I.

The Employer-Employee Relationship as the matrix or basis for a labor court's jurisdiction to hear and decide labor disputes A. The Four-Fold Test i. Viana v. Al-lagadan - In determining the existence of employeremployee relationship, the following elements are generally considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employees conduct although the latter is the most important element. ii. Vda. De Cruz v. Manila Hotel - What pieces the orchestra shall play, and how the music shall be arranged or directed, the intervals and other details such are left to the leader's discretion. The music instruments, the music papers and other paraphernalia are not furnished by the Hotel, they belong to the orchestra, which in turn belongs to Tirso Cruz not to the Hotel. The individual musicians, and the instruments they have not been selected by the Hotel. It reserved no power to discharge any musician. How much salary is given to the individual members is left entirely to "the orchestra" or the leader. Payment of such salary is not made by the Hotel to the individual musicians, but only a lump-sum compensation is given weekly to Tirso Cruz. Considering the above features of the relationship, in connection with the tests indicated by numerous authorities, it is our opinion that Tirso Cruz was not an employee of the Manila Hotel, but one engaged to furnish music to said hotel for the price of P250.00 daily, in other words, an independent contractor within the meaning of the law of master and servant. iii. LVN Pictures v. Philippine Musicians Guild - It is well settled that "an employer-employee relationship exists . . .where the person for whom the services are performed reserves a right to control not only the end to be achieved but also the means to be used in reaching such end . . . ." By reason of said control, the employeremployee relationship was held to exist between the

iv. v.

vi.

vii.

management and the workers, notwithstanding the intervention of an alleged independent contractor, who had, and exercise, the power to hire and fire said workers. The aforementioned control over the means to be used" in reaching the desired end is possessed and exercised by the film companies over the musicians in the cases before us. Torillo v. Leogardo Legend Hotel v. Realuyo - Relevantly, it is worth remembering that the employer need not actually supervise the performance of duties by the employee, for it sufficed that the employer has the right to wield that power. Tongko v. Manulife - the only conclusion that can be made is that the absence of evidence showing Manulifes control over Tongkos contractual duties points to the absence of any employer-employee relationship between Tongko and Manulife. In the context of the established evidence, Tongko remained an agent all along; although his subsequent duties made him a lead agent with leadership role, he was nevertheless only an agent whose basic contract yields no evidence of means-and-manner control Javier v. Fly Ace Corp - the onus probandi falls on petitioner to establish or substantiate such claim by the requisite quantum of evidence.

II. General Labor Policy A. Constitution i. Art II SECTION 2. The Philippines renounces war as an instrument of national policy, adopts the generally accepted principles of international law as part of the law of the land and adheres to the 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 the prosperity and independence of the nation and free the people from

poverty through policies that provide adequate social services, promote full employment, a rising standard of living, and an improved quality of life for all. SECTION 10. The State shall promote social justice in all phases of national development SECTION 11. The State values the dignity of every human person and guarantees full respect for human rights. SECTION 13. The State recognizes the vital role of the youth in national building and shall promote and protect their physical, moral, spiritual, intellectual, and social well-being. It shall inculcate in the youth patriotism and nationalism, and encourage their involvement in public and civic affairs. SECTION 14. The State recognizes the role of women in nation-building, and shall ensure the fundamental equality before the law of women and men. SECTION 18. The State affirms labor as a primary social economic force. It shall protect the rights of workers and promote their welfare. SECTION 20. The State recognizes the indispensable role of the private sector, encourages private enterprise, and provides incentives 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 equal protection of the laws. SECTION 4. No law shall be passed abridging the freedom of speech, of expression, or of the press, or the right of the people peaceably to assemble and petition the Government for redress of grievances. SECTION 8. The right of the people, including those employed in the public and private sectors, to form unions, associations, or societies for purposes not contrary to law shall not be abridged. SECTION 10. No law impairing the obligation of contracts shall be passed.

iii. Art. XII SECTION 1. The goals of the national economy are a more equitable distribution of opportunities, income, and wealth; a sustained increase in the amount of goods and services produced by the nation for the benefit of the people; and an expanding productivity as the key raising the quality of life for all, especially the underprivileged. The State shall promote industrialization and full employment based on sound agricultural development and agrarian reform, through industries that make full and efficient use of human and natural resources, and which are competitive in both domestic and foreign markets. However, the State shall protect Filipino enterprises against unfair foreign competition and trade practices. In the pursuit of these goals, all sectors of the economy and all regions of the country shall be given optimum opportunity to develop. Private enterprises, including corporations, cooperatives, and similar collective organizations, shall be encouraged to broaden the base of their ownership. iv. Art. XIII SECTION 1. The Congress shall give highest priority to the enactment of measures that protect and enhance the right of all the people to human dignity, reduce social, economic, and political inequalities, and remove cultural inequities by equitably diffusing wealth and political power for the common good. To this end, the State shall regulate the acquisition, ownership, use, and disposition of property and its increments.

SECTION 2. The promotion of social justice shall include the commitment to create economic opportunities based on freedom of initiative and self-reliance. SECTION 3. The State shall afford full protection to labor, local and overseas, organized and unorganized, and promote full employment and equality of employment opportunities for all. It shall guarantee the rights of all workers to selforganizations, and peaceful concerted activities, including the right to strike in accordance with law. They shall be entitled to security of tenure, humane conditions of work, and a living wage. They shall also participate in policy and decision-making processes affecting their rights and benefits as may be provided by law. The State shall promote the principle of shared responsibility between workers and employers and the preferential use of voluntary modes in settling disputes, including conciliation, and shall enforce their mutual compliance therewith to foster industrial peace. The State shall regulate the relations between workers and employers, recognizing the right of labor to its just share in the fruits of production and the right of enterprises to reasonable returns on investments, and to expansion and growth.

v. Art. XIV SECTION 1. The State shall protect and promote the right of all citizens to quality education at all levels and shall take appropriate steps to make such education accessible to all. SECTION 2. The State shall : (1) Establish, maintain, and support a complete, adequate, and integrated system of education relevant to the needs of the people and society; (2) Establish and maintain a system of free public education in the elementary and high school levels. Without limiting the natural right of parents to rear their children, elementary education is compulsory for all children of school age; (3) Establish and maintain a system of scholarship grants, student loan programs, subsidies, and other incentives which shall be available to deserving students in both public and private schools, especially to the underprivileged; (4) Encourage non-formal, informal, and indigenous learning systems, as well as self-learning, independent, and out-ofschool study programs particularly those that respond to community needs; and (5) Provide adult citizens, the disabled, and out-of-school youth with training in civics, vocational efficiency, and other skills.

SECTION 16. The right of the people and their organizations to effective and reasonable participation at all levels of social, political, and economic decision-making shall not be abridged. The State shall, by law, facilitate the establishment of adequate consultation mechanisms.

B. Labor Code Article 3. Declaration of basic policy. - The State shall afford protection to labor, promote full employment, ensure equal work opportunities regardless of sex, race or creed and regulate the relations between workers and employers. The State shall assure the rights of workers to self-organization, collective bargaining, security of tenure, and just and humane 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 promote and develop a tax-exempt employees' compensation program whereby employees and their dependents, in the event of workconnected disability or death, may promptly secure adequate income benefit, and medical or related benefits. Article 211. Declaration of policy. A. It is the policy of the State: To promote and emphasize the primacy of free collective bargaining and negotiations, including voluntary arbitration, mediation and conciliation, as modes of setting labor or industrial disputes; To promote free trade unionism as an instrument for the enhancement of democracy and the promotion of social justice and development; To foster the free and voluntary organization of a strong and united labor movement; To promote the enlightenment of workers concerning their rights and obligations as union members and as employees; To provide an adequate administrative machinery for the expeditious settlement of labor or industrial disputes; To ensure a stable but dynamic and just industrial peace; and To ensure the participation of workers in decision and policy-making processes affecting their rights, duties and welfare. To encourage a truly democratic method of regulating the relations between the employers and employees by means of agreements freely entered into through collective bargaining, no court or administrative agency or official

shall have the power to set or fix wages, rates of pay, hours of work or other terms and conditions of employment, except as otherwise provided under this Code. Article 221. Technical rules not binding and prior resort to amicable settlement. In any proceeding before the Commission or any of the Labor Arbiters, the rules of evidence prevailing in courts of law or equity shall not be controlling, and it is the spirit and intention of this Code that the Commission and its members and the Labor Arbiters shall use every and all reasonable means to ascertain the facts in each case speedily and objectively, without regard to technicalities of law or procedure, all in the interest of due process. In any proceeding before the Commission or any Labor Arbiter, the parties may be represented by legal counsel but it shall be the duty of the Chairman, any Presiding Commissioner or Commissioner or any Labor Arbiter to exercise complete control of the proceedings at all stages. Any provision of law to the contrary notwithstanding, the Labor Arbiter shall exert all efforts towards the amicable settlement of a labor dispute within his jurisdiction on or before the first hearing. The same rule shall apply to the Commission in the exercise of its original jurisdiction. (As amended by RA 6715) Article 255. Exclusive bargaining representation and workers' participation in policy and decision-making. The labor organization designated or selected by the majority of the employees in an appropriate collective bargaining unit shall be the exclusive representative of the employee in such unit for the purpose of collective bargaining. However, an individual employee or group of employees shall have

a.

