicles. Hence, Garado was an employee
requisites are attendant: (1) the dismissal is grounded on any of the of Skillpower & was merely assigned by Skillpower to Fuji Xerox.
causes stated in Article 282 of the Labor Code, and (2) the employee has Dismissed complaint.
been notified in writing and given the opportunity to be heard and to NLRC’s Findings: Garado is an employee of Fuji Xerox & was illegally
defend himself. Article 282(c) of the Labor Code provides that "willful dismissed. Although Garado’s request was wrongful, dismissal would be a
breach by the employee of the trust reposed in him by his employer" is a disproportionate penalty. Although Skillpower had substantial capital
cause for the termination of employment by an employer. Ordinary breach assets, the fact was that the copier machines, which Garado operated,
of trust will not suffice, it must be willful and without justifiable excuse. belonged to Fuji Xerox, and that although it was Skillpower, which
This must be founded on facts established by the employer who must suspended Garado, the latter merely acted at the behest of Fuji Xerox.
clearly & convincingly prove by substantial evidence the facts & incidents Fuji Xerox’s argument: Skillpower is an independent contractor &
upon which loss of confidence may be fairly made to rest. Otherwise, Garado is its employee. Garado was recruited by Skillpower; wrork done
illegal dismissal. by Garado was not necessary to the conduct of business of Fuji; salaries &
The alleged loss of confidence was spawned by the lawyers’ complaints benefits were paid directly by Skillpower; Garado worked under control of
– Sadac insults lawyers, even in the presence of his clients; outburst of Skillpower, etc.
temper on inconsequential matters; mismanagement, ineffectiveness as
head & indecisiveness on basic legal questions. Affirmative. Once employed, Garado was never assigned to any other
A wide latitude of discretion is given an employer in terminating the client of Skillpower. In fact, although under the agreement, Skillpower was
employment of managerial employees on the ground of breach of trust supposed to provide only temporary services, Skilipower actually supplied
and confidence. In order to constitute just cause for dismissal, the act Fuji Xerox the labor which the latter needed for its Xerox Copier Project for
complained of must be related to the performance of the duties of the 7 years, from ’77-84.
employee such as would show him to be thereby unfit to continue working Garado signed a contract entitled as Appointment as Contract Worker,
for the employer. stating that his status was that of a contract worker for a definite period
Here, the grievances of the lawyers, in main, refer to what are perceived from 1 Jan ’83 to 30 Jun ’83. As such, his employment was considered
to be certain objectionable character traits of Sadac. Although petitioners temporary, to terminate automatically 6 months after. Garado was made
have charged Sadac with allegedly mishandling two cases in his long to understand that he was an employee of Skillpower, and not of the client
service with the bank, it is quite apparent that Sadac would not have been to which he was assigned. Therefore, the termination of the contract or
asked to resign had it not been for the letter-complaint of his associates in any renewal/extension thereof did not entitle him to become an employee
the Legal Department. Confident that no employer-employee existed of the client and the latter was not under any obligation to appoint him as
between the bank and Sadac, petitioners have put aside the procedural such, notwithstanding the total duration of the contract or any extension
requirements for terminating ones employment – notice apprising him of or renewal thereof. However, this is nothing but a crude attempt to
particular acts/omissions for which dismissal is sought, & another notice circumvent the law and undermine the security of tenure of private
informing him of employer’s decision to dismiss him. respondent by employing workers under six-month contracts which are
Failure to comply with these requirements taints the dismissal with later extended indefinitely through renewals.
illegality. This procedure is mandatory, any judgment reached by To uphold the contractual arrangement between the bank and CESI
management without that compliance can be considered void and would in effect be to permit employers to avoid the necessity of hiring
inexistent. While it is true that the essence of due process is simply an regular or permanent employees and to enable them to keep their
opportunity to be heard or, as applied in administrative proceedings, an employees indefinitely on a temporary or casual status. (See: Art. 106, LC)
opportunity to explain one's side, meetings in the nature of consultation As to contention that the service provided by Skillpower is not directly
and conferences such as the case here, however, may not be valid related nor necessary to the business of selling & leasing copier
substitutes for the proper observance of notice and hearing. machines of Fuji: untenable. the Xerox Copier Project of petitioners
As to moral damages: petitioners have not been motivated by malice or promotes goodwill for the company. It may not generate income for the
bad faith nor have they acted in wanton, oppressive or malevolent manner company but there are activities which a company may find necessary to
such as to warrant a judgment against them for moral and exemplary engage in because they ultimately redound to its benefit. Operating the
damages. It follows, then, that the individual petitioners may not be held company’s copiers at its branches advertises the quality of their products
solidarily liable with the bank. A corporation is a juridical entity with legal and promotes the company’s reputation and public image. It also
personality separate and distinct from those acting for and in its behalf advertises the utility and convenience of having a copier machine. It is
and, in general, from the people comprising it. The rule is that obligations noteworthy that while not operated for profit the copying service is not
incurred by the corporation, acting through its directors, officers and intended either to be promotional, as, indeed, Fuji charged a fee for the
employees, are its sole liabilities. It was not shown that Bank has had a copies made. Wrong to say that if a task is not directly related to the
direct hand in the dismissal of Sadac. But reinstatement is no longer employers business, or it falls under what may be considered
possible. housekeeping activities, the one performing the task is a job contractor.
Wherefore, entitled to backwages from termination of employment until The determination of the existence of an employer-employee relationship
turning 60 yrs of age, retirement benefits, + P5k. is defined by law according to the facts of each case, regardless of the
nature of the activities involved.
Phil. Fuji vs. NLRC (1996) As to contention that Fuji never exercised control over the conduct of
Garado: this claim was belied by two letters by Atty. Luis to Nick Macaraig.
ISSUE: WON an employer-employee relationship exists between Fuji Xerox Letters reveal the role which Fuji Xerox played in the dismissal of Garado.
& Garado They dispel any doubt that Fuji Xerox exercised disciplinary authority over
Garado and that Skillpower issued the order of dismissal merely in
6 May ’77: Fuji Xerox entered into an agreement under which obedience to the decision of Fuji.
Skillpower, Inc. supplied workers to operate copier machines of Fuji Xerox As to contention that Skillpower is a highly-capitalized business
as part of the latter’s Xerox Copier Project in its sales offices. Pedro venture, registered as an independent employer: the service being
Garado was assigned as key operator at Fuji Xerox’s Buendia Branch in rendered by Garado was not a specific or special skill that Skillpower. was
Feb ’80. in the business of providing. Although in the Neri case the telex machine
Feb ’83: Garado went on leave & his place was taken over by a operated by the employee belonged to the employer, the service was
substitute. Upon his return in March, he discovered there was spoilage of deemed permissible because it was specific and technical. This cannot be
over 600 copies. Afraid he might be blamed, he tried to talk to a service said of the service rendered by Garado. (Cited: Bk III, Rule VIII, Sec. 8, IRR
& Art. 106 LC) The typewriters and vehicles bear no direct relationship to
the job for which Skillpower contracted its service of operating copier
 Labor Standards Case Digest
machines and offering copying services to the public. The fact is management-union matters, employee benefits and the like.
that Skillpower did not have copying machines of its own. What it did was Bustamante failed to rebut these.
simply to supply manpower to Fuji Xerox. One who does not have an As to territorial assignments given to sales agents, cannot be held as
independent business for undertaking the job contracted for is just an indicative of the exercise of control over an employee. First of all, the place
agent of the employer. of work in the business of soliciting insurance does not figure prominently
As to the agreement between Fuji & Skillpower that Skillpower is an in the equation. And more significantly, Bustamante failed to rebut
independent contractor: The nature of ones business is not determined by AFPMBAI's allegation that it had never issued him any territorial
self-serving appellations one attaches thereto but by the tests provided by assignment at all. Court cannot draw the same inference from this feature.
statute and prevailing case law. Skilipower is, therefore, a labor-only Again, the significant factor in determining the relationship of the
contractor and Garado is not its employee. No grave abuse of discretion parties is the presence or absence of supervisory authority to control the
can thus be imputed to the NLRC for declaring Fuji Xerox guilty of illegal method and the details of performance of the service being rendered, and
dismissal of Garado. the degree to which the principal may intervene to exercise such control.
The presence of such power of control is indicative of an employment
AFP vs. NLRC (1997) relationship, while absence thereof is indicative of independent
contractorship. In other words, the test to determine the existence of
ISSUE: WON an employer-employee relationship exists independent contractorship is whether one claiming to be an independent
contractor has contracted to do the work according to his own methods
Eutiquio Bustamante had been an insurance underwriter of AFP Mutual and without being subject to the control of the employer except only as to
Benefit Assoc. Inc. since ’75. The Sales Agent’s Agreement between them the result of the work. Not every form of control that a party reserves to
provided: sales agent shall be entitles to commission due for all premiums himself over the conduct of the other party in relation to the services being
actually due & received by AFMBAI, there shall be no employer-employee rendered may be accorded the effect of establishing an employer-
relationship between the parties & sales agent is an independent contractor, employee relationship.
among others. Bustamante is an independent contractor. He was free to sell insurance
5 Jul ’89: AFPMBAI dismissed Bustamante for misrepresentation & for at any time as he was not subject to definite hours or conditions of work
simultaneously selling insurance for another life insurance company in and in turn was compensated according to the result of his efforts. By the
violation of said agreement. nature of the business of soliciting insurance, agents are normally left free
At the time of dismissal, Bustamante was entitled to accrued to devise ways and means of persuading people to take out insurance.
commissions equivalent to 24 mos/Sales Agent Agreement & as stated in There is no prohibition for Bustamante to work for as long as he does not
account summary. Said summary showed that Bustamante had total violate the Insurance Code. He was free to solicit life insurance anywhere
commission receivable of P438,835, of which only P78,039.89 had been he wanted and he had free and unfettered time to pursue his business. He
paid to him. did not have to punch in and punch out the bundy clock as he was not
Bustamante wrote AFPMBAI, seeking release of his commission for said required to report to the office regularly. He was not covered by any
24 mos. AFPMBAI replied that he was entitled to only P75k-P100k. employee policies or regulations and not subject to the disciplinary action
Believing this, Bustamante signed a quitclaim in favor of AFPMBAI. of management on the basis of the Employee Code of Conduct. He had
Oct ’89: Bustamante was informed that his check was ready for release. complete control over his occupation. He was free to engage in other
In collecting his check, he discovered that his total commissions for 24 occupation or practice other profession for as long as he did not commit
months actually amounted to P354,796.09 from an account summary any violation of the ethical standards prescribed in the Sales Agent's
attached. However, Bustamante was paid only P35k. Agreement.
23 Nov ’89: Bustamante filed a complaint with Ofc of Insurance The line should be drawn between rules that merely serve as guidelines
Commissioner praying for the payment of correct amount of his towards the achievement of the mutually desired result without dictating
commission. He was advised that DOLE had jurisdiction. the means or methods to be employed in attaining it, and those that
26 Feb ’90: Bustamante filed complaint with DOLE, claiming control or fix the methodology and bind or restrict the party hired to the
commission for 2 yrs from termination of employment equivalent to 30% use of such means. The first, which aim only to promote the result, create
of premiums remitted during employment, P354k as commission earned, no employer-employee relationship unlike the second, which address both
etc. the result and the means used to achieve it. It is, therefore, usual and
AFMBAI’s arguments: there is no employer-employee relationship expected for an insurance company to promulgate a set of rules to guide
between them. its commission agents in selling its policies that they may not run afoul of
LA Decision: dismissal was just & valid. Claim for separation pay is the law and what it requires or prohibits.
denied. The proviso in the SAA assigning Bustamante to a specific area of As to issue of jurisdiction of NLRC & LA: Bustamante had never been
responsibility & production quota signals existence of employer-employee AFPMBAI’s employee, but only its commission agent. As an independent
relationship. Affirmed by NLRC. contractor, his claim for unpaid commission should have been litigated in
an ordinary civil action. The jurisdiction of LA & NLRC is set forth in Article
The existence of an employer-employee relationship is ultimately a 217 LC. Only to disputes arising out of or in connection with an employer-
question of fact and that the findings thereon by LA and NLRC shall be employee relationship.
accorded not only respect but even finality when supported by substantial
evidence. Determinative factor in such finality is the presence of FEATI vs. Bautista (1996)
substantial evidence to support said finding; otherwise, such cannot bind
this Court. ISSUE: WON an employer-employee relationship exists
Absence of control. The fact that Bustamante was required to solicit
business exclusively for AFPMBAI could hardly be considered as control in 14 Jan ’63: President of FEATI University Faculty Club PAFLU wrote a
labor jurisprudence. Insurance agents are barred from serving more than letter to Mrs. Victoria Araneta, President of Feati Uni, informing her of the
one insurance company, in order to protect the public and to enable organization of the Faculty Club into a registered labor union.
insurance companies to exercise exclusive supervision over their agents in The Faculty Club is composed of members who are professors and/or
their solicitation work. Thus, the exclusivity restriction clearly springs from instructors of the Uni.
a regulation issued by the Insurance Commission, and not from an 22 Jan ’63: President of Faculty Club sent another letter containing 26
intention by AFPMBAI to establish control over the method and manner by demands that have connection with the employment of the members of
which private respondent shall accomplish his work. This feature is not the Faculty Club by the Uni & requesting an answer within 10 days from
meant to change the nature of the relationship between the parties, nor receipt. President of Uni answered, requesting that she be given at least
does it necessarily imbue such relationship with the quality of control 30 days to study through the different phases of the demands.
envisioned by the law. Meanwhile, counsel for the Uni wrote a letter to the PFC demanding
The fact that Bustamante was bound by company policies, proof of its majority status & designation as a bargaining representative.
memo/circulars, rules and regulations issued from time to time is also not 1 Feb ’63: PFC again wrote the PU, rejecting request for extension of
indicative of control. Insurance solicitors are never affected or covered by time. On the same day, filed a notice of strike with BOL, alleging that Uni
the rules and regulations concerning employee conduct and penalties for refused to bargain collectively.
violations thereof, work standards, performance appraisals, merit 18 Feb ’63: Members of FC declared a strike & established picket lines
increases, promotions, absenteeism/attendance, leaves of absence, in the premises of the Uni, resulting in disruption of classes. Despite
 Labor Standards Case Digest
further efforts to effect settlement, no satisfactory agreement was In using the word "includes" and not "means", Congress did
arrived at. not intend to give a complete definition of "employer", but rather that such
21 Mar ’63: Pres. Of PH certified to CIR the dispute between the definition should be complementary to what is commonly understood as
management of Uni & FC pursuant to Sec 10, RA 875. employer. The statutory definition includes not only "a principal employer
In connection with the dispute between Uni & FC, various cases were but also a person acting in the interest of the employer", and secondly, the
filed with CIR. In a case, the Judge issued an Order, ordering the strikers Act itself specifically enumerates those who are not included in the term
to return immediately to work & the Uni to take them back. "employer", namely: (1) a labor organization (otherwise than when acting
Before the said order was issued, Uni had employed professors & as an employer), (2) anyone acting in the capacity of officer or agent of
instructors to take the places of those professors & instructors who had such labor organization (Sec. 2[c]), and (3) the Government and any
struck. FC filed with CIR a petition to declare in contempt of court, alleging political subdivision or instrumentality thereof insofar as the right to strike
that Uni refused to accept back to work the returning strikers. for the purpose of securing changes or modifications in the terms and
University’s contentions: FC has no right to unionize/organize as a conditions of employment is concerned. Among these statutory
labor union for collective bargaining purposes and to be certified as a exemptions, educational institutions are not included; hence, they can be
collective bargaining agent within the purview of the Industrial Peace Act, included in the term "employer." This Court, however, has ruled that those
and consequently it has no right to strike and picket on the ground of educational institutions that are not operated for profit are not within the
FEATI’s alleged refusal to bargain collectively where such duty does not purview of RA 875.
exist in law and is not enforceable against an educational institution. Also RA 875 does not give a comprehensive but only a complementary
alleged that RA 875 is not applicable to the University because it is an definition of the term “employer”. The lexical definition is "one who
educational institution and not an industrial establishment and hence not employs; one who uses; one who engages or keeps in service;" and "to
an "employer" in contemplation of said Act; and neither is RA 875 employ" is "to provide work and pay for; to engage one’s service; to hire.
applicable to the members of the Faculty Club because the latter are The Workmen’s Compensation Act defines employer as including "every
independent contractors and, therefore, not employees within the purview person or association of persons, incorporated or not, public or private,
of the said Act. and the legal representative of the deceased employer" and "includes the
owner or lessee of a factory or establishment or place of work or any other
Court has ruled that certain educational institutions and other juridical person who is virtually the owner or manager of the business carried on in
entities are beyond the purview of RA 875 in the sense that the Court of the establishment or place of work but who, for reason that there is an
Industrial Relations has no jurisdiction to take cognizance of charges of independent contractor in the same, or for any other reason, is not the
unfair labor practice filed against them, but it is nonetheless true that the direct employer of laborers employed there." The Minimum Wage Law
principal reason of this Court in ruling such is that those entities are not states that "employer includes any person acting directly or indirectly in
organized, maintained and operated for profit and do not declare the interest of the employer in relation to an employee and shall include
dividends to stockholders. the Government and the government corporations." The Social Security
University of San Agustin vs. CIR: USA is an educational institution Act defines employer as "any person, natural or juridical, domestic or
conducted and managed by a ‘religious non-stock corporation duly foreign, who carries in the Philippines any trade, business, industry,
organized and existing under the laws of the Philippines.’ It was organized undertaking, or activity of any kind and uses the services of another
not for profit or gain or division of the dividends among its stockholders, person who is under his orders as regards the employment, except the
but solely for religious and educational purposes. The main issue involved Government and any of its political subdivisions, branches or
in the present case is WON a charitable institution or one organized not instrumentalities, including corporations owned or controlled by the
for profit but for more elevated purposes, charitable, humanitarian, etc., Government."
like the BSP, be included in the definition of "employer" contained in RA Under none of the above definitions may the University be excluded,
875, and whether the employees of said institution fall under the definition especially so if it is considered that every professor, instructor or teacher
of "employee" also contained in the same RA. If they are included, then in the teaching staff of the University, as per allegation of the University
any act which may be considered unfair labor practice, within the meaning itself, has a contract with the latter for teaching services, albeit for one
of said Republic Act, would come under the jurisdiction of the Court of semester only. The University engaged the services of the professors,
Industrial Relations; but if they do not fall within the scope of said provided them work, and paid them compensation or salary for their
Republic Act, particularly, its definitions of employer and employee, then services. Even if the University may be considered as a lessee of services
the Industrial Court would have no jurisdiction at all. CA 103, creating CIR under a contract between it and the members of its Faculty, still it is
down through the Eight Hour Labor Law, was intended by the Legislature included in the term "employer." Running through the word "employ" is
to apply only to industrial employment and to govern the relations the thought that there has been an agreement on the part of one person
between employers engaged in industry and occupations for purposes of to perform a certain service in return for compensation to be paid by an
profit and gain, and their industrial employees, but not to organizations employer.
and entities which are organized, operated and maintained not for profit As to contention that it is not an industrial establishment: Sec. 2(c) of
or gain, but for elevated and lofty purposes, such as, charity, social service, RA 875 does not state that the employers included in the definition of the
education and instruction, hospital and medical service, the term "employer" are only and exclusively "industrial establishments". On
encouragement and promotion of character, patriotism and kindred the contrary, the term "employer" encompasses all employers except
virtues in youth of the nation, etc. those specifically excluded by the Act. In the second place, even the Act
Same doctrine was affirmed in UST vs. Hon. Villanueva, La Consolacion itself does not refer exclusively to industrial establishment and does not
Colleged vs. CIR. However, in FEU vs. CIR, he Court upheld the finding that confine its application thereto.
FEU, also an educational institution, was guilty of unfair labor practices. It cannot be denied that running a university engages time and
This was because FEU made profits from SY ’52-53 to ’58-59. attention; that it is an occupation or a business from which the one
The Industrial Peace Act would apply also to non-profit organizations or engaged in it may derive profit or gain. The University is not an industrial
entities, the only exception being the Govt, including any political establishment in the sense that an industrial establishment is one that is
subdivision or instrumentality thereof, insofar as govt functions are engaged in manufacture or trade where raw materials are changed or
concerned. Hence, IPA is applicable to any organization or entity — fashioned into finished products for use. But for the purposes of the
whatever may its purpose when it was created — that is operated for profit Industrial Peace Act the University is an industrial establishment because
or gain. it is operated for profit and it employs persons who work to earn a living.
Does the University operate as an educational institution for profit? As to contention that even if it were an employer, still there would be
Does it declare dividends for its stockholders? If it does not, it must be no employer-employee relationship because the members of FC are not
declared beyond the purview of RA 875; but if it does, RA 875 must apply employees within purview of RA 875: Sec. 2(d) of RA 875 provide that,
to it. “employee’ shall include any employee end shall not be limited to the
FEATI itself admits that it has declared dividends. It realizes profits & employee of a particular employer unless the act explicitly states otherwise
parts of such earning is distributed as dividends to private stockholders or and shall include any individual whose work has ceased as a consequence of,
individuals. Hence, RA 875 is applicable. or in connection with, any current labor dispute or because of any unfair labor
As to contention that it is not an employer within contemplation of RA practice and who has not obtained any other substantially equivalent and
875 because it is not an industrial establishment: no merit. Sec. 2 OF ra regular employment."
875 provides, “employer includes any person acting in the interest of an "Teachers" are not to be included among those who perform "physical
employer, directly or indirectly, but shall not include any labor organization labor" (teachers are not ‘workers’), but it does not mean that they are not
(otherwise than when acting as an employer) or any one acting in the employees. University instructors as employees and declared RA 875
capacity or agent of such labor organization.” applicable to them in their employment relations with their school. The
 Labor Standards Case Digest
professors and/or instructors of the University neither ceased to the owner/operator a fee commonly called “boundary” for the
be employees when they struck, for Sec. 2 of RA 875 includes among use of the unit.
employees any individual whose work has ceased as a consequence of, or Applying four-fold test, control is the most important. Under the control
in connection with a current labor dispute. Striking employees maintain test, an employer-employee relationship exists if the "employer" has
their status as employees of the employer. reserved the right to control the "employee" not only as to the result of the
As to contention that the professors & instructors are independent work done but also as to the means and methods by which the same is to
contractors because FEATI does not exercise control over their work: a be accomplished. Otherwise, no such relationship exists.
