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LEYTE IV ELECTRIC COOPERATIVE INC vs. LEYECO IV EMPLOYEES UNION-ALU

Facts
On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU
(respondent) entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file employees,
for a period of five (5) years effective January 1, 1998. On June 7, 2000, respondent, through its Regional VicePresident, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all employees, as provided for
in the CBA.
Petitioner, on the other hand, in its Position Paper, insisted payment of the holiday pay in compliance
with the CBA provisions, stating that payment was presumed since the formula used in determining the daily rate
of pay of the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied
by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special
days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.
Issue
Whether or not Leyte IV Electric Cooperative is liable for underpayment of holiday pay.
Ruling
Leyte IV Electric Cooperative is not liable for underpayment of holiday pay. The Voluntary Arbitrator
gravely abused its discretion in giving a strict or literal interpretation of the CBA provisions that the holiday pay
be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position
Paper that the employees were paid all the days of the month even if not worked. In light of such admission,
petitioners submission of its 360 divisor in the computation of employees salaries gains significance.
This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43
Producers Bank of the Philippines v. National Labor Relations Commission. In this case, the monthly salary was
fixed by Wellington to provide for compensation for every working day of the year including the holidays specified
by law and excluding only Sundays. In fixing the salary, Wellington used what it called the 314 factor; that is,
it simply deducted 51 Sundays from the 365 days normally comprising a year and used the difference, 314, as
basis for determining the monthly salary. The monthly salary thus fixed actually covered payment for 314 days of
the year, including regular and special holidays, as well as days when no work was done by reason of fortuitous
cause, such as transportation strike, riot, or typhoon or other natural calamity, or cause not attributable to the
employees.
It was also applied in Odango v. National Labor Relations Commission, where Court ruled that the use of
a divisor that was less than 365 days cannot make the employer automatically liable for underpayment of holiday
pay. In said case, the employees were required to work only from Monday to Friday and half of Saturday. Thus,
the minimum allowable divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays (or
52 half Saturdays). Any divisor below 287 days meant that the employees were deprived of their holiday pay for
some or all of the ten legal holidays. The 304-day divisor used by the employer was clearly above the minimum
of 287 days.
In this case, the employees are required to work only from Monday to Friday. Thus, the minimum
allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays
from 365 days. Considering that petitioner used the 360-day divisor, which is clearly above the minimum,
indubitably, petitioners employees are being given their holiday pay. Thus, the Voluntary Arbitrator should not
have simply brushed aside petitioners divisor formula. In granting respondents claim of non-payment of holiday
pay, a double burden was imposed upon petitioner because it was being made to pay twice for its employees
holiday pay when payment thereof had already been included in the computation of their monthly salaries.

ARELLANO UNIVERSITY EMPLOYEES AND WORKERS UNION, et al. v. COURT OF APPEALS, et al. 502
SCRA 219 (2006), THIRD DIVISION (Carpio Morales, J.)

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An ordinary striking worker may not be declared to have lost his employment status by mere participation in an
illegal strike.
The Arellano University Employees and Workers Union (the Union), the exclusive bargaining representative of
about 380 rank-and-file employees of Arellano University, Inc. (the University), filed with the National Conciliation
and Mediation Board (NCMB) a Notice of Strike charging the University with Unfair Labor Practice (ULP). After
several controversies and petitions, a strike was staged.
Upon the lifting of the strike, the University filed a Petition to Declare the Strike Illegal before the National Labor
Relations Commission (NLRC). The NLRC issued a Resolution holding that the University was not guilty of ULP.
Consequently, the strike was declared illegal. All the employees who participated in the illegal strike were
thereafter declared to have lost their employment status.
ISSUE:
Whether or not an employee is deemed to have lost his employment by mere participation in an illegal strike
HELD:
Under Article 264 of the Labor Code, an ordinary striking worker may not be declared to have lost his
employment status by mere participation in an illegal strike. There must be proof that he knowingly participated
in the commission of illegal acts during the strike. While the University adduced photographs showing strikers
picketing outside the university premises, it failed to identify who they were. It thus failed to meet the
substantiality of evidence test applicable in dismissal cases.
With respect to the union officers, as already discussed, their mere participation in the illegal strike warrants their
dismissal.
Philippine Veterans Bank vs NLRC (1999) G.R. 130439
Facts:
In 1983, petitioner Philippine Veterans Bank was placed under receivership by the Central Bank (now Bangko
Sentral). Petitioner was subsequently placed under liquidation on 15 June 1985. Consequently, its employees,
including private respondent Dr. Jose Teodorico V. Molina, were terminated from work and given their respective
separation pay and other benefits. To assist in the liquidation, some of petitioners former employees were
rehired, among them Molina, whose re-employment commenced on 15 June 1985. On 11 May 1991, MOLINA
filed a complaint against members of the liquidation team. The complaint demanded the implementation of Wage
Orders Nos. NCR-01 and NCR-02 (hereafter W.O. 1 and W.O. 2) as well as moral damages and attorneys fees
in the amount of P300,000.
Meanwhile, W.O. 1 took effect on November 1990, prescribing a P17-increase in the daily wage of employees
whose monthly salary did not exceed P3,802.08. On the other hand, W.O. 2 became mandated a P12-increase
in the daily wage of employees whose monthly salary did not exceed P4,319.16. Molina claimed that his salary
should have been adjusted in compliance with said wage orders. The liquidation team countered that MOLINA
was not entitled to any salary increase because he was already receiving a monthly salary of P6,654.60.
Labor Arbiter rejected the 26.16 factor used by the liquidators in computing the daily wage of MOLINA, adopting
instead the factor of 365 days. Consequently, they were ordered to pay Molina the wage differentials due him
under W.O. 1 and W.O. 2. On appeal, the NLRC sustained the labor arbiters ruling after concluding that Molina
was a regular employee of petitioner with a basic monthly salary of P3,754.60 at the time of his dismissal on 31
January 1992. He was, therefore, entitled to the wage increases mandated by the aforesaid wage orders.
Issue: Whether Molina is entitled to wage increase computation that used the 365 days factor.
Held: Molina is entitled to the wage increase computation using the 365 days as factor.
The documents attached show that the Bank has been consistently using the factor of 365 days in computing
your equivalent monthly salary prior to its being placed under receivership by the Central Bank. This is evident
in the wage and allowance increases granted under previous Presidential Decrees and Wage Orders, which

