1. PABLO ARIZALA, SERGIO MARIBAO, LEONARDO JOVEN, and FELINO BULANDUS, vs.

THE COURT OF APPEALS and THE PEOPLE OF THE PHILIPPINES

FACTS: Under the Industrial Peace Act, government-owned or controlled corporations had the
duty to bargain collectively and were otherwise subject to the obligations and duties of employers
in the private sector. he Act also prohibited supervisors to become, or continue to be, members
of labor organi!ations composed of ran"-and-file employees, and prescribed criminal sanctions
for breach of the prohibition.
It was under the regime of said Industrial Peace Act that the #overnment $ervice Insurance
$ystem %#$I$, for short& became bound by a collective bargaining agreement e'ecuted between
it and the labor organi!ation representing the majority of its employees, the #$I$ (mployees
Association. he agreement contained a )maintenance-of-membership) clause, i.e., that all
employees who, at the time of the e'ecution of said agreement, were members of the union or
became members thereafter, were obliged to maintain their union membership in good standing
for the duration of the agreement as a condition for their continued employment in the #$I$.
here appears to be no dispute that at that time, the petitioners occupied supervisory positions in
the #$I$. Pablo Ari!ala and $ergio *aribao were, respectively, the +hief of the Accounting
,ivision, and the +hief of the -illing $ection of said ,ivision, in the +entral .isayas /egional
0ffice of the #$I$. 1eonardo 2oven and 3elino -ulandus were, respectively, the Assistant +hief
of the Accounting ,ivision %sometimes Acting +hief in the absence of the +hief& and the Assistant
+hief of the 3ield $ervice and 4on-1ife Insurance ,ivision %and Acting ,ivision +hief in the
absence of the +hief&, of the same +entral .isayas /egional 0ffice of the #$I$. ,emands were
made on all four of them to resign from the #$I$ (mployees Association, in view of their
supervisory positions. hey refused to do so. +onse5uently, two %6& criminal cases for violation of
the Industrial Peace Act were lodged against them in the +ity +ourt of +ebu: one involving Ari!ala
and *aribao and the other, 2oven and -ulandus.
-oth criminal actions resulted in the conviction of the accused in separate decisions. .
he appeals were consolidated on motion of the appellants, and eventuated in a judgment
promulgated on 2anuary 67, 879: affirming the convictions of all four appellants. he appellants
moved for reconsideration. hey argued that when the so called )879; +onstitution) too" effect
on 2anuary 89, 879; pursuant to Proclamation 4o. 88<=, the case of Ari!ala and *aribao was still
pending in the +ourt of Appeals and that of 2oven and -ulandus, pending decision in the +ity
+ourt of +ebu> that since the provisions of that constitution and of the 1abor +ode subse5uently
promulgated %effective on 4ovember 8, 879=&, repealing the Industrial Peace Act-placed
employees of all categories in government-owned or controlled corporations without distinction
within the +ivil $ervice, and provided that the terms and conditions of their employment were to
be )governed by the +ivil $ervice 1aw, rules and regulations) and hence, no longer subject of
collective bargaining, the appellants ceased to fall within the coverage of the Industrial Peace Act
and should thus no longer continue to be prosecuted and e'posed to punishment for a violation
thereof. hey pointed out further that the criminal sanction in the Industrial Peace Act no longer
appeared in the 1abor +ode.
he Appellate +ourt denied their plea for reconsideration. ?ence, the present petition for review
on certiorari.
ISSUE: @hether or not the petitionersA criminal liability for a violation of the Industrial Peace Act
may be deemed to have been obliterated in virtue of subse5uent legislation and the provisions of
the 879; and 87B9 +onstitutions.
HELD: C($. he petitioners contend that the right of self-organi!ation and collective bargaining
had been withdrawn by the 1abor +ode from government employees including those in
government-owned and controlled corporations- chiefly for the reason that the terms and
conditions of government employment, all embraced in civil service, may not be modified by
collective bargaining because set by law. It is therefore immaterial, they say, whether supervisors
are members of ran"-and-file unions or not> after all, the possibility of the employerAs control of the
members of the union thru supervisors thus rendering collective bargaining illusory, which is the
main reason for the prohibition, is no longer of any conse5uence.
his was true, for a time. As already discussed, both under the 1abor +ode and P, B<9,
government employees, including those in government-owned or controlled corporations, were
indeed precluded from bargaining as regards terms and conditions of employment because these
were set by law and hence could not possibly be altered by negotiation.
-ut (0 888 restored the right to organi!e and to negotiate and bargain of employees of
)government corporations established under the +orporation +ode.) And (0 8B<, and apparently
/A :98D, too, granted to all government employees the right of collective bargaining or
negotiation e'cept as regards those terms of their employment which were fi'ed by law> and as to
said terms fi'ed by law, they were prohibited to stri"e to obtain changes thereof.
he decisive consideration is that at present, supervisors who were already members of a ran"-
and-file labor organi!ation at the time of the effectivity of Implementing /ules of /A :98D, are
authori!ed to )remain therein.) It seems plain, in other words, that the maintenance by
supervisors of membership in a ran"-and-file labor organi!ation even after the enactment of a
statute imposing a prohibition on such membership, is not only not a crime, but is e'plicitly
allowed, under present law.
6. P HILIPPINE NATIONAL OIL COMPANY-ENERGY DEVELOPMENT CORPORATION, .
HON. VICENTE T. LEOGARDO, DEPUTY MINISTER OF LABOR AND VICENTE D. ELLELINA
FACTS: Petitioner P40+-(,+ is a subsidiary of the Philippine 4ational 0il +ompany %P40+&.
