LABOR STANDARDS Review | 1st Semester S.Y.
2018-2019
JUNE 14, 2018
MORTEJO (1 of 2)
SOCIAL JUSTICE
This is not an additional principle to our Constitution. It is an integrated choice
thrust of the Constitution. Social Justice is a conviction on the part of our
founding fathers to include in our fundamental law that analysis of our society
that it is seriously ill; that it is seriously impaired, and that there is so much
inequality in our society - inequality on economic, material, cultural, social and
intellectual. Because of this, the State is mandated by our Constitution to
address these disadvantaged sectors. To provide them more benefits by way
of legislation to correct the imbalance; to attend to this serious imbalance.
Because the thesis is, if this is not attended to then, our society might reach a
point where it is not viable. It would explode because of this serious inequality.
So, the underlying premise of the social justice thrust of the Constitution is
the serious defect of our society or inequality.
The US Constitution does not have social justice provision because they
assume that all citizens within American society stand on equal footing with
each other. There is no disadvantaged member of their society.
Now, you say “How about the indigenous people in US, the American Indian?
Are they not disadvantaged in their society?” They are addressed statutorily in
the US. In fact, they are recognized as a nation: the Indian nation. So they are
assigned specific territories and their existence is highly subsidized. If you
can just pass an exam and you write down that you are a native Indian, you
get all the privileges. You get the subsidy. The Indians are practically the
disadvantaged in the United States.
Examples of sectors in Philippine society which are not included in the
mainstream:
 Indigenous People’s
 The subsistence farmers
 The subsistence fishermen
 The daily-wage earners and workers
 Working women
Examples of sectors in Philippine society which are not included in the
disadvantaged:
 orphans, widows, the mentally-challenged people (those affected
by Down syndrome)
Are they not, by themselves, crying out for the State’s protection and help?
Yes, but they have already been addressed by the Civil Code by Parens Patriae
– that fundamental father rule of the State which is called upon to respond in
cases of abandoned children, widows, those are the traditional objects of
charity in society. Because what is presumed is the opposite: Sanity is
presumed over insanity. It is presumed that you have parents. Only when a
minor child is roaming around parentless the State reacts. After you have
become of age Parens Patriae ceases because you are now sui juris, assuming
that there are no other impediments that result in restricting your capacity to
act. In other words, the State acts by way of exception in the cases of
widows, orphans and those that are mentally-challenged.
But in social justice, the State acts by assuming a permanent posture which is
the grant in law institutionalizing more benefits to the disadvantaged sectors.
You are granted more in law because you have less in life. The whole idea is to
correct the imbalance.
What is the result of that judicially?
The Judge cannot nullify a law granting benefits to these constitutionally-
recognized disadvantaged sectors because the Judge cannot go against the
Constitution. His/her discretion is already pre-empted. You cannot attack a
minimum wage law that adjusts the minimum wage in the upward direction
because it impairs the obligation and contracts. The Constitution prohibits the
impairment of obligations arising from contracts. However, one of the
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From the Lectures of Fr. Gus Nazareno 1
4-Manresa | Ateneo de Davao University College of Law
exceptions to the non-impairment clause of the Constitution is the Police
Power. The State may impair obligations and contracts by increasing
minimum wage or increasing taxes.
DOCTRINE OF COMPASSIONATE JUSTICE
Social Justice has given birth to the Doctrine of Compassionate Justice in
Labor. This doctrine was laid down by Justice Enrique Fernando in the
celebrated case of Almira vs BF Goodrich Phil Inc. 58 SCRA 120 (1974).
According to Justice Fernando, the worst or capital punishment that you can
give upon a laborer is to separate him from his employment. You practically
deprive him of the right to earn and the right to secure the means to live. Then
the State comes in and makes it difficult the separation of an employee from
his work. There has to be cause:
 JUST CAUSE if it is culpable cause. You do not provide for
benefits because the employee brought about his own dismissal.
 AUTHORIZED CAUSE if it is neutral to the employee. You must
provide separation benefits because it is the circumstances
beyond the control of the employee and the employer that brings
about the termination of the employee
Be that as it may, Justice Fernando says that, the employer must see to it that
this (dismissal) is not resorted to in a facile manner; that this should not be
the instant solution. You do not impose capital punishment right away.
Compassionate justice would imply, at the very least:
“where a penalty less punitive would suffice, whatever missteps may be
committed by labor ought not to be visited with a consequence so severe.
It is not only because of the law's concern for the workingman. There is, in
addition, his family to consider. Unemployment brings untold hardships
and sorrows on those dependent on the wage-earner. The misery and pain
attendant on the loss of jobs then could be avoided if there be acceptance
of the view that under all the circumstances of this case, petitioners
should not be deprived of their means of livelihood. Nor is this to condone
what had been done by them. For all this while, since private respondent
considered them separated from the service, they had not been paid. From
the strictly juridical standpoint, it cannot be too strongly stressed, to follow
Davis in his masterly work, Discretionary Justice, 32 that where a decision
may be made to rest an informed judgment rather than rigid rules, all the
equities of the case must be accorded their due weight. Finally, labor law
determinations, to quote from Bultmann, should be not only secundum
rationem but also secundum caritatem.”
Judgments that are dealing with termination or dismissal should be based not
only according to reason (secundum rationem) but also according to charity
(secundum caritatem).
So because of that, it became acceptable for labor tribunals to mitigate lawful
dismissals by granting benefits. Bisan pag nakasala, tagaan gihapon ug pa-
baon. So Labor Arbiters begin awarding financial assistance.
That became the practice until the Supreme Court began to make a turn-
around in 1988 in the case of PLDT vs NLRC (G.R. No. 80609, August 23, 1988.)
This is where Justice Isagani Cruz ruled that:
“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. Where
the reason for the valid dismissal is, for example, habitual intoxication or
an offense involving moral turpitude, like theft or illicit sexual relations
with a fellow worker, the employer may not be required to give the
dismissed employee separation pay, or financial assistance, or whatever
other name it is called, on the ground of social justice.”
Gi-usab nila ni, gi-bawi nila ning compassionate justice. Why? Because
according to Cruz:
“A contrary rule would, as the petitioner correctly argues, have the effect,
of rewarding rather than punishing the erring employee for his offense.”

In this case, PLDT has a telephone operator who assures a third party that you
will get a line. Apply lang diha, ako’y follow-up, taga-i lang ko ug gamay. So
nihatag ang 3rd party, unya ni-apply siya pero wala gyud siya kakuha ug linya.
Nag-sige na siya ug balik-balik. Wa man gyud nakahatag ug line ang telephone
operator. So finally, gi-sumbong siya. PLDT conducted an investigation and
sure enough PLDT found out that she received the money of the would-be
subscriber. That’s estafa.
After PLDT dismissed her, she filed an illegal dismissal case. Why? Because
later on it was said gi-bawi man sa nagsumbong niya ang iyang sumbong. But
PLDT said we dismissed her on the basis of substantial evidence, we found
out. There are witnesses. She was at fault. And then this PLDT erring
employee says, “I have been with PLDT for more than 10 years and there is no
major wrongdoing that I have been involved in, so at least that 10 years
should be counted in my favor as mitigating.” Isagani Cruz says, that 10 years
is not mitigating, it’s aggravating because 10 years na gud ka nabuhi na PLDT
ang nag-sweldo nimo. The more you should be good to your employer. Your
employer does not deserve to be cheated in that fashion.
That became the rule that is known as “No financial assistance to employees
dismissed on the ground of serious misconduct or causes that reflect on the
employees’ depraved character.” Other causes, i.e. habitual negligence,
habitual tardiness, that is not considered a serious misconduct. You may still
be awarded financial assistance. So, compassionate justice was still stretched
until 2010 that is the case of Solidbank vs NLRC (G.R. No. 165951, March 30,
2010.) The SC said:
“While the CA should not be faulted for sympathizing with the plight of
respondents as they suddenly lost their means of livelihood, this Court
holds that it is precisely because of the sudden loss of employment − one
that is beyond the control of labor − that the law statutorily grants
separation pay and dictates how the same should be computed. Thus, any
business establishment that decides to cease its operations has the
burden of complying with the law. This Court should refrain from adding
more than what the law requires, as the same is within the realm of the
legislature.”
That would be judicial legislation if you add to the separation benefits of those
that are terminated for authorized cause.
In 2011, this was applied in the government sector. There was a policeman
who was dismissed from service, his name was Dumduma. What was his
fault? In his application for superintendent, he falsified his records that he
already graduated from his advance course etc. But then it was discovered
that he never studied for this advance course which is necessary for the rank
of superintendent. He falsified public records. Gikaluy-an man gihapon siya,
gipa-baunan man gihapon siya sa Court of Appeals. The decision was En Banc
but Per Curiam with Justice Brion registering a very vigorous dissent. And the
argument of Brion was: in the private sector di na man na mahimo, ngano sa
public sector himuon man na? That’s abuse of public funds. Are we more lax in
the public sector because it is not our money that is involved, kwarta man na
sa taxpayer? Are we more stringent on private funds because it is private?
[Father did not mention the title of the case but I think he was referring to
Dumduma vs CSC (G.R. No. 182606, December 4, 2011)]
So finally, 1 year later or in 2012, there was a civil case entitled Civil Service
Commission vs Veloso (673 SCRA 676, June 19, 2012). It was said in that case:
“The policy of social justice is not intended to countenance wrongdoing
simply because it is committed by the underprivileged.”
Those are the words of the Court quoting the earlier case of PLDT vs NLRC.
So now, even in the public sector, you cannot be given extra benefits no
matter how long your service is if you have been dismissed for wrongdoing. It
was Justice Brion who wrote the En Banc decision because he was the
dissenter of the Dumduma decision 1 year earlier.
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LABOR STANDARDS Review | 1st Semester S.Y. 2018-2019
From the Lectures of Fr. Gus Nazareno 2
4-Manresa | Ateneo de Davao University College of Law
Excerpt of the decision written by Justice Cruz in the case of Cebu Royal Plant
vs Minister of Labor which says:
“We take this opportunity to reaffirm our concern for the lowly worker who,
often at the mercy of his employers, must look up to the law for his
protection. Fittingly, that law regards him with tenderness and even favor
and always with faith and hope in his capacity to help in shaping the
nation's future. It is error to take him for granted. He deserves our abiding
respect. How society treats him will determine whether the knife in his
hands shall be a caring tool for beauty and progress or an angry weapon of
defiance and revenge. The choice is obvious, of course. If we cherish him
as we should, we must resolve to lighten "the weight of centuries" of
exploitation and disdain that bends his back but does not bow his head.”]
ACOSTA (2 of 2)
He puts quotation marks "in “the weight of centuries” because he is quoting
from a very famous poem “The Man with the Hoe” -
Bowed by the weight of centuries he leans
Upon his hoe and gazes on the ground,
The emptiness of ages in his face,
And on his back the burden of the world.
Who made him dead to rapture and despair,
Who loosened and let down this brutal jaw?
Whose was the hand that slanted back this brow?
Whose breath blew out the light within this brain?
(Wala na nabug atan na siya sa iyang damgo, nabug atan na sya sa iyang gipas
an, wala na syay panahon nga mutan aw sa langit)
Should social justice be based on that?
I think the concept of social justice has been overtaken by many other
concepts because the most marked improvement happened not under social
justice. The movement of the so called China middleclass happened without
social justice. There are now estimates 300-500 M people that have been
lifted out of absolute poverty in China in the span of 30 years.
What is absolute poverty?
In the 80s it was “if you live on one dollar a day, less than 1 dollar a day- you
are in absolute poverty. Now, adjusted to inflation, it is now 2 dollars, if you
live on 2 dollars a day, you are in absolute poverty. Ang baon nako 100 ra,
absolute poverty? No, you are not in absolute poverty. That means a family.
Today, if you and your family live with P106 or less a day- you are in absolute
poverty.
So, 300-500 M people have been lifted out of absolute poverty in China and
China just applied the Classical trickle-down effect. Wala may minimum wage
sa China, it’s just the market demand wage and yet they have created this
considerable middleclass that is now the target of so many corporations. They
want to be in China because china is the market to be in. china just bought
more cars than the US. So it’s the biggest car market now. The US used to be
the biggest car manufacturer, now it is China. That is a testament.
(FGN read the 2017 Bar questions)
DISTINGUISH HOUSEHELPER & HOUSEWORKER
Kani, pangutan-on jud ni kay naa mana silay household. Unsa may difference
anang house helper ug house worker?
They both work in a home. The house helper works in the home of the
household that employs her. The house worker works in his/her home, mao ni
sya ang industrial worker-the house worker. The former is a domestic and is
not covered by the regular provisons of the Labor Code.

DISTINGUISH LEARNER FROM AN APPRENTICE.
Q. The Regional Tripartite Wages and Productivity Board (RTWPB) for Region 3
issued a wage order on November 2, 2017 fixing the minimum wages for all
industries throughout Region 3.
(a) Is the wage order subject to the approval of the National Wages and
Productivity Commission before it takes effect? (2%)
Pagka-klaro ana, di mana ang NWPC. Pag iappeal nimo ang wage
order, but a mere appeal does not stay the effectivity. It does not
require approval.
(b) The law mandates that no petition for wage increase shall be
entertained within a period of 12 months from the effectivity of the
wage order. Under what circumstances may the Kilusang Walang
Takot, a federation of labor organizations that publicly and openly
assails the wage order as blatantly unjust, initiate the review of the
wage increases under the wage order without waiting for the end of
the 12-month period? Explain your answer. (3%)
Pasabton nimo sya. It is the issuance of another wage order that is
prohibited in 12 months. But there is no wrong about discussing
your wage. You can claim extraordinary inflation, undue hardships
in your region caused by so many factors like the Consumer Price
Index, the demand for higher prices in basic commodities, and
then you can initiate hearing. But it (the wage order) will take
effect, which should be issued after 12 months.
Q. One of Pacific Airline's policies was to hire only single applicants as flight
attendants, and considered as automatically resigned the flight attendants at the
moment they got married. Is the policy valid? Explain your answer. (2.5%)
Wala na. Giveaway. Giveaway.
CASES ON EMPLOYER-EMPLOYEE RELATIONSHIP
Supposed you are asked: are you in favor or against contractualization?
Ipakita nimo na kabalo k aba. Whether we like it or not, all labor or another is
contractual because it is based on contract-expressed or implied. There is no
such thing as labor non-contractual because labor (employer-employee
relationship) is a contract. Contractualization is a misnomer. It is a wrong
name.
The only issue is whether labor should be necessary a contact with an
indefinite term or with a definite term, because the presumption is without a
definite term. If you are hired and there is nothing said- the assumption is- its’
indefinite because the bias is for security of tenure.
But the modern world now is bid on fractionalization of labor. Labor is broken
up, jobs are broken. That is the effect of technology in the workplace. You can
structure a business in such a way that- the one who answers call is
thousands of kilometers away. It would be a disgrace for our economy if we
cannot take advantage of that in the name of indefinite tenure only. If we
cannot take advantage, we lose out.
Perez vs Pomar (2 Phil 682)
Even if there are no words, no agreement, when a service is rendered to
another like being an interpreter in the course of the journey through
checkpoints by which your services facilitates the safe passage of your
companion. He asked you to render this interpretation services with the
American commander of the checkpoint. That service is compensable even if
no agreement was entered into as to the compensation and how much is the
compensation.
Why? The SC said when you render service to another and that service is
usually compensable then compensation isowing even if there is no
agreement. In other words, the burden to prove that there should be no
compensation is explicit in stating that there is no compensation- you must
waive your right to compensation from the very start.
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From the Lectures of Fr. Gus Nazareno 3
4-Manresa | Ateneo de Davao University College of Law
GENERAL RULE: Compensability of service rendered to another is presumed
provided that the said service is normally compensated.
EXCEPTION:
 When the set-up is such that the service that has been rendered is
not normally compensated.
Minyo man mung duha, asawa ka, nagluto ka sa imong bana,
paghuman mangutana ka, unsa man ang compensation nako? Wa
mana. Understood na kay minyo man mung duha. That is not
compensable service by virtue of that all-encompassing contract
which is a contract nonetheless-which is the marriage contract.
Naa naka sa family relations ana.
So even before social justice, because this is 1903, the social justice provision
came in 1935 Constitution. That’s the first time it came out. 80 years na, unsa
man guy nabuhat niana. Do not write this in the bar. Social justice is a failed
policy. It’s not the beauty of the concept, its reality.
LVN vs. Philippine Musicians Guild
It recalls the four essential requisites of employer-employee relationships that
has been pronounced by the Supreme Court in the earlier case of Viana vs Al-
Lagadan:
1. Selection and Hiring
2. Payment of Wages
3. Power to Dismiss
4. Power of Control.
The only difference is that in LVN vs Phil Musicians Guild, the SC says that
sometimes even if the first three requisites are not complied with, as long as
you comply with power of control, there exist ER-EE relationship.
Between the musicians that used in providing music for a film and the movie
producing company, there is ER-EE relationship.
Did the movie producing company select and chose those musicians? No,
they were not chosen. It is the musical director who is chosen by the
company. And the musical director is chosen on a term basis. The musical
director looks for the musicians that he need. He collects them.
Who did the selection and hiring? It is the musical director who is not the
employee of the movie producing company.
Once they are gathered, who pays them? Not the movie company, it is the
musical director who pays them out of the lump sum receives from the
company. If they don’t behave or performs according to the standards given
them by the musical director, if they do not show up during practice, who can
fire them? It’s the director not the movie company.
So how come this musicians are employees of the movie company? How
come they can form a union vis-a-vis the movie company?
It’s because of the Power of Control Test. In the last instance when the music
is going to be married to the movie and become a permanent feature in that
movie, who comes in? It is no longer the musical director, it is the movie
director who directs the musicians precisely on how to play, how to make it
adhere to the theme, the tempo and how to make it permanently affect the
impact of the movie. That is why they are the employee of the movie
company. That is the distinguishing test.
The power of control is not the only test but it is the paramount test. Once it is
verified, the other elements are just ancillary elements. It is the power of
control that is to determine not just the goals or end to be achieve but the
method, the manner, or means arriving at that goal or end.
DIFFERENT FEATURES OF THE POWER OF CONTROL
Sterling Products vs Sol.

