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MIDTERM MEMORIZE LABOR

1. Company Practice
2. Certainly, a practice or custom is, as a general rule, not a source of a legally
demandable or enforceable right. Company practice, just like any other fact, habits,
customs, usage or patterns of conduct, must be proven
3. Social Justice and Separation Pay - But where the cause of the separation is more
serious than mere inefficiency, the generosity of the law must be more discerning.
4. We hold that henceforth separation pay shall be allowed as a measure of social justice
only in those instances where the employee is validly dismissed for causes other than
serious misconduct or those reflecting on his moral character.
5. Four-Fold Test
a. the selection and engagement of the employee;
b. the payment of wages;
c. the power of dismissal; and
d. the employers power to control the employee with respect to the means and
methods by which the work is to be accomplished

Control Test - Among the four, the most determinative factor in


ascertaining the existence of employer-employee relationship is the "right
of control test".30 "It is deemed to be such an important factor that the
other requisites may even be disregarded.
For where the person for whom the services are performed reserves the
right to control not only the end to be achieved, but also the means by
which such end is reached, employer-employee relationship is deemed to
exist.

Economic reality/dependence test - In addition to the standard of


right-of-control, the existing economic conditions prevailing between the
parties, can help in determining the existence of an employer-employee
relationship.
The employee must depend on the employer for his primary source of
livelihood.
The better approach would therefore be to adopt a two-tiered test
involving: (1) the putative employers power to control the employee
with respect to the means and methods by which the work is to be
accomplished; and (2) the underlying economic realities of the activity
or relationship.

6. Management Prerogative The employers prerogative to regulate all aspects of


employment relating to the employees work assignment, the working methods and the
place and manner of work according to his judgment and discretion.
The only limitations to the exercise of this prerogative are those imposed by labor laws
and the principles of equity and substantial justice.
7. (Transfer of employees)
a. a transfer is a movement from one position to another of equivalent rank, level or
salary without break in the service or a lateral movement from one position to
another of equivalent rank or salary;
b. the employer has the inherent right to transfer or reassign an employee for
legitimate business purposes;
c. a transfer becomes unlawful where it is motivated by discrimination or bad faith or
is effected as a form of punishment or is a demotion without sufficient cause;
d. the employer must be able to show that the transfer is not unreasonable,
inconvenient, or prejudicial to the employee.
8. Constructive dismissal - Quitting because continued employment is rendered
impossible, unreasonable or unlikely, or an offer involving a demotion in rank and
diminution of pay.
Leaving him with no option but to forego with his continued employment.
9. Employment Restriction
a. The post-retirement competitive employment ban is unreasonable because it has
no geographical limits; respondent is barred from accepting any kind of
employment in any competitive bank within the proscribed period.
b. The employer, is burdened to establish that a restrictive covenant barring an
employee from accepting a competitive employment after retirement or
resignation is not an unreasonable or oppressive, or in undue or unreasonable
restraint of trade, thus, unenforceable for being repugnant to public policy.
c. There are two principal grounds on which the doctrine is founded that a
contract in restraint of trade is void as against public policy. One is, the
injury to the public by being deprived of the restricted partys industry; and the
other is, the injury to the party himself by being precluded from pursuing his
occupation, and thus being prevented from supporting himself and his family.
d. Is not a prohibition on the employees engaging in competitive work but is merely
a denial of the right to participate in the retirement plan if he does so engage.
Thus, in determining whether the contract is reasonable or not, the trial
court should consider the following factors:
(a) whether the covenant protects a legitimate business interest of the employer;
(b) whether the covenant creates an undue burden on the employee;
(c) whether the covenant is injurious to the public welfare;
(d) whether the time and territorial limitations contained in the covenant are
reasonable; and

(e) whether the restraint is reasonable from the standpoint of public policy
10. Bona fide occupational qualification exception - Thus, they rule that unless the
employer can prove that the reasonable demands of the business require a distinction
based on marital status and there is no better available or acceptable policy which
would better accomplish the business purpose, an employer may not discriminate
against an employee based on the identity of the employees spouse. This is known as
the bona fide occupational qualification exception.
Two requirements:
a. Business necessity
b. No other way to address the business purpose besides making the occupational
qualification
To justify a bona fide occupational qualification, the employer must prove two
factors:
a. that the employment qualification is reasonably related to the essential
operation of the job involved; and,
b. that there is a factual basis for believing that all or substantially all persons
meeting the qualification would be unable to properly perform the duties of the
job
RW: LC 136 Stipulation against marriage

