Labrev CD3
Labrev CD3
Labrev CD3
ESPINOSA
GR No. 227734, Aug 09, 2017
FACTS: It was alleged by the respondents that on various dates, Alba hired them as construction
workers for his projects in several residential villages within Metro Manila and nearby provinces. The
respondents were Alba's regular employees who were paid different wage rates that ranged from
P350.00 to P500.00 a day, but were deprived of some statutorily-mandated benefits such as their
overtime pay, 13th month pay, holiday pay, and service incentive leave (SIL) pay. On different dates in
2013, some of the respondents confronted Alba regarding their benefits, but such action eventually
resulted in their dismissal.
For his defense, Alba argued that the respondents could not be deemed his regular employees. He
claimed to be a mere taker of small-scale construction projects for house repairs and renovations. In the
construction industry, he was deemed a mere mamamakyaw, who would pool a team of skilled and semi-
skilled carpenters and masons for specific projects that usually lasted from one to two weeks. The
respondents were paid daily wages ranging from P600.00 to P1,000.00, depending on their skill, and
could take on projects with their own clients after Alba's projects had terminated.[13] For succeeding
projects, Alba would only take in construction workers who were still available for the duration of the
new work.
As he denied any liability for the respondents' claims, Alba likewise presented certifications from clients
indicating that the latter directly paid the salaries of the workers provided by Alba for the projects. He
also argued that the respondents used their own tools at work, and received instructions from either the
architect or foreman engaged by the project owner.
The respondents were displeased by Alba's explanations. To disprove Alba's claim that he was a mere
mamamakyaw, they presented gate passes, issued by the villages where Alba had construction projects,
which indicated that Alba was a "contractor."
The LA dismissed the complaints. The LA referred to the following circumstances affecting the parties'
payment of wages and the element of control, and which negated the claim that the respondents should
be deemed employees of Alba: first, the wages of the respondents were paid directly by the project
owners; second, the respondents applied their own methodology and used their own tools and
equipment as they discharged their work; and third, the respondents obtained their work instructions
from architects or the foreman directly hired by the owners or clients. The supposed gate passes issued
by village representatives did not qualify as substantial evidence to show that Alba was indeed a
contractor.
The respondents' appeal was partly granted by the NLRC. The association between Alba and the
respondents was established after Alba readily proclaimed that the respondents were part of his pool of
workers. Alba had the power to determine who would remain in or be terminated from his projects. He
also admitted that he paid the respondents their wages on a daily basis. The four-fold test in
determining the existence of an employer-employee relationship was duly satisfied. Their employment
was deemed regular given that they had been continuously rehired for Alba's projects for several years.
More importantly, they performed tasks which were necessary and indispensable to the usual business
or trade of Alba.
CA dismissed Alba's petition. The CA reiterated the satisfaction of the four-fold test that is considered in
finding employer-employee relationship. The appellate court likewise assessed the nature of work that
the respondents were required to accomplish, vis-a-vis the type of Alba's business, which prompted the
CA to also affirm the finding that the illegally dismissed respondents were regular employees.
RULING: The existence of an employer-employee relationship between him and the respondents was
sufficiently established. Alba's relationship with the respondents satisfies the four-fold test.
From the records, it is clear that Alba possessed this power to control, and had in fact freely exercised it
over the respondents. Alba failed to satisfactorily rebut the respondents' direct assertions that Alba
frequented the work sites, and would reprimand his workers whom he believed were idle or sluggish. He
even controlled the time when they had to stay at work. The respondents relied upon instructions
coming from Alba, as their work was for projects obtained by the latter. He controlled the results of the
work that the respondents had to perform, along with the means and methods by which to accomplish
them. His control was not negated by any instructions that came from a foreman or an architect, as
directives that came from them, if there were at all, were understandably limited. The respondents
worked for Alba who held the project, and the latter was the one who exercised authority over them.
Even Alba's allegation that the respondents were independent contractors was not amply substantiated.
Time and again, the Court has emphasized that "the test of independent contractorship is 'whether one
claiming to be an independent contractor has contracted to do the work according to his own methods
and without being subject to the control of the employer, except only as to the results of the work. The
Court has explained Alba's exercise of control over the respondents. For a worker to be deemed an
independent contractor, it is further necessary to establish several indicators. In Television and
Production Exponents, Inc. and/or Tuviera v. Servañ a,[43] the Court explained:
Aside from possessing substantial capital or investment, a legitimate job contractor or subcontractor
carries on a distinct and independent business and undertakes to perform the job, work or service on its
own account and under its own responsibility according to its manner and method, and free from the
control and direction of the principal in all matters connected with the performance of the work except
as to the results thereof.
"It is the burden of the employer to prove that a person whose services it pays for is an independent
contractor rather than a regular employee with or without a fixed term."Undeniably, Alba failed to
discharge this burden.
Insular Life Assurance Co., Ltd. vs. NLRC 179 SCRA 459 , November 15, 1989
FACTS:
In 1968, Insular Life Assurance Co., Ltd. (the Company) and Melecio Basiao entered into a contract
authorizing Basiao to solicit within the Philippines applications for insurance policies and annuities in
accordance with the existing rules and regulations of the Company. Basiao would receive compensation,
in the form of commissions. The Rules in the Company’s Rate Book and its Agent’s Manual, as well as
circulars promulgated by the Company, were made part of said contract. Four years later, in 1972, the
parties entered into another contract, An Agency Manager’s Contract. To implement his end of it, Basiao
organized an agency named M. Basiao and Associates, while concurrently fulfilling his commitments
under the first contract with the Company.
In 1979, the Company terminated the Agency Manager’s Contract. Thereafter, Basiao sued the Company
in a civil action, which, Basiao alleges prompted the Company to terminate his engagement under the
first contract and stop payment of his commissions.
Basiao then filed with the Ministry of Labor a complaint against the Company, seeking to recover
commissions allegedly unpaid. Respondents disputed the Ministry’s jurisdiction over Basiao’s claim,
asserting that he was not an employee of the Company but an independent contractor. The Labor Arbiter
found for Basiao, ruling that the underwriting agreement established an employer-employee relationship
between him and the Company, conferring jurisdiction on the Ministry of Labor to adjudicate his claim.
In the Company’s appeal with the NLRC, the NLRC affirmed the aforesaid decision. Hence, the present
petition for certiorari and prohibition.
The Company argued that there was no employer-employee relation in the legal and generally accepted
sense existed between it and Basiao, claiming that the terms of the contract they had entered into made
Basiao the master of his own time and selling methods, left to his judgment the time, place and
means of soliciting insurance, set no accomplishment quotas and compensated him on the basis of
results obtained.
Respondent contend that the critical feature distinguishing the status of an employee from that of an
independent contractor is control, that is, whether or not the party who engages the services of another
has the power to control the latter’s conduct in rendering such services. The contract obliges Basiao,
among others, to observe and conform to all rules and regulations which the Company may from time to
time prescribe. The Company prescribed the qualifications of applicants for insurance, processed their
applications and determined the amounts of insurance cover to be issued as indicative of the control,
which made Basiao, in legal contemplation, an employee of the Company.
ISSUE:
Whether or not an employer-employee relationship was established between the Company and Basiao.
HELD: None.
It is true that the “control test” expressed in the following pronouncement of the Court in the 1956 case
of Viana vs. Alejo Al-Lagadan:
It should, however, be obvious that not every form of control that the hiring party reserves to himself
over the conduct of the party hired in relation to the services rendered may be accorded the effect of
establishing an employer-employee relationship between them in the legal or technical sense of the term.
Logically, the line should be drawn between rules that merely serve as guidelines towards the
achievement of the mutually desired result without dictating the means or methods to be employed in
attaining it, and those that control or fix the methodology and bind or restrict the party hired to the use
of such means. The first, which aim only to promote the result, create no employer-employee
relationship unlike the second, which address both the result and the means used to achieve it.
Rules and regulations governing the conduct of the business are provided for in the Insurance Code and
enforced by the Insurance Commissioner. It is, therefore, usual and expected for an insurance company
to promulgate a set of rules to guide its commission agents in selling its policies that they may not run
afoul of the law and what it requires or prohibits. Of such a character are the rules which prescribe
the qualifications of persons who may be insured, subject insurance applications to processing
and approval by the Company, and also reserve to the Company the determination of the
premiums to be paid and the schedules of payment. None of these really invades the agent’s
contractual prerogative to adopt his own selling methods or to sell insurance at his own time and
convenience, hence cannot justifiably be said to establish an employer-employee relationship
between him and the company.
No showing has been made that any such rules or regulations were in fact promulgated, much less that
any rules existed or were issued which effectively controlled or restricted his choice of methods—or the
methods themselves—of selling insurance. Absent such showing, the Court will not speculate that any
exceptions or qualifications were imposed on the express provision of the contract leaving Basiao “x x x
free to exercise his own judgment as to the time, place and means of soliciting insurance.”