University controls the work of the members of its faculty; that a university Affirmative. The relationship between jeepney owners/operators on one
prescribes the courses or subjects that professors teach, and when and hand and jeepney drivers on the other under the boundary system is that
where to teach; that the professors’ work is characterized by regularity of employer-employee and not of lessor-lessee. In the lease of chattels, the
and continuity for a fixed duration; that professors are compensated for lessor loses complete control over the chattel leased although the lessee
their services by wages and salaries, rather than by profits; that the cannot be reckless in the use thereof, otherwise he would be responsible
professors and/or instructors cannot substitute others to do their work for the damages to the lessor. In the case of jeepney owners/operators
without the consent of the university; and that the professors can be laid and jeepney drivers, the former exercise supervision and control over the
off if their work is found not satisfactory. All these indicate that the latter. The management of the business is in the owner's hands. The owner
university has control over their work; and professors are, therefore, as holder of the certificate of public convenience must see to it that the
employees and not independent contractors. driver follows the route prescribed by the franchising authority and the
Independent contractors can employ others to work and accomplish rules promulgated as regards its operation. Now, the fact that the drivers
contemplated result without consent of contractee, while ‘employee’ do not receive fixed wages but get only that in excess of the so-called
cannot substitute another in his place without consent of his employer. "boundary" they pay to the owner/operator is not sufficient to withdraw
Even if university professors are considered independent contractors, the relationship between them from that of employer and employee.
still they would be covered by RA 875. The Act did not exclude Hence, petitioners are undoubtedly employees of private respondent
“independent contractors” from the orbit of “employees”. because as taxi drivers they perform activities which are usually necessary
Since members of the FC are employees, it follows that they have a or desirable in the usual business or trade of their employer.
right to unionize in accordance with Sec. 3 of Magna Carta of Labor. This Again, termination of employment must be effected in accordance with
right is also guaranteed by the Constitution. law. Petitioners, being employees of Goodman, can be dismissed only for
As to contention that members of the FC cannot unionize & FC cannot just and authorized cause, and after affording them notice and hearing
exist as a valid labor org: record shows that the Faculty Club is a duly prior to termination. In the instant case, Goodman had no valid cause to
registered labor organization, and this fact is admitted by counsel for the terminate the employment of petitioners. Neither were there 2 written
University. notices sent by Goodman informing each of the petitioners that they had
As to contention that taking in of replacements was valid & return-to- been dismissed from work.
work order was an impairment of its contract with the replacements: The Under the law, an employee who is unjustly dismissed from work shall
faculty members, by striking, have not abandoned their employment but, be entitled to reinstatement without loss of seniority rights and other
rather, they have only ceased from their labor. They have not lost their privileges and to his full backwages, inclusive of allowances, and to his
right to go back to their positions, because the declaration of a strike is not other benefits or their monetary equivalent computed from the time his
a renunciation of their employment and their employee relationship with compensation was withheld from him up to the time of his actual
the University. The employment of replacement was not authorized by CIR. reinstatement. Thus, employees illegally dismissed prior to March 21,
At most, that was a temporary expedient resorted to by the University, 1989, are entitled to backwages up to 3 years without deduction or
which was subject to the power of the CIR to allow to continue or not. qualification, while those illegally dismissed after that date are granted full
The return-to-work order cannot be considered as an impairment of the backwages inclusive of allowances and other benefits or their monetary
contract entered into by petitioner with the replacements. Besides, labor equivalent from the time their actual compensation was withheld from
contracts must yield to the common good and such contracts are subject them up to the time of their actual reinstatement. Considering that
to the special laws on labor unions, collective bargaining, strikes and petitioners were terminated from work on August 1, 1991, they are
similar subjects. entitled to full backwages on the basis of their last daily earnings.
The University, in the case before Us, does not claim that it no longer As to issue of deduction for washing fees: it is not illegal. After a tour of
needs the services of professors and/or instructors; neither does it claim duty, it is incumbent upon the driver to restore the unit he has driven to
that it was imperative for it to lay off the striking professors and instructors the same clean condition when he took it out. Car washing after a tour of
because of impending bankruptcy. On the contrary, it was imperative for duty is indeed a practice in the taxi industry and is in fact dictated by fair
the University to hire replacements for the strikers. When the professors play. Hence, the drivers are not entitled to reimbursement of washing
and instructors struck on 18 Feb ’63, they continued to be employees of charges.
the University for the purposes of the labor controversy notwithstanding
the subsequent termination of their teaching contracts. Makati vs. NLRC (1989)

Jardin vs. NLRC (2000) ISSUE: WON an employer-employee relationship exists

ISSUE: WON an employer-employee relationship exists Private respondents have been working for Makati Haberdashery, Inc. as
tailors, seamstresses, sewers, basters, & ‘plantsadoras’. They are paid on a
Petitioners were drivers of Philjama Intl. Inc., a domestic corporation piece-rate basis except Maria Angeles & Leonila Serafine who are paid on
engaged in the operation of “Goodman Taxi.” They used to drive a monthly basis. In addition to this, they are given daily allowance of P3
Goodman’s taxicabs every other day on a 24-hr work schedule under the provided they report for work before 9:30am everyday.
boundary system. Under this arrangement, petitioners earned an average They were required to work from/before 9:20am up to 6/7pm from
of P400 daily. Nevertheless, Goodman admittedly regularly deducts from Monday TO Saturday & during peak periods even on Sundays & holidays.
petitioners’ daily earnings the amount of P30 supposedly for washing of 20 Jul ’84: Sandigan ng Manggagawang Pilipino, a labor organization of
taxi units. Petitioners decided to form a labor union to protect their rights respondent workers, filed a complaint for underpayment of the basic
& interests. wage, underpayment of living allowance, nonpayment of overtime work,
Upon learning of this plan, Goodman refused to let petitioners drive nonpayment of holiday pay, nonpayment of service incentive pay, 13th
their taxicabs when they reported for work on 6 Aug ’91. Petitioners month pay & benefits provided under Wage Orders Nos. 1-5.
suspected that they were singled out because they were the leaders & During pendency, Dioscoro Pelobello left with Salvador Rivera, a
active members of the union. Aggrieved, they filed a complaint for unfair salesman of Haberdashery, an open packaged which was discovered to
labor practice, illegal dismissal & illegal deduction of washing fees. contain a “jusi” barong tagalog. When confronted, Pelobello replied that
LA dismissed. NLRC reversed, ruling that petitioners are employees of the same was ordered by Casimiro Zapata for his customer. Zapata
Goodman & their dismissal must be for just cause & after due process. allegedly admitted that he copied the design of Haberdashery. But in the
But upon motion for reconsideration, reversed itself. afternoon, when questioned again, Pelobello & Zapata denied ownership.
Memorandum was issued to each of them to explain why no action
Admitted is the fact that complainants are taxi drivers purely on the should be taken against them. But they allegedly did not submit their
boundary system. Under this system, the driver takes out his unit & pays explanation & did not report for work. Hence, they were dismissed by
 Labor Standards Case Digest
Haberdashery on 4 Feb ’85. They countered by filing a complaint refund of illegal deductions, payment of wage differentials,
for illegal dismissal. various pecuniary benefits provided by laws, damages, legal interest,
reinstatement and attorneys fees, against Corfarm.
Affirmative. The important requisite of control is present. When a Laguesma’s decision: dismissed the petition for certification election for
customer enters into a contract with the haberdashery or its proprietor, lack of employer-employee relationship.
the latter directs an employee who may be a tailor, pattern maker, sewer Corfarm’s contentions: it had no power of control. Petitioners were
or "plantsadora" to take the customer's measurements, and to sew the street-hired workers engaged from time to time to do loading & unloading
pants, coat or shirt as specified by the customer. Supervision is actively work. There was no superintendent-in-charge to give orders & there were
manifested in all these aspects — the manner and quality of cutting, no gate passes issued, nor tools, equipment & paraphernalia issued by
sewing and ironing. Corfarm for loading/unloading.
Further, the presence of control is immediately evident in this
memorandum issued by Asst. Manager Inocencio dated 30 May ’81: new Affirmative. The existence of an independent contractor relationship is
procedures shall be followed – follow instruction & orders from generally established by the following criteria. The contractor is carrying
Valderama; before accepting job orders, tailors must check the materials, on an independent business; the nature and extent of the work; the skill
job orders, due dates & other things; among others. required; the term and duration of the relationship; the right to assign the
From this memorandum alone, it is evident that Haberdashery has performance of a specified piece of work; the control and supervision over
reserved the right to control its employees not only as to the result but the workers; payment of the contractors workers; the control and the
also the means and methods by which the same are to be accomplished. supervision over the workers; the control of the premises; the duty to
That private respondents are regular employees is further proven by the supply the premises, tools, appliances, materials and laborers, and the
fact that they have to report for work regularly from 9:30 am to 6/7 p.m. mode, manner and terms of payment. None of the above criteria exists
and are paid an additional allowance of P3 daily if they report for work here.
before 9:30 a.m. and which is forfeited when they arrive at or after 9:30 The absence of a written contract which specifies the performance of a
a.m. specified piece of work, the nature and extent of the work and the term
Since they are regular employees, they are not independent contractors. and duration of the relationship between petitioner and Corfarm belies the
Private respondents did not exercise independence in their own methods, latter’s allegation that the former is indeed and independent contractor.
but on the contrary were subject to the control of petitioners from the Also, Corfarm failed to show by clear and convincing proof that
beginning of their tasks to their completion. Unlike independent respondent has the substantial capital or investment to qualify as an
contractors who generally rely on their own resources, the equipment, independent contractor under the law. The premises, tools, equipment and
tools, accessories, and paraphernalia used by private respondents are paraphernalia are all supplied by Corfarm. It is only the manpower or
supplied and owned by petitioners. Private respondents are totally labor force which the alleged contractor supplies, suggesting the existence
dependent on Haberdashery. of a labor only contracting scheme which is prohibited by law. Further, if
As to issue of entitlement to Minimum Wage: affirmative. All employees petitioners are indeed independent contractors, they should have offered
paid by the result shall receive not less than the applicable new minimum their services to other companies & not to work exclusively for Corfarm.
wage rates for 8 hours work a day, except where a payment by result rate However, Laguesma inexplicably reversed his previous ruling of
has been established by the Secretary of Labor. existence of employer-employee relationship. Why the sudden change of
LA decided that “for lack of sufficient evidence to support the claims of mind? No additional pieces of evidence were adduced and no existing
the complainants for alleged violation of the minimum wage, their claims ones were identified by Laguesma to support such strange reversal. The
for underpayment re violation of the Minimum Wage Law under Wage unblemished fact is that Corfarm was the recruiter and employer of
Orders Nos. 1-5 must perforce fall.” Records show that private petitioners members.
respondents did not appeal the above ruling of the Labor Arbiter to the The applicable law in independent contractorship is Art. 106, LC.
NLRC; neither did they file any petition raising that issue in the Supreme Undeniable that petitioners members worked as cargadores for
Court. Accordingly, insofar as this case is concerned, that issue has been Corfarm. They loaded, unloaded and piled sacks of palay from the
laid to rest. But they can claim cost of living allowance & 13th month pay. warehouses to the cargo trucks and from the cargo trucks to the buyers.
However, they are not entitled to service incentive leave pay because as This work is directly related, necessary and vital to the operations of
piece-rate workers being paid at a fixed amount for performing work Corfarm. Moreover, Corfarm did not even allege, much less prove, that
irrespective of time consumed in the performance thereof, they fall under petitioners members have substantial capital or investment in the form of
one of the exceptions stated in Sec. 1(d), Rule V, IRR, Book III, LC. They tools, equipment, machineries, and work premises, among others.
also cannot claim holiday pay. Furthermore, Corfarm did not contradict petitioners allegation that it paid
As to issue of illegal dismissal: the copied barong tagalog, was in the wages directly to these workers without the intervention of any third-party
possession of Pelobello who pointed to Zapata as the owner. When independent contractor.
required by their employer to explain in a memorandum issued to each of Applying Art. 280 LC, CPWU members were regular employees of
them, they not only failed to do so but instead went on AWOL, waited for Corfarm. Their tasks were essential in the usual business of Corfarm.
the period to explain to expire and for petitioner to dismiss them. As to alleged admission of lack of employer-employee relationship:
Assuming that such acts do not constitute abandonment of their jobs as alleged admissions cannot be taken against petitioners’ cause. First, the
insisted by private respondents, their blatant disregard of their employer's contents of the admissions are highly suspect. The records reveal that the
memorandum is undoubtedly an open defiance to the lawful orders of the admissions of Juanito Costales, Jr., Carlito Costales and Juanito
latter, a justifiable ground for termination of employment by the employer. Medenilla were in the form of affidavits of adhesion which were identical in
The right of an employer to dismiss an employee whose continuance in content, differentiated only by the typewritten names and the signatures of
the service is inimical to the employer's interest. Hence, no illegal the workers. Second, only three of the workers executed such affidavits.
dismissal. Such pro forma and identical affidavits do not prove lack of employer-
employee relationship against all members of petitioner. Third, the
Caurdanetaan vs. Laguesma (1998) employer-employee relationship is clearly proven by substantial evidence.
Corfarm sorely failed to show that petitioners members were independent
ISSUE: WON an employer-employee relationship exists contractors. We rule that no particular form of proof is required to prove
the existence of an employer-employee relationship. Any competent and
Caurdanetaan Piece Workers Union has 92 members who worked as relevant evidence may show the relationship. Fourth, and in any event, the
cargador at the warehouse & ricemills of Corfarm Grains. As cargadores, alleged admissions of the three workers that they worked with other rice
they loaded, unloaded and piled sacks of palay from the warehouse to the mills do not work against them. Assuming arguendo that they did work
cargo trucks and those brought by cargo trucks for delivery to different with other rice mills, this was required by the imperative of meeting their
places. They were paid by Corfarm on a piece rate basis. When Corfarm basic needs.
denied some benefits to these cargadores, the latter organized Since employee-employer relationship exists, the holding of a
Caurdanetaan union. certification election necessarily follows. There should be no unnecessary
Upon learning of its formation, Corfarm barred its members from obstacle to the holding of such election, for it is a statutory policy that
working with them and replaced them with non-members of the union should not be circumvented.
sometime in the middle of ‘92. As to illegal dismissal, alleged order of remand will only prolong the
9 Jul ’92: Caurdanetaan filed a petition for certification election. While agony of 92 union members: LA rendered decision on the case in favor of
pending, also filed a complaint for illegal dismissal, unfair labor practice, petitioners based on position paper filed by the latter & the available
 Labor Standards Case Digest
records of the case. It was alleged by Corfarm that the decision Affirmative. The conduct of the fishing operations was
should be set aside for lack of procedural due process. undisputably shown by the testimony of Alipio Ruga, the patron/pilot of
However, Corfarm was not denied procedural due process, and the 7/B Sandyman II, to be under the control and supervision of De Guzman’s
labor arbiters decision was based on competent, credible and substantial operations manager. Matters dealing on the fixing of the schedule of the
evidence. Corfarm had been duly informed of the pendency of the illegal fishing trip and the time to return to the fishing port were shown to be the
dismissal case, but it chose not to participate therein without any known prerogative of De Guzman. While performing the fishing operations,
justifiable cause. The labor arbiter sent notices of hearing or arbitration to petitioners received instructions via a single-side band radio from De
the parties, requiring them to submit position papers. Corfarm did not Guzman’s operations manager who called the patron/pilot in the morning.
attend the hearing. Corfarm failed to file its position paper. Clearly, They are told to report their activities, their position, and the number of
Corfarm was given an opportunity to present its evidence, but it failed or tubes of fish-catch in one day. Clearly thus, the conduct of the fishing
refused to avail itself of this opportunity without any legal reason. Due operations was monitored by De Guzman thru patron/pilot of 7/B
process is not violated where a person is given the opportunity to be Sandyman II who is responsible for disseminating the instructions to the
heard, but chooses not to give his side of the case. crew members.
The finding that Juanito Costales, Jr. was an employee of Corfarm was Conclusion that there had been no change in the situation of the parties
allegedly inconsistent with his admission that he was the owner of since ’68 when De Guzman obtained favorable judgment in Case 708,
Carcado Contracting Services. As earlier observed, the inconsistency is exempting it from compulsory coverage of SSS Law is not supported by
irrelevant. Juan Costales, Jr. was an employee of Corfarm. Owning this evidence on record.
alleged outfit is not inconsistent with such employment. The NLRC also Herein petitioners were directly hired by De Guzman Fishing, through
questioned the amount of the employees compensation. In one instance, its general manager, Arsenio de Guzman, and its operations manager,
the workers stated that they were receiving P45/days work of eight hours. Conrado de Guzman and have been under the employ of De Guzman
In another, they claimed that they were paid P0.12 per sack or cavan. Fishing for a period of 8-15 years in various capacities, except for Laurente
alleged inconsistencies are more apparent than real. Records reveal that Bautu who was hired on August 3, 1983 as assistant engineer.
the P57 was the promised compensation; however, there was an While tenure or length of employment is not considered as the test of
unauthorized deduction of P12; thus, the amount of P45/day. The claim employment, nevertheless the hiring of petitioners to perform work which
of P0.12 per sack or cavan is the basic computation of how workers or is necessary or desirable in the usual business or trade of private
haulers earn their wage for the day. respondent for a period of 8-15 years since 1968 qualify them as regular
There is also unfair labor practice. Instead of sitting down with the employees within the meaning of Art. 281 of LC as they were indeed
individual complainants or the union officers to discuss their demands, engaged to perform activities usually necessary or desirable in the usual
Corfarm resorted to mass lay-off of all the members of the union and fishing business or occupation of De Guzman Fishing.
replaced them with outsiders. (See: Art. 248 LC) Also, petitioners received compensation on a percentage commission
The thirteenth month pay awarded should be computed for each year based on the gross sale of the fish-catch i.e. 13% of the proceeds of the
of service from the time each employee was hired up to the date of his sale if the total proceeds exceeded the cost of the crude oil consumed
actual reinstatement. The same computation applies to the award of the during the fishing trip, otherwise only 10% of the proceeds of the sale.
service incentive leave and underpaid wages. Each employee is to be paid Such compensation falls within the scope and meaning of the term "wage"
the remaining underpaid wages from the date of his or her hiring in as defined under Art. 97(f) of LC.
accordance with the then prevailing wage legislations. Likewise, a refund of Further, the fact that on mere suspicion based on the reports that
P12 shall be computed for each day of service of each employee, to be petitioners allegedly sold their fish-catch at midsea without the knowledge
reckoned from the date such employee was hired. The damages awarded and consent of private respondent, petitioners were unjustifiably not
should be sustained because the employer acted in bad faith. allowed to board the vessel on 11 Sep ‘83 to resume their activitieswithout
giving them the opportunity to air their side on the accusation against
Ruga vs. NLRC (1990) them unmistakably reveals the disciplinary power exercised by De
Guzman over them and the corresponding sanction imposed in case of
ISSUE: WON an employer-employee relationship exists violation of any of its rules and regulations. The virtual dismissal of
petitioners from their employment was characterized by undue haste
Petitioners were the fishermen-crew members of 7/B Sandyman II, one when less extreme measures consistent with the requirements of due
of the several fishin vessels owned & operated by De Guzman Fishing process should have been first exhausted. In that sense, the dismissal of
Enterprises. Petitioners rendered service aboard said vessel in various petitioners was tainted with illegality.
capacities: Alipio Ruga & Jose Parma as patron/pilot, Jaime Barbin as Even on the assumption that they sold the fish-catch at midsea, act of
master fisherman, Nicanor Francisco as second fisherman, Philip virtual dismissal contradicts theory of “joint fishing venture.” A joint
Cervantes & Eleuterio Barbin as fishermen. venture, including partnership, presupposes generally a parity of
For services rendered in the conduct of De Guzman’s regular business standing between the joint co-venturers or partners, in which each party
of “trawl” fishing, petitioners were paid on percenatage commission basis has an equal proprietary interest in the capital or property contributed and
in cash by Mrs. Pilaw de Guzman, cashier of De Guzman. As agreed upon, where each party exercises equal lights in the conduct of the business. It
they received 13% of the proceeds of the sale of the fish-catch if the total would be inconsistent with the principle of parity of standing between the
proceeds exceeded the cost of crude oil consumed during the fishing trip; joint co-venturers as regards the conduct of business, if De Guzman would
otherwise, they received 10% of the toal proceeds of the sale. outrightly exclude petitioners from the conduct of the business without
The patron/pilot, chief engineer & master fishermen received minimum first resorting to other measures consistent with the nature of a joint
income of P350/wk while assistant engineer, 2nd fisherman, & fisherman- venture undertaking. Instead of arbitrary unilateral action, De Guzman
winchman received a minimum income of P206/wk. should have discussed with an open mind the advantages and
11 Sep ’83: upon arrival at the port, petitioners were told by Jorge de disadvantages of petitioners' action with its joint co-venturers if indeed
Guzman to proceed to the police station for investigation on the report there is a "joint fishing venture" between them.
that they sold some of their fish-catch at midsea to the prejudice of De Wherefore, reinstatement to former positions with 3-yr backwages &
Guzman. However, petitioners denied this charge & alleged that it was a other monetary benefits.
countermove to their having formed a labor union & becoming members
of Defender of Industrial Agricultural Labor Organizations & General Agro vs. NLRC (1989)
Workers Union.
During investigation, no witnesses were presented. Notwithstanding, De ISSUE: WON an employer-employee relationship exists between a security
Guzman refused to allow petitioners to return to the fishing vessel to agency & its security guards
resume their work on the same day.
22 Sep: petitioners individually filed their complaints for illegal Private respondents (46) worked as security guards and/or janitors
dismissal & non-payment of 13th moth pay, emergency cost of living under individual contracts with Agro Commercial Security Services
allowance & service incentive pay. Agency. They were assigned to firms & offices where Agro had contracts
24 Oct ’83: De Guzman submitted position paper, denying employer- providing security & janitorial services. Their individual contracts provides:
employee relationship. Rather, they were engaged in joint venture. security guard, agrees to temporary suspension of his employment completely
NLRC Decision: there was joint venture arrangement. to include such changes in his employment status with the Agency, in case of
termination of contract between the Agency and its Client, or reduction in
force of same.
 Labor Standards Case Digest
Early ’86: Agro’s service contracts with various corporations & returning the equipment to Viva Films warehouse, assisting in the
government agencies to which private respondents were previously fixing of the lighting system, and performing other tasks that the
assigned had been terminated generally due to the sequestration of said cameraman and/or director may assign.
offices by the PCGG. Accordingly, many of private respondents were May ’92: Maraguinot & Enero sought the assistance of their supervisor,
placed on “floating status” on 16 Sep ’86. “Floating status" means an Mrs. Alejandria Cesario, to facilitate their request that Viva Films adjust
indefinite period of time when private respondents do not receive any their salary in accordance with the minimum wage law.
salary or financial benefit provided by law. A number of them later Jun ’92: Mrs. Cesario informed them that Mr. Vic del Rosario would
obtained employment in other security agencies. agree to increase their salary only if they signed a blank employment
25 Jul ’86: on account of uncertainty of their employment, private contract. But they refused.
respondents filed complaint for illegal dismissal. They sought payment of Jun ’92: Viva Films forced Enero to go on leave but when he reported
their respective separation pay, 13th month pay for ’86 & service incentive back to work, he was not taken back.
leave pay. Meanwhile, Maraguinot was dropped from the company payroll from 8-
21 Jun ’92 but was returned on 22 Jun. Again, he was asked to sign a blak
Affirmative. Private respondents are regular employees of Agro. Their employment contract but when he refused, Viva Films terminated his
individual length of service ranges from 4 to more than 10 years. They services on 20 Jul ’92. They sued for illegal dismissal.
worked as security guards/janitors. Their employment contracts provide, Viva Films’ contentions: they contract persons called producers -- also
among others – security guard upon acceptance of his position or referred to as associate producers -- to produce or make movies for Viva
undertaking for employment, shall observe, follow and obey all rules, Films. Also, Maraguinot & Enero are project employees of the associate
regulations, code of conduct required by the agency; security guard upon producers who, in turn, act as independent contractors. As such, there is
acceptance of his position or undertaking for employment, shall observe, no employer-employee relationship. Further contend that it was the
follow and obey all rules, regulations, code of conduct required by the associate producer of film Mahirap Maging Pogi who hired Maraguinot.
agency; security guard, agrees to temporary suspension of his Movie was shot from 2 Jul – 22 Jul & only then that Maraguinot was
employment completely to include such changes; agency may terminate relased upon payment of his last salary. As to Enero, he was hired for
or dismiss the security guard. movie Sigaw ng Puso (retitled Narito ang Puso). He went on vacation & by
It was Agro who determined how much private respondents received as the time he reported for work, shooting had already been completed.
their monthly salary, overtime/night differential pay, mid-year and NLRC Decision: reversed LA. They are project employees.
