Arts.

82-96
1. Arizala v. CA, 189 SCRA 584
2. PNOC-EDC v. Leogardo, 175 SCRA 26
3. NWSA v. NWSA Consolidated Unions, 11 SCRA 766
4. San Miguel v. Democratic Labor Union, 8 SCRA 613
5. Apex Mining v. NLRC, 196 SCRA 251
6. Tan v. Lagrama, 387 SCRA 393
7. Rada v. NLRC, 205 SCRA 69
8. PAL v. NLRC, 302 SCRA 582
9. Natl Devt. Corp v. CIR, 6 SCRA 763
10. Isaac Peral Bowling Alley v. United Employees Welfare Assoc, 102 Phil 219
11. Arica v. NLRC, 170 SCRA 776
12. National Shipyards Steel Corp. v. CIR, 3 SCRA 890
13. Caltex Regular Employees v. Caltex, 247 SCRA 398
14. PNB v. PNB Employees Assoc., 115 SCRA 507
15. Engineering Equipment Inc., v. Minister of Labor, 138 SCRA 616
16. DOLE DO No. 02, Series of 2004.
17. Mercury Drug v. Dayao, 117 SCRA 99
18. Inerphil Union FFW v. Interphil Lab Inc., 372 SCRA 658
19. Remerco Garments v. Minister of Labor, 135 SCRA 167
20. Producers Bank v. NLRC, 355 SCRA 489
21. Asian Transmission Corp v. CA, G.R. No. 144664, 15 March 2004.
22. JRC v. NLRC, 156 SCRA 27
23. JPL Marketing v. CA, 463 SCRA 136
24. Auto Bus v. Bautista, 458 SCRA 578
25. Fernandez v. NLRC, 285 SCRA 149
26. Republic Planters Bank v. NLRC, 266 SCRA 142
27. Ace Navigation v. CA, 338 SCRA 70

thereof. They pointed out further that the criminal sanction in

the Industrial Peace Act no longer appeared in the Labor Code.
1. PABLO ARIZALA, SERGIO MARIBAO, LEONARDO
JOVEN, and FELINO BULANDUS, vs. THE COURT OF
APPEALS and THE PEOPLE OF THE PHILIPPINES
FACTS: Under the Industrial Peace Act, government-owned or
controlled corporations had the duty to bargain collectively and
were otherwise subject to the obligations and duties of
employers in the private sector. The Act also prohibited
supervisors to become, or continue to be, members of labor
organizations composed of rank-and-file employees, and
prescribed criminal sanctions for breach of the prohibition.
It was under the regime of said Industrial Peace Act that the
Government Service Insurance System (GSIS, for short)
became bound by a collective bargaining agreement executed
between it and the labor organization representing the majority
of its employees, the GSIS Employees Association. The
agreement contained a "maintenance-of-membership"
clause, i.e., that all employees who, at the time of the
execution of said agreement, were members of the union or
became members thereafter, were obliged to maintain their
union membership in good standing for the duration of the
agreement as a condition for their continued employment in the
GSIS.
There appears to be no dispute that at that time, the petitioners
occupied supervisory positions in the GSIS. Pablo Arizala and
Sergio Maribao were, respectively, the Chief of the Accounting
Division, and the Chief of the Billing Section of said Division, in
the Central Visayas Regional Office of the GSIS. Leonardo
Joven and Felino Bulandus were, respectively, the Assistant
Chief of the Accounting Division (sometimes Acting Chief in the
absence of the Chief) and the Assistant Chief of the Field
Service and Non-Life Insurance Division (and Acting Division
Chief in the absence of the Chief), of the same Central Visayas
Regional Office of the GSIS. Demands were made on all four
of them to resign from the GSIS Employees Association, in
view of their supervisory positions. They refused to do so.
Consequently, two (2) criminal cases for violation of the
Industrial Peace Act were lodged against them in the City Court
of Cebu: one involving Arizala and Maribao and the other,
Joven and Bulandus.
Both criminal actions resulted in the conviction of the accused
in separate decisions. .
The appeals were consolidated on motion of the appellants,
and eventuated in a judgment promulgated on January 29,
1976 affirming the convictions of all four appellants. The
appellants moved for reconsideration. They argued that when
the so called "1973 Constitution" took effect on January 17,
1973 pursuant to Proclamation No. 1104, the case of Arizala
and Maribao was still pending in the Court of Appeals and that
of Joven and Bulandus, pending decision in the City Court of
Cebu; that since the provisions of that constitution and of the
Labor Code subsequently promulgated (effective on November
1, 1974), repealing the Industrial Peace Act-placed employees
of all categories in government-owned or controlled
corporations without distinction within the Civil Service, and
provided that the terms and conditions of their employment
were to be "governed by the Civil Service Law, rules and
regulations" and hence, no longer subject of collective
bargaining, the appellants ceased to fall within the coverage of
the Industrial Peace Act and should thus no longer continue to
be prosecuted and exposed to punishment for a violation

The Appellate Court denied their plea for reconsideration.

Hence, the present petition for review on certiorari.
ISSUE: Whether or not the petitioners' criminal liability for a
violation of the Industrial Peace Act may be deemed to have
been obliterated in virtue of subsequent legislation and the
provisions of the 1973 and 1987 Constitutions.
HELD: YES. The petitioners contend that the right of selforganization and collective bargaining had been withdrawn by
the Labor Code from government employees including those in
government-owned and controlled corporations- chiefly for the
reason that the terms and conditions of government
employment, all embraced in civil service, may not be modified
by collective bargaining because set by law. It is therefore
immaterial, they say, whether supervisors are members of
rank-and-file unions or not; after all, the possibility of the
employer's control of the members of the union thru
supervisors thus rendering collective bargaining illusory, which
is the main reason for the prohibition, is no longer of any
consequence.
This was true, for a time. As already discussed, both under the
Labor Code and PD 807, government employees, including
those in government-owned or controlled corporations, were
indeed precluded from bargaining as regards terms and
conditions of employment because these were set by law and
hence could not possibly be altered by negotiation.
But EO 111 restored the right to organize and to negotiate and
bargain of employees of "government corporations established
under the Corporation Code." And EO 180, and apparently RA
6715, too, granted to all government employees the right of
collective bargaining or negotiation except as regards those
terms of their employment which were fixed by law; and as to
said terms fixed by law, they were prohibited to strike to obtain
changes thereof.
The decisive consideration is that at present, supervisors who
were already members of a rank-and-file labor organization at
the time of the effectivity of Implementing Rules of RA 6715,
are authorized to "remain therein." It seems plain, in other
words, that the maintenance by supervisors of membership in
a rank-and-file labor organization even after the enactment of a
statute imposing a prohibition on such membership, is not only
not a crime, but is explicitly allowed, under present law.

2. PHILIPPINE NATIONAL OIL COMPANY-ENERGY

DEVELOPMENT CORPORATION, v. HON. VICENTE T.
LEOGARDO, DEPUTY MINISTER OF LABOR AND VICENTE
D. ELLELINA
FACTS: Petitioner PNOC-EDC is a subsidiary of the Philippine
National Oil Company (PNOC). On 20 January 1978, it filed
with the Ministry of Labor and Employment, Regional Office
No. VII, Cebu City (MOLE), a clearance application to
dismiss/terminate the services of private respondent, Vicente
D. Ellelina, a contractual employee.chanrobles virtual lawlibrary
The application for clearance was premised on Ellelinas

alleged commission of a crime (Alarm or Public Scandal)

during a Christmas party on 19 December 1977 at petitioners
camp in Uling, Cebu, when, because of the refusal of the raffle
committee to give him the prize corresponding to his lost
winning ticket, he tried to grab the armalite rifle of the PC
Officer outside the building despite the warning shots fired by
the latter.
Clearance to dismiss was initially granted by MOLE but was
subsequently revoked and petitioner was ordered to reinstate
Ellelina to his former position, without loss of seniority rights,
and with backwages from 1 February 1978 up to his actual
reinstatement.
Petitioner appealed to the Minister of Labor who, acting
through public respondent, affirmed, on 14 August 1981, the
appealed Order. Hence, this Petition
ISSUES: 1.Whether or not the public respondent has no
jurisdiction over petitioner because it is a government-owned or
controlled corporation

Acting on a certification of the President of the Philippines, the

Court of Industrial Relations conducted a hearing on December
5, 1957 on the controversy then existing between petitioner
and respondent unions which the latter embodied in a
"Manifesto" dated December 5, 1957, namely: implementation
of the 40-Hour Week Law (Republic Act No. 1880); alleged
violations of the collective bargaining agreement dated
December 28, 1956 concerning "distress pay" ; minimum wage
of P5.25; promotional appointments and filling of vacancies of
newly created positions; additional compensation for night
work; wage increases to some laborers and employees; and
strike duration pay. In addition, respondent unions raised the
issue of whether the 25% additional compensation for Sunday
work should be included in computing the daily wage and
whether, in determining the daily wage of a monthly salaried
employee, the salary should be divided by 30 days.
Later, however, respondent intervenors amended their petition
by including a new demand for overtime pay in favor of Jesus
Centeno, Cesar Cabrera, Feliciano Duiguan, Cecilio
Remotigue, and other employees receiving P4,200.00 per
annum or more.chanrobles

2. whether or not Ellelinas dismissal was justified.

HELD: 1. NO. In NASECO v. NLRC (G.R. No. 69870,

November 29, 1988), we had occasion to apply the present
Constitution in deciding whether or not the employees of
NASECO (a subsidiary of the NIDC, which is in turn a
subsidiary wholly-owned by the PNB, a government-owned
corporation) are covered by the Civil Service Law or the Labor
Code notwithstanding that the case arose at the time when the
1973 Constitution was still in effect. We held that the NLRC
has jurisdiction over the employees of NASECO "on the
premise that it is the 1987 Constitution that governs because it
is the Constitution in place at the time of decision;" and that
being a corporation without an original charter, the employees
of NASECO are subject to the provisions of the Labor Code.
2. No. The application for clearance was premised on Ellelinas
alleged commission of a crime (Alarm or Public Scandal)
during a Christmas party on 19 December 1977 at petitioners
camp in Uling, Cebu, when, because of the refusal of the raffle
committee to give him the prize corresponding to his lost
winning ticket, he tried to grab the armalite rifle of the PC
Officer outside the building despite the warning shots fired by
the latter. In so far as Ellelina is concerned, we hold that the
reinstatement ordered by public respondent, without loss of
seniority rights, is proper. However, consistent with the rulings
of the Court, backwages should be limited to three years from
1 February 1978. The dismissal ordered by petitioner was a bit
too harsh considering the nature of the act which he had
committed and that it was his first offense.
3. NWSA CONSOLIDATED UNIONS v. NATIONAL
WATERWORKS AND SEWERAGE AUTHORITY, JESUS
CENTENO, ET AL.,
FACTS: Petitioner National Waterworks & Sewerage Authority
is a government-owned and controlled corporation created
under Republic Act No. 1383, while respondent NWSA
Consolidated Unions are various labor organizations
composed of laborers and employees of the NAWASA. The
other respondents are intervenors Jesus Centeno, Et Al.,
hereinafter referred to as intervenors.

On February 5, 1958, petitioner filed a motion to dismiss the

claim for overtime pay alleging that respondent Court of
Industrial Relations was without jurisdiction to pass upon the
same because, as mere intervenors, the latter cannot raise
new issues not litigated in the principal case, the same not
being the lis mota therein involved. To this motion the
intervenors filed an opposition. Thereafter, respondent court
issued on order allowing the issue to be litigated. Petitioners
motion to reconsider having been denied, it filed its answer to
the petition for intervention. Finally, on January 16, 1961,
respondent court rendered its decision
Its motion for reconsideration having been denied, NAWASA
filed the present petition for review.
ISSUES: 1. Whether NAWASA is performing governmental
functions and, therefore, essentially a service agency of the
government;
2. Whether NAWASA is a public utility and therefore, exempted
from paying additional compensation for work on Sundays and
legal holidays;
3. Whether the intervenors are "managerial employees" within
the meaning of Republic Act 2377 and, therefore, not entitled to
the benefits of Commonwealth Act No. 444, as amended;
4. Whether respondent Court of Industrial Relations has
jurisdiction to adjudicate overtime pay considering that this
issue was not among the demands of respondent union in the
principal case but was merely dragged into the case by the
intervenors;
5. Whether those attached to the General Auditing Office and
the Bureau of Public Works come within the purview of
Commonwealth Act No. 444, as amended;
6. In determining whether one has worked in excess of eight
hours, whether the undertime for that day should be set-off;
7. In computing the daily wage, whether the additional
compensation for Sunday work should be included;

