Labor Law Rev Midterms Sobrevinas Reviewer

7/30/2019 Labor Law Rev Midterms Sobrevinas Reviewer

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I. The Employer-Employee Relationship as the matrixor basis for a labor court's jurisdiction to hear anddecide labor disputesA. The Four-Fold Test

i. Viana v. Al-lagadan - In determining the existenceof employer-employee relationship, the followingelements are generally considered, namely: (1) the

selection and engagement of the employee; (2) thepayment of wages; (3) the power of dismissal; and(4) the power to control the employees conduct although the latter is the most important element.

ii. Vda. De Cruz v. Manila Hotel - What pieces theorchestra shall play, and how the music shall bearranged or directed, the intervals and other details such are left to the leader's discretion. The musicinstruments, the music papers and otherparaphernalia are not furnished by the Hotel, they

belong to the orchestra, which in turn belongs toTirso Cruz not to the Hotel. The individualmusicians, and the instruments they have not beenselected by the Hotel. It reserved no power todischarge any musician. How much salary is given tothe individual members is left entirely to "theorchestra" or the leader. Payment of such salary isnot made by the Hotel to the individual musicians,but only a lump-sum compensation is given weeklyto Tirso Cruz. Considering the above features of the

relationship, in connection with the tests indicatedby numerous authorities, it is our opinion that TirsoCruz was not an employee of the Manila Hotel, butone engaged to furnish music to said hotel for theprice of P250.00 daily, in other words, anindependent contractor within the meaning of thelaw of master and servant.

iii. LVN Pictures v. Philippine Musicians Guild - It iswell settled that "an employer-employee relationshipexists . . .where the person for whom the servicesare performed reserves a right to control not onlythe end to be achieved but also the means to beused in reaching such end . . . ." By reason of saidcontrol, the employer-employee relationship was

held to exist between the management and theworkers, notwithstanding the intervention of analleged independent contractor, who had, andexercise, the power to hire and fire said workers. Theaforementioned control over the means to be used"in reaching the desired end is possessed andexercised by the film companies over the musiciansin the cases before us.

iv. Torillo v. Leogardo -v. Legend Hotel v. Realuyo - Relevantly, it is worth

remembering that the employer need not actually

supervise the performance of duties by theemployee, for it sufficed that the employer has theright to wield that power.

vi. Tongko v. Manulife - the only conclusion that canbe made is that the absence of evidence showingManulifes control over Tongkos contractual dutiespoints to the absence of any employer-employeerelationship between Tongko and Manulife. In thecontext of the established evidence, Tongkoremained an agent all along; although hissubsequent duties made him a lead agent withleadership role, he was nevertheless only an agentwhose basic contract yields no evidence of means-and-manner control

vii. Javier v. Fly Ace Corp - the onus probandi falls onpetitioner to establish or substantiate such claim bythe requisite quantum of evidence.

II. General Labor Policy


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A. Constitutioni. Art II

SECTION 2. The Philippines renounces war as

an instrument of national policy, adopts thegenerally accepted principles of internationallaw as part of the law of the land and adheres tothe policy of peace, equality, justice, freedom,

cooperation, and amity with all nations. SECTION 9. The State shall promote a just and

dynamic social order that will ensure theprosperity and independence of the nation andfree the people from poverty through policiesthat provide adequate social services, promotefull employment, a rising standard of living, andan improved quality of life for all.

SECTION 10. The State shall promote socialjustice in all phases of national development

SECTION 11. The State values the dignity ofevery human person and guarantees full respectfor human rights.

SECTION 13. The State recognizes the vital role

of the youth in national building and shallpromote and protect their physical, moral,spiritual, intellectual, and social well-being. Itshall inculcate in the youth patriotism andnationalism, and encourage their involvement inpublic and civic affairs.

SECTION 14. The State recognizes the role of

women in nation-building, and shall ensure thefundamental equality before the law of womenand men.

SECTION 18. The State affirms labor as a

primary social economic force. It shall protectthe rights of workers and promote their welfare.

SECTION 20. The State recognizes theindispensable role of the private sector,

encourages private enterprise, and providesincentives to needed investments.

ii. Art. III

SECTION 1. No person shall be deprived of life,liberty, or property without due process of law,nor shall any person be denied the equalprotection of the laws.

SECTION 4. No law shall be passed abridgingthe freedom of speech, of expression, or of thepress, or the right of the people peaceably toassemble and petition the Government forredress of grievances.

SECTION 8. The right of the people, including

those employed in the public and privatesectors, to form unions, associations, orsocieties for purposes not contrary to law shallnot be abridged.

SECTION 10. No law impairing the obligation of

contracts shall be passed.iii. Art. XII

SECTION 1. The goals of the national economyare a more equitable distribution ofopportunities, income, and wealth; a sustainedincrease in the amount of goods and servicesproduced by the nation for the benefit of thepeople; and an expanding productivity as thekey raising the quality of life for all, especiallythe underprivileged.

The State shall promote industrialization and fullemployment based on sound agriculturaldevelopment and agrarian reform, throughindustries that make full and efficient use ofhuman and natural resources, and which arecompetitive in both domestic and foreignmarkets. However, the State shall protect


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Filipino enterprises against unfair foreigncompetition and trade practices.

In the pursuit of these goals, all sectors of theeconomy and all regions of the country shall begiven optimum opportunity to develop. Privateenterprises, including corporations,cooperatives, and similar collectiveorganizations, shall be encouraged to broadenthe base of their ownership.

iv. Art. XIII

SECTION 1. The Congress shall give highestpriority to the enactment of measures thatprotect and enhance the right of all the peopleto human dignity, reduce social, economic, andpolitical inequalities, and remove culturalinequities by equitably diffusing wealth andpolitical power for the common good.

To this end, the State shall regulate theacquisition, ownership, use, and disposition ofproperty and its increments.

SECTION 2. The promotion of social justice

shall include the commitment to createeconomic opportunities based on freedom ofinitiative and self-reliance.

SECTION 3. The State shall afford full

protection to labor, local and overseas,organized and unorganized, and promote fullemployment and equality of employmentopportunities for all.

It shall guarantee the rights of all workers toself-organizations, and peaceful concertedactivities, including the right to strike inaccordance with law. They shall be entitled to

security of tenure, humane conditions of work,and a living wage. They shall also participate inpolicy and decision-making processes affectingtheir rights and benefits as may be provided bylaw.

The State shall promote the principle of sharedresponsibility between workers and employersand the preferential use of voluntary modes insettling disputes, including conciliation, andshall enforce their mutual compliance therewithto foster industrial peace.

The State shall regulate the relations betweenworkers and employers, recognizing the right oflabor to its just share in the fruits of productionand the right of enterprises to reasonablereturns on investments, and to expansion and

growth.

SECTION 16. The right of the people and theirorganizations to effective and reasonableparticipation at all levels of social, political, andeconomic decision-making shall not beabridged. The State shall, by law, facilitate theestablishment of adequate consultationmechanisms.

v. Art. XIV

SECTION 1. The State shall protect and

promote the right of all citizens to qualityeducation at all levels and shall take appropriatesteps to make such education accessible to all.

SECTION 2. The State shall :


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(1) Establish, maintain, and support a complete,adequate, and integrated system of educationrelevant to the needs of the people and society;(2) Establish and maintain a system of freepublic education in the elementary and highschool levels. Without limiting the natural rightof parents to rear their children, elementaryeducation is compulsory for all children of schoolage;(3) Establish and maintain a system ofscholarship grants, student loan programs,subsidies, and other incentives which shall beavailable to deserving students in both publicand private schools, especially to theunderprivileged;(4) Encourage non-formal, informal, andindigenous learning systems, as well as self-learning, independent, and out-of-school study

programs particularly those that respond tocommunity needs; and(5) Provide adult citizens, the disabled, and out-of-school youth with training in civics, vocationalefficiency, and other skills.

B. Labor Code

Article 3.Declaration of basic policy. - TheState shall afford protection to labor, promotefull employment, ensure equal workopportunities regardless of sex, race or creedand regulate the relations between workers andemployers. The State shall assure the rights ofworkers to self-organization, collectivebargaining, security of tenure, and just andhumane conditions of work.

Article 4. Construction in favor of labor. -All doubts in the implementation and

interpretation of the provisions of this Code,including its implementing rules and regulations,shall be resolved in favor of labor.

Article 166. Policy. The State shall promoteand develop a tax-exempt employees'compensation program whereby employees and

their dependents, in the event of work-connected disability or death, may promptlysecure adequate income benefit, and medical orrelated benefits.