Christmas bonus and 13th month pay, uniforms and meal allowances and
other benefits mandated by law. Private respondents were reported by the Affirmative. Contracting out of labor is allowed only in case of job
Agro as its employees for purposes of social security coverage. Agro contracting (Sec. 8, Rule VIII, Book III, IRR).
remitted their withholding taxes to BIR and made monthly contributions to Assuming that the associate producers are job contractors, they must
the Pag-ibig fund for their benefit. It was Agro who determined and then be engaged in the business of making motion pictures. As such, and
decided on the assignments, promotions and salary increases of private to be a job contractor under the preceding description, associate
respondents, their working hours, the firearms to be issued to them and producers must have tools, equipment, machinery, work premises, and
janitorial devices and tools to be used. Likewise, it was Agro who imposed other materials necessary to make motion pictures. However, the associate
the appropriate disciplinary measures on private respondents by way of producers here have none of these.
reprimand, suspension and dismissal. Viva Films’ evidence reveals that the movie-making equipment are
Elements of existence of employer-employee relationship: 1) the supplied to the producers and owned by Viva. These include generators,
selection and engagement of the employees; 2) payment of wages; 3) the cables and wooden platforms, cameras and shooting equipment; in fact,
power of dismissal and 4) the power to control the employees' conduct Viva likewise owns the trucks used to transport the equipment. Clear that
Hence, private respondents are Agro’s regular employees who enjoy the associate producer merely leases the equipment from Viva.
security of tenure & who cannot be dismissed except for cause. Viva Films further narrated that Viva’s generators broke down during
As to alleged illegal dismissal: filing of complaint was premature. At petitioners last movie project, which forced the associate producer
the time they filed their complaint, most of them were still on the job or on concerned to rent generators, equipment and crew from another
assignments and it was only in Sep ‘86 when most of them were placed company. This only shows that the associate producer did not have
on "floating status." substantial capital nor investment in the form of tools, equipment and
It appears that 27 of the private respondents accepted employment in other materials necessary for making a movie. Viva in effect admit that
other security agencies without previously resigning from employment their producers, especially petitioners’ last producer, are not engaged in
with Agro. Hence, this is just cause for termination of their services & as permissible job contracting.
such, they are no entitled to any separation pay. If Viva insist that their associate producers are labor contractors, then
As to the other 17 private respondents, they admittedly remained in these producers can only be labor-only contractors, defined under Art.
“floating status” for more than 6 months. Such a 'floating status" is not 106 LC & Sec. 9, Rule VIII, Bk III, IRR.
unusual for security guards employed in security agencies as their As labor-only contracting is prohibited, the law considers the person or
assignments primarily depend on the contracts entered into by the agency entity engaged in the same a mere agent or intermediary of the direct
with third parties. Such a stipulated status is, therefore, lawful. employer. But even by the preceding standards, the associate producers
“Floating status” should only last for a reasonable time. When the of Viva cannot be considered labor-only contractors as they did not
“floating status” of the private respondents lasts for more than 6 months, supply, recruit nor hire the workers.
they may be considered to have been illegally dismissed from their It was Juanita Cesario, Shooting Unit Supervisor and an employee of
service. Thus, entitled to the corresponding benefits for their separation. Viva, who recruited crew members from an available group of free-lance
As to allegation of Agro that it was denied due process: without basis. workers which includes the complainants Maraguinot and Enero. And in
Agro was afforded the opportunity to file its position paper. It even entered their Memorandum, Viva declared that the associate producer hires the
into a stipulation of facts with private respondent. services of... 6) camera crew which includes (a) cameraman; (b) the utility
crew; (c) the technical staff; (d) generator man and electrician; (e) clapper;
Maraguinot vs. Viva Films (1998) etc. This clearly showed that the associate producers did not supply the
workers required by the movie project.
ISSUE: WON an employer-employee relationship exists The relationship between Viva and its producers or associate producers
seems to be that of agency, as the latter make movies on behalf of Viva,
18 Jul ’89: Alejandro Maraguinot Jr. was employed by Viva Films as whose business is to make movies. As such, the employment relationship
part of the filming crew with salary of P375/wk. 4 months later, he was between petitioners and producers is actually one between petitioners and
designated as Asst. Electrician with weekly salary of P400, increased to Viva, with the latter being the direct employer.
P450 in May ’90. Also, the four elements are present here. Viva’s control is evident in its
Jun ’91: Maraguinot was promoted to the rank of Electrician with mandate that the end result must be a quality film acceptable to the
weekly salary of P475, increased to P593 in Sep ’91. company. The means and methods to accomplish the result are likewise
On the other hand, Jun ’90: Paulino Enero was employed by Viva Films controlled by Viva, viz., the movie project must be finished within schedule
as member of the shooting crew with weekly salary of P375, increased to without exceeding the budget, and additional expenses must be justified;
P425, then P475. certain scenes are subject to change to suit the taste of the company; and
Their tasks consisted of loading, unloading and arranging movie the Supervising Producer, the eyes and ears of Viva and del Rosario,
equipment in the shooting area as instructed by the cameraman, intervenes in the movie-making process by assisting the associate
producer in solving problems encountered in making the film.
 Labor Standards Case Digest
The director merely instructs petitioners on how to better 16 Mar: he went on sick leave for 10 days. His SSS sickness
comply with Viva’s requirements to ensure that a quality film is completed benefits application form signed by ALU’s physician was given to ALU for
within schedule and without exceeding the budget. At bottom, the director submission to SSS.
is akin to a supervisor who merely oversees the activities of rank-and-file Upon expiration of his leave, he reported back for work but was
employees with control ultimately resting on the employer. By informed by ALU’s Area VP for Luzon of his termination effective 15 Mar.
commanding crew members to observe the rules and regulations Bautista filed a complaint.
promulgated by Viva, the appointment slips only emphasize Viva’s control Deputy Minister’s Decision: Bautista was merely accommodated by
over petitioners. ALU after he was dismissed by his former employer in ’72. His
Aside from control, the element of selection and engagement is likewise membership coverage with SSS, which shows that ALU is the one paying
present in the instant case and exercised by Viva by virtue of the the employer’s share in the premiums is not conclusive proof that Bautista
appointment slips. Nowhere in the appointment slip does it appear that it is ALU’s employer. There was no employer-employee relationship.
was the producer or associate producer who hired the crew members;
moreover, it is Viva’s corporate name which appears on the heading of the Affirmative. The mere fact that ALU is a labor union does not mean that
appointment slip. What likewise tells against Viva is that it paid petitioners it cannot be considered an employer of the persons who work for it. Much
salaries as evidenced by vouchers, containing Viva’s letterhead, for that less should it be exempted from the very labor laws which it espouses as
purpose. labor organization.
As to illegal dismissal: Viva expressly admitted that petitioners were Bautista was an employee of ALU as reflected in the latter's individual
part of a work pool and, while petitioners were initially hired possibly as payroll sheets and shown by Bautista's membership with SSS and the
project employees, they had attained the status of regular employees in ALU’s share of remittances in hiss favor. Even more significant, is the
view of Viva’s conduct. ALU's act of filing a clearance application with the MOL to terminate the
A project employee or a member of a work pool may acquire the status Bautista’s services. Bautista was selected and hired by the Union. He was
of a regular employee when the following concur: 1) There is a continuous paid wages by the Union. ALU had the power to dismiss him as indeed it
rehiring of project employees even after cessation of a project; and 2) The dismissed him. And definitely, the Union tightly controlled the work of
tasks performed by the alleged project employee are vital, necessary and Bautista as one of its organizers.
indispensable to the usual business or trade of the employer. However, the However, the records show that antipathy and antagonism between
length of time curing which the employee was continuously rehired is not Bautista and ALU militate against the former's reinstatement. ALU would
controlling but merely serves as a badge of regular employment. not want to have a union organizer whom it does not trust and who could
Enero was employed for a total of 2 years and engaged in at least 18 sabotage its efforts to unionize commercial and industrial establishments.
projects, while Maraguinot was employed for some 3 years and worked on Severance pay, therefore, is more proper in order. Hence, instead of
at least 23 projects. The tasks of petitioners were vital, necessary and returning Bautista to his former position, ALU is ordered to pay him an
indispensable to the usual business or trade of the employer, considering amount equal to his backwages for only three years and the separation
the nature of the work performed and its relation to the scheme of the pay to which he may be entitled as of the end of the three year period.
particular business or trade in its entirety.
As to work pool: A work pool may exist although the workers in the pool David vs. Macasio (2014)
do not receive salaries and are free to seek other employment during
temporary breaks in the business, provided that the worker shall be ISSUE: WON there exists an employer-employee relationship
available when called to report for a project. Although primarily applicable
to regular seasonal workers, this set-up can likewise be applied to project Statement of facts by John Macasio:
workers insofar as the effect of temporary cessation of work is concerned. 6 Jan ’95: Macasio had been working as butcher for Ariel David, in Yiels
This is beneficial to both the employer and employee for it prevents the Hog Dealer. David exercised effective control & supervision over his work,
unjust situation of coddling labor at the expense of capital and at the pointing out that David set the work day, reporting time & hogs to be
same time enables the workers to attain the status of regular employees. chopped, as well as manner by which he was to perform his work. David
As to contention that workers were not regularly maintained in the also paid his salary of P700 & approved or disapproved his leaves.
payroll & were free to offer services to other companies when there were It was also alleged that David owned the hogs delivered for chopping, as
no on-going projects: cannot defeat the workers status of regularity. There well as the work tools & implements. David also rented the workplace &
is foreseeable suspension of work. employes about 25 butchers & delivery drivers.
However, the import of this decision is not to impose a positive and Jan ’09: Macasio filed a complaint before LA for non-payment of
sweeping obligation upon the employer to re-hire project employees. What overtime pay, holiday pay, 13th month pay & service incentive leave.
this decision merely accomplishes is a judicial recognition of the David’s defense:
employment status of a project or work pool employee in accordance with He claimed he started hog dealer business in 2005 & only has 10
what is fait accompli, i.e., the continuous re-hiring by the employer of employees. Alleged that he hired Macasio as a butcher/chopper on
project or work pool employees who perform tasks necessary or desirable “pakyaw” or task basis who is, therefore, not entitled to overtime pay,
to the employers usual business or trade. Project or work pool employees holiday pay & 13th month pay. Also pointed out that Macasio usually starts
who have gained the status of regular employees are subject to the no his work at 10pm & ends at 2am, that he received fixed amount of
work-no pay principle. A work pool may exist although the workers in the P700/engagement regardless of actual number of hours he spent
pool do not receive salaries and are free to seek other employment during chopping & that he was not engaged to report for work & did not receive
temporary breaks in the business, provided that the worker shall be any fee when no hogs were delivered. Hence, he claimed that Macasio was
available when called to report for a project. not his employee as he hired him on pakyaw basis. Also, alleged that he
Ruling here is meant to give life to the constitutional policy of issued the certification of employment upon Macasio’s request.
strengthening the labor sector but not at the expense of management. LA Decision: dismissed complaint for lack of merit. Gave credence to
Ruling does not mean that simply because an employee is a project or claim that David engaged Macasio on “pakyaw” or task basis. Also noted
work pool employee even outside the construction industry, he is deemed, that Macasio received fixed amount of P700 for every work done,
ipso jure, a regular employee. regardless of number of hours that he spent working or the volume of
Since they have gained regular status, their dismissal was illegal. They hogs he had to chop per engagement; that Macasio worked for only 4
are entitled to backwages & reinstatement, without loss of seniority rights hours; that P700 fixed wage exceeds the prevailing daily minimum wage.
& other benefits that may have accrued. NLRC affirmed LA ruling. However, CA reversed. Macasio is still entitled
to monetary claims. as a task basis employee, Macasio is excluded from
Bautista vs. Inciong (1988) the coverage of holiday, SIL and 13th month pay only if he is likewise a
"field personnel." A "field personnel" is one who performs the work away
ISSUE: WON there exists an employer-employee relationship from the office or place of work and whose regular work hours cannot be
determined with reasonable certainty. Elements are lacking in this case.
’72: Reynaldo Bautista was employed by Associated Labor Unions as
‘Organizer’. He paid his monthly SSS contributions, with ALU as his Affirmative. David confuses engagement on "pakyaw" or task basis with
employer. the lack of employment relationship. Impliedly, David asserts that their
15 Mar ’79: he was left in the office of ALU while his other co-organizers "pakyawan" or task basis arrangement negates the existence of
were in Cainta, Rizal attending a certification election at Chrysler. employment relationship. No merit to this. Engagement on "pakyaw" or
task basis does not characterize the relationship that may exist between
 Labor Standards Case Digest
the parties, i.e., whether one of employment or independent In determining whether workers engaged on "pakyaw" or task
contractorship. Art. 97(6), Article 101 LC speaks of workers paid by results basis" is entitled to holiday and SIL pay, the presence (or absence) of
or those whose pay is calculated in terms of the quantity or quality of their employer supervision as regards the worker’s time and performance is the
work output which includes "pakyaw" work and other non-time work. key: if the worker is simply engaged on pakyaw or task basis, then the
LA and NLRC denied Macasio’s claim not because of the absence of an general rule is that he is entitled to a holiday pay and SIL pay unless
employer-employee but because of its finding that since Macasio is paid exempted from the exceptions specifically provided under Article 94
on pakyaw or task basis, then he is not entitled to SIL, holiday and 13th (holiday pay) and Article 95 (SIL pay) of LC. However, if the worker
month pay. However, existence of an employer-employee relationship is in engaged on pakyaw or task basis also falls within the meaning of "field
fact a non-issue in this case. At any rate, employing the control test, there personnel" under the law, then he is not entitled to these monetary
is an employer-employee relationship. benefits.
First, David engaged the services of Macasio, thus satisfying the element However, Macasio does not fall under the classification of “field
of "selection and engagement of the employee." In the Sinumpaang personnel.” First, Macasio regularly performed his duties at David’s
Salaysay, David stated that “nag apply po siya sa akin at kinuha ko siya na principal place of business; second, his actual hours of work could be
chopper”. Second, David paid Macasio’s wages. He had been paying him determined with reasonable certainty; and, third, David supervised his
P700/day after the latter had finished his day’s task. This satisfies the time and performance of duties. Since Macasio cannot be considered a
element of payment of wages. Third, David had been setting the day & "field personnel," then he is not exempted from the grant of holiday, SIL
time when Macasion should report for work. This power to determine the pay even as he was engaged on "pakyaw" or task basis.
work schedule implies power of control. By having the power to control
Macasio’s work schedule, David could regulate Macasio’s work & could
even refuse to give him any assignment. Fourth, David had the right &
power to control & supervise Macasio’s work as to the means & methods
of performing it. Also, David rents the place where Macasio had been San Miguel vs. Ople (1989)
performing his tasks. Moreover, Macasio would leave the workplace only
after he had finished chopping all of the hog meats given to him for the ISSUE: WON the new marketing scheme adopted by San Miguel violates
day’s task. Since Macasio performed his tasks at David’s workplace, David the collective bargaining agreement
could easily exercise control and supervision over the former. Also, David
would still engage Macasio’s services and have him report for work even 17 Apr ’78: a collective bargaining agreement was entered into by San
during the days when only few hogs were delivered for butchering. Miguel Corp Sales Force Union & San Miguel Corp, effective on 1 May ’78
Under this overall setup, all those working for David, including Macasio, to 31 Jan ’81. Sec. 1 of Art. IV provides: Employees within the appropriate
could naturally be expected to observe certain rules and requirements and bargaining unit shall be entitled to a basic monthly compensation plus
David would necessarily exercise some degree of control as the chopping commission based on their respective sales.
of the hog meats would be subject to his specifications. Accordingly, Sep ’79: SMC introduced a marketing scheme known as
whether or not David actually exercised this right or power to control is Complementary Distribution System whereby its beer products were
beside the point as the law simply requires the existence of this power to offered for sale directly to wholesalers through SM’s slaes offices.
control or, as in this case, the existence of the right and opportunity to The labor union filed complaint for unfair labor practice in the Ministry
control and supervise Macasio. of Labor, with notice of strike. Alleged that the CDS was contrary to the
As to “pakyaw” basis: a distinguishing characteristic of "pakyaw" or existing marketing scheme whereby the Route Salesmen were assigned
task basis engagement, as opposed to straight-hour wage payment, is the specific territories within which to sell their stocks of beer, and wholesalers
non-consideration of the time spent in working. In a task-basis work, the had to buy beer products from them, not from the company. Also alleged
emphasis is on the task itself, in the sense that payment is reckoned in that the new marking scheme violates Section 1, Article IV of the collective
terms of completion of the work, not in terms of the number of time spent bargaining agreement because the introduction of the CDS would reduce
in the completion of work. Once the work or task is completed, the worker the take-home pay of the salesmen and their truck helpers for the
receives a fixed amount as wage, without regard to the standard company would be unfairly competing with them.
measurements of time generally used in pay computation. However, Minister dismissed the notice of strike by the union – nothing
Macasio would usually start his work at 10pm. Thereafter, regardless of in the record as to suggest that the unilateral action of the employer in
the total hours that he spent at the workplace or of the total number of the inaugurating the new sales scheme was designed to discourage union
hogs assigned to him for chopping, Macasio would receive the fixed organization or diminish its influence, but rather it is undisputable that the
amount of P700 once he had completed his task. Clearly, these establishment of such scheme was part of its overall plan to improve
circumstances show a "pakyaw" or task basis engagement. efficiency and economy and at the same time gain profit to the highest.
As to entitlement to holiday, 13th month & SIL pay: general rule is that Also found that corollary to the adoption of the assailed marketing
holiday and SIL pay provisions cover all employees. To be excluded from technique is the effort of the company to compensate whatever loss the
their coverage, an employee must be one of those that these provisions workers may suffer because of the new plan over and above than what has
expressly exempt, strictly in accordance with the exemption. Under the been provided in the collective bargaining agreement.
IRR, exemption from the coverage of holiday and SIL pay refer to "field
personnel and other employees whose time and performance is Negative. CDS is a valid exercise of management prerogatives. Except
unsupervised by the employer including those who are engaged on task or as limited by special laws, an employer is free to regulate, according to his
contract basis.” The IRR on holiday and SIL pay do not exclude employees own discretion and judgment, all aspects of employment, including hiring,
"engaged on task basis" as a separate and distinct category from work assignments, working methods, time, place and manner of work,
employees classified as "field personnel." Rather, these employees are tools to be used, processes to be followed, supervision of workers, working
altogether merged into one classification of exempted employees. regulations, transfer of employees, work supervision, lay-off of workers and
The payment of an employee on task or pakyaw basis alone is the discipline, dismissal and recall of work.
insufficient to exclude one from the coverage of SIL and holiday pay. They Every business enterprise endeavors to increase its profits. In the
are exempted from the coverage of Title I (including the holiday and SIL process, it may adopt or devise means designed towards that goal.
pay) only if they qualify as "field personnel." The IRR therefore validly So long as a company's management prerogatives are exercised in
qualifies and limits the general exclusion of "workers paid by results" good faith for the advancement of the employer's interest and not for the
found in Article 82 from the coverage of holiday and SIL pay. purpose of defeating or circumventing the rights of the employees under
The phrase "other employees whose performance is unsupervised by special laws or under valid agreements, Court will uphold them. San
the employer" must not be understood as a separate classification of Miguel Corporation's offer to compensate the members of its sales force
employees to which service incentive leave shall not be granted. Rather, it who will be adversely affected by the implementation of the CDS by
serves as an amplification of the interpretation of the definition of field paying them a so-called "back adjustment commission" to make up for the
personnel under the Labor Code as those "whose actual hours of work in commissions they might lose as a result of the CDS proves the company's
the field cannot be determined with reasonable certainty." The same is good faith and lack of intention to bust their union.
true with respect to the phrase "those who are engaged on task or contract
basis, purely commission basis." Said phrase should be related with "field Sonza vs. ABS-CBN (2004)
personnel," applying the rule on ejusdem generis that general and
unlimited terms are restrained and limited by the particular terms that ISSUE: WON an employer-employee relationship exists
they follow.
 Labor Standards Case Digest
May ’94: ABS-CBN Broadcasting Corp signed an Agreement Even after ABS-CBN ceased broadcasting his programs, ABS-
with Mel & Jay Management & Devt Corp, represented by Jose Sonza. CBN still paid him his talent fees. Plainly, ABS-CBN adhered to its
MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN as undertaking in the Agreement to continue paying Sonza’s talent fees
talent for radio & television. The agreement listed the services Sonza during the remaining life of the Agreement even if ABS-CBN cancelled
would render: co-host for Mel & Jay radio program 8-10am M-F, co-host Sonza’s programs through no fault of Sonza.
for Mel & Jay tv program 5:30-7pm S. ABS-CBN agreed to pay Sonza’s If it were true that complainant was really an employee, he would
services a monthly talent fee of P310k for first year & P317k for 2nd & 3rd merely resign, instead. Sonza did actually resign from ABS-CBN but he
year. also, as president of MJMDC, rescinded the Agreement. However, this is
1 Apr ’96: Sonza wrote a letter to ABS-CBN President Lopez, informing immaterial. Whether Sonza rescinded the Agreement or resigned from
that Mr. Sonza irrevocably resigned in view of recent events concerning his work does not determine his status as employee or independent
programs & career. contractor.
30 Apr: Sonza filed a complaint against ABS-CBN, alleging that it did Fourth, a television program host is an independent contractor,
not pay his salaries separation pay, service incentive leave pay, 13th month according to foreign case law (Alberty). Applying control test, Sonza is not
pay, signing bonus, travel allowance and amounts due under the an employee but an independent contractor. The control test is the most
Employees Stock Option Plan. important test our courts apply in distinguishing an employee from an
10 Jul: ABS-CBN filed motion to dismiss on the ground that no independent contractor. Test is based on the extent of control the hirer
employer-employee relationship existed between them. Meanwhile, it exercises over a worker. The greater the supervision and control the hirer
continued to remit Sonza’s monthly talent fees through his account at exercises, the more likely the worker is deemed an employee.
PCIB. Also opened new account with same bank where ABS-CBN ABS-CBN engaged Sonza’s services specifically to co-host the Mel & Jay
deposited Sonza’s talent fees & other payments due him. programs. ABS-CBN did not assign any other work to Sonza. To perform
LA’s Decision: Sonza was engaged by ABS-CBN by reason of his his work, Sonza only needed his skills and talent. How Sonza delivered his
peculiar skills and talent as a TV host and a radio broadcaster. Unlike an lines, appeared on television, and sounded on radio were outside ABS-
ordinary employee, he was free to perform the services he undertook to CBNs control. Sonza did not have to render eight hours of work per day.
render in accordance with his own style. The benefits conferred to The Agreement required Sonza to attend only rehearsals and tapings of
complainant under the May 1994 Agreement are certainly very much the shows, as well as pre- and post-production staff meetings. ABS-CBN
higher than those generally given to employees. Whatever benefits Sonza could not dictate the contents of Sonzas script. However, the Agreement
enjoyed arose from specific agreement by the parties and not by reason of prohibited Sonza from criticizing in his shows ABS-CBN or its interests.
employer-employee relationship. The fact that he was made subject to The clear implication is that Sonza had a free hand on what to say or
respondents Rules and Regulations, likewise, does not detract from the discuss in his shows provided he did not attack ABS-CBN or its interests.
absence of employer-employee relationship. ABS-CBN’s sole concern was the quality of the shows and their standing in
NLRC & CA’s Rulings: no employer-employee relationship. MJMDC the ratings. Clearly, ABS-CBN did not exercise control over the means and
entered into the contract merely as an agent of Sonza, the principal. methods of performance of Sonza’s work.
