Labor Law Articles 82 - 93

Articles 82 -93 Book III Title I Chapters 1-2 Labor Code 1

David v. Macasio (G.R. No. 195466, July 2, 2014) 1
Annotations: 1
Digest: 2
Robina Farms Cebu v. Villa (G.R. No. 175869, April 18, 2016) 3
Annotations: 3
Digest: 4
Brotherhood Labor Unity Movement v. Zamora (G.R. No. L-48645, January 7, 1987) 5
Annotations: 5
Digest: 5
NWSA v. NWSA Consolidated Unions (G.R. No. L-18938, August 31, 1964) 6
Annotations: 6
Digest: 7
National Sugar Refineries Corporation vs. NLRC (G.R. No. 101761, March 24, 1993) 8
Annotations: 8
Digest: 9
San Miguel Brewery, Inc. vs. Democratic Labor Org. (G.R. No. L-18353, July 31, 1963) 10
Annotations: 10
Digest: 10

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Articles 82 -93 Book III Title I Chapters 1-2 Labor Code

David v. Macasio (G.R. No. 195466, July 2, 2014)

Annotations:
1. Remedial Law; Civil Procedure; Appeals; Petition for Review on Certiorari; In this Rule 45
petition for review on certiorari of the Court of Appeals’ (CA’s) decision rendered under a Rule
65 proceeding, the Supreme Court’s (SC’s) power of review is limited to resolving matters
pertaining to any perceived legal errors that the CA may have committed in issuing the assailed
decision.—In this Rule 45 petition for review on certiorari of the CA’s decision rendered under a Rule
65 proceeding, this Court’s power of review is limited to resolving matters pertaining to any
perceived legal errors that the CA may have committed in issuing the assailed decision. This is in
contrast with the review for jurisdictional errors, which we undertake in an original certiorari action.
In reviewing the legal correctness of the CA decision, we examine the CA decision based on how it
determined the presence or absence of grave abuse of discretion in the NLRC decision before it and
not on the basis of whether the NLRC decision on the merits of the case was correct. In other words,
we have to be keenly aware that the CA undertook a Rule 65 review, not a review on appeal, of the
NLRC decision challenged before it.
2. Labor Law; Pakyaw Basis; Engagement on “pakyaw” or task basis does not characterize the
relationship that may exist between the parties, i.e., whether one of employment or independent
contractorship.—Engagement on “pakyaw” or task basis does not characterize the relationship that
may exist between the parties, i.e., whether one of employment or independent contractorship. Article
97(6) of the Labor Code defines wages as “x x x the remuneration or earnings, however designated,
capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or
commission basis, or other method of calculating the same, which is payable by an employer to an
employee under a written or unwritten contract of employment for work done or to be done, or for
services rendered or to be rendered[.]” In relation to Article 97(6), Article 101 of the Labor Code
speaks of workers paid by results or those whose pay is calculated in terms of the quantity or quality
of their work output which includes “pakyaw” work and other non-time work.
3. Same; Employer-Employee Relationship; Elements of.—To determine the existence of an
employer-employee relationship, four elements generally need to be considered, namely: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and
(4) the power to control the employee’s conduct. These elements or indicators comprise the so-called
“four-fold” test of employment relationship. Macasio’s relationship with David satisfies this test.

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4. Same; Pakyaw Basis; A distinguishing characteristic of “pakyaw” or task basis engagement, as