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were given by the Bank on monthly basis, i.e., where the rest days are unworked but paid. This is also indicated
in the appointment and service records of bank personnel who started out as daily paid employees and were
eventually promoted as permanent employees with fixed monthly salaries. However, when R.A. 6640 went into
force, the Bank unilaterally reduced the factor to 262 instead of maintaining factor 365 as was the practice/policy
long before the effectivity of the Act. And when R.A 6727 took effect, the Bank reverted to the old practice/policy
of using factor 365 days in computing your equivalent monthly rate salary.
May we add that the old practice of the bank in using factor 365 days in a year in determining equivalent monthly
salary cannot unilaterally be changed by your employer without the consent of the employees, such practice
being now a part of the terms and conditions of your employment. An employment agreement, whether written
or unwritten, is a bilateral contract and as such either party thereto cannot change or amend the terms thereof
without the consent of the other party thereto.
It is clear that respondent is entitled to the wage increase under R.A. 6440 computed on the basis of 365 paid
days and to the corresponding salary differentials as a result of the application of this factor. Evidently, the use
of the 365 factor is binding and conclusive, forming as it did part of the employment contract. To abandon such
policy and revert to its old practice of using the 26.16 factor would be a diminution of a labor benefit, which is
prohibited by the Labor Code. It cannot be doubted that the 365 factor favors petitioners employees because it
results in a higher determination of their monthly salary.

Odango vs NLRC (2005) G.R. 147420

Facts:
Petitioners are monthly-paid employees of ANTECO whose workdays are from Monday to Friday and half of
Saturday. After a routine inspection, the Regional Branch of the Department of Labor and Employment found
ANTECO liable for underpayment of the monthly salaries of its employees. On September 1989, the DOLE
directed ANTECO to pay its employees wage differentials amounting to P1,427,412.75. ANTECO failed to pay.
On various dates in 1995, thirty-three (33) monthly-paid employees filed complaints with the NLRC praying for
payment of wage differentials, damages and attorneys fees.
On November 1996, the Labor Arbiter rendered a Decision in favor of petitioners granting them wage
differentials amounting to P1,017,507.73 and attorneys fees of 10%. ANTECO appealed the Decision to the
NLRC where it reversed the Labor Arbiters Decision. The NLRC denied petitioners motion for reconsideration.
Petitioners then elevated the case to CA where it dismissed the petition for failure to comply with Section 3, Rule
46 of the Rules of Court. The Court of Appeals explained that petitioners failed to allege the specific instances
where the NLRC abused its discretion. The appellate court denied petitioners motion for reconsideration.
Issue: Whether or not the petitioners are entitled to money claims.
Held: Petitioners are not entitled to money claims or wage differentials.
The petitioners claim is based on Section 2, Rule IV, Book III of the Implementing Rules and Policy Instructions
No. 9 issued by the Secretary of Labor which was declared null and void since in the guise of clarifying the Labor
Codes provisions on holiday pay, they in effect amended them by enlarging the scope of their exclusion.
Even assuming that Section 2, Rule IV of Book III is valid, their claim will still fail. The basic rule in this
jurisdiction is "no work, no pay." The right to be paid for un-worked days is generally limited to the ten legal
holidays in a year. Petitioners claim is based on a mistaken notion that Section 2, Rule IV of Book III gave rise to
a right to be paid for un-worked days beyond the ten legal holidays. Petitioners line of reasoning is not only a
violation of the "no work, no pay" principle, it also gives rise to an invidious classification, a violation of the equal
protection clause.

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[G.R. No. 116593. September 24, 1997]
PULP AND PAPER, INC., petitioner, vs. NATIONAL LABOR RELATIONS COMMISSION AND
EPIFANIA ANTONIO, respondents.
Facts: Antonio was a regular employee of the corporation having served thereat as Wrapper. For
unknown reasons, she was advised verbally of her termination and was given a prepared form of
Quitclaim and Release which she refused to sign. Instead she brought the present complaint for illegal
dismissal. In charging the [herein petitioner] of underpayment of wages, complainant in the same
position paper alleges that, rarely during her employment with the respondent she received her salary, a
salary which was in accordance with the minimum wage law. She was not paid overtime pay, holiday
pay and five-day service incentive leave pay, hence she is claiming for payments thereof by instituting
the present case. Respondent suffered at that time, losses which meant lower salaries or lessening of
workers.
Issue: Whether or not the NLRC erred in ruling in favor of private respondent granting the
underpayment equivalents notwithstanding the facts that she is a piece- worker.
Ruling: No. In the absence of wage rates based on time and motion studies determined by the labor
secretary or submitted by the employer to the labor secretary for his approval, wage rates of piece-rate
workers must be based on the applicable daily minimum wage determined by the Regional Tripartite
Wages and Productivity Commission. To ensure the payment of fair and reasonable wage rates, Article
101of the Labor Code provides that the Secretary of Labor shall regulate the payment of wages by
results, including pakyao, piecework and other nontime work. The same statutory provision also
states that the wage rates should be based, preferably, on time and motion studies, or those arrived at in
consultation with representatives of workers and employers organizations. In the absence of such
prescribed wage rates for piece-rate workers, the ordinary minimum wage rates prescribed by the
Regional Tripartite Wages and Productivity Boards should apply.
In the present case, petitioner as the employer unquestionably failed to discharge the foregoing
responsibility. Petitioner did not submit to the secretary of labor a proposed wage rate -- based on time
and motion studies and reached after consultation with the representatives from both workers and
employers organization -- which would have applied to its piece-rate workers. Without those
submissions, the labor arbiter had the duty to use the daily minimum wage rate for non-agricultural
workers prevailing at the time of private respondents dismissal, as prescribed by the Regional
Tripartite Wages and Productivity Boards. In the absence of such wage rate, the labor arbiter cannot be
faulted for applying the prescribed minimum wage rate in the computation of private respondents
separation pay. In fact, it acted and ruled correctly and legally in the premises.
It is clear, therefore, that the applicable minimum wage for an eight-hour working day is the basis for
the computation of the separation pay of piece-rate workers like private respondent. The computed
daily wage should not be reduced on the basis of unsubstantiated claims that her daily working hours
were less than eight. Aside from its bare assertion, petitioner presented no clear proof that private
respondents regular working day was less than eight hours. Thus, the labor arbiter correctly used the
full amount of P118.00 per day in computing private respondents separation pay.

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VILLUGA v NLRC
Facts:
Petitioners were employed in the tailoring shop owned by the private respondent, Zapanta. They were paid
according to the number of items they have done and they work observing no fixed hours. Villuga was dismissed
due to failure to report to work because of illness he was then deemed to abandon his work. The others claimed
they were dismissed because of membership with the union PSSLU. Unfair labor practices, illegal dismissal and
other money claims were dismissed except for Villugas 13th month pay.
WON petitioners were employees of respondent
WON petitioners are entitled to benefits and other payments
Held:
There is an employer-employee relationship existing. This relationship exists because of the following elements:
selection and engagement of the employee, payment of wages, power of dismissal, power to control the
employees conduct. Because of this, they are entitled to holiday pay, 13th month pay, OT pay, premium pay and
service incentive leave pay.