The Court, therefore, rules that under the contract invoked by him, Basiao was not an employee
of the petitioner, but a commission agent, an independent contractor whose claim for unpaid
commissions should have been litigated in an ordinary civil action. The Labor Arbiter erred in
taking cognizance of, and adjudicating, said claim, being without jurisdiction to do so, as did the
respondent NLRC in affirming the Arbiter’s decision. This conclusion renders it unnecessary and
premature to consider Basiao’s claim for commissions on its merits.
WHEREFORE, the appealed Resolution of the National Labor Relations Commission is set aside, and that
complaint of private respondent Melecio T. Basiao in RAB Case No. VI-0010-83 is dismissed.
DY KEH BENG vs. INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES
Facts:
A charge of unfair labor practice was led against Dy Keh Beng, proprietor of a basket factory for
dismissing 2 of his workers for the latter’s participation in union activities. Filed before the CIR on
behalf of International Labor and Marine Union of the Philippines and two of its members, Solano
and Tudla.
In his answer, Dy Keh Beng contended that he did not know Tudla and that Solano was not his
employee because the latter came to the establishment only when there was work which he did
on pakiaw basis, each piece of work being done under a separate contract.
After trial, the hearing officer of CIR rendered a decision in favor of the respondent, although
Solano was admitted to have worked on piece basis.
Issue:
Whether or not there existed an employee-employer relationship between the petitioner and
private respondent.
Ruling:
Yes.
Petitioner really anchors his contention of the non-existence of employee-employer relationship
on the control test.
Petitioner contends that the private respondents "did not meet the control test in the light
of the . . . definition of the terms employer and employee, because:
- there was no evidence to show that petitioner had the right to direct the manner and method
of respondent's work."
- it is argued that petitioner's evidence showed that "Solano worked on a pakiaw basis" and that
he stayed in the establishment only when there was work.
Considering the fiding by the Hearing Examiner that the establishment of Dy Keh Beng is
"engaged in the manufacture of baskets known as kaing , it is natural to expect that those working
under Dy would have to observe, among others, Dy's requirements of size and quality of the
kaing . Some control would necessarily be exercised by Dy as the making of the kaing would be
subject to Dy's specifications. Parenthetically, since the work on the baskets is done at Dy's
establishments, it can be inferred that the proprietor Dy could easily exercise control on the men
he employed.
DY KEH BENG, petitioner, vs. INTERNATIONAL LABOR and MARINE UNION OF THE PHILIPPINES, ET
AL., respondents. G.R. No. L-32245 May 25, 1979
FACTS:
- Petitioner, Dy Keh Beng, proprietor of basket factory, was charged with ULP for discriminatory acts
defined under Sec 4(a), subparagraph (1 & 4), R.A. No. 875 by dismissing on September 28-29, 1960,
respectively, Carlos N. Solano and Ricardo Tudla for their union activities.
After PI was conducted, a case was filed in the CIR for in behalf of the ILMUP and two of its members,
Solano and Tudla. Dy Keh Beng contended that he did not know Tudla and that Solano was not his
employee because the latter came to the establishment only when there was work which he did on
pakiaw basis. According to Dy Keh Beng, Solano was not his employee for the following reasons:
ISSUE:
Whether or not an employee employer relation existed between petitioner Dy Keh Beng and the respondents
Solano and Tudla.
HELD:
- The SC also noted the decision of Justice Paras in the case of “Sunrise Coconut Products Co. Vs. CIR
(83 Phil 518, 523):
o “judicial notice of the fact that the so-called "pakyaw" system mentioned in this case as
generally practiced in our country, is, in fact, a labor contract -between employers and
employees, between capitalists and laborers.”
- With regard to the control test the SC said that
o “It should be borne in mind that the control test calls merely for the existence of the right
to control the manner of doing the work, not the actual exercise of the right.”
- Considering the finding by the Hearing Examiner that the establishment of Dy Keh Beng is
"engaged in the manufacture of baskets known as kaing, it is natural to expect that those working
under Dy would have to observe, among others, Dy's requirements of size and quality of the kaing.
Some control would necessarily be exercised by Dy as the making of the kaing would be subject to
Dy's specifications. Parenthetically, since the work on the baskets is done at Dy's establishments, it
can be inferred that the proprietor Dy could easily exercise control on the men he employed.
The petition was dismissed. The Court affirmed the decision of the CIR.
SONZA VS ABS-CBN BROADCASTING CORP
431 SCRA 583
FACTS:
- In May 1994, ABS-CBN signed an agreement with the Mel and Jay Management and Development
Corporation (MJMDC). ABS-CBN was represented by its corporate officers while MJMDC was
represented by Sonza, as President and general manager, and Tiangco as its EVP and treasurer.
Referred to in the agreement as agent, MJMDC agreed to provide Sonza’s services exclusively to ABS-
CBN as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310,
000 for the first year and P317, 000 for the second and third year.
- On April 1996, Sonza wrote a letter to ABS-CBN's President, Eugenio Lopez III, where he irrevocably
resigned in view of the recent events concerning his program and career. The acts of the station are
violative of the Agreement and said letter will serve as notice of rescission of said contract. The
letter also contained the waiver and renunciation for recovery of the remaining amount stipulated
but reserves the right to seek recovery of the other benefits under said Agreement.
- After the said letter, Sonza filed with the Department of Labor and Employment a complaint alleging
that ABS-CBN did not pay his salaries, separation pay, service incentive pay,13th month pay, signing
bonus, travel allowance and amounts under the Employees Stock Option Plan (ESOP). ABS-CBN
contended that no employee-employer relationship existed between the parties. However, ABS-CBN
continued to remit Sonza’s monthly talent fees but opened another account for the same purpose.
- Labor Arbiter: dismissed the complaint and found that there is no employee-employer relationship.
The LA ruled that he is not an employee by reason of his peculiar skill and talent as a TV host and a
radio broadcaster. Unlike an ordinary employee, he was free to perform his services in accordance
with his own style. NLRC and CA affirmed the LA. Should there be any complaint, it does not arise
from an employer-employee relationship but from a breach of contract.
ISSUE:
Whether or not there was employer-employee relationship between the parties.
HELD:
There is no employer-employee relationship between Sonza and ABS-CBN. Petition denied. Judgment
decision affirmed.
- Case law has consistently held that the elements of an employee-employer relationship are selection
and engagement of the employee, the payment of wages, the power of dismissal and the employer’s
power to control the employee on the means and methods by which the work is accomplished. The last
element, the so-called "control test", is the most important element.
B. Payment of Wages
ABS-CBN directly paid SONZA his monthly talent fees with no part of his fees going to MJMDC. SONZA
asserts that this mode of fee payment shows that he was an employee of ABS-CBN. SONZA also points
out that ABS-CBN granted him benefits and privileges “which he would not have enjoyed if he were truly
the subject of a valid job contract.”
All the talent fees and benefits paid to SONZA were the result of negotiations that led to the
Agreement. If SONZA were ABS-CBN’s employee, there would be no need for the parties to stipulate on
benefits such as “SSS, Medicare, x x x and 13th month pay” which the law automatically incorporates into
every employer-employee contract. Whatever benefits SONZA enjoyed arose from contract and not
because of an employer-employee relationship. In addition, SONZA’s talent fees are so huge and out of
the ordinary that they indicate more an independent contractual relationship rather than an employer-
employee relationship. ABS-CBN agreed to pay SONZA such huge talent fees precisely because of
SONZA’s unique skills, talent and celebrity status not possessed by ordinary employees.
C. Power of Dismissal
For violation of any provision of the Agreement, either party may terminate their relationship. SONZA
failed to show that ABS-CBN could terminate his services on grounds other than breach of contract, such
as retrenchment to prevent losses as provided under labor laws.
During the life of the Agreement, ABS-CBN agreed to pay SONZA’s talent fees as long as “AGENT and Jay
Sonza shall faithfully and completely perform each condition of this Agreement.” Even if it suffered
severe business losses, ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay
SONZA’s talent fees during the life of the Agreement. This circumstance indicates an independent
contractual relationship between SONZA and ABS-CBN.
SONZA admits that even after ABS-CBN ceased broadcasting his programs, ABS-CBN still paid him his
talent fees. Plainly, ABS-CBN adhered to its undertaking in the Agreement to continue paying SONZA’s
talent fees during the remaining life of the Agreement even if ABS-CBN cancelled SONZA’s programs
through no fault of SONZA.
D. Power of Control
First, SONZA contends that ABS-CBN exercised control over the means and methods of his work. SONZA’s
argument is misplaced. ABS-CBN engaged SONZA’s services specifically to co-host the “Mel & Jay”
programs. ABS-CBN did not assign any other work to SONZA. To perform his work, SONZA only needed
his skills and talent. How SONZA delivered his lines, appeared on television, and sounded on radio were
outside ABS-CBN’s control. SONZA did not have to render eight hours of work per day. The Agreement
required SONZA to attend only rehearsals and tapings of the shows, as well as pre- and post-production
staff meetings. ABS-CBN could not dictate the contents of SONZA’s script. However, the Agreement
prohibited SONZA from criticizing in his shows ABS-CBN or its interests. The clear implication is that
SONZA had a free hand on what to say or discuss in his shows provided he did not attack ABS-CBN
or its interests.
