JUNE 19
Power to control!
Let us begin with Employee’s Compensation. The beginning of
employee’s compensation is Picart vs. Smith (last clear chance? :o).
There is a cart loaded with coal. It is on rails. One of the rails
was broken or disjointed. So much so that when the cart goes over it,
it sinks, then, recovers. It has been 3 days like that. The employees
reported that to the supervisor. Nothing is done.
Employee in question is pushing the cart. His companions warn
him: Naay tigmahan (hehe .. sori .. wala ko kabalo sa term ). Ayaw
paluyo dira. Wala siya nagpatuo, nagpaluyo siya. Natikwang ang cart.
Nadat-ugan siya.
When you talk about coal carts, it’s supposed to be 1 ton.
The defense of the employer: negligence. Giingnan na siya ayaw
paluyo dira, tua nagdiretso!
Cause of action of the employee: the employer is negligent. He
did not repair that. That is gross negligence because he ignored 3
notices.
Can the employee recover?
Negligence is beside the point because our employee’s
compensation now is a no-fault system.
All you have to do is:
1. you are employed
2. it occurred at the workplace
3. it occurred during working hours
That is enough. That is work-related injury, sickness or death.
How many of you have gone through the ER-EE relationship
cases, this list of cases?
Supposed you are asked in the bar question: Is the rendition of
service or labor essential in an ER-EE relationship?
If you say yes, where is it in the 4 requisites for the existence
of ER-EE relationship? Does it say one, renders labor to another?
NO. The four requisites, as enunciated in Al Lagadan case (Viana vs.
May 31, 1956), and repeated in LVN vs. PHIL. MUSICIANS GUILD
(January 28, 1961), are:
1. selection and hiring
2. payment of wages
3. power to fire
4. power to control not only the goals to be achieved but
also the means and methods used
Haa man ang service dira?
Now, because you have read those cases of ER-EE relationship,
why is it that rendition of services is not one of the requisites of ER-EE
relationship?
Simply because if the employee does not render service, he
would cease to be an employee. ER-EE relationship would cease. The
contract of employment would cease.
Mu-leave ka kay magbakasyon ka. Wala na, humana ang imong
pagka-employee. Nagkasakit ka, wala ka nitrabaho. Di na ka
employee kay wala ka naman nag-render ug service.
But you still remain an employee, isn’t it? You go on leave and if
that is provided for in your individual contract or CBA, you continue to
receive your regular salary.
Do you receive ECOLA kung kanang mu-absent ka, wala
nitrabaho or vacation leave? What is ECOLA? Dili na siya sakit 
Emergency Cost of Living Allowance, which is? Kamo lain inyong gina-
adtuan sa internet?  Adto mo sa National Wages and Productivity
Commission. All the Labor Standard wages in all the regions are there.
Diri sa Davao, non-agricultural, the highest classification for
wages in our jurisdiction, P234 basic and ECOLA is P16.
Unya, naay Wage Order No. 15 (?), another ECOLA P15.
Effective June 16, basic is P250 plus ECOLA of P15. Before that Wage
Order No. 15, the ECOLA was P16, P234 ang basic, P250 tanan.
Karon, Wage Order No. 15, 2 na ang ECOLA. Naa nay gidugan na
ECOLA P15. P15 plus P16, P31 na karon ang ECOLA. Karong
September, the old ECOLA of Wage Order No. 15 will be integrated
into the basic. Mahimo na ang basic P 250, ang ECOLA P 15, so P
265.
Can you receive ECOLA if wala ka nagtrabaho? YES. It always
goes with the basic. Everytime you are entitled to the basic, you are
entitled to ECOLA.
The issue is now whether you are working or not working. The
issue is are you receiving the basic. If you receive the basic, you are
entitled to ECOLA.
If you are not working and one of the requisites for ER-EE
relationship is actual rendition of service and you are no longer
rendering service, because you are lying in your banig, masakiton ka,
therefore, you took a sick leave, then, you are no longer an employee.
So, to go back, selection and hiring, payment of wages, power to
dismiss and power to control. Those are the 4 requisites.
LVN vs. PHIL. MUSICIANS GUILD brings out the particular
insight that the first 3 requisites, selection and hiring, payment of
wages and power to dismiss, may not be fulfilled. But if the 4 th one is
fulfilled, then, it is possible that there can still be an ER-EE employee.
The next question is: is our relationship Father ER-EE? Even if the 3
are not there – I did not select you nor hire you, I do not pay wages – but,
I control. Pag-ingon nako let us pray, manindog mo  What I say you
write down. Mag-ingon ko magtest ta ugma, magtest ta. So, I have day-
to-day control, not only as to the goal to pass but also the means and
methods. Therefore, does that make you (us, students) my employees and
I (Father as our professor) as your employer?
The power of control test is the most important test but it is not the
only test. It is greatly material in the determination of the existence of a
contract of an ER-EE but it is not the only test.
Look at LVN vs. PHIL. MUSICIANS GUILD.
The argument of LVN is this: You musicians, you think you are our
employees. That is why you want to make a union vis-à-vis us. We are not
your employers. You are not our employees. We are engaged in the
business of making movies. You are engaged in the making of music.
Kana lang daan, dili na ta ER-EE. Sine mi, music mo. How can we be your
employer? Precisely because I do not know about music, I hire a musical
director. The musical director is my employee. I ask him, pangitag music
that will be fitting for this film. I give you lump sum amount. We contract.
Movie company, musical director. Lump sum amount, say P300,000.
Pangita ug music ini. Ang title ani kay “Caregiver”. Basaha nang script,
pangita ug music ana. Siya na ang mangita.
The movie company does not know the business of music. It cannot
know who are the good musicians. Who are the drummers that are worthy
of their instruments? Who are the good wind instruments players? Mayo
kaya ni siya mu-tayhop ug trumpeta kay dako ug lawas? They do not
know.
So, how come they are employees?
Supreme Court says you might have begun like that. But then, you
changed. How? You hired a musical director. But you told the musical
director, anhi magpractice sa studio. Klaruhon ta na! Arun makuha nimo
ang imong tao, naay LVN bus. Gamita na. Unya, call slips. Tagai na ug
call slips imong musicians. Nganong dili na man lang i-call, butangan pa
man ug slips? Kay, record na siya sa opisina sa pagkaon. Pila ka packed
lunch ang gamiton. Mao ra tong tagaan ug packed lunch. Asa gikan ang
packed lunch? Sa musical director? Sa LVN! Ang nagpatawag nila kay
LVN.
That indicates control. All those instances indicate control.
And finally, with the so-called final take, when they decide the
particular rendition of the music that is going to be attached to the movie,
whether or not the musicians are called upon to be part of the visual take of
the movie, because they are part of the scene of the movie, they are
playing there, or they have no part. They just provide the music. In the
final take, the musical director fades out from the scene. And the one who
determines the final take is the movie director.
Tan-awa naghilak si Sharon, paspasan na ang violin 
Ang movie director na ang nagbuot ana. And it is measured by
seconds. That is how movies are finally edited. Either the movie fits into
the music or the music fits into the movie.
(Talks about a scene in the film Butch Cassidy and the Sundance Kid,
starring Paul Newman, where the scene inspired the song Raindrops Keep
Fallin’ on My Head … aaaah! )
It is the musical director who gives the material. But finally, the one
who chooses the precise version is the movie director because in the end,
he is the final creator of the film.
That is why the Supreme Court said, attention to detail is fulfillment of
the 4th requirement. Control, not just as to the goal or the end product, but
also as to the means and methods to produce that end product.
That is what makes LVN vs. PHIL. MUSICIANS GUILD a very
revolutionary ruling.
If you will go through some of the quoted cases there, in the United
States, for a while, they side-tracked into the economic entity test. How
much machinery per worker is invested? That is the test. The Supreme
Court of the US found that is inadequate. It does not fit all kinds of cases.
Finally, they withdraw from that ruling. They went back to the power of
control test.
The other cases show you precisely how the test is met.
Location separation does not violate (?) the power of control
test. The employer may be separated from the employee physically but
the test is still met. That is shown in the case of STERLING PRODUCTS
vs. SOL (February 28, 1963).
Her job is to find out whether the company that contracted certain
advertisements to be aired by certain radio stations at definite times are
complying with their obligations under the contract. The contract for
advertisement stipulates that advertisements for Sterling Products should be
aired at certain times, let us say, noon, evening and early morning and they
are paid per exposure.
Who will verify that? They hire somebody to be a radio monitor. Mao
na siya tig-paminaw. The radio monitor is not informed about the contract.
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The radio monitor is just told to record the time you hear these
advertisements.
That job does not require the radio monitor to report at Sterling
office. She just stays at home and listens to the radio.
When she is finally fired for some other reasons, she claims
security of tenure. The company says no, you are not our employee.
You are a casual employee, just hired for the advertisements.
She says, I am your employee. You gave me an ID. The
employer says that is not definitive. Is that one of the requisites of
ER-EE relationship? You have an ID? Maybe that ID was given to you
so that you can go inside the premises to collect your salary.
The issue is can the control test be met even if the employer is
far away from the employee on a regular, habitual basis? In everyday
of your work, you do not really need him to be close to you, to
supervise you and control the means and methods you are using to
achieve the goal.
The Supreme Court says yes, the control test in this instance is
met. Why? Because of the number of forms Sol had to fill out. She
fills it out.
In other words, in effect, the form supervises the employee.
Pagmuingon siya, 10:45 Astring-o-sol ad. Aah! Namakak man ni siya
kay wala man tay contrata na ana ba, na 10:45. 12 noon naa ta.
So, she is monitored by the forms. So, it is possible to supervise.
It is possible to control the means and methods used.
Kining mga repair crews, let us say Davao Light and Power
Company, there are several crews. Naay short circuit sa Buhangin.
Larga mo. Are they supervised or are they not supervised? They can
be supervised. They are monitored by radio. Their odometer is read
by the security guard before they leave the guard house. Pagbalik ana
niya, record na sad. Mahibaw-an na pila ka kilometro na sila. Wala ba
sila niadto sa Times Beach unya nagkilaw  Mahibaw-an man na.
That is still location separation and yet, you can be monitored.
DY KEH BENG vs. INTERNATIONAL LABOR (May 25,
1979). We are talking here about a maker of kaings. In Cebuano, it
is called bukag. Big baskets.
Apparently, it is farmed out to workers. Some of them make it in
the premises of the employer, others bring the materials home and
what they bring back are finished products.