0n 6< 2anuary 879B, it filed with the *inistry of 1abor and (mployment, /egional 0ffice 4o. .II,
+ebu +ity %*01(&, a clearance application to dismissEterminate the services of private
respondent, .icente ,. (llelina, a contractual employee.chanrobles virtual lawlibrary
he application for clearance was premised on (llelinaFs alleged commission of a crime %Alarm or
Public $candal& during a +hristmas party on 87 ,ecember 8799 at petitionerFs camp in Uling,
+ebu, when, because of the refusal of the raffle committee to give him the pri!e corresponding to
his lost winning tic"et, he tried to grab the armalite rifle of the P+ 0fficer outside the building
despite the warning shots fired by the latter.
+learance to dismiss was initially granted by *01( but was subse5uently revo"ed and petitioner
was ordered to reinstate (llelina to his former position, without loss of seniority rights, and with
bac"wages from 8 3ebruary 879B up to his actual reinstatement.
Petitioner appealed to the *inister of 1abor who, acting through public respondent, affirmed, on
8= August 87B8, the appealed 0rder. ?ence, this Petition
ISSUES: 8.@hether or not the public respondent has no jurisdiction over petitioner because it is a
government-owned or controlled corporation
6. whether or not (llelinaFs dismissal was justified.
HELD: 8. 40. In 4A$(+0 v. 41/+ %#./. 4o. :7B9<, 4ovember 67, 87BB&, we had occasion to
apply the present +onstitution in deciding whether or not the employees of 4A$(+0 %a
subsidiary of the 4I,+, which is in turn a subsidiary wholly-owned by the P4-, a government-
owned corporation& are covered by the +ivil $ervice 1aw or the 1abor +ode notwithstanding that
the case arose at the time when the 879; +onstitution was still in effect. @e held that the 41/+
has jurisdiction over the employees of 4A$(+0 )on the premise that it is the 87B9 +onstitution
that governs because it is the +onstitution in place at the time of decision>) and that being a
corporation without an original charter, the employees of 4A$(+0 are subject to the provisions of
the 1abor +ode.
6. 4o. he application for clearance was premised on (llelinaFs alleged commission of a crime
%Alarm or Public $candal& during a +hristmas party on 87 ,ecember 8799 at petitionerFs camp in
Uling, +ebu, when, because of the refusal of the raffle committee to give him the pri!e
corresponding to his lost winning tic"et, he tried to grab the armalite rifle of the P+ 0fficer outside
the building despite the warning shots fired by the latter. In so far as (llelina is concerned, we
hold that the reinstatement ordered by public respondent, without loss of seniority rights, is
proper. ?owever, consistent with the rulings of the +ourt, bac"wages should be limited to three
years from 8 3ebruary 879B. he dismissal ordered by petitioner was a bit too harsh considering
the nature of the act which he had committed and that it was his first offense.
;. N!SA CONSOLIDATED UNIONS . NATIONAL !ATER!OR"S AND SE!ERAGE
AUTHORITY, JESUS CENTENO, ET AL.,
FACTS: Petitioner 4ational @aterwor"s G $ewerage Authority is a government-owned and
controlled corporation created under /epublic Act 4o. 8;B;, while respondent 4@$A
+onsolidated Unions are various labor organi!ations composed of laborers and employees of the
4A@A$A. he other respondents are intervenors 2esus +enteno, (t Al., hereinafter referred to as
intervenors.
Acting on a certification of the President of the Philippines, the +ourt of Industrial /elations
conducted a hearing on ,ecember D, 87D9 on the controversy then e'isting between petitioner
and respondent unions which the latter embodied in a )*anifesto) dated ,ecember D, 87D9,
namely: implementation of the =<-?our @ee" 1aw %/epublic Act 4o. 8BB<&> alleged violations of
the collective bargaining agreement dated ,ecember 6B, 87D: concerning )distress pay) >
minimum wage of PD.6D> promotional appointments and filling of vacancies of newly created
positions> additional compensation for night wor"> wage increases to some laborers and
employees> and stri"e duration pay. In addition, respondent unions raised the issue of whether
the 6DH additional compensation for $unday wor" should be included in computing the daily
wage and whether, in determining the daily wage of a monthly salaried employee, the salary
should be divided by ;< days.
1ater, however, respondent intervenors amended their petition by including a new demand for
overtime pay in favor of 2esus +enteno, +esar +abrera, 3eliciano ,uiguan, +ecilio /emotigue,
and other employees receiving P=,6<<.<< per annum or more.chanrobles
0n 3ebruary D, 87DB, petitioner filed a motion to dismiss the claim for overtime pay alleging that
respondent +ourt of Industrial /elations was without jurisdiction to pass upon the same because,
as mere intervenors, the latter cannot raise new issues not litigated in the principal case, the
same not being the lis mota therein involved. o this motion the intervenors filed an opposition.
hereafter, respondent court issued on order allowing the issue to be litigated. PetitionerFs motion
to reconsider having been denied, it filed its answer to the petition for intervention. 3inally, on
2anuary 8:, 87:8, respondent court rendered its decision
Its motion for reconsideration having been denied, 4A@A$A filed the present petition for review.