b.

c. d. e. f. g.

h.

the right at any time to present grievances to their employer. Any provision of law to the contrary notwithstanding, workers shall have the right, subject to such rules and regulations as the Secretary of Labor and Employment may promulgate, to participate in policy and decision-making processes of the establishment where they are employed insofar as said processes will directly affect their rights, benefits and welfare. For this purpose, workers and employers may form labor-management councils: Provided, That the representatives of the workers in such labormanagement councils shall be elected by at least the majority of all employees in said establishment. (As amended by RA 6715) Article 263. Strikes, picketing and lockouts. (a) It is the policy of the State to encourage free trade unionism and free collective bargaining. Article 275. Tripartism and tripartite conferences. (a) Tripartism in labor relations is hereby declared a State policy. Towards this end, workers and employers shall, as far as practicable, be represented in decision and policymaking bodies of the government.

Art. 1701. Neither capital nor labor shall act oppressively against the other, or impair the interest or convenience of the public. III. Labor Standards 1. Labor Code Article 82. Coverage. The provision of this Title shall apply to employees in all establishments and undertakings, whether for profit or not, but not to government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another and workers who are paid by results as determined by the Secretary of Labor and Employment in appropriate regulations. As used herein, "managerial employees" refers to those whose primary duty consists of the management of the establishment in which they are employed or of a department or subdivision thereof, and to other officers or members of the managerial staff. "Field personnel" refers to non-agricultural employees who regularly perform their duties away from the principal place of business or branch office of the employer and whose actual hours of work in the field cannot be determined with reasonable certainty. Article 83. Normal hours of work. The normal hours of work of any employee shall not exceed eight in a day. Health personnel in cities or municipalities with a population of at least one million or in hospitals or clinics with a bed capacity of at least one hundred shall hold regular office hours for eight hours a day, for five days a

C. Civil Code Art. 1700. The relations between capital and labor are not merely contractual. They are so impressed with public interest that labor contracts must yield to the common good. Therefore, such contracts are subject to the special laws on labor unions, collective bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of labor and similar subjects.

week, or a total of forty hours a week, exclusive of time for meals, except where the exigencies of the service require that such personnel work for six days, forty-eight hours, in which case they shall be entitled to an additional compensation of at least 30 percent of their regular wage for work on the sixth day. For purposes of this Article, "health personnel" shall include: resident physicians, nurses, nutritionists, dieticians, pharmacists, social workers, laboratory technicians, paramedical technicians, psychologists, midwives, attendants and all other hospital or clinic personnel. Article 84. Hours worked. Hours worked shall include (a) all time during which an employee is required to be on duty or to be at a prescribed workplace, and (b) all time during which an employee is suffered or permitted to work. Rest periods of short duration during working hours shall be counted as hours worked. Article 85. Meal periods. Subject to such regulations as the Secretary of Labor and Employment may prescribe, it shall be the duty of every employer to give his employees not less than sixty minutes time-off for their regular meals. Article 86. Night shift differential. Every employee shall be paid a night shift differential of not less than ten percent of his regular wage for each hour of work performed between ten o'clock in the evening and six o'clock in the morning. Article 87. Overtime work. Work may be performed beyond eight hours a day provided that the employee is paid for the overtime work an additional compensation equivalent to his regular wage plus at least twenty-five percent thereof. Work performed beyond eight hours on a holiday or rest

day shall be paid an additional compensation equivalent to the rate for the first eight hours on a holiday or rest day plus at least 30 percent thereof. Article 88. Undertime not offset be overtime. Undertime work on any particular day shall not be offset by overtime work on any other day. Permission given to the employee to go on leave on some other day of the week shall not exempt the employer from paying the additional compensation required in this Chapter. Article 89. Emergency overtime work. Any employee may be required by the employer to perform overtime work in any of the following cases: (a) When the country is at war or when any other national or local emergency has been declared by Congress or the Chief Executive; (b) When it is necessary to prevent loss of life or property or in case of imminent danger to public safety due to an actual or impending emergency in the locality caused by serious accidents, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity; (c) When there is urgent work to be performed on machines, installation or equipment, in order to avoid serious loss or damage to the employer or some other cause of similar nature; (d) When the work is necessary to prevent loss or damage to perishable goods; (e) Where the completion or continuation of the work started before the 8th hour is necessary to prevent serious obstruction or prejudice to the business or operations of the employer.

Any employee required to render overtime work under this Article shall be paid the additional compensation required in this Chapter. Article 90. Computation of additional compensation. For purposes of computing overtime and other additional remuneration as required by this Chapter, the "regular wage" of an employee shall include the cash wage only, without deduction on account of facilities provided by the employer. 2. Househelpers i. Apex Mining v. NLRC - The mere fact that the househelper or domestic servant is working within the premises of the business of the employer and in relation to or in connection with its business, as in its staffhouses for its guest or even for its officers and employees, warrants the conclusion that such househelper or domestic servant is and should be considered as a regular employee of the employer and not as a mere family househelper or domestic servant as contemplated in Rule XIII, Section l(b), Book 3 of the Labor Code, as amended. ii. Remington v. Castaneda - In the case at bar, the petitioner itself admits in its position paper33 that respondent worked at the company premises and her duty was to cook and prepare its employees lunch and merienda. Clearly, the situs, as well as the nature of respondents work as a cook, who caters not only to the needs of Mr. Tan and his family but also to that of the petitioners employees, makes her fall squarely within the definition of a regular employee under the doctrine enunciated in the Apex Mining case. That she works within company premises, and that she does not cater exclusively to the personal comfort of Mr. Tan and his family, is reflective of the existence of the petitioners right of control over her functions,

which is the primary indicator of the existence of an employeremployee relationship. iii. Barcenas v. NLRC - Moreover, the work that petitioner performed in the temple could not be categorized as mere domestic work. Thus, We find that petitioner, being proficient in the Chinese language, attended to the visitors, mostly Chinese, who came to pray or seek advice before Buddha for personal or business problems; arranged meetings between these visitors and Su and supervised the preparation of the food for the temple visitors; acted as tourist guide of foreign visitors; acted as liaison with some goverment offices; and made the payment for the temple's Meralco, MWSS and PLDT bills. Indeed, these tasks may not be deemed activities of a household helper. They were essential and important to the operation and religious functions of the temple. 3. Management Prerogatives i. San Miguel Brewery Sales Force Union v. Ople - So long as a company's management prerogatives are exercised in good faith for the advancement of the employer's interest and not for the purpose of defeating or circumventing the rights of the employees under special laws or under valid agreements, this Court will uphold them. San Miguel Corporation's offer to compensate the members of its sales force who will be adversely affected by the implementation of the CDS by paying them a so-called "back adjustment commission" to make up for the commissions they might lose as a result of the CDS proves the company's good faith and lack of intention to bust their union. ii. Sime Darby Pilipinas v. NLRC - The case before us does not pertain to any controversy involving discrimination of employees but only the issue of whether the change of work schedule, which management deems necessary to increase production, constitutes unfair labor practice. As shown by the

records, the change effected by management with regard to working time is made to apply to all factory employees engaged in the same line of work whether or not they are members of private respondent union. Hence, it cannot be said that the new scheme adopted by management prejudices the right of private respondent to self-organization. iii. Interphil v. Interphil - Respondent company could have withheld these benefits pending the final resolution of this case. Yet, considering perhaps the financial hardships experienced by its employees and the economic situation prevailing, respondent company chose to let its employees avail of their separation benefits. The Court views the gesture of respondent company as an act of generosity for which it should not be punished. 4. Compressed Work Week i. DOLE D.O. No. 02 Series of 2004 ii. DOLE Department Advisory No. 2 Series of 2009 5. Waiting time i. Arica v. NLRC - Furthermore, the thirty (30)-minute assembly is a deeply- rooted, routinary practice of the employees, and the proceedings attendant thereto are not infected with complexities as to deprive the workers the time to attend to other personal pursuits. They are not new employees as to require the company to deliver long briefings regarding their respective work assignments. Their houses are situated right on the area where the farm are located, such that after the roll call, which does not necessarily require the personal presence, they can go back to their houses to attend to some chores. In short, they are not subject to the absolute control of the company during this period, otherwise, their failure to report in the assembly time would justify the company to impose disciplinary measures. The CBA does not contain any provision to this effect; the record is also bare of any proof on this point.

