VOLUME 1 - LABOR STANDARDS

SECOND YEAR LAW

FIRST SEMESTER, A.Y. 2019 – 2020

A Case Digest Compilation

Presented to

Atty. Jefferson M. Marquez

School of Law and Governance

University of San Carlos

Cebu City, Philippines

By:

Mar Darby G. Parayday

JD - NT 2
EH 410

October 2019
Contents
I. THE APPLICABLE LAWS
II. BASIC PRINCIPLES
1. Sonza vs. ABS-CBN 1
G.R. No. 138051, June 10, 2004
2. Lazaro vs. Social Security Commission 4
435 SCRA 472 [2004]
3. Phil. Global Communication vs. De Vera 5
459 SCRA 260 [2005]
4. ABS-CBN vs. Nazareno 7
G.R. No. 164156, Sept. 26, 2006
5. Francisco vs. NLRC 10
500 SCRA 690 [2006]
6. Nogales et al., vs. Capitol Medical Center et al. 11
G.R. No. 142625, December 19, 2006
7. Coca-Cola Bottlers Phils., vs. Dr. Climaco 14
G.R. No. 146881, February 15, 2007
8. Calamba Medical Center vs. NLRC et al. 16
G.R. No. 176484, Nov. 25, 2008
9. Escasinas et al., vs. Shangri-las Mactan Island Resort et al. 18
G.R. No. 178827, March 4, 2009
10. Tongko vs. Manufacturer Life Insurance Co. (Phils), Inc., et al. 20
G.R. No. 167622, January 25, 2011 En Banc
see June 29, 2010 Main Decision
11. Semblante et al., vs. Court of Appeals, et al. 24
G.R. No. 196426, August 15, 2011
12. Bernarte vs. Phil. Basketball Association et al. 25
G.R. No. 192084, September 14, 2011
13. Lirio vs. Genovia 29
G.R. No. 169757, November 23, 2011
14. Jao vs. BCC Products Sales Inc. 33
G.R. No. 163700, April 18, 2012
15. Legend Hotel (Manila) vs. Realuyo 35
G.R. No. 153511, July 18, 2012
16. The New Philippine Skylanders, Inc., vs. Dakila 40
G.R. No. 199547, Sept. 24, 2012
17. Tesoro et al., vs. Metro Manila Retreaders Inc., et al. 41
GR No. 171482, March 12, 2014
18. Royale Homes Marketing Corp., vs. Alcantara 44
GR No. 195190, July 28, 2014
19. Fuji Television Network Inc. vs. Espiritu 46
GR No. 204944-45, December 3, 2014
20. Cabaobas et al., vs. Pepsi Cola 56
GR No.176908, March 25, 2015
21. Begino et al., vs. ABS-CBN Corp. 59
GR No. 199166, April 20, 2015
22. Social Security System vs. Ubana 63
GR No. 200114, Aug 25, 2015
23. Century Properties Inc. vs. Babiano, et al. 66
GR No. 220978, July 5, 2016
24. Lu vs. Enopia 68
GR No. 197899, March 6, 2017
25. Apelanio vs. Arcanys, Inc. 70
GR No. 227098, November 14, 2018
26. Dr. Loreche-Amit vs. Cagayan De Oro Medical Center 72
GR No. 216635, June 3, 2019
27. Fernandez vs. Kalookan SlaughterHouse Inc. 75
GR No. 225075, June 19, 2019

III. HIRING OF EMPLOYEE

1. PT&T vs. NLRC 79
272 SCRA 596 [1997]
2. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils. 80
G.R. No. 162994, Sept. 17, 2004
3. Star Paper Corp., vs. Simbol 83
G.R. No. 164774, April 12, 2006
4. Del Monte Phils vs. Velasco 85
G.R. No. 153477, March 6, 2007
5. Yrasuegui vs. Phil Air Lines 87
G.R. No. 168081, October 17, 2008

IV. WAGES & WAGE RATIONALIZATION ACT

IV-A VIOLATION OF WAGE ORDER
6. S.I.P. Food House et al., vs. Batolina 91
GR No. 192473, Oct 11, 2010
7. SLL International Cables Specialist vs. NLRC 93
GR No. 172161, March 2, 2011
8. Vergara, Jr. vs. Coca-Cola Bottlers Phils Inc. 97
G.R. No. 176985, April 1, 2013
9. Royal Plant Workers Union vs. Coca-Cola Bottlers Phils Inc-Cebu Plant 99
G.R. No. 198783, April 15, 2013
10. The National Wages & Productivity Commission et al., vs. The Alliance of
Progressive Labor et al. 103
GR No. 150326, March 12, 2014
11. David/Yiels Hog Dealer vs. Macasio 106
GR No. 195466, July 2, 2014
12. Our Haus Realty Development Corp., vs. Parian et al. 110
GR No. 204651, August 6, 2014
13. Milan et al., vs. NLRC 114
GR No. 202961, February 4, 2015
14. Toyota Pasig Inc vs. De Peralta 116
GR No. 213488, Nov 7, 2016
15. Soriano et al., vs. Secretary of Finance 118
G.R. Nos. 184450, 184508, 184538, 185234, January 24, 2017, En Banc
16. CCBPI vs. Iloilo Coca-Cola Plant Employees Union 123
GR No. 195297, December 5, 2018
17. Pablico et al., vs. Cerro/Master Pab Resto Bar 127
GR No. 227200, June 10, 2019

V. WAGE ENFORCEMENT AND RECOVERY

18. Tiger Construction and Development Corp vs. Abay et al. 130
GR No. 164141, Feb. 26, 2010
19. People’s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al.
GR No. 179652, March 6, 2012 Resolution on the main Decision of May 8, 2009
133
20. Superior Packaging Corp., vs. Balagsay et al. 136
G.R. No. 178909, October 10, 2012
21. Department of Labor & Employment vs. Kentex Manufacturing Corp. GR No.
233781, July 8, 2019 138

VI. WAGE PROTECTION PROVISIONS & PROHIBITIONS REGARDING

WAGES
22. SHS Perforated Materials, Inc. et al., vs. Diaz 142
GR No. 185814, Oct. 13, 2010
23. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo
G.R. No. 188169, November 28, 2011 144
24. Locsin II vs. Mekeni Food Corp. 147
GR No. 192105, December 9, 2013
25. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union 149
GR No. 191714, Feb 26, 2014
26. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso.
152
GR No. 181806, March 12, 2014
27. Bluer Than Blue Joint Ventures Co., vs. Esteban 155
GR No. 192582, April 7, 2014, citing 2011 Nina Jewelry Manufacturing of Metal
Arts Inc. vs. Montecillo
28. Netlink Computer Inc. vs. Delmo 157
GR No. 160827, June 18, 2014
29. PLDT vs. Estranero 159
GR No. 192518, October 15, 2014
30. Milan et al vs. NLRC 163
GR No. 202961, Feb. 4, 2015
31. Galang et al., vs. Boie Takeda Chemicals Inc. et al. 166
GR No. 183934, July 20, 2016
32. Coca-Cola Bottlers Phils Inc., vs. CCBPI Sta Rosa Plant Employees Union 169
GR No. 197494, March 25, 2019

VII. PAYMENT OF WAGES

33. Congson vs. NLRC 173
243 SCRA 260 [1995]
34. North Davao Mining vs. NLRC 175
254 SCRA 721 [1996]
35. Heirs of Sara Lee vs. Rey 177
G.R. No. 149013, Aug. 31, 2006

VIII. CONDITIONS OF EMPLOYMENT

36. San Juan De Dios Hospital vs. NLRC 179
282 SCRA 316 [1997]
37. Sime Darby vs. NLRC 181
289 SCRA 86 [1998]
38. Phil. Airlines vs. NLRC 183
302 SCRA 582 [1999]
39. Linton Commercial Co., Inc., vs. Hellera 163147, October 10, 2007 187
40. Bisig Manggagawa sa Tryco vs. NLRC 189
G.R. No. 151309, Oct. 15, 2008
41. Dasco et al., vs. Phiktranco Service Enterprise 192
GR No. 211141, June 29, 2016
42. HSY Marketing Ltd., Villatique 195
GR No. 219569, August 17, 2016
43. A. Nate Casket Maker et al., vs. Arango, et al. 197
GR No. 192282, October 5, 2016

IX. MINIMUM LABOR STANDARD BENEFITS

44. San Miguel Corp., vs. CA 200
G.R. No. 146775, Jan. 30, 2002
45. Tan vs. Lagrama 204
G.R. No. 151228, August 15, 2002
46. Lambo vs. NLRC 207
317 SCRA 420
47. R&E Transport vs. Latag 209
G.R. No. 155214, Feb. 13, 2004
48. Asian Transmission vs. CA 211
425 SCRA 478 [2004]
49. Autobus Transport System vs. Bautista 213
G.R. No. 156364, May 16, 2005
50. San Miguel Corp., vs. Del Rosario 217
G.R. No. 168194, Dec. 13, 2005
51. Penaranda vs. Baganga Plywood Corp. 222
G.R. No. 159577, May 3, 2006
52. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU
G.R. No. 1577745, October 19, 2007, citing Wellington Investment vs. Trajano, 245
SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004 226
53. Bahia Shipping Services vs. Chua 228
G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533 [1998]
54. PNCC Skyway Traffic Management and Security Division Workers Organization
229
GR No. 171231, Feb. 17, 2010
55. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr.
G.R. No. 198662, Sept. 12, 2012 231
56. Robina Farms Cebu vs. Villa 233
GR No. 175869, April 18, 2016
57. Dasco et al., vs. Philtranco Service Enterprise 236
GR No. 211141, June 29, 2016
58. HSY Marketing Ltd., vs. Villastique 238
GR No. 219569, Aug. 17, 2016
59. Dela Salle Araneta University vs. Bernardo 241
GR No. 190809, February 13, 2017

X. OTHER SPECIAL BENEFITS

60. Reyes vs. NLRC et al. 244
G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs. Dela Serna,
228 SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]
61. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco
Metal-NAFLU 246
G.R. No. 170734, May 14, 2008
62. Universal Robina Sugar Milling Corp. vs. Caballeda 247
G.R. No. 156644, July 28, 2008
63. Cercado vs. Uniprom, Inc. 251
G.R. No. 188154, October 13, 2010
64. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al. 253
G.R. No. 198662, September 12, 2012
65. Padillo vs. Rural bank of Nabunturan Inc. 255
G.R. No. 199338, January 21, 2013
66. Grace Christian High School vs. Lavandera 257
G.R No. 177845, August 20, 2014
67. Goodyear Philippines Inc. vs. Angus 259
G.R No. 185449, November 12, 2015
68. Banco De Oro Unibank vs.Sagaysay 264
G.R No. 214961, September 16, 2015
69. Perez vs. Camparts Industries Inc. 266
GR No. 197557, October 5, 2016
70. De Salle Araneta University vs. Bernardo 268
GR No. 190809, February 13, 2017
71. Catotocan vs. Lourdes School of Quezon City 271
G.R No. 213486, April 26, 2017, citing 1996 Pantranco North Express
72. Philippine Airlines vs. Hassaram 274
G.R. No. 217730, June 5, 2017
73. Laya vs. Court of Appeals 275
GR No. 205813, January 10, 2018 En Banc
74. Maria De Leon Transportation Inc., et.al. vs. Macuray 281
GR No. 214940, June 6, 2018

XI. JURISDICTION OF THE LABOR ARBITER

XII. NLRC RULES OF PROCEDURE, AMENDED
75. Lockheed Detective & Watchman Agency 285
G.R. No. 185918, April 18, 2012
76. Portillo vs. Rudolf Lietz, Inc. et al. 287
G.R. No. 196539, October 10, 2012
77. Building Care Corp. vs. Macaraeg 291
G.R. No. 198357, December 10, 2012
78. McBurnie vs. Ganzon 295
G.R. No. 178034/1718117, October 17, 2013, En Banc
79. Indophil Textile Mills Inc. vs. Engr. Adviento 302
G.R. No. 171212, August 4, 2014
80. Manila Mining Corp., vs. Amor 305
G.R. No. 182800, April 20, 2015, citing 2015 Mcburnie
81. Toyota Alabang Inc vs. Games 309
G.R. No. 206612, Aug 17, 2015
82. Social Security System vs. Ubana 313
G.R. No. 200114, Aug 25, 2015
83. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils 317
G.R. No. 198675, Sept 23, 2015
84. Quantum Foods, Inc. vs. Esloyo 320
G.R. No. 213696, December 9, 2015, citing 2015 Mcburnie
85. Dela Rosa Liner Inc et vs. Borela et. al. 323
G.R. No. 207286, July 29, 2016
86. Fontana Development Corp., vs. Vukasinovic 329
G.R. No. 222424, September 21, 2016
 JOSE Y. SONZA, petitioner, vs. ABS-CBN BROADCASTING

CORPORATION, respondent.

G.R. No. 138051 June 10, 2004

Facts: In May 1994, ABS-CBN signed an Agreement with the Mel and Jay
Management and Development Corporation (MJMDC). Referred to in the Agreement
as "AGENT," MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN as
talent for radio and television.

On 1 April 1996, SONZA wrote a letter to ABS-CBN’s President, Eugenio Lopez III,
regarding his decision to irrevocably resign in view of recent events concerning his
programs and career. In the letter, he stated that he is waiving and renouncing
recovery of the remaining amount stipulated the Agreement but reserves the right to
seek recovery of the other benefits under said Agreement.

On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department
of Labor and Employment (NCR) alleging that ABS-CBN did not pay his salaries,
separation pay, service incentive leave pay, 13th month pay, signing bonus, travel
allowance and amounts due under the Employees Stock Option Plan. ABS-CBN, on
the other hand, filed a Motion to Dismiss on the ground that no employer-employee
relationship existed between the parties. It insisted that SONZA is an independent
contractor.

The Labor Arbiter dismissed SONZA’s complaint. It ratiocinated that whatever

benefits SONZA enjoyed arose from the Agreement between him and ABS-CBN and
not by reason of employer-employee relationship. NLRC and CA sustained the
decision of the Labor Arbiter.

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Issue: Whether SONZA is an employee of ABS-CBN or an independent contractor.

Ruling: The Supreme Court ruled that SONZA is not an employee of ABS-CBN but
an independent contractor.

Selection and Engagement of Employees. Independent contractors often present

themselves to possess unique skills, expertise or talent to distinguish them from
ordinary employees. The specific selection and hiring of SONZA, because of his
unique skills, talent and celebrity status not possessed by ordinary employees, is a
circumstance indicative, but not conclusive, of an independent contractual
relationship. If SONZA did not possess such unique skills, talent and celebrity status,
ABS-CBN would not have entered into the Agreement with SONZA but would have
hired him through its personnel department just like any other employee.

Payment of Wages. All the talent fees and benefits paid to SONZA were the result of
negotiations that led to the Agreement. If SONZA were ABS-CBN’s employee, there
would be no need for the parties to stipulate on benefits such as "SSS, Medicare, x x
x and 13th month pay"20 which the law automatically incorporates into every
employer-employee contract. Whatever benefits SONZA enjoyed arose from contract
and not because of an employer-employee relationship. SONZA’s talent fees,
amounting to P317,000 monthly in the second and third year, are so huge and out
of the ordinary that they indicate more an independent contractual relationship
rather than an employer-employee relationship.

Power of Dismissal. During the life of the Agreement, ABS-CBN agreed to pay
SONZA’s talent fees as long as "AGENT and Jay Sonza shall faithfully and completely
perform each condition of this Agreement." Even if it suffered severe business losses,
ABS-CBN could not retrench SONZA because ABS-CBN remained obligated to pay
SONZA’s talent fees during the life of the Agreement. This circumstance indicates an
independent contractual relationship between SONZA and ABS-CBN.

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Power of Control. Applying the control test to the present case, the Court found that
SONZA is not an employee but an independent contractor. The control test is the
most important test our courts apply in distinguishing an employee from an
independent contractor. This test is based on the extent of control the hirer exercises
over a worker. The greater the supervision and control the hirer exercises, the more
likely the worker is deemed an employee. The converse holds true as well – the less
control the hirer exercises, the more likely the worker is considered an independent
contractor.

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ANGELITO L. LAZARO, Proprietor of Royal Star Marketing, petitioner, vs. SOCIAL
SECURITY COMMISSION, ROSALINA LAUDATO, SOCIAL SECURITY SYSTEM and
THE HONORABLE COURT OF APPEALS, respondents.

G.R. No. 138254 July 30, 2004

Facts: Rosalina M. Laudato (respondent) filed a petition before the SSC for social
security coverage and remittance of unpaid monthly social security contributions
against Angelito L. Lazaro (petitioner), proprietor of Royal Star Marketing, which is
engaged in the business of selling home appliances. Laudato alleged that despite her
employment as sales supervisor of the sales agents for Royal Star from April of 1979
to March of 1986, Lazaro failed to report her to the SSC for compulsory coverage or
remit her social security contributions.

Lazaro denied that Laudato was a sales supervisor of Royal Star, averring instead that
she was a mere sales agent whom he paid purely on commission basis. Lazaro also
maintained that Laudato was not subjected to definite hours and conditions of work.
As such, Laudato could not be deemed an employee of Royal Star.

The SSC ruled in favor of Laudato. Applying the control test, it held that Laudato was
an employee of Royal Star and ordered petitioner to pay the unremitted social
security contributions of Laudato plus damages. The CA affirmed SSC’s ruling.

Issue: Whether or not respondent is an employee, which entitles her to be under the
coverage of the Social Security Act.

Ruling: The Supreme Court held that Laudato is an employee of Royal Star
Marketing. The fact that Laudato was paid by way of commission does not preclude
the establishment of an employer-employee relationship. Neither does it follow that
a person who does not observe normal hours of work cannot be deemed an

4
employee.

The relevant factor remains whether the "employer" controls or has reserved the
right to control the "employee" not only as to the result of the work to be done but
also as to the means and methods by which the same is to be accomplished. As
emphasized by SSC, Laudato was a sales supervisor and not a mere agent. As such,
Laudato oversaw and supervised the sales agents of the company, and thus was
subject to the control of management as to how she implements its policies and its
end results.

The finding of the SSC that Laudato was an employee of Royal Star is supported by
substantial evidence such as the cash vouchers issued by Royal Star to Laudato,
calling cards of Royal Star denominating Laudato as a "Sales Supervisor" of the
company, and Certificates of Appreciation issued by Royal Star to Laudato in
recognition of her unselfish and loyal efforts in promoting the company. On the
other hand, Lazaro has failed to present any convincing contrary evidence, relying
instead on his bare assertions. Hence, the Supreme Court denied the petition and
affirmed the decision of CA.