8. What is the correct method to determine the equivalent daily

wage of a monthly-salaried employee, especially in a firm
which is a public utility?;
9. Considering that the payment of night compensation is not
by virtue of any statutory provision but emanates only from an
award of respondent Court of Industrial Relations, whether the
same can be made retroactive and cover a period prior to the
promulgation of the award;
10. Whether the minimum wage fixed and awarded by
respondent Court of Industrial Relations in another case (MWD
Workers Union v. MWD, CIR Case No. 359-V) applies to those
employed long after the promulgation thereof, whether hired as
temporary, emergency and casual workers for a definite period
and for a specific project;
11. How should the collective bargaining agreement of
December 28, 1956 and Resolution No. 29, series of 1957 of
the Grievance Committee be interpreted and construed insofar
as the stipulations therein contained relative to "distress pay" is
concerned?; and
12. Whether, under the first indorsement of the President of the
Philippines dated August 12, 1957, which authorizes herein
petitioner to stagger the working days of its employees and
laborers, those whose services are indispensably continuous
throughout the year may be staggered in the same manner as
the pump, valve, filter and chlorine operators, guards,
watchman, medical services, and those attached to the
recreational facilities.
HELD: 1. NO. The National Waterworks and Sewerage
Authority is a government corporation performing not
governmental but proprietary functions, and as such comes
within the coverage of Commonwealth Act No. 444. The
National Waterworks & Sewerage Authority was not created for
purposes of local government. It is not a municipal corporation.
It was created "for the purpose of consolidating and
centralizing all waterworks, sewerage and drainage systems in
the Philippines under one control and direction and general
supervision. "The NAWASA, therefore, though a public
corporation, is not a municipal corporation, because it is not an
agency of the State to regulate or administer the local affairs of
the town, city, or district which is incorporated.
Moreover, the NAWASA, by its charter, has personality and
power separate and distinct from the government. It is an
independent agency of the government although it is placed,
for administrative purposes, under the Department of Public
Works and Communications. It has continuous succession
under its corporate name and may sue and be sued in court. It
has corporate powers to be exercised by its board of directors;
it has its own assets and liabilities; and it may charge rates for
its services.
2. YES. The NAWASA is a public utility because its primary
function is to construct, maintain and operate water reservoirs
and waterworks for the purpose of supplying water to the
inhabitants, as well as to consolidate and centralize all water
supplies and drainage systems in the Philippines. The
NAWASA is a public utility. Although pursuant to Section 4 of
Commonwealth Act 444, it is not obliged to pay an additional
sum of 25% to its laborers for work done on Sundays and legal
holidays, yet it must pay said additional compensation by virtue
of the contractual obligation it assumed under the collective
bargaining agreement. In other words, the employees and

laborers of NAWASA can be made to work on Sundays and

legal holidays without being required to pay them an additional
compensation of 25%. It may, therefore, be said that while
under Commonwealth Act No. 444 a public utility is not
required to pay additional compensation to its employees and
workers for work done on Sundays and legal holidays, there is,
however, no prohibition for it to pay such additional
compensation if it voluntarily agrees to do so. The NAWASA
committed itself to pay this additional compensation. It must
pay not because of compulsion of law but because of
contractual obligation.
3. NO. As a matter of fact, they are required to observe working
hours and record their time work and are not free to come and
go to their offices, nor move about at their own discretion. They
do not, therefore, come within the category of "managerial
employees" within the meaning of the law.
Employees who have little freedom of action and whose main
function is merely to carry out the companys orders, plans and
policies, are not managerial employees and hence are covered
by Commonwealth Act No. 444.
4. YES. The Court of Industrial Relations has jurisdiction to
adjudicate overtime pay where there was employer- employee
relationship existing between the parties at the time the dispute
arose. The fact that the question of overtime payment is not
included in the principal case in the sense that it is not one of
the items of dispute certified to by the President is of no
moment, for it comes within the sound discretion of the Court of
Industrial Relations. Moreover, in labor disputes technicalities
of procedure should as much as possible be avoided not only
in the interest of labor but to avoid multiplicity of action. This
claim has no merit.
5. The GAO employees assigned to work in the NAWASA even
if they were paid out of the latters funds cannot be regarded as
employees of the NAWASA on matters relating to
compensation. They are employees of the national government
and are not covered by the Eight- Hour Labor Law. The same
may be said of the Bureau of Public Works assigned to work in
the NAWASA.
6. NO. The method used by the NAWASA in offsetting the
overtime with the undertime and at the same time charging
said undertime to the accrued leave is unfair, for under such
method the employee is made to pay twice for his undertime
because his leave is reduced to that extent while he was made
to pay for it with work beyond the regular working hours. The
proper method should be to deduct the undertime from the
accrued leave but pay the employee the overtime to which he
is entitled. This method also obviates the irregular schedule
that would result if the overtime should be set off against the
undertime for that would place the schedule for working hours
dependent on the employee.
7. YES. The differential pay for Sundays is a part of the legal
wage. Hence, it was correctly included in computing the weekly
wages of those employees and laborers who worked seven
days a week and were regularly receiving the 25% salary
differential for a period of three months prior to the
implementation of Republic Act 1880. This is so even if
petitioner is a public utility in view of the contractual obligation it
has assumed on the matter.
8. In the computation of daily wages of employees paid by the
month distinction should be made between government
employees like the General Auditing Office (GAO) employees

and those who are not. The computation for government

employees is governed by Section 254 of the Revised
Administrative Code while for others the correct computation is
the monthly salary divided by the actual number of working
hours in the month or the regular monthly compensation
divided by the number of working days in the month.
9. YES. It is of common occurrence that a working man who
has already rendered night time service takes him a long time
before he can muster enough courage to confront his employer
with the demand for payment for it for fear of possible reprisal.
It happens that many months or years are allowed to pass by
before he could be made to present such claim against his
employer, and so it is neither fair nor just that he be deprived of
what is due him simply because of his silence for fear of losing
the means of his livelihood. Hence, it is not erroneous for the
Court of Industrial Relations to make the payment of such night
compensation retroactive to the date when the work was
actually performed.
The power of the Court of Industrial Relations to order the
payment of compensation for overtime service prior to the date
of the filing of the claim has been recognized by this Court
(Luzon Stevedoring Co., Inc. v. Luzon Marine Department
Union, Et Al., L-9265, April 29, 1957). The same reasons given
therein for the retroactivity of overtime compensation may also
be given for the retroactivity of payment of night compensation,
as such reasoning runs along the line already abovestated.
10. YES.The rates of minimum pay fixed in a CIR case are
applicable not only to those who were already in the service as
of the date of the decision but also to those who were
employed subsequent to said date. We find no valid reason to
disagree with the foregoing finding of the Court of Industrial
Relations considering that the award continued to be valid and
effective in spite of the notice of termination given by the
employer. No good reason is seen why such award should not
apply to those who may be employed after its approval by the
court there being nothing therein that may prevent its extension
to them. Moreover, the industrial court can at any time during
the effectiveness of an award alter and modify in whole or in
part said award or reopen any question involved therein under
Section 17 of Commonwealth Act No. 103, and such is what
said court has done when it made the award extensive to the
new employees, more so when they are similarly situated. To
do otherwise would be to foster discrimination.
11. All the laborers, whether assigned to the sewerage division
or not who are actually working inside or outside the sewerage
chambers, are entitled to distress pay. As thus interpreted, we
find that those who are entitled to the distress pay are those
employees and laborers who work in the sewerage chambers
whether they belong to the sewerage division or not, and by
sewerage chambers should be understood to mean as the
surroundings where the work is actually done, not necessarily
"inside the sewerage chambers." This is clearly inferred from
the conference held in the Department of Labor on November
25, 1957 where it was agreed that the compensation should be
paid to those who work "in and outside" the sewerage
chambers in accordance with the terms of Resolution No. 9 of
the Grievance Committee. It should be noted that, according to
said resolution, sewerage chambers include "pits, trenches,
and other excavations that are necessary to tap the sewer
lines." And the reason given for this extra compensation is the
"unusual distress" that is caused to the laborers by working in
the sewerage chambers in the form and extent
abovementioned.

It is clear then that all the laborers whether of the sewerage

division or not assigned to work in and outside the sewerage
chambers and suffering unusual distress because of the nature
of their work are entitled to the extra compensation. And this
conclusion is further bolstered by the findings of the industrial
court regarding the main activities of the sewerage division.
12. YES. Staggering of working hours is not required where the
evidence shows that the work is not continuous. The industrial
court justified the staggering of the work days of those holding
positions as pump operators, valve operators, filter operators,
chlorine operators, watchmen and guards, and those in the
medical service for the reason that the same was made
pursuant to the authority granted by the President who in the
valid exercise of the powers conferred upon him by Republic
Act No. 1880 could prescribe the working days of employees
and laborers in government-owned and controlled corporations
depending upon the exigencies of the service. The court,
however, stated that the staggering should not apply to the
personnel in the construction, sewerage, maintenance,
machineries and shops because they work below 365 days a
year and their services are not continuous to require
staggering. From this portion of the decision, the petitioner
appeals.
Considering that respondent court found that the workers in
question work less than 365 days a year and their service are
not continuous to require staggering, we see no reason to
disturb this finding. This is contrary to the very essence of the
request that the staggering should be made only with regard to
those phases of the operation of the NAWASA that have to be
attended to continuously for twenty-four hours without
interruption which certainly cannot apply to the workers
mentioned in the last part of the decision of the respondent
court on the matter.
4. SAN MIGUEL BREWERY INC., ETC. v. DEMOCRATIC
LABOR ORGANIZATION, ET AL.,
FACTS: On January 27, 1953, the Democratic Labor
Association filed a complaint against the San Miguel Brewery,
Inc., embodying 12 demands for the betterment of the
conditions of employment of its members. The company filed
its answer to the complaint specifically denying its material
averments and answering the demands point by point. The
company asked for the dismissal of the complaint. At the
hearing held sometime in September, 1955, the union
manifested its desire to confine its claim to its demands for
overtime, night-shift differential pay, and attorneys fees,
although it was allowed to present evidence on service
rendered during Sundays and holidays, or on its claim for
additional separation pay and sick and vacation leave
compensation. After the case had been submitted for decision,
Presiding Judge Jose S. Bautista, who was commissioned to
receive the evidence, rendered decision expressing his
disposition with regard to the points embodied in the complaint
on which evidence was presented. The demands for the
application of the Minimum Wage Law to workers paid on
"pakiao" basis, payment of accumulated vacation and sick
leave and attorneys fees, as well as the award of additional
separation pay, were either dismissed, denied, or set aside. Its
motion for reconsideration having been denied by the industrial
court en banc, which affirmed the decision of the court a quo
with few exceptions, the San Miguel Brewery, Inc. interposed
the present petition for review.

ISSUE: WHETHER OR NOT EIGHT-HOUR LABOR LAW

APPLIES TO OUTSIDE OR FIELD SALES PERSONNEL.
HELD: NO. Where after the morning roll call the outside or field
sales personnel leave the plant of the company to go on their
respective sales routes and they do not have a daily time
record but the sales routes are so planned that they can be
completed within 8 hours at most, and they receive monthly
salaries and sales commissions in variable amounts, so that
they are made to work beyond the required eight hours similar
to piece work, "pakiao", or commission basis regardless of the
time employed, and the employees participation depends on
their industry, it is held that the Eight-Hour Labor Law has no
application to said outside or field sales personnel and that
they are not entitled to overtime compensation. The philosophy
behind this exemption is that his earnings are in the form of
commission based on the gross receipts of the 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 his commission.
5. APEX MINING COMPANY, INC., v. NATIONAL LABOR
RELATIONS COMMISSION and SINCLITICA CANDIDO
FACTS: Private respondent Sinclitica Candido was employed
by petitioner Apex Mining Company, Inc. on May 18, 1973 to
perform laundry services at its staff house located at Masara,
Maco, Davao del Norte. In the beginning, she was paid on a
piece rate basis. However, on January 17, 1982, she was paid
on a monthly basis at P250.00 a month which was ultimately
increased to P575.00 a month. On December 18, 1987, while
she was attending to her assigned task and she was hanging
her laundry, she accidentally slipped and hit her back on a
stone. She reported the accident to her immediate supervisor
Mila de la Rosa and to the personnel officer, Florendo D. Asirit.
As a result of the accident she was not able to continue with
her work. She was permitted to go on leave for medication. De
la Rosa offered her the amount of P2,000.00 which was
eventually increased to P5,000.00 to persuade her to quit her
job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed her
on February 4, 1988. On March 11, 1988, private respondent
filed a request for assistance with the Department of Labor and
Employment. After the parties submitted their position papers
as required by the labor arbiter assigned to the case on August
24, 1988 the latter rendered a decision, Judgment is hereby
rendered ordering the respondent, Apex Mining Company, Inc.,
Masara, Davao del Norte, to pay the complainant. petitioner
appealed to the public respondent National Labor Relations
Commission (NLRC), wherein in due course a decision was
rendered by the Fifth Division thereof on July 20, 1989
dismissing the appeal for lack of merit and affirming the
appealed decision. A motion for reconsideration thereof was
denied in a resolution of the NLRC dated June 29, 1990.
Hence, the herein petition for review by certiorari
ISSUE: WHETHER OR NOT private respondent should be
treated as a mere househelper or domestic servant and not as
a regular employee of petitioner.
HELD: NO. Private Respondent is a regular employee. Under
Rule XIII, Section 1(b), Book 3 of the Labor Code, as
amended, the terms "househelper" or "domestic servant" are
defined as follows: The term `househelper as used herein is
synonymous to the term `domestic servant and shall refer to
any person, whether male or female, who renders services in