This, therefore, demonstrates the indubitable fact that the thirty (30)-minute assembly time was not primarily intended for the interests of the employer, but ultimately for the employees to indicate their availability or non-availability for work during every working day. 6. Travel Time i. Radav. NLRC - If driving these employees to and from the project site is not really part of petitioner's job, then there would have been no need to find a replacement driver to fetch these employees. But since the assigned task of fetching and delivering employees is indispensable and consequently mandatory, then the time required of and used by petitioner in going from his residence to the field office and back, that is, from 5:30 a.m. to 7:00 a.m. and from 4:00 p.m. to around 6:00 p.m., which the labor arbiter rounded off as averaging three hours each working day, should be paid as overtime work. 7. Weekly Rest Periods i. Labor Code Article 91. Right to weekly rest day. (a) It shall be the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty-four consecutive hours after every six consecutive normal work days. The employer shall determine and schedule the weekly rest day of his employees, subject to collective agreement and to such rules and regulations as the Secretary of Labor and Employment may provide. However, the employer shall respect the preference of employees as to their weekly rest day when such preference is based on religious grounds. Article 92. When employer may require work on a rest day. The employer may require his employees to work on any day:

a) In case of actual or impending emergencies caused by serious accidents, fire, flood, typhoon, earthquake, epidemic or other disaster or calamity to prevent loss of life and property or imminent danger to public safety; b) In case of urgent work to be performed on the machinery, equipment or installation to avoid serious loss which the employer would otherwise suffer; c) In the event of abnormal pressure of work due to special circumstances, where the employer cannot ordinarily be expected to resort to other measures; d) To prevent loss or damage to perishable goods; e) Where the nature of the work requires continuous operations and the stoppage of work may result in irreparable injury or loss to the employer; and f) Under other circumstances analogous or similar to the foregoing as determined by the Secretary of Labor and Employment. Article 93. Compensation for rest day, Sunday or holiday work. (a) Where an employee is made or permitted to work on his scheduled rest day, he shall be paid an additional compensation of at least 30 percent of his regular wage. An employee shall be entitled to such additional compensation for work performed on Sunday only when it is his established rest day.

When the nature of the work of the employee is such that he has no regular workdays and no regular rest days can be scheduled, he shall be paid an additional compensation of at least 30 percent of his regular wage for work performed on Sundays and holidays. Work performed on any special holiday shall be paid an additional compensation of at least 30 percent of the regular wage of the employee. Where such holiday work falls on the employee's scheduled rest day, he shall be entitled to an additional compensation of at least 50 percent of his regular wage. Where the collective bargaining agreement or other applicable employment contract stipulates the payment of a higher premium pay than that prescribed under this Article, the employer shall pay such higher rate. ii. Remerco v. Minister of Labor - It is the duty of every employer, whether operating for profit or not, to provide each of his employees a rest period of not less than twenty four (24) hours after every six (6) consecutive normal work days. 14 Even if there really existed an urgency to require work on a rest day, (which is not in the instant case) outright dismissal from employment is so severe a consequence, more so when justifiable grounds exist for failure to report for work. 8. Holidays and Service Incentive Leave i. Labor Code Article 94. Right to holiday pay. Every worker shall be paid his regular daily wage during regular holidays, except in retail and service establishments regularly employing less than ten (10) workers;

The employer may require an employee to work on any holiday but such employee shall be paid a compensation equivalent to twice his regular rate; and As used in this Article, "holiday" includes: New Years Day, Maundy Thursday, Good Friday, the ninth of April, the first of May, the twelfth of June, the fourth of July, the thirtieth of November, the twenty-fifth and thirtieth of December and the day designated 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 service incentive leave of five days with pay. This provision shall not apply to those who are already enjoying the benefit herein provided, those enjoying vacation leave with pay of at least five days and those employed in establishments regularly employing less than ten employees or in establishments exempted from granting this benefit by the Secretary of Labor and Employment after considering the viability or financial condition of such establishment. The grant of benefit in excess of that provided herein shall not be made a subject of arbitration or any court or administrative action. Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages.

ii. San Miguel v. CA - Considering that all private corporations, offices, agencies, and entities or establishments operating within the designated Muslim provinces and cities are required to observe Muslim holidays, both Muslim and Christians working within the Muslim areas may not report for work on the days designated by law as Muslim holidays. iii. Jose Rizal College v. NLRC - It is readily apparent that the declared purpose of the holiday pay which is the prevention of diminution of the monthly income of the employees on account of work interruptions is defeated when a regular class day is cancelled on account of a special public holiday and class hours are held on another working day to make up for time lost in the school calendar. Otherwise stated, the faculty member, although forced to take a rest, does not earn what he should earn on that day. Be it noted that when a special public holiday is declared, the faculty member paid by the hour is deprived of expected income, and it does not matter that the school calendar is extended in view of the days or hours lost, for their income that could be earned from other sources is lost during the extended days. Similarly, when classes are called off or shortened on account of typhoons, floods, rallies, and the like, these faculty members must likewise be paid, whether or not extensions are ordered. iv. Union of Filipro Employees v. Vivar - In San Miguel Brewery,
Inc. v. Democratic Labor Organization (8 SCRA 613 [1963]), the Court had occasion to discuss the nature of the job of a salesman. Citing the case of Jewel Tea Co. v. Williams, C.C.A. Okla., 118 F. 2d 202, the Court stated: The reasons for excluding an outside salesman are fairly apparent. Such a salesman, to a greater extent, works individually. There are no restrictions respecting the time he shall work and he can earn as much or as little, within the range of his ability, as his ambition dictates. In lieu of overtime he ordinarily receives commissions as extra compeInsation. He works away from his

employer's place of business, is not subject to the personal supervision of his employer, and his employer has no way of knowing the number of hours he works per day. While in that case the issue was whether or not salesmen were entitled to overtime pay, the same rationale for their exclusion as field personnel from holiday pay benefits also applies.

legal that its computation should be up to the date of reinstatement as provided under Section 279 of the Labor Code, as amended, which reads: Art. 279. Security of Tenure. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation is withheld from him up to the time of his actual reinstatement. (emphasis supplied). However, the Implementing Rules clearly state that entitlement to "benefit provided under this Rule shall start December 16, 1975, the date the amendatory provision of the [Labor] Code took effect." 43 Hence, petitioners, except Lim and Canonigo, should be entitled to service incentive leave pay from December 16, 1975 up to their actual reinstatement. vii. JPL Marketing v. CA - Admittedly, private respondents were not given their 13th month pay and service incentive leave pay while they were under the employ of JPL. Instead, JPL provided salaries which were over and above the minimum wage. The Court rules that the difference between the minimum wage and the actual salary received by private respondents cannot be deemed as their 13th month pay and service incentive leave pay as such difference is not equivalent to or of the same import as the said benefits contemplated by law. Thus, as properly held by the Court of Appeals and by the NLRC, private respondents are entitled to the 13th month pay and service incentive leave pay.