Can they form a union vis-à-vis Dy Keh Beng who owns the
establishment? If they can, that means they are employees of Dy Keh
Beng. If they cannot, they are not employees. They are independent
contractors making baskets and passing them on to Dy Keh Beng.
But they formed a union. So, they are asserting that they are
employees. When Dy Keh Beng dismissed them, they filed an unfair
labor practice complaint, meaning that they are employees and they
were dismissed because they were forming a union.
The issue is are they employees in the first place?
Dy Keh Beng says my obligation as an employer I have to deny
the control test. And it is very easy for me to do that. I do not even
know these workers. How can I control them? They cannot present
any evidence that I control them. In fact, they just claim that they are
my employees but they have not given any evidence of my control.
Wala sila nakapakita ug bundy clock, time card. Wala sila
nakapakita ug notice na na-late mo. There is no evidence. Therefore,
I cannot be their employer because they have not proven control.
In order to meet the control test, is it necessary that you actually
adduce evidence of exercise of control?
The Supreme Court says no, no need. What is needed is to
prove reservation of that right. Ipakita nimo dinha that you have
the right to control, you can control but you did not control.
Reservation of the right to control is what is now important than
evidence of actual exercise of control.
How can that be proven? Because there are definite standards
for the kaing. The size is pre-determined. The particular make, the
materials, the width, that is given. And according to the Supreme
Court, it escapes common sense that Dy Keh Beng did not accept any
basket that is given. Kagamay sa basket, dili man na dawaton kay dili
man na kaing. That is how you exercise control.
That is important because in subcontracting, this comes up again.
Many times, the workers of the subcontractor will say that we are
really the employees of the principal. Why? Because it is not our
agency that supervises us. It is the client of our agency who
supervises us. Kinsa man nagscreen namo na mu-apply mi aning
special offer? Sila. Kinsa man nag-interview namo? Ang Procter and
Gamble, dili ning Davao Manpower. Kinsa man nag-assign namo na
kining Surf mao ni among ibaligya? Ang kliyente. Kinsa man nag-
supervise namo? Ang kliyente sa among amo.
So, the most important test is the power to control the means
and methods. Therefore, they are the employees. They just the
manpower agency as a conduit. Therefore, there is labor-only
contracting. You cancel out the agency kay wala man jud sila
nagsupervise. The only employer they have is the client.
Remember, even if you cannot prove actual exercise, if you can
prove reservation of the power to control, that is enough.
The last question: whether or not the control test can be met even if
control is intermittent. To pass the control test, must control be continuous
and uninterrupted?
RJL MARTINEZ FISHING vs. NLRC (January 31, 1984)
These are unskilled workers. Their job is to unload the fishing boats of
RJL Martinez. RJL Martinez Fishing has 50 deep sea fishing boats. At least
1 or 2, sometimes more than 5, land (dock siguro .. ) during the day.
And these workers, wade up to their waste and carry the fish all the way to
dry land from the shore. RJL Martinez had to hire workers who will unload
the fishing catch.
When these workers were asking for ECOLA, RJL Martinez decided to
terminate them. They said, no, you cannot terminate us. We are your
employees. RJL said: How you be our employees? You unload us but
then, when there is another ship coming, you also go there and unload and
you also receive salary or compensation from them. So, you are not under
our control. How can you say to your employer controlling the means and
methods when after you unload our ships, there are other ships.
RJL Martinez says our engagement with you is per loading and
unloading. After that, no more. You are casual, you are not regular. That
is the argument of RJL Martinez.
To put it in other terms, RJL Martinez says: kung tinuod pa mi na
employer, ang control namo ninyo continous. Load ka, unload ka. Wala
naman kay loadan, puyo dira. Ayaw na balhin-balhin sa uban. Dira ka
lang. Paghulat dinha. Unya wa naman. Paghulat dinha kay ikaw controlled
ka nako. That is what is RJL Martinez is saying.
The employees are saying that they taking it against us that we look
for more work when the work that you give us is not enough. You just
count the hours that we have unloaded based on a rate, which is minimum
wage. That is what you pay us. That is why to fill up our hours, we go to
other fishing boats when they arrive. But the moment your fishing boats
arrive, because we are your employees, we leave the other fishing boats.
We go and unload from your ships.
Then, RJL Martinez says, for the control test to be met, it must be
continuous. There must be no gap. Otherwise, there is no control.
The Supreme Court says no. Control can be proven even if it is
discontinuous.
Notice the requirements of this test which commentator’s say is the
most important test of ER-EE relationship. The power to control not just
the goal or end to be achieved but also the means and methods used to
achieve the goal.
Read the cases. You still have time to read these. It is not really yet
bar review. Basic, fundamental na 
JUNE 26
I would like to bring to your attention this latest case of:
PHILIPPINE SOCIETY FOR THE PREVENTION OF CRUELTY TO
ANIMALS (PSPCA) vs. COA (Sept. 25, 2007)
Why is this case important? It is decided en banc and the ponente is
Justice Austria-Martinez.
There are several provisions in the Labor Code which says that
government employees are not included. They are not included in the
Labor Code.
There is no problem when it comes to employees of the National
Government, employees of the subdivisions like Davao City, employees of
instrumentalities like the AFP or PNP or the agencies like the BIR and
Bureau of Customs. But the problem comes in when it is government-
owned or controlled corporations.
You are already familiar with the original charter that has been applied
by the Supreme Court in the Lumanta case.
Namely, under Article IX-B, of the Constitution that defines the ambit
of government employees in government-owned or controlled corporations
must have an original charter.
If the corporation was directly created by law and its constitution and
by-laws is a law, then, it is government-owned and controlled corporation.
Therefore, it is not covered by the Labor Code. That is the original
charter test, the charter test.
Here comes the case of Philippine Society for the Prevention of Cruelty
to Animals vs. COA (534 SCRA 112).
PSPCA was created by Act 1285 on January 19, 1905. Tigulang na di
ai ning Prevention of Cruelty to Animals. The law creating it directly is Act
1285. When you say Act, it is not Commonwealth Act. It is not Republic
Act. It is not Presidential Act. It is an Act, which means US Congress pa,
under the US government.
Nganong karon lang ni hilabti sa COA? The case does not say so. But
the case says that COA came there for a survey audit preparatory to their
auditing already, in detail, the financial situation of PSPCA. Why? Because
they got a lot of money from foreign sources.
When the COA reported to PSPCA to survey them, this society refused.
They said that “we are private.” But the COA said, how can you be private
when you were created by Act 1285? And you are, by that Act, granted
power to arrest all those violators of animal laws. You are empowered to
impose fines.
But then PSPCA said that was withdrawn by a later law, CA 148
November 8, 1936. Now, they can no longer arrest and collect fines.
Before, they could. But after the law, no more. They are strictly private.
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 Then, the COA said how are you different are you from the Boy
Scouts of the Philippines, which was created by law and was declared
by the Supreme Court as government? Boy Scouts of the Philippines is
a government-owned and controlled corporation because it was also
created by an act. In fact, the act specifies that it is the official youth
program of the government and the number one boy scout of the
Philippines is the president of the Republic, regardless of whether it is
a male or a female.
So, that was the main argument.
The question is: Is this a government-owned and controlled
corporation, covered by Civil Service, COA, etc?
This is where the Supreme Court in an en banc decision,
unanimous, says that it is not. Supreme Court says that the original
charter test cannot be applied to Philippine Society for the Prevention
of Cruelty to Animals.
Why can it not be applied?
According to the Supreme Court, the original charter test has its
beginnings in the 1935 Constitution and later. Since the underpinnings
of the charter test were introduced only by the 1935 Constitution and
not earlier, it follows that the test cannot apply to the petitioner,
Philippine Society for the Prevention of Cruelty to Animals, because it
was incorporated by virtue of Act 1285 January 19, 1905.
The Supreme Court said settled is the rule that laws in general
have no retroactive effect, unless the contrary is provided.
Then, you have this other argument that there is really no
connection with government with the PSPCA. They never received
funds. They were never commissioned by the government. They
were never audited by COA. They raise their own funds. And they
were never in practice nor deputized by the government to implement
or enforce laws and rules against cruelty to animals.
PSPCA vs. COA (Sept. 25, 2007)
FACTS: PSPCA was incorporated by virtue of Act No. 1285, enacted
on January 19, 1905. At the time of the enactment of Act No. 1285,
the original Corporation Law, Act No. 1459, was not yet in existence.
PSPCA was initially imbued under its charter with the power to
apprehend violators of animal welfare laws. In addition, the petitioner
was to share one-half (1/2) of the fines imposed and collected through
its efforts for violations of the laws related thereto. Subsequently,
however, the power to make arrests as well as the privilege to retain a
portion of the fines collected for violation of animal-related laws were
recalled by virtue of C.A. No. 148.
On Dec. 1, 2003, an audit team from COA visited the office of
PSPCA to conduct an audit survey. The petitioner demurred on the
ground that it was a private entity not under the jurisdiction of COA.
Petitioner explained that although PSPCA was created by special
legislation, this necessarily came about because in January 1905 there
was as yet neither a Corporation Law or any other general law under
which it may be organized and incorporated, nor a SEC which would
have passed upon its organization and incorporation.
Petitioner argues that it exercises no governmental functions, that
nowhere in its charter is it indicated that it is a public corporation, that
if it were a government body, that there would have been no need for
the State to grant it tax exemptions, that the employees of the
petitioner are registered and covered by the SSS, that PSPCA does not
receive any form of financial assistance from the government, that
C.A. No. 148 effectively deprived the petitioner of its powers to make
arrests and serve processes as these functions were placed in the
hands of the police force, that no government appointee or
representative sits on the board of trustees of PSPCA, that its charter
fails to show that any act or decision of the petitioner is subject to the
approval of or control by any government agency, except to the extent
that it is governed by the law on private corporations in general and
that the Committee on Animal Welfare, under the Animal Welfare Act
of 1998, includes members from both the private and the public
sectors.
The respondents contend that since the petitioner is a “body
politic” created by virtue of a special legislation and endowed with a
governmental purpose, then, indubitably, the COA may audit the
financial activities of the latter.
ISSUE: Whether or not PSPCA qualifies as a government agency that
may be subject to audit by respondent COA
HELD: NO, PSPCA is not a government agency. The charter test
cannot be applied.
Essentially, the “charter test” as it stands today provides: The
test to determine whether a corporation is government owned or
controlled, or private in nature is simple. Is it created by its own
charter for the exercise of a public function, or by incorporation under
the general corporation law? Those with special charters are
government corporations subject to its provisions , and its employees
are under the jurisdiction of the Civil Service Commission, and are
compulsory members of the Government Service Insurance System.