and about the employers home and which services are usually
necessary or desirable for the maintenance and enjoyment
thereof, and ministers exclusively to the personal comfort and
enjoyment of the employers family. The foregoing definition
clearly contemplates such househelper or domestic servant
who is employed in the employers home to minister
exclusively to the personal comfort and enjoyment of the
employers family. Such definition covers family drivers,
domestic servants, laundry women, yayas, gardeners,
houseboys and other similar househelps. The definition cannot
be interpreted to include househelp or laundrywoman working
in staffhouses of a company, like petitioner who attends to the
needs of the companys guests and other persons availing of
said facilities. By the same token, it cannot be considered to
extend to the driver, houseboy, or gardener exclusively working
in the company, the staffhouses and its premises. They may
not be considered as within the meaning of a "househelper" or
"domestic servant" as above-defined by law. The criteria is the
personal comfort and enjoyment of the family of the employer
in the home of said employer. While it may be true that the
nature of the work of a househelper, domestic servant or
laundrywoman in a home or in a company staffhouse may be
similar in nature, the difference in their circumstances is that in
the former instance they are actually serving the family while in
the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other
agricultural or similar pursuit, service is being rendered in the
staffhouses or within the premises of the business of the
employer. In such instance, they are employees of the
company or employer in the business concerned entitled to the
privileges of a regular employee.
The mere fact that the househelper or domestic servant is
working within the premises of the business of the employer
and in relation to or in connection with its business, as in its
staffhouses for its guests or even for its officers and
employees, warrants the conclusion that such househelper or
domestic servant is and should be considered as a regular
employee of the employer and not as a mere family
househelper or domestic servant as contemplated in Rule XIII,
Section 1(b), Book 3 of the Labor Code, as amended. Because
of an accident which took place while private respondent was
performing her laundry services, she was not able to work and
was ultimately separated from the service. She is, therefore
entitled to appropriate relief as a regular employee of petitioner.
Inasmuch as private respondent appears not to be interested in
returning to her work for valid reasons, the payment of
separation pay to her is in order.
6. ROLANDO Y. TAN v. LEOVIGILDO LAGRAMA and THE
HONORABLE COURT OF APPEALS
FACTS: Petitioner Rolando Tan is the president of Supreme
Theater Corporation and the general manager of Crown and
Empire Theaters in Butuan City. Private respondent Leovigildo
Lagrama is a painter, making ad billboards and murals for the
motion pictures shown at the Empress, Supreme, and Crown
Theaters for more than 10 years, from September 1, 1988 to
October 17, 1998. On October 17, 1998, private respondent
Lagrama was summoned by Tan and upbraided: "Nangihi na
naman ka sulod sa imong drawinganan." ("You again urinated
inside your work area.") When Lagrama asked what Tan was
saying, Tan told him, "Ayaw daghang estorya. Dili ko gusto nga
mo-drawing ka pa. Guikan karon, wala nay drawing. Gawas."
("Dont say anything further. I dont want you to draw anymore.
From now on, no more drawing. Get out.") Lagrama denied the
charge against him. He claimed that he was not the only one

who entered the drawing area and that, even if the charge was
true, it was a minor infraction to warrant his dismissal.
However, everytime he spoke, Tan shouted "Gawas" ("Get
out"), leaving him with no other choice but to leave the
premises. Lagrama filed a complaint with the Sub-Regional
Arbitration Branch No. X of the National Labor Relations
Commission (NLRC) in Butuan City. He alleged that he had
been illegally dismissed and sought reinvestigation and
payment of 13th month pay, service incentive leave pay, salary
differential, and damages. Petitioner Tan denied that Lagrama
was his employee. He asserted that Lagrama was an
independent contractor who did his work according to his
methods, while he (petitioner) was only interested in the result
thereof. He cited the admission of Lagrama during the
conferences before the Labor Arbiter that he was paid on a
fixed piece-work basis, i.e., that he was paid for every painting
turned out as ad billboard or mural for the pictures shown in the
three theaters, on the basis of a "no mural/billboard drawn, no
pay" policy. He submitted the affidavits of other cinema owners,
an amusement park owner, and those supervising the
construction of a church to prove that the services of Lagrama
were contracted by them. He denied having dismissed
Lagrama and alleged that it was the latter who refused to paint
for him after he was scolded for his habits. As no amicable
settlement had been reached, Labor Arbiter Rogelio P. Legaspi
directed the parties to file their position papers. On June 17,
1999, he rendered a decision in favor of Lagrama. Petitioner
Rolando Tan appealed to the NLRC Fifth Division, Cagayan de
Oro City, which, on June 30, 2000, rendered a decision 4
finding Lagrama to be an independent contractor, and for this
reason reversing the decision of the Labor Arbiter. Respondent
Lagrama filed a motion for reconsideration, but it was denied
for lack of merit by the NLRC in a resolution of September 29,
2000. He then filed a petition for certiorari under Rule 65 before
the Court of Appeals. The Court of Appeals found that
petitioner exercised control over Lagramas work by dictating
the time when Lagrama should submit his billboards and
murals and setting rules on the use of the work area and rest
room. Although it found that Lagrama did work for other cinema
owners, the appeals court held it to be a mere sideline
insufficient to prove that he was not an employee of Tan. The
appeals court also found no evidence of any intention on the
part of Lagrama to leave his job or sever his employment
relationship with Tan. Accordingly, on May 31, 2001, the Court
of Appeals rendered a decision in favor of Lagrama. Petitioner
moved for a reconsideration, but the Court of Appeals found no
reason to reverse its decision and so denied his motion for lack
of merit. 5 Hence, this petition for review on certiorari.
ISSUES: 1. Whether or not an employer-employee relationship
existed between petitioner and private respondent
2. whether or not petitioner is guilty of illegally dismissing
private Respondent.
HELD: 1. YES. In determining whether there is an employeremployee relationship, we have applied a "four-fold test," to
wit: (1) whether the alleged employer has the power of
selection and engagement of employees; (2) whether he has
control of the employee with respect to the means and
methods by which work is to be accomplished; (3) whether he
has the power to dismiss; and (4) whether the employee was
paid wages. These elements of the employer-employee
relationship are present in this case.
First. The existence in this case of the first element is
undisputed. It was petitioner who engaged the services of
Lagrama without the intervention of a third party.

Second. It is the existence of the second element, the power of

control, that requires discussion here. In the case at bar, albeit
petitioner Tan claims that private respondent Lagrama was an
independent contractor and never his employee, the evidence
shows that the latter performed his work as painter under the
supervision and control of petitioner. Lagrama worked in a
designated work area inside the Crown Theater of petitioner,
for the use of which petitioner prescribed rules. The rules
included the observance of cleanliness and hygiene and a
prohibition against urinating in the work area and any place
other than the toilet or the rest rooms. Petitioners control over
Lagramas work extended not only to the use of the work area,
but also to the result of Lagramas work, and the manner and
means by which the work was to be accomplished.
Moreover, it would appear that petitioner not only provided the
workplace, but supplied as well the materials used for the
paintings, because he admitted that he paid Lagrama only for
the latters services. Private respondent Lagrama claimed that
he worked daily, from 8 oclock in the morning to 5 oclock in
the afternoon. Petitioner disputed this allegation and
maintained that he paid Lagrama P1,475.00 per week for the
murals for the three theaters which the latter usually finished in
3 to 4 days in one week. Even assuming this to be true, the
fact that Lagrama worked for at least 3 to 4 days a week
proves regularity in his employment by petitioner.
Third. That petitioner had the right to hire and fire was admitted
by him in his position paper submitted to the NLRC. By stating
that he had the right to fire Lagrama, petitioner in effect
acknowledged Lagrama to be his employee. For the right to
hire and fire is another important element of the employeremployee relationship. 13 Indeed, the fact that, as petitioner
himself said, he waited for Lagrama to report for work but the
latter simply stopped reporting for work reinforces the
conviction that Lagrama was indeed an employee of petitioner.
For only an employee can nurture such an expectancy, the
frustration of which, unless satisfactorily explained, can bring
about some disciplinary action on the part of the employer.
Fourth. Payment of wages is one of the four factors to be
considered in determining the existence of employer-employee
relation. Wages are defined as "remuneration or earnings,
however designated, capable of being expressed in terms of
money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same,
which is payable by an employer to an employee under a
written or unwritten contract of employment for work done or to
be done, or for services rendered or to be rendered." 14 That
Lagrama worked for Tan on a fixed piece-work basis is of no
moment. Payment by result is a method of compensation and
does not define the essence of the relation." 15 It is a method
of computing compensation, not a basis for determining the
existence or absence of employer-employee relationship. One
may be paid on the basis of results or time expended on the
work, and may or may not acquire an employment status,
depending on whether the elements of an employer-employee
relationship are present or not.
2. YES. The Implementing Rules of the Labor Code 29 provide
that no worker shall be dismissed except for a just or
authorized cause provided by law and after due process. This
provision has two aspects: (1) the legality of the act of
dismissal, that is, dismissal under the grounds provided for
under Article 282 of the Labor Code and (2) the legality in the
manner of dismissal. The illegality of the act of dismissal

constitutes discharge without just cause, while illegality in the

manner of dismissal is dismissal without due process. In this
case, by his refusal to give Lagrama work to do and ordering
Lagrama to get out of his sight as the latter tried to explain his
side, petitioner made it plain that Lagrama was dismissed.
Urinating in a work place other than the one designated for the
purpose by the employer constitutes violation of reasonable
regulations intended to promote a healthy environment under
Art. 282(1) of the Labor Code for purposes of terminating
employment, but the same must be shown by evidence. Here
there is no evidence that Lagrama did urinate in a place other
than a rest room in the premises of his work. Instead of
ordering his reinstatement as provided in Art. 279 of the Labor
Code, the Labor Arbiter found that the relationship between the
employer and the employee has been so strained that the
latters reinstatement would no longer serve any purpose. The
parties do not dispute this finding. Hence, the grant of
separation pay in lieu of reinstatement is appropriate. This is of
course in addition to the payment of backwages which, in
accordance with the ruling in Bustamante v. NLRC should be
computed from the time of Lagramas dismissal up to the time
of the finality of this decision, without any deduction or
qualification.

7. HILARIO RADA v. NATIONAL LABOR RELATIONS

COMMISSION and PHILNOR CONSULTANTS AND
PLANNERS, INC
FACTS: "Petitioners initial employment with this Respondent
was under a Contract of Employment for a Definite Period
dated July 7, 1977, copy of which is hereto attached and made
an integral part hereof as Annex A whereby Petitioner was
hired as Driver for the construction supervision phase of the
Manila North Expressway Extension, Second Stage
(hereinafter referred to as MNEE Stage 2) for a term of about
24 months effective July 1, 1977.
x

"Highlighting the nature of Petitioners employment, Annex A

specifically provides as follows:chanrob1es virtual 1aw library
It is hereby understood that the Employer does not have a
continuing need for the services of the Employee beyond the
termination date of this contract and that the Employees
services shall automatically, and without notice, terminate upon
the completion of the above specified phase of the project; and
that it is further understood that the engagement of his/her
services is coterminous with the same and not with the whole
project or other phases thereof wherein other employees of
similar position as he/she have been hired. (Par. 7, Emphasis
supplied). "Petitioners first contract of employment expired on
June 30, 1979. Meanwhile, the main project, MNEE Stage 2,
was not finished on account of various constraints, not the
least of which was inadequate funding, and the same was
extended and remained in progress beyond the original period
of 2.3 years. Fortunately for the Petitioner, at the time the first
contract of employment expired, Respondent was in need of
Driver for the extended project. Since Petitioner had the
necessary experience and his performance under the first
contract of employment was found satisfactory, the position of
Driver was offered to Petitioner, which he accepted. Hence a
second Contract of Employment for a Definite Period of 10
months, that is, from July 1, 1979 to April 30, 1980 was
executed between Petitioner and Respondent on July 7,

1979. . . "In March 1980 some of the areas or phases of the

project were completed, but the bulk of the project was yet to
be finished. By that time some of those project employees
whose contracts of employment expired or were about to
expire because of the completion of portions of the project
were offered another employment in the remaining portion of
the project. Petitioner was among those whose contract was
about to expire, and since his service performance was
satisfactory, respondent renewed his contract of employment in
April 1980, after Petitioner agreed to the offer. Accordingly, a
third contract of employment for a definite period was executed
by and between the Petitioner and the Respondent whereby
the Petitioner was again employed as Driver for 19 months,
from May 1, 1980 to November 30, 1981, . . .
"This third contract of employment was subsequently extended
for a number of times, the last extension being for a period of 3
months, that is, from October 1, 1985 to December 31,
1985, . . . "The last extension, from October 1, 1985 to
December 31, 1985 (Annex E) covered by an Amendment to
the Contract of Employment with a Definite Period, was not
extended any further because Petitioner had no more work to
do in the project. This last extension was confirmed by a notice
on November 28, 1985 duly acknowledged by the Petitioner
the very next day, . . . "Sometime in the 2nd week of December
1985, Petitioner applied for Personnel Clearance with
Respondent dated December 9, 1985 and acknowledged
having received the amount of P3,796.20 representing
conversion to cash of unused leave credits and financial
assistance. Petitioner also released Respondent from all
obligations and or claims, etc. in a Release, Waiver and
Quitclaim . . ." Culled from the records, it appears that on May
20, 1987, petitioner filed before the NLRC, National Capital
Region, Department of Labor and Employment, a Complaint for
nonpayment of separation pay and overtime pay. Petitioner
filed an Amended Complaint alleging that he was illegally
dismissed and that he was not paid overtime pay although he
was made to render three hours overtime work from Monday to
Saturday for a period of three years. Labor Arbiter Dominador
M. Cruz rendered a decision in favor of the petitioner. Hence
this petition.
ISSUES: 1. WHETHER OR NOT PETITIONER IS ILLEGALLY
DISMISSED.
2. WHETHER OR NOT PETITIONER IS ENTITLED TO
OVERTIME PAY
HELD: 1. NO. From the foregoing, it is clear that petitioner is a
project employee considering that he does not belong to a
"work pool" from which the company would draw workers for
assignment to other projects at its discretion. It is likewise
apparent from the facts obtaining herein that petitioner was
utilized only for one particular project, the MNEE Stage 2
Project of respondent company. Hence, the termination of
herein petitioner is valid by reason of the completion of the
project and the expiration of his employment contract.
2. YES. Anent the claim for overtime compensation, we hold
that petitioner is entitled to the same. The fact that he picks up
employees of Philnor at certain specified points along EDSA in
going to the project site and drops them off at the same points
on his way back from the field office going home to Marikina,
Metro Manila is not merely incidental to petitioners job as a
driver. On the contrary, said transportation arrangement had
been adopted, not so much for the convenience of the
employees, but primarily for the benefit of the employer, herein
private Respondent. Since the assigned task of fetching and
delivering employees is indispensable and consequently

mandatory, then the time required of and used by petitioner in

going from his residence to the field office and back, that is,
from 5:30 A.M. to 7:00 A.M. and from 4:00 P.M. to around 6:00
P.M., which the labor arbiter rounded off as averaging three
hours each working day, should be paid as overtime work.
Quintessentially, petitioner should be given overtime pay for
the three excess hours of work performed during working days
from January, 1983 to December, 1985.

