Summary of a Philippine Supreme Court Decision
G.R. No. 86010 October 3, 1989
LEOPOLDO GUARIN and ONE HUNDRED TWENTY (120) OTHERS, petitioners, vs.NATIONAL LABOR RELATIONS COMMISSION, LIPERCON SERVICES, INC., and/or NOVELTY PHILIPPINES, INC., respondents.
Facts of the case:
In 1983, private respondents Lipercon Services, Inc. and Novelty Philippines, Inc. entered into a "Contract of Services" in which the former, for a contract price, undertook to provide the latter with Contractual Laborers/Helpers/Janitors. For this reason, petitioners were hired by Lipercon to work with Novelty as helpers, janitors, janitresses, firemen, and mechanics. Petitioners worked with Novelty as such for three years. In 1986, Novelty terminated its agreement with Lipercon and consequently petitioners were dismissed. Petitioners filed an illegal dismissal case against Novelty and Lipercon, in which case the Labor Arbiter ruled that petitioners were regular employees of Novelty and declared their dismissal illegal. Both employers appealed. The National Labor Relations Commission reversed the Labor Arbiter's decision and ruled that Lipercon was an independent contractor. It ordered Lipercon to reinstate petitioners.
Issue:
Whether or not Lipercon is an independent contractor and the petitioners are its employees.
Ruling:
The Supreme Court ruled that as provided in Article 106 of the Labor Code, and as can be gleaned from the agreement between Lipercon and Novelty, it was clear that Lipercon was a "labor-only" contractor and thus served merely an agent of Novelty tasked to provide it with manpower. Lipercon's contention that it is an independent contractor because it claimed to have substantial capital and investment in tools and equipment was not given merit because it was not able to present substantial evidence to that effect. On the contrary, the Supreme Court held that petitioners' works were directly related to the daily operations of a garment factory since gardeners work to maintain clean and well-kept grounds around the factory, mechanics to keep the machines functioning properly, and firemen to look out for fires. This fact is confirmed, according to the Court, by Novelty's rehiring the workers or renewing the contract with Lipercon every year from 1983 to 1986, a period of three (3) years.
As Lipercon was a "labor-only" contractor, the workers it supplied Novelty became regular employees of the latter and the Court ordered their reinstatement with backwages.
Tuesday, September 16, 2008
Kamayan Point Hotel vs National Labor Relations Commission
A Summary of a Decision of the Supreme Court of the Philippines
G.R. No. 75289 August 31, 1989
Facts of the case:
Kamayan Point Hotel had been giving its employees the so-called "14th Month Pay" from 1979 to 1981. In 1982 however, it suffered losses due to a bad business decision and eventually closed business in 1984. In 1982, due to said financial difficulty, it was not able to give said 14th Month Pay to its employees so that in 1983, private respondent Federation of Free Workers (FFW) filed a complaint with the Labor Arbiter for its non-payment. The Labor Arbiter rendered a decision in favor of FFW, which decision on appeal to the National Labor Relations Commission (NLRC) was affirmed with modification. Both the FFW, Labor Arbiter and NLRC were one in contending that although there was no law granting the 14th Month Pay, still the employees of Kamayan Point Hotel were still entitled to it by virtue of said practice having ripened into a company practice that can no longer be withdrawn without violating the statutory prohibition against diminution of benefits.
Issue:
Whether or not the non-granting of the 14th Month Pay which had been granted before amounted to a violation of the statutory prohibition against diminution of benefits as contained in Article 100 of the Labor Code of the Philippines which provides "Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code".
Ruling:
The Supreme Court ruled that such was not a diminution of benefits being enjoyed at the time of the promulgation of the Labor Code on the following reasons:
G.R. No. 75289 August 31, 1989
Facts of the case:
Kamayan Point Hotel had been giving its employees the so-called "14th Month Pay" from 1979 to 1981. In 1982 however, it suffered losses due to a bad business decision and eventually closed business in 1984. In 1982, due to said financial difficulty, it was not able to give said 14th Month Pay to its employees so that in 1983, private respondent Federation of Free Workers (FFW) filed a complaint with the Labor Arbiter for its non-payment. The Labor Arbiter rendered a decision in favor of FFW, which decision on appeal to the National Labor Relations Commission (NLRC) was affirmed with modification. Both the FFW, Labor Arbiter and NLRC were one in contending that although there was no law granting the 14th Month Pay, still the employees of Kamayan Point Hotel were still entitled to it by virtue of said practice having ripened into a company practice that can no longer be withdrawn without violating the statutory prohibition against diminution of benefits.
Issue:
Whether or not the non-granting of the 14th Month Pay which had been granted before amounted to a violation of the statutory prohibition against diminution of benefits as contained in Article 100 of the Labor Code of the Philippines which provides "Nothing in this Book shall be construed to eliminate or in any way diminish supplements, or other employee benefits being enjoyed at the time of promulgation of this Code".
Ruling:
The Supreme Court ruled that such was not a diminution of benefits being enjoyed at the time of the promulgation of the Labor Code on the following reasons:
- The first reason was obviously because the Labor Code took effect in 1974 while said benefit was given only starting 1979, so that it cannot be said that said benefit was already being enjoyed by Kamayan Point's employees at the time of promulgation of the Labor Code. Thus, that particular provision has no application in the case at bar.
- Since there is no law making the granting of a 14th Month Pay mandatory, the same can only be considered as additional benefit which is gratuitous in nature, and for which, the employees cannot make demands.