opposed to straight-hour wage payment, is the non-consideration of the time spent in working.
—A distinguishing characteristic of “pakyaw” or task basis engagement, as opposed to straight-hour
wage payment, is the non-consideration of the time spent in working. In a task-basis work, the
emphasis is on the task itself, in the sense that payment is reckoned in terms of completion of the
work, not in terms of the number of time spent in the completion of work. Once the work or task is
completed, the worker receives a fixed amount as wage, without regard to the standard measurements
of time generally used in pay computation.
5. Same; Holiday Pay; Service Incentive Leave Pay; Field Personnel; Under the Implementing
Rules and Regulations (IRR), exemption from the coverage of holiday and Service Incentive
Leave (SIL) pay refer to “field personnel and other employees whose time and performance is
unsupervised by the employer including those who are engaged on task or contract basis.”—The
general rule is that holiday and SIL pay provisions cover all employees. To be excluded from their
coverage, an employee must be one of those that these provisions expressly exempt, strictly in
accordance with the exemption. Under the IRR, exemption from the coverage of holiday and SIL pay
refer to “field personnel and other employees whose time and performance is unsupervised by the
employer including those who are engaged on task or contract basis[.]” Note that unlike Article 82 of
the Labor Code, the IRR on holiday and SIL pay do not exclude employees “engaged on task basis”
as a separate and distinct category from employees classified as “field personnel.” Rather, these
employees are altogether merged into one classification of exempted employees. Because of this
difference, it may be argued that the Labor Code may be interpreted to mean that those who are
engaged on task basis, per se, are excluded from the SIL and holiday payment since this is what the
Labor Code provisions, in contrast with the IRR, strongly suggest. The arguable interpretation of this
rule may be conceded to be within the discretion granted to the LA and NLRC as the quasi-judicial
bodies with expertise on labor matters.
6. Same; Same; Same; Same; Pakyaw Basis; The payment of an employee on task or pakyaw basis
alone is insufficient to exclude one from the coverage of Service Incentive Leave (SIL) and
holiday pay.—The payment of an employee on task or pakyaw basis alone is insufficient to exclude
one from the coverage of SIL and holiday pay. They are exempted from the coverage of Title I
(including the holiday and SIL pay) only if they qualify as “field personnel.” The IRR therefore
validly qualifies and limits the general exclusion of “workers paid by results” found in Article 82
from the coverage of holiday and SIL pay. This is the only reasonable interpretation since the
determination of excluded workers who are paid by results from the coverage of Title I is “determined
by the Secretary of Labor in appropriate regulations.”
7. Same; Same; Same; Same; In determining whether workers engaged on “pakyaw” or task basis
is entitled to holiday and Service Incentive Leave (SIL) pay, the presence (or absence) of
employer supervision as regards the worker’s time and performance is the key.—In determining
whether workers engaged on “pakyaw” or task basis is entitled to holiday and SIL pay, the presence
(or absence) of employer supervision as regards the worker’s time and performance is the key: if the
worker is simply engaged on pakyaw or task basis, then the general rule is that he is entitled to a
holiday pay and SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker engaged
on pakyaw or task basis also falls within the meaning of “field personnel” under the law, then he is
not entitled to these monetary benefits.
8. Same; 13th Month Pay; As with holiday and service incentive leave pay, 13th month pay
benefits generally cover all employees; an employee must be one of those expressly enumerated
to be exempted. Section 3 of the Rules and Regulations Implementing Presidential Decree (P.D.)
No. 851 enumerates the exemptions from the coverage of 13th month pay benefits.—The
governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13th month pay
benefits generally cover all employees; an employee must be one of those expressly enumerated to be
exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851 enumerates the
exemptions from the coverage of 13th month pay benefits. Under Section 3(e), “employers of those
who are paid on x x x task basis, and those who are paid a fixed amount for performing a specific
work, irrespective of the time consumed in the performance thereof” are exempted. Note that unlike
the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations
Implementing PD No. 851 exempts employees “paid on task basis” without any reference to “field
personnel.” This could only mean that insofar as payment of the 13th month pay is concerned, the law
did not intend to qualify the exemption from its coverage with the requirement that the task worker be
a “field personnel” at the same time.

Digest:
Facts: In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing
business under the name and style “Yiels Hog Dealer,” for non-payment of overtime pay, holiday pay and
13th month pay. He also claimed payment for moral and exemplary damages and attorney’s fees. Macasio
also claimed payment for service incentive leave (SIL) David claimed that he started his hog dealer
business in 2005 and that he only has ten employees. The LA concluded that as Macasio was engaged on

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“pakyaw” or task basis, he is not entitled to overtime, holiday, SIL and 13th month pay. The NLRC
affirmed the LA decision, thus this case reach the CA which says that Macasio is entitled to his monetary
claims following the doctrine laid down in Serrano v. Severino Santos Transit.The CA explained that as a
task basis employee, Macasio is excluded from the coverage of holiday, SIL and 13th month pay only if
he is likewise a “field personnel.”Thus this case reached the SC.

Issue: Whether or not Macasio is entitled of overtime pay, holiday pay, 13th month pay and payment for
service incentive leave.

Held: Yes, in so far as the Holiday and SIL pay is concern. To determine whether workers engaged on
“pakyaw” ortask basis” is entitled to holiday and SIL pay, the presence (or absence) of employer
supervision as regards the worker’s time and performance is the key: if the worker is simply engaged on
pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and SIL pay unless
exempted from the exceptions specifically provided under Article 94 (holiday pay) and Article 95 (SIL
pay) of the Labor Code. However, if the worker engaged on pakyaw or task basis also falls within the
meaning of “field personnel” under the law, then he is not entitled to these monetary benefits. CA that
Macasio does not fall under the definition of “field personnel.” The CA’s finding in this regard is
supported by the established facts of this case: first, Macasio regularly performed his duties at David’s
principal place of business; second, his actual hours of work could be determined with reasonable
certainty; and, third, David supervised his time and performance of duties. Since Macasio cannot be
considered a “field personnel,” then he is not exempted from the grant of holiday, SIL pay even as he was
engaged on “pakyaw” or task basis.
However, the governing law on 13th month pay is PD No. 851. As with holiday and SIL pay, 13th
month pay benefits generally cover all employees; an employee must be one of those expressly
enumerated to be exempted. Section 3 of the Rules and Regulations Implementing P.D. No. 851
enumerates the exemptions from the coverage of 13th month pay benefits. Under Section 3(e),
“employers of those who are paid on task basis, and those who are paid a fixed amount for performing a
specific work, irrespective of the time consumed in the performance thereof are exempted. Note that
unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of the Rules and Regulations
Implementing PD No. 851exempts employees "paid on task basis" without any reference to "field
personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the law did
not intend to qualify the exemption from its coverage with the requirement that the task worker be a "field
personnel" at the same time. Thus Macasio is not entitled to 13th month pay.
Wherefore, the petition was partially granted the petition insofar as the payment of 13th month
pay to respondent is concerned. But all other aspect of the CA’s decision was affirmed.