Article 211.Declaration of policy. A. It is thepolicy of the State:

a. To promote and emphasize the primacy of freecollective bargaining and negotiations, includingvoluntary arbitration, mediation and conciliation,as modes of setting labor or industrial disputes;

b. To promote free trade unionism as aninstrument for the enhancement of democracyand the promotion of social justice anddevelopment;

c. To foster the free and voluntary organization ofa strong and united labor movement;

d. To promote the enlightenment of workersconcerning their rights and obligations as unionmembers and as employees;

e. To provide an adequate administrative

machinery for the expeditious settlement oflabor or industrial disputes;f. To ensure a stable but dynamic and just

industrial peace; andg. To ensure the participation of workers in

decision and policy-making processes affectingtheir rights, duties and welfare.

h. To encourage a truly democratic method ofregulating the relations between the employers


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and employees by means of agreements freelyentered into through collective bargaining, nocourt or administrative agency or official shallhave the power to set or fix wages, rates of pay,hours of work or other terms and conditions ofemployment, except as otherwise providedunder this Code.

Article 221. Technical rules not bindingand prior resort to amicable settlement. Inany proceeding before the Commission or any ofthe Labor Arbiters, the rules of evidenceprevailing in courts of law or equity shall not becontrolling, and it is the spirit and intention ofthis Code that the Commission and its membersand the Labor Arbiters shall use every and allreasonable means to ascertain the facts in eachcase speedily and objectively, without regard to

technicalities of law or procedure, all in theinterest of due process. In any proceedingbefore the Commission or any Labor Arbiter, theparties may be represented by legal counsel butit shall be the duty of the Chairman, anyPresiding Commissioner or Commissioner or anyLabor Arbiter to exercise complete control of theproceedings at all stages.

Any provision of law to the contrarynotwithstanding, the Labor Arbiter shall exert allefforts towards the amicable settlement of alabor dispute within his jurisdiction on or beforethe first hearing. The same rule shall apply tothe Commission in the exercise of its original

jurisdiction. (As amended by RA 6715)

Article 255. Exclusive bargainingrepresentation and workers' participation

in policy and decision-making. The labororganization designated or selected by themajority of the employees in an appropriatecollective bargaining unit shall be the exclusiverepresentative of the employee in such unit forthe purpose of collective bargaining. However,an individual employee or group of employeesshall have the right at any time to presentgrievances to their employer.

Any provision of law to the contrarynotwithstanding, workers shall have the right,subject to such rules and regulations as theSecretary of Labor and Employment maypromulgate, to participate in policy anddecision-making processes of the establishmentwhere they are employed insofar as saidprocesses will directly affect their rights,

benefits and welfare. For this purpose, workersand employers may form labor-managementcouncils: Provided, That the representatives ofthe workers in such labor-management councilsshall be elected by at least the majority of allemployees in said establishment. (As amendedby RA 6715)

Article 263. Strikes, picketing andlockouts. (a) It is the policy of the State toencourage free trade unionism and freecollective bargaining.

Article 275. Tripartism and tripartiteconferences. (a) Tripartism in labor relations ishereby declared a State policy. Towards thisend, workers and employers shall, as far aspracticable, be represented in decision andpolicy-making bodies of the government.


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C. Civil Code

Art. 1700. The relations between capital andlabor are not merely contractual. They are soimpressed with public interest that laborcontracts must yield to the common good.

Therefore, such contracts are subject to the

special laws on labor unions, collectivebargaining, strikes and lockouts, closed shop,wages, working conditions, hours of labor andsimilar subjects.

Art. 1701. Neither capital nor labor shall act

oppressively against the other, or impair theinterest or convenience of the public.

III. Labor Standards1. Labor Code

Article 82. Coverage. The provision of this

Title shall apply to employees in allestablishments and undertakings, whether forprofit or not, but not to government employees,managerial employees, field personnel,members of the family of the employer who aredependent on him for support, domestichelpers, persons in the personal service ofanother and workers who are paid by results asdetermined by the Secretary of Labor andEmployment in appropriate regulations.

As used herein, "managerial employees" refersto those whose primary duty consists of themanagement of the establishment in which theyare employed or of a department or subdivisionthereof, and to other officers or members of themanagerial staff.

"Field personnel" refers to non-agriculturalemployees who regularly perform their dutiesaway from the principal place of business orbranch office of the employer and whose actualhours of work in the field cannot be determinedwith reasonable certainty.

Article 83. Normal hours of work. Thenormal hours of work of any employee shall notexceed eight in a day.

Health personnel in cities or municipalities witha population of at least one million or inhospitals or clinics with a bed capacity of atleast one hundred shall hold regular office hoursfor eight hours a day, for five days a week, or atotal of forty hours a week, exclusive of time formeals, except where the exigencies of the

service require that such personnel work for sixdays, forty-eight hours, in which case they shallbe entitled to an additional compensation of atleast 30 percent of their regular wage for workon the sixth day. For purposes of this Article,"health personnel" shall include: residentphysicians, nurses, nutritionists, dieticians,pharmacists, social workers, laboratorytechnicians, paramedical technicians,psychologists, midwives, attendants and allother hospital or clinic personnel.

Article 84.Hours worked. Hours worked shall

include (a) all time during which an employee isrequired to be on duty or to be at a prescribedworkplace, and (b) all time during which anemployee is suffered or permitted to work.


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Rest periods of short duration during workinghours shall be counted as hours worked.

Article 85. Meal periods. Subject to suchregulations as the Secretary of Labor andEmployment may prescribe, it shall be the dutyof every employer to give his employees not

less than sixty minutes time-off for their regularmeals.

Article 86. Night shift differential. Every

employee shall be paid a night shift differentialof not less than ten percent of his regular wagefor each hour of work performed between teno'clock in the evening and six o'clock in themorning.

Article 87. Overtime work. Work may be

performed beyond eight hours a day providedthat the employee is paid for the overtime workan additional compensation equivalent to hisregular wage plus at least twenty-five percentthereof. Work performed beyond eight hours ona holiday or rest day shall be paid an additionalcompensation equivalent to the rate for the firsteight hours on a holiday or rest day plus at least30 percent thereof.

Article 88. Undertime not offset beovertime. Undertime work on any particularday shall not be offset by overtime work on anyother day. Permission given to the employee togo on leave on some other day of the week shallnot exempt the employer from paying theadditional compensation required in thisChapter.

Article 89. Emergency overtime work. Anyemployee may be required by the employer toperform overtime work in any of the followingcases:(a) When the country is at war or when anyother national or local emergency has been

declared by Congress or the Chief Executive;(b) When it is necessary to prevent loss of life orproperty or in case of imminent danger to publicsafety due to an actual or impending emergencyin the locality caused by serious accidents, fire,flood, typhoon, earthquake, epidemic or otherdisaster or calamity;(c) When there is urgent work to be performedon machines, installation or equipment, in orderto avoid serious loss or damage to the employeror some other cause of similar nature;

(d) When the work is necessary to prevent lossor damage to perishable goods;(e) Where the completion or continuation of thework started before the 8th hour is necessary toprevent serious obstruction or prejudice to thebusiness or operations of the employer.

Any employee required to render overtime workunder this Article shall be paid the additionalcompensation required in this Chapter.

Article 90. Computation of additional

compensation. For purposes of computingovertime and other additional remuneration asrequired by this Chapter, the "regular wage" ofan employee shall include the cash wage only,without deduction on account of facilitiesprovided by the employer.


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2. Househelpersi. Apex Mining v. NLRC - The mere fact that the

househelper or domestic servant is working withinthe premises of the business of the employer andin relation to or in connection with its business, asin its staffhouses for its guest or even for itsofficers and employees, warrants the conclusionthat such househelper or domestic servant is andshould be considered as a regular employee of theemployer and not as a mere family househelper ordomestic servant as contemplated in Rule XIII,Section l(b), Book 3 of the Labor Code, asamended.

ii. Remington v. Castaneda - In the case at bar, thepetitioner itself admits in its position paper33 thatrespondent worked at the company premises andher duty was to cook and prepare its employees

lunch and merienda. Clearly, the situs, as well asthe nature of respondents work as a cook, whocaters not only to the needs of Mr. Tan and hisfamily but also to that of the petitionersemployees, makes her fall squarely within thedefinition of a regular employee under the doctrineenunciated in the Apex Mining case. That sheworks within company premises, and that she doesnot cater exclusively to the personal comfort of Mr.

Tan and his family, is reflective of the existence ofthe petitioners right of control over her functions,which is the primary indicator of the existence ofan employer-employee relationship.

iii. Barcenas v. NLRC - Moreover, the work thatpetitioner performed in the temple could not becategorized as mere domestic work. Thus, We findthat petitioner, being proficient in the Chineselanguage, attended to the visitors, mostly Chinese,

who came to pray or seek advice before Buddha forpersonal or business problems; arranged meetingsbetween these visitors and Su and supervised thepreparation of the food for the temple visitors;acted as tourist guide of foreign visitors; acted asliaison with some goverment offices; and made thepayment for the temple's Meralco, MWSS and PLDTbills. Indeed, these tasks may not be deemedactivities of a household helper. They wereessential and important to the operation andreligious functions of the temple.