8. PAL v. NLRC, 302 SCRA 582

FACTS: Private respondent was employed as flight
surgeon at petitioner company. He was assigned at the PAL
Medical Clinic at Nichols and was on duty from 4:00 in the
afternoon until 12:00 midnight. On February 17, 1994, at
around 7:00 in the evening, private respondent left the clinic to
have his dinner at his residence, which was about five-minute
drive away. A few minutes later, the clinic received an
emergency call from the PAL Cargo Services. One of its
employees, Mr. Manuel Acosta, had suffered a heart
attack. The nurse on duty, Mr. Merlino Eusebio, called private
respondent at home to inform him of the emergency. The
patient arrived at the clinic at 7:50 in the evening and Mr.
Eusebio immediately rushed him to the hospital. When private
respondent reached the clinic at around 7:51 in the evening,
Mr. Eusebio had already left with the patient. Mr. Acosta died
the following day. Upon learning about the incident, PAL
Medical Director Dr. Godofredo B. Banzon ordered the Chief
Flight Surgeon to conduct an investigation. The Chief Flight
Surgeon, in turn, required private respondent to explain why no
disciplinary sanction should be taken against him. In his
explanation, private respondent asserted that he was entitled
to a thirty-minute meal break; that he immediately left his
residence upon being informed by Mr. Eusebio about the
emergency and he arrived at the clinic a few minutes
later; that Mr. Eusebio panicked and brought the patient to the
hospital without waiting for him. Finding private respondents
explanation unacceptable, the management charged private
respondent with abandonment of post while on duty. He was
given ten days to submit a written answer to the administrative
charge. In his answer, private respondent reiterated the
assertions in his previous explanation. He further denied that
he abandoned his post on February 17, 1994. He said that he
only left the clinic to have his dinner at home. In fact, he
returned to the clinic at 7:51 in the evening upon being
informed of the emergency. After evaluating the charge as well
as the answer of private respondent, petitioner company
decided to suspend private respondent for three months
effective December 16, 1994.
Private respondent filed a complaint for illegal suspension
against petitioner. Labor Arbiter Romulus A. Protasio rendered
a decision declaring the suspension of private respondent
illegal. Petitioner appealed to the NLRC. The NLRC, however,
dismissed the appeal after finding that the decision of the
Labor Arbiter is supported by the facts on record and the law
on the matter. The NLRC likewise denied petitioners motion for
reconsideration.
Petitioner argues that being a full-time employee, private
respondent is obliged to stay in the company premises for not
less than eight (8) hours. Hence, he may not leave the
company premises during such time, even to take his meals.

ISSUES: 1. WON the suspension of Dr. Fabros for 3 months is

valid.
2. WON private respondent is not allowed to leave the
company premises during meal time.

HELD: 1. No. There was an illegal suspension on the part of

PAL. The facts do not support petitioners allegation that
private respondent abandoned his post on the evening
of February 17, 1994. Private respondent left the clinic that
night only to have his dinner at his house, which was only a
few minutes drive away from the clinic. His whereabouts were
known to the nurse on duty so that he could be easily reached
in case of emergency. Upon being informed of Mr. Acostas
condition, private respondent immediately left his home and
returned to the clinic. These facts belie petitioners claim of
abandonment.

2. NO. Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.The normal hours of work
of any employee shall not exceed eight (8) hours a day.
Health personnel in cities and municipalities with a population
of at least one million (1,000,000) or in hospitals and clinics
with a bed capacity of at least one hundred (100) shall hold
regular office hours for eight (8) hours a day, for five (5) days a
week, exclusive of time for meals, except where the
exigencies of the service require that such personnel work for
six (6) days or forty-eight (48) hours, in which case they shall
be entitled to an additional compensation of at least thirty per
cent (30%) of their regular wage for work on the sixth day. For
purposes of this Article, health personnel shall include:
resident physicians, nurses, nutritionists, dieticians,
pharmacists, social workers, laboratory technicians,
paramedical technicians, psychologists, midwives, attendants
and all other hospital or clinic personnel. (emphasis supplied)
Art. 85. Meal periods.Subject to such regulations as the
Secretary of Labor may prescribe, it shall be the duty of every
employer to give his employees not less than sixty (60)
minutes time-off for their regular meals.
Section 7, Rule I, Book III of the Omnibus Rules
Implementing the Labor Code further states:
Sec. 7. Meal and Rest Periods.Every employer shall give
his employees, regardless of sex, not less than one (1) hour
time-off for regular meals, except in the following cases when a
meal period of not less than twenty (20) minutes may be given
by the employer provided that such shorter meal period is
credited as compensable hours worked of the employee;
(a) Where the work is non-manual work in nature or does not
involve strenuous physical exertion;
(b) Where the establishment regularly operates not less than
sixteen hours a day;
(c) In cases of actual or impending emergencies or there is
urgent work to be performed on machineries, equipment or
installations to avoid serious loss which the employer would
otherwise suffer; and

(d) Where the work is necessary to prevent serious loss of

perishable goods.
Rest periods or coffee breaks running from five (5) to twenty
(20) minutes shall be considered as compensable working
time.
Thus, the eight-hour work period does not include the
meal break. Nowhere in the law may it be inferred that
employees must take their meals within the company
premises. Employees are not prohibited from going out of the
premises as long as they return to their posts on time. Private
respondents act, therefore, of going home to take his dinner
does not constitute abandonment.

9. Natl Devt. Corp v. CIR, 6 SCRA 763 G.R. No. L-15422.

November 30, 1962.
4. ID.; ID.; QUESTION OF WHAT IS COMPENSABLE WORK
ONE OF FACT. The question of what constitutes
compensable work is one of fact the determination of which
depends upon the particular circumstances, to be determined
by the courts in controverted cases. (31 Am. Jur., Sec. 626, pp.
877-878.)
FACTS: At the National Development Co., a governmentowned and controlled corporation, there were four shifts of
work. One shift was from 8 a.m. to 4 p.m., while the three other
shifts were from 6 a.m. to 2 p.m.; then from 2 p.m. to 10 p.m.
and, finally, from 10 p.m. to 6 a.m. In each shift, there was a
one-hour mealtime period, to wit: from (1) 11 a.m. to 12 noon
for those working between 6 a.m. and 2 p.m. and from (2) 7
p.m. to 8 p.m. for those working between 2 p.m. and 10 p.m.
The records disclose that although there was a one-hour
mealtime, petitioner nevertheless credited the workers with
eight hours of work for each shift and paid them for the same
number of hours. However, since 1953, whenever workers in
one shift were required to continue working until the next
shift, Petitioner, instead of crediting them with eight hours of
overtime work, has been paying them for six hours only,
petitioner claiming that the two hours corresponding to the
mealtime periods should not be included in computing
compensation. On the other hand, respondent National Textile
Workers Union whose members are employed at the NDC,
maintained the opposite view and asked the Court of Industrial
Relations to order the payment of additional overtime pay
corresponding to the mealtime periods. After hearing, Judge
Arsenio I. Martinez of the CIR issued an order holding that
mealtime should be counted in the determination of overtime
work and accordingly ordered petitioner to pay P101,407.96 by
way of overtime compensation. Petitioner filed a motion for
reconsideration but the same was dismissed by the CIR en
banc on the ground that petitioner failed to furnish the union a
copy of its motion.
Petitioner appealed to this Court.
ISSUE: WON the mealtime breaks should be considered
working time
HELD: NO. The idle time that an employee may spend for
resting and during which he may leave the spot or place of
work though not the premises of his employer, is not counted
as working time only where the work is broken or is not
continuous. Indeed, it has been said that no general rule can

be laid down as to what constitutes compensable work, but

rather the question is one of fact depending upon the particular
circumstances, to be determined by the courts in controverted
cases. (31 Am. Jur. Sec. 626 pp. 877-878.)
In this case, the CIRs finding that work in the petitioner
company was continuous and did not permit employees and
laborers to rest completely is not without basis in evidence and
following our earlier rulings, We shall not disturbed the same.
10. Isaac Peral Bowling Alley v. United Employees Welfare
Assoc, 102 Phil 219 G.R. No. L-9831. October 30, 1957
PINBOYS EMPLOYMENT PERMANENT; CASE AT BAR.
As warranted by the evidence presented and the
circumstances obtaining in the case at bar which lend to the
employment of the 36 pinboys the character of permanency, as
no other pinboys were employed (except in their absence)
during the period involved in this case, the finding of the lower
court that said workers of the company are regular employees
thereof should be sustained.
FACTS: On October 6, 1952, the United Employees Welfare
Association, a legitimate labor union, presented a petition
before the Department of Labor on behalf of the 36 pinboys of
the Isaac Peral Bowling Alley, allegedly affiliated with said
union. The petition (Case No. 754 of the Department of Labor)
made specific demands from the company among which were
the conversion of their (pinboys) wages from hourly to daily
basis; vacation and sick leaves; medical and hospital bills;
payment of their wages during a strike if such strike had to be
declared due to the refusal of the company to consider their
demands; and that the United Employees Welfare Association
be recognized as the sole bargaining agency. This petition was
certified by the Department of Labor to the Court of Industrial
Relations. On the same day, however, the 36 pinboys
concerned therein staged a strike, whereupon the Court
intervened and a commissioner of the same called the parties
to a conference. It was agreed that the striking pinboys would
return and be admitted to their work under the same working
conditions and arrangements prevailing before the declaration
of the strike, pending the final disposition of the case, and the
management on the other hand was precluded from accepting
pinboys other than those appearing in its payrolls before the
strike unless the Court expressly authorize the admission of
new ones. The company filed its answer denying the material
averments of the petition and contended that in view of the
nature of the business of the company, the payment of the
wages of its pinboys can not be converted from the hourly to
daily basis; that said pinboys were receiving wages in
accordance with law and were being paid additional
compensation for any work rendered on Sundays; that the
company was actually shouldering medical and hospital bills of
those injured or who become ill in line of duty; that the pinboys
were just casual workers and not permanently employed by the
company; that the Union cannot be recognized as the sole
bargaining agency because aside from the fact that the
pinboys were not the only ones working in that establishment,
the company had no confidence in said union. It was, therefore
prayed that the petition be dismissed with costs against therein
petitioner.
The Court rendered decision finding the petitioning pinboys as
permanent and regular employees and not merely casual
workers of the company; that from the start of its business on
March 1, 1951, to July 31 of the same year, the company paid

10

its pinboys wages at the rate of P80 a month and that from
August 1, 1951, to date, the pinboys received wages at the rate
of P0.50 per hour of actual work; that the pinboys in said
company were working on 2 shifts, the morning shift working or
staying, at the instance of the management, in their respective
alleys from 8:00 a.m. to 5:00 p.m., or for 9 hours on ordinary
days and legal holidays, whereas the second shift began their
work from 5:00 p.m. until 12:00 midnight or 1:00 a.m. on
regular days and legal holidays and from 4:00 p.m. to 1:00 a.m.
on Sundays. The Court thus ordered the company to pay the
pinboys in the day shift 25 per cent additional compensation
over their basic wages for 1 hour overtime on ordinary days
and legal holidays to pay those in the night shift 25 per cent
additional compensation for 1 hour overtime on Sundays,
which should be computed from the date they had been
rendered; and another 25 per cent additional compensation
over their basic pay for those working from 6:00 p.m. until
12:00 or 1:00 a.m. as the case may be, to be computed from
the time the petition was filed in court. The Court also held that
the pinboys were entitled yearly to 8 days vacation leave and 7
days sick leave with pay, and the United Employees Welfare
Association was recognized as the sole bargaining agency for
its members (pinboys). The other demands were denied.
A motion for the reconsideration of said decision, filed by the
company, was subsequently denied by the Court en banc.
Isaac Peral Bowling Alley thus filed a petition for certiorari with
this Court.
ISSUES: 1.WON the pinboys involved in this case are
permanent workers of the company and that they rendered
service for more than 8 hours.
2. WON those working in the night shift are entitled to 25 per
cent additional compensation
3. WON the Court was right in awarding vacation and sick
leave to the said 36 pinboys.
HELD: 1. YES. We must not forget that the company pays its
pinboys wages at the rate of P0.50 per hour of actual work
which, as a matter of fact was a wage allowed by the Wage
Service considering the nature of the business of the company
(Exhibit 30), and that the finding of the lower Court on this point
was made before the promulgation of Our doctrine in the case
of Luzon Stevedoring Co., Inc., v. Luzon Marine Department
Union, 1 G. R. No. L-9265, April 29, 1957, wherein We
pronounced that "to constitute non- working hours for the
purpose of the Minimum Wage Law, the laborer or worker need
not leave the premises of the factory, shop or boat (or
establishment) in order that his period of rest shall not be
counted, it being enough that he cease to work, may rest
completely and leave or may leave at his will the spot where he
actually stays while working to go somewhere else, whether
within or outside the premises of said factory, shop or boat
(establishment). If these requisites are complied with, such
period shall not be counted." In view of what appears in the
payrolls and vouchers signed by the pinboys, We are inclined
to believe that such requisites had been satisfied, there being
no evidence to the contrary. Such being the case, the
conclusion arrived at by the lower Court to the effect that for
the period above- mentioned the pinboys worked for 9 hours a
day just because they remained in the premises of the Bowling
Alley, finds no support to stand on and, consequently, said
conclusion should be adjusted to what the evidence really
show.