Sonza’s contentions: there is employer-employee relationship, such Although ABS-CBN did have the option not to broadcast Sonza’s show,
that LA has jurisdiction over him. ABS-CBN was still obligated to pay Sonza’s talent fees. Thus, even if ABS-
CBN was completely dissatisfied with the means and methods of Sonza’s
Negative, independent contractorship. First, ABS-CBN engaged Sonza’s performance of his work, or even with the quality or product of his work,
services to co-host its television and radio programs because of Sonza’s ABS-CBN could not dismiss or even discipline Sonza. All that ABS-CBN
peculiar skills, talent and celebrity status. The specific selection and hiring could do is not to broadcast Sonza’s show but ABS-CBN must still pay his
of Sonza, because of his unique skills, talent and celebrity status not talent fees in full.
possessed by ordinary employees, is a circumstance indicative, but not As to contention that there is control over means & methods of his
conclusive, of an independent contractual relationship. If Sonza did not work: Clearly, ABS-CBN’s right not to broadcast Sonza’s show, burdened
possess such unique skills, talent and celebrity status, ABS-CBN would not as it was by the obligation to continue paying in full Sonza’s talent fees,
have entered into the Agreement with Sonza but would have hired him did not amount to control over the means and methods of the
through its personnel department just like any other employee. performance of Sonza’s work. ABS-CBN could not terminate or discipline
Independent contractors often present themselves to possess unique Sonza even if the means and methods of performance of his work - how
skills, expertise or talent to distinguish them from ordinary employees. he delivered his lines and appeared on television - did not meet ABS-CBNs
Second, ABS-CBN directly paid Sonza his monthly talent fees with no approval. This proves that ABS-CBNs control was limited only to the result
part of his fees going to MJMDC. All the talent fees and benefits paid to of Sonza’s work, whether to broadcast the final product or not. Either case,
Sonza were the result of negotiations that led to the Agreement. If Sonza has to pay talent fees in full.
were ABS-CBN’s employee, there would be no need for the parties to As to contention that ABS-CBN has control because it supplied all
stipulate on benefits such as SSS, Medicare, and 13th month pay which equipment & crew: However, the equipment, crew and airtime are not the
the law automatically incorporates. Whatever benefits SONZA enjoyed tools and instrumentalities Sonza needed to perform his job. What Sonza
arose from contract and not because of an employer-employee principally needed were his talent or skills and the costumes necessary for
relationship. his appearance.
Sonza’s talent fees, amounting to P317k monthly in the second and As to contention that ABS-CBN subjected him to its rules & standards
third year, are so huge and out of the ordinary that they indicate more an of performance: The Agreement stipulates that Sonza shall abide with the
independent contractual relationship rather than an employer-employee rules and standards of performance covering talents of ABS-CBN. The
relationship. ABS-CBN agreed to pay Sonza such huge talent fees Agreement does not require Sonza to comply with the rules and standards
precisely because of Sonza’s unique skills, talent and celebrity status not of performance prescribed for employees of ABS-CBN. The code of
possessed by ordinary employees. Obviously, Sonza acting alone conduct refers to the TV & Radio Code of KBP. The KBP code applies to
possessed enough bargaining power to demand and receive such huge broadcasters, not to employees of radio and television stations.
talent fees for his services. The power to bargain talent fees way above the Broadcasters are not necessarily employees of radio and television
salary scales of ordinary employees is a circumstance indicative, but not stations. Clearly, the rules and standards of performance referred to in the
conclusive, of an independent contractual relationship. Agreement are those applicable to talents and not to employees of ABS-
Also, the payment of talent fees directly to Sonza and not to MJMDC CBN.
does not negate the status of Sonza as an independent contractor. The Not all rules imposed by the hiring party on the hired party indicate
parties expressly agreed on such mode of payment. that the latter is an employee of the former. In this case, Sonza failed to
Third, for violation of any provision of the Agreement, either party show that these rules controlled his performance. We find that these
may terminate their relationship. Sonza failed to show that ABS-CBN could general rules are merely guidelines towards the achievement of the
terminate his services on grounds other than breach of contract, such as mutually desired result, which are top-rating television and radio programs
retrenchment to prevent losses as provided under labor laws. that comply with standards of the industry. Not every form of control that
During the life of the Agreement, ABS-CBN agreed to pay Sonza’s talent a party reserves to himself over the conduct of the other party in relation
fees as long as agent and Jay Sonza shall faithfully and completely to the services being rendered may be accorded the effect of establishing
perform each condition of this Agreement. Even if it suffered severe an employer-employee relationship.
business losses, ABS-CBN could not retrench Sonza because ABS-CBN As to contention that the exclusivity clause in the Agreement is the
remained obligated to pay Sonza’s talent fees during the life of the most extreme form of control which ABS-CBN exercised over him: no
Agreement. This circumstance indicates an independent contractual merit. Being an exclusive talent does not by itself mean that Sonza is an
relationship between Sonza and ABS-CBN. employee of ABS-CBN. Even an independent contractor can validly provide
 Labor Standards Case Digest
his services exclusively to the hiring party. In the broadcast completion of the program, and may be extended/renewed
industry, exclusivity is not necessarily the same as control. The hiring of provided that the program is on-going; a PA may also be assigned to new
exclusive talents is a widespread and accepted practice in the programs upon the cancellation of one program and the commencement
entertainment industry. This practice is not designed to control the means of another. As such, their compensation is computed on a program basis,
and methods of work of the talent, but simply to protect the investment of a fixed amount for performance services irrespective of the time
the broadcast station. consumed.
MJMDC was an agent of Sonza. In a labor-only contract, there are three NLRC’s Ruling: respondents were entitled to the benefits under the
parties involved: (1) the labor-only contractor; (2) the employee who is CBA because they were regular employees who contributed to the profits
ostensibly under the employ of the labor-only contractor; and (3) the of petitioner through their labor.
principal who is deemed the real employer. Under this scheme, the labor-
only contractor is the agent of the principal. The law makes the principal Where a person has rendered at least one year of service, regardless of
responsible to the employees of the labor-only contractor as if the the nature of the activity performed, or where the work is continuous or
principal itself directly hired or employed the employees. These intermittent, the employment is considered regular as long as the activity
circumstances are not present in this case. exists, the reason being that a customary appointment is not
MJMDC merely acted as Sonza’s agent. The records do not show that indispensable before one may be formally declared as having attained
MJMDC acted as ABS-CBN’s agent. It is absurd to hold that MJMDC, which regular status. (See: Art. 280 LC)
is owned, controlled, headed and managed by Sonza, acted as agent of The primary standard, therefore, of determining regular employment is
ABS-CBN in entering into the Agreement with Sonza, who himself is the reasonable connection between the particular activity performed by
represented by MJMDC. That would make MJMDC the agent of both ABS- the employee in relation to the usual trade or business of the employer.
CBN and Sonza. MJMDC is a management company devoted exclusively The test is whether the former is usually necessary or desirable in the
to managing the careers of Sonza and his broadcast partner, Tiangco. usual business or trade of the employer. The connection can be
MJMDC is not engaged in any other business, not even job contracting. determined by considering the nature of work performed and its relation
Again, talents are independent contractors. The right of labor to security to the scheme of the particular business or trade in its entirety. Also, if the
of tenure as guaranteed in the Constitution arises only if there is an employee has been performing the job for at least a year, even if the
employer-employee relationship under labor laws. Not every performance performance is not continuous and merely intermittent, the law deems
of services for a fee creates an employer-employee relationship. If radio repeated and continuing need for its performance as sufficient evidence of
and television program hosts can render their services only as employees, the necessity if not indispensability of that activity to the business. Hence,
the station owners and managers can dictate to the radio and television the employment is considered regular, but only with respect to such
hosts what they say in their shows. This is not conducive to freedom of the activity and while such activity exists.
press. Not considered regular employees are "project employees," the
Lastly, Sonza’s claims are all based on the May 1994 Agreement and completion or termination of which is more or less determinable at the
stock option plan, and not on the Labor Code. Clearly, the present case time of employment and "seasonal employees" whose employment by its
does not call for an application of the Labor Code provisions but an nature is only desirable for a limited period of time. Even then, any
interpretation and implementation of the May 1994 Agreement. employee who has rendered at least 1 year of service, whether continuous
or intermittent, is deemed regular with respect to the activity performed &
ABS-CBN vs. Nazareno (2006) while such activity actually exists.
Affirmative. Of no moment that ABS-CBN hired respondents as
ISSUE: WON an employer-employee relationship exists "talents." The fact that respondents received pre-agreed "talent fees"
instead of salaries, that they did not observe the required office hours, and
ABS-CBN employed Nazareno, Gerzon, Deiparine & Lerasan as that they were permitted to join other productions during their free time
production assistants on different dates. They were assigned at the news are not conclusive of the nature of their employment. Respondents cannot
and public affairs, for various radio programs in the Cebu Broadcasting be considered "talents" because they are not actors or actresses or radio
Station, with a monthly compensation of P4k. They were issued ABS-CBN specialists or mere clerks or utility employees. They are regular
employees’ IDs and were required to work for a minimum of eight hours a employees who perform several different duties under the control and
day, including Sundays and holidays. Their tasks includes: preparing & direction of ABS-CBN executives and supervisors.
arranging the airing of commercial broadcasting, coordinating & arranging Two kinds of regular employees: (1) those engaged to perform
personalities for air interviews, coordinating & preparing schedule of activities which are necessary or desirable in the usual business or trade
reporters for scheduled news reporting, among others. of the employer; and (2) those casual employees who have rendered at
They were under the control & supervision of Asst. Station Manager least one year of service, whether continuous or broken, with respect to
Dante Luzon & News Manager Leo Lastimosa. the activities in which they are employed.
19 Dec ’96: ABS-CBN & Rank-and-file employees executed a Collective What determines whether a certain employment is regular or otherwise
Bargaining Agreement to take effect during 11 Dec ’96 to 11 Dec ’99. is not the will or word of the employer, to which the worker oftentimes
However, ABS-CBN refused to recognize PAs as part of the bargaining unit, acquiesces, much less the procedure of hiring the employee or the
respondents were not included in the CBA. manner of paying the salary or the actual time spent at work. It is the
20 Jul ’00: ABS-CBN through Luzon issued a Memorandum informing character of the activities performed in relation to the particular trade or
PAs that effective 1 Aug, they would be assigned to non-drama programs business taking into account all the circumstances, and in some cases the
& that DYAB studio operations would be handled by studio technician. length of time of its performance and its continued existence. It is obvious
Their schedule & other assignments were revised. Gerzon was assigned as that one year after they were employed by ABS-CBN, respondents became
full-time PA of TV News Dept. regular employees by operation of law.
12 Oct: respondents filed Complaint for Recognition of Regular Respondents cannot be considered as project or program employees
Employment Status, Underpayment of Overtime Pay, Holiday Pay, because no evidence was presented to show that the duration and scope
Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay of the project were determined or specified at the time of their
with Damages. engagement. Under existing jurisprudence, project could refer to two
Respondents’ allegations: they were employed as regular & full-time distinguishable types of activities. First, a project may refer to a particular
employees for continuous period of more than 5 years with monthly salary job or undertaking that is within the regular or usual business of the
of P4k. They insisted that they belonged to a “work pool” from which ABS- employer, but which is distinct and separate, and identifiable as such,
CBN chose persons to be given specific assignments at its discretion, & from the other undertakings of the company. Second, the term project
were thus under its direct supervision & control. They pray that they be may also refer to a particular job or undertaking that is not within the
declared as regular & permanent employees as condition precedent for regular business of the employer. Such a job or undertaking must also be
their admission into the union. identifiably separate and distinct from the ordinary or regular business
ABS-CBN’s contentions: respondents were PAs who basically assist in operations of the employer.
the conduct of a particular program ran by an achor or talent. They The principal test is whether or not the project employees were
perform leg work. Hence, they are considered as “program employees” assigned to carry out a specific project or undertaking, the duration and
since they are basically engaged by the station for a particular or specific scope of which were specified at the time the employees were engaged for
program broadcasted by the radio station. Maintained that PAs, reporters, that project. Respondents had continuously performed the same activities
anchors & talents occasionally sideline for other programs they produce. for an average of five years. Their assigned tasks are necessary or
As program employees, a PA’s engagement is coterminous with the desirable in the usual business or trade of ABS-CBN. While length of time
may not be a sole controlling test for project employment, it can be a
 Labor Standards Case Digest
strong factor to determine whether the employee was hired for a requests & instructions, as well as program standards, policies,
specific undertaking or in fact tasked to perform functions which are vital, rules & regulations of ABC, KBP, etc.
necessary and indispensable to the usual trade or business of the The duties of Murillo as enumerated in her employment contract
employer. indicate that ABC had control over her work. Aside from control, ABC also
Program employees, or project employees, are different from dictated the work assignments and payment of her wages. ABC also had
independent contractors because in the case of the latter, no employer- power to dismiss her. All these being present, clearly, there existed an
employee relationship exists. In this case, there is an employer-employee employment relationship between Murillo and ABC.
relationship. Also mentioned the two kinds of employees.
First. In the selection and engagement of respondents, no peculiar or Requisites for regularity of employment have been met. Murillo’s work
unique skill, talent or celebrity status was required from them because was necessary or desirable in the usual business or trade of the employer
they were merely hired through ABS-CBN’s personnel department just like which includes, as a pre-condition for its enfranchisement, its participation
any ordinary employee. in the governments news and public information dissemination. In
Second. The so-called "talent fees" of respondents correspond to wages addition, her work was continuous for a period of four years. This repeated
given as a result of an employer-employee relationship. Respondents did engagement under contract of hire is indicative of the necessity and
not have the power to bargain for huge talent fees, a circumstance desirability of the petitioners work in private respondent ABCs business.
negating independent contractual relationship. As to contention that contract was characterized by a valid fixed-
Third. ABS-CBN could always discharge respondents should it find their period employment: negative. For such contract to be valid, it should be
work unsatisfactory, and respondents are highly dependent on the ABS- shown that the fixed period was knowingly and voluntarily agreed upon by
CBN for continued work. the parties. There should be no force, duress or improper pressure
Fourth. The degree of control and supervision exercised by ABS-CBN brought to bear upon the employee. It should satisfactorily appear that the
over respondents through its supervisors negates the allegation that employer and the employee dealt with each other on more or less equal
respondents are independent contractors. terms with no moral dominance being exercised by the employer over the
Ergo, respondents are entitled to the benefits provided for in the employee. Moreover, fixed-term employment will not be considered valid
existing CBA between ABS-CBN and its rank-and-file employees. As where, from the circumstances, it is apparent that periods have been
regular employees, respondents are entitled to the benefits granted to all imposed to preclude acquisition of tenurial security by the employee.
other regular employees of ABS-CBN under the CBA. It does not appear that employer & employee dealt with each other on
A collective bargaining agreement is a contract entered into by the equal terms. Murillo could not object to the terms of her employment
union representing the employees and the employer. However, even the contract because she did not want to lose the job that she loved and the
non-member employees are entitled to the benefits of the contract. It is workplace that she had grown accustomed to which is exactly what
binding on all employees of the company. Therefore, whatever benefits are happened when she finally manifested her intention to negotiate. She was
given to the other employees of ABS-CBN must likewise be accorded to left with no choice but to affix her signature of conformity on each renewal
private respondents who were regular employees of ABS-CBN. Besides, of her contract as already prepared by ABC. Otherwise, SBC would have
only talent-artists were excluded from the CBA and not production simply refused to renew her contract.
assistants who are regular employees of the respondents. ABC’s practice of repeatedly extending Murillo’s 3-mo contract for 4
years is a circumvention of the acquisition of regular status. Hence, no
Murillo vs. CA (2007) valid fixed-term employment. Murillo is entitled to security of tenure.
Hence, there was illegal dismissal.
ISSUE: WON an employer-employee relationship exists
EXCLUDED EMPLOYEES
2 Oct ’95: Associated Broadcasting Company hired Thelma Dumpit-
Murillo as newscaster & co-anchor for Balitang-Balita. Contract was for National Sugar vs. NBSR (1993)
period of 3 months. It was renewed 4x. in addition, Murillo’s services were
engaged for the program Live on Five. ISSUE: WON the supervisory employees are considered as officers or
30 Sep ’99: after 4 yrs of repeated renewals, Murillo’s talent contract members of the managerial staff who are exempt from covering of Art. 82
expired. Two weeks after the expiration of last contract, Murillo sent letter
to Mr. Javier, VP for News & Public Affairs of ABC, informing the latter that National Sugar Refineries Corp operates 3 sugar refineries located in
she was still interested in renewing her contract subject to salary increase. Bukidnon, Iloilo & Batangas. The Batangas refinery was privatized on 11
Thereafter, she stopped reporting for work. Apr ’92 pursuant to Proc. No. 50. NBSR Supervisory Union represents the
5 Nov: Murillo wrote Mr. Javier another letter, reiterating request of former supervisors of NASUREFCO Batangas Sugar Refinery.
terms & conditions for her renewal & said that if she should not receive 1 Jun ’88: NASUREFCO implemented a Job Evaluation Program
any formal response, she will deem it as constructive dismissal. affecting all employees, from rank-and-file to department heads. Jobs were
Month later, Murillo sent demand letter to ABC demanding ranked according to effort, responsibility, training and working conditions
reinstatement to her former position, payment of unpaid wages for and relative worth of the job. As a result, all positions were re-evaluated &
services rendered, payment of 13th month pay, vacation/sick/service all employees including the members of NBSR were granted salary
incentive leaves & other monetary benefits due to a regular employee. adjustments & increases in benefits commensurate to their actual duties.
ABC replied that a check covering her talent fees for Sep 16-Oct 20 had About 10 yrs prior to the JE Program, members of NBSR were treated
been processed but her other claims had no basis in fact or law. in the same manner as rank-and-file employees. As such, they used to be
20 Dec: Murillo filed a complaint. paid overtime, rest day & holiday pay. But with the implementation of the
LA dismissed. NLRC reversed, holding that there was an employer- Program, adjustments were made: 1) members of NBSR were re-classified
employee relationship. under levels S-5 to S-8 which are considered managerial staff for purposes
of compensation & benefits, 2) increase in basic pay, 3) longevity pay was
Affirmative. Murillo was a regular employee under contemplation of increased, 4) entitled to increased company COLA, 5) P100 allowance.
law. The practice of having fixed-term contracts in the industry does not 20 Jun ’90: members of NBSR fied a complaint with LA for non-
automatically make all talent contracts valid and compliant with labor law. payment of overtime, rest day & holiday pay.
The assertion that a talent contract exists does not necessarily prevent a NASUREFCO’s contentions: while the members of respondent union, as
regular employment status. supervisors, may not be occupying managerial positions, they are clearly
Note that Sonza case is not applicable here. ABC had control over the officers or members of the managerial staff because they meet all the
performance of Murillo’s work. Noteworthy too, is the comparatively low conditions prescribed by law. For purposes of forming unions, certification
P28k monthly pay of Murillo vis the P300k a month salary of Sonza, that elections, collective bargaining, and so forth, the union members are
all the more bolsters the conclusion that Murillo was not in the same supervisory employees. In terms of working conditions and rest periods
situation as Sonza. and entitlement to the questioned benefits, however, they are officers or
The contract of employment of Murillo with ABC stipulated her duties & members of the managerial staff, hence they are not entitled thereto.
responsibilities – render services as newscaster, be involved in news-
gathering operations, participate in live remote coverages, be available for Affirmative. While the Constitution is committed to the policy of social
any other news assignment, attend production meetings, among others. justice and the protection of the working class, it should not be supposed
Also stipulated that Murillo agrees that she will promptly comply with the that every labor dispute will be automatically decided in favor of labor.
Management also has its own rights. In determining whether an employee
 Labor Standards Case Digest
is within the terms of the statutes, the criterion is the character of Moreover, the requirement that "actual hours of work in the
the work performed, rather than the title of the employee's position. field cannot be determined with reasonable certainty" must be read in
Cursory perusal of the Job Value Contribution Statements of the union conjunction with Rule IV, Book III, IRR (“field personnel and other employees
members will show that these supervisory employees are under the direct whose time and performance is unsupervised by the employer”).
supervision of their respective department superintendents and that As to contention that company’s sales personnel are supervised shown
generally they assist the latter in planning, organizing, staffing, directing, by the Supervisor of the Day schedule & company circular: The clause
controlling communicating and in making decisions in attaining the "whose time and performance is unsupervised by the employer" did not
company's set goals and objectives. They are responsible for the effective amplify but merely interpreted and expounded the clause "whose actual
and efficient operation of their respective departments. Hence, they hours of work in the field cannot be determined with reasonable certainty."
discharge duties and responsibilities which ineluctably qualify them as Hence, query must be made as to whether or not such employee's time
officers or members of the managerial staff. and performance is constantly supervised by the employer.
Sec. 2, Rule I, Bk III, IRR: (1) their primary duty consists of the The SOD schedule adverted to by Filipro does not in the least signify
performance of work directly related to management policies of their that these sales personnel's time and performance are supervised. The
employer; (2) they customarily and regularly exercise discretion and purpose of this schedule is merely to ensure that the sales personnel are
independent judgment; (3) they regularly and directly assist the out of the office not later than 8am and are back in the office not earlier
managerial employee whose primary duty consist of the management of a than 4pm. Court fails to see how the company can monitor the number of
department of the establishment in which they are employed (4) they actual hours spent in field work by an employee through the imposition of
execute, under general supervision, work along specialized or technical sanctions on absenteeism contained in the company circular.
lines requiring special training, experience, or knowledge; (5) they execute, As to contention that the fact that they are given incentive bonus every
under general supervision, special assignments and tasks; and (6) they do quarter based on performance is proof that their actual hours of work can
not devote more than 20% of their hours worked in a work-week to be determined: sales personnel are given incentive bonuses precisely
activities which are not directly and clearly related to the performance of because of the difficulty in measuring their actual hours of field work.
their work hereinbefore described. These employees are evaluated by the result of their work and not by the
Therefore, they are exempt from the coverage of Art. 82 & not entitled actual hours of field work which are hardly susceptible to determination.
to overtime, rest day & holiday pay.