3. Management Prerogativesi. San Miguel Brewery Sales Force Union v. Ople

- So long as a company's managementprerogatives are exercised in good faith for theadvancement of the employer's interest and not forthe purpose of defeating or circumventing the

rights of the employees under special laws or undervalid agreements, this Court will uphold them. SanMiguel Corporation's offer to compensate themembers of its sales force who will be adverselyaffected by the implementation of the CDS bypaying them a so-called "back adjustmentcommission" to make up for the commissions theymight lose as a result of the CDS proves thecompany's good faith and lack of intention to busttheir union.

ii. Sime Darby Pilipinas v. NLRC - The case beforeus does not pertain to any controversy involvingdiscrimination of employees but only the issue ofwhether the change of work schedule, whichmanagement deems necessary to increaseproduction, constitutes unfair labor practice. Asshown by the records, the change effected bymanagement with regard to working time is madeto apply to all factory employees engaged in the


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same line of work whether or not they aremembers of private respondent union. Hence, itcannot be said that the new scheme adopted bymanagement prejudices the right of privaterespondent to self-organization.

iii. Interphil v. Interphil - Respondent companycould have withheld these benefits pending thefinal resolution of this case. Yet, consideringperhaps the financial hardships experienced by itsemployees and the economic situation prevailing,respondent company chose to let its employeesavail of their separation benefits. The Court viewsthe gesture of respondent company as an act ofgenerosity for which it should not be punished.

4.Compressed Work Weeki. DOLE D.O. No. 02 Series of 2004

ii. DOLE Department Advisory No. 2 Series of

2009

5. Waiting timei. Arica v. NLRC - Furthermore, the thirty (30)-

minute assembly is a deeply- rooted, routinarypractice of the employees, and the proceedingsattendant thereto are not infected withcomplexities as to deprive the workers the time toattend to other personal pursuits. They are not newemployees as to require the company to deliver

long briefings regarding their respective workassignments. Their houses are situated right on thearea where the farm are located, such that afterthe roll call, which does not necessarily require thepersonal presence, they can go back to theirhouses to attend to some chores. In short, they arenot subject to the absolute control of the companyduring this period, otherwise, their failure to reportin the assembly time would justify the company to

impose disciplinary measures. The CBA does notcontain any provision to this effect; the record isalso bare of any proof on this point. This, therefore,demonstrates the indubitable fact that the thirty(30)-minute assembly time was not primarilyintended for the interests of the employer, butultimately for the employees to indicate theiravailability or non-availability for work during everyworking day.

6. Travel Timei. Radav. NLRC - If driving these employees to and

from the project site is not really part of petitioner'sjob, then there would have been no need to find areplacement driver to fetch these employees. Butsince the assigned task of fetching and deliveringemployees is indispensable and consequentlymandatory, then the time required of and used bypetitioner in going from his residence to the field

office and back, that is, from 5:30 a.m. to 7:00 a.m.and from 4:00 p.m. to around 6:00 p.m., which thelabor arbiter rounded off as averaging three hourseach working day, should be paid as overtimework.

7. Weekly Rest Periodsi. Labor Code

Article 91. Right to weekly rest day. (a) Itshall be the duty of every employer, whether

operating for profit or not, to provide each of hisemployees a rest period of not less than twenty-four consecutive hours after every sixconsecutive normal work days.

The employer shall determine and schedule theweekly rest day of his employees, subject tocollective agreement and to such rules andregulations as the Secretary of Labor and


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Employment may provide. However, theemployer shall respect the preference ofemployees as to their weekly rest day whensuch preference is based on religious grounds.

Article 92. When employer may requirework on a rest day. The employer may require

his employees to work on any day:

a) In case of actual or impendingemergencies caused by serious accidents,fire, flood, typhoon, earthquake, epidemicor other disaster or calamity to preventloss of life and property or imminentdanger to public safety;

b) In case of urgent work to be performed onthe machinery, equipment or installation

to avoid serious loss which the employerwould otherwise suffer;

c) In the event of abnormal pressure of workdue to special circumstances, where theemployer cannot ordinarily be expected toresort to other measures;

d) To prevent loss or damage to perishablegoods;

e) Where the nature of the work requirescontinuous operations and the stoppage ofwork may result in irreparable injury orloss to the employer; and

f) Under other circumstances analogous orsimilar to the foregoing as determined bythe Secretary of Labor and Employment.

Article 93. Compensation for rest day,Sunday or holiday work. (a) Where anemployee is made or permitted to work on hisscheduled rest day, he shall be paid anadditional compensation of at least 30 percentof his regular wage. An employee shall be

entitled to such additional compensation forwork performed on Sunday only when it is hisestablished rest day.

When the nature of the work of the employee issuch that he has no regular workdays and noregular rest days can be scheduled, he shall bepaid an additional compensation of at least 30percent of his regular wage for work performedon Sundays and holidays.

Work performed on any special holiday shall bepaid an additional compensation of at least 30percent of the regular wage of the employee.Where such holiday work falls on the employee'sscheduled rest day, he shall be entitled to anadditional compensation of at least 50 percentof his regular wage.

Where the collective bargaining agreement orother applicable employment contract stipulatesthe payment of a higher premium pay than thatprescribed under this Article, the employer shallpay such higher rate.

ii. Remerco v. Minister of Labor - It is the dutyof every employer, whether operating for profit ornot, to provide each of his employees a rest periodof not less than twenty four (24) hours after everysix (6) consecutive normal work days. 14 Even if


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there really existed an urgency to require work ona rest day, (which is not in the instant case)outright dismissal from employment is so severe aconsequence, more so when justifiable groundsexist for failure to report for work.

8. Holidays and Service Incentive Leavei. Labor Code

Article 94. Right to holiday pay. Every worker

shall be paid his regular daily wage during regularholidays, except in retail and serviceestablishments regularly employing less than ten(10) workers;

The employer may require an employee to work onany holiday but such employee shall be paid acompensation equivalent to twice his regular rate;and

As used in this Article, "holiday" includes: NewYears Day, Maundy Thursday, Good Friday, theninth of April, the first of May, the twelfth of June,the fourth of July, the thirtieth of November, thetwenty-fifth and thirtieth of December and the daydesignated by law for holding a general election.

Article 95. Right to service incentive leave.Every employee who has rendered at least one

year of service shall be entitled to a yearly serviceincentive leave of five days with pay.

This provision shall not apply to those who arealready enjoying the benefit herein provided, thoseenjoying vacation leave with pay of at least fivedays and those employed in establishmentsregularly employing less than ten employees or inestablishments exempted from granting this

benefit by the Secretary of Labor and Employmentafter considering the viability or financial conditionof such establishment.

The grant of benefit in excess of that providedherein shall not be made a subject of arbitration orany court or administrative action.

Article 96. Service charges. All service chargescollected by hotels, restaurants and similarestablishments shall be distributed at the rate ofeighty-five percent (85%) for all coveredemployees and fifteen percent (15%) formanagement. The share of the employees shall beequally distributed among them. In case theservice charge is abolished, the share of thecovered employees shall be considered integratedin their wages.

ii. San Miguel v. CA - Considering that all privatecorporations, offices, agencies, and entities orestablishments operating within the designated Muslimprovinces and cities are required to observe Muslimholidays, both Muslim and Christians working withinthe Muslim areas may not report for work on thedays designated by law as Muslim holidays.

iii. Jose Rizal College v. NLRC - It is readilyapparent that the declared purpose of the holiday paywhich is the prevention of diminution of the monthlyincome of the employees on account of workinterruptions is defeated when a regular class day iscancelled on account of a special public holiday and classhours are held on another working day to make up fortime lost in the school calendar. Otherwise stated, thefaculty member, although forced to take a rest, does notearn what he should earn on that day. Be it noted thatwhen a special public holiday is declared, the faculty


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member paid by the hour is deprived of expectedincome, and it does not matter that the school calendaris extended in view of the days or hours lost, for theirincome that could be earned from other sources is lostduring the extended days. Similarly, when classes arecalled off or shortened on account of typhoons, floods,rallies, and the like, these faculty members must likewisebe paid, whether or not extensions are ordered.

iv. Union of Filipro Employees v.Vivar - In San MiguelBrewery, Inc. v. Democratic Labor Organization (8 SCRA613 [1963]), the Court had occasion to discuss the natureof the job of a salesman. Citing the case of Jewel TeaCo. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Courtstated:

The reasons for excluding an outsidesalesman are fairly apparent. Such asalesman, to a greater extent, works

individually. There are no restrictionsrespecting the time he shall work and he canearn as much or as little, within the range ofhis ability, as his ambition dictates. In lieu ofovertime he ordinarily receives commissionsas extra compeInsation. He works away fromhis employer's place of business, is notsubject to the personal supervision of hisemployer, and his employer has no way ofknowing the number of hours he works perday.