ISSUES: 8. @hether 4A@A$A is performing governmental functions and, therefore, essentially a
service agency of the government>
6. @hether 4A@A$A is a public utility and therefore, e'empted from paying additional
compensation for wor" on $undays and legal holidays>
;. @hether the intervenors are )managerial employees) within the meaning of /epublic Act 6;99
and, therefore, not entitled to the benefits of +ommonwealth Act 4o. ===, as amended>
=. @hether respondent +ourt of Industrial /elations has jurisdiction to adjudicate overtime pay
considering that this issue was not among the demands of respondent union in the principal case
but was merely dragged into the case by the intervenors>
D. @hether those attached to the #eneral Auditing 0ffice and the -ureau of Public @or"s come
within the purview of +ommonwealth Act 4o. ===, as amended>
:. In determining whether one has wor"ed in e'cess of eight hours, whether the undertime for
that day should be set-off>
9. In computing the daily wage, whether the additional compensation for $unday wor" should be
included>
B. @hat is the correct method to determine the e5uivalent daily wage of a monthly-salaried
employee, especially in a firm which is a public utilityI>
7. +onsidering that the payment of night compensation is not by virtue of any statutory provision
but emanates only from an award of respondent +ourt of Industrial /elations, whether the same
can be made retroactive and cover a period prior to the promulgation of the award>
8<. @hether the minimum wage fi'ed and awarded by respondent +ourt of Industrial /elations in
another case %*@, @or"ers Union v. *@,, +I/ +ase 4o. ;D7-.& applies to those employed
long after the promulgation thereof, whether hired as temporary, emergency and casual wor"ers
for a definite period and for a specific project>
88. ?ow should the collective bargaining agreement of ,ecember 6B, 87D: and /esolution 4o.
67, series of 87D9 of the #rievance +ommittee be interpreted and construed insofar as the
stipulations therein contained relative to )distress pay) is concernedI> and
86. @hether, under the first indorsement of the President of the Philippines dated August 86,
87D9, which authori!es herein petitioner to stagger the wor"ing days of its employees and
laborers, those whose services are indispensably continuous throughout the year may be
staggered in the same manner as the pump, valve, filter and chlorine operators, guards,
watchman, medical services, and those attached to the recreational facilities.
HELD: 8. 40. he 4ational @aterwor"s and $ewerage Authority is a government corporation
performing not governmental but proprietary functions, and as such comes within the coverage of
+ommonwealth Act 4o. ===. he 4ational @aterwor"s G $ewerage Authority was not created for
purposes of local government. It is not a municipal corporation. It was created )for the purpose of
consolidating and centrali!ing all waterwor"s, sewerage and drainage systems in the Philippines
under one control and direction and general supervision. )he 4A@A$A, therefore, though a
public corporation, is not a municipal corporation, because it is not an agency of the $tate to
regulate or administer the local affairs of the town, city, or district which is incorporated.
*oreover, the 4A@A$A, by its charter, has personality and power separate and distinct from the
government. It is an independent agency of the government although it is placed, for
administrative purposes, under the ,epartment of Public @or"s and +ommunications. It has
continuous succession under its corporate name and may sue and be sued in court. It has
corporate powers to be e'ercised by its board of directors> it has its own assets and liabilities> and
it may charge rates for its services.
6. C($. he 4A@A$A is a public utility because its primary function is to construct, maintain and
operate water reservoirs and waterwor"s for the purpose of supplying water to the inhabitants, as
well as to consolidate and centrali!e all water supplies and drainage systems in the Philippines.
he 4A@A$A is a public utility. Although pursuant to $ection = of +ommonwealth Act ===, it is
not obliged to pay an additional sum of 6DH to its laborers for wor" done on $undays and legal
holidays, yet it must pay said additional compensation by virtue of the contractual obligation it
assumed under the collective bargaining agreement. In other words, the employees and laborers
of 4A@A$A can be made to wor" on $undays and legal holidays without being re5uired to pay
them an additional compensation of 6DH. It may, therefore, be said that while under
+ommonwealth Act 4o. === a public utility is not re5uired to pay additional compensation to its
employees and wor"ers for wor" done on $undays and legal holidays, there is, however, no
prohibition for it to pay such additional compensation if it voluntarily agrees to do so. he
4A@A$A committed itself to pay this additional compensation. It must pay not because of
compulsion of law but because of contractual obligation.
;. 40. As a matter of fact, they are re5uired to observe wor"ing hours and record their time wor"
and are not free to come and go to their offices, nor move about at their own discretion. hey do
not, therefore, come within the category of )managerial employees) within the meaning of the law.
(mployees who have little freedom of action and whose main function is merely to carry out the
companyFs orders, plans and policies, are not managerial employees and hence are covered by
+ommonwealth Act 4o. ===.
=. C($. he +ourt of Industrial /elations has jurisdiction to adjudicate overtime pay where there
was employer- employee relationship e'isting between the parties at the time the dispute arose.
he fact that the 5uestion of overtime payment is not included in the principal case in the sense
that it is not one of the items of dispute certified to by the President is of no moment, for it comes
within the sound discretion of the +ourt of Industrial /elations. *oreover, in labor disputes
technicalities of procedure should as much as possible be avoided not only in the interest of labor
but to avoid multiplicity of action. his claim has no merit.
D. he #A0 employees assigned to wor" in the 4A@A$A even if they were paid out of the latterFs
funds cannot be regarded as employees of the 4A@A$A on matters relating to compensation.
hey are employees of the national government and are not covered by the (ight- ?our 1abor
1aw. he same may be said of the -ureau of Public @or"s assigned to wor" in the 4A@A$A.