pinboys the charter of permanency, as no other pinboys were

employed (except in their absence) during the period involved
in this case, the finding of the lower Court that said workers of
the company are regular employees thereof should be
sustained.
2. YES. The grant of additional compensation to those working
at night has been recognized by this Court as a valid exercise
of the general powers of the Court of Industrial Relations and
may be allowed for "hygienic, medical, moral, cultural and
sociological reasons" (Shell Co. of the Phil. Islands, Ltd. v.
National Labor Union, 2 G. R. No L-1309, July 26, 1948), and
We find no reason why the lower Court cannot apply the same
measure to the workers involved herein considering that
irrespective of the nature of their jobs, those working at night
suffer a continued general loss of energies and are deprived of
the same comfort. The ruling of the court a quo on this matter
should be, therefore, affirmed.
3. NO. In view of the absence of express legislation granting
employees of private firms or establishments the benefits of
vacation and sick leaves with pay, said employees are not
assured of such privileges, which are proper subject matters
for collective bargaining between employers and employees.
Although strictly speaking, therefore, there is no ground for the
granting of said privileges, the Court of Industrial Relations in
the exercise of its broad powers under Commonwealth Act No.
103 had on several occasions dealt with and granted claims for
these benefits. With the enactment of Republic Act No. 875
and the abolition of the Courts general jurisdiction over labor
disputes, this power seems to have been curtailed. It is
believed, however, that whenever the Court of Industrial
Relations may exercise its power of compulsory arbitration, as
when a case is certified to it by the President of the Philippines,
being again possessed of general powers, said Court may still
grant these benefits. (See authorities cited in Franciscos Labor
Laws, Vol. II, 3rd ed., p. 508 et seq)
In the case at bar, We cannot ignore the fact that the claim was
passed upon by the lower Court when it was still possessed of
its broad powers and could have validly granted the same, as it
did. But it also appears that the Court a quo was aware of the
financial condition of the company as "not very sound due to
losses reported during the years 1952 and 1953 although it
had a little profit in 1951" (p. 6 Decision), and considering that
the ability of the employer to make payment of these privileges
must also be reckoned with, it is but just that this demand (sick
and vacation leaves with pay) be denied, at least for the time
being. Anyway, this could be made the subject of a future
agreement between the workers and the management.
Wherefore, the decision appealed from is modified in so far as
it grants the 36 pinboys represented by respondent Union
Employees Welfare Association sick and vacation leaves, a
matter which is left to further bargaining agreement between
the parties, and with regard to the payment of the hours of
overtime allegedly earned by said pinboys which shall be
determined in the proper incident in the lower Court after this
decision becomes final, subject to the doctrine on the point laid
down by this Court in the case of Luzon Stevedoring Co., Inc.
v. Luzon Marine Department Union (101 Phil., 257). Without
pronouncement as to costs. It is so ordered.
11. Arica v. NLRC, 170 SCRA 776 [G.R. No. 78210. February
28, 1989.]

In view of the evidence presented and the circumstances

obtaining in this case which lend to the employment of the 36

11

FACTS: Teofilo Arica et al and 561 others sued Standard Fruits

Corporation (STANFILCO) Philippines for allegedly not paying
the workers for their assembly time which takes place every
work day from 5:30am to 6am. The assembly time consists of
the roll call of the workers; their getting of assignments from
the foreman; their filling out of the Laborers Daily
Accomplishment Report; their getting of tools and equipments
from the stockroom; and their going to the field to work. The
workers alleged that this is necessarily and primarily for
STANFILCOs benefit.
ISSUE: Whether or not the 30-minute activity of the petitioners
before the scheduled working time is compensable under the
Labor Code

Industrial Relations where it was docketed as Case No. 1058V, claiming overtime compensation from the NASSCO. The
case was submitted for decision on a stipulation of facts, of
which the following forms part.
"4. That to meet the exigencies of the service in the
performance of the above work, petitioners (i.e., Abiday and
the 38 other employees) have to work when so required in
excess of eight (8) hours a day and/or during Sundays and
legal holidays (actual overtime service is subject to
determination on the basis of the logbook of the vessels, time
sheets and other pertinent records of the respondent (i.e.,
NASSCO);
x

HELD: No. Noteworthy is the decision of the Minister of Labor,

on May 12, 1978 in the aforecited case (Associated Labor
Union v. Standard (Phil.) Fruit Corporation, NLRC Case No.
26-LS-XI-76) where significant findings of facts and
conclusions had already been made on the matter.
The Minister of Labor held:jgc:chanrobles.com.ph
"The thirty (30)-minute assembly time long practiced and
institutionalized by mutual consent of the parties under Article
IV, Section 3, of the Collective Bargaining Agreement cannot
be considered as waiting time within the purview of Section 5,
Rule I, Book III of the Rules and Regulations Implementing the
Labor Code . . .
"Furthermore, the thirty (30)-minute assembly is a deeplyrooted, routinary practice of the employees, and the
proceedings attendant thereto are not infected with
complexities as to deprive the workers the time to attend to
other personal pursuits. They are not new employees as to
require the company to deliver long briefings regarding their
respective work assignments. Their houses are situated right
on the area where the farms are located, such that after the roll
call, which does not necessarily require the personal presence,
they can go back to their houses to attend to some chores. In
short, they are not subject to the absolute control of the
company during this period, otherwise, their failure to report in
the assembly time would justify the company to impose
disciplinary measures. The CBA does not contain any provision
to this effect; the record is also bare of any proof on this point.
This, therefore, demonstrates the indubitable fact that the thirty
(30)-minute assembly time was not primarily intended for the
interests of the employer, but ultimately for the employees to
indicate their availability or non-availability for work during
every working day."

12. National Shipyards Steel Corp. v. CIR, 3 SCRA 890 [G.R.

No. L-20838. July 30, 1965.]
FINDING THAT LABORERS HAD WORKED OVERTIME IS A
FINDING OF FACT CONCLUSIVE ON SUPREME COURT.
The finding of the Court of Industrial Relations to the effect that
laborers had worked overtime is a finding of fact which the
Supreme Court cannot disturb if it is supported by sufficient
evidence.
FACTS: NASSCO is the owner of a number of vessels used in
connection with its business of ship building and repair.
Respondents are employed as crew members of its tugboats.
On April 15, 1957, respondents filed this case in the Court of

"6. The petitioners are paid by the respondent their regular

salaries and subsistence allowance, without additional
compensation for overtime work."cralaw virtua1aw library
the Court of Industrial Relations issued an order requiring
NASSCO to pay respondents 25 per cent additional
compensation for work done in excess of eight hours and, for
this purpose, directed its examiner to make the computation on
the basis of the log book, time sheets and other records of the
NASSCO.
The examiner submitted two reports, the first, which was filed
on February 14, 1958, covering the period January 1 to
December 31, 1957, and the second, which was filed on April
30, 1958, covering the period January 1, 1954 to December
31, 1956, in both of which he credited respondents with
overtime work at an average of five hours a day.
These reports became the subject of review in this Court in two
separate petitions for certiorari filed by NASSCO. In G. R. No.
L-13732 (NASSCO v. CIR) decided on April 14, 1959,
NASSCO challenged the jurisdiction of the Court of Industrial
Relations and raised the question of whether the order of that
court, which directed the computation of overtime pay, could be
considered a decision. The petition was dismissed for lack of
merit. In 107 Phil. 1006 (NASSCO v. CIR), decided on April 29,
1960), NASSCO raised again the question of jurisdiction. Again
the petition was dismissed, the resolution on the first petition
having become the law of the case.
On November 25, 1960, therefore, respondents filed a
"petition" asking the Court of Industrial Relations to direct its
examiner to proceed with the computation of overtime pay for
the period 1949-53 and 1958-60. This was granted. On June
15, 1962, therefore, the examiner submitted a third report
which the Court of Industrial Relations in its order of November
27, 1962 approved. NASSCO asked for a reconsideration but
the Court of Industrial Relations en banc denied its motion.
Hence this petition for review.
ISSUE: WON there is no evidence to support the examiners
finding that respondents rendered five hours of overtime
service daily during the periods 1949-53 and 1958-60.
HELD: NO. The first error assigned by the petitioner that there
was no evidence submitted to support the Courts finding that
respondents rendered five hours overtime service, is not well
taken. Pedro de Joya, the marine land surveyor employed by
the petitioner testified that the respondent had really worked
overtime as shown by their daily time sheets, payrolls,
logbooks and other pertinent records of the petitioner. De Joya
stated that the crew of the ship or launch of the petitioner were

12

supposed to work on a three-8 hours shifts but they only

had two men assigned on the deck, the captain and the
master; in the engine only 2 men engineers and two oilers
were assigned; and in other places in the launch or ship only
two members of the crew were assigned so that each member
of the crew ordinarily worked a minimum of at least 12 hours
each. He testified further that sometimes the crew had to work
more than 12 hours due to repairs, storms and other
calamities.
13. Caltex Regular Employees v. Caltex, 247 SCRA 398 [G.R.
No. 111359. August 15, 1995.]

FACTS: On 12 December 1985, petitioner Union and private

respondent Caltex (Philippines), Inc. ("Caltex") entered into a
Collective Bargaining Agreement ("1985 CBA") which was to
be in effect until midnight of 31 December 1988. The CBA
included, among others, the following
provision:jgc:chanrobles.com.ph
"ARTICLE III
HOURS OF WORK
In conformity with Presidential Decree 442, otherwise known
as the Labor Code of the Philippines, as amended, the regular
work week shall consist of eight (8) hours per day, seven (7)
days, Monday through Sunday, during which regular rates of
pay shall be paid in accordance with Annex B and work on the
employees one Day of Rest, shall be considered a special
work day, during which Day of Rest rates of pay shall be paid
as provided in Annex B. Daily working schedules shall be
established by management in accordance with the
requirements of efficient operations on the basis of eight (8)
hours per day for any five (5) days. Provided, however,
employees required to work in excess of forty (40) hours in any
week shall be compensated in accordance with Annex B of this
Agreement. 1 (Emphasis supplied)
Pertinent portions of Annex "B" of the 1985 CBA are also
quoted here as follows:jgc:chanrobles.com.ph
Sometime in August 1986, the Union called Caltexs attention
to alleged violations by Caltex of Annex "B" of the 1985 CBA,
e.g. non-payment of night-shift differential, non-payment of
overtime pay and non-payment at "first day-off rates" for work
performed on a Saturday.
Caltex s Industrial Relations manager immediately evaluated
petitioners claims and accordingly informed petitioner Union
that differential payments would be timely implemented. In the
implementation of the re-computed claims, however, no
differential payment was made with respect to work performed
on the first 2 1/2 hours on a Saturday. On 7 July 1987, the
Union instituted a complaint for unfair labor practice against
Caltex alleging violation of the provisions of the 1985 CBA.
Petitioner Union charged Caltex with shortchanging its
employees when Caltex compensated work performed on the
first 2 1/2 hours of Saturday, an employees day of rest, at
regular rates, when it should be paying at "day of rest" or "day
off" rates. Caltex denied the accusations of the Union. It
averred that Saturday was never designated as a day of rest,
much less a "day-off." It maintained that the 1985 CBA
provided only 1 day of rest for employees at the Manila Office,
as well as employees similarly situated at the Legazpi and
Marinduque Bulk Depots. This day of rest, according to Caltex
was Sunday.

In due time, the Labor Arbiter ruled in favor of petitioner Union,

while finding at the same time that private respondent Caltex
was not guilty of any unfair labor practice. Labor Arbiter
Valentin C. Guanio, interpreting Article III and Annex "B" of the
1985 CBA, concluded that Caltexs employees had been given
two (2) days (instead of one [1] day) of rest, with the result that
work performed on the employees first day of rest, viz.
Saturday, should be compensated at "First day-off" rates. On
appeal by Caltex, public respondent NLRC set aside the
decision of Labor Arbiter Guanio. The NLRC found that the
conclusions of the Labor Arbiter were not supported by the
evidence on record. The NLRC, interpreting the provisions of
the 1985 CBA, concluded that CBA granted only one (1) day of
rest, e.g., Sunday. The Unions motion for reconsideration was
denied on 9 June 1993.
The controversy we must address in this Petition
for Certiorari relates to the appropriate interpretation of Article
III in relation to Annex "B" of the parties 1985 CBA.
Petitioner Union also contended that private respondent Caltex
in the instant petition was violating the statutory prohibition
against off-setting undertime for overtime work on another day.
Union counsel attempted to establish this charge by asserting
that the employees had been required to render "overtime
work" on a Saturday but compensated only at regular rates of
pay, because they had not completed the eight (8)-hour work
period daily from Monday thru Friday.
Petitioners counsel, in his final attempt to lay a basis for
compelling private respondent to pay premium rates of pay for
all hours worked on a Saturday, regardless of the number of
hours actually worked earlier during the week, i.e., on Monday
to Friday, insists that private respondent cannot require its
employees to complete the 40-hour regular work week on a
Saturday, after it has allowed its employees to render only 371/2 hours of work.
ISSUES: 1. WON respondent Caltex was violating the statutory
prohibition against off-setting undertime for overtime work on
another day
2. WON private respondent can be compelled to pay premium
rates of pay for all hours worked on a Saturday, regardless of
the number of hours actually worked earlier during the week
HELD: 1. NO. The Court finds petitioners contention bereft of
merit. Overtime work consists of hours worked on a given day
in excess of the applicable work period, which here is eight (8)
hours. It is not enough that the hours worked fall on
disagreeable or inconvenient hours. In order that work may be
considered as overtime work, the hours worked must be in
excess of and in addition to the eight (8) hours worked during
the prescribed daily work period, or the forty (40) hours worked
during the regular work week Monday thru Friday. In the
present case, under the 1985 CBA, hours worked on a
Saturday do not, by that fact alone, necessarily constitute
overtime work compensable at premium rates of pay, contrary
to petitioners assertion. These are normal or regular work
hours, compensable at regular rates of pay, as provided in the
1985 CBA; under that CBA, Saturday is not a rest day or a
"day off." It is only when an employee has been required on a
Saturday to render work in excess of the forty (40) hours which
constitute the regular work week that such employee may be
considered as performing overtime work on that Saturday. We
consider that the statutory prohibition against offsetting
undertime one day with overtime another day has no
application in the case at bar.