- Kamayon Point cannot be obliged to assume a "double burden" by requiring it to grant 14th Month Pay on top of the mandatory 13th Month Pay and similar benefits merely because it had, out of its liberality, given the same before. Since it is no longer in the financial position to grant said benefit, it cannot be punished because of liberality in the past, by compelling it to give what it is not capable of giving.
Monday, September 15, 2008
Bisig ng Manggagawa vs Philippine Refining Co.
A Summary of a Decision of the Supreme Court of the Philippines
G.R. No. L-27761 September 30, 1981
Facts of the case:
In 1966, petitioner union Bisig ng Manggagawa ng Philippine Refining Company, Inc. filed with the Court of First Instance of Manila a petition for declaratory relief seeking, among others, the judgement that their Christmas bonus be included as part of their basic pay for the computation of overtime pay. Petitioner based its contention primarily on the ruling of the Supreme Court in NAWASA vs. NAWASA Consolidated Unions, et all G.R. No. L-18938, August 31, 1964, 11 SCRA 766 where it was declared that the 'regular rate' is also deemed to include other incentives and bonuses which employers may receive as part of their regular pay.
Respondent Philippine Refining Company, Inc. on the other hand contended that in their collective bargaining agreement (CBA), the parties never intended to include the employees' Christmas bonus in the computation of the overtime pay, and that it did agree to raise the overtime rate to 50% instead of 25% of the regular base pay precisely on the consideration that it be based only on the regular base pay and should not include Christmas bonus.
Issue:
The issue resolved by the Supreme Court was whether or not, in the interpretation of the provision of the CBA of the parties on overtime pay, the term "regular base pay" should include Christmas bonus, and that in case it should not, whether such interpretation would contravene the principle established in the Nawasa vs Nawasa case.
Ruling:
The Supreme Court ruled that the term "regular base pay" is clear, unequivocal and requires no interpretation. It held that the term means regular basic pay which necessarily EXCLUDES money received in different concepts such as Christmas bonus and other fringe benefits. The Court observed that in framing up their CBA escpecially on the provision regarding overtime pay, it was only the regular base pay that was considered, and the same fact was undeniably known to the petitioner - the very reason, according to the court, why it attempted to have a different provision pertaining to overtime pay which would include Christmas bonus and other benefits. This factual information by itself constrains the petitioner to question the intention of that particular phrase in their CBA pertaining to overtime pay but could only claim that it violated the Nawasa doctrine and insist that it be reformed to conform to said doctrine.
The Supreme Court held that the Nawasa ruling did not limit that the computation of overtime pay to be based solely on the employees' regular wage or salary, which according to law includes bonuses and other benefits. What is important is that the product resulting from the computation must always be equal or higher than the statutory requirement of 25% more than the regular wage. In the case at bar, the formula adopted by the CBA is 50% more than the regular basi pay, which when computer is much higher than what can be arrived at using the statutory formula. Thus, the Court declared that the provisions of the CBA as to the computation of overtime pay has amply complied with what is required by law, and therefore is valid and not in contravention to the Nawasa doctrine.
G.R. No. L-27761 September 30, 1981
Facts of the case:
In 1966, petitioner union Bisig ng Manggagawa ng Philippine Refining Company, Inc. filed with the Court of First Instance of Manila a petition for declaratory relief seeking, among others, the judgement that their Christmas bonus be included as part of their basic pay for the computation of overtime pay. Petitioner based its contention primarily on the ruling of the Supreme Court in NAWASA vs. NAWASA Consolidated Unions, et all G.R. No. L-18938, August 31, 1964, 11 SCRA 766 where it was declared that the 'regular rate' is also deemed to include other incentives and bonuses which employers may receive as part of their regular pay.
Respondent Philippine Refining Company, Inc. on the other hand contended that in their collective bargaining agreement (CBA), the parties never intended to include the employees' Christmas bonus in the computation of the overtime pay, and that it did agree to raise the overtime rate to 50% instead of 25% of the regular base pay precisely on the consideration that it be based only on the regular base pay and should not include Christmas bonus.
Issue:
The issue resolved by the Supreme Court was whether or not, in the interpretation of the provision of the CBA of the parties on overtime pay, the term "regular base pay" should include Christmas bonus, and that in case it should not, whether such interpretation would contravene the principle established in the Nawasa vs Nawasa case.
Ruling:
The Supreme Court ruled that the term "regular base pay" is clear, unequivocal and requires no interpretation. It held that the term means regular basic pay which necessarily EXCLUDES money received in different concepts such as Christmas bonus and other fringe benefits. The Court observed that in framing up their CBA escpecially on the provision regarding overtime pay, it was only the regular base pay that was considered, and the same fact was undeniably known to the petitioner - the very reason, according to the court, why it attempted to have a different provision pertaining to overtime pay which would include Christmas bonus and other benefits. This factual information by itself constrains the petitioner to question the intention of that particular phrase in their CBA pertaining to overtime pay but could only claim that it violated the Nawasa doctrine and insist that it be reformed to conform to said doctrine.
The Supreme Court held that the Nawasa ruling did not limit that the computation of overtime pay to be based solely on the employees' regular wage or salary, which according to law includes bonuses and other benefits. What is important is that the product resulting from the computation must always be equal or higher than the statutory requirement of 25% more than the regular wage. In the case at bar, the formula adopted by the CBA is 50% more than the regular basi pay, which when computer is much higher than what can be arrived at using the statutory formula. Thus, the Court declared that the provisions of the CBA as to the computation of overtime pay has amply complied with what is required by law, and therefore is valid and not in contravention to the Nawasa doctrine.
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