Second, SONZA urges us to rule that he was ABS-CBN’s employee because ABS-CBN subjected him to its
rules and standards of performance. SONZA claims that this indicates ABS-CBN’s control “not only [over]
his manner of work but also the quality of his work." The Agreement stipulates that SONZA shall
abide with the rules and standards of performance “covering talents” of ABS-CBN. The Agreement
does not require SONZA to comply with the rules and standards of performance prescribed for
employees of ABS-CBN. The code of conduct imposed on SONZA under the Agreement refers to the
“Television and Radio Code of the Kapisanan ng mga Broadcaster sa Pilipinas (KBP), which has been
adopted by the COMPANY (ABS-CBN) as its Code of Ethics.” The KBP code applies to broadcasters, not to
employees of radio and television stations. Broadcasters are not necessarily employees of radio and
television stations. Clearly, the rules and standards of performance referred to in the Agreement are
those applicable to talents and not to employees of ABS-CBN.
In any event, not all rules imposed by the hiring party on the hired party indicate that the latter is an
employee of the former. In this case, SONZA failed to show that these rules controlled his performance.
We find that these general rules are merely guidelines towards the achievement of the mutually desired
result, which are top-rating television and radio programs that comply with standards of the industry.
Lastly, SONZA insists that the “exclusivity clause” in the Agreement is the most extreme form of control
which ABS-CBN exercised over him. This argument is futile. Being an exclusive talent does not by
itself mean that SONZA is an employee of ABS-CBN. Even an independent contractor can validly
provide his services exclusively to the hiring party. In the broadcast industry, exclusivity is not
necessarily the same as control.
The hiring of exclusive talents is a widespread and accepted practice in the entertainment industry. This
practice is not designed to control the means and methods of work of the talent, but simply to protect the
investment of the broadcast station. The broadcast station normally spends substantial amounts of
money, time and effort “in building up its talents as well as the programs they appear in and thus expects
that said talents remain exclusive with the station for a commensurate period of time.” Normally, a much
higher fee is paid to talents who agree to work exclusively for a particular radio or television station. In
short, the huge talent fees partially compensates for exclusivity, as in the present case.
CHAVEZ vs NLRC
Respondents: NATIONAL LABOR RELATIONS COMMISSION, SUPREME PACKAGING, INC. and ALVIN
LEE, Plant Manager
FACTS:
Supreme Packaging, Inc. engaged the services of Pedro Chavez, as truck driver tasked to deliver
the Supreme Packaging’s products from its factory in Bataan, to its various customers, mostly in
Metro Manila.
o Supreme Packaging furnished Chavez with a truck. Most of the delivery trips were made at
nighttime (starting 6:00 p.m. and returning thereto in the afternoon two or three days
after).
o The deliveries were made in accordance with the routing slips issued by Supreme
Packaging indicating the order, time and urgency of delivery.
o Initially, Chavez was paid P350.00 per trip, adjusted to P480.00 and, at the time of his
alleged dismissal, P900.00 per trip.
Chavez expressed to respondent Alvin Lee, Supreme Packaging’s plant manager, Chavez’s desire
to avail himself of the benefits that the regular employees were receiving such as overtime pay,
nightshift differential pay, and 13th month pay, among others. Although promised, such were not
extended to him.
Chavez filed a complaint for regularization but before the case could be heard, he was terminated.
Consequently, an amended complaint was filed for illegal dismissal, unfair labor practice and non-
payment of overtime pay, nightshift differential pay, 13th month pay, among others.
Supreme Packaging denied the existence of an employer-employee relationship, averring that
Chavez was an independent contractor as evidenced by the contract of service, renewed twice, the
terms being the same except for the payment to Chavez. Chavez had the sole control over the
means and methods by which his work was accomplished. He paid the wages of his helpers and
exercised control over them.
o They also did not dismiss Chavez. Rather, the severance of his contractual relation with
the Supreme Packaging was due to his violation of the terms and conditions of their
contract. Chavez allegedly failed to observe the minimum degree of diligence in the proper
maintenance of the truck he was using, thereby exposing Supreme Packaging to
unnecessary significant expenses of overhauling the said truck.
ISSUE: Whether there existed an employer-employee relationship between the Supreme Packaging and
the Chavez – YES
RATIO:
The elements to determine the existence of an employment relationship are: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
employer’s power to control the employee’s conduct. The most important element is the
employer’s control of the employee’s conduct, not only as to the result of the work to be done, but
also as to the means and methods to accomplish it. All the four elements are present in this case.
First. Undeniably, it was Supreme Packaging who engaged the services of the Chavez without the
intervention of a third party.
Second. That Chavez was paid on a per trip basis is not significant. This is merely a method of
computing compensation and not a basis for determining the existence or absence of employer-
employee relationship. One may be paid on the basis of results or time expended on the work,
and may or may not acquire an employment status, depending on whether the elements of an
employer-employee relationship are present or not. In this case, it cannot be gainsaid that Chavez
received compensation from the Supreme Packaging for the services that he rendered to the
latter.
Third. Supreme Packaging’s power to dismiss Chavez was inherent in the fact that they engaged
the services of the Chavez as truck driver. They exercised this power by terminating Chavez’s
services albeit in the guise of “severance of contractual relation” due allegedly to the latter’s
breach of his contractual obligation.
Fourth. While an independent contractor enjoys independence and freedom from the control and
supervision of his principal, an employee is subject to the employer’s power to control the means
and methods by which the employee’s work is to be performed and accomplished.
Although Supreme Packaging denied that they exercised control over the manner and methods by
which Chavez accomplished his work, a careful review of the records shows that the latter
performed his work as truck driver under the Supreme Packaging’ supervision and control: 1. The
truck driven by the Chavez belonged to Supreme Packaging; 2. There was an express instruction
from the Supreme Packaging that the truck shall be used exclusively to deliver Supreme
Packaging’s goods; 3. Supreme Packaging directed Chavez, after completion of each delivery, to
park the truck in either of two specific places only, to wit: at its office in Metro Manila or at BEPZ,
Mariveles, Bataan; 4. Supreme Packaging determined how, where and when the Chavez would
perform his task by issuing to him gate passes and routing slips.
Chavez performed the delivery services exclusively for the Supreme Packaging for a continuous
and uninterrupted period of ten years.
Neither can Supreme Packaging’ claim that the Chavez was guilty of gross negligence. The single
and isolated act of the Chavez’s negligence in the proper maintenance of the truck alleged by the
Supreme Packaging does not amount to “gross and habitual neglect” warranting his dismissal.
However, circumstances do not warrant Chavez’s reinstatement. More equitable disposition is
separation pay.
Auto Bus Transport vs Bautista
Res: Antonio Bautista has been employed by pet. ABT as driver-conductor. Res was paid on
commission basis (7%) of the total gross income per travel—2x a month basis
While res was driving along Sta Fe, Nueva Vizcaya the bus he was driving accidentally bumped the
rear portion of Autobus No 124, as the latter vehicle suddenly stopped at a sharp curve without
giving any warning
Res—accident happened because he was compelled to go back to Roxas, Isabela, although he had
not slept for almost 24 hrs—also alleged that he was not allowed to work until he fully paid (75,
551.50), representing 30% of the cost of repair of the damaged buses and despite res pleas for
reconsideration—same was ignored—after 1 mo sent him a letter of termination.
Res instituted complaint for illegal dismissal with money claims for non-payment of 13 th mo pay
and service incentive leave
Pet: maintained that res employment was replete with offenses involving reckless imprudence,
gross negligence and dishonesty.
Pet—avers that in the exercise of its management prerogative, res employment was terminated
only after the latter was provided with an opportunity to explain his side regarding the accident
LA: dismissed—auto bus must pay complainant:
o 13th month pay
o Service incentive leave pay
NLRC:
Sec 3: Employers covered—the decree shall apply to all employers except to:
Affirmed with modification LA deleting the award for 13th month pay
Issue:
Ruling:
a) Every employee who has rendered at least one (1) year of service shall be
entitled to a yearly service incentive leave of five days with pay
Employees engaged on task or contract basis or paid on purely commission basis are not
automatically exempted from the grant of service incentive leave UNLESS they fall under the
classification of field personnel.
They
BOOK III, Rule V: Service Incentive Leave
are Art 82 (Labor Code): paid
Section 1. Coverage—this rule shall apply to all employees except:
“field personnel” – refer to non-agricultural employees who regularly perform their
duties away from
d) Field the principal
personnel placeemployees
and other of business or branch
whose office ofisthe
performance employer
unsupervised
and whose actual
by the hours of
employer work in those
including the field
whocannot be determined
are engaged with
on task or reasonable
contract basis,
certainty.
purely commission basis, or those who are paid in a fixed amount for
performing work irrespective of the time consumed in the performance
specific
amount for rendering service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the fact that they are
performing work away from the principal office of the employee.