13

2. NO. The company practice of allowing employees to leave

thirty (30) minutes earlier than the scheduled off-time had been
established primarily for the convenience of the employees
most of whom have had to commute from work place to home
and in order that they may avoid the heavy rush hour vehicular
traffic. There is no allegation here by petitioner Union that such
practice was resorted to by Caltex in order to escape its
contractual obligations. This practice, while it effectively
reduced to 37-1/2 the number of hours actually worked by
employees who had opted to leave ahead of off-time, is not be
construed as modifying the other terms of the 1985 CBA. As
correctly pointed out by private respondent, the shortened work
period did not result in likewise shortening the work required for
purposes of determining overtime pay, as well as for purposes
of determining premium pay for work beyond forty (40) hours
within the calendar week. It follows that an employee is entitled
to be paid premium rates, whether for work in excess of (8)
hours on any given day, or for work beyond the forty (40)-hour
requirement for the calendar week, only when the employee
had, in fact, already rendered the requisite number of hours
8 or 40 prescribed in the 1985 CBA.
14. PNB v. PNB Employees Assoc., 115 SCRA 507
FACTS: PNB and PNB Employees Association (PEMA) had a
dispute regarding the proper computation of overtime pay.
PEMA wanted the cost of living allowance (granted in 1958)
and longevity pay (granted in 1961) to be included in the
computation. PNB disagreed and the 2 parties later went
before the CIR to resolve the dispute.
CIR decided in favor of PEMA and held that PNB should
compute the overtime pay of its employees on the basis of the
sum total of the employees basic salary or wage plus cost of
living allowance and longevity pay. The CIR relied on the ruling
in NAWASA v NAWASA Consolidated Unions, which held that
for purposes of computing overtime compensation, regular
wage includes all payments which the parties have agreed
shall be received during the work week, including differentiated
payments for working at undesirable times, such as at night
and the board and lodging customarily furnished the
employee. This prompted PNB to appeal, hence this case.
ISSUE: WON the cost of living allowance and longevity pay
should be
included in the computation of overtime pay as held by the CIR
HELD: NO. In the instant case, longevity pay cannot be
included in the computation of overtime pay for the very simple
reason that the contrary is expressly stipulated in the collective
bargaining agreement and, as should be the case, it is settled
that the terms and conditions of a collective bargaining
agreement constitute the law between the parties.
Notwithstanding the portions of NAWASAs opinion relied upon
by PEMA, there is nothing in CA 444 that could justify its
posture that cost-of-living allowance should be added to the
regular wage in computing overtime pay.
SYNOPSIS
In connection with an industrial dispute certified by the
President of the Philippines, respondent Court of Industrial
Relations (CIR) ruled, that petitioner Philippine National Bank
(PNB) should include cost-of-living allowances (equity pay) and
longevity pay to the sum total of every employees basic salary
or wage as basis for computation of the overtime pay of its
employees. Respondent CIRs decision was based on its
interpretation of the applicable law, the Eight-Hour Labor Law

(Commonwealth Act No. 444), in the light of its own impression

of the Supreme Courts opinion in NAWASA v. NAWASA
Consolidated Unions (G. R. No. L-18938, promulgated August
31, 1964, 11 SCRA 766) wherein it was held that in computing
the daily wage of employees and workers who worked seven
days a week their 25% Sunday differential pay should be
included; and the computation should not be based exclusively
on the basic wage.
On review, the Supreme Court held that: (a) longevity pay
cannot be included in the computation of overtime pay since
the contrary is expressly stipulated in the collective bargaining
agreement which constitutes the law between the parties; (b)
notwithstanding the portions of the NAWASA opinion relied
upon by respondent PEMA, there is nothing in the Eight- Hour
Labor Law that could justify its posture that the cost of living
allowance should be added to the regular wage in computing
overtime pay; (c) the NAWASA ruling relied upon by
respondent PEMA was obiter dictum, the only issue therein
being whether or not "in computing the daily wage, the
additional compensation for Sunday should be included" ; and
(d) in the absence of any specific provision in a collective
bargaining agreement, what are decisive in determining the
basis for computation of overtime pay are two germane
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 intended to be permanent and regular, not
contingent nor temporary and given only to remedy a situation
which can change any time.
15. Engineering Equipment Inc., v. Minister of Labor, 138
SCRA 616

FACTS: In 1977, Aspera was contracted by Engineering

Equipment, Inc. to work as a mechanical engineer in Saudi
Arabia. He was contracted to work for 10 hours a day. Later he
sued Engineering Equipment claiming that he is entitled to
overtime pay because under the law, the working hours should
be 8 hours a day only hence the extra 2 hours should be paid
as overtime. Engineering Equipment averred that Aspera is a
managerial employee.
ISSUE: Whether or not Aspera is entitled to OT pay.
HELD: No. Engineering Equipment was able to prove that
Aspera is part of the managerial staff, a fact which Aspera did
not deny. Aspera was a managerial employee exercising
supervision and control over rank-and-file employees with
power to recommend disciplinary action or their dismissal. As a
managerial employee within the meaning of the law, he was
not entitled to overtime pay.
17. Mercury Drug v. Dayao, 117 SCRA 99 [G.R. No. L-30452.
September 30, 1982.]
SYNOPSIS
Respondents, employees of petitioner Mercury Drug, Co., filed
a petition with the Court of Industrial Relations (CIR) praying

14

among others for payment of their unpaid wages for work done
on Sundays and legal holidays and of additional compensation
for nighttime work. Respondents alleged that they were
coerced by petitioner into entering into contracts of
employment waiving the said benefits. Petitioner filed an
answer after its motion to dismiss was denied. The Industrial
Court rendered judgment in favor of respondents ruling that an
agreement in a contract of employment which would exclude
the 25% additional compensation for work done during
Sundays and holidays is null and void, and ordered petitioner
to payrespondents two additional sums equivalent to 25% of
their respective basic salaries for services rendered on
Sundays and legal holidays, and additional compensation for
nighttime services. Hence, the present recourse of petitioner,
alleging among others, that it was contrary to public policy
todeclare the contracts of employment null and void.
The Supreme Court held that the entire employment contracts
were not declared null and void but only the provision on
salaries which excluded additional compensation for services
rendered on Sundays and legal holidays; that while the broad
powers of the CIR under Commonwealth Act 103 may have
been curtailed by Republic Act 875 limiting them to the four
categories expressed therein, our jurisprudence has upheld the
CIRs assumption of jurisdiction over claims for night work; and
that additional compensation for nighttime work is founded on
public policy which cannot be waived.
Petition dismissed and the decision and resolution appealed
from are affirmed.
Facts: The respondents filed a petition against the petitioner
praying: 1) payment of their unpaid back wages for work done
on Sundays and legal holidays plus 25c/c additional
compensation from date of their employment up to June 30,
1962; 2) payment of extra compensation on work done at night;
3) reinstatement of Januario Referente and Oscar Echalar to
their former positions with back salaries; and, as against the
respondent union, for its disestablishment and the refund of all
monies it had collected from petitioners.
The respondent court rendered its decision that:
1. The claim of the petitioners for payment of back wages
corresponding to the first four hours work rendered on every
other Sunday and first four hours on legal holidays should be
denied for lack of merit;
2. Respondent Mercury Drug Company, Inc. is hereby ordered
to pay the sixty- nine (69) petitioners: (a) An additional sum
equivalent to 25% of their respective basic or regular salaries
for services rendered on Sundays and legal holidays during the
period from March 20, 1961 up to June 30, 1962; and (b)
Another additional sum or premium equivalent to 25% of their
respective basic or regular salaries for nighttime services
rendered from March 20, 1961 up to June 30, 1962; and
3. Petitioners' petition to convert them to monthly employees
should be, as it is hereby, denied for lack of merit. Not satisfied
with the decision, the respondents filed a motion for its
reconsideration. The motion for reconsideration, was however,
denied by the Court en banc.
Issues: a. Whether or not private respondent is entitled to
claims for 25% additional compensation performing work
during Sunday and legal holidays.
b. Whether or not the 25% compensation had already been
included in the private respondents monthly salaries.
c. Whether or not the contracts of employment were null and
void was not put in issue, hence, the respondent court

pursuant to the Rules of Court should have refrained from

ruling that such contracts of employment were null and void.
Held: The Supreme Court dismissed the petition. On the first
issue, based on Sec. 4 CA No. 444, No person, firm or
corporation, business establishment or place of center of labor
shall compel an employee or laborer to work during Sundays
and legal holidays unless he is paid an additional sum of at
least twenty-five per centum of his regular remuneration:
PROVIDED, HOWEVER, That this prohibition shall not apply to
public utilities performing some public service such as
supplying gas, electricity, power, water, or providing means of
transportation or communication.
In this case, the petitioner does not fall on exemptions.
On the second issue, their 25% additional compensation for
work done on Sundays and Legal Holidays were not included
in their respective monthly salaries. The petitioner contention
was not supported by substantial evidence.
The last issue, the Mercury Drug Co., Inc., maintains a chain
of drugstores that are open every day of the week and, for
some stores, up to very late at night because of the nature of
the pharmaceutical retail business. The respondents knew that
they had to work Sundays and holidays and at night, not as
exceptions to the rule but as part of the regular course of
employment. Presented with contracts setting their
compensation on an annual basis with an express waiver of
extra compensation for work on Sundays and holidays, the
workers did not have much choice.
The private respondents were at a disadvantage insofar as the
contractual relationship was concerned. Workers in our country
do not have the luxury or freedom of declining job openings or
filing resignations even when some terms and conditions of
employment are not only onerous and inequitous but illegal.
It is precisely because of this situation that the framers of the
Constitution embodied the provisions on social justice (Section
6, Article II) and protection to labor (Section 9, Article II) in the
Declaration of Principles and State Policies.

18. Interphil Union FFW v. Interphil Lab Inc., 372 SCRA 658
[G.R. No. 142824. December 19, 2001.]
Interphil Laboratories Employees Union-FFW is the sole and
exclusive bargaining agent of the rank-and-file employees of
Interphil Laboratories, Inc., a company engaged in the
business of manufacturing and packaging pharmaceutical
products. They had a Collective Bargaining Agreement (CBA)
effective from 01 August 1990 to 31 July 1993.
Prior to the expiration of the CBA or sometime in February
1993, Allesandro G. Salazar, 1 Vice-President-Human
Resources Department of respondent company, was
approached by Nestor Ocampo, the union president, and
Hernando Clemente, a union director. The two union officers
inquired about the stand of the company regarding the duration
of the CBA which was set to expire in a few months. Salazar
told the union officers that the matter could be best discussed
during the formal negotiations which would start soon.
In March 1993, Ocampo and Clemente again approached
Salazar. They inquired once more about the CBA status and
received the same reply from Salazar. In April 1993, Ocampo
requested for a meeting to discuss the duration and effectivity
of the CBA. Salazar acceded and a meeting was held on 15
April 1993 where the union officers asked whether Salazar
would be amenable to make the new CBA effective for two (2)

15

years, starting 01 August 1993. Salazar, however, declared that

it would still be premature to discuss the matter and that the
company could not make a decision at the moment. The very
next day, or on 16 April 1993, all the rank-and-file employees of
the company refused to follow their regular two-shift work
schedule of from 6:00 a.m. to 6:00 p.m., and from 6:00 p.m. to
6:00 a.m. At 2:00 p.m. and 2:00 a.m., respectively, the
employees stopped working and left their workplace without
sealing the containers and securing the raw materials they
were working on. When Salazar inquired about the reason for
their refusal to follow their normal work schedule, the
employees told him to "ask the union officers." To minimize the
damage the overtime boycott was causing the company,
Salazar immediately asked for a meeting with the union
officers. In the meeting, Enrico Gonzales, a union director, told
Salazar that the employees would only return to their normal
work schedule if the company would agree to their demands as
to the effectivity and duration of the new CBA. Salazar again
told the union officers that the matter could be better discussed
during the formal renegotiations of the CBA. Since the union
was apparently unsatisfied with the answer of the company, the
overtime boycott continued. In addition, the employees started
to engage in a work slowdown campaign during the time they
were working, thus substantially delaying the production of the
company.

finding that the issues raised would require a formal hearing

and the presentation of evidentiary matters, directed Labor
Arbiters Caday and M. Sol del Rosario to proceed with the
hearing of the cases before them and to thereafter submit their
report and recommendation to his office.

On 14 May 1993, petitioner union submitted with respondent

company its CBA proposal, and the latter filed its counterproposal. On 03 September 1993, respondent company filed
with the National Labor Relations Commission (NLRC) a
petition to declare illegal petitioner unions "overtime boycott"
and "work slowdown" which, according to respondent
company, amounted to illegal strike.
On 22 October 1993, respondent company filed with the
National Conciliation and Mediation Board (NCMB) an urgent
request for preventive mediation aimed to help the parties in
their CBA negotiations. The parties, however, failed to arrive at
an agreement and on 15 November 1993, respondent
company filed with the Office of the Secretary of Labor and
Employment a petition for assumption of jurisdiction.