Robina Farms Cebu v. Villa (G.R. No. 175869, April 18, 2016)

Annotations:
1. Pleadings and Practice; Verification; Being a mere formal requirement, the courts may even
simply order the correction of improperly verified pleadings, or act on the same upon waiving
the strict compliance with the rules of procedure.—Section 4(a), Rule VI of the Amended NLRC
Rules of Procedure requires an appeal to be verified by the appellant herself. The verification is a
mere formal requirement intended to secure and to give assurance that the matters alleged in the
pleading are true and correct. The requirement is complied with when one who has the ample
knowledge to swear to the truth of the allegations in the complaint or petition signs the verification, or
when the matters contained in the petition have been alleged in good faith or are true and correct.
Being a mere formal requirement, the courts may even simply order the correction of improperly
verified pleadings, or act on the same upon waiving the strict compliance with the rules of procedure.
It is the essence of the NLRC Rules of Procedure to extend to every party-litigant the amplest
opportunity for the proper and just determination of his cause, free from the constraints of
technicalities. Accordingly, the substantial compliance with the procedural rules is appreciated in
favor of Villa.
2. Labor Law; Termination of Employment; Retirement; Retirement is the result of a bilateral act
of both the employer and the employee based on their voluntary agreement that upon reaching
a certain age, the employee agrees to sever his employment.—Retirement is the result of a bilateral
act of both the employer and the employee based on their voluntary agreement that upon reaching a
certain age, the employee agrees to sever his employment. The difficulty in the case of Villa arises
from determining whether the retirement was voluntary or involuntary. The line between the two is
thin but it is one that the Court has drawn. On one hand, voluntary retirement cuts the employment
ties leaving no residual employer liability; on the other, involuntary retirement amounts to a
discharge, rendering the employer liable for termination without cause. The employee’s intent is
decisive. In determining such intent, the relevant parameters to consider are the fairness of the process
governing the retirement decision, the payment of stipulated benefits, and the absence of badges of
intimidation or coercion.

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3. Same; Same; Same; Early Retirement Program; In case of early retirement programs, the offer
of benefits must be certain while the acceptance to be retired should be absolute.—In case of
early retirement programs, the offer of benefits must be certain while the acceptance to be retired
should be absolute. The acceptance by the employees contemplated herein must be explicit, voluntary,
free and uncompelled. In Jaculbe v. Silliman University, 518 SCRA 445 (2007), we elucidated that:
[A]n employer is free to impose a retirement age less than 65 for as long as it has the employees’
consent. Stated conversely, employees are free to accept the employer’s offer to lower the retirement
age if they feel they can get a better deal with the retirement plan presented by the employer. Thus,
having terminated petitioner solely on the basis of a provision of a retirement plan which was not
freely assented to by her, respondent was guilty of illegal dismissal.
4. Same; Overtime Pay; Burden of Proof; The burden of proving entitlement to overtime pay rests
on the employee because the benefit is not incurred in the normal course of business.—
Entitlement to overtime pay must first be established by proof that the overtime work was actually
performed before the employee may properly claim the benefit. The burden of proving entitlement to
overtime pay rests on the employee because the benefit is not incurred in the normal course of
business. Failure to prove such actual performance transgresses the principles of fair play and equity.
5. Same; Same; Any employee could render overtime work only when there was a prior
authorization therefor by the management.— The NLRC’s reliance on the daily time records
(DTRs) showing that Villa had stayed in the company’s premises beyond eight hours was misplaced.
The DTRs did not substantially prove the actual performance of overtime work. The petitioner
correctly points out that any employee could render overtime work only when there was a prior
authorization therefor by the management. Without the prior authorization, therefore, Villa could not
validly claim having performed work beyond the normal hours of work.
6. Same; Service Incentive Leave; Although the grant of vacation or sick leave with pay of at least
five (5) days could be credited as compliance with the duty to pay service incentive leave
(SIL), the employer is still obliged to prove that it fully paid the accrued SIL pay to the
employee.—Although the grant of vacation or sick leave with pay of at least five days could be
credited as compliance with the duty to pay service incentive leave, the employer is still obliged to
prove that it fully paid the accrued service incentive leave pay to the employee. The Labor Arbiter
originally awarded the service incentive leave pay because the petitioner did not present proof
showing that Villa had been justly paid. The petitioner submitted the affidavits of Zanoria explaining
the payment of service incentive leave after the Labor Arbiter had rendered her decision. But that was
not enough, for evidence should be presented in the proceedings before the Labor Arbiter, not after
the rendition of the adverse decision by the Labor Arbiter or during appeal. Such a practice of belated
presentation cannot be tolerated because it defeats the speedy administration of justice in matters
concerning the poor workers.