PHILIPPINE GLOBAL COMMUNICATIONS, INC., petitioner, vs.

RICARDO DE VERA, respondent.

G.R. No. 157214 June 7, 2005

Facts: On May 15, 1981, respondent De Vera, a physician by profession, offered his
services to Philcom (petitioner) and proposed his plan of works to attend to the
medical needs of its employees. The parties agreed and formalized respondent’s
proposal in a document denominated as RETAINERSHIP CONTRACT which will be for
a period of one year subject to renewal. Said contract was renewed yearly, from 1981
to 1994. However, for the years 1995 and 1996, renewal of the contract was only
made verbally.

5
In December 1996, Philcom, through a letter, informed De Vera of its decision to
discontinue the latter’s retainer’s contract effective December 31, 1996 because
management has decided that it would be more practical to provide medical services
to its employees through accredited hospitals near the company premises. On
January 22, 1997, De Vera filed a complaint for illegal dismissal before the NLRC,
alleging that he was dismissed without due process.

The Labor Arbiter dismissed De Vera’s complaint on the rationale that as a "retained
physician" under a valid contract mutually agreed upon by the parties, De Vera was
an "independent contractor" and that he "was not dismissed but rather his contract
with Philcom ended when such contract was not renewed after December 31, 1996.
NLRC, on appeal, reversed the decision of the Labor Arbiter finding that De Vera is a
regular employee and ordered his reinstatement. CA agreed with NLRC but modified
its decision that instead of reinstatement, it ordered Philcom to pay the respondent a
separation pay instead.

Issue: Whether or not an employee-employer relationship exists between Philcom

and De Vera.

Ruling: The Supreme Court disagreed with CA and sustained the decision of the
Labor Arbiter that De Vera is not an employee of Philcom, but an independent
contractor.

The four fold test is wanting in this case. It was De Vera who sets the parameters of
what his duties would be in offering his services to petitioner. From the time he
started to work with petitioner, he never was included in its payroll; was never
deducted any contribution for remittance to the Social Security System (SSS); and
was in fact subjected by petitioner to the ten (10%) percent withholding tax for his
professional fee. An ordinary employee would consider the SSS payments important

6
and thus make sure they would be paid. De Vera never bothered to ask the
respondent to remit his SSS contributions. This clearly shows that the complainant
never considered himself an employee of PHILCOM. It was also noted that the power
to terminate the parties’ relationship was mutually vested on both. Either may
terminate the arrangement at will, with or without cause.

Moreover, there is no element of control. Philcom had no control over the means
and methods by which De Vera went about performing his work. De Vera could even
embark in the private practice of his profession. With the recognition of the fact that
petitioner consistently engaged the services of respondent on a retainer basis, as
shown by their various "retainership contracts", so can petitioner put an end, with or
without cause, to their retainership agreement as therein provided.

ABS-CBN BROADCASTING CORPORATION, petitioner, vs. MARLYN NAZARENO,

MERLOU GERZON, JENNIFER DEIPARINE, and JOSEPHINE LERASAN, respondents.

G.R. No. 164156 September 26, 2006

Facts: ABS-CBN (petitioner) employed respondents as production assistants (PAs) and

were assigned at the news and public affairs, for various radio programs in the Cebu
Broadcasting Station. They were issued ABS-CBN employees’ IDs and were required
to work for a minimum of eight hours a day, including Sundays and holidays. On
December 19, 1996, ABS-CBN and the ABS-CBN Rank-and-File Employees executed a
Collective Bargaining Agreement (CBA). However, since petitioner refused to
recognize PAs as part of the bargaining unit, respondents were not included to the
CBA.

On October 12, 2000, respondents filed a Complaint for Recognition of Regular

Employment Status, Underpayment of Overtime Pay, Holiday Pay, Premium Pay,
Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against the
petitioner before the NLRC. They insisted that they belonged to a "work pool" from

7
which petitioner chose persons to be given specific assignments at its discretion, and
were thus under its direct supervision and control regardless of nomenclature.

ABS-CBN maintained that as program employees, a PA’s engagement is coterminous

with the completion of the program, and may be extended/renewed provided that
the program is on-going. Hence, their compensation is computed on a program
basis, a fixed amount for performance services irrespective of the time consumed.

On July 30, 2001, the Labor Arbiter rendered judgment in favor of the respondents,
and declared that they were regular employees of petitioner. On appeal, the NLRC
set aside and vacated the Labor Arbiter’s decision and entered a new one ordering
ABS-CBN to pay respondents of their wage differentials and other benefits arising
from the CBA as of 30 September 2002. In sustaining the decision of NLRC, CA
averred that respondents are not mere project employees, but regular employees
who perform tasks necessary and desirable in the usual trade and business of
petitioner and not just its project employees.

Issue: Whether or not respondents are regular employees.

Ruling: Yes, respondents are regular employees. Citing Article 280 of the Labor Code,
the Supreme Court stated that any employee who has rendered at least one year of
service, whether continuous or intermittent, is deemed regular with respect to the
activity performed and while such activity actually exists.

The Supreme Court further mentioned that there are two kinds of regular employees
under the law: (1) those engaged to perform activities which are necessary or
desirable in the usual business or trade of the employer; and (2) those casual
employees who have rendered at least one year of service, whether continuous or
broken, with respect to the activities in which they are employed.

8
What determines whether a certain employment is regular or otherwise is the
character of the activities performed in relation to the particular trade or business
taking into account all the circumstances, and in some cases the length of time of its
performance and its continued existence. It is obvious that one year after they were
employed by petitioner, respondents became regular employees by operation of law.

Respondents cannot be considered "talents" because they are not actors or actresses
or radio specialists or mere clerks or utility employees. Additionally, respondents
cannot be considered as project or program employees. The principal test is whether
or not the project employees were assigned to carry out a specific project or
undertaking, the duration and scope of which were specified at the time the
employees were engaged for that project. In this case, it is undisputed that
respondents had continuously performed the same activities for an average of five
years. Their assigned tasks are necessary or desirable in the usual business or trade
of the petitioner.

It follows then that respondents are entitled to the benefits provided for in the
existing CBA between petitioner and its rank-and-file employees. As regular
employees, respondents are entitled to the benefits granted to all other regular
employees of petitioner under the CBA.

9
 ANGELINA FRANCISCO, Petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, KASEI CORPORATION, SEIICHIRO TAKAHASHI, TIMOTEO ACEDO,
DELFIN LIZA, IRENE BALLESTEROS, TRINIDAD LIZA and

RAMON ESCUETA, Respondents.

G.R. No. 170087 August 31, 2006

Facts: In 1995, Francisco was hired by Kasei. She was designated as Accountant and
Corporate Secretary and was assigned to handle all the accounting needs of the
company. She was also designated as Liaison Officer to the City of Makati to secure
business permits, construction permits and other licenses for the initial operation of
the company. In 1996, petitioner was designated as Acting Manager and has
performed her duties for 5 years.

In January 2001, petitioner was replaced but she was assured that she would and still
be connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her
salary and did not pay her with mid-year bonus allegedly because the company was
not earning well. On October 2001, petitioner did not receive her salary from the
company. When she demanded for her salary, she was informed that she is no
longer connected with the company. Hence, she did not report for work and filed an
action for constructive dismissal before the labor arbiter.

Respondents, on the other, hand, maintained that she is not an employee of Kasei.
She was hired as a technical consultant and she performed her work at her own
discretion without control and supervision of the company. Her services are only
temporary in nature.

The Labor Arbiter ruled in favor of Francisco which decision as affirmed by NLRC. CA,
on the other hand, dismissed Francisco’s complaint on the ground of constructive
dismissal.

Issue: Whether or not an employer-employee relationship exists.

Ruling: Yes, she is an employee of Kasei.

The Supreme Court applied the two-tiered test to determine the existence of

10
employer-employee relationship which involved: (1) the putative employer’s power to
control the employee with respect to the means and methods by which the work is
to be accomplished; and (2) the underlying economic realities of the activity or
relationship.

By applying the control test, there is no doubt that petitioner is an employee of

Kasei Corporation because she was under the direct control and supervision of Seiji
Kamura, the corporation’s Technical Consultant. Under the broader economic reality
test, the petitioner can likewise be said to be an employee of Kasei because she is
economically dependent on the company for her continued employment in the
latter’s line of business.

She was selected and engaged by the company for compensation, and is
economically dependent upon respondent for her continued employment in that line
of business. More importantly, Kasei had the power to control petitioner with the
means and methods by which the work is to be accomplished.

Therefore, the petition was granted.

ROGELIO P. NOGALES, for himself and on behalf of the minors, ROGER

ANTHONY, ANGELICA, NANCY, and MICHAEL CHRISTOPHER, all surnamed
NOGALES, petitioners, vs. CAPITOL MEDICAL CENTER, DR. OSCAR ESTRADA, DR.
ELY VILLAFLOR, DR. ROSA UY, DR. JOEL ENRIQUEZ, DR. PERPETUA LACSON, DR.
NOE ESPINOLA, and NURSE J. DUMLAO, respondents.

G.R. No. 142625 December 19, 2006

Facts: Pregnant with her fourth child, Corazon Nogales (37 years old) was under the
exclusive prenatal care of Dr. Oscar Estrada. While Corazon was on her last trimester
of pregnancy, Dr. Estrada noted an increase in her blood pressure and development
of leg edema indicating preeclampsia, which is a dangerous complication of
pregnancy.

On May 26, 1976, Corazon was admitted at the CMC for delivery of the child. Dr.

11
Estrada ordered the injection of 10 grams of magnesium sulfate. However, Dr. Ely
Villaflor, who was assisting Dr. Estrada, administered only 2.5 grams of magnesium
sulfate. Dr. Estrada, assisted by Dr. Villaflor, applied low forceps to extract Corazon's
baby. In the process, piece of cervical tissue was allegedly torn. The baby came out
in an apnic, cyanotic, weak and injured condition. Corazon began to manifest
moderate vaginal bleeding which rapidly became profuse. Dr. Noe Espinola, head of
the Obstetrics-Gynecology Department of the CMC, was apprised of Corazon's
condition by telephone. Upon being informed that Corazon was bleeding profusely,
Dr. Espinola ordered immediate hysterectomy. Despite Dr. Espinola's efforts, Corazon
died.

Petitioners filed a complaint for damages with the Regional Trial Court. Petitioners
mainly contended that defendant physicians and CMC personnel were negligent in
the treatment and management of Corazon's condition. Petitioners charged CMC
with negligence in the selection and supervision of defendant physicians and hospital
staff. Trial court rendered judgment finding Dr. Estrada solely liable for damages.

The Court of Appeals upheld the trial court's ruling, finding Dr. Estrada as an
independent contractor-physician. The Court of Appeals applied the "borrowed
servant" doctrine considering that Dr. Estrada was an independent contractor who
was merely exercising hospital privileges. This doctrine provides that once the
surgeon enters the operating room and takes charge of the proceedings, the acts or
omissions of operating room personnel, and any negligence associated with such
acts or omissions, are imputable to the surgeon.

Issues: 1.) Whether or not there is employer-employee relationship between Dr.

Estrada and CMC; 2.) Whether CMC is vicariously liable for the negligence of Dr.
Estrada

Ruling: Dr. Estrada is not an employee of CMC, but an independent contractor.

12
However, CMC is still vicariously liable. The Court finds no single evidence pointing
to CMC's exercise of control over Dr. Estrada's treatment and management of
Corazon's condition. It is undisputed that throughout Corazon's pregnancy, she was
under the exclusive prenatal care of Dr. Estrada. Dr. Estrada is not an employee of
CMC, but an independent contractor.

In general, a hospital is not liable for the negligence of an independent contractor-

physician. There is, however, an exception to this principle. The hospital may be liable
if the physician is the "ostensible" agent of the hospital. This exception is also known
as the "doctrine of apparent authority." The doctrine essentially involves two factors
to determine the liability of an independent-contractor physician. The first factor
focuses on the hospital's manifestations and is sometimes described as an inquiry
whether the hospital acted in a manner which would lead a reasonable person to
conclude that the individual who was alleged to be negligent was an employee or
agent of the hospital. In this regard, the hospital need not make express
representations to the patient that the treating physician is an employee of the
hospital; rather a representation may be general and implied. The doctrine of
apparent authority is a specie of the doctrine of estoppel. Article 1431 of the Civil
Code provides that "through estoppel, an admission or representation is rendered
conclusive upon the person making it, and cannot be denied or disproved as against
the person relying thereon." CMC impliedly held out Dr. Estrada as a member of its
medical staff.

Through CMC's acts, CMC clothed Dr. Estrada with apparent authority thereby
leading the Spouses Nogales to believe that Dr. Estrada was an employee or agent
of CMC. CMC cannot now repudiate such authority. First, CMC granted staff
privileges to Dr. Estrada. Second, CMC made Rogelio sign consent forms printed on
CMC letterhead. Third, Dr. Estrada's referral of Corazon's profuse vaginal bleeding to
Dr. Espinola, who was then the Head of the Obstetrics and Gynecology Department
of CMC, gave the impression that Dr. Estrada as a member of CMC's medical staff
was collaborating with other CMC-employed specialists in treating Corazon. Hence,
CMC is also liable.

13
 COCA COLA BOTTLERS (PHILS.), INC./ERIC MONTINOLA, Manager,

Petitioners, vs. DR. DEAN N. CLIMACO, Respondent.

G.R. No. 146881 February 5, 2007

Facts: Dr. Dean Climaco (respondent), a medical doctor, was hired by Coca-cola
Bottlers Phil. (petitioner) by virtue of a Retainer Agreement. The terms and conditions
are as follows:

1. That the agreement shall only for 1 year beginning Jan. 1, 1988 to Dec. 31,
1988. Either party may terminate the contract upon giving a 30-day written
notice to the other;

2. That petitioner shall compensate respondent a retainer fee of

P3,800/month. The DOCTOR may charge professional fee for hospital services
rendered in line with his specialization;

3. That in consideration of the retainer’s fee, the DOCTOR agrees to perform

the duties and obligations in the COMPREHENSIVE MEDICAL PLAN, made an
integral part of this retainer agreement;

4. That the DOCTOR shall observe clinic hours at the company’s premises
from Monday to Saturday of a minimum of two (2) hours each day or a
maximum of TWO (2) hours each day or treatment from 7:30 a.m. to 8:30 a.m.
and 3:00pm to 4:00pm. It is further understood that the DOCTOR shall be on
call at all times during the other work shifts to attend to emergency case(s);

5. That no employee-employer relationship shall exist between the company

and the DOCTOR.

The retainer agreement expired after 1 year. However, despite the non-renewal of
the agreement, respondent continued to perform his functions as company doctor to
petitioner until he received a letter dated March 9, 1995 from the company ending
their retainership agreement. Respondent thereafter filed a complaint before the
NLRC seeking recognition as a regular employee of petitioner and thus prayed from

14
payment of all the benefits of a regular employee including 13th month pay, COLA,
holiday pay, service incentive leave, and Christmas bonus. Also, respondent filed
another complaint for illegal dismissal against petitioner.

In the Decisions dated Nov. 28, 1996 & Feb. 24, 1997, both the instant complaint was
dismissed by the Labor Arbiters and subsequently affirmed by the NLRC on the
ground that no employer-employee relationship existed between petitioner-company
and respondent. However when it was elevated to CA for review, the latter ruled that
employer-employee relationship existed between the parties after applying the four-
fold test: (1) power to hire employee (2) payment of wages (3) power to dismissal (4)
and power to control over the employee with respect to the means and methods by
which the work is to be accomplished.

Issue: Whether or not there exists an employer-employee relationship between the

parties.

Ruling: The Court agrees with the finding of the Labor Arbiter and the NLRC. The
Court held that the Labor Arbiter and the NLRC correctly found that Petitioner
Company lacked the power of control over the performance by respondent of his
duties.

The Court citing the case of Neri vs. NLRC said, petitioner, through the
Comprehensive Medical Plan, provided guidelines merely to ensure that the end
result was achieved. In other words, what was sought to be controlled by the
petitioner company was actually the end result of the task. The guidelines or the
Comprehensive Medical Plan were laid down merely to ensure that the desired end
result was achieved but did not control the means and methods by which
respondent performed his assigned tasks.

15
The Supreme Court further held that, an employee is required to stay in the
employer’s workplace or proximately close thereto that he cannot utilize his time
effectively and gainfully for his own purpose. Such is not the prevailing situation
here. The respondent does not dispute that fact that outside of the two (2) hours
that he is required to be at petitioner company’s premises, he is not at all further
required to just sit around in the premises and wait for an emergency to occur so as
to enable him from using such hours for his own benefit and advantage. In fact,
respondent maintains his own private clinic attending his private practice in the city,
where he services his patients and bills them accordingly.

The Court finds that the requirement to be on call for emergency cases does not
amount to such control, but are necessary incidents to the Retainership Agreement.
The Supreme Court also notes that the Agreement granted to both parties the power
to terminate their relationship upon giving a 30-day notice. Hence, petitioner did not
wield the sole power of dismissal or termination. Therefore, the petition was
GRANTED.

CALAMBA MEDICAL CENTER, INC., petitioner vs. NLRC, RONALDO LANZANAS

AND MERCEDITHA* LANZANAS, respondents.

G.R. No. 176484 November 25, 2008

Facts: Calamba Medical Center, engaged the services of medical doctors-spouses Dr.
Ronaldo and Dr. Merceditha Lanzanas as part of its team of resident physicians.
Reporting at the hospital twice-a-week on twenty-four-hour shifts, respondents were
paid a monthly "retainer" of P4,800.00 each. Also resident physicians were also given
a percentage share out of fees charged for out-patient treatments, operating room
assistance and discharge billings, in addition to their fixed monthly retainer.

The work schedules of the members of the team of resident physicians were fixed by
petitioner's medical director Dr. Desipeda, and they were issued ID, enrolled in the

16
SSS and withheld tax from them. After an incident where Dr. Trinidad overheard a
phone conversation between Dr. Ronaldo and a fellow employee Diosdado Miscala,
the former was given a preventive suspension and his wife Dr. Merceditha was not
given any schedule after sending the Memorandum. On March 1998, Dr. Ronaldo
filed a complaint for illegal suspension and Dr. Merceditha for illegal dismissal.

Issue: Whether or not there exists an employer-employee relationship between

petitioner and the spouses-respondents.

Ruling: Drs. Lanzanas are declared employee by the petitioner hospital. Under the
"control test," an employment relationship exists between a physician and a hospital
if the hospital controls both the means and the details of the process by which the
physician is to accomplish his task.