:. 40. he method used by the 4A@A$A in offsetting the overtime with the undertime and at the
same time charging said undertime to the accrued leave is unfair, for under such method the
employee is made to pay twice for his undertime because his leave is reduced to that e'tent while
he was made to pay for it with wor" beyond the regular wor"ing hours. he proper method should
be to deduct the undertime from the accrued leave but pay the employee the overtime to which
he is entitled. his method also obviates the irregular schedule that would result if the overtime
should be set off against the undertime for that would place the schedule for wor"ing hours
dependent on the employee.
9. C($. he differential pay for $undays is a part of the legal wage. ?ence, it was correctly
included in computing the wee"ly wages of those employees and laborers who wor"ed seven
days a wee" and were regularly receiving the 6DH salary differential for a period of three months
prior to the implementation of /epublic Act 8BB<. his is so even if petitioner is a public utility in
view of the contractual obligation it has assumed on the matter.
B. In the computation of daily wages of employees paid by the month distinction should be made
between government employees li"e the #eneral Auditing 0ffice %#A0& employees and those
who are not. he computation for government employees is governed by $ection 6D= of the
/evised Administrative +ode while for others the correct computation is the monthly salary
divided by the actual number of wor"ing hours in the month or the regular monthly compensation
divided by the number of wor"ing days in the month.
7. C($. It is of common occurrence that a wor"ing man who has already rendered night time
service ta"es him a long time before he can muster enough courage to confront his employer with
the demand for payment for it for fear of possible reprisal. It happens that many months or years
are allowed to pass by before he could be made to present such claim against his employer, and
so it is neither fair nor just that he be deprived of what is due him simply because of his silence
for fear of losing the means of his livelihood. ?ence, it is not erroneous for the +ourt of Industrial
/elations to ma"e the payment of such night compensation retroactive to the date when the wor"
was actually performed.
he power of the +ourt of Industrial /elations to order the payment of compensation for overtime
service prior to the date of the filing of the claim has been recogni!ed by this +ourt %1u!on
$tevedoring +o., Inc. v. 1u!on *arine ,epartment Union, (t Al., 1-76:D, April 67, 87D9&. he
same reasons given therein for the retroactivity of overtime compensation may also be given for
the retroactivity of payment of night compensation, as such reasoning runs along the line already
abovestated.
8<. C($.he rates of minimum pay fi'ed in a +I/ case are applicable not only to those who were
already in the service as of the date of the decision but also to those who were employed
subse5uent to said date. @e find no valid reason to disagree with the foregoing finding of the
+ourt of Industrial /elations considering that the award continued to be valid and effective in spite
of the notice of termination given by the employer. 4o good reason is seen why such award
should not apply to those who may be employed after its approval by the court there being
nothing therein that may prevent its e'tension to them. *oreover, the industrial court can at any
time during the effectiveness of an award alter and modify in whole or in part said award or
reopen any 5uestion involved therein under $ection 89 of +ommonwealth Act 4o. 8<;, and such
is what said court has done when it made the award e'tensive to the new employees, more so
when they are similarly situated. o do otherwise would be to foster discrimination.
88. All the laborers, whether assigned to the sewerage division or not who are actually wor"ing
inside or outside the sewerage chambers, are entitled to distress pay. As thus interpreted, we find
that those who are entitled to the distress pay are those employees and laborers who wor" in the
sewerage chambers whether they belong to the sewerage division or not, and by sewerage
chambers should be understood to mean as the surroundings where the wor" is actually done,
not necessarily )inside the sewerage chambers.) his is clearly inferred from the conference held
in the ,epartment of 1abor on 4ovember 6D, 87D9 where it was agreed that the compensation
should be paid to those who wor" )in and outside) the sewerage chambers in accordance with
the terms of /esolution 4o. 7 of the #rievance +ommittee. It should be noted that, according to
said resolution, sewerage chambers include )pits, trenches, and other e'cavations that are
necessary to tap the sewer lines.) And the reason given for this e'tra compensation is the
)unusual distress) that is caused to the laborers by wor"ing in the sewerage chambers in the form
and e'tent abovementioned.
It is clear then that all the laborers whether of the sewerage division or not assigned to wor" in
and outside the sewerage chambers and suffering unusual distress because of the nature of their
wor" are entitled to the e'tra compensation. And this conclusion is further bolstered by the
findings of the industrial court regarding the main activities of the sewerage division.
86. C($. $taggering of wor"ing hours is not re5uired where the evidence shows that the wor" is
not continuous. he industrial court justified the staggering of the wor" days of those holding
positions as pump operators, valve operators, filter operators, chlorine operators, watchmen and
guards, and those in the medical service for the reason that the same was made pursuant to the
authority granted by the President who in the valid e'ercise of the powers conferred upon him by
/epublic Act 4o. 8BB< could prescribe the wor"ing days of employees and laborers in
government-owned and controlled corporations depending upon the e'igencies of the service.
he court, however, stated that the staggering should not apply to the personnel in the
construction, sewerage, maintenance, machineries and shops because they wor" below ;:D
days a year and their services are not continuous to re5uire staggering. 3rom this portion of the
decision, the petitioner appeals.
+onsidering that respondent court found that the wor"ers in 5uestion wor" less than ;:D days a
year and their service are not continuous to re5uire staggering, we see no reason to disturb this
finding. his is contrary to the very essence of the re5uest that the staggering should be made
only with regard to those phases of the operation of the 4A@A$A that have to be attended to
continuously for twenty-four hours without interruption which certainly cannot apply to the wor"ers
mentioned in the last part of the decision of the respondent court on the matter.