As to alleged voluntary employer practice: the members of NBSR were San Miguel vs. Democratic (1963)
paid the questioned benefits for the reason that, at that time, they were
rightfully entitled thereto. Prior to the JE Program, they could not be ISSUE:
categorically classified as members/officers of the managerial staff
considering that they were then treated on the same level as rank-and-file. After morning roll call, employees of SMB leave the plant of the
Hence, there is no voluntary employer practice. To be considered as such, company to go on their respective sales routes at 7am for soft drink trucks
it should have been practiced over a long period of time, and must be or 8am for beer trucks. They do not have a daily time record.
shown to have been consistent and deliberate. Their sales routes are so planner that they can be completed within 8
With their promotion, they are no longer entitled to the benefits. if the hrs at most, or that the employees could make their sales on their routes
union members really wanted to continue receiving the benefits which within such number of hours. The moment these outside or field
attach to their former positions, there was nothing to prevent them from employees leave the plant and while in their sales routes they are on their
refusing to accept their promotions and their corresponding benefits. Also, own, and often times when the sales are completed, or when making short
there is no showing that the JE Program was intended to circumvent the trip deliveries only, they go back to the plant, load again, and make
law & deprive the members of NBSR of the benefits they used to receive. another round of sales. The amount of compensation they receive is
uncertain depending upon their individual efforts or industry. Besides
Union of Filipino vs. Vivar (1992) monthly salary, they are paid sales commission.
27 Jan ’55: Democratic Labor Assoc. filed complaint against San Miguel
ISSUE: WON the sales personnel are entitled to holiday pay Brewery, Inc. embodying 12 demands for the betterment of the conditions
of employment of its members.
8 Nov ’85: Filipro, Inc. (now Nestle) filed with NLRC a petition for
declaratory relief seeking a ruling on its rights & obligations respecting SMB’s contentions: since employees are paid a commission on the
claims of its monthly paid employees for holiday pay. sales they make outside the requires 8 hrs beside their fixed salary, they
2 Jan ’80: Abitrator Vivar rendered a decision, ordering Filipro to pay its do not need to be paid overtime compensation for the reason that the
monthly paid employees holiday pay pursuant to Art. 94 LC, subject to commission they are paid already takes the place of overtime pay.
exclusions specified in Art. 82. Tenable. Eight-Hour Labor Law only has application where an employee
Filipro filed motion for clarification seeking, among others, the exclusion or laborer is paid on a monthly or daily basis, or is paid a monthly or daily
of salesmen, sales representatives, truck drivers, merchandisers and compensation, in which case, if he is made to work beyond the requisite
medical representatives (sales personnel) from award of the holiday pay. period of 8 hours, he should be paid the additional compensation
Union of Filipro Employees’ contention: their sales personnel are not prescribed by law. This law has no application when the employee or
field personnel & are therefore, entitled to holiday pay. laborer is paid on a piece-work, "pakiao", or commission basis, regardless
Filipro’s contentions: they are field employees. The period between of the time employed. The philosophy behind this exemption is that his
8am to 4/4:30pm comprises the sales personnel’s working hours which earnings in the form of commission based on the gross receipts of the
can be determined with reasonable certainty. day. His participation depends upon his industry so that the more hours
he employs in the work the greater are his gross returns and the higher
Affirmative. The controversy centers on the interpretation of the clause his commission.
"whose actual hours of work in the field cannot be determined with Insofar as the extra work they perform are concerned, they can be
reasonable certainty." Undisputed that these sales personnel start their field considered as employees paid on piece work, "pakiao", or commission
work at 8am after having reported to the office and come back to the basis. Hence, they are not entitled to overtime compensation.
office at 4pm or 4:30pm if they are Makati-based.
The requirement for the salesmen and other similarly situated SMB’s contentions: watchmen & security guards are not entitled to
employees to report for work at the office at 8am and return at 4/4:30pm extra pay for work done during these days because they are paid on a
is not within the realm of work in the field as defined in the Code but an monthly basis and are given one day off which may take the place of the
exercise of purely management prerogative of providing administrative work they may perform either on Sunday or any holiday.
control over such personnel. This does not in any manner provide a Untenable. Section 4 of CA 444 expressly provides that no person, firm
reasonable level of determination on the actual field work of the or corporation may compel an employee or laborer to work during
employees which can be reasonably ascertained. Actual field work begins Sundays and legal holidays unless he is paid an additional sum of 25% of
after 8am, when the sales personnel follow their field itinerary, and ends his regular compensation. This proviso is mandatory, regardless of the
immediately before 4/4:30pm when they report back to their office. The nature of compensation. The only exception is with regard to public
period between these hours comprises their hours of work in the field, the utilities who perform some public service.
extent or scope and result of which are subject to their individual capacity
and industry and which "cannot be determined with reasonable certainty." Cadiz vs. Phil Sinter (1979)
 Labor Standards Case Digest
(cited in Azucena)
House personnel hired by a ranking company official, a foreigner, but At the Natl Devt Co, there were 4 shifts of work – 8am-4pm, 6am-2pm,
paid for by the company itself, to maintain a staff house provided for the 2pm-10pm, 10pm-6am. In each shift, there was a one-hr mealtime period.
official, are not the latter’s domestic helpers but regular employees of the Records disclose that although there was a 1-hr mealtime, NDC
company. nevertheless credited the workers with 8 hrs of work for each shift and
paid them for the same number of hours. However, since ‘53, whenever
Rosales vs. Tan (1979) workers in one shift were required to continue working until the next shift,
NDC instead of crediting them with 8 hrs of overtime work, has been
(cited in Azucena) paying them for 6 hrs only.
Waiters of a hotel do not fall under the term “domestic servants and CIR Judge Martinez held that mealtime should be counted in the
persons in the personal service of another” nor under the terms “farm determination of overtime work & ordered NDC to pay P101,407.96 by
laborers”, “laborers who prefer to be paid on piece work basis” and way of overtime compensation.
“members of the family of the employer working for him”. Therefore, they NDC’s contentions: the 2 hrs corresponding to the mealtime periods
do not fall within any of the exceptions provided for in Sec. 2, CA 44 and should not be included in computing compensation. Also alleged that CIR
their work is within the scope of the Eight-Hour Labor Law. lost jurisdiction over the claims for overtime pay upon the enactment of
the Industrial Peace Act (RA 875).
Dela Cruz vs. NLRC (1998) National Textile Workers Union: should be counted & asked for CIR to
order payment of additional overtime pay corresponding to mealtime
ISSUE: WON Dela Cruz, as chief patron, is entitled to his money claims periods.

Rolando Dela Cruz’s allegations: he started working with Emmanuel Lo Affirmative. Sec. 1, CA 444: The legal working day for any person
in Jun ’88 as ordinary crew & received wages in cash from the share of employed by another shall be of not more than eight hours daily. When the
the catch of the fishing boat. On Jan ’89, he was promoted to light boat work is not continuous, the time during which the laborer is not working and
operator & his wages were increased. On Mar ’89, he was again promoted can leave his working place and can rest completely shall not be counted.
to second patron until Nov ’89, when he became a full-pledged patron Under the law, the idle time that an employee may spend for resting
(captain) of Lo’s fishing boat known as M/DCA Sheenly Joy. As captain, he and during which he may leave the spot or place of work though not the
received a monthly salary of P450 and 10 shares of the fish catch plus premises of his employer, is not counted as working time only where the
P2/fish box commission. But on 2 Dec ’90, Emmanuel Lo dismissed Dela work is broken or is not continuous. However, no general rule can be laid
Cruz without notice & separation pay. He alleged that Lo was the one who down as to what constitutes compensable work, rather the question is one
hired him, the one who made all the job promotions, paid the salaries & of fact depending upon particular circumstances, to be determined by the
dismissed him. He also alleged that Lo directed personally the fishing controverted in cases.
operation, where to send the light boat, where to fish and when to go In the case at bar, the work in NDC was continuous and did not permit
ashore. In other words, he had complete control of his fishing boat, the employees & laborers to rest completely. Their time cards show that the
officers and crew. work was continuous & without interruption. Employees cannot freely
leave their workplace nor rest completely. Furthermore, the computation
Lo’s contentions: he had no participation whatsoever in so far as the of the work was on a 24-hr basis & is divided into shifts. Hence, mealtime
decision when to go out is concerned; that his only obligation is to provide breaks should be counted as working time for purposes of overtime
for fuel and oil and the equipment needed by the crew; that Dela Cruz was compensation.
not paid any salary and his compensation consist only of his share in the As to issue on jurisdiction: For such jurisdiction of CIR to come into
catch of the fishing vessel every time it goes out fishing; that the fishing play, the following requisites must be complied with: a) there must exist
vessel does not go out everyday nor the whole year round. Basically, that between the parties an employer-employee relationship or the claimant
they had no employer-employee relationship. Rather, their undertaking is must seek his reinstatement; and b) the controversy must relate to a case
one of joint venture with him as boat owner, supplying the boat and its certified by the President to the CIR as one involving national interest, or
equipment and Dela Cruz and the crew members contributing necessary must arise either under the Eight-Hour Labor Law, or under the Minimum
labor and the parties getting specific shares for their contributions. Wage Law. In default of any, the claim becomes a mere money claim that
As to existence of employer-employee relationship: Lo gave orders to comes under the jurisdiction of the regular courts.
set sail & the patron and crew would merely obey. Lo had been in the NDC does not deny the existence of an employer-employee relationship
fishing business for years. He first had only one boat. He infused hundreds between it & the members of the union. Therefore, CIR has jurisdiction.
of thousands, if not millions, as capital in the business and caused the
acquisition of 2 more boats. This simply means that he is knowledgeable Pan American vs. Pan American Employees (1961)
about the deep sea fishing business. Indeed, it is foolhardy for a
businessman to invest this kind of money in a fishing boat and let ISSUE: WON the 1-hr meal period should be counted as overtime work
somebody operate it without him exercising at the least the right to control
the manner its going to be used in the work to be done although not Pan American Employees Assoc. filed a complaint against Pan American
actually exercising such right. Hence, there is control. World Airways System. CIR ordered the company to permanently adopt
As to illegal dismissal, unfair labor practice & other money claims: the straight 8-hr shift inclusive of meal period which is mutually beneficial
dismissal was not justified hence, there is illegal dismissal. to the parties.
Pan American’s contentions: the 1-hr meal period should not
considered as overtime work (after deducting 15 minutes) because the
Lo’s contentions: Dela Cruz was a managerial employee hence, not evidence showed that the employees could rest completely & were not in
entitled to his money claims. any manner under the control of the company during that period.
Negative. A managerial employee is therefore excluded from the
coverage of the law as regards conditions of employment which include Affirmative. It was found that during the so called meal period, the
hours of work, weekly rest periods, holidays, service incentive leaves and mechanics were required to stand by for emergency work; that if they
service charges. As chief patron, albeit an unlicensed one, Dela Cruz was happened not to be available when called, they were reprimanded by the
tasked to take complete charge & command of the vessel and perform the leadman; that as in fact it happened on many occasions, the mechanics
responsibilities and duties of a ship captain. Hence, he is exempted from had been called from their meals or told to hurry Employees Association
payment of overtime pay, premium pay for holidays & rest days & service up eating to perform work during this period.
incentive leave pay. The Industrial Court's order for permanent adoption of a straight 8-hour
shift including the meal period was but a consequence of its finding that
HOURS OF WORK the meal hour was not one of complete rest, but was actually a work hour,
Hours Worked since for its duration, the laborers had to be on ready call. Of course, if the
Company practices in this regard should be modified to afford the
NDC vs. CIR (1962) mechanics a real rest during that hour (ex., by installing an entirely
different emergency crew, or any similar arrangement), then the
ISSUE: WON the mealtime breaks of the Union members should be modification of this part of the decision may be sought from the Court.
considered working time
 Labor Standards Case Digest
As to issue on jurisdiction: CIR may properly take cognizance
of cases if, at the time of the petition, the complainants were still in the Sibal vs. Notre Dame (1990)
service of the employer, or, having been separated from such service,
should ask for reinstatement; otherwise, such claims should be brought ISSUE: WON Sibal is entitled to compensation for during semestral break
before the regular courts.
In the case at bar, there is no question that the employees claiming Delia Sibal was employed as school nurse by Notre Dame of Greater
overtime compensation were still in the service of the company when the Manila starting Jan ’73. Prior to SY ’76-’77, she was compensated on a
case was filed. Hence, CIR has jurisdiction. 12-mo basis, although she worked only during the 10-mo period of
classes. She was not required to report for work for the entire Christmas &
summer vacations.
10 Mar ’76: Notre Dame director Fr. Enrique Gonzales requested her to
shorten her summer vacation, from 2 weeks after the last day of classes to
2 weeks before the first day of classes. Sibal acceded.
Sometime Apr ’80: Fr. Gonzales required her to report during that
summer to help in the library. In a letter, Sibal contested the order, stating
that it will necessitate a change in the terms & conditions of her
employment & that library work is alien to her profession as nurse.
Lectures, Meetings, Training Programs Nov ’80: Fr. Gonzales was replaced by Fr. Pablo Garcia, an American, as
new director. He required Sibal to report for work during the summer but
PRISCO vs. CIR (1960) Sibal informed him that her contract does not require her to report for
work during summer vacation. SIbal, then, filed leaves of absences but
ISSUE: WON the additional 1-hr for briefing of the security guards should failed to receive her vacation pay.
be counted as hours worked, hence entitled to overtime pay During SY ’81-’82, Sibal was assigned to teach health subjects to 900
students spread out in 19 sections of the entire HS Dept. however, she was
The security guards of PRISCO have been employed & required to not given compensation for teaching, notwithstanding the fact that other
observe a 24-hr guard duty divided into 3 shifts of 8 hrs each. teachers were duly compensated for extra work done.
15 Apr ’53: the Assistant Chief Security Officer of PRISCO, acting for the Dec ’81: Sibal received her 13th month pay which was computed on the
Chief Security Officer, issued a Memorandum, directing the security basis of a 10mo period only.
guards to report for duty 2 hrs in advance of the usual time (1-hr for 5 Apr ’82: Fr. Garcia again required Sibal to work during the summer to
briefing, according to Azucena) for guard work. update all the clinical records of the students but she objected, reiterating
Pursuant thereto, the security guards had been rendering such overtime the contract. She also reminded Fr. Garcia that she had not received any
work until 13 Jan ‘54 when the order was revoked after a change of compensation for teaching health subjects the past school year. Fr. Garcia
management. replied in a letter, stating that she was not entitled to extra compensation
15 Feb ’55: PRISCO Workers Union filed with CIR a petition, praying for teaching because teaching was allegedly part of her regular working
that PRISCO be ordered to pay its present employees their basic pay & at program as school nurse.
least 25% additional compensation for 1 hr overtime work they had Again, Sibal called the attention of Fr. Garcia to the school’s failure to
previously rendered as security guards of PRISCO from 17 Apr ’53 to 13 pay her salary for the summer of ’81 & of the deficiency in her 13th month
Jan ’54, and the additional compensation of at least 25% for the work pay. However, Fr. Garcia refused to consider Sibal’s demands & threatened
they have been rendering on Sundays & legal holidays from 7 Mar ’54. to take drastic measures against her.
PRISCO’s Answer: it denied the claim for payment of 1-hr overtime 10 May ’82: failing to receive compensation demanded, Sibal filed a
work, asserting that such overtime, if rendered, was not authorized. That complaint for non-payment of vacation pay for 4 summer months,
although some of claimants had rendered work on Sundays & legal compensation for teaching health subjects, deficiency in 13th month pay.
holidays, they had already been paid. When Sibal reported for work, Notre Dame served her letter of
27 Dec ’57: CIR issued an order requiring PRISCO to pay the claimants. termination effective immediately & it also submitted a copy of the
PRISCO’s contentions: CIR had no jurisdiction. The Memorandum termination paper to the Ministry of Labor & Employment.
ordering the claimants to render extra work was void for being issued The following day, Sibal amended her complaint, adding illegal
without authority. Hence, it is not bound to pay for the alleged overtime. dismissal and unfair labor practice charges.
8 Sep ’83: Fr. Garcia was eventually replaced, in view of the charges
Affirmative. Shortly after the enforcement of the memorandum, the against him by more than 20 teachers & personnel, as well as Faculty.
security guards protested to the management of PRISCO. However, instead Notre Dame’s contentions: Sibal is not entitled to compensation for
of revoking said memorandum on the ground that it was unauthorized by teaching health subjects allegedly because she taught during her regular
the management, General Manager De la Cruz told the security guards working hours & that subject Health was allied to her profession as nurse.
that the reason why it was being enforced, was to discipline them and that
their work was only light and that 1 hour was of no importance. This is Affirmative. Semestral breaks may be considered as "hours worked"
viewed as tacit ratification of the memorandum, on the part of the officials under the IRR of Labor Code and that regular professors and teachers are
who had the power to validly act for it. entitled to ECOLA during the semestral breaks, their "absence" from work
The services rendered outside of the regular working hours partake the not being of their own will.
nature of overtime work. In this case, the security guards were directed to Sibal is entitled to compensation for teaching health subjects. Although
report for duty one hour in advance of the usual time for guard work for the subject taught is Health and allied to her profession, and is taught
briefing purposes. (cited by Azucena) during regular working hours, Sibal's teaching the subject in the classroom
No question that a contract of employment exists between PRISCO & and her administering to the health needs of students in the clinic involve
the security guards, and that pursuant to the terms of the memorandum, two different and distinct jobs. Hence, should be paid compensation.
the latter are to render 8 hrs labor. When PRISCO's official required them Sibal has established that in several precedents, non-teaching personnel
to render an additional hour work, and the security guards had to comply of respondent school who were made to handle teaching jobs were
(as non-compliance was punishable and actually punished with actually paid actual compensation. Extra pay for extra work should be
disciplinary action), a supplemental contractual obligation was created. applied.
As to jurisdiction: where the employer-employee relationship is still As to illegal dismissal: LA found that the termination of Sibal was not
existing or is sought to be reestablished because of its wrongful severance supported by any just cause or reason. Hence, there is illegal dismissal.
(as where the employee seeks reinstatement), the Court of Industrial One's employment, profession, trade or calling is a "property right", and
Relations has jurisdiction over all claims arising out of, or in connection the wrongful interference therewith is an actionable wrong. While it is true
with employment, such as those related to the Minimum Wage Law and that it is the sole prerogative of the management to dismiss or lay-off an
the Eight-Hour Labor Law. After the termination of the relationship and no employee, the exercise of such a prerogative, however, must be made
reinstatement is sought, such claims becomes mere money claims, and without abuse of discretion, for what is at stake is not only Sibal’s but also
come within the jurisdiction of the regular courts. her means of livelihood.
Hence, CIR has jurisdiction in this case. As to moral damages: Sibal had been the subject of discrimination for
over a year before she was ultimately dismissed. When she justifiably
Semestral Break refused to obey the order to report for work for two summers, she was not
 Labor Standards Case Digest
given her vacation pay for both occasions. Unlike her, the doctor Sec 1, CA 444: The legal working day for any person employed
and dentist who worked in the same clinic, were not required to report by another shall be of not more than eight hours daily. When the work is not
during summer and were given their respective vacation pay. Again, Sibal, continuous, the time during which the laborer is not working AND CAN LEAVE
unlike the teachers who accepted extra load, was not given extra HIS WORKING PLACE and can rest completely, shall not be counted.
compensation when she taught health subjects to 900 students for one We do not need to set for seamen a criterion different from that applied
year. By withholding such compensation, Notre Dame stood to gain at the to laborers on land, for the only thing to be done is to determine the
expense of Sibal, the amount of salary which it could have paid to 2 meaning and scope of the term "working place" used therein. A laborer
teachers. need not leave the premises of the factory, shop or boat in order that his
Wherefore, Notre Dame is ordered to reinstate Sibal to her former period of rest shall not be counted, it being enough that he "cease to
position without loss of seniority rights & with backwages for 3 yrs from work", may rest completely and leave or may leave at his will the spot
the time of her illegal dismissal, to pay her regular extra compensation where he actually stays while working, to go somewhere else, whether
relative to teaching health subjects & to pay moral damages. within or outside the premises of said factory, shop or boat.
Affirmative. There is no need to look into the nature of the work of
claimant mariners to ascertain the truth of Luzon Stevedoring’s allegation
that this kind of seamen have had enough "free time.” It was found that
the company gave the laborers 3 free meals a day with a recess of 20
minutes after each meal. However, this decision was specifically amended
by the Court en banc, wherein it held that the claimants herein rendered
services to the Company from 6am-6pm including Sundays and holidays,
Work Hours of Seamen which implies either that said laborers were not given any recess at all, or
that they were not allowed to leave the spot of their working place, or that
Soriano vs. Phil. Rock (1956) they could not rest completely.
As to issue on WON the manifest acquiescence of the union members
(cited in Azucena) over a period of almost 2 yrs with reference to the sufficiency of their
The fact that the tugboat was navigated 4 hours beyond 5pm does not wages & not having made protest is equivalent to estoppel: The
necessarily mean that during those days the appellee performed service principles of estoppel and laches cannot be invoked against employees or
beyond 8 hrs. his presence on board more than 8 hours a day might have laborers in an action for the recovery of compensation for past overtime
been required by the nature of his service, but there is no specific work. In the first place, it would be contrary to the spirit of the Eight-Hour
evidence that he had been working all that time. It was not absolutely Labor Law, under which. as already seen, the laborers cannot waive their
necessary for him to be continuously attending to the motor of the right to extra compensation. In the second place, the law principally
tugboat. He could leave the motor during part of said time and get rested obligates the employer to observe it, so much so that it punishes the
completely. He had an assistant who could watch it and inform him of employer for its violation and leaves the employee free and blameless. In
whatever disorder may develop therein. The fact that he was subject to call the third place, the employee or laborer is in such a disadvantageous
in case some disorder may develop in the motor does not necessarily position as to be naturally reluctant or even apprehensive in asserting a
mean he was working. claim which may cause the employer to devise a way for exercising his
right to terminate the employment.
Luzon Stevedoring vs. Luzon Marine (1957) The right of the laborers to overtime pay cannot be waived. The
complaining laborers have declared that long before the filing of this case,
ISSUE: WON the 20 min break after mealtime given to the laborers should they had informed Mr. Martinez, a sort of overseer of the petitioner, that
be counted as working hours they had been working overtime and claiming the corresponding
compensation therefor, and there is nothing on record to show that the
21 Jun ’48: Luzon Marine Dept Union filed a petition with CIR claimants, at least the majority of them, had received wages in excess of
containing several demands against Luzon Stevedoring, among which the minimum wage later provided by RA 602, approved April 6, 1951. On
were the petition for full recognition of the right of collective bargaining, the contrary, it appears that 34 out of 58 claimants received salaries less
close shop & check off. than the minimum wage authorized under Minimum Wage Law.
18 Jul ’48: while case was still pending, said union declared a strike As to when should payment in arrears be based: It is of common
which was ruled down as illegal by the Court. occurrence that a workingman has already rendered services in excess of
Union filed another petition, praying that the remaining unresolved the statutory period of 8 hours for some time before he can be led or he
demands of the Union presented in original petition be granted. can muster enough courage to confront his employer with a demand for
Trial Court findings: Luzon Stevedoring gave its employees 3 free meals payment thereof. Fear of possible unemployment sometimes is a very
every day & about 20 minutes of rest after each mealtime. They worked strong factor that gags the man from asserting his right under the law and
from 6am to 6pm every day including Sundays & holidays. For work it may take him months or years before he could be made to present a
performed in excess of 8 hrs, the officers, patrons & radio operators were claim against his employer. To allow the workingman to be compensated
given overtime pay in the amount of P4 each & P2 each for the rest of the only from the date of the filing of the petition with the court would be to
crew up to Mar ’47. After said date, these payments were increased to P5 penalize him for his acquiescence or silence.