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LAMBO vs. NATIONAL LABOR RELATIONS COMMISSION

Facts
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor
Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m. to
7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless
of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and
sought recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay,
separation pay, 13th month pay, and attorneys fees. After hearing, Labor Arbiter found private respondents guilty
of illegal dismissal and accordingly ordered them to pay petitioners claims. On appeal, the NLRC reversed the
decision of the Labor Arbiter. The NLRC held petitioners guilty of abandonment of work and accordingly
dismissed their claims except that for 13th month pay.
Petitioners allege that they were dismissed by private respondents as they were about to file a petition with
the Department of Labor and Employment (DOLE) for the payment of benefits such as Social Security System
(SSS) coverage, sick leave and vacation leave. They deny that they abandoned their work.
Issue
Whether or not the petitioners are entitled to the minimum benefits provided by law.
Ruling
The petitioners are entitled to the minimum benefits provided by law. There is no dispute that petitioners
were employees of private respondents although they were paid not on the basis of time spent on the job but
according to the quantity and the quality of work produced by them. 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.) Both classes of workers are paid per unit accomplished.
Piece-rate payment is generally practiced in garment factories where work is done in the company premises,
while payment on pakyao and takay basis is commonly observed in the agricultural industry, such as in sugar
plantations where the work is performed in bulk or in volumes difficult to quantify. 4 Petitioners belong to the first
category, i.e., supervised employees.
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked
in the companys premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that
they were paid on a piece-rate basis does not negate their status as regular employees of private respondents.
The term wage is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being
expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment
by the piece is just a method of compensation and does not define the essence of the relations. Nor does the
fact that petitioners are not covered by the SSS affect the employer-employee relationship.
As petitioners were illegally dismissed, they are entitled to reinstatement with back wages. The Arbiter
applied the rule in the Mercury Drug case, according to which the recovery of back wages should be limited to
three years without qualifications or deductions. Any award in excess of three years is null and void as to the
excess. The Labor Arbiter correctly ordered private respondents to give separation pay.
Considerable time has lapsed since petitioners dismissal, so that reinstatement would now be impractical and
hardly in the best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners
at the rate of one month salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year. The awards for overtime pay, holiday pay and 13 th month pay are in accordance
with our finding that petitioners are regular employees, although paid on a piece-rate basis.

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CHAVEZ VS. NLRC
448 SCRA 478. January 17, 2005
FACTS
The respondent company, Supreme Packaging, Inc. engaged the services of the petitioner, Pedro
Chavez, as truck driver. The respondent company furnished the petitioner with a truck. The petitioner
expressed to respondent Alvin Lee, respondent companys plant manager, his desire to avail himself of
the benefits that the regular employees were receiving such as overtime pay, nightshift differential pay,
and 13th month pay, among others. Although he promised to extend these benefits to the petitioner,
respondent Lee failed to actually do so. Petitioner filed a complaint for regularization with the Regional
Arbitration Branch. Before the case could be heard, respondent company terminated the services of the
petitioner. Consequently, the petitioner filed an amended complaint against the respondents for illegal
dismissal, unfair labor practice and non-payment of overtime pay, nightshift differential pay, and 13th
month pay, among others. The respondents, for their part, denied the existence of an employeremployee relationship between the respondent company and the petitioner. They averred that the
petitioner was an independent contractor as evidenced by the contract of service which he and the
respondent company entered into. The relationship of the respondent company and the petitioner was
allegedly governed by this contract of service.
The respondents insisted that the petitioner had the sole control over the means and methods by
which his work was accomplished. He paid the wages of his helpers and exercised control over them.
As such, the petitioner was not entitled to regularization because he was not an employee of the
respondent company. The respondents, likewise, maintained that they did not dismiss the petitioner.
Rather, the severance of his contractual relation with the respondent company was due to his violation
of the terms and conditions of their contract.
ISSUE:
whether or not there existed an employer-employee relationship between the respondent
company and the petitioner.
RULING:
Yes. There was an employer-employee relationship in the case at bar.
The elements to determine the existence of an employment relationship are: (1) the selection
and engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
employers power to control the employees conduct. All the four elements are present in this case.
Of the four elements of the employer-employee relationship, the control test is the most
important. Although the respondents denied that they exercised control over the manner and methods
by which the petitioner accomplished his work, a careful review of the records shows that the latter
performed his work as truck driver under the respondents supervision and control. Their right of
control was manifested by the following attendant circumstances:
1. The truck driven by the petitioner belonged to respondent company;
2. There was an express instruction from the respondents that the truck shall be used exclusively
to deliver respondent companys goods;
3. Respondents directed the petitioner, after completion of each delivery, to park the truck in
either of two specific places only, to wit: at its office in Metro Manila at 2320 Osmea Street, Makati
City or at BEPZ, Mariveles, Bataan; and
4. Respondents determined how, where and when the petitioner would perform his task by
issuing to him gate passes and routing slips.

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These circumstances, to the Courts mind, prove that the respondents exercised control over the
means and methods by which the petitioner accomplished his work as truck driver of the respondent
company. The contract of service indubitably established the existence of an employer-employee
relationship between the respondent company and the petitioner. It bears stressing that the existence
of an employer-employee relationship cannot be negated by expressly repudiating it in a contract
and providing therein that the employee is an independent contractor when, as in this case, the
facts clearly show otherwise. Indeed, the employment status of a person is defined and prescribed
by law and not by what the parties say it should be.