11. Quitclaims
A quitclaim is invalid or contrary to public policy only:
(1) where there is clear proof that the waiver was wrangled from an
unsuspecting or gullible person; or
(2) where the terms of settlement are unconscionable on their face.
It is true that quitclaims executed by employees are often frowned upon as contrary to
public policy. But that is not to say that all waivers and quitclaims are invalid as against
public policy.31
Quitclaims will be upheld as valid if the following requisites are present:
(1) the employee executes a deed of quitclaim voluntarily;
(2) there is no fraud or deceit on the part of any of the parties;
(3) the consideration of the quitclaim is credible and reasonable; and,
(4) the contract is not contrary to law, public order, public policy, morals or good
customs or prejudicial to a third person with a right recognized by law

12. Section 2 (1), Article IX B of the 1987 Constitution - Sec. 2. (1) The civil service
embraces all branches, subdivisions, instrumentalities, and agencies of the
Government, including government-owned or controlled corporations with original
charters.
We ruled that the new phrase "with original charter" means that government-owned
and controlled corporations refer to corporations chartered by special law as
distinguished from corporations organized under the Corporation Code.
13. Illegal Recruitment
a. The impression that he had the power or authority to send them abroad.
b. Worth stressing, the Migrant Workers and Overseas Filipinos Act of 1995 is a
special law, a violation of which is malum prohibitum, not mala in se. Intent is
thus, immaterial26and mere commission of the prohibited act is punishable.
c. And each debtor may be compelled to pay the entire obligation. Recruitment
agency liability is joint and several
d. Under Section 10 of R.A. No. 8042, a worker dismissed from overseas employment
without just, valid or authorized cause is entitled to his salary for the unexpired portion
of his employment contract or for three (3) months for every year of the unexpired term
e. What an employee does on free time is beyond the employers sphere of inquiry.
f. Recruitment agencies are expected to extend assistance to their deployed OFWs,
especially those in distress. The recruitment agencies should be the first to come
to the rescue of our distressed OFWs
14. Commencement of employer-employee relationship (OFW)
a. Commencement of employer employee relationship begins when the migrant
worker is actually deployed from the point of hire
b. But even before the commencement of the employer-employee relationship,
causes as to right of damages under a perfected contract may arise
c. The contract is perfected when the parties consent to the object and cause of the
contract
15. Jurisdiction OFW
a. Labor Arbiter of the NLRC
b. Exclusive and original jurisdiction arising out of an employer-employee
relationship or by virtue of law or contract entered into by the Overseas Filipino
Worker for deployment abroad
c. LA has jurisdiction on money claims even if not deployed
16. Ban on Direct Hiring Art 18
17. Venue Where the offense was committed or where the offended party actually resides
at the time of the commission of the offense
18. Managerial employees and Managerial Staff - The test of "supervisory" or "managerial
status" depends on whether a person possesses authority to act in the interest of his
employer and whether such authority is not merely routinary or clerical in nature, but
requires the use of independent judgment

Employees are considered occupying managerial positions if they meet all


of the following conditions, namely:
1) Their primary duty consists of management of the establishment in
which they are employed or of a department or subdivision thereof;
2) They customarily and regularly direct the work of two or more
employees therein;
3) They have the authority to hire or fire other employees of lower rank; or
their suggestions and recommendations as to the hiring and firing and as
to the promotion or any other change of status of other employees are given
particular weight.
They are considered as officers or members of a managerial staff if they
perform the following duties and responsibilities:
1) The primary duty consists of the performance of work directly related to
management of policies of their employer;
2) Customarily and regularly exercise discretion and independent judgment;
3) (i) Regularly and directly assist a proprietor or a managerial employee whose
primary duty consists of management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision work
along specialized or technical lines requiring special training, experience, or
knowledge; or (iii) execute, under general supervision, special assignment and
tasks
19. Field Personnel
a. who regularly perform their duties away from the principal place of business or
branch office of the employer
b. AND whose actual hours of work in the field cannot be determined with
reasonable certainty.
c. Hence, in deciding whether or not an employees actual working hours in the
field can be determined with reasonable certainty, query must be made as to
whether or not such employees time and performance is constantly supervised
by the employer.
d. If they perform tasks which are necessary and desirable in the usual business of
the employer they are considered regular employees
20. Domestic servant - shall refer to any person, whether male or female, who renders
services in and about the employers home and which services are usually necessary or