While in that case the issue was whether or notsalesmen were entitled to overtime pay, the samerationale for their exclusion as field personnel fromholiday pay benefits also applies.

v. Imbuido v. NLRC - Having already worked formore than three (3) years at the time of herunwarranted dismissal, petitioner is undoubtedly

entitled to service incentive leave benefits,computed from 1989 until the date of her actualreinstatement. As we ruled in the recent case ofFernandez vs. NLRC,[40] "[s]ince a serviceincentive leave is clearly demandable after oneyear of service whether continuous or broken or its equivalent period, and it is one of the"benefits" which would have accrued if anemployee was not otherwise illegally dismissed,it is fair and legal that its computation should beup to the date of reinstatement as providedunder Section [Article] 279 of the Labor Code, asamended, which reads:

"ART. 279. Security of Tenure. An employeewho is unjustly dismissed from work shall beentitled to reinstatement without loss ofseniority rights and other privileges and to his

full backwages, inclusive of allowances, and tohis other benefits or their monetaryequivalent computed from the time hiscompensation is withheld from him up to thetime of his actual reinstatement."

vi. Fernandez v. NLRC - Since a service incentiveleave is clearly demandable after one year ofservice whether continuous or broken or itsequivalent period, and it is one of the "benefits"which would have accrued if an employee wasnot otherwise illegally dismissed, it is fair andlegal that its computation should be up to thedate of reinstatement as provided under Section279 of the Labor Code, as amended, whichreads:

Art. 279.Security of Tenure. Anemployee who is unjustly dismissed from


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work shall be entitled to reinstatementwithout loss of seniority rights and other

privileges and to his full backwages,inclusive of allowances, and to his otherbenefits or their monetary equivalentcomputed from the time hiscompensation is withheld from him up tothe time of his actual reinstatement.(emphasis supplied).

However, the Implementing Rules clearly statethat entitlement to "benefit provided under thisRule shall start December 16, 1975, the datethe amendatory provision of the [Labor] Codetook effect." 43 Hence, petitioners, except Limand Canonigo, should be entitled to serviceincentive leave pay from December 16, 1975 upto their actual reinstatement.

vii.JPL Marketing v. CA - Admittedly, privaterespondents were not given their 13th monthpay and service incentive leave pay while theywere under the employ of JPL. Instead, JPLprovided salaries which were over and abovethe minimum wage. The Court rules that thedifference between the minimum wage and theactual salary received by private respondentscannot be deemed as their 13th month pay andservice incentive leave pay as such difference is

not equivalent to or of the same import as thesaid benefits contemplated by law. Thus, asproperly held by the Court of Appeals and by theNLRC, private respondents are entitled to the13th month pay and service incentive leave pay.

viii. Sugue v. Triumph International quotingJ.B. Heibron n. National Labor Union:

When the case of strikes, and according to theCIR even if the strike is legal, strikers may notcollect their wages during the days they did notgo to work, for the same reasons if not more,laborers who voluntarily absent themselves fromwork to attend the hearing of a case in whichthey seek to prove and establish their demandsagainst the company, the legality and proprietyof which demands is not yet known, should losetheir pay during the period of such absencefrom work. The age-old rule governing therelation between labor and capital ormanagement and employee is that a "fair day'swage for a fair day's labor." If there is no workperformed by the employee there can be nowage or pay, unless of course, the laborer wasable, willing and ready to work but was illegallylocked out, dismissed or suspended. It is hardly

fair or just for an employee or laborer to fight orlitigate against his employer on the employer'stime.

In a case where a laborer absents himself fromwork because of a strike or to attend aconference or hearing in a case or incidentbetween him and his employer, he might seekreimbursement of his wages from his unionwhich had declared the strike or filed the case inthe industrial court. Or, in the present case, he

might have his absence from his work chargedagainst his vacation leave.

9. Other Leaves:i. Maternity Leave Labor Code. Article 133.

Maternity leave benefits.


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Every employer shall grant to any pregnant womanemployee who has rendered an aggregate service ofat least six (6) months for the last twelve (12) months,maternity leave of at least two (2) weeks prior to theexpected date of delivery and another four (4) weeksafter normal delivery or abortion with full pay basedon her regular or average weekly wages. Theemployer may require from any woman employeeapplying for maternity leave the production of amedical certificate stating that delivery will probablytake place within two weeks.

The maternity leave shall be extended without pay onaccount of illness medically certified to arise out of thepregnancy, delivery, abortion or miscarriage, whichrenders the woman unfit for work, unless she hasearned unused leave credits from which suchextended leave may be charged.

The maternity leave provided in this Article shall bepaid by the employer only for the first four (4)deliveries by a woman employee after the effectivityof this Code.

ii. Paternity Leave See RA 8187iii. Parental Leave See RA 8972

10. Service Chargei. Labor Code

Article 96. Service charges. All servicecharges collected by hotels, restaurants andsimilar establishments shall be distributed at therate of eighty-five percent (85%) for all coveredemployees and fifteen percent (15%) formanagement. The share of the employees shallbe equally distributed among them. In case theservice charge is abolished, the share of the

covered employees shall be consideredintegrated in their wages.

ii. Mayon Hotel v. Adana - While complainants, whowere employed in the hotel, receive[d] variousamounts as profit share, the same cannot beconsidered as part of their wages in determining theirclaims for violation of labor standard benefits.Although called profit share[,] such is in the nature ofshare from service charges charged by the hotel. Thisis more explained by [respondents] when theytestified that what they received are not fixedamounts and the same are paid not on a monthlybasis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also,[petitioners] failed to submit evidence that theamounts received by [respondents] as profit share areto be considered part of their wages and had beenagreed by them prior to their employment. Further,how can the amounts receive[d] by [respondents] be

considered as profit share when the same [are] basedon the gross receipt of the hotel[?] No profit can asyet be determined out of the gross receipt of anenterprise. Profits are realized after expenses arededucted from the gross income.

As stated in Mabeza v. NLRC,87 the employer simplycannot deduct the value from the employee's wageswithout satisfying the following: (a) proof that suchfacilities are customarily furnished by the trade; (b)the provision of deductible facilities is voluntarily

accepted in writing by the employee; and (c) thefacilities are charged at fair and reasonable value.

As ruled in Mabeza, food or snacks or otherconvenience provided by the employers are deemedas supplements if they are granted for theconvenience of the employer. The criterion in makinga distinction between a supplement and a facility does


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not so much lie in the kind (food, lodging) but thepurpose.91 Considering, therefore, that hotel workersare required to work different shifts and are expectedto be available at various odd hours, their readyavailability is a necessary matter in the operations ofa small hotel, such as petitioners' business.92 Thededuction of the cost of meals from respondents'wages, therefore, should be removed.

11. Wagesi. Labor Code

WAGES

Chapter IPRELIMINARY MATTERS

Article 97. Definitions. As used in this Title:

"Person" means an individual, partnership,association, corporation, business trust, legalrepresentatives, or any organized group ofpersons.

"Employer" includes any person acting directlyor indirectly in the interest of an employer inrelation to an employee and shall include thegovernment and all its branches, subdivisionsand instrumentalities, all government-owned orcontrolled corporations and institutions, as wellas non-profit private institutions, ororganizations.

"Employee" includes any individual employed byan employer.

"Agriculture" includes farming in all its branchesand, among other things, includes cultivation

and tillage of soil, dairying, the production,cultivation, growing and harvesting of anyagricultural and horticultural commodities, theraising of livestock or poultry, and any practicesperformed by a farmer on a farm as an incidentto or in conjunction with such farmingoperations, but does not include themanufacturing or processing of sugar, coconuts,abaca, tobacco, pineapples or other farmproducts.

"Employ" includes to suffer or permit to work.

"Wage" paid to any employee shall mean theremuneration 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 anemployer to an employee under a written orunwritten contract of employment for work doneor to be done, or for services rendered or to berendered and includes the fair and reasonablevalue, as determined by the Secretary of Laborand Employment, of board, lodging, or otherfacilities customarily furnished by the employerto the employee. "Fair and reasonable value"shall not include any profit to the employer, orto any person affiliated with the employer.

Article 98. Application of Title. This Title

shall not apply to farm tenancy or leasehold,domestic service and persons working in theirrespective homes in needle work or in anycottage industry duly registered in accordancewith law.