v. Imbuido v. NLRC - Having already worked for more than three (3) years at the time of her unwarranted dismissal, petitioner is undoubtedly entitled to service incentive leave benefits, computed from 1989 until the date of her actual reinstatement. As we ruled in the recent case of Fernandez vs. NLRC,[40] "[s]ince a service incentive leave is clearly demandable after one year of service whether continuous or broken or its equivalent period, and it is one of the "benefits" which would have accrued if an employee was not otherwise illegally dismissed, it is fair and legal that its computation should be up to the date of reinstatement as provided under Section [Article] 279 of the Labor Code, as amended, which reads: "ART. 279. Security of Tenure. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to his other benefits or their monetary equivalent computed from the time his compensation is withheld from him up to the time of his actual reinstatement." vi. Fernandez v. NLRC - Since a service incentive leave is clearly demandable after one year of service whether continuous or broken or its equivalent period, and it is one of the "benefits" which would have accrued if an employee was not otherwise illegally dismissed, it is fair and

viii. Sugue v. Triumph International quoting J.B. Heibron n. National Labor Union: When the case of strikes, and according to the CIR even if the strike is legal, strikers may not collect their wages during the days they did not go to work, for the same reasons if not more, laborers who voluntarily absent themselves from work to attend the hearing of a case in which they seek to prove and establish their demands against the company, the legality and propriety of which demands is not yet known, should lose their pay during the period of such absence from work. The age-old rule governing the relation between labor and capital or management and employee is that a "fair day's wage for a fair day's labor." If there is no work performed by the employee there can be no wage or pay, unless of course, the laborer was able, willing and ready to work but was illegally locked out, dismissed or suspended. It is hardly fair or just for an employee or laborer to fight or litigate against his employer on the employer's time. In a case where a laborer absents himself from work because of a strike or to attend a conference or hearing in a case or incident between him and his employer, he might seek reimbursement of his wages from his union which had declared the strike or filed the case in the industrial court. Or, in the present case, he might have his absence from his work charged against his vacation leave. 9. Other Leaves: i. Maternity Leave Labor Code. Article 133. Maternity leave benefits. Every employer shall grant to any pregnant woman employee who has rendered an aggregate service of at least six (6) months for the last twelve (12) months, maternity leave of at least two (2) weeks prior to the expected date of delivery and another four (4) weeks

after normal delivery or abortion with full pay based on her regular or average weekly wages. The employer may require from any woman employee applying for maternity leave the production of a medical certificate stating that delivery will probably take place within two weeks. The maternity leave shall be extended without pay on account of illness medically certified to arise out of the pregnancy, delivery, abortion or miscarriage, which renders the woman unfit for work, unless she has earned unused leave credits from which such extended leave may be charged. The maternity leave provided in this Article shall be paid by the employer only for the first four (4) deliveries by a woman employee after the effectivity of this Code. ii. iii. Paternity Leave See RA 8187 Parental Leave See RA 8972

10. Service Charge i. Labor Code Article 96. Service charges. All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty-five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wages. ii. Mayon Hotel v. Adana - While complainants, who were employed in the hotel, receive[d] various amounts as profit share, the same cannot be considered as part of their wages in determining their claims for violation of labor standard benefits. Although called profit share[,] such is in the nature of share from service charges charged by the hotel. This is more explained by [respondents] when

they testified that what they received are not fixed amounts and the same are paid not on a monthly basis (pp. 55, 93, 94, 103, 104; vol. II, rollo). Also, [petitioners] failed to submit evidence that the amounts received by [respondents] as profit share are to be considered part of their wages and had been agreed by them prior to their employment. Further, how can the amounts receive[d] by [respondents] be considered as profit share when the same [are] based on the gross receipt of the hotel[?] No profit can as yet be determined out of the gross receipt of an enterprise. Profits are realized after expenses are deducted from the gross income. As stated in Mabeza v. NLRC,87 the employer simply cannot deduct the value from the employee's wages without satisfying the following: (a) proof that such facilities are customarily furnished by the trade; (b) the provision of deductible facilities is voluntarily accepted in writing by the employee; and (c) the facilities are charged at fair and reasonable value. As ruled in Mabeza, food or snacks or other convenience provided by the employers are deemed as supplements if they are granted for the convenience of the employer. The criterion in making a distinction between a supplement and a facility does not so much lie in the kind (food, lodging) but the purpose.91 Considering, therefore, that hotel workers are required to work 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 petitioners' business.92 The deduction of the cost of meals from respondents' wages, therefore, should be removed. 11. Wages i. Labor Code WAGES Chapter I PRELIMINARY MATTERS

Article 97. Definitions. As used in this Title: "Person" means an individual, partnership, association, corporation, business trust, legal representatives, or any organized group of persons. "Employer" includes any person acting directly or indirectly in the interest of an employer in relation to an employee and shall include the government and all its branches, subdivisions and instrumentalities, all government-owned or controlled corporations and institutions, as well as nonprofit private institutions, or organizations. "Employee" includes any individual employed by an employer. "Agriculture" includes farming in all its branches and, among other things, includes cultivation and tillage of soil, dairying, the production, cultivation, growing and harvesting of any agricultural and horticultural commodities, the raising of livestock or poultry, and any practices performed by a farmer on a farm as an incident to or in conjunction with such farming operations, but does not include the manufacturing or processing of sugar, coconuts, abaca, tobacco, pineapples or other farm products. "Employ" includes to suffer or permit to work. "Wage" paid to any employee shall mean the remuneration or earnings, however designated, capable of being expressed in terms of money, whether fixed or ascertained on a time, task, piece, or commission basis, or other method of calculating the same, which is payable by an employer to an employee under a written or unwritten contract of

employment for work done or to be done, or for services rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee. "Fair and reasonable value" shall not include any profit to the employer, or to any person affiliated with the employer. Article 98. Application of Title. This Title shall not apply to farm tenancy or leasehold, domestic service and persons working in their respective homes in needle work or in any cottage industry duly registered in accordance with law. Chapter II MINIMUM WAGE RATES Article 99. Regional minimum wages. The minimum wage rates for agricultural and non-agricultural employees and workers in each and every region of the country shall be those prescribed by the Regional Tripartite Wages and Productivity Boards. (As amended by Section 3, Republic Act No. 6727, June 9, 1989). Article 100. Prohibition against elimination or 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. Article 101. Payment by results. The Secretary of Labor and Employment shall regulate the payment of wages by results, including pakyao, piecework, and other non-time work, in order to ensure the payment of fair and reasonable wage rates, preferably through time and

motion studies or in consultation with representatives of workers and employers organizations. Chapter III PAYMENT OF WAGES Article 102. Forms of payment. No employer shall pay the wages of an employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or any object other than legal tender, even when expressly requested by the employee. Payment of wages by check or money order shall be allowed when such manner of payment is customary on the date of effectivity of this Code, or is necessary because of special circumstances as specified in appropriate regulations to be issued by the Secretary of Labor and Employment or as stipulated in a collective bargaining agreement. Article 103. Time of payment. Wages shall be paid at least once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. If on account of force majeure or circumstances beyond the employers control, payment of wages on or within the time herein provided cannot be made, the employer shall pay the wages immediately after such force majeure or circumstances have ceased. No employer shall make payment with less frequency than once a month. The payment of wages of employees engaged to perform a task which cannot be completed in two (2) weeks shall be subject to the following conditions, in the absence of a collective bargaining agreement or arbitration award:

That payments are made at intervals not exceeding sixteen (16) days, in proportion to the amount of work completed; That final settlement is made upon completion of the work. Article 104. Place of payment. Payment of wages shall be made at or near the place of undertaking, except as otherwise provided by such regulations as the Secretary of Labor and Employment may prescribe under conditions to ensure greater protection of wages. Article 105. Direct payment of wages. Wages shall be paid directly to the workers to whom they are due, except: In cases of force majeure rendering such payment impossible or under other special circumstances to be determined by the Secretary of Labor and Employment in appropriate regulations, in which case, the worker may be paid through another person under written authority given by the worker for the purpose; or Where the worker has died, in which case, the employer may pay the wages of the deceased worker to the heirs of the latter without the necessity of intestate proceedings. The claimants, if they are all of age, shall execute an affidavit attesting to their relationship to the deceased and the fact that they are his heirs, to the exclusion of all other persons. If any of the heirs is a minor, the affidavit shall be executed on his behalf by his natural guardian or next-ofkin. The affidavit shall be presented to the employer who shall make payment through the Secretary of Labor and Employment or his representative. The representative of the Secretary of Labor and Employment shall act as referee in dividing the amount paid among the heirs. The payment ii.

of wages under this Article shall absolve the employer of any further liability with respect to the amount paid. Gaa v. CA Article 1708 used the word "wages" and not "salary" in relation to "laborer" when it declared what are to be exempted from attachment and execution. The term "wages" as distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled, paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a higher degree of employment, or a superior grade of services, and implies a position of office: by contrast, the term wages " indicates considerable pay for a lower and less responsible character of employment, while "salary" is suggestive of a larger and more important service (35 Am. Jur. 496). The distinction between wages and salary was adverted to in Bell vs. Indian Livestock Co. (Tex. Sup.), 11 S.W. 344, wherein it was said: "'Wages' are the compensation given to a hired person for service, and the same is true of 'salary'. The words seem to be synonymous, convertible terms, though we believe that use and general acceptation have given to the word 'salary' a significance somewhat different from the word 'wages' in this: that the former is understood to relate to position of office, to be the compensation given for official or other service, as distinguished from 'wages', the compensation for labor." Annotation 102 Am. St. Rep. 81, 95. We do not think that the legislature intended the exemption in Article 1708 of the New Civil Code to operate in favor of any but those who are laboring men or women in the sense that their work is manual. Persons belonging to this class usually look to the reward of a day's labor for immediate or present support, and such persons are more in need of the exemption than any others. Petitioner Rosario A. Gaa is definitely not within that class.

iii.