Digest:
FACTS: Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension,
illegal dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay in the
Regional Arbitration Branch No. VII of the NLRC in Cebu City.
On April 21, 2003, Labor Arbiter Violeta Ortiz-Bantug rendered her decision finding that Villa
had not been dismissed from employment.
Although ordering Villa's reinstatement, the Labor Arbiter denied her claim for backwages and
overtime pay because she had not adduced evidence of the overtime work actually performed. The Labor
Arbiter declared that Villa was entitled to service incentive leave pay for the period of the last three years
counted from the filing of her complaint because the petitioner did not refute her claim thereon.
On February 23, 2005, the NLRC rendered its judgment dismissing the appeal by the petitioner
but granting that of Villa.
The decision of the Labor Arbiter is REVERSED and SET ASIDE and a new one ENTERED
declaring complainant to have been illegally dismissed. Consequently, respondents are hereby directed to
immediately reinstate complainant to her former position without loss of seniority rights and other
privileges within ten (10) days from receipt of this decision and to pay complainant Overtime Pay.
According to the NLRC, the petitioner's appeal was fatally defective and was being dismissed
outright because it lacked the proper verification and certificate of non-forum shopping.
On September 27, 2006, the CA promulgated its assailed decision dismissing the petition for
certiorari.
WHEREFORE, premises considered, the instant petition is hereby ordered DISMISSED for lack
of merit. The assailed decision is AFFIRMED with MODIFICATION, in that petitioner Lily Ngochua
should not be held liable with petitioner corporation.
The petitioner posits that the CA erroneously affirmed the giving of overtime pay and service
incentive leave pay to Villa; that she did not adduce proof of her having rendered actual overtime work;
that she had not been authorized to render overtime work; and that her availment of vacation and sick
leaves that had been paid precluded her claiming the service incentive leave pay.

ISSUE 1: Whether or not the burden of proving entitlement to overtime pay rests on the employer?

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ISSUE 2: Whether or not any employee could render overtime work without prior authorization by the
management?

HELD: No. The burden of proving entitlement to overtime pay rests on the employee. No. Any employee
can render overtime work only when there was a prior authorization by the management.
We partly agree with the petitioner's position.
Firstly, entitlement to overtime pay must first be established by proof that the overtime work was
actually performed before the employee may properly claim the benefit. The burden of proving
entitlement to overtime pay rests on the employee because the benefit is not incurred in the normal course
of business. Failure to prove such actual performance transgresses the principles of fair play and equity.
And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa had
stayed in the company's premises beyond eight hours was misplaced. The DTRs did not substantially
prove the actual performance of overtime work. The petitioner correctly points out that any employee
could render overtime work only when there was a prior authorization therefor by the management.
Without the prior authorization, therefore, Villa could not validly claim having performed work beyond
the normal hours of work. Moreover, Section 4(c), Rule I, Book III of the Omnibus Rules Implementing
the Labor Code relevantly states as follows:
Section 4. Principles in determining hours worked. – The following general principles shall
govern in determining whether the time spent by an employee is considered hours worked for purposes of
this Rule:
(a)
x x x.
(b)
x x x.
(c)
If the work performed was necessary, or it benefited the employer, or the employee could not
abandon his work at the end of his normal working hours because he had no replacement, all time spent
for such work shall be considered as hours worked, if the work was with the knowledge of his employer
or immediate supervisor. (bold emphasis supplied)
(d) x x x.

Brotherhood Labor Unity Movement v. Zamora (G.R. No. L-48645, January 7, 1987)

Annotations:
1. Labor Relations; Factors considered in determining employeremployee relationship.—In
determining the existence of an employeremployee relationship, the elements that are generally
considered are the following: (a) the selection and engagement of the employee; (b) the payment of
wages; (Q) the power of dismissal; and (d) the employer’s power to control the employee with respect
to the means and methods by which the work is to be accomplished. It is the socalled “control test”
that is the most important element.
2. Labor Relations; Criteria for determining existence of independent contractor relationship.—
The existence of an independent contractor relationship is generally estabished by the following
criteria: “whether or not the contractor is carrying on an independent business; the nature and extent
of the work; the skill required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the work to another; the
employer’s power with respect to the hiring, firing, and payment of the contractor’s workers; the
control of the premises; the duty to supply the premises tools, appliances, materials and laborer; and
the mode, manner, and terms of payment.
3. Ibid; Unfair Labor Practice; Where there is an existing CBA, a group of employees who wish to
form another union must follow Labor Code procedures.—The respondent company had an
existing collective bargaining agreement with the IBM Union which is the recognized collective
bargaining representative at the respondent’s glass placed there being a recognized bargaining
representative of all employees at the company’s glass plant, the petitioners cannot merely form a
union and demand bargaining. The Labor Code provides the proper procedure for the recognition of
unions as sale bargaining representatives. This must be followed.

Digest:
Facts: The petitioners are workers who have been employed at the San Miguel Parola Glass Factory as
“pahinantes” or “kargadors” for almost seven years. They worked exclusively at the SMC plant, never
having been assigned to other companies or departments of San Miguel Corp, even when the volume of
work was at its minimum. Their work was neither regular nor continuous, depending on the volume of
bottles to be loaded and unloaded, as well as the business activity of the company. However, work
exceeded the eight-hour day and sometimes, necessitated work on Sundays and holidays. -for this, they
were neither paid overtime nor compensation.
Sometime in 1969, the workers organized and affiliated themselves with Brotherhood Labor
Unity Movement (BLUM). They wanted to be paid to overtime and holiday pay. They pressed the SMC

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management to hear their grievances. BLUM filed a notice of strike with the Bureau of Labor Relations in
connection with the dismissal of some of its members. San Miguel refused to bargain with the union
alleging that the workers are not their employees but the employees of an independent labor contracting
firm, Guaranteed Labor Contractor.
The workers were then dismissed from their jobs and denied entrance to the glass factory despite their
regularly reporting for work. A complaint was filed for illegal dismissal and unfair labor practices.