The power of Control test can be met even if the worker is not within the
physical premises of the company.
This moving of a radio monitor girl performs her job in her own home,
sometimes you cannot tell kung naminaw ban a sya sa radio o nagpasuso sa
iyang anak because she can do it at the same time.
Now does that negate the power of control? The SC says no. the power of
control may be met by advance instructions, by required reporting standards,
periodic reporting. That is how power of control is met if the worker is away
from the principal workplace of the employer.
Dy Keh Beng vs International Labor
Is the power of control met if no evidence in fact is proffered, that it was
exercise? There is no evidence submitted that power of control was exercised.
Is the power of control negated if compensation is on a piece rate basis not on
a time card basis?
The SC says piece rate mode of payment merely proves payment; it does not
characterize the relationship. What characterizes the relationship? – power of
control.
Is there is power of control if the compensation is on a piece rate basis? Yes,
because it is obvious that the employer will not receive and buy products of
the offeror or employee if it is not according to specifications. So the sample
or specification is the mode of exercising power of control. If it does not fit or
not in accordance with the specs of the sample, then it cannot be accepted.
There is control there.
RJL Martinez Fishing vs NLRC
Must the power of control be exercised in a continuous, uninterrupted
fashion? The SC says no.
The utility men who load can unload the fishing vessel of the putative
employer after they finish loading and unloading the ships, they also go and
load and unload other fishing vessels. Does that deny the power of control
because they went to another fishing vessel owned by another employer? The
SC says no because the employer that they dedicate their services to cannot
provide them continuous work so why do you penalize them for working for
another in order to fill up their time and give them a full day wage. So they are
still the employees of RJL even if after they finish their work less than 8 hours
a day they go to another vessel.
The theory of RJL Martinez is this: they are independent workers and our
relationship begins with every loading and unloading and ends with the end of
that loading and unloading. mao na nga mubalhin silag lain kay mao raman to
among relationship. The SC says no. Tao na nimo. Ngano man? Girehistro man
nimo sa SSS. Your vessels have the first priority, naa gani na di nila na byaan.
ayaw Silag siluti kay nangita silag dungag sweldo.
That is the nature of the power of control test. It is a mechanical test. If the
work no longer constitutes mechanical acts, it is useless for purposes of
measuring ER-EE relationship.
Suppose you are a financial analyst of an investment bank, you are at the
bottom because you crunch numbers. Wala kay hours of work and what your
doing is necessary to your employer. Pero ang trabaho nimo dri sa utok. Ang
bayad nimo percentage because you take cases (merger, capital acquisition)
and you analyze the numbers. Mao na imong trabaho.
How do determine that the control test is met? Are dictated as to the means
of achieving the end? The end is give advice to our clients, what should we do
in this particular situation? Control test? Wala, di magsibli. Why? Because in
the original industrial evolution it did not exists. Industrial revolution was
before there was factory. Now, there are factories. But once you are in realm
of intellectual products, this fades.
JUNE 21, 2018
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LABOR STANDARDS Review | 1st Semester S.Y. 2018-2019
From the Lectures of Fr. Gus Nazareno 4
4-Manresa | Ateneo de Davao University College of Law
CANDOLITA (1 of 2)
We continue with discussing the basic principles of employer-employee
relationship.
Employer-employee relationship is a contract and we contrast this
government engagement with the public sector, because the government
engagement is NOT a contract. It is a public trust. You are entrusted with an
office. How are you entrusted? Either of 2 ways: You are either
1. elected
2. appointed.
In either of these cases, there must be a law to which the creation of your
office, or position or plantilla, can be traced. If there is no law, then there is no
office. What if somebody says, “Confidential employee man ko, that
requirement does not apply to me.” Nasayop na siya (He is mistaken). You
cannot just create confidential positions out of thin air. You have to be able to
trace the source of your appointment or election, even if you are a confidential
employee.
The difference between the two is that in the private sector, your position is a
property right. The right to earn a living. And you cannot be deprived of that
right unless it is in accordance with the law. The law says that tenure is
presumed, all things being equal, the moment you start employment, and
there are no other conditions, you are entitled to that job indefinitely, subject
to the condition that no just or authorized cause supervenes. If no just or
authorized cause supervenes, then, there is no foreseeable end to your
employment. Hangtod sa hangtod ka. What will intervene? Retirement is an
authorized cause.
In government, is tenure presumed? Is there security of tenure?
The constitution says tenure is presumed if you have the proper appointment
or the proper election. In election of course there is a term, in appointment
there is also a term if the position is covered by a term.
Can the government pass a law suddenly abolishing your position?
Yes. The government can do that.
Suppose the position is abolished without any benefits. Can you file an action to
demand benefits because you have been in that position for 15 years?
The SC said: No, because again, it is not a property right.
Can you sue to take over your job?
In the private sector, if you are deprived of your job, then you file an illegal
dismissal or illegal termination case. In the government, the general rule is
that it is not a property right. But if there is an interloper, somebody who takes
over your job when you are the rightful appointee or this interloper has none of
the qualifications that is required of the job; than you can file what is called a
quo warranto.
Refresher (pero I know we all know this naman): Quo warranto (Latin “by
what authority”) is a legal procedure to challenge an individual’s right to or
authority over the position he/she holds.
The problem of quo warranto is that it’s supposed to be partly the state and
partly the one who should be the rightful occupant of the position. That is the
only instance where you can file or recover your official position in
government, because your position is based on law, not based on contract.
This is very fundamental. This is the reason why in government you cannot go
into collective bargaining, nor exercise the right to self-organization because it
is not a property right.
Compensation for your work is determined not by contract, but by law, which
is the standardization law on wages/compensation or if there is a different
law exempting your institution. Many offices/government financial institutions
have been taken out of standardization. Central bank, Landbank, Development
Bank are all not included in standardization. This concept grounds the rest of
the application of labor laws--- Why government cannot strike, why they have
security of tenure… but remember that they have security of tenure but for
purposes other than security of tenure in the private sector. Private sector has

security of tenure, government also has security of tenure BUT for a different
purpose.
What is the difference?
In the private sector, it is granted to benefit the employee themselves.
But in the public sector, it is granted not for the sake of employees (because
they are not supposed to consider it as a property right that they can hand
over and pass on to somebody else.) They are given security of tenure by the
Constitution and implemented in the Civil Service Law for the sake of public
service. Because if government employees do not have security of tenure,
then they will be discouraged, they will be demoralized and public service will
suffer.
So, government employees are granted security of tenure indirectly. They
benefit from it but they are NOT the object of the beneficence of the state.
In the private sector, you can be dismissed when there is (1) authorized cause
and when there is (2) culpable cause. When you say culpable cause, it means
causes that the employee is responsible for. (e.g. Serious disobedience,
habitual neglect, committing a crime against employer.)
In the government sector, you are dismissed for cause. What is cause? Cause
is legal cause. There is one cause in the Civil Service Law that is the subject of
so much discussion--- notoriously undesirable to public service. Blanket kaayo
noh? Wala gi-specify kung pwede ba ka hawaon kay ngil-ad ba kaha ka ug
nawong, or kay dili ka-agwanta imong mga kauban sa public service kay wala
ka’y ligo. “Notoriously undesirable”man kaha? 
Now, in labor laws, we are talking about not just any labor for another. We are
not talking about compensable labor for another. We are talking about
specific labor performed for another that is covered by the Labor Code.
Because there are so many other kinds of labor for another that is not covered
by the Labor Code. Example: Independent contracting, covered by Art. 1713 of
the Civil Code.
What is the difference between Independent Contracting and ER-EE relationship?
The difference is the control test. If you are engaged to perform activities
usual and necessary to your employer and your employer has the power to
control not just the goal or end to be achieved but also the means, method
and the manner in achieving that end, then you are in an ER-EE relationship. It
is Independent Contracting if you are engaged to perform an activity but the
owner or the person you are performing it for, does not dictate the means,
method or manner of carrying out that activity. That is not Labor Code; that is
independent contracting.
Read the case of Cabe vs Tumang, 135 scra 389, 1985 case.
CABE vs. TUMANG
G.R. No. L-57682 March 18, 1985
This case is about the jurisdiction of the Labor Regional Office over a
breach of a construction contract.
Samuel Tamayo agreed to construct for the spouses Cabe their residential
house. Tamayo started the work. The Cabes dispensed with his services
when he allegedly made certain deviations from the plans. The house was
finished by other persons.
Tamayo sued the Cabes in the Regional Office of the Department of Labor
in Laoag City for the recovery of P7,000 as payment of labor and
materials. He filed the case as head carpenter of his 18 co-workers, whose
wages he had advanced, and for reimbursement of materials which he had
purchased.
The Assistant Regional Director for Arbitration ordered the Cabes to pay
Tamayo P6,400 as contractual wages and P600 as reimbursement of
materials. The Cabes assailed that decision by certiorari. They contend
that the Assistant Director acted without jurisdiction.
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From the Lectures of Fr. Gus Nazareno 5
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SC held that Tamayo was an independent contractor and not an employee
of the Cabes. The Labor Regional Office and the National Labor Relations
Commission had no jurisdiction over his claim. Their jurisdiction is
confined to claims arising from employer-employee relationship.
Decision of Assistant Regional Director Tumang is reversed.
The SC says they should never have gone to RD of Labor. The case was
dismissed for want of jurisdiction. Pero wala’y rason nga gibutang nganong
want of jurisdiction. It’s an easy read. It’s one of the shortest cases I’ve ever
come across.
What if you changed the facts of the case, gipahawa siya (Tamayo) and ang
iyang assistants ang ni-adto sa RD of Labor, then that’s already 106, 107 and
108 regarding contracting and sub-contracting.
Even if the contract is labor-only contracting or even if it is bonafide
contracting (which is contracting that is allowed), the indirect employer
(kaning mga spouses na gusto sa ilang dream house), they are responsible for
the wages of the employees of the contractor, whether or not it is labor-only
contracting or bonafide contracting. They are answerable for underpayment or
non-payment of wages. Sigurado ang jurisdiction dira. It is correct that there is
no ER-EE relationship. BUT the Labor Code says that in the event of
underpayment or nonpayment by contractor of the wages of the employees,
seconded into the project of the indirect employer, the indirect employer is
responsible.
Is that still the case if the indirect employer has already paid the contractor for
the wages of his employees?
Ang contractor ang nidagan. Tubagunon ba gihapon sa employer? Yes. The law
says he still has to pay without prejudice to his running after the contractor
for double payment.
What if the contractor has already paid the employees but the employer has not
yet paid the contractor? Where does the contractor go?
He does not go to the NLRC or labor arbiter. He goes to regular courts
because his relationship with the indirect employer is not ER-EE.
If the unpaid laborers sue the indirect employers, can the indirect employer
implead the contractor on a third party complaint on the ground that he (the
indirect employer) has already paid the contractor?
Can he do so in the same case? Yes, because it is only ancillary to the claims
of the employees. Wala na gani ang employee, wala na’y third party claim na
ma-file, pero kung naa pa gani unpaid employee, maka-third party ka (in this
situation given naa pa ma’y unpaid laborers so pwede pa).
What is labor-only contracting?
It is ER-EE relationship imposed by law. If the employees do not get paid, ang
manubag jud kay ang indirect employer. If the contractor is engaged to
perform activities which are usual or necessary to the trade or business of the
indirect employer, than you have labor-only contracting. Legally the contractor
is disregarded by the law and there is only one employer now. That is the
indirect ER.
Example: Coca-Cola. They have a busy season during Christmas so they have
extra production requirements. They enter into an agreement with a
manpower agency for the supply of extra personnel. Where are these extra
personnel deployed? They are put in the bottling area. That is an activity usual
and necessary to the trade or business of Coca-Cola. That is labor-only
contracting. The employees of the contractor become employees of Coca-
Cola.
When can Coca-cola enter into bonafide contracting? What if Coco-Cola says
“Our boss from Mexico is coming to inspect us. We have to put on our best
face” so they enter into a contract with a landscaping contractor.
SABRIDO (2 of 2)