Philex v. Philex Supervisors Petitioners now contend that the doctrine of "equal pay for equal work" should not remove management prerogative to institute difference in salary on the basis of seniority, skill, experience and the dislocation factor in the same class of supervisory workers doing the same kind of work.18 vi. In this case, the Court cannot agree because petitioners failed to adduce evidence to show that an ex-Padcal supervisor and a locally hired supervisor of the same rank are initially paid the same basic salary for doing the same kind of work. They failed to differentiate this basic salary from any kind of salary increase or additional benefit which may have been given to the ex-Padcal supervisors due to their seniority, experience and other factors. The records only show that an ex-Padcal supervisor is paid a higher salary than a locally hired supervisor of the same rank. Therefore, petitioner failed to prove with satisfactory evidence that it has not discriminated against the locally hired supervisor in view of the unequal salary.

not help petitioners. Basic is the rule in statutory construction that all doubts in the implementation and the interpretation of the provisions of the Labor Code, as well as its implementing rules and regulations, must be resolved in favor of labor. Aklan Electric Coop v. NLRC We are accordingly constrained to overturn public respondent's findings that petitioner is not justified in its refusal to pay private respondents' wages and other fringe benefits from June 16, 1992 to March 18, 1993; public respondents stated that private respondents were paid their salaries from January to May 1992 and again from March 19, 1993 up to the present. As cited earlier, petitioner's Board in a Resolution No. 411 dated September 9, 1992 dismissed private respondents who were on illegal strike and who refused to report for work at Kalibo office effective January 31, 1992; since no services were rendered by private respondents they were not paid their salaries. Private respondents never questioned nor controverted the Resolution dismissing them and nowhere in their Comment is it stated that they questioned such dismissal. Private respondents also have not rebutted petitioner's claim that private respondents illegally collected fees and charges due petitioner and appropriated the collections among themselves to satisfy their salaries from January to May 1992, for which reason, private respondents are merely claiming salaries only for the period from June 16, 1992 to March 1993. Five J Taxi v. NLRC Art. 114.Deposits for loss or damage. No employer shall require his worker to make deposits from which deductions shall be made for 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 making deposits is a recognized one, or is necessary or desirable as determined by the Secretary of Labor in appropriate rules and regulations.

iv.

Sevilla Trading v. Semana In the light of the clear ruling of this Court, there is, thus no reason for any mistake in the construction or application of the law. When petitioner Sevilla Trading still included over the years non-basic benefits of its employees, such as maternity leave pay, cash equivalent of unused vacation and sick leave, among others in the computation of the 13th-month pay, this may only be construed as a voluntary act on its part. Putting the blame on the petitioners payroll personnel is inexcusable. Nasipit Lumber v. NLRC - The Court wishes to stress that the law does not automatically grant exemption to all establishments belonging to an industry which is deemed "distressed." Hence, RXO1, Section 3 (4), must not be construed to automatically include all establishments belonging to a distressed industry. The fact that the wording of a wage order may contain some ambiguity would

vii.

v.

It can be deduced therefrom that the said article provides the rule on deposits for loss or damage to tools, materials or equipments supplied by the employer. Clearly, the same does not apply to or permit deposits to defray any deficiency which the taxi driver may incur in the remittance of his "boundary." Also, when private respondents stopped working for petitioners, the alleged purpose for which petitioners required such unauthorized deposits no longer existed. In other case, any balance due to private respondents after proper accounting must be returned to them with legal interest. viii. Atok Big Wedge Mutual v. Atok Big Wedge - "Supplements", therefore, constitute extra renumeration or special privileges or benefits given to or received by the laborers over and above their ordinary earnings or wages. Facilities, on the other hand, are items of expense necessary for the laborer's and his family's existence and subsistence, so that by express provision of the law (sec. 2 [g]) they form part of the wage and when furnished by the employer are deductible therefrom since if they are not so furnished, the laborer would spend and pay for them just the same. It is thus clear that the facilities mentioned in the agreement of October 29, 1952 do not come within the term "supplements" as used in Art. 19 of the Minimum Wage Law. Apodaca v. NLRC Lastly, assuming further that there was a call for payment of the unpaid subscription, the NLRC cannot validly set it off against the wages and other benefits due petitioner. Article 113 of the Labor Code allows such a deduction from the wages of the employees by the employer, only in three instances, to wit: ART. 113. Wage Deduction. No employer, in his own behalf or in behalf of any person, shall make any deduction from the wages of his employees, except: x.

(a) In cases where the worker is insured with his consent by the employer, and the deduction is to recompense the employer for the amount paid by him as premium on the insurance; (b) For union dues, in cases where the right of the worker or his union to checkoff has been recognized by the employer or authorized in writing by the individual worker concerned; and (c) In cases where the employer is authorized by law or regulations issued by the Secretary of Labor. Jardin v. NLRC With regard to the amount deducted daily by private respondent from petitioners for washing of the taxi units, we view the same as not illegal in the context of the law. We note that after a tour of duty, it is incumbent upon the driver to restore the unit he has driven to the same clean condition when he took it out. Car washing after a tour of duty is indeed a practice in the taxi industry and is in fact dictated by fair play. Hence, the drivers are not entitled to reimbursement of washing charges. Equitable Banking v. Sadac case where, it was held that a lawyer and can be considered an employee in as much as the case can be brought to the jurisdiction of the NLRC. Songco v. NLRC The ambiguity between Article 97(f), which defines the term 'wage' and Article XIV of the Collective Bargaining Agreement, Article 284 of the Labor Code and Sections 9(b) and 10 of the Implementing Rules, which mention the terms "pay" and "salary", is more apparent than real. Broadly, the word "salary" means a recompense or consideration made to a person for his pains or industry in another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the pay of the Roman soldier, it carries with it the fundamental idea of compensation for services rendered. Indeed, there is eminent authority for holding that the words "wages" and "salary" are in

xi.

ix.

xii.

essence synonymous (Words and Phrases, Vol. 38 Permanent Edition, p. 44 citing Hopkins vs. Cromwell, 85 N.Y.S. 839,841,89 App. Div. 481; 38 Am. Jur. 496). "Salary," the etymology of which is the Latin word "salarium," is often used interchangeably with "wage", the etymology of which is the Middle English word "wagen". Both words generally refer to one and the same meaning, that is, a reward or recompense for services 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 included in the definition of "wage", the logical conclusion, therefore, is, in the computation of the separation pay of petitioners, their salary base should include also their earned sales commissions. xiii. Special Steel v. Villareal - "ART. 116. Withholding of wages and kickbacks prohibited. It shall be unlawful for any person, directly or indirectly, to withhold any amount from the wages (and benefits) of a worker or induce him to give up any part of his wages by force, stealth, intimidation, threat or by any other means whatsoever without the workers consent." The above provision is clear and needs no further elucidation. Indeed, petitioner has no legal authority to withhold respondents 13th month pay and other benefits. What an employee has worked for, his employer must pay.7 Thus, an employer cannot simply refuse to pay the wages or benefits of its employee because he has either defaulted in paying a loan guaranteed by his employer; or violated their memorandum of agreement; or failed to render an accounting of his employers property. 12. Women Employees i. Lakpue Drug v. Belga In the instant case, the alleged misconduct of Belga barely falls within the situation contemplated by the law. Her absence for 16 days was justified considering that she had just delivered a child, which can hardly be considered a forbidden act, a

dereliction of duty; much less does it imply wrongful intent on the part of Belga. Tropical harps on the alleged concealment by Belga of her pregnancy. This argument, however, begs the question as to how one can conceal a full-term pregnancy. We agree with respondents position that it can hardly escape notice how she grows bigger each day. While there may be instances where the pregnancy may be inconspicuous, it has not been sufficiently proven by Tropical that Belgas case is such. Belgas failure to formally inform Tropical of her pregnancy can not be considered as grave misconduct directly connected to her work as to constitute just cause for her separation. The charge of disobedience for Belgas failure to comply with the memoranda must likewise fail. Disobedience, as a just cause for termination, must be willful or intentional. Willfulness is characterized by a wrongful and perverse mental attitude rendering the employees act inconsistent with proper subordination.11 In the instant case, the memoranda were given to Belga two days after she had given birth. It was thus physically impossible for Belga to report for work and explain her absence, as ordered. ii. PT&T v. NLRC In the case at bar, petitioner's policy of not accepting or considering as disqualified from work any woman worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all women workers by our labor laws and by no less than the Constitution. Contrary to petitioner's assertion that it dismissed private respondent from employment on account of her dishonesty, the record discloses clearly that her ties with the company were dissolved principally because of the company's policy that married women are not qualified for employment in PT & T, and not merely because of her supposed acts of dishonesty.