Issue: Whether or not there was employer-employee (ER-EE)relationship between the workers and San
Miguel Corp.

Held: YES. In determining if there is an existence of the (ER-EE) relationship, the four-fold test was used
by the Supreme Court. These are:
• The selection and engagement of the employee
• Payment of wages
• Power of dismissal
• Control Test- the employer’s power to control the employee with respect to the means and methods by
which work is to be accomplished
In the case, the records fail to show that San Miguel entered into mere oral agreements of
employment with the workers. Considering the length of time that the petitioners have worked with the
company, there is justification to conclude that they were engaged to perform activities necessary in the
usual business or trade. Despite past shutdowns of the glass plant, the workers promptly returned to their
jobs. The term of the petitioner’s employment appears indefinite and the continuity and habituality of the
petitioner’s work bolsters the claim of an employee status.
As for the payment of the workers’ wages, the contention that the independent contractors were
paid a lump sum representing only the salaries the workers where entitled to have no merit. The amount
paid by San Miguel to the contracting firm is no business expense or capital outlay of the latter. What the
contractor receives is a percentage from the total earnings of all the workers plus an additional amount
from the earnings of each individual worker.
The power of dismissal by the employer was evident when the petitioners had already been
refused entry to the premises. It is apparent that the closure of the warehouse was a ploy to get rid of the
petitioners, who were then agitating the company for reforms and benefits.
The inter-office memoranda submitted in evidence prove the company’s control over the workers. That
San Miguel has the power to recommend penalties or dismissal is the strongest indication of the
company’s right of control over the workers as direct employer.
*SC ordered San Miguel to reinstate the petitioners with 3 years backwages.

NWSA v. NWSA Consolidated Unions (G.R. No. L-18938, August 31, 1964)

Annotations:
1. Public corporations; NAWASA does not perform governmental but only proprietary function.
—The National' Waterworks and Sewerage Authority is a government corporation performing not
governmental but proprietary functions, and as such comes within the coverage of Commonwealth
Act No. 444.
2. Same; Supply of water and sewerage service are ministrant functions.—The business of
providing water supply and sewerage service are but ministrant functions of government.
3. Labor relations; Public utility obliged to pay differential sum under collective bargaining agreement.
—The NAWASA is a public utility. Although pursuant to Section 4 of Commonwealth Act 444 it is
not obliged to pay an additional sum of 25% to its laborers for work done on Sundays and legal
holidays, yet it must pay said additional compensation by virtue of the contractual obligation it
assumed under the collective bargaining agreement.
4. Same; Non-managerial employees covered by Commonwealth Act No.444.—Employees who
have little freedom of action and whose main function is merely to carry out the company's orders,
plans and policies, are not managerial employees and hence are covered by Commonwealth Act No.
444.
5. Same; Jurisdiction of Court of Industrial Relations determined at time dispute arose.—The
Court of Industrial Relations has jurisdiction to adjudicate overtime pay where there was employer-
employee relationship existing between the parties at the time the dispute arose.
6. Same; Employees of other offices assigned to NAWASA not employees of latter.—The GAO
employees assigned to work in the NAWASA even if they were paid out of the latter's funds cannot be
regarded as employees of the NAWASA on matters relating to compensation. They are employees of
the national government and are not covered by the Eight-Hour 'Labor Law. The same may be said of
the Bureau of Public Works assigned to work in the NAWASA.
7. Same; Offsetting overtime with undertime when unfair.—The method used by the NAWASA in
offsetting the overtime with the undertime and at the same time charging said undertime to the
accrued leave is unfair.

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8. Same; Differential pay for Sundays is part of legal wage.—The differential pay for Sundays is a
part of the legal wage. Hence, it was correctly included in computing the weekly wages of those
employees and laborers who worked seven days a week and were regularly receiving the 25% salary
differential for a period of three months prior to the implementation of Republic Act 1880. This is so
even if petitioner is a public utility in view of the contractual obligation it has assumed on the matter.
9. Same; Different computation of daily wages of government and non-government employees.—
In the computation of daily wages of employees paid by the month, distinction should be made
between government employees like the GAO employees and those who are not. The computation for
government employees is governed by Section 254 of the Revised Administrative Code while for
others the correct computation is the monthly salary divided by the actual number of working hours in
the month or the regular monthly compensation divided by the number of working days in the month.
10. Same; Night compensation to be paid from time services were rendered.—The laborers must be
compensated for nighttime work as of the date the same was rendered,,
11. Same; Minimum wage rates applicable also to employees hired subsequent to date of decision.
—The rates of minimum pay pay f ixed in a CIR case are applicable not only to those who were
already in the service as of the date of the decision but also to those who were employed subsequent
to said date,
12. Same; "Distress pay" applicable to all employees whose work have -to do with the sewerage
chambers.—All the laborers, whether assigned to the sewerage division or not who are actually
working inside or outside the sewerage chambers, are entitled to distress pay.
13. Same; Staggering not required where work not continuous.—Staggering of working hours is not
required where the evidence shows that the work is not continuous,