Since the underpinnings of the charter test had been
introduced by the 1935 Constitution and not earlier, it follows
that the test cannot apply to the petitioner, which was
incorporated by virtue of Act No. 1285, enacted on January 19, 1905.
Settled is the rule that laws in general have no retroactive effect, unless the
contrary is provided.
There are a few exceptions. Statutes can be given retroactive effect in
the following cases: (1) when the law itself so expressly provides; (2) in
case of remedial statutes; (3) in case of curative statutes; (4) in case of
laws interpreting others; and (5) in case of laws creating new rights. 1[18]
None of the exceptions is present in the instant case.
In a legal regime where the charter test doctrine cannot be applied,
the mere fact that a corporation has been created by virtue of a special law
does not necessarily qualify it as a public corporation.
There being neither a general law on the formation and organization of
private corporations nor a restriction on the legislature to create private
corporations by direct legislation, the Philippine Commission at that moment
in history was well within its powers in 1905 to constitute the petitioner as a
private juridical entity.
So, the Supreme Court said that this case is different from the case of:
VETERANS FEDERATION OF THE PHIL vs. REYES
(483 SCRA 526 – February 28, 2006)
This is an en banc decision. This is by Chico-Nazario.
This time the Supreme Court declared Veterans Federation as
government.
And the reverse here is true, ha. Veterans Federation is an
aggrupation of different veterans clubs. And the veterans clubs are all
funded by private funds. Amot ang membership fees of the veterans. After
you are formed, you are federated with the Veterans Federation.
And the Veterans Federation is affiliated with the Department of
National Defense. In fact, it was placed under direct supervision of the
DND Secretary. It has functions, in time of war, to oversee the recruitment,
etc. It has to coordinate with the government.
And the Supreme Court said that the Veterans Federation is a
governmental corporation. It is a government-owned and controlled
corporation. That is why it was granted tax exemption under RA 1178.
VETERANS FEDERATION OF THE PHIL vs. REYES
(483 SCRA 526 – February 28, 2006)
FACTS: Veterans Federation of the Philippines (VFP) is a corporate body
organized under RA 2640, dated 18 June 1960, as amended, and duly
registered with the SEC.
A DND Departnment Circular was issued and entitled as Further
Implementing the Provisions of Sections 1 and 2 of RA 2640. The said rules
shall govern and apply to the management and operations of the of VFP.
VFP received a letter informing it of the order to conduct Management
Audit of the VFP. VFP alleged that the challenged department circular could
not validly lay standards classifying the VFP, an essentially civilian
organization, within the ambit of statutes only applying to government
entities. Petitioner claims that it is not a public nor a governmental entity
but a private organization, and advances this claim to prove that the
issuance of DND Department Circular No. 04 is an invalid exercise of
respondent Secretary’s control and supervision.
Petitioner vigorously argues that the VFP is a private non-government
organization, pressing on the following contentions:
1. VFP does not possess the elements which would qualify it as a
public office, particularly the possession/delegation of a portion of
sovereign power of government to be exercised for the benefit of the
public;
2. VFP funds are not public funds;
3. VFP funds come from membership dues;
4. The lease rentals raised from the use of government lands
reserved for the VFP are private in character and do not belong to
the government;
5. VFP retains its essential character as a private, civilian federation of
veterans voluntarily formed by the veterans themselves to attain a unity
of effort, purpose and objectives;
6. The Administrative Code of 1987 does not provide that the VFP is an
attached agency; and
7. DBM declared that the VFP is a non-government organization and
issued a certificate that the VFP has not been a direct recipient of any
funds released by the DBM
ISSUE: Whether or not VFP is a private corporation
HELD: VFP is in fact a public corporation for the following reasons:
1. RA 2640 is entitled “An Act to Create a Public Corporation to be
Known as the Veterans Federation of the Philippines, Defining its
Powers, and for Other Purposes”;
2. Any action or decision of the Federation or of the Supreme
Council shall be subject to the approval of the Secretary of
Defense;
3. VFP is required to submit annual reports of its proceedings for the
past year to the President of the Philippines or to the Secretary of
National Defense;
4. VFP was listed as among the government-owned and controlled
corporations that will not be privatized; and
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5. In Ang Bagong Bayani – OFW Labor Party v. COMELEC , the SC
held in a minute resolution that the “VFP is an adjunct of the
government”.
The functions of VFP are executive functions designed to
implement RA 2640 but also the Constitutional mandate for the State
to provide immediate and adequate care, benefits and other forms of
assistance to war veterans and veterans of military campaigns, their
surviving spouses and orphans.
The fact that no budgetary appropriations have been released to
the VFP does not prove that it is a private corporation. If the DBM,
however, is mistaken as to its conclusion regarding the nature of VFP’s
incorporation, its previous assertions will not prevent future budgetary
appropriations to the VFP. The erroneous application of the law by
public officers does not bar a subsequent correct application of the
law.
Nevertheless, funds in the hands of the VFP from whatever
source are public funds, and can be used only for public purposes.
Neither is the civilian nature of VFP relevant in this case. The
Constitution does not contain any prohibition, express or implied,
against the grant of control and/or supervision to the Secretary of
National Defense over a civilian organization.
The Administrative Code, by giving definitions of the various
entities covered by it, acknowledges that its enumeration is not
exclusive.
Petitioner VFP is a public corporation. As such, it can be placed
under the control and supervision of the Secretary of National Defense,
who consequently has the power to conduct an extensive management
audit of petitioner corporation.
So, read those 2 cases. Those are the latest cases on whether or
not you are covered by the Labor Code.
Another case that falls under when government is supposed to be
not covered by the Labor Code. The other exception is Articles 106 to
107, when it comes to joint and several liability of the contractor if the
government is the contractor.
You are no strangers from the ruling of the Supreme Court that if
the contractor did not pay the salaries of the employees, the indirect
employer, even if it is government, is liable jointly and severally. That
has been the ruling of the Supreme Court.
Here comes the case of:
GSIS vs. NLRC, LANTING SECURITY
G.R. NO. 157647, October 15, 2007
GSIS contracted a janitorial service provider. They entered into
an agreement. In the middle of the agreement, there was a wage
order. And the wage order precisely provided that the increase in the
minimum wage was for the account of the indirect employer. The
contractor will not answer for the increase.
So, the contractor went to the GSIS. Hain naman ang increase?
Mao man ang sulti sa balaod. So, the GSIS paid the contractor. Now,
the contractor did not pay the employees the differential.
The employees of the contractor sued both the contractor and
GSIS, the indirect employer.
GSIS said “we have already paid. So, we have to be discharged
of the obligation. And we are government. So, we should not make
this contractor solely liable because the money has already been paid.”
What did the NLRC say?
NLRC says that you are the only one with visible assets.
Therefore, we are in agreement with the Sheriff to levy on your assets.
GSIS says, does it not matter if we are government?
The Supreme Court said: joint and several liability is for the
benefit of the workers. And this Court is mandated to uphold its
benefit even if the indirect employer is government.
GSIS vs. NLRC, LANTING SECURITY
G.R. NO. 157647, October 15, 2007
FACTS: Lanting Security and Watchman Agency (LSWA) entered into
a Security Service Contract to provide security guards to the properties
of the GSIS.
During the effectivity of the contract, LSWA requested the GSIS
for an upward adjustment of the contract rate in view of Wage Order 1
and 2. GSIS approved the upward adjustment.
On March 15, 1993, GSIS terminated the Security Service
Contract with LSWA. Complainants filed separate complaints against
LSWA for underpayment of wages and non-payment of labor standard
benefits. LSWA filed a Third-Party Complaint against GSIS for
underpayment of complainants' wages. GSIS alleged that the Third-
Party Complaint states no cause of action against it; that LSWA
obligated itself in the Security Service Contract to be solely liable for
the enforcement of and compliance with all existing labor laws, rules
and regulations; that the GSIS Board of Trustees approved the upward
adjustment on a month-to-month basis.
The Labor Arbiter held LSWA and GSIS jointly and severally liable
for the payment of complainants' money claims, pursuant to Articles
106 and 107 of the Labor Code.
The NLRC held the GSIS solely liable for payment of complainants'
money claims. CA reverted back to the ruling holding GSIS and LSWA
jointly and severally liable for the payment of complainants' salary
differentials.
GSIS avers that it cannot twice be held liable for complainants' salary
differentials since it fully paid complainants' salaries by incorporating in the
Security Service Contract the salary rate increases mandated by Wage
Order Nos. 1 and 2; otherwise, it would be unjust enrichment on the part of
complainants and/or LSWA at its expense. It submits that Articles 106 and
107 of the Labor Code were not contemplated by its framers to cover
principals or clients of service contractors who had already paid for the
wages of the contractor or subcontractor.
ISSUE: Whether or not GSIS is solidarily liable for payment of
complainants-respondents’ salary differentials
RULING: YES, GSIS is solidarily liable.
The petition is bereft of merit.
Articles 106 and 107 of the Labor Code provide:
ART. 106. Contractor or subcontractor.– Whenever an employer enters
into contract with another person for the performance of the former’s work,
the employees of the contractor and of the latter’s subcontractor, if any,
shall be paid in accordance with the provisions of this Code.
In the event that the contractor or subcontractor fails to pay
the wage of his employees in accordance with this Code, the
employer shall be jointly and severally liable with his contractor or
subcontractor to such employees to the extent of the work
performed under the contract, in the same manner and extent that
he is liable to employees directly employed by him.
xxx
ART. 107 Indirect employer.– The provisions of the immediately
preceding Article shall likewise apply to any person, partnership, association
or corporation which, not being an employer, contracts with an independent
contractor for the performance of any work, task, job or project. (Emphasis
supplied.)
The joint and several liability of the employer or principal was
enacted to ensure compliance with the provisions of the Code,
principally those on statutory minimum wage. The contractor or
subcontractor is made liable by virtue of his or her status as a direct
employer, and the principal as the indirect employer of the contractor’s
employees. This liability facilitates, if not guarantees, payment of
the workers’ compensation, thus, giving the workers ample
protection as mandated by the 1987 Constitution. This is not
unduly burdensome to the employer. Should the indirect employer
be constrained to pay the workers, it can recover whatever
amount it had paid in accordance with the terms of the service
contract between itself and the contractor.
Under Article 1217 of the Civil Code, if the GSIS should pay the money
claims of complainants, it has the right to recover from LSWA whatever
amount it has paid in accordance with the terms of the service contract
between the LSWA and the GSIS.
