wages cases

7/24/2019 Wages Cases

1/23

WAGES CASES

SONGCO v NLRC

FACTS:

Private respondent F.E. Zuellig (M), Inc.,led !it" t"e #epart$ent o% &a'or

(egional *ce +o. ) an applicationseeking clearance to terminate theservices of petitioners Jose Songco,Romeo Cipres, and Amancio an!elallegedl- on t"e ground o% RE"RENC#EN" d!e to $nanciallosses% T"is application !as seasona'l-opposed '- petitioners alleging t"at t"eco$pan- is not suering %ro$ an- losses."he& alleged f!rther that the& are'eing dismissed 'eca!se of theirmem'ership in the !nion. At t"e last"earing o% t"e case, "o!ever, petitioners$ani%ested t"at t"e- are no longercontesting t"eir dis$issal. T"e partiest"en agreed t"at t"e sole issue to 'eresolved is t"e 'asis o% t"e separation pa-due to petitioners. Petitioners, !"o !ere int"e sales %orce o% Zuellig receivedmonthl& salaries of at least ()*,***%+n addition, the& receivedcommissions for ever& sale the&made%

T"e C/A entered into 'et, Zuellig and t"e

Zuellig Assocn contains t"e :

etire$ent 0ratuit-

Section l(a)1An- e$plo-ee, !"o is

separated %ro$ e$plo-$ent due to old

age, sic2ness, deat" or per$anent la-1o

not d!e to the fa!lt of said emplo&ee

shall receive from the compan& a

retirement grat!it& in an amo!nt

e!ivalent to one -./

month0s salaryper &ear of service1%

Art% 23)% Reduction of personnel% 3

T"e ter$ination o% e$plo-$ent o% an-

e$plo-ee due to t"e installation o% la'or

saving1devices, redundanc-, retrenc"$ent

to prevent losses, and ot"er si$ilar

causes, shall entitle the emplo&ee

a4ected there'& to separationpay%

ule 4, /oo2 5I o% t"e ules I$ple$enting

t"e &a'or Code provide:

Sec. 6('). 7"ere t"e ter$ination o%

e$plo-$ent is due to retrec"$ent

initiated '- t"e e$plo-er to prevent losses

or ot"er si$ilar causes, or !"ere t"e

e$plo-ee suers %ro$ a disease and "iscontinued e$plo-$ent is pro"i'ited '-

la! or is pre8udicial to "is "ealt" or to t"e

"ealt" o% "is co1e$plo-ees, the

emplo&ee shall 'e entitled to

termination pa& e!ivalent at least to

his one month salar&, or to one5half

monthpayfor ever& &ear of service,

6hichever is higher, a fraction of at

least si7 -8/ months 'eing considered

as one 6hole &ear%

&A: rdered to pa- t"e co$plainants

separation pa- 9 t"eir 4 $ont" salar-

(eclusive o% co$$issions, allo!ances,

etc.) %or ever- -r o% service

+&C: #is$issed %or lac2 o% $erit,.

ISS;E: 7"et"er or not earned sales

co$$issions and allo!ances s"ould 'e

included in t"e $ont"l- salar- o%

petitioners %or t"e purpose o% co$putation

o% t"eir separation pa-.

position !as t"at in arriving att"e correct and legal a$ount o% separationpa- due t"e$, !"et"er under t"e &a'orCode or t"e C/A, t"eir 'asic salar-,earned sales co$$issions and allo!ancess"ould 'e added toget"er.

Article 6?(%) '- itsel% is eplicit t"atco$$ission is included in t"e denition o%t"e ter$ @!age@. It "as 'een repeatedl-declared '- t"e courts t"at !"ere t"e la!spea2s in clear and categorical language,t"ere is no roo$ %or interpretation orconstruction t"ere is onl- roo$ %orapplication7A0E I+ 0E+EIC SE+SE

&A: 7e can sa- t"at co$$ission '- itsel%$a- 'e considered a !age. T"is is not


2/23

so$et"ing novel %or it cannot 'e gainsaidt"at certain t-pes o% e$plo-ees li2eagents, eld personnel and sales$en donot earn an- regular dail-, !ee2l- or$ont"l- salaries, 'ut rel- $ainl- onco$$ission earned.

T"e a$'iguit- 'et!een Article 6?(%),

!"ic" denes t"e ter$ >!age> and ArticleBI5 o% t"e Collective /argainingAgree$ent, Article D o% t"e &a'or Codeand Sections 6(') and 4 o% t"eI$ple$enting ules, 6hich mention theterms 9pa&9 and 9salar&9, is moreapparent than real%/roadl-, t"e 6ord9salar&9 means a recompense orconsideration made to a person forhis pains or ind!str& in another man0s'!siness% 7"et"er it 'e derived %ro$@salariu$,@ or $ore %anci%ull- %ro$ @sal,@t"e pa- o% t"e o$an soldier, it carries

!it" it t"e %unda$ental idea o% co$pensation %or services rendered.