Digest:
Facts: Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled
corporation created under Republic Act No. 1383, while respondent NWSA Consolidated Unions are
various labor organizations composed of laborers and employees of the NAWASA. The Court of
Industrial Relations conducted a hearing on the controversy then existing between petitioner and
respondent unions which the latter embodied in a "Manifesto", namely: implementation of the 40-Hour
Week Law (Republic Act No. 1880); alleged violations of the collective bargaining agreement concerning
"distress pay"; minimum wage of P5.25; promotional appointments and filling of vacancies of newly
created positions; additional compensation for night work; wage increases to some laborers and
employees; and strike duration pay. In addition, respondent unions raised the issue of whether the 25%
additional compensation for Sunday work should be included in computing the daily wage and whether,
in determining the daily wage of a monthly-salaried employee, the salary should be divided by 30 days.
The respondent court rendered its decision stating that the NAWASA is an agency not performing
governmental functions and, therefore, is liable to pay additional compensation for work on Sundays and
legal holidays conformably to Commonwealth Act No. 444, known as the Eight-Hour Labor Law and
granted the claims of the union.

Issue: 1. Whether or not NAWASA is performing governmental functions and, therefore, essentially a
service agency of the government. 2. Whether or not NAWASA is a public utility and, therefore,
exempted from paying additional compensation for work on Sundays and legal holidays. 3. Whether or
not the intervenors are "managerial employees" within the meaning of Republic Act 2377 and, therefore,
not entitled to the benefits of Commonwealth Act No. 444. 4. What is the correct method to determine
the equivalent daily wage of a monthly salaried employee, especially in a firm which is a public utility?

Held: 1. No, NAWASA is not an agency performing governmental functions. Rather, it performs
proprietary functions, and as such comes within the coverage of Commonwealth Act No. 444. While
under republic Act No. 1383 the NAWASA is considered as a public corporation it does not show that it
was so created for the government of a portion of the State. There are two kinds of public corporation,
namely, municipal and non-municipal. A municipal corporation is the body politic established by law
particularly as an agency of the State to assist in the civil government of the country chiefly to regulate
the local and internal affairs of the city or town that is incorporated. Non- municipal corporations, on the
other hand, are public corporations created as agencies of the State for limited purposes to take charge
merely of some public or state work other than community government. The National Waterworks and
Sewerage Authority was not created for purposes of local government. It was created for the "purpose of
consolidating and centralizing all waterworks, sewerage and drainage system in the Philippines under one
control and direction and general supervision." The NAWASA therefore, though a public corporation, is
not a municipal corporation, because it is not an agency of the State to regulate or administer the local
affairs of the town, city, or district which is incorporated. Moreover, the NAWASA, by its charter, has
personality and power separate and distinct from the government. It is an independent agency of the
government and it may charge rates for its services.
2. Yes, NAWASA is a public utility because its primary function is to construct, maintain and
operate water reservoirs and waterworks for the purpose of supplying water to the inhabitants, as well as
consolidate and centralize all water supplies and drainage systems in the Philippines. A public utility is

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exempt from paying additional compensation for work on Sundays and legal holidays conformably to
Section 4 of Commonwealth Act No. 444. However, by virtue of the contractual obligation NAWASA has
with the respondent unions, it has obligated itself for the payment of additional compensation.
3. No. One of the distinguishing characteristics managerial employee may be known as expressed
in the explanatory note of Republic Act No. 2377 is that he is not subject to the rigid observance of
regular office hours. The true worth of his service does not depend so much on the time he spends in
office but more on the results he accomplishes. In fact, he is free to go out of office anytime. The
philosophy behind the exemption of managerial employees from the 8-Hour Labor Law is that such
workers are not usually employed for every hour of work but their compensation is determined
considering their special training, experience or knowledge which requires the exercise of discretion and
independent judgment, or perform work related to management policies or general business operations
along specialized or technical lines. For these workers it is not feasible to provide a fixed hourly rate of
pay or maximum hours of labor. In this case, the functions, duties and responsibilities of the intervenors
do not bear any direct relation with the management of the NAWASA, nor do they participate in the
formulation neither of its policies nor in the hiring and firing of its employees. Moreover, they are
required to observe working hours and record their time work and are not free to come and go to their
offices, or move about at their own discretion.
4. It is evident that Republic Act 1880 does not intend to raise the wages of the employees over
what they are actually receiving. Rather, its purpose is to limit the working days in a week to five days, or
to 40 hours without however permitting any reduction in the weekly or daily wage of the compensation
which was previously received.
a. It has been held that for purposes of computing overtime compensation a regular wage
includes all payments which the parties have agreed shall be received during the work week, including
piece work wages, differential payments for working at undesirable times, such as at night or on Sundays
and holidays, and the cost of board and lodging customarily furnished the employee. The "regular rate" of
pay also ordinarily includes incentive bonus or profit-sharing payments made in addition to the normal
basic pay, and it was also held that the higher rate for night, Sunday and holiday work is just as much a
regular rate as the lower rate for daytime work. The higher rate is merely an inducement to accept
employment at times which are not as desirable from a workman's standpoint
b. The way to determine the daily rate of a monthly employee is to divide the monthly
salary by the actual number of working hours in the month. Thus, Section 8 (g) of Republic Act No. 1161,
as amended by Republic Act 1792, provides that the daily rate of compensation is the total regular
compensation for the customary number of hours worked each day. In other words, the correct
computation shall be (a) the monthly salary divided by the actual of working hours in a month or (b) the
regular monthly compensation divided by the number of working days in a month.

National Sugar Refineries Corporation vs. NLRC (G.R. No. 101761, March 24, 1993)

Annotations:
1. Labor Law; Constitutional Law; While social justice has an inclination to give favor and
protection to the working class, the cause of the labor sector is not upheld at all times as the
management has also a right entitled to respect and enforcement in the interest of simple fair
play.—While the Constitution is committed to the policy of social justice and the protection of the
working class, it should not be supposed that every labor dispute will be automatically decided in
favor of labor. Management also has its own rights which, as such, are entitled to respect and
enforcement in the interest of simple fair play. Out of its concern for those with less privileges in life,
this Court has inclined more often than not toward the worker and upheld his cause in his conflicts
with the employer. Such favoritism, however, has not blinded us to the rule that justice is in every
case for the deserving, to be dispensed in the light of the established facts and the applicable law and
doctrine.
2. Same; Classification of Employment; Criterion which determines whether a particular
employee is within the definition of a statute is the character of work performed rather than
title or nomenclature of position held.—The question whether a given employee is exempt from the
benefits of the law is a factual one dependent on the circumstances of the particular case. In
determining whether an employee is within the terms of the statutes, the criterion is the character of
the work performed, rather than the title of the employee's position. Consequently, while generally
this Court is not supposed to review the factual findings of respondent commission, substantial justice
and the peculiar circumstances obtaining herein mandate a deviation from the rule.
3. Same; Same; Same; Overtime pay, etc.; Supervisory employees discharging functions that
qualify them as officers or members of the managerial staff considered exempt from the
coverage of Article 82 of the Labor Code and therefore, not entitled to overtime, rest day and
holiday pay—The members of respondent union discharge duties and responsibilities which
ineluctably qualify them as officers or members of the managerial staff, as defined in Section 2, Rule
I, Book III of the aforestated Rules to Implement the Labor Code, viz.: x x x Under the facts
obtaining in this case, we are constrained to agree with petitioner that the union members should be

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considered as officers or members of the managerial staff and are, therefore, exempt from the
coverage of Article 82. Perforce, they are not entitled to overtime, rest day and holiday pay.
4. Same; Same; Same; Same; Payment of the questioned benefits has not ripened into a
contractual obligation as payment thereof was made at a time when they were rightfully entitled
thereto.—We likewise do not subscribe to the finding of the labor arbiter that the payment of the
questioned benefits to the union members has ripened into a contractual obligation. x x x The
members of respondent union were paid the questioned benefits for the reason that, at that time, they
were rightfully entitled thereto. Prior to the JE Program, they could not be categorically classified as
members or officers of the managerial staff considering that they were then treated merely on the
same level as rank-and-file. Consequently, the payment thereof could not be construed as constitutive
of voluntary employer practice, which cannot now be unilaterally withdrawn by petitioner.
5. Same; Same; Same; Same; Same; Entitlement to benefits provided for by law requires prior
compliance with conditions set forth therein.—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. Entitlement to the benefits provided for by law requires prior compliance with the
conditions set forth therein. With the promotion of the members of respondent union, they occupied
positions which no longer meet the requirements imposed by law. Their assumption of these positions
removed them from the coverage of the law, ergo, their exemption therefrom.
6. Same; Management Prerogatives; Promotion of employees is a recognized management
prerogative to be exercised in good faith; Case at bar.—Promotion of its employees is one of the
jurisprudentially recognized exclusive prerogatives of management, provided it is done in good faith.
In the case at bar, private respondent union has miserably failed to convince this Court that the
petitioner acted in bad faith in implementing the JE Program. There is no showing that the JE
Program was intended to circumvent the law and deprive the members of respondent union of the
benefits they used to receive.

Digest:
Facts: Petitioner National Sugar Refineries Corporation (NASUREFCO), a corporation which is fully
owned and controlled by the Government, operates three (3) sugar refineries located at Bukidnon, Iloilo
and Batangas. Private respondent union represents the former supervisors of the NASUREFCO Batangas
Sugar Refinery.
In 1988, petitioner implemented a Job Evaluation (JE) Program affecting all employees, from
rank-and-file to department heads. We glean from the records that for about ten years prior to the JE
Program, the members of respondent union were treated in the same manner as rank-and file employees.
As such, they used to be paid overtime, rest day and holiday pay pursuant to the provisions of Articles 87,
93 and 94 of the Labor Code as amended.
With the implementation of the JE Program, members of respondent union were re-classified
under levels S-5 to S-8 which are considered managerial staff for purposes of compensation and benefits.
In May 1990, petitioner NASUREFCO recognized herein respondent union, which was organized
pursuant to Republic Act NO. 6715 allowing supervisory employees to form their own unions, as the
bargaining representative of all the supervisory employees at the NASUREFCO Batangas Sugar Refinery.
In June 1990, the members of herein respondent union filed a complainant with the executive
labor arbiter for non-payment of overtime, rest day and holiday pay allegedly in violation of Article 100
of the Labor Code.
In 1991, Executive Labor Arbiter Pido directed NASUREFCO to pay for the wages complained
of.
On appeal, in a decision promulgated on July 1991, respondent National Labor Relations
Commission (NLRC) affirmed the decision of the labor arbiter on the ground that the members of
respondent union are not managerial employees, and, therefore, they are entitled to overtime, rest day and
holiday pay. Respondent NLRC declared that these supervisory employees are merely exercising
recommendatory powers subject to the evaluation, review and final action by their department heads.