That petitioner exercised control over respondents gains light from the undisputed
fact that in the emergency room, the operating room, or any department or ward for
that matter, respondents' work is monitored through its nursing supervisors, charge
nurses and orderlies. Without the approval or consent of petitioner or its medical
director, no operations can be undertaken in those areas. For control test to apply, it
is not essential for the employer to actually supervise the performance of duties of
the employee, it being enough that it has the right to wield the power.

With respect to respondents' sharing in some hospital fees, this scheme does not
sever the employment tie between them and petitioner as this merely mirrors
additional form or another form of compensation or incentive similar to what
commission-based employees receive as contemplated in Article 97 (f) of the Labor
Code.

Moreover, respondents were made subject to petitioner-hospital's Code of Ethics -

the provisions of which cover administrative and disciplinary measures on negligence
of duties, personnel conduct and behavior, and offenses against persons, property

17
and the hospital's interest.

More importantly, petitioner itself provided incontrovertible proof of the employment

status of respondents, namely, the identification cards it issued them, the pay slips
and BIR W-2 (now 2316) Forms which reflect their status as employees, and the
classification as "salary" of their remuneration. Moreover, it enrolled respondents in
the SSS and Medicare (Philhealth) program. It bears noting at this juncture that
mandatory coverage under the SSS Law is premised on the existence of an
employer-employee relationship, except in cases of compulsory coverage of the self-
employed.

JEROMIE D. ESCASINAS and EVAN RIGOR SINGCO, Petitioners, vs. SHANGRI-LA'S

MACTAN ISLAND RESORT and DR. JESSICA J.R. PEPITO, Respondents

G.R. No. 178827 March 4, 2009

Facts: Registered nurses Jeromie D. Escasinas and Evan Rigor Singco were engaged
in 1999 and 1996, respectively, by Dr. Jessica Joyce R. Pepito (respondent doctor) to
work in her clinic at respondent Shangri-la’sMactan Island Resort in Cebu of which
she was a retained physician. In late 2002, petitioners filed with the National Labor
Relations Commission (NLRC) a complaint for regularization, underpayment of wages,
non-payment of holiday pay, night shift differential and 13th month pay differential
against respondents, claiming that they are regular employees of Shangri-la. Shangri-
la claimed, however, that petitioners were not its employees but of respondent
doctor, that Article 157 of the Labor Code, as amended, does not make it mandatory
for a covered establishment to employ health personnel, that the services of nurses is
not germane nor indispensable to its operations, and that respondent doctor is a
legitimate individual contractor who has the power to hire, fire and supervise the
work of nurses under her.

Issues: 1.) Whether or not there was an employee-employer relationship between

18
Shangri-La and the petitioners. 2.) Whether or not Dr. Pepito is an independent
contractor

Ruling: SC ruled that there no such relationship. The petitioners are under the direct
supervision of Dr. Pepito, an independent contractor.

(1) The resolution of the case hinges, in the main, on the correct interpretation of
Art. 157 vis a vis Art. 280 and the provisions on permissible job contracting of the
Labor Code, as amended. Under the foregoing provision, Shangri-la, which employs
more than 200 workers, is mandated to “furnish” its employees with the services of a
full-time registered nurse, a part-time physician and dentist, and an emergency clinic
which means that it should provide or make available such medical and allied
services to its employees, not necessarily to hire or employ a service provider. The
term “full-time” in Art. 157 cannot be construed as referring to the type of
employment of the person engaged to provide the services, for Article 157 must not
be read alongside Art. 280[9] in order to vest employer-employee relationship on the
employer and the person so engaged. The phrase “services of a full-time registered
nurse” should thus be taken to refer to the kind of services that the nurse will render
in the company’s premises and to its employees, not the manner of his engagement.

(2) The existence of an independent and permissible contractor relationship is

generally established by considering the following determinants: whether the
contractor is carrying on an independent business; the nature and extent of the work;
the skill required; the term and duration of the relationship; the right to assign the
performance of a specified piece of work; the control and supervision of the work to
another; the employer's power with respect to the hiring, firing and payment of the
contractor's workers; the control of the premises; the duty to supply the premises,
tools, appliances, materials and labor; and the mode, manner and terms of payment.
Against the above-listed determinants, the Court holds that respondent doctor is a
legitimate independent contractor. That Shangri-la provides the clinic premises and
medical supplies for use of its employees and guests do not necessarily prove that

19
respondent doctor lacks substantial capital and investment. Besides, the
maintenance of a clinic and provision of medical services to its employees is required
under Art. 157, which are not directly related to Shangri-la’s principal business –
operation of hotels and restaurants.

GREGORIO V. TONGKO, Petitioner, vs. THE MANUFACTURERS LIFE INSURANCE

CO. (PHILS.), INC. and RENATO A. VERGEL DE DIOS, Respondents.

G.R. No. 167622 January 25, 2011 [see June 29, 2010 Main Decision]

Facts: Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic

corporation engaged in life insurance business.Renato A. Vergel De Dios was, during
the period material, its President and Chief Executive Officer. Gregorio V. Tongko
started his professional relationship with Manulife on July 1, 1977 by virtue of a
Career Agent's Agreement (Agreement) he executed with Manulife. In the
Agreement, it is provided that: It is understood and agreed that the Agent is an
independent contractor and nothing contained herein shall be construed or
interpreted as creating an employer-employee relationship between the Company
and the Agent. The Company may terminate this Agreement for any breach or
violation of any of the provisions hereof by the Agent by giving written notice to the
Agent within fifteen (15) days from the time of the discovery of the breach. No
waiver, extinguishment, abandonment, withdrawal or cancellation of the right to
terminate this Agreement by the Company shall be construed for any previous failure
to exercise its right under any provision of this Agreement.

Either of the parties hereto may likewise terminate his Agreement at any time
without cause, by giving to the other party fifteen (15) days’ notice in writing. In
1983, Tongko was named as a Unit Manager in Manulife's Sales Agency
Organization.In 1990, he became a Branch Manager. As the CA found, Tongko's
gross earnings from his work at Manulife, consisting of commissions, persistency
income, and management overrides. The problem started sometime in 2001, when
Manulife instituted manpower development programs in the regional sales
management level. Relative thereto, De Dios addressed a letter dated November 6,

20
2001 to Tongko regarding an October 18, 2001 Metro North Sales Managers
Meeting. Stating that Tongko’s Region was the lowest performer (on a per Manager
basis) in terms of recruiting in 2000 and, as of today, continues to remain one of the
laggards in this area.

Other issues were: "Some Managers are unhappy with their earnings and would want
to revert to the position of agents." And "Sales Managers are doing what the
company asks them to do but, in the process, they earn less." Tongko was then
terminated. Therefrom, Tongko filed a Complaint dated November 25, 2002 with the
NLRC against Manulife for illegal dismissal in the Complaint. In a Decision dated April
15, 2004, Labor Arbiter dismissed the complaint for lack of an employer-employee
relationship. The NLRC's First Division, while finding an employer-employee
relationship between Manulife and Tongko applying the four-fold test, held Manulife
liable for illegal dismissal. Thus, Manulife filed an appeal with the CA. Thereafter, the
CA issued the assailed Decision dated March 29, 2005, finding the absence of an
employer-employee relationship between the parties and deeming the NLRC with no
jurisdiction over the case.

Issues: 1.) Whether or not Tongko was an employee of Manulife; 2.) Whether or not
Tongko was illegally dismissed.

Ruling:

On the first Issue:

Yes. In the instant case, Manulife had the power of control over Tongko that would
make him its employee. Several factors contribute to this conclusion. In the
Agreement dated July 1, 1977 executed between Tongko and Manulife, it is
provided that: The Agent hereby agrees to comply with all regulations and
requirements of the Company as herein provided as well as maintain a standard of
knowledge and competency in the sale of the Company's products which satisfies

21
those set by the Company and sufficiently meets the volume of new business
required of Production Club membership.Under this provision, an agent of Manulife
must comply with three (3) requirements: (1) compliance with the regulations and
requirements of the company; (2) maintenance of a level of knowledge of the
company's products that is satisfactory to the company; and (3) compliance with a
quota of new businesses. Among the company regulations of Manulife are the
different codes of conduct such as the Agent Code of Conduct, Manulife Financial
Code of Conduct, and Manulife Financial Code of Conduct Agreement, which
demonstrate the power of control exercised by the company over Tongko. The fact
that Tongko was obliged to obey and comply with the codes of conduct was not
disowned by respondents. Thus, with the company regulations and requirements
alone, the fact that Tongko was an employee of Manulife may already be established.
Certainly, these requirements controlled the means and methods by which Tongko
was to achieve the company's goals.

More importantly, Manulife's evidence establishes the fact that Tongko was tasked to
perform administrative duties that establishes his employment with Manulife.
Additionally, it must be pointed out that the fact that Tongko was tasked with
recruiting a certain number of agents, in addition to his other administrative
functions, leads to no other conclusion that he was an employee of Manulife.

On the second Issue:

In its Petition for Certiorari dated January 7, 2005[26] filed before the CA, Manulife
argued that even if Tongko is considered as its employee, his employment was
validly terminated on the ground of gross and habitual neglect of duties, inefficiency,
as well as willful disobedience of the lawful orders of Manulife. Manulife stated: In
the instant case, private respondent, despite the written reminder from Mr. De Dios
refused to shape up and altogether disregarded the latter's advice resulting in his
laggard performance clearly indicative of his willful disobedience of the lawful orders
of his superior. As private respondent has patently failed to perform a very
fundamental duty, and that is to yield obedience to all reasonable rules, orders and

22
instructions of the Company, as well as gross failure to reach at least minimum
quota, the termination of his engagement from Manulife is highly warranted and
therefore, there is no illegal dismissal to speak of. It is readily evident from the
above-quoted portions of Manulife's petition that it failed to cite a single iota of
evidence to support its claims. Manulife did not even point out which order or rule
that Tongko disobeyed.

More importantly, Manulife did not point out the specific acts that Tongko was guilty
of that would constitute gross and habitual neglect of duty or disobedience. Manulife
merely cited Tongko's alleged "laggard performance," without substantiating such
claim, and equated the same to disobedience and neglect of duty. Apropos thereto,
Art. 277, par. (b), of the Labor Code mandates in explicit terms that the burden of
proving the validity of the termination of employment rests on the employer. Failure
to discharge this evidential burden would necessarily mean that the dismissal was
not justified, and, therefore, illegal. The Labor Code provides that an employer may
terminate the services of an employee for just cause and this must be supported by
substantial evidence. The settled rule in administrative and quasi-judicial proceedings
is that proof beyond reasonable doubt is not required in determining the legality of
an employer's dismissal of an employee, and not even a preponderance of evidence
is necessary as substantial evidence is considered sufficient. Substantial evidence is
more than a mere scintilla of evidence or relevant evidence as a reasonable mind
might accept as adequate to support a conclusion, even if other minds, equally
reasonable, might conceivably opine otherwise. Here, Manulife failed to overcome
such burden of proof. It must be reiterated that Manulife even failed to identify the
specific acts by which Tongko's employment was terminated much less support the
same with substantial evidence.

To repeat, mere conjectures cannot work to deprive employees of their means of

livelihood. Thus, it must be concluded that Tongko was illegally dismissed. Moreover,
as to Manulife's failure to comply with the twin notice rule, it reasons that Tongko
not being its employee is not entitled to such notices. Since we have ruled that
Tongko is its employee, however, Manulife clearly failed to afford Tongko said

23
notices. Thus, on this ground too, Manulife is guilty of illegal dismissal.

MARTICIO SEMBLANTE and DUBRICK PILAR, Petitioners, vs. COURT OF APPEALS,

19th DIVISION, now SPECIAL FORMER 19th DIVISION, GALLERA DE MANDAUE /
SPOUSES VICENTE and MARIA LUISA LOOT, Respondents.

G.R. No. 196426 August 15, 2011

Facts: Petitioners assert that they were hired by respondents, as the official masiador
and sentenciador, respectively, of the cockpit sometime in 1993.

A masiador calls and takes the bets from the gamecock owners and other bettors
and orders the start of the cockfight. He also distributes the winnings after deducting
the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador
oversees the proper gaffing of fighting cocks, determines the fighting cocks' physical
condition and capabilities to continue the cockfight, and eventually declares the
result of the cockfight.

For their services as masiador and sentenciador, Semblante receives PhP2,000 per
week or a total of PhP8,000 per month, while Pilar gets PhP3,500 a week or
PhP14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday
every week, excluding monthly derbies and cockfights held on special holidays. Their
working days start at 1:00 p.m. and last until 12:00 midnight, or until the early hours
of the morning depending on the needs of the cockpit. Petitioners had both been
issued employees' identification cards that they wear every time they report for duty.
They alleged never having incurred any infraction and/or violation of the cockpit
rules and regulations.

On November 14, 2003, however, petitioners were denied entry into the cockpit

24
upon the instructions of respondents, and were informed of the termination of their
services effective that date. This prompted petitioners to file a complaint for illegal
dismissal against respondents.

Issue: Whether or not there existed an employer-employee relationship between the

petitioners and respondent.

Ruling: Petitioners are NOT employees of respondents, since their relationship fails
to pass the four-fold test of employment. The Court have repeatedly mentioned in
countless decisions: (1) the selection and engagement of the employee; (2) the
payment of wages; (3) the power of dismissal; and (4) the power to control the
employee's conduct, which is the most important element.

As found by both the NLRC and the CA, respondents had no part in petitioners'
selection and management; petitioners' compensation was paid out of the
arriba(which is a percentage deducted from the total bets), not by petitioners; and
petitioners performed their functions as masiador and sentenciador free from the
direction and control of respondents. In the conduct of their work, petitioners relied
mainly on their "expertise that is characteristic of the cockfight gambling," and were
never given by respondents any tool needed for the performance of their work.

Respondents, not being petitioners' employers, could never have dismissed, legally or
illegally, petitioners, since respondents were without power or prerogative to do so in
the first place. The rule on the posting of an appeal bond cannot defeat the
substantive rights of respondents to be free from an unwarranted burden of
answering for an illegal dismissal for which they were never responsible.

JOSE MEL BERNARTE, Petitioner, vs. PHILIPPINE BASKETBALL ASSOCIATION

(PBA), JOSE EMMANUEL M. EALA, and PERRY MARTINEZ, Respondents.

25
 G.R. No. 192084 September 14, 2011

Facts: Complainants, Jose Mel Bernarte and Renato Guevarra, aver that they were
invited to join the PBA as referees. During the leadership of Commissioner Emilio
Bernardino, they were made to sign contracts on a year-to-year basis. During the
term of Commissioner Eala, however, changes were made on the terms of their
employment.

Bernarte, was not made to sign a contract during the first conference of the All-
Filipino Cup which was from February 23, 2003 to June 2003. It was only during the
second conference when he was made to sign a one and a half month contract for
the period July 1 to August 5, 2003.

January 15, 2004, Bernarte received a letter from the Office of the Commissioner
advising him that his contract would not be renewed citing his unsatisfactory
performance on and off the court. It was a total shock for Bernarte who was awarded
Referee of the year in 2003. He felt that the dismissal was caused by his refusal to fix
a game upon order of Ernie De Leon.

Guevarra alleges that he was invited to join the PBA pool of referees in February
2001. On March 1, 2001, he signed a contract as trainee. Beginning 2002, he signed
a yearly contract as Regular Class C referee. On May 6, 2003, respondent Martinez
issued a memorandum to Guevarra expressing dissatisfaction over his questioning on
the assignment of referees officiating out-of-town games. Beginning February 2004,
he was no longer made to sign a contract.

Labor Arbiter’s decision, on 31 March 2005, declared petitioner an employee whose

dismissal by respondents was illegal. Accordingly, the Labor Arbiter ordered the
reinstatement of petitioner and the payment of back wages, moral and exemplary

26
damages and attorney’s fees.

In its 28 January 2008 Decision, the NLRC affirmed the Labor Arbiter’s judgment. The
NLRC agreed that the PBA has no control over the referees’ acts of blowing the
whistle and making calls during basketball games, it, nevertheless, theorized that the
said acts refer to the means and methods employed by the referees in officiating
basketball games for the illogical reason that said acts refer only to the referees’
skills. How could a skilled referee perform his job without blowing a whistle and
making calls? Worse, how can the PBA control the performance of work of a referee
without controlling his acts of blowing the whistle and making calls?

The Court of Appeals found petitioner an independent contractor since respondents

did not exercise any form of control over the means and methods by which
petitioner performed his work as a basketball referee.

The Court of Appeals denied the motion for reconsideration.

Issue: Whether petitioner is an employee of respondents, which in turn determines

whether petitioner was illegally dismissed.

Ruling: At any rate, the NLRC declared the issue on the finality of the Labor Arbiter’s
decision moot as respondents’ appeal was considered in the interest of substantial
justice. We agree with the NLRC. The ends of justice will be better served if we
resolve the instant case on the merits rather than allowing the substantial issue of
whether petitioner is an independent contractor or an employee linger and remain
unsettled due to procedural technicalities.

The existence of an employer-employee relationship is ultimately a question of fact.

As a general rule, factual issues are beyond the province of this Court. However, this

27
rule admits of exceptions, one of which is where there are conflicting findings of fact
between the Court of Appeals, on one hand, and the NLRC and Labor Arbiter, on the
other, such as in the present case.

To determine the existence of an employer-employee relationship, case law has

consistently applied the four-fold test, to wit: (a) the selection and engagement of
the employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee on the means and methods by which the
work is accomplished. The so-called “control test” is the most important indicator of
the presence or absence of an employer-employee relationship.

We agree with respondents that once in the playing court, the referees exercise their
own independent judgment, based on the rules of the game, as to when and how a
call or decision is to be made. The referees decide whether an infraction was
committed, and the PBA cannot overrule them once the decision is made on the
playing court. The referees are the only, absolute, and final authority on the playing
court. Respondents or any of the PBA officers cannot and do not determine which
calls to make or not to make and cannot control the referee when he blows the
whistle because such authority exclusively belongs to the referees. The very nature of
petitioner’s job of officiating a professional basketball game undoubtedly calls for
freedom of control by respondents.

Moreover, the following circumstances indicate that petitioner is an independent

contractor: (1) the referees are required to report for work only when PBA games are
scheduled, which is three times a week spread over an average of only 105 playing
days a year, and they officiate games at an average of two hours per game; and (2)
the only deductions from the fees received by the referees are withholding taxes.