Indeed, t"ere is e$inent aut"orit- %or"olding t"at t"e !ords @!ages@ and@salar-@ are in essence s-non-$ous(7ords and P"rases, 5ol. D Per$anentEdition, p. citing


3/23

o% respondent Paper Industries Corporation

o% t"e P"ilippines (PICP) in /islig, Surigao

del Sur. In 466 PICP suered a $a8or

nancial set'ac2 allegedl- 'roug"t a'out

'- t"e 8oint i$pact o% restrictive

govern$ent regulations on logging and

t"e econo$ic crisis. To avert %urt"er

losses, it undertoo2 a retrenc"$entprogra$ and ter$inated t"e services o%

petitioners. Accordingl-, petitioners

received separation pa- co$puted at t"e

rate o% one (4) $ont" 'asic pa- %or ever-

-ear o% service. /elieving "o!ever t"at t"e

allo6ances the& allegedl& reg!larl&

received on a monthl& 'asis d!ring

their emplo&ment sho!ld have 'een

incl!ded in the comp!tation thereof

the& lodged a complaint for

separation pa& di4erentials%

A&&7A+CES:

Staf/Manager's Allowance espondent

PICP provides %ree "ousing %acilities to

supervisor- and $anagerial e$plo-ees

assigned in /islig. T"e privilege includes

%ree !ater and electric

consu$ption. !ing "o!ever to s"ortage

o% suc" %acilities, it !as constrained to

grant Sta allo!ance instead to t"ose !"o

live in rented "ouses outside 'ut near t"evicinit- o% t"e $ill site. /ut t"e allo!ance

ceases !"enever a vacanc- occurs in t"e

co$pan->s "ousing %acilities.

Transportation Allowance 1 To relieve

respondent PICP>s $otor pool in /islig

%ro$ a 'arrage o% reuests %or co$pan-

ve"icles and to sta'iliNe co$pan- ve"icle

reuire$ents it grants transportation

allo!ance to 2e- o*cers and Managers

assigned in t"e $ill site !"o use t"eir o!n

ve"icles in t"e per%or$ance o% t"eir

duties.

Bislig Allowance 1 T"e /islig Allo!ance is

given to #ivision Managers and corporate

o*cers assigned in /islig on account o%

t"e "ostile environ$ent prevailing

t"erein. /ut once t"e recipient is

trans%erred else!"ere outside /islig, t"e

allo!ance ceases.

&A: t"e su'8ect allo!ances, 'eing

custo$aril- %urnis"ed '- respondent

PICP and regularl- received '-

petitioners, %or$ed part o% t"e latter>s

!ages. ordered to pa- petitionersseparation pa- dierentials plus 4O

t"ereo%.

+&C: Allo!ances did +T %or$ part o%

salar- 'ase

C+TE+TI+: In t"is petition %or certiorari,

petitioners su'$it t"at t"eir allo!ances

are included in t"e denition o% @%acilities@

in Art. 6?, par. (%), o% t"e &a'or Code,

'eing necessar- and indispensa'le %ort"eir eistence and

su'sistence. Furt"er$ore t"e- clai$ t"at

t"eir avail$ent o% t"e $onetar-

euivalent o% t"ose @%acilities@ on a

$ont"l- 'asis !as c"aracteriNed '-

per$anenc-, regularit- and

custo$ariness.

ISS;E: 7+ allo!ances 'e included in t"e

separation pa-


4/23

determined '& the Secretar& of

La'or%9

C;STMA= Q allo!ances !ere onl-

te$porar-, not regularl- received '-

petitioners. 7 allo!ances do not represent

suc" %air and reasona'le value as

deter$ined '- t"e proper aut"orit- si$pl-

'ecause t"e StaManager>s allo!ance

and transportation allo!ance !erea$ounts given '- respondent co$pan- in

lieu o% actual provisions %or "ousing and

transportation needs !"ereas t"e /islig

allo!ance !as given in consideration o%

'eing assigned to t"e "ostile environ$ent

t"en prevailing in /islig.

T"e inevita'le conclusion is t"at, as

reac"ed '- t"e +&C, su'8ect allo!ances

did not %or$ part o% petitioners> !ages.

/ut in vie! o% t"e previous discussion t"at

t"e disputed allo!ances

!ere not regularl-received '- petitioners

"erein, t"ere !as no reason at all %or

petitioners to resort to t"e a'ove cases.

;&I+0: PETITI+ #ISMISSE# +T PAT

F SEPAATI+ PA=

SLL +N"ERNA"+ONAL v NLRC

FACTS:

So$eti$e in 466, and Hanuar- 466?,

private respondents oldan &opeN and

#anilo CaRete and Edgardo ZuRiga

(ZuRiga %or 'revit-) respectivel-, !ere

"ired '- petitioner &agon as apprentice

or trainee ca'leBlineman. "he three

6ere paid the f!ll minim!m 6age and

other 'ene$ts '!t since the& 6ere

onl& trainees, the& did not report for

6ork reg!larl& '!t came in asS=:S"+"="ES to the reg!lar 6orkers

or in !ndertakings that needed e7tra

6orkers to e7pedite completion of

6ork.

A%ter t"eir training, ZuRiga, CaRete and

&opeN !ere engaged as pro8ect e$plo-ees

'- t"e petitioners in t"eir Islaco$ pro8ect


5/23

in /o"ol. Private respondents started on

Marc" 4G, 466? until #ece$'er 466?.

=pon the completion of their proect,

their emplo&ment 6as also

terminated

So$eti$e in Marc" 466D, ZuRiga and

CaRete !ere engaged again '- &agon aspro8ect e$plo-ees %or its PT Antipolo,

iNal pro8ect, !"ic" ended so$eti$e in

(sic) t"e late Septe$'er 466D. As a

conseuence, ZuRiga and CaRetes

e$plo-$ent !as ter$inated. For t"is

pro8ect, ZuRiga and CaRete received onl-

t"e !age o% P4G. dail-. T"e $ini$u$

prescri'ed !age %or iNal at t"at ti$e

!as P4..

n Ma- 4, 4666, private respondents %ort"e t" ti$e !or2ed !it" &agons pro8ect

in Ca$arin, Caloocan Cit- !it" Furu2a!a

Corporation as t"e general contractor.

