5.
CONDITIONS OF EMPLOYMENT HOURS OF WORK
STATUTIRY REFERENCE: ARTS. 82 90, LABOR CODE; BOK III,
RULES, I, IA, II, RULES TO IMPLEMENT THE LABOR;
5.01. HOURS REGLATION
RATIONALE AND ENFORCEMENT;
CASE:
MANILA TERMINAL CO. INC. vs. CIR, 91 PHIL 625 (52)
FACTS: On September 1, 1945, Herein petitioner undertook the
arrastre service in some of the piers in Manilas Port Area at the
request and under the control of the U.S. Army. Petitioner hired
some 30 men as watchmen on 12 hour shifts at a compensation of
P3.00 per day for the day shift and P6.00 per day for the night
shift. On February 1, 1946, the petitioner began the postwar
operation of the arrastre service at the present at the request and
under the control of the Bureau of Customs, by virtue of a contract
entered into with Philippine Government. The watchmen of the
petitioner continued in the service with a number of substitution
and additions, their salaries having been raised during the month
of February to P4.00 per day for the dayshift and P6.25 per day for
the nightshift.
Later, some of the members of the Manila Terminal Relief and
Mutual Aid Association, sent a letter to the Department of Labor,
requesting that the overtime pay be investigated, but nothing was
done by the Department. On May 27, 1947 the petitioner instituted
the system of strict 8 hour shifts. On July 28, 1947 Manila Aid
Association filed an amended petition with the Court of Industrial
Relations praying, among others, that petitioner be ordered to pay
its watchmen or police force overtime pay from the
commencement of their employment.
The case thereafter alleviated in which Judge Lanting ruled;
1.) The decision under review should be affirmed in so far it grants
compensation for overtime on regular days during the period from
the date of entrance to duty to May 24, 1947, such compensation
to consist of the amount that corresponds to the four hours
overtime at the regular rate and an additional amount of 25 per
cent thereof.
2.) As the compensation for work done on Sundays and legal
holidays, the petitioner should pay its watchmen the compensation
that corresponds to the overtime (in excess of 8 hours) at the
regular rate only.
3.) The watchmen are not entitled to night differential pay for past
service, and therefore the decision should be reversed.
Hence, this petition, contending that the agreement under which
its police force were paid certain specific wages for 12 hour shifts,
included overtime compensation.
ISSUE: W/N the agreement under which its police force were paid
certain specific wages for 12 hour shifts, includes the overtime
compensation?
HELD:
No, The Court ruled that in times of acute employment, regardless
of its terms and conditions, their main concern in the first place
being admission to some work. The petitioners watchmen must
have railroaded themselves into their employment for their
subsistence, although they found themselves required to work for
12 hours a day. True, there was agreement to work, but it cannot
fairly be supposed that they had the freedom to bargain in any
way, much less to insist in the observance of the 8 hour labor law.
Also, there was no reduction was made in the salaries which its
watchmen received under the 12 hour arrangement. Although, it
may be argued that the salary for the night shift was lessened, the
fact that the rate for the day shift was increased in a sense tends
to militate against the contention that the salaries given during the
12 hour shifts included overtime compensation.
The law gives the Association the right to extra compensation. And
they could not be held to have impliedly waived such extra
compensation, for the obvious reason that could not have
expressly waived it.
It is high time that all employers were warned that the public is
interested in the strict enforcement of the Eight Hour Labor Law.
This was designed not only to safeguard the health and welfare of
the laborer or employee, but in a way to minimize unemployment
by forcing employers, in cases where more than 8 hour operation
is necessary, to utilize different shifts of laborers or employees
working only for 8 hour each.
The appealed decision, in the form voted by Judge Lanting, is
affirmed, it being understood that the petitioners watchmen will
be entitled to extra compensation only from the dates they
respectively entered the service of the petitioner.
5.02 COVERAGE; ART. 82 276 (CODAL)
EXEMPTION MANAGERIAL EMPLOYEES
CASE:
PENARANDA vs. BANGANGA PLYWOOD CORP., 489 SCRA 94
(06)
FACTS: Charlito Penaranda was hired as an employee of Baganga
Corporation with a monthly salary of P5,000 as Foreman/Boiler
