Sixth Assignment: 

Article 82 to 96 of the Labor Code and the corresponding Implementing Rules RA 10151 RA 8972 RA 9262 RA 9710 Thirteen Month Pay Law, as amended 

Cases

1. Donald Kwok vs. Philippine Carpet Manufacturing Corporation, April 28, 2005a. P: father in law, put up R. Lim – papa in law, general manager, 36 years, Kwok

demanded accumulated vaca leave creditsb. Sum of money case against dadc. Verbal promise to pay the leave credits as presidentd. President said I can’t you need board resolution e. P say he refused to give because falling outf. ISSUE: Entitled to cash equivalent of leave credits: NO. You need a board res. To

bind corporation. President is ultra vires g. DOCTRINE: Court cannot presume existence of privilege despite high position

and P has burden to prove existence but also that he is entitled Not inherent in the petitioner’s position

h.2. Linton Commercial Co., Inc. vs. Hellera, October 10, 2007 – REDUCTION OF WORK

DAYS; WHEN VALIDa. The validity of the reduction of working hours upheld in Philippine Graphic Arts,

Inc. vs. NLRC, 166 SCRA 118 (1988); The Bureau of Working Conditions of the DOLE released a bulletin providing for in determining when an employer can validly reduce the regular number of working days.— the Court upheld for the validity of the reduction of working hours, taking into consideration the following:

i. The arrangement was temporary, ii. It was a more humane solution instead of a retrenchment of personnel,

there was notice and consultations with the workers and supervisors, iii. A consensus were reached on how to deal with deteriorating economic

conditions and iv. It was sufficiently proven that the company was suffering from losses. 

b. Bureau of Working Conditions of the DOLE, moreover, released a bulletin providing for in determining when an employer can validly reduce the regular number of working days. The said bulletin states that a reduction of the number of regular working days is valid where the arrangement is resorted to by the employer to prevent serious losses due to causes beyond his control, such as when

there is a substantial slump in the demand for his goods or services or when there is lack of raw materials.

c. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State’s policy to afford protection to labor and provide full employment.—A close examination of petitioners’ financial reports for 1997-1998 shows that, while the company suffered a loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its operations. In business, sustained operations in the black is the ideal but being in the red is a cruel reality. However, a year of financial losses would not warrant the immolation of the welfare of the employees, which in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be contrary to the State’s policy to afford protection to labor and provide full employment.

d. PRROF of loses not needed to be shown; required show to DOLE the compressed worked week schedule; flexible working arrangementts

FACTS:

- Labor complaint filed before the National Labor Relations Commission (NLRC) in which herein respondents contended that petitioner Linton Commercial Company, Inc. (Linton) had committed illegal reduction of work when it imposed a reduction of work hours thereby affecting its employees.

- Linton is a domestic corporation engaged in the business of importation, wholesale, retail and fabrication of steel and its by-products.3 Petitioner Desiree Ong is Linton’s vice presi-dent.4 On 17 December 1997, Linton issued a memorandum5addressed to its employees informing them of the company’s decision to suspend its operations from 18 December 1997 to 5 January 1998 due to the currency crisis that affected its business operations.

- Linton issued another memorandum8 informing them that effective 12 January 1998, it would implement a new compressed workweek of three (3) days on a rotation basis. In other words, each worker would be working on a rotation basis for three working days only instead for six days a week.

- Linton proceeded with the implementation of the new policy without waiting for its approval by DOLE.

- PETITIONERS: devaluation of the peso created a negative impact in international trade and affected their business because a majority of their raw materials were imported. 

- LA: GUILTY of illegal reduction of work hours- NLRC: REVERSED. Management prerogative - Linton’s financial statements for 1997-1998 showed no indication of financial losses, and

the alleged loss of P3,645,422.00 in 1997 was considered insubstantial considering its total

asset of P1,065,948,601.00. Hence, the appellate court considered Linton’s losses as de minimis.24

- failed to adopt a more sensible means of cutting the costs of its operations in less drastic measures not grossly unfavorable to labor. Hence, Linton failed to establish enough factual basis to justify the necessity of a reduced workweek.