& P2.50 until the time of their separation or the strike of 19 Jul ’48. When As to reasonableness of the law providing for the grant of overtime
the tugboats underwent repairs, their personnel worked only 8 hrs a day wages: courts cannot go outside of the field of interpretation so as to
excluding Sundays & holidays. Although there was an effort on the part of inquire into the motive or motives of Congress in enacting a particular
the claimants to show that some had worked beyond 6pm, evidence was piece of legislation. It may be alleged, however, that the delay in asserting
uncertain & indefinite. Also, the company, by nature of its business is the right to back overtime compensation may cause an unreasonable or
considered a public service operator & therefore, exempt from paying irreparable injury to the employer, because the accumulation of such back
additional remuneration or compensation for work performed on Sundays overtime wages may become so great that their payment might cause the
and legal holidays, pursuant to Sec. 4, CA 444. bankruptcy or the closing of the business of the employer who might not
Luzon Marine’s contentions: members of the union who had rendered be in a position to defray the same.
services from 6am-6pm were entitle to 4 hrs overtime pay & that the time
allotted to the taking of their meals should not be deducted from the 4 hrs National vs. CIR (1961)
of overtime rendered by said employees. Also that the 20 minutes rest
given to them after mealtime should not be deducted. ISSUE: WON Malondras is entitled to overtime compensation for the 16
Luzon Stevedoring’s contentions: although the seamen concerned hrs that he was required to be on board
stayed in it's tugboats, or merely within its compound, for 12 hours, yet
their work was not continuous but interrupted or broken. While it is true NASSCO is the owner of several barges & tugboats used in the
that the workers herein were required to report for work at 6am and were transportation of cargoes & personnel in connection with its business of
made to stay up to 6pm, their work was not continuous and they could shipbuilding and repair.
have left the premises of their working place were it not for the inherent In order that its bargemen could immediately be called to duty
physical impossibility peculiar to the nature of their duty which prevented whenever their services are needed, they are required to stay in their
them from leaving the tugboats. respective barges. They were given living quarters therein as well as
subsistence allowance of P1.50/day during the time they are on board.
 Labor Standards Case Digest
However, upon prior authority of their superior officers, they may “makakasaksak ako” and also because he did not perceive such
leave their barges when said barges are idle. task as one of his duties as radio officer.
15 Apr ’57: 39 crew members of NASSCO’s tugboat service, including 30 Apr: Hernandez was ordered to disembark & was repatriated. He
Dominador Malondras, filed with CIR a complaint for the payment of was paid his salaries & wages only up to 16 May ’90.
overtime compensation. 21 Jun: Hernandez filed a complaint for illegal dismissal.
NASSCO admitted that to meet the exigencies of the service,
complainants have to work when so required in excess of 8 hrs a day Stolt-Nielsen’s contentions: Hernandez’ dismissal was with just cause
and/or during Sundays & legal holidays. They are paid their regular because he refused to comply with the captain’s order to assist the crew
salaries & subsistence allowance but without additional compensation for member who was being repatriated.
overtime work. Untenable. Willful disobedience of the employer’s lawful orders are a
22 Nov: CIR issued an order directing the court examiner to compute just cause for the dismissal of an employee, provided the 2 requisites
the overtime compensation due to the claimants. CE submitted his report concur: 1) the employee's assailed conduct must have been wilful or
– Dominador Malondras rendered an average overtime service of 5 hrs intentional, the wilfulness characterized by a "wrongful and perverse
each day for the period of 1 Jan – 31 Dec ’57. Hence, the Court approved attitude"; and 2) the order violated must be reasonable, lawful, made
the report and ordered NASSCO to pay their overtime compensation. known to the employee and must pertain to the duties which he had been
30 Apr ’58: CE submitted his 2nd partial report covering period 1 Jan engaged to discharged. However, not every case of insubordination or
’54 to 31 Dec ’56, giving each crewman an average of 5 overtime hrs per wilful disobedience by an employee of a lawful work-connected order of
day. Malondras, however, was not included sine his daily time sheets were the employer or its representative is reasonably penalized with dismissal.
not available then. The crewmen concerned were paid. Hernandez was indeed bound to obey the lawful commands of the
18 Sep ’59: because of his exclusion from the 2nd report, Malondras captain but only as long as these pertain to his duties. The order to carry
filed petition, asking for the payment of his overtime compensation for the luggage of a crew member, while being lawful, is not part of the duties
periods 1 Jan ’54 to 31 Dec ’56 and from Jan-Apr ’57. of a radio officer. Assuming it is, his so-called “act of disobedience” does
15 Jan ’60: CE submitted a report crediting Malondra with 4,349 not warrant the supreme penalty of dismissal. It was found that his
overtime hours, average of 5 overtime hrs a day. Court ordered CE to actuation was the first & only act of disobedience during his service with
make re-examination. CE submitted amended report, giving Malondras an Stolt. Circumstance shows that the utterance of the crew member instilled
average of 16 hrs overtime per day. fear in Hernandez that he was deterred from carrying out the order.
NASSCO’s contentions: the mere fact that Malondras was required to
be on board his barge all day so that he could immediately be called to Stolt’s contention: it adopted the view that the "guaranteed or fixed
duty when his services were needed does not imply that he should be paid overtime pay of 30% of the basic salary per month" embodied in their
overtime for 16 hours a day, but that he should receive compensation only employment contract should be awarded to them as part of a "package
for the actual service in excess of 8 hours that he can prove. benefit." They have theorized that even without sufficient evidence of
actual rendition of overtime work they would automatically be entitled to
Negative. Malondras should not be paid overtime compensation for overtime pay. The contract provision means that the fixed overtime pay of
every hour in excess of the regular working hours that he was on board his 30% would be a basis for computing the overtime pay if and when
vessel or barge each day, irrespective of whether or not he actually put in overtime work would be rendered. Simply stated, the rendition of overtime
work during those hours. work and the submission of sufficient proof that the said work was actually
Seamen are required to stay on board their vessels by the very nature performed are conditions to be satisfied before a seaman could be entitled
of their duties, and it is for this reason that, in addition to their regular to overtime pay which would be computed on the basis of 30% of the
compensation, they are given free living quarters and subsistence basic monthly salary. In short, the contract provision guarantees the right
allowances when required to be on board. It could not have been the to overtime pay but the entitlement to such benefit must first be
purpose of our law to require their employers to pay them overtime even established. Realistically speaking, a seaman, by the very nature of his job,
when they are not actually working; otherwise, every sailor on board a stays on board a ship or vessel beyond the regular eight-hour work
vessel would be entitled to overtime for sixteen hours each day, even if he schedule. For the employer to give him overtime pay for the extra hours
had spent all those hours resting or sleeping in his bunk, after his regular when he might be sleeping or attending to his personal chores or even just
tour of duty. The correct criterion in determining whether or not sailors lulling away his time would be extremely unfair and unreasonable.
are entitled to overtime pay is not, therefore, whether they were on board Tenable. close scrutiny of the computation of the monetary award
and can not leave ship beyond the regular eight working hours a day, but shows that the award for overtime was for the remaining 6 months and 3
whether they actually rendered service in excess of said number of hours. days of Hernandez’s contract at which time he was no longer rendering
While Malondras' daily time sheets do not show his actual working services as he had already been repatriated. Hence, he is not entitled to
hours, nevertheless, NASSCO has already admitted that Malondras and his any overtime pay.
co-claimants did render service beyond 8 hours a day when so required
by the exigencies of the service; and in fact, Malondras was credited and Meal Periods
already paid for 5 hours daily overtime work during the period from May 1
to December 31, 1957, under the examiner's first report. Since Malondras NDC vs. CIR (supra.)
has been at the same job since 1954, it can be reasonably inferred that
the overtime service he put in whenever he was required to be aboard his Sime Darby vs. NLRC (1998)
barge all day from 1954 to 1957 would be more or less consistent.
As to WON the subsistence allowance received by Malondras for the ISSUE: WON the act of management in revising the work schedule of its
periods covered should be deducted from his overtime compensation: employees & discarding their paid lunch break constitutive of unfair labor
negative. This allowance is independent of and has nothing to do with practice
whatever additional compensation for overtime work was due to NASSCO's
bargemen. According to NASSCO itself, the reason why their bargemen are Sime Darby Pilipinas, Inc. is engaged in the manufacture of automotive
given living quarters in their barges and subsistence allowance at the rate tires, tubes & other rubber products. On the other hand, Sime Darby
of P1.50/day was because they were required to stay in their respective Salaried Employees Assoc. is an association of monthly salaried
barges in order that they could be immediately called to duty when their employees of Sime Darby at its Marikina factory.
services were needed. All company factory workers in Marikina worked from 7:45am to
3:45pm with a 30-min paid “on call” lunch break.
Stolt-Nielsen vs. NLRC (1996) 14 Aug ’92: Sime Darby issued a memorandum to all factory-based
employee advising all its monthly salaried employees a change in work
ISSUE: WON Hernandez is entitled to overtime pay schedule – 7:45am to 4:45pm on M-F, 7:45am to 11:45am on S; coffee
break will be 10 mins only; lunch break will be for 1 hour.
Meynardo Hernandez was hired by Stolt-Nielsen as radio officer on SDSEA felt affected adversely by the change in the work schedule &
board M/T Stolt Condor for a period of 10mos. He boarded the vessel on discontinuance of 30-min paid “on call” lunch break. It filed a complaint
20 Jan ’90. with LA for unfair labor practice, discrimination & evasion of liability.
26 Apr: Ship Captain ordered Hernandez to carry the baggage of crew LA Decision: dismissed. The change in the work schedule & elimination
member Lito Loveria who was being repatriated. He refused to obey the of the 30-min paid lunch break constituted a valid exercise of
order out of fear in vie of the utterance of said crew member, management prerogative. The factory workers would be unjustly enriched
 Labor Standards Case Digest
if they continued to be paid during their lunch break even if they independent of the day shift. Hence, there are actually two shifts:
were no longer "on call" or required to work during the break. shift workers who work during the day, and those who work at night.
Night work affects the health of workers & deprives him of certain
Negative. The right to fix the work schedules of the employees rests things that make life relatively pleasant – full and uninterrupted rest and
principally on their employer. Sime Darby, as the employer, cites as some moments of solace, entertainment or spiritual & cultural expansion.
reason for the adjustment the efficient conduct of its business operations It is said that the workers can rest during the day after working all night;
and its improved production. It rationalizes that while the old work but perhaps you can give the rest of the body one day and one full
schedule included a 30-min paid lunch break, the employees could be restorative tonic effect that can only provide the natural sleep at night? It is
called upon to do jobs during that period as they were "on call." Even if said also that some prefer to work at night under our scorching weather,
denominated as lunch break, this period could very well be considered as thus avoiding the heat of the day. We fear, however, that this is better
working time because the factory employees were required to work if spoken than practiced. In fact, few persons react favorably to nightwork.
necessary and were paid accordingly for working. With the new work Night work cannot be regarded as desirable, either from the point of
schedule, the employees are now given a one-hour lunch break without view of the employer or of the wage earner. It is uneconomical unless
any interruption from their employer. For a full one-hour undisturbed overhead costs are unusually heavy. Frequently the scale of wages is
lunch break, the employees can freely and effectively use this hour not higher as an inducement to employees to accept employment on the night
only for eating but also for their rest and comfort which are conducive to shift, and the rate of production is generally lower.
more efficiency and better performance in their work. The lack of sunlight tends to produce anemia and tuberculosis and to
Since the employees are no longer required to work during this one- predispose to other ills. Night work brings increased liability to eyestrain
hour lunch break, there is no more need for them to be compensated for and accident. Serious moral dangers are there also likely to result from the
this period. The new work schedule fully complies with the daily work necessity of traveling the streets alone at night, and from the interference
period of 8 hours without violating the Labor Code. Besides, the new with ordinary home life. From an economic point of view. Moreover, the
schedule applies to all employees in the factory similarly situated whether investigations showed that night work was unprofitable, being lower to day
they are union members or not. As such, it cannot be said that the new work both in quality and in quantity. Wherever it had been abolished, in
scheme adopted prejudices the right of SDSEA to self-organization. the long run both the efficiency of the management and of the workers
Every business enterprise endeavors to increase its profits. In the was raised. Furthermore, it was found night work That laws are a valuable
process, it may devise means to attain that goal. Even as the law is aid in enforcing acts fixing the maximum period of employment.
solicitous of the welfare of the employees, it must also protect the right of The case against night work, then, may be said to rest upon several
an employer to exercise what are clearly management prerogatives. Thus, grounds. In the first place, there are the remotely injurious effects of
management is free to regulate, according to its own discretion and permanent night work manifested in the later years of the worker's life. Of
judgment, all aspects of employment, including hiring, work assignments, more immediate importance to the average worker is the disarrangement
working methods, time, place and manner of work, processes to be of his social life, including the recreational activities of his leisure hours
followed, supervision of workers, working regulations, transfer of and the ordinary associations of normal family relations. From an
employees, work supervision, lay off of workers and discipline, dismissal economic point of view, nightwork is to be discouraged because of its
and recall of workers. So long as such prerogative is exercised in good adverse effect upon efficiency and output. A moral argument against
faith for the advancement of the employer's interest and not for the nightwork in the case of women is that the night shift forces the workers to
purpose of defeating or circumventing the rights of the employees under go to and from the factory in darkness. Recent experiences of industrial
special laws or under valid agreements, it should be upheld. nations have added much to the evidence against the continuation of
While the Constitution is committed to the policy of social justice and nightwork, except in extraordinary circumstances and unavoidable
the protection of the working class, it should not be supposed that every emergencies. The immediate prohibition of nightwork for all laborers is
dispute will be automatically decided in favor of labor. Management also hardly practicable; its discontinuance in the case of women employees is
has rights which, as such, are entitled to respect and enforcement in the unquestionably desirable. 'The night was made for rest and sleep and not
interest of simple fair play. for work' is a common saying among wage-earning people, and many of
them dream of an industrial order in which there will be no night shift.
Night Shift Differential As to jurisdiction of CIR: CIR has jurisdiction – 1) when there is a
dispute between the principal and the employee or worker on the issue of
Shell vs. NLU (1948) wages, 2) any dispute, industrial or agricultural, resulting from any
differences in wages, compensation units, hours work, employment
ISSUE: WON the workers are entitled to additional pay during night shift conditions, etc. CIR’s power is not limited to decide the dispute, to grant
the remedy requested by the parties but may also include any matter or
National Labor Union instituted an action, praying that the Shell workers determination for the purpose of settling the dispute.
be paid additional compensation for their work at night. It seemed that In the case at bar, there is undoubtedly an industrial dispute. Shell is
night service needs a certain number of workers because the planes from not willing to pay its night workers higher wages.
abroad often come off and land at night. Thus, it is necessary that evening
chores for supplying fuel & lubricants are made. Naric vs. Naric (1959)
CIR issued a decision, ordering Shell to pay its workers who work at
night an additional compensation of 50% of their regular wages if they ISSUE: WON the employee performing his regular 8 hours work during
worked by day. the daytime be paid for his services from 5-9pm as "overtime work" and at
Shell’s contentions: there is no legal provision empowering the CIR to the same time be paid from 6-9pm as night work?"
order the payment of additional workers who work at night and that Act
No. 444 relieved the employer of such obligation as it is provided in the In a case, CIR promulgated a decision directing the National Rice &
Act, where it made compulsory the "overtime" (additional compensation) Corn Corp. to pay its workers 25% additional compensation for night work
pay for work rendered beyond 8 hours, and such cases do not include the rendered by them.
work at night. 21 May ’56: CIR issued an order directing its chief examiner to
NLU’s contentions: the authority of CIR is part of the extensive & compute the additional compensation for night work granted in its
effective powers that CA 103 grants to the CIR. Also, that Act 444 has no decision covering the period from 3 Oct ’52 to 16 Feb ’53.
application as it is necessarily limited in scope, particularly referring CE report shows that there are 163 workers & employees of Naric who
exclusive to maximum hours of work allowed in industrial establishments. rendered night work from said period & the 25% additional compensation
of said workers and employees computed on the basis of their respective
Affirmative. Law No. 444 is not applicable to this case, it is evident that monthly salaries amounted to P5,221.84.
it has a specific purpose, namely: (a) fix the maximum 8-hour working 24 Sep: Naric Workers Union filed a petition for execution of the
day; (b) identify certain exceptional cases you can authorize work outside decision. However, Naric filed its opposition, contending that said motion
the working day; (c) provide a bonus, which should not be less than 25% was premature because the report of the CE has not yet been passed
of regular salary for the "overtime" or work in excess of 8 hours. upon & approved by the Court hence, not final.
Shell requires its workers to a day full of work or 8 hrs of work. Also, it During hearing, CE was called upon to explain his report. He stated that
requires work to be done at night. Night work here is not only prolongation in making his report he considered any all work performed between 6pm
or “overtime” regular work day. It is another kind of work, absolutely and 6am as "night work" and accordingly has awarded each employee or
worker an additional compensation of 25% for "night work". He further
 Labor Standards Case Digest
stated that if a particular employee worked from 8am to 5pm should be bound by their voluntary commitments is obsolete in
and then rendered overtime service from 5pm of the same day to 7pm, he this time and age. Mercury Drug Co., Inc., maintains a chain of drugstores
considered the work from 5 to 6 pm as overtime work and entitled to 25% that are open every day of the week and, for some stores, up to very late at
additional compensation as overtime work, and the same work from 6 to 7 night because of the nature of the pharmaceutical retail business. The
pm as both overtime work and night work. respondents knew that they had to work Sundays and holidays and at
CIR issued an order approving the same & ordered Naric to deport said night, not as exceptions to the rule but as part of the regular course of
amount within 5 days from receipt of order. employment. Presented with contracts setting their compensation on an
annual basis with an express waiver of extra compensation for work on
Affirmative. The “two shifts” comment in the Shell case does not intend Sundays and holidays, the workers did not have much choice. The private
to convey the idea that work done at night cannot also be an overtime respondents were at a disadvantage insofar as the contractual relationship
work. The comment only served to emphasize that the demand which the was concerned.
Shell company made upon its laborers is not merely an overtime work but As to the contracts: the contracts signed by Nardo et.al. are on
night work and so there was need to differentiate night work from daytime standard form. These contracts were not declared by the respondent court
work. While there was no law actually requiring payment of additional null and void in their entirety. It merely ruled that any agreement in a
compensation for night work, the industrial court has the power to contract of employment which would exclude the 25% additional
determine the wages that night workers should receive under CA 103, and compensation for work done during Sundays and holidays is null and void
so it justified the additional compensation given to night workers by the as mandated by law.
industrial court in the Shell case for "hygienic, medical, moral, cultural and As to contention that the 25% additional compensation had already
sociological reasons." That case therefore cannot be invoked as an been included in their monthly salaries: merely based on the testimony of
authority for concluding that one who does night work cannot be paid its lone witness, Jacinto Concepcion. On the other hand, Nardo et. al.
additional compensation for the same work as overtime. One is paid for presented evidence through the testimonies of Nardo Dayao, Ernesto
his work done during the night and the other is paid because it is excess Talampas, and Josias Federico who are themselves among the employees
of the regular eight-hour work may be legally required to do. One is done who filed the case for unfair labor practice.
for reasons of health and the other because of an express mandate of law.
By way of example: Let us suppose that the workers of an industrial Seaborne vs. NLRC (1994)
company work in three shifts: one from 8am to 4pm; another from 4pm
to 12pm; and still another from 12pm to 8am. Supposing that night work ISSUE: WON Ternida is entitled to his money claims
begins from 6pm and ends at 6am. Under the law and jurisprudence, the
first shift workers will have to be paid a compensation as day workers; the 8 Apr ’83: Armando Ternida began working for Seaborne Carriers Corp.
second shift workers will have to be partly as day workers and partly as as Tug Master with monthly salary of P2,475.
night workers; and the third workers will have to be partly paid as night 15 Sep ’87: the tugboat he was manning met an accident. Half of the
workers and partly as day workers. repairs, P5k, was shouldered by Seaborne. Ternida was required to pay for
Supposing again that the second shift workers, for some justifiable the other half & an initial salary deduction of P250 was actually made.
reasons, are required to extend their work from 12pm to 2am. Under the 24 Sep ’87: Ternida sought permission to go on leave of absence to ask
law, they are entitled to additional compensation for overtime work on the from DOLE if such deduction was legal but this request was not granted.
basis of their wages as night workers. If the first shift workers were Instead, he was asked by Gatan, Seaborner’s president & manager, to
required to extend their work up to 8pm, is it not fair and logical that for tender his resignation. When refused, since he had not yet received any
the two hours they work at night (6:00 to 8:00) they also be paid an separation pay, he was dismissed. So Ternida filed for illegal dismissal,
overtime compensation on the basis of wages paid for night workers? This illegal deduction & unpaid wages.
is the only logical conclusion based on our ruling in the Shell case which Seaborne’s contentions: award to Ternida should not have included
requires payment of additional compensation for night work. service incentive pay because it was never sought in the complaint and he
is already enjoying vacation leave benefits. Also alleged that Ternida failed
Mercury vs. Dayao (1982) to prove or establish that he is entitled to the same, & that he did not
specify which holiday or what year he was not paid said benefits.
ISSUE: WON Nardo et. al. are entitled to additional compensation
Affirmative. Ternida’s allegation of non-payment of these benefits, to
17 Mar ’64: Nardo Dayao & 70 others filed a complaint against Mercury which he is by law entitled, is a negative allegation which need not be
Drug Co. for payment of their unpaid back wages for work done on supported by evidence unless it is an essential part of the cause of action.
Sundays & legal holidays plus 25% additional compensation from date of It must be noted that the main cause of action of Ternida is his illegal
employment up to 30 Jun ‘62; 2) payment of extra compensation on work dismissal, and the claim for the monetary benefits is but an incident of the
done at night; 3) reinstatement of Januario Referente & Oscar Echalar. protest against such dismissal. Thus, the burden of proving that payment
Mercury’s contentions: they have no cause of action against Mariano of said benefits has been made rests upon the party who will suffer if no
Que because their employer Mercury Drug Co. is separate and distinct evidence at all is presented by either party, that is, Seaborne as Ternidas
from its incorporators stockholders. Also that no court has the power to employer.
set wages, rates of pay, hours of employment, or other conditions of As to WON Gatan should be held responsible to Ternida for the
employment to the extent of disregarding an agreement thereon between payment of backwages & other monetary benefits awarded by NLRC: All
the Mercury & Nardo, and of fixing night differential wages. Also that they that the evidence shows is that Gatan ordered Ternida to resign and
were fully paid for services rendered under their contracts. dismissed him when he failed to do so without considering the reason for
such refusal, which is the non-payment of his separation pay. There is
Affirmative. Witnesses for Nardo et.al. declared they worked on regular nothing on record which would prove the insinuation that Jerry Gatan
days and on every other Sunday and also during all holidays; that for sanctioned the deduction of P250 from Ternida’s salary, as well as the
services rendered on Sundays and holidays they were not paid for the first denial of the latter's request for leave of absence. These factors are simply
4 hours and what they only received was the overtime compensation not sufficient to convince this Court that Gatan acted with malice and in
corresponding to the number of hours after or in excess of the first four bad faith in the termination of Ternida’s employment.
hours; and that such payment is being indicated in the overtime pay for
work done in excess of eight hours on regular working days. It is also National Semiconductor vs. NLRC (1998)
claimed that their nighttime services could well be seen on their respective
daily time records. ISSUE: Who has the burden of proving a claim for night shift differential
Moreover, Mercury did not deny that Nardo et.al. rendered nighttime pay, the worker who claims not to have been paid night shift differentials,
work. In fact, no additional evidence was necessary to prove that they were or the employer in custody of pertinent documents which would prove the
entitled to additional compensation for whether or not they were entitled fact of payment of the same?
to the same is a question of law which the respondent court answered
correctly. The "waiver rule" is not applicable in the case at bar. Additional National Semiconductor Distribution, Ltd. is a foreign corporation
compensation for nighttime work is founded on public policy, hence the licensed to do business in the PH. It manufactures & assembles electornic
same cannot be waived. parts for export.