desirable for the maintenance and enjoyment thereof, and ministers exclusively to the
personal comfort and enjoyment of the employers family."
21. Workers Paid by Results - There are two categories of employees paid by results: (1)
those whose time and performance are supervised by the employer. (Here, there is an
element of control and supervision over the manner as to how the work is to be
performed. A piece-rate worker belongs to this category especially if he performs his
work in the company premises.); and (2) those whose time and performance are
unsupervised. (Here, the employers control is over the result of the work. Workers
on pakyao and takay basis belong to this group.)
22. Basic Work Schedule
a. Not more than 8 hours a day
b. Not more than 5 days in a workweek. The work week can begin at any time of
the day, at any day even during Saturday or Sunday.
c. Mandatory meal break period of not less than 60 minutes a day
23. Requirement for Idle time or Rest period to be non-compensable; The employee
can:
a. Cease to work
b. Can rest completely
c. Can leave the work premises at his own will
-

As We understand this term, a laborer need not leave the premises of


the factory, shop or boat in order that his period of rest shall not be
counted, it being enough that he "cease to work", may rest completely
and leave or may leave at his will the spot where he actually stays while
working, to go somewhere else, whether within or outside the premises
of said factory, shop or boat.

24. On Call
Sec. 5(b), Rule I, Book III, Omnibus Rules - (b) An employee who is required to remain
on call in the employer's premises or so close thereto that he cannot use the time
effectively and gainfully for his own purpose shall be considered as working while on
call. An employee who is not required to leave word at his home or with company
officials where he may be reached is not working while on call.
25. Overtime Work
a. The employee is paid for overtime work an additional compensation equivalent to
his regular wage plus at least 25% thereof.
b. Claim for overtime pay must be proven by SUBSTANTIAL EVIDENCE
26. Art. 86. Night shift differential. Every employee shall be paid a night shift differential
of not less than ten percent (10%) of his regular wage for each hour of work performed
between ten oclock in the evening and six oclock in the morning.

a. It bears pointing out that additional compensation for nighttime work is founded
on public policy.[32] Working at night is violative of the law of nature for it is the
period for rest and sleep. An employee who works at night has less stamina and
vigor. Thus, he can easily contract disease
b. Thus, the correct criterion in determining whether they are entitled to overtime
pay or night shift differential is not whether they were on board and cannot leave
ship beyond the regular eight working hours a day, but whether they actually
rendered service in excess of said number of hours.
27. Art. 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 (24)
consecutive hours after every six (6) consecutive normal work days.
b. Where an employee is made or permitted to work on his scheduled rest day, he
shall be paid an additional compensation of at least thirty percent (30%) of his
regular wage.
c. 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 thirty percent (30%) of his regular wage for
work performed on Sundays and holidays.
d. Work performed on any special holiday shall be paid an additional compensation
of at least thirty percent (30%) of the regular wage of the employee. Where such
holiday work falls on the employees scheduled rest day, he shall be entitled to an
additional compensation of at least fifty per cent (50%) of his regular wage.
28. Holiday Pay
a. 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
b. 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
c. 11 mandatory paid holidays
d. The entitlement to 11 paid REGULAR Holidays should not be reduced in the
event of double holiday
Teachers
a. Not entitled to compensation on REGULAR HOLIDAY
b. Entitled to receive Holiday pay on SPECIAL PUBLIC HOLIDAY
Muslim Holiday
a. Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides
that (t)he provisions of this Code shall be applicable only to Muslims x x x.
However, there should be no distinction between Muslims and non-Muslims
as regards payment of benefits for Muslim holidays