Head/ Shift Engineer to take charge of the operations and
maintenance of its steam plant boiler.
He alleges that he was illegally terminated and that his termination
was without due process and valid grounds. Furthermore, he was
not paid his OT pay, premium pay for working during holidays, and
night shift differentials. So he filed an action for illegal dismissal.
Hudson Chua, the General Manager of Baganga alleges that
Penarandas separation was done pursuant to Art. 238 of the Labor
Code. The company was on temporary closure due to repair and
general maintenance and it applied for clearance with the DOLE to
shut down and dismiss employees. He claims that due to the
insistence of complainant, he was paid his separation benefits. But
when the company partially re-opened, Penaranda faild to re-
apply.
Chua also alleges that since he is a managerial employee, he is not
entitled to OT pay and if ever he rendered services beyond the
normal hours of work, there was no office order/authorization for
him to do so.
The Labor Arbiter ruled that there was no illegal dismissal and that
Penarandas complaint was premature because he was still
employed with Baganga. As regards the benefits, the Labor Arbiter
found petitioner entitled to OT pay, premium pay for working on
rest days and attorneys fees.
On appeal, NLRC deleted the award of OT pay, premium pay and
attorneys fees.
The CA dismissed Penarandas Petition for Certiorari based on
procedural failures.
ISSUE: W/N Penaranda is a regular employee entitled to monetary
benefits under Art. 82 of the Labor Code.
HELD:
NO, Penaranda is part of the managerial staff which takes him out
of the coverage of labor standards. The Implementing Rules define
members of a managerial staff as those with the ff.
responsibilities:
(1) The primary duty consists of the performance of work directly
related to management policies of the employer;
(2) Customarily and regularly exercise discretion and independent
judgment;
(3) (i) Regularly and directly assist a proprietor or a managerial
employee whose primary duty consists of the management of the
establishment in which he is employed or subdivision thereof; or
(ii) execute under general supervision work along specialized or
technical lines requiring special training, experience, or knowledge;
or (iii) execute under general supervision special assignments and
tasks; and
(4) who do not devote more than 20 percent of their hours worked
in a workweek to activities which are not directly and closely
related to the performance of the work described in paragraphs
(1), (2), and (3) above."
Petitioner supervised the engineering section of the steam plant
boiler. His work involved overseeing the operation of the machines
and the performance of the workers in the engineering section.
This work necessarily required the use of discretion and
independent judgment to ensure the proper functioning of the
steam plant boiler. As supervisor, petitioner is deemed a member
of the managerial staff.
Even Penaranda admitted that he was a supervisor. In his Position
Paper, he stated that he was the foreman responsible for the
operation of the boiler. The term foreman implies that he was the
representative of management over the workers and the operation
of the department. His classification as supervisor is further
evident from the manner his salary was paid. He belonged to the
10% of respondents 354 employees who were paid on a monthly
basis; the others were paid only on a daily basis.
*No justification to award overtime pay and premium pay for rest
days to Penaranda.
ASIA PACIFIC CHRISTENING INC. vs. FAROLAN, 393 SCRA
454 (04)
FACTS: Respondent Maria Linda R. Farolan was hired as Sales
Manager of petitioner for its passenger and cargo GSA operations
for Scandinavian Airline System (SAS).
Soon after respondent assumed her post, she participated in a
number of meetings/seminars (technical aspects all geared
towards improving her marketing and sales skills)
Respondent, upon instruction of Bondoc (VP/Comptroller),
submitted a report. As reflected in respondents report, there was
a drop in SAS sales revenues which to her was attributable to
market forces beyond her control.
Petitioner directed its high ranking officer Roberto Zozobrado to
conduct an investigation on the matter and identify the problem/s
and implement possible solutions.
Zozobrado thus informally took over some of respondents
marketing and sales responsibilities, albeit respondent retained her
title as Sales Manager and continued to receive her salary as such.
Soren Jespersen, General Manager of SAS, came to the Philippines