Service Incentive leave (SIL)—is a right which accrues to every employee who has
served within 12 mos, whether continues or broken reckoned from the date the
employee starter working (including authorized absences and paid regular
holidays) UNLESS the working days in the establishment as a matter of practice or
policy or that provided in the employment contracts, is less than 12 mos, in which
case said period shall be considered as 1 year.
In each and every depot, there is always the Dispatcher whose function is precisely to see to it that the
bus and its crew leave the premises at specific times and arrive at the estimated proper time. The driver,
complainant, was therefore under constant supervision while in the performance of this work.
He cannot be considered a field personnel but a regular employee who performs tasks usually
necessary and desirable to the usual trade of petitioner’s business. Respondent is ENTITLED to the
GRANT OF SERVICE INCENTIVE LEAVE.
3 ELEMENTS—CAUSE OF ACTION:
1. A right in favor of the plaintiff by whatever means and under whatever law it
arises or is created.
2. An obligation on the part of the named defendant to respect or not to violate
such right
3. An act or omission on the part of such defendant violative of the right of the
plaintiff or constituting a breach of the obligation of the defendant to the
plaintiff.
In cases of nonpayment of allowances and other monetary benefits, if it established that the benefits
being claimed have been withheld from the employee for a period longer than 3 years, the amount
pertaining to the period beyond the 3 year prescriptive period is barred by prescription. –the amount
that can only be demanded by the aggrieved employee shall be limited to the amount of the benefits
withheld within 3 years before the filing of the complaint.
Policy of LC—to grant service incentive leave pay to workers in all establishments, subject to a few
exceptions.
“every employee who has rendered at least 1 year of service shall be entitled to
a yearly incentive leave of five (5) days with pay
Applying Art 291—the 3 year prescriptive period commences, not at the end of the year when the
employee becomes entitled to the commutation of his service incentive leave but from the time when the
employer refuses to pay its monetary equivalent after demand of commutation or upon termination of
the employee’s services.
In the case at bar, respondent had not made use of his service incentive leave nor demanded for its
commutation until his employment was terminated. Neither did petitioner compensate his accumulated
SIL at the time of his dismissal—only upon filing of of complaint for illegal dismissal.
His cause of action to claim the payment of his accumulated SIL leave thus accrued from the time
when his employer dismissed him and failed to pay his accumulated leave credits. Since res filed his
money claim after only 1 month from the time of dismissal—filed within prescriptive period.
G.R. No. 146073 January 13, 2003
JERRY E. ACEDERA, ANTONIO PARILLA, AND OTHERS LISTED IN ANNEX "A," 1, petitioners-
appellants, vs. INTERNATIONAL CONTAINER TERMINAL SERVICES, INC. (ICTSI), NATIONAL LABOR
RELATIONS COMMISSION and HON. COURT OF APPEALS, respondents-appellees.
Facts:
Ordinarily, a person whose interests are already represented will not be permitted to do the same except
when there is a suggestion of fraud or collusion or that the representative will not act in good faith.
Jerry Acedera, et al. are employees of International Container Terminal Services, Inc. (ICTSI) and are
members of Associated Port Checkers & Workers Union-International Container Terminal Services, Inc.
(APCWU-ICTSI), a duly registered labor organization. ICTSI entered into a five-year CBA with APCWU
which reduced the employees· work days from 304 to 250 days a year.
The Wage Board decreed wage increases in NCR which affected ICTSI. Upon the request of APCWU to
compute the actual monthly increase in the employee’s salary by multiplying the mandated increase by
365 days and dividing by 12 months, ICTSI stopped using 304 days as divisor and started using 365 days
to determine the daily wage.
Later on, ICTSI entered into a retrenchment program which prompted APCWU to file a complaint before
the LA for ICTSI·s use of 365 days, instead of 250 days, as divisor in the computation of wages. Acedera et
al. filed a Motion to Intervene which was denied by the LA. On appeal, NLRC affirmed LA·s decision.
Acedera et al. filed a petition for certiorari to the CA which was dismissed.
Issue: Whether or not Acedera et al. have no legal right to intervene in the case as their intervention was
a superfluity. YES
Ratio:
Acedera et al. stress that they have complied with the requisites for intervention because (1) they are the
ones who stand to gain or lose by the direct legal operation and effect of any judgment that may be
rendered in this case, (2) no undue delay or prejudice would result from their intervention since their
Complaint-in-Intervention with Motion for Intervention was filed while the Labor Arbiter was still
hearing the case and before any decision thereon was rendered, and (3) it was not possible for them to
file a separate case as they would be guilty of forum shopping because the only forum available for them
was the Labor Arbiter.
Acedera et al., however, failed to consider, in addition to the rule on intervention, the rule on
representation. A labor union is one such party authorized to represent its members under Article
242(a) of the Labor Code which provides that a union may act as the representative of its members for
the purpose of CBA. This authority includes the power to represent its members for the purpose of
enforcing the provisions of the CBA.
That APCWU acted in a representative capacity "for and in behalf of its Union members and other
employees similarly situated, the title of the case filed by it at the Labor Arbiters Office so expressly
states.
While a party acting in a representative capacity, such as a union, may be permitted to intervene in a
case, ordinarily, a person whose interests are already represented will not be permitted to do the same
except when there is a suggestion of fraud or collusion or that the representative will not act in good
faith for the protection of all interests represented by him.
Acedera et al. cite the dismissal of the case filed by ICTSI, first by the Labor Arbiter, and later by the Court
of Appeals. The dismissal of the case does not, however, by itself show the existence of fraud or collusion
or a lack of good faith on the part of APCWU. There must be clear and convincing evidence of fraud or
collusion or lack of good faith independently of the dismissal. This, Acedera et al. failed to proffer.
Acedera et al. likewise express their fear that APCWU would not prosecute the case diligently because of
its “sweetheart relationship" with ICTSI. There is nothing on record, however, to support this alleged
relationship which allegation surfaces as a mere afterthought because it was never raised early on. It was
raised only in petitioners-appellants· reply to ICTSI·s comment in the petition at bar, the last pleading
submitted to this Court, which was filed on June 20, 2001 or more than 42 months after petitioners-
Appellants filed their Complaint-in-Intervention with Motion to Intervene with the Labor Arbiter. To
reiterate, for a member of a class to be permitted to intervene in a representative action, fraud or
collusion or lack of good faith on the part of the representative must be proven. It must be based on facts
borne on record. Mere assertions, as what petitioners-appellants proffer, do not suffice.
Topic MUSLIM HOLIDAY
Ponente KAPUNAN, j.
RELEVANT FACTS
Oct. 17, 1992 – DOLE Iligan District Office, conducted a routine inspection in the premises of San
Miguel Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees.
DOLE sent a copy of the inspection result to SMC and it was received by and explained to its
personnel officer Elena dela Puerta.
SMC contested the findings and so DOLE conducted summary hearings on different dates.
Still, SMC failed to submit proof that it was paying regular Muslim holiday pay to its employees.
Hence, the Regional Director Alan Macaraya issued a compliance order directing SMC to
consider Muslim holidays as regular holidays and to pay both its Muslim and non-Muslim
employees holiday pay within 30 days from receipt of the order.
SMC appealed to the DOLE main office in Manila Dismissed for lack of merit.
SMC appealed to the SC via Rule 65, which it referred to the CA. CA modified the compliance order
issued by the Regional Director with regards the payment of Muslim holiday pay from 200% to
150% of the employee’s basic salary.
SMC filed MR but it was denied by the CA.
Hence, this petition via Rule 65.
Issue Ratio
RULING
NOTES
PD 1083
Art. 169. Official Muslim holidays. - The following are hereby recognized as legal Muslim holidays: (a)
Amun Jadīd (New Year), which falls on the first day of the first lunar month of Muharram;
(b) MaulidunNabī (Birthday of the Prophet Muhammad), which falls on the twelfth day of the third lunar
month of RabiulAwwal;
(c) Lailatul Isrā Wal Mirāj (Nocturnal Journey and Ascension of the Prophet Muhammad), which falls on
the twentyseventh day of the seventh lunar month of Rajab;
(d) ĪdulFitr (Hari Raya Puasa), which falls on the first day of the tenth lunar month of Shawwal,
commemorating the end of the fasting season; and
(e) ĪdūlAdhā (Hari Raya Haji),which falls on the tenth day of the twelfth lunar month of DhūlHijja.
Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays shall be officially observed
in the Provinces of Basilan, Lanao del Norte, Lanao del Sur, Maguindanao, North Cotabato, Iligan, Marawi,
Pagadian, and Zamboanga and in such other Muslim provinces and cities as may hereafter be created;
(2) Upon proclamation by the President of the Philippines, Muslim holidays may also be officially
observed in other provinces and cities.