- ISSUE: whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by reducing from six to three the number of working days with the employees working on a rotation basis. YES ILLEGAL REDUCTION

- Linton failed to present adequate, credible and persuasive evidence to show that it was in dire straits and indeed suffering, or would imminently suffer, from drastic business losses. It did not find the reduction of work hours justifiable, considering that the alleged loss of P3,645,422.00 in 1997 is insubstantial compared to Linton’s total asset of P1,065,948,601.76.44

3. Bisig Manggagawa sa Tryco vs. NLRC, October 15, 2008 – Transfer of EE valid ifa. Legitb. Bisig is UNION of Tryco (manufactures Vet meds)c. TRYCO operate in Caloocand. SIGNED a compressed work week schedule (M-F)e. Agreed to no overtime pay even if continue working f. Immediately waived pay for the hours they work from 5-6 PM (in the Contract)g. Tryco was sent a letter by B. of Animal Industry that said they were only licensed

to operate I Bulacanh. Memorandum to EE that they will movei. P refused to move kasi malayo, hassle j. Bisig opposed representing P, opposed unfair labor practice, STRIKEk. Unfair: Infringe labor’s right to organize l. P asked for overtime pay from 5-6 PMm. SC: DENIED IT ALLLLLLn. P not constructively dismissed, not amount to unfair labor practice o. Not entitled to overtime pay: Law recognizes waiver of overtime pay; GR:

maximum 8 hours for 6 weeks, but you can agree for compressed p. Management prerogative to transfer business q. LECTURE: is mere inconvenience a valid justification to refuse being

transferred? Why would they want to enter a compressed working arrangement? 4. Legend Hotel (Manila) vs. Hernani S. Realuyo, July 18, 2012

a. R: Concert Pianist, P required R to play, his work required him to conform to the request of the manager – certain song, wear certain clothes, MGMT notified that they had to cut costs

b. Contract: Stated that he was paid as a talent fee (renumeration)c. When dismissed filed a claim for illegal dismissal, tried to prove that he was

employee – HE WAS AN EE even if talent contract siya; time in and out, where he plays

d. Renumeration is a wage however designated for work done or services rendered e. Power of control existed, ER does not have to exercise it f. VALID retrenchment:

i.5. Hilario Rada vs. NLRC, January 9, 1992

a. Project fixed for a specific undertaking, termination determined Not a regular employee

b. Hours work include all time where EE is allowed to suffer or is permitted to work c. ER was constructing a big project; entered into three contracts extended beyond

orig period of 3 yearsd. R needed a driver, RADA took home some vehicles e. Filnor ERf. 8 years then he was terminatedg. Claims illegal dismissal, became regularized h. Mere fact that after 8 years, your services will be terminatedi. PROJECTED EMPLOYEE

6. Lepanto Consolidated Mining Company vs. Lepanto Local Staff Union, August 20, 2008a. CLAIM for night shift differential and longetivity pay b. WON workers are entitled to night shift differential for work performed beyond

the regular day shift 7-3 PM. CBA is law between parties, stipulations were unequivocal that regular employees who work beyond the 7-3 PM period would not be entitled to night differential prior to computing the overtime pay

c. Eusdem generis: explain that portion d. FIELD PERSONNNEL

7. Auto Bus Transport Systems, Inc. vs. Antonio Bautista, May 16, 20058. Sentinel Security Agency, Inc. vs. NLRC, September 3, 1998

a. What is the purpose of giving SIL to employees: So EEs will be enticed to serve longer in the company

b. Is a SIL commutable?c.