13. Handicapped Employees i. Bernardo v. NLRC money counters case. 14. Apprentices i. Century Canning v. CA Since Palad is not considered an apprentice because the apprenticeship agreement was enforced before the TESDAs approval of petitioners apprenticeship program, Palad is deemed a regular employee performing the job of a "fish cleaner." Clearly, the job of a "fish cleaner" is necessary in petitioners business as a tuna and sardines factory. Under Article 28021 of the Labor Code, an employment is deemed regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer. ii. Nitto Enterprises v. NLRC - Hence, since the apprenticeship agreement between petitioner and private respondent has no force and effect in the absence of a valid apprenticeship program duly approved by the DOLE, private respondent's assertion that he was hired not as an apprentice but as a delivery boy ("kargador" or "pahinante") deserves credence. He should rightly be considered as a regular employee of petitioner as defined by Article 280 of the Labor Code: Art. 280. Regular and Casual Employment. The provisions of written agreement to the contrary notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be regular where the employee has been engaged to perform activities which are usually necessary or desirable in the usual business or trade of the employer, except where the employment has been fixed for a specific project or undertaking the completion or termination of which has been determined at the time of the engagement of the employee or where the work or services to be performed 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 one year of service, whether such service is continuous or broken, shall be considered a regular employee with respect to the activity in which he is employed and his employment shall continue while such activity exists.

IV. Job Contracting and Labor-Only Contracting i. Labor Code: o Article 106. Contractor or subcontractor. Whenever an employer enters into a contract with another person for the performance of the formers work, the employees of the contractor and of the latters subcontractor, if any, shall be paid in accordance with the provisions of this Code. In the event that the contractor or subcontractor fails to pay the wages of his employees in accordance with this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to such employees to the extent of the work performed under the contract, in the same manner and extent that he is liable to employees directly employed by him. The Secretary of Labor and Employment may, by appropriate regulations, restrict or prohibit the contracting-out of labor to protect the rights of workers established under this Code. In so prohibiting or restricting, he may make appropriate distinctions between labor-only contracting and job contracting as well as differentiations within these types of contracting and determine who among the parties involved shall be considered the employer

for purposes of this Code, to prevent any violation or circumvention of any provision of this Code. There is "labor-only" contracting where the person supplying workers to an employer does not have substantial capital or investment in the form of tools, equipment, machineries, work premises, among others, and the workers recruited and placed by such person are performing activities which are directly related to the principal business of such employer. In such cases, the person or intermediary shall be considered merely as an agent of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. ii.

liability under this Chapter, they shall be considered as direct employers. DOLE DO: http://www.dole.gov.ph/fndr/bong/files/DO%20No_%2018-A11.pdf (1986) PBCom v. NLRC T he definition of "labor-only" contracting in Rule VIII, Book III of the Implementing Rules must be read in conjunction with the definition of job contracting given in Section 8 of the same Rules. The undertaking given by CESI in favor of the bank was not the performance of a specific job for instance, the carriage and delivery of documents and parcels to the addresses thereof. There appear to be many companies today which perform this discrete service, companies with their own personnel who pick up documents and packages from the offices of a client or customer, and who deliver such materials utilizing their own delivery vans or 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 to carry out the work of messengers. Such undertaking of CESI was complied with when the requisite number of persons were assigned or seconded to the petitioner bank. Orpiada utilized the premises and office equipment of the bank and not those of (CESI) Messengerial workthe delivery of documents to designated persons whether within or without the bank premises is of course directly related to the day-to-day operations of the bank. Section 9(2) quoted above does not require for its applicability that the petitioner must be engaged in the delivery of items as a distinct and separate line of business. (1989) Guarin v. NLRC The jobs assigned to the petitioners as mechanics, janitors, gardeners, firemen and grasscutters were directly related to the business of Novelty as a garment manufacturer. In the case of Philippine Bank of Communications vs. NLRC, 146 SCRA 347, we ruled that the work of a messenger is

iii.

o Article 107. Indirect employer. The provisions of the immediately preceding article shall likewise apply to any person, partnership, association or corporation which, not being an employer, contracts with an independent 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 or subcontractor to furnish a bond equal to the cost of labor under contract, on condition that the bond will answer for the wages due the employees should the contractor or subcontractor, as the case may be, fail to pay the same. o Article 109. Solidary liability. The provisions of existing laws to the contrary notwithstanding, every employer or indirect employer shall be held responsible with his contractor or subcontractor for any violation of any provision of this Code. For purposes of determining the extent of their civil iv.

directly related to a bank's operations. In its Comment, Novelty contends that the services which are directly related to manufacturing garments are sewing, 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 imagination that one may conclude that the services of janitors, janitresses, firemen, grasscutters, mechanics and helpers are directly related to the business of manufacturing garments" (p. 78, Rollo). Not so, for the work of gardeners in maintaining clean and well-kept grounds around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires, are directly related to the daily operations of a garment factory. That fact is confirmed by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986, a period of three (3) years. v. (2000) Vinoya v. NLRC From the two aforementioned decisions, it may be inferred that it is not enough to show substantial capitalization or investment in the form of tools, equipment, machineries and work premises, among others, to be considered as an independent contractor. In fact, jurisprudential holdings are to the effect that in determining the existence of an independent contractor relationship, several factors might be considered such as, but not necessarily confined to, whether the contractor is carrying on an independent business; the nature and extent of the work; the skill required; the term and duration of the relationship; the right to assign the performance of specified pieces of 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 supply premises, tools, appliances, materials and labor; and the mode, manner and terms of payment. (1993) Neri v. NLRC based on the foregoing, BCC cannot be considered a "labor-only" contractor because it has substantial

capital. While there may be no evidence that it has investment in the form of tools, equipment, machineries, work premises, among others, it is enough that it has substantial capital, as was established before the Labor Arbiter as well as the NLRC. In other words, the law does not require both substantial capital and investment in the form of tools, equipment, machineries, etc. This is clear from the use of the conjunction "or". If the intention was to require the contractor to prove that he has both capital and the requisite investment, then the conjunction "and" should have been used. But, having established that it has substantial capital, it was no longer necessary for BCC to further adduce evidence to prove that it does not fall within the purview of "labor-only" contracting. There is even no need for it to refute petitioners' contention that the activities they perform are directly related to the principal business of respondent bank. Be that as it may, the Court has already taken judicial notice of the general practice adopted in several government and private institutions and industries of hiring independent contractors to perform special services. 9 These services range from janitorial, 10 security 11 and even technical or other specific services such as those performed by petitioners Neri and Cabelin. While these services may be considered directly related to the principal business of the employer, 12 nevertheless, they are not necessary in the conduct of the principal business of the employer. vii. (1989) Tabas v. California Mfg. It would have been different, we believe, had Livi been discretely a promotions firm, and that California had hired it to perform the latter's merchandising activities. For then, Livi would have been truly the employer of its employees, and California, its client. The client, in that case, would have been a mere patron, and not an employer. The employees would not in that event be unlike waiters, who, although at the service of customers, are not the latter's employees, but of the restaurant.

vi.