PD 1083
(3) The provisions of this Code shall be applicable only to Muslims and nothing herein shall be construed
to operate to the prejudice of a non-Muslim.
Atok-Big Wedge Mutual Benefit Association vs. Atok-Big Wedge Mining Company Incorporated
Facts: On 04 September 1950, the Atok-Big Wedge Mutual Benefit Association, a labor union, demanded
from the Atok-Big Wedge Mining Company, among others, an increase of 50 centavos in the daily wage.
In the course of conciliatory measures, some of the demands were granted and the others, including the
daily wage increase, rejected. The Court fixed, effective from the date of the demand, the minimum wage
at 2.65 pesos with rice ration and 3.20 without rice ration, denying deduction from the minimum wage,
the value of housing facilities furnished by Atok to its employees and efficiency bonus. Respondent
subsequently presented an urgent petition for authority to cease its operations and lay-off employees
due to heavy losses, increased taxes, high cost of materials, negligible quantity of ore deposits, and the
enforcement of the Minimum Wage Law, the continued operation of the company would lead to its
immediate bankruptcy and collapse.
Instead of hearing the petition, the Court convened the parties for voluntary conciliation and
mediation and thereafter, the parties reached an agreement valuing the facilities that will form part of
the wages and to be charged in full or partially by Respondent against laborer or employee in the
exigencies of operation. The labor union argues that to allow the deduction of facilities appearing in the
Agreement would be contrary to the mandate of Section 19 of the Minimum Wage Law, which states that
an employer is not justified in reducing supplements furnished on the date of enactment.
Ruling: NO. The meaning of the term "supplements" has been fixed by the Code of Rules and Regulations
promulgated by the Wage Administration Office to implement the Minimum Wage Law (Ch. 1, [c]), as:
extra renumeration or benefits received by wage earners from their employees and include but are not
restricted to pay for vacation and holidays not worked; paid sick leave or maternity leave; overtime rate
in excess of what is required by law; sick, pension, retirement, and death benefits; profit-sharing; family
allowances; Christmas, war risk and cost-of-living bonuses; or other bonuses other than those paid as a
reward for extra output or time spent on the job.
FACTS
Norma Mabeza was an employee hired by Hotel Supreme in Baguio City. In 1991, an inspection was
made by the Department of Labor and Employment (DOLE) at Hotel Supreme and the DOLE inspectors
discovered several violations by the hotel management. Immediately, the owner of the hotel, Peter Ng,
directed his employees to execute an affidavit which would purport that they have no complaints
whatsoever against Hotel Supreme particularly the latter's compliance with minimum wage and other
labor standard provisions of law. Mabeza signed the affidavit but she refused to certify it with the
prosecutor’s office.
MABEZA’S CONTENTION
That same day, as she refused to go to the City Prosecutor’s Office, she was ordered by the hotel
management to turn over the keys to her living quarters and to remove her belongings to the hotel’s
premises. She then filed a leave of absence which was denied by her employer. She attempted to return
to work but the hotel’s cashier told her that she should not report to work and instead continue with her
unofficial leave of absence.
Three days after her attempt to return to work, she filed a complaint against the management for illegal
dismissal before the Arbitration Branch of the NLRC in Baguio City. In addition to that, she alleged
underpayment of wages, non-payment of holiday pay, service incentive leave pay, 13th month pay, night
differential and other benefits.
NG’S CONTENTION
Peter Ng, in their Answer, argued that her unauthorized leave of absence from work is the ground for her
dismissal. He even maintained that her allegation of underpayment and non-payment of benefits had no
legal basis. He raises a new ground of loss of confidence, which was supported by his filing of criminal
case for the alleged qualified theft of the petitioner (Peter Ng filed a criminal complaint against Mabeza
as he alleged that she had stolen a blanket and some other stuff from the hotel)
LA’S DECISION
The Labor Arbiter ruled in favor of the hotel management on the ground of loss of confidence. She
appealed to the NLRC which affirmed the Labor Arbiter’s decision. Hence, this petition.
MAIN ISSUE
Whether or not Mabeza’s certain facilities may be deducted from her wage No.
The labor arbiter’s contention that the reason for the monetary benefits received by the petitioner
between 1981 to 1987 were less than the minimum wage was because petitioner did not factor in the
meals, lodging, electric consumption and water she received during the period of computations. Granting
that meals and lodging were provided and indeed constituted facilities, such facilities could not be
deducted without the employer complying first with certain legal requirements. Without satisfying these
requirements, the employer simply cannot deduct the value from the employee’s wages.
First, proof must be shown that such facilities are customarily furnished by the trade. Second, the
provision of deductible facilities must be voluntary accepted in writing by the employee. Finally, facilities
must be charged at fair and reasonable value. These requirements were not met in the instant case.
Private respondent failed to present any company policy to show that the meal and lodging are part of
the salary. He also failed to provide proof of the employee’s written authorization and he failed to show
how he arrived at the valuations. More significantly, the food and lodging, or electricity and water
consumed by the petitioner were not facilities but supplements. A benefit or privilege granted to an
employee for the convenience of the employer is not a facility. The criterion in making a distinction
between the two not so much lies in the kind but the purpose. Considering, therefore, that hotel workers
are required to work on different shifts and are expected to be available at various odd hours, their ready
availability is a necessary matter in the operations of a small hotel, such as the private respondent’s
hotel.
OTHER ISSUES
The pivotal question in any case where unfair labor practice on the part of the employer is alleged is
whether or not the employer has exerted pressure, in the form of restraint, interference or coercion,
against his employee’s right to institute concerted action for better terms and conditions of employment.
Without doubt, the act of compelling employees to sign an instrument indicating that the employer
observed labor standard provisions of the law when he might not have, together with the act of
terminating or coercing those who refuse to cooperate with the employees’ scheme constitutes unfair
labor practice.
Abandonment is not present. Mabeza returned several times to inquire about the status of her work or
her employment status. She even asked for a leave but was not granted. Her asking for leave is a clear
indication that she has no intention to abandon her work with the hotel. Even the employer knows that
his purported reason of dismissing her due to abandonment will not fly so he amended his reply to
indicate that it is actually “loss of confidence” that led to Mabeza’s dismissal.
It is true that loss of confidence is a valid ground to dismiss an employee. But this is ideally only applied
to workers whose positions require a certain level or degree of trust particularly those who are members
of the managerial staff. Evidently, an ordinary chambermaid who has to sign out for linen and other hotel
property from the property custodian each day and who has to account for each and every towel or
bedsheet utilized by the hotel’s guests at the end of her shift would not fall under any of these two classes
of employees for which loss of confidence, if ably supported by evidence, would normally apply. Further,
the suspicious filing by Peter Ng of a criminal case against Mabeza long after she initiated her labor
complaint against him hardly warrants serious consideration of loss of confidence as a ground of
Mabeza’s dismissal.
INSULAR HOTEL EMPLOYEES UNION-NF vs. WATERFRONT INSULAR HOTEL DAVAO
GR. No. 174040-41
FACTS:
Respondent Waterfront Insular Hotel Davao (respondent) sent the Department of Labor and
Employment (DOLE), Region XI, Davao City, a Notice of Suspension of Operations notifying the same that
it will suspend its operations for a period of six months due to severe and serious business losses. In said
notice, respondent assured the DOLE that if the company could not resume its operations within the six-
month period, the company would pay the affected employees all the benefits legally due to them.
During the period of the suspension, Domy R. Rojas (Rojas), the President of Davao Insular Hotel Free
Employees Union (DIHFEU-NFL), the recognized labor organization in Waterfront Davao, sent
respondent a number of letters asking management to reconsider its decision.
In a letter dated November 8, 2000, Rojas intimated that the members of the Union were determined to
keep their jobs and that they believed they too had to help respondent.
In another letter dated November 20, 2000, Rojas sent respondent more proposals as a form of the
Union's gesture of their intention to help the company.
It is understood that with the suspension of the CBA renegotiations, the same existing CBA shall be
adopted and that all provisions therein shall remain enforced except for those mentioned in this
proposal.
These proposals shall automatically supersede the affected provisions of the CBA.
In a handwritten letter dated November 25, 2000, Rojas once again appealed to respondent for it to
consider their proposals and to re-open the hotel. In said letter, Rojas stated that manpower for fixed
manning shall be one hundred (100) rank-and-file Union members instead of the one hundred forty-five
(145) originally proposed.
After series of negotiations, respondent and DIHFEU-NFL, represented by its President, Rojas, and Vice-
Presidents, Exequiel J. Varela Jr. and Avelino C. Bation, Jr., signed a Memorandum of Agreement (MOA)
wherein respondent agreed to re-open the hotel subject to certain concessions offered by DIHFEU-NFL in
its Manifesto.
Accordingly, respondent downsized its manpower structure to 100 rank-and-file employees as set forth
in the terms of the MOA. Moreover, as agreed upon in the MOA, a new pay scale was also prepared by
respondent.