=. SAN MIGUEL BRE!ERY INC., ETC. . DEMOCRATIC LABOR ORGANIZATION, ET AL.,
FACTS: 0n 2anuary 69, 87D;, the ,emocratic 1abor Association filed a complaint against the
$an *iguel -rewery, Inc., embodying 86 demands for the betterment of the conditions of
employment of its members. he company filed its answer to the complaint specifically denying
its material averments and answering the demands point by point. he company as"ed for the
dismissal of the complaint. At the hearing held sometime in $eptember, 87DD, the union
manifested its desire to confine its claim to its demands for overtime, night-shift differential pay,
and attorneyFs fees, although it was allowed to present evidence on service rendered during
$undays and holidays, or on its claim for additional separation pay and sic" and vacation leave
compensation. After the case had been submitted for decision, Presiding 2udge 2ose $. -autista,
who was commissioned to receive the evidence, rendered decision e'pressing his disposition
with regard to the points embodied in the complaint on which evidence was presented. he
demands for the application of the *inimum @age 1aw to wor"ers paid on )pa"iao) basis,
payment of accumulated vacation and sic" leave and attorneyFs fees, as well as the award of
additional separation pay, were either dismissed, denied, or set aside. Its motion for
reconsideration having been denied by the industrial court en banc, which affirmed the decision of
the court a 5uo with few e'ceptions, the $an *iguel -rewery, Inc. interposed the present petition
for review.
ISSUE: @?(?(/ 0/ 40 (I#?-?0U/ 1A-0/ 1A@ APP1I($ 0 0U$I,( 0/ 3I(1,
$A1($ P(/$044(1.
HELD: 40. @here after the morning roll call the outside or field sales personnel leave the plant of
the company to go on their respective sales routes and they do not have a daily time record but
the sales routes are so planned that they can be completed within B hours at most, and they
receive monthly salaries and sales commissions in variable amounts, so that they are made to
wor" beyond the re5uired eight hours similar to piece wor", )pa"iao), or commission basis
regardless of the time employed, and the employeesF participation depends on their industry, it is
held that the (ight-?our 1abor 1aw has no application to said outside or field sales personnel and
that they are not entitled to overtime compensation. he philosophy behind this e'emption is that
his earnings are in the form of commission based on the gross receipts of the day. ?is
participation depends upon his industry so that the more hours he employs in the wor" the
greater are his gross returns and the higher his commission.
D. APE# MINING COMPANY, INC., . NATIONAL LABOR RELATIONS COMMISSION and
SINCLITICA CANDIDO
FACTS: Private respondent $inclitica +andido was employed by petitioner Ape' *ining
+ompany, Inc. on *ay 8B, 879; to perform laundry services at its staff house located at *asara,
*aco, ,avao del 4orte. In the beginning, she was paid on a piece rate basis. ?owever, on
2anuary 89, 87B6, she was paid on a monthly basis at P6D<.<< a month which was ultimately
increased to PD9D.<< a month. 0n ,ecember 8B, 87B9, while she was attending to her assigned
tas" and she was hanging her laundry, she accidentally slipped and hit her bac" on a stone. $he
reported the accident to her immediate supervisor *ila de la /osa and to the personnel officer,
3lorendo ,. Asirit. As a result of the accident she was not able to continue with her wor". $he was
permitted to go on leave for medication. ,e la /osa offered her the amount of P6,<<<.<< which
was eventually increased to PD,<<<.<< to persuade her to 5uit her job, but she refused the offer
and preferred to return to wor". Petitioner did not allow her to return to wor" and dismissed her on
3ebruary =, 87BB. 0n *arch 88, 87BB, private respondent filed a re5uest for assistance with the
,epartment of 1abor and (mployment. After the parties submitted their position papers as
re5uired by the labor arbiter assigned to the case on August 6=, 87BB the latter rendered a
decision, 2udgment is hereby rendered ordering the respondent, Ape' *ining +ompany, Inc.,
*asara, ,avao del 4orte, to pay the complainant. petitioner appealed to the public respondent
4ational 1abor /elations +ommission %41/+&, wherein in due course a decision was rendered by
the 3ifth ,ivision thereof on 2uly 6<, 87B7 dismissing the appeal for lac" of merit and affirming the
appealed decision. A motion for reconsideration thereof was denied in a resolution of the 41/+
dated 2une 67, 877<.
?ence, the herein petition for review by certiorari
ISSUE: @?(?(/ 0/ 40 private respondent should be treated as a mere househelper or
domestic servant and not as a regular employee of petitioner.