T"eir contract !ould epire on Fe'ruar-

D, , t"e period o% co$pletion o% t"e

pro8ect. Fro$ Ma- 4, 466?1#ece$'er

4666, private respondents received t"e

!age o%P4G.. At t"is ti$e, t"e

$ini$u$ prescri'ed rate %or Manila

!as P46D.. In Hanuar- to Fe'ruar- D,

t"e t"ree received t"e !age o% P4G..

T"e eisting rate at t"at ti$e!as P4..

EC+MIC P/&EMS. FaceKdL !it"

econo$ic pro'le$KsL, &agon !as

constrained to cut do!n t"e overti$e

!or2 o% its !or2erKsLK,L including private

respondents. T"us, !"en reuested '-

private respondents on Fe'ruar- D,

to !or2 overti$e, Lagon ref!sed and

told private respondents that if the&

insist, the& 6o!ld have to go home attheir o6n e7pense and that the&

6o!ld not 'e given an&more time nor

allo6ed to sta& in the !arters%T"is

pro$pted private respondents to leave

t"eir !or2 and !ent "o$e to Ce'u.

CMP&AI+T. Private respondents led a

co$plaint %or illegal dis$issal, non1

pa-$ent o% !ages, "olida- pa-, 4t"

$ont" pa- %or 466? and 466D and service

incentive leave pa- as !ell as da$ages

and attorne-s %ees.

&A: Private e$plo-ees are regular

e$plo-ees 'ec o% repeatedl- "ired '-

petitioner underpd +T illegal dis$issal

+&C: A*r$ed decision o% &A

CA: egular e$plo-ees T"e CA also

stated t"at t"e %ailure o% petitioners to

co$pl- !it" t"e si$ple 'ut co$pulsor-

reuire$ent to su'$it a report o%

ter$ination to t"e nearest Pu'lic

E$plo-$ent *ce ever- ti$e private

respondents e$plo-$ent !as ter$inated

!as proo% t"at t"e latter !ere not pro8ect

e$plo-ees 'ut regular e$plo-eesunderpd. . It ruled t"at t"e 'oard and

lodging, electricit-, !ater, and %ood

en8o-ed '- t"e private respondents could

not 'e included in t"e co$putation o% t"eir

!ages 'ecause t"ese !ere given !it"out

t"eir !ritten consent.

C+TE+TI+: Petitioners reiterated t"eir

position t"at t"e value o% t"e %acilities t"at

t"e private respondents en8o-ed s"ould 'e

included in t"e co$putation o% t"e

@!ages@ received '- t"e$.

ISS;E: !"et"er or not t"ere is evidence on

record to support t"e ndings o% t"e &A,

t"e +&C and t"e CA t"at private

respondents !ere pro8ect or regular

e$plo-ees and t"at t"eir salar-

dierentials "ad 'een paid


6/23

dierentials, service incentive leave and

ot"er clai$s o% !or2ers "ave 'een paid 3

are not in t"e possession o% t"e !or2er 'ut

in t"e custod- and a'solute control o% t"e

e$plo-er.

In t"is case, petitioners, aside %ro$ 'are

allegations t"at private respondentsreceived !ages "ig"er t"an t"e prescri'ed

$ini$u$, %ailed to present an- evidence,

suc" as pa-roll or pa-slips, to support

t"eir de%ense o% pa-$ent. T"us,

petitioners utterl- %ailed to disc"arge

t"e on#s pro"an%i.

MI+IM;M 7A0E. Private respondents, on

t"e ot"er "and, are entitled to 'e paid t"e

$ini$u$ !age, !"et"er t"e- are regular

or non1regular e$plo-ees.

Section , ule 5II o% t"e ules to

I$ple$ent t"e &a'or Code46specicall-

enu$erates t"ose !"o are not covered '-

t"e pa-$ent o% $ini$u$ !age. (roect

emplo&ees are not among them%

+ FACI&ITIES A&&7A/&E #E#;CTI+S.n !"et"er t"e value o% t"e %acilitiess"ould 'e included in t"e co$putation o%t"e @!ages@ received '- private

respondents, Section . of ;OLEemorand!m Circ!lar No% 2 providesthat an emplo&er ma& provides!'sidiDed meals and snacks to hisemplo&ees provided that the s!'sid&shall not 'e less that *F of the fairand reasona'le val!e of s!chfacilities% ;E;=C"+ON> In suc" cases,t"e e$plo-er $a- deduct %ro$ t"e !ageso% t"e e$plo-ees not $ore t"an ?O o%t"e value o% t"e $eals and snac2s en8o-ed'- t"e latter, provided that s!chded!ction is 6ith the 6ritten

a!thoriDation of the emplo&eesconcerned%

RE=+S+"ES :EHORE ;E;=C"+ONSCAN :E A;E>

-./ proo% $ust 'e s"o!n t"at suc"%acilities are custo$aril- %urnis"ed '- t"etrade

() t"e provision o% deducti'le %acilities$ust 'e voluntaril- accepted in !riting '-t"e e$plo-ee and

() %acilities $ust 'e c"arged atreasona'le value.Mere avail$ent is notsu*cient to allo! deductions %ro$e$plo-ees !ages.

NO"E> T"ese reuire$ents, "o!ever,"ave not 'een $et in t"is case. S&& %ailedto present an- co$pan- polic- orguideline s"o!ing t"at provisions %or$eals and lodging !ere part o% t"ee$plo-ees salaries. It also %ailed toprovide proo% o% t"e e$plo-ees !rittenaut"oriNation, $uc" less s"o! "o! t"e-arrived at t"eir valuations. At an- rate, itis not even clear !"et"er privaterespondents actuall- en8o-ed said%acilities.

HAC+L+"+ES v S=((LEEN"S% It is o% t"evie! t"at t"e %ood and lodging, or t"eelectricit- and !ater allegedl- consu$ed'- private respondents in t"is case !erenot %acilities 'ut supple$ents.

In t"e case o%Atok-Big Wedge Assn. v.

Atok-Big Wedge Co.,22t"e t!o ter$s

!ere distinguis"ed %ro$ one anot"er in

t"is !ise:

9S!pplements,9 t"ere%ore, constitute

etra re$uneration or special privileges or'enets given to or received '- t"e

la'orers o!erand a"o!e their or%inary

earnings or wages. 9Hacilities,9 on t"e

ot"er "and, are ite$s o% epense

necessar- %or t"e la'orer>s and "is %a$il->s

eistence and su'sistence so t"at '-

epress provision o% la! (Sec. KgI/, the&

form part of the 6age and 6hen

f!rnished '& the emplo&er are

ded!cti'le therefrom, since if the&

are not so f!rnished, the la'orer6o!ld spend and pa& for them !st

the same%

I+ T


7/23

the la'orers0 'asic 6ages, it is afacilit&%

In t"e case at 'enc", t"e ite$s provided!ere given %reel- '- S&& %or t"e purpose o%$aintaining t"e e*cienc- and "ealt" o% its!or2ers !"ile t"e- !ere !or2ing at t"eirrespective pro8ects.

;&I+0: PETITII+ #E+IE#.

O=R #A=S REAL" ;EK" COR(% v(ARLAN

FACTS:

espondents Aleander Parian, Ha- Erinco,Aleander Canlas, Herr- Sa'ulao and/ernardo Tenedero!ere all la'orers!or2ing %or petitioner ur


8/23

c. T"e %acilities $ust 'e c"arged at %air

and reasona'le value

EBAMI+ATI+:

a% "he facilit& m!st 'e c!stomaril&f!rnished '& the trade% In a string o%

cases, !e "ave concluded t"at one o% t"e'adges to s"o! t"at a %acilit- iscusto$aril- %urnis"ed '- t"e trade is t"eeistence o% a co$pan- polic- or guidelines"o!ing t"at provisions %or a %acilit- !eredesignated as part o% t"e e$plo-eessalaries.4 E s"o!ed Sinu$pangSala-sa-

SC: 7e agree !it" t"e +&Cs nding t"att"e sinu$paang sala-sa- state$entssu'$itted '- ur


9/23

Co$$ission,6t"is Court !as con%ronted

!it" t"e issue on t"e proper

c"aracteriNation o% t"e %ree 'oard and

lodging provided '- t"e e$plo-er. 7e

eplained:

T"e Court, at t"is point, $a2es a

distinction 'et!een @%acilities@ and@supple$ents@. It is o% t"e vie! t"at t"e

%ood and lodging, or t"e electricit- and

!ater allegedl- consu$ed '- private

respondents in t"is case !ere not %acilities

'ut supple$ents. 9S!pplements9,

t"ere%ore, constitute etra re$uneration

or special privileges or 'enets given to or

received '- t"e la'orers overand a'ove

t"eir ordinar- earnings or !ages

P;PSE IS MATEIA&. ;lti$atel-, t"e realdierence lies not on t"e 2ind o% t"e

'enet 'ut on t"e purpose !"- it !as

given '- t"e e$plo-er% +f it is primaril&

for the emplo&ees gain, then the

'ene$t is a facilit& if its provision is

mainl& for the emplo&ers advantage,

then it is a s!pplement. Again, t"is is to

ensure t"at e$plo-ees are protected in

circu$stances !"ere t"e e$plo-er

designates a 'enet as deducti'le %ro$

t"e !ages even t"oug" it clearl- !or2s to

t"e e$plo-ers greater convenience oradvantage.

;nder t"e purpose test, s!'stantial

consideration m!st 'e given to the

NA"=RE of the emplo&ers '!siness in

relation to the character or t&pe of

6ork performed '& the emplo&ees

involved%

+AT;E F Es /;SI+ESS. ur ur


10/23


11/23

/ased on t"e %oregoing pronounce$ent, it

is o'vious t"at t"e 'enetsentitle$ents

su'8ects o% t"e instant case are all

'onuses !"ic" !ere given '- t"e private

respondent out o% its generosit- and

$unicence.

: Can t"ese 'onuses 'e considered parto% t"e !age or salar- or co$pensation

$a2ing t"e$ en%orcea'le o'ligationsJ

SC: +.

For a 'onus to 'e en%orcea'le:

(a) it $ust "ave 'een pro$ised '- t"e

e$plo-er and epressl- agreed

upon '- t"e parties,KL

(') or it $ust "ave "ad a ed

a$ountK4Land "ad 'een a long

and regular practice on t"e part o%

t"e e$plo-er.KL

+N "#E CASE A" :AR> T"e'enetsentitle$ents in uestion !erenever su'8ects o% an- epress agree$ent'et!een t"e parties. T"e- !ere neverincorporated in t"e Collective /argainingAgree$ent (C/A).

T"e records reveal t"at t"ese'enetsentitle$ents "ave not 'eensu'8ects o% an- epress agree$ent'et!een t"e union and t"e co$pan-, and"ave not -et 'een incorporated in t"eC/A%

NO H+ME; AO=N"% T"e C"rist$asparties and its incidental 'enets, and t"egiving o% cas" incentive toget"er !it" t"eservice a!ard cannot 'e said to "ave eda$ounts. 7"at is clear %ro$ t"e records ist"at over t"e -ears, t"ere "ad 'een a

do!ntrend in t"e a$ount given as servicea!ard.