9. JPL Marketing Promotions vs. CA, NLRC, July 8, 2005a. How do you compute 13th month pay v SIL b. When do you start computing for the 13th month pay v. SIL day start

employment v. 1 year after10. National Waterworks and Sewerage Authority vs. NWSA Consolidated Union, August

31, 1964 undertime not offset by overtime pay; differential pay of Sundays is part of the legal wage

a. P= GOCCb. Employees worked undertime and P created a method of offsetting the undertime

from overtime work to their accrued leavec. SC: This method is UNFURd. Employee is made to pay twice for his undertime because his leave reduced to

that extent while he was made to pay for it with work beyond the regular working hours (proper method is just to deduct from accrued leave) BUT pay EE for overtime

e. MANAGERIAL POSIITONf. Not the designation but the nature of the activities performed; here merely

carry out the policies by management

g. FACTS: Petitioner National Waterworks & Sewerage Authority is a government-owned and controlled corporation created under Republic Act No. 1383, while respondent NWSA Consolidated Unions are various labor organizations composed of laborers and employees of the NAWASA. The other respondents are intervenors Jesus Centeno, et al., hereinafter referred to as intervenors.

h. The Court of Industrial Relations (now NLRC) conducted a hearing on the controversy then existing between petitioner and respondent unions specifically the implementation of the 40-Hour Week Law (Republic Act No. 1880)Respondent intervenors filed a petition in intervention on the issue of additional compensation for night work.

i. The court ruled that “The NAWASA is an agency not performing governmental functions and, therefore, is liable to pay additional compensation for work on Sundays and legal holidays conformably to Commonwealth Act No. 444, known as the Eight-Hour Labor Law, even if said days should be within the staggered five-work days authorized by the President; the intervenors do not fall within the category of “managerial employees” as contemplated in Republic Act 2377 and so are not exempt from the coverage of the Eight-Hour Labor Law”

j. ISSUE: Whether the intervenors are “managerial employees” within the meaning of Republic Act 2377 and, therefore, not entitled to the benefits of Commonwealth Act No. 444, as amended;

k. HELD: NO.Section 2 of Republic Act 2377 provides.“Sec. 2.This Act shall apply to all persons employed in any industry or occupation, whether public or private, with the exception of farm laborers, laborers who prefer to be paid on piece work basis, managerial employees outside sales personnel, domestic servants — persons in the personal service of another and members of the family of the employer working for him.“The term ‘managerial employee’ in this Act shall mean either (a) any person whose primary duty consists of the management of the establishment in which he is employed or of a customarily recognized department or subdivision thereof, or (b) any officer or member of the managerial staff.”

l. One of the distinguishing characteristics by which a managerial employee may be known as expressed in the explanatory note of Republic Act No. 2377 is that he is not subject to the rigid observance of regular office hours. The true worth of his service does not depend so much on the time he spends in office but more on the results he accomplishes. In fact, he is free to go out of office anytime.

m. NON-MANAGERIAL EMPLOYEES COVERED BY COMMONWEALTH ACT NO. 444. — Employees who have little freedom of action and whose main function is merely to carry out the company’s orders, plans and policies, are not managerial employees and hence are covered by Commonwealth Act No. 444.The philosophy behind the exemption of managerial employees from the 8-Hour Labor Law is that such workers are not usually employed for every hour of work but their compensation is determined considering their special training, experience or knowledge which requires the exercise of discretion and independent judgment, or perform work related to management policies or

general business operations along specialized or technical lines. For these workers it is not feasible to provide a fixed hourly rate of pay or maximum hours of labor.

n. The intervenors herein are holding position of responsibility. One of them is the Secretary of the Board of Directors. Another is the private secretary of the general manager. Another is a public relations officer, and many chiefs of divisions or sections and others are supervisors and overseers. Respondent court, however, after examining carefully their respective functions, duties and responsibilities found that their primary duties do not bear any direct relation with the management of the NAWASA, nor do they participate in the formulation of its policies nor in the hiring and firing of its employees. The chiefs of divisions and sections are given ready policies to execute and standard practices to observe for their execution. Hence, it concludes, they have little freedom of action, as their main function is merely to carry out the company’s orders, plans and policies.

o. How to compute overtime pay: only consider the cash wage including the facilities (benefits like board and lodging) Compensation will be bigger