The retained employees individually signed a "Reconfirmation of Employment" which embodied the new
terms and conditions of their continued employment. Each employee was assisted by Rojas who also
signed the document.
On August 22, 2002, Darius Joves (Joves) and Debbie Planas, claiming to be local officers of the National
Federation of Labor (NFL), filed a Notice of Mediation before the National Conciliation and Mediation
Board (NCMB), Region XI, Davao City. In said Notice, it was stated that the Union involved was "DARIUS
JOVES/DEBBIE PLANAS ET AL., National Federation of Labor." The issue raised in said Notice was the
"Diminution of wages and other benefits through unlawful Memorandum of Agreement."
On August 29, 2002, the NCMB called Joves and respondent to a conference to explore the possibility of
settling the conflict. In the said conference, respondent and petitioner Insular Hotel Employees Union-
NFL (IHEU-NFL), represented by Joves, signed a Submission Agreement wherein they chose AVA Alfredo
C. Olvida (AVA Olvida) to act as voluntary arbitrator. Submitted for the resolution of AVA Olvida was the
determination of whether or not there was a diminution of wages and other benefits through an unlawful
MOA. In support of his authority to file the complaint, Joves, assisted by Atty. Danilo Cullo (Cullo),
presented several Special Powers of Attorney (SPA) which were, however, undated and unnotarized.
On September 16, 2002, a second preliminary conference was conducted in the NCMB, where Cullo
denied any existence of an intra-union dispute among the members of the union. Cullo, however,
confirmed that the case was filed not by the IHEU-NFL but by the NFL. When asked to present his
authority from NFL, Cullo admitted that the case was, in fact, filed by individual employees named in the
SPAs. The hearing officer directed both parties to elevate the aforementioned issues to AVA Olvida.
The case was docketed as Case No. AC-220-RB-11-09-022-02 and referred to AVA Olvida. Respondent
again raised its objections, specifically arguing that the persons who signed the complaint were not the
authorized representatives of the Union indicated in the Submission Agreement nor were they parties to
the MOA. AVA Olvida directed respondent to file a formal motion to withdraw its submission to
voluntary arbitration.
1. Who may file a notice or declare a strike or lockout or request preventive mediation?
Section 3, Rule IV of the NCMB Manual of Procedure provides who may file a notice of preventive
mediation, to wit:
Who may file a notice or declare a strike or lockout or request preventive mediation. —
Any certified or duly recognized bargaining representative may file a notice or declare a strike
or request for preventive mediation in cases of bargaining deadlocks and unfair labor practices.
The employer may file a notice or declare a lockout or request for preventive mediation in the
same cases. In the absence of a certified or duly recognized bargaining representative, any
legitimate labor organization in the establishment may file a notice, request preventive
mediation or declare a strike, but only on grounds of unfair labor practice.
From the foregoing, it is clear that only a certified or duly recognized bargaining agent may file a notice
or request for preventive mediation. It is curious that even Cullo himself admitted, in a number of
pleadings, that the case was filed not by the Union but by individual members thereof. Clearly, therefore,
the NCMB had no jurisdiction to entertain the notice filed before it.
2. WON the NCMB and Voluntary Arbitrators had no jurisdiction over the complaint.
Even though respondent signed a Submission Agreement, it had, however, immediately manifested its
desire to withdraw from the proceedings after it became apparent that the Union had no part in the
complaint. As a matter of fact, only four days had lapsed after the signing of the Submission Agreement
when respondent called the attention of AVA Olvida in a "Manifestation with Motion for a Second
Preliminary Conference" that the persons who filed the instant complaint in the name of Insular Hotel
Employees Union-NFL had no authority to represent the Union.
Respecting petitioners' thesis that unsettled grievances should be referred to voluntary arbitration as
called for in the CBA, the same does not lie. The pertinent portion of the CBA reads:
“In case of any dispute arising from the interpretation or implementation of this Agreement or
any matter affecting the relations of Labor and Management, the UNION and the COMPANY
agree to exhaust all possibilities of conciliation through the grievance machinery. The
committee shall resolve all problems submitted to it within fifteen (15) days after the problems
ha[ve] been discussed by the members. If the dispute or grievance cannot be settled by the
Committee, or if the committee failed to act on the matter within the period of fifteen (15) days
herein stipulated, the UNIONand the COMPANY agree to submit the issue to Voluntary
Arbitration. Selection of the arbitrator shall be made within seven (7) days from the date of
notification by the aggrieved party. The Arbitrator shall be selected by lottery from four (4)
qualified individuals nominated by in equal numbers by both parties taken from the list of
Arbitrators prepared by the National Conciliation and Mediation Board (NCMB). If the Company
and the Union representatives within ten (10) days fail to agree on the Arbitrator, the NCMB
shall name the Arbitrator. The decision of the Arbitrator shall be final and binding upon the
parties. However, the Arbitrator shall not have the authority to change any provisions of the
Agreement. The cost of arbitration shall be borne equally by the parties.”
3. WON the individual members of the Union have the requisite standing to question the
MOA before the NCMB?
Petitioners have not, however, been duly authorized to represent the union.
“Pursuant to Article 260 of the Labor Code, the parties to a CBA shall name or designate their respective
representatives to the grievance machinery and if the grievance is unsettled in that level, it shall
automatically be referred to the voluntary arbitrators designated in advance by parties to a CBA.
Consequently, only disputes involving the union and the company shall be referred to the grievance
machinery or voluntary arbitrators.
4. If the individual members of the Union have no authority to file the case, does the
federation to which the local union is affiliated have the standing to do so?
A local union does not owe its existence to the federation with which it is affiliated. It is a separate and
distinct voluntary association owing its creation to the will of its members. Mere affiliation does not
divest the local union of its own personality, neither does it give the mother federation the license to act
independently of the local union. It only gives rise to a contract of agency, where the former acts in
representation of the latter. Hence, local unions are considered principals while the federation is deemed
to be merely their agent.”
Based on the foregoing, this Court agrees with approval with the disquisition of the CA when it ruled that
NFL had no authority to file the complaint in behalf of the individual employees
“the voluntary arbitrator had no jurisdiction over the case. Waterfront contents that the Notice of
Mediation does not mention the name of the Union but merely referred to the National Federation of
Labor (NFL) with which the Union is affiliated. In the subsequent pleadings, NFL's legal counsel even
confirmed that the case was not filed by the union but by NFL and the individual employees named in the
SPAs which were not even dated nor notarized.
Even granting that petitioner Union was affiliated with NFL, still the relationship between that of the
local union and the labor federation or national union with which the former was affiliated is generally
understood to be that of agency, where the local is the principal and the federation the agency. Being
merely an agent of the local union, NFL should have presented its authority to file the Notice of
Mediation. While We commend NFL's zealousness in protecting the rights of lowly workers, We cannot,
however, allow it to go beyond what it is empowered to do.”
As provided under the NCMB Manual of Procedures, only a certified or duly recognized bargaining
representative and an employer may file a notice of mediation, declare a strike or lockout or
request preventive mediation. The Collective Bargaining Agreement (CBA), on the other, recognizes
that DIHFEU-NFL is the exclusive bargaining representative of all permanent employees. The inclusion of
the word "NFL" after the name of the local union merely stresses that the local union is NFL's affiliate. It
does not, however, mean that the local union cannot stand on its own. The local union owes its creation
and continued existence to the will of its members and not to the federation to which it belongs. The
spring cannot rise higher than its source, so to speak.
5. WON respondent was not really suffering from serious losses as found by the CA.
No. In its petition before the CA, respondent submitted its audited financial statements which show that
for the years 1998, 1999, until September 30, 2000, its total operating losses amounted to
P48,409,385.00. Based on the foregoing, the CA was not without basis when it declared that respondent
was suffering from impending financial distress. While the Wage Board denied respondent's petition for
exemption, this Court notes that the denial was partly due to the fact that the June 2000 financial
statements then submitted by respondent were not audited. Cullo did not question nor discredit the
accuracy and authenticity of respondent's audited financial statements. This Court, therefore, has no
reason to question the veracity of the contents thereof. Moreover, it bears to point out that respondent's
audited financial statements covering the years 2001 to 2005 show that it still continues to suffer losses.
6. WON Article 100 of the Labor Code applies only to benefits already enjoyed at the time of
the promulgation of the Labor Code.
Clearly, the prohibition against elimination or diminution of benefits set out in Article 100 of the Labor
Code is specifically concerned with benefits already enjoyed at the time of the promulgation of the Labor
Code. Article 100 does not, in other words, purport to apply to situations arising after the promulgation
date of the Labor Code
7. Does the non-ratification of the MOA in accordance with the Union's constitution prove
fatal to the validity thereof?
No. It must be remembered that after the MOA was signed, the members of the Union individually signed
contracts denominated as "Reconfirmation of Employment." Cullo did not dispute the fact that of the 87
members of the Union, who signed and accepted the "Reconfirmation of Employment," 71 are the
respondent employees in the case at bar. Moreover, it bears to stress that all the employees were
assisted by Rojas, DIHFEU-NFL's president, who even co-signed each contract.