b. We must remind the respondent-appellant that wages and other emoluments


granted by law to the working man are determined on the basis of the
criteria laid down by laws and certainly not on the basis of the workers faith
or religion.
29. Service Incentive Leave (SIL)
a. (a) 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.
b. Service incentive leave is a right which accrues to every employee who has
served "within 12 months, whether continuous or broken reckoned from the
date the employee started working, including authorized absences and paid
regular holidays
c. It is also "commutable to its money equivalent if not used or exhausted at the
end of the year."
d. In short, the payment of an employee on task or pakyaw basis alone is
insufficient to exclude one from the coverage of SIL and holiday pay. They are
exempted from the coverage of Title I (including the holiday and SIL pay) only if
they qualify as field personnel.
e. However, the Court disagrees with the Court of Appeals ruling that the
13th month pay and service incentive leave pay should be computed from the
start of employment up to the finality of the NLRC resolution. While computation
for the 13th month pay should properly begin from the first day of employment,
the service incentive leave pay should start a year after commencement of
service, for it is only then that the employee is entitled to said benefit.
30. 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.
TIP - "tip" is defined as meaning a gratuity; a gift; a present; a fee; money given, as to a
servant to secure better or more prompt service. It cannot be demanded from the
customer. Whether or not tips will be given is dependent on the will and generosity of
the giver.
Furthermore, it is presumed that the parties were aware of the plain, ordinary and
common meaning of the word "tip." As a bartender, Orlando cannot feign ignorance on
the practice of tipping and that tips are normally paid by customers and not by the
employer.
31. 13th Month Pay - All employers are hereby required to pay all their employees receiving a
basic salary, regardless of the nature of their employment, a 13th-month pay not later
than December 24 of every year.

PD 851 contemplates the situation of land-based workers, and not of seafarers who
generally earn more than domestic land-based workers.
However, employers already paying their employees a 13th month pay or its equivalent
are not covered by the law. Under the Revised Guidelines on the Implementation of the
13th-Month Pay Law,31 the term "equivalent" shall be construed to include Christmas
bonus, mid-year bonus, cash bonuses and other payments amounting to not less than
1/12 of the basic salary. The intention of the law was to grant some relief - not to all
workers - but only to those not actually paid a 13thmonth salary or what amounts to it,
by whatever name called.
32. No work, No pay - 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, suspended or dismissed or otherwise illegally prevented from
working.
Under the principle of a fair days wage for a fair days labor, the petitioners were
not entitled to the wages during the period of the strike (even if the strike might
be legal), because they performed no work during the strike.
33. Facilities and Supplements

Facilities
Benefit that is part of laborers basic wages

Supplements
Benefit given to the employee that constitutes
extra renumeration above and over his basic
earning or wage

Includes articles and services for the benefit of

For the benefit of the employer

the employee
Does NOT INCLUDE:
a. Tools of trade or articles for the benefit
of the employer
b. Necessary for the conduct of the
employers business
On whether the value of the facilities should be included in the computation of the
"wages" received by private respondents, Section 1 of DOLE Memorandum Circular No.
2 provides that an employer may provide subsidized meals and snacks to his employees
provided that the subsidy shall not be less that 30% of the fair and reasonable value of
such facilities. In such cases, the employer may deduct from the wages of the employees
not more than 70% of the value of the meals and snacks enjoyed by the latter, provided
that such deduction is with the written authorization of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees wages, the
following requisites must all be attendant:
a. proof must be shown that such facilities are customarily furnished by the trade;
b. second, the provision of deductible facilities must be voluntarily accepted in writing
by the employee; and
c. finally, facilities must be charged at reasonable value.20 Mere availment is not
sufficient to allow deductions from employees wages.
The distinction lies not so much in the kind of benefit or item (food, lodging,
bonus or sick leave) given, but in the purpose for which it is given.
"Supplements", therefore, constitute extra remuneration or special privileges or benefits
given to or received by the laborers over and above their ordinary earnings or wages.
"Facilities", on the other hand, are items of expense necessary for the laborer's and his
family's existence and subsistence so that by express provision of law (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.
34. Equal pay for work of equal value - Fair wages and equal remuneration for work of
equal value without distinction of any kind
The foregoing provisions impregnably institutionalize in this jurisdiction the long
honored legal truism of "equal pay for equal work." Persons who work with
substantially equal qualifications, skill, effort and responsibility, under similar conditions,
should be paid similar salaries.[22] This rule applies to the School, its "international
character" notwithstanding.
35. Wage Deduction
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:
(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 check-off 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.