If you engage contracted labor, to do that, that is already labor-only
contracting. The contractor is immediately cancelled. The employees of the
contractor becomes the employees of Coca-cola who contracted the
contractor. Wala nay go-between because you are made to perform activities
which are (…) to the business. When can Coca-cola enter into a bona fide
contracting? For instance, Coca-cola says, “Our boss from Mexico is coming.
We have to put on our best face. SO we will enter into a contract with a
landscaping contractor! Aron mangawala nang mga sagbot dinha.” Kanang mga
trabahante dinha, kung dili na sila masweldohan, can they sue Coca-cola? Of
course they can be sued. The indirect employer is always responsible for the
under-payment or non-payment of the wages of the employees of the
contractor. ALWAYS.
Now, kung pahawaon na sila kay nahuman na ang project. Unya muingon sila
“dili! We are already employees of Coca-cola. Gitagaan man gani mig T-Shirt.
Naa na miy T-Shirt sa Coca-cola. Unya dili mi empleyado sa Coca-cola? Dire man
mi gatrabaho sa ilang opisina. We already have Coca-cola bodies!”
Dili man mo empleyado sa Coca-cola. Empleyado mo sa contractor. The
activities for which you were engaged are not usual and necessary for Coca-
cola. Unsa man diay ng Coca-cola, landscaper? Dili useful na sa ilaha kanang
magbuhat kag ug buda or unsa pa dinha. So your job is tangential. It has no
direct relation to the business of the employer.
Dili ka maregular. Dili ka nya empleyado. Ngano manubag man lagi sya ug dili mi
mabayran? Kay niingon man ang balaod. For the protection of the employees, if
they are not paid, then you pay.
Now, there have been recent decisions because there is a requirement for
bona fide employment. Not only that you are engaged to perform activities
which are not directly related to the business of the indirect employers, but
the contractor, your employer, must have sufficient capital, or sufficient
investment in equipment, office space, and other necessities. So the Supreme
Court has had decisions where it says if the contractor is only capitalized in its
incorporation papers submitted to the SEC to the tune of fifty thousand
(P50,000) and his payroll reaches P600,000 for the whole year, it does not
have the sufficient capital.
Ako naproblemahan ko nianang desisyona. Why? Because the Supreme Court
has suddenly ventured out on a lim (?). What you put down when you submit
your incorporation papers with the SEC is your capital stock. It’s not capital.
Capital is the sum total of the goods and assets that you have in your
corporation. And that can be taken not just from contributions, subscriptions.
You can go to the bank and borrow! For me, that is how a business is done. If
you rely on other people’s money by subscription, walay makasugod ug
business ana kay wala pa man kay negosyo. Katuohan kaya ka sa public? Lisod
na pagkumbense. Adto ka sa bangko, explain ka didto. Pahuwamon man ka.
The trouble is you have this law that says you have to have sufficient
investment in capital, equipment and other resources. That is just good if it is
a foor-shock (?) job. Pero ug muabot ka sa digital business. Mag-ilis sila ug
database. Maghire sila ug analysts and programers kay maoy mutaod sa
programs. Do you think they will qualify as having enough capital? Pangutan-
on nimo na, pila may capital? Wa man mi capital. Kay ang makina gamiton, inyo.
Are we expected to bring a mini frame here? No. It’s the computer of the
school to which we will install. Dili man na ilahang computer ang gamiton.
Computer man na sa eskwelahan. Wa man na silay kwarta o equipment.
Kahibalo rana ilang dala pero mahal kayo nag per hour. That is where the
paradigm of the labor code breaks down. The more and more we progress
technologically, these break down because work become disassembles and it
is now fragmented with the coming of the new technology. The first one to go
is the security of tenure. It is meaningless in today’s technology.
I just like to point out the case of merchandisers. The landmark case before
was Tabas vs. California Manufacturing (169 SCRA 497), 1989. Kanang mga
special orders ba - Detergents, soaps, now even with foods. Before you launch
them, you have what they call a special order program. They will not employ
their regular employees to do this special launching. They contract a special
manpower agency that provides them the so-called merchandisers, promo
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From the Lectures of Fr. Gus Nazareno 6
4-Manresa | Ateneo de Davao University College of Law
girls nga magsuroy-suroy. “Testingi ninyo among kape na 3-in-1, 4-in-1, naa pa
gyuy 7-in-1!”
Question: Is that usual and necessary to the trade and business of the indirect
employer? Mao man na ilang ingon. “Usa mi katuig cgeg suroy ug baligya aning
ilang 4-in-1 unya karon ilang iterminate ang program. Dili na mahimo! I am a
regular because I am doing something that is usual and necessary to the
trade or business of the indirect employer”
Nganong usual and necessary man? Unsa diay imong gibuhat? Namaligya,
sales. Ingon man ang indirect employer, dili man ikaw ang namaligya. Naa man
mi tawo ang mamaligyaay. Ikaw ang tig-kati, tig-create ug special discount to
build demand. Ug naa na gani, wa naka! Mangita nasad kag laing produkto didto
nga imong i-special offer. Kay ikaw special ka namo.
The SC says they are REGULAR because special offers have now become a
regular feature in consumer foods, in detergents, etc. If a company does not
engage in these special offers, they will be behind. So it has now become a
regular feature. That was as of 1989. Karon pagkagawas sa ubang decision sa
SC. Diba? We took that up! Fronterra.
Fronterra. Merchandisers gihapon. Duha ni sila ka merchandisers sa primero.
Fronterra was engaged in the selling of dairy product. They are very big in
Australian and New Zealand markets. Originally kanang Anchor butter, that is
Fronterra. But gipalit na sa San Miguel Philippines. So duha ni sila ka
merchandisers, isa na ni sila katuig. Padulong na ni sila sa duha katuig. Gi-cut
man sa Fronterra ang ilahang contracts sa Mechandising Manpower
Contractor. Dili na nila i-renew. Unsa may gibuhat sa duha? Ni-resign sila atong
contractor unya adto sila sa fronterra unya ingon nila “i-apil na mi ato napud sa
makadaog sa bidding contract for merchandisers”. Girecommend sila unya
gidawat sila sa bag-o nasad nga contractor. So dugang nasad silag isa ka tuig.
More than 2 years na sila sa Fronterra. Giputol naman sad ang contract. Karon
kay wala naman silay kadaganan. Gikiha na nila ang Fronterra. Ingon sila, by
reason of the length of service we have given to Fronterra, we are really
regular. We have been hired to perform activities which are usual and
necessary to the business of Fronterra because we have been trusted by
Fronterra. Balhin-balhin man gani mi. Sa ato pa, gikihinanglan nila ang among
service.
Ingon ang Froterra - dili lagi namo na sila empleyado. Kung amo pa na silang
employado, then their engagement with us should be seamless. Walay putol
ba. Ni-resign gud sila atong contractor. Unya nibalik sila. Dili ba gi-admit na nila
nga empleyado sila sa contractor, dili kami?
The SC decided on the basis of stare decisis - Tabas vs. California
Manufacturing! Pero the SC has awaken to the nature of job definition. The SC
said that merchandisers are now independent contractors. That is the ruling in
Fronterra. Bali na run ang Tabas vs. California Manufacturing. Wala na, nayabo
na. Kining mga merchandisers, mga promo girls, special projects, special na
gyud na sila. There is now a precedent that they are no longer regular. They
are bona fide contractor.
Let us say Marco Polo Hotel. They engaged a general contractor, Engineering
Equipment, Inc. to construct a building. EEI engages a sub-contractor. Who is
a sub-contractor? Masonryworks, Inc. Silay mubuhat anang mga low-bearing
structures. Sila’y buhat anang mga mannequin, tanan nga mga ing-ana. Pero
kanang sa mga bung-bong dili na man kay hollow blocks ang gamiton. So
Marco Polo hotel, then EEI who will construct the hotel engages the services
of Masonryworks, Inc. Kinahinglan man sila nga mupaspas. Unya kanang
pagtaod ana kay butangan pa man nag mga bintana ug purtahan. Aron mas
mupaspas, kini sad siya, mucontract sad ug contactor nga ang espesyalidad kay
ang mutaod sad ning mga bintana ug mga bung-bong, Doors and Windows. Pila
na man ka contractor? This is a sub-sub-contractor (Doors and Windows). This
is a sub-contractor (Masonryworks). This is the main contractor (EEI). Kini sila
tanan, tagsa-tagsa they have their own employees.
Supposed you are asked, the employees of Doors and Windows they are not
paid their wages. Whom can they sue? They can sue EVERYBODY! They can

sue Doors and Windows (sub-subcontractor). They cay can sue
Masonryworks, they can implead sub-contractor, the EEI the main contractor.
Or they can sue Marco Polo Hotel, the indirect contractor. Do not make the
mistake of saying, first they will sue dah dah dah. It will show you do not know
your law! Article 106 says the liability is joint and solidary. So you can them
immediately and there is no limit. All the way you can implead them.
The only exception is if the contracting chain is broken. Once it is broken, you
cannot do beyond. Give me an example. PharmiTemcom (??). Sa India ni sila.
What did they do? They decided to sell all of their hard assets – cell sites,
transmission equipment, optic fiber, they sold it! They sold it back to their
seller – Siemens, Erickson, Nokia. But before they sold it, they entered into a
contract of perpetual lease that they will lease these equipment and that the
lessor (Siemens, etc. who bought the equipment). The lessee can expect from
the lessor to expand the equipment, add to the equipment depending on the
growth of their subscription. If they (lessors) cannot supply, then they have a
choice of contracting other suppliers and enter into a lease agreement. So you
have Siemens, Erickson, Nokia who are the lessors are very far (?). They are
based in Sweden and Finland. They will need people who will maintain the
equipment. So they maintained a subcontract with Telecoms Maintenance,
Inc. In terms of adding new equipment kay niadto kay 3G, unya naa nay 4G,
unya naa pa gyuy 5G! Unya itaod man na nimo. Kinsa may mutaod ana? Ang ga-
maintain dili man na kabalo mutaod. So naa nasad kay lain nga imong i-contract
- Technicians, Inc. Kanang technicians, Inc. nga mag measure sa output ug
input, musaka ba na sila sa mga cell sites? Dili na sila musaka kay mga
engineers man na sila. Mangahulog palang na sila. Reverse, Inc. sila nay
musaka didto.
Suppose Reverse employees nga katong tig-alsa, nga maoy musaka didto sa
mga cell sites, dili sila mabayran? Who can they sue? Can they sue Reverse?
YES. Can they sue Technicians, Inc? YES kay mao man nay nagcontrata nila.
Can they sue Telecoms Maintenance Telecom, Inc? YES kay mao may
nicontrata sa Technicians. Can they sue Erickson? YES kay mao man nay
number 1 nga contractor. Can they sue Pharmi? Dili na. Kay ngano man? Dili na
man na contracting ang contract nila (with Erickson). Lease na man na. The
contracting chain is broken. Lease is a nominate contract and it is under the
jurisdiction of the regular courts, under the Civil Code. It is not under 106, 107
of the Labor Code. So mao na inong bantayan. Remember the joint solidary
liability between the contractors and the sub-contractors.
Suppose the contractor contracts with the government. The indirect employer
is the government. The contractor fails to pay. Can the employees of the
contractor go to the labor arbiter and sue the government, the National Food
Authority? Can they sue? It is the government, not covered by the Labor Code.
We have 3 decided cases.
The SC says YES. Because of the employer-employee relationship is created
by law. Its one of the few instances is embraced by the Labor Code in order to
protect the defenseless workers. So you can sue the government. Unya kinsa
may mu-decide ana ang Labor Arbiter? Unya mubalik sa SC? Paita.
So there are atleast three kinds of employer-employee relationship created by
law.
1. Bona-fide contracting. The activities that are contracted out are
not directly related to the business of the indirect employee. In
that case, the indirect employer is limited to the underpayment or
non-payment of wages. Mao ra nay iyang extent of liability.
2. Labor-only contracting. It means that the employees of the
contractor are made to perform activities which are usual and
necessary to the business of the indirect employer OR the
contractor does not have sufficient capital or investment by way
of equipment, etc. The contractor is cancelled out and the indirect
employer becomes the only employer and is liable not only for the
under-payment or non-payment but for all other obligations under
labor and social legislation: SSS, PAG-IBIG, PHILHEALTH. All those
obligations of the regular employer.
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From the Lectures of Fr. Gus Nazareno 7
4-Manresa | Ateneo de Davao University College of Law
3. Hospitality Girls. That is found in Article 138 before but now it has
been renumbered to 136. Classification of certain woman
workers.
Article 138. Classification of Certain Women Workers. “Any woman who is
permitted or suffered to work, with or without compensation, in any night
club, cocktail lounge, massage clinic, bar or similar establishments under
the effective control or supervision of the employer for a substantial period
of time as determined by the Secretary of Labor and Employment, shall be
considered as an employee of such establishment for purposes of labor
and social legislation.
They are called Hospitality girls. Kinsa may nagpasulod ana niya dinha? Wa sad
ka kabalo basta kay naa na na sya dinha. Nganong naa man sya dinha? Kay
itagaan syag komisyon sa drinks sa iyang costumer. That’s how she earns. Is
she obliged to come to work everyday? No. She is not obliged to keep her
attendance. Who selected her? The night club? No, ni-appear ra ba sya dinha.
Who fires her? Nobody. Does she has regular working hours? Wala. Payment
of Wages? Commission, wala may wages. Power of Control – wa sad. Way
control. And yet why is there an employer-employee relationship? Because the
law says so. It is an employer-employee relationship imposed by law.
Remember, the fact that you are a government agency and you are the
indirect employer does not save you from liability under an employer-
employee relationship that is imposed by law.
JUNE 28, 2018
JARDINEL (1 of 2)
We have to distinguish ER-EE relationship from other contracts that have a
similarity with ER-EE relationship. Last year’s bar examination, the examinees
said that the examiner might have been my clone because the first question is
“what are the requisites for ER-EE relationship?” Its only 2 pts. Dali dali-a nag
suwat. Pero kung mao rana imo nahibaw-an, hawda! Then the next question is,
“are drivers, under the boundary system, is it a lease contract or ER-EE
relationship?”
LEASE CONTRACT
So those were asked, to find out whether you know because in the decided
case of ABBAS vs INTL Brotherhood Labor. Why was Judge Abbas in the case?
Because these involved drivers of the auto-calessas (AC), the old jeeps of the
Americans. These drivers were convinced by union organizers to form a
union. The thing for the union, they were working for a lower boundary
system. They threatened the operators - “If you will not agree, then we will go
on strike”. That’s why the operators, they went to the CFI. They did not go to
the Labor Arbiter because they believed that this is not ER-EE relationship.
This is a lease contract. We, the operator are not the employers of the drivers
of that boundary system. They rent the car from me. What is their payment?
The boundary. SO it’s a lease contract. That’s their stand.
The drivers said NO! We are your employees.
What is the ruling of the court? It’s so obvious! They are not in a lease
contract. It is ER-EE relationship. ABBAS does not have jurisdiction to issue a
restraining order telling the drivers you cannot go on strike. Abbas does not
have the power to stop them from striking. He is issuing that order beyond his
jurisdiction. Why? Because they are employees of the operators.
The SC said it is obvious. Why is it obvious? SC does not say so, does not
explain. So you have to think, why is this so clear? It is so clear because if you
were really leasing the car then it is RENT-A-CAR. If it is so, then you can bring
it anywhere - COTABATO, SURIGAO… But if you are in a boundary system, you
are obliged to stay within the franchise route of the operator. You cannot go
out of that. According to the SC, the boundary is a reasonable figure that will
account for gross receipts less gasoline and deduct fuel expenses of the
driver so that they have something left for himself and the operator. So he is
really an employee in which case the operator is obliged:

1. To pay him in the very lease, minimum wage everyday.
2. To enroll the driver to SSS, Pag-ibig, Philhealth, the obligations of
the employer, labor standards and soc leg.
Because he cannot go out of the franchise route of the operator that is why he
is an employee.
PEDDLERS
How do you distinguish a peddler from a salesman?
A peddler brings with him, the objects that he is selling. Pag baligya niya hatag
dayun, (puto, kutsinta, kalamay, etc.) If you are a salesman, you need not bring
the objects that you are selling. Diba manuktok ka sa mga balay tapos
mamaligya ka.
But if you are a peddler, are you peddling for yourself or are you an employee
of the owner of the objects that you are peddling? Like nestle ice cream, unsa
mana siya? Is he an independent salesman selling his own ice cream in which
case, gipalit niya ang ice cream sa iyang source unya karon namaligya siya for
himself, he has no employer. Or is he an employee of the supplier of the ice
cream? You are obviously not a salesman because you are brining with you
the objects that you are selling. When are you a salesman of the supplier of
ice cream? When are you a peddler doing business for yourself? That is the
case of SNOW WHITE vs GARCIA.
According to the SC there, luoy si Garcia, ga-peddle lang ni siya ug ice cream.
Who supplied the cart? It is SNOW WHITE. Who supplies the ice na iyang
ibutang para magpabilig bugnaw ang ice cream? It is SNOW WHITE. The ice
cream? It is SNOW WHITE. The SC said that he is an employee for sure
because at the end of the day if he cannot sell all the ice cream, iuli man niya
sa SNOW WHITE company. The fact that he can return it means the title to the
ice cream has not passed to him. Kay gipalit man niya, iya na to. Pag uli nia
tawgon nia iyang mga anak to eat the remaining. Kay di man niya mauli. That’s
what the SC said.
So this case should be contrasted with the case of of MAFINCO TRADING vs.
OPLE 70 SCRA 139 1978. Mafinco trading is the marketing arm of SARSI.
SARSI sales people entered into a peddler’s contract. The peddler is identified.
He says “he will be selling only SARSI” using the truck provided by MAFINCO
trading and then he posts a bond to secure the payment of wages of his driver
if he chooses to hire a driver and a helper to carry the pieces of softdrinks.
That’s in the contract. So you put up a bond:
1. To answer for the salaries of these people;
2. To cover the liabilities of the inventory that you take from their
warehouse
You have two surety bonds. Then you say in the peddler’s contract that the
license to peddle which you have to obtain from city hall.
Question: Is he a peddler for himself or is it ER-EE relationship? Kining
MAFINCO naa silay contract. The SC said, this relationship is characterized
only by the contract and what the four corners of the contract provide is this
is the relationship. Why did the SC say that? Because there are actually two
subsidiary contracts within that contract which if you say that there is ER-EE
relationship then those two subsidiary contracts will be lifted out from the
jurisdiction of the regular courts. What are those 2 contracts? CONTRACT OF
SURETY. This is because the peddler is obliged to put up a bond to cover
salaries of his salaries or helper. And another bond to cover his inventory
goods which he withdraw from the warehouse. That is what differentiated it
from SNOW WHITE vs GARCIA.
See?(Father compares the two cases) Truck - peddler, Softdrinks - Ice cream,
mauli niya - mauli sad niya. Ngano kini ER-EE relationship? Tungod atong
surety, cashbond. That is a nominate contract in the civil code and the one
that has jurisdiction is the regular courts.
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From the Lectures of Fr. Gus Nazareno 8
4-Manresa | Ateneo de Davao University College of Law
LUMAPAS (2 of 2)
TENANCY
Another contract that we have to differentiate is tenancy and EE-ER
relationship. In both there is labor provided by the employee, there is labor
provided by the tenant. How can tenancy be differentiated from EE-ER
relationship? The landmark case is Delos Reyes vs Espinelli, 1969 case.
You have here a coconut hacienda. As usual the owner is absentee, tua siya sa
syudad. Naa syay encargado. Sya ang namahala sa hacienda and he brings in
people to live there and do the harvesting of the coconuts, processing, drying
of copra, etc. And then bahin, there is a sharing system. Now for a long time
the haciendero never received any income from his hacienda. So the encargado
did not also report to him. So one day he goes over to his hacienda and lo and
behold he sees people who are already staying there and the encargado is
nowhere to be found. Absentee ang haciendero absentee pa ang encargdo. So
nasuko ang haciendero. Gipapahawa nya, ako ang tag-iya diri, ang nagbutang sa
inyoha diri dili man ang tag-iya. Now what happened? Gikiha siya. Gidala sya sa
agrarian reform. Niingon tung mga tao didto tenant mi so we have a right to
stay there. Unsa may defense sa haciendero? Agrarian court has no
jurisdiction, move to dismiss! Why? We are in EE-ER relationship. Tanawa ra
gud o. Sya na ron na mu-claim na EE-ER for his benefit.
So, the issue is are they tenants or are they employees? Before that, the
agrarian court has to determine if it was the encargado, the one who placed
those people there, is that binding on the absentee landlord.
First issue, binding. Because he granted authority as to the workings of the
hacienda. He can constitute tenancy that is binding on the land, binding on
the haciendero.
Second. Are they tenants? That is when the SC goes into a long disquisition. It
says in EE-ER relationship there is an enterprise which wholly belongs to the
employer and the employees are merely coopted. It is the employer who
dictates everything. Why? Because he owns the enterprise. That is the
beginning of managerial prerogative. Because he owns the enterprise he has
the right to possess. Kanang empleyado nimo, ingnan nimo trabaho ka diri. Di na
gani ko gusto nimo pahawa diri, kay ako man tag-iya ani. Kung papahawaon
nimo siya you are exercising your managerial prerogative that flows from
ownership. Now, the trouble is there is the Labor Code. If you have employees
you cannot just kick him out and exercise your right to possess without
running afoul with the law.
By the way, do you know the difference between right to possess and right of
possession? The correct terminology is if you are the owner, you have the
right to possess. Your right to possess flows from ownership. Ownership: jus
possidendi, jus fruendi, jus utendi (that’s not a bad word ah haha), jus abutendi
for as long as you do not transgress others’ rights. Finally, jus disponendi.
From ownership all these rights are flowing. But when you say jus
possessiones, right of possession, that is different. If you are a lessee you have
a right of possession, a separate and distinct right because you entered into a
contract with the owner. You now have a right of possession over and against
his right to possess because he surrendered that to you for a consideration.
Now, going back. The owner has the right to possess his business because he
is the only owner. The employees if it’s a farm, sometimes, they can stay in
the bunkhouse but at anytime he can be thrown out if he is dismissed from
work for a culpable offense. But tenancy is different. Remember, tenancy did
not originate in the industrial revolution. It antedates the industrial revolution.
There were already tenants as early as the middle ages. And the crown, the
lord had tenants to work his land and they would share to the landlord a
certain amount of the produce. But they could not be driven off the land. In
fact the landlord has the obligation to bring over to safety these tenants, in
case of emergency when there are marauders that will be attacking, trying to
rob innocent people. The landlord has the obligation to protect them. So it’s
not a strict transaction of “you work for me and I give you”. It’s a social setup
and that setup is tenurial in nature. It’s based on the land. The moment you
are accepted then your children and your children’s children will continue to

farm that land. In fact you have what they call a farm lot and whatever you
produce there you do not share with the landlord. Kanang tenant ug naa na
syay balay, naa syay manok dira, naa syay baboy. Bahinan pa ba nya ang
landlord? Dili. Bahinan nya iyang upa na basakan. Anha sila dira magbahin. Pero
kana iyang gipuy-an na naa syay gibuhi dirang hayop, naa syay nangka diha, that
is his own. Iya na because he has the right to stay there. He has the right of
possession by virtue of tenancy and that dates back to custom and age-old
practice. So the possession is different.
The labor is different. In EE-ER relationship only the employee works for the
employer. In tenancy, the tenant plus his entire family. Kanang tanom,
harvesting, pag-abono, weeding, the family helps out. Kung labor, imong
pugson ng bata eh di ma-child labor ka. Abuse! Muingon ka di man na abuse.
Naa bay abuse sa agricultural? Wa ma na. Uban2x ra na pagtanom. Kanang
bata na magsunod sa daro. The entire family contributes labor. And then as to
the compensation, compensation in EE-ER relationship is without condition
whether you are making money or not. You must pay him on the 15th and the
30th. And it must be according to the regular minimum wage. But in tenancy
the compensation is dependent on
1. THE EXISTENCE OF A HARVEST. Ug way harvest kay gibagyo mo,
unsa may bahinon. Wala.
2. THE SIZE OF THE HARVEST. The bigger the harvest the bigger the
share both of the farm owner and the tenant.
So there you can see, in EE-ER relationship if there is only one enterprise
owned by the employer, in tenancy it is a joint venture of agricultural
production over agricultural land. Kinsa may magbuot kanus-a magtanom,
unsay itanom, unsa kadako ang tamnan, fertilizer na ibutang, in EE-ER
relationship it’s only the farm owner who decides. Igo lang sya mumandar sa
iyang empleyado. Tenancy, kinsay magbuot? Tenant ang magbuot. In EE-ER
relationship there is power of control. In tenancy ang tenant ang magbuot. Naa
na sila mga superstition sa tanom. Sila magbuot kanus-a ang tanom, unsay
tamnan nimo. Does the farm owner in tenancy have any control at all? The SC
says in the case the landowner can exercise control by exception. He can
intervene if the tenant does something out of the ordinary. Syay makabuot
kung lahi ang lihok sa tenant. For instance, nag-basak mo diha. Napulo na
katuig ning tenant nagbasak dinha. Nya kalit lang niingon sya magsugod na ta
ug orchid. The landowner can put his foot down and stop the tenant because it
is not the usual practice there. Ingnon nya tanawa kinsa ga-orchid diri, wa may
mutubo na orchid dinhi. He can exercise control by way of exception. So those
are the key differences between tenancy and EE-ER relationship.
INDUSTRIAL PARTNERSHIP
Industrial partnership is found in the Civil Code.
Now if you do not contribute any money or assets but you only contribute
your industry, your labor, you are called an industrial partner.
Here is a fishing boat that goes into the deep sea for days and the owner picks
a captain. Captain2x ba, basag bituon, kabasa gamay ug mapa. And then this
captain picks up his own crew and the boat owner supplies the crude oil, the
diesoline, the rocks of ice to preserve their catch, the sawdust and then the
victuals of the ship, kan-onon sa crew. And they are out at sea for days. When
they come back with their catch, the catch is sold and from the gross sales is
deducted the expenses. And then the net proceeds is divided into two. One
half goes to the owner, the other half goes to the crew. And the captain always
gets double share. Is this industrial partnership or EE-ER relationship? The
landmark case is Villavilla vs Court of Appeals, 212 S 488, 1992 case. There the
SC listed down the two line of cases, where in one line it is EE-ER relationship
and in the other case it is industrial partnership.
The differentiating factor is the power of control. If the fishing boat has
contact with the owner thru satellite communication and regularly gets a feed
of satellite, GPS, as to where the catch of fish is located. Then that is
considered control and the relationship is EE-ER relationship. If there is no
communication, it is the captain who decides when they leave, how long they
stay out, that is industrial partnership. Pareha lang na sa Diwalwal. Owner sa
tunnel. Naa na syay abantero. Sya may mubasa kung asa ang ore. Naa na sya
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From the Lectures of Fr. Gus Nazareno 9
4-Manresa | Ateneo de Davao University College of Law
crew. Ang iyang crew gitawag na kicker. Now, the ore you get you sell it and
from the gross proceeds immediately deducted is the expenses. Expenses,
katung pagbomba sa tubig. Mahal kaayo ang elektrisidad didto. Now all those
expenses are deducted. The net proceeds divided into two, one half to the
owner, the other half to the crew. Again, the abantero gets double share. Is
that industrial partnership or EE-ER relationship? The issue is control. If the
owner predetermines the destination, how far you go, etc. then he has control
then they are employees. Muingon gani ug silay magbuot, silay mangita didto sa
ore then that is industrial partnership. Again, the issue is power of control.
Another example of industrial partnership is the case of Besa vs Trajano 146 S
401. Besa used to be a top shoemaker. Custom-made shoemaker. Muadto
kang Besa magpasukod ka ug sapatos, buhaton nila sumala sa imong sukod.
Tailor-fit for you. In that establishment there are several shoe stands. Ug naay
shoe shine boys. Kinsa may nagbutang sa ilaha dira? Ang management sa
Besa. Kinsa may mubayad nila? Ang individual customer na nagpalimpyu sa
ilang sapatos. Now, the individual customer has a choice, to go to the window
of Besa and pay Besa and then Besa will give the share to the shoeshine boys.
Or the customer will pay directly to the shoeshine boy and the boy will give the
share to Besa. Now sometimes the customer is happy and gives a generous
tip.
That arrangement, is that EE-ER relationship? Now the boys who were
beginning to organize into a union, they say we are employees because Besa
has control over us. We are given a test. Where is your shoeshine box.
Tanawon nila. Unsa may imong mga equipment dinha. And then what is your
procedure. Approve na gani ka makashine na ka dira. There are several who are
accredited and there are standby boys when someone is absent.
Is that control? The SC said that they are not employees. They are industrial
partners because their compensation is flexible. Sometimes the customer
pays Besa or pays the shoe shine boy directly and gives a tip. So what
removes it from EE-ER relationship is
1. flexibility in compensation
2. Not given office or work hours. They can absent themselves if
they want to because naa may standby. No mandatory working
hours. And you can keep the extra tips you receive.
Pareha ra na sa kaso sa Manila Golf Club vs NLRC. Kanang mga caddies sa golf
club. Magform na sila ug union. Manila Golf says you are not employees. You
are accredited. You standby and if the club member sees you he will get you.
There is a minimum fee for caddies but customer sometimes pays a tip. But
then the caddies say Manila Golf exercises control over us. We cannot just
caddy wearing slippers, we have to have shoes, socks. Ikaduha, they cannot
caddy is they are wearing just t-shirt. Dapat naay collar. That’s the rule. And
you must be wearing white polo shirt. Unya ang imong sinulti-an walay
pamalikas nya sige gyud ka “sir” ug “po” sa imong gi-caddyhan. So they say they
are under the control of Manila Golf Club as to language, behavior, attire. We
are employees because Manila Golf controls not only the ends, the objective
to be achieved but also the means and manner of achieving the goal.
SC says that is not power of control because Manila Golf Club has similar
rules to their members. Like the members cannot go into the lanai and
restaurant just wearing shorts or slippers. They must wear proper attire. Di ka
makapamalikas, you have golf abuse, gibunal bunal nimo makit-an gani ka you
will be fined.
Power of control ba na sa members? There are rules in this club and each
section is subjected to rules which may appear as power of control but it is
actually for the better administration of the club. But the SC did not say that
they have two members of Manila Golf Club who did not recuse themselves.
At the time it was Justice Padilla and Justice Sarmiento, sitting justices and
members of Manila Golf and they did not inhibit themselves. Industrial
partnership, not EE-ER relationship.
JULY 5, 2018
LAVARES (1 of 2)

We have gone through the basic contracts that are akin to labor. Then, I have
pointed out to you the movement of the decisions of the Supreme Court like
for instance, how the Supreme Court has changed its mind from the
celebrated case of Tabas vs. California Manufacturing (169 SCRA 497, 1989).
The ruling there is: promo girls/special merchandising personnel of a
company are doing work that is directly related to the principal business and
undertaking of the putative employer. They are regular. That is what Tabas vs.
California Manufacturing says.
Now, the same set of facts in Fonterra Brands Phils. Inc. vs. Largado and
Estrellado (March 18, 2015). Some 25 years later, the Supreme Court changed
its mind. Merchandising employees of Fonterra, another food company by
California Manufacturing, are term employees. They are legitimate employees
of the contractor and they do not enjoy security of tenure. I’m bringing this up
because of the controversies that are still alive with respect to “Endo”. Endo is
taken from the expression “End of Contract”. So wa na kay trabaho because
your contract has ended. 5 months ka.. it’s the end of your contract. No more.
Then, you reapply. After 1 month, they rehire you. 5 months nasad. Then you
are told, end of contract. Wa kay trabaho. They call it the scourge of current
labor practice. This endo is a bad word. You are a villain if you propagate this
endo. A systematized way of connecting employment contracts in such a
manner as to obviate regularization. Dili ka maregular mao na whole purpose
ana.
Merchandising people – program program ma na.. special offer.. kay ngano
man? Naa nasad bagong Tide. *tells short history of Tide* Kinsa man naga
promote ana? Those are the merchandisers, the promo sales people.. “You
buy this bulk Tide and you save” mao man na. Those people who engage in
this, do they ever become regular? Because Tide keeps on being on launched
and re-launched and re-launched.
The reasoning in Tabas vs. California Manufacturing is: it’s true. This drive for
new sales is concentrated and there is a time inception (?) and a time
termination to boost the sales consciousness, it’s part sales drive and it’s part
advertising drive. It’s true. It is defined in time but the realities of the sales
retail market is such that there is no __ that hopes to have an increase in sales
if it does not employ a special promotion programmer. So it has become a
standard feature in programs. It is now regular, necessary, and convenient to
the main business and trade of the employer. Mao nay reasoning. Tinuod
promo mo.. special mo.. pero and promo ug special, dili na special. It is regular
for any product. Ma Pepsi ka.. ma sabon ka.. ma pahumot ka.. naa na gyud
nay drive (?) so it gets it down regular (?). Therefore, people who are engaged
in that… they have to be made regular because it is in excess of 6 months.
They are now regular. That is the reasoning.
What is the reasoning of Fonterra? It is this: If you begin as a term worker..
there is a beginning and there is an agreed end.. what is that? That is a
contract between your employer-contractor and the indirect employer. You
cannot change that into regular employment just because the contract is
renewed. The necessary nature of that particular engagement is short-lived.
Wala may promo na nagpadayon nalang hangtod sa hangtod. Dili. A promo, by
its nature, is limited. That is why it is a term contract and it does not become
regular just because it is repeated by so many employers. Kita ka sa
reasoning? Mao nay gitawag na logic. Mao na imong reasoning, mao sad na
akong gamiton for the same facts that you present. I argued the opposite.
Term term term dili man na mausab.. term man gyud na. The same facts but
the conclusion is different. *mimics* You read the case and see the
difference.
The first view is the Labor Code view – Blas Ople’s point of view, the author of
Labor Code. Patay na ni si Ople. This Fonterra point of view is the essence of
new employment. Employment now is necessarily temporary because of the
speed which technology is moving. If you have an economy that only engages
in full employment, then it is a backward economy. It is a stagnating economy.
Necessarily with the employment of technology, there are new skills that are
required. So those who possess old skills will be unemployed unless they
retrain and engage in continuous study and training. They will be left behind.
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From the Lectures of Fr. Gus Nazareno 10
4-Manresa | Ateneo de Davao University College of Law
Mao nang pareho ni Trump ug iyang supporters. Mao nay nahibilin sa America.
*story about Certified Financial Analysts (CFA) exams*
We have decided that we are in private sector. Now, you have to think it over.
When it is Labor Standards, there are categories where there is employer-
employee relationship but they are exempted from Labor Standards. That is
the second horizon that you have to put in your head. Managerial employees,
field personnel, members of the family living with the employer for support,
domestics, persons in the service of another.. there exists employer-employee
relationship but they are not covered by Labor Standards. Sulod ni siya unta
pero dili. Wala ni silay labot. Let us go through those categories of exceptions.
1. Managerial employees
A manager is an employee. He has an employer-employee contract but he is
not included in the Labor Standards provision with respect to minimum wage,
overtime pay, holiday pay, rest day pay -- all those different standard benefits
that an employee ordinarily enjoys.
Managerial employees in Labor Standards are of 2 kinds
1. managerial employee proper
2. members of the managerial staff
The first kind is the managerial employee proper. What does he manage?
Either he manages the whole enterprise (Ex. CEO) or he manages a section,
department, or division thereof. He lays down policies. He has the power to
hire, fire, discipline, promote, demote, or reassign. Those are his prerogatives
as a managerial employee. In all these, what is the common denominator?
How do you know that he is establishing policies? The common denominator
is the exercise of independent judgment.
There is also an exercise of judgment. You might think that he is a managerial
employee because he has the revised (?) judgment. But it is not independent.
Who is that? A consultant. Kinsa man ang nagtindog sa Board? Ang consultant
(saying) “This is the result of our studies…” mao ni iyang ipoint out.. he is talking
about policies that will govern or will take place of existing defective policies.
Why is he not a managerial employee? Because his judgment is not
independent, it is merely advisory.
But a manager, once he makes his judgment, it’s __ to everybody else.
Everybody else is opted into that judgment and that is the policy that is
carried into. That is a managerial employee. Remember, off-repeated doctrine
on the coin (?) – A manager is not such because of his title. A manager is a
manager because of what he/she does. What he/she does is characterized by
the exercise independent judgment; weighing down policies for the entire
enterprise or for a section, department, or division and the judgment to hire,
fire, discipline, discharge, promote, demote, or reassign etc. Those are the acts
that make you a manager. This is the first kind of manager.
The second kind of manager is a member of the managerial staff. He does not
lay down policies. He has no power to hire, fire, dismiss, etc. but he is handling
material knowledge or data that is relevant only to the management. It has
nothing to do with right of __ and that data that he is handling is Labor
Relations related. That is a managerial employee as a member of the
managerial staff. Example: Cost Accountant. As a Cost Accountant, he/she
has nobody under him/her. He/she sits in front of the computer the whole
day. *enumerates symptoms of Carpal Tunnel Syndrome*
What is the Cost Accountant handling? Her job is to arrive at the true and
faithful cost of the materials that are inputted into the production of the
finished product, the cost of the finished product, and the post-production
cost of the product. And she pits that against the cost of money to make all
the products. That is the work of a Cost Accountant. She may work up to
10:00 in the evening. She does not get overtime because a manager is
exempt, excluded from the benefit of overtime.
So, two kinds of manager employees ha: one who lays down policies, has the
power to discipline, promote, demote etc. and I left out one requirement -- one
who can effectively recommend i.e. supervisory. The supervisory employee is
a managerial employee in Labor Standards. In Labor Relations, it is not

managerial. In Labor Relations, the supervisory employee can form a union
provided that they are with the other supervisors. They cannot join the rank
and file.
If you compare the managerial employees in Labor Standards and the
managerial employees in Labor Relations, the managerial employees in Labor
Standards is broader because it includes the supervisory employees. In Labor
Relations, it excludes the supervisors. Supervisors can form labor
organizations. That is the big difference between the two.
2. Government Employees
Pasagdan na lang nato ni. It is a mistake when you say that government
employees are exempted from Labor Standards. No. Wala na silay apil. That
why the provisions here on government employees are surplusage. They are
unnecessary because this book is not intended to be addressing government
employees. It is the Civil Service Law that has to say something about
government employees. So, government employees are exclusions, not
exemptions. There is no employer-employee relationship between government
employees and the government.
3. Field Personnel
The second category of employees that are exempted are the field personnel.
Field personnel are those employees who comply with these three (3)
requisites:
1. They are non-agricultural;
*story about a farm worker and explains what a “bud inject” is* Ngano ang
bayad sa TADECO ana nila dili daily? Nganong per bud man? Aron masiguro sila
na gidapat didto ang injection. Aron makahibaw sad sila sa konsumo sa
injection. Kailangan makita gyud nang bud na imong giinjectionan. Mao ba na
sila ang “field personnel”? Dili! Dili na sila field personnel because the first
requirement is that they must be non-agricultural.
2. They perform their duties away from the principal office of their
employer; and
Wala na silay desk, walay lingkuranan. Tua na sila sa field. *story about
problems of Filipinos with consonants, Fr. Gus’ experience in the seminary,
Malcolm Gladwell’s book, and Bar topnotcher Atty. Camille Remoroza.* Lol.
3. The hours of work cannot be determined with reasonable
certainty.
According to the Supreme Court, the classic field personnel is a salesman. If
you have a salesman that has a desk, I tell you, you will not have sales. Sige
lang sulat, gwapo kaayog mga reports pero way sales. He must be outside of
the principal office. ___ Alright, a salesman does not work in the principal
office. He is non-agricultural. Why is it that it is only the salesman that is
properly speaking, you cannot determine his hours of work with reasonable
certainty? Why? It is because of the nature of his working hours. Kung naa
siyay gitarget na kliyente na mupalit anang iyang ginabaligya iyang giimbita ug
kaon sa gawas. Kanang pagpangaon nila, is that still working hours? If you
count that as working hours, it is not exactly just for the employer. Nabusog
man sad siya (salesman). Mao bitaw na gitawag na sales representation.
Reimburse nimo. Dili kay ingon na ang imong pagkaon bayran pa ka niya sa
imong oras ana. It is difficult to determine with certainty the hours of work.
Because that is your job, you are not entitled to the standard benefits that are
provided by law like overtime pay, holiday pay, rest day pay… you are not
entitled to those benefits.
*reiterates the 3 requisites* Do not make a mistake of classifying a Davao
Light lineman a field personnel. He is non-agricultural. He does not work in the
principal office but outside because he repairs the broken electric wires and
cables of Davao Light. His hours of work can be determined with reasonable
certainty. Can be determined man na. Macontact man na. Naa lang na dira ga-
follow up ang supervisor, sigeg tawag. Naa silay logbook. Your time can be
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From the Lectures of Fr. Gus Nazareno 11
4-Manresa | Ateneo de Davao University College of Law
determined with reasonable certainty. But a salesman, by the nature of the
work, it cannot be determined with reasonable certainty.
LIZADA (2 of 2)
4. Family members dependent on the employer for support
It might be the parent employing the son or daughter and the latter living with
the parents or it could be the son or daughter employing the retired parent and
they’re living together. Is there er-ee rel.? YES! But the question is there is a
pre-existing relationship that is more comprehensive and fundamental than
the er-ee rel. In other words, filiation is more comprehensive and by virtue of
that relationship the ee might be getting more than what the law even
requires. So, they are excluded to avoid confusion; they’re placed in the Civil
Code, Family Relations. The governing relationship is FILIATION, NOT er-ee rel.
DOMESTICS
Art. 82 still says domestics but you should now consider that as amended
because of the new law which has this terminology of KASAMBAHAY.
Domestics are excluded because kasambahay antedates the Labor Code; it
antedates the Republic. Even before Magellan came to the Philippines, they’re
already kasambahays. Unsa na sa Tagalog? Aliping... They existed long before
and there’s an entire protocol of that relationship. Many times, it grants more
than what the Labor Code provides. It is important that we consider the case
of Apex Mining vs. NLRC, 199 SCRA 278 (1991). Leading case for Kasambahays-
Domestics.
Apex Mining has white house that provided quarters, lodging for expatriate
employees (Japanese). Apex Mining hired maids. What was their job? To clean
the rooms where the expatriates will stay, to cook for them, to do the laundry
and so on. In other words, they’re doing the chores of domestics-
kasambahays. Are they kasambahays? These employees filed a case (money
claims) to collect overtime pay, minimum wage (they weren’t paid minimum
wage) because they’re paid domestic rates. Are they or are they not
kasambahays? That is the issue.
The SC said NO. They are NOT domestics as classified by Apex; they’re
INDUSTRIAL WORKERS. What makes them industrial worker? It’s not the task
that they do. It is because they’re EMPLOYER is an INDUSTRIAL
establishment; it’s NOT a household. What makes you therefore a
domestic/kasambahay is NOT what you do; it is your EMPLOYER. If your
employer is NOT a household, you’re not a domestic.
Kung single ka, maka hire ka ba ug maid? It would seem not because according
to the law, a domestic is one who serves the personal comfort and
convenience of the household. But there is another category akin to
kasambahay and that is PERSONS IN THE PERSONAL SERVICE OF ANOTHER.
If you’re single and you don’t have a household, you actually hiring persons in
the personal service of another and therefore they’re still excluded, exempted
from the Labor Standards Benefits of Minimum Wage of industrial workers,
etc. I want to point out that FAMILY DRIVERS are NO longer included as
domestics under the new law.
Be careful because in the primer of DOLE on kasambahays under the new law,
they insert this in bold letters that kasambahays have the right to self-
organization. If you look at the law, there’s nothing there that says
kasambahays have the right to self-organization but why does the primer say
that? No basis at all. Can you imagine the kasambahay will form a union
against their employer? What happens if they declare a strike? Dili sila
magtrabaho, dili sila manghukad, magluto, mag-picket sila sa gawas. Paghuman
nila picket, since the employer of the law is obliged to provide them with
lodging and food, musaka sila balik sailang employer. Mangita silag bahaw
didto, mukaon unya human matulog sila didto. Pagka ugma, naog napud sila
tapos picket napud sila. IMPRACTICAL LEGALLY.
Domestics are the product of Middle Ages and they’re still obtaining up to
now. Trivia: Prince Harry that the head of their maids is from Bacolod and

actually one of the top teachers there in UK and became a domestic in the
Royal House; that she’s already retired and she was invited to the Royal
Weddings as she is considered Members of the Household… And if you’re a
good master, you will include in your will the people who served you and that
is not included in the Labor Code. Go through Kasambahay Law because it’s all
there; working hours, rest periods, rest days as required. It’s in the standard
bulletin; it’s in the book I gave you.
5. Pakiao workers
Workers that are paid by results. You can use the term pakiao as the Labor
Code uses it but make sure your spelling is correct. There are 2 kinds:
1. Piece-rate worker
2. Task basis worker
Piece-rate worker is whose output is standard pieces of objects. Each of
which has a rate of uniform. If you’re a worker made to produce hats, for each
hat you are paid 15 pesos. All they do is count the number of hats multiply it
by unit standard 15 pesos and that is your remuneration.
A regular pakiao worker doesn’t have hours of work designated and required
of him. He’s not obliged to show up at 8 and to leave at 5. He determines his
hours of work; so the longer he works, the more output he has. He determines
really how much he earns.
What if the employer uses the pakiao rate in order to circumvent the minimum
wage? Does that happen? Yes, many times that happens. What does the Labor
Code say? How do you remedy it? Do you file a money claims right away with
the Labor Arbiter and ask for deficiency, underpayment of wages because
your rate is not sufficient for a day’s work to give you at least a minimum
wage? The answer is NO. What you have to do is first to petition the Regional
Director of Labor to determine whether the rate they’re paying you is
reasonable rate.
According to the law, the reasonable rate must not be based on the fastest or
slowest worker but of the midrange worker; that should be the basis of the
rate. In order to determine that, the DOLE Regional office will conduct time
and motion studies. This is industrial engineering to determine that the rate is
the most reasonable in this kind of activity. If an employer engages pakiao
workers, he must not put a time constraint __. He must give them as much
time as they want for as long as they produce output and he pays them
accordingly.
Can you engage time workers and give them quota as to their output? Parehas
anang Timex in Mactan. It’s the biggest manufacturing factory of Timex
watches; which is actually the soul of all other watches, kanang Swatch,
Benetton, Timex na gi markahan and tatakan lang. Dako kaayo nang Mactan
kay na perfect man nilag buhat ana; the most efficient and best quality. Per
section na sila and tagaan silag quota, you must produce for every 8 hours. If
you can’t make 12, mahimo bang dili ka bayran saimo sweldo? Dili, bayran ka
gihapon. The quota is only for purposes of discipline. Kung dili ka makaabot
sa quota, warningan kana. And within a month, paltos nasad ka, 2 nd warning.
Paltos pa gani ka in the same month, ika-3 kana, you are removed from the
line and ipadala nasad kag retraining. Balik ka sa original rate nimo pagsulod,
which is within minimum wage. Wala kay incentive kay wa man ka kahuman
saimo quota. In other words, you are given quota only for purposes of
DISCIPLINE and NOT for remuneration/compensation.
6. Retail and services establishments employing not more than 5
employees
Are they exempted from NIGHT SHIFT DIFFERENTIAL (NSD)? Remember NSD
is at least 10% of your straight time rate. Kung 10 imo taga oras, mahimong
11 imo taga oras if you’re working between the hours of 10pm-6am because
those are considered night hours. But if your establishment is retail or service
employing not more than 5 employees, then your employees are NOT entitled
to NSD.
 RETAIL ESTABLISHMENT - sells goods to end users or consumers
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 WHOLESALE ESTABLISHMENT - sells goods to those who will
resell them to consumer/users
 STILL RETAIL ESTABLISHMENT – sells both retail and wholesale
 SERVICE ESTABLISHMENT – sells service ex. Barbershop, beauty
shop
BQ in Civil Law by Jose Diokno. You’ll understand that he wasn’t called again
to be an examiner after he gave this problem:
There’s a restaurant and this customer ordered oyster soup. The soup
steaming hot was delivered to him. As he was sipping the soup when he
noticed a white spherical object at the bottom of the soup. When he fished it
out, it was a south sea pearl and he put it inside his pocket. The waiter of the
restaurant tapped his shoulder and said that is not yours, it belongs to the
restaurant. Customer said that, “I ordered for this. I paid for this”. Now there’s
a controversy and they go to court. Who has the rightful claim over the pearl?
Suggested Answer: It DEPENDS. If the restaurant is a RETAIL establishment,
the owner is the client who ordered the oyster soup. If it’s a SERVICE
establishment, then the owner is the restaurant. You’re a service
establishment if you serve your clients right there and they consume the meal
right there. What you’re selling is nutritional satisfaction to customers. Hasta
ba diay bukog imo kan-on? Dili man, kana lang man makaon. Ang dili makaon
ibilin nimo kay sa restau man na. Kanang pearl makaon ba diay na nimo? Dili
man, ibilin na nimo kay sa resto na.
A restaurant can be BOTH retail and service establishment. It is also RETAIL if
it has takeout orders. So if it has takeouts, then it is the customer that owns
the pearl.
JULY 12, 2018
RESURRECCION (1 of 2)
By the time you take the Bar, this is the hot topic: Mandanas vs. Executive
Secretary (G.R. No. 199802 July 3, 2018)
Mandanas vs. Executive Secretary
(G.R. No. 199802 July 3, 2018)
(Fr. Gus emphasized the issue on LGU’s shares on the national taxes)
From FT: Section 6, Article X the 1987 Constitution textually commands
the allocation to the LGUs of a just share in the national taxes, viz.:
Section 6. Local government units shall have a just share, as
determined by law, in the national taxes which shall be automatically
released to them.
Section 6, when parsed, embodies three mandates, namely: (1) the LGUs
shall have a just share in the national taxes; (2) the just share shall be
determined by law; and (3) the just share shall be automatically released
to the LGUs.
Congress has sought to carry out the second mandate of Section 6 by
enacting Section 284, Title III (Shares of Local Government Units in the
Proceeds of National Taxes), of the LGC, which is again quoted for ready
reference:
Section 284. Allotment of Internal Revenue livce3. - Local government
units shall have a share in the national internal revenue taxes based
on the collection of the third fiscal year preceding the current fiscal
year as follows:
(a) On the first year of the effectivity of this Code, thirty percent
(30%);
(b) On the second year, thirty-five percent (35%); and
(c) On the third year and thereafter, forty percent (40%).
xxx
There is no issue as to what constitutes the LGUs' just share expressed in
percentages of the national taxes (Le., 30%, 35% and 40% stipulated in