In other words, unlike regular employees who ordinarily report for work eight hours
per day for five days a week, petitioner is required to report for work only when PBA

28
games are scheduled or three times a week at two hours per game. In addition,
there are no deductions for contributions to the Social Security System, Philhealth or
Pag-Ibig, which are the usual deductions from employees’ salaries. These undisputed
circumstances buttress the fact that petitioner is an independent contractor, and not
an employee of respondents.

CESAR C. LIRIO, doing business under the name and style of CELKOR AD
SONICMIX, Petitioner, vs. WILMER D. GENOVIA, Respondent.

G.R. No. 169757 November 23, 2011

Facts: On July 9, 2002, respondent Wilmer D. Genovia filed a complaint against

petitioner Cesar Lirio and/or Celkor Ad Sonicmix Recording Studio for illegal
dismissal, non-payment of commission and award of moral and exemplary damages.

Genovia (respondent) alleged that on August 15, 2001, he was hired as studio
manager by petitioner Lirio (petitioner), owner of Celkor Ad Sonicmix Recording
Studio (Celkor). He was employed to manage and operate Celkor and to promote
and sell the recording studio's services to music enthusiasts and other prospective
clients. He received a monthly salary of P7,000.00. They also agreed that he was
entitled to an additional commission of P100.00 per hour as recording technician
whenever a client uses the studio for recording, editing or any related work. He was
made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m. On
Saturdays, he was required to work half-day only, but most of the time, he still
rendered eight hours of work or more. All the employees of petitioner, including
respondent, rendered overtime work almost every day, but petitioner never kept a
daily time record to avoid paying the employees overtime pay.

Respondent stated that a few days after he started working as a studio manager,
petitioner approached him and told him about his project to produce an album for
his 15-year-old daughter, Celine Mei Lirio, a former talent of ABS-CBN Star Records.

29
Petitioner asked respondent to compose and arrange songs for Celine and promised
that he (Lirio) would draft a contract to assure respondent of his compensation for
such services. As agreed upon, the additional services that respondent would render
included composing and arranging musical scores only, while the technical aspect in
producing the album, such as digital editing, mixing and sound engineering would
be performed by respondent in his capacity as studio manager for which he was paid
on a monthly basis. Petitioner instructed respondent that his work on the album as
composer and arranger would only be done during his spare time, since his other
work as studio manager was the priority. Respondent then started working on the
album.

Respondent alleged that before the end of September 2001, he reminded petitioner
about his compensation as composer and arranger of the album. Petitioner verbally
assured him that he would be duly compensated. By mid-November 2001,
respondent finally finished the compositions and musical arrangements of the songs
to be included in the album. Before the month ended, the lead and back-up vocals
in the ten (10) songs were finally recorded and completed. From December 2001 to
January 2002, respondent, in his capacity as studio manager, worked on digital
editing, mixing and sound engineering of the vocal and instrumental audio files.

Thereafter, respondent was tasked by petitioner to prepare official correspondence,

establish contacts and negotiate with various radio stations, malls, publishers, record
companies and manufacturers, record bars and other outlets in preparation for the
promotion of the said album. By early February 2002, the album was in its
manufacturing stage. ELECTROMAT, manufacturer of CDs and cassette tapes, was
tapped to do the job. The carrier single of the album, which respondent composed
and arranged, was finally aired over the radio on February 22, 2002.

On February 26, 2002, respondent again reminded petitioner about the contract on
his compensation as composer and arranger of the album. Petitioner told respondent
that since he was practically a nobody and had proven nothing yet in the music

30
industry, respondent did not deserve a high compensation, and he should be
thankful that he was given a job to feed his family. Petitioner informed respondent
that he was entitled only to 20% of the net profit, and not of the gross sales of the
album, and that the salaries he received and would continue to receive as studio
manager of Celkor would be deducted from the said 20% net profit share.
Respondent objected and insisted that he be properly compensated. On March 14,
2002, petitioner verbally terminated respondent’s services, and he was instructed not
to report for work.

Respondent asserts that he was illegally dismissed as he was terminated without any
valid grounds, and no hearing was conducted before he was terminated, in violation
of his constitutional right to due process. Having worked for more than six months,
he was already a regular employee. Although he was a so called “studio manager,”
he had no managerial powers, but was merely an ordinary employee. He prayed for
his reinstatement without loss of seniority rights, or, in the alternative, that he be
paid separation pay, back wages and overtime pay; and that he be awarded unpaid
commission in the amount of P2,000.00 for services rendered as a studio technician
as well as moral and exemplary damages.

Respondent’s evidence consisted of the Payroll dated July 31, 2001 to March 15,
2002, which was certified correct by petitioner, and Petty Cash Vouchers evidencing
receipt of payroll payments by respondent from Celkor.

In defense, petitioner averred that his relationship with respondent is one of an

informal partnership under Article 1767of the New Civil Code, since they agreed to
contribute money, property or industry to a common fund with the intention of
dividing the profits among themselves. Allegedly, both agreed to co-produce the
album based on the following terms and conditions: (1) petitioner shall provide all
the financing, equipment and recording studio; (2) Celine Mei Lirio shall sing all the
songs; (3) respondent shall act as composer and arranger of all the lyrics and the
music of the five songs he already composed and the revival songs; (4) petitioner
shall have exclusive right to market the album; (5) petitioner was entitled to 60% of

31
the net profit, while respondent and Celine Mei Lirio were each entitled to 20% of
the net profit; and (6) respondent shall be entitled to draw advances of P7,000.00 a
month, which shall be deductible from his share of the net profits and only until such
time that the album has been produced.

Petitioner insisted that had no control over the time and manner by which
respondent composed or arranged the songs, except on the result thereof.
Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon.
Hence, petitioner contended that no employer-employee relationship existed
between him and the respondent, and there was no illegal dismissal to speak of.

Issue: Whether or not employer-employee relationship exists?

Ruling: Yes. The elements to determine the existence of an employment relationship

are: (a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer’s power to control the employee’s
conduct. The most important element is the employer’s control of the employee’s
conduct, not only as to the result of the work to be done, but also as to the means
and methods to accomplish it.

It is settled that no particular form of evidence is required to prove the existence of

an employer-employee relationship. Any competent and relevant evidence to prove
the relationship may be admitted.

In this case, the documentary evidence presented by respondent to prove that he

was an employee of petitioner are as follows: (a) a document denominated as
"payroll" (dated July 31, 2001 to March 15, 2002) certified correct by petitioner, which
showed that respondent received a monthly salary of P7,000.00 (P3,500.00 every 15th
of the month and another P3,500.00 every 30th of the month) with the
corresponding deductions due to absences incurred by respondent; and (2) copies of
petty cash vouchers, showing the amounts he received and signed for in the payrolls.

32
The said documents showed that petitioner hired respondent as an employee and he
was paid monthly wages of P7,000.00. Petitioner wielded the power to dismiss as
respondent stated that he was verbally dismissed by petitioner, and respondent,
thereafter, filed an action for illegal dismissal against petitioner. The power of
control refers merely to the existence of the power. It is not essential for the
employer to actually supervise the performance of duties of the employee, as it is
sufficient that the former has a right to wield the power. Nevertheless, petitioner
stated in his Position Paper that it was agreed that he would help and teach
respondent how to use the studio equipment. In such case, petitioner certainly had
the power to check on the progress and work of respondent.

CHARLIE JAO, Petitioner, vs.BCC PRODUCTS SALES INC., and TERRANCE TY,
Respondents.

G.R. No. 163700 April 18, 2012

Facts: Petitioner offered the following: (a) BCC Identification Card (ID) issued to him
stating his name and his position as “comptroller,” and bearing his picture, his
signature, and the signature of Ty; (b) a payroll of BCC for the period of October 1-
15, 1996 that petitioner approved as comptroller; (c) various bills and receipts related
to expenditures of BCC bearing the signature of petitioner; (d) various checks
carrying the signatures of petitioner and Ty, and, in some checks, the signature of
petitioner alone; (e) a court order showing that the issuing court considered
petitioner’s ID as proof of his employment with BCC; (f) a letter of petitioner dated
March 1, 1997 to the Department of Justice on his filing of a criminal case for estafa
against Ty for non-payment of wages; (g) affidavits of some employees of BCC
attesting that petitioner was their co-employee in BCC; and (h) a notice of raffle
dated December 5, 1995 showing that petitioner, being an employee of BCC,

33
received the notice of raffle in behalf of BCC.

But respondent countered the evidences presented by the petitioner by proving that
Charlie Jao is not their employee, as SFC had installed petitioner as its comptroller in
BCC to oversee and supervise SFC’s collections and the account of BCC to protect
SFC’s interest; that their issuance of the ID to petitioner was only for the purpose of
facilitating his entry into the BCC premises in relation to his work of overseeing the
financial operations of BCC for SFC; that the ID should not be considered as evidence
of petitioner’s employment in BCC; that petitioner executed an affidavit in March
1996, stating, among others, that he is a CPA presently employed at SFC.

Issue: Whether or not there exist an employee-employer relationship between the

petitioner and respondent.

Ruling: The Supreme Court held that there exist no employee-employer relationship
between the two based on the affidavits made by the petitioner that he is an
employee of SFC to oversee and supervise SFC's collection.

Moreover, in determining the presence or absence of an employer-employee

relationship, the Court has consistently looked for the following incidents, to wit: (a)
the selection and engagement of the employee; (b) the payment of wages; (c) the
power of dismissal; and (d) the employer’s power to control the employee on the
means and methods by which the work is accomplished. The last element, the so-
called control test, is the most important element.

It can be deduced from the March 1996 affidavit of petitioner that respondents
challenged his authority to deliver some 158 checks to SFC. Considering that he
contested respondents’ challenge by pointing to the existing arrangements between
BCC and SFC, it should be clear that respondents did not exercise the power of

34
control over him, because he thereby acted for the benefit and in the interest of SFC
more than of BCC.

In addition, petitioner presented no document setting forth the terms of his

employment by BCC. The failure to present such agreement on terms of employment
may be understandable and expected if he was a common or ordinary laborer who
would not jeopardize his employment by demanding such document from the
employer, but may not square well with his actual status as a highly educated
professional.

LEGEND HOTEL (MANILA), owned by TITANIUM CORPORATION, and/or, NELSON

NAPUD, in his capacity as the President of Petitioner Corporation, Petitioner, vs.
HERNANI S. REALUYO, also known as JOEY ROA, Respondent.

G.R. No. 153511 July 18, 2012

Facts: This labor case for illegal dismissal involves a pianist employed to perform in
the restaurant of a hotel.

On August 9, 1999, Realuyo, whose stage name was Joey R. Roa, filed a complaint
for alleged unfair labor practice, constructive illegal dismissal, and the
underpayment/nonpayment of his premium pay for holidays, separation pay, service
incentive leave pay, and 13th month pay. He prayed for attorney’s fees, moral
damages of P100,000.00 and exemplary damages for P100,000.00 - Roa averred that
he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from
September 1992 with an initial rate of P400.00/night; and that it had increased to
P750.00/night. During his employment, he could not choose the time of
performance, which had been fixed from 7:00PM to 10:00pm for three to six times a
week. July 9, 1999: the management had notified him that as a cost-cutting measure,
his services as a pianist would no longer be required effective July 30, 1999.

35
In its defense, petitioner denied the existence of an employer-employee relationship
with Roa, insisting that he had been only a talent engaged to provide live music at
Legend Hotel’s Madison Coffee Shop for three hours/day on two days each week;
and stated that the economic crisis that had hit the country constrained
management to dispense with his services. - December 29, 1999: the Labor Arbiter
(LA) dismissed the complaint for lack of merit upon finding that the parties had no
employer-employee relationship, because Roa was receiving talent fee and not salary,
which was reinforced by the fact that Roa received his talent fee nightly, unlike the
regular employees of the hotel who are paid monthly.

NLRC affirmed the LA’s decision on May 31, 2001.

CA set aside the decision of the NLRC, saying CA failed to take into consideration
that in Roa’s line of work, he was supervised and controlled by the hotel’s restaurant
manager who at certain times would require him to perform only tagalong songs or
music, or wear barong tagalong to conform with the Filipinana motif of the place
and the time of his performance is fixed. As to the status of Roa, he is considered a
regular employee of the hotel since his job was in furtherance of the restaurant
business of the hotel. Granting that Roa was initially a contractual employee, by the
sheer length of service he had rendered for the company, he had been converted
into a regular employee. - CA held that the dismissal was due to retrenchment in
order to avoid or minimize business losses, which is recognized by law under Art.
283 of the Labor Code.

Issues: 1.) Whether or not there was employer-employee relationship between the
two? 2.) Whether or not Roa was validly terminated?

Ruling: 1. Employer-employee relationship existed between the parties.

36
Roa was undeniably employed as a pianist of the restaurant. The hotel wielded the
power of selection at the time it entered into the service contract dated Sept. 1, 1992
with Roa. The hotel could not seek refuge behind the service contract entered into
with Roa. It is the law that defines and governs an employment relationship, whose
terms are not restricted to those fixed in the written contract, for other factors, like
the nature of the work the employee has been called upon to perform, are also
considered.

The law affords protection to an employee, and does not countenance any attempt
to subvert its spirit and intent. Any stipulation in writing can be ignored when the
employer utilizes the stipulation to deprive the employee of his security of tenure.
The inequality that characterizes employer-employee relationship generally tips the
scales in favor of the employer, such that the employee is often scarcely provided
real and better options.

The argument that Roa was receiving talent fee and not salary is baseless. There is
no denying that the remuneration denominated as talent fees was fixed on the basis
of his talent, skill, and the quality of music he played during the hours of his
performance. Roa’s remuneration, albeit denominated as talent fees, was still
considered as included in the term wage in the sense and context of the Labor Code,
regardless of how petitioner chose to designate the remuneration, as per Article 97(f)
of the Labor Code.

The power of the employer to control the work of the employee is considered the
most significant determinant of the existence of an employer-employee relationship.
This is the so-called control test, and is premised on whether the person for whom
the services are performed reserves the right to control both the end achieved and
the manner and means used to achieve that end.

Lastly, petitioner claims that it had no power to dismiss respondent due to his not

37
being even subject to its Code of Discipline, and that the power to terminate the
working relationship was mutually vested in the parties, in that either party might
terminate at will, with or without cause. This claim is contrary to the records. Indeed,
the memorandum informing respondent of the discontinuance of his service because
of the financial condition of petitioner showed the latter had the power to dismiss
him from employment.-

2. No, Roa was not validly terminated.

The conclusion that Roa’s termination was by reason of retrenchment due to an

authorized cause under the labor Code is inevitable.

Retrenchment is one of the authorized causes for the dismissal of employees

recognized by the Labor Code. It is a management prerogative resorted to by
employers to avoid ro to minimize business losses. On this matter, Article 283 of the
Labor Code states:

Article 283. Closure of establishment and reduction of personnel.

The employer may also terminate the employment of any employee

due to the installation of labor-saving devices, redundancy,
retrenchment to prevent losses or the closing or cessation of operation
of the establishment or undertaking unless the closing is for the
purpose of circumventing the provisions of this Title, by serving a
written notice on the workers and the Ministry of Labor and
Employment at least one (1) month before the intended date thereof.
xxx. In case of retrenchment to prevent losses and in cases of closures
or cessation of operations of establishment or undertaking not due to
serious business losses or financial reverses, the separation pay shall
be equivalent to one (1) month pay or at least one-half (1/2) month
pay for every year of service, whichever is higher. A fraction of at least

38
 six (6) months shall be considered one (1) whole year.

Justifications for retrenchment: a. The expected losses should be substantial and not
merely de minimis in extent; b. The substantial losses apprehended must be
reasonably imminent; c. The retrenchment must be reasonably necessary and likely to
effectively prevent the expected losses; and d. The alleged losses, if already incurred,
and the expected imminent losses sought to be forestalled must be proved by
sufficient and convincing evidence.

In termination cases, the burden of proving that the dismissal was for a valid or
authorized cause rests upon the employer. Here, petitioner did not submit evidence
of the losses to its business operations and the economic havoc it would thereby
imminently sustain. It only claimed that Roa’s termination was due to its “present
business/financial condition.” This bare statement fell short of the norm to show a
valid retrenchment. Hence, there was no valid cause for the retrenchment of
respondent. Since the lapse of time since the retrenchment might have rendered
Roa’s reinstatement to his former job no longer feasible, Legend Hotel should pay
him separation pay at the rate of one month pay for every year of service computed
from September 1992 until the finality of this decision, and full back wages from the
time his compensation was withheld until the finality of this decision. Petition denied.

39
 THE NEW PHILIPPINE SKYLANDERS, INC. and/or JENNIFER M. ENANO-BOTE,
Petitioners, vs. FRANCISCO N. DAKILA, Respondent.

G.R. No. 199547 September 24, 2012

Facts: Respondent Francisco Dakila (Dakila) was employed by The New Philippine
Skylanders, Inc. (Skylanders) as early as 1987 and terminated for cause in April 1997
when the corporation was sold. In May 1997, he was rehired as consultant by
Skylanders under a Contract for Consultancy Services.

Thereafter, in a letter dated April 19, 2007, Dakila informed Skylanders of his
compulsory retirement effective May 2, 2007 and sought for the payment of his
retirement benefits. His request, however, was not acted upon. Instead, he was
terminated from service effective May 1, 2007.

Thus, Dakila filed a complaint for constructive illegal dismissal. He averred that the
consultancy contract was a scheme to deprive him of the benefits of regularization,
claiming to have assumed tasks necessary and desirable in the trade or business of
Skylanders and under their direct control and supervision. On the contrary,
Skylanders argued that Dakila was not their regular employee as he was not required
to observe regular working hours and was free to adopt means and methods to
accomplish his task except as to the results of the work required of him. Hence, no
employer-employee relationship existed between them.

Both the Labor Arbiter and the NLRC ruled that Dakila was illegally dismissed. The
Court of Appeals affirmed the findings of the Labor Arbiter and the NLRC.

Issue: Whether or not Dakila was illegally dismissed?

40
Ruling: Yes. Dakila was illegally dismissed. The issue of illegal dismissal is premised
on the existence of an employer-employee relationship between the parties
herein.Records reveal that both the LA and the NLRC, as affirmed by the CA, have
found substantial evidence to show that respondent Dakila was a regular employee
who was dismissed without cause.

Following Article 279 of the Labor Code, an employee who is unjustly dismissed from
work is entitled to reinstatement without loss of seniority rights and other privileges
and to his full backwages computed from the time he was illegally dismissed.
However, considering that respondent Dakila was terminated on May 1, 2007, or one
(1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no
longer feasible. His backwages should be computed only for days prior to his
compulsory retirement which in this case is only a day.