Mercury’s contention that its employees fully understood what they
signed when they entered into the contracts of employment and that they
 Labor Standards Case Digest
Edgar Philip Santos was employed by NSC as a technician in terminate his services. Thus, it is clear the minimum
its Special Products Group with monthly salary of P5,501. He was requirements of due process have been fulfilled by NSC.
assigned to the graveyard shift starting at 10pm until 6am. That the investigations conducted by petitioner may not be considered
8 Jan ’93: Santos did not report for work on his shift. He resumed his formal or recorded hearings or investigations is immaterial. A formal or
duties as night shift Technician Support only on 9 Jul. however, at the end trial type hearing is not all times and in all instances essential to due
of his shift the following morning, he made 2 entries in his daily time process, the requirements of which are satisfied where the parties are
record to make it appear that he worked on both 8 & 9 Jan ’93. afforded fair and reasonable opportunity to explain their side of the
Joel Limsiaco, his immediate supervisor, received the report that there controversy.
was no technician in the graveyard shift on 8 Jan. Thus, Limsiaco checked
the DTRs & found that Santos indeed did not report for work on said date. Overtime Work
But when he checked the DTR again in the morning of 9 Jan, he found the
entry made by Santos the day before. National vs. CIR (supra.)
Informal investigations were conducted by the management. Santos
was required in a memorandum to explain explain in writing within 48 hrs PNB vs. CIR (1982)
from notice why no disciplinary action should be taken against him for
dishonesty, falsifying DTR and violation of company rules and regulations. ISSUE: What is the basis for the computation of the overtime pay; WON
11 Jan: Santos submitted his written explanation alleging that he was ill longevity pay is included in the computation of overtime pay
on the day he was absent. As regards the entry on 8 January, he alleged
that it was merely due to oversight or carelessness on his part. 28 Jan ’65: President of PH issued a certification of an industrial
14 Jan: NSC dismissed him on the ground of falsification of his DTR, dispute between the PNB Employees Assoc. and the PNB. It was alleged
which act was inimical to the company and constituted dishonesty and that PNB failed to comply with its commitment of organizing a Committee
serious misconduct. on Personnel Affairs to take charge of screening & deliberating on the
20 Jan: Santos filed a complaint for illegal dismissal and non-payment promotion of employees covered by the collective bargaining agreement.
of back wages, premium pay for holidays and rest days, night shift Said date, CIR issued an order aimed at settling the dispute temporarily.
differential pay, allowances, separation pay, moral damages & atty's fees. It ordered to settle the strike & for employees to return to work
LA Findings: Santos was dismissed on legal grounds although he was immediately starting 29 Jan. it also created the Committee on Personnel
not afforded due process, hence, NSC was ordered to indemnify him P1k. Affarirs to start functioning on 1 Feb.
Likewise ordered the payment of P19,801.47 representing Santos' unpaid PNB filed another pleading for the following cause of action:
night shift differentials. NLRC affirmed. 1. PNB’s BOD approved a revision of the computation of overtime
NSC’s contentions: question of non-payment of night shift differentials pay retroactive as of 1 Jul ’54 & authorized a recomputation of the
was never raised as an issue nor pursued and proved by Santos in the regular 1-hr and extra overtime already rendered by all officers &
proceeding before the Labor Arbiter; that Santos was already paid his employees of PNB. However, in 1963, PNB withdrew said benefits
night shift differentials, and any further payment to him would amount to without just cause & still refused to reinstate in spite of repeated
unjust enrichment; and, that the P1k indemnity is totally unjustified as he demands.
was afforded ample opportunity to be heard. 2. PEMA has repeatedly requested PNB that the cost of living
allowance & longevity pay be taken into account in the
A perusal of Santos' position paper filed before the Labor Arbiter reveals computation of overtime pay. Until now, PNB has not taken any
that the question of non-payment of night shift differentials was concrete steps toward the payment of the differential overtime &
specifically raised as an issue in the proceedings below which was never nighttime pays arising from CLA & longevity pay.
abandoned by Santos. The fact that Santos neglected to substantiate his PNB’s Answer: alleged causes of action were not disputes existing
claim for night shift differentials is not prejudicial to his cause. After all, the between the parties; they are mere money claims hence, CIR has no
burden of proving payment rests on petitioner NSC. Santos' allegation of jurisdiction; parties have not stipulated under the CBA between them;
non-payment of this benefit, to which he is by law entitled, is a negative premature as the pertinent CBA has not yet expired.
allegation which need not be supported by evidence unless it is an
essential part of his cause of action. It must be noted that his main cause As to jurisdiction of CIR: it speaks of the existence of a labor dispute
of action is his illegal dismissal, and the claim for night shift differential is between the parties and of a strike declared by PEMA. There is E-E
but an incident of the protest against such dismissal. Thus, the burden of relationship. What confers jurisdiction on the Industrial Court is not the
proving that payment of such benefit has been made rests upon the party form or manner of certification by the President, but the referral to said
who will suffer if no evidence at all is presented by either party. court of the industrial dispute between the employer and the employees.
As a general rule, one who pleads payment has the burden of proving it. NAWASA Ruling: For purposes of computing overtime compensation a
Even where the plaintiff must allege non-payment, the general rule is that regular wage includes all payments which the parties have agreed shall be
the burden rests on the defendant to prove payment, rather than on the received during the work week, including piece-work wages, differential
plaintiff to prove non-payment. payments for working at undesirable times, such as at night or on
For sure, Santos cannot adequately prove the fact of non-payment of Sundays and holidays, and the cost of board and lodging customarily
night shift differentials since the pertinent employee files, payrolls, records, furnished the employee. The 'Regular rate of pay also ordinarily includes
remittances and other similar documents — which will show that Santos incentive bonus or profit- sharing payments made in addition to the
rendered night shift work; the time he rendered services; and, the normal basic pay and it was also held that the higher rate for night,
amounts owed as night shift differentials — are not in his possession but Sunday and holiday work is just as much as regular rate as the lower rate
in the custody and absolute control of NSC. for daytime work. The higher rate is merely an inducement to accept
Santos has been in NSC's employ for 5 years – starting 13 Jan 1988 employment at times which are not at desirable form a workman's
when he was hired to 14 Jan 1993 when his services were terminated — standpoint.
and NSC never denied that Santos rendered night shift work. In fact, it However, the NAWASA case is not applicable here. To apply the
even presented some documents purporting to prove that he was NAWASA computation would require a different formula for each and
assigned to work on the night shift. By choosing not to fully and every employee, would require reference to and continued use of
completely disclose information to prove that it had paid all the night shift individual earnings in the past, thus multiplying the administrative
differentials due Santos, NSC failed to discharge the burden of proof. difficulties of the Company.
As to issue on due process: Santos was accorded full opportunity to be “Regular wage or salary”. Why is a laborer or employee who works
heard before he was dismissed. The essence of due process is simply an beyond the regular hours of work entitled to extra compensation called in
opportunity to be heard, or as applied to administrative proceedings, an this enlightened time, overtime pay? It is for the reason that he is made to
opportunity to explain one's side. In the instant case, NSC furnished work longer than what is commensurate with his agreed compensation for
Santos notice as to the particular acts which constituted the ground for his the statutorily fixed or voluntarily agreed hours of labor he is supposed to
dismissal. By requiring him to submit a written explanation within 48 do. When he thus spends additional time to his work, the effect upon him
hours from receipt of the notice, the company gave him the opportunity to is multi-faceted: he puts in more effort, physical and/or mental; he is
be heard in his defense. Santos availed of this chance by submitting a delayed in going home to his family to enjoy the comforts thereof; he
written explanation. Furthermore, investigations on the incident were might have no time for relaxation, amusement or sports; he might miss
actually conducted on 9 Jan 1993 and 11 Jan 1993. Finally, private important pre-arranged engagements; etc., etc.
respondent was notified on 14 Jan 1993 of the management's decision to
 Labor Standards Case Digest
Overtime work is actually the lengthening of hours developed
to the interests of the employer and the requirements of his enterprise. It ISSUE: WON Christmas bonus & other fringe benefits are excluded in the
follows that the wage or salary to be received must likewise be increased, computation of overtime pay under the CBA between the parties
and more than that, a special additional amount must be added to serve
either as encouragement or inducement or to make up fop the things he 15 Apr ’66: Bisig ng Manggagawa ng Philippine Refining Co. Inc. filed
loses which We have already referred to. And on this score, it must always with the CFI a petition for declaratoty relief. It contended that PRC was
be borne in mind that wage is indisputably intended as payment for work under obligation to include the employees’ Christmas bonus & other fringe
done or services rendered. benefits in the computation of their overtime pay.
Thus, in order to meet the effects of uncertain economic conditions PRC’s Answer: the parties never intend, in their 1965 CBA, to include
affecting adversely the living conditions of wage earners, employers, Christmas bonus & other fringe benefits in the computation of the
whenever the financial conditions of the enterprise permit, grant them overtime pay. In fact, the company agreed to a rate of 50%, which is much
what has been called as cost-of-living allowance. In other words, instead of higher than the 25% required by the 8-Hour Labor Law on the condition
leaving the workers to assume the risks of or drift by themselves amidst that in computing the overtime pay, only the “regular base pay” would be
the cross -currents of country-wide economic dislocation, employers try considered.
their best to help them tide over the hardships and difficulties of the During trial, it was established that the CBA contained a provision that
situation. Sometimes, such allowances are voluntarily agreed upon in the overtime compensation of the employees was computed on the basis
collective bargaining agreements. At other times, it is imposed by the solely of their basic monthly pay, i.e., excluding the employees' Christmas
government. bonus and other fringe benefits, and that in the negotiations which led to
Two distinctive features: First, it is evidently gratifying that the the execution of the 1965 collective bargaining agreement, the matter of
government, in keeping with the humanitarian trend of the times, always the proper interpretation of the phrase "regular base pay" was discussed.
makes every effort to keep wages abreast with increased cost of living
conditions, doing it as soon as the necessity for it arises. However, Negative. The phrase "regular base pay" is clear, unequivocal and
obviously, in order not to overdo things, except when otherwise provided, it requires no interpretation. It means regular basic pay and necessarily
spares from such obligation employers who by mutual agreement with excludes money received in different concepts such as Christmas bonus
their workers are already paying what the corresponding law provides. and other fringe benefits. In the CBA, the overtime compensation was
In the case at bar, the cost-of-living allowance began to be granted in invariably based only on the regular basic pay, exclusive of Christmas
1958 and the longevity pay in 1981. In other words, they were granted by bonus and other fringe benefits.
PNB upon realizing the difficult plight of its labor force in the face of the Employers covered by CA 444 are under legal compulsion to grant their
unusual inflationary situation in the economy of the country, which, employees overtime compensation in amounts not less than their basic
however acute, was nevertheless expected to improve. There was thus pay and the fringe benefits regularly and continuously received by them
evident an inherently contingent character in said allowances. They were plus 25% thereof. This does not however mean that agreements
not intended to be regular, much less permanent additional part of the concerning overtime compensation should always provide for a
compensation of the employees and workers. Much less were they computation based on the employee's "regular wage or salary” i.e. regular
dependent on extra or special work done or service rendered by the base pay plus fringe benefits regularly and continuously received. For it is
corresponding recipient. Rather, they were based on the needs of their axiomatic that in multiplication, the product is directly related to the
families as the conditions of the economy warranted. multiplicand the multiplier, and that the multiplicand Is inversely related
Negative. Anent longevity pay, this was not based on the daily or to the multiplier conveniently, the same product may be obtained despite
monthly amount of work done or service rendered it was more of a reduction of the multiplicand provided that the multiplier is
gratuity for their loyalty, or their having been in the bank's employment for correspondingly increased.
consideration periods of time. It is beyond question that longevity pay Conformably, there is still compliance with the above-stated ruling
cannot be included in the computation of overtime pay for the reason that despite the fact that the overtime compensation is based only on the
the contrary is expressly stipulated in the collective bargaining agreement employee's "regular base pay" (the multiplicand) as long as the rate of
and, as should be the case, it is settled that the terms and conditions of a 25% (the multiplier) is increased by such amount as to produce a result
collective bargaining agreement constitute the law between the parties. (the product) which is not less than the result to be obtained in computing
CIR could not impose upon the parties in an E-E conflict, terms & 25% of the employee's "regular wage or salary" ("regular base pay" plus
conditions which are inconsistent with the existing law and jurisprudence. fringe benefits regularly and continuously received). In fine, the parties
Anent cost-of-living allowance, the same has to be examined in another may agree for the payment of overtime compensation in an amount to be
perspective. While PEMA had been always demanding for its integration determined by applying a formula other than the statutory formula of
into the basic pay, it never succeeded in getting the conformity of PNB "regular wage or qqqs plus at least twenty-five per centum additional"
thereto, and so, all collective bargaining agreements entered into provided that the result in applying the contractual formula is not less
periodically by the said parties did not provide therefor. However, there is than the result in applying said statutory formula.
nothing in CA 444 that could justify its posture that cost-of-living In the case at bar, it is admitted that the contractual formula of “regular
allowance should be added to the regular wage in computing overtime base pay plus 50% thereof” yields an overtime compensation which is
pay. Nowhere did NAWASA refer to extra, temporary and contingent higher than the result in applying the statutory formula in Nawasa case.
compensation unrelated to work done or service rendered, which as Hence, it is valid.
explained earlier is the very nature of cost-of- living allowance.
The basis of computation of overtime pay beyond that required by CA PALEA vs. PAL (1976)
444 must be the collective bargaining agreement. It is not for the court to
impose upon the parties anything beyond what they have agreed upon ISSUE:
which is not tainted with illegality. On the other hand, where the parties fail
to come to an agreement, on a matter not legally required, the court 14 Feb ’63: PH Air Lines Employees Assoc. & PH Air Lines Supervisors
abuses its discretion when it obliges any of them to do more than what is Assoc. commenced an action against PAL, praying that it be ordered to
legally obliged. In the absence of any specific provision on the matter in a revise its method of computing the basic daily & hourly rate of its monthly
collective bargaining agreement, what are decisive in determining the salaried employees & to pay them their accrued sala differentials. What is
basis for the computation of overtime pay are two very germane sought to be revised is PAL’s formula in computing wages:
considerations, namely, (1) whether or not the additional pay is for extra
work done or service rendered and (2) whether or not the same is 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑠𝑎𝑙𝑎𝑟𝑦 × 12
intended to be permanent and regular, not contingent nor temporary and = 𝑥 𝑏𝑎𝑠𝑖𝑐 𝑑𝑎𝑖𝑙𝑦 𝑟𝑎𝑡𝑒
365 (𝑛𝑜. 𝑜𝑓 𝑐𝑎𝑙𝑒𝑛𝑑𝑎𝑟 𝑑𝑎𝑦𝑠 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟)
given only to remedy a situation which can change any time. 𝑥
Again, overtime pay is for extra effort beyond that contemplated in the = 𝑏𝑎𝑠𝑖𝑐 ℎ𝑜𝑢𝑟𝑙𝑦
8
employment contract, hence when additional pay is given for any other into this:
purpose, it is illogical to include the same in the basis for the computation 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑠𝑎𝑙𝑎𝑟𝑦 × 12
= 𝑥 𝑏𝑎𝑠𝑖𝑐 𝑑𝑎𝑖𝑙𝑦 𝑟𝑎𝑡𝑒
of overtime pay. (𝑛𝑜. 𝑜𝑓 𝑎𝑐𝑡𝑢𝑎𝑙 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑑𝑎𝑦𝑠)
𝑥
= 𝑏𝑎𝑠𝑖𝑐 ℎ𝑜𝑢𝑟𝑙𝑦
*Caltez vs. CIR (3 Nov 1986) 8

Bisig vs. Philippine Refining Co. (1981) CIR issued an order denying the union’s prayer for a modified wage
formula. It ruled, “it appears that for may years since 1952, and even
 Labor Standards Case Digest
previously, PAL has been consistently and regularly determining the Fermin Reotan, Silvestre Reotan & Praxedes Balane were
basic and hourly rates of monthly salaried employees by multiplying the guards-watchment in the agencies of NARIC in Naga, Labay & Daet.
monthly salary by 12 months and dividing the product by 365 days to arrive Inasmuch as these agencies had each only 2 guards-watchmen, the
at the basic daily rate, and dividing the quotient by 8 to compute the basic guards had been required by their immediate supervisors to work in 2
hourly rate. There has been no attempt to revise this formula notwithstanding shifts of 12 hours daily each, except when they were on vacation or sick
the various negotiations. Hence, PALSA & PALEA are now estopped.” leave of absence.
Union’s contentions: there is error to PAL’s wage formula, particularly The guards-watchmen made demands of payment of the corresponding
the use of 365 days as divisor. The use of such would necessarily include overtime compensation but were not heeded by NARIC. They filed with
off-days which, under the terms of CBA, were not paid days. This is so claims & it was decided in their favor. Notwithstanding, NARIC persisted in
since for work down on an off-day, an employee was paid 100% plus 25% its refusal to pay said compensation. Hence, another action was filed.
or 100% plus 37-½% of his regular working hour rate. NARIC’s contentions: its Pres-Manager had ordered that “except in
CIR ordered the reversal of its decision. special cases of overtime work specifically approved by the management
to be with pay, no payment of overtime work will be approved", for
Off-days are not paid days, Precisely, off-days are rest days for the pursuant to Resolution No. 479 of its BOD, "no overtime nor meal allowance
worker. He is not required to work on such days. Note that the basis of shall be allowed unless previously approved by the General Manager and only
remuneration or compensation is actual service rendered & in the ever in cases of absolute necessity.” Also, that the period during which said
pervading labor spirit aimed at humanizing the conditions of the working plaintiffs were on leave of absence should not have been included in the
man. Since during his off-days an employee is not compelled to work, he computation of the amounts due them by way of overtime according to
cannot, conversely, demand for his corresponding pay. If, however, a the decision appealed from.
worker works on his off-day, the laws reward him with a premium higher
than what he would receive when he works on his regular working day. Sec. 6 of CA 444 specifically provides that 'any agreement or contract
Such being the case, the divisor in computing an employee's basic daily between the employer and the laborer or employee contrary to the
rate should be the actual working days in a year. The number of off-days provision of this Act shall be null and void ab initio.’ Sec. 3 further
are not to be counted precisely because on such off-days, an employee is provides that 'in all such cases the laborers and employees shall be
not required to work. Simple common sense dictates that should an entitled to receive compensation for the overtime work performed at the
employee opt not to work — which he can legally do — on an off-day, and same rate as the regular wages or salary, plus at least 25% additional'.
for such he gets no pay, he would be unduly robbed of a portion of his Sec. 4 provides that 'no person, firm, or corporation ... shall compel an
legitimate pay if and when in computing his basic daily and hourly rate, employee or laborer to work during Sundays and legal holidays, unless he
such off-day is deemed subsumed by the divisor. is paid an additional sum of at least 25% of his regular remuneration."
As to contention that NAWASA doctrine should not apply because it is Affirmative. Sec. 10, EO 350, Series of 1951 provides that officers and
a public utility: NAWASA is also a public utility which likewise requires its employees of the [PRISCO] are subject to the CS Law ... refer to the fixed
workers to work the whole year round. Moreover, the NAWASA is a tenure of office of its officers and employees who may be removed only for
government-owned corporation & PAL is akin to it, being a government- cause as provided by law.” CS Law has been made applicable to NARIC by
controlled corporation. EO 399, s. 1951.
As to contention that union is estopped: mere innocent silence will not A government-owned corporation run and operated like any ordinary
work estoppel. There must also be some element of turpitude or corporation which may realize profits and incur losses and the jurisdiction
negligence connected with the silence by which another is misled to his of the CIR in labor disputes involving government-owned corporations is
injury. It is not denied that PAL's formula of determining daily and hourly recognized. Moreover, it is a well-established doctrine that when the
rate of pay has been decided and adopted by it unilaterally without the Government engages in business, it abdicates part of its sovereign
knowledge and express consent of the employees. It was only later on that prerogatives and descends to the level of a citizen, and thereby subjects
the employees came to know of the formula's irregularity and its being itself to the laws and regulations governing the relation of labor and
violative of the CBA. PALSA immediately proposed that PAL use the management. Additional compensation for overtime, Sundays and legal
correct method of computation, which proposal PAL chose to ignore. holidays' work, and for night time work, have been granted to labor.
Clearly, the alleged long-standing silence by the PAL employees is in truth However, it appears that Fermin Reotan had been on LOA for 36 days &
and in fact innocent silence, which cannot place a party in estoppel. Silvestre Reotan and Praxedes Balane had been absent for 1 day & 4 days
Further, in the interest of public policy, estoppel & laches cannot arrest respectively, these absences should not be considered in computing the
the recovery of overtime compensation. It would be contrary to the spirit overtime compensation due to them.
of the 8-Hour Labor Law if the workers can waive their right to extra
compensation. Global vs. Atienza (1986)
The present case calls for the application of the Civil Code provisions on
the prescriptive period in the filing of actions based on written contracts, ISSUE: WON Clarita Rosal is entitled to overtime pay
not the 3-yr prescriptive period provided in the CA 444. Union’s claim
fundamentally involves the strict compliance by PAL of the provisions on Feb ’70: Clarita Rosal was employed by Global Inc. as a sales clerk with
wage computation embodied in the CBA. The 3-yr period fixed in CA 444 a salary of P450/mo.
will apply, if the claim for differentials for overtime work is solely based on 11 Nov ’76: Global filed with DOLE an application for clearance to
said law & not on a CBA or any other contract. In this case, the claim is a terminate the services of Rosal for having violated company rules &
demandable right of the employees by reason of their CBA. Therefore, it is regulations by incurring repeated absences & tardiness. She was placed
anchored on a written contract, to which the 10-yr prescriptive period of under preventive suspension on 16 Nov pending resolution of the
CC shall govern. application for clearance.
3 Dec: Rosal filed her opposition to the clearance application. She
Manila Railroad vs. CIR (1952) complained of illegal dismissal, overtime pay & premium pay.