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(2000) Escario v. NLRC - Among the circumstances that tend to establish the status of D.L. Admark as a legitimate job contractor are: 1) The SEC registration certificate of D.L. Admark states that it is a firm engaged in promotional, advertising, marketing and merchandising activities. 2) The service contract between CMC and D.L. Admark clearly provides that the agreement is for the supply of sales promoting merchandising services rather than one of manpower placement.11 3) D.L. Admark was actually engaged in several activities, such as advertising, publication, promotions, marketing and merchandising. It had several merchandising contracts with companies like Purefoods, Corona Supply, Nabisco Biscuits, and Licron. It was likewise engaged in the publication business as evidenced by it magazine the "Phenomenon."12 4) It had its own capital assets to carry out its promotion business. It then had current assets amounting to P6 million and is therefore a highly capitalized venture.13 It had an authorized capital stock of P500,000.00. It owned several motor vehicles and other tools, materials and equipment to service its clients. It paid rentals of P30,020 for the office space it occupied.

distinct and independent business and undertakes the contract work on his account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of his work except as to the results thereof; (b) the contractor has substantial capital or investment; and (c) the agreement between the principal and contractor or subcontractor assures the contractual employees' entitlement to all labor and occupational safety and health standards, free exercise of the right to self-organization, security of tenure, and social welfare benefits. x. (2008) PAL v. Ligan Respondents having performed tasks which are usually necessary and desirable in the air transportation business of petitioner, they should be deemed its regular employees and Synergy as a labor-only contractor. (2010) SMC v. MAERC In comparison, MAERC, as earlier discussed, displayed the characteristics of a labor-only contractor. Moreover, while MAERC's investments in the form of buildings, tools and equipment amounted to more than P4 Million, we cannot disregard the fact that it was the SMC which required MAERC to undertake such investments under the understanding that the business relationship between petitioner and MAERC would be on a long term basis. Nor do we believe MAERC to have an independent business. Not only was it set up to specifically meet the pressing needs of SMC which was then having labor problems in its segregation division, none of its workers was also ever assigned to any other establishment, thus convincing us that it was created solely to service the needs of SMC. Naturally, with the severance of relationship between MAERC and SMC followed MAERC's cessation of operations, the loss of jobs for the whole MAERC workforce and the resulting actions instituted by the workers.

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(2008) Purefoods v. NLRC - Permissible job contracting or subcontracting refers to an arrangement whereby a principal agrees to put out or farm out with the contractor or subcontractor the performance or completion of a specific job, work or service within a definite or predetermined period regardless of whether such job, work or service is to be performed or completed within or outside the premises of the principal.29 In this arrangement, the following conditions must be met: (a) the contractor carries on a

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(2009) Coca Bottlers v. Agito In sum, Interserve did not have substantial capital or investment in the form of tools, equipment, machineries, and work premises; and respondents, its supposed employees, performed work which was directly related to the principal business of petitioner. It is, thus, evident that Interserve falls under the definition of a "labor-only" contractor, under Article 106 of the Labor Code; as well 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 is also apparent that Interserve is a labor-only contractor under Section 5(ii)44 of the Rules Implementing Articles 106-109 of the Labor Code, as amended, since it did not exercise the right to control the performance of the work of respondents.

contractor; and declared that the NLRC's finding that it "was not a mere labor-only contractor because it has substantial capital or investment in the form of tools, equipment, machineries, work premises, ** " was "based on insubstantial evidence, as the NLRC (had merely) pointed out that 'it (LIPERCON) claims to be possessed among others, of substantial capital and equipment essential to carry out its business as a general independent contractor' **." In other words, in Guarin, LIPERCON was held to have failed to discharge its burden of proof that "it has substantial capital, investment, tools, etc." Not so in the case at bar. Here, there is substantial evidence, detailed by the Labor Arbiter, to establish LIPERCON's character as an independent contractor in the real sense of the word, 25 which makes the Labor Arbiter's ruling more acceptable than respondent Commission's on the same matter, being founded solely on an inapplicable precedent. Also more deserving of assent is said Labor Arbiter's conclusion that the complainants' acceptance of employment in LIPERCON in December, 1986 lasting for a period of some two years effectively operated as a cessation of the prior relationship they had with PIONEER and COCA COLA in consequence of which they became entitled to separation pay from COCA COLA, PIONEER being 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 started working, unless it is covered by an apprenticeship agreement stipulating a longer period. The services of an employee who has been engaged on a probationary basis may be terminated for a just cause or when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. An employee

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(2010) Aliviado v. Procte and Gamble To emphasize, there is labor-only contracting when the contractor or sub-contractor merely recruits, supplies or places workers to perform a job, work or service for a principal25 and any of the following elements are present: i) The contractor or subcontractor does not have substantial capital or investment which relates to the job, work or service to be performed and the employees recruited, supplied or placed by such contractor or subcontractor are performing activities which are directly related to the main business of the principal; or ii) The contractor does not exercise the right to control over the performance of the work of the contractual employee.

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(1998) Coca-cola Bottlers v. Hingpit Respondent Commission grounded its reversal of the Arbiter's adjudgment solely on a 1989 judgment of this Court, Guarin et al. v. Lipercon 23 in which LIPERCON had also been involved as a labor contractor of another company. 24 There, the Court held LIPERCON to be a "labor-only"

who is allowed to work after a probationary period shall be considered a regular employee. ii. Mauricio v. NLRC - Anent the first issue, the submission of clearance from a previous employer is a reasonable requirement to qualify as a regular employee upon the expiration of the six months probationary employment. This reasonable regulation is mandatory in the sense that it speaks of the employees character before he or she becomes a regular employee. For sure, no employer in his right mind would engage the regular service of an employee unless he is certain of the moral character of a probationary employee applying as regular employee. To say that the requirement is a mere formality is an oversimplification of the long standing policy in the bank industry that bank officers must be honest and beyond reproach. Holiday Inn Manila v. NLRC - On the issue of illegal dismissal, we find that Honasan was placed by the petitioner on probation twice, first during her on-the-job training for three weeks, and next during another period of six months, ostensibly in accordance with Article 281. Her probation clearly exceeded the period of six months prescribed by this article. Probation is the period during which the employer may determine if the employee is qualified for possible inclusion in the regular force. In the case at bar, the period was for three weeks, during Honasan's on-the-job training. When her services were continued after this training, the petitioners in effect recognized that she had passed probation and was qualified to be a regular employee. iv. Mariwasa Mfg. v. Leogardo - By voluntarily agreeing to an extension of the probationary period, Dequila in effect waived any benefit attaching to the completion of said period if he still failed to make the grade during the period of extension. The Court finds nothing in the law which by any fair interpretation prohibits such a waiver. And no public policy protecting the employee and the

security of his tenure is served by prescribing voluntary agreements which, by reasonably extending the period of probation, actually improve and further a probationary employee's prospects of demonstrating his fitness for regular employment. v. Woodridge v. Benito - Initially, it should be clarified that this controversy revolves only on respondents probationary employment. On March 31, 2001, the effective date of their dismissal,33 respondents were not regular or permanent employees; they had not yet completed three (3) years of satisfactory service as academic personnel which would have entitled them to tenure as permanent employees in accordance with the Manual of Regulations for Private Schools. Probationary employees enjoy security of tenure in the 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 of tenure and compel their employers to renew their employment contracts. In fact, the services of an employee hired on probationary basis may be terminated when he fails to qualify as a regular employee in accordance with reasonable standards made known by the employer to the employee at the time of his engagement. There is nothing that would hinder the employer from extending a regular or permanent appointment to an employee once the employer finds that the employee is qualified for regular employment even before the expiration of the probationary period. Conversely, if the purpose sought by the employer is neither attained nor attainable within the said period, the law does not preclude the employer from terminating the probationary employment on justifiable ground. 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 the school year, the employer has the option

iii.

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not to renew the contract, particularly considering the teacher's performance.32 If the contract is not renewed, the employment relationship terminates.33 If the contract is renewed, usually for another school year, the probationary employment continues.34 Again, at the end of that period, the parties may opt to renew or not to renew the contract.35 If renewed, this second renewal of the contract for another school year would then be the last year since it would be the third school year of probationary employment.36 At the end of this third year, the employer may now decide whether to extend a permanent appointment to the employee, primarily on the basis of the employee having met the reasonable standards of competence and efficiency set by the employer.37 For the entire duration of this three-year period, the teacher remains under probation.38 Upon the expiration of his contract of employment, being simply on probation, he cannot automatically claim security of tenure and compel the employer to renew his employment contract. vii. Aliling v. Feliciano - (d) In all cases of probationary employment, the employer shall make known to the employee the standards under which he will qualify as a regular employee at the time of his engagement. Where no standards are made known to the employee at that time, he shall be deemed a regular employee. Tiamsons Enterprises v. CA Private respondents were remiss in showing that petitioner failed to qualify as a regular employee. Except for their allegations that she was apprised of her status as probationary and that she would be accorded regular status once she meets their standards, no evidence was presented of these standards and that petitioner had been apprised of them at the time she was hired as a probationary employee. Neither was it shown that petitioner failed to meet such standards. Petitioner should have been informed as to the basis of private respondents decision not to extend her regular or permanent