ASHMOR M. TESORO, PEDRO ANG and GREGORIO SHARP, Petitioners, vs.

METRO MANILA RETREADERS, INC. (BANDAG) and/or NORTHERN LUZON
RETREADERS, INC. (BANDAG) and/or POWER TIRE AND RUBBER CORP.
(BANDAG), Respondent.

G.R. No. 171482 March 12, 2014

Facts: On various dates between 1991 and 1998, petitioners Ashmor M. Tesoro,
Pedro Ang, and Gregorio Sharp used to work as salesmen for respondents Metro
Manila Retreaders, Inc., Northern Luzon Retreaders, Inc., or Power Tire and Rubber
Corporation. These are sister companies collectively called “Bandag”. Bandag offered
repair and retread services for used tires.

In 1998, however, Bandag developed a franchising scheme that would enable others
to operate tire and retreading businesses using its trade name and service system.

41
Petitioners quit their jobs as salesmen and entered into separate Service Franchise
Agreements (SFAs) with Bandag for the operation of their respective franchises.
Under this SFA, Bandag would provide funding with the petitioners subject to regular
liquidation of revolving funds. The expenses of these funds will be deducted from
their sale in order to determine their income. After some time, petitioners began to
default on their obligations to submit periodic liquidations of their operational
expenses in relation to the revolving funds Bandag provided them. Bandag
terminated their SFA.

Aggrieved, petitioners filed a complaint for constructive dismissal, non–payment of

wages, incentive pay, 13th month pay and damages against Bandag with the
National Labor Relations Commission (NLRC). Petitioners contend that despite the
SFA, they remained employees of Bandag.

For its part, Bandag pointed out that petitioners freely resigned from their
employment and decided to avail themselves of the opportunity to be independent
entrepreneurs under the franchise scheme that Bandag had. Thus, no employer–
employee relationship existed between petitioners and Bandag.

Issue: Whether or not petitioners remained to be Bandag’s salesmen under the

franchise scheme it entered into with them.

Ruling: No, petitioners were no longer employees of Bandag the moment they
entered into the SFA. Franchising is a business method of expansion that allows an
individual or group of individuals to market a product or a service and to use of the
patent, trademark, trade name and the systems prescribed by the owner.

Applying the four-fold test, it is noted that petitioners are not employees. When
petitioners agreed to operate Bandag’s franchise branches in different parts of the

42
country, they knew that this substantially changed their former relationships. They
were to cease working as Bandag’s salesmen, the positions they occupied before
they ventured into running separate Bandag branches. They were to cease receiving
salaries or commissions. Their incomes were to depend on the profits they made.
Yet, petitioners did not then complain of constructive dismissal. They took their
chances, ran their branches, Gregorio Sharp in La Union for several months and
Ashmor Tesoro in Baguio and Pedro Ang in Pangasinan for over a year. Clearly, their
belated claim of constructive dismissal is quite hollow.

It is pointed out that Bandag continued, like an employer, to exercise control over
petitioners’ work. It points out that Bandag: (a) retained the right to adjust the price
rates of products and services; (b) imposed minimum processed tire requirement
(MPR); (c) reviewed and regulated credit applications; and (d) retained the power to
suspend petitioners’ services for failure to meet service standards. But uniformity in
prices, quality of services, and good business practices are the essence of all
franchises. A franchisee will damage the franchisor’s business if he sells at different
prices, renders different or inferior services, or engages in bad business practices.
These business constraints are needed to maintain collective responsibility for
faultless and reliable service to the same class of customers for the same prices. This
is not the “control” contemplated in employer–employee relationships. Control in
such relationships addresses the details of day to day work like assigning the
particular task that has to be done, monitoring the way tasks are done and their
results, and determining the time during which the employee must report for work or
accomplish his assigned task. Petitioners cannot use the revolving funds feature of
the SFAs as evidence of their employer–employee relationship with Bandag. These
funds do not represent wages. They are more in the nature of capital advances for
operations that Bandag conceptualized to attract prospective franchisees. Petitioners’
incomes depended on the profits they make, controlled by their individual abilities to
increase sales and reduce operating costs.

43
 ROYALE HOMES MARKETING CORPORATION, Petitioner, vs. FIDEL P.
ALCANTARA [deceased], substituted by his heirs, Respondent.

G.R. No. 195190 July 28, 2014

Facts: Royale Homes, a corporation engaged in marketing real estates, appointed

Alcantara as its Marketing Director for a fixed period of one year. His work consisted
mainly of marketing Royale Homes' real estate inventories on an exclusive basis.
Royale Homes reappointed him for several consecutive years.

On December 17, 2003, Alcantara filed a Complaint for Illegal Dismissal against
Royale Homes alleging that he was dismissed from work without any valid or just
cause and in gross disregard of the proper procedure for dismissing employees. He
prayed to be reinstated to his former position without loss of seniority rights and
other privileges, as well as to be paid backwages, moral and exemplary damages,
and attorney's fees.

Royale Homes denied that Alcantara is its employee because:

(1) it engaged his services as an independent sales contract for one year only;

(2) he never received any salary, 13th month pay, overtime pay or holiday pay;

(3) he was paid on commission basis;

(4) it had no control on how Alcantara would accomplish his tasks

Labor Arbiter rendered a Decision holding that Alcantara is an employee of Royale

Homes. NLRC rendered its Decision ruling that Alcantara is not an employee but a
mere independent contractor of Royale Homes. It based its ruling mainly on the
contract. CA promulgated its Decision reversing the NLRC's Decision pointing out
that Royale Homes exercised some degree of control over Alcantara since his jobis
subject to company rules, regulations, and periodic evaluations.

44
Issue: Whether or not Alcantara was an independent contractor or an employee of
Royale Homes

Ruling: Alcantara is not an employee of Royal Home but a mere independent

contractor.

The juridical relationship of the parties based on their written contract:

The primary evidence of the nature of the parties' relationship in this case is the
written contract that they signed. While the existence of employer-employee
relationship is a matter of law, the characterization made by the parties in their
contract as to the nature of their juridical relationship cannot be simply ignored,
particularly in this case where the parties' written contract unequivocally states their
intention at the time they entered into it. In this case, the contract duly signed and
not disputed by the parties, conspicuously provides that "no employer-employee
relationship exists between" Royale Homes and Alcantara, as well as his sales agents.
It is clear that they did not want to be bound by employer-employee relationship at
the time of the signing of the contract. The stipulation of the contract is clear and no
construction is needed, as per SC.

The juridical relationship of the parties based on Control Test:

The Supreme Court noted that the four-fold test is wanting in this case.

The CA ratiocinated that since the performance of his tasks is subject to company
rules, regulations, code of ethics, and periodic evaluation, the element of control is
present. The court disagrees. Not every form of control is indicative of employer-
employee relationship. A person who performs work for another and is subjected to
its rules, regulations, and code of ethics does not necessarily become an employee.
As long as the level of control does not interfere with the means and methods of

45
accomplishing the assigned tasks, the rules imposed by the hiring party on the hired
party do not amount to the labor law concept of control that is indicative of
employer-employee relationship.

Payment of Wages:

The element of payment of wages is also absent in this case. Alcantara's

remunerations consist only of commission override of 0.5%, budget allocation, sales
incentive and other forms of company support. There is no proof that he received
fixed monthly salary. No payslip or payroll was ever presented and there is no proof
that Royale Homes deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine Health Insurance
Corporation, or Pag-Ibig Fund.

FUJI TELEVISION NETWORK, INC., Petitioner, vs. ARLENE S. ESPIRITU,

Respondent.

G.R. No. 204944-45 December 3, 2014

Facts: Arlene S. Espiritu (Arlene) was engaged by Fuji Television Network, Inc. (Fuji) as
a news correspondent/producer tasked to report Philippine news to Fuji through its
Manila Bureau field office. The employment contract was initially for one year, but
was successively renewed on a yearly basis with salary adjustments upon every
renewal.

In January 2009, Arlene was diagnosed with lung cancer. She informed Fuji about her
condition, and the Chief of News Agency of Fuji, Yoshiki Aoki, informed the former
that the company had a problem with renewing her contract considering her
condition. Arlene insisted she was still fit to work as certified by her attending
physician.

After a series of verbal and written communications, Arlene and Fuji signed a non-

46
renewal contract. In consideration thereof, Arlene acknowledged the receipt of the
total amount of her salary from March-May 2009, year-end bonus, mid-year bonus
and separation pay. However, Arlene executed the non-renewal contract under
protest.

Arlene filed a complaint for illegal dismissal with the NCR Arbitration Branch of the
NLRC, alleging that she was forced to sign the non-renewal contract after Fuji came
to know of her illness. She also alleged that Fuji withheld her salaries and other
benefits when she refused to sign, and that she was left with no other recourse but
to sign the non-renewal contract to get her salaries.

The Labor Arbiter dismissed the complaint and held that Arlene was not a regular
employee but an independent contractor. The NLRC reversed the Labor Arbiter’s
decision and ruled that Arlene was a regular employee since she continuously
rendered services that were necessary and desirable to Fuji’s business.

The Court of Appeals affirmed that NLRC ruling with modification that Fuji
immediately reinstate Arlene to her position without loss of seniority rights and that
she be paid her backwages and other emoluments withheld from her. The Court of
Appeals agreed with the NLRC that Arlene was a regular employee, engaged to
perform work that was necessary or desirable in the business of Fuji, and the
successive renewals of her fixed-term contract resulted in regular employment. The
case of Sonza does not apply in the case because Arlene was not contracted on
account of a special talent or skill. Arlene was illegally dismissed because Fuji failed
to comply with the requirements of substantive and procedural due process. Arlene,
in fact, signed the non-renewal contract under protest as she was left without a
choice.

Issues: 1.) Was Arlene an independent contractor? 2.) Was Arlene a regular
employee? 3.) Was Arlene illegally dismissed?

47
Ruling: 1. ARLENE WAS NOT AN INDEPENDENT CONTRACTOR.

Fuji alleged that Arlene was an independent contractor citing the Sonza case. She
was hired because of her skills. Her salary was higher than the normal rate. She had
the power to bargain with her employer. Her contract was for a fixed term. It also
stated that Arlene was not forced to sign the non-renewal agreement, considering
that she sent an email with another version of her non-renewal agreement.

Arlene argued (1) that she was a regular employee because Fuji had control and
supervision over her work; (2) that she based her work on instructions from Fuji; (3)
that the successive renewal of her contracts for four years indicated that her work
was necessary and desirable; (4) that the payment of separation pay indicated that
she was a regular employee; (5) that the Sonza case is not applicable because she
was a plain reporter for Fuji; (6) that her illness was not a ground for her dismissal;
(7) that she signed the non-renewal agreement because she was not in a position to
reject the same.

DISTINCTIONS AMONG FIXED-TERM EMPLOYEES, INDEPENDENT CONTRACTORS,

AND REGULAR EMPLOYEES:

Fixed Term Employment

1) The fixed period of employment was knowingly and voluntarily agreed upon by
the parties without any force, duress, or improper pressure being brought to bear
upon the employee and absent any other circumstances vitiating his
consent;

2) It satisfactorily appears that the employer and the employee dealt with each other
on more or less equal terms with no moral dominance exercised by the former or
the latter. These indications, which must be read together, make the Brent doctrine

48
applicable only in a few special cases wherein the employer and employee are on
more or less in equal footing in entering into the contract. The reason for this is
evident: when a prospective employee, on account of special skills or market forces,
is in a position to make demands upon the prospective employer, such prospective
employee needs less protection than the ordinary worker. Lesser limitations on the
parties’ freedom of contract are thus required for the protection of the employee.

For as long as the guidelines laid down in Brent are satisfied, this court will recognize
the validity of the fixed-term contract.

Independent Contractor

One who carries on a distinct and independent business and undertakes to perform
the job, work, or service on its own account and under one’s own responsibility
according to one’s own manner and method, free from the control and direction of
the principal in all matters connected with the performance of the work except as to
the results thereof. No employer-employee relationship exists between the
independent contractors and their principals.

Art. 106. Contractor or subcontractor. Whenever an employer enters into a 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.

The Secretary of Labor and Employment may, by appropriate regulations, restrict or

prohibit the contracting-out of labor to protect the rights of workers established
under this Code. In so prohibiting or restricting, he may make appropriate
distinctions between labor-only contracting and job contracting as well as
differentiations within these types of contracting and determine who among the
parties involved shall be considered the employer for purposes of this Code, to
prevent any violation or circumvention of any provision of this Code. There is “labor-

49
only” contracting where the person supplying workers to an employer does not have
substantial capital or investment in the form of tools, equipment, machineries, work
premises, among others, and the workers recruited and placed by such person are
performing activities which are directly related to the principal business of such
employer. In such cases, the person or intermediary shall be considered merely as an
agent of the employer who shall be responsible to the workers in the same manner
and extent as if the latter were directly employed by him.

Department Order No. 18-A, Series of 2011, Section 3

(c) . . . an arrangement whereby a principal agrees to put out or farm out with a
contractor the performance or completion of a specific job, work or service within a
definite or predetermined period, regardless of whether such job, work or service is
to be performed or completed within or outside the premises of the principal.

This department order also states that there is a trilateral relationship in legitimate
job contracting and subcontracting arrangements among the principal, contractor,
and employees of the contractor. There is no employer-employee relationship
between the contractor and principal who engages the contractor’s services,but there
is an employer-employee relationship between the contractor and workers hired to
accomplish the work for the principal.

Jurisprudence has recognized another kind of independent contractor: individuals

with unique skills and talents that set them apart from ordinary employees. There is
no trilateral relationship in this case because the independent contractor himself or
herself performs the work for the principal. In other words, the relationship is
bilateral.

There are different kinds of independent contractors: those engaged in legitimate job
contracting and those who have unique skills and talents that set them apart from
ordinary employees. Since no employer-employee relationship exists between

50
independent contractors and their principals, their contracts are governed by the Civil
Code provisions on contracts and other applicable laws.

Regular Employees

Contracts of employment are different and have a higher level of regulation because
they are impressed with public interest. Article 13, Section 3 of the 1987 Constitution
provides full protection to labor.

Apart from the Constitutional guarantee, Article 1700 of the Civil Code states that:
The relations between capital and labor are not merely contractual. They are so
impressed with public interest that labor contracts must yield to the common good.
Therefore, such contracts are subject to the special laws on labor unions, collective
bargaining, strikes and lockouts, closed shop, wages, working conditions, hours of
labor and similar subjects.

In contracts of employment, the employer and the employee are not on equal
footing. Thus, it is subject to regulatory review by the labor tribunals and courts of
law. The law serves to equalize the unequal. The labor force is a special class that is
constitutionally protected because of the inequality between capital and labor. This
presupposes that the labor force is weak.

The level of protection to labor should vary from case to case. When a prospective
employee, on account of special skills or market forces, is in a position to make
demands upon the prospective employer, such prospective employee needs less
protection than the ordinary worker.

The level of protection to labor must be determined on the basis of the nature of
the work, qualifications of the employee, and other relevant circumstances such as
but not limited to educational attainment and other special qualifications.

51
Fuji’s argument that Arlene was an independent contractor under a fixed-term
contract is contradictory. Employees under fixed-term contracts cannot be
independent contractors because in fixed-term contracts, an employer-employee
relationship exists. The test in this kind of contract is not the necessity and
desirability of the employee’s activities, “but the day certain agreed upon by the
parties for the commencement and termination of the employment relationship.” For
regular employees, the necessity and desirability of their work in the usual course of
the employer’s business are the determining factors. On the other hand
independent contractors do not have employer-employee relationships with their
principals.

To determine the status of employment, the existence of employer-employee

relationship must first be settled with the use of the four-fold test, especially the
qualifications for the power to control.

The distinction is in this guise:

Rules that merely serve as guidelines towards the achievement of a mutually desired
result without dictating the means or methods to be employed creates no employer-
employee relationship; whereas those that control or fix the methodology and bind
or restrict the party hired to the use of such means creates the relationship.

In application, Arlene was hired by Fuji as a news producer, but there was no
evidence that she was hired for her unique skills that would distinguish her from
ordinary employees. Her monthly salary appeared to be a substantial sum. Fuji had
the power to dismiss Arlene, as provided for in her employment contract. The
contract also indicated that Fuji had control over her work as she was required to
report for 8 hours from Monday to Friday. Fuji gave her instructions on what to
report and even her mode of transportation in carrying out her functions was
controlled. Therefore, Arlene could not be an independent contractor.

52
 ARLENE WAS A REGULAR EMPLOYEE WITH A FIXED-TERM CONTRACT

In determining whether an employment should be considered regular or non-regular,

the applicable test is the reasonable connection between the particular activity
performed by the employee in relation to the usual business or trade of the
employer. The standard, supplied by the law itself, is whether the work undertaken is
necessary or desirable in the usual business or trade of the employer, a fact that can
be assessed by looking into the nature of the services rendered and its relation to
the general scheme under which the business or trade is pursued in the usual course.
It is distinguished from a specific undertaking that is divorced from the normal
activities required in carrying on the particular business or trade.

However, there may be a situation where an employee’s work is necessary but is not
always desirable in the usual course of business of the employer. In this situation,
there is no regular employment. Fuji’s Manila Bureau Office is a small unit and has a
few employees. Arlene had to do all activities related to news gathering.

A news producer “plans and supervises newscast [and] works with reporters in the
field planning and gathering information, including monitoring and getting news
stories, reporting interviewing subjects in front of a video camera, submission of
news and current events reports pertaining to the Philippines, and traveling to the
regional office in Thailand.” She also had to report for work in Fuji’s office in Manila
from Mondays to Fridays, eight per day. She had no equipment and had to use the
facilities of Fuji to accomplish her tasks.

The successive renewals of her contract indicated the necessity and desirability of her
work in the usual course of Fuji’s business. Because of this, Arlene had become a
regular employee with the right to security of tenure.

Arlene’s contract indicating a fixed term did not automatically mean that she could
never be a regular employee. For as long as it was the employee who requested, or

53
bargained, that the contract have a “definite date of termination,” or that the fixed-
term contract be freely entered into by the employer and the employee, then the
validity of the fixed-term contract will be upheld.

ARLENE WAS ILLEGALLY DISMISSED

As a regular employee, Arlene was entitled to security of tenure under Article 279 of
the Labor Code and could be dismissed only for just or authorized causes and after
observance of due process.

The expiration of the contract does not negate the finding of illegal dismissal. The
manner by which Fuji informed Arlene of non-renewal through email a month after
she informed Fuji of her illness is tantamount to constructive dismissal. Further,
Arlene was asked to sign a letter of resignation prepared by Fuji. The existence of a
fixed-term contract should not mean that there can be no illegal dismissal. Due
process must still be observed.