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Chapter IIMINIMUM WAGE RATES

Article 99. Regional minimum wages. Theminimum wage rates for agricultural and non-agricultural employees and workers in each andevery region of the country shall be thoseprescribed by the Regional Tripartite Wages andProductivity Boards. (As amended by Section 3,Republic Act No. 6727, June 9, 1989).

Article 100. Prohibition against elimination

or diminution of benefits. Nothing in thisBook shall be construed to eliminate or in anyway diminish supplements, or other employeebenefits being enjoyed at the time ofpromulgation of this Code.

Article 101. Payment by results.

The Secretary of Labor and Employment shallregulate the payment of wages by results,including pakyao, piecework, and other non-time work, in order to ensure the payment offair and reasonable wage rates, preferablythrough time and motion studies or inconsultation with representatives of workersand employers organizations.

Chapter IIIPAYMENT OF WAGES

Article 102. Forms of payment. No employershall pay the wages of an employee by means ofpromissory notes, vouchers, coupons, tokens,tickets, chits, or any object other than legal

tender, even when expressly requested by theemployee.

Payment of wages by check or money ordershall be allowed when such manner of paymentis customary on the date of effectivity of thisCode, or is necessary because of specialcircumstances as specified in appropriateregulations to be issued by the Secretary ofLabor and Employment or as stipulated in acollective bargaining agreement.

Article 103. Time of payment. Wages shallbe paid at least once every two (2) weeks ortwice a month at intervals not exceeding sixteen(16) days. If on account of force majeure orcircumstances beyond the employers control,payment of wages on or within the time herein

provided cannot be made, the employer shallpay the wages immediately after such forcemajeure or circumstances have ceased. Noemployer shall make payment with lessfrequency than once a month.

The payment of wages of employees engaged toperform a task which cannot be completed intwo (2) weeks shall be subject to the followingconditions, in the absence of a collectivebargaining agreement or arbitration award:

That payments are made at intervals notexceeding sixteen (16) days, in proportion to theamount of work completed;

That final settlement is made upon completionof the work.


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Article 104. Place of payment. Payment ofwages shall be made at or near the place ofundertaking, except as otherwise provided bysuch regulations as the Secretary of Labor andEmployment may prescribe under conditions toensure greater protection of wages.

Article 105. Direct payment of wages.

Wages shall be paid directly to the workers towhom they are due, except:

In cases of force majeure rendering suchpayment impossible or under other specialcircumstances to be determined by theSecretary of Labor and Employment inappropriate regulations, in which case, theworker may be paid through another personunder written authority given by the worker for

the purpose; or

Where the worker has died, in which case, theemployer may pay the wages of the deceasedworker to the heirs of the latter without thenecessity of intestate proceedings. Theclaimants, if they are all of age, shall execute anaffidavit attesting to their relationship to thedeceased and the fact that they are his heirs, tothe exclusion of all other persons. If any of theheirs is a minor, the affidavit shall be executedon his behalf by his natural guardian or next-of-kin. The affidavit shall be presented to theemployer who shall make payment through theSecretary of Labor and Employment or hisrepresentative. The representative of theSecretary of Labor and Employment shall act asreferee in dividing the amount paid among theheirs. The payment of wages under this Article

shall absolve the employer of any furtherliability with respect to the amount paid.

ii. Gaa v. CA Article 1708 used the word "wages" andnot "salary" in relation to "laborer" when it declaredwhat are to be exempted from attachment andexecution. The term "wages" as distinguished from"salary", applies to the compensation for manuallabor, skilled or unskilled, paid at stated times, andmeasured by the day, week, month, or season, while"salary" denotes a higher degree of employment, or asuperior grade of services, and implies a position ofoffice: by contrast, the term wages " indicatesconsiderable pay for a lower and less responsiblecharacter of employment, while "salary" is suggestiveof a larger and more important service (35 Am. Jur.496).

The distinction between wages and salary wasadverted to in Bell vs. Indian Livestock Co. (Tex. Sup.),11 S.W. 344, wherein it was said: "'Wages' are thecompensation given to a hired person for service, andthe same is true of 'salary'. The words seem to besynonymous, convertible terms, though we believethat use and general acceptation have given to theword 'salary' a significance somewhat different fromthe word 'wages' in this: that the former is understoodto relate to position of office, to be the compensationgiven for official or other service, as distinguished

from 'wages', the compensation for labor." Annotation102 Am. St. Rep. 81, 95.

We do not think that the legislature intended theexemption in Article 1708 of the New Civil Code tooperate in favor of any but those who are laboringmen or women in the sense that their work is manual.Persons belonging to this class usually look to the


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reward of a day's labor for immediate or presentsupport, and such persons are more in need of theexemption than any others. Petitioner Rosario A. Gaais definitely not within that class.

iii. Philex v. Philex Supervisors Petitioners nowcontend that the doctrine of "equal pay for equalwork" should not remove management prerogative to

institute difference in salary on the basis of seniority,skill, experience and the dislocation factor in the sameclass of supervisory workers doing the same kind ofwork.18

In this case, the Court cannot agree becausepetitioners failed to adduce evidence to show that anex-Padcal supervisor and a locally hired supervisor ofthe same rank are initially paid the same basic salaryfor doing the same kind of work. They failed to

differentiate this basic salary from any kind of salaryincrease or additional benefit which may have beengiven to the ex-Padcal supervisors due to theirseniority, experience and other factors.

The records only show that an ex-Padcal supervisor ispaid a higher salary than a locally hired supervisor ofthe same rank. Therefore, petitioner failed to provewith satisfactory evidence that it has notdiscriminated against the locally hired supervisor inview of the unequal salary.

iv. Sevilla Trading v. Semana In the light of the clearruling of this Court, there is, thus no reason for anymistake in the construction or application of the law.When petitioner Sevilla Trading still included over theyears non-basic benefits of its employees, such asmaternity leave pay, cash equivalent of unusedvacation and sick leave, among others in the

computation of the 13th-month pay, this may only beconstrued as a voluntary act on its part. Putting theblame on the petitioners payroll personnel isinexcusable.

v. Nasipit Lumber v. NLRC - The Court wishes tostress that the law does not automatically grantexemption to all establishments belonging to an

industry which is deemed "distressed." Hence, RX-O1,Section 3 (4), must not be construed to automaticallyinclude all establishments belonging to a distressedindustry. The fact that the wording of a wage ordermay contain some ambiguity would not helppetitioners. Basic is the rule in statutory constructionthat all doubts in the implementation and theinterpretation of the provisions of the Labor Code, aswell as its implementing rules and regulations, mustbe resolved in favor of labor.

vi. Aklan Electric Coop v. NLRC We are accordinglyconstrained to overturn public respondent's findingsthat petitioner is not justified in its refusal to payprivate respondents' wages and other fringe benefitsfrom June 16, 1992 to March 18, 1993; publicrespondents stated that private respondents werepaid their salaries from January to May 1992 andagain from March 19, 1993 up to the present. As citedearlier, petitioner's Board in a Resolution No. 411dated September 9, 1992 dismissed private

respondents who were on illegal strike and whorefused to report for work at Kalibo office effective

January 31, 1992; since no services were rendered byprivate respondents they were not paid their salaries.Private respondents never questioned norcontroverted the Resolution dismissing them andnowhere in their Comment is it stated that theyquestioned such dismissal. Private respondents also


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have not rebutted petitioner's claim that privaterespondents illegally collected fees and charges duepetitioner and appropriated the collections amongthemselves to satisfy their salaries from January toMay 1992, for which reason, private respondents aremerely claiming salaries only for the period from June16, 1992 to March 1993.

vii. Five J Taxi v. NLRC Art. 114. Deposits for lossor damage. No employer shall require his worker tomake deposits from which deductions shall be madefor the reimbursement of loss of or damage to tools,materials, or equipment supplied by the employer,except when the employer is engaged in such trades,occupations or business where the practice of makingdeposits is a recognized one, or is necessary ordesirable as determined by the Secretary of Labor inappropriate rules and regulations.