to assess the statistics on SAS sales revenues and SAS was
convinced that respondent was not fit for the job of Sales
Manager; and in view of the changes introduced by Zozobrado,
SAS-GSA sales operations drew positive results.
Respondent Farolan nevertheless, received letter from Jespersen
congratulating him for exceeding sale results in April and a number
of recommendations for improvement.
However, on even date, Petitioner terminated the employment of
respondent on ground of loss of trust and confidence
Thus, respondent filed a complaint for illegal dismissal with prayer
for damages and attorneys fees.
Respondents version: alleged that Bondoc and Zozobrado had
asked her to tender her resignation as she was not the person
whom SAS was looking for to handle the position of Sales Manager
9 but that she refused, hence, she was terminated
LA: ruled in favor of respondent; NLRC: reversed the ruling of the
CA: Set aside the decision of NLRC
ISSUE: W/N, APC, AS EMPLOYER, HAS THE MANAGEMENT
PREROGATIVE TO REPLACE A SALES MANAGER WHOM IT HAS
REASONABLE GROUNDS TO BELIEVE CANNOT EFFECTIVELY
DISCHARGE THE DUTIES DEMANDED BY SUCH POSITION.
HELD:
NO, Recent decisions of this Court distinguish the treatment of
managerial employees from that of rank and file personnel insofar
as the application of the doctrine of loss of trust and confidence is
concerned
MANAGERIAL EMPLOYEES; CONDITIONS THAT MUST BE MET
BEFORE ONE MAY BE CONSIDERED A MANAGERIAL EMPLOYEE.
As enunciated in Samson v. NLRC, 330 SCRA 460, Before one
may be properly considered a managerial employee, all the
following conditions must be met: (1) Their primary duty consists
of the management of the establishment in which they are
employed or of a department or subdivision thereof; (2) They
customarily and regularly direct the work of two or more
employees therein; (3) They have the authority to hire or fire
other employees of lower rank; or their suggestions and
recommendations as to the hiring and firing and as to the
promotion or any other change of status of other employees are
given particular weight. (Section 2(b), Rule I, Book III of the
Omnibus Rules Implementing the Labor Code, italics supplied).
It is not disputed that her job description, and the terms and
conditions of her employment, with the exception of her salary and
allowances, were never reduced to writing.
By respondents claim, her function, as verbally explained to her
by Murray, dealt mainly with servicing of existing clientele.
Bondoc, however, described respondents functions and duties as
critical
DISMISSAL; LOSS OF TRUST AND CONFIDENCE; MUST BE BASED
ON A WILLFUL BREACH AND FOUNDED ON CLEARLY ESTABLISHED
FACTS; BREACH OF DUTIES; WHEN CONSIDERED WILLFUL; CASE
AT BAR. Even assuming, however, that respondent was a
managerial employee, the stated ground (in the letter of
termination) for her dismissal, loss of confidence, should have a
basis and determination thereof cannot be left entirely to the
employer. Loss of trust and confidence to be a valid ground for an
employees dismissal must be based on a willful breach and
founded on clearly established facts. A breach is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse,
as distinguished from an act done carelessly, thoughtlessly,
heedlessly or inadvertently. Respondents detailed REPORT dated
September 8, 1993, relative to SAS profit and loss for 1993, which
was closely examined and analyzed by the LA contains an
explanation of what brought about the decline in sales revenues.
And it contains too a number of recommended measures on
improvement of sales for the remainder of 1993 and for 1994. As
did the Labor Arbiter and the Court of Appeals, this Court finds
respondents explanation in her Report behind the decline in sales
revenues as due to market forces beyond respondents control
plausible. In any event, there is no showing that the decline is
reflective of any willful breach of duties by respondent.
NATIONAL WATERWORKS AND SEWERAGE AUTHORITY vs.
NAWASA CONSOLIDATED UNIONS, 11 SCRA 766 (65)
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 Court of Industrial Relations
conducted a hearing on the controversy then existing between
petitioner and respondent unions which the latter embodied in a
"Manifesto", namely: implementation of the 40-Hour Week Law
(Republic Act No. 1880); alleged violations of the collective
bargaining agreement concerning "distress pay"; minimum wage
of P5.25; promotional appointments and filling of vacancies of
newly created positions; additional compensation for night work;
wage increases to some laborers and employees; and strike