Moreoever, disease as a ground for termination under Article 284 of the Labor Code
and Book VI, Rule 1, Section 8 of the Omnibus Rules Implementing the Labor Code
require two requirements to be complied with: (1) the employee’s disease cannot be
cured within six months and his continued employment is prohibited by law or
prejudicial to his health as well as to the health of his co-employees; and (2)
certification issued by a competent public health authority that even with proper
medical treatment, the disease cannot be cured within six months. The burden of
proving compliance with these requisites is on the employer. Non-compliance leads
to illegal dismissal.

Arlene was not accorded due process. After informing her employer of her lung
cancer, she was not given the chance to present medical certificates. Fuji immediately
concluded that Arlene could no longer perform her duties because of chemotherapy.
Neither did it suggest for her to take a leave. It did not present any certificate from a

54
competent public health authority.

55
 PURISIMO M. CABA OBAS, EXUPERIO C. MOLINA, GILBERTO V. OPINION,
VICENTE R. LAURON, RAMON M. DE PAZ, JR., ZACARIAS E. CARBO, JULITO G.
ABARRACOSO, DOMINGO B. GLORIA, and FRANCISCO P. CUMPIO, Petitioners,
vs. PEPSI-COLA PRODUCTS, PHILIPPINES, INC., Respondents.

G.R. No. 176908 November 11, 2015

Facts: Pepsi-Cola Products Philippines, Inc.’s Tanauan Plant in Tanauan, Leyte

incurred business losses in the total amount of 29,167,390.00. To avert further losses,
PCPPI implemented a company-wide retrenchment program and retrenched 47
employees of its Tanauan Plant.

Petitioners, who are permanent and regular employees of the Tanauan Plant,
received their respective letters, informing them of the cessation of their
employment. Petitioners then filed their respective complaints for illegal dismissal
before the National Labor Relations Commission Regional Arbitration Branch No. VIII
in Tacloban City.

Petitioners alleged that PCPPI was not facing serious financial losses because after
their termination, it regularized four (4) employees and hired replacements for the
forty-seven (47) previously dismissed employees. They also alleged that PCPPI's CRP
was just designed to prevent their union, Leyte Pepsi-Cola Employees Union-
Associated Labor Union (LEPCEU-ALU), from becoming the certified bargaining agent
of PCPPI's rank-and-file employees.

PCPPI countered that petitioners were dismissed pursuant to its CRP to save the
company from total bankruptcy and collapse; thus, it sent notices of termination to
them and to the Department of Labor and Employment.

In support of its argument that its CRP is a valid exercise of management

56
prerogative, PCPPI submitted audited financial statements showing that it suffered
financial reverses in 1998 in the total amount of SEVEN HUNDRED MILLION
(P700,000,000.00) PESOS, TWENTY- SEVEN MILLION (P27,000,000.00) PESOS of which
was allegedly incurred in the Tanauan Plant in 1999.

The Labor Arbiter ruled that the dismissal of the petitioners was illegal. On appeal of
both parties, the Fourth Division of the NLRC reversed the decision of the labor
arbiter.

The petitioners’ appeal was dismissed and the CA affirmed the NLRC’s Fourth
Division’s decision. However, acting on the petition for certiorari filed by Molon, et
al., the CA reversed its own decision and declaring that the retrenchment was
contrary to the prescribed rules and procedure and declaring that petitioners were
illegally terminated. Their reinstatement to their former positions or its equivalent is
hereby ordered, without loss of seniority rights and privileges and PEPSI-COLA is also
ordered the payment of their backwages from the time of their illegal dismissal up to
the date of their actual reinstatement. If reinstatement is not feasible because of
strained relations or abolition of their respective positions, the payment of separation
pay equivalent to 1 month salary for every year of service, a fraction of at least 6
months shall be considered a whole year. The monetary considerations received by
some of the employees shall be deducted from the total amount they ought to
receive from the company.

Issue: Whether or not the dismissal was legal and valid.

Ruling: The petition has no merit.

Essentially, the prerogative of an employer to retrench its employees must be

exercised only as a last resort, considering that it will lead to the loss of the

57
employees' livelihood. It is justified only when all other less drastic means have been
tried and found insufficient or inadequate. Corollary thereto, the employer must
prove the requirements for a valid retrenchment by clear and convincing evidence;
otherwise, said ground for termination would be susceptible to abuse by scheming
employers who might be merely feigning losses or reverses in their business ventures
in order to ease out employees.

REQUISITES:

1. 1.That retrenchment is reasonably necessary and likely to

prevent business losses which, if already incurred, are not merely de minimis, but
substantial, serious, actual and real, or if only expected, are reasonably imminent
as perceived objectively and in good faith by the employer;

1. 1.That the employer served written notice both to the

employees and to the Department of Labor and Employment at least one month
prior to the intended date of retrenchment;

1. 1.That the employer pays the retrenched employees separation

pay equivalent to one (1) month pay or at least one-half (½) month pay for every
year of service, whichever is higher;

1. 1.That the employer exercises its prerogative to retrench

employees in good faith for the advancement of its interest and not to defeat or
circumvent the employees’ right to security of tenure; and

(5) That the employer used fair and reasonable criteria in ascertaining who
would be dismissed and who would be retained among the employees, such
as status, efficiency, seniority, physical fitness, age, and financial hardship for
certain workers.

58
In due regard of these requisites, the Court observes that Pepsi had validly
implemented its retrenchment program.

It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness,

the findings of fact by the NLRC, especially when affirmed by the CA – as in this case
– are binding and conclusive upon the Court. Thus, given that there lies no
discretionary abuse with respect to the foregoing findings, the Court sees no reason
to deviate from the same.

Moreover, it must be underscored that Pepsi’s management exerted conscious efforts

to incorporate employee participation during the implementation of its retrenchment
program. Records indicate that Pepsi had initiated sit-downs with its employees to
review the criteria on which the selection of who to be retrenched would be based.

NELSON V. BEGINO, GENER DEL VALLE, MONINA A VILA-LLORIN AND MA.

CRISTINA SUMAYAO, Petitioners, vs. ABS-CBN CORPORATION (FORMERLY, ABS-
CBN BROADCASTING CORPORATION) AND AMALIA VILLAFUERTE, Respondents.

G.R. No. 199166 April 20, 2015

Facts: Respondent ABS-CBN is a television and radio broadcasting company with

Amalia Villafuerte as the manager. Thru Villafuerte, ABS-CBN engaged in the services
of petitioners Benigno and Del Valle who were cameramen/editors for TV
broadcasting. Petitioners Ma. Cristina Sumayao and Llorin were likewise reporters
sometime in 1996-2002. Their services were engaged thru talent contracts that
provided terms ranging from 3 months to 1 year. They were also given Project

59
Assignment Forms which detailed the duration of a p[articular project as well as the
budget and the daily technical requirements thereof. Petitioners were tasked to cover
news items for subsequent daily airings in respondents’ TV Patrol Bicol Program.

While specifically providing that nothing therein shall be deemed or construed to

establish an employer-employee relationship between the parties, the aforesaid
Talent Contracts included, among other matters, provisions on the following matters:

a. a.the Talent’s creation and performance of work in accordance

with the ABS-CBN’s professional standards and compliance with its policies and
guidelines covering intellectual property creators, industry codes as well as the
rules and regulations of the Kapisanan ng mga Broadcasters sa Pilipinas (KBP)
and other regulatory agencies;

a. a.the Talent’s non-engagement in similar work for a person or

entity directly or indirectly in competition with or adverse to the interests of ABS-
CBN and non-promotion of any product or service without prior written consent;

(c) the results-oriented nature of the talent’s work which did not require them
to observe normal or fixed working hours.3 Subjected to contractor’s tax,
petitioners’ remunerations were denominated as Talent Fees which, as of last
renewal, were admitted to be pegged per airing day at P273.35 for Begino, P
302.92 for Del Valle, P 323.08 for Sumayao and P 315.39 for Llorin.

Petitioners claim for regularization, underpayment of overtime pay, holiday pay, 13th
month pay and service incentive leave pay. They also claim that their work is
necessary in the business of ABS CBN. They further allege that they were working
under the direct supervision and control of ABSCBN.

60
Respondent argued that, although it occasionally engages in production and
generates programs thru various means, ABS-CBN is primarily engaged in the
business of broadcasting television and radio content. Not having the full manpower
complement to produce its own program, the company had allegedly resorted to
engaging independent contractors like actors, directors, artists, anchormen, reporters,
scriptwriters and various production and technical staff, who offered their services in
relation to a particular program.

Petitioners filed a 2nd complaint for the same cause of action due to the fact that
ABS CBN terminated their services during the pendency of the first case.

Issue: Whether or not petitioners may claim from ABS-CBN? Whether or not there is
an employer – employee relationship?

Ruling: To determine the existence of said relation, case law has consistently applied
the four-fold test, to wit: (a) the selection and engagement of the employee; (b) the
payment of wages; (c) the power of dismissal; and (d) the employer's power to
control the employee on the means and methods by which the work is
accomplished.23 Of these criteria, the so-called “control test” is generally regarded
as the most crucial and determinative indicator of the presence or absence of an
employer-employee relationship. Under this test, an employer-employee relationship
is said to exist where the person for whom the services are performed reserves the
right to control not only the end result but also the manner and means utilized to
achieve the same.

ART. 280. Regular and Casual Employment: The provisions of written agreement to
the contrary notwithstanding and regardless of the oral agreement of the parties, an
employment shall be deemed to be regular where the employee has been engaged
to perform activities which are usually necessary or desirable in the usual business or

61
trade of the employer, except where the employment has been fixed for a specific
project or undertaking the completion or termination of which has been determined
at the time of the engagement of the employee or where the work or service to be
performed is seasonal in nature and the employment is for the duration of the
season.

An employment shall be deemed to be casual if it is not covered by the preceding

paragraph: Provided, That, any employee who has rendered at least one year of
service, whether such service is continuous or broken, shall be considered a regular
employee with respect to the activity in which he is employed and his employment
shall continue while such actually exists.

The Court finds that, notwithstanding the nomenclature of their Talent Contracts
and/or Project Assignment Forms and the terms and condition embodied therein,
petitioners are regular employees of ABS-CBN. Time and again, it has been ruled
that the test to determine whether employment is regular or not is the reasonable
connection between the activity performed by the employee in relation to the
business or trade of the employer. As cameramen/editors and reporters, petitioners
were undoubtedly performing functions necessary and essential to ABS-CBN’s
business of broadcasting television and radio content. It matters little that
petitioners’ services were engaged for specified periods for TV Patrol Bicol and that
they were paid according to the budget allocated therefor. Aside from the fact that
said program is a regular weekday fare of the ABS-CBN’s Regional Network Group in
Naga City, the record shows that, from their initial engagement in the aforesaid
capacities, petitioners were continuously re-hired by respondents over the years. To
the mind of the Court, respondents’ repeated hiring of petitioners for its long-
running news program positively indicates that the latter were ABS-CBN’s regular
employees.

Also, the court finds that petitioners were under the direct control and supervision of
the network. Thus, SC ruled in favor of petitioners.

62
 SOCIAL SECURITY SYSTEM, Petitioner, v. DEBBIE UBAÑA, Respondent.

G.R. No. 200114 August 24, 2015

Facts: Respondent Debbie Ubana filed a civil case for damages against the DBP
Service Corporation, petitioner Social Security System (SSS), and the SSS Retirees
Association before the RTC. She alleged that after she applied for employment,
passed the examinations and accomplished all the requirements, she was instead
referred to DBP Service Corporation for "transitory employment." She claimed she
was qualified for her position as Processor, having completed required training and
passed the SSS qualifying examination for Computer Operations Course given by the
National Computer Institute, U.P. Diliman yet she was not given the proper salary.
When she can no longer stand the exploitation of being transeferred from one
department to another without being absorbed permanently as an employee and
without proper payment of wage, she was then forced to resign.She averred that she
suffered actual losses because of it for six years while working for the petitioner.
Citing Civil Service Commission Memorandum Circular No. 40, respondent contended
that the performance of functions outside of the nature provided in the appointment
and receiving salary way below that received by regular SSS employee’s amount to
an abuse of rights.

Petitioner and its co-defendants SSS Retirees Association and DBP Service
Corporation filed their respective motions to dismiss, arguing that the subject matter
of the case and respondent's claims arose out of employer-employee relations, which
are beyond the RTC's jurisdiction and properly cognizable by the National Labor
Relations Commission (NLRC).

RTC dismissed the complaint on the ground of lack of jurisdiction, stating that the
complaint filed is clearly a case of unfair labor practice, therefore should be filed with
the Labor Arbiter of the NLRC. This was however set aside by the same court during
reconsideration because SSS was created under an original charter pursuant to
R.A. No. 1161as amended by R.A. 8282, which means that the said agency is

63
governed by the Civil Service Commission. However, since the SSS denied the
existence of an employer-employee relationship, and the case is one for Damages, it
is not the Civil Service Commission that has jurisdiction to try the case, but the
regular courts.

CA affirmed this decision of RTC agreeing that a careful perusal of the complaint
shows that it is one action for damages which the regular courts have jurisdiction. It
is the nature of action of the subject of the controversy that must be based on in
determining which body has jurisdiction. Where the claim to the principal relief
sought is to be resolved not by reference to the Labor Code or other labor relations
statute or a collective bargaining agreement but by the general civil law, the
jurisdiction over the dispute belongs to the regular courts of justice and not to the
Labor Arbiter and the NLRC.

Issue: Whether or not Labor Code has any relevance to the principal relief sought in
the complaint, giving NLRC jurisdiction over it?

RULING: No. Labor Code does not apply in this case, therefore NLRC has no
jurisdiction to try and hear the case. Jurisdiction should be with the regular courts.

During respondent's stint with petitioner, she never became an SSS employee, as she
remained an employee of DBP Service Corporation and SSS Retirees Association -
the two being independent contractors with legitimate service contracts with SSS.
Petitioner denied the existence of employer-employee relationship but in fact insists
on the validity of the service agreements with DBP Service Corporation and SSS
Retirees Association, meaning that SSS is not the true employer. In order for the
Labor Arbiter to acquire jurisdiction over a dispute, there must be an employer-
employee relation between the parties thereto. Article 217 of the Labor Code as
amended vests upon the labor arbiters exclusive original jurisdiction only over the
following:

64
1. Unfair labor practices;

2. Termination disputes;

3. If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;

4. Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;

5. Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and

6. Except claims for Employees Compensation, Social Security, Medicare and

maternity benefits, all other claims, arising from employer- employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a
claim for reinstatement.

Since there is no employer-employee relationship between the parties herein, then

there is no labor dispute cognizable by the Labor Arbiters or the NLRC. There being
no employer-employee relation or any other definite or direct contract between
respondent and petitioner, the latter being responsible to the former only for the
proper payment of wages, respondent is thus justified in filing a case against
petitioner, based on Articles 19 and 20 of the Civil Code, to recover the proper salary
due her as SSS Processor. Because of this, case is remanded to RTC for the

65
continuation of proceedings.

CENTURY PROPERTIES, INC., Petitioner, vs EDWIN J. BABIANO and EMMA B.

CONCEPCION, Respondents.

G.R. No. 220978 July 5, 2016

Facts: Concepcion was initially hired as a sales agent by Century Properties, Inc. (CPI)
and was eventually promoted as project director on September 1, 2007. As such, she
signed an employment agreement, denominated as “Contract of Agency for Project
Director” which provided, among others, that she would directly report to Edwin J.
Babiano and receive a monthly subsidy of P60, 000.00, 0.5 percent commission, and
cash incentives.

On March 31, 2008, she executed a similar contract anew with CPI in which she
would receive a monthly subsidy of P50, 000.00, 0.5 percent commission, and cash
incentives as per company policy. It was stipulated in both contracts that no
employer-employee relationship exists between her and CPI.

She resigned as CPI’s project director through a letter dated Feb. 23, 2009, effective
immediately. On August 8, 2011, she and Babiano filed a complaint before the NLRC
for non-payment of commissions and damages against CPI and its executive vice
president claiming that their repeated demands for their payment remained
unheeded. CPI invoked the defense that the NLRC had no jurisdiction to hear the
complaint because there was no employer-employee a relationship between them,
and thus, she should have litigated the same in an ordinary civil action.

Issue: Whether or not employer-employee relationship exists.

Ruling: No. Anent the nature of Concepcion’s engagement, based on case law, the
presence of the following elements evince the existence of an employer-employee

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relationship: (a) the power to hire, i.e., the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the
employer’s power to control the employee’s conduct, or the so called “control test.”

The control test is commonly regarded as the most important indicator of the
presence or absence of an employer-employee relationship. Under this test, an
employer-employee relationship exists where the person for whom the services are
performed reserves the right to control not only the end achieved, but also the
manner and means to be used in reaching that end. Guided by these parameters, the
Court finds that Concepcion was an employee of CPI considering that:

a. a.CPI continuously hired and promoted Concepcion from October

2002 until her resignation on February 23, 2009, thus, showing that CPI exercised
the power of selection and engagement over her person and that she performed
functions that were necessary and desirable to the business of CPI;

a. a.the monthly “subsidy” and cash incentives that Concepcion was

receiving from CPI are actually remuneration in the concept of wages as it was
regularly given to her on a monthly basis without any qualification, save for the
“complete submission of documents on what is a sale policy”;

a. a.CPI had the power to discipline or even dismiss Concepcion as her

engagement contract with CPI expressly conferred upon the latter “the right to
discontinue her service anytime during the period of engagement should she fail
to meet the performance standards,” among others, and that CPI actually
exercised such power to dismiss when it accepted and approved Concepcion’s
resignation letter; and most importantly,

a. a.as aptly pointed out by the CA, CPI possessed the power of control
over Concepcion because in the performance of her duties as Project Director -
particularly in the conduct of recruitment activities, training sessions, and skills

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 development of Sales Directors - she did not exercise independent discretion
thereon, but was still subject to the direct supervision of CPI, acting through
Babiano. Besides, while the employment agreement of Concepcion was
denominated as a “Contract of Agency for Project Director,” it should be stressed
that the existence of employer-employee relations could not be negated by the
mere expedient of repudiating it in a contract.

JOAQUIN LU, Petitioner vs TIRSO ENOPIA, et.al., Respondents

G.R. No. 197899 March 6, 2017

Facts: Enopia and others were hired from January 20, 1994 to March 20, 1996 as
crew members of the fishing mother boat FIB MG-28 owned by Joaquin “Jake” Lu
who is the sole proprietor of Mommy Gina Tuna Resources [MGTR] based in General
Santos City.