It can be deduced therefrom that the said articleprovides the rule on deposits for loss or damage totools, materials or equipments supplied by theemployer. Clearly, the same does not apply to orpermit deposits to defray any deficiency which thetaxi driver may incur in the remittance of his"boundary." Also, when private respondents stoppedworking for petitioners, the alleged purpose for whichpetitioners required such unauthorized deposits nolonger existed. In other case, any balance due to

private respondents after proper accounting must bereturned to them with legal interest.

viii. Atok Big Wedge Mutual v. Atok Big Wedge -"Supplements", therefore, constitute extrarenumeration or special privileges or benefits given toor received by the laborers over and above theirordinary earnings or wages. Facilities, on the other

hand, are items of expense necessary for the laborer'sand his family's existence and subsistence, so that byexpress provision of the law (sec. 2 [g]) they form partof the wage and when furnished by the employer aredeductible therefrom since if they are not sofurnished, the laborer would spend and pay for them

just the same. It is thus clear that the facilitiesmentioned in the agreement of October 29, 1952 do

not come within the term "supplements" as used inArt. 19 of the Minimum Wage Law.

ix. Apodaca v. NLRC Lastly, assuming further thatthere was a call for payment of the unpaidsubscription, the NLRC cannot validly set it off againstthe wages and other benefits due petitioner. Article113 of the Labor Code allows such a deduction fromthe wages of the employees by the employer, only inthree instances, to wit:

ART. 113. Wage Deduction. No employer, in his ownbehalf or in behalf of any person, shall make anydeduction from the wages of his employees, except:

(a) In cases where the worker is insured with hisconsent by the employer, and the deduction is torecompense the employer for the amount paid by himas premium on the insurance;

(b) For union dues, in cases where the right of the

worker or his union to checkoff has been recognizedby the employer or authorized in writing by theindividual worker concerned; and

(c) In cases where the employer is authorized by lawor regulations issued by the Secretary of Labor.


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x. Jardin v. NLRC With regard to the amountdeducted daily by private respondent from petitionersfor washing of the taxi units, we view the same as notillegal in the context of the law. We note that after atour of duty, it is incumbent upon the driver to restorethe unit he has driven to the same clean conditionwhen he took it out. Car washing after a tour of duty isindeed a practice in the taxi industry and is in fact

dictated by fair play. Hence, the drivers are notentitled to reimbursement of washing charges.

xi. Equitable Banking v. Sadac case where, it washeld that a lawyer and can be considered anemployee in as much as the case can be brought tothe jurisdiction of the NLRC.

xii. Songco v. NLRC The ambiguity between Article97(f), which defines the term 'wage' and Article XIV of

the Collective Bargaining Agreement, Article 284 ofthe Labor Code and Sections 9(b) and 10 of theImplementing Rules, which mention the terms "pay"and "salary", is more apparent than real. Broadly, theword "salary" means a recompense or considerationmade to a person for his pains or industry in anotherman's business. Whether it be derived from"salarium," or more fancifully from "sal," the pay ofthe Roman soldier, it carries with it the fundamentalidea of compensation for services rendered. Indeed,there is eminent authority for holding that the words

"wages" and "salary" are in essence synonymous(Words and Phrases, Vol. 38 Permanent Edition, p. 44citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89App. Div. 481; 38 Am. Jur. 496). "Salary," theetymology of which is the Latin word "salarium," isoften used interchangeably with "wage", theetymology of which is the Middle English word"wagen". Both words generally refer to one and the

same meaning, that is, a reward or recompense forservices performed. Likewise, "pay" is the synonym of"wages" and "salary" (Black's Law Dictionary, 5th Ed.).Inasmuch as the words "wages", "pay" and "salary"have the same meaning, and commission is includedin the definition of "wage", the logical conclusion,therefore, is, in the computation of the separation payof petitioners, their salary base should include also

their earned sales commissions.

xiii. Special Steel v. Villareal - "ART. 116. Withholdingof wages and kickbacks prohibited. It shall beunlawful for any person, directly or indirectly, towithhold any amount from the wages (and benefits) ofa worker or induce him to give up any part of hiswages by force, stealth, intimidation, threat or by anyother means whatsoever without the workersconsent."

The above provision is clear and needs no furtherelucidation. Indeed, petitioner has no legal authorityto withhold respondents 13th month pay and otherbenefits. What an employee has worked for, hisemployer must pay.7 Thus, an employer cannotsimply refuse to pay the wages or benefits of itsemployee because he has either defaulted in paying aloan guaranteed by his employer; or violated theirmemorandum of agreement; or failed to render anaccounting of his employers property.

12. Women Employeesi. Lakpue Drug v. Belga In the instant case, the

alleged misconduct of Belga barely falls within thesituation contemplated by the law. Her absence for 16days was justified considering that she had justdelivered a child, which can hardly be considered aforbidden act, a dereliction of duty; much less does it


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imply wrongful intent on the part of Belga. Tropicalharps on the alleged concealment by Belga of herpregnancy. This argument, however, begs thequestion as to how one can conceal a full-termpregnancy. We agree with respondents position thatit can hardly escape notice how she grows bigger eachday. While there may be instances where thepregnancy may be inconspicuous, it has not been

sufficiently proven by Tropical that Belgas case issuch.

Belgas failure to formally inform Tropical of herpregnancy can not be considered as grave misconductdirectly connected to her work as to constitute justcause for her separation.

The charge of disobedience for Belgas failure tocomply with the memoranda must likewise fail.

Disobedience, as a just cause for termination, must bewillful or intentional. Willfulness is characterized by awrongful and perverse mental attitude rendering theemployees act inconsistent with propersubordination.11 In the instant case, the memorandawere given to Belga two days after she had givenbirth. It was thus physically impossible for Belga toreport for work and explain her absence, as ordered.

ii. PT&T v. NLRC In the case at bar, petitioner's policyof not accepting or considering as disqualified from

work any woman worker who contracts marriage runsafoul of the test of, and the right against,discrimination, afforded all women workers by ourlabor laws and by no less than the Constitution.Contrary to petitioner's assertion that it dismissedprivate respondent from employment on account ofher dishonesty, the record discloses clearly that herties with the company were dissolved principally

because of the company's policy that married womenare not qualified for employment in PT & T, and notmerely because of her supposed acts of dishonesty.

13. Handicapped Employeesi. Bernardo v. NLRC money counters case.

14. Apprentices

i. Century Canning v. CA Since Palad is notconsidered an apprentice because the apprenticeshipagreement was enforced before the TESDAs approvalof petitioners apprenticeship program, Palad isdeemed a regular employee performing the job of a"fish cleaner." Clearly, the job of a "fish cleaner" isnecessary in petitioners business as a tuna andsardines factory. Under Article 28021 of the LaborCode, an employment is deemed regular where theemployee has been engaged to perform activities

which are usually necessary or desirable in the usualbusiness or trade of the employer.

ii. Nitto Enterprises v. NLRC - Hence, since theapprenticeship agreement between petitioner andprivate respondent has no force and effect in theabsence of a valid apprenticeship program dulyapproved by the DOLE, private respondent's assertionthat he was hired not as an apprentice but as adelivery boy ("kargador" or "pahinante") deservescredence. He should rightly be considered as a regular

employee of petitioner as defined by Article 280 of theLabor Code:

Art. 280. Regular and Casual Employment. Theprovisions of written agreement to the contrarynotwithstanding and regardless of the oral agreementof the parties, an employment shall be deemed to beregular where the employee has been engaged to


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perform activities which are usually necessary ordesirable in the usual business or trade of theemployer, except where the employment has beenfixed for a specific project or undertaking thecompletion or termination of which has beendetermined at the time of the engagement of theemployee or where the work or services to beperformed is seasonal in nature and the employment

is for the duration of the season.iii.iv. An employment shall be deemed to be casual if it is

not covered by the preceding paragraph: Provided,That, any employee who has rendered at least oneyear of service, whether such service is continuous orbroken, shall be considered a regular employee withrespect to the activity in which he is employed and hisemployment shall continue while such activity exists.

IV. Job Contracting and Labor-Only Contractingi. Labor Code:o Article 106. Contractor or subcontractor.

Whenever an employer enters into a contractwith another person for the performance of theformers work, the employees of the contractorand of the latters subcontractor, if any, shall bepaid in accordance with the provisions of thisCode.

In the event that the contractor or

subcontractor fails to pay the wages of hisemployees in accordance with this Code,the employer shall be jointly and severallyliable with his contractor or subcontractorto such employees to the extent of thework performed under the contract, in thesame manner and extent that he is liableto employees directly employed by him.

The Secretary of Labor and Employmentmay, by appropriate regulations, restrictor prohibit the contracting-out of labor toprotect the rights of workers establishedunder this Code. In so prohibiting orrestricting, he may make appropriatedistinctions between labor-onlycontracting and job contracting as well asdifferentiations within these types ofcontracting and determine who among theparties involved shall be considered theemployer for purposes of this Code, toprevent any violation or circumvention ofany provision of this Code.

