Atty. Maria Christina S.
Sagm it
Art. 88. Undertime not offset by overtime. Undertime work on
any particular day shall not be offset by overtime work on any
other day. Permission given to the employee to go on leave on
some other day of the week shall not exempt the employer from
paying the additional compensation required in this Chapter.
The method used by NWSA in offsetting the overtime with the
undertime and at the same time charging said undertime to the
accrued leave of the employee 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.
ATTY S: If an employee comes in late, halimbawa, two hours. Tapos
mamaya niya ie-extend. 8 pa din yun. Thats still 8 hours.
What if the person is late for two hours today and renders 10 hours
tomorrow? Hindi mo pwedeng i-offset yun because ang mawawala sa
kanya na plus 25% ay mas malaki kaysa dun sa di niya tinrabaho today.
If nawala sa kanya ngayon 2 hours work, ang mawawala sa kanya
bukas 2 hours plus 25%, and if its a holiday 30%.
What should be done is if he has paid leaves, then that should be
deducted from his paid leaves. Kung wala siyang leaves, imi-minus
niya ngayon sa sweldo yung 2 hours late.
The proper method should be to deduct the undertime hours from the
accrued leave but to pay the employee the overtime compensation to
which he is entitled. Where the employee has exhausted his leave
credits, his undertime hours may simply be deducted from his days
wage, but he should still be paid his overtime compensation for work
in excess of 8 hours a day.
Clarification! Kapag ubos na, anong gagawin mo? Pwede na bang mag
off-set? Di pa rin. Dapat i-minus mo nalang sa sweldo. So you get the
daily wage, divided by 8 hours, thats your hourly rate. And kung late
siya ng 1 hour, minus siya ng 1 hour. Kung late siya ng 2 hours, minus
siya ng 2 hours.
Art. 89. Emergency overtime work. Any employee may be required
by the employer to perform overtime work in any of the following
cases:
1. When the country is at war or when any other national
or local emergency has been declared by the National
Assembly or the Chief Executive;
2. When it is necessary to prevent loss of life or property
or in case of imminent danger to public safety due to
an actual or impending emergency in the locality
caused by serious accidents, fire, flood, typhoon,
earthquake, epidemic, or other disaster or calamity;
3. When there is urgent work to be performed on
machines, installations, or equipment, in order to
avoid serious loss or damage to the employer or some
other cause of similar nature;
4. When the work is necessary to prevent loss or damage
to perishable goods; and
5. Where the completion or continuation of the work
started before the eighth hour is necessary to prevent
serious obstruction or prejudice to the business or
operations of the employer.
6. Any employee required to render overtime work under
this Article shall be paid the additional compensation
required in this Chapter.
It is important to know the enumerations because if a person ref uses
to render overtime work, the first question is, can he actually refuse
validly? Generally, yes. Except any of the conditions in Article 89 is
present. Pag di siya sumunod, pinapag-overtime siya, may emergency,
may perishable goods, he can be charged with insubordination.
Art. 90. Computation of additional compensation. For purposes of
computing overtime and other additional remuneration as required by
this Chapter, the "regular wage" of an employee shall include the cash
wage only, without deduction on account of facilities provided by the
employer.
Facilities could be board and lodging, meals, so nandiyan yan. Yung
iba kasi, they cannot give the full minimum wage in cash, pero
nagbibigay sila ng pagkain. So ang pinapagawa ko jan, ipapa-price
dapat sa wage board yung value ng pagkain. That is included in
computing overtime, rest day pay, holiday pay, etc. So yun ang basis.
The basis in computing for the overtime pay should be the regular pay,
so it excludes the additional or extra pay such as those rendered in
rest days and night differentials, cost of living allowance, and
payments for sick leaves.
In the computation of overtime pay, the premium pay for work done on
Sundays, holidays and at night and other fringe benefits which are
occasionally and not regularly, received and not by all employees,
should not be added to the basic pay. (Kiong Notes)
But of course, later on, when we will be discussing 13 th month pay,
meron tayong allowances na deemed integrated.
Im not sure if you are aware of efforts to compress the work week in
the private sectors. But in the public sector, meron yan sila. Instead
na mag-work sila ng Friday, they will work all hours Monday to
Thursday. Meron yan dati. So ngayon everyday na naman sila.
 Atty. Maria Christina
In the private sector, what prompted nitong mga bagay nato, except
in the case of Meralco which is a 1959 case, in recent times, what
prompted the adoption of the compressed work week schemes was
the power outage problem. Eh kung brownout ka nga naman, naka
tang ka lang ng Friday. Brownout ka naman, nagtitipid ka na. Bakit ka
pa mag sa-Saturday work?
The energy problem, especially in Mindanao, prompted the Department
of Labor to adopt compressed work week schemes. And ang laging
punto ng mga pro-labor people, that is diminution of salary. May
nagtanong, Isnt that a violation of Article 88 or undertime is offset
by overtime? Kung ako naman si worker at sasabihin mo sa akin na
may isang araw na hindi ako maglalaba ng aking uniform, na di ako
mamamasahe, na di ako mag-iisip ano ang baon ko.. If there is mutual
agreement between the parties, I think there is a valid waiver.
But as we will see, this can only run for a limited period of 6 months.
Hindi ito pwedeng forever. Otherwise, there would be constructive
retrenchment.
GUIDELINES ON THE ADOPTION OF FLEXIBLE
WORK ARRANGEMENTS (FWAS)
The flexible work arrangements which labor and management may consider are
the following:
(1) Compressed Workweek wherein the normal workweek is reduced to
less than six days but the total number of work hours of 48 hours
per week shall remain. The normal workday is increased to more
than eight hours but not to exceed 12 hours, without
corresponding overtime premium. The concept can be adjusted
accordingly depending on the normal workweek of the company
pursuant to the provisions of Department Advisory No. 02, series
of 2004, dated 2 December 2004.
Ito yung di masyadong malinaw sa akin. Without paying
additional overtime. But my concern is, it is not
consistent in the ruling in Meralco. Go back to the basic
law, all decisions of the SC shall form part of the law of
the land. It cannot be cancelled out by an executive act.
We go back to Meralco.
(2) Reduction of Workdays wherein the normal workdays per week are
reduced but should not last for more than six months.
(3) Rotation of Workers wherein the employees are rotated or
alternately provided work within the workweek.
Example: Group A, MWF. Group B, TThS. Rotation. Anong
nangyayari nun? Nababawasan yung working days ng
tao. So instead na 6 days a week yung sweldo niya,
nagiging 3 days. Naturally it will result to diminution.
Kaya nga very important yung conditions, kung kalian
lang pwede mangyari ito.
(4) Forced Leave wherein the employees are required to go on leave for
several days or weeks utilizing their leave credits if there are any.
(5) Broken-time schedule wherein the work schedule is not continuous
but the work hours within the day or week remain.
Halimbawa, di ka kailangan sa restaurant kasi walang
customer from 3:00 to 5:00, diyan ka lang, break time.
Balik tayo sa compensable hours. If you are able to rest
and do your personal activities, although you didnt
S. Sagm it
leave the premises, that should not be paid. Thats
consistent with broken-time.
(6) Flexi-holidays schedule wherein the employees agree to avail the
holidays at some other days provided there is no diminution of
existing benefits as a result of such arrangement.
Anong ibig sabihin ng flexi-holiday? Mag ta-trabaho ka
sa pasko, pero sa 27 di ka papasok as long as there is
no diminution. Ibig sabihin, ibibigay din sayo ang 200%
sa pasko.
This is a situation where you have a comprised work week way back in
1959, but the DOLE set forth the requirement before it can engage in
a compressed work week. What are the conditions?
General Rule: Right to overtime pay cannot be waived however if there
is a compressed workweek proposed, the same shall be valid if it meets
the following conditions:
(a) The employees voluntarily agree to work 9 hours a day
from Monday to Friday
(b) That there will not be any diminution whatsoever in the
weekly or monthly take home pay and fringe benefits of
the employees
(c) The value of the benefits that will accrue to the
employees under the proposed work schedule is more
than or at least commensurate with or equal to the 1
hour overtime pay that is due them during the
weekdays based on the employees quantification
Ito yung sinasabi ko sa inyo na inconsistent
with the DOLE Advisory. It said that there is
no need to pay the overtime. But case law
says, dapat ma(?) mo yun or more than the
one hour overtime. Because theres one
hour overtime everyday para ma-cover nila
yung Saturday work. Instead of eight
hours, they become nine hours. So ma co-
cover mo yung work hours during the sixth
day. If you ask me, this governs and not the
DOLE Advisory.
(d) The one hour overtime pay of the employees will become
due and demandable if ever they are permitted or made
to work on any Saturday during the effectivity of the
new working time arrangement, since the agreement
between the employees and management is that there
will be no Saturday work in exchange for a longer
workday during weekdays
(e) The work of the employees does not involve strenuous
physical exertion and they are provided with adequate
rest periods or coffee breaks in the morning and
afternoon; and
(f) The effectivity of the proposed working time
arrangement shall be of temporary duration as
determined by DOLE.
If you go by the DOLE Advisory, there has to be an agreement between
the employees and the employer.
Ang isa pang kailangan i-emphasize dito is non-manual work.
Because kung eight hours nga eh mahirap na sa physical work, what
more if ipa-extend mo ng nine to eleven hours?
 Atty. Maria Christina S. Sagm it

(6) Under other circumstances analogous or similar to the

foregoing as determined by the Secretary of Labor and
Employment.
Art. 91. Right to weekly rest day.
Again, if you are asked, the person who is required to work on his rest
(1) It shall be the duty of every employer, whether operating for
day, but he did not work. Does he have the right to refuse? Generally,
profit or not, to provide each of his employees a rest period
of not less than twenty-four (24) consecutive hours after yes. Exceptions are those enumerated. Be able to compare and contrast
every six (6) consecutive normal work days. this with the enumerations for overtime work.
(2) The employer shall determine and schedule the weekly rest
day of his employees subject to collective bargaining
agreement and to such rules and regulations as the
Secretary of Labor and Employment may provide. However,
the employer shall respect the preference of employees as
to their weekly rest day when such preference is based on
religious grounds.
(1) When the country is at (1) In case of actual or
war or when any other impending emergencies
Ang sinasabi lang natin dito, after six consecutive days of working, national or local caused by serious
there has to be a break. And if the person is required to work on his emergency has been accident, fire, flood,
rest day, then there should be a commensurate payment of a premium declared by the National typhoon, earthquake,
pay for rest day work. Assembly or the Chief epidemic or other
Executive; disaster or calamity to
In terms of religious preference.. For instance the worker wants to prevent loss of life and
have his day off on Thursday because he is a member of the INC, how (2) When it is necessary to property, or imminent
should that be treated by the employer? prevent loss of life or danger to public safety;
property or in case of
E M PL O Y E E P REF E R E N CE . I R R B oo k II I R ul e I I I imminent danger to (2) In cases of urgent work
public safety due to an to be performed on the
SECTION 4. Preference of employee. - The preference of employee
actual or impending machinery, equipment,
as to his weekly day of rest shall be respected by the employer if
emergency in the or installation, to avoid
the same is based on religious grounds. The employee shall make
locality caused by serious loss which the
known his preference to the employer in writing at least seven
serious accidents, fire, employer would
days before the desired effectivity of the initial rest day so
flood, typhoon, otherwise suffer;
preferred.
earthquake, epidemic,
or other disaster or
Where, however the choice of the employees as to their rest day
calamity; (3) In the event of abnormal
based on religious grounds will inevitably result in serious
pressure of work due to
prejudice or obstruction to the operations of the undertaking and
(3) When there is urgent special circumstances,
the employer cannot normally be expected to resort to other
work to be performed on where the employer
remedial measures, the employer may so schedule the weekly rest
machines, installations, cannot ordinarily be
day of their choice for at least two days in a month.
or equipment, in order expected to resort to
So compromise. If Thursday for that employer is weekday, and the INC to avoid serious loss or other measures;
member would like to have his day off on that day, two days in a month damage to the employer
papayag siya; two days in month, hindi pwede. Otherwise, mag-resign ka or some other cause of (4) To prevent loss or
nalang. similar nature; damage to perishable
goods;
(4) When the work is
Art. 92. When employer may require work on a rest day. The necessary to prevent
employer may require his employees to work on any day: loss or damage to (5) Where the nature of the
(1) In case of actual or impending emergencies caused by perishable goods; and work requires
serious accident, fire, flood, typhoon, earthquake, continuous operations
(5) Where the completion or and the stoppage of
epidemic or other disaster or calamity to prevent loss
continuation of the work may result in
of life and property, or imminent danger to public
work started before the irreparable injury or loss
safety;
(2) In cases of urgent work to be performed on the eighth hour is necessary to the employer; and
machinery, equipment, or installation, to avoid serious to prevent serious
loss which the employer would otherwise suffer; obstruction or prejudice
(3) In the event of abnormal pressure of work due to to the business or
special circumstances, where the employer cannot operations of the
ordinarily be expected to resort to other measures; employer.
(4) To prevent loss or damage to perishable goods;
(5) Where the nature of the work requires continuous
operations and the stoppage of work may result in
irreparable injury or loss to the employer; and
 Atty. Maria Christina S. Sagm it

IF THE PERSON IS REQUIRED TO WORK ON HIS REST DAY, HOW MUCH?
Article 93. Compensation for rest day, Sunday or holiday work. least 30% thereof.
a . Where an employee is made or permitted to work on his
scheduled rest day, he shall be paid an additional compensation
of at least thirty percent (30%) of his regular wage. An employee
shall be entitled to such additional compensation for work
performed on Sunday only when it is his established rest day.
HOW ABOUT IF HIS REST DAY FALLS ON A SPECIAL HOLIDAY, SO REST DAY AND AT
THE SAME TIME SPECIAL HOLIDAY, HOW MUCH?
50%.
to his rate for the first eight hours on such holiday wor k plus at
Daily wage = P100
Regular Holiday = P100 + 100% = P200
Overtime of 1 hour = hourly rate (P200/8) of P25 + 30% =
P32.5
Total Salary = P132.5
The basic pay during a regular holiday is the double rate. So kung ano
yung rate for that day, you divide it by 8, and thats the hourly rate.

Another example:
Please note the implementing rules.
Daily wage = P400
New Years Day January 1 Regular Holiday = P400 + 100% = P800
Maundy Thursday movable Overtime of 3 hours = hourly rate (800/8) of P100 + 30% x
date 3 hours = P390
Good Friday movable date Total Salary = P1190
Araw ng Kagitingan April 9
Ninoy Aquino Day August 21 Labor Day May 1 In case of night shift differential, use the double rate on a regular
All Saints Day November 1 Independence Day June 12 holiday and add 10%.
Last Day of the Year Dec 31 National Heroes Day last
Sunday of August Night shift of 1 hour = hourly rate of P100 + 10% = P110
EidL Fitr movable date
Bonifacio Day Nov 20
Christmas Day Dec 25 Rule: If the employee does not intend to work on a regular holiday, in
Rizal Day December 30 order to be entitled to the holiday pay, he is required to be present
Eidul Adha movable date on the day before the holiday. This rule only applies if the employee
does not work.
WHAT IF THERE ARE TWO REGULAR HOLIDAYS FALLING ON THE SAME DAY?
DOLE issued Explanatory Bulletin on Workers Entitlement to Holiday Exception: When the employee is on leave.
Pay on April 9, 1993, Araw ng Kagitingan and Good Friday , on the
correct payment of holiday compensation on April 9, 1993 which, apart
from being Good Friday, is also Araw ng Kagitingan. WHAT IF THE DAY BEFORE THE HOLIDAY IS A REST DAY?
The employee is required to be present the day before his rest day.
If unworked The covered employees are entitled to at least 200% of
their basic wage even if said holiday is unworked.
WHAT IS THE RULE WITH REGARDS TO HOLIDAY DURING SHUTDOWN?
If worked Employees who are suffered or permitted to work on such IRR Book III Rule IV
day is entitled to compensation of at least 300% of his basic wage. Section 7. Temporary or periodic shutdown and temporary
cessation of work .
So ganito yan. Alamin natin kung ano ang regular holidays to be able a. In cases of temporary or periodic shutdown and
to differentiate them from special holidays. And of course, the rates temporary cessation of work of an establishment, as
are different. Ano ba yung dalawang holidays na nagkakasabay every when a yearly inventory or when the repair or cleaning
4 years? On April 9, it is both Araw ng Kagitingan and Good Friday. So of machineries and equipment is undertaken, the
kapag di ka nagtrabaho at dalawang holiday, may 200% ka na. Kapag regular holidays falling within the period shall be
nagtrabaho ka, 300%. So: compensated in accordance with this Rule.
b. The regular holiday during the cessation of operation
1 regular holiday
of an enterprise due to business reverses as
unworked 100%
authorized by the Secretary of Labor and Employment
worked 200%
may not be paid by the employer.
2 regular holidays
unworked 200% So paid pa rin. Going to the principle that if the shutdown is outside
worked 300% the control of the employee, he should be paid holiday pay.

HOW ABOUT IF YOU WORKED ON A REGULAR HOLIDAY AND YOU RENDERED IN CASE OF MONTHLY-PAID EMPLOYEES, WHAT IS THE RULE? ARE THEY STILL
OVERTIME? ENTITLED TO HOLIDAY PAY?
IRR Book III Rule V
Sec. 5. Overtime pay for holiday work. For work performed in
excess of eight hours on a regular holiday, an employee shall be
paid an additional compensation for the overtime work equivalent Art. 94 of the Labor Code is clear that monthly-paid employees are
not excluded from the benefits of holiday pay. Sec. 2, Rule IV, Book
 Atty. Maria Christina
III of the IRR and Policy Instruction No. 9 are null and void since in
the guise of clarifying the Labor Codes provision on holiday pay,
they in effect amended them by enlarging the scope of their
exclusion.
The divisor assumes an important role in determining WON holiday
pay is already included in the monthly-paid employees salary and
in the computation of his daily rate.
WHAT IS THE CORRECT DIVISOR NOW THAT THERE ARE ALREADY 12 REGULAR
HOLIDAYS?
261. In that case, if regular holiday is unworked, the monthly-paid
employee is no longer entitled to additional compensation. If worked,
he is entitled to only the additional 100% because the other 100% is
already incorporated in his monthly salary.
WHAT IS THE COVERAGE OF HOLIDAY PAY?
IRR Book III Rule IV
Section 1. Coverage. This rule shall apply to all employees,
except:
a. Those of the government and any of the political
subdivision, including government-owned and
controlled corporations;
b. Those of retail and service establishments regularly
employing less than ten workers;
c. Domestic helpers and persons in the personal service
of another;
d. Managerial employees as defined in Book Three of the
Code;
e. Field personnel and other employees whose time and
performance is unsupervised by the employer
including those who are engaged on task or contract
basis, purely commission basis, or those who are paid
a fixed amount for performing work irrespective of the
time consumed in the performance thereof.
Field personnel, whose time and performance cannot be determined
with reasonable certainty, shall not be entitled to regular holiday
pay same as overtime.
Lebatique is not a field personnel for the following reasons:
(1) company drivers, including Lebatique, are directed to
deliver the goods at a specified time and place;
(2) they are not given the discretion to solicit, select and
contact prospective clients; and
(3) Far East issued a directive that company drivers should
stay at the clients premises during truck-ban hours
which is from 5:00 to 9:00 a.m. and 5:00 to 9:00 p.m.
Even petitioners admit that the drivers can report early in the
morning, to make their deliveries, or in the afternoon, depending on
the production of animal feeds. Drivers, like Lebatique, are under
the control and supervision of management officers. Lebatique,
therefore, is a regular employee whose tasks are usually necessary
and desirable to the usual trade and business of the company. Thus,
he is entitled to the benefits accorded to regular employees of Far
East, including overtime pay and service incentive leave pay.
S. Sagm it
HOW DO YOU DETERMINE IF A PERSON IS A FIELD PERSONNEL OR NOT?
It is the absence of control over time; it is the absence of certainty
as to whether he is dedicating his time to work. Kapag naspecify
yan, hindi siya field personnel. Otherwise, he is.
IN THE CASE OF PUBLIC SCHOOL TEACHERS, WHAT IS THE RULE?
IRR Book III Rule IV
Section 8. Holiday pay of certain employees.
a. Private school teachers, including faculty members of
colleges and universities, may not be paid for the
regular holidays during semestral vacations. They
shall, however, be paid for the regular holidays during
Christmas vacation;
HOW ABOUT IN THE CASE OF PIECE-RATE WORKERS?
IRR Book III Rule IV
Section 8. Holiday pay of certain employees.
b. Where a covered employee is paid by results or
output, such as payment on piece-work, his holiday
pay shall not be less than his average daily earnings
for the last seven actual working days preceding the
regular holiday; Provided, however, that in no case
shall the holiday pay be less than the applicable
statutory minimum wage rate.
Example: Dec. 25 Christmas Day
Dec. 18 400
Dec. 19 317
Dec. 20 200 (below minimum wage but DOLE approved)
Dec. 21 150
Dec. 22 100
Dec. 23 300
Dec. 24 500
So you add everything and divide by 7.
Holiday pay = P281
This rule only applies if he did not work during the regular holiday.
But if he worked, his daily earning for that day will jus t be added
100%.
IN THE CASE OF SEASONAL WORKERS, WHAT IS THE RULE?
IRR Book III Rule IV
Section 8. Holiday pay of certain employees .
c. Seasonal workers may not be paid the required holiday
pay during off-season when they are not at work.
Of course this is subject to existing circumstances.
HOLIDAY ON A SUNDAY?
A regular holiday falling on a Sunday creates no legal obligation for
the employer to pay extra, aside from the usual holiday pay, to its
monthly-paid employees ( Wellington vs Trajano ).
Every worker should, according to the Labor Code, "be paid his
regular daily wage during regular holidays , except in retail and
service establishments regularly employing less than (10)
 Atty. Maria Christina
workers;" this, of course, even if the worker does no work on these
holidays. The regular holidays include: "New Year's Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the
twelfth of June, the fourth of July, the thirtieth of November, the
twenty-fifth of December, and the day designated by law for holding
a general election (or national referendum or plebiscite).
Particularly as regards employees "who are uniformly paid by the
month, "the monthly minimum wage shall not be less than the
statutory minimum wage multiplied by 365 days divided by
twelve." This monthly salary shall serve as compensation "for all
days in the month whether worked or not," and "irrespective of the
number of working days therein." In other words, whether the
month is of (30) or (31) days' duration, or (28) or (29) (as in
February), the employee is entitled to receive the entire monthly
salary. So, too, in the event of the declaration of any special holiday,
or any fortuitous cause precluding work on any particular day or
days (such as transportation strikes, riots, or typhoons or other
natural calamities), the employee is entitled to the salary for the
entire month and the employer has no right to deduct the
proportionate amount corresponding to the days when no work was
done. The monthly compensation is evidently intended precisely to
avoid computations and adjustments resulting from the
contingencies just mentioned which are routinely made in the case
of workers paid on daily basis.
Apparently the monthly salary was fixed by Wellington to provide
for compensation for every working day of the year including the
holidays specified by law and excluding only Sundays. In fixing
the salary, Wellington used what it calls the " 314 factor ;" that is to
say, it simply deducted 51 Sundays from the 365 days normally
comprising a year and used the difference, 314, as basis for
determining the monthly salary. The monthly salary thus fixed
actually covers payment for 314 days of the year, including regular
and special holidays, as well as days when no work is done by reason
of fortuitous cause, as above specified, or causes not attributable
to the employees.
The Labor Officer who conducted the routine inspection of
Wellington discovered that in certain years, two or three regular
holidays had fallen on Sundays. This had precluded the enjoyment
by the employees of a non-working day, and the employees had
consequently had to work an additional day for that month. This
ratiocination received the approval of his Regional Director who
opined that "when a regular holiday falls on a Sunday, an extra or
additional working day is created and the employer has the
obligation to pay its employees for the extra day except the last
Sunday of August since the payment for the said holiday is already
included in the 314 factor."
The monthly salary in Wellington which is based on the so-called
"314 factor" accounts for all 365 days of a year; i.e. , Wellington's
"314 factor" leaves no day unaccounted for; it is paying for all the
days of a year with the exception only of 51 Sundays.
THERE IS NO PROVISION OF LAW REQUIRING ANY EMPLOYER TO MAKE
SUCH ADJUSTMENTS IN THE MONTHLY SALARY RATE SET BY HIM TO TAKE
ACCOUNT OF LEGAL HOLIDAYS FALLING ON SUNDAYS IN A GIVEN YEAR,
OR, CONTRARY TO THE LEGAL PROVISIONS BEARING ON THE POINT,
OTHERWISE TO RECKON A YEAR AT MORE THAN 365 DAYS.
The situation in this case could be likened to this:
National Heroes is on August 30 and usually it falls on the last Sunday of
August. The Wellington case tells us na Holiday yun. Sunday yan syempre
hindi ako nagtrabaho. Kelangan bigyan mo ako ng 100%. Wait. Tingnan
muna natin ano ang divisor (314). The 314 already includes all the
holidays. And, Sunday, which is usually a non-working day, is already
excluded here. The question is kaya nga excluded eh so kelangan
S. Sagm it
bayaran mo ako. Hindi eh. Holiday nga yan tapos non-working day mo
pa. so bakit kita babayaran ng additional? So, kasama na. integrated na
yun.
Another situation is:
May isang tao nagtrabaho siya ng Sunday tapos sinabi niya, Dahil Sunday
at nagtrabaho ako, bigyan mo ako ng extra 30%. Rest day ko yan eh.
Sunday is not always a rest day. In a cases which we will discuss later,
hindi niya rest day yung Sunday pero feeling niya dahil Sunday
pinagtrabaho mo ako meron akong 30%. Eh ang rest day niya is another
day eh; or there is no fixed rest day na Sunday. Pag hindi fixed yung rest
day mo at pinagtrabaho ka ng Sunday, hindi automatic na may additional
30%.
Principle of the case: If you are going to rest on your rest day, may 30%?
Not necessarily.
Art. 95. Right to service incentive leave.
1) 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.
2) This provision shall not apply to those who are already enjoying
the benefit herein provided, those enjoying vacation leave with
pay of at least five days and those employed in establishments
regularly employing less than ten employees or in
establishments exempted from granting this benefit by the
Secretary of Labor and Employment after considering the
viability or financial condition of such establishment.
3) The grant of benefit in excess of that provided herein shall not
be made a subject of arbitration or any court or administrative
action.
DOES THE ONE YEAR HAVE TO BE CONTINUOUS?
No .
RULE V, Sec 1 6 of IRR (familiarize)
SECTION 2. Right to service incentive leave . 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.
SECTION 3. The term "at least one-year service" shall mean service
for not less than 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 contract is less than 12 months, in
which case said period shall be considered as one year.
WHAT DO YOU MEAN BY BROKEN?
For example, after 2 months nagresign ka tapos after 2 months
bumalik ka, tapos naka-9 months ka na. So, those are still counted.
You are already entitled. Di ka na mag-aantay ng another 12
months. Kasali na rin yung cases of suspension.
 Atty. Maria
SECTION 1. Coverage . This rule shall apply to all employees
except:
(a) Those of the government and any of its political
subdivisions, including government-owned and
controlled corporations;
(b) Domestic helpers and persons in the personal service
of another;
(c) Managerial employees as defined in Book Three of this
Code;
(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
a fixed amount for performing work irrespective of the
time consumed in the performance thereof;
(e) Those who are already enjoying the benefit herein
provided;
(f) Those enjoying vacation leave with pay of at least five
days; and
(g) Those employed in establishments regularly employing
less than ten employees.
SECTION 4. ACCRUAL OF BENEFIT. Entitlement to the benefit
provided in this Rule shall start December 16, 1975, the date the
amendatory provision of the Code took effect.
SECTION 5. TREATMENT OF BENEFIT . The service incentive leave
shall be commutable to its money equivalent if not used or
exhausted at the end of the year.
SECTION 6. RELATION TO AGREEMENTS . Nothing in the Rule shall
justify an employer from withdrawing or reducing any benefits,
supplements or payments as provided in existing individual or
collective agreements or employer's practices or policies.
You have the coverage under 82 and 83, you have this specific coverage
under the IRR. For me, kahit sabihing IRR lang to, as against 82 and 83, ito
ang mag-gogovern. Very specific eh.
AN ACT GRANTING PATERNITY LEAVE OF SEVEN (7) DAYS WITH
FULLPAY TO ALL MARRIED EMPLOYEES IN THE PRIVATE AND PUBLIC
SECTORS FOR THE FIRST FOUR (4) DELIVERIES OF THE LEGITIMATE
SPOUSE WITH WHOM HE IS COHABITING AND FOR OTHER PURPOSES
SECTION 2. Notwithstanding any law, rules and regulations to the
contrary, every married male employee in the private and public
sectors shall be entitled to a paternity leave of seven (7) days
with full pay for the first four (4) deliveries of the legitimate
spouse with whom he is cohabiting. The male employee applying
for paternity leave shall notify his employer of the pregnancy of
his legitimate spouse and the expected date of such delivery.
For purposes, of this Act, delivery shall include childbirth or
any miscarriage.
SECTION 3. Definition of Term. - For purposes of this Act, Paternity
Leave refers to the benefits granted to a married male employee
allowing him not to report for work for seven (7) days but
continues to earn the compensation therefor, on the condition
that his spouse has delivered a child or suffered a miscarriage for
purposes of enabling him to effectively lend support to his wife in
Christina S. Sagm it
her period of recovery and/or in the nursing of the newly-born
child.
SECTION 5. Any person, corporation, trust, firm, partnership,
association or entity found violating this Act or the rules and
regulations promulgated thereunder shall be punished by a fine
not exceeding Twenty-five thousand pesos (P25,000) or
imprisonment of not less than thirty (30)days nor more than six
(6) months.
If the violation is committed by a corporation, trust or firm,
partnership, association or any other entity, the penalty of
imprisonment shall be imposed on the entity's responsible
officers, including, but not limited to, the president, vice-
president, chief executive officer, general manager, managing
director or partner directly responsible therefor.
SECTION 6. Nondiminution Clause. - Nothing in this Act shall be
construed to reduce any existing benefits of any form granted
under existing laws, decrees, executive orders, or any contract
agreement or policy between employer and employee.
WHEN MAY BE AVAILED?
Within a reasonable period, only for the first four deliveries and the
conditions must be present.
WHAT IF THEY WERE SEPARATED BECAUSE OF WORK?
It will still apply since it is a valid reason.
MATERNITY will be discussed in your Social Legislation. But, take note of
the difference; There is no condition of marriage as it is the woman who
is bearing the child. Otherwise, it will be inconsistent with our Solo-
Parent Act.
WHO IS A SOLO PARENT?
AN ACT PROVIDING FOR BENEFITS AND PRIVILEGES TO SOLO PARENTS
AND THEIR CHILDREN, APPROPRIATING FUNDS THER EFOR AND FOR
OTHER PURPOSES
Section 3. Definition of Terms. - Whenever used in this Act, the
following terms shall mean as follows:
(a) "Solo parent" - any individual who falls under any of the
following categories:
(1) A woman who gives birth as a result of rape and
other crimes against chastity even without a final
conviction of the offender: Provided , That the
mother keeps and raises the child;
(2) Parent left solo or alone with the responsibility
of parenthood due to death of spouse;
(3) Parent left solo or alone with the responsibility
of parenthood while the spouse is detained or is
serving sentence for a criminal conviction for at
least one (1) year;
(4) Parent left solo or alone with the responsibility
of parenthood due to physical and/or mental
incapacity of spouse as certified by a public medical
practitioner;
(5) Parent left solo or alone with the responsibility
of parenthood due to legal separation or de
facto separation from spouse for at least one (1)
 Atty. Maria
year, as long as he/she is entrusted with the
custody of the children;
(6) Parent left solo or alone with the responsibility
of parenthood due to declaration of nullity or
annulment of marriage as decreed by a court or by
a church as long as he/she is entrusted with the
custody of the children;
(7) Parent left solo or alone with the responsibility
of parenthood due to abandonment of spouse for at
least one (1) year;
(8) Unmarried mother/father who has preferred to
keep and rear her/his child/children instead of
having others care for them or give them up to a
welfare institution;
(9) Any other person who solely provides parental
care and support to a child or children;
(10) Any family member who assumes the
responsibility of head of family as a result of the
death, abandonment, disappearance or prolonged
absence of the parents or solo parent.
A change in the status or circumstance of the
parent claiming benefits under this Act, such that
he/she is no longer left alone with the
responsibility of parenthood, shall terminate
his/her eligibility for these benefits.
Section 8. Parental Leave. - In addition to leave privileges under
existing laws, parental leave of not more than seven (7) working
days every year shall be granted to any solo parent employee who
has rendered service of at least one (1) year.
AN ACT DEFINING VIOLENCE AGAINST WOMEN AND THEIR CHILDREN,
PROVIDING FOR PROTECTIVE MEASURES FOR VICTIMS, PRESCRIBING
PENALTIES THEREFORE, AND FOR OTHER PURPOSES
SECTION 43. Entitled to Leave. Victims under this Act shall be
entitled to take a paid leave of absence up to ten (10) days in
addition to other paid leaves under the Labor Code and Civil Service
Rules and Regulations, extendible when the necessity arises as
specified in the protection order.
Any employer who shall prejudice the right of the person under
this section shall be penalized in accordance with the provisions
of the Labor Code and Civil Service Rules and Regulations. Likewise,
an employer who shall prejudice any person for assisting a co-
employee who is a victim under this Act shall likewise be liable for
discrimination.
AN ACT PROVIDING FOR THE MAGNA CARTA OF WOMEN
Section 18. Special Leave Benefits for Women. - A woman
employee having rendered continuous aggregate employment
service of at least six (6) months for the last twelve (12) months
shall be entitled to a special leave benefit of two (2) months with
full pay based on her gross monthly compensation following
surgery caused by gynecological disorders.
Christina S. Sagm it
IS IT COMMUTABLE TO CASH? NO.
NOTE: SSS VS MAGNA CARTA. There is exclusivity rule in SSS. Therefore, you
can only choose one. You cannot avail both.
As the family driver of CHUA LO TAN, CUAJAO earned P5.00 a day
from Aug 1, 1951 to Nov 4, 1956. CUAJAO was hospitalized for (19)
days in 1951, (13) days in 1952, and (3) days in 1953. During the
period of his employment, he did not enjoy any vacation leave, which
at the rate of (4) days a month, as provided in Article 1695 of the
Civil Code, would have aggregated, if accumulated, to 316 days
vacation leave, worth, at the rate of P5.00 a day, P1,580.00.
CUAJAO maintains that there has been no such waiver on his part,
he having testified that seasonable demands had been made by him
upon CHUA LO TAN.
CUAJAO insists that his right to vacation leave cannot be waived.
WHETHER OR NOT THERE WAS WAIVER; WHETHER OR NOT TAN IS
ENTITLED TO REIMBURSE THE HOSPITALIZATION EXPENSES. NO
This privilege must be demanded in its opportunity time and if he
allows the years to go by in silence, he was it. It becomes a mere
concession or act of grace of the employer.
Upon the other hand, the award for hospitalization expenses is
based upon Article 1689 of the Civil Code of the Philippines which,
Chua Lo Tan maintains, does not justify said award. Said article
reads:
Household service shall always be reasonably compensated. Any
stipulation that household service is without compensation shall be
void. Such compensation shall be in addition to the house helper's
lodging, food, and medical attendance.
The right to "medical attendance" exclusive of hospitalization
is purely statutory in character. What is more, even where
specifically conferred at by statute, said right to medical
attendance is deemed subject to the "rule of necessity", in the
sense that said right is dependent upon the need for said medical
attendance. The determination of the issue must depend upon the
circumstances surrounding each case.
There is absolutely no evidence expert or otherwise regarding
the necessity of his confinement in a hospital. He did not even try
to prove that Chua Lo Tan had been advised of his (plaintiff's) illness
or of his hospitalization, either prior or subsequently thereto.
Needless to say it is only fair that, except in cases of extreme
urgency, the party who may have to defray the cost of medical
attendance and/or hospitalization, be given a say which Chua Lo
Tan has not had - in the choice of the physician who will treat the
patient and/or the hospital in which he will be confined.
24 May 1995, ANTONIO BAUTISTA has been employed by AUTO BUS
TRANSPORT SYSTEMS, INC, as driver-conductor with travel routes
Manila-Tuguegarao via Baguio, Baguio- Tuguegarao via Manila and
Manila-Tabuk via Baguio. BAUTISTA was paid on commission basis,
(7%) of the total gross income per travel, on a twice a month basis.
03 Jan 2000, while BAUTISTA was driving Autobus No. 114, the bus
he was driving accidentally bumped the rear portion of Autobus No.
124, as the latter vehicle suddenly stopped at a sharp curve
without giving any warning.
 Atty. Maria Christina
BAUTISTA averred that the accident happened because he was
compelled by the management to go back to Roxas, Isabela,
although he had not slept for (24) hours, as he had just arrived in
Manila from Roxas, Isabela. He was not allowed to work until he fully
paid the amount of P75,551.50, representing (30%) of the cost of
repair of the damaged buses and that despite pleas for
reconsideration, the same was ignored by management. After a
month, management sent him a letter of termination.
instituted a Complaint for Illegal Dismissal with Money Claims for
nonpayment of 13 th month pay and service incentive leave pay
against Autobus.
AUTO BUS maintained that BAUTISTAs employment was replete with
offenses involving reckless imprudence, gross negligence, and
dishonesty. It presented copies of letters, memos, irregularity
reports, and warrants of arrest pertaining to several incidents
wherein respondent was involved.
In the exercise of its management prerogative, respondents
employment was terminated only after the latter was provided with
an opportunity to explain his side regarding the accident on 03
January 2000.
WHETHER OR NOT RESPONDENT IS ENTITLED TO SERVICE INCENTIVE
LEAVE; YES
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.
AUTO BUS contention that BAUTISTA is not entitled to the grant of
service incentive leave just because he was paid on purely
commission basis is misplaced. What must be ascertained in order
to resolve the issue of propriety of the grant of service incentive
leave to respondent is whether or not he is a field personnel.
BAUTISTA IS NOT A FIELD PERSONNEL. The driver, the complainant
herein, was therefore under constant supervision while in the
performance of this work. He cannot be considered a field
personnel.
a) there are its inspectors assigned at strategic places who
board the bus and inspect the passengers, the punched
tickets, and the conductors reports.
b) There is also the mandatory once-a-week car barn or shop
day, where the bus is regularly checked as to its
mechanical, electrical, and hydraulic aspects, whether or
not there are problems thereon as reported by the driver
and/or conductor.
c) They too, must be at specific place as specified time, as
they generally observe prompt departure and arrival from
their point of origin to their point of destination.
d) In each and every depot, there is always the Dispatcher
whose function is precisely to see to it that the bus and its
crew leave the premises at specific times and arrive at the
estimated proper time.
HE IS A REGULAR EMPLOYEE who performs tasks usually necessary
and desirable to the usual trade of petitioners business.
Accordingly, BAUTISTA is entitled to the grant of service incentive
leave.
Article 291: All money claims arising from employer-employee
relationship shall be filed within (3) years from the time the cause
of action accrued; otherwise, they shall be forever barred.
In cases of nonpayment of allowances and other monetary benefits,
if it is established that the benefits being claimed have been
withheld from the employee for a period longer than (3) years, the
S. Sagm it
amount pertaining to the period beyond the three-year prescriptive
period is therefore barred by prescription. The amount that can only
be demanded by the aggrieved employee shall be limited to the
amount of the benefits withheld within (3) years before the filing
of the complaint.
In the case of service incentive leave, the employee may choose to
either use his leave credits or commute it to its monetary
equivalent if not exhausted at the end of the year . Furthermore, if
the employee entitled to service incentive leave does not use or
commute the same, he is entitled upon his resignation or separation
from work to the commutation of his accrued service incentive
leave.
Accrual of cause of action: from the moment the employer refuses
to remunerate its monetary equivalent if the employee did not make
use of said leave credits but instead chose to avail of its
commutation, not at the end of the year when the employee
becomes entitled to the commutation of his service incentive leave.
If the employee wishes to accumulate his leave credits and opts for
its commutation upon his resignation or separation from
employment, his cause of action to claim the whole amount of his
accumulated service incentive leave shall arise when the employer
fails to pay such amount at the time of his resignation or separation
from employment.
BAUTISTA had not made use of his service incentive leave nor
demanded for its commutation until his employment was
terminated by petitioner. Neither did AUTOBUS compensate his
accumulated service incentive leave pay at the time of his dismissal.
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.
ACTION HAS NOT YET PRESCRIBED. 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
respondent 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.
Money claims may be claimed within three years. So hindi ka nagsweldo
ng tama since 2014. Nagfile siya ng kaso today, pwede iyang iclaim
whatever he can clain 3 years back. Kung 10 years ka nang hindi
binibigyan ng tama, you can only claim up to 3 years.
The exception is SIL which can be claimed the entire time (Autobus).
Taun-taon hindi ka binibigyan ng SIL , kung hinid mo naman hiningi so wala
pang cause of action. Kung hiningi mo, hindi binigay at magtatatlong taon
na, wala ka nang makukuha. Pero kung walang evidence na hiningi mo
every year, nagfile ka today, you can get the entire period.
That is why the first benefit that you should give is Minimum Wage kasi
may criminal aspect; second, social benefits (SSS, PhilHealth, Pag -ibig).
May criminal cases din ito. Third, most important, SIL. Walang limit kasi
kung magkano ang pwedeng maclaim.
As to the other benefits, namely, holiday pay, premium pay,
13 th month pay and service incentive leave which the labor arbiter
 Atty. Maria Christina
failed to rule on but which petitioners prayed for in their
complaint, we hold that petitioners are so entitled to these
benefits. Three (3) factors lead us to conclude that petitioners,
although piece-rate workers, were regular employees of private
respondents. First, as to the nature of petitioners tasks, their job
of repacking snack food was necessary or desirable in the usual
business of private respondents, who were engaged in the
manufacture and selling of such food products; second, petitioners
worked for private respondents throughout the year, their
employment not having been dependent on a specific project or
season; and third, the length of time that petitioners worked for
private respondents. Thus, while petitioners mode of compensation
was on a per piece basis, the status and nature of their employment
was that of regular employees.
The Rules Implementing the Labor Code exclude certain employees
from receiving benefits such as nighttime pay, holiday pay, service
incentive leave and 13th month pay, inter alia , field personnel and
other employees whose time and performance is unsupervised by
the employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in
the performance thereof. Petitioners as piece-rate workers do not
fall within this group. Further, in Section 8 (b), Rule IV, Book III,
piece workers are specifically mentioned as being entitled to
holiday pay.
There are two kind of piece rate workers supervised and unsupervised.
In this case, supervised. Again, piece-rate is just a mode of compensation.
It does not mean that you are no longer an employee/worker. Since
supervised, they are entitled to SIL and other benefits.
PAYMENT OF BENEFITS UNDER PD 525, 1123, 1614. PETs were
underpaid. However, all claims which accrued more than three (3)
years prior to February 26, 1980 are no longer recoverable.
There is merit, however, in respondents' contention that claims that
accrued more than three years before the complaint was filed on
Feb 26, 1980 had prescribed. Article 292 of the Labor Code is clear.
Art. 292. Money claims. All money claims arising from employer-
employee relations arising during the effectivity of this Code shall
be filed within three (3) years from the time the cause of action
accrued; otherwise they shall be forever barred.
All money claims accruing prior to the effectivity of this Code shall
be filed with the appropriate entities established under this Code
within one (1) year from the date of effectivity, and shall be
processed or determined in accordance with implementing rules
and regulations of the Code; otherwise, they shall be forever barred.
Petitioners' allegation that there were six (6) employees in Sun
Valley Subdivision "excluding others" in effect stated that there
were other employees of the corporation, except that they were not
stationed in Sun Valley Subdivision. The clear policy of the Labor
Code is to include all establishments, except a few classes, under
the coverage of the provision granting service incentive leave to
workers. RESP' claim is that they fell within the exception. Hence, it
was incumbent upon them to prove that they belonged to a class
excepted by law from the general rule. Specifically, it was the duty
of RESP, not of PETs, to prove that there were less than ten (10)
employees in the company. Having failed to discharge its task,
RESPs must be deemed to be covered by the general rule,
notwithstanding the failure of PETs to allege the exact number of
S. Sagm it
employees of the corporation. PETs must be deemed entitled to
service incentive leave.
1989 CBA has (2) sections on sick leave with pay benefits which
apply to (2) distinct classes of workers in petitioner's company,
namely:
(1) the regular non-intermittent workers or those workers
who render a daily eight-hour service to the company
and are governed by Sec 1, Art VIII of the 1989 CBA; and
(2) intermittent field workers who are members of the
regular labor pool and the present regular extra labor
pool as of the signing of the agreement on April 15,
1989 or those workers who have irregular working days
and are governed by Sec 3, Art VIII of the 1989 CBA.
BOTH CLASSES OF WORKERS ARE ENTITLED TO SICK LEAVE WITH PAY
BENEFITS provided they comply with the conditions set forth under
Section 1 in relation to the last paragraph of Section 3, to wit: (1)
the employee-applicant must be regular or must have rendered at
least one year of service with the company ; and (2) the application
must be accompanied by a certification from a company-designated
physician.
Sick leave benefits, like other economic benefits stipulated in the
CBA such as maternity leave and vacation leave benefits, among
others, are by their nature, intended to be replacements for regular
income which otherwise would not be earned because an employee
is not working during the period of said leaves. By their nature,
upon agreement of the parties, they are intended to alleviate the
economic condition of the workers.
The LAST SENTENCE OF SECT 1, ART VIII OF THE 1989 CBA, DOES NOT
BAR THE REGULAR INTERMITTENT WORKERS FROM THE PRIVILEGE OF
COMMUTATION OR CONVERSION TO CASH OF THE UNENJOYED PORTION
OF THEIR SICK LEAVE WITH PAY BENEFITS, if qualified. For the phrase
"herein sick leave privilege," refers to the privilege of having a fixed
15-day sick leave with pay which, as mandated by Section 1, only
the non-intermittent workers are entitled to. This fixed 15-day sick
leave with pay benefit should be distinguished from the variable
number of days of sick leave, not to exceed 15 days, extended to
intermittent workers under Section 3 depending on the number of
hours of service rendered to the company, including overtime
pursuant to the schedule provided therein. It is only fair and
reasonable for petitioner-company not to stipulate a fixed 15-day
sick leave with pay for its regular intermittent workers since, as
the term "intermittent" implies, there is irregularity in their work-
days. Reasonable and practical interpretation must be placed on
contractual provisions.
Whatever doubt there may have been early on was clearly
obliterated when DAVAO INTEGRATED recognized the said privilege
and paid its intermittent workers the cash equivalent of the
unenjoyed portion of their sick leave with pay benefits during the
lifetime of the CBA of Oct 16, 1985 until (3) months from its renewal
on April 15, 1989. The said privilege of commutation or conversion
to cash, being an existing benefit, the DAVAO INTEGRATED may not
unilaterally withdraw, or diminish such benefits.
 Atty. Maria Christina
RESP as piece-rate employees are not entitled to service incentive
leave pay as well as holiday pay even if they are entitled to other
benefits like COLA and 13th month pay. Service incentive leave pay
shall not apply to employees whose performance is unsupervised
by the employer, including those who are paid in a fixed amount for
performing work irrespective of the time consumed in the
performance thereof.
In this case, the piece-rate workers are unsupervised.
Art. 96. Service charges. All service charges collected by hotels,
restaurants and similar establishments shall be distributed at the
rate of eighty-five percent (85%) for all covered employees and
fifteen percent (15%) for management. The share of the
employees shall be equally distributed among them. In case the
service charge is abolished, the share of the covered employees
shall be considered integrated in their wages.
RULE VI, BK III OF THE IRR
SECTION 1. Coverage. This rule shall apply only to
establishments collecting service charges such as hotels,
restaurants, lodging houses, night clubs, cocktail lounge,
massage clinics, bars, casinos and gambling houses, and similar
enterprises, including those entities operating primarily as
private subsidiaries of the Government.
SECTION 2. Employees covered. This rule shall apply to all
employees of covered employers, regardless of their positions,
designations or employment status, and irrespective of the
method by which their wages are paid except to managerial
employees.
As used herein, a "managerial employee" shall mean one who is
vested with powers or prerogatives to lay down and execute
management policies and/or to hire, transfer, suspend, lay-off,
recall, discharge, assign, or discipline employees or to effectively
recommend such managerial actions. All employees not falling
within this definition shall be considered rank-and-file employees.
SECTION 3. Distribution of service charges. All service charges
collected by covered employers shall be distributed at the rate of
85% for the employees and 15% for the management. The 85%
shall be distributed equally among the covered employees. The
15% shall be for the disposition by management to answer for
losses and breakages and distribution to managerial employees
at the discretion of the management in the latter case.
SECTION 4. Frequency of distribution. The shares referred to
herein shall be distributed and paid to the employees not less
than once every two (2) weeks or twice a month at intervals not
exceeding sixteen (16) days.
SECTION 5. Integration of service charges. In case the service
charges is abolished the share of covered employees shall be
considered integrated in their wages. The basis of the amount to
be integrated shall be the average monthly share of each
employee for the past twelve (12) months immediately preceding
the abolition of withdrawal of such charges.
SECTION 6. Relation to agreements. Nothing in this Rule shall
prevent the employer and his employees from entering into any
agreement with terms more favorable to the employees than
S. Sagm it
those provided herein, or be used to diminish any benefit granted
to the employees under existing laws, agreement and voluntary
employer practice.
CAN THE EMPLOYER WITHDRAW THE SERVICE CHARGE?
Yes. But instead of the customers paying the charge, it is no w the
responsibility of the employer.
When we say employees, we are talking about rank and file employees. It
is illegal to charge employees for breakages.
When we talk about service charge, we are talking about the one charged
by service establishments, not all establishments charge service charge.
Art. 97 (f) Wage paid to any employee shall mean the
remunerations 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
and includes the fair and reasonable value, as determined by the
Secretary of Labor and Employment, of board, lodging, or other
facilities customarily furnished by the employer to the employee.
Fair and reasonable value shall not include any profit to the
employer, or to any person affiliated with the employer.
IS IT THE SAME AS SALARY?
The final analysis (according to Maam Sagmit)
Wage- usually used for rank and file, laborers
Salary- usually managers, officers
But in the final analysis, the two are used in the same concept.
WHAT IS IMPORTANT IN THE DEFINITION?
Wages and salary indicate the payment for the work done by the
employee.
IS THERE SUPPOSED TO BE A WRITTEN THE CONTRACT?
Not necessarily.
HOW DO WE ACCOUNT FOR ESTABLISHMENTS THAT PROVIDE MEALS AND
HOUSING TO ITS EMPLOYEES?
It shall be credited as part of the salary the condition being, the
amount shall be determined by the wage board
If the employer is the one dictating the amount of the board and
lodging, that will not be valid- that is not the creditable amount we
are looking for. If the employer wants credit for what he is providing,
the Board should be the one dictating the value of the meals and
lodging, and not the employer. Tendency diyan mas malaki na yung
charges nila kesa sa sweldo ng employee!
Example yung lumapit sa akin na waiter, 100 pesos a day.
Justification ng employer eh kasi pinapakain ko naman yan. Bawal yan!
(nakaka-high blood!) Tatambay ka na lang sa bahay kung ganyan.
 Atty. Maria Christina
Songco is a sales agent of Zuellig (pharmaceutical company). The
issue is whether the commission that he is earning should form part
of his wages.
Even if the commission were in the form of incentives, still these
commissions were direct remunerations of the services they rendered
which contributed to the increase of the income of the employer.
Hence, shall be included in the computation of their wage.
DOES THIS MEAN THAT ALL ALLOWANCES SHOULD FORM PART OF WAGES?
No. Other benefits may not form part of the salary of the employee.
Pinaguusapan natin dito wage which shall be the basis in the
computation of retirement pay, separation pay, back wages; so, the
question is in the computation of the latter, do we include allowances
in the computation? Will allowances be considered a part of the wage?
Are all allowances considered in the concept of wages?
There was an extensive discussion as to what kind of allowances are
included as to why allowances are included in this case of Songco.
So SC held in this case that generally, allowances are not included in
the computation, however, if we consider the nature of the job of the
sales agent, he actually survives in the form of commission, walang
basic pay. So if you remove commission without the basic pay, how do
you compute for the separation pay, retirement, etc? So the nature of
his work and the payment scheme led to the SC ruling that the
allowances shall be computed in the computation but may mga
minention na conditional allowances that are not included.
The allowances and other fringe benefits cannot be charged as part of
the 60% portion of the tuition fee increase.
WHAT CAN BE CHARGED?
These are to be devoted entirely in basic salary of the employees, so
the allowances cannot be included which are over and above their
wage.
All their supplemental allowances shall not be considered in the wage.
Diba sabi 60% of increase will only cover wages, definitely allowances
are not part of wages, ergo, you have a definition of wages in Cebu, it
does not include allowances.
Sales agent- commission
Private school Teacher- allowances
Magkaiba ang nature ng job, magkaiba kini-claim na inclusion.
WON the gratuity pay should be granted as equivalent to one month
or 3-day salary .
The gratuity pay is not intended to pay the actual services of the
employees, but it is a monetary pay as a form of reward of their
exemplary and satisfactory services to the company.
Fair days wage for a fair days labor- you will encounter this when you
go to Labor Relations.
For example yung employees nag-strike, even if the strike proved to be
legal. In the end it does not matter. If you did not go to work, you do not get
S. Sagm it
a pay. Did you render any productive work? No. Is this compensable? No. fair
days wage for a fair days labor.
Thats why your favorite president, the woman who should be in prison, she
was a fan of long holidays, but she did not look at the plight of ordinary
employees. The ordinary employee is not happy because no work no pay. No
work for 3 days, meaning no money for food for 3 days. No work, no pay!
WON SSS is liable for the payment of wages of members of the Union
who admittedly did not work during the 17-day strike declared in
1968 by the rank & file employees of the union.
The failure to work on the part of the members of the Union was due
to circumstances not attributable to themselves. But neither should
the burden of the economic loss suffered by them be shifted to their
employer, the SSS, which was equally faultless, considering that the
situation was not a direct consequence of the employers lockout or
unfair labor practice. So this also upheld the principle of fair days
wage for fair days labor.
What if the SSS employees were prevented from entering the
premises by those engaged in strike, would the Sc rule the same?
No. The failure to work is outside the control of the employees, why
should you penalize them? This is subject of course to evidences that
they really tried to enter the premises.
WON Bodegas is entitled to compensation during the days when there
were brownouts & machine trouble.
So again, outside the control of the employer. What was the ruling? SC
said no. The general principle is that an employee is entitle to receive
as backwages all the amounts he may have lost starting from the date
of his dismissal up to the time of his reinstatement. This is again the
principle of fair days wage for a fair days labor. If there is no work
performed by the employee, there can be no wage or pay unless the
laborer was able, willing, and ready to work but was illegally locked
out or suspended.
WON commissions are included in determining compliance with the
minimum wage requirement.
You have to consider this in the so-called claim. This is a more recent
case, so tingnan natin ang ruling.
They were truck drivers of a softdrinks company, doubling as
salesmen.
So madami na: We have non-managerial personnel, Salesmen, Truck
helpers, Truck drivers, Halo-halo biglang may field at non-field.
So why did the company want their commission to be included in the
computation of their minimum wage? If we do not include, no
compliance in the part of the employer sa wage order. Kasi ang malaki
commission eh, yung basic medyo maliit. SC now included
commissions in 97 (f). While commissions are indeed incentives or
forms of encouragement to inspire employees to put a little more
industry on the jobs particularly assigned to them, still these
commissions are direct remunerations for services rendered.
 Atty. Maria
This is the reason why many employers do not want to adjust the
salary kasi pag nag-compute na, dami kelangan i-adjust s/a
retirement pay, 13 th month pay, etc.
Ang ginagawa ko I make it an allowance not to reduce their wage but
because we have a tax law exempting minimum wage earners from
paying income tax. So mas malaki na take home nila, pero sa
computation ng 13 th month pay, kasama pa rin yun. Thats the reason.
Won the allowances granted to petitioners should be included in the
computation of their separation pay. NO.
Anong klaseng allowance ito? Are these the same allowances in the
previous cases? What were their positions?
No, magkaiba. Not the same with the sales agent. These are high
ranking people, the allowances that were included here were staff/
managers allowance, transportation allowance and bislig allowance.
Yung managers allowance that falls under housing allowance, with
free water and light consumption pa.
What is Bislig allowance? given to division managers and corporate
officers assigned in Bislig on account of the hostile environment
prevailing therein. But once the recipient is transferred outside Bislig,
the allowance ceases.
Should the allowances be included? What did the SC say?
SC said NO. when an employed customarily furnishes his employee
board, lodging, or other facilities, the fair and reasonable value
thereof, as determined by the SOLE, is included in wage in order to
ascertain whether they form part of the wages. In order ro ascertain
whether they form part of the wages, divide the discussion to-
customarily furnished, board lodging, or other facilities & fair
reasonable value as determined by the SOLE.
Bakit di kasama ang allowances nila dito sa wage? What was the
reason? They were temporary and not regularly given.
The allowances were given with certain conditions. So if they were not
regularly given, nawawala yung concept na integrated siya sa wage.
Unlike commissions which are already the regular remunerations of
sales agents, for instance.
WHAT WAS THE NAME OF THE COMPANY? J.C. Tailor Shop and/ or Johnny
Co.
WON allowances given already become customary.
In this case, we go back to the principle that the mode of
compensation does not rely on the existence or absence of ER-EE
relationship and we determine such relationship by the 4-fold test.
Regardless kung piece rate or fixed rate, it does not negate their
status as regular employees of JC. The rates were only modes in the
payment of their compensation.
WHO IS AN EMPLOYER?
Art. 97 (b): Employer includes any person acting directly or
indirectly in the interest of an employer in relation to an employee
and shall include the government and all its branches, subdivisions
Christina S. Sagm it
and instrumentalities, all government-owned or controlled
corporations and institutions, as well as non-profit private
institutions, or organizations.
IS THE GOVERNMENT INCLUDED? Yes, according to the definition.
Does that mean that the section on wages under the Labor code will
apply to government agencies?
WON C. PLANAS IS EXEMPTED FROM PAYING HOLIDAY & SIL PAY?
The SC said no because RA 6727 known as the Wage Rationalization
Act provides for the statutory minimum wage of all workers and
employees in the private sector. Sec.4 thereof provides that
household or domestic helpers and persons employed in the personal
service of another, including family drivers, are exempted from the
Act.
Private sector ba siya? San ba siya nagtratrabaho? The employees here
work for Cohu
Sige punta muna tayo sa wage rationalization act, why was there an
allegation that they were not entitled to holiday and SIL pays?
They were not entitled to holiday/ SIL pay for they were employed in
retail & service establishment regularly employing less than 10
workers. So that is the rule. Dapat less than 10 employees, hindi aabot
ng 10.
Why do they allege that they were entitled? They were saying that
Cohu had more than 24 employees. They were hired as laborers. They
were paid below the minimum wage for the past 3 years, and they
were required to work for more than 8 hours a day without overtime
pay. They never enjoyed holiday pay and did not have a rest day as
they worked 7 days a week and that they were not paid SIL pay
although they have been working more than a year.
AS TO THE QUITCLAIM. SC said it is not valid, because such was against
public policy.
Solve muna natin ha, yung kini-claim nila benefits, are they entitled or
not entitled? They are entitled, because the business of the employer
here was not a retail/ service establishment. They did not present any
evidence. The one claiming for exemptions must present substantial
evidence that he should not pay, but in this case there was absence
of evidence.
As a general rule, not all quitclaims are invalid per se. however there
are 2 instances that the SC said that quitclaims shall be considered
invalid:
1. where there is clear proof that the waiver was wangled
from an unsuspecting or gullible person, or
2. where the terms of settlement are unconscionable on
their face.
In these cases, the law will step in to annul the questionable
transactions.
Dito wala naman yung dalawa, the quitclaim was voluntary. Therefore,
the quitclaims signed by the employees were valid. Valid? Bakit may
award sa dispositive portion? Bakit may 18, 417 pesos?
If you take a look at the ruling of the SC, this was a decision rendered
pending settlement. Nagkaroon ng quitclaim, the SC did not rule in
 Atty. Maria Christina
favor of the employees. However, meron pa rin tayong award kasi yan
yung salary differentials thats why they have the 18k plus na award.
So, sabi ng SC sige valid pero hindi parin na quit lahat ng claims. So sa
tingin ko baka hindi na-include lahat ng monetary benefits. SC had to
rule na meron pang 18k plus na di pa nabibigay. Baka nilagay lang
ibang claims but not this one.
50% rule kasi ganito, kung claim mo 10k, binayaran ka ng 5k ok solve,
pero kung claim mo lower than 50%, that is deemed unconscionable.
WHAT WAS THE ISSUE IN THE CASE OF ABARQUEZ, IN RELATION TO ART.
127?
WON the cash conversion of unused sick leave paid by the company
may be withdrawn or diminished unilaterally.
WHY DID I ASSIGN THIS UNDER ART. 100 AND 127? ARE THESE PROVISIONS
THE SAME?
100 pertains to the prohibitions against employers diminishing the
wages given to the employees, 127 pertains to the wage board. Uy
wage board kung 327 lang yung sweldo, wag mo na ibaba yung sweldo
to 300. In both cases, diminution ang bawal.
IS ARTICLE 100 AND 127 THE SAME?
No. Article 100 pertains to the prohibition against employers
diminishing or decreasing the benefits or the wages enjoyed by the
employees. On the other hand, 127 pertains to the wage board. In
both cases, what is prohibited is the diminution.
WHY DID I ASSIGN DAVAO V. ABARQUEZ?
In this case, the issue is whether the conversion of unused sick
leave into cash is considered practice.
WAS THERE DIMINUTION IN THIS CASE?
Yes, there was diminution because It is a fact that petitioner-
company had, on several instances in the past, granted and paid the
cash equivalent of the unenjoyed portion of the sick leave benefits
of some intermittent workers. Under the circumstances, these may
be deemed to have ripened into company practice or policy which
cannot be peremptorily withdrawn.
The petitioner, Reynaldo Tiangco, is a fishing operator who owns the
Reynaldo Tiangco Fishing Company and a fleet of fishing vessels
engaged in deep-sea fishing which operates from Navotas, Rizal. His
business is capitalized at P2,000,000.00, while his co-petitioner,
Victoria Tiangco, is a fish broker whose business is capitalized at
P100,000.00.
The private respondents are batillos engaged by the peti tioners to
unload the fish catch from the vessels and take them to the Fish
Stall of the petitioner Victoria Tiangco.
The work of these batillos were limited to days of arrival of the
fishing vessels and their working days in a month are comparatively
few. Their working hours average 4 hours a day.
On April 8, 1980, the private respondents filed a complaint against
the petitioners with the Ministry of Labor and Employment for non-
payment of their legal holiday pay and service incentive leave pay,
WHAT WAS THE CLAIM ALL ABOUT? THEY WERE CLAIMING WHAT BENEFITS?
as well as underpayment of their emergency cost of living
allowances which used to be paid in full irrespective of their
working days, but which were reduced effective February, 1980, in
S. Sagm it
contravention of Article 100 of the new Labor Code which prohibits
the elimination or diminution of existing benefits.
The petitioners denied the laborers contention. They argued that
no law was violated as their refusal to pay allowances for non-
working days is in consonance with the principle of no work, no
allowance, and that they could not pay private respondents fixed
monthly allowance without risking the viability of their business.
Decision of the Director of the National Capital Region of the Ministry
of Labor and Employment:
The daily extra pay given to private respondents was a production
incentive benefit separate and distinct from the service incentive
leave pay and legal holiday pay, payment of which cannot be used
to offset a benefit provided by law, and ordered the petitioners to
pay the private respondents their service incentive leave pay and
legal holiday pay. However, he denied the laborers claim for
differentials in the emergency cost of living allowance for the
reason that the emergency cost of living allowance accrues only
when the labourers actually work following the principle of no work
no pay.
Decision of the Minister of Labor and Employment:
He directed the petitioners to restore and pay the individual
respondents their fixed monthly allowance from March 1980 and to
pay them the amount of P58,860.00, as underpayment of their
living allowance from May 1977 to February 21, 1980.
Petitioners contention: Respondent Deputy Minister of Labor and
Employment erred when it ordered them to pay the private
respondents a fixed monthly allowance from March 1980, despite
the no work, no pay, law.
W/N the Deputy Minister of Labor and Employment erred when it
ordered the payment of respondents allowances. NO
Indeed, the record shows that the private respondents work for the
petitioners on a part-time basis and their work average only 4 days
a week. It is not also disputed that the private respondents work
for more than one employer so that the private respondents should
be paid their living allowance only for the days they actually worked
in a week or month and all the employers of the employee shall
share proportionately in the payment of the allowance of the
employee.
However, the respondent Deputy Minister of Labor and Employment
correctly ruled that since the petitioners had been paying the
private respondents a fixed monthly emergency allowance since
November 1976 up to February 1980, as a matter of practice and/or
verbal agreement between the petitioners and the private
respondents, the discontinuance of the practice and/or agreement
unilaterally by the petitioners contravened the provisions of the
Labor Code, particularly Article 100 thereof which prohibits the
elimination or diminution of existing benefits.
Section 15 of the Rules on PD 525 and Section 16 of the Rules on PD
1123 also prohibits the diminution of any benefit granted to the
employees under existing laws, agreements, and voluntary
employer practice.
The claim is all about the non-payment of their legal holiday pay and
service incentive leave pay.
 Atty. Maria Christina
WAS THERE DIMINUTION IN THIS CASE?
Yes, there was diminution because the discontinuance of the
practice and/or agreement unilaterally by the petitioners
contravened the provisions of the Labor Code, particularly Article
100 thereof which prohibits the elimination or diminution of
existing benefits.
If you look at the cases, it seems that the concurring period is two
(2) years. If the benefit has been given without any conditions for
a period of 2 years, then we can conclude that the granting of which
has ripened into practice.
Mamerto Asis was appointed Legal Counsel of the Central Azucarera
de Pilar. Later, concurrently with his position as Legal Counsel, he
was named Head of its Manpower and Services Department.
In addition to Mamerto Asis basic salaries and other fringe benefits
as legal counselor and later as Head of its Manpower and Services
Department, his employer, CENTRAL AZUCARERA DE PILAR, granted
him, and a few other officials of the company, a month ly ration of
200 liters of gasoline and a small tank of liquefied petroleum gas
(LPG). This monthly ration was temporarily revoked some five (5)
years later as a cost reduction measure of the Central.
The petitioner commenced an action against the Central with the
Regional Office of the Ministry of Labor and Employment, seeking
restoration of his monthly ration of gasoline and LPG, and
complaining against a signed memorandum ordaining his relief (by
being placed on leave of absence. He theorized that he ha d in effect
been dismissed, illegally.
The Regional Directors judgment was for petitioners
reinstatement including the restoration of additional benefits
(ration of gasoline and LPG) but upon appeal by Central, the Deputy
Minister of Labor reversed the Regional Directors decision. Hence,
this petition.
WON an employee may demand the restoration of the revoked
additional benefits even if such are not part of the basic salary.
No. The revocation of the ration had been occasioned by force of
circumstances affecting the Centrals business. The monthly ration
was not a part of his basic salary, and is not indeed found in any of
the management payroll vouchers pertinent to the petitioner.
Moreover, the adverse consequences of the suspension of the
monthly rations had been largely if not entirely negated by the
Centrals undertaking to reimburse the petitioner for his actual
consumption of fuel during the period of suspension.
Plus, in lieu of the monthly ration, he was reimbursed for his actual
expenses. Thus, there was no diminution in this case.
The controversy came about because of the implementation of the
decision of the Court of Industrial Relations (CIR) of June 29, 19631
directing petitioner Lexal Laboratories (Lexal) to reinstate
Guillermo Ponseca, a dismissed employee, to his former position
"with full back wages from the day of his dismissal up to the time
he is actually reinstated without loss of his seniority rights and of
such other rights and privileges enjoyed by him prior to his lay-off."
S. Sagm it
CIR: Ponseca was entitled to back wages from November 5, 1958
when he ceased reporting for work, to November 24, 1963 a day
prior to his reinstatement on November 25, 1963; and that for the
number of days that he was supposed to be in Manila, he was to
earn P4.50 a day, and during the periods when he should have been
in the provinces, P4.50 a day plus a per diem of P4.00 or a total of
P8.50 daily.
This order was subsequently modified by CIR's resolution of May 22,
1965 which directed the deduction of P5,000.00 previously paid
Ponseca under the judgment and P610.00 which Ponseca earned
from other sources during his lay-off.
Petitioners: objected to the inclusion of the P4.00 per diem in the
computation of Ponseca's back wages because the latter "did not
actually spend for his meals and lodgings for he was all the time in
Manila, his station."
CIR: per diems should be paid as part of the back wages because
they were "paid to him regularly."
WON per diems are included in backpay. NO.
Per diem is "a daily allowance" given "for each day he (an officer or
employee) was away from his home base".
It is intended to cover the cost of lodging and subsistence of
officers and employees when the latter are on duty outside of their
permanent station.
Lexal concedes that whenever its employee, Guillermo Ponseca, was
out of Manila, he was allowed a per diem of P4.00 broken down as
follows:
P1.00 for breakfast;
P1.00 for lunch;
P1.00 for dinner; and
P1.00 for lodging.
Ponseca during the period involved did not leave Manila.
Therefore, he spent nothing for meals and lodging outside of Manila.
Because he spent nothing, there is nothing to be reimbursed. Since
per diems are in the nature of reimbursement, Ponseca should not
be entitled to per diems.
Besides, back wages are what an employee has lost "in the way of
wages" due to his dismissal. So that, because Ponseca earned P4.50
a day, "then that is the amount which he lost daily by reason of his
dismissal, nothing more nothing less:"
As to the computation of his Net Backpay: But the CIR order of
February 15, 1965 credits Ponseca with 1,856 days for the period
from November 5, 1958 to November 24, 1963 but there should
only be 1,846 days from November 5, 1958 to November 24, 1963.
1,846 days x P4.50=. P8,307.00
Less: Advance payment P5,000.00
Earnings from other sources P610.00 P5,610.008
NET BACKPAY P2,697.00
SC: ordering petitioner Lexal Laboratories to pay Guillermo Ponseca,
by way of net backpay, the sum of P2,697.00.
Take a look at the benefits that are integrated, part of basic wage,
and take a look at the benefits that are considered as not part of
 Atty. Maria Christina
the definition. And subject as to what conditions. Thats very
important.
The petitioner-employer implemented a Job Evaluation (JE) Program
affecting all employees from rank-abd-file to department heads.
Jobs were ranked according to effort, responsibility, training and
working conditions and relative worth of the jobs. All positions were
re-evaluated, and all employees including the members of
respondent union were granted salary adjustments and increases
in benefits commensurate to their actual duties and functions.
For about 10 years prior to the JE Program, the members of the
respondent supervisors union were treated in the same manner as
rank-and-file employeed. They used to be apid overtime, rest day
and holiday apy pursuant to Article 87, 93, and 94 of the Labor Code.
They lost these benefits because thjrough the JE Program their
positions were reclassified from rank-and-file to supervisory or
managerial. But it was also shown that they received upward
adjustments in basic pay and allowances.
The members of the union filed a complaint to recover overtime, rest
day, and holiday pay.
WHETHER OR NOT THERE WAS DIMINUTION. NO.
Prior to the JE Program, the union members, while being
supervisors, received benefits similar to those of the rank-and-file
employees such as overtime, rest day, and holiday pay.
After the JE Program, there was an ascent in position, rank, and
salary. This in essence is a promotion which is defined as the
advancement from one position to another with an increase in
duties and responsibilities as authorized by law, and usually
accompanied by an increase in salary.
Quintessentially, with the promotion of the union members, they
are no longer entitled to the benefits which attach and pertain
exclusively to their former positions.
WHY IS THERE AN ALLEGATION OF DIMINUTION?
There was an allegation of diminution because when the promotion
of some of the employees happened, their entitlement to some
benefits were stopped by the company.
SO WAS THERE DIMINUTION?
No, there was no diminution it is considered a promotion and they
were no longer entitled to the benefits enjoyed by their previous
positions.
Petitioners States Marine Corporation and Royal Line, Inc. were
engaged in the business of marine coastwise transportation,
employing therein several steamships of Philippine registry.
1952, respondent union filed with the CIR, a petition against the
States Marine Corporation and Royal Line, Inc. alleging the following:
a. That the officers and men working on board the
petitioners' vessels have not been paid their sick leave,
vacation leave and overtime pay;
b. that the petitioners threatened or coerced them to
accept a reduction of salaries, observed by other
shipowners;
S. Sagm it
c. that after the Minimum Wage Law had taken effect, the
petitioners required their employees on board their
vessels, to pay the sum of P.40 for every meal (by
deducting the cost of meals from the wages and
salaries), while the masters and officers were not
required to pay their meals
d. that the petitioners dismissed Captain Asensi when he
refused to yield to the general reduction salaries.
The petitioners averred that there is no law which provides for the
payment of sick leave or vacation leave to employees or workers of
private firms; that the shipowners and operators in Cebu were
paying the salaries of their officers and men, depending upon the
margin of profits they could realize and other factors or
circumstances of the business; that in enacting Rep. Act No. 602
(Minimum Wage Law), the Congress had in mind that the amount of
P.40 per meal, furnished the employees should be deducted from
the daily wages; that Captain Asensi was not dismissed for alleged
union activities, but with the expiration of the terms of the contract
between said officer and the petitioners, his services were
terminated.
Take note: Prior to the effectivity of the Minimum Wage Law on
August 4,1951, no deductions of the cost of meals were made
against the wages and salaries of the crew. But after the effectivity,
they started deducting the cost of meals from the wages/salaries
of the crew except the deck officers and engineers.
Petitioners herein contend that the deductions are legal and should
not be reimbursed to the respondent union. The union, however,
claims that the same are illegal and reimbursement should be made.
WON THE DEDUCTION FOR COSTS OF MEALS FROM THE WAGES OR
SALARIES IS ILLEGAL AND SAME SHOULD BE REIMBURSED TO THE
EMPLOYEE CONCERNED. Yes.
Such deductions are not authorized. In the coastwise business of
transportation of passengers and freight, the men who compose
the complement of a vessel are provided with free meals by the
shipowners, operators or agents, because they hold on to their
work and duties, regardless of "the stress and strain concomitant
of a bad weather, unmindful of the dangers that lurk ahead in the
midst of the high seas."
It is argued that the food or meals given to the deck officers, marine
engineers and unlicensed crew members in question, were mere
"facilities" which should be deducted from wages, and not
"supplements" which, according to said section 19, should not be
deducted from such wages.
Supplements", therefore, constitute extra remuneration or special
privileges or benefits given to or received by the laborers over and
above their ordinary earnings or wages.
"Facilities", on the other hand, are items of expense necessary for
the laborer's and his family's existence and subsistence so that by
express provision of law, they form part of the wage and when
furnished by the employer are deductible therefrom, since if they
are not so furnished, the laborer would spend and pay for them just
the same.
In short, the benefit or privilege given to the employee which
constitutes an extra remuneration above and over his basic or
ordinary earning or wage, is supplement; and when said benefit or
privilege is part of the laborers' basic wages, it is a facility. The
 Atty. Maria Christina
criterion is not so much with the kind of the benefit or item (food,
lodging, bonus or sick leave) given, but its purpose.
Considering, therefore, as definitely found by the respondent court
that the meals were freely given to crew members prior to August
4, 1951, while they were on the high seas "not as part of their
wages but as a necessary matter in the maintenance of the health
and efficiency of the crew personnel during the voyage", the
deductions therein made for the meals given after August 4, 1951,
should be returned to them, and the operator of the coastwise
vessels affected should continue giving the same benefit.
It having been found and held by the SC that the meals or food in
question are not facilities but supplements.
> The shipping companies argue that the furnishing of meals to the
crew before the effectivity of Rep. Act No. 602, is of no moment,
because such circumstance was already taken into consideration by
Congress, when it stated that "wage" includes the fair and
reasonable value of boards customarily furnished by the employer
to the employees.
If We are to follow the theory of the herein petitioners, then a crew
member, who used to receive a monthly wage of P100.00, before
August 4, 1951, with no deduction for meals, after said date, would
receive only P86.00 monthly (after deducting the cost of his meals
at P.40 per meal), which would be very much less than the P122.00
monthly minimum wage, fixed in accordance with the Minimum
Wage Law. Instead of benefiting him, the law will adversely affect
said crew member. Such interpretation does not conform with the
avowed intention of Congress in enacting the said law.
One should not overlook a fact fully established, that only
unlicensed crew members were made to pay for their meals or food,
while the deck officers and marine engineers receiving higher pay
and provided with better victuals, were not. This pictures in no
uncertain terms, a great and unjust discrimination obtaining in the
present case.
In this case, SC distinguished between facilities and supplements.
Accordingly, facilities should be part of the basic salary and supplements,
contrary to facilities, are grants given by the employers to employees
which is over and above the basic wage and should not be credited
against the basic salary.
TELL ME WHETHER THIS IS A SUPPLEMENT OR A FACILITY
Vitamins supplement
Car plan facility (if you provide transportation, it is very
beneficial. Thus, facility.)
Lodging facility
Rice facility
Uniform supplement
The determination of whether or not an item should be classified as
supplement or facility is not on the kind of item that is given to the
employee, but rather, it is as to the intention or purpose of the item given
by the employer to the employee. If it is necessary for the daily needs of
the employee and his family, then it can be credited against the ba sic
wage.
In giving of facilities, the purpose is not only to benefit the employee, but
also to benefit the employer.
Usually, if basic commodity, that partakes the nature of a facility. If
supplement, you can live without it.
S. Sagm it
Wage No.6 took effect on Oct.30, 1984, increased the COLA of non -
agricultural workers in the private sector.
Petitioner complied with said wage order by paying its monthly-paid
employees the mandated P3.00 per day COLA.
However, in computing said COLA, petitioner multiplied the P3.00
daily COLA by 22 days, which is the number of working days.
Respondent Union disagreed with the computation claiming that
the daily COLA rate of P3.00 should be multiplied by 30 days.
Respondent also alleged that prior to the effectivity of the Wage
Order, petitioner had been paying the monthly COLA on the basis of
30 days per month and that this constituted employer practice.
Respondent filed a complaint for illegal deduction, underpayment,
unpaid allowances, and violation of Wage Order No.6.
LA ruled that the monthly COLA should be computed on the basis of
22 days because 22 days is the basis used for computing vacation
and sick leave, OT pay and other benefits and it would be unjust to
compel petitioner to use the 30 days as basis.
NLRC reversed the LAs decision and held petitioner as guilty of
illegal deductions. Workers paid on monthly basis are entitled to
COLA on Saturdays, Sundays and legal holidays even if unworked.
WON 30 DAYS SHOULD BE USED AS A BASIS IN COMPUTING THE COLA.
NO. Section 5 of the Rules Implementing Wage Orders No. 6 provide:
Section 5. Allowance for Unworked Days. All Covered employees
shall be entitled to their daily living allowance during the days that
they are paid their basic wage, even if unworked.
The payment of COLA is mandated only for the days that the
employees are paid their basic wage, even if said days are
unworked. Where the company observes a 5-day work week, as
provided in the CBA, it will have to be held that the COLA should be
computed on the basis of 22 days.
Payment in full by petitioner of the COLA before the execution of
the CBA and in compliance with Wage Orders Nos. 1 to 5(previous
WOs), should not be construed as constitutive of voluntary
employer practice. To be considered as such, it should have been
practiced over a long period of time, and must be shown to have
been consistent and deliberate.
In Wage Order No.4 (previous Wage Order), there was lack of
administrative guidelines in the implementation of the Wage Orders
and it was later when its Rules Implementing Wage Order No.4 was
issued that a formula for the conversion of the daily allowance to
its monthly equivalent was laid down. Absent clear administrative
guidelines, petitioner cannot be faulted for erroneous application
of the law. Payment may be said to have been made by reason of a
mistake in the construction or application of a doubtful or difficult
question of law. Since it is a past error that is being corrected, no
vested right may be said to have arisen nor any diminution of
benefits under Art. 100 of the LC may be said to have resulted by
virtue of the correction.
This is an exception to the rule that if a particular benefit has been
considered as practice the employer is required to continue giving the
 Atty. Maria Christina
same benefits. If there is an erroneous application of the law, it is
considered an exception to the general rule and the correct
implementation of the wage order is not violative of the prohibition
against non-diminution.
Since it is a past error that is being corrected, no vested right may be
said to have arisen nor any diminution of benefit under Article 100 of the
Labor Code 3 may be said to have resulted by virtue of the correction.
On September 4, 1950, demand was submitted to petitioner by
respondent union through its officers for various concession,
among which were
(a) an increase of P0.50 in wages,
(b) commutation of sick and vacation leave if not enjoyed
during the year,
(c) various privileges, such as free medical care, medicine, and
hospitalization,
(d) right to a closed shop, check off, etc.,
(e) no dismissal without prior just cause and with a prior
investigation, etc.
Some of the demands, were granted by the petitioner, and the other
were rejected, and so hearings were held and evidence submitted
on the latter.
After the hearing the respondent court rendered a decision, the
most important provisions of which were those
1. fixing the minimum wage for the laborers at P3.20,
2. declaring that additional compensation representing
efficiency bonus should not be included as part of the
wage, and
3. making the award effective from September 4, 1950.
It is against these portions of the decision that this appeal is taken.
WHETHER OR NOT THE EFFICIENCY BONUS FORMS PART OF WAGES.
It depends upon the circumstances or condition for its payment.
CONTENTION OF PETITIONER: It is next contended that the efficiency
bonus paid the laborer should have been included in his (minimum)
wage, in the same manner as the value of living quarters.
WHETHER OR NOT BONUS FORMS PART OF WAGES DEPENDS UPON THE
CIRCUMSTANCES OR CONDITION FOR ITS PAYMENT.
1. ADDITIONAL COMPENSATION WHICH THE EMPLOYER PROMISED:
part of wage
If it is an additional compensation which the employer
promised and agreed to give without any conditions
imposed for its payment, such as success of business
or greater production or output, then it is part of the
wage.
2. Dependent only to PROFIT realization: Not part of wage
But if it is paid only if profits are realized or a certain
amount of productivity achieved, it cannot be
considered part of the wages. In the case at bar, it is not
payable to all but to laborers only. It is also paid on the
basis of actual production or actual work accomplished.
If the desired goal of production is not obtained or the
amount of actual work accomplished, the bonus does
S. Sagm it
not accrue. It is evidence that under the circumstances
it is paid only when the labor becomes more efficient or
more productive. It is only an inducement for efficiency,
a prize therefor, not a part of the wage.
The terms of the stipulation are clearly against petitioner's
contention. There being no question as to its (agreement)
existence, the same must be given force and effect.
The RULE is: even if a particular bonus has been granted for more than 2
years, if it is conditional in nature, then the conditions must be satisfied
before the grant is continued. If the conditions are not met, then there is
still the option of not giving the bonus.
WHETHER OR NOT EMPLOYEES ARE ENTITLED TO CHRISTMAS BONUS
As in Christmas Bonus, the employees are entitled. As a rule, a
bonus is not a demandable and enforceable obligation; it may
nevertheless be granted on equitable consideration as when the
giving of such bonus has been the companys long and regular
practice. To be considered a regular practice, the giving of the
bonus should have been done over a long period of time, and must
be shown to have been consistent and deliberate and
[unconditional].
If you gave without any conditions, then there is now the duty to give,
otherwise, it will run counter to Article 100.
No grant of signing bonus because it took them more than 2 years to
agree to the CBA. The condition is goodwill. It may be in the nature of a
bonus, gratuitously given, but subject to the condition of goodwill, which
is absent in this case.
Again, the RULE is, if the bonus is freely given without any condition, then
it has to be given if it has been granted for a period of 2 years. If there is
a condition, even if more than 10 years have passed that it is give,, still
the conditions must be complied with.
On November 18, 1986, the Union, through its president, filed a
letter-complaint against TRB with the Conciliation Division of the
Bureau of Labor Relations. The union claims that:
1. The Management of TRB per memo dated October 10, 1986
paid the employees their holiday pay but has withheld from
the union the basis of their computation.
2. The computation in question has allegedly decreased the
daily salary rate of the employees. This diminution of
existing benefits has decreased our overtime rate and has
affected the employees' take home pay.
3. The diminution of benefits being enjoyed by the employees
since the immemorial, e.g. mid-year bonus, from 2 months
gross pay to 2 months basic and year-end bonus from 3
months gross to only 2 months.
4. The refusal by management to recall active union members
from the branches which were being transferred without
prior notice, solely at the instance of the branch, manager.
TRB pointed out that the NLRC, not the Bureau of Labor Relations,
had jurisdiction over the money claims of the employees.
In the meantime, the parties who had been negotiating for a
collective bargaining agreement. However, the union insisted on
 Atty. Maria Christina
pursuing the case, arguing that the CBA would apply prospectively
only to claims arising after its effectivity.
(1) WON THE GRANTING OF BONUSES IS A MANAGEMENT PREROGATIVE.
(2) WON THE GRANT OF BONUSES HAS RIPENED INTO A COMPANY
PRACTICE.
(3) WON THERE WAS A DIMINUTION IN THE EMPLOYEES SALARIES.
TRBs Contention: It insisted that it had paid the holiday pay. The
practice of giving them bonuses at year's end, would only depend
on how profitable the operation of the bank had been.
(1) YES. A bonus is "a gratuity or act of liberality of the giver which
the recipient has no right to demand as a matter of right". "It is
something given in addition to what is ordinarily received by or
strictly due the recipient." The granting of a bonus is basically a
management prerogative which cannot be forced upon the employer
"who may not be obliged to assume the onerous burden of granting
bonuses or other benefits aside from the employee's basic salaries
or wages
The matter of giving them bonuses over and above their lawful
salaries and allowances is entirely dependent on the profits, if any,
realized by the Bank from its operations during the past year.
From 1979-1985, the bonuses were less because the income of the
Bank had decreased. In 1986, the income of the Bank was only 20.2
million pesos, but the Bank still gave out the usual 2 months basic
mid-year and 2 months gross year-end bonuses. The bank pointed
out, however, that the Bank weakened considerably after 1986 on
account of political developments in the country. Suspected to be a
Marcos-owned or controlled bank, it was placed under
sequestration by the present administration and is now managed
by the PCGG.
(2) Unions contention: The granting of bonuses to the employees
had ripened into a company practice that may not be adjusted to
the prevailing financial condition of the Bank.
Held:NO. It has no legal and moral bases. Its fiscal condition having
declined, the Bank may not be forced to distribute bonuses which it
can no longer afford to pay and, in effect, be penalized for its past
generosity to its employees.
(3) Unions contention: The decrease in the midyear and year-end
bonuses constituted a diminution of the employees' salaries.
NO. bonuses are not part of labor standards in the same class as
salaries, cost of living allowances, holiday pay, and leave benefits,
which are provided by the Labor Code.
WAS THE BONUS CONDITIONAL IN NATURE?
Yes. The bonus was conditioned on how profitable the bank is.
SC ruled that petitioner may not be obliged to pay bonuses to its
employees. The matter of giving them bonuses over and above their
lawful salaries and allowances is entirely dependent on the profits,
if any, realized by the Bank from its operations during the past year.
HOW DID SC COMPARE MID-YEAR BONUS TO THE OTHER BENEFITS?
Private respondent's contention, that the decrease in the midyear
and year-end bonuses constituted a diminution of the employees'
salaries, is not correct, for bonuses are not part of labor standards
in the same class as salaries, cost of living allowances, holiday pay,
and leave benefits, which are provided by the Labor Code.
S. Sagm it
In 1984, Manilabank was experiencing liquidity problems and had
incurred chronic reserve deficiencies against deposit liabilities. As
a result, it was placed under comptrollership by the Central Bank. A
month before that, the bank was already prohibited by the Monetary
Board from granting new loans, making new investments (except
investments in government securities with Central Bank support),
and from declaring stock dividends.
Feliciano Miranda was designated as receiver by the Monetary Board
to take charge of the banks assets and liabilities. He terminated
343 officers and top managers of the bank. Those terminated are
the respondents in this case. Although the respondents were all
paid separation and/or retirement benefits due to them, they come
to court claiming entitlement to additional benefits:
1. wage increases
2. Christmas bonuses
3. mid-year bonuses
4. profit-sharing
5. car and travel plans
6. gasoline allowances
7. differentials on accrued leaves, retirement, and other
bonuses
8. longetivity pay and loyalty pay
9. medical, dental, and optical benefits
10. uniform allowances
The respondents claim that the entitlement to the foregoing
benefits was based on Manilabanks alleged practice, policy and
tradition of awarding said benefits. They contended that the policy
has ripened into vested property rights in their favor.
Manila bank, on its part, alleged that the additional benefits sought
are without basis since these are conferred by management only
when it deems necessary to do so. The award of the said benefits
is in the nature of a management prerogative which, it contended,
can be withheld by management upon a clear showing that the
company is not in a position to grant them either because of
financial difficulties or circumstances which do not warrant
conferment of such benefits. And since it was experiencing
financial distress, it claimed that it was in no position to g ive the
benefits sought.
Labor arbiter decided in favor of respondents and ordered
Manilabank to pay in full all the claims of private respondents
amounting to P193,338,212.33, plus 12% interest annually and
10% of the total award as attorneys fees.
Manilabank appealed and posted a bond in the form of a certification
from the Central Bank that the portion of Manilabanks funds in an
amount equal to that of the total award of the labor arbiter, has
been reserved and set aside by the Central Bank to ans wer for the
private respondents claims should they finally be adjudged to be
entitled thereto.
ARE THE RESPONDENTS ENTITLED TO SUCH BENEFITS?
No. Both the Labor Arbiter and the NLRC opted to award all the
additional benefits claimed by the 343 private respondents who had
already been duly paid separation pay and/or retirement benefits
upon termination of their employment. The NLRC erroneously
adopted the findings of the labor arbiter, misapplying the time-
honored rule that factual findings of quasi-judicial agencies are
accorded not only respect but even finality if supported by
substantial evidence. It declared that the additional benefits
sought are in the nature of bonuses which when made part of the
 Atty. Maria Christina
wage or salary or compensation of an employee become demandable
and enforceable.
Both the Labor Arbiters and the NLRCs findings and conclusions are
flawed.
By definition, a bonus is a gratuity or act of liberality of the giver
which the recipient has no right to demand as a matter of right. It
is something given in addition to what is ordinarily received by or
strictly due the recipient. The granting of a bonus is basically a
management prerogative which cannot be forced upon the employer
who may not be obliged to assume the onerous burden of gra nting
bonuses or other benefits aside from the employees basic salaries
or wages, especially so if it is incapable of doing so.
It is evident, therefore, that petitioner bank was operating on net
losses from the years 1984, 1985 and 1986, thus, resulting to its
eventual closure in 1987 and liquidation in 1988. Clearly, there was
no success in business or realization of profits to speak of that
would warrant the conferment of additional benefits sought by
private respondents. No company should be compelled to act
liberally and confer upon its employees additional benefits over and
above those mandated by law when it is plagued by economic
difficulties and financial losses. No act of enlightened generosity
and self-interest can be exacted from near empty, if not empty,
coffers.
SC modified judgment deleting 5% profit sharing, wage increases,
Christmas bonuses, differentials on accrued leaves, retirement
benefits, and mid-year bonuses. The award of medical benefits,
longetivity pay are affirmed.
WHAT IS BEING CLAIMED? OF THESE BENEFITS, WHAT WERE RULED TO BE
SHOULD HAVE BEEN GRANTED?
Consequently, on the ten (10) items awarded to herein private
respondents (enumerated at page 3) which represent additional
benefits, they having already been paid separation and retirement
benefits, we rule as follows:
First. The award of 5% profit sharing of petitioner banks net profits
for the years 1985 and 1986 is deleted as there were clearly no
profits to share during that period given the banks financial status
in 1985 and 1986 when it was operating on net losses.
Second. The award of wage increases and Christmas and mid-year
bonuses from 1985 to 1988, being in the nature of gratuities and
dependent as they on the petitioners liberality and capability to
give, is likewise deleted for same reasons above stated.
Third. The award of differentials on accrued leaves, retirement
benefits and Christmas and mid-year bonuses is also deleted as a
necessary and logical consequence of the denial of the wage
increases and Christmas and mid-year bonuses.
Fourth. The award of medical, dental and optical benefits is well -
taken and, therefore, affirmed.
Fifth. The claim for travel plans for 23 senior officers, and car plans
and gasoline allowances for 23 senior officers, 15 senior managers
and 54 assistant managers may only be granted to those officers
who have not yet availed of the said benefit subject to the proper
determination by the labor arbiter.
Sixth and last. Claims for longevity pay, loyalty bonuses and uniform
allowance of P600.00 for 1985 may be granted given the apparent
S. Sagm it
loyalty and allegiance shown by herein private respondents to
petitioner bank despite rough sailing during the said period of time.
Petitioners Marcos, Andrada, Lopez and Cruz were regular
employees of respondent Insular Life Assurance Co., but were
dismissed on November 1, 1990 when their positions were declared
redundant. A special redundancy benefit was paid to them.
Meanwhile, in the same year that they were dismissed, the Insular
Life approved the grant of an anniversary bonus. Later on March
1991, Insular Life also granted a performance bonus equivalent to
2 months salary and 2.75 basic salary.
Lopez sent a letter to Insular Life questioning the redundancy
package. She claimed that they should receive their respective
service awards and other prorated bonuses which they had earned
at the time they were dismissed.
However later, Insular Life required petitioners to execute a
Release and Quitclaim which petitioners complied with a writ ten
protest reiterating their previous demand.
Upon inquiry from the Legal Service of the DOLE, the labor
department issued its opinion saying among others that a gratuity
or bonus, by reason of its long and regular concession indicating
company practice, may become regarded as part of regular
compensation and thus demandable and that the fact that they
were asked to sign the Release and Quitclaim did not affect their
right to the material benefits of the service award.
Despite said opinion, Insular Life still refused to pay petitioners
service awards. This prompted petitioners to file a complaint with
the NLRC for payment of their service awards, including
performance and anniversary bonuses.
Petitioners contended that they are likewise entitled to the
performance and anniversary bonuses because, at the time the
performance bonus was announced to be given, they were only
short of two (2) months service to be entitled to the full amount
thereof as they had already served the company for ten (10)
months prior to the declaration of the grant of said benefit. Also,
they lacked only fifteen (15) days to be entitled to the full amount
of the anniversary bonus when it was announced to be given to
employees as of November 15, 1990.
W/N PETITIONERS ARE ENTITLED TO THE SERVICE AWARDS,
PERFORMANCE AND ANNIVERSARY BONUS. YES.
The fact that an employee has signed a satisfaction receipt for his
claims does not necessarily result in the waiver thereof.
The law does not consider as valid any agreement whereby a worker
agrees to receive less compensation than what he is entitled to
recover. A deed of release or quitclaim cannot bar an employee from
demanding benefits to which he is legally entitled.
Quitclaims and/or complete releases executed by the employees do
not estop them from pursuing their claims arising from unfair labor
practices of the employer. The basic reason for this is that such
quitclaims and/or complete releases are against public policy and,
therefore, null and void.
On the grant of the service awards, performance and anniversary
bonus.
 Atty. Maria Christina
Since each of the complainants have rendered services to
respondent in multiple(s) of five years prior to their separation
from employment, respondent should be paid their service awards
for 1990. Service awards are governed by respondent's employee's
manual and (are) therefore contractual in nature.
We cannot see any cogent reason why an anniversary bonus which
respondent gives only once in every five years were given to all
employees of respondent as of 15 November 1990 and not to
complainants who have rendered service to respondent for most of
the five year cycle. This is also true in the case of performance
bonus which were given to permanent employees of respondent as
of 30 March 1991 and not to employees who have been connected
with respondent for most of 1990 but were separated prior to 30
March 1991.
The authorities hold that if one enters into a contract of
employment under an agreement that he shall be paid a certain
salary by the week or some other stated period and, in addition, a
bonus, in case he serves for a specified length of time, there is no
reason for refusing to enforce the promise to pay the bonus, if the
employee has served during the stipulated time, on the ground that
it was a promise of a mere gratuity.
This is true if the contract contemplates a continuance of the
employment for a definite term, and the promise of the bonus is
made at the time the contract is entered into. If no time is fixed for
the duration of the contract of employment, but the employee
enters upon or continues in service under an offer of a bonus if he
remains therein for a certain time, his service, in case he remains
for the required time, constitutes an acceptance of the offer of the
employer to pay the bonus and, after that acceptance, the offer
cannot be withdrawn, but can be enforced by the employee.
The weight of authority in American jurisprudence, with which we
are persuaded to agree, is that after the acceptance of a promise
by an employer to pay the bonus, the same cannot be withdrawn,
but may be enforced by the employee. However, in the case at bar,
equity demands that the performance and anniversary bonuses
should be prorated to the number of months that petitioners
actually served respondent company in the year 1990. This
observation should be taken into account in the computation of the
amounts to be awarded to petitioners.
IS THERE AN UNUSUAL CIRCUMSTANCE IN THIS CASE? COMPARE AND CONTRAST
WITH THE CASES OF TRADERS AND MANILABANK.
Petitioners here are relieved from duty on the ground of
redundancy, which is contrary to Traders and Manilabanks reason
financial losses.
WOULD THE SC RULE IN THE SAME WAY IF THE SAME ISSUE OF PROFITABILITY
IN TRADERS AND MANILABANK IS PRESENT HERE?
Looking at the facts, the subject is performance bonus. Thus, the
court would have ruled in the same way since the kind of bonus
involved here is different from the 2 previous cases.
99 persons (petitioners) were rank & file employees of Empire Food
Products. They filed a complaint for payment of money claims and
for violations of labor standards laws.
23 Oct 90: Empire & the employees entered into a MOA, where Labor
Congress of the Philippines and its Local Chapter as the sole &
exclusive bargaining agent and representative for all rank & file
S. Sagm it
employees of Empire, regarding their wages, hours of work, & other
terms & conditions.
MOA was approved by Mediator Cortez & LCP was certified as the
bargaining agent among the employees of Empire.
23 Jan 91: Petitioners filed a complaint for unfair labor practice,
union busting thru harassments, threats, & interfering with rights
employees to self-organization, violation of MOA, & underpayment
of wages.
LA failed to rule on the other benefits prayed for by petitioners,
such as the holiday pay, premium pay, 13th month pay & service
incentive leave.
WON THE EMPLOYEES ARE ENTITLED TO THE BENEFITS THEY CLAIM
Yes. Although the employees are piece-rate workers, they were
regular employees are Empire. First, as to the nature of petitioners'
tasks, their job of repacking snack food was necessary or desirable
in the usual business of Empire, who were engaged in the
manufacture and selling of such food products. Second, petitioners
worked for Empire throughout the year, their employment not
having been dependent on a specific project or season. Third, the
length of time that petitioners worked for Empire. Thus, while
petitioners' mode of compensation was on a "per piece basis," the
status and nature of their employment was that of regular
employees.
The Rules Implementing the Labor Code exclude certain employees
from receiving benefits such as nighttime pay, holiday pay, service
incentive leave and 13th month pay field personnel and other
employees whose time and performance is unsupervised by the
employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed
amount for performing work irrespective of the time consumed in
the performance thereof.
Plainly, petitioners as piece-rate workers do not fall within this
group. Not only did petitioners labor under the control of Empire as
their employer, likewise did petitioners toil throughout the year
with the fulfillment of their quota as supposed basis for
compensation.
As to overtime pay: the workers who are paid by results including
those who are paid on piece-work, takay, pakiao, or task basis, if
their output rates are in accordance with the standards prescribed
under Sec. 8, Rule VII, Book III are not entitled to receive overtime
pay. However, Empire did not allege adherence to the standards set
forth in Sec. 8 nor with the rates prescribed by the Secretary of
Labor. As such, petitioners are beyond the ambit of exempted
persons and are therefore entitled to overtime pay.
There are two kinds of payment by result:
(1) Where the employer supervises the employees; and
(2) Where the control and supervision is as to the time.
For those who are supervised, there are also 2 kinds:
(1) The rate is determined by DOLE; or
(2) The rate is determined by the employer.
When we talk of rate determined by the employer, all the benefits under
the Labor Code must be given. However, if the rate given was the product
of the Time and Motion Study of DOLE, even if you do not give minimum
wage, you do not violate the law.
 Atty. Maria Christina
[Cheesecurls Case] If there was supervision, and if the actual time was
determined, then they cannot be considered as those exempted.
JOB OF THE PLAINTIFF/ RESPONSIBILITIES:
They were hired as driver/mechanic and helper, respectively, in
trucking firm of Bernardo Jiminez, JJ Trucking in December 1987.
They were assigned to a ten-wheeler truck to haul soft drinks of
Coca-Cola Bottling Company and paid on commission basis, initially
fixed at 17% but later increased to 20% in 1988.
CAUSES OF ACTION
On June 29, 1990, herein private respondent Pedro and Fredelito
Juanatas, father and son, filed a claim for unpaid
wages/commissions, separation pay and damages against JJ's
Trucking and/or Dr. Bernardo Jimenez. Said respondents, as
complainants therein, alleged that in December, 1987,
ALLEGATIONS OF THE PLAINTIFF:
1.) For the years 1988 and 1989 they received only a partial
commission of P84, 000.00 from petitioners' total gross
income of almost P1, 000,000.00 for the said two years.
Consequently, with their commission for that period
being computed at 20% of said income, there was an
unpaid balance to them of P106,211.86;
2.) That until March, 1990 when their services were illegally
terminated, they were further entitled to P15,050.309
which, excluding the partial payment of P7,000.00,
added up to a grand total of P114,261.86 due and
payable to them;
3.) That petitioners' refusal to pay their aforestated
commission was a ploy to unjustly terminate them.
DEFENSES OF THE DEFENDANT:
1.) Fredelito Juanatas was not an employee of the firm but
was merely a helper of his father Pedro;
2.) THAT All commissions for 1988 and 1989, as well as
those up to March, 1990, were duly paid;
3.) And that the truck driven by respondent Pedro Juanatas
was sold to one Winston Flores in 1991 and, therefore,
private respondents were not illegally dismissed.
WHETHER OR NOT PRIVATE RESPONDENTS WERE NOT PAID THEIR
COMMISSIONS IN FULL, AND WHETHER OR NOT RESPONDENT FREDELITO
JUANATAS WAS AN EMPLOYEE OF JJ'S TRUCKING.
(1) We find no reason to disturb the findings of respondent NLRC
that the entire amount of commissions was not paid, this BY REASON
OF THE EVIDENT FAILURE OF HEREIN PETITIONERS TO PRESENT EVIDENCE
THAT FULL PAYMENT THEREOF HAS BEEN MADE.
It is a basic rule in evidence that each party must prove his
affirmative allegation. Since the burden of evidence lies with the
party who asserts an affirmative allegation, the plaintiff or
complainant has to prove his affirmative allegations in the
complaint and the defendant or respondent has to prove the
affirmative allegations in his affirmative defenses and
counterclaim. Considering that petitioners herein assert that the
disputed commissions have been paid, they have the bounden duty
to prove that fact.
S. Sagm it
As a general rule, one who pleads payment has the burden of
proving it. 9 Even where the plaintiff must allege non-payment, the
general rule is that the burden rests on the defendant to prove
payment, rather than on the plaintiff to prove non-payment. 10 The
debtor has the burden of showing with legal certainty that the
obligation has been discharged by payment.
When the existence of a debt is fully established by the evidence
contained in the record, the burden of proving that it has been
extinguished by payment devolves upon the debtor who offers such
a defense to the claim of the creditor. 12 Where the debtor
introduces some evidence of payment, the burden of going forward
with the evidence as distinct from the general burden of proof
shifts to the creditor, who is then under a duty of producing some
evidence to show non-payment.
In the instant case, the right of respondent Pedro Juanatas to be
paid a commission equivalent to 17%, later increased to 20%, of
the gross income is not disputed by petitioners. Although private
respondents admit receipt of partial payment, petitioners still have
to present proof of full payment.
Where the defendant sued for a debt admits that the debt was
originally owed, and pleads payment in whole or in part, it is
incumbent upon him to prove such payment. That a plaintiff admits
that some payments have been made does not change the burden
of proof. The defendant still has the burden of establishing
payments beyond those admitted by plaintiff.
The testimony of petitioners which merely denied the claim of
private respondents, unsupported by documentary evidence, is not
sufficient to establish payment. Although petitioners submitted a
notebook showing the allegedvales of private respondents for the
year 1990, the same is inadmissible and cannot be given probative
value considering that it is not properly accomplished, is undated
and unsigned, and is thus uncertain as to its origin and
authenticity.
The positive testimony of a creditor may be sufficient of itself to
show non-payment, even when met by indefinite testimony of the
debtor. Similarly, the testimony of the debtor may also be sufficient
to show payment, but, where his testimony is contradicted by the
other party or by a disinterested witness, the issue may be
determined against the debtor since he has the burden of proof. The
testimony of the debtor creating merely an inference of payment
will not be regarded as conclusive on that issue.
Hence, for failure to present evidence to prove payment, petitioners
defaulted in their defense and in effect admitted the allegations of
private respondents.
(2) The father is declared to be employee as an employee of the
Trucking Firm while the son is not. The Court applied the four-fold
test.
The agreement was between petitioner JJ's Trucking and
respondent Pedro Juanatas. The hiring of a helper was discretionary
on the part of Pedro. Under their contract, should he employ a
helper, he would be responsible for the latter's compensation. With
or without a helper, respondent Pedro Juanatas was entitled to the
same percentage of commission. Respondent Fredelito Juanatas
was hired by his father, Pedro, and the compensation he received
was paid by his father out of the latter's commission. Further,
Fredelito was not subject to the control and supervision of and
dismissal by petitioners but of and by his father.
 Atty. Maria Christina
WHAT MUST BE THE FORM OF PAYMENT OF WAGE? HOW OFTEN?
[Book III, Rule VIII, Sec. 3 of IRR] Wages shall be paid not less often
than once every 2 weeks or twice a month at intervals not
exceeding 16 days, unless payment cannot be made with such
regularity due to force majeure or circumstances beyond the
employers control, in which case the employer shall pay the wages
immediately after such force majeure or circumstances have
ceased.
HOW ABOUT DIFFERENT MODES OF PAYMENT?
[Book III, Rule VIII, Sec. 1 of IRR] As a general rule, wages shall be
paid in legal tender and the use of tokens, promissory notes,
vouchers, coupons, or any other form alleged to represent legal
tender is absolutely prohibited even when expressly requested by
the employee.
HOW SHOULD IT BE DONE?
Generally, it should be done manually. However, there are
exceptions.
Payment of wages by ATM is now allowed under a Labor Advisory
dated November 25, 1996.
[Rule III, Book VIII, Sec. 2 of IRR] Payment of wages by bank checks,
postal checks, or money orders is allowed where such manner of
wage payment is customary on the date of the effectivity of the
Code, where it is stipulated ina collective agreement, or where all
of the following conditions are met: (1) There is a bank or other
facility for encashment within a radius of one kilometer (1km) from
the workplace; (2) The employer, or any of his agents or
representatives, does not receive any pecuniary benefit directly or
indirectly from the arrangement; (3) The employees are given
reasonable time during banking hours to withdraw their wages from
the bank which time shall be considered as compensable hours
worked if done during working hours; and (4) The payment by check
is with the written consent of the employees concerned if there is
no collective agreement authorizing the payment of wages by bank
checks.
The burden of proving that payment has been made rests on the
employer. Absent any proof that payment has been made, the court will
rule in favor of the employee.
Place of payment, subject to the ATM rule.
AN ACT TO RATIONALIZE WAGE POLICY DETERMINATION BY
ESTABLISHING THE MECHANISM AND PROPER STANDARDS THEREFOR,
AMENDING FOR THE PURPOSE ARTICLE 99 OF, AND INCORPORATING
ARTICLES 120, 121, 122, 123, 124, 126 AND 127 INTO,
PRESIDENTIAL DECREE NO. 442, AS AMENDED, OTHERWISE KNOWN
AS THE LABOR CODE OF THE PHILIPPINES, FIXING NEW WAGE RATES,
PROVIDING WAGE INCENTIVES FOR IN DUSTRIAL DISPERSAL TO THE
COUNTRYSIDE, AND FOR OTHER PURPOSES
Section 7. Upon written permission of the majority of the
employees or workers concerned, all private establishments,
companies, businesses, and other entities with twenty five
(25) or more employees and located within one (1) kilometer
radius to a commercial, savings or rural bank shall pay the
wages and other benefits of their employees through any of
said banks and within the period of payment of wages fixed by
Presidential Decree No. 442, as amended, otherwise known as
the Labor Code of the Philippines.
S. Sagm it
WHAT ARE THE EXCEPTIONS TO DIRECT PAYMENT?
Art. 105. Direct payment of wages. Wages shall be paid directly
to the workers to whom they are due, except:
1) In cases of force majeure rendering such payment impossible
or under other special circumstances to be determined by the
Secretary of Labor and Employment in appropriate regulations, in
which case, the worker may be paid through another person under
written authority given by the worker for the purpose; or
2) Where the worker has died, in which case, the employer may
pay the wages of the deceased worker to the heirs of the latter
without the necessity of intestate proceedings. The claimants, if
they are all of age, shall execute an affidavit attesting to their
relationship to the deceased and the fact that they are his heirs,
to the exclusion of all other persons. If any of the heirs is a minor,
the affidavit shall be executed on his behalf by his natural
guardian or next-of-kin. The affidavit shall be presented to the
employer who shall make payment through the Secretary of Labor
and Employment or his representative. The representative of the
Secretary of Labor and Employment shall act as referee in dividing
the amount paid among the heirs. The payment of wages under
this Article shall absolve the employer of any further liability wi th
respect to the amount paid.
WHAT IS THE RULE WITH RESPECT TO CLAIMS FOR LABOR STANDARDS?
Halimbawa, janitor ng isang agency, gusto magdemanda. Anong rule
dyan, sino ang pwede mademanda?
Art. 109. Solidary liability - The provisions of existing laws to the
contrary notwithstanding, every employer or indirect employer
shall be held responsible with his contractor or subcontractor for
any violation of any provision of this Code. For purposes of
determining the extent of their civil liability under this Chapter,
they shall be considered as direct employers.
The principal is in need of services, and the services are not necessary
and desirable to the main business. For example, security or janitorial
services, these are what you call auxiliary services. Do you see companies
hiring janitors or guards as regulars? No. What they do is they go to a
contractor (manpower agency) and enter into a service agreement with
the contractor and then the contractor will now find people who will be
providing the auxiliary services. And you call these people contractors
employees. Strictly speaking, the employment contract is between the
contractor and the employee. The contractor is the one exercising control
and supervision over said employees. This is the legitimate contracting
under the law: Independent contracting. The contractor has substantial
capitalization, 3 million. The 3 million may be in the form of money or in
the form of tools or equipment. Hindi talaga pure cash. Si contractor
independent tawag sa kanya. It carries on an independent business with
many clients, hindi lang isang company. The principal and employees,
strictly speaking, wala silang relasyon. What 106 to 109 is telling us is
that even in this ideal situation is that if the contractor doesnt give all
that we discussed ---- like walang holiday pay, walang 13th month pay,
walang SIL---- if any of those labor standards benefits is not given, it can
now run after the principal. Kasi solidary liability. Sabay silang liable.
Dapat madali para sa empleyado ang maghabol. Yan ang point ng 106 -
209.
Kaya my point is, even if you are a legitimate principal, you are not spared
from liability. Common mistake of employers, mag-aagency sila para safe
sila. No. The principal is still liable.
 Atty. Maria Christina
What if your contractor has no substantial capital? What if ang trabaho
na ginagawa is necessary and desirable? Chef and restaurant? Teacher
and school? You are now entering the realm of labor contracting. Which
means the principal is actually the employer of this people. These
employees will now become regular employees. The liability will depend if
it is independent contracting or labor-only contracting. So if its
independent contracting, you only become liable for labor standards. But
for labor-only contractors, then you now become the employer. Lahat ng
obligations ng employer, ikaw dapat magbigay.
E FF E CT OF L A B O R - O NL Y- CO NT RA CTI N G
1) The subcontractor will be treated as the agent of the principal, and
representations by the subcontractor to the employees will bind
the principal.
2) The principal will become the employer as if it directly employed the
workers, and will be responsible for all their entitlements and
benefits under the labor laws.
3) The principal and the subcontractor will be solidarily treated as the
employer.
4) The employees will become employees of the principal, subject to
the classifications of employees under Article 280 of the Labor
Code.
S U M MA R Y O F P R O H I B IT E D LA B O R CO N T RA CT I N G
Sec 5 and 6 of D.O. No 18-02
1) Labor Only Contracting generally prohibited
2) Contracting that terminates the employment of regular employees,
or reduces their work hours or reduces or splits a bargaining unit,
if such contracting out is not done in good faith and not justified by
business exigencies.
3) Contracting with a Cabo
CABO refers to a person or group of persons or to a labor
group which in the guise of a labor organization, supplies
workers to an employer, with or without any monetary or
other consideration whether in the capacity of an agent of the
employer or as an ostensible independent contractor
4) Contracting with in-house agency
5) Contracting because of a strike or lockout
6) Contracting that constitutes unfair labor practice under Article 248
Philippine Bank of Communications and the Corporate Executive
Search Inc. (CESI) entered into a letter agreement dated January
1976 under which (CESI) undertook to provide "Tempo[rary]
Services" to petitioner Consisting of the "temporary services" of
eleven (11) messengers. The contract period is described as being
"from January 1976." The petitioner in truth undertook to pay a
"daily service rate of P18, " on a per person basis.
Ricardo Orpiada was thus assigned to work with the petitioner
bank. As such, he rendered services to the bank, within the
premises of the bank and alongside other people also rendering
services to the bank. The position paper submitted by (CESI) to the
National Labor Relations Commission stated that (CESI) hired
Ricardo Orpiada on 25 June 1975 as a Tempo Service employee, and
assigned him to work with the petitioner bank "as evidenced by the
appointment memo issued to him on 25 June 1975. " Be that as it
may, on or about October 1976, the petitioner requested (CESI) to
withdraw Orpiada's assignment because, in the allegation of the
bank, Orpiada's services "were no longer needed." On 29 October
1976, Orpiada instituted a complaint in the Department of Labor
S. Sagm it
(now Ministry of Labor and Employment) against the petitioner for
illegal dismissal and failure to pay the 13th month pay provided for
in Presidential Decree No. 851.
WHAT IS THE NATURE OF THE RELATIONSHIP BETWEEN THE BANK AND
(CESI)?
Articles 106 and 107 of the Labor Code of the Philippines
(Presidential Decree No. 442, as amended) provides as follows: ART.
106. Contractor or sub-contractor.Whenever an employer enters
into a contract with another person for the performance of the
former's work, the employees of the contractor and of the lat ter's
subcontractor, if any, shall be paid in accordance with the
provisions in this Code.
The complainants here were employed by the security agency as
security guards. They worked previously in different offices and
establishments but were later transferred to Rosewood Processing.
A complaint or illegal dismissal; underpayment of wages; and for
nonpayment of overtime pay, legal holiday pay, premium pay for
holiday and rest day, thirteenth month pay, cash bond deposit,
unpaid wages and damages was filed against Veterans Philippine
Scout Security Agency and/or Sergio Jamila IV. Rosewood was
thereafter impleaded as a third-party respondent by the security
agency. The Labor Arbiter ruled that Rosewood was jointly and
severally liable with the security agency as the complainants direct
employer pursuant to Articles 106, 107 and 109 of the Labor Code.
W/N Rosewood is solidarily liable with the security agency for the
payment of back wages, wage differential and separation pay.
ROSEWOOD IS LIABLE ONLY FOR WAGE DIFFERENTIALS
Fairness likewise dictates that the petitioner should not, be held
liable for wage differentials incurred while the complainants were
assigned to other companies. Under these cited provisions of the
Labor Code, should the contractor fail to pay the wages of its
employees in accordance with law, the indirect employer
(Rosewood), is jointly and severally liable with the contractor, but
such responsibility should be understood to be limited to the
extent of the work performed under the contract, in the same
manner and extent that he is liable to the employees directly
employed by him.
WHETHER OR NOT A VALID AND BINDING EMPLOYER-EMPLOYEE
RELATIONSHIP HAD EXISTED BETWEEN PETITIONER CORPORATION AND
APOLINARIO.
Petitioners contention: that Apolinario was not its own employee
but, rather, an independent contractor who conducted his own
separate business under the trade name of "VM Automotive Repair
Service" and had his own "Contract Workers."
Many other factors are present which demonstrate that that
relationship is properly characterized as one of employer-employee.
We conclude, further, that the same factors indicate the existence
of a "labor-only" contracting arrangement between petitioner
Corporation on the one hand as owner, and upon the other hand,
Apolinario as "labor-only" contractor and his "Contract Workers."
We note firstly that, under the Work Contract, Apolinario supplied
only "labor and supervision (over his "Contract Workers") in the
performance of automotive body painting work which the company
 Atty. Maria Christina
(i.e., Broadway Motors) may from time to time, award to him under
(the) contract." Apolinario also undertook to "hire and bring in
additional workers as may be required by the company, to handle
additional work load or to accelerate or facilitate completion of work
in process. Petitioner Corporation supplied all the tools, equipment,
machinery and materials necessary for Apolinario to carry out his
assigned painting jobs, which painting jobs were executed by
Apolinario and his men within the premises owned and maintained
by petitioner Corporation. The control and direction exercised by
petitioner Corporation over the work done by Apolinario and his
"Contract Workers" was well- nigh complete, as indicated earlier.
There was, furthermore, no evidence adduced by petitioner
Corporation to show that Apolinario had substantial capital
investment in "VM Automotive Repair Service" or that "VM
Automotive Repair Service" carried on, in its own premises, a car
repair business operation separate and distinct from that engaged
in by petitioner Corporation, an operation the tools or equipment of
which were owned by Apolinario and the customers of which were
not customers of Broadway Motors. What the evidence of record
reveals is that the alleged "Contract Work" carried out by Apolinario
and his "Contract Workers," excepting overtime work, was
performed during regular working hours six (6) days in a week,
which circumstance must have made it virtually impossible for them
to carry on any additional and independent auto painting business
outside the premises of Broadway Motors. Finally, Apolinario and his
men were engaged in the performance of a line of work
automobile painting which was directly related to, if not an
integral part altogether of the regular business operations of
petitioner Corporation i.e., that of an automotive repair shop.
WON BCC is engaged in labor-only contracting
No. BCC need not prove that it made investments in the form of
tools, equipment, machineries, work premises, among others,
because it has established that it has sufficient capitalization. BCC
had a capital stock of P1M fully subscribed and paid for. BCC is
therefore a highly capitalized venture and cannot be deemed
engaged in "labor-only" contracting. There is "labor-only"
contracting where: (a) the person supplying workers to an
employer does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises, among
others; and, (b) the workers recruited and placed by such person
are performing activities which are directly related to the principal
business of the employer.
Based on the foregoing, BCC cannot be considered a "labor only"
contractor because it has substantial capital. While there may be
no evidence that it has investment in the form of tools, equipment,
machineries, work premises, among others, it is enough that it has
substantial capital. The law does not require both substantial
capital & investment in the form of tools, equipment, machineries,
etc. this is clear from the use of the conjunction or. Having
established that it has substantial capital, it was no longer
necessary for BCC to further adduce evidence to prove that it does
not fall within the purview of "laboronly" contracting. There is even
no need for it to refute Neri's contention that the activities they
perform are directly related to the principal business of FEB.
W/N LIVI IS AN INDEPENDENT CONTRACTOR THEREBY ABSOLVING
CALIFORNIA FROM ANY LIABILITY AS EMPLOYER OF THE PETITIONERS. NO.
S. Sagm it
Californias 1st contention: LIVI is an independent contractor as its
business manpower services is separate and distinct from
Californias general business of manufacturing.
The bare fact that LIVI maintains a separate line of business does
not extinguish the equal fact that it has provided California with
workers to pursue the latters own business. It is not then, as if LIVI
had served as Californias sales agent, but it was the Petitioners
who work as promotional merchandisers of California. LIVI simply
supplied California with the manpower necessary to carry out
Californias merchandising activities, using Californias premises
and equipment. While LIVI is admittedly and independent
contractor providing temporary services of manpower to its client,
when it thus provided California with manpower, LIVI supplied
California with personnel, as if such personnel had been directly
hired by California. Hence, Article 106 applies. LIVI is a labor -only
contractor and a mere agent of California.
Hence, California is the direct employer of the Petitioners and
therefore liable to the Petitioners by operation of law. It would have
been different if LIVI was a promotions firm and California had hired
it to perform the latters merchandising activities. For then, LIVI
would be the true employer of the Petitioners and California would
have been a mere patron.
Californias 2nd contention: Petitioners have been hired on a
temporary or seasonal basis.
NO MERIT. Under Art. 218, they became regular employees after one
year service, since their initial 6-month contracts were
subsequently renewed for another 6 months.
W/N CALIFORNIA IS LIABLE TO PETITIONERS. YES. CALIFORNIAS
CONTENTION: VALID RETRENCHMENT DUE TO FINANCIAL DISTRESS
BROUGHT ABOUT BY UNFAVORABLE POLITICAL AND ECONOMIC
ATMOSPHERE COUPLED BY THE FEBRUARY REVOLUTION
NO MERIT. No substantial evidence other than self -serving claims.
WON LIPERCON SERVICES IS AN INDEPENDENT CONTRACTOR AND THAT
PETITIONERS ARE ITS EMPLOYEES. OR (UNDER THE TOPIC OF SOLIDARY
LIABILITY) WON THE PRIVATE RESPONDENTS (PRS) LIPERCON AND
NOVELTY ARE SOLIDARILY LIABLE TO PETITIONERS HEREIN.
NO. Decision of NLRC is set aside and that of the Labor Arbiter is
reinstated. OR NO solidary liability in this case, Novelty is solely
liable to herein petitioners.
Whether or not an agricultural laborer who was hired on pakyaw
basis can be considered an employee entitled to compulsory
coverage and corresponding benefits.
YES. The mandatory coverage under the SSS Law (Republic Act No.
1161, as amended by PD 1202 and PD 1636) is premised on the
existence of an employer-employee relationship. There is no
question that Tana was selected and his services engaged by either
Ayalde herself, or by Antero Maghari, her overseer. Corollarily, they
also held the prerogative of dismissing or terminating Tanas
employment. The dispute is in the question of payment of wages.
Margarita Tana and her corroborating witnesses testified that her
husband was paid daily wages per quincena as well as on pakyaw
basis. Ayalde, on the other hand, insists that Tana was paid solely
on pakyaw basis.
 Atty. Maria Christina
WON Basiao is an employee or an independent contractor
RULING: BASIAO is an independent contractor. The claim for unpaid
commission should have been filed in the regular courts in an
ordinary civil action. No employer-employee relationship between a
commission agent and an investment company, but that the former
was an independent contractor where said agent and others
similarly placed were: (a) paid compensation in the form of
commissions based on percentages of their sales, any balance of
commissions earned being payable to their legal representatives in
the event of death or registration; (b) required to put up
performance bonds; (c) subject to a set of rules and regulations
governing the performance of their duties under the agreement
with the company and termination of their services for certain
causes; (d) not required to report for work at any time, nor to
devote their time exclusively to working for the company nor to
submit a record of their activities, and who, finally, shouldered their
own selling and transportation expenses.
W/N Encarnacion is an employee of Gersher or Petrophil. Gersher
The SC agreed with the Labor Arbiter that respondent Encarnacion
was the employee of respondent Gersher and not petitioner
Petrophil. This fact was admitted by no less than Gersher in its
position paper which it filed with the Labor Relations Division of the
then Department of Labor. The Payrolls of respondent Gersher also
show that respondent Encarnacion was its employee. For the period
from March 15, 1976 and continuously up to March 31, 1977,
respondent Encarnacion was receiving his salary from respondent
Gersher. There was never an instance during this period that
Encarnacion received his salary from Petrophil Corporation.
ARTICLE 109. Solidary liability. The provisions of existing laws to
the contrary notwithstanding, every employer or indirect
employer shall be held responsible with his contractor or
subcontractor for any violation of any provision of this Code. For
purposes of determining the extent of their civil liability under
this Chapter, they shall be considered as direct employers.
I would like to emphasize that the liability is not only with respect to labor
standards. Just like an ordinary employer, the contractor will be liable to
that extent. Also, the contractor is a mere agent. But in one decided case,
despite the fact that the contractor is an agent, it was made solidary
liable for the wages of the workers.
On January 1, 1988, Rhone-Poulenc acquired from Union Carbide the
latters agro-chemical formulation plant in Mandaluyong. Prior to
the sale Union Carbide entered into a contract with CSI for the
latters supply of janitorial services. During the transition period,
Union Carbide continued to avail itself of CSIs janitorial services.
But on March 1988, Union Carbide formally notified CSI of the
termination of their janitorial service agreement because of the
global buy-out of Rhone-Poulenc of its business.
The janitors assigned to Union Carbide were issued by CSI a
memorandum for their reassignment but they refused to
acknowledge it. When the janitors reported for work at Union
Carbides Namayan Plant, they were refused admission. They then
S. Sagm it
filed separate complaints for illegal dismissal against Union Carbide,
Rhone and CSI.
WHETHER OR NOT THE JANITORS WERE EMPLOYEES OF UNION CARBIDE;
WHETHER OR NOT CSI IS A LABOR-ONLY CONTRACTOR; AND
WHETHER OR NOT PETITIONER RHONE-POULENC ABSORBED THE
JANITORS INTO ITS WORKFORCE.
1. No, the janitors are not the employees of Union Carbide
There is no employer-employee relationship between Union Carbide
and the respondent janitors. The respondents themselves admitted
that they were selected and hired by CSI and were assigned to Union
Carbide. CSI likewise acknowledged that the two janitors were its
employees. The janitors drew their salaries from CSI and not fro m
Union Carbide. CSI exercised control over these janitors through
Richard Barroga, also a CSI employee, who gave orders and
instructions to CSI janitors assigned to the Namayan plant.
Moreover, CSI had the power to assign its janitors to various clients
and to pull out, as it had done in a number of occasions, any of its
janitors working at Union Carbide.
2. CSI is not a labor-only contractor but an independent contractor.
As to whether CSI is engaged in labor-only contracting or in job
contracting, applying the test prescribed by the Labor Code and the
implementing rules, we find sufficient basis from the records to
conclude that CSI is engaged in job contracting. As correctly
declared by the labor arbiter:
Moreover, CSI is a legitimate service contractor. It is registered as
one and doing business as such with a number of known companies
in the country. It has a contract with UCFEI to assign janitorial and
ground services to the latter for a fee. The complainants' work were
basically janitorial and gardening chores. The tools of their trade
were supplied by CSI. Of course, we are aware of the complainants'
claim that they were made to do chores which are production jobs.
Yet, there is no showing of regularity or permanence of such
assignment. Those occasional errands cannot be considered as
genuine control of UCFEI over the complainants.
3. No, Rhone-Poulenc did not absorb the janitors into its work force.
It must be stressed that the janitorial service agreement between
Union Carbide and CSI binds only the two, and not petitioner Rhone-
Poulenc. As new owner, Rhone-Poulenc had every right to choose its
own service contractor.
WHAT WAS THE ISSUE HERE?
Whether or not the janitors were employees of Rhone-Poulenc;
What was the Ruling of the SC? There was a claim that there was
regular employment because the janitors continued to work during
the 3-month transition period, how did the SC deal with that issue?
The contract did not involve Rhone-Poulenc and yet it enjoyed the
janitorial services during the 3-month transition period thats why
there is a claim for regularization and how did the SC deal with that
issue?
No. During the three-month transition period prior to Union
Carbide's turnover of the facilities, the service contract between
Union Carbide and CSI was still in force. Whatever benefit the
petitioner derived from the continuous availment by Union Carbide
of the services of CSI's janitors was merely incidental.
 Atty. Maria Christina
You must be able to determine between legitimate and labor-only
contracting.You must know the terminologies. You must know the
requisites for a valid or legitimate contracting. You must know
substantial capitalization means. Be familiar with definition of
terms and connect it with the present situation (decided cases).
J O B C O N T R A C T I N G . There is job contracting permissible under the Code
if the following conditions are met:
(1) The contractor carries on an independent business and undertakes
the contract work on his own account under his own responsibility
according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with
the performance of the work except as to the results thereof; and
(2) The contractor has substantial capital or investment in the form of
tools, equipment, machineries, work premises, and other materials
which are necessary in the conduct of his business.
LABOR-ONLY CONTRACTING.
(a) Any person who undertakes to supply workers to an employer shall
be deemed to be engaged in labor-only contracting where such
person:
(1) Does not have substantial capital or investment in the
form of tools, equipment, machineries, work premises
and other materials; and
(2) The workers recruited and placed by such person are
performing activities which are directly related to the
principal business or operations of the employer in
which workers are habitually employed.
(b) Labor-only contracting as defined herein is hereby prohibited and
the person acting as contractor shall be considered merely as an
agent or intermediary of the employer who shall be responsible to
the workers in the same manner and extent as if the latter were
directly employed by him.
S U B S T A N T I A L C A P I T A L required capitalization according to
jurisprudence is P1M. But capitalization now is P 500,000.
If there is no capitalization even if there is compliance with the
nature of work, it is still only a labor-only contracting
If you have capitalization only but the nature of work is not met
still labor-only contracting
ART. 110. Worker preference in case of bankruptcy. - In the event
of bankruptcy or liquidation of an employers business, his
workers shall enjoy first preference as regards their wages and
other monetary claims, any provisions of law to the contrary
notwithstanding. Such unpaid wages and monetary claims shall be
paid in full before claims of the government and other creditors
may be paid.
WHATS THE PREFERENCE ACCORDING TO 110?
In cases of bankruptcy or liquidation, workers are given priority
with regard to their claims in relation to the services they rendered.
ASSUMING THAT THERE IS JUDICIAL DECLARATION OF INSOLVENCY AND THERE
ARE MANY CLAIMS BY SEVERAL CREDITORS, DOES THIS MEAN THAT THE CLAIMS
OF THE WORKERS WILL BE PRIORITIZED?
Not necessarily. Article 110 of the Labor Code must be read
together with Articles 2241, 2241 and 2244 of the New Civil Code.
ARTICLE 2241. With reference to specific movable property of the
debtor, the following claims or liens shall be preferred:
S. Sagm it
(1) Duties, taxes and fees due thereon to the State or any
subdivision thereof;
(2) Claims arising from misappropriation, breach of trust,
or malfeasance by public officials committed in the
performance of their duties, on the movables, money
or securities obtained by them;
(3) Claims for the unpaid price of movables sold, on said
movables, so long as they are in the possession of the
debtor, up to the value of the same; and if the movable
has been resold by the debtor and the price is still
unpaid, the lien may be enforced on the price; this
right is not lost by the immobilization of the thing by
destination, provided it has not lost its form,
substance and identity; neither is the right lost by the
sale of the thing together with other property for a
lump sum, when the price thereof can be determined
proportionally;
(4) Credits guaranteed with a pledge so long as the things
pledged are in the hands of the creditor, or those
guaranteed by a chattel mortgage, upon the things
pledged or mortgaged, up to the value thereof;
(5) Credits for the making, repair, safekeeping or
preservation of personal property, on the movable
thus made, repaired, kept or possessed;
(6) Claims for laborers wages, on the goods
manufactured or the work done;
(7) For expenses of salvage, upon the goods salvaged;
(8) Credits between the landlord and the tenant, arising
from the contract of tenancy on shares, on the share
of each in the fruits or harvest;
(9) Credits for transportation, upon the goods carried, for
the price of the contract and incidental expenses,
until their delivery and for thirty days thereafter;
(10) Credits for lodging and supplies usually furnished to
travellers by hotel keepers, on the movables belonging
to the guest as long as such movables are in the hotel,
but not for money loaned to the guests;
(11) Credits for seeds and expenses for cultivation and
harvest advanced to the debtor, upon the fruits
harvested;
(12) Credits for rent for one year, upon the personal
property of the lessee existing on the immovable
leased and on the fruits of the same, but not on money
or instruments of credit;
(13) Claims in favor of the depositor if the depositary has
wrongfully sold the thing deposited, upon the price of
the sale. In the foregoing cases, if the movables to
which the lien or preference attaches have been
wrongfully taken, the creditor may demand them from
any possessor, within thirty days from the unlawful
seizure .
ARTICLE 2242. With reference to specific immovable property and
real rights of the debtor, the following claims, mortgages and
liens shall be preferred, and shall constitute an encumbrance on
the immovable or real right:
(1) Taxes due upon the land or building;
(2) For the unpaid price of real property sold, upon the
immovable sold;
(3) Claims of laborers, masons, mechanics and other
workmen, as well as of architects, engineers and
contractors, engaged in the construction,
reconstruction or repair of buildings, canals or other
works, upon said buildings, canals or other works;
 Atty. Maria
(4) Claims of furnishers of materials used in the
construction, reconstruction, or repair of buildings,
canals or other works, upon said buildings, canals or
other works;
(5) Mortgage credits recorded in the Registry of Property,
upon the real estate mortgaged;
(6) Expenses for the preservation or improvement of real
property when the law authorizes reimbursement,
upon the immovable preserved or improved;
(7) Credits annotated in the Registry of Property, in virtue
of a judicial order, by attachments or executions, upon
the property affected, and only as to later credits;
(8) Claims of co-heirs for warranty in the partition of an
immovable among them, upon the real property thus
divided;
(9) Claims of donors or real property for pecuniary
charges or other conditions imposed upon the donee,
upon the immovable donated;
(10) Credits of insurers, upon the property insured, for the
insurance premium for two years.
ARTICLE 2244. With reference to other property, real and personal,
of the debtor, the following claims or credits shall be preferred in
the order named:
(1) Proper funeral expenses for the debtor, or children under
his or her parental authority who have no property of
their own, when approved by the court;
(2) Credits for services rendered the insolvent by employees,
laborers, or household helpers for one year preceding the
commencement of the proceedings in insolvency;
(3) Expenses during the last illness of the debtor or of his or
her spouse and children under his or her parental
authority, if they have no property of their own;
(4) Compensation due the laborers or their dependents under
laws providing for indemnity for damages in cases of
labor accident, or illness resulting from the nature of the
employment;
(5) Credits and advancements made to the debtor for
support of himself or herself, and family, during the last
year preceding the insolvency;
(6) Support during the insolvency proceedings, and for three
months thereafter;
(7) Fines and civil indemnification arising from a criminal
offense;
(8) Legal expenses, and expenses incurred in the
administration of the insolvents estate for the common
interest of the creditors, when properly authorized and
approved by the court;
(9) Taxes and assessments due the national government,
other than those mentioned in articles 2241, No. 1, and
2242, No. 1;
(10) Taxes and assessments due any province, other than
those referred to in articles 2241, No. 1, and 2242, No. 1;
(11) Taxes and assessments due any city or municipality,
other than those indicated in articles 2241, No. 1, and
2242, No. 1;
(12) Damages for death or personal injuries caused by a quasi-
delict;
(13) Gifts due to public and private institutions of charity or
beneficence;
2. (14) Credits which, without special privilege, appear in
(a) a public instrument; or (b) in a final judgment, if they
have been the subject of litigation. These credits shall
have preference among themselves in the order of
Christina S. Sagm it
priority of the dates of the instruments and of the
judgments, respectively.
WHAT DO YOU MEAN BY ORDINARY CREDITORS?
Ordinary creditors are persons on whose favor a debt was
constituted without any security.
WHAT IS THE DIFFERENCE BETWEEN 2241 AND 2242 ON ONE HAND, AND 2242
WITH THE OTHER?
The properties under 2241 (movables) and 2242 (immovables) are
subject to a lien while under 2244 is not subject to any lien. Which
means that liens over specific properties must be satisfied first
before the order of priority in 2244 is followed.
Example: Isang araw may lumapit sayo, nangunutang. Mukhang
mayaman; maganda and bag; maganda ang relo; maganda ang alahas;
maganda ang kotse; madanga ang bahay; mukhang maraming pera sa
bangko. So pinautang mo. And di mo alam, ang sasakyan naka
mortgage sa bangko. And bahay at kotse pinarepair and di pa
nabayaran ang repairman. May pera sa bangko 1,000,000. Kaya lang
may utang siya na 2,000,000. Special preferred to sila (mortgagee,
repairman). Wala dito yung laborers wages except for the job done for
the repair of the house. So yung repairman na hindi nabayaran para sa
repair sa kotse at bahay, specific yan, nakalista yan sa 2241 at 2242.
If you take a look at 110, it would seem that the worker is highly
prioritized. Yes, but only with respect to the loose change, those without
any lien. So yung argument nung mga workers na dapat mauna kami sa
creditors, it only holds true when there is no lien, there is no mortgage
or not in the enumeration in 2241 and 2242.
NOTE: Regardless of the presence of a judicial declaration of insolvency,
the laborers are preferred only after all liens are satisfied.
If you take a look at 2244, first in the enumeration is funeral expenses.
But this has been overtaken by number 2 (employees) by virtue of the
DBP cases.
So pag kayo ang nagpapautang, siguraduhin niyo na isa kayo sa 2241 or
2242.
The employees won monetary claims against Riverside Mills
Corporation. After the judgment had become final and executory, a
writ of execution was issued to levy the properties of RMC but the
auction sale was prevented by a writ of possession issued in favor
of DBP. DBP obtained a writ of possession on June 7, 1985 of all the
properties of RMC after having extra-judicially foreclosed the same
at public auction earlier in 1983. The employees then filed a petition
with the NLRC to declare their preference over the levied properties.
The Labor Arbiter sustained the employees position.
DBP maintains that the public respondent misinterpreted Article
110 of the Labor Code and Section 10, Rule VIII, Book III of the
Revised Rules and Regulations Implementing the Labor Code in that
the said respondent upheld the existence of the worker's
preference over and above earlier encumbrances on the properties
of RMC despite the absence of any bankruptcy or liquidation
proceeding instituted against the latter. The petitioner argues that
there must be a judicial declaration, or at the very least, a
cognizance by an appropriate court or administrative agency of
bankruptcy or inability of the employer to meet its obligations.
 Atty. Maria Christina
Is Article 110 applicable? NO.
It is quite clear from the provisions that a declaration of bankruptcy
or a judicial liquidation must be present before the worker's
preference may be enforced. Thus, Article 110 of the Labor Code and
its implementing rule cannot be invoked by the respondents in this
case absent a formal declaration of bankruptcy or a liquidation
order. Following the rule in Republic v. Peralta, supra, to hold that
Article 110 is also applicable in extra-judicial proceedings would be
putting the worker in a better position than the State which could
only assert its own prior preference in case of a judicial proceeding.
Therefore, as stated earlier, Article 110 must not be viewed in
isolation and must always be reckoned with the provisions of the
Civil Code.
IN THE SECOND DBP CASE, WHAT WAS THE RULING OF THE SC?
We, therefore, hold that Labor Arbiter committed grave abuse of
discretion in ruling that the private respondents may enforce their
first preference in the satisfaction of their claims over those of the
petitioner in the absence of a declaration of bankruptcy or judicial
liquidation of RMC. There is, of course, nothing in this decision which
prevents the respondents from instituting involuntary insolvency
or any other appropriate proceeding against their employer RMC
where respondents' claims can be asserted with respect to their
employer's assets.
WHAT WAS THE ISSUE IN THE FIRST DBP CASE?
Whether or not Article 110 is applicable. The Supreme Court said
No. Article 110 of the Labor Code and its implementing rule cannot
be invoked by the respondents in this case absent a formal
declaration of bankruptcy or a liquidation order.
A decision was rendered by the NCR Director of MOLE in favor of the
employees of Riverside Mills Corporation. The case involves a
complaint for illegal dismissal, unfair labor practice, illegal
deductions from salaries and violation of the minimum wage.
However, the writ of execution was returned unserved and
unsatisfied because DBP had instituted extra-judicial foreclosure
proceedings as early as 1983 on the properties and other assets of
RMC as a result of the latter's failure to meet its obligations on the
loans it secured from petitioner.
Private respondents contended that pursuant to Article 110 of the
Labor Code, they enjoy first preference and an automatic lien over
the mortgaged properties of. They also contended that the terms
"bankruptcy" or "liquidation" are broad enough to cover a situation
where there is a cessation of the operation of the employer's
business as in the case at bar.
Petitioner contended that Article 110 of the Labor Code finds no
application in the case at bar for the following reasons: (1) The
properties sought to be delivered have ceased to belong to RMC in
view of the fact that petitioner had foreclosed on the mortgage, and
the properties have been sold and delivered to third parties; (2) The
requisite condition for the application of Article 110 of the Labor
Code is not present since no bankruptcy or insolvency proceedings
over RMC properties and assets have been undertaken
IN THE CASE OF PNB V. CRUZ, WHY WAS THERE APPLICATION OF 110?
MOLE ruled in favor of private respondents and dismissed
petitioner's motion for reconsideration.
WHETHER OR NOT ARTICLE 110 OF THE LABOR CODE APPLIES IN THE CASE
AT BAR. NO
S. Sagm it
It is clear from the wording of the law that the preferential right
accorded to employees and workers under Article 110 may be
invoked only during bankruptcy or judicial liquidation proceedings
against the employer. The law is unequivocal and admits of no other
construction. In the case at bar, there is only a cessation of the
operation of the employers business.
What Article 110 of the Labor Code establishes is not a lien, but a
preference of credit in favor of employees. This simply means tha t
during bankruptcy, insolvency or liquidation proceedings involving
the existing properties of the employer, the employees have the
advantage of having their unpaid wages satisfied ahead of certain
claims which may be proved therein.
Article 110 may be invoked only during bankruptcy or judicial
liquidation proceedings against the employer. The law is
unequivocal and admits of no other construction. In the case at bar,
there is only a cessation of the operation of the employers
business. Hence, there can be no application of Article 110.
AMEX laid-off about 70% of its employees because it was
experiencing business reverses. The retained employees
constituting 30% of the work force however, were not paid their
wages. This non-payment of salaries went on until July 1982 when
AMEX completely ceased operations and instead entered into an
operating agreement with T.M. San Andres Development Corporation
whereby the latter would be leasing the equipment and machineries
of AMEX.
The unpaid employees sought redress from the Labor Arbiter who
rendered a decision finding their claim valid and meritorious. And
that if AMEX is unable to satisfy the claims, the same can be
satisfied from the proceeds or fruits of its machineries and
equipment being operated by respondent T.M. San Andres Dev.
Corp.
PNB, in its capacity as mortgagee-creditor of AMEX interposed an
appeal. The appeal was primarily based on the allegation that the
workers' lien covers unpaid wages only and not the termination or
severance pay which the workers likewise claimed they were
entitled to.
WHETHER OR NOT ARTICLE 110 COVERS UNPAID WAGES ONLY AND NOT
TERMINATION PAY.
For purposes of the application of Article 110, "termination pay is
reasonably regarded as forming part of the remuneration or other
money benefits accruing to employees or workers by reason of their
having previously rendered services..." Hence, separation pay must
be considered as part of remuneration for services rendered or to
be rendered.
Indeed Article 110 of the Labor Code, as amended, aforecited, now
provides that the workers' preference covers not only unpaid wages
but also other monetary claims.
No! Article 110 is not applicable. There is no insolvency nor
bankruptcy in this case. Only suspension of payment.
 Atty. Maria Christina
Suspension of payments is a close relative of bankruptcy, the
difference being in bankruptcy the company is saying that it can no
longer pay all its creditors, all the debts will be considered as gone)
So if after declaration of bankruptcy and its approval you won the
jackpot in the lotto, you will not obliged to pay.
WHAT DO YOU MEAN BY SUSPENSION OF PAYMENTS?
It is the scheduling of payments at dates later than the original
maturity date. In short, the debts are not gone, just deferred.
WAS THERE APPLICATION OF 110 IN PNB?
NO.
WERE THEY PAID? WASNT THERE APPLICATION OF 110?
There was payment. The reason being PNB did not question the
claims earlier on and not because of the application of Article 110.
Rubberworld is a domestic corporation which used to be in the
business of manufacturing footwear, bags and garments. It filed
with the Securities and Exchange Commission a petition for
suspension of payments.
In an order dated December 28, 1994, the SEC favorably ruled on the
petition for suspension of payments.
Private respondents, who claim to be employees of petitioner
corporation, filed against petitioners [from] April to July 1995
their respective complaints for illegal dismissal, unfair labor
practice, damages and payment of separation pay, retirement
benefits, 13th month pay and service incentive pay.
Petitioners moved to suspend the proceedings in the above labor
cases on the strength of the SEC Order.
The Labor Arbiter denied the aforesaid motion holding that the
injunction contained in the SEC Order applied only to the
enforcement of established rights and did not include the
suspension of proceedings involving claims against petitioner
which have yet to be ascertained. The Labor Arbiter further held
that the order of the SEC suspending all actions for claims against
petitioners does not cover the claims of private respondents in the
labor cases because said claims and the concomitant liability of
petitioners still had to be determined, thus carrying no dissipation
of the assets of petitioners.
Petitioners appealed the adverse order of the Labor Arbiter to
public respondent NLRC which dismissed the appeal for lack of merit
and, instead, sustained the rulings of the Labor Arbiter.
WHETHER OR NOT THE EXECUTION OF MONEY CLAIMS IN THE CASE AT
BAR CAN BE STAYED. YES
"xxx where the petition filed is one for declaration of a state of
suspension of payments due to a recognition of the inability to pay
one's debts and liabilities, and where the petitioning corporation
either: (a) has sufficient property to cover all its debts but foresees
the impossibility of meeting them when they fall due (solvent but
illiquid) or (b) has no sufficient property (insolvent) but is under
the management of a rehabilitation receiver or a management
committee, the applicable law is P.D. 902-A pursuant to Section 5
par. (d) thereof.
S. Sagm it
However, if the petitioning corporation has no sufficient assets to
cover its liabilities and is not under a rehabilitation receiver or a
management committee created under P.D. 902-A and does not
seek merely to have the payments of its debts suspended, but
seeks a declaration of insolvency xxx the applicable law is Act 1956
[The Insolvency Law] on voluntary insolvency, xxx.
In the case at bar, Petitioner Rubberworld filed before the SEC a
Petition for Declaration of Suspension of Payments, as well as a
propose rehabilitation plan. On December 28, 1994, the SEC ordered
the creation of a management committee and the suspension of all
actions for claim against Rubberworld.
Upon the appointment [by, the SEC] of a management committee
or a rehabilitation receiver," all actions for claims against the
corporation pending before any court, tribunal or board shall ipso
jure be suspended.
The law is clear: upon the creation of a management committee or
the appointment of rehabilitation receiver, all claims for actions
"shall be suspended accordingly." No exception in favor of labor
claims is mentioned in the law. Since the law makes no distinction
or exemptions, neither should this Court.
IN THE CASE OF RUBBERWORLD, WHAT WAS THE SITUATION HERE?
Rubberworld in under rehabilitation.
WHY IS THERE AUTOMATIC STAY? WHATS THE BASIS FOR THE NON-EXECUTION
OF THE DECISION?
PD 902-A, as amended, the relevant provisions of which read:
Sec. 5. In addition to the regulatory adjudicative functions of the
Commission over corporations, partnerships and other forms of
associations registered with it as expressly granted under existing
laws and decrees, it shall have original and exclusive jurisdiction to
hear and decide cases involving:
xxx xxx xxx
d) Petitions of corporations, partnerships or associations to be
declared in the state of payments in cases where the corporation,
partnership or association possesses sufficient property to cover all
its debts regulatory but foresees the impossibility of meeting them
when they respectively fall due or in cases where the corporation,
partnership or association has no sufficient assets to cover its
liabilities, but is under the management of a rehabilitation receiver or
management committee created pursuant to this Decree.
Sec. 6. In order to effectively exercise such jurisdiction, the
Commission shall possess the following powers:
xxx xxx xxx
c) To appoint one or more receivers of the property, real or personal,
which is the subject of the action pending before the Commission in
accordance with the pertinent provisions of the Rules of Court in such
other cases whenever necessary in order to preserve the rights of the
parties-litigants and/or protect the interest of the investing public
and creditors: . . . Provided, finally, That upon appointment of a
management committee, the rehabilitation receiver, board or body,
pursuant to this Decree, all actions for claims against corporations,
partnerships, or associations under management or receivership
pending before any court, tribunal, board or body shall be suspended
accordingly.
 Atty. Maria Christina
IS THERE AN INSOLVENCY?
NO, suspension of payments only to cater the rehabilitation of the
Rubberworld.
Its a matter of plugging the values.
WHAT IS THE FACT THAT PREVENTS EXECUTION?
Rehabilitation giving them the chance to recover. All claims shall
be stayed even if there is a final decision.
In this case, the fact that there is already a management committee
or employment of rehabilitation receiver will stay execution
proceedings in all claims or actions.
ARTICLE 124. A wage distortion shall mean a situation where an
increase in prescribed wage rates results in the elimination or
severe contraction of intentional quantitative differences in wage
or salary rates between and among employee groups in an
establishment as to effectively obliterate the distinctions
embodied in such wage structure based on skills, length of
service, or other logical bases of differentiation.
In the present case, it is clear that no wage distortion resulted
when respondent implemented the subject Wage Orders in the
covered branches. In the said branches, there was an increase in the
salary rates of all pay classes. Furthermore, the hierarchy of
positions based on skills, length of service and other logical bases
of differentiation was preserved. In other words, the quantitative
difference in compensation between different pay classes remained
the same in all branches in the affected region. Put differently, the
distinction between Pay Class 1 and Pay Class 2, for example, was
not eliminated as a result of the implementation of the two Wage
Orders in the said region. Hence, it cannot be said that there was a
wage distortion.
A wage parity between employees in different rungs is not at issue
here, but a wage disparity between employees in the same rung but
located in different regions of the country.
A disparity in wages between employees holding similar positions
but in different regions does not constitute wage distortion as
contemplated by law. As previously enunciated, it is the hierarchy
of positions and the disparity of their corresponding wages and
other emoluments that are sought to be preserved by the concept
of wage distortion. Put differently, a wage distortion arises when a
wage order engenders wage parity between employees in different
rungs of the organizational ladder of the same establishment. It
bears emphasis that wage distortion involves a parity in the salary
rates of different pay classes, which, as a result, eliminates the
distinction between the different ranks in the same region.
SUGGESTED FORMULA FOR CORRECTING WAGE
DISTORTION
1. PINEDA
2. PINEDA-CRUZ
3. PERCENTILE APPROACH
4. PHILIPPINE CONSTRUCTION SUPPLY FORMULA
5. JODA FORMULA
S. Sagm it
6. WIREROPE FORMULA
7. BAGTAS APPROACH
IS THIS APPLICABLE WITH EMPLOYEES RECEIVING LESS THAN 1,000?
MEMORANDUM ORDER 28: that all employees are hereby required to
pay all their rank-and-file employees a 13th month pay not later
than December 24 of every year.
WHOE ARE THE EXEMPTED EMPLOYERS?
(PD 851, SECTION 3)
(a) Distressed employers, such as (1) those which are
currently incurring substantial losses or (2) in the case
of non-profit institutions and organizations, where their
income, whether from donations, contributions, grants
and other earnings from any source, has consistently
declined by more than forty (40%) percent of their
normal income for the last two (2) years, subject to the
provision of Section 7 of this issuance;
(b) The Government and any of its political subdivisions,
including government-owned and controlled
corporations, except those corporations operating
essentially as private subsidiaries of the Government;
(c) Employers already paying their employees 13-month pay
or more in a calendar year of its equivalent at the time of
this issuance;
(d) Employers of household helpers and persons in the
personal service of another in relation to such workers;
and
(e) Employers of those who are paid on purely commission,
boundary, or task basis, and those who are paid a fixed
amount for performing a specific work, irrespective of the
time consumed in the performance thereof, except where
the workers are paid on piece-rate basis in which case the
employer shall be covered by this issuance insofar as
such workers are concerned.
Section 2. (a) "Thirteenth-moth pay" shall mean one twelfth
(1/12) of the basic salary of an employee within a calendar year;
IS AN EMPLOYEE WHO HAS WORKED FOR 2 MONTHS ENTITLED?
YES, MEMORANDIM ORDER 28: Such employees are entitled to the
benefit regardless of their designation or employment status, and
irrespective of the method by which their wages are paid, provided
that they have worked for at least one (1) month during a calendar
year.
WHETHER UNDER PD 851, CAC IS OBLIGED TO GIVE ITS WORKERS A 13 TH
MONTH SALARY IN ADDITION TO CHRISTMAS, MILLING & AMELIORATION
BONUSES
NO. The evident intention of the law, as revealed by the law itself,
was to grant an additional income in the form of a 13th month pay
to employees not already receiving the same. Otherwise put, the
 Atty. Maria Christina
intention was to grant some relief not to all workers but only
to the unfortunate ones not actually paid a 13th month salary or
what amounts to it, by whatever name called; but it was not
envisioned that a double burden would be imposed on the employer
already paying his employees a 13th month pay or its equivalent
whether out of pure generosity or on the basis of a binding
agreement and, in the latter ease, regardless of the conditional
character of the grant (such as making the payment dependent on
profit), so long as there is actual payment. Otherwise, what was
conceived to be a 13th month salary would in effect become a 14th
or possibly 15th month pay.
ACCORDING TO MAAM: --bAsta yung computation is the same or over
1/12, there is already compliance.
WHETHER DOLE IS OBLIGED TO GIVE ITS WORKERS 13 TH MONTH PAY IN
ADDITION TO THE YEAR-END PRODUCTIVITY BONUS
NO. It becomes clear that the year-end productivity bonus granted
by petitioner to respondents pursuant to their CBA is, in legal
contemplation, an integral part of their 13th month pay,
notwithstanding its conditional nature. When, therefore,
petitioner, in order to comply with the mandate of PD No. 851,
credited the year-end productivity bonus as part of the 13th month
pay and adopted the procedure of paying only the difference
between said bonus and 1/12th of the worker's yearly basic salary,
it acted well within the letter and spirit of the law and its
implementing rules. For in the event that "an employer pays less
than one-twelfth of the employees' basic salary, all that said
employer is required to do under the law is to pay the difference."
WHETHER KAMAYA IS OBLIGED TO PAY ITS EMPLOYEES 14 TH MONTH PAY
NO. There is no law that mandates the payment of the 14th month
pay. This is emphasized in the grant of exemption under
Presidential Decree 851, which states: "Employers already paying
their employees a 13th month pay or its equivalent are not covered
by this Decree." Necessarily then, only the 13th month pay is
mandated. Having enjoyed the additional income in the form of the
13th month pay, respondents' insistence on the 14th month pay for
1982 is already an unwarranted expansion of the liberality of the
law.
WHETHER THE EMPLOYERS ARE STILL OBLIGED TO PAY 13 TH MONTH PAY
TO ITS WORKERS DESPITE GIVING THEM NON-MONETARY BENEFITS.
YES. Section 3 of PD No. 851 provides that such benefits in the form
of food or free electricity, assuming they were given, were not a
proper substitute for the 13th month pay required by law. PD 851
provides:
Section 3. Employees covered The Decree shall apply to all
employees except to:
The term 'its equivalent' as used in paragraph (c) hereof shall
include Christmas bonus, mid-year bonus, profit-sharing payments
and other cash bonuses amounting to not less than 1/12 of the
basic salary but shall not include cash and stock dividends, cost of
S. Sagm it
living allowances and all other allowances regular ly enjoyed by the
employee, as well as non-monetary benefits.
Where an employer pays less than 1/12 of the employee's basic
salary, the employer shall pay the difference."
Neither may year-end rewards for loyalty and service be considered
in lieu of 13th month pay. Section 10 of the Rules and Regulations
Implementing Presidential Decree No. 851 provides:
Section 10. Prohibition against reduction or elimination of benefits-
Nothing herein shall be construed to authorize any employer to
eliminate, or diminish in any way, supplements, or other employee
benefits or favorable practice being enjoyed by the employee at the
time of promulgation of this issuance."
WHETHER IN THE COMPUTATION OF THE 13 TH MONTH PAY UNDER PD
851, PAYMENTS FOR SICK, VACATION OR MATERNITY LEAVES, PREMIUM
FOR WORK DONE ON REST DAYS AND SPECIAL HOLIDAYS INCLUDING PAY
FOR REGULAR HOLIDAYS AND NIGHT DIFFERENTIALS SHOULD BE
CONSIDERED.
NO. Under PD 851, the basic salary of an employee is used as the
basis in the determination of his 13 th month pay. Any
compensations or remunerations, which are deemed not part of the
basic pay is excluded as basis in the in the computation of the
mandatory bonus.
Under the IRR of PD 851, the following compensations are deemed
not part of the basic salary:
a) Cost-of-living allowances granted pursuant to Presidential
Decree 525 and Letter of Instructions No. 174; b) Profit sharing
payments; c) All allowances and monetary benefits which are not
considered or integrated as part of the regular basic salary of tile
employee at the time of the promulgation of the Decree on
December 16, 1975.
Overtime pay, earnings and other remunerations are excluded as
part of the basic salary and in the computation of the 13th-month
pay.
The exclusion of cost-of-living allowances under PD 525 and Letter
of Instructions No. 174, and profit sharing payments indicate the
intention to strip basic salary of other payments which are properly
considered as "fringe" benefits. Likewise, the catch-all exclusionary
phrase "all allowances and monetary benefits which are not
considered or integrated as part of the basic salary" shows also the
intention to strip basic salary of any and all additions which may be
in the form of allowances or "fringe" benefits.
The all-embracing phrase "earnings and other renumeration" which
are deemed not part of the basic salary includes within its meaning
payments for sick, vacation, or maternity leaves. Maternity
premium for works performed on rest days and special holidays
pays for regular holidays and night differentials. As such they are
deemed not part of the basic salary and shall not be considered in
the computation of the 13th-month they, were not so excluded.
It is clear that overtime pay is an additional compensation other
than and added to the regular wage or basic salary, for reason of
which such is categorically excluded from the definition of basic
salary under the Supplementary Rules and Regulations
Implementing PD 851.
 Atty. Maria Christina
WHETHER THE SALES COMMISSIONS SHOULD BE INCLUDED IN THE
COMPUTATION OF THE 13 TH MONTH PAY.
YES. The sales commissions received for every duplicating machine
sold constituted part of the basic compensation or remuneration of
the salesmen of Philippine Duplicators for doing their job. The
portion of the salary structure representing commissions simply
comprised an automatic increment to the monetary value initially
assigned to each unit of work rendered by a salesman. Especially
significant here also is the fact that the fixed or guaranteed portion
of the wages paid to the Philippine Duplicators' salesmen
represented only 15%-30% of an employee's total earnings in a
year.
The sales commissions were an integral part of the basic salary
structure of Philippine Duplicators' employees salesmen. These
commissions are not overtime payments, nor profit-sharing
payments nor any other fringe benefit. Thus, the salesmen's
commissions, comprising a pre-determined percent of the selling
price of the goods sold by each salesman, were properly included in
the term "basic salary" for purposes of computing their 13th month
pay.
IMPORTANT: both productivity bonuses and sales commissions may
have an incentive effect. But there is reason to distinguish one from
the other here. Productivity bonuses are generally tied to the
productivity or profit generation of the employer corporation.
Productivity bonuses are not directly dependent on the extent an
individual employee exerts himself. A productivity bonus is
something extra for which no specific additional services are
rendered by any particular employee and hence not legally
demandable, absent a contractual undertaking to pay it. Sales
commissions, on the other hand, such as those paid in Duplicators,
are intimately related to or directly proportional to the extent or
energy of an employee's endeavors. Commissions are paid upon the
specific results achieved by a salesman-employee. It is a
percentage of the sales closed by a salesman and operates as an
integral part of such salesman's basic pay.
WHETHER THE DRIVERS & CONDUCTORS, PAID ON A COMMISSION BASIS,
ARE ENTITLED TO 13 TH MONTH PAY.
YES. Every employee receiving a commission in addition to a fixed
or guaranteed wage or salary, is entitled to a 13th month pay. For
purposes of entitling rank and file employees a 13th month pay, it
is immaterial whether the employees concerned are paid a
guaranteed wage plus commission or a commission with
guaranteed wage inasmuch as the botton line is that they receive a
guaranteed wage.
while the bus drivers and conductors of respondent company are
considered by the latter as being compensated on a commission
basis, they are not paid purely by what they receive as commission.
As admitted by respondent company, the said bus drivers and
conductors are automatically entitled to the basic minimum pay
mandated by law in case the commissions they earned be less than
their basic minimum for (8) hours work. Evidently therefore, the
commissions form part of the wage or salary of the bus drivers and
conductors. A contrary interpretation would allow an employer to
skirt the law and would result in an absurd situation where an
employee who receives a guaranteed minimum basic pay cannot be
entitled to a 13th month pay simply because he is technically
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referred to by his employer per the CBA as an employee
compensated on a purely commission basis.
Commission is the recompense, compensation, reward of an
employee, agent, salesman, executor, trustee, receiver, factor,
broker or bailee, when the same is calculated as a percentage on
the amount of his transactions or on the profit of the principal.
While said commissions may be in the form of incentives or
encouragement to inspire said bus drivers and conductors to put a
little more zeal and industry on their jobs, still, it is safe to say that
the same are direct remunerations for services rendered, given the
small remuneration they receive for the services they render, which
is precisely the reason why respondent allowed the drivers and
conductors a guaranteed minimum wage.
In sum, the 13th month pay of the bus drivers and conductors who
are paid a fixed or guaranteed minimum wage in case their
commissions be less than the statutory minimum, and commissions
only in case where the same is over and above the statutory
minimum, must be equivalent to one-twelfth (1/12) of their total
earnings during the calendar year.
WHETHER MAMUYAC IS ENTITLED TO 6, 635 AS A 13 TH MONTH PAY.
YES. The 13th month pay of an individual is (not less than) (1/12)
of the total basic salary earned by an employee within a calendar
year. Moreover, in No. 6 thereof, it is provided that an employee who
has resigned or whose services were terminated at any time before
the time for payment of the 13th month pay is entitled to this
monetary benefit in proportion to the length of time he worked
during the year, reckoned from the time he started working during
the calendar year up to the time of his resignation or termination
from the service. Thus, if he worked only from January up to
September, his proportionate 13th month pay should be equivalent
to the total basic salary he earned during that period.
Since no evidence was adduced by respondent that petitioners
observe a different formula in the computation of the 13th month
pay for their employees, the aforementioned mode of computation
should be applied. Thus, considering that in 1989 respondent
rendered service for only 6 months, her 13th month pay should be
(1/12) of the total compensation she received for that year, that
is, P7,319.00. Consequently her 13th month pay for the year 1989
should be P610.00. Following the same formula, respondent should
receive a 13th month pay of P850,00 for the year 1990 for services
rendered for three months wherein she received a total
compensation of P10,205.00, that is, P10,205.00 divided by 12
equals P850.00.
ACCORDING TO MAAM: As long as the person rendered service at
least 1 month, she is entitled to the pay proportional 13 th month
pay.
WHETHER THE RESPONDENTS ARE ENTITLED TO 13 TH MONTH PAY.
YES. Petitioners have no basis to claim that the company is
exempted from complying with the pertinent provisions of the law
relating to the payment of 13th month compensation.
 Atty. Maria Christina
The Pl,000.00 salary ceiling provided in PD No. 851 pertains to basic
salary, not total monthly compensation. The petitioners admit that
the respondents work only five days a week and that they each
receive a basic daily wage of P40.00 only. A simple computation of
the basic daily wage multiplied by the number of working days in a
month results in an amount of less than Pl,000.00. Thus, there is
no basis for the contention that the company is exempted from the
provision of Presidential Decree No. 851 which mandated the
payment of 13th month compensation to employees receiving less
than P1,000.00 a month.
Even assuming, arguendo, that the respondents are each paid a
monthly salary of over Pl,000.00, the company is still not in a
position to claim exemption. The rules and regulations
implementing Presidential Decree No. 851 provide that a distressed
employer shall qualify for exemption from the requirements of the
Decree only upon prior authorization from the Secretary of Labor
and Employment. As correctly pointed out by the Solicitor General,
no such prior authorization had been obtained by the petitioner
firm.
IF DECIDED TODAY: ENTITLED TO 13 TH MONTH PAY, MORE THAN 1,000,
THE EMPLOYER IS STILL LIABLE.
WHETHER THE GOVERNMENT EMPLOYEES ARE COVERED UNDER PD 851.
NO. An analysis of the "whereases" of P.D. No. 851 shows that the
President had in mind only workers in private employment when he
issued the decree. There was no intention to cover persons working
in the government service. What the P.D. No. 851 intended to cover,
as explained in the prefatory statement of the Decree, are only
those in the private sector whose real wages require protection
from world-wide inflation. This is emphasized by the "whereas"
clause which states that 'there has been no increase in the legal
minimum wage rates since 1970'. This could only refer to the
private sector, and not to those in the government service because
at the time of the enactment of Presidential Decree No. 851 in 1975,
only the employees in the private sector had not been given any
increase in their minimum wage. The employees in the government
service had already been granted in 1974 a ten percent across-the-
board increase on their salaries
To say that the words "all employers" in P.D. No. 851 includes the
Government and all its agencies, instrumentalities, and
government-owned or controlled corporations would also result in
nightmarish budgetary problems.
BASIC PRINCIPLE: Covered with Corporation Code, LABOR CODE.
With an original charter: CIVIL SERVICE
WHETHER SALAFRANCA IS ENTITLED TO 13 TH MONTH PAY.
NO. With respect to the issue that petitioner, being a managerial
employee, is not entitled to thirteenth month pay, Memorandum
Order No. 28, as implemented by the Revised Guidelines on the
Implementation of the 13th Month Pay Law dated November 16,
1987, provides:
Section 1 of Presidential Decree No. 851 is hereby modified to the
extent that all employers are hereby required to pay all their rank
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and file employees a 13th month pay not later than December 24 of
every year.
Clearly, therefore, the foregoing exempts managerial employees
from this benefit. Of course, this does not preclude an employer
from granting other bonuses, in lieu of the 13th month pay, to
managerial employees in its discretion.
ARTICLE 111. Attorneys fees.
a. In cases of unlawful withholding of wages, the culpable
party may be assessed attorneys fees equivalent to
ten percent of the amount of wages recovered.
b. It shall be unlawful for any person to demand or
accept, in any judicial or administrative proceedings
for the recovery of wages, attorneys fees which
exceed ten percent of the amount of wages recovered.
Art. 222. Appearances and Fees.
Non-lawyers may appear before the Commission or any Labor
Arbiter only:
a. If they represent themselves; or
b. If they represent their organization or members
thereof.
No attorneys fees, negotiation fees or similar charges of any kind
arising from any collective bargaining agreement shall be imposed
on any individual member of the contracting union: Provided,
However, that attorneys fees may be charged against union
funds in an amount to be agreed upon by the parties. Any
contract, agreement or arrangement of any sort to the contrary
shall be null and void.
WHETHER THE REDUCTION OF TAGANAS CONTINGENT FEE IS WARRANTED.
YES. A contingent fee arrangement is an agreement laid down in an
express contract between a lawyer and a client in which the lawyer's
professional fee, usually a fixed percentage of what may be recovered
in the action is made to depend upon the success of the litigation. This
arrangement is valid in this jurisdiction. It is, however, under the
supervision and scrutiny of the court to protect clients from unjust
charges. Section 13 of the Canons of Professional Ethics states that "a
contract for a contingent fee, where sanctioned by law, should be
reasonable under all the circumstances of the case including the risk
and uncertainty of the compensation, but should always be subject to
the supervision of a court, as to its reasonableness".
The 50% of the judgment award as attorneys fees is excessive and
unreasonable.
IMPORTANT: Petitioner's contingent fee falls within the purview of
Article 111 of the Labor Code. This article fixes the limit o n the amount
of attorney's fees, which a lawyer, like petitioner, may recover in any
judicial or administrative proceedings since the labor suit where he
represented private respondents asked for the claim and recovery of
wages. The court is not even precluded from fixing a lower amount than
the ten percent ceiling prescribed by the article when circumstances
warrant it. Nonetheless, considering the circumstances and the able
handling of the case, petitioner's fee need not be further reduced. The
contingent fee was unreasonable and unconscionable.