Parties had an income-sharing arrangement wherein 55% goes to Lu, 45% to the
crew members, with an additional 4% as “backing incentive”; they also equally share
the expenses for the maintenance and repair of the mother boat, and for the
purchase of nets, ropes and payaos.

Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing

Agreement between them, but complainants refused to sign the same as they
opposed the one-year term provided in the agreement.

According to complainants, during their dialogue on August 18, 1997, Lu terminated

their services right there and then because of their refusal to sign the agreement. On
the other hand, Lu alleged that the master fisherman (piado) Ruben Salili informed
him that complainants still refused to sign the agreement and have decided to return
the vessel FIB MG-28.

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On August 25, 1997, complainants filed their complaint for illegal dismissal, monetary
claims and damages. Despite serious efforts made by Labor Arbiter (LA), the case was
not amicably settled.

The LA rendered a Decision dismissing the case for lack of merit finding that there
was no employer-employee relationship existing between petitioner and the
respondents but a joint venture.

Complainants appealed to the National Labor Relations Commission (NLRC).

The NLRC affirmed the LA Decision in its Resolution. Complainants’ motion

for reconsideration was denied in a Resolution.

Complainants filed a petition for certiorari with the CA

The CA dismissed the petition for having been filed beyond the 60-day reglementary
period as provided under Rule 65 of the Rules of Court, and that the sworn
certification of non-forum shopping was signed only by two (2) of the complainants
who had not shown any authority to sign in behalf of the other crewmembers. As
their motion for reconsideration was denied, they went to the Supreme Court via a
petition for certiorari assailing the dismissal which the SC granted and remanded the
case to the CA for further proceedings.

In a remanded case, the CA rendered its assailed Decision reversing the NLRC
awarding separation pay, full backwages, exemplary damages, and attorney’s fees.
The CA found that Lu exercised control over respondents. Lu’s motion for
reconsideration was denied by the CA. Aggrieved, he filed the instant petition for

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review on certiorari.

Issues: 1.) Whether or not there was employer-employee relationship between the
parties; 2.) Whether or not the CA can pass upon the evidence in a petition for
certiorari.

Ruling: The judicial function of the CA in the exercise of its certiorari jurisdiction over
the NLRC extends to the careful review of the NLRC’s evaluation of the evidence
because the factual findings of the NLRC are accorded great respect and finality only
when they rest on substantial evidence. Accordingly, the CA is not to be restrained
from revising or correcting such factual findings whenever warranted by the
circumstances simply because the NLRC is not infallible. Indeed, to deny to the CA
this power is to diminish its corrective jurisdiction through the writ of certiorari.

In determining the existence of an employer-employee relationship, the following

elements are considered: (1) the selection and engagement of the workers; (2) the
power to control the worker’s conduct; (3) the payment of wages by whatever means;
and (4) the power of dismissal.

The Court found all these elements present in this case.

APELANIO, Petitioner, vs. ARCANYS, INC., Respondents
 GR No. 227098,

November 14, 2018

Facts: On April 10, 2012, Apelanio was hired by Arcanys, Inc. as a Usability/Web
Design Expert. He was placed on a "probationary status" for a period of six months.
Due to low evaluation ratings, Arcanys served Apelanio a letter, informing him that
Arcanys would not convert his status into a regular employee. Apelanio was given his

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final pay and he signed a Waiver, Release and Quitclaim" in favor of respondents.

Apelanio averred that when his probationary contract was terminated, he was
immediately offered a retainership agreement lasting from October 10, 2012 until
October 24, 2012, which involved a similar scope of work and responsibilities but on
a project basis, without security of tenure, with lesser pay, and without any labor
standard benefits. Apelanio was confused with the arrangement, but agreed since he
had a family to support. He believed that he was still undergoing Arcanys’ evaluation.

On October 26, 2012, after the lapse of the retainership agreement, Apelanio was
offered another retainership agreement, from October 25, 2012 to November 12,
2012, again with an identical scope of work but at a reduced daily rate.

As a result, Apelanio became suspicious of Arcanys’ motives and consulted with a

lawyer, who informed him that said practice was illegal. He then refused to sign the
second retainership agreement, and questioned why they offered him another
retainership agreement if he was deemed unqualified for the position.

Apelanio filed a complaint for illegal dismissal.

Issue: Whether or not Apelanio was illegally dismissed

Ruling: No. The SC cited the CA’s ruling:

The first agreement, which supposedly re-hired Apelanio for the same position, did
not bear his signature. This fact alone stirs doubt on whether the aforementioned
agreement really got finalized.

The NLRC gave full credence to Apelanio's proposition that it is normal for an
employee not to sign his copy and that if Apelanio really wanted to, he could have
signed his copy before submitting it as evidence.

Unfortunately, We cannot align Our view with that of the NLRC considering that x x x
the absence of Apelanio's signature in the first agreement was also coupled with
other indicators that support the conclusion that such agreement was never really
carried out.

First, the draft of the second agreement, which Apelanio claimed to be another

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extension of the first, indicated that such agreement was entered into, and supposed
to be signed by the parties on the 10th of October 2012 (the date supposedly of the
first agreement).

Second, the Skype conversation between Apelanio and Arcanys’ representative on

October 24, 2012 x x x showed that they were discussing possible compensation at
P18,000.00, which was the remuneration indicated in the first agreement. If the first
agreement got finalized and was already implemented, then why would the draft of
the second one still indicate the 10th October 2012 as the date of execution and
signing of the first agreement?

Although it may be argued that the dates were merely clerical errors orunreplaced
entries resulting to oversight, the Skype conversation between Apelanio and Arcanys’
representative on October 24, 2012, confirmed the non-conclusion of the first
agreement; for it would be illogical for the parties to still discuss the remuneration
indicated in the first agreement if the same had already been implemented, and, in
fact, was about to end on the day that the conversation took place

Furthermore, a review of the retainership agreements indicates that Apelanio was

merely engaged as a consultant, in relation to the hacking incidents endured by
Arcanys. Apelanio merely alleged that he was hired as an employee under said
retainership agreements, but has yet to provide evidence to support such claim. "It is
a basic rule in evidence that each party must prove his affirmative allegations."
Therefore, Article 281 of the Labor Code finds no application in this case, absent any
evidence to prove that Apelanio worked beyond his probationary employment.

Hence, petition is DENIED.

DR. MARY JEAN P. LORECHE-AMIT , petitioner, vs. CAGAYAN DE ORO MEDICAL

CENTER, INC. (CDMC), DR. FRANCISCO OH and DR. HERNANDO EMANO,
respondents

Facts: Dr. Mary Jean P. Loreche-Amit started working with Cagayan De Oro Medical
Center, Inc. (CDMC), sometime in May 1996, when she was engaged by the late Dr.
Jose N. Gaerlan (Dr. Gaerlan) as Associate Pathologist in the Department of

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Laboratories. Upon the demise of Dr. Gaerlan, CDMC's Board of Directors formally
appointed petitioner as Chief Pathologist for five years or until May 15, 2011.

On June 13, 2007, the Board passed a resolution, recalling petitioner's appointment
as Chief Pathologist. This prompted petitioner to file a complaint for illegal dismissal,
contending that she was dismissed by CDMC from her work without just cause and
due process. She averred that Dr. Hernando Emano asked her to help his daughter
Dr. Helga Emano-Bleza to qualify as a pathologist considering that petitioner is one
of the Board of Governors accredited by the PRC. However, petitioner refused
because the latter failed to qualify in the clinical pathology examination. Such refusal,
according to petitioner, started the subtle attempt of Dr. Emano to oust her from her
job.

Soon thereafter, Dr. Francisco Oh issued an Inter-Office Memorandum addressed to

all laboratory personnel stating that working in and out of the building without
proper permission is to be treated as absence without official leave and payment for
printing of duplicate copies not endorsed to the hospital is a form of stealing. As
petitioner slammed the Memorandum against the wall and tagged the name of Dr.
Oh as an irrational man, she received an Inter-Office Memorandum from Dr. Oh for
alleged conduct unbecoming/insubordination, and to explain why her appointment
should not be revoked due to such behavior. A Memorandum recalling her
appointment was issued.

For their part, Dr. Emano, Dr. Oh, and CDMC (collectively referred to as respondents)
averred that petitioner was not hired by them as she merely assisted Dr. Gaerlan in
operating the hospital's laboratory. Respondents maintained that petitioner worked
at the same time as pathologist in Capitol College Hospital and J.R. Borja Memorial
Hospital as she was not prohibited to do so.

The Labor Arbiter found that petitioner is a corporate officer of the hospital because
of her appointment by the Board of Directors through a resolution; thus, matters
relating to the propriety of her dismissal is under the jurisdiction of the RTC under
Section 5.2 of RA No. 8799 (The Securities Regulation Code of the Philippines).

On appeal, the NLRC in a Resolution affirmed the ruling of the Labor Arbiter.

73
Petitioner filed a Petition for Certiorari before the CA but the same, as well as her
subsequent motion for reconsideration, were dismissed.

Issue: Whether or not petitioner is an employee of the CDMC.

Ruling: No. The four-fold test, to wit: 1) the selection and engagement of the
employees; 2) the payment of wages; 3) the power of dismissal; and 4) the power to
control the employee's conduct, must be applied to determine the existence of an
employer- employee relationship.

Based on the records, CDMC does not exercise the power of control over petitioner.
The power to control the work of the employee is considered the most significant
determinant of the existence of an employer-employee relationship. This test is
premised on whether the person for whom the services are performed reserves the
right to control both the end achieved and the manner and means used to achieve
that end.

As the Labor Arbiter, NLRC, and the CA aptly observed, petitioner was working for
two other hospitals aside from CDMC, not to mention those other hospitals which
she caters to when her services are needed. Such fact evinces that petitioner controls
her working hours. On this note, relevant is the economic reality test which this Court
has adopted in determining the existence of employer-employee relationship. Under
this test, the economic realities prevailing within the activity or between the parties
are examined, taking into consideration the totality of circumstances surrounding the
true nature of the relationship between the parties, to wit:

x x x. In our jurisdiction, the benchmark of economic reality in analyzing

possible employment relationships for purposes of applying the Labor Code
ought to be the economic dependence of the worker on his employer.

Thus, the fact that petitioner continued to work for other hospitals strengthens the
proposition that petitioner was not wholly dependent on CDMC.

Petitioner likewise admitted that she receives in full her 4% share in the Clinical
Section of the hospital regardless of the number of hours she worked therein.
Alternatively put, petitioner manages her method and hours of work.

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The rule is that where a person who works for another performs his job more or less
at his own pleasure, in the manner he sees fit, not subject to definite hours or
conditions of work, and is compensated according to the result of his efforts and not
the amount thereof, no employer-employee relationship exists.

Moreover, the Memorandum, pertaining to petitioner's behavior, issued by Dr. Oh

does not sufficiently establish the element of control. The Memorandum merely
states that intolerable behavior in the hospital cannot be countenanced. It is
administrative in character which does not, in any way, pertains to the manner and
method of petitioner's work.

In sum, this Court finds no reason to overturn the finding of the LA, NLRC, and the
CA that there was no illegal dismissal in this case as it was not sufficiently proven
that petitioner is indeed an employee of CDMC.

ARNULFO M. FERNANDEZ, petitioner, vs. KALOOKAN SLAUGHTERHOUSE,

INCORPORATED/ERNESTO CUNANAN, respondents
 G.R. No. 225075, June 19,
2019

Facts: Petitioner was hired in 1994 as a butcher by Kalookan Slaughterhouse, Inc. a

single proprietorship owned by respondent Ernesto Cunanan. He claimed that he
worked from Monday to Sunday, from 6:30 P.M. to 7:30 A.M., with a daily wage of
P700.00, which was later reduced to P500.00.8 He further claimed that he met an
accident while driving Kalookan Slaughterhouse’s truck in December 2013 and that
deductions were made from his wages. He questioned these deductions in July 2014,

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and thereafter he was treated unreasonably. Petitioner further claimed that on July
21, 2014, he suffered from a headache and did not report for work. The next day,
however, he was shocked when he only received P200.00 due to his previous
undertime and was informed that he could no longer report for work due to his old
age.

Kalookan Slaughterhouse asserted that petitioner is an independent butcher working

under its Operation Supervisor, Cirilo Tablit. He received payment based on the
number of hogs he butchered and was only required to be in the slaughterhouse
when customers brought hogs to be slaughtered. Kalookan Slaughterhouse alleged
that it imposed policies on the entry to the premises, which applied to employees,
dealers, independent butchers, hog and meat dealers and trainees, and that
petitioner violated the policies and he misconstrued the disallowance to enter the
slaughterhouse as an act of dismissal.

On August 5, 2014, petitioner filed the complaint for illegal dismissal before the LA.
After the exchange of pleadings, the LA ruled that petitioner was illegally dismissed.
Aggrieved, Kalookan Slaughterhouse appealed to the NLRC, which reversed the LA.
Petitioner questioned the NLRC Decision to the CA through a petition for certiorari.
The CA, however, denied the petition. Petitioner moved for reconsideration but the
CA denied this. Hence, this Petition.

Issue: Whether or not the CA committed a reversible error in affirming the NLRC
Decision and Resolution which failed to recognize that there was an employer-
employee between the petitioner and the respondents.

Ruling: Yes, CA committed an error.

Petitioner was an employee of Kalookan Slaughterhouse. It is settled that "[t]o

determine the existence of an employer-employee relationship, four elements
generally need to be considered, namely: (1) the selection and engagement of the
employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to
control the employee's conduct. These elements or indicators comprise the so-called
'four-fold' test of employment relationship."

Petitioner submitted the following: (a) log sheets for three days in September 2012

76
where it was shown that he reported for work; (b) three gate passes and one
identification card all of which state that he was a butcher; 40 and (c) trip ticket
showing that on December 30, 2007, petitioner was part of a group who went to
Bataan. The ticket had a notation that petitioner was a captain of the trip and the
truck with Plate Number CJH 377 was driven by a certain Peter.

On the other hand, Kalookan Slaughterhouse presented the following pieces of

evidence:

a. a.Sinumpaang Salaysay of Tablit alleging that he has been an

employee of Kalookan Slaughterhouse for more or less 20 years, he was given
authority by Cunanan to hire people as hog butchers when the need arose but
he himself would be responsible for paying them, and that one of those hog
butchers was petitioner, he did not exercise control over the means and methods
of the butchers and he only monitored if they furnished their work;

b. b.Photographs of petitioner sleeping in the premises of Kalookan

Slaughterhouse;

c. c.Photographs of policies implemented by Kalookan Slaughterhouse as

listed by Tablit; and,

d. d.Sinumpaang Salaysay of De Guzman where he alleged that he is a

caretaker of Kalookan Slaughterhouse and he knew of petitioner as one of the
butchers hired by Tablit; he would often reprimand petitioner for failing to follow
Kalookan Slaughterhouse's policies such as when petitioner failed to wear his ID,
wear his uniform, and properly store his knives used for butchering. Petitioner
would also sometimes come to work with dirty clothes, and there was one time
he caught petitioner sleeping. He also alleged that petitioner is Tablit's employee,
and that he would only see petitioner when there were many hogs to be
butchered, thus petitioner would not report for work every day.

From the foregoing, it is undisputed that petitioner rendered butchering services at

Kalookan Slaughterhouse. The LA found that petitioner was engaged by Kalookan
Slaughterhouse itself since petitioner submitted log sheets and gate passes.

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The Court finds that the NLRC and the CA committed a grave error and agrees with
the LA.

Similar to the facts of this case, the Court in Masonic Contractor, Inc. v. Madjos ruled
that the fact that the company provided identification cards and uniforms and the
vague affidavit of the purported employer were sufficient evidence to prove the
existence of employer-employee relationship.

Here, the totality of petitioner's evidence and the admissions of Kalookan

Slaughterhouse convinces the Court that petitioner was indeed an employee of
Kalookan Slaughterhouse. Petitioner was able to present an I.D., gate passes, log
sheets, and a trip ticket. Kalookan Slaughterhouse even admitted through De
Guzman that uniforms were given to all personnel, including petitioner.

Moreover, petitioner was able to submit an I.D. in addition to the gate passes. The
trip ticket and the log sheets also showed that Kalookan Slaughterhouse engaged
petitioner. These are sufficient to prove that petitioner was engaged by Kalookan
Slaughterhouse. The CA, however, disregarded the gate passes, as it claimed that the
gate pass had a note that such did not qualify the holder as an employee. This is an
error as this only applied to one of the gate passes and the other gate passes did
not have this notation.

PHILIPPINE TELEGRAPH AND TELEPHONE COMPANY, petitioner, vs. NATIONAL

LABOR RELATIONS COMMISSION and GRACE DE GUZMAN, respondents.

G.R. No. 118978 May 23, 1997

Facts: Grace de Guzman was initially hired by petitioner as a reliever for a fixed
period from November 21, 1990 until April 20, 1991 vice one C.F. Tenorio who went
on maternity leave. Under the Reliever Agreement which she signed with Petitioner
Company, her employment was to be immediately terminated upon expiration of the
agreed period. Thereafter, from June 10, 1991 to July 1, 1991, and from July 19,
1991 to August 8, 1991, private respondent’s services as reliever were again engaged
by petitioner, this time in replacement of one Erlinda F. Dizon who went on leave
during both periods. After August 8, 1991, and pursuant to their Reliever Agreement,

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her services were terminated.

It now appears that private respondent had made the a representation that she was
single even though she contracted marriage months before, in the two successive
reliever agreements which she signed on June 10, 1991 and July 8, 1991. When
petitioner supposedly learned about the same later, its branch supervisor sent to
private respondent a memorandum requiring her to explain the discrepancy. In that
memorandum, she was reminded about the company’s policy of not accepting
married women for employment.

Private respondent was dismissed from the company effective January 29, 1992,
which she readily contested by initiating a complaint for illegal dismissal. Labor
Arbiter handed down a decision declaring that private respondent, who had already
gained the status of a regular employee, was illegally dismissed by petitioner. On
appeal to the National Labor Relations Commission (NLRC), said public respondent
upheld the labor arbiter and it ruled that private respondent had indeed been the
subject of an unjust and unlawful discrimination by her employer, PT&T.

Issue: Whether or not discrimination merely by reason of the marriage of a female

employee is expressly prohibited by Article 136.

Ruling: SC ruled that the stipulation is violative of Art. 136 of the Labor Code. An
employer is free to regulate, according to his discretion and best business judgment,
all aspects of employment, “from hiring to firing,” except in cases of unlawful
discrimination or those which may be provided by law. Petitioner’s policy of not
accepting or considering as disqualified from work any woman worker who contracts
marriage runs afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution.