There is "labor-only" contracting wherethe person supplying workers to an

employer does not have substantialcapital or investment in the form of tools,equipment, machineries, work premises,among others, and the workers recruitedand placed by such person are performingactivities which are directly related to theprincipal business of such employer. Insuch cases, the person or intermediaryshall be considered merely as an agent ofthe employer who shall be responsible tothe workers in the same manner and

extent as if the latter were directlyemployed by him.

o Article 107. Indirect employer. The

provisions of the immediately preceding articleshall likewise apply to any person, partnership,association or corporation which, not being anemployer, contracts with an independent


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contractor for the performance of any work,task, job or project.

o Article 108. Posting of bond. An employer or

indirect employer may require the contractor orsubcontractor to furnish a bond equal to thecost of labor under contract, on condition thatthe bond will answer for the wages due the

employees should the contractor orsubcontractor, as the case may be, fail to paythe same.

o Article 109. Solidary liability. The provisions

of existing laws to the contrary notwithstanding,every employer or indirect employer shall beheld responsible with his contractor orsubcontractor for any violation of any provisionof this Code. For purposes of determining the

extent of their civil liability under this Chapter,they shall be considered as direct employers.

ii. DOLE DO:http://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A-

11.pdf

iii. (1986) PBCom v. NLRC T he definition of "labor-only" contracting in Rule VIII, Book III of theImplementing Rules must be read in conjunction withthe definition of job contracting given in Section 8 ofthe same Rules. The undertaking given by CESI infavor of the bank was not the performance of aspecific job for instance, the carriage and deliveryof documents and parcels to the addresses thereof.

There appear to be many companies today whichperform this discrete service, companies with theirown personnel who pick up documents and packagesfrom the offices of a client or customer, and who

deliver such materials utilizing their own delivery vansor motorcycles to the addresses. In the present case,the undertaking of (CESI) was to provide its client-thebank-with a certain number of persons able tocarry out the work of messengers. Such undertakingof CESI was complied with when the requisite numberof persons were assigned or seconded to thepetitioner bank. Orpiada utilized the premises and

office equipment of the bank and not those of (CESI)Messengerial work-the delivery of documents todesignated persons whether within or without thebank premises is of course directly related to theday-to-day operations of the bank. Section 9(2)quoted above does not require for its applicability thatthe petitioner must be engaged in the delivery ofitems as a distinct and separate line of business.

iv. (1989) Guarin v. NLRC The jobs assigned to the

petitioners as mechanics, janitors, gardeners, firemenand grasscutters were directly related to the businessof Novelty as a garment manufacturer. In the case ofPhilippine Bank of Communications vs. NLRC, 146SCRA 347, we ruled that the work of a messenger isdirectly related to a bank's operations. In itsComment, Novelty contends that the services whichare directly related to manufacturing garments aresewing, textile cutting, designs, dying, quality control,personnel, administration, accounting, finance,customs, delivery and similar other activities; and that

allegedly, "[i]t is only by stretching the imaginationthat one may conclude that the services of janitors,

janitresses, firemen, grasscutters, mechanics andhelpers are directly related to the business ofmanufacturing garments" (p. 78, Rollo). Not so, for thework of gardeners in maintaining clean and well-keptgrounds around the factory, mechanics to keep themachines functioning properly, and firemen to look
http://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A-11.pdfhttp://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A-11.pdfhttp://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A-11.pdfhttp://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A-11.pdf


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out for fires, are directly related to the dailyoperations of a garment factory. That fact is confirmedby Novelty's rehiring the workers or renewing thecontract with Lipercon every year from 1983 to 1986,a period of three (3) years.

v. (2000) Vinoya v. NLRC From the twoaforementioned decisions, it may be inferred that it is

not enough to show substantial capitalization orinvestment in the form of tools, equipment,machineries and work premises, among others, to beconsidered as an independent contractor. In fact,

jurisprudential holdings are to the effect that indetermining the existence of an independentcontractor relationship, several factors might beconsidered such as, but not necessarily confined to,whether the contractor is carrying on an independentbusiness; the nature and extent of the work; the skill

required; the term and duration of the relationship;the right to assign the performance of specified piecesof work; the control and supervision of the workers;the power of the employer with respect to the hiring,firing and payment of the workers of the contractor;the control of the premises; the duty to supplypremises, tools, appliances, materials and labor; andthe mode, manner and terms of payment.

vi. (1993) Neri v. NLRC based on the foregoing, BCCcannot be considered a "labor-only" contractor

because it has substantial capital. While there may beno evidence that it has investment in the form oftools, equipment, machineries, work premises, amongothers, it is enough that it has substantial capital, aswas established before the Labor Arbiter as well asthe NLRC. In other words, the law does not requireboth substantial capital and investment in the form oftools, equipment, machineries, etc. This is clear from

the use of the conjunction "or". If the intention was torequire the contractor to prove that he has bothcapital and the requisite investment, then theconjunction "and" should have been used. But, havingestablished that it has substantial capital, it was nolonger necessary for BCC to further adduce evidenceto prove that it does not fall within the purview of"labor-only" contracting. There is even no need for it

to refute petitioners' contention that the activitiesthey perform are directly related to the principalbusiness of respondent bank.

Be that as it may, the Court has already taken judicialnotice of the general practice adopted in severalgovernment and private institutions and industries ofhiring independent contractors to perform specialservices. 9 These services range from janitorial, 10security 11 and even technical or other specific

services such as those performed by petitioners Neriand Cabelin. While these services may be considereddirectly related to the principal business of theemployer, 12 nevertheless, they are not necessary inthe conduct of the principal business of the employer.

vii. (1989) Tabas v. California Mfg. It would havebeen different, we believe, had Livi been discretely apromotions firm, and that California had hired it toperform the latter's merchandising activities. For then,Livi would have been truly the employer of its

employees, and California, its client. The client, in thatcase, would have been a mere patron, and not anemployer. The employees would not in that event beunlike waiters, who, although at the service ofcustomers, are not the latter's employees, but of therestaurant.


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viii. (2000) Escario v. NLRC - Among the circumstancesthat tend to establish the status of D.L. Admark as alegitimate job contractor are:

1) The SEC registration certificate of D.L. Admarkstates that it is a firm engaged in promotional,advertising, marketing and merchandising activities.

2) The service contract between CMC and D.L. Admarkclearly provides that the agreement is for the supplyof sales promoting merchandising services rather thanone of manpower placement.11

3) D.L. Admark was actually engaged in severalactivities, such as advertising, publication,promotions, marketing and merchandising. It hadseveral merchandising contracts with companies likePurefoods, Corona Supply, Nabisco Biscuits, and

Licron. It was likewise engaged in the publicationbusiness as evidenced by it magazine the"Phenomenon."12

4) It had its own capital assets to carry out itspromotion business. It then had current assetsamounting to P6 million and is therefore a highlycapitalized venture.13 It had an authorized capitalstock of P500,000.00. It owned several motor vehiclesand other tools, materials and equipment to serviceits clients. It paid rentals of P30,020 for the office

space it occupied.

ix. (2008) Purefoods v. NLRC - Permissible jobcontracting or subcontracting refers to anarrangement whereby a principal agrees to put out orfarm out with the contractor or subcontractor theperformance or completion of a specific job, work orservice within a definite or predetermined period

regardless of whether such job, work or service is tobe performed or completed within or outside thepremises of the principal.29 In this arrangement, thefollowing conditions must be met: (a) the contractorcarries on a distinct and independent business andundertakes the contract work on his account under hisown responsibility according to his own manner andmethod, free from the control and direction of his

employer or principal in all matters connected withthe performance of his work except as to the resultsthereof; (b) the contractor has substantial capital orinvestment; and (c) the agreement between theprincipal and contractor or subcontractor assures thecontractual employees' entitlement to all labor andoccupational safety and health standards, freeexercise of the right to self-organization, security oftenure, and social welfare benefits.

x. (2008) PAL v. Ligan Respondents havingperformed tasks which are usually necessary anddesirable in the air transportation business ofpetitioner, they should be deemed its regularemployees and Synergy as a labor-only contractor.

xi. (2010) SMC v. MAERC In comparison, MAERC, asearlier discussed, displayed the characteristics of alabor-only contractor. Moreover, while MAERC'sinvestments in the form of buildings, tools andequipment amounted to more than P4 Million, we

cannot disregard the fact that it was the SMC whichrequired MAERC to undertake such investments underthe understanding that the business relationshipbetween petitioner and MAERC would be on a longterm basis. Nor do we believe MAERC to have anindependent business. Not only was it set up tospecifically meet the pressing needs of SMC whichwas then having labor problems in its segregation


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division, none of its workers was also ever assigned toany other establishment, thus convincing us that itwas created solely to service the needs of SMC.Naturally, with the severance of relationship betweenMAERC and SMC followed MAERC's cessation ofoperations, the loss of jobs for the whole MAERCworkforce and the resulting actions instituted by theworkers.

xii. (2009) Coca Bottlers v. Agito In sum, Interservedid not have substantial capital or investment in theform of tools, equipment, machineries, and workpremises; and respondents, its supposed employees,performed work which was directly related to theprincipal business of petitioner. It is, thus, evident thatInterserve falls under the definition of a "labor-only"contractor, under Article 106 of the Labor Code; aswell as Section 5(i) of the Rules Implementing Articles

106-109 of the Labor Code, as amended.