Joint and solidary liability is simply meant to assure aggrieved workers
of immediate and sufficient payment of what is due them. This is in line
with the policy of the State to protect and alleviate the plight of the working
class.
Before that, there was this case of:
NATIONAL FOOD AUTHORITY vs. MASADA SECURITY AGENCY
453 SCRA 70 (2005) (see case digests)
You already came across this case.
There was a new wage order. The new wage order says the increase
in the basic is this much. And this is the increase mandated by this law is
the responsibility of the indirect employer.
Masada Security went to NFA, the beleaguered agency, and asked for
the increase and the roll-up cost which come as a result of the increase.
Kung increasan ka ug basic, mu-increase man pud ang imong 13 th month.
Unya, security guards man ni. They work 365 days in a year man. So, naa
nay premium pay, automatic. Every Sunday is considered your rest day.
So, you receive premium pay on Sunday. If mu-overtime ka, musaka pud
ang imong overtime because it is based on the basic.
So, the security agency says, you are obligated not just to pay us the
bare minimum increase mandated by the law, but the necessary increases
that will result because of the increase of the basic. It stands to reason
according to Masada Security.
The NLRC said Masada is correct. The Court of Appeals that it stands
to reason.
When they went to the Supreme Court, the Supreme Court says no.
The law only says the increase will be for the account of the indirect
employer. It does not say the increase plus the necessary following roll-up
increases.
The interpretation therefore of the wage liability in Articles 106 and
107 seems to be interpreted strictly. You cannot be made to shoulder, if
you are an indirect employer, more than what the law literally says. Not
even for consequential increases or the so-called roll-up costs.
That is a Labor Relations term – roll-up costs. Kanang mag-collective
bargaining, mag-ingon ka na tagai ko ug P10 increase daily. Dili man na
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P10 daily. Ang amot ana sa SSS, musaka man. Mabalhin man ka ug
bracket. Iphon man na nimo to find out the total cost of your demand
-13th month increases, overtime increases. And you tell the union, in
truth and in fact, your demand costs this much. For you, it is just a
very low increase. You multiply it with the number of workers and you
say this is the cost. No, that is not the cost. You have to include the
so-called roll-up cost. That is necessarily done in bargain.
But the Supreme Court wala man nakaila kung unsa man and roll-
up cost :o
Where will we (Masada Security) get that?
The Supreme Court said that you will get that from your own
share of the contract price of the agreement between you and National
Food Authority. You must have some shares. That is where you will
get it.
So, those are the 2 latest cases on the solidary liability of Articles
106 and 107.
Let me just bring to your attention the 3 instances where we
say there is an ER-EE relationship created by law. The law itself
creates this ER-EE relationship.
Remember that ER-EE relationship is a contract. And under the
rules of contract, we follow the number one of principle, which is the
principle of autonomy. Parties are free whether or not to enter into
a contract. Dutlan na gani nimo ug pusil ang iyang bagolbagol, dili na
na kontrata. Pinugsanay na na. Bisan pa naa kay hinungdan ngano
nimo gidutlan ug pusil. That is not valid because that is not free
consent. It must be voluntary.
What happens when the government says there is a contract, an
ER-EE relationship, bisan wala ninyo but-a? That is what happens in
an ER-EE relationship enforced by law.
1. Indirect employer
Company A engages Masada security to provide janitorial
services. The price for the janitorial services is computed by square
meters. At how much are you willing to pay the janitorial services?
Once a week there must be a thorough shampoo of the floor. Once a
month there must be a general cleaning of the ceiling, etc. Unya mu-
bid ang different agencies based on the square meters. Iphon nimo
pila katao imong ipadala.
The law says the if the agency cannot pay the employees na
iyang gipadala sa indirect employer, the indirect employer becomes
jointly and solidarily (severally ata dapat ) liable. He becomes like
the employer because he must pay the wages that should have not
been paid but was not paid by the direct employer, the janitorial
agency.
Remember this test: if it is a bonafide contract, meaning, not
labor-only contracting, then, you can only be made liable as to the
underpayment of wages and benefits. Wala ka tagai ug ECOLA, 13 th
month, overtime pay, premium pay. Kana. Mao na imong tubagon.
Pero if wala tagai ug maternity benefits, wala ka nay labot ni ana.
That is not wages and benefits. That is social legislation.
When do you know it is bonafide? When you contract out the
services that the Supreme Court has said in NERI vs. NLRC as
contractable services. These are needs that may be contracted out.
What are these according to Neri?
a. security services
b. maintenance services
c. janitorial services
d. other technical services
That is:
NERI vs. NLRC (July 21, 1993) (see case digests)
The Supreme Court takes judicial notice of the widespread
practice, both in the public and private sector of contracting out
security services, janitorial services, maintenance services, and other
technical services.
Supreme Court can say that because if you go to the Supreme
Court webpage, one of their pages is for those who want to qualify to
bid for janitorial services of the court and security services. The
requirements are there. The Supreme Court has so many
requirements.
The question is: suppose, those janitorial service providers or
those security agencies fail to pay the guards and the janitors that are
seconded to the courts, who will be sued, jointly and severally? 
You should write a paper on that.
What will happen when they file a case? The Labor Arbiter will
not probably know yet the consequences here. Although, it will begin
to know because who will it summon to appear?  Chief Justice Puno,
being the head of the Supreme Court? 
The ruling for the discrimination for age in the US Supreme Court
is the same as our ruling here on security of tenure. The burden of
proof that the employer did not discriminate against an employee by
reason of age is the burden of proof of the employer himself, not the
employee.
Before that is the job of the unions, to gather all these data to prove
that there is discrimination. Let us say race – lagum ko, negro unya wala
ko pasudla dinha. How do I prove discrimination? Statistical. If in this city,
its unskilled workers, the market for your labor is only local. If the city has
the population percentage of 40% black, 60% non-black and the labor
component of this particular factory is not 40-60, then, already, the
employer must prove that this statistic is not indicative of discrimination.
But now, for age, all you have to do is allege. Mao ni akong edad. I
was employed, then, I was removed. Now, it is the turn of the employer to
prove that there was no discrimination when you were removed. That is
the rule.
Sa ato, wala pa na. Why? Pangutan-on man sa imong application
form, how old are you? Date of birth? You cannot require any application
for the date of birth unless the age has direct relation to the job.
Ana sila looking for a child actor? Unya 50 years old and above ka?
Discrimination oh?  That is direct relation to the job. Then, you can ask
for the date of birth. Unless it is directly related, you cannot.
JULY 9
More or less we have covered all the ER-EE relationship cases.
I will just touch on an important particular issue: whether or not ER-
EE relationship is a question of fact or a question of law.
You will find just as many cases that will say where the ER-EE
relationship is question of fact. Facts determine whether there exists and
ER-EE relationship. And there are cases also where the SC says ER-EE
relationship is a question of law.
What is the correct configuration of that particular question?
Reading through all the cases, the way to reconcile is this:
If the putative ER is only one, then, most likely, you will have
a question of fact and the requirements there for the existence of the ER-
EE relationship.
If the requirements are hazy, like selection and hiring, payment of
wages, power to dismiss, then, the settling issue will be power of control,
not its existence but its reservation in the very least – whether or not the
putative employer reserves the right to control, even if no evidence is given
of its actual existence. If there is glimmer of evidence on that, then, the
trier of facts must hold that the ER-EE relationship exists. Why? Because
the presumption is or the biased is for the existence of the ER-EE
relationship.
For purposes of the ordinary man, there is greater protection if there
exists ER-EE relationship. That is why the law stretches the interpretation
of the 4 requirements – power to dismiss, selection and hiring, payment of
wages and power of control.
No where in the requirements does it say rendition of service.
In the same way, you see how the law operates on a contract of
carriage. Is it interpreted in favor of the common carrier? NO, the common
carrier is under very heavy exaction. It must exercise not only the diligence
of a good father of a family but the greatest degree of diligence. Even if
there is no carriage yet, the contract of carriage already exists. Even if the
passenger has already reached his destination, for as long has not yet gone
out fully, freely and autonomously to charter his course anywhere, the
contract of carriage still exists.
That is why in ER-EE relationships, the requirements are stretched
precisely for the protection for ordinary worker.
The picture however change when there are multiple putative
employers, when there is contracting and sub-contracting. Once
you have that picture, it is not the facts that determine. It is the law
that determines.
So much so, that even if certain personalities that are excluded by the
Labor Code like the government, why is it that they are still made to answer
for the liabilities of the government even if they are government when there
is non-payment or underpayment of wages? Because it is no longer the
facts that determine, it is the law itself that determines.
Once you have multiple putative employers, then, most likely, it is the
law that determines. In those cases, ER-EE relationship is a question of
law, no longer a question of fact.
Please keep that in mind  I cannot recall if that question has been
asked in the Bar Examinations. But someday, it might be asked.
We have gone through the list of contracts close to, akin to, similar to
ER-EE relationship. And our mind is now set, by reading through these
cases, reading through these facts, gradually they built a horizon. That is
the use of reading cases – you accumulate a sense of facts stored in a
background.
Then, you come through a set of facts, whether it may be in the bar
examinations or later on when you are practicing as a lawyer. To make
sense of those facts, you put it against the horizon.
5
 You give the data a chance to address you, a chance to speak to
you. In the end, it is your horizon 
The first thing that you do is you ask is this or is this not an ER-
EE relationship. What horizon will you use pertinent to the cases of
ER-EE relationship? If it does not make sense in any of those cases,
then, you slowly eliminate it. And your answer will be short.
If you decide that it is an ER-EE relationship, then, you move it
into another horizon because Article 82 lists a series of ER-EE
relationship that are not covered for purposes of Labor Standards Law.
ARTICLE 82. Coverage. — The provisions of this title shall
apply to employees in all establishments and undertakings whether for
profit or not, but not to government employees, managerial
employees, field personnel, members of the family of the employer
who are dependent on him for support, domestic helpers, persons in
the personal service of another, and workers who are paid by results
as determined by the Secretary of Labor in appropriate regulations.
As used herein, "managerial employees" refer to those whose
primary duty consists of the management of the establishment in
which they are employed or of a department or subdivision thereof,
and to other officers or members of the managerial staff.
"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.
What are those?
1. The first in the enumeration of the Labor Code, Article 82 is not
an exception but an exclusion – that is government employees.
They are not included because there is no ER-EE relationship
between the government and the government EE. They are not
covered.
But then again, because of certain provisions, they are covered.