+T A &+0 PACTICE. Also, t"e grant o%t"ese t!o a%ore$entioned 'onuses cannot'e considered to "ave 'een t"e privaterespondents long and regular practice. To'e considered a regular practice, t"egiving o% t"e 'onus s"ould "ave 'eendone over a long period o% ti$e, and $ust'e s"o!n to "ave 'een consistent and

deli'erate.KLT"e do!ntrend in t"e granto% t"ese t!o 'onuses over t"e -earsde$onstrates t"at t"ere is not"ingconsistent a'out it.

"o hold that an emplo&er sho!ld 'eforced to distri'!te 'on!ses 6hich itgranted o!t of kindness is to penaliDe

him for his past generosit&%

;&I+0: CA #ECISI+ AFFIME#.

"S(+C COR(% v "S(+C E(LOEES=N+ON

FACTS:

TSPIC is engaged in t"e 'usiness o%designing, $anu%acturing, and $ar2etingintegrated circuits to serve t"e

co$$unication, auto$otive, dataprocessing, and aerospace industries.espondent TSPIC E$plo-ees ;nion (FF7)(;nion), on t"e ot"er "and, is t"eregistered 'argaining agent o% t"e ran21and1le e$plo-ees o% TSPIC. T"erespondents are all $e$s o% t"e ;nion.

In 4666, TSPIC and t"e ;nion entered intoa Collective /argaining Agree$ent (C/A)KDL%or t"e -ears to . T"e C/Aincluded a provision on -earl- salar-increases starting Hanuar- until

Hanuar- .

Conseuentl-, on Hanuar- 4, , all t"eregular ran21and1le e$plo-ees o% TSPICreceived a 4O increase in t"eir salar-.Accordingl-, t"e %ollo!ing nine (6)respondents (rst group) !"o !erealread- regular e$plo-ees received t"esaid increase in t"eir salar-. T"e C/A alsoprovided t"at e$plo-ees !"o acuireregular e$plo-$ent status !it"in t"e -ear'ut a%ter t"e eectivit- o% a particularsalar- increase s"all receive a

proportionate part o% t"e increase uponattain$ent o% t"eir regular status

+E7 7A0E #E. T"en on cto'er ,, t"e egional Tripartite 7age andProductivit- /oard, +ational Capitalegion, issued 7age rder +o. +C1DK4L(7 +o. D) 6hich raised the dail&minim!m 6age from (h( 22%


12/23

In Hanuar- 4, TSPIC i$ple$ented t"ene! !age rates as $andated '- t"e C/A.As a result, t"e nine e$plo-ees (rstgroup), !"o !ere senior to t"e a'ove1listed recentl- regulariNed e$plo-ees,received less !ages.

n Hanuar- 46, 4, a %e! !ee2s a%ter

t"e salar- increase %or t"e -ear 4'eca$e eective, TSPICs As correctl-pointed out '- TSPIC, t"e overpa-$ent o%its e$plo-ees !as a result o% an error. T"iserror !as i$$ediatel- rectied '- TSPICupon its discover-. 7e "ave ruled 'e%oret"at an erroneousl- granted 'enet $a-'e !it"dra!n !it"out violating t"epro"i'ition against non1di$inution o%

'enets.


13/23

deduct %ro$ t"e salaries 'ased on t"eco$putations discussed in t"is #ecision.

;&I+0: AFFIME# 7 M#IFICATI+S

LE(AN"O CERA+CS v LE(AN"OCERA+CS E(LOEES ASSOC+A"+ON

FACTS:

Petitioner &epanto Cera$ics 'usiness ispri$aril- to $anu%acture, $a2e, 'u- andsell, on !"olesale 'asis, a$ong ot"ers,tiles, $ar'les,$osaics and ot"er si$ilar products.

espondent &epanto Cera$ics E$plo-eesAssociation (respondent Association) is alegiti$ate la'or organiNation dul-registered !it" t"e #epart$ent o% &a'or

and E$plo-$ent. It is t"e sole andeclusive 'argaining agent in t"eesta'lis"$ent o% petitioner.

In #ec., &epanto gave P, 'onus to itse$plo-ees.

Su'seuentl-, in Septe$'er 4666,petitioner and respondent Associationentered into a Collective /argainingAgree$ent (C/A) !"ic" provides %or,a$ong ot"ers, t"e grant o% a C"rist$asgi%t pac2age'onus to t"e $e$'ers o% t"e

respondent Association.

In t"e succeeding -ears, 4666, and4, t"e 'onus !as not in cas". Instead,petitioner gave eac" o% t"e $e$'ers o%respondent Association Tile RedemptionCerti$cates e!ivalent to (,***%**%

T"e 'onus %or t"e -ear is t"e root o%t"e present dispute. Petitioner gave a-ear1end cas" 'enet o% Si


14/23

!it"out ualication. Terse and clear, t"esaid provision did not state t"at t"eC"rist$as pac2age s"all 'e $ade todepend on t"e petitioners nancialstanding. T"e records are also 'ere%t o%an- s"o!ing t"at t"e petitioner $ade itclear during C/A negotiations t"at t"e'onus !as dependent on an- condition.

Indeed, i% t"e petitioner and respondentAssociation intended t"at t"eP,.'onus !ould 'e dependent on t"eco$pan- earnings, suc" intention s"ould"ave 'een epressed in t"e C/A.

+ FI+A+CIA& CISIS. #espite t"e AsianFinancial Crisis in 466D14666, petitionerCA++T insist 'usiness losses as 'asis%or disregarding its underta2ing. In 466D,petitioner suered net loss o% $ore t"an QP4M and -et it gave a P 'onus tot"e $e$s o% t"e respondent assocn.

Also, in 1 4 despite negative FS,still it $anaged to give e$plo-ees t"esaid 'onus.

All given, 'usiness losses are a %ee'leground %or petitioner to repudiate itso'ligation under t"e C/A. T"e rule issettled t"at an- 'enet and supple$ent'eing en8o-ed '- t"e e$plo-ees cannot'e reduced, di$inis"ed, discontinued oreli$inated '- t"e e$plo-er. T"e principleo% non1di$inution o% 'enets is %oundedon t"e constitutional $andate to protect

t"e rig"ts o% !or2ers and to pro$ote t"eir!el%are and to aord la'or %ull protection.

;&I+0: PETITI+ #E+IE#.

EAS"ERN "ELECON (#+LS% v EAS"ERN"ELECOS E(LOEES =N+ON

FACTS:

Eastern Teleco$$unications P"ils., Inc.(ETPI) is a corporation engaged in t"e'usiness o% providing teleco$$unications

%acilities, particularl- leasing internationaldate lines or circuits, regular landlines,internet and data services, e$plo-ingapproi$atel- e$plo-ees.

Eastern Teleco$s E$plo-ees ;nion (ETE;)is t"e certied eclusive 'argaining agento% t"e co$pan-s ran2 and le e$plo-ees!it" a strong %ollo!ing o% 4? regular$e$'ers. It "as an eisting collectiKveL'argaining agree$ent !it" t"e co$pan-

to epire in t"e -ear !it" a SideAgree$ent signed on Septe$'er , 4.

&A/ #ISP;TE. In essence, t"e la'ordispute !as a spin1o o% t"e compan&splan to defer pa&ment of the 2**.)th, .


15/23

a co$pan- practice !"ic" could no longer'e unilaterall- !it"dra!n '- ETPI.

+&C: Co$plaint o% union dis$issed Ecannot 'e %orced to pa- t"e ;nion $e$st"e 4t", 4Gt", and 4t" $ont" 'onuses %ort"e -ear o% 4 since it !as 'asicall- a$gt prerog.

CA: declared t"at t"e Side Agreementsof the .3 and 2**. C:A created acontract!al o'ligation on E"(+ toconfer the s!'ect 'on!ses to itsemplo&ees 6itho!t !ali$cation orcondition% It also %ound t"at t"e grant o%said 'onuses "as alread- ripened into aco$pan- practice and t"eir denial !oulda$ount to di$inution o% t"e e$plo-ees'enets.

ISS;E: 7"et"er or not petitioner ETPI is

lia'le to pa- 4t"

, 4Gt"

and 4t"

$ont"'onuses %or t"e -ear and 4t"$ont"'onus %or t"e -ear to t"e $e$'erso% respondent union


16/23

Respondents 6orked as instr!cted!ntil April 2*, ., '!t 6itho!treceiving their 6ages after 6hich,the& 6ere terminated fromemplo&ment.

CMP&AI+T. Against #+& Securit- andpetitioner %or illegal dis$issal, separation

pa-, salara- dierential, 4t" $ont"pa-,etc.

&A: Against #+& and petitioner orderedsep pa- 'ut +T illegall- dis$issed

ISS;E: 7+ CA erred in $a2ing petitionerlia'le solidaril- ! #+&


17/23

months at a time.KGLT"e- !ere assigned atdierent outlets, super$ar2ets and stores!"ere t"e- "andled all t"e products o%PW0. T"e- received t"eir !ages %ro$ Pro$$10e$ or SAPS.

CMP&AI+T. against PW0 %or regulariNation,service incentive leave pa- and ot"er 'enets

!it" da$ages. T"e co$plaint !as latera$endedK44Lto include t"e $atter o% t"eirsu'seuent dis$issal.

ISS;E: !"et"er PW0 is t"e e$plo-er o%petitioners

7"ere la'or1onl- contracting eists,t"e &a'or Code itsel% esta'lis"es an e$plo-er1e$plo-ee relations"ip 'et!een t"e e$plo-erand t"e e$plo-ees o% t"e la'or1onl-contractorIn t"e #ecision, t"e SC ruled t"at (a) t"atPro$$10e$, Inc. (Pro$$10e$) is alegiti$ate independent contractor (') t"atSales and Pro$otions Services (SAPS) is ala'or1onl- contractor conseuentl- itse$plo-ees are considered e$plo-ees o%Procter W 0a$'le P"ils., Inc. (PW0) (c) t"atPro$$10e$ is guilt- o% illegal dis$issal (d)

t"at SAPSPW0 is li2e!ise guilt- o% illegaldis$issal (e) t"at petitioners are entitled toreinstate$ent and (%) t"at t"e dis$issede$plo-ees o% SAPSPW0 are entitled to $oralda$ages and attorne-s %ees t"ere 'eing 'ad%ait" in t"eir dis$issal.

ES&;TI+

Procter and 0a$'le led an M.

The March 9, !"! #ecision has attained$nality% it is therefore i&&uta'le.T"us a

nd

M is a Ps clai$ t"at t"e Court erredin not appl-ing t"e %our1%old test, particularl-t"e control test in deter$ining !"et"er SAPSis a legiti$ate independent contractor or ala'or1onl- contractor. As discussed in ourMarc" 6, 4 #ecision, t"e applica'le rulesare Article 4 o% t"e &a'or Code and ule
http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/160506.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/160506.htm#_ftn11http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/160506.htm#_ftn5http://sc.judiciary.gov.ph/jurisprudence/2010/march2010/160506.htm#_ftn11


18/23

5III1A, /oo2 III o% t"e $ni'us ulesI$ple$enting t"e &a'or Code, as a$ended'- #epart$ent rder +o. 4D1.KL

T"ere%ore, t"e control test is $erel- one o% t"e%actors to consider. T"is is clearl- deduced%ro$ t"e a'ove1provision !"ic" states t"atla'or1onl- contracting eists !"en any o% t"e

t!o ele$ents is present. In our Marc" 6, 4#ecision, it !as esta'lis"ed t"at SAPS "as nosu'stantial capitaliNation and it !asper%or$ing $erc"andising and pro$otionalactivities !"ic" are directl- related to PW0>s'usiness. Since SAPS $et one o% t"ereuire$ents, it !as enoug" 'asis %or us to"old t"at it is a la'or1onl- contractor.Conseuentl-, its principal, PW0, is consideredt"e e$plo-er o% its e$plo-ee.

H;STIFICATI+ F &ACU F S;/.CAPITA&.SA(S having a paid5in capital of

onl& (.,2


19/23

la'or1onl- contractor is euivalent to declaringt"at t"ere is an e$plo-er1e$plo-eerelations"ip 'et!een t"e principal and t"ee$plo-ees o% t"e supposed contractor, and t"ela'or1onl- contractor is considered as a $ereagent o% t"e principal, t"e real e$plo-er.

+ /ASIS. In t"e present case, petitioners

clai$ t"at t"eir contractors are independentcontractors, and, t"ere%ore, t"is case is one o%per$issi'le 8o' contracting, is !it"out 'asis.*irst,respondents !or2 as !eavers, grinders,sanders and nis"ers is directl- relatedto M0TI>s principal 'usiness o% rattan %urniture$anu%acturing. Where the emplo&ees aretasked to !ndertake activities !s!all&desira'le or necessar& in the !s!al'!siness of the emplo&er, the contractoris considered as a la'or5onl& contractorand s!ch emplo&ees are considered as

reg!lar emplo&ees of ER%

Secon%, M0TI !as !na'le to present an&proof that its contractors had s!'stantialcapital% "here 6as no evidencepertaining to the contractors0capitaliDation nor to t"eir invest$ent intools, euip$ent or i$ple$ents actuall- usedin t"e per%or$ance or co$pletion o% t"e 8o',!or2, or service t"at t"e- !ere contracted torender. T"e la! casts t"e 'urden on t"econtractor to prove t"at it "as su'stantialcapital, invest$ent, tools, etc. E$plo-ees, on

t"e ot"er "and, need not prove t"at t"econtractor does not "ave su'stantial capital,invest$ent, and tools to engage in 8o'1contracting.

T"us, t"e contractors are la'or1onl- contractorssince t"e- do not "ave su'stantial capital orinvest$ent !"ic" relates to t"e serviceper%or$ed and respondents per%or$edactivities !"ic" !ere directl- relatedto M0TI>s$ain 'usiness.

SOL++;AR L+A:% M0TI, t"e principal

e$plo-er, is solidaril- lia'le !it" t"e la'or1onl- contractors, %or t"e rig"t%ul clai$s o% t"ee$plo-ees. ;nder t"is set1up, la'or1onl- contractors are dee$ed agents of theprincipal, M0TI, and t"e la! $a2es t"eprincipal responsi'le to t"e e$plo-ees o%t"e la'or1onl- contractor as i% t"e principalitsel% directl- "ired or e$plo-ed t"ee$plo-ees.


S(+C N S(AN v (AJE

FACTS:

S!i%t Foods, Inc. (Swit) is a su'sidiar- o%FM Corporation t"at $anu%actures and

processes $eat products and ot"er %oodproducts. SNSs '!siness is to s!ppl&manpo6er services to its clients for afee%S6ift and SNS have a contract topromote S6ift prod!cts.

Pa8e, a$ong ot"ers, !or2ed as #eliPro$o0irls o% S!i%t products in varioussuper$ar2ets in Tarlac and Pa$panga.

CMP&AI+T. T"e- !ere all dis$issed %ro$t"eir e$plo-$ent on Fe'ruar- D,466D. T"e- led t!o co$plaints %or illegal

dis$issal against S+S and S!i%t 'e%ore t"e+ational &a'or elations Co$$ission(45*).

&A: %ound S+S to 'e t"e agent o% S!i%tsolidaril- lia'le

+&C: dis$issed appeal %or lac2 o% $erit

ISS;E: 7+ S+S is solidaril- lia'le


20/23

"as su'stantial capital, and "e "asassured t"e contractual e$plo-eesentitle$ent to all la'or and occupationalsa%et- and "ealt" standards, %ree eerciseo% t"e rig"t to sel%1organiNation, securit- o%tenure, and social and !el%are 'enets

RE=+S+"ES OH LEG+"+A"E JO:5

CON"RAC"+NG>4) T"e contractor or su'contractor carrieson a distinct and independent 'usinessand underta2es to per%or$ t"e 8o', !or2or service on its o!n account and underits o!n responsi'ilit-, according to its o!n$anners and $et"ods, and %ree %ro$ t"econtrol and direction o% t"e principal in all$atters connected !it" t"e per%or$anceo% t"e !or2 ecept as to t"e resultst"ereo%

) t"e contractor or su'contractor "as

su'stantial capital or invest$ent and

) t"e agree$ent 'et!een t"e principaland contractor or su'contractor assurest"e contractual e$plo-ees entitle$ent toall la'or and occupational sa%et- and"ealt" standards, %ree eercise o% rig"t tosel%1organiNation, securit- o% tenure, andsocial and !el%are 'enetMoreover, as %ound '- t"e &a'or Ar'iter,t"ere !as no evidence t"at S+S "assu'stantial capital or invest$ent.

In vie! o% t"e %oregoing, !e conclude t"att"e reuisites a'ove1$entioned are noto'taining in t"e present case.