Issue: Whether or not the Supervisors are considered Managerial Employees and should no longer
receive overtime, rest day and holiday pay.

Held: Yes. ”Art. 82 Coverage. — The provisions of this title shall apply to employees in all
establishments and undertakings whether for profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer who are dependent on him for
support, domestic helpers, persons in the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in Appropriate regulations.
"As used herein, 'managerial employees' refer to those whose primary duty consists of the
management of the establishment in which they are employed or of a department or subdivision thereof,
and to other officers or members of the managerial staff." (Emphasis supplied.)
It is the submission of petitioner that while the members of respondent union, as supervisors, may
not be occupying managerial positions, they are clearly officers or members of the managerial staff

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because they meet all the conditions prescribed by law and, hence, they are not entitled to overtime, rest
day.
Quintessentially, with the promotion of the union members, they are no longer entitled to the
benefits which attach and pertain exclusively to their positions. Entitlement to the benefits provided for by
law requires prior compliance with the conditions set forth therein. With the promotion of the members of
respondent union, they occupied positions which no longer met the requirements imposed by law. Their
assumption of these positions removed them from the coverage of the law, ergo, their exemption
therefrom.
As correctly pointed out by petitioner, if the union members really wanted to continue receiving
the benefits which attach to their former positions, there was nothing to prevent them from refusing to
accept their promotions and their corresponding benefits. As the saying goes by, they could not, as a
simple matter of law and fairness, get the best of both worlds at the expense of NASUREFCO.
Promotion of its employees is one of the jurisprudentially-recognized exclusive prerogatives of
management, provided it is done in good faith. In the case at bar, private respondent union has miserably
failed to convince this Court that the petitioner acted implementing the JE Program. There is no showing
that the JE Program was intended to circumvent the law and deprive the members of respondent union of
the benefits they used to receive.

San Miguel Brewery, Inc. vs. Democratic Labor Org. (G.R. No. L-18353, July 31, 1963)

Annotations:
1. Labor laws; Eight-Hour Labor Law; No application to outside or field sales personnel.—Where
after the morning roll call the outside or field sales personnel leave the plant of the company to go on
their respective sales routes and they do not have a daily time record but the sales routes are so
planned that they can be completed within 8 hours at most, and they receive monthly salaries and
sales commissions in variable amounts, so that they are made to work beyond the required eight hours
similar to piece work, "pakiao", or commission basis regardless of the time employed, and the
employees' participation depends on their industry, it is held that the Eight-Hour Labor Law has no
application to said outside or field sales personnel and that they are not entitled to overtime
compensation.
2. Same; Same; Night salary differentials retroactive.—Watchmen who rendered night duties once
every three weeks continuously during the period of their employment should be paid 25% additional
compensation for work from 6:00 to 12:00 p.m. and 75% additional compensation for work from
12:01 to 6:00 in the morning retroactive prior to date of demand because a similar claim had been
filed long before and had been the subject of negotiation between the union and the company which
culminated in a strike which fizzled out with the understanding that such claim should be settled in
court.
3. Same; Same; Sundays and holidays pay.—Watchmen who work on Sundays and holidays are
entitled to extra pay for work done during these days although they are paid on a monthly basis and
are given one day off. Section 4 of Commonwealth Act No. 444 expressly provides that no employer
may compel an employee to work during Sundays and legal holidays unless he is paid an additional
sum of his regular compensation. This proviso is mandatory, regardless of the nature of the
compensation. The only exception is with regard to public utilities who perform some public service.

Digest:
Facts: Respondent Democratic Labor Assoc. filed a manifestation claiming for the following against
petitioner SMB: overtime pay, night-shift differential pay, attorney’s fees. Separation pay, and sick and
vacation leave compensation. Judge Bautista ruled that those working outside the company’s premises are
entitled to overtime compensation, hence, the Eight-Hour Labor Law applies to them. Petitioner filed for
an M.R. before the CIR. It was denied, HENCE THE PETITION

Issue: Whether the Eight-Hour Labor Law applies to respondent workers.

Held: No, The Eight-Hour Labor Law only applies to an employee who is paid on a monthly or daily
basis. This law has no application to employees paid on a piece-work basis. CIR is wrong to apply the law
to the piece-work employees. According to a ruling by DOLE on Dec. 9, 1957, field sales personnel
receiving monthly salaries (such as the respondents in this case) are not subject to the Eight-Hour Labor
Law (although they are paid on a monthly basis, their commission shall be considered as payment for
extra time he renders in excess of 8 hours).
Additional Issue: Are the claimants who are watchmen and security guards entitled to extra pay
for work done on Sundays and Holidays?
COURT: They are entitled to such pay as per Comm. Act No. 444. They shall be entitled to +
25% of their regular salary.
PETITION: GRANTED: Decision of the CIR, SET ASIDE.

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