Stipulated in each Reconfirmation of Employment were the new salary and benefits scheme. In addition,
it bears to stress that specific provisions of the new contract also made reference to the MOA. Thus, the
individual members of the union cannot feign knowledge of the execution of the MOA. Each contract was
freely entered into and there is no indication that the same was attended by fraud, misrepresentation or
duress. To this Court's mind, the signing of the individual "Reconfirmation of Employment" should,
therefore, be deemed an implied ratification by the Union members of the MOA.
While the terms of the MOA undoubtedly reduced the salaries and certain benefits previously enjoyed by
the members of the Union, it cannot escape this Court's attention that it was the execution of the MOA
which paved the way for the re-opening of the hotel, notwithstanding its financial distress. More
importantly, the execution of the MOA allowed respondents to keep their jobs. It would certainly be
iniquitous for the members of the Union to sign new contracts prompting the re-opening of the hotel
only to later on renege on their agreement on the fact of the non-ratification of the MOA.
American Wire Union v American Wire Co.
April 29, 2005
FACTS:
American Wire and Cable Co., Inc. (Company) is a corporation engaged in the manufacture of wires
and cables. There are 2 unions in this company, the American Wire and Cable Monthly-Rated
Employees Union (Monthly-Rated Union) and the American Wire and Cable Daily-Rated Employees
Union (Daily-Rated Union).
Company withdrew and denied certain benefits and entitlements from its employees due allegedly to
dismal financial performance as evidenced by the company’s unaudited Revenues and Profitability
Analysis for the years 1996-2000.
Feb. 16, 2001: Original action was filed before the National Conciliation and Mediation Board
(NCMB) of DOLE by the two unions for voluntary arbitration alleging that the Company violated LC
Art. 100 (Prohibition against Elimination of Diminution of Benefits. – Nothing in this Book shall be
construed to eliminate or in any way diminish supplements, or other employee benefits being
enjoyed at the time of promulgation of this Code) for suddenly and unilaterally withdrawing and
denying, without valid cause and without consent by unions, said benefits which they have long
enjoyed.
Subject benefits:
o Service Award
o 35% premium pay of an employee’s basic pay for work during Holy Monday, Holy Tuesday,
Holy Wednesday, December 23, 26, 27, 28 and 29,
o Christmas Party
o Promotional Increase
15 members of Daily-Rated Union were assigned new job classifications which they
allege to be in the nature of a promotion thus they are asking for a grant of increase in
their salaries
June 21, 2001: A Submission Agreement was filed by the parties before the Office for Voluntary
Arbitration. Assigned as Voluntary Arbitrator was Angel A. Ancheta.
July 4, 2001: Parties simultaneously filed their respective position papers with the Office of the
Voluntary Arbitrator, NCMB, and DOLE.
Voluntary Arbitrator (September 2001): Ruled in favor of respondent company.
o Company NOT GUILTY of violating LC 100 for withdrawing subject benefits as it was justified
by its dismal financial performance. It is also justified in not granting any promotional
increase to the 15 Daily-Rated Union Members in the absence of a promotion.
o Company however, is directed to grant the service award at its discretion, in consultation with
the Unions on grounds of equity and fairness.
MOR was filed by both unions but was DENIED.
Daily-Rated Union appealed before CA. They allege that Voluntary Arbitrator erred in finding that
the company did not violate Article 100 for withdrawing benefits and in adopting the company’s
unaudited Revenues and Profitability Analysis for the years 1996-2000 in justifying the latter’s
withdrawal of the questioned benefits (alleges that unaudited report cannot be basis for profit and
loss).
CA: AFFIRMED Voluntary Arbiter, ruled in favor of respondent company and DENIED DUE COURSE to
petition for lack of merit
MOR filed contending that CA misappreciated the facts of the case, and that it committed serious
error when it ruled that the unaudited financial statement bears no importance in the instant case. It
was DENIED for not presenting new issues.
Hence, this petition under special civil action for certiorari citing grave abuse of discretion amounting
to lack of jurisdiction.
Petitioner’s Arguments:
The grant of benefits was customary practice that cannot be unilaterally withdrawn by private
respondent without the tacit consent of the petitioner. The benefits in question were given by the
respondent to the petitioner consistently, deliberately, and unconditionally since time immemorial
and not due to an error in interpretation, or a construction of a difficult question of law.
The benefits given by the respondent cannot be considered as a “bonus” as they are not founded on
profit. Even assuming that it can be treated as a “bonus,” the grant of the same, by reason of its long
and regular concession, may be regarded as part of regular compensation.
With respect to the fifteen (15) employees who are members of petitioner union that were given new
job classifications, a promotional increase in their salaries was in order.
The company’s Revenues and Profitability Analysis for the years 1996 being unaudited should not
have justified the company’s sudden withdrawal of the benefits/entitlements. The normal and/or
legal method for establishing profit and loss of a company is through a financial statement audited
by an independent auditor as mentioned in cited cases.
On the matter of the withdrawal of the service award, the petitioner argues that it is the employee’s
length of service which is taken as a factor in the grant of this benefit, and not whether the company
acquired profit or not
Respondent’s Arguments:
The grant of all subject benefits has not ripened into practice that the employees concerned can claim
a demandable right over them. The grant of these benefits was conditional based upon the
financial performance of the company and that conditions/circumstances that existed before have
indeed substantially changed thereby justifying the discontinuance of said grants.
The company’s financial performance was affected by the recent political turmoil and instability that
led the entire nation to a bleeding economy. Hence, it only necessarily follows that the company’s
financial situation at present is already very much different from where it was three or four years
ago.
On the subject of the unaudited financial statement, cited cases by petitioner do not require that the
only legal method to ascertain profit and loss is through an audited financial statement. The cases
only provide that an audited financial statement is the normal method.
The 15 members of petitioner union were not actually promoted. There was only a realignment of
positions.
ISSUES:
1. PROCEDURAL ISSUE: Whether petition should be dismissed outright as its mode of appeal should be
under a petition for review on certiorari under Rule 45, and not through a special civil action for
certiorari under Rule 65? (YES, but SC has discretion to dismiss but it resolved to decide on merits)
2. MAIN: Whether or not private respondent is guilty of violating Article 100 of the Labor Code, as
amended, when the benefits/entitlements given to the members of petitioner union were withdrawn?
(NO)
a. Whether the benefits/entitlements are not in the nature of a bonus as they are not founded in
profit and thus cannot be unilaterally withdrawn? (NO, they are bonuses)
b. Assuming they are bonuses, whether they still cannot be unilaterally withdrawn as they
are demandable and enforceable obligations
a. As they are part of wage/salary/compensation? (NO)
b. As they have been long established company practice? (NO)
c. Whether the company’s unaudited revenues and profitability analysis for the years 1996-2000
cannot be considered as adequate basis to justify the sudden and unilateral withdrawal of subject
benefits? (Need not be answered)
d. Whether the promotional increase for the 15 members is warranted? (NO)
RATIO:
1. YES, but SC has the discretion to dismiss the appeal if it is defective even assuming that the mode of
appeal taken by the petitioner is improper. Sound policy dictates that it is far better to dispose the case
on the merits, rather than on technicality. SC may brush aside the procedural barrier and take cognizance
of the petition as it raises an issue of paramount importance.
2. NO, they are not guilty of violating LC 100 for withdrawing said benefits as said benefits are bonuses
not made part of wages and not long established practice and thus can be unilaterally withdrawn.
a. No, they are bonuses which were given by the private respondent out of its generosity and
munificence.
Producers Bank of the Philippines v. NLRC: A bonus is an amount granted and paid to an employee for
his industry and loyalty which contributed to the success of the employer’s business and made
possible the realization of profits. It is an act of generosity granted by an enlightened employer to
spur the employee to greater efforts for the success of the business and realization of bigger
profits.
The granting of a bonus is a management prerogative, something given in addition to what is
ordinarily received by or strictly due the recipient. Thus, a bonus is not a demandable and
enforceable obligation, except when it is made part of the wage, salary or compensation of the
employee.
The additional 35% premium pay for work done during selected days of the Holy Week and
Christmas season, the holding of Christmas parties with raffle, and the cash incentives given together
with the service awards are all in excess of what the law requires each employer to give its
employees.
The granting of the same was a management prerogative, which, whenever management sees
necessary, may be withdrawn, unless they have been made a part of the wage or salary or
compensation of the employees.
b. NO, for a bonus to be enforceable, it must have been promised by the employer and expressly
agreed upon by the parties, or it must have had a fixed amount and had been a long and regular
practice on the part of the employer. Subject benefits are neither.
b1. The benefits/entitlements in question were never subjects of any express agreement between the
parties. They were never incorporated in the Collective Bargaining Agreement (CBA). As observed by the
Voluntary Arbitrator, the records reveal that these benefits/entitlements have not been subjects of any
express agreement between the union and the company, and have not yet been incorporated in the CBA.