Respondent’s act of concealing the true nature of her status from PT&T could not be
properly characterized as willful or in bad faith as she was moved to act the way she
did mainly because she wanted to retain a permanent job in a stable company. In
other words, she was practically forced by that very same illegal company policy into
misrepresenting her civil status for fear of being disqualified from work.

The government, to repeat, abhors any stipulation or policy in the nature of that

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adopted by petitioner PT&T. Under American jurisprudence, job requirements which
establish employer preference or conditions relating to the marital status of an
employee are categorized as a “sex-plus” discrimination where it is imposed on one
sex and not on the other. Further, the same should be evenly applied and must not
inflict adverse effects on a racial or sexual group which is protected by federal job
discrimination laws.

Petitioner’s policy is not only in derogation of the provisions of Article 136 of the
Labor Code on the right of a woman to be free from any kind of stipulation against
marriage in connection with her employment, but it likewise assaults good morals
and public policy, tending as it does to deprive a woman of the freedom to choose
her status, a privilege that by all accounts inheres in the individual as an intangible
and inalienable right.

Hence, while it is true that the parties to a contract may establish any agreements,
terms, and conditions that they may deem convenient, the same should not be
contrary to law, morals, good customs, public order, or public policy. Carried to its
logical consequences, it may even be said that petitioner’s policy against legitimate
marital bonds would encourage illicit or common-law relations and subvert the
sacrament of marriage.

DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON,

petitioners, vs. GLAXO WELLCOME PHILIPPINES, INC., Respondent.

G.R. No. 162994 September 17, 2004

Facts: Petitioner Pedro Tecson was hired by respondent Glaxo Wellcome Philppines
(Glaxo) as medical representative on October 24, 1994 thereafter signed a contract of
employment which stipulates among others that he agrees to study and abide
existing company rules; to disclose to management any existing of future relationship
by consanguinity or affinity with co-employees or employees of competing drug
companies and if ever that such management find such conflict of interest, he must
resign. The Employee Code of Conduct of Glaxo similarly provides that an employee

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is expected to inform management of any existing or future relationship by
consanguinity or affinity with co-employees or employees of competing drug
companies. If management perceives a conflict of interest or a potential conflict
between such relationship and the employee’s employment with the company, the
management and the employee will explore the possibility of a “transfer to another
department in a non-counterchecking position” or preparation for employment
outside the company after six months.

Reminders from Tecson’s district manager did not stop him from marrying. Tecson
married Bettsy, an Astra’s Branch Coordinatior in Albay. She supervised the district
managers and medical representatives of her company and prepared marketing
strategies for Astra in that area.

Tecson was reassigned to another place and was not given products that the Astra
Company has and he was not included in products seminars and training.

Tecson requested for time in complying said policy by asking for a transfer in the
Glaxo’s milk division in which the other company had no counterpart. Thereafter, he
bought the matter to Grievance Committee but the parties failed to resolve such
issue, Glaxo offered Tecson a separation pay of one-half (½) month pay for every
year of service, or a total of P50,000.00 but he declined the offer. On November 15,
2000, the National Conciliation and Mediation Board (NCMB) rendered its Decision
declaring as valid Glaxo’s policy on relationships between its employees and persons
employed with competitor companies, and affirming Glaxo’s right to transfer Tecson
to another sales territory.

Tecson filed for a petition for review on the CA and the CA promulgated that the
NCMB did not err in rendering its decision. A recon was filed in appellate court but it
was denied, hence this petition for certiorari. Petitioner’s contention it was violative
of constitutional law which is the equal protection clause and he was constructively

81
dismissed while the respondents’ contention that it is a valid exercise of its
management prerogatives.

Issue: Whether or not the policy of a pharmaceutical company prohibiting its

employees from marrying employees of another pharmaceutical company is valid.

Ruling: This petition was denied.Glaxo has a right to guard its trade secrets,
manufacturing formulas, marketing strategies and other confidential programs and
information from competitors, especially so that it and Astra are rival companies in
the highly competitive pharmaceutical industry.

The prohibition against personal or marital relationships with employees of

competitor companies upon Glaxo’s employees is reasonable under the
circumstances because relationships of that nature might compromise the interests of
the company. In laying down the assailed company policy, Glaxo only aims to
protect its interests against the possibility that a competitor company will gain access
to its secrets and procedures.

That Glaxo possesses the right to protect its economic interests cannot be denied.
No less than the Constitution recognizes the right of enterprises to adopt and
enforce such a policy to protect its right to reasonable returns on investments and to
expansion and growth.

The challenged company policy does not violate the equal protection clause of the
Constitution as petitioners erroneously suggest. It is a settled principle that the
commands of the equal protection clause are addressed only to the state or those
acting under color of its authority.

From the wordings of the contractual provision and the policy in its employee

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handbook, it is clear that Glaxo does not impose an absolute prohibition against
relationships between its employees and those of competitor companies. Its
employees are free to cultivate relationships with and marry persons of their own
choosing. What the company merely seeks to avoid is a conflict of interest between
the employee and the company that may arise out of such relationships.

There was no merit in Tecson’s contention that he was constructively dismissed when
he was transferred from the Camarines Norte-Camarines Sur sales area to the Butuan
City-Surigao City-Agusan del Sur sales area, and when he was excluded from
attending the company’s seminar on new products which were directly competing
with similar products manufactured by Astra. Constructive dismissal is defined as a
quitting, an involuntary resignation resorted to when continued employment
becomes impossible, unreasonable, or unlikely; when there is a demotion in rank or
diminution in pay; or when a clear discrimination, insensibility or disdain by an
employer becomes unbearable to the employee. The record does not show that
Tecson was demoted or unduly discriminated upon by reason of such transfer.

STAR PAPER CORPORATION, JOSEPHINE ONGSITCO & SEBASTIAN CHUA,

Petitioners, vs. RONALDO D. SIMBOL, WILFREDA N. COMIA & LORNA E.
ESTRELLA, Respondents.

G.R. No. 164774 April 12, 2006

Facts: Star Paper Corporation employed Ronaldo Simbol on October 1993. He met
Alma Dayrit, also an employee of the company, whom he married. Before marriage,
Josephine Ongsitco, the manager, advised the couple that one of them must resign if
they decided to get married pursuant to a company policy to which Simbol
complied. Simbol resigned on June 20, 1998 pursuant to the company policy.

On February 5, 1997, Comia was hired by the company. She met Howard Comia, a
co-employee, whom she married on June 1, 2000. Ongsitco likewise reminded them

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the company policy, Comia resigned on June 30, 2000.

Estrella was also hired on July 29, 1994. She met Luisito Zuñiga, also a co-worker.
Petitioners stated that Zuñiga, a married man, got Estrella pregnant. The company
allegedly could have terminated her services due to immorality but she opted to
resign on December 21, 1999.

The Labor Arbiter dismissed the complaint and stated that the company policy was
decreed pursuant to what the respondent corporation perceived as management
prerogative. On appeal to the NLRC, the Commission affirmed the decision of the
Labor Arbiter. In its assailed Decision dated August 3, 2004, the Court of Appeals
reversed the NLRC decision.

Issue: Whether or not the questioned policy violates the rights of the employee
under the Constitution and the Labor Code?

Ruling: The Court ruled on the side of the respondents.

Article 136 of the Labor Code which provides:

It shall be unlawful for an employer to require as a condition of employment or

continuation of employment that a woman employee shall not get married, or to
stipulate expressly or tacitly that upon getting married a woman employee shall be
deemed resigned or separated, or to actually dismiss, discharge, discriminate or
otherwise prejudice a woman employee merely by reason of her marriage.

It is significant to note that respondents were hired after they were found fit for the
job, but were asked to resign when they married a co-employee. Petitioners failed to
show how the marriage of Simbol to Alma Dayrit could be detrimental to its business

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operations. It must be reasonable under the circumstances to qualify as a valid
exercise of management prerogative.

The questioned policy may not facially violate Article 136 of the Labor Code but it
creates a disproportionate effect. The failure of petitioners to prove a legitimate
business concern in imposing the questioned policy cannot prejudice the employee’s
right to be free from arbitrary discrimination based upon stereotypes of married
persons working together in one company.

DEL MONTE PHILIPPINES, INC., Petitioner, vs. LOLITA VELASCO, Respondent.

G.R. No. 153477 March 6, 2007

Facts: Lolita Velasco was hired by Del Monte as seasonal employee and was
subsequently regularized by Del Monte. On June 1987, petitioner warned Velasco of
its absences and was repeatedly reminded that her absence without permission may
result to forfeiture of her vacation leave.

Another warning was sent due to her absences without permission which eventually
led to the forfeiture of her vacation entitlement. On September 1994, a notice of
hearing was sent to Velasco informing her of the charges filed against her for
violating the Absence without leave rule. On January 1995, after the hearing, Del
Monte terminated the services of Velasco due to excessive absence without leave.
Feeling aggrieved, Velasco filed a case for illegal dismissal. She asserted that she was
absent since she was suffering urinary tract infection and she was pregnant.

She sent an application for leave to the supervisor. Upon check-up of the company
doctor, Velasco was advised to rest. On the following check-ups, she was again
advised to rest where this time, she was not able to get secure a leave.

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The Labor Arbiter rendered decision that she was an incorrigible absentee.
Respondent appealed to the NLRC. NLRC vacated the decision of the Labor Arbiter. It
decided that respondent was illegally dismissed and was entitled to reinstatement.
Petitioner appealed to CA where it dismissed its claim and affirmed NLRC, thus, this
petition.

Issue: Whether or not the dismissal was illegal.

Ruling: Yes. In this case, by the measure of substantial evidence, what is controlling
is the finding of the NLRC and the CA that respondent was pregnant and suffered
from related ailments. It would be unreasonable to isolate such condition strictly to
the dates stated in the Medical Certificate or the Discharge Summary. It can be safely
assumed that the absences that are not covered by, but which nonetheless
approximate, the dates stated in the Discharge Summary and Medical Certificate, are
due to the continuing condition of pregnancy and related illnesses, and, hence, are
justified absences.

The termination was illegal since it comes within the purview of the prohibited acts
provided in Article 137 of the Labor Code. Based on Article 137, it shall be unlawful
for any employer to:

1. 1.Deny any woman employee the benefits provided for in this Chapter
or to discharge any woman employed by him for the purpose of preventing
her from enjoying any of the benefits provided under this Code;

1. 1.Discharge such woman on account of her pregnancy, or while on

leave or in confinement due to her pregnancy; and

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 1. 1.Discharge or refuse the admission of such woman upon returning to
her work for fear that she may again be pregnant.

The respondent was illegally dismissed by the petitioner on account of her

pregnancy. The act of the employer is unlawful, it being contrary to law.

ARMANDO G. YRASUEGUI, petitioners, vs. PHILIPPINE AIRLINES, INC.,

respondents.

G.R. No. 168081 October 17, 2008

Facts: Petitioner Armando G. Yrasuegui was a former international flight steward of

Philippine Airlines, Inc. (PAL). He stands 5’8’’ tall and the proper weight for a man of
his height and body structure is from 147 to 166 pounds, as mandated by the Cabin
and Crew Administration Manual of PAL.

The weight problems of petitioner dates back to 1984 and was advised go on an
extended vacation leave for several occasions to meet the company’s weight
standards. On February 25, 1989, petitioner underwent weight check. It was
discovered that he gained, instead of losing, weight. He was overweight at 215
pounds, He was formally requested to trim down to his ideal weight and report for
weight checks on several dates and was also told that he may avail of the services of
the company physician should he wish to do so.

On November 13, 1992, PAL finally served petitioner a Notice of Administrative

Charge for violation of company standards on weight requirements for not attending
to his weight checks and not losing weight.

On June 15, 1993, petitioner was formally informed by PAL that due to his inability to
attain his ideal weight, and considering the utmost leniency extended to him which
spanned a period covering a total of almost five (5) years, his services were

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considered terminated effective immediately.

On November 18, 1998, Labor Arbiter Valentin C. Reyes ruled that petitioner was
illegally dismissed. The Labor Arbiter held that the weight standards of PAL are
reasonable in view of the nature of the job of petitioner. However, the weight
standards need not be complied with under pain of dismissal since his weight did
not hamper the performance of his duties. Assuming that it did, petitioner could be
transferred to other positions where his weight would not be a negative factor.
Notably, other overweight employees, i.e., Mr. Palacios, Mr. Cui, and Mr. Barrios, were
promoted instead of being disciplined.

They appealed to the NLRC and on June 23, 2000, the NLRC rendered judgment
affirming the Labor Arbiter’s decision. NLRC agree with the findings of the Labor
Arbiter but it found as unnecessary to hold that petitioner was not remiss in the
performance of his duties as flight steward despite being overweight and should
have limited himself to the issue of whether the failure of petitioner to attain his
ideal weight constituted willful defiance of the weight standards of PAL. Both appeal
of respondent PAL was dismissed.

In its appeal to the CA, the decision of the NLRC was reversed and set aside and
opined that there was grave abuse of discretion on the part of the NLRC because it
looked at wrong and irrelevant considerations in evaluating the evidence of the
parties. Contrary to the NLRC ruling, the weight standards of PAL are meant to be a
continuing qualification for an employee’s position. The failure to adhere to the
weight standards is an analogous cause for the dismissal of an employee under
Article 282(e) of the Labor Code in relation to Article 282(a). On petitioner’s motion,
the CA held that the weight standards of PAL are a bona fide occupational
qualification which, in case of violation, justifies an employee’s separation from the
service.

Issue: Whether or not petitioner’s dismissal is valid and can be predicated on the
bona fide occupational qualification defense.

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Ruling: SC upheld the legality of dismissal. Separation pay, however, should be
awarded in favor of the employee as an act of social justice or based on equity. This
is so because his dismissal is not for serious misconduct and neither it ia reflective of
his moral character.

The obesity of petitioner, when placed in the context of his work as flight attendant,
becomes an analogous cause under Article 282(e) of the Labor Code. His obesity
may not be unintended, but is nonetheless voluntary. “[v]oluntariness basically means
that the just cause is solely attributable to the employee without any external force
influencing or controlling his actions. This element runs through all just causes under
Article 282, whether they be in the nature of a wrongful action or omission. Gross
and habitual neglect, a recognized just cause, is considered voluntary although it
lacks the element of intent found in Article 282(a), (c), and (d).”

Likewise petitioner’s claim of discrimination must fail. The Constitution, the Labor
Code, and RA No. 7277 or the Magna Carta for Disabled Persons contains provisions
similar to Bona fide occupational qualification (BFOQ).

In Star Paper Corporation v. Simbol, this Court held that in order to justify a BFOQ,
the employer must prove:

(1) The employment qualification is reasonably related to the essential operation of

the job involved; and

(2) That there is factual basis for believing that all or substantially all persons meeting
the qualification would be unable to properly perform the duties of the job.

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In short, the test of reasonableness of the company policy is used because it is
parallel to BFOQ.

BFOQ is valid “provided it reflects an inherent quality reasonably necessary for

satisfactory job performance.”

The weight standards of PAL are reasonable. A common carrier, from the nature of
its business and for reasons of public policy, is bound to observe extraordinary
diligence for the safety of the passengers it transports. The primary objective of PAL
in the imposition of the weight standards for cabin crew is flight safety It cannot be
gainsaid that cabin attendants must maintain agility at all times in order to inspire
passenger confidence on their ability to care for the passengers when something
goes wrong.

The business of PAL is air transportation. As such, it has committed itself to safely
transport its passengers. In order to achieve this, it must necessarily rely on its
employees, most particularly the cabin flight deck crew who are on board the
aircraft. The weight standards of PAL should be viewed as imposing strict norms of
discipline upon its employees. On board an aircraft, the body weight and size of a
cabin attendant are important factors to consider in case of emergency. Aircrafts
have constricted cabin space, and narrow aisles and exit doors.

Thus, the arguments of respondent that whether the airlines flight attendants are
overweight or not has no direct relation to its mission of transporting passengers to
their destination; and that the weight standards has nothing to do with airworthiness
of respondents airlines, must fail. The court is also of view that the biggest problem
with an overweight cabin attendant is the possibility of impeding passengers from
evacuating the aircraft, should the occasion call for it. The job of a cabin attendant
during emergencies is to speedily get the passengers out of the aircraft safely. Being
overweight necessarily impedes mobility and evacuation might slow down just

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because a wide-bodied cabin attendant is blocking the narrow aisles.

S.I.P. FOOD HOUSE and MR. and MRS. ALEJANDRO PABLO, Petitioners, vs.
RESTITUTO BATOLINA, ALMER CALUMPISAN, ARIES MALGAPO, ARMANDO
MALGAPO, FLORDELIZA MATIAS, PERCIVAL MATIAS, ARWIN MIRANDA, LOPE
MATIAS, RAMIL MATIAS, ALLAN STA. INES, Respondents.

G.R. No. 192473 October 11, 2010

Facts: The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the

employees of the Government Service Insurance System (GSIS). Incidental to its
purpose, GMPC wanted to operate a canteen in the new GSIS Building, but had no
capability and expertise in this area. Thus, it engaged the services of the petitioner
S.I.P. Food House (SIP), owned by the spouses Alejandro and Esther Pablo, as
concessionaire. The respondents Restituto Batolina and nine (9) others (the
respondents) worked as waiters and waitresses in the canteen.

In February 2004, GMPC terminated SIP’s “contract as GMPC concessionaire. The

termination of the concession contract caused the termination of the respondents’
employment, prompting them to file a complaint for illegal dismissal, with money
claims, against SIP and the spouses Pablo. NLRC ruled in favor of the petitioner and
CA affirmed the ruling of NLRC.SIP seeks a reversal of the appellate court’s ruling
that it was the employer of the respondents, claiming that it was merely a labor-only
contractor of GMPC.

Issue: Whether or not SIP was liable to them for their statutory benefits, although it
was not made to answer for their lost employment due to the involuntary nature of
the canteen’s closure.

Ruling:

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The employer-employee relationship issue

The CA ruled out SIP’s claim that it was a labor-only contractor or a mere agent of
GMPC. We agree with the CA; SIP and its proprietors could not be considered as
mere agents of GMPC because they exercised the essential elements of an
employment relationship with the respondents such as hiring, payment of wages and
the power of control, not to mention that SIP operated the canteen on its own
account as it paid a fee for the use of the building and for the privilege of running
the canteen. The fact that the respondents applied with GMPC in February 2004
when it terminated its contract with SIP, is another clear indication that the two
entities were separate and distