Labor Cases in the Philippines

8/10/2019 Labor Cases in the Philippines

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G.R. No. L-49774 February 24, 1981SAN MIGUEL CORPORAION !CAGA"AN COCA-COLA PLAN#, petitioner,vs.$o%. AMA&O G. INCIONG, &e'u(y M)%)*(er o+ Labor a% CAGA"AN COCA-COLA FREEORERS UNION,respondents.

&E CASRO, J.:Petition for certiorari and prohibition, with preliminary injunction to review the Order 1datedDecember 19, 1978 rendered by the Deputy inister of !abor in "#$ %O& 'ase (o. ))9*77doc+eted as Cagayan Coca-Cola Free Workers Union vs. Cagayan Coca-Cola Plant, SanMiguel Corporation, which denied herein petitioner-s motion for reconsideration and orderedthe immediate eecution of a prior Order 2dated /une 7, 1978.

On /anuary 0, 1977, 'aayan 'oca*'ola $ree 2or+ers 3nion, private respondent herein, fileda complaint aainst "an iuel 'orporation 4'aayan 'oca*'ola Plant5, petitioner herein,allein failure or refusal of the latter to include in the computation of 10th* month pay suchitems as sic+, vacation or maternity leaves, premium for wor+ done on rest days and specialholidays, includin pay for reular holidays and niht differentials.

6n Order /dated $ebruary 1, 1977 was issued by %eional Office (o. & where the complaintwas filed reuirin herein petitioner "an iuel 'orporation 4'aayan 'oca*'ola Plant5 to paythe difference of whatever earnins and the amount actually received as 10th month payecludin overtime premium and emerency cost of livin allowance.

erein petitioner appealed from that Order to the inister of !abor in whose behalf the Deputyinister of !abor 6mado :. ;ncion issued an Order 4dated /une 7, 1978 affirmin the Order of%eional Office (o. & and dismissin the appeal for lac+ of merit. Petitioner-s motion forreconsideration havin been denied, it filed the instant petition.

On $ebruary 1


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"ection ? of the %ules and %eulations for the implementation of Presidential Decree 81provides=

a5 #hirteenth*month pay shall mean one twelfth 41@1?5 of the basic salary of anemployee within a calendar yearb5 Aasic salary shall include all remunerations on earnins paid by an employer

to an employee for services rendered but may not include cost*of*livinallowances ranted pursuant to Presidential Decree (o. ? or !etter of;nstructions (o. 17


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6rt. 87. Covertime ork. 2or+ may be performed beyond eiht hours a dayprovided what the employee is paid for the overtime wor+, additionalcompensation euivalent to his reular wae plus at least twenty*five 4?5percent thereof.

;t is clear that overtime pay is an additional compensation other than and added to the reularwae or basic salary, for reason of which such is cateorically ecluded from the definition of

basic salary under the "upplementary %ules and %eulations ;mplementin Presidential Decree81.;n 6rticle 90 of the same 'ode, pararaph

c5 wor+ performed on any special holiday shall be paid an additionalcompensation of at least thirty percent 40)5 of the reular wae of theemployee.

;t is li+ewise clear that prernium for special holiday which is at least 0) of the reular wae isan additional compensation other than and added to the reular wae or basic salary. $orsimilar reason it shall not be considered in the computation of the 10th* month pay.2E%E$O%E, the Orders of the Deputy !abor inister dated /une 7, 1978 and December 19,1978 are hereby set aside and a new one entered as above indicated. #he #emporary

%estrainin Order issued by this 'ourt on $ebruary 1


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retirement benefits, 10th month pay, ta refund, earned sic+ and vacation leaves, financial

assistance, service incentive leave pay, damaes and attorney-s fees.

Petitioner contends that the commissions form part of the basic salary, citin the case of

Philippine Duplicators, ;nc. v. (ational !abor %elations 'ommission, wherein the 'ourt held that

commissions earned by salesmen form part of their basic salary. Private respondent counters

that petitioner +new that the overridin commission is not included in the basic salary because it

had not been considered as such for a lon time in the computation of the 10th month pay,

leave commissions, absences and tardiness.

I**ue 2O( the averae monthly sales commission should be included in the computation of

his retirement benefits and 10thmonth pay.

$e3 6verae monthly sales commission should not be included in the computation of his

retirement benefits and 10thmonth pay.