11. Stolt-Nielsen Marine Service vs. NLRC, July 11, 1996 – SEAMAN’S RIGHT TO OVERTIME PAY

a. Radio officer hernandez who worked on a vessel. Ship captain order to carry baggage of someone who was being repatriated. Refused. Ordered to disembark and was repatriated in 1990

b. Filed a case with POEA for overtime pay for the unexpired portion of his contract 6 months 3 days

c. P argue that refusal of request was in violation of the Section 1 CBA and the Standard Employment Contract Dismissed for insubordination and serious misconduct

ISSUE: WON Hernandez is entitled to overnight pay: NORequisites:- Rendition of proof- Sufficient proof- In this case, no proof of overtime work- Contract provision guaratnees the right of overtime pay but entitlement to benefit must be

first established - Is there a conflict with this case and the principle that the employer has the

documentation that…12. Abduljuahid R. Pigcaulan vs. Security and Credit Investigation, January 16, 2012

a. It is not for an employee to prove non payment of benefits to which he is entitled to by law. It is the employer who has the burden of proving payment of these claims

b. 2 security guards employed by R, both filed a complaint for underpayment of salaries and non payment of benefits, presented Daily Time Records DTR and itemized list of claimes

c. Canoy: moot because did not file proper petitiond. Pigcaulan: entitled to holiday pay, SIL, and 13th month e. What evidence presented that they were entitled to overtime

13. Cebu Institute of Technology vs. Hon. Blass Ople, December 18, 1987

a. Claim for non payment of Cost of living allowance, service incentive leaves and 13th month pay

b. Cebu argues that the allowances were mandated by law but they already paid the same as reflected in the hourly rate increase

c. Court held 60% tuition increase was strictly for higher salary and wage, not for benefits above the increase in basic salary

d. Tuition fee increases form PD 451: Private schools assail that any increase in salary should be taken from the 60% increase in tuition fund.

e. HELD: in PD 451: Allowances and benefits claimed do not do not form part of the salary increases paid out of the 60% portion of the proceeds BUT BP 232 (Education Act, thus benefits already included in the salary increases paid out of the 60% portion of proceeds

f. 3rd issue: Ministry of edu, cult, and sports can issue IRR to interpret the law) repealed 451 WON schools and employees can enter in to CBA allocating more than 60% of incremental proceeds for salary increases and other benefits of said employees 60% is only a minimum

g. Are teachers field personnel? No because the school exercises supervision over them…no longer 60%....it’s 70%

h. 13th month pay…” or its EQUIVALENT” …..transportation allowance, electricity, food NOT EQUIVALENT to 13th month pay

14. CBTC Employees Union vs. The Honorable Jacobo C. Clave, January 7, 1986 a. CBTC employees entitled to holiday payb. Section 2 Void because the Secretary of Labor enacted it beyond the scope of his

powers c. kjg

15. Asian Transmission Corporation vs. The Hon. Court of Appeals, March 15, 2004a. Legal holidays are statutory in nature and cannot be amended by contractb. Purpose of holiday payc. What if a regular holiday fell on a Sunday? What’s the rule with payment

16. San Miguel Corporation vs. The Honorable Court of Appeals, January 30, 200217. Trans-Asia Phils. Employees vs. NLRC, December 13, 1999 – HOLIDAY included in te

DIVISOR (286)a. Deducted ALL SUNDAYS b. Uses 286 as divisor; but the correct divisor was 287c. If it’s favorable to the EE, use 286, if the divisor is lower, then favorable to EE,

ABSENCES: use 287 but for overtime, use 28618. Producers Bank of the Philippines vs. NLRC, March 28, 2001--

a. A bonus is not a demandable and enforceable obligation, except when it is made part of the wage, salary or compensation of the employee; An employer cannot be forced to distribute bonuses which it can no longer afford to pay, for to hold otherwise would be to penalize the employer for his past generosity.

b. The granting of a bonus is a management prerogative, something given in addition to what is ordinarily received by or strictly due the recipient.

c. an act of generosity granted by an enlightened employer to spur the employee to greater efforts for the success of the business and realization of bigger profits. 