a. In this case, the withholding of respondents salary does not fall under any of the
circumstances provided under Article 113. Neither was it established with certainty

that respondent did not work from November 16 to November 30, 2005. Hence, the
Court agrees with the LA and the CA that the unlawful withholding of respondents
salary amounts to constructive dismissal.
Respondents reinstatement, however, is no longer feasible as antagonism has
caused a severe strain in their working relationship. Under the doctrine of
strained relations, the payment of separation pay is considered an acceptable
alternative to reinstatement when the latter option is no longer desirable or viable.
b. The Civil Code provides that the employer is authorized to withhold wages for debts
due:
Article 1706. Withholding of the wages, except for a debt due, shall not be made by
the employer.
"Debt" in this case refers to any obligation due from the employee to the employer. It
includes any accountability that the employee may have to the employer. There is no
reason to limit its scope to uniforms and equipment, as petitioners would argue.
c. The return of the propertys possession became an obligation or liability on the part
of the employees when the employer-employee relationship ceased. Thus, respondent
Solid Mills has the right to withhold petitioners wages and benefits because of this
existing debt or liability
Withholding of payment by the employer does not mean that the employer may
renege on its obligation to pay employees their wages, termination payments, and
due benefits. The employees benefits are also not being reduced. It is only subjected
to the condition that the employees return properties properly belonging to the
employer. This is only consistent with the equitable principle that "no one shall be
unjustly enriched or benefited at the expense of another."
36. Non-diminution of benefits
Article 100 of the Labor Code, otherwise known as the Non-Diminution Rule, mandates
that benefits given to employees cannot be taken back or reduced unilaterally by the
employer because the benefit has become part of the employment contract, written or
unwritten. [18] The rule against diminution of benefits applies if it is shown that the
grant of the benefit is based on an express policy or has ripened into a practice over a
long period of time and that the practice is consistent and deliberate. Nevertheless, the
rule will not apply if the practice is due to error in the construction or application of a
doubtful or difficult question of law. But even in cases of error, it should be shown that
the correction is done soon after discovery of the error
37. Preferential Right in case of Bankruptcy
Art. 110. Worker preference in case of bankruptcy. In the event of bankruptcy or
liquidation of an employer's business, his workers shall enjoy first preference as
regards wages due them for services rendered during the period prior to the

bankruptcy or liquidation, any provision of law to the contrary notwithstanding.


Unpaid wages shall be paid in full before other creditors may establish any claim to
a share in the assets of the employer.
In Republic v. Peralta, 150 SCRA 37 (1987), the Court held that the term "wages"
includes separation pay.
We have repeatedly stressed that before the workers' preference provided by Article 110
may be invoked, there must first be a declaration of bankruptcy or a judicial liquidation
of the employer's business.
Consequently, a liquidation of similar import or other equivalent general liquidation
must also necessarily be a proceeding in rem so that all interested persons whether
known to the parties or not may be bound by such proceeding.
38. Wage distortion and Wage Order
a. Wage distortion means the disappearance or virtual disappearance of pay
differentials between lower and higher positions in an enterprise because of
compliance with a wage order.
Wage distortion involves four elements:
1. An existing hierarchy of positions with corresponding salary rates
2. A significant change in the salary rate of a lower pay class without a
concomitant increase in the salary rate of a higher one
3. The elimination of the distinction between the two levels
4. The existence of the distortion in the same region of the country
b. That this re-establishment of a significant differential was the result of collective
bargaining negotiations, rather than of a special grievance procedure, is not a
legal basis for ignoring it.
c. Contrary to petitioner's postulation, a disparity in wages between employees
holding similar positions but in different regions does not constitute wage
distortion as contemplated by law. It must be understood that varying in each
region of the country are controlling factors such as the cost of living; supply
and demand of basic goods, services and necessities; and the purchasing power
of the peso. Other considerations underscore the necessity of the law. Wages in
some areas may be increased in order to prevent migration to the National
Capital Region and, hence, to decongest the metropolis. Therefore, what the
petitioner herein bewails is precisely what the law provides in order to achieve its
purpose.

d. In ECOP,46 the Court declared that there are two ways of fixing the minimum
wage: the "floor-wage" method and the "salary-ceiling" method. The "floor-wage"
method involves the fixing of a determinate amount to be added to the prevailing
statutory minimum wage rates. On the other hand, in the "salary-ceiling"
method, the wage adjustment was to be applied to employees receiving a certain
denominated salary ceiling. In other words, workers already being paid more
than the existing minimum wage (up to a certain amount stated in the Wage
Order) are also to be given a wage increase.47
To illustrate: under the "floor wage method", it would have been sufficient if the
Wage Order simply set P15.00 as the amount to be added to the prevailing
statutory minimum wage rates, while in the "salary-ceiling method", it would
have been sufficient if the Wage Order states a specific salary, such as P250.00,
and only those earning below it shall be entitled to the salary increase.

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