#his 'ourt has held, in Philippine Duplicators that, the salesmen-s commissions, comprisin a

pre*determined percentae of the sellin price of the oods sold by each salesman, wereproperly included in the term basic salary for purposes of computin the 10th month pay. #he

salesmen-s commission are not overtime payments, nor profit*sharin payments nor any other

frine benefit but a portion of the salary structure which represents an automatic increment to

the monetary value initially assined to each unit of wor+ rendered by a salesman.

'ontrarily, in Aoie*#a+eda, the so*called commissions paid to or received by medical

representatives of Aoie*#a+eda 'hemicals or by the ran+ and file employees of Philippine $uji

&ero 'o., were ecluded from the term basic salary because these were paid to the medical

representatives and ran+*and*file employees as productivity bonuses, which are enerally tied

to the productivity, or capacity for revenue production, of a corporation and such bonuses

closely resemble profit*sharin payments and have no clear direct or necessary relation to the

amount of wor+ actually done by each individual employee. $urther, commissions paid by the

Aoie*#a+eda 'ompany to its medical representatives could not have been sales commissions in

the same sense that Philippine Duplicators paid the salesmen their sales commissions. edical

representatives are not salesmen> they do not effect any sale of any article at all.

;n fine, whether or not a commission forms part of the basic salary depends upon the

circumstances or conditions for its payment, which indubitably are factual in nature for they will

reuire a re*eamination and calibration of the evidence on record.

6s to the main issue whether petitioner-s commissions be considered in the computation of his

retirement benefits and 10th month pay, we rule in the neative. 6rticle ?87 of the !abor 'ode,as amended by %epublic 6ct (o. 7B


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overtime pay or profit*sharin statements, they are properly ecluded in computin retirement

pay. owever, sales commissions which are effectively an interal portion of the basic salary

structure of an employee, shall be included in determinin the retirement pay.

6t bar, petitioner %oelio /. %eyes was receivin a monthly sum of P1),919.?? as salary

correspondin to his position as 3nit anaer. #hus, as correctly ruled by public respondent

(!%', the overridin commissions paid to him by 3niversal %obina 'orp. could not have been

-sales commissions- in the same sense that Philippine Duplicators paid its salesmen sales

commissions. 3nit anaers are not salesmen> they do not effect any sale of article at all.

#herefore, any commission which they receive is certainly not the basic salary which measures

the standard or amount of wor+ of complainant as 3nit anaer. 6ccordinly, the additional

payments made to petitioner were not in fact sales commissions but rather partoo+ of the nature

of profit*sharin business. 'ertainly, from the foreoin, the doctrine in Aoie*#a+eda 'hemicals

and Philippine $uji &ero 'orporation, which pronounced that commissions are additional pay

that does not form part of the basic salary, applies to the present case. 6side from the fact that

as unit manaer petitioner did not enter into actual sale transactions, but merely supervised the

salesmen under his control, the disputed commissions were not reularly received by him. Onlywhen the salesmen were able to collect from the sale transactions can petitioner receive the

commissions. 'onversely, if no collections were made by the salesmen, then petitioner would

receive no commissions at all. ;n fine, the commissions which petitioner received were not part

of his salary structure but were profit*sharin payments and had no clear, direct or necessary

relation to the amount of wor+ he actually performed. #he collection made by the salesmen from

the sale transactions was the profit of private respondent from which petitioner had a share in

the form of a commission.


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Peo'3e* roa5a*()% . Se5. o+ &OLEG.R. %o. 17902. May 8, 2669

Fa5(*/andeleon /ueGan 4respondent5 filed a complaint aainst PeopleH s Aroadcastin "ervice, ;nc.4Aombo%adyo Phils., ;nc5 4petitioner5 for illeal deduction, non*payment of service incentiveleave, 10thmonth pay, premium pay for holiday and rest day and illeal diminution of benefits,delayed payment of waes and non*coverae of """, P6:*;A;: and Philhealth before the Department of!abor and Employment 4DO!E5%eional Office (o. I;;, 'ebu 'ity. On the basis of the complaint, the DO!Econducted a plant level inspection on ?0 "eptember ?))0. ;n the !nspection "eport Form, the !abor;nspector wrote under the headin J$indins@%ecommendationsK Jnon*diminution of benefitsK


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and J(ote= %espondent deny employer*employee relationship with the complainant* see (oticeof ;nspection results. Petitioner was reuired to rectify@restitute the violations within five 45days from receipt. (o rectification was effected by petitioner> thus, summary investiations wereconducted, with the parties eventually ordered to submit their respective position papers. ;n hisOrder dated ?7 $ebruary ?))