ISSUE: WON the working hours of the petitioner is only from

7:30 am to 4:30 pm

On 24 January 1994, petitioner union filed with the NCMB a

Notice of Strike citing unfair labor practice allegedly committed
by respondent company. On 12 February 1994, the union
staged a strike.
On 14 February 1994, Secretary of Labor Nieves Confesor
issued an assumption order 4 over the labor dispute. On 02
March 1994, Secretary Confesor issued an order directing
respondent company to "immediately accept all striking
workers, including the fifty-three (53) terminated union officers,
shop stewards and union members back to work under the
same terms and conditions prevailing prior to the strike, and to
pay all the unpaid accrued year end benefits of its employees
in 1993." 5 On the other hand, petitioner union was directed to
"strictly and immediately comply with the return-to-work orders
issued by (the) Office . . . 6 The same order pronounced that"
(a)ll pending cases which are direct offshoots of the instant
labor dispute are hereby subsumed herewith." 7
In the interim, the case before Labor Arbiter Caday continued.
On 16 March 1994, petitioner union filed an "Urgent
Manifestation and Motion to Consolidate the Instant Case and
to Suspend Proceedings" seeking the consolidation of the case
with the labor dispute pending before the Secretary of Labor.
Despite objection by respondent company, Labor Arbiter Caday
held in abeyance the proceedings before him. However, on 06
June 1994, Acting Labor Secretary Jose S. Brillantes, after

On 05 September 1995, Labor Arbiter Caday submitted his

recommendation to the then Secretary of Labor Leonardo A.
Quisumbing. 8 Then Secretary Quisumbing approved and
adopted the report in his Order.
According to petitioner union, the provisions of their CBA on
working hours clearly stated that the normal working hours
were "from 7:30 a.m. to 4:30 p.m." 14 Petitioner union
underscored that the regular work hours for the company was
only eight (8) hours.
Petitioner union moved for the reconsideration of the order but
its motion was denied. The union went to the Court of Appeals
via a petition for certiorari. In the now questioned decision
promulgated on 29 December 1999, the appellate court
dismissed the petition. The unions motion for reconsideration
was likewise denied.
Hence, the present recourse.

HELD: NO. The parties in the CBA stipulated that: the schedule of shift
work shall bemaintained;however the company may change the prevailing
work time at its discretion,should changebe necessary in the operations of the
Company. All employees shall observesuch rules ashave been laid down by
the company for the purpose of effecting control over workinghours.It is
evident from the foregoing provisions that the working hours may
bechanged, at thediscretion of the company, should such change be
necessary for itsoperations and that theemployees shall observe such rules
as have been laid down by thecompany. The companyhad to adopt a
continuous 24-hour work daily schedule by reason of the nature of
itsbusiness and the demands of its clients. It was established that
theemployees adhered tothe said work schedule since 1988. The
employees are deemed tohave waived the eight-hour schedule since they
followed, without any question or complain,the two shift schedulewhile their
CBA was still in force and even prior thereto. As theemployees assented
bypractice to this arrangement, they cannot now be heard to claim thatthe
overtime boycott is justified because they were not obliged to work beyond
eight hours.
19. Remerco Garments v. Minister of Labor, 135 SCRA 167
FACTS: Private respondents Zenaida Bustamante, Luz
Raymundo and Ruth Corpuz were the employees of Remerco
Garments Manufacturing, a domestic corporation engaged in
the business of manufacturing and exporting of mens, ladies
and childrens dresses.
During the period of their employment with petitioner, Luz
Raymundo and Zenaida Bustamante were given three
consecutive warnings. The first, on June 24; then on July 24;
and the third one, on October 15, 1978 for alleged refusal to
render overtime work. Finally, they were penalized with one
weeks suspension effective October 16, 1978.
It appears that Luz Raymundo was required to work on
October 15, 1978, a Sunday, despite her request for exemption
to work on that Sunday, her rest day. Her request was
disapproved. For failure to report for work despite denial of her
request, she was notified of her dismissal effective upon

16

expiration of her suspension. Thereafter or more specifically on

October 16, 1978, petitioner filed a clearance application to
dismiss her on grounds of insubordination. Raymundo opposed
said application by filing a complaint for illegal dismissal and for
money claims.
With respect to Zenaida Bustamante, she failed to report for
work despite the expiration of her suspension on October 23,
1978. Petitioner contends that said failure constitutes
abandonment which it later invoke as ground for clearance
application to dismiss her from employment filed on November
10, 1978. Like Raymundo, Zenaida Bustamante opposed the
clearance application by filing a complaint for illegal dismissal
claiming that her alleged failure to report for work was due to
illness, as in fact, she was treated by one Dr. Lorenzo Yuson
for fever and severe stomach ache on October 15,
1978.cralawnad
Ruth Corpuz, like the two aforenamed co-respondents of hers,
was also given a warning for refusal to render overtime work
on another date, August 30, 1978. She was subsequently
dismissed on October 4, 1978 for having written a chalk mark
on a nylon jacket for export allegedly a violation of Rule 26 of
petitioners rules and regulations, which provides: "Employees
are strictly prohibited from defacing or writing on walls of the
factory, toilets or any other company property." The clearance
application for her dismissal was filed only on October 5, 1978
which she also opposed by filing a complaint for illegal
dismissal. The case was submitted for conciliation
proceedings, but no settlement was arrived at.
The Acting Director of National Capital Region, MOLE, issued
an order granting petitioners application for clearance to
terminate the employment of private respondents and
dismissing their complaints for lack of merit. Private
respondents appealed the order to the National Labor
Relations Commission. Meanwhile, the Acting Director of the
National Capital Region, MOLE, elevated the records of the
case to the Labor Appeals and Review Staff, Office of the
Minister of Labor. The Minister of Labor rendered a decision
reversing the appealed order and directed petitioner to
reinstate private respondents Luz Raymundo, Zenaida
Bustamante and Ruth Corpuz to their former positions without
loss of seniority rights and privileges and with full backwages.
Petitioners motion for reconsideration was denied by the
Minister of Labor.
Hence, this petition for certiorari.
ISSUE: WON sufficient legal grounds exist under the relevant
facts and applicable law to justify the dismissal of private
respondents Luz Raymundo and Zenaida Bustamante.
HELD: NO. While it is true that it is the sole prerogative of the
management to dismiss or lay-off an employee, the exercise of
such a prerogative, however, must be made without abuse of
discretion, for what is at stake is not only private respondents
positions but also their means of livelihood. Basically, the right
of an employer to dismiss an employee differs from and should
not be confused with the manner in which such right is
exercised. It must not be oppressive and abusive since it
affects ones person and property. On the consequent charge
of abandonment, it must be noted that Zenaida Bustamante
filed a complaint for illegal dismissal on November 15, 1978 to
oppose the clearance application to dismiss her. Of course, it is
a recognized principle that abandonment of work by an
employee is inconsistent with the immediate filing of a
complaint for illegal dismissal. It would be illogical for Zenaida
Bustamante to abandon her job and then immediately file an
action seeking her reinstatement. At that time, no employee

would recklessly abandon her job knowing fully well the acute
unemployment problem then existing and the difficulty of
looking for a means of livelihood.
The illegality of the dismissal of the herein private
respondents, under the facts and circumstances disclosed,
becomes even more apparent in the light of the express
provision of the Constitution, requiring the State to assure the
workers "security of tenure" and "just and humane conditions
of work." The constitutional mandate of security of tenure and
just and humane conditions of work, both as aspects of the
protection accorded to labor, militates against the severity of
the sanction imposed on private respondents. The penalty of
dismissal from the service, even assuming petitioners charges
to be true, is too severe a penalty. It is a penalty out of
proportion to the offense committed failure to report for work
on a Sunday (October 15, 1978) when after all, suspension
would suffice. The dismissal came as an afterthought because
private respondents were already suspended for one week.
The lack of sympathetic understanding of the underlying
reasons for their absence aggravated by the indecent haste
attendant to the efforts of petitioner to terminate the services of
private respondents portray a total disregard of the
constitutional mandate of "security of tenure" and "just and
humane conditions of work" which the State is mandated to
protect. The New Labor Code is clear on this point. It is the
duty of every employer, whether operating for profit or not, to
provide each of his employees a rest period of not less than
twenty four (24) hours after every six (6) consecutive normal
work days. Even if there really existed an urgency to require
work on a rest day, (which is not in the instant case) outright
dismissal from employment is so severe a consequence, more
so when justifiable grounds exist for failure to report for work.
20. Producers Bank v. NLRC, 355 SCRA 489
21. Asian Transmission Corp v. CA, G.R. No. 144664, 15
March 2004.
FACTS:
The Department of Labor and Employment (DOLE),
through Undersecretary Cresenciano B.Trajano, issued an
Explanatory Bulletin, wherein it clarified, that employees are
entitled to 200% of theirbasic wage, which, apart from being
Good Friday, and, therefore, a legal holiday, is also
Araw ngKagitingan,
which is also a legal holiday, even if unworked. Despite
the explanatory bulletin, petitionerAsian Transmission
Corporation opted to pay its daily paid employees only 100% of
their basic
pay.Respondent Bisig ng Asian Transmission Labor Union (BA
TLU) protested. In accordance with Step 6 of the grievance
procedure of the Collective Bargaining Agreement existing
between petitioner and BATLU,the controversy was
submitted for voluntary arbitration. The Office of the Voluntary
Arbitratorrendered a decision directing petitioner to pay its
covered employees "200% and not just 100% of theirregular
daily wages for the unworked.In deciding in favor of the Bisig
ng Asian Transmission Labor Union (BATLU), the
VoluntaryArbitrator held that Article 94 of the Labor Code
provides for holiday pay for every regular holiday,
thecomputation of which is determined by a legal formula
which is not changed by the fact that there aretwo holidays
falling on one day; and that that the law, as amended,
enumerates 12 regular holidays forevery year, and should not
be interpreted as authorizing a reduction to nine the number of
paid regularholidays "just because April 9 (Araw ng Kagitingan)

17

in certain years, is also Holy Friday or MaundyThursday."The

Court of Appeals upheld the findings of the Voluntary Arbitrator,
holding that the CollectiveBargaining Agreement between
petitioner and BATLU, the law governing the relations between
them,clearly recognizes their intent to consider
Araw ng Kagitingan
and Maundy Thursday, on whatever datethey may fall in any
calendar year, as paid legal holidays during the effectivity of
the CBA and that "thereis no condition, qualification or
exception for any variance from the clear intent that all holidays
shall becompensated.The Court of Appeals further held that "in
the absence of an explicit provision in law whichprovides for [a]
reduction of holiday pay if two holidays happen to fall on the
same day, any doubt in theinterpretation and implementation of
the Labor Code provisions on holiday pay must be resolved
infavor of labor."Hence, this petition.
ISSUE:
whether or not daily-paid employees are entitled to be paid for
two regular holidays which fallon the same day
RULING:
Holiday pay is a legislated benefit enacted as part of the
Constitutional imperative that the Stateshall afford protection to
labor. Its purpose is not merely "to prevent diminution of the
monthly incomeof the workers on account of work interruptions.
In other words, although the worker is forced to take arest, he
earns what he should
earn, that is, his holiday pay.
It is also intended to enable the worker toparticipate in the
national celebrations held during the days identified as with
great historical andcultural significance.Independence Day
(June 12),
Araw ng Kagitingan
(April 9),National Heroes Day (last Sunday of August),
Bonifacio Day(November 30) and Rizal Day (December 30)
were declared national holidays toafford Filipinos with a
recurring opportunity to commemorate the heroism of the
Filipino people,promote national identity, and deepen the spirit
of patriotism. Labor Day (May 1) is a day traditionally
reserved to celebrate the contributions of the working class to
the development of the nation, while thereligious holidays
designated in Executive Order No. 203 allow the worker to
celebrate his faith with hisfamily.As reflected above, Art. 94 of
the Labor Code, as amended, afford a worker the enjoyment of
12paid regular holidays. The provision is mandatory,
regardless of whether an employee is paid on amonthly or daily
basis.Since a worker is entitled to the enjoyment of 12 paid
regular holidays, the fact that two
holidays
fall onthe same date should not operate to reduce to 11 the 12
holiday pay benefits a worker is entitled toreceive.It is
elementary, under the rules of statutory construction, that when
the language of the law isclear and unequivocal, the law must
be taken to mean exactly what it says. In the case at bar, there
isnothing in the law which provides or indicates that the
entitlement to 12 days of holiday pay shall bereduced to 11
when two holidays fall on the same day.In any event, Art. 4 of
the Labor Code provide that all doubts in the implementation
andinterpretation of its provisions, including its implementing
rules and regulations, shall be resolved infavor of labor. For the
working m
ans welfare should be the primordial and
paramount consideration.Moreover, Sec. 11, Rule IV, Book III
of the Omnibus Rules to Implement the Labor Code provides
that"Nothing in the law or the rules shall justify an employer in
withdrawing or reducing any benefits,supplements or payments
for unworked regular holidays as provided in existing individual
or collectiveagreement or employer practice or policy. From the
pertinent provisions of the CBA entered into by theparties,

petitioner had obligated itself to pay for the legal holidays as

required by law.