employment. This case is bereft of any proof like an evaluation or assessment report which would support private respondents claim that she failed to comply with the standards in order to become a regular employee. VI. Security of Tenure and Termination of Employment Art 277 (b) - Subject to the constitutional right of workers to security of tenure and their right to be protected against dismissal except for a just and authorized cause and without prejudice to the requirement of notice under Article 283 of this Code, the employer shall furnish the worker whose employment is sought to be terminated a written notice containing a statement of the causes for termination and shall afford the latter ample opportunity to be heard and to defend himself with the assistance of his representative if he so desires in accordance with company rules and regulations promulgated pursuant to guidelines set by the Department of Labor and Employment. Any decision taken by the employer shall be without prejudice to the right of the worker to contest the validity or legality of his dismissal by filing a complaint with the regional branch of the National Labor Relations Commission. The burden of proving that the termination was for a valid or authorized cause shall rest on the employer. The Secretary of the Department of Labor and Employment may suspend the effects of the termination pending resolution of the dispute in the event of a prima facie finding by the appropriate official of the Department of Labor and Employment before whom such dispute is pending that the termination may cause a serious labor dispute or is in implementation of a mass lay-off. (As amended by Section 33, Republic Act No. 6715, March 21, 1989) Art 279 - Article 279. Security of tenure. In cases of regular employment, the employer shall not terminate the services of an employee except for a just cause or when authorized by this Title. An employee who is unjustly dismissed from work shall be entitled to reinstatement without loss of seniority rights and other privileges and to his full backwages, inclusive of allowances, and to

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his other benefits or their monetary equivalent computed from the time his compensation was withheld from him up to the time of his actual reinstatement. (As amended by Section 34, Republic Act No. 6715, March 21, 1989) A. Preventive Suspension i. IRR - SEC. 2. Standards of due process; requirements of notice.In all cases of termination of employment, the following standards of due process shall be substantially observed: I. For termination of employment based on just causes as defined in Article 282 of the Code: (a) A written notice served on the employee specifying the ground or grounds for termination, and giving said employee reasonable opportunity within which to explain his side. (b) A hearing or conference during which the employee concerned, with the assistance of counsel if he so desires is given opportunity to respond to the charge, present his evidence, or rebut the evidence presented against him. (c) A written notice of termination served on the employee, indicating that upon due consideration of all the circumstances, grounds have been established to justify his termination. SECTION 1. Security of tenure and due process. No workers shall be dismissed except for a just or authorized cause provided by law and after due process. SECTION 2. Notice of dismissal. Any employer who seeks to dismiss a worker shall furnish him a written notice stating the particular acts or omission constituting the grounds for his dismissal. In cases of

abandonment of work, the notice shall be served at the worker's last known address. SECTION 3. Preventive suspension. The employer may place the worker concerned under preventive suspension if his continued employment poses a serious and imminent threat to the life or property of the employer or of his co-workers. SECTION 4. Period of suspension. No preventive suspension shall last longer than 30 days. The employer shall thereafter reinstate the worker in his former or in a substantially equivalent position or the employer may extend the period of suspension provided that during the period of extension, he pays the wages and other benefits due to the worker. In such case, the worker shall not be bound to reimburse the amount paid to him during the extension if the employer decides, after completion of the hearing, to dismiss the worker. ii. King of Kings v. Mamac (1) The first written notice to be served on the employees should contain the specific causes or grounds for termination against them, and a directive that the employees are given the opportunity to submit their written explanation within a reasonable period. "Reasonable opportunity" under the Omnibus Rules means every kind of assistance that management must accord to the employees to enable them to prepare adequately for their defense.15 This should be construed as a period of at least five (5) calendar days from receipt of the notice to give the employees an opportunity to study the accusation against them, consult a union official or lawyer, gather data and evidence, and decide on the defenses they will raise against the complaint. Moreover, in order to enable the

employees to intelligently prepare their explanation and defenses, the notice should contain a detailed narration of the facts and circumstances that will serve as basis for the charge against the employees. A general description of the charge will not suffice. Lastly, the notice should specifically mention which company rules, if any, are violated and/or which among the grounds under Art. 282 is being charged against the employees. (2) After serving the first notice, the employers should schedule and conduct a hearing or conference wherein the employees will be given the opportunity to: (1) explain and clarify their defenses to the charge against them; (2) present evidence in support of their defenses; and (3) rebut the evidence presented against them by the management. During the hearing or conference, the employees are given the chance to defend themselves personally, with the assistance of a representative or counsel of their choice. Moreover, this conference or hearing could be used by the parties as an opportunity to come to an amicable settlement. (3) After determining that termination of employment is justified, the employers shall serve the employees a written notice of termination indicating that: (1) all circumstances involving the charge against the employees have been considered; and (2) grounds have been established to justify the severance of their employment. iii. PNB v. Velasco PNB has the right to preventively suspend Velasco during the pendency of the administrative case against him. It was obviously done as a measure of selfprotection. It was necessary to secure the vital records of PNB which, in view of the position of Velasco as internal auditor, are easily accessible to him. iv. v. vi.

Velasco was preventively suspended for more than thirty (30) days as of May 27, 1996, while the records bear that Velasco was paid his salaries from August 1, 1996 to October 31, 1996.[79] Thus, the NLRC is correct in its holding that he may recover his salaries from May 27, 1996 to July 31, 1996. PAL v. NLRC Jo Cinema v. Abellana Valenzuela v. Caltex Phil

B. Just Causes for Termination i. Labor Code: i. Article 282. Termination by employer. An employer may terminate an employment for any of the following causes: Serious misconduct or willful disobedience by the employee of the lawful orders of his employer or representative in connection with his work; Gross and habitual neglect by the employee of his duties; Fraud or willful breach by the employee of the trust reposed in him by his employer or duly authorized representative; Commission of a crime or offense by the employee against the person of his employer or any immediate member of his family or his duly authorized representatives; and Other causes analogous to the foregoing.

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Analogous Cases i. A Marquez v. Leogardo inutility to perform work due to ones own fault ii. MF Violago v . NLRC theft iii. National Union of Restaurant Workers v. CIR death threats iv. John Hancock Life Insurance v. Davis theft in the work place

C. Authorized Causes for Termination i. Labor Code: i. Article 283. Closure of establishment and reduction of personnel. The employer may also terminate the employment of any employee due to the installation of labor-saving devices, redundancy, retrenchment to prevent losses or the closing or cessation of operation of the establishment or undertaking unless the closing is for the purpose of circumventing the provisions of this Title, by serving a written notice on the workers and the Ministry of Labor and Employment at least one (1) month before the intended date thereof. In case of termination due to the installation of labor-saving devices or redundancy, the worker affected thereby shall be entitled to a separation pay equivalent to at least his one (1) month pay or to at least one (1) month pay for every year of service, whichever is higher. In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month pay or at least one-half (1/2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall be considered one (1) whole year.

ii. JAT General Devices v. NLRC iii. East Ridge Golf Club Inc. iv. Sebuguero v. NLRC v. Plastimer Industrial vi. Banco Filipino vii. Mindanao Terminal and Borkerage viii. North Davao Mining D. Illness as Ground for Termination i. Article 284. Disease as ground for termination. An employer may terminate the services of an employee who has been found to be suffering from any disease and whose continued employment is prohibited by law or is prejudicial to his health as well as to the health of his co-employees: Provided, That he is paid separation pay equivalent to at least one (1) month salary or to one-half (1/2) month salary for every year of service, whichever is greater, a fraction of at least six (6) months being considered as one (1) whole year. E. Termination by the employee i. Article 285. Termination by employee. An employee may terminate without just cause the employee-employer relationship by serving a written notice on the employer at least one (1) month in advance. The employer upon whom no such notice was served may hold the employee liable for damages. An employee may put an end to the relationship without serving any notice on the employer for any of the following just causes: Serious insult by the employer or his representative on the honor and person of the employee;

Inhuman and unbearable treatment accorded the employee by the employer or his representative; Commission of a crime or offense by the employer or his representative against the person of the employee or any of the immediate members of his family; and Other causes analogous to any of the foregoing. F. Suspension of Operations i. Article 286. When employment not deemed terminated. The bona-fide suspension of the operation of a business or undertaking for a period not exceeding six (6) months, or the fulfillment by the employee of a military or civic duty shall not terminate employment. In all such cases, the employer shall reinstate the employee to his former position without loss of seniority rights if he indicates his desire to resume his work not later than one (1) month from the resumption of operations of his employer or from his relief from the military or civic duty. ii. Industrial Timber Corp v. Ababoni G. Retirement