What are some provisions that necessitate the coverage of
government?
a. Case of of Philippine Society for the Prevention of
Cruelty to Animals (PSCPA) vs. COA 534 SCRA 112
(2007)
Under Article IX-B of the Constitution, government EEs
covers all those that are engaged by the national
government, any of its subdivisions, agencies,
instrumentalities, including government-owned and
controlled corporations with original charter.
Kanang mga in-ana, timan-an na niyo. Formula na na.
It should be one of your standard phases.
The implication of Article IX-B of the Constitution is that
if you have an original charter, you are government. You
are excluded from the Labor Code. That is the implication.
That is known as the original charter test.
The Supreme Court said that the Philippines Society for
Prevention of Cruelty to Animals, even if it has an original
charter because it was directly created by law (Act 1285,
dated January 19, 1905), it is still private because the
original charter test cannot be given retroactive
effect. At the time it was created by law, there was no
Constitution - no 1935 Constitution, no 1973 Constitution, no
Constitution of 1987.
Besides that, it really functions as a private entity. It
had private funding. Its administration of funds was private.
Its application of private funds was not governmental in
nature.
This is differentiated from Boy Scouts of the
Philippines vs. NLRC because the Boy Scouts was already
created by an original charter before the 1935 Constitution.
Its administration has always been directly linked with the
government because it has always been used in the past as
a direct arm for influencing the youth, which in the
Constitution is supposed to be one of the pillars of the future
of our society. In all the various schools, boy scouting is a
specific program for the formation of the youth. Plus the
proviso that the number one boy scout is no less than the
President of the Philippines, regardless of his or her gender.
When the law does not differentiate, neither should we
distinguish. That is a very important rule in Statutory
Construction.
Under the Boy Scout Law, the president, regardless of
the gender, is the number one boy scout.
BOY SCOUTS OF THE PHILIPPINES vs. NLRC
196 SCRA 176
FACTS: In 1984, the Secretary-General of BSP issued five (5) special
orders (SO) for the respondents who were all rank-and-file employees.
The SO mandates that they will be transferred to BSP Camp in
Asuncion, Davao del Norte from their camp in Makiling. Respondents
averred that such order is prejudicial not only to their economic stability but
also to their families.
Upon their filing of a complaint, they were subsequently terminated.
The LA dismissed the complaint for lack of jurisdiction. NLRC reversed the
decision ordering BSP to reinstate respondents with full back wages.
BSP contends that it is under the CS Law because it is an organization
created under CA 111 (an Act to Create a Public Corporation to be known
as BSP) with obligation towards nation-building.
ISSUE: Who has jurisdiction?
HELD: CSC has jurisdiction. It is a GOCC with original charter. Considering
its character and the purpose of its function, the statutory designation of
BSP as a “public corporation”, and the substantial participation of the
government in the selection of its members, there is no doubt that it falls
under CS Law. (Lakas Atenista transcription )
So, this is one instance (PSPCA case) where the exclusion in Article 82
is disregarded.
b. Second instance is solidary liability in case of contracting
and sub-contracting. If the government is involved as indirect
employer and there is underpayment or non-payment of wages,
the government remains solidarily liable.
c. What is the third? We will jump to Labor Relations.
In the case of Association of Court Appeals Employees
(ACAE) vs. Laguesma, the Supreme Court said that the
Department of Labor can go to the Court of Appeals and
supervise the certification for election of the Court of Appeals’
employees without violating the independence mandated of the
separate branches of the government - meaning the executive is
co-equal, separate and distinct and independent from the
judiciary. There is no violation if the Department of Labor goes
over and supervises.
In that way, there is also no violation of the exclusion of the
government employees if the union of government employees is
required by Executive Order 180 to be registered both in the Civil
Service and in the Department of Labor. That is the requirement
of EO 180.
ACAE vs. CALLEJA
203 SCRA 596
FACTS: ACAE means Association of Court of Appeals Employees. They are
government employees who formed a union. Subsequently, another union
was formed named as CACAE. They filed a complaint against the DOLE on
the ground that the DOLE cannot supervise the election because that will be
tantamount to the executive branch interfering with the judiciary.
ISSUE: Whether or not the Bureau of Labor Relations has jurisdiction to
handle disputes among associations of employees working for the judiciary
HELD: Under EO 180, the law governing certification elections in the CA, it
is the function of the Court to regulate all activities of the judicial personnel.
This includes the Supreme Court, to the end that the independence,
effectiveness and integrity of the Judiciary is not impaired or compromised.
Claims for higher compensation or improved facilities must therefore be
viewed in terms of fiscal autonomy. Neither the DOLE nor the CSC, nor any
other agency, have the jurisdiction to adjudicate such claims. Ultimately, all
unresolved legal questions are decided by the Court. However, in much
the same way as the CSC conducts competitive examinations to grant the
requisite eligibility to court personnel, the DOLE must handle the
certification process in the CA, considering it expertise, machinery and
experience in this kind of activity. Therefore, the BLR must do the job.
There is no transgression of the doctrine of separation of powers.
(Lakas Atenista Transcription )
Right then and there, you have 3 exceptions to the general rule that
government employees are excluded from the purview of the Labor Code.
2. The second group of workers is managerial employees.
Managerial employees are of two kinds:
a. Managerial employees proper – those whose primary duty
consists of the management of the establishment or a
department or a subdivision thereof
b. Managerial employees because they are members of the
managerial staff
The decided case that is pertinent to this classification for purposes of
Labor Standard is National Sugar Refining vs. NLRC 220 SCRA 452
(1993).
NATIONAL SUGAR REFINERIES vs. NLRC
FACTS: The different workers involved in this case are workers of the
following positions: technical assistant to the refinery operations manager,
6
shift sugar warehouse supervisor, senior financial budget analyst,
general accountant cost accountant, shift boiler supervisor, shift
operations chemist, shift process supervisor etc. The company
underwent a job evaluation program and the said positions were
particularly recommended to be separately categorized as members of
the managerial staff. As a consequence, their basic pay was raised by
50%. As soon as they were made into a separate category of workers,
they formed a union distinct from those of the rank and file
employees. They, then, entered into a CBA which no longer provided
for overtime pay, premium pay and holiday pay.
2 years later, they asked from the Labor Arbiter for the
reinstatement of the benefits which they once enjoyed. Their
argument was that they are not managerial employees under the
definition or Art. 212(m) of the Labor Code and that is precisely why
they can form a union and that therefore, they are entitled to the
benefits which they received in the past since they ripened into a right.
The Labor Arbiter ruled in their favor. Decision affirmed by the NLRC.
HELD: They are members of the managerial staff since they are
holding non-line positions which are connected to the line hierarchy of
the company. The definition of managerial employees in Article 82 of
the Labor Code should be applied instead of Article 212(m) since the
issue here is hours of work and other benefits.
The SC ruled that when they are enjoying such benefits, they
were entitled to it. However, since there was a job evaluation wherein
they were promoted into a different category, i.e. managerial
employees, they are no longer entitled to it. The SC said: The test
more rationale for this rule from a long practice requires an indubitable
showing that an employer agreed to continue giving the benefits
knowing fully well that the employees are not covered by the law
requiring payment thereof. The employer did not continue to pay the
premiums on time pay the moment they were reclassified. It could
have been different if it continued and then it ceased. But since it did
not continue, the employer is no guilty of diminution of benefits.
If you read your commentaries, how did it distinguish managerial
employees from rank and file?
If they use Labor Relations cases, chances are, their explanation
is less than accurate. Why? Because the managerial employee in
Labor Relations is not the same as the managerial employee in Labor
Standards. The managerial employee in Labor Standards is broader.
The managerial employee in Book 5, Labor Relations, is smaller
compared to Labor Standards.
Example: Supervisors in Labor Relations have a limited exercise
of the right to self-organization. They are not really classified as
managerial employees because if you are classified as managerial
employees in Labor Relations, you have absolutely no right to exercise
self-organization.
But when you cross, managerial employees under Labor
Standards are broader. Supervisors are already managerial
employees. They are not entitled to overtime. What is more,
somebody who does not ostensibly do any managerial act because he
does not have any to supervise, he is still considered as managerial,
and therefore, not entitled to overtime, premium pay and other
benefits.
For instance, if you are a cost accountant, you have no
supervisors. Cost accounting now, unlike in the past, can be done with
the use of a PC. Before you would need filing clerks because your
records are all kept in hardcopy. Now, because you are just hooked
up to the system, it just needs most probably a CPA who will handle
cost accounting for a large corporation and they have a way of
retrieving costs. At the end of the day, you know your costs.
Is that cost accountant, who has no contact at all with anybody, a
rank-and-file employee? The answer is NO, because he is explicitly left
out under Article 82 – members of the managerial staff.
Why is he included? Because he deals with managerial
information. Mostly, this managerial information is Labor Relations
related, managerial related. It puts him in a difficult situation of
having to compute for his rank-and-file benefit when he is in fact
always in association with managing.
The reason why management EEs in Labor Standards is because
they are not hired for the hours of work that they render. Why are
they hired? They are hired for their special training, to produce
results, to set-up goals, pursue the goals and monitor the pursuit of
goals. Time is not directly related.
Does it mean that the manager does not have to show-up in the
office? NO. But that is not the essence of his purpose of being
engaged. His purpose is not time related, but results related, goal
related, expertise.
That is why their salaries are not computed on a time basis.
3. We go to third group of EEs that are excluded. There is ER-EE
relationship but it is excluded. Who are these? Field personnel.
What do you have to remember about field personnel? 3 things.
a. The word field is anything but agricultural.
b. Regularly perform their duties outside the offices of the ER
c. Their type of work, their hours of work cannot be determined
with reasonable certainty.
One of the cases that brings this about is the case of MERCIDAR
FISHING CORPORATION vs. NLRC, F. AGAO 297 SCRA 440 (1998). It
is a case of EEs in a deep-sea fishing boat. Does it mean that it has to be
counted the entire time that he is out at sea as working time because it is
outside the place of office of the ER?
The answer is NO. Fishermen employed by petitioner have no choice
but to remain on board its vessel. Although they performed non-
agricultural work away from the petitioner’s business offices, the fact
remains that throughout the duration of their work, they are under the
effective control and supervision of the petitioner through the vessels
patron or master, as the NLRC correctly held.
It is not automatic therefore that just because you work outside the
place of office that you are a field personnel. What is more important is
that your hours of work cannot be determined with reasonable certainty.
Why can it not be determined? Not because there is lack of supervision or
supervision is difficult, but because of the nature of their work. Bisan
unsang tutok nimo sa iyang trabaho, di gyud ka makadetermine ug pila
iyang oras pagtrabaho.
MERCIDAR FISHING CORP vs. NLRC
FACTS: Private respondent had been employed as a “bodegero” or ship’s
quartermaster. He alleged that he had been sick and thus allowed to go on
leave without pay for one month but that when he reported to work, he
was told to come back another time as he could not be reinstated
immediately. Thereafter, petitioner refused to give him work. Private
respondent asked for a certificate of employment from petitioner. Petitioner
refused to issue the certificate unless he submitted his resignation. Since
private respondent refused to submit such letter unless he was given
separation pay, petitioner prevented him from entering the premises.
Petitioner alleged that it was private respondent who actually
abandoned his work.
The Labor Arbiter ordered the respondent to reinstate complainant
with back wages, pay him his 13th month pay and incentive leave pay for
1990.
On appeal, the NLRC dismissed petitioner’s claim that it cannot be held
liable for service incentive leave pay by fishermen in its employ as the latter
supposedly are “field personnel” and thus not entitled to such pay under the
Labor Code.
ISSUE: Whether or not the fishing crew members cannot be classified as
field personnel under Article 82 of the Labor Code.
HELD: The petition has no merit.
“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.
In deciding whether or not an employee’s actual working hours in the
field can be determined with reasonable certainty, query must be made as
to whether or not such employee’s time and performance is constantly
supervised by the employer.
In this case, during the entire course of their fishing voyage, fishermen
employed by petitioner have no choice but to remain on board its vessel.
Although they perform non-agricultural work away from petitioner’s
business offices, the fact remains that throughout the duration of their work
they are under the effective control and supervision of petitioner through
the vessel’s patron or master as the NLRC correctly held.
(Lakas Atenista Transcription )
The classic example of a field personnel is the salesman. Sa iyang
pagpamaligya, ayuhon na na iyang customer. Mangaon sila sa gawas.
Pakan-on sa gawas. Sige sila storya, hoping that in the end he will get a
job order.
It would be unfair to the ER to count the entire time as working time.
In other words, the very nature of his functions render it impossible to
determine with certainty his hours of work.
Please remember that when it comes to field personnel. Not just
because they are outside.
That is the reason why they are exempted. It would be unfair to the
ER if their hours of work would be counted because frankly speaking, it
cannot be determined with reasonable certainty.
4. Domestic helpers
5. Persons in the personal service of another
These two are similar. Unsa mang diperensiya aning duha?
Domestics serve for the personal comfort of a household. And they
include the services of a family driver.
What is the significance of the inclusion of a family driver? The
inclusion of the family driver is significant to tell us that it is not the activity
that makes him domestic. It is the employer. Driving is an industrial task.
And yet, if you are a family driver, you are not an industrial worker. You
7
are domestic. What makes you a domestic? Not the chore that you
do but your ER. If it is a household, you are not an industrial worker if
you are a driver. You are not covered by the industrial minimum wage
rate. You are covered by the minimum wage rates of domestics,
which is P 800 in 1 st class cities, P 650 in 1 st class municipalities and
other places P 500. Mao na ba rate karun sa Davao? Wa nay maid na
makuha ug P800 
Technically, all the maids should be already be registered with the
SSS because the moment their wage reaches P 1,000, they must be
compulsorily covered.
The difference between persons in the personal service of
another and domestic is that domestics are household. If you do not
have a household, then, it is personal service.
They are exempted from Labor Standards law because the type
of engagement is ante-dated, long before the Industrial Revolution.
But those considered in the personal service of another are the
valet.
If you are not married, you cannot have domestics. But you can
have persons in the personal service.
In the case of APEX MINING vs. NLRC 199 SCRA 278 (1991),
these chamber maids who were serving the company house that
accommodated Japanese expatriates working for Apex Mining, the
maid there that were cleaning the house, cooking, doing the laundry of
the Japanese, when they were paid domestic rates, the Supreme Court
said that is violation.
What were they doing? They were doing domestic chores.
Manilhig, magluto, maglaba. Are they not associated with domestic
chores? Pedestrian language dictates that if they do that, maid sila.
But in law, that is not what is determinative of domestics. It is
the employers. The Supreme Court says that they should not be paid
domestic rates. They should be paid commercial or industrial
minimum wage rates.
APEX MINING COMPANY, INC. vs. NATIONAL LABOR
RELATIONS COMMISSION and SINCLITICA CANDIDO
FACTS:
 Candido was employed Apex Mining to perform laundry services
at its staff house located at Maco, Davao del Norte. On December 18,
1987, while she was attending to her assigned task and she was
hanging her laundry, she accidentally slipped and hit her back on a
stone.
 As a result of the accident she was not able to continue with her
work. She was permitted to go on leave for medication. The manager
of Apex offered her the amount of P5,000.00 to persuade her to quit
her job, but she refused the offer and preferred to return to work.
Petitioner did not allow her to return to work and dismissed her.
 Candido filed a request for assistance with the DOLE. The Labor
Arbiter rendered a decision in favor of Candido, which was affirmed by
the NLRC.
ISSUE: Whether or not a househelper in the staff houses of an
industrial company a domestic helper or a regular employee of the said
firm.
RULING:
 The term 'domestic servant' and shall refer to any person,
whether male or female, who renders services in and about the
employer's home and which services are usually necessary or desirable
for the maintenance and enjoyment thereof, and ministers exclusively
to the personal comfort and enjoyment of the employer's family
 The foregoing definition clearly contemplates such househelper or
domestic servant who is employed in the employer's home to minister
exclusively to the personal comfort and enjoyment of the employer's
family. Such definition covers family drivers, domestic servants,
laundry women, yayas, gardeners, houseboys and other similar
househelps.
 The definition cannot be interpreted to include househelp or
laundry women working in staffhouses of a company, like petitioner
who attends to the needs of the company's guest and other persons
availing of said facilities. By the same token, it cannot be considered to
extend to the driver, houseboy, or gardener exclusively working in the
company, the staffhouses and its premises. They may not be
considered as within the meaning of a "househelper" or "domestic
servant" as above-defined by law.
 The mere fact that the househelper or domestic servant is
working 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 guest 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. (Christ May Andolana )
Please remember: if a domestic is made to perform industrial or
commercial task, ang maid nimo sa balay ingnan nimo na adto sa tindahan
kay ni absent tong atong tindera. If they do that, you have assigned her to
do commercial task. That transforms her. That makes her into a
commercial worker. And she ceases to receive domestic rates. She must
receive commercial rates.
Please keep in mind that the transformation is only one way. Kung
ang imong tindera ingnan nimo adto didto kay nakuyapan ang maid, wa
nay mubantay sa bata. Pag-adto sa balay, nahimo ba siya ug domestic?
NO, she continues to be a commercial worker. You cannot lower her salary.
Her salary only goes up. The transformation only works one way.
If you are asked a question, what are the working hours of a
domestic? They are provided in the Civil Code, Article 1695. The working
hours are not more than 10 hours.
ARTICLE 1695. House helpers shall not be required to work more than
ten hours a day. Every house helper shall be allowed four days' vacation
each month, with pay.
Remember the RIGHTS OF HOUSE HELPERS/DOMESTICS:
1. They have a right to an original contract of not more than 2
years.
After 2 years ana, they can leave. That is Article 142.
ARTICLE 142. Contract of Domestic service. — The
original contract of Domestic service shall not last for more than two
(2) years but it may be renewed for such periods as may be agreed
upon by the parties.
2. They have a right to the minimum wage of domestics , which is
now provided under Article 143. P 800, P 650, P 500.
The determination of the wage is the type of city or
municipality.
ARTICLE 143. Minimum wage. — (a) Househelpers shall
be paid the following minimum wage rates:
(1) Eight hundred pesos (P800.00) a month for househelpers in
Manila, Quezon, Pasay and Caloocan cities and the municipalities of
Makati, San Juan, Mandaluyong, Muntinlupa, Navotas, Malabon,
Parañaque, Las Piñas, Pasig and Marikina in Rizal Province.
(2) Six hundred fifty pesos (P650.00) a month for those in other
chartered cities and first-class municipalities; and
(3) Five hundred fifty pesos (P550.00) a month for those in other
municipalities.
Provided, That the employers shall review the employment contracts of
their househelpers every three (3) years with the end in view of
improving the terms and conditions thereof.
Provided, further, That those househelpers who are receiving at least
One thousand pesos (P1,000.00) shall be covered by the Social
Security System (SSS) and be entitled to all the benefits provided
thereunder.
3. The right to an opportunity for at least an elementary education if
below 18.
Naa gani maid na kuhaon below 18, wala pa nahuman ug
grade school, what is your duty? Paeskwelahon nimo siya? NO,
your duty is to given them an opportunity for an elementary
education.
So, dad-on nimo siya sa grade school. Ienrol nimo siya
dinha. Pareporton nimo didto. Pero pagtan-aw niya siya
pinakatas-an didto. Unya ang teacher sige ingon sa iya sit down
there, bisan naglingkod na siya, ah, dili na siya mubalik  This
means you have complied with your obligation to provide an
opportunity for an elementary education.
What is the youngest age for maid? 15 – covered sila ana.
Younger than 15 is illegal.
4. The right to just and human treatment. The right to an
indemnity for an unjust termination .
What is the indemnity or damages for unjust termination?
Compensation already incurred plus 15-day pay, according to
Article 149 of the Labor Code.
ARTICLE 149. Indemnity for unjust termination of
services. — If the period of household service is fixed, neither the
employer nor the househelper may terminate the contract before the
expiration of the term, except for a just cause. If the househelper is
unjustly dismissed, he or she shall be paid the compensation already
earned plus that for fifteen (15) days by way of indemnity.
If the househelper leaves without justifiable reason, he or she
shall forfeit any unpaid salary due him or her not exceeding fifteen
(15) days.
8
 5. The right to board, lodging and medical attendance free of
charge under Article 148.
Right na niya na pakan-on, patulgon dira. That is why
domestics cannot form a union. Kay gikan sila magstrike, kada
gabii, mupauli gihapon sa imo – diha gihapon matulog. Hiloan
tingali mo  Strike does not sever ER-EE relationship, is it not?
ARTICLE 148. Board, lodging and medical
attendance. — The employer shall furnish the househelper free
of charge suitable and sanitary living quarters as well as adequate
food and medical attendance.
6. The right to leave the service on 5-day notice if engagement
is without a term under Article 150.