d. The intention of Presidential Decree (P.D.) 851 was to grant some relief—not to all workers—but only to those not actually paid a 13th month salary or what amounts to it, by whatever name called.

e. requires all employers to pay their employees receiving a basic salary of not more than P1,000 a month, regardless of the nature of the employment, a 13th month pay, not later than December 24 of every year. However, employers already paying their employees a 13th month pay or its equivalent are not covered by the law.

f.  “equivalent” shall be construed to include Christmas bonus, mid-year bonus, cash bonuses and other payments amounting to not less than 1/12 of the basic salary.

g. not envisioned that a double burden would be imposed on the employer already paying his employees a 13th month pay or its equivalent—whether out of pure generosity or on the basis of a binding agreement. To impose upon an employer already giving his employees the equivalent of a 13th month pay would be to penalize him for his liberality and in all probability, the employer would react by withdrawing the bonuses or resist further voluntary grants for fear that if and when a law is passed giving the same benefits, his prior concessions might not be given due credit.

h. The use of 314 as a divisor leads to the inevitable conclusion that the ten legal holidays are already included therein.—Apparently, the divisor of 314 is arrived at by subtracting all Sundays from the total number of calendar days in a year, since Saturdays are considered paid rest days, as stated in the inter-office memorandum. 

FACTS:- charging petitioner with diminution ofbenefits, noncompliance with Wage Order No. 6 and

non-payment of holiday pay. In addition, private respondent prayed for damages.2

- LA: Dismissed- NLRC: Reversed except for damages- 1.The unpaid bonus (mid-year and Christmas bonus) and 13th month pay;- 2.Wage differentials under Wage Order No. 6 for November 1, 1984 and the corresponding

adjustment thereof; and- 3.Holiday pay under Article 94 of the Labor Code, but not to exceed three (3) years.- PETITIONER: banking institution, has been providing several benefits to its employees since

1971 when it started its operation. Among thebenefits it had been regularly giving is a mid-year bonus equivalent to an employee’s one-month basic pay and a Christmas bonus equivalent to an employee’s one whole month salary 

- When P.D. 851, the law granting a 13th month pay, took effect, the basic pay previously being given as part of theChristmas bonus was applied as compliance to it (P.D. 851), the allowances remained as Christmas bonus;

- early part of 1984, the bank was placed under conservatorship but it still provided the traditional mid-year bonus

- By virtue of an alleged Monetary Board Resolution No. 1566, the bank only gave a one-half (1/2) month basic pay as complianceof the 13th month pay and none for theChristmas bonus. 

- RESPONDENT: having been given for thirteen consecutive years, have ripened into a vested right and, as such, can no longer be unilaterally withdrawn by petitioner without violating Article 100 of Presidential Decree No. 4429which prohibits the diminution or elimination ofbenefits already being enjoyed by the employees. 

- PETITIONER: cannot be compelled to pay the alleged bonus differentials due to its depressed financial condition, as evidenced by the fact that in 1984 it was placed under conservatorship by the Monetary Board. According to petitioner, it sustained losses in themillions of pesos from 1984 to 1988, an assertion which was affirmed by the labor arbiter. Moreover, petitioner points out that the collective bargaining agreement of the parties does not provide for thepayment of any mid-year or Christmas bonus. 

- ON 13th MONTH PAY: Petitioner argues that it is not covered by PD 851 since the midyear and Christmas bonuses it has been giving its employees from to 1988 exceeds thebasic salary for one month (except for where a totalof one month basic salary was given). Hence, this amount should be applied towards the satisfactionof the 13th month pay, pursuant to Section 2 of PD 851.28

a. even assuming the truth ofprivate respondent’s claims as contained in its position paper or Memorandum regarding thepayments received by its members in the form of13th month pay, mid-year bonus and Christmas bonus, it is noted that, for each and every year involved, the total amount given by petitioner would still exceed, or at least be equal to, one month basic salary and thus, may be considered as an “equivalent” of the 13th month pay mandated by PD 851. Thus, petitioner is justified in crediting themid-year bonus and Christmas bonus as part of the13th month pay.