subparagraphs (a), (b), and (c) of Section 284). Yet, Section 6, supra,
mentions national taxes as the source of the just share of the LGUs while
Section 284 ordains that the share of the LGUs be taken from national
internal revenue taxes instead.
Has not Congress thereby infringed the constitutional provision?
Garcia contends that Congress has exceeded its constitutional boundary
by limiting to the NIRTs the base from which to compute the just share of
the LGUs.
We agree with Garcia's contention.
Although the power of Congress to make laws is plenary in nature,
congressional lawmaking remains subject to the limitations stated in the
1987 Constitution!' The phrase national internal revenue taxes engrafted in
Section 284 is undoubtedly more restrictive than the term national taxes
written in Section 6. As such, Congress has actually departed from the
letter of the 1987 Constitution stating that national taxes should be the
base from which the just share of the LGU comes. Such departure is
impermissible. Verba legis non est recedendum (from the words of a
statute there should be no departure).' Equally impermissible is that
Congress has also thereby curtailed the guarantee of fiscal autonomy in
favor of the LGUs under the 1987 Constitution.
Taxes are the enforced proportional contributions exacted by the State
from persons and properties pursuant to its sovereignty in order to
support the Government and to defray all the public needs. Every tax has
three elements, namely: (a) it is an enforced proportional contribution
from persons and properties; (b) it is imposed by the State by virtue of its
sovereignty; and (c) it is levied for the support of the Government." Taxes
are classified into national and local. National taxes are those levied by the
National Government, while local taxes are those levied by the LGUs.
What the phrase national internal revenue taxes as used in Section 284
included are all the taxes enumerated in Section 21 of the National
Internal Revenue Code (NIRC), as amended by R.A. No. 8424, viz.:
Section 21. Sources of Revenue. — The following taxes, fees and
charges are deemed to be national internal revenue taxes:
(a) Income tax:
(b) Estate and donor's taxes;
(c) Value-added tax;
(d) Other percentage taxes:
(e) Excise taxes;
(I) Documentary stamp taxes: and
(g) Such other taxes as arc or hereafter may be imposed and
collected by the Bureau of Internal Revenue.
In view of the foregoing enumeration of what are the national internal
revenue taxes, Section 284 has effectively deprived the LGUs from
deriving their just share from other national taxes, like the customs duties.
The Constitution is old already. Since 1987. Governor of Batangas sued, for
collection of his local government unit’s share. Syaro di ni mugawas sa Bar
Exam. This decision was released in July 2018.
Labor Review discussion proper:
We were into the list of employees that are exempted, not included, do not
receive the labor standards benefit written in the Labor Code – Basic
Employee’s Benefit and Wages such as minimum wage, 8-hr load, overtime
pay, regular holiday pay.
Who are these employees?
1. Managerial employee (Art. 82, Labor Code)
2. Field personnel (Art. 82, Labor Code)
3. Family members dependent on the employer for support
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4. Domestics/Persons in the personal service of another
(Kasambahay)
5. Pakyaw workers/workers paid by results
6. Retail and/or Service Establishment (RSE) workers where the
RSE’s employees are not more than five
7. [As to night shift differential:] Health personnel
8. [As to the work week] Health personnel of cities of at least 1
million in population or of health establishments whether for
diagnostics or for treatment that have at least the equivalent of
100 bed capacity. (Art. 83, LC)
Their work week is shortened. It is not 6 days consecutive but only 5
days. If they are made to work on the 6th day, then they will have to
be paid 30% additional to their straight time pay.
9. Fishermen crew
The crew of a Philippine fishing vessel that goes up to sea, if they
are made to work in excess of 8 hours, then they will have to be paid
just the same straight-time pay without any additional pay.
LABOR STANDARDS LAWS VS. SOCIAL LEGISLATION
How are they differentiated as to the nature of benefits?
Labor Standards (LS) laws set the benefits in black and white. In the law itself.
Social Legislation (SL) sets benefits at the time when the employee is no
longer at work or can no longer at work.
In LS, the employee must be working in order to get the benefits. In SL, the
employee gets the benefits because he can no longer work. Example, he has
reached his retirement age so he gets retirement benefits. He is sick so he
gets sickness benefits. He is subjected to total permanent incapacity so he
receives benefits. Because he can no longer work.
LS is given to the employee as part of his compensation dictated by the law.
In SL, sometimes it is not only the employee who receives benefits but also
the dependents. [That is,] if the employee dies and he has dependents. So the
latter gets the benefits from SL.
Labor Standards vs. Labor Relations
LS benefits are dictated by law. Whether the employer (ER) or the employee
(EE) agrees on it or not, the law grants it to the employee. The ER is compelled
to grant the employee whether he agrees to it or not.
In Labor Relations (LR), the benefits are arrived at by agreement of the parties.
And it must always be above the LS. If it is just LS benefits that are agreed
upon in the CBA, it is considered as a Sweetheart CBA. That is illegal because
you don’t go through the motions of organizing a labor organization only to
receive LS benefits! What’s the use? You already get that from the law! You
don’t need to organize and engage in collective bargaining together.
So, the benefits in LR are not granted by law but are arrived at through
agreement of the parties. BUT it is always higher than LS.
If the same benefit in LR that is in the CBA is also found in LS, then it is called
in LR as incremental benefits. Example, LS sets minimum wage. Kinahanglan
mas taas pa ka kaysa minimum wage diri sa LR. The expend? of the difference
is incremental. Another example, pilay hatag sa LS na leaves? 5 days ra man
ang Service Incentive Leave. Suppose the ER through the CBA grants 2 weeks
Sick Leave and 1 week Vacation Leave, those are called incremental benefits.
The same leaves but those in LR are higher. There is an increment.
If the CBA provides for benefits not at all provided in LS. For instance, in the
CBA the ER agrees to grant to every EE one sack of rice a month as a rice
allowance benefit. That is in kind. That is not found in LS. Those are called
supplemental benefits.
A word about supplemental benefits: the moment the ER grants these, he is
actually granting two benefits. He is paying the taxes for that benefit and he is
granting more than what the law says. If he grants one sack of rice a month to
the employee, the EE does not pay the taxes or the money that will be used to

buy the rice. So, there is some tax subsidy there that is given by the ER. Not
only that, the ER is also defending the EE against inflation. Tingali katong
niaging duha ka tuig ang presyo sa bugas nga Banay-banay 7-tonner kay 50
pesos. Karon, tag-70 pesos na, nisaka na ang presyo.
You are actually granting more benefits than ostensibly you are (sic). Because
you are freeing the EE from taxes and defending him against inflation.
Makalolooy ka. Because the Labor Code does not reward a generous ER. In
fact the LC punishes a generous ER. How? You can no longer withdraw it!
Once you have begun to give it, you are in it up to your [years?]. Dili na ka
makagawas ana. Unsaon man nimo pag-gawas ana? There is only one way.
You buy your way out in exchange of that. That’s what San Miguel did to stop
the practice which they had for 25 years of giving 1 sack of rice per EE.
Niadtong gisugdan na nila, ang sako sa bugas kay 25 pesos pa. Pero sige na
man ug saka, dili na ni mahimo. So they had to buy it out.
That is the problem of benefits. For instance… there is always a fright now.
The higher level the employees are, the more benefits that are supplemental is
granted to them. For instance, health benefits, these are not just monolithic
benefits. These are actually several benefits bundled into one ___ health
benefits. Duna ka bay dental benefits? Hospitalization benefits? Medical
operation benefits? Vision benefits? All those benefits have a peso value. And
if you just give the benefits in kind, there are two things that right away come
in. You pay the taxes and the inflation. So, the advice of the practitioners now
is when you go into collective bargaining and you decide to pay in kind
benefits, do not mention the benefits without mentioning the maximum peso
value that you are willing to pay.
Say you are entitled to medical vision benefit that may be purchased by 500
pesos per employee. Dili na kaayo magka-anam ug dako ang bayran sa
employer.
It is more complicated than LS. That is the difference between LS and LR.
BASIC PRINCIPLES THAT NORMALLY COME OUT IN THE BAR
EXAMINATIONS:
1. Principle of Prohibition against Involuntary Servitude
This basic principle is constitutional and it affects what the ER can demand
from his EE.
Suppose an ER sends an EE on a special training for which the ER pays a
handsome fee. And then muingon ang ER sa EE, “Pag apil gani ka ani,
kinahanglan 3 ka tuig ka nga magpabilin aning kompanya.”
You cannot decided within 3 years from the time you complete the training
that they give you. Is that binding on the EE? That is not binding. That is
involuntary servitude because the Constitution says that no involuntary
servitude in any form shall exist except as a punishment for a crime whereof
the party shall have been duly convicted.
So, you cannot be kept by an ER because he has spent for some training.
What happens if you leave during the ban? ER may ask you for damages. Pay
that he [cannot?] go to the Labor Arbiter or to any regular court to ask you to
stay and continue to work for that ER according to your promise.
So if you are an ER, what do you do if you are paying somebody and you need
to send him to training for which you are going to pay for that training. You
follow the case of Singapore Airlines vs. Judge Paño (G.R. No. L-47739 June
22, 1983). Make the EE sign a contract with surety and it is liquidated
damages. EE is sent for training and promises to stay for 4 years after the
training. Because that is the way they will amortize the training cost. If EE
leaves within 3 years from the time that EE completed the training, he will
have to pay this much. It is in decelerating amount. If EE leaves within 2 years,
EE pays much higher than what is paid when EE leaves within 3 years. [And so
on.] It is a graduated liquidated damages. EE already agreed to the damage
that he will pay. And then EE will have a surety. If he breaks this bargain in the
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agreement, then ER will run after the surety. And it should be a surety that is
acceptable to the ER.
Once you do that, there is that agreement, you take it out from the ER-EE
relationship. It is now an agreement that is within the jurisdiction of the
regular courts. Because there is now a surety. That is a nominate contract.
What are the things you have to watch out about this principle? Application of
this in Kasambahay. A recruiter of a kasambahay here in Mindanao wants to
bring young girls to Manila as kasambahay. And the way they do it, they
advance money to the parents. Binlan nila ug 3000 pesos. Ang recruiter ang
mugastos sa pamasahe pa-Manila. Nya pag-abot didto sa balay ingnan [sa
recruiter ang dalaga], “’Day bayran ni nimo. Kada bulan deducted na sa imong
sweldo. Hangtod dili ka ma-impas dili ka mamahimong mubiya sa imong
agaron.” That is involuntary servitude! You cannot do that. The more accurate
term for that is indentured slavery.
Pero kung kamo mag Strike. Then Secretary of Labor assumes jurisdiction
over the strike and then subsequently orders “Return to Work”. Dili ba na
slavery? Can you be ordered to return to work? Is that involuntary servitude?
That is raised to the Supreme Court in the case of Kaisahan Ng Mga
Manggagawa Sa Kahoy Sa Pilipinas vs. Gotamco Saw Mill (G.R. No. L-1573
March 29, 1948). The SC said that that is not involuntary servitude. You are
ordered to work under pain of losing your job. If you really don’t want to work,
don’t go. Then you’d lose your job. You are compelled but you are not a slave.
You are still free to disregard the order but of course, you’d lose your job. That
is the price you pay.
You know, because of the involuntary servitude prohibition in the Constitution,
the EE may not be forced to work. But the ER there may be forced to accept
EEs. When there is illegal termination, decided final and executory, the court
can order EE to return to work and must be accepted back to work by the ER.
He cannot do anything but to accept.
2. Principle against Diminution of Benefits and Wages
Under labor law, whenever there is any change mandated by the ER or there is
a change mandated by the laws, it is always accompanied by a caveat which
says, “Nothing in this rules shall be understood to diminish the wages and
benefits of the employees.”
So, wages and benefits under Philippine Jurisprudence, can only remain the
same or it can go up. It cannot go down. That is LS.
In LR, you can agree to a lower pay but never lower than the LS. Why is that
allowed in LR? Because you may be exchanging it for a higher benefit.
Example, the business of the ER is going down. ER and EE may then agree
with employees receiving less than what they regularly receive [but no more
less than the LS wage level] but there will be no terminations. That is allowed.
That is the only exception against diminution of benefits and wages.
Another situation: before, you are paid daily. Now you will be paid monthly.
That means your pay remains the same every month regardless of the number
of actual working days of the month. Like in August, there are a lot of holidays.
Mao gihapon ang imong sweldo bisan upat ka adlaw ang natangtang sa
imong trabaho.
Is the company allowed to change from daily paid to monthly? Yes, any kind of
change of pay rate, the company is allowed as part of managerial prerogative.
What is the limitation of that? The limitation is this: the take home pay must
not be lower in the changed computation system from the original. Mausab na
gani nang take home pay nimo nga muubos na, there is a violation against the
prohibition against the diminution of wages and benefits.
But night shift differential is a different case. If the EE used to work at night,
there is an additional 10% of his regular wage for each hour of worked
performed. But when EE’s work is transferred to day shift, there no more 10%
night shift differential. Necessarily, he would be receiving less than what he

regularly receives. Here, there is no violation on the prohibition diminution of
wages and benefits. The wage differential here can be explained.
Pero kung wala gani explanation, pareho imong working hours in the changed
computation from that where you came from. Pareho, walay diperensya unya
niubos imong take home pay. That means diminution of benefits and wages.
Therefore, there is violation. That is how you balance this principle.
3. Principle against the waiver of rights of labor (only with
governmental intervention)
Requisites for a valid waiver:
1. There must be a right that has ripened
2. The right must be waivable
(Examples of rights not waivable: right to life, right to counsel when you waive
your right to counsel during custodial investigation, *labor standards rights)
You can waive labor standards rights in the backward direction but you
cannot waive them in the forward direction.
In the forward direction: [Example: Naay tao naghangyo ug trabaho employer.
Naghangyo sya ug masking unsa ra na matrabaho maski dili sya sweldohan
basta mapakaon ra sya ug mahatagan ug tuluganan. Dili ni pwede kay dili niya
ma-waive ang iyang right na makadawat ug sweldo. Kailangan bayran sa
employer ang gitrabaho sa employee.]
In the backward direction: When your labor rights are reduced to money
claims against your ER, you can waive it. But the outlook of the SC is that if
you have a certain money claim and the compromise amount is grossly
inadequate, it is presumed to be legal fraud. So, it will be nullified. The only
way by which a compromise of money claims in labor to have a respect of the
court is if there is an intervention by a labor official and the amount is not
grossly inadequate. That amount will be considered enough legal
compensation for that of the EE. There must always be an intervention of a
labor official.
3. Knowingly, voluntarily and freely waived
Kita gani ka anang mga kaso sa Bar Examination. Ang [question on]
compromise. It must be knowingly done. Naa kay igong pagsabot. It should be
also voluntarily and freely done. Wala ka gitutukan ug pusil aron musugot na
lang ka. Nakasabot ka sa imong gipadaplin na katungdanan. Those are the
other requirements [of a valid waiver of a labor right through compromise].
And [the validity of the compromise] is reinforced by the amount and by the
assistance of the labor official.
CONFESOR (2 of 2)
4. Principle of Interpretation of Labor Laws and Labor Contracts in
favor of Labor in cases of doubt –
Examples:
1) Labor law uses the term “within 10 days”? does it refer to
calendar days? Whichever is in favor of labor will be the
interpretation of the 10 days.
2) VAWC Leave entitles you to leave from your work because you
have to appear in court involving a case of legal separation with
you husband who has physically abused you. The missed work
cannot be counted against you because of VAWC law. But this is
NOT a labor legislation. Therefore, in case of doubt, you cannot
interpret this law in your favor because a criminal law is
interpreted in case of doubt, in favor of the accused.
Note: (L)abor - labor union; (l)abor – individual solitary single
worker who by himself is open to abuse
3 sources of oppression of Labor
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From the Lectures of Fr. Gus Nazareno 15
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1. Employer –
2. Government –
3. Labor Organization – the union. Interpretation of the
law on Strikes is strict against Labor (big L – labor
union), but liberally in case of doubt in favor of labor
(small L - individual solitary single worker).
3) Right to Strike is NOT interpreted in favor or (L)abor. It causes
disturbance in the general well-being of the society. The
requisites must be complied with strictly.
The waiting and cooling off period must be complied with
liberally. If you cannot go on strike based on bargaining deadlock
for 30 days, you waited for 29 days and by mistake you went on
strike after the 29th day, your strike is illegal. There can be no
substantial compliance.
You cannot go on strike without the strike vote of the majority of
the Bargaining Unit. So all must vote. There must be a clear
majority before the bargaining unit can go on strike. The filing of
the notice of strike is by the union, but the actual going on strike
is already the whim of the bargaining unit. That is why a strike
vote is required. When you want to overturn a strike vote because
the ER has an offer, there is a deadlock. It does not require the
entire bargaining unit, it just require the majority of the quorum of
the union. The required majority is lesser. That is in favor of labor.
In contracts, doubts are interpreted in favor of labor, except in cases of Union
Security Clause. A union security clause is a contractual limitation on the
worker’s right to strike or right to exercise self-organization. If he has not yet
chosen a union, he may be compelled to join a union. That is a limitation on
his right. When there is a USC, that and the right to self-organization
embraced by the CBA becomes a matter replete with public interest and the
EE may not just be expelled from the union on a flimsy reason. The ER is
required to investigate why the EE has been expelled from the union. Is there
substantial evidence supporting the expulsion from the union of the EE? Was
he given due process according to the CBL of the LO. If there is no evidence,
then ER does not have to comply with the Union’s demand to terminate the
EE. If the ER accedes to the union’s request without any investigation, then ER
is solidarily liable with the union for the illegal termination that has occurred.
5. Six Sources of Labor Rights
1) LAW - Constitution, Labor Code, IRR
2) TRIBUNALS - Final and Executory Decisions/Awards of LA, VA,
NLRC, CA, SC
3) COMPANY POLICY DULY PUBLISHED AND MADE KNOWN TO EES
4) ACTUAL COMPANY PRACTICE THAT HAS RIPENED INTO A RIGHT
5) INDIVIDUAL EMPLOYMENT CONTRACTS – may be expressed or
implied; written or oral
6) COLLECTIVE BARGAINING AGREEMENTS – even if expired CBA
until a new CBA is entered into to replace the old CBA
Rules to observed in case of conflict among these sources of rights
1. Rights found in Labor Statutes or IRR cannot be superior to
the Constitution
Salazar vs Achacoso 183 SCRA 145 (1990)
This involved the old 38(c) of the Old Labor Code. SC held
that it is unconstitutional as it empowered the POEA
administrator to arrest illegal recruiters. Only a judge can
issue a warrant of arrest under the strict requirements of
the Constitution. The POEA cannot issue an order arresting
an illegal recruiter.
2. IRR cannot legislate rights in contravention with the rights
found in the Labor Statutes

CBTC Employees Union vs Yap
Old Sec. 2, Rule 4, Book III of the IRR. To quote, “the regular
holiday pay is limited to daily paid employees” whereas the
law states that “every worker shall be paid their regular
holiday pay”. The interpretation of the Bureau of Working
Conditions by Dir. Trajano - this Regular Holiday Pay under
the LC in practice is only obtained by daily paid workers
because if you are a monthly-paid worker you are already
presumed paid of a holiday pay. So in effect he was saying,
that regular holiday pay is limited to daily-paid. SC found
that IRR is ultra vires, beyond the powers of the Secretary to
issue as it amended the law.
3. A later constitutional provision prevails over an earlier
contradictory constitutional provision.
1987 prevails over 1973. According to the 1973
Constitution, Government Ees include Ees of GOCCs with or
without original charter (broader scope). The reason of the
constitutional convention for that provision is “if we do not
embrace GOCC without original charter, it is very easy for
government officials to escape the control of government
by simply creating another corporation under the General
Enabling Act by the Corporation Code And recruiting
government Ees at the expense of the Taxpayer’s money
and it is not subjected to the CSC rules on payment. That is
an abuse of public funds.
Under the 1987 constitution, it explicitly states that
Government Ees embraces national government ees,
subdivisions, agencies, instrumentalities including GOCCS
with original charter.
Lumanta vs NLRC (1989)
4. Where 2 decisions of the SC are in conflict, the later one
prevails except for the parties involved in the earlier
decision
A. Marcopper Mining vs Ople June 11, 1981
Decision SC en banc ruled that ER must grant
13th month pay over and above Christmas
bonus that is already the same amount as the
13th month pay because PD 851 does not intend
to diminish the benefits already obtained by the
Ees as of its enactment.
B. NFSW vs Obejera May 31, 1982 an ER need not
grant a 13th month pay over and above
Christmas and Productivity Bonus which is
already equivalent in amount to 13th month pay.
PD 851 neither mandates a punishment to a
generous ER, nor does it mandate a 14th month
pay.
The ER in the 1981 decision cannot ask for the
application of the 1982 ruling. That is because of the
principle of the law of the case which is different from
Supreme Court Ruling as part of the law of the land.
The decision has already become final and executory
for you, you cannot change it as it is the law of your
case.
5. And the two decisions involve the same parties, the decision
that constitutes a supervening fact renders the execution of
the other decision no longer equitable
Sampaguita Garments vs NLRC 233 SCRA 260 June 17, 1994
Garments worker on her way out of the factory, searched by
the guards, found to have brought with her materials of her
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garment station. She was investigated. She explained that
she wanted to keep up with the quota. She was terminated.
After termination, she filed a case for illegal termination. The
Company also filed for theft. In the labor case (substantial
evidence), the Ee won, but was convicted under the criminal
case (proof beyond reasonable doubt). The illegal termination
case was dismissed by the SC so the finding of illegal
dismissal became final. Remand to the LA and so LA issued
an execution order for reinstatement, however this cannot be
done as the Ee was convicted. SC held that the earlier
decision is the criminal case, the later decision is illegal
dismissal but cannot be executed due to the supervening fact
of Ee being convicted.
6. Where a company declared policy or practice is in conflict
with the law, the one which is in favor of labor prevails.
Davao Fruits vs Associated Labor Unions Association G.R.
No. 85073
13th month pay is supposed to be computed to your
straight-time pay received over the 12-month period, divided
by 12 that is your 13th month pay, not including holiday pay,
overtime pay, etc. the company here included the additional
payments divided by 12. It was paid for four years until they
wanted to cut the practice. The union opposed contending
that Ees obtained a vested right due to company practice.
Davao Fruits invokes solutio indebitii (payment of debt not
owing). SC held that it constitutes diminution of benefits as
the company does not seek return of the payment made,
but seeks to discontinue the practice.
7. Where there are two conflicting written contracts, the
contract in favor of labor is the superior.
See: VIR-JEN SHIPPING vs. NLRC 125 SCRA 577
(November 18, 1983) EN BANC Penned by Justice
Gutierrez, Jr.
JULY 19, 2018
CANDOLITA (1 of 1)
There is labor-only contracting when a person who supplies workers to the ER
does not have substantial capital or investment in the form of tools,
equipment, machineries and work premises, among others; and the workers
recruited and placed by such persons are performing acts which are directly
related to the principal business of such ER. However, the SC does not use
that as criteria.
What does the SC use as criteria? The SC uses Article 280 --- that the workers
are made to perform acts that are usually necessary or desirable to the usual
business or trade of the ER. That’s the definition of regular employee. Not
Article 106.
Article 280. Regular and casual employment. The provisions of written
agreement to the contrary notwithstanding and regardless of the oral
agreements 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 service to be performed is seasonal in nature and the employment
is for the duration of the season.
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.
Article 106. Contractor or sub-contractor. Whenever an employer enters
into a contract with another person for the performance of the former's
work, the employees of the contractor and of the latter's sub-contractor, if
any, shall be paid in accordance with the provisions of this Code.
In the event that the contractor or sub-contractor 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 sub-contractor 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 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.
Example: Coca-cola Bottling Corporation of the Philippines. They manufacture
coke, mao na ilang business. They then entered into a contract with a
warehouse distributing company for a warehouse. They also hired a
manpower agency for the supply of a forklift operator and softdrink
determinator(?), meaning sya magbuot asa ipadala ang bottles, asa ipadaplin
ang empties. Mao iyang trabaho sa warehouse. So we have Coca-cola and the
warehousing agency. The forklift operators have been transferred from one
agency to another and finally they are not renewed. They sue Coca-cola and
the warehousing agency. Will the case prosper?
A: SC says “We do not accept Coca-cola’s argument that they are hiring people
that do jobs that are usual and necessary to Coca-cola. They are hiring people
that do something directly related to Coca-cola.” Now they are using 106 --
“directly related.” Why? Because the argument is “You make the bottling, yes,
but what good are you bottling if you cannot sell it?”
So the warehousing and selling of Coca-cola is directly related to bottling. Dira
gigamit sa SC ang directly related but normally when SC determines whether
you are engaged in labor-only contracting, SC uses Article 280 --- whether the
workers are made to perform acts that are usually necessary or desirable to
the usual business or trade of the ER. Why does SC go all through the trouble?
Because determining “directly-related” is a very ambiguous test.
Example: Banks. What is the function of a bank? It safeguards the money that
you deposit. All banks enter into a contract with security agencies because
banks claim it is not usual or necessary to their trade or business since banks
are financial institutions. Their claim is that the safeguarding is tangential
only. If you claim that the banks cannot contract out the security guards
because it is usual and necessary, then it will be like requiring the banks to
hire people who are trained in shooting guns, trained with handling arms and
ammunitions. That is why the banks will say that it is no longer related to their
functions as financial institutions. Articles 106 vs Article 280 is still a big
debate. What is usual and necessary, what is directly related. Take note:
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“Usual and necessary” --- wide, on the other hand, when you say “directly
related”, the measure is narrower.
Tabas vs California case (1989) is an issue of whether to use directly related
or usual and necessary. In Tabas, the SC said that since you can hardly sell
anything without giving out promos, it is considered usual and necessary and
therefore, the promo merchandisers are regular and cannot be contracted out.
BUT the Fonterra case (2015) comes along and SC says promo merchandisers
are term workers; their work is short-lived and not sustained, so therefore not
usual and necessary.
TABAS VS. CALIFORNIA MANUFACTURING CO., INC.
[169 SCRA 497, GR 80680]
FACTS: Petitioners were the employees of Livi Manpower Services. They
were assigned to the respondent pursuant to a manpower supply
agreement as “promotional merchandisers”.
It was provided in the agreement that 1. California would have no control
or supervision over the workers as to how they perform or accomplish
their work, 2. Livi is an independent contractor and that it has the sole
responsibility of complying with all the existing as well as future laws,
rules and regulations pertinent to employment of labor, 3. the assignment
to California was “seasonal and contractual”, and 4. payroll including COLA
and holiday pay shall be delivered by Livi at California’s premises.
Petitioners were made to sign 6-month employment contracts which were
renewed for the same period. Unlike regular employees of California, they
did not receive fringe benefits and bonuses and were paid only a daily
allowance.
Petitioners contend that they have become regular employees of
California.
ISSUE: Is there an employer-employee relationship between California and
the petitioners?
HELD: Yes. The existence of an employer-employee relationship is a
question of law and cannot be made subject to agreement. The
stipulations in the manpower supply agreement will not erase either
party’s obligations as an employer.
California’s contention that the workers are not performing activities
which are directly related to its general business of manufacturing is
untenable. The promotion or sale of products including the task of
occasional price-tagging is an integral part of the manufacturing business.
Livi as a placement agency had simply supplied the manpower necessary
for California to carry out its merchandising activities using the latter’s
premises and equipment. Merchandising is likewise not a specific project
because it is an activity related to the day-to-day operations of California.
Petitioners are ordered reinstated as regular employees.
Compare with…
FONTERRA BRANDS PHILS v. LEONARDO LARGADO
G.R. No. 205300, March 18, 2015
FACTS:
Fonterra contracted the services of Zytron Marketing for the marketing
and promotion of its milk and dairy products. Pursuant to the contract,
Zytron provided Fonterra with trade merchandising representatives
(TMRs), including respondents Largado and Estrellado.
On May 3, 2006, Fonterra sent Zytron a letter terminating its promotions
contract, effective June 5, 2006. Fonterra then entered into an agreement
for manpower supply with A.C. Sicat Marketing. Desirous of continuing
their work as TMRs, respondents submitted their job applications with A.C.