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the visitorial and enforcement power provided in 6rt. 1?84b5 of the !abor 'ode, as amended by%6 770). #he (ational !abor %elations 'ommission 4(!%'5 was held to be the primary aencyin determinin the eistence of an employer*employee relationship. #his was the interpretationof the 'ourt of the clause in cases where the relationship of employer *employee still eists in

6rt. 1?84b5.

ISSUE2hether or not under the epanded visitorial and enforcement powers of the "ecretary of !aborranted by %6 770), the "ecretary of !abor has jurisdiction over the cases involvin thedetermination of the eistence of employer*employee relationship.

$ELhe 'ourt treated the otion for 'larification as a second motion for reconsideration, rantinsaid motion and reinstatin the petition. ;t is apparent that there is a need to delineate the

jurisdiction of the DO!E "ecretary vis*N*vis that of the (!%'. 3nder 6rt. 1?84b5 of the !abor'ode, as amended by %6 770), the DO!E is fully empowered to ma+e a determination as to theeistence of an employer*employee relationship in the eercise of its visitorial and enforcementpower, subject to judicial review, not review by the (!%'. ;f a complaint is brouht before the

DO!E to ive effect to the labor standards provisions of the !abor 'ode or other laborleislation, and there is a findin by the DO!E that there is an eistin employer*employeerelationship, the DO!E eercises jurisdiction to the eclusion of the (!%'. ;f the DO!E findsthat there is no employer*employee relationship, the jurisdiction is properly with the (!%'. ;f acomplaint is filed with the DO!E, and it is accompanied by a claim for reinstatement, the

jurisdiction is properly with the !abor 6rbiter, under 6rt. ?17405 of the !abor 'ode, whichprovides that the !abor 6rbiter has oriinal and eclusive jurisdiction over those cases involvinwaes, rates of pay, hours of wor+, and other terms and conditions of employment, ifaccompanied by a claim for reinstatement. ;f a complaint is filed with the (!%', and there is stillan eistin employer*employee relationship, the jurisdiction is properly with the DO!E. #hefindins of the DO!E, however, may still be uestioned throuh a petition for certiorari under%ule B of the %ules of 'ourt

:e(;ro I%(e33)e%5e < Se5ur)(y Cor'., * Se5re(ary o+ &OLE !2669# G.R. 1720/7

$acts=Petitioner /ethro ;ntellience and "ecurity 'orporation 4/ethro5 is a security service contractorwith a security service contract areement with co*petitioner Qa+ult Phils., ;nc. 4Qa+ult5. On thebasis of a complaint filed by respondent $rederic+ :arcia 4:arcia5, one of the security uardsdeployed by /ethro, for underpayment of waes, leal@special holiday pay, premium pay for restday, 10thmonth pay, and niht shift differential, the Department of !abor and Employment4DO!E5* %eional Office (o. ;I conducted an inspection at Qa+ultHs premises in 'alamba,!auna in the course of which several labor standards violations were noted, includin +eepin

of payrolls and daily time records in the main office, underpayment of waes, overtime pay andother benefits, and non*reistration with the DO!E as reuired under Department Order (o. 18*)?.earins on :arciaHs complaint and on the subseuent complaints of his co*respondents :il'ordero et al. were conducted durin which /ethro submitted copies of payrolls coverin /une1B to 0), ?))0, $ebruary to ay 1B*01,?))


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?. 2hether petitioner /ethro, as the admitted employer of respondents, could not be epected to+eep payrolls and daily time records in Qa+ultHs premises as its office is in RueGon 'ity, hence,the inspection conducted in Qa+ultHs plant had no basis.0. 2hether or not the issuance of the uestioned writs of eecution and arnishment bythe DO!E*%eional Director was in order.

eld=2hile it is true that under 6rticles 1?9 and ?17 of the !abor 'ode, the !abor 6rbiter has

jurisdiction to hear and decide cases where the areate money claims of each employeeeceeds P,))).)), said provisions do not contemplate nor cover the visitorial and enforcement powersof the "ecretary of !abor or his duly authoriGed representatives. %ather, said powers are defined andset forth in 6rticle 1?8 of the !abor 'ode 4as amended by %.6.(o. 770)5.6rt. 1?8 eplicitly ecludesfrom its coverae 6rticles 1?9 and ?17 of the !abor 'ode by the phrase= 4(5otwithstandin the provisions of 6rticles 1?9 and ?17 of this 'ode to the contrary Sthereby retainin and further strenthenin the power of the "ecretary of !abor or his dulyauthoriGed representative to issue compliance orders to ive effect to the labor standardsprovisions of said 'ode and other labor leislation based on the findins of labor employmentand enforcement officers or industrial safety enineers made in the course of inspection

;n the case at bar, the "ecretary of !abor correctly assumed jurisdiction over the case as itdoes not come under the eception clause in 6rt. 1?84b5 of the !abor 'ode. 2hile

petitioner /ethro appealed the inspection results and there is a need to eamine evidentiary

matters to resolve the issues raised, the payrolls presented by it were considered in the ordinary

course of inspection. 2hile the employment records of the employees could not be epected to

be found in Qa+ultHs premises in 'alamba, as /ethroHs offices are in RueGon 'ity, the records

show that /ethro was iven ample opportunity to present its payrolls and other pertinent

documents durin the hearins and to rectify the violations noted durin the ocular inspection. ;t,

however, failed to do so, more particularly to submit competent proof that it was ivin

its security uards the waes and benefits mandated by law.

/ethroHs failure to +eep payrolls and daily time records in Qa+ultHs premises was not the only laborstandard violation found to have been committed by it> it li+ewise failed to reister as a service

contractor with the DO!E, pursuant to Department Order (o. 18*)? and, as earlier stated, to

pay the waes and benefits in accordance with the rates prescribed by law. ;t bears emphasis

that the "O!E, under 6rticle 1)B of the !abor 'ode, as amended, eercises uasi*judicial

power, atleast to the etent necessary to determine violations of labor standards provisions of

the 'ode and other labor leislation. e@she or the %eional Directors can issue compliance

orders and writs of eecution for the enforcement thereof. #he sinificance of and bindin effect

of the compliance orders of the DO!E "ecretary is enunciated in 6rticle 1?8 of the !abor 'ode. 6nd

"ec. , %ule I 4Eecution5 of the %ules on Disposition of !abor "tandards 'ases in %eional

Offices provides that the filin of a petition for certiorari shall not stay the eecution of theappealed order or decision, unless the arieved party secures a temporary restrainin order

4#%O5 from the 'ourt. ;n the case at bar, no #%O or injunction was issued, hence, the issuance

of the uestioned writs of eecution and arnishment by the DO!E*%eional Director was in

order.

Me(eoro . Crea()e Crea(ure*$6'#"= 'reative 'reatures hired Iictor eteoro and the rest of the petitioners on various datesas artists, carpenters, and welders, tas+ed to desin, create, assemble, set*up, and dismantleprops, and provide sound effects to 'reatives various #I prorams and movies. ;n 1999,eteoro and the others filed a complaint aainst 'reative for non*payment of labor standards

incentives with the DO!E*('%. 6n inspection was conducted. 'reative claimed that thepetitioners were only contractual wor+ers, and as such, no employer*employee relationshipeisted. #hus, the DO!E could not have eercised jurisdiction over the case, for it had none. ;tadded that the petitioners were free*lance individuals, performin special services with s+ills andepertise inherently eclusive to them li+e actors, actresses, directors, producers, and scriptwriters, such that they were treated as special types of wor+ers. Petitioners, on the other hand,aver that they were employees because the elements of an employer*employee relationshipeisted. "ubseuently, petitioners filed a complaint for illeal dismissal aainst 'reative, with


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prayer for payment of overtime pay, premium pay for holiday and rest day, holiday pay, serviceincentive leave pay, 10 th month pay, and attorneyHs fees before the (!%'. 6 few months after,DO!E %eional Director aimo Aaluyot !im issued an order directin 'reative to paypetitioners. On appeal, DO!E "ecretary Patricia "to. #omas upheld the DO!E %eionalDirectors findins. "he stated that the "ecretary of !abor or his duly authoriGed representativeis allowed to use his visitorial and enforcement powers to ive effect to labor leislation

reardless of the amount involved. On appeal, the '6 dismissed the case aainst 'reative forlac+ of jurisdiction. Petition for review on certiorari.

;""3E= 2@( the DO!E*('% properly eercised its jurisdiction over the case.

(O. #he DO!E "ecretary and her authoriGed representatives, such as the DO!E*('% Director,have jurisdiction to enforce compliance with labor standards laws under the broad visitorial andenforcement powers conferred by 6rticle 1?8 of the !abor 'ode, and epanded by %6 (o.770). Aut this not withstandin, the power of the %eional Director to hear and decide moneyclaims is not absolute. #he last sentence of 6rticle 1?8 4b5 of the !abor 'ode, otherwise +nownas the eception clause, provides an instance when the %eional Director or hisrepresentatives may be divested of jurisdiction over a labor standards case. 3nder prevailin

jurisprudence, the so*called eception clause has the followin elements, all of whichmust concur=4a5#hat the employer contests the findins of the labor reulations officer and raises issuesthereon> 4b5 #hat in order to resolve such issues, there is a need to eamine evidentiarymatters> and4c5#hat such matters are not verifiable in the normal course of inspection. ;n the instant case,'reative reistered its objection to the findins of the labor inspector at the earliest opportunity.;t is clear that 'reative contested and continues to contest the findins and conclusions of thelabor inspector. 6lso, the uestion of whether or not petitioners were independentcontractors@project employees@free*lance wor+ers is a uestion of fact that necessitates the

eamination of evidentiary matters not verifiable in the course of inspection. Ierily, the %eionalDirector and the "ecretary of !abor are divested of jurisdiction to decide the case, andthe (!%' is the aency clothed with authority to do so. Petition denied for lac+ of merit.'6 decision affirmed.

#o contest means to raise uestions as to the amounts complained of or the absence ofviolation of labor standards laws> or, issues as to the complainantsriht to labor standardsbenefits. %aisin lac+ of jurisdiction alone is not the contestcontemplated by the eceptionclause. ;t is necessary that theemployer contest the findins of the labor reulations officerdurin the hearin or after receipt of the notice of inspection results. ore importantly, the +eyreuirement for the %eional Director and the DO!E "ecretary to be divested of jurisdiction isthat the evidentiary matters be not verifiable inthe course of inspection. 2here the evidence

presented was verifiable in the normal course of inspection, even if presented belatedly by theemployer, the %eional Director, and later the DO!E "ecretary, may still eamine it> and theseofficers are not divested of jurisdiction to decide the case

URANES *. SEC. OF LAOR

=GR No. 122791, February 19, 266/>Fa5(*Petitioner Placido O. 3rbanes, /r., doin business under the name and style of 'atalina "ecurity

6ency, entered into an areement to provide security services to respondent "ocial "ecurity"ystem 4"""5. Durin the effectivity of the areement, petitioner, by letter of ay 1B, 199


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I**ue2hether or not the "ecretary of !abor have jurisdiction to review appeals from decisions of the%eional Directors in complaints filed under 6rticle 1?9 of the !abor 'ode

Ru3)%

;n the case at bar, even if petitioner filed the complaint on his and also on behalf of the securityuards, the relief souht has to do with the enforcement of the contract between him and the""" which was deemed amended by virtue of 2ae Order (o. ('%*)0. #he controversysubject of the case at bar is thus a civil dispute, the proper forum for the resolution of which isthe civil courts. Aut even assumin arguendo that petitioner-s complaint were filed with theproper forum, for lac+ of cause of action it must be dismissed.6rticles 1)B, 1)7 and 1)9 ofthe !abor 'ode provide=

6%#. 1)B. 'O(#%6'#O% O% "3A'O(#%6'#O%.C2henever an employer enters into contract with another person for the performance of theformer-s wor+, the employees of the contractor and of the latter-s subcontractor, if any, shall be

paid in accordance with the provisions of this 'ode.

!n the event that the contractor or subcontractor #ails to pay the age o# his employeesin accordance ith this Code, the employer shall be $ointly and severally liable ith hiscontractor or subcontractor to such employees to the e%tent o# the ork per#ormed under the contract, inthe same manner and e%tent that he is liable to employees directly employed by him.

4Emphasis and underscorin5

6%#. 1)7.;(D;%E'# EP!OQE%.C#he provisions of the immediately precedin 6rticle shall li+ewise apply to any person,

partnership, association or corporation which, not bein an employer, contracts with anindependent contractorfor the performance of any wor+, tas+, job or project.6%#. 1)9.

"O!;D6%Q !;6A;!;#Q.C#he provisions of eistin laws to the contrary notwithstandin, every employer or indirectemployer shall be held responsible with his contractor or subcontractor for any violation of anyprovision of this 'ode. $or purposes of determinin the etent of their civil liability under this'hapter, they shall be considered as direct employers. ;n fine, the liability of the """ toreimburse petitioner arises only if and when petitioner pays his employee*security uards theincreases mandated by 2ae Order (o. ('%*)0.#he records do not show that petitioner haspaid the mandated increases to the security uards. #he security uards in fact have filed a

complaint with the (!%' aainst petitioner relative to, amon other thins, underpaymentof waes

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Labor Cases in the Philippines