duration pay. In addition, respondent unions raised the issue of
whether the 25% additional compensation for Sunday work 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 30 days. The respondent court
rendered its decision stating 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 and granted the claims of the union.
ISSUE:
1. W/N NAWASA is performing governmental functions and,
therefore, essentially a service agency of the government.
2. W/N NAWASA is a public utility and, therefore, exempted from
paying additional compensation for work on Sundays and legal
holidays.
3. W/N the intervenors are "managerial employees" within the
meaning of Republic Act 2377 and, therefore, not entitled to the
benefits of Commonwealth Act No. 444.
4. What is the correct method to determine the equivalent daily
wage of a monthly salaried employee, especially in a firm which is
a public utility?
HELD:
1. No, NAWASA is not an agency performing governmental
functions. Rather, it performs proprietary functions, and as such
comes within the coverage of Commonwealth Act No. 444. While
under republic Act No. 1383 the NAWASA is considered as a public
corporation it does not show that it was so created for the
government of a portion of the State. There are two kinds of public
corporation, namely, municipal and non-municipal. A municipal
corporation is the body politic established by law particularly as an
agency of the State to assist in the civil government of the country
chiefly to regulate the local and internal affairs of the city or town
that is incorporated. Non- municipal corporations, on the other
hand, are public corporations created as agencies of the State for
limited purposes to take charge merely of some public or state
work other than community government. The National Waterworks
and Sewerage Authority was not created for purposes of local
government. It was created for the "purpose of consolidating and
centralizing all waterworks, sewerage and drainage system in the
Philippines under one control and direction and general
supervision." The NAWASA therefore, though a public corporation,
is not a municipal corporation, because it is not an agency of the
State to regulate or administer the local affairs of the town, city, or
district which is incorporated. Moreover, the NAWASA, by its
charter, has personality and power separate and distinct from the
government. It is an independent agency of the government and it
may charge rates for its services.
2. Yes, NAWASA is a public utility because its primary function is
to construct, maintain and operate water reservoirs and
waterworks for the purpose of supplying water to the inhabitants,
as well as consolidate and centralize all water supplies and
drainage systems in the Philippines. A public utility is exempt from
paying additional compensation for work on Sundays and legal
holidays conformably to Section 4 of Commonwealth Act No. 444.
However, by virtue of the contractual obligation NAWASA has with
the respondent unions, it has obligated itself for the payment of
additional compensation.
3. No. One of the distinguishing characteristics 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. 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. In this case,
the functions, duties and responsibilities of the intervenors do not
bear any direct relation with the management of the NAWASA, nor
do they participate in the formulation neither of its policies nor in
the hiring and firing of its employees. Moreover, they are required
to observe working hours and record their time work and are not
free to come and go to their offices, or move about at their own
discretion.
4. It is evident that Republic Act 1880 does not intend to raise the
wages of the employees over what they are actually receiving.
Rather, its purpose is to limit the working days in a week to five
days, or to 40 hours without however permitting any reduction in
the weekly or daily wage of the compensation which was
previously received.
a. It has been held that for purposes of computing overtime
compensation a regular wage includes all payments which the
parties have agreed shall be received during the work week,
including piece work wages, differential payments for working at
undesirable times, such as at night or on Sundays and holidays,
and the cost of board and lodging customarily furnished the
employee. The "regular rate" of pay also ordinarily includes
incentive bonus or profit-sharing payments made in addition to the
normal basic pay, and it was also held that the higher rate for
night, Sunday and holiday work is just as much a regular rate as