HELD: 40. Private /espondent is a regular employee. Under /ule JIII, $ection 8%b&, -oo" ; of
the 1abor +ode, as amended, the terms )househelper) or )domestic servant) are defined as
follows: he term KhousehelperF as used herein is synonymous to the term Kdomestic servantF and
shall refer to any person, whether male or female, who renders services in and about the
employerFs home and which services are usually necessary or desirable for the maintenance and
enjoyment thereof, and ministers e'clusively to the personal comfort and enjoyment of the
employerFs family. he foregoing definition clearly contemplates such househelper or domestic
servant who is employed in the employerFs home to minister e'clusively to the personal comfort
and enjoyment of the employerFs family. $uch definition covers family drivers, domestic servants,
laundry women, yayas, gardeners, houseboys and other similar househelps. he definition
cannot be interpreted to include househelp or laundrywoman wor"ing in staffhouses of a
company, li"e petitioner who attends to the needs of the companyFs guests and other persons
availing of said facilities. -y the same to"en, it cannot be considered to e'tend to the driver,
houseboy, or gardener e'clusively wor"ing in the company, the staffhouses and its premises.
hey may not be considered as within the meaning of a )househelper) or )domestic servant) as
above-defined by law. he criteria is the personal comfort and enjoyment of the family of the
employer in the home of said employer. @hile it may be true that the nature of the wor" of a
househelper, domestic servant or laundrywoman in a home or in a company staffhouse may be
similar in nature, the difference in their circumstances is that in the former instance they are
actually serving the family while in the latter case, whether it is a corporation or a single
proprietorship engaged in business or industry or any other agricultural or similar pursuit, service
is being rendered in the staffhouses or within the premises of the business of the employer. In
such instance, they are employees of the company or employer in the business concerned
entitled to the privileges of a regular employee.
he mere fact that the househelper or domestic servant is wor"ing within the premises of the
business of the employer and in relation to or in connection with its business, as in its staffhouses
for its guests or even for its officers and employees, warrants the conclusion that such
househelper or domestic servant is and should be considered as a regular employee of the
employer and not as a mere family househelper or domestic servant as contemplated in /ule JIII,
$ection 8%b&, -oo" ; of the 1abor +ode, as amended. -ecause of an accident which too" place
while private respondent was performing her laundry services, she was not able to wor" and was
ultimately separated from the service. $he is, therefore entitled to appropriate relief as a regular
employee of petitioner. Inasmuch as private respondent appears not to be interested in returning
to her wor" for valid reasons, the payment of separation pay to her is in order.
:. ROLANDO Y. TAN . LEOVIGILDO LAGRAMA and THE HONORABLE COURT OF
APPEALS
FACTS: Petitioner /olando an is the president of $upreme heater +orporation and the general
manager of +rown and (mpire heaters in -utuan +ity. Private respondent 1eovigildo 1agrama is
a painter, ma"ing ad billboards and murals for the motion pictures shown at the (mpress,
$upreme, and +rown heaters for more than 8< years, from $eptember 8, 87BB to 0ctober 89,
877B. 0n 0ctober 89, 877B, private respondent 1agrama was summoned by an and upbraided:
)4angihi na naman "a sulod sa imong drawinganan.) %)Cou again urinated inside your wor"
area.)& @hen 1agrama as"ed what an was saying, an told him, )Ayaw daghang estorya. ,ili "o
gusto nga mo-drawing "a pa. #ui"an "aron, wala nay drawing. #awas.) %),onFt say anything
further. I donFt want you to draw anymore. 3rom now on, no more drawing. #et out.)& 1agrama
denied the charge against him. ?e claimed that he was not the only one who entered the drawing
area and that, even if the charge was true, it was a minor infraction to warrant his dismissal.
?owever, everytime he spo"e, an shouted )#awas) %)#et out)&, leaving him with no other choice
but to leave the premises. 1agrama filed a complaint with the $ub-/egional Arbitration -ranch
4o. J of the 4ational 1abor /elations +ommission %41/+& in -utuan +ity. ?e alleged that he had
been illegally dismissed and sought reinvestigation and payment of 8;th month pay, service
incentive leave pay, salary differential, and damages. Petitioner an denied that 1agrama was his
employee. ?e asserted that 1agrama was an independent contractor who did his wor" according
to his methods, while he %petitioner& was only interested in the result thereof. ?e cited the
admission of 1agrama during the conferences before the 1abor Arbiter that he was paid on a
fi'ed piece-wor" basis, i.e., that he was paid for every painting turned out as ad billboard or mural
for the pictures shown in the three theaters, on the basis of a )no muralEbillboard drawn, no pay)
policy. ?e submitted the affidavits of other cinema owners, an amusement par" owner, and those
supervising the construction of a church to prove that the services of 1agrama were contracted by
them. ?e denied having dismissed 1agrama and alleged that it was the latter who refused to paint
for him after he was scolded for his habits. As no amicable settlement had been reached, 1abor
Arbiter /ogelio P. 1egaspi directed the parties to file their position papers. 0n 2une 89, 8777, he
rendered a decision in favor of 1agrama. Petitioner /olando an appealed to the 41/+ 3ifth
,ivision, +agayan de 0ro +ity, which, on 2une ;<, 6<<<, rendered a decision = finding 1agrama
to be an independent contractor, and for this reason reversing the decision of the 1abor Arbiter.
/espondent 1agrama filed a motion for reconsideration, but it was denied for lac" of merit by the
41/+ in a resolution of $eptember 67, 6<<<. ?e then filed a petition for certiorari under /ule :D
before the +ourt of Appeals. he +ourt of Appeals found that petitioner e'ercised control over
1agramaFs wor" by dictating the time when 1agrama should submit his billboards and murals and
setting rules on the use of the wor" area and rest room. Although it found that 1agrama did wor"
for other cinema owners, the appeals court held it to be a mere sideline insufficient to prove that
he was not an employee of an. he appeals court also found no evidence of any intention on the
part of 1agrama to leave his job or sever his employment relationship with an. Accordingly, on
*ay ;8, 6<<8, the +ourt of Appeals rendered a decision in favor of 1agrama. Petitioner moved for
a reconsideration, but the +ourt of Appeals found no reason to reverse its decision and so denied
his motion for lac" of merit. D ?ence, this petition for review on certiorari.
ISSUES: 8. @hether or not an employer-employee relationship e'isted between petitioner and
private respondent
6. whether or not petitioner is guilty of illegally dismissing private Respondent.
HELD: 8. C($. In determining whether there is an employer-employee relationship, we have
applied a )four-fold test,) to wit: %8& whether the alleged employer has the power of selection and
engagement of employees> %6& whether he has control of the employee with respect to the means
and methods by which wor" is to be accomplished> %;& whether he has the power to dismiss> and
%=& whether the employee was paid wages. hese elements of the employer-employee
relationship are present in this case.
3irst. he e'istence in this case of the first element is undisputed. It was petitioner who engaged
the services of 1agrama without the intervention of a third party.
$econd. It is the e'istence of the second element, the power of control, that re5uires discussion
here. In the case at bar, albeit petitioner an claims that private respondent 1agrama was an
independent contractor and never his employee, the evidence shows that the latter performed his
wor" as painter under the supervision and control of petitioner. 1agrama wor"ed in a designated
wor" area inside the +rown heater of petitioner, for the use of which petitioner prescribed rules.
he rules included the observance of cleanliness and hygiene and a prohibition against urinating
in the wor" area and any place other than the toilet or the rest rooms. PetitionerFs control over
1agramaFs wor" e'tended not only to the use of the wor" area, but also to the result of 1agramaFs
wor", and the manner and means by which the wor" was to be accomplished.
*oreover, it would appear that petitioner not only provided the wor"place, but supplied as well the
materials used for the paintings, because he admitted that he paid 1agrama only for the latterFs
services. Private respondent 1agrama claimed that he wor"ed daily, from B oFcloc" in the morning
to D oFcloc" in the afternoon. Petitioner disputed this allegation and maintained that he paid
1agrama P8,=9D.<< per wee" for the murals for the three theaters which the latter usually finished
in ; to = days in one wee". (ven assuming this to be true, the fact that 1agrama wor"ed for at
least ; to = days a wee" proves regularity in his employment by petitioner.
hird. hat petitioner had the right to hire and fire was admitted by him in his position paper
submitted to the 41/+. -y stating that he had the right to fire 1agrama, petitioner in effect
ac"nowledged 1agrama to be his employee. 3or the right to hire and fire is another important
element of the employer-employee relationship. 8; Indeed, the fact that, as petitioner himself
said, he waited for 1agrama to report for wor" but the latter simply stopped reporting for wor"
reinforces the conviction that 1agrama was indeed an employee of petitioner. 3or only an
employee can nurture such an e'pectancy, the frustration of which, unless satisfactorily
e'plained, can bring about some disciplinary action on the part of the employer.
3ourth. Payment of wages is one of the four factors to be considered in determining the e'istence
of employer-employee relation. @ages are defined as )remuneration or earnings, however
designated, capable of being e'pressed in terms of money, whether fi'ed or ascertained on a
time, tas", piece, or commission basis, or other method of calculating the same, which is payable
by an employer to an employee under a written or unwritten contract of employment for wor"
done or to be done, or for services rendered or to be rendered.) 8= hat 1agrama wor"ed for an
on a fi'ed piece-wor" basis is of no moment. Payment by result is a method of compensation and
does not define the essence of the relation.) 8D It is a method of computing compensation, not a
basis for determining the e'istence or absence of employer-employee relationship. 0ne may be
paid on the basis of results or time e'pended on the wor", and may or may not ac5uire an
employment status, depending on whether the elements of an employer-employee relationship
are present or not.
6. C($. he Implementing /ules of the 1abor +ode 67 provide that no wor"er shall be dismissed
e'cept for a just or authori!ed cause provided by law and after due process. his provision has
two aspects: %8& the legality of the act of dismissal, that is, dismissal under the grounds provided
for under Article 6B6 of the 1abor +ode and %6& the legality in the manner of dismissal. he
illegality of the act of dismissal constitutes discharge without just cause, while illegality in the
manner of dismissal is dismissal without due process. In this case, by his refusal to give 1agrama
wor" to do and ordering 1agrama to get out of his sight as the latter tried to e'plain his side,
petitioner made it plain that 1agrama was dismissed. Urinating in a wor" place other than the one
designated for the purpose by the employer constitutes violation of reasonable regulations
intended to promote a healthy environment under Art. 6B6%8& of the 1abor +ode for purposes of
terminating employment, but the same must be shown by evidence. ?ere there is no evidence
that 1agrama did urinate in a place other than a rest room in the premises of his wor". Instead of
ordering his reinstatement as provided in Art. 697 of the 1abor +ode, the 1abor Arbiter found that
the relationship between the employer and the employee has been so strained that the latterFs
reinstatement would no longer serve any purpose. he parties do not dispute this finding. ?ence,
the grant of separation pay in lieu of reinstatement is appropriate. his is of course in addition to
the payment of bac"wages which, in accordance with the ruling in -ustamante v. 41/+ should
be computed from the time of 1agramaFs dismissal up to the time of the finality of this decision,
without any deduction or 5ualification.
9. HILARIO RADA . NATIONAL LABOR RELATIONS COMMISSION and PHILNOR
CONSULTANTS AND PLANNERS, INC
FACTS: )PetitionerFs initial employment with this /espondent was under a L+ontract of
(mployment for a ,efinite PeriodF dated 2uly 9, 8799, copy of which is hereto attached and made
an integral part hereof as Anne' A whereby Petitioner was hired as L,riverF for the construction
supervision phase of the *anila 4orth ('pressway ('tension, $econd $tage %hereinafter referred
to as *4(( $tage 6& for a term of Labout 6= months effective 2uly 8, 8799.F
x x x
)?ighlighting the nature of PetitionerFs employment, Anne' A specifically provides as
follows:chanrob8es virtual 8aw library
LIt is hereby understood that the (mployer does not have a continuing need for the services of the
(mployee beyond the termination date of this contract and that the (mployeeFs services shall
automatically, and without notice, terminate upon the completion of the above specified phase of
the project> and that it is further understood that the engagement of hisEher services is
coterminous with the same and not with the whole project or other phases thereof wherein other
employees of similar position as heEshe have been hired.F %Par. 9, Emphasis supplied&.
)PetitionerFs first contract of employment e'pired on 2une ;<, 8797. *eanwhile, the main project,
*4(( $tage 6, was not finished on account of various constraints, not the least of which was
inade5uate funding, and the same was e'tended and remained in progress beyond the original
period of 6.; years. 3ortunately for the Petitioner, at the time the first contract of employment
e'pired, /espondent was in need of ,river for the e'tended project. $ince Petitioner had the
necessary e'perience and his performance under the first contract of employment was found
satisfactory, the position of ,river was offered to Petitioner, which he accepted. ?ence a second
+ontract of (mployment for a ,efinite Period of 8< months, that is, from 2uly 8, 8797 to April ;<,
87B< was e'ecuted between Petitioner and /espondent on 2uly 9, 8797. . . )In *arch 87B< some
of the areas or phases of the project were completed, but the bul" of the project was yet to be
finished. -y that time some of those project employees whose contracts of employment e'pired
or were about to e'pire because of the completion of portions of the project were offered another
employment in the remaining portion of the project. Petitioner was among those whose contract
was about to e'pire, and since his service performance was satisfactory, respondent renewed his
contract of employment in April 87B<, after Petitioner agreed to the offer. Accordingly, a third
contract of employment for a definite period was e'ecuted by and between the Petitioner and the
/espondent whereby the Petitioner was again employed as ,river for 87 months, from *ay 8,
87B< to 4ovember ;<, 87B8, . . .
)his third contract of employment was subse5uently e'tended for a number of times, the last
e'tension being for a period of ; months, that is, from 0ctober 8, 87BD to ,ecember ;8, 87BD, . . .
)he last e'tension, from 0ctober 8, 87BD to ,ecember ;8, 87BD %Anne' (& covered by an
LAmendment to the +ontract of (mployment with a ,efinite Period,F was not e'tended any further
because Petitioner had no more wor" to do in the project. his last e'tension was confirmed by a
notice on 4ovember 6B, 87BD duly ac"nowledged by the Petitioner the very ne't day, . . .
)$ometime in the 6nd wee" of ,ecember 87BD, Petitioner applied for LPersonnel +learanceF with
/espondent dated ,ecember 7, 87BD and ac"nowledged having received the amount of
P;,97:.6< representing conversion to cash of unused leave credits and financial assistance.
Petitioner also released /espondent from all obligations and or claims, etc. in a L/elease, @aiver
and MuitclaimF . . .) +ulled from the records, it appears that on *ay 6<, 87B9, petitioner filed
before the 41/+, 4ational +apital /egion, ,epartment of 1abor and (mployment, a +omplaint
for nonpayment of separation pay and overtime pay. Petitioner filed an Amended +omplaint
alleging that he was illegally dismissed and that he was not paid overtime pay although he was
made to render three hours overtime wor" from *onday to $aturday for a period of three years.
1abor Arbiter ,ominador *. +ru! rendered a decision in favor of the petitioner. ?ence this
petition.
ISSUES: 8. @?(?(/ 0/ 40 P(II04(/ I$ I11(#A11C ,I$*I$$(,.
6. @?(?(/ 0/ 40 P(II04(/ I$ (4I1(, 0 0.(/I*( PAC
HELD: 8. 40. 3rom the foregoing, it is clear that petitioner is a project employee considering that
he does not belong to a )wor" pool) from which the company would draw wor"ers for assignment
to other projects at its discretion. It is li"ewise apparent from the facts obtaining herein that
petitioner was utili!ed only for one particular project, the *4(( $tage 6 Project of respondent
company. ?ence, the termination of herein petitioner is valid by reason of the completion of the
project and the e'piration of his employment contract.
6. C($. Anent the claim for overtime compensation, we hold that petitioner is entitled to the same.
he fact that he pic"s up employees of Philnor at certain specified points along (,$A in going to
the project site and drops them off at the same points on his way bac" from the field office going
home to *ari"ina, *etro *anila is not merely incidental to petitionerFs job as a driver. 0n the
contrary, said transportation arrangement had been adopted, not so much for the convenience of
the employees, but primarily for the benefit of the employer, herein private Respondent. $ince the
assigned tas" of fetching and delivering employees is indispensable and conse5uently
mandatory, then the time re5uired of and used by petitioner in going from his residence to the
field office and bac", that is, from D:;< A.*. to 9:<< A.*. and from =:<< P.*. to around ::<< P.*.,
which the labor arbiter rounded off as averaging three hours each wor"ing day, should be paid as
overtime wor". Muintessentially, petitioner should be given overtime pay for the three e'cess
hours of wor" performed during wor"ing days from 2anuary, 87B; to ,ecember, 87BD.