Sicat, which hired them for a term of five (5) months.
When respondents’ 5-month contracts with A.C. Sicat were about to
expire, they allegedly sought renewal thereof, but were allegedly refused.
This prompted respondents to file complaints for illegal dismissal,
regularization, non-payment of service incentive leave and 13th month
pay, and actual and moral damages, against petitioner, Zytron, and A.C.
Sicat.
ISSUE:
Whether or not Zytron and A.C. Sicat are labor-only contractors, making
Fonterra the employer of herein respondents.
HELD: No. Zytron and A.C. Sicat were not labor-only contractors.
Respondents were fixed-term employees. As previously held by this Court,
fixed-term employment contracts are not limited, as they are under the
present Labor Code, to those by nature seasonal or for specific projects
with predetermined dates of completion; they also include those to which
the parties by free choice have assigned a specific date of termination.
In the case at bar, it is clear that respondents were employed by A.C. Sicat
as project employees. In their employment contract with the latter, it is
clearly stated that “[A.C. Sicat is] temporarily employing [respondents] as
TMR[s] effective June 6[, 2006] under the following terms and conditions:
The need for your service being only for a specific project, your temporary
employment will be for the duration only of said project of our client,
namely to promote FONTERRA BRANDS products xxx which is expected
to be finished on or before Nov. 06, 2006.”
Respondents, by accepting the conditions of the contract with A.C. Sicat,
were well aware of and even acceded to the condition that their
employment thereat will end on said pre-determined date of termination.
They cannot now argue that they were illegally dismissed by the latter
when it refused to renew their contracts after its expiration.
We have been through the various people considered exempt even if they are
in ER-EE relationships. E.g. government, managerial, field personnel.
Now we go to labor standards benefits.
We begin with hours of work. Suppose you are asked in the Bar, how many
hours of work must a worker perform for a full day’s pay? A: Not more than 8
hrs.
You know very well one of the sources of rights of workers is company
practice and company policy. If they conflict which one prevails? The one that
prevails depends on which is more favorable to the worker.
Example: The law says 8 hours maximum work, and let’s say you are one of
the staff of an insurance company with a regular 8-5 job. Suppose you are
tolerated to extend your lunch. Instead of returning to work at 1pm, you go
back to work at 2 pm. How many hours lang imong gi-spend on work? 7 na
lang na, dili na 8 hours because of your 2-hour lunch break instead. If you do
that for 2 years, it becomes a matter of right. The company cannot force you
to work for 8 hours, because it has already ripened into a right. So for that
workplace, full day’s pay is only 7 hours work. Kung ikaw ang company and
nasayop ka ana, how do you bring it back to 8 hours? Bayaran na sad nimo sila
ug extra, increasan nimo.
Again, how many hours must an employee work in order to gain a full day’s
pay? Not more than 8. It can be 7 or 6. Because certain workplaces admit
lesser than 8 hours work.
Article 83. Normal hours of work. The normal hours of work of any
employee shall not exceed eight in a day.
…xxx
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From the Lectures of Fr. Gus Nazareno 18
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What is the reference point used in the Philippines? It’s not the work week but
the working day.
What is a working day in the Labor Code? In the IRR, it is defined as “24
consecutive hours beginning each day at the same time at the first hour of
work.”
If you work within 24 hours for more than 8 hours, the hours of work above 8
hours is overtime. So you have overtime (OT) pay, which means during a
working day there is a 25% addition to your straight-time pay.
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.
Example: Let’s say one day you were not able to punch in at 8am kay you got
involved in a car accident so naka-time in ka 10am na. Wala pa niinit imong
lubot sa lingkuranan, tindog na ka’g usab kay lunch at 12nn. And then at 5pm,
which is supposed to be the time na mu-time out ka from work, ingnan ka sa
employer na 7pm na ka maka-out. Pag-gawas sa sweldo, muingon ka
“Employer, nganong wala to nimo gi-overtime akong extra 2 hrs?” Who is
correct, the complainant worker or the management who did not treat this
particular time as OT? It is the management who is correct. Why? Because
you are paid a full day’s pay for full day’s labor unya 10am naman ka ni-in. So
wala ka ni-OT. Working day is the reference.
Another situation: Let us say that this particular workplace is in a 3-shift
business: 7am-3pm, 3pm-11pm and 11pm-7am. Continuous, non-stop work is
contemplated and wala’y meal period. Example of this is are hospitals. Let’s
say the policy is change of shift in the next month. At first day shift ka so 7am-
3pm, and then at the end of the month, at the very last day of you 7am-3pm
shift, pagkagabie ana, mu-report na sad ka sa new shift nimo na 11pm-7am.
What is your rate of pay for the first day of the shift? Ang imong 7am-3pm, you
are paid your regular rate. Pagbalhin nimo sa 11pm-7am, you are paid OT pay
because that is within your working day. That is within your 24 consecutive
hours beginning each day at the same time for the first hour of work. Plus, you
will also be entitled to Night Shift Differential (NSD) which is at least 10%. The
following day your regular working day begins at 11pm na.
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.
What is the consequence of that? The consequence is a compressed work
week program by DOLE. Illegal na.
Example: Your work is only from Monday-Thursday but you work 10 hours
each day. Still, 40-hour workweek gihapon. What is wrong about that? You are
offsetting undertime with OT. Di lagi ka pakita sa Friday but OT ka all the other
days. That is prohibited by law. Because you trade OT pay for straight-time
pay. Your rate of pay for above 8 hours is more than your straight-time pay for
8 hours of work. Article 88 says you cannot offset undertime with overtime
unless the Labor Code is amended. Maski muingon pa ka na the workers all
agreed. Can you waive labor standard rights in the forward direction? You
cannot. That is contrary to public policy. That is why there’s an 80-hour labor
law. Until you amend all these provisions, compressed work week cannot be
instituted. Any of these employers are really risking suits from their
employees.
General rule: Labor standards cannot be waived.
Exception: Waivable only when it has been reduced to a money claim before
the LA.
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.
When can you be made to do OT? Under the grounds provided for by law --
national emergency, calamity, work necessary done to machines, work with
perishable goods, other analogous circumstances. Then you can be made to
do OT and be paid OT rates.
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.
What are the compensable working hours? 10-15 minutes maximum break.
They refer to times when you are not working but it is compensable by law.
Article 84 of the Labor Code. There are two (2) rules in 84--- all the time you
are required to be at the place of work or at a designated place AND all the
times that you are suffered or permitted to work. That is compensable
working time.
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.
Example: You begin work at 6:30 in the morning but you have to be present at
6am because your employer requires you to first take a shower before you put
on your overalls. It is only after you’ve showered that you start preparing your
feedcart for pigs. That 30 minutes a day that you come ahead of your counted
hours, is that compensable? That is compensable. Because you cannot be
excused. Ma-late gani ka, suko kayo ng ER nimo. That 30 minutes spent on
preparatory activities is integral to your work.
Another example: You are working then nikalit lang brownout so di ka
katrabaho. Is that compensable? Naa’y memo ang DOLE ana. Brownouts that
do not exceed 1 hour and you are not given a chance to leave the workplace
and make use of the time for your personal business, that is compensable. But
the company has the right to extend the working hours in order to recover.
Another example: How about when you attend seminars outside the hours of
work? Like Saturdays or Sundays. The 1st rule is—is it outside the working
hours? 2nd--- do you have a choice whether to attend it or not? if you do not
have a choice, then that is compensable. 3rd--- are you productive or not
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productive in that seminar? If it is left to your choice whether to attend or not,
then that is not compensable.
SECTION 6. Lectures, meetings, training programs. — Attendance at
lectures, meetings, training programs, and other similar activities shall not
be counted as working time if all of the following conditions are met:
(a) Attendance is outside of the employee's regular working hours;
(b) Attendance is in fact voluntary; and
(c) The employee does not perform any productive work during such
attendance.
Can you be exempted from meal periods? Yes, if the job is non-manual in
nature and you are given at least 30 mins to consume your meals, then it is
compensable, then the 1-hour meal period may be dispensed with. Aside from
that situation, the general rule is that there is no exception from meal period.
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.
What do you mean when you say a work is “manual in nature?” A construction
worker. Dili man na sila pwede na dili nimo hatagan ug meal period. Bug-at kayo
ng mga ginadala nila. Pero if salesgirl ka. Nagbaligya ka ug fishball inside the
mall, your work is non-manual in nature because naka-prepare naman daan ang
fishballs. Hinay hinay na na sila ug pungko dira, hinay hinay na sila ug kaon
kung wala’y customer mupalit. Mahimo na kay non-manual in nature man.
Example: Here is the leading case of the airline crew in MIA. The rule for airline
crew is you do not make the plane wait, so you must be ready when the plane
arrives. The scheduling of the plane is that it should arrive before 12nn. So
theoretically, the ground crew has a 1-hour meal period before the plane is
scheduled to arrive. However, sometimes the plane comes late, and so they
have to rush because the turnaround time of the plane is crucial. Their
question is: “Many times we have to give up our meal for the plane. Is that
uncertainty enough so as to demand that our meal periods be compensable?”
SC says YES, the meal periods are now compensable because you cannot
peacefully take your meals and the plane coming in late has almost become
the rule and not the exception.
Situation: Let’s say you are in the cement mixing crew, and at the end of the
working day, you still have chores left to do. Is that compensable working
time? That is compensable working time because that is integrally connected
with your working hours. But let’s say after your work is done, you stay pa at
your place of work to sharpen your tools for tomorrow. Is that compensable
working time? NO. It is not compensable because it is YOUR tools. It is your
responsibility to be ready with your tools, it’s not the ER’s responsibility.
Is travel time compensable? Travel time from the home to the workplace and
back is normally not compensable working time.
Even if you are picked up by a bus of the company, does your compensable
working time begin from the time you are picked up? Not yet, BUT the liability
of the ER for employee’s compensation already begins the moment you are in
his control. You are in his control the moment you enter the vehicle of your
employer. So any accident that happens from there is work related
injury/death and it is compensable under employee’s compensation.
Suppose your job requires you to move from one working site to another. Your
travel time is compensable. That is compensable because that is directly
related to the job (e.g inspector). Travel time becomes compensable if by
special arrangement it becomes part of your job.
Example: Kanang mga inventory clerks sa dagkong supermarket. At the end of
the year mag inventory na sila, mag ihap pila ang nabilin na noodles. Let’s say

sa Gaisano Mall. Then daghan man ug branch ang Gaisano Mall --- naa sa Toril,
naa sa Tibungco, sa Illustre… kanang travel time ana compensable working
time because they have to finish it in one day because that is the inventory
that will appear on the balance sheet of the indirect ER that engaged them.
That is when travel time becomes compensable.
So we have seen the rights and labor standards with respect to hours of work,
compensability, rest periods, meal periods, rest day.
What is a rest day? 24 consecutive hours of no work after 6 consecutive
working days.
SECTION 3. Weekly rest day. — Every employer shall give his employees a
rest period of not less than twenty-four (24) consecutive hours after every
six consecutive normal work days.
So a workweek is Mon-Sat. You are entitled to 24 continuous hours of no work
after the end of your workweek. Exception: If you are a health worker in a city
with the latest rated population of at least 1 million, or your health institution
is equivalent to a 100-bed hospital, then your workweek is not 6 days but only
5 days. If you work on the Saturday then you are entitled to additional 30% of
your straight time pay. Then Sunday, it is not assumed to be your rest day.
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 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.
Your rest day may be based on religious ground, if you are catholic, you will
want your rest day to be Sunday but the exigencies of work may not allow you
to be off work during Sunday. What happens? Then you can enter into
compromise. 2 weeks of your preference, 2 weeks of the month preference of
employer. That is the norm given by the Labor Code.
SECTION 4. Preference of employee. — The preference of the employee as
to his weekly day of rest shall be respected by the employer if the same is
based on religious grounds. The employee shall make known his preference
to the employer in writing at least seven (7) days before the desired
effectivity of the initial rest day so preferred.
Where, however, the choice of the employee as to his rest day based on
religious grounds will inevitably result in serious prejudice or obstruction to
the operations of the undertaking and the employer cannot normally be
expected to resort to other remedial measures, the employer may so
schedule the weekly rest day of his choice for at least two (2) days in a
month.
Make a distinction between premium pay and OT pay. What is the difference?
Both premium pay and overtime pay are additional compensation to your
straight-time regular pay. Premium pay is additional compensation for
working on days when you are not obliged to work, like your rest day or regular
holiday or declared holiday. OT is additional compensation to your straight-
time pay for working in excess of 8 hours or maximum number of hours of
work for a full day’s pay. That is the difference between premium pay and OT
pay.
SECTION 8. Overtime pay. — Any employee covered by this Rule who is
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permitted or required to work beyond eight (8) hours on ordinary working
days shall be paid an additional compensation for the overtime work in the
amount equivalent to his regular wage plus at least twenty-five percent
(25%) thereof.
SECTION 9. Premium and overtime pay for holiday and rest day work. —
(a) Except employees referred to under Section 2 of this Rule, an employee
who is permitted or suffered to work on special holidays or on his
designated rest days not falling on regular holidays, shall be paid with an
additional compensation as premium pay of not less than thirty percent
(30%) of his regular wage. For work performed in excess of eight (8) hours
on special holidays and rest days not falling on regular holidays, an
employee shall be paid an additional compensation for the overtime work
equivalent to his rate for the first eight hours on a special holiday or rest
day plus at least thirty percent (30%) thereof.
Can it happen that the additional compensation is both premium and OT? Yes.
If you are made to work in excess of 8 hours during your rest day. Then as to
the excess of 8 hours, you are entitled to both premium and OT pay. Look up
the computation in the manual.
What is a regular holiday? It is a technical term. It refers to those days listed in
article 94 of the LC now.
Article 94. Right to holiday pay. (a) Every worker shall be paid his regular
daily wage during regular holidays, except in retail and service
establishment regularly employing less than ten workers;
(b) 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
(c) As used in this Article, "holiday" includes: New Year's Day, Maundy
Thursday, Good Friday, the ninth of April, the first of May, the twelfth of
June, last Sunday of August, first of November, the thirtieth of November,
the twenty-fifth and the thirtieth of December, thirty-first of December, and
the day designated by law for holding a general election.
There is a new law that makes the enumeration of the regular holidays of the
LC dependent on the 1987 Administrative Code of the Philippines. How many
regular holidays do we have, sa una 10, and that includes before the day
designated by national law as the day for regular and local elections. It has
been removed as a regular holiday. What has been added are the 2 Muslim
holidays: Eid al-Fitr and Eid’l Adha.
Section 26. Regular Holidays and Nationwide Special Days. -
1. Unless otherwise modified by law, order or proclamation, the
following regular holidays and special days shall be observed in this
country:
(A) Regular Holidays
New Year's Day January 1
Maundy Thursday- Movable date
Good Friday Movable date
Araw ng Kagitingan (Bataan and Corregidor Day)
April 9
Labor Day May 1
Independence Day- June 12
National Heroes Day- Last Sunday of August
Bonifacio Day November 30
Christmas Day December 25
Rizal Day December 30
(B) Nationwide Special Days
All Saints Day November 1
Last Day of the Year- December 31
Now special rules with respect to holidays. Regular holiday, the premium is
100%, so for non-working you are already paid but if you work, you receive
200%. However, if you absent yourself for the nearest preceding working day
 LABOR STANDARDS Review | 1st Semester S.Y. 2018-2019
From the Lectures of Fr. Gus Nazareno 21
4-Manresa | Ateneo de Davao University College of Law

you lose the benefit of your regular holiday. Holy Thursday and Good Friday
are successive regular holidays. If you absent yourself on Wednesday, which
is a regular working day, you lose the benefit of the two regular holidays. What
if you show up for Friday to work? Then you will be paid 200% on the Friday.
SECTION 4. Compensation for holiday work. — Any employee who is
permitted or suffered to work on any regular holiday, not exceeding eight
(8) hours, shall be paid at least two hundred percent (200%) of his regular
daily wage. If the holiday work falls on the scheduled rest day of the
employee, he shall be entitled to an additional premium pay of at least
30% of his regular holiday rate of 200% based on his regular wage rate.
month pay is due to anyone who has worked at least 1 month for the duration
of the calendar year. All rank-and-file employees in the private sector who
have worked for at least one (1) month during the calendar year are entitled to
receive 13th month pay regardless of their position, designation or
employment status.
Computation of the 13th month pay primarily consists of the total basic
monthly salary of an employee for the whole year, divided by twelve (12)
months. Those who have worked for less than a year, however, are only
entitled to receive the amount due to them on the number of months they
were employed.

SECTION 10. Successive regular holidays. — Where there are two (2)
successive regular holidays, like Holy Thursday and Good Friday, an
employee may not be paid for both holidays if he absents himself from
work on the day immediately preceding the first holiday, unless he works
on the first holiday, in which case he is entitled to his holiday pay on the
second holiday.
Moreover, an employer is given the prerogative to release the 13th month pay
in installments of two (2) to whichever number that is convenient to satisfy
the condition that the mandatory benefit be given before December 24 every
year. By practice, many companies maintain two installments, first in May and
then in December, where the first fifty percent (50%) is given as an aid for
employees to prepare for the opening of the regular school year in June.

What happens if the regular holiday falls on a Sunday, are you entitled to
regular holiday pay? The decided case involves monthly paid workers. You are
not entitled if you are a monthly paid worker, because the total # of workdays
in the year are all accounted for. You receive the same holiday every month
regardless of the total number of working days of the month so therefore you
are already paid.
BUT in another decided case, the SC says if that 1 day constitutes 2 regular
holidays, are you entitled to 2 regular holidays? Let’s say Holy Thursday falls
on Araw ng Kagitingan. Yes. Bec the benefit that is provided for here is 12
regular holidays, you will be less than 1 regular holiday if you are not given 2
holidays. But suppose it is 2 regular holidays falling on that day and you work
on that day? How much do you receive? 200% and the other regular holiday
100%. Kay imong gitrabaho dili man 2 ka adlaw, isa ra man ka adlaw. And the
other holiday 100% so naka 300% ka na.
Service charges
Article 96. Service charges. All service charges collected by hotels,
restaurants and similar establishments shall be distributed at the rate of
85 percent for all covered employees and 15 percent 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 integrated into their wages.
Service charges are items of pay only applicable to restaurants, hotel and
other similar establishments. They are indicated in the official receipt or
invoice. It is an additional charge of a percentage of the service or goods you
paid for. The SC says that it is supposed to be accumulated and divided to
85% for the rank and file employees and 15% to the owner or management.

Night work for women So that is the service charge.

Please take note that the prohibition against night work for women has been We are done with labor standards.
legislated out of existence. The virtue of women no longer needs protection,
that is the problem na daw of the police who must protect women who work at
night. Women now have the prerogative to take advantage of better wages for
working at night.

Service Incentive Leave

It can be vacation leave, it can be sick leave and it is reducible to cash. If at

the end of the year, if you have not made use of the 5 days or di mo naubos
ang SIL mo, you can convert it to cash.

Article 95. Right to service incentive leave. (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) This provision shall not apply to those who are already enjoying the
benefit herein provided, those enjoying vacation leave with pay 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 after considering the viability or financial
condition of such establishment.

(c) The grant of benefit in excess of that provided herein shall not be made
a subject of arbitration or any court or administrative action.

13th month pay

Please take note of this, if you are dismissed for cause, and it is November,
you are given your accrued pay. Bayran ka sa imong sweldo and together with
that is your 5 days SIL and your accrued 13th month pay. Because the 13th

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From the Lectures of Fr. Gus Nazareno 22
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