The Court, however, does not stop at this finding. It isalso apparent that Interserve is a labor-only contractorunder Section 5(ii)44 of the Rules ImplementingArticles 106-109 of the Labor Code, as amended, sinceit did not exercise the right to control the performanceof the work of respondents.

xiii. (2010) Aliviado v. Procte and Gamble Toemphasize, there is labor-only contracting when the

contractor or sub-contractor merely recruits, suppliesor places workers to perform a job, work or service fora principal25 and any of the following elements arepresent:

i) The contractor or subcontractor does not havesubstantial capital or investment which relates to the

job, work or service to be performed and the

employees recruited, supplied or placed by suchcontractor or subcontractor are performing activitieswhich are directly related to the main business of theprincipal; or

ii) The contractor does not exercise the right to controlover the performance of the work of the contractualemployee.

xiv. (1998) Coca-cola Bottlers v. Hingpit RespondentCommission grounded its reversal of the Arbiter'sadjudgment solely on a 1989 judgment of this Court,Guarin et al. v. Lipercon 23 in which LIPERCON hadalso been involved as a labor contractor of anothercompany. 24 There, the Court held LIPERCON to be a"labor-only" contractor; and declared that the NLRC'sfinding that it "was not a mere labor-only contractorbecause it has substantial capital or investment in the

form of tools, equipment, machineries, work premises,** " was "based on insubstantial evidence, as theNLRC (had merely) pointed out that 'it (LIPERCON)claims to be possessed among others, of substantialcapital and equipment essential to carry out itsbusiness as a general independent contractor' **." Inother words, in Guarin, LIPERCON was held to havefailed to discharge its burden of proof that "it hassubstantial capital, investment, tools, etc."

Not so in the case at bar. Here, there is substantial

evidence, detailed by the Labor Arbiter, to establishLIPERCON's character as an independent contractor inthe real sense of the word, 25 which makes the LaborArbiter's ruling more acceptable than respondentCommission's on the same matter, being foundedsolely on an inapplicable precedent. Also moredeserving of assent is said Labor Arbiter's conclusionthat the complainants' acceptance of employment in


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LIPERCON in December, 1986 lasting for a period ofsome two years effectively operated as a cessationof the prior relationship they had with PIONEER andCOCA COLA in consequence of which they becameentitled to separation pay from COCA COLA, PIONEERbeing merely its hiring agent.

V. Probationary Employment

i. Labor Code Article 281. Probationary employment.

Probationary employment shall not exceed six(6) months from the date the employee startedworking, unless it is covered by anapprenticeship agreement stipulating a longerperiod. The services of an employee who hasbeen engaged on a probationary basis may beterminated for a just cause or when he fails toqualify as a regular employee in accordance

with reasonable standards made known by theemployer to the employee at the time of hisengagement. An employee who is allowed towork after a probationary period shall beconsidered a regular employee.

ii. Mauricio v. NLRC - Anent the first issue, thesubmission of clearance from a previous employer is areasonable requirement to qualify as a regularemployee upon the expiration of the six monthsprobationary employment. This reasonable regulation

is mandatory in the sense that it speaks of theemployees character before he or she becomes aregular employee. For sure, no employer in his rightmind would engage the regular service of anemployee unless he is certain of the moral characterof a probationary employee applying as regularemployee. To say that the requirement is a mereformality is an oversimplification of the long standing

policy in the bank industry that bank officers must behonest and beyond reproach.

iii. Holiday Inn Manila v. NLRC - On the issue of illegaldismissal, we find that Honasan was placed by thepetitioner on probation twice, first during her on-the-

job training for three weeks, and next during anotherperiod of six months, ostensibly in accordance withArticle 281. Her probation clearly exceeded the period

of six months prescribed by this article.

Probation is the period during which the employermay determine if the employee is qualified forpossible inclusion in the regular force. In the case atbar, the period was for three weeks, during Honasan'son-the-job training. When her services were continuedafter this training, the petitioners in effect recognizedthat she had passed probation and was qualified to bea regular employee.

iv. Mariwasa Mfg. v. Leogardo - By voluntarilyagreeing to an extension of the probationary period,Dequila in effect waived any benefit attaching to thecompletion of said period if he still failed to make thegrade during the period of extension. The Court findsnothing in the law which by any fair interpretationprohibits such a waiver. And no public policyprotecting the employee and the security of his tenureis served by prescribing voluntary agreements which,by reasonably extending the period of probation,

actually improve and further a probationaryemployee's prospects of demonstrating his fitness forregular employment.

v. Woodridge v. Benito - Initially, it should be clarifiedthat this controversy revolves only on respondentsprobationary employment. On March 31, 2001, theeffective date of their dismissal,33 respondents were


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not regular or permanent employees; they had not yetcompleted three (3) years of satisfactory service asacademic personnel which would have entitled themto tenure as permanent employees in accordance withthe Manual of Regulations for Private Schools.Probationary employees enjoy security of tenure inthe sense that during their probationary employment,they cannot be dismissed except for cause or when he

fails to qualify as a regular employee.36 However,upon expiration of their contract of employment,probationary employees cannot claim security oftenure and compel their employers to renew theiremployment contracts. In fact, the services of anemployee hired on probationary basis may beterminated when he fails to qualify as a regularemployee in accordance with reasonable standardsmade known by the employer to the employee at thetime of his engagement. There is nothing that would

hinder the employer from extending a regular orpermanent appointment to an employee once theemployer finds that the employee is qualified forregular employment even before the expiration of theprobationary period. Conversely, if the purpose soughtby the employer is neither attained nor attainablewithin the said period, the law does not preclude theemployer from terminating the probationaryemployment on justifiable ground.

vi. SPCQC v. Ancheta The common practice is for the

employer and the teacher to enter into a contract,effective for one school year.31 At the end of theschool year, the employer has the option not to renewthe contract, particularly considering the teacher'sperformance.32 If the contract is not renewed, theemployment relationship terminates.33 If the contractis renewed, usually for another school year, theprobationary employment continues.34 Again, at the

end of that period, the parties may opt to renew or notto renew the contract.35 If renewed, this secondrenewal of the contract for another school year wouldthen be the last year since it would be the thirdschool year of probationary employment.36 At theend of this third year, the employer may now decidewhether to extend a permanent appointment to theemployee, primarily on the basis of the employee

having met the reasonable standards of competenceand efficiency set by the employer.37 For the entireduration of this three-year period, the teacher remainsunder probation.38 Upon the expiration of his contractof employment, being simply on probation, he cannotautomatically claim security of tenure and compel theemployer to renew his employment contract.

vii. Aliling v. Feliciano - (d) In all cases of probationaryemployment, the employer shall make known to the

employee the standards under which he will qualify asa regular employee at the time of his engagement.Where no standards are made known to the employeeat that time, he shall be deemed a regular employee.

viii. Tiamsons Enterprises v. CA Private respondentswere remiss in showing that petitioner failed to qualifyas a regular employee. Except for their allegationsthat she was apprised of her status as probationaryand that she would be accorded regular status onceshe meets their standards, no evidence was presented

of these standards and that petitioner had beenapprised of them at the time she was hired as aprobationary employee. Neither was it shown thatpetitioner failed to meet such standards.

Petitioner should have been informed as to the basisof private respondents decision not to extend herregular or permanent employment. This case is bereft


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of any proof like an evaluation or assessment reportwhich would support private respondents claim thatshe failed to comply with the standards in order tobecome a regular employee.

VI. Security of Tenure and Termination ofEmployment

Art 277 (b) - Subject to the constitutional right of

workers to security of tenure and their right to beprotected against dismissal except for a just andauthorized cause and without prejudice to therequirement of notice under Article 283 of this Code,the employer shall furnish the worker whoseemployment is sought to be terminated a writtennotice containing a statement of the causes fortermination and shall afford the latter ampleopportunity to be heard and to defend himself withthe assistance of his representative if he so desires in

accordance with company rules and regulationspromulgated pursuant to guidelines set by theDepartment of Labor and Employment. Any decisiontaken by the employer shall be without prejudice tothe right of the worker to contest the validity orlegality of his dismissal by filing a complaint with theregional branch of the National Labor RelationsCommission. The burden of proving that thetermination was for a valid or authorized cause shallrest on the employer. The Secretary of theDepartment of Labor and Employment may suspend

the effects of the termination pending resolution ofthe dispute in the event o

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