the lower rate for daytime work. The higher rate is merely an
inducement to accept employment at times which are not as
desirable from a workman's standpoint
b. The way to determine the daily rate of a monthly employee is to
divide the monthly salary by the actual number of working hours in
the month. Thus, Section 8 (g) of Republic Act No. 1161, as
amended by Republic Act 1792, provides that the daily rate of
compensation is the total regular compensation for the customary
number of hours worked each day. In other words, the correct
computation shall be (a) the monthly salary divided by the actual
of working hours in a month or (b) the regular monthly
compensation divided by the number of working days in a month.
TEST FIELD PERSONNEL;
AUTO BUS TRANSPORT SYSTEMS INC. vs. BAUTISTA, 485
SCRA 578 (05)
FACTS: Antonio Bautista was employed by Auto Bus Transport
Systems, Inc. in May 1995. He was assigned to the Isabela-Manila
route and he was paid by commission (7% of gross income per
travel for twice a month).
In January 2000, while he was driving his bus he bumped another
bus owned by Auto Bus. He claimed that he bumped the he
accidentally bumped the bus as he was so tired and that he has
not slept for more than 24 hours because Auto Bus required him to
return to Isabela immediately after arriving at Manila. Damages
were computed and 30% or P75,551.50 of it was being charged to
Bautista. Bautista refused payment.
Auto Bus terminated Bautista after due hearing as part of Auto
Bus management prerogative. Bautista sued Auto Bus for Illegal
Dismissal. The Labor Arbiter Monroe Tabingan dismissed Bautistas
petition but ruled that Bautista is entitled to P78,117.87 13th
month pay payments and P13,788.05 for his unpaid service
incentive leave pay.
The case was appealed before the National Labor Relations
Commission. NLRC modified the LAs ruling. It deleted the award
for 13th Month pay. The court of Appeals affirmed the NLRC.
Auto Bus averred that Bautista is a commissioned employee and if
that is not reason enough that Bautista is also a field personnel
hence he is not entitled to a service incentive leave. They invoke:
Art. 95. RIGHT TO SERVICE INCENTIVE LEAVE
(a) Every employee who has rendered at least one year of service
shall be entitled to a yearly service incentive leave of five days
with pay.
Book III, Rule V: SERVICE INCENTIVE LEAVE
SECTION 1. Coverage. This rule shall apply to all employees
except:
(d) Field personnel and other employees whose performance is
unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are
paid in a fixed amount for performing work irrespective of the time
consumed in the performance thereof; . . .
ISSUE: W/N Bautista is entitled to Service Incentive Leave. If he
is, W/N the three (3)-year prescriptive period provided under
Article 291 of the Labor Code, as amended, is applicable to
respondents claim of service incentive leave pay?
HELD:
Yes, Bautista is entitled to Service Incentive Leave. The Supreme
Court emphasized that it does not mean that just because an
employee is paid on commission basis he is already barred to
receive service incentive leave pay.
The question actually boils down to whether or not Bautista is a
field employee.
According to Article 82 of the Labor Code, field personnel shall
refer to non-agricultural employees who regularly perform their
duties away from the principal place of business or branch office of
the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.
As a general rule, field personnel are those whose performance of
their job/service is not supervised by the employer or his
representative, the workplace being away from the principal office
and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for
rendering specific service or performing specific work. If required
to be at specific places at specific times, employees including
drivers cannot be said to be field personnel despite the fact that
they are performing work away from the principal office of the
employee.
Certainly, Bautista is not a field employee. He has a specific route
to traverse as a bus driver and that is a specific place that he
needs to be at work. There are inspectors hired by Auto Bus to
constantly check him. There are inspectors in bus stops who
inspects the passengers, the punched tickets, and the driver.
Therefore he is definitely supervised though he is away from the
Auto Bus main office.
On the other hand, the 3 year prescriptive period ran but Bautista
was able to file his suit in time before the prescriptive period
expired. It was only upon his filing of a complaint for illegal
dismissal, one month from the time of his dismissal, that Bautista