ARTICLE 150. Service of termination notice. — If
the duration of the household service is not determined either in
stipulation or by the nature of the service, the employer or the
househelper may give notice to put an end to the relationship five
(5) days before the intended termination of the service
7. The right to employment certification
The industrial or commercial worker does not have the right
to demand from her ER certification as to the number of years
that he was working.
The main domestic right is the employment certification.
Very few know that.
JULY 10, 2008
Groups of workers that are excluded or exempted from Labor
Standards benefits as provided in the Labor Code:
1. Government employees
2. Managerial employees
3. Field personnel
4. Domestic helpers
5. Persons in the personal service of another
(Ika-7th na ang pakiao workers. Based sa lectures niya before may isa
na hindi pa namention in class - members of the family of the
employer who are dependent on him for support – so, eto ang ika-
6th .. i think )
7. Pakiao workers
Pakiao is a technical term in Labor, it is not just a word in the
vernacular. It is an official and technical terms found in the Labor
Code. You must get the spelling of the Labor Code – “pakiao”.
The only problem is, in the Fair Labor Standards Act of the United
States (from which our Labor Standards laws were drawn), pakiao
workers or workers paid are of two kinds:
a. worker paid on a piece-rate basis
b. worker paid on a task basis.
Pakiao sa ato, piece rate, pakiao. When you are paid on a task
basis, pakiao gihapon. Dili kaayo differentiated. Our terminology
covers a multitude of conditions.
But in the Fair Labor Standards Act of the US, there are
differentiations.
Why do I point that out? Because of the lack of differentiation,
the Supreme Court itself committed a blunder. They mistake a certain
pakiao arrangement. The error of the Supreme Court is that they are
actually amending the law. It is not judicial legislation, by the fact that
they supply something which is not there, therefore, they are
legislating. But they are really contravening.
In ROSARIO BROS vs. OPLE (134 SCRA 172 – 1984), it
says, this Court rules that tailors and similar workers hired in the
tailoring department of a department store, although paid weekly
wages on piece-work basis, are employees paid on a piece-rate basis,
not independent contractors. Dili pa na kaayo na grabe na sayop.
Then, it says, accordingly, as regular workers paid on piece-rate
basis, petitioners are not entitled to overtime pay, holiday pay,
premium pay, rest day pay and service incentives.
Correct pa na!
ROSARIO BROTHERS, INC vs. OPLE, NLRC, et al
(July 31, 1984)
FACTS: Private respondents are tailors, pressers, stitchers and
similar workers hired by the petitioner in its tailoring department.
Some had worked there since 1969 until their separation on January 2,
1978. For their services, they were paid weekly wages on piece-work
basis, minus the withholding tax per BIR rules. They were registered
with the SSS as employees of petitioner and premiums were deducted
from their wages. They were members of the labor union which has a
CBA with the company. They were required to report for work from
Monday through Saturday and to stay in the tailoring shop for no less than
8 hours a day, unless no job order was given them after waiting 2 to 3
hours, in which case, they may leave and may come in the afternoon. Their
attendance was recorded through a bundy clock just like the other
employees of petitioner. Private respondents filed a complaint for violation
of PD 851 (13th month pay) and PD 525, as amended by PD 1123
(Emergency Living Allowance) against petitioner.
Petitioner contends that the employees are excluded from the
coverage of PD 525, 851 and 1123 because of the nature of their
employment, there being 'no fixed time with regards to entry and exit' and
no fixed number of days of work, with respect to said employees.
On appeal, the Ministry of Labor examined carefully the decrees and
find absolutely no indication therein that the employees are indeed
excluded. Nor are the rules implementing the decrees supportive of the
petitioner's contention.
Section 2 of the rules implementing PD 525 provides: 'The Decree shall
apply to all employees of covered employers, regardless of their position,
designation or employment status, and irrespective of the method by which
their wages are paid, including temporary, casual, probationary, and
seasonal employees and workers.' And Section 3, of the rules implementing
PD 851 provides that 'all employees of covered employers shall be entitled
to benefits provided under the Decree . . . regardless of their position,
designation or employment status, and irrespective of the method by which
their wages are paid.' Section 2 of the same rules explicitly provides that
the rules apply to 'workers paid on piece-rate basis' or 'those who are paid
a standard amount for every piece or unit of work produced that is more or
less regularly replicated, without regard to the time spent in producing the
same.
ISSUE: Whether or not an employer-employee relationship exists
between the petitioner and the private respondents.
RULING: Petition is devoid of merit. The selection and hiring of private
respondents were done by the petitioner, through the master cutter of its
tailoring department who was a regular employee. Private respondents
received their weekly wages from petitioner on piece-work basis, which is
within the scope and meaning of the term “wage” as defined under Article
97(f) of the New Labor Code. Petitioner had the power to dismiss private
respondents. Private respondents’ conduct in the performance of their work
was controlled by petitioner and they were allowed to register with the SSS
as employees of petitioner.
The SC affirmed the ruling of the Ministry of Labor.
But then, in LABOR CONGRESS of the PHIL vs. NLRC (290 SCRA
509 – 1998), it says the piece-rate employees are entitled to night-shift
differential, holiday pay, service incentive leave, premium pay and 13 th
month pay in accordance with the rules to implement the Labor Code.
LABOR CONGRESS vs. NLRC (May 21, 1998)
FACTS: Petitioners were rank-and-file employees of respondent Empire
Food Products, which hired them on various dates. Petitioners filed a
complaint for illegal lockout and/or dismissal and underpayment of wages.
Complainants' admitted that they are piece workers or paid on a
pakiao basis i.e. a certain amount for every thousand pieces of cheese curls
or other products repacked. The only limitation for piece workers or pakiao
workers is that they should receive compensation no less than the minimum
wage for an 8-hour work.
The Labor Arbiter ruled that there was no under payment of wages.
This was affirmed by the NLRC.
ISSUE: Whether or not petitioners should be reinstated from the date of
their dismissal up to the time of their reinstatement, with backwages,
statutory benefits, damages and attorney's fees.
HELD:
The failure to work for one day, which resulted in the spoilage of
cheese curls does not amount to abandonment of work. In fact two (2)
days after the reported abandonment of work or on January 23, 1991,
petitioners filed a complaint for, among others, unfair labor practice, illegal
lockout and/or illegal dismissal. One could not possibly abandon his work
and shortly thereafter vigorously pursue his complaint for illegal dismissal.
Petitioners are therefore entitled to reinstatement with full back wages.
Nevertheless, the records disclose that taking into account the number of
employees involved, the length of time that has lapsed since their dismissal,
and the perceptible resentment and enmity between petitioners and private
respondents which necessarily strained their relationship, reinstatement
would be impractical and hardly promotive of the best interests of the
parties. In lieu of reinstatement then, separation pay at the rate of one
month for every year of service is in order.
Petitioners, as piece-rate workers having been paid by the piece, there
is need to determine the varying degrees of production and days worked by
each worker.
As to the other benefits, namely, holiday pay, premium pay, 13th
month pay and service incentive leave which the labor arbiter failed to rule
on but which petitioners prayed for in their complaint, we hold that
petitioners are so entitled to these benefits. Three factors lead us to
9
conclude that petitioners, although piece-rate workers, were regular
employees of private respondents:
(1) as to the nature of petitioners' tasks, their job of repacking snack
food was necessary or desirable in the usual business of private
respondents, who were engaged in the manufacture and selling of
such food products; (2) petitioners worked for private respondents
throughout the year, their employment not having been dependent on
a specific project or season; and
(3) the length of time that petitioners worked for private respondents.
Thus, while petitioners' mode of compensation was on a "per
piece basis," the status and nature of their employment was that of
regular employees.
The Rules Implementing the Labor Code exclude certain
employees from receiving benefits such as nighttime pay, holiday pay,
service incentive leave and 13th month pay, inter alia, "field personnel
and other employees whose time and performance is unsupervised by
the employer, including those who are engaged on task or contract
basis, purely commission basis, or those who are paid a fixed amount
for performing work irrespective of the time consumed in the
performance thereof." Plainly, petitioners as piece-rate workers do not
fall within this group. Not only did petitioners labor under the control
of private respondents as their employer, likewise did petitioners toil
throughout the year with the fulfillment of their quota as supposed
basis for compensation. Further, in Section 8(b), Rule IV, Book III,
piece workers are specifically mentioned as being entitled to holiday
pay.
In addition, the Revised Guidelines on the Implementation of the
13th Month Pay Law, in view of the modifications to P.D. No. 851 by
Memorandum Order No. 28, clearly exclude the employer of piece rate
workers from those exempted from paying 13th month pay.
According to Sec 2(e), Rule I, Book III of the Implementing
Rules, workers who are paid by results including those who are paid
on piece-work, takay, pakiao, or task basis, if their output rates are in
accordance with the standards prescribed under Sec. 8, Rule VII, Book
III, of these regulations, or where such rates have been fixed by the
Secretary of Labor in accordance with the aforesaid section, are not
entitled to receive overtime pay. Here, private respondents did not
allege adherence to the standards set forth in Sec. 8 nor with the rates
prescribed by the Secretary of Labor. As such, petitioners are beyond
the ambit of exempted persons and are therefore entitled to overtime
pay.
When you name benefits and yet Article 82 explicitly singles out
pakiao workers as not included in those benefits, is that judicial
legislation? That is judicial booboo.
The only correct thing with the Supreme Court is scholarship
because the moment they make a decision and it passed motion for
reconsideration, it is fixed. As Justice Cardoso said, the Supreme
Court is infallible because it is final. It is not final because it is
infallible. And the fallibility of the Supreme Court must be a constant
worry of the judicial system. The players in the judicial system cannot
voice out the shortcoming of the Supreme Court if they have an
interest to pursue. Who can do that? The academicians. And you do
that, by showing it.
Article 82 says pakiao workers are not included in these benefits
– overtime. Then, here comes Davide and he says that these are
piece-rate workers and as such, they are entitled to night shift
differential, holiday pay, service incentive leave, premium pay and 13 th
month pay. Of what he says, only one is correct – 13 th month pay.
13th month pay is correct because it is not in the Labor Code. And 13 th
month pay is special.
There is one type of pakiao worker that is entitled to 13 th month
pay – that is the piece-rate pakiao worker. The pakiao worker that is
paid by results is not entitled to 13 th month pay. I am talking of PD
851 and the further guidelines issued by Corazon Aquino.
Sayop ni.
Why are pakiao workers taken out?
They are taken out because the amount of their pay is related not
to the time that they put in but to the industry that they devote.
If you are a pakiao worker, you are not a time worker. The basis
of your pay is not time. The basis of your pay is output. If it is piece-
rate, its uniform output. That is why it is a uniform rate per piece
because pare-pareho man na.
What happens if you are paid piece rate and you are given
hours?
You report at 8. You have break time at 12 for 1 hour. Then,
you are dismissed at 5. What happens?
Under Fair Labor Standards Act of the United States, you have
become a time worker. And you must be paid at least the minimum
wage, regardless of the amount you finish.
Suppose you are given time and you are also given quota
8 to 12, 1 to 5 – 8 hours. Kinahanglan muhuman ka ug 25 na kalo.
Ug dili gani, dili ka sweldohan. It cannot be done. The quota is just a
matter of discipline. It is just a matter of issue of supervision. But it cannot
be the basis for remuneration. Why? Because you are now given time.
What is the bias of the Labor Code?
The bias of the Labor Code is your time. If there is doubt, you are
timed. If you are timed, you are entitled to at least the minimum wage.
If you are paid piece rate and you have a suspicion that the piece rate
system is used to circumvent the minimum wage, what is your remedy?
Under the Labor Code, you cannot file straight with the Labor Arbiter
for underpayment or nonpayment of wages. You cannot do that. Your
remedy is first determine whether or not the piece-rate system has been
exploited to circumvent the minimum wage.
On a verified petition, you go to the Regional Director of Labor and ask
for a time and motion study. That is your remedy.
And then, after making a time and motion study, because there are
guidelines, the piece rate is not supposed to be based on the fastest worker
nor should it be based on the slowest worker, but on the average worker.
If after time and motion study, the piece rate that is given to you ends
up with you getting less than the minimum wage for an average
performance of 8 hours, then, you can go to the Labor Arbiter and ask for
underpayment of wages.
This time you have a backing from the Department of Labor – time
and motion study.
Keep that in mind.
2 Kinds of Pakiao Workers:
1. Piece-rate
2. Payment by results
Remember, the provision on wages is not covered by Title 3. It is in
an entirely different title. As to when you are paid, what you are paid, how
often you are paid, or where you are paid, that is a different provision.
Muingon ka, kay piece-rate man ko, kada mahuman nako, ihap na ta
dayon. Bayri ko dayon, di man kaha ko time worker. No, you cannot do
that.
You are still bound by the general rule that when it comes to wages,
payment may be made, twice a month, only at intervals not longer than 16
days. That is a separate section in the Labor Code.
That is why the wages conditions are separated.
Muingon ka, nahuman naman nako pagsemento. Maghulat pa di ai ko
ug two weeks una ko bayran? Naa kay 2 ka assistant. Gisabot nimo na
wala niy oras ha. Basta ganahan magtrabaho, magtrabaho. Wa gyud ninyo
pahulayi. 2 mo ka adlaw, puli puli. Nahuman ninyo 3 ra ka adlaw.
Can the employer say that since wages are going to be paid once
every two weeks at intervals not more than 16 days, steady ra mo di ha?
They cannot do that. Why? Because of another factor. The engagement is
casual in nature and the engagement has terminated. Therefore, there
must be a settlement because it has terminated. It is not open-ended.
When it is open-ended, the fact (?) that payment is made in two
weeks, in no case longer than 16 days, than can be followed.
But if the engagement is casual in nature, then, at the completion,
there must be payment.
What happens if you enter into an agreement that there is
retention?
Retention – normally, if you contract to construct something.
Magpakural ka – in-ani and design sa kural, isemento ang foundation, 3 ka
hollowblock ang lubong, ispecify tanan, mao ni ang materiales. Unya, this
should be finished in 30 days. Unya, retention – 10% of the contracted
price.
Pagkahuman ana, bayran nimo siya unya muretain ka ug 10%. After
30 days, una pa nimo pulihi ang 10% pag nasatisfy na nimo na way naliki.
Unsa man na? That is independent contracting. Wa nay labor ana.
That is already independent contracting. Once there are retentions,
materials, and Labor Code labor ra man na. Sudlan na gani ug lain, di na
na Labor Code but independent contracting.
So, you have to be clear about what the legally significant facts are.
If it is not uniform, then it is not piece rate. It is task basis.
For instance, you are trader and you drive a rig (20 ft van). Ang mag-
guyod ana kay prime mover. Actually, prime mover applies to God only 
Now, from Davao to any point in Mindanao, driver ka and paid on a
per trip basis. Unsa man ka? Piece rate or task basis? The trouble is the
trip is not standard. Naa man na silay taripa sa trip nila: Davao to Iligan,
mao ni ang taripa. Davao to Gen San, mao ni ang taripa. They are paid by
results. That is not piece rate.
Unya tagaan ka ug problem – nabuthan siya ug tire, kabuang siya
pangita mekaniko, natulog sa ilalom sa truck. Is he entitled to overtime?
How can he be entitled to overtime when he is already exempted under
Article 82? He cannot be paid overtime. He is not paid on an hourly basis.
He is not a time worker. He is a payment by results worker. He is a pakiao
worker, based on the results.
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 That is very clear ha because there are no materials involved in
driving. It is just strictly more on the part of the driver.
8. Retail and Service Establishment with not more than 5
employees as they are exempted to night shift differential
That is from the rules implementing the Labor Code, Book III,
Rule 2, Section 1.
This particular exemption is aimed at sari-sari stores, which opens
very early in the morning unya gabii na sila gasara.
But they must not be more than 5 employees.
A retail establishment is one that sells goods or commodities
not for the purpose of resale but for purposes of use and/or
consumption. That is a retail.
A service establishment is one that dispenses services for the
satisfaction of a particular need of the customer.
When you offer for service, it is for the satisfaction of a customer.
Sometime ago, the great Senator Jose W. Diokno was made the
examiner of Civil Law. One of the questions he asked in Civil Law is
this: here is a customer of a restaurant. He ordered oyster soup. The
oyster soup was served on his table steaming hot. He looked at the
oyster soup and it looked inviting. He straight away drove into the
oyster soup. There was a glimmer at the bottom of the bowl. He
scoop it up and saw that it was a pearl. As he was about to pick the
pearl with his thumb and forefinger, the head waiter tapped him on his
shoulder. He said that belongs to us. That is not yours.
Gibayran nako ni. Ako ni. Dili na imo, sa restaurant na. So,
naglalis sila. The question: who has the better right to the pearl?
When Diokno was asked what is the answer, Diokno said it all
depends whether the restaurant is also a take-out restaurant. If it is a
take-out restaurant, it is not only a service establishment since it
caters to your nutritional need not to mention the need of your palette
for good tasting food to your satisfaction. If you can buy orders and
have it packaged and brought out, flesh and bones of the fried chicken
together, that means that it is a retail establishment also, not just a
service establishment.
So, if it is also a retail establishment, then you have a right to the
unedible thing such as the pearl. That is the reasoning of Diokno.
mangutana if labor, labor exam man ni. That is not just a Labor exam, that
is the bar exam. You are tested as to whether your entire knowledge of law
is adequate. So, you have to ask if this is a labor problem or not. This
might be an independent contracting problem. So, you have to examine
the elements.
Once you have decided that this is a labor case, then, the next
question is: does this follow under the exceptions because this is question
of labor standards. When you are discussing about hours of work, rates of
pay, vacation leave, 13th month pay – those are all labor standards.
Unya mangita ka ug hain ang union dinhi? Wa man.
Unsa man ni? Pakiao workers? Domestic? Naa kay check-off list ba.
Ug imo na jud ni gitun-an, balik balik na nimo, usa ra ka tan-aw, bagting
dayon ka .. mao ni. Balika dayon ug tan-aw. The horizon works! If you
have sufficient familiarity, then, you will know what to do.
If you decided that it is not excluded, that’s when you go to the merits
of the case, after you have cleared these two preliminary questions.
And then, you have to watch out for so-called “red-herrings” because
that is the standard way labor examiners fool their examinees by putting
false landmarks.
So and so a probationary worker failed to report to work on his first
day and then, he worked on the second day. And he was made to work 12
hours to compensate for his absence. Is he entitled to overtime since he is
a probationary worker?
Probationary has something to do with tenure, nothing to do with
labor standards. Madakpan gani ka ana and mao na ang makahassle nimo,
wa na, taob ka.
Whether he is probationary or regular, the issue is is he a time worker?
If he is a time worker, he is entitled to overtime. If he is not a time worker,
he is not entitled to overtime. That is the whole point.
Those are called red-herrings meant to distract you.
--

A beauty parlor is a service establishment. Musobra na gani sa 5

kabuok ang magptul-id sa kulot, magputol sa tass, sobra gani na 5,
not covered.

A bakery is a retail establishment. A barber shop is a service

establishment. What happens if there are more than 5 barbers there?
(walay answer .. hehe .. )

Those are the problematic associated with this particular section

9. Health personnel of cities of at least 1M population or

establishments that are weighted (?) to be at least 100 bed
capacity
Even if the population is less than 1M, if the hospital you are
working for has 100 bed capacity, according to its license, then, you
are covered.
What is the particular difference of health personnel that are
covered? As to the work week. A work week is at least 6 consecutive
working day for the ordinary industrial, agricultural or commercial
worker. But for health personnel in cities of 1M or of at least 100 bed
capacity hospitals or health institutions, then, there work week is only
5 days.
Can they be made to work fro 6 days? YES, but their rate of pay
on the 6th day is 130%. There is a premium on their work on the 6 th
day.
The wording of the law is such that even the gardener of a
hospital with 100 bed or a hospital in a 1M population city is covered
by health personnel because in the enumeration, it is “other
employees”.

10. Fishermen crew

We are talking here of Section 45, PD 704 – The Fisheries Act of
1975. This group of workers are exempted from the overtime pay of 8
hour Labor law.
So if you are out at sea, deep-sea fishing, and you are made to
work more than 8 hours of your working day, you will be paid for the
excess hours. But you will not be paid overtime rate. You will be paid
straight time pay. That is the rule with respect to fishermen crew.
That is because of the specific provision of Section 45, PD 704,
which as far as I know has not been repealed.

We are through with the excluded and exempted employees.

(Sabi sa start sa lecture 11 group of workers, 10 lang man .. kasama

na iyong hindi niya namention na members of the family of the ER
who are dependent on him for support )

You are given a problem. The first thing that you have to
determine is: Is this Labor Code or not? That is the question that you
must assess. Ayaw tukod dayon! Ayaw paghuna-huna na ngano man
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