Petitioner has not denied having made proposals with the private respondent for the service award and
the additional 35% premium pay to be made part of the CBA.
b2. The Christmas parties and its incidental benefits, and the giving of cash incentive together
with the service award cannot be said to have fixed amounts and to have been the company’s long
and regular practice.
To be considered a “regular practice,” the giving of the bonus should have been done over a
long period of time, and must be shown to have been consistent and deliberate. What is
clear from the records is that over the years, there had been a downtrend in the amount given as
service award. There was also a downtrend with respect to the holding of the Christmas parties in
the sense that its location changed from paid venues to one which was free of charge, evidently to
cut costs. The downtrend in the grant of these two bonuses over the years demonstrates that
there is nothing consistent about it.
The Christmas party and raffle of prizes was merely sponsored by the respondent corporation out
of generosity and that the same is dependent on the financial performance of the company for
a particular year
The additional 35% premium pay for work rendered during selected days of the Holy Week and
Christmas season cannot be held to have ripened into a company practice. Aside from the general
averment of the petitioner that this benefit had been granted by the private respondent since time
immemorial, there had been no evidence adduced that it had been a regular practice. It was only
granted for two (2) years and with the express reservation from corporation’s owner that it
cannot continue to grant the same in view of the company’s current financial situation.
To hold that an employer should be forced to distribute bonuses which it granted out of kindness
is to penalize him for his past generosity
d. It is not necessary anymore to delve into the Revenues and Profitability Analysis for the years 1996-
2000 submitted by the private respondent, having thus ruled that the additional 35% premium pay for
work rendered during selected days of the Holy Week and Christmas season, the holding of Christmas
parties with its incidental benefits, and the grant of cash incentive together with the service award are all
bonuses which are neither demandable nor enforceable obligations of the private respondent.
e. Union was unable to adduce proof that a promotion indeed occurred with respect to the 15 employees,
the Daily Rated Union’s claim for promotional increase likewise falls there being no promotion
established under the records at hand.
HELD: Decision and Resolution of CA which affirmed the decision of the Voluntary Arbitrator is
AFFIRMED.
G.R. No. 123938 May 21, 1998
Labor Congress of the Philippines vs. NLRC
Doctrine:
Application of LC Article 286(n) in determination of status of piece workers as regular workers versus LC
Article 86 definition
Facts:
The 99 persons (Ana Marie Ocampo, Mary Intal, et al) as private petitioners in the proceeding
(represented by the Labor Congress of the Phils.) were rank-and-file employees of private respondent
Empire Food Products (a food and fruit processing company), hired on various dates.
Ocampo et al filed against Empire an NLRC complaint for payment of money claims and for violation of
labor standards laws. Alongside this they also filed a petition for direct certification for the Labor
Congress to be their bargaining representative. On Oct. 23, 1990, petitioners represented by LCP, and
private respondents Gonzalo and Evelyn Kehyeng (Kehyeng spouses) entered into a Memorandum of
Agreement, recognizing the following:
Status of LCP as sole and exclusive Bargaining Agent and Representative for all rank and file
employees of the Empire Food Products regarding "wages, hours of work, and other terms and
conditions of employment";
With regard to the NLRC complaint, all parties agree to resolve the issues during the Collective
Bargaining Agreement;
Proper adjustment of wages, withdrawal of case from the Calendar of NLRC, non-interference or
any ULP act, etc.
On Oct. 24, 1990, the Mediator Arbiter approved the memorandum and certified LCP as the sole and
exclusive bargaining agent for the rank-and-file employees of Empire.
On November 1990, LCP President Navarro submitted to Empire a proposal for collective bargaining.
However, on January 1991, the private petitioners Ana Marie et al filed a complaint for:
Unfair Labor Practices via Illegal Lockout and Dismissal;
Union-Busting through harassment, threats and interference to the right for self-organization;
Violation of the Oct. 23, 1990 memorandum
Underpayment of wages
Actual, moral and exemplary damages
Petitioners:
The fact that they are piece workers does not imply that they are not regular employees entitled
for reinstatement.
LA and NLRC decisions were not supported by substantial evidence;
Abandonment of work was not proved by substantial evidence;
Much credit given to the Kehyeng spouses’ self-serving arguments.
Respondents:
Ana Marie, et al were piece workers hence they are exempt from labor standards benefits
Issues:
1. [RELEVANT] WON the petitioners are entitled to labor standard benefits, considering their status
as piece rate workers.
2. WON the actions of Ana Marie, et al constituted abandonment of work.
Held:
1. YES, petitioners are entitled to labor standards benefits, namely, holiday pay, premium pay, 13 th
month pay and service incentive leave.
2. NO, failure to appear to work did not constitute abandonment,
Ratio:
Supreme Court decision cites that Ana Marie, et al, despite being “pakyao” or piece workers does not
imply that they are not regular employees entitled to reinstatement. Applying the two-fold test from LC
Article 286(n) [Art. 280 (old)], the SC found that the supposedly piece workers had three factors in their
favor:
a) The nature of the tasks of Ana Marie, et al of repacking snack food items was NECESSARY and
DESIRABLE in the usual business of Empire Foods, which is a food and fruit processing company.
According to Tabas vs California Manufacturing, merchandisers of processed food who
coordinates for sales of processed food was a necessity and was desirable for the day-to-day
operations of a food processing company. With more reason would the job of food packers be
necessary for the day-to-day operations of a food processing plant.
b) Ana Marie et al worked throughout the year, with their employment being independent from a
specific project or season.
c) The length of time that petitioners fulfilled the requirement of Article 286(n).
Therefore, the SC considered the employees as regular employees despite their status as piece workers,
according them benefits such as holiday pay, premium pay, 13 th month pay and service incentive leave.
The Rules Implementing the Labor Code exclude certain employees from receiving benefits such as
nighttime pay, holiday pay, service incentive leave and 13th month pay, inter alia, "field personnel and
other employees whose time and performance is unsupervised by the employer, including those who are
engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof." However, petitioners as
piece-rate workers do not fall within this group. Not only did the employees labor under the control of
Empire, the employees also worked throughout the year to fulfil their quota as “basis for compensation”.
Further, in Section 8 (b), Rule IV, Book III, piece workers are specifically mentioned as being entitled to
holiday pay.
In addition, the Revised Guidelines on the Implementation of the 13th Month Pay Law, in view of the
modifications to P.D. No. 851 19 by Memorandum Order No. 28, clearly exclude the employer of piece
rate workers from those exempted from paying 13th month pay, to wit:
2. EXEMPTED EMPLOYERS - The following employers are still not covered by P.D. No. 851:
d. Employers of those who are paid on purely commission, boundary or task basis, and
those who are paid a fixed amount for performing specific work, irrespective of the time
consumed in the performance thereof, except where the workers are paid on piece-rate
basis in which case the employer shall grant the required 13th month pay to such workers.
However, the Revised Guidelines as well as the Rules and Regulations identify those workers who fall
under the piece-rate category as those who are paid a standard amount for every piece or unit of work
produced that is more or less regularly replicated, without regard to the time spent in producing the
same.
They should also be paid for overtime pay, even though Sec. 2(e), Rule I, Book III of the Implementing
Rules states that:
“…workers who are paid by results including those who are paid on piece-work, takay, pakiao, or
task basis, if their output rates are in accordance with the standards prescribed under Sec. 8, Rule
VII, Book III, of these regulations, or where such rates have been fixed by the Secretary of Labor in
accordance with the aforesaid section, are not entitled to receive overtime pay.”
In this case, Empire Foods did not allege that they adheredtothestandardsset forthin Sec. 8, Rule VII,
Book III, norwiththeratesprescribedbytheSecretaryofLabor. Therefore, even though they are piece
workers, they are entitled to overtime pay
With regard to the issue of abandonment of work, the SC cited the Office of Solicitor General’s
observations:
In finding that petitioner employees abandoned their work, the Labor Arbiter and the NLRC relied
on the testimony of Security Guard Rolando Cairo that on January 21, 1991, petitioners refused to
work. As a result of their failure to work, the cheese curls ready for repacking on said date were
spoiled…
… The failure to work for one day, which resulted in the spoilage of cheese curls does not amount to
abandonment of work. In fact two (2) days after the reported abandonment of work or on January
23, 1991, petitioners filed a complaint for, among others, unfair labor practice, illegal lockout
and/or illegal dismissal.
Furthermore, the SC stressed that the burden of proving the existence of just cause for dismissing an
employee, such as abandonment, rests on the employer. According to the SC, Empire Foods failed to
discharge this burden as basis for dismissing the employees.
Also, the SC considered that, in terminating the employees for abandonment of work, Empire failed to
serve to the employees a written notice of termination (as required by the Two-Notice rule and Section 2,
Rule XIV, Book V of the Omnibus Rules), violating the employees’ right to security of tenure and the
constitutional right to due process.