demanded from his former employer commutation of his
accumulated leave credits. His cause of action to claim the
payment of his accumulated service incentive leave thus accrued
from the time when his employer dismissed him and failed to pay
his accumulated leave credits.
Therefore, the prescriptive period with respect to his claim for
service incentive leave pay only commenced from the time the
employer failed to compensate his accumulated service incentive
leave pay at the time of his dismissal. Since Bautista had filed his
money claim after only one month from the time of his dismissal,
necessarily, his money claim was filed within the prescriptive
period provided for by Article 291 of the Labor Code.
Definition of Service Incentive Leave
Service incentive leave is a right which accrues to every employee
who has served within 12 months, whether continuous or broken
reckoned from the date the employee started working, including
authorized absences and paid regular holidays unless the working
days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in
which case said period shall be considered as one year. It is also
commutable to its money equivalent if not used or exhausted at
the end of the year. In other words, an employee who has served
for one year is entitled to it. He may use it as leave days or he
may collect its monetary value.
FAR EAST AGRICULTURAL SUPPLY INC. vs. LABATIQUE,
375 SCRA 491 (07)
FACTS: In March 1996, Lebatique was hired as a driver by FAR
EAST AGRICULTURAL SUPPLY, INC. with a daily wage of P223.50.
His job as a driver includes the delivery of animal feeds to the
clients of the company. He must report either in the morning or in
the afternoon to make the deliveries.
On January 24, 2000, Lebatique was suspended by Manuel Uy
(brother of FEASIs General Manager Alexander Uy) for allegedly
using the company vehicle illegally.
On the same day, Lebatique filed a complaint for nonpayment of
overtime pay against Alexander Uy.
Uy summoned Lebatique and asked why he was claiming overtime
pay. Lebatique said since he started working with the company he
has never been paid OT pay. Uy consulted with his brother. On
January 29, 2000, Uy told Lebatique to look for another job.
Lebatique then filed an Illegal Dismissal case against the company.
The Labor Arbiter ruled in favor of Lebatique. Uy was ordered to
reinstate Lebatique and at the same time to pay Lebatique his
13th month pay, back wages (time when case was pending),
service incentive leave pay and OT pay all amounting to
P196,659.72.
Uy argued that Lebatique was not dismissed and that he was
merely suspended; that he abandoned his job; and that Lebatique
was a field personnel not entitled to overtime pay and service
incentive leave.
ISSUE: W/N Lebatique is a field personnel?
HELD:
No. Lebatique is a regular employee.
Uy illegally dismissed Lebatique when he told him to look for
another job. Judging at the sequence of event, Lebatique earned
the ire of Uy when he filed a complaint for nonpayment of OT pay
on the day Lebatique was suspended by Manuel Uy. Such is not a
valid reason for dismissing Lebatique.
Uy cannot therefore claim that he merely suspended Lebatique.
Further, Lebatique did not abandon his job. His filing of this case is
proof enough that he had no intention to abandon his job.
To constitute abandonment as a just cause for dismissal, there
must be:

(a) absence without justifiable reason; and

(b) a clear intention, as manifested by some overt act, to sever the

employer-employee relationship.

None of the above was proven by Uy.

Also, Lebatique is not a field personnel as defined above for the

following reasons:

(1) company drivers, including Lebatique, are directed to deliver

the goods at a specified time and place;

(2) they are not given the discretion to solicit, select and contact
prospective clients; and

(3) Far East issued a directive that company drivers should stay at
the clients premises during truck-ban hours which is from 5:00 to
9:00 a.m. and 5:00 to 9:00 p.m.

As a regular employee, Lebatique is entitled to service incentive

leave and OT pay.

The Supreme Court affirmed the Labor Arbiters decision but

remanded the case for properly computing Lebatiques OT pay
taking in to consideration the companys time keeping records.

Field Personnel Defined

Field personnel are those who regularly perform their duties away
from the principal place of business of the employer and whose
actual hours of work in the field cannot be determined with
reasonable certainty.

UNION OF FILIPINO EMPLOYEES vs. VIVAR, 205 SCRA 200

(92)