22. JRC v. NLRC, 156 SCRA 27

TOPIC:
Art. 94 - Right to Holiday Pay
FACTS:
1. Petitioner is a non-stock, non-profit educational institution. It
has three groups of employees:(a) personnel on monthly
basis, who receive their monthly salary uniformly
throughout theyear, irrespective of the actual number
of working days in a month without deduction
forholidays;(b) personnel on daily basis who are paid on actual
days worked and they receive unworkedholiday pay and(c)
collegiate faculty who are paid on the basis
of student contract hour. Before the start ofthe
semester they sign contracts with the college
undertaking to meet their classes as per schedule.2.
Petitioner did not pay holiday pay from 1975 1977.
Thus private respondent NATOW filed with the Ministry
of Labor a complaint in behalf of the faculty and personnel of
Jose Rizal College.3. February 5, 1979
LABOR ARBITERs
decision:(a) Faculty and personnel paid by the month
uniformly in a school year, irrespective of thenumber
of working days in a month, without deduction for
holidays, are presumed to be already paid the 10 paid
legal holidays and are no longer entitled to separate payment
for thesaid regular holidays;(b) Personnel who are paid their
wages daily are entitled to be paid the 10 unworked
regularholidays according to the pertinent provisions of the
Rules and Regulations Implementing theLabor Code;(c)
Faculty who by contract are paid compensation per student
contract hour are not entitledto unworked regular holiday pay
considering that these regular holidays have been excludedin
the programming of the student contact hours.4. NLRC
decision: Modified. Teaching personnel paid by the hour are
declared to be entitled to holidaypay5. In counting student
contract hours, legal holidays are excluded and
labeled in the schedule as "noclass day." On the
other hand, if a regular week day is declared a
holiday, the school calendar isextended to
compensate for that day. Thus
petitioner argues that the advent of any of the
legalholidays within the semester will not affect the
faculty's salary because this day is not includedin their
schedule while the calendar is extended
to compensate for special holidays
. Thus therequired number of lecture hours is not diminished.
ISSUE:
W hether the school faculty who according to their
contracts are paid per lecture hour are entitled
tounworked holiday pay
HELD:
Decisions set aside.
NO (for regular holidays) YES(for special holidays)
(a) petitioner is exempted from paying hourly paid
faculty members their pay for regular
holidays, whether the same be during the regular semesters
of the school year or during semestral, Christmas, orHoly
Week vacations;(b) petitioner is ordered to pay said faculty
members their regular hourly rate on days declared as
specialholidays or for some reason classes are called off or
shortened for the hours they are supposed to havetaught,
whether extensions of class days be ordered or not; in case of

18

extensions said faculty membersshall likewise be paid their

hourly rates should they teach during said extensions.
RATIO:
- The Court held that the aforementioned
implementing rule is not justified by the provisions
of the law which after all is silent with respect to faculty
members paid by the hour who because of
their teachingcontracts are obliged to work and consent to be
paid only for work actually done.- On the other hand, both
the law and the Implementing Rules governing
holiday pay are silent as to payment on Special Public
Holidays.1. It is readily apparent that the declared purpose of
the holiday pay which is the prevention of diminutionof the
monthly income of the employees on account of
work interruptions is def eated when a regularclass
day is cancelled on account of a special public
holiday and class hours are held on another working
day to make up for time lost in the school calendar.

The faculty member, although forced to take a rest,

does not earn what he should earn onthat day. The
faculty member paid by the hour is deprived of
expected income, and it doesnot matter that the
school calendar is extended in view of the days or
hours lost, for theirincome that could be earned from
other sources is lost during the extended days.
W henclasses are called off or shortened on account of
typhoons, floods, rallies, and the like, thesefaculty members
must likewise be paid, whether or not extensions are ordered
23. JPL Marketing v. CA, 463 SCRA 136
JPL MARKETING PROMOTIONS,v. CA
G.R. No. 151966
July 8, 2005
TINGA, J.:
petitioners JPL MARKETING PROMOTIONS,
respondents COURT OF APPEALS, NATIONAL LABOR
RELATIONS COMMISSION, NOEL
GONZALES, RAMON ABESA III and
FAUSTINO ANINIPOT
summary JPL stopped direct merchandising in
employees assigned location. They were
requested to wait for further notice for new
reassignment. There was no illegal dismissal
mainly because the employees were the ones
who severed ties with JPL within the 6-month
period allotted to the employers to resume
work or reassign its employees pursuant to art
286 of the LC.

19

facts of the case

JPL is a domestic corporation engaged in the business of

recruitment and placement of workers, while private
respondents Noel Gonzales, Ramon Abesa III and
Faustino Aninipot were employed by JPL as
merchandisers on separate dates and assigned at
different establishments in Naga City and Daet,
Camarines Norte as attendants to the display of California
Marketing Corporation, one of JPL clients.

13 Aug 96: JPL notified private respondents that CMC

would stop its direct merchandising activity in the Bicol
Region, Isabela, and Cagayan Valley effective 15 August
1996.

They were advised to wait for further notice as they

would be transferred to other clients.

However, on 17 October 1996, private respondents

Abesa and Gonzales filed before the NLRC
complaints for illegal dismissal, praying for
separation pay, 13th month pay, service incentive
leave pay and payment for moral damages. Aninipot
filed a similar case thereafter.

LA Rivera dismissed complaints for lack of merit

The LA said that Gonzales and Abesa applied with

another store before the 6month period given by
law to JPL to provide private respondents a new
assignment. Thus, they may be considered to have
unilaterally severed their relation with JPL, and
cannot charge JPL with illegal dismissal.

LA said that it was their obligatioin to wait until they

were reassigned by JPL, and if after six months
they were not reassigned, they can file an action for
separation pay but not for illegal dismissal.

The claims for 13th month pay and service incentive

leave pay was also denied since private respondents
were paid way above the applicable minimum wage
during their employment.

NLRC affirmed LA but ordered Separation pay, based on

their last salary rate and counted from the first day of their
employment with the respondent JPL up to the finality of
this judgment; Service Incentive Leave pay, and 13th
month pay, computed as in No.1 hereof

CA affirmed
issue
WON private respondents are entitled to separation pay, 13th
month pay and service incentive leave pay - YES
What should be the reckoning point for computing said awards.
From the time the employees severed their ties with JPL
ratio

The employee is granted separation pay:

Under Arts. 283 and 284 of the Labor Code,

separation pay is authorized only in cases of
dismissals due to any of these reasons: (a)
installation of labor saving devices; (b) redundancy;
(c) retrenchment; (d) cessation of the employer's
business; and (e) when the employee is suffering
from a disease and his continued employment is
prohibited by law or is prejudicial to his health and to
the health of his coemployees.

As a measure of social justice in those cases where

the employee is validly dismissed for causes other

than serious misconduct or those reflecting on his

moral character, but only when he was illegally
dismissed

Under Sec. 4(b), Rule I, Book VI of the Implementing

Rules to Implement the Labor Code that provides for
the payment of separation pay to an employee
entitled to reinstatement but the establishment where
he is to be reinstated has closed or has ceased
operations or his present position no longer exists at
the time of reinstatement for reasons not attributable
to the employer.

The common denominator of the instances where

payment of separation pay is warranted is that the
employee was dismissed by the employer.
In the instant case, there was no dismissal to speak of.
Private respondents were simply not dismissed at all,
whether legally or illegally. What they received from JPL
was not a notice of termination of employment, but a
memo informing them of the termination of CMCs
contract with JPL. More importantly, they were advised
that they were to be reassigned. At that time, there was
no severance of employment to speak of.

(MAIN TOPIC)

Furthermore, Art. 286 of the Labor Code allows the bona

fide suspension of the operation of a business or
undertaking for a period not exceeding six 6 months,
wherein an employee/employees are placed on the socalled floating status.

When that floating status of an employee lasts for more

than six months, he may be considered to have been
illegally dismissed from the service. Thus, he is entitled to
the corresponding benefits for his separation, and this
would apply to suspension either of the entire business or
of a specific component thereof.

As clearly borne out by the records of this case, private

respondents sought employment from other
establishments even before the expiration of the six (6)month period provided by law. As they admitted in their
comment, all three of them applied for and were employed
by another establishment after they received the notice
from JPL.

JPL did not terminate their employment; they themselves

severed their relations with JPL. Thus, they are not
entitled to separation pay.

The Court is not inclined in this case to award

separation pay even on the ground of compassionate
justice.

The Court of Appeals relied on the cases wherein the

Court awarded separation pay to legally dismissed
employees on the grounds of equity and social
consideration.

Said cases involved employees who were actually

dismissed by their employers, whether for cause or
not. Clearly, the principle applies only when the
employee is dismissed by the employer, which is
not the

Nonetheless, JPL cannot escape the payment of 13th

month pay and service incentive leave pay to private

respondents. Said benefits are mandated by law and

should be given to employees as a matter of right.

They were not given their 13th month pay and

service incentive leave pay while they were under the
employ of JPL. Instead, JPL provided salaries which
were over and above the minimum wage.

The Court rules that the difference between the

minimum wage and the actual salary received by
private respondents cannot be deemed as their 13th
month pay and service incentive leave pay as such
difference is not equivalent to or of the same
import as the said benefits contemplated by law.

The computation for both benefits should only be up

to 15 August 1996, or the last day that private
respondents worked for JPL.

To extend the period to the date of finality of the

NLRC resolution would negate the absence of
illegal dismissal, or to be more precise, the want of
dismissal in this case. Besides, it would be unfair to
require JPL to pay private respondents the said
benefits beyond 15 August 1996 when they did
not render any service to JPL beyond that date
24. Auto Bus v. Bautista, 458 SCRA 578
Service Incentive Leave Pay
Antonio Bautista was employed by Auto Bus Transport
Systems, Inc. in May 1995. He was assigned to the IsabelaManila route and he was paid by commission (7% of gross
income per travel for twice a month).
In January 2000, while he was driving his bus he bumped
another bus owned by Auto Bus. He claimed that he bumped
the he accidentally bumped the bus as he was so tired and
that he has not slept for more than 24 hours because Auto Bus
required him to return to Isabela immediately after arriving at
Manila. Damages were computed and 30% or P75,551.50 of it
was being charged to Bautista. Bautista refused payment.
Auto Bus terminated Bautista after due hearing as part of Auto
Bus management prerogative. Bautista sued Auto Bus for
Illegal Dismissal. The Labor Arbiter Monroe Tabingan
dismissed Bautistas petition but ruled that Bautista is entitled
to P78,1117.87 13th month pay payments and P13,788.05 for
his unpaid service incentive leave pay.
The case was appealed before the National Labor Relations
Commission. NLRC modified the LAs ruling. It deleted the
award for 13th Month pay. The court of Appeals affirmed the
NLRC.
Auto Bus averred that Bautista is a commissioned employee
and if that is not reason enough that Bautista is also a field
personnel hence he is not entitled to a service incentive leave.
They invoke:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE

(a) Every employee who has rendered at least one year of

service shall be entitled to a yearly service incentive leave of
five days with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees
except:
(d) Field personnel and other employees whose performance
is unsupervised by the employer including those who are
engaged on task or contract basis, purely commission basis, or
those who are paid in a fixed amount for performing work
irrespective of the time consumed in the performance thereof; .
..
ISSUE: Whether or not Bautista is entitled to Service Incentive
Leave. If he is, Whether or not the three (3)-year prescriptive
period provided under Article 291 of the Labor Code, as
amended, is applicable to respondents claim of service
incentive leave pay.
HELD: Yes, Bautista is entitled to Service Incentive Leave. The
Supreme Court emphasized that it does not mean that just
because an employee is paid on commission basis he is
already barred to receive service incentive leave pay.
The question actually boils down to whether or not Bautista is
a field employee.
According to Article 82 of the Labor Code, field personnel shall
refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch
office of the employer and whose actual hours of work in the
field cannot be determined with reasonable certainty.
As a general rule, field personnel are those whose
performance of their job/service is not supervised by the
employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot
be determined with reasonable certainty; hence, they are paid
specific amount for rendering specific service or performing
specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field
personnel despite the fact that they are performing work away
from the principal office of the employee.
Certainly, Bautista is not a field employee. He has a specific
route to traverse as a bus driver and that is a specific place
that he needs to be at work. There are inspectors hired by Auto
Bus to constantly check him. There are inspectors in bus stops
who inspects the passengers, the punched tickets, and the
driver. Therefore he is definitely supervised though he is away
from the Auto Bus main office.
On the other hand, the 3 year prescriptive period ran but
Bautista was able to file his suit in time before the prescriptive
period expired. It was only upon his filing of a complaint for

illegal dismissal, one month from the time of his dismissal, that
Bautista demanded from his former employer commutation of
his accumulated leave credits. His cause of action to claim the
payment of his accumulated service incentive leave thus
accrued from the time when his employer dismissed him and
failed to pay his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for
service incentive leave pay only commenced from the time the
employer failed to compensate his accumulated service
incentive leave pay at the time of his dismissal. Since Bautista
had filed his money claim after only one month from the time of
his dismissal, necessarily, his money claim was filed within the
prescriptive period provided for by Article 291 of the Labor
Code.
Definition of Service Incentive Leave
Service incentive leave is a right which accrues to every
employee who has served within 12 months, whether
continuous or broken reckoned from the date the employee
started working, including authorized absences and paid
regular holidays unless the working days in the establishment
as a matter of practice or policy, or that provided in the
employment contracts, is less than 12 months, in which case
said period shall be considered as one year. It is
alsocommutable to its money equivalent if not used or
exhausted at the end of the year. In other words, an employee
who has served for one year is entitled to it. He may use it as
leave days or he may collect its monetary value.
25. Fernandez v. NLRC, 285 SCRA 149
26. Republic Planters Bank v. NLRC, 266 SCRA 142
27. Ace Navigation v. CA, 338 SCRA 70
Facts: Under the POEA approved contract of employment,
private respondent, who works as a bartender on board the
vessel MV Orient Express, shall receive a monthly basic salary
of US S450.00, flat rate, including overtime pay for 12 hours of
work daily plus tips of US S2.00 per passenger per day. He
was also entitled to 2.5 days of vacation leave with pay each
month.
Private respondent filed a complaint before the labor arbiter for
vacation leave pay and unpaid tips amounting to US
S36,000.00. The Labor Arbiter ordered the recruitment agency
and the principal to pay jointly and severally private respondent
his vacation leave pay. The claim for tips was dismissed for
lack of merit.
On appeal, NLRC ordered the payment of unpaid tips.
Issue: WON employers are liable to pay tips.
Held: No. Payment for overtime was included in the monthly
salary, the supposed tips mentioned in the contract should be
deemed included thereat. It is presumed that the parties were
aware of the plain, ordinary and common meaning of the word

tip. A bartender cannot feign ignorance on the practice of

tipping and that tips are normally paid by customers and not by
the employer.
It has been said that a tip denotes a voluntary act, but whether
considered from the standpoint of the giver or the recipient, a
tip lacked the essential element of a gift, namely, the free
bestowing of a gratuity without a consideration, and that
despite its apparent voluntariness, there is an element of
compulsion in tipping.