OIC Leogardo of DOLE lifted the preventive suspension of Rosal, finding
If the work performed was necessary, or that it benefited the company her suspension not warranted & reinstated her to her former position
or that the employee could not abandon his work at the end of his eight without loss of rights & with full backwages from the time of preventive
hour work because there was no substitute ready to take his place and he suspension up to the date of her actual reinstatement.
performed overtime services upon the order of his immediate superior, 28 Jun ’79: After hearings, LA granted the clearance for Rosal’s
notwithstanding the fact that there was a standing circular to the effect termination. Global was ordered to pay Rosal overtime pay at the rate of 1
that before overtime work may be performed with pay, the approval of the hr everyday starting 1 Nov ’74 to 16 Nov ’76 when she was suspended.
corresponding department head should be secured, such overtime She was also to be paid backwages from 2 Dec ’76 to 31 May ’78.
services are compensable inspite of the fact that said overtime services Global’s contention: it was found that the grounds of absenteeism &
were rendered without the prior approval of the Department Head. tardiness were valid causes to terminate the employment. Therefore, the
preventive suspension is likewise valid & just. Therefore, she is not entitled
Reotan vs. National Rice (1962) to backwages. Anent overtime pay, the grant of overtime pay in favor of
Rosal at the rate of 1 hour everyday starting 1 Nov ‘74 to 16 Nov ‘76 is
ISSUE: WON NARIC should give overtime pay to Reotan notwithstanding not justified as there is nothing in the record except her bare allegations
its nature as a GOCC subject to the CS Law which would show that she truly and actually rendered said overtime work.
 Labor Standards Case Digest
Negative. It should be denied for want of sufficient factual & interruption. Hence, Bodegas should not be entitled to backwages
legal basis. The evidence on record shows that the office hours of Rosal during these days.
are from 8am-5pm, with noon break from 12nn-1pm from Monday thru Policy Instruction No. 36 provides, “Brownouts running for more than
Saturday. No employee is authorized to work after office hours, during twenty minutes may not be treated as hours worked provided that any of
Sundays and Holidays unless required by a written memorandum from the following conditions are present; a) The employees can leave their
the General Manager. During the period from 1 Nov ‘74 to 16 Nov ‘76, no work place or go elsewhere whether within or without the work premises;
employee of the company was ever required to work after 5pm. Neither or b) The employees can use the time effectively for their own interest.”
did the company require any employee to work during Sundays or Where the failure of workers to work was not due to the employer's
Holidays except on 1 Nov ‘76, on which date Rosal was requested to work fault, the burden of economic loss suffered by the employees should not
through a written memorandum signed by the General Manager. Rosal be shifted to the employer. Each party must bear his own loss.
admitted this, and that she was properly compensated for her work on Indeed, it would neither be fair nor just to allow Bodegas to recover
said date. something he has not earned and could not have earned and to further
The claim of Rosal that she rendered overtime work from 1 Nov ‘74 to penalize Durabuilt over and above the losses it had suffered due to lack of
16 Nov ‘76 has not been substantiated by adequate evidence. Her time raw materials and the energy-saving programs of the government.
records for said period show that she had no time-in and time-out during Bodegas cannot be allowed to enrich himself at the expense of Durabuilt.
Sundays and Holidays, except for some time records where there were no The computation of backwages should be based on daily rather than on
time-outs in the afternoon, Rosal's time records show that she regularly monthly pay schedules where, as in the case at bar, such basis is more
left the office at or a few minutes after 5pm. The records where there were realistic and accurate.
no time-outs in the afternoon were sufficiently explained by Global's Wherefore, Durabuilt is ordered to pay Bodegas his backwages from the
witness as due to a mechanical defect in the office bundy clock. The same time he was terminated up to the time he was actually reinstated
omission of time-outs was found in the records of the other employees, computed on the basis of the number of days when Durabuilt's business
but only Rosal complained. was in actual operation. The number of days where no work was required
As to issue of backwages: She is entitled Leogardo rendered his and could be done by Durabuilt's employees on account of shutdowns due
decision lifting the preventive suspension of Rosal & ordered Global to to electrical power interruptions, machine repair, and lack of raw materials
reinstate her. However, reinstatement had not been complied with. Neither are not considered hours worked for purposes of computing the
was it appealed by Global, therefore, the decision had become final and Durabuilt's obligation to Bodegas.
executory. To exempt Global from the payment of backwages would be to
give premium to the blant disregard of orders of the Ministry of Labor. William Lines vs. Lopez (1980)
Moreover, it would be in consonance with compassionate justice that Rosal
be paid backwages during period that she was supposed to be reinstated. ISSUE: WON Lopez is entitled to overtime pay

Durabuilt vs. NLRC (1987) 5 May ’47: William Lines Inc., which is engaged in shipping business in
the PH, employed Eugenio Lopez as storekeeper of M/V Luzon, with
ISSUE: WON Bodegas is entitled to compensation during the days when monthly salary of P122. Later, he was transferred to M/V Edward, then to
there were brownouts & machine trouble M/V Victoriano, and finally to M/V Davao.
13 Oct ’62: Lopez’s services were terminated when M/V Davao dry-
11 Jul ’83: Reynaldo Bodegas filed an illegal dismissal complaint docked in Cebu. He received separation pay of P1,586.
against Durabuilt, a tire recapping plant. 17 Mar ’64: Lopez, who was refused readmission to work by William
13 Feb ’84: LA ordered reinstatement of Bodegas with full backwages Lines, filed a petition, claiming salary differentials in the amount of P2,816,
from the time he was terminated up to the time he is actually reinstated, premium pay for servces rendered on Sundays & holidays, plus daily
without loss of seniority rights and benefits accruing to him. Since overtime compensation, with request for reinstatement.
Durabuilt failed to file an appeal, decision became final. Pursuant to the William Lines’ contention: no cause of action, CIR had no jurisdiction.
judgment, a computation of backwages, ECOLA, 13th month pay, sick & Dismissal of Lopes was lawful because he had been paid his separation
vacation leave benefits was submitted. Amounted to P24,316.38 pay; that he was not entitled to premium pay because William Lines is a
Durabuilt’s opposition, contentions: the computation contemplated a public utility corporation; that his various claims had prescribed; that
straight computation of 26 working days in one month when the period Lopez never renderd overtime service because the nature of his work was
covered by the computation was intermittently interrupted due to frequent without fixed time & did not require him to work more than 8 hrs/day.
brownouts and machine trouble and that Bodegas had only a total of Lopez’s contention: his main duties were to clean the storeroom & to
250.75 days of attendance in 1982 due to absences. serve food to the passengers. Although there was no exact number of
However, LA denied the opposition. NLRC affirmed LA. hours for either of these duties, he estimated that 2 hours, more or less,
were spent each time in cleaning the storeroom, morning & afternoon,
Negative. Backwages, in general, are granted on grounds of equity for while 2 hours, more or less, were also needed to serve food, which he did
earnings which a worker or employee has lost due to his dismissal from 3x a day. This clearly averaged 10 hours a day.
work. The general principle is that an employee is entitled to receive as
backwages all the amounts he may have lost starting from the date of his Affirmative. TC found that he had been working no less than 10 hours
dismissal up to the time of his reinstatement. Court has established a daily. Doubts should be resolved in his favor to pursue the ends of the 8-
policy, fixing the amount of backwages to a just and reasonable level Hour Labor Law. But, since Sec. 7-A of the 8-Hour Labor Law allows the
without qualification or deduction. To fix the amount of backwages without enforcement of an action "within three years after the cause of action
qualification/deduction simply means that the workers are to be paid their accrued, otherwise, such action shall be forever barred", Lopez can collect
backwages fixed as of the time of their dismissal or strike without only the overtime compensation for the 2 hrs in excess of the regular 8
deduction for their earnings elsewhere during their law-off and without hrs a day which accrued within 3 yrs immediately before the filing of the
qualification of their backwages as thus fixed; i.e. unqualified by any wage petition on 17 Mar ‘64. Similar claims which accrued prior to the 3-yr
increases or other benefits that may have been received by their co- period or before 17 Mar ‘61 have already prescribed, and can no longer
workers who were not dismissed or did not go on strike. be enforced in this action.
The age-old rule governing the relation between labor and capital, or However, since Lopez’s services were terminated on 13 Oct ‘62, the
management and employee of a "fair day's wage for a fair day's labor" computation of the 2-hr daily overtime will cover the period from 17 Mar
remains as the basic factor in determining employees' wages, and for that ‘61 to 13 Oct ‘62, or a period of 1 year, 6 months and 26 days, from
matter backwages. If there is no work performed by the employee there which shall be excluded Sundays and legal holidays based on the principle
can be no wage or pay unless, of course, the laborer was able, willing and that being on board the vessel on these days were "part and parcel of" and
ready to work but was illegally locked out, or suspended. "inherent" in his work.
In the case at bar, Durabuilt conceded to the illegal dismissal of As to illegal dismissal: negative. The dismissal was not wrongful. It is
Bodegas. It is willing to pay backwages. However, it argued that for days not controverted that his employment with William Lines was without
where no work was required and could be done by its employees, no definite period. Under RA 1052, “an employee may be dismissed by the
wages could have been earned and, thereafter, lost by said employees to employer without just cause by serving at least one month advance notice
justify an award of backwages. It claimed that on certain days, their to the employee, or by giving the said employee one-half month for every
business was not in actual operation due to brownouts or power year of service of the employee, whichever is longer, a fraction of at least
six months being considered as one whole year."
 Labor Standards Case Digest
The question of actual notice becomes immaterial in view of Esquejo’s minimum salary:
William’s compliance with the alternative requirement – that Lopez 54 × 314 𝑑𝑎𝑦𝑠
= 𝑃1,413 𝑚𝑜𝑛𝑡ℎ𝑙𝑦 𝑠𝑎𝑙𝑎𝑟𝑦
accepted separation pay. Since the burden of proof of illegal dismissal 12 𝑚𝑜𝑛𝑡ℎ𝑠
devolved upon Lopez himself, his failure to discharge this burden defeats The hourly overtime pay:
his allegation that he was illegally dismissed. 54
ℎ𝑜𝑢𝑟𝑠 = 𝑃6.75 × 4 ℎ𝑜𝑢𝑟𝑠 = 𝑃27.00
In cases of employment, without a definite period, in a commercial. 8
industrial. or agricultural establishment or enterprise, the employer or the 𝑃27.00 × 1.25 = 𝑃33.75 × 20 𝑠ℎ𝑜𝑢𝑙𝑑 𝑏𝑒 26 𝑑𝑎𝑦𝑠 = 𝑃887.50
employee may eliminate at any time the employment with just cause; or But that should be P877.50.
without just cause in the case of an employee by serving notice on the 𝑃1,413.00 𝑙𝑒𝑔𝑎𝑙 𝑚𝑖𝑛𝑖𝑚𝑢𝑚 𝑤𝑎𝑔𝑒
employer at least one month in advance, or in the case of an employer, by +𝑃887.50 877.50 𝑎𝑠 𝑙𝑒𝑔𝑎𝑙 𝑜𝑣𝑒𝑟𝑡𝑖𝑚𝑒 𝑝𝑎𝑦
serving such notice to the employee at least one month in advance or one- = 𝑃2,290.50 (𝑎𝑚𝑜𝑢𝑛𝑡 𝑑𝑢𝑒 𝑡𝑜 𝐸𝑠𝑞𝑢𝑒𝑗𝑜 𝑢𝑛𝑑𝑒𝑟 𝑡ℎ𝑒 𝑙𝑎𝑤)
half month for every year of service of the employee, whichever is longer, a Hence, there is a difference of P209.50.
fraction of at least six months being considered as one whole year. As to issue on meeting of the minds: it was alleged by PESALA that
As to issue on jurisdiction: disputes that arise while the employer- Esquejo cannot be allowed to question the said salary arrangements for
employee relationship between the parties exists, or the employee seeks the extra 4 hrs overtime pay after the lapse of 4 yrs and claim only now
reinstatement comes within the jurisdiction of CIR. When such relationship that the same is not included in the terms of the employment contract.
is over and the employee does not seek reinstatement, all claims become There is no such agreement as to overtime pay. In fact, the contract was
money claims that fall under the jurisdiction of the regular courts. definite only as to the number of hours of work to be rendered but vague
as to what is covered by the salary stipulated. Said contract appears to be
in the nature of a document identifiable as an appointment memorandum.
It cannot be said that there was a meeting of the minds between the
PESALA vs. NLRC (1996) parties, it appearing that Esquejo considered the 4 hrs work in excess of
the 8 hours as overtime work and compensated by way of Esquejo’s
monthly salary while on the latters part, said work rendered is likewise
ISSUE: WON an employee is entitled to overtime pay for work rendered in
claimed as overtime work but yet unpaid in view of Esquejo’s being given
excess of 8 hrs/day, given the fact that his employment contract specifies
only his basic salary.
a 12-hr workday at a fixed monthly salary rate that is above the legal
While it is true that Esquejo received a salary rate which is higher than
minimum wage
that the minimum provided by law, it does not however follow that any
additional compensation due him can be offset by his salary in excess of
1 Mar ’86: Angel Esquejo started working as a company guard & was
the minimum, especially in the absence of an express agreement to that
receiving a monthly basic salary of P1,990 plus an emergency allowance
effect. To consider otherwise would be in disregard of the rule of non-
of P510. He was required to work 12 hrs/day.
diminution of benefits which are above the minimum being extended to
10 Dec: PAL Employees Savings & Loan Assoc. BOD approved a salary
the employees. Furthermore, such arrangement is likewise in disregard of
adjustment for the complainant, increasing his monthly basic salary to
the manner required by the law on how overtime compensation must be
P2,310 & emergency allowance of P510.
determined.
Because of his impressive performance on his assigned job, another
PESALA contends that the agreed salary rate in the employment
adjustment was approved, increasing his monthly basic salary to P2,880.
contract should be deemed to cover overtime pay, otherwise serious
Later, several salary adjustments were made. His latest salary prior to the
distortions in wages would result since a mere company guard will be
filing of complaint was P3,720.
receiving a salary much more that the salaries of other employees who are
During his entire period of employment, he was required to perform
much higher in rank and position than him in the company. This
overtime work without any additional compensation. PESALA, then,
argument flimsy and undeserving of consideration. How can paying an
refused to give P25 increase on the minimum wage rates provided by law.
employee the overtime pay due him cause serious distortions in salary
10 Oct ’90: Esquejo filed a complaint for non-payment of overtime pay
rates or scales? And how can other employees be aggrieved when they did
& non-payment of the P25 statutory minimum wage increase.
not render any overtime service?
12 Oct: Esquejo was suspended for 37 days for an offense he allegedly
As to issue on unjust enrichment: since the stipulated pay did not
committed sometime last Aug ’89.
include overtime pay, there can be no undue enrichment in claiming what
legally belongs to Esquejo.
Statement of facts by PESALA: manager of PESALA, Sulpicio Jomales,
However, records show that Esquejo absented himself from work for
wrote to Esquejo informing him that the position of a guard will be
one day in Aug 1989. For this unworked day, no overtime pay must be
abolished & that he will be reassigned to the position of a ledger
due. As to the rest of his period of employment subject to the three year
custodian. He will now be working 8 hrs/day.
limitation rule which dates from October 10, 1987 up to his appointment
29 Aug: Esquejo was administratively charged with serious misconduct
as Ledger Custodian on December 1, 1989 after which is regular work
or disobedience of the lawful orders of PESALA & gross & habitual neglect
period was already reduced to eight hours, there being no showing that
of his duties. It was alleged that he forwarded the checks of Mr. Jimenez &
the Esquejo absented himself from work, and he being then required to
Mr. dela Banda without the signature of the Treasurer & President of
work for a period of twelve hours daily, We therefore rule on Esquejo’s
PESALA, which resulted in a delay to the embarrassment of PESALA. Also,
entitlement to overtime compensation for the duration of the aforesaid
that before he went on his vacation, he failed to leave or surrender the
period in excess of one working day.
keys of the office (main and back doors), which resulted to damage, injury
& embarrassment of PESALA.
PESALA faults Esquejo when it said that there was no meeting of minds
MERALCO vs. MERALCO (1959)
between the parties, since the employment contract explicitly states
without any equivocation that the overtime pay for work rendered for 4
hours in excess of the 8 hour regular working period is already included in ISSUE: WON the laborers & employees are entitled to overtime pay
the P1,990 basic salary. This is very clear from the fact that the
appointment states 12 hours a day work. Meralco Workers Union, composed of laborers & employees of Manila
Affirmative. It appears that the basic salary plus emergency allowance Electric Company, charged said company with unfair labor practice,
given to Esquejo did not actually include the overtime pay claimed by alleging (1) that it discriminatorily discharged Conrado Trinidad by reason
PESALA. Following the computation, it would appear that by adding the of his union activities, and (2) that union members were refused overtime
legal minimum monthly salary which at the time was P1,413 and the legal compensation enjoyed by non-members.
overtime pay P877.50, the total amount due the private respondent as LC found that Trinidad’s discharge was caused by his repeated
basic salary should have been P2,290.50. By adding the emergency cost absences without previous permission and that the members who were
of living allowance (ECOLA) of P510 as provided by the employment denied overtime compensation had signed a waiver in consideration of
contract, the total basic salary plus emergency allowance should have certain valuable privileges, it dismissed the charges.
amounted to P2,800.50. However, PESALA admitted that it actually paid Union’s contentions: Trinidad was absent only twice. Also, since the
Esquejo P1,990 as basic salary plus P510.00 emergency allowance or a court had found that some workers worked overtime, it should have
total of only P2,500. Undoubtedly, Esquejo was shortchanged in the directed Meralco to make payment.
amount of P300.50. PESALA’s own computations thus clearly establish
that Esquejo’s claim for overtime pay is valid. Negative. Since the only issue in this case was that of unfair labor
practice based on alleged discrimination in the payment of overtime
 Labor Standards Case Digest
compensation, & the court found that there had been no such (1) A worker is entitled to overtime pay only for work in actual
discrimination, it had no alternative but to dismiss the charge as without service beyond 8 hrs. If a worker should incur in undertime during his regular
foundation. daily work, should said undertime be deducted in computing his overtime
If the Union believes & can prove that there has been a violation of the work?
8-Hour Labor Law, what it should do is to file a charge on that specific Negative. The method used by NAWASA in offsetting the overtime with
point so that adequate proof could be adduced for or against it. The Union the undertime and at the same time charging said undertime to the
cannot just assume that the waiver of overtime compensation by drivers accrued leave of the employee is unfair because then, the employee is
who preferred to work in the motor pool was against the law, it appearing made to pay twice for his undertime because his leave is reduced to that
that such waiver was to be in consideration for certain certain valuable extent while he was made to pay for it with work beyond the regular
privileges they were to enjoy, & there is no proof that the value of those working hours. The proper method should be to deduct the undertime
privileges did not adequately compensate for such work. from the accrued leave but pay the employee the overtime to which he is
As to Trinidad’s dismissal: it was found that previous to the two entitled. This method also removes the irregular schedule that would
absences without permission, Trinidad had already been absent 5 times result if the overtime should be set off against the undertime for that
and was warned that should he again absent himself from work without would place the schedule for working hours dependent on the employee.
permission, he would be dismissed from the service. Repeated absences (2) One of the distinguishing characteristics of a managerial employee
without permission are something that should not be taken lightly in an is that he is not subject to the rigid observance of regular office hours. The
enterprise, which, like Meralco, is under obligation to furnish electric light true worth of his service does not depend so much on the time he spends
& power 24 hrs a day to the inhabitants of a metropolitan and industrial in office but more on the results he accomplishes. In fact, he is free to go
city like Manila, and that disregard of warning against repetition of a series out of office anytime.
of absences amounts to gross indiscipline which no enterprise should be Negative. The respondents here are holding a position of responsibility.
compelled to tolerate. One of them is the Secretary of the Board of Directors. Another is the
private secretary of the general manager. Another is a public relations
Engineering vs. MOLE (1985) officer, and many other chiefs of divisions or sections and others are
supervisors and overseers. However, their primary duties do not bear any
ISSUE: WON Miguel Aspera is entitled to overtime pay direct relation with the management of the NAWASA, nor do they
participate in the formulation of its policies nor in the hiring and firing of
Miguel Aspera, a mechanical engineer, worked for Engineering its employees. The chiefs of divisions and sections are given ready policies
Equipment Inc. in Saudi Arabia for nearly a year from 26 Apr ’77 to 16 to execute and standard practices to observe for their execution. Hence, it
Apr ’78 with a monthly salary of P750 (P860) with a six-day work week concludes, they have little freedom of action, as their main function is
consisting of 10 working hours. merely to carry out the company's orders, plans and policies.
Aspera worked 10 hrs for 335 working days. He claimed that his As a matter of fact, they are required to observe working hours and
monthly salary should correspond to 8 hrs of daily work & that for the record their time work and are not free to come and go to their offices, nor
additional 2 hrs daily, he was entitled to overtime pay at $1.2162/hr or to move about at their own discretion. They do not, therefore, come within
$814.85 for 670 hrs during 335 working days. the category of "managerial employees" within the meaning of the law.
NLRC awarded him such amount as overtime pay. Also declared void As to contention that daiy wage should be computed exclusively on the
the stipulation for a 10-hr working day, being contrary to Sec. 82 of LC. basic wage without including the automatic increase of 25%
Engineering’s contentions: Aspera was a managerial employee corresponding to Sunday differential: RA 1880 does not intend to raise
exercising supervision & control over its rank-and-file employees with the wages of the employees over what they are actually receiving. Rather,
power to recommend disciplinary action or their dismissal. Hence, he is its purpose is to limit the working days in a week to five days, or to 40
not entitled to overtime pay. Also asserted that Aspera was one of several hours without however permitting any reduction in the weekly or daily
employees who signed written contracts with a "built-in" overtime pay in wage of the compensation which was previously received.
the 10-hr working day and that their basic monthly pay was adjusted to For purposes of computing overtime compensation, a regular wage
reflect the higher amount covering the guaranteed 2-hr extra time whether includes all payments which the parties have agreed shall be received
worked or unworked. Further, the contracts were submitted to Director during the work week, including piece work wages, differential payments
Jonathan Dela Cruz & approved the same; that without such approval, for working at undesirable times, such as at night or on Sundays and
Engineering would not have stipulated the 10-hr work schedule. holidays, and the cost of board and lodging customarily furnished the
employee. The higher rate for night, Sunday and holiday work is just as
Negative. Aspera had not denied that he was a managerial employee much a regular rate as the lower rate for daytime work. The higher rate is
within the meaning of Sec. 82. As such, he was not entitled to overtime merely an inducement to accept employment at times which are not as
pay. It appeared that the Acting Minister of Labor & Director Dela Cruz desirable from a workman's standpoint.
awarded overtime pay & disregarded a contract that he himself had
previously sealed with his imprimatur. Because of that approval, *Sto. Domingo vs. Phil. Rock (1930) ~ NLRC case
Engineering acted in good faith in enforcing the contract. Hence, Dela Cruz
committed grave abuse of discretion. COMPUTATION
*Caltez vs. CIR (3 Nov 1986)
Mercury vs. Dayao (supra.)
VALIDITY OF COMPRESSED WORK WEEK

UNDERTIME vs. OVERTIME MERALCO vs. MERALCO (1959) supra.

NWSA vs. NWSA (1964)

ISSUE: (1) WON the undertime of an employee should be set off with his
overtime, (2) WON the employees are “managerial employees” &
therefore, not entitled to the benefits of CA 444

National Waterworks & Sewerage Authority is a GOCC created under RA

1383 while NWSA Consolidated Unions are various labor organizations
composed of laborers & employees of NAWASA.
5 Dec ’57: CIR conducted a hearing on the controversy then existing
between NAWASA & Unions as to the implementation of the 40-Hour
Week Law, alleged violations of CBA concerning “distress pay”, minimum
wage of P5.25, additional compensation for night work, wage increase.
They also included a new demand for overtime pay in favor of Jesus
Centeno, Cesar Cabrera, Feliciano Duiguan, Cecilio Remotigue & others
receiving P4,200/annum or more.