- HOLIDAY PAY: However, the divisor was reduced to 303 by virtue of an inter-office memorandum issued on 13 August 1986

- was for the sole purpose of increasing the employees’ overtime pay and was not meant to replace the use of 314 as the divisor in the computation of the daily rate for salary-related benefits.

- August 18, 1986, the petitioner bank used a divisor of 314 days in arriving at the daily wage rate of the monthly-salaried employees. Effective August 18, 1986, this was changed. It adopted the following formula:

Basic salary x 12 months = Daily Wage Rate

     303 days

- By utilizing this formula even up to the present, the conclusion is inescapable that the petitioner bank is not actually paying its employees the regular holiday pay mandated by

law. Consequently, it is bound to pay the salary differential of its employees effective November 1, 1974 up to the present. 

- the divisor of 314 will still be used in the computation for cash conversion and in the determination of the daily rate. Thus, based on the records of this case andthe parties’ own admissions, the Court holds that petitioner has complied with the requirements ofArticle 94 of the Labor Code.

- 314: to compute for regular holiday pay - 303: to compute overtime- Creditability provision: they have already given the EE an amount Compliance of

any wage order that may be issued a regional wage order

19. Leyte IV Electric Cooperative, Inc. vs. Layeco IV, October 19, 2007 – PAYMENT OF HOLIDAY PAY (already included in their monthly salary because they used 360 as the divisor (way above the minimum required)

a.FACTS:- Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV Employees Union-ALU

(respondent) entered into a Collective Bargaining Agreement (CBA)[3] covering petitioner rank-and-file employees, for a period of five (5) years effective January 1, 1998

- sent a letter to petitioner demanding holiday pay for all employees, as provided for in the CBA- employees all the holiday pays enumerated in the CBA- Section 2, Article VIII of the CBA on the payment of holiday pay, for arbitration of the National

Conciliation and Mediation Board (NCMB), Regional Office No. VIII in Tacloban City- EMPLOYER: payment was presumed since the formula used in determining the daily rate of pay of

the covered employees is Basic Monthly Salary divided by 30 days or Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula, the employees are already paid their regular and special days, the days when no work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.

- LA: petitioner liable for payment of unpaid holidays from 1998 to 2000 in the sum of P1,054,393.07- Voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA

provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the admission of respondent in its Position Paper[41] that the employees were paid all the days of the month even if not worked. In light of such admission, petitioner's submission of its 360 divisor in the computation of employees’ salaries gains significance.

- “[t]he divisor assumes an important role in determining whether or not holiday pay is already included in the monthly paid employee’s salary and in the computation of his daily rate”.

- employees are required to work only from Monday to Friday. Thus, the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked Sundays and 51 un-worked Saturdays from 365 days.

- 360-day divisor, which is clearly above the minimum, indubitably, petitioner's employees are being given their holiday pay.

- In granting respondent's claim of non-payment of holiday pay, a “double burden” was imposed upon petitioner because it was being made to pay twice for its employees' holiday pay when payment thereof had already been included in the computation of their monthly salaries.

- Pay attention to the cases mentioned in this case

20. Jose Rizal College vs. NLRC, December 1, 1987a.

21. The Chartered Bank Employees Association vs. Hon Blas F. Ople, August 28, 1985a. Employees who are uniformly paid by the month Added an exclusion to the

holiday pay22. Cezar Ondango vs. NLRC, June 10, 2004

a. WHAT WAS DEDUCTEDb. WHAT WAS ALLOWABLE DIVISORc. WHAT WAS IT CONTESTING

23. PALEA vs. Philippine Air Lines, Inc., March 31, 1976

1. Claim made by a managerial employee: EE has the burden of proof; what could have been presented so Kwok would be entitled to leave credits: Filed for such leaves

a. Is a affidavit not sufficient admissible as evidence 2. Must the compressed work week be approved by DOLE before they implemented 3.