21/23


22/23


:A:AS v LORENO S#+((+NG COR(%

FACTS:

espondent &orenNo S"ipping Corporation

(&SC) is a dul- organiNed do$estic

corporation engaged in t"e s"ipping

industr- it o!ns several euip$ent

necessar- %or its 'usiness. n Septe$'er

6, 466?, LSC entered into a +eneral

uip&ent Maintenance Repair and

Manage&ent (ervices Agree&entI

-Agree&ent/ 6ith :est anpo6er

Services, +nc% -:S+/%;nder

t"eAgreement, /MSI undertoo2 to provide$aintenance and repair services to &SCs

container vans, "eav- euip$ent, trailer

c"assis, and generator sets. :S+

f!rther !ndertook to provide

checkers to inspect all containers

received for loading to andBor

!nloading from its vessels%

&EASE. &SC leased its euip$ent, tools,

and tractors to /MSI.KLT"e period o% lease

!as coter$inous !it" t"eAgreement.

:S+ then hired petitioners onvario!s dates to 6ork at LSC ascheckers, 6elders, !tilit& men, clerks,forklift operators, motor pool andmachine shop 6orkers, technicians,trailer drivers, and mechanics%Si-ears later, or on Ma- 4, , &SCentered into anot"er contract !it" /MSI,t"is ti$e, a service contract.

CMP&AI+T. Petitioners led !it" t"e&a'or Ar'iter (&A) a co$plaint %orregulariNation against &SC and /MSI. ncto'er 4, , &SC ter$inatedt"eAgreement, eective cto'er 4,.Conseuentl-, petitioners lost t"eire$plo-$ent.

/MSI asserted t"at it is an independentcontractor. It averred t"at it !as !illing toregulariNe petitioners "o!ever, so$e o%t"e$ lac2ed t"e reuisite ualications %ort"e 8o'. /MSI !as !illing to reassign

petitioners !"o !ere !illing to acceptreassign$ent. /MSI denied petitionersclai$ %or underpa-$ent o% !ages andnon1pa-$ent o% 4t"$ont" pa- and ot"er'enets.

&A: #is$issed petitioners co$plaint.Petitioners !ere EEs o% /MSI It !as /MSI

!"ic" "ired petitioners, paid t"eir !ages,and eercised control over t"e$.

APPEA&: Petitioners appealed to t"e+ational &a'or elations Co$$ission(+&C), arguing t"at /MSI !as engaged inla'or1onl- contracting. T"e- insisted t"att"eir e$plo-er !as &SC.

+&C: Petition 0A+TE# /MSI +Tengaged in leg. 8o' contracting.

&SC !ent to CA via certiorari. /MSI !as anindependent contractor

CA: eversed t"e CA relied on t"eprovisions o% t"eAgreement, !"erein/MSI !arranted t"at it is an independentcontractor, !it" adeuate capital,epertise, 2no!ledge, euip$ent, andpersonnel necessar- %or t"e servicesrendered to &S.


23/23

su'contracting i% t"e %ollo!ing conditionsconcur:

(a) T"e contractor carries on a distinct andindependent 'usiness and underta2es t"econtract !or2 on "is account under "iso!n responsi'ilit- according to "is o!n$anner and $et"od, %ree %ro$ t"e control

and direction o% "is e$plo-er or principalin all $atters connected !it" t"eper%or$ance o% "is !or2 ecept as to t"eresults t"ereo%

(') T"e contractor "as su'stantial capitalor invest$ent and

(c) T"e agree$ent 'et!een t"e principaland t"e contractor or su'contractorassures t"e contractual e$plo-ees>entitle$ent to all la'or and occupationalsa%et- and "ealt" standards, %ree eercise

o% t"e rig"t to sel%1organiNation, securit- o%tenure, and social !el%are 'enets.KL

Given the a'ove standards, 6es!stain the petitioners contentionthat :S+ is engaged in la'or5onl&contracting%6irst, petitioners !or2ed at &SCs pre$ises,and no!"ere else. t"er t"an t"eprovisions o% t"eAgreement, there 6asno sho6ing that it 6as :S+ 6hichesta'lished petitioners 6orkingproced!re and methods, 6hich

s!pervised petitioners in their 6ork,or 6hich eval!ated the same. "here6as a'sol!te lack of evidence that:S+ e7ercised control over them ortheir 6ork, e7cept for the fact thatpetitioners 6ere hired '& :S+%

Secon%, &SC 6as !na'le to presentproof that :S+ had s!'stantialcapital. T"e record 'e%ore us is 'ere%t o%an- proo% pertaining to t"e contractors

capitaliNation, nor to its invest$ent intools, euip$ent, or i$ple$ents actuall-used in t"e per%or$ance or co$pletion o%t"e 8o', !or2, or service t"at it !ascontracted to render. What is clear 6asthat the e!ipment !sed '& :S+6ere o6ned '&, and merel& rentedfrom, LSC%

Thir%, petitioners performed activities6hich 6ere directl& related to themain '!siness of LSC. T"e !or2 o%petitioners as c"ec2ers, !elders, utilit-$en, drivers, and $ec"anics could onl- 'ec"aracteriNed as part o%, or at least clearl-related to, and in t"e pursuit o%, &SCs'usiness. &ogicall-, !"en petitioners !ereassigned '- /MSI to &SC, /MSI acted$erel- as a la'or1onl- contractor.

5astly, as %ound '- t"e +&C, /MSI "ad no

ot"er client ecept %or &SC, and neit"er/MSI nor &SC re%uted t"is nding, t"ere'-'olstering t"e +&C nding t"at /MSI is ala'or1onl- contractor.

Conseuentl-, t"e !or2ers t"at /MSIsupplied to &SC 'eca$e regulare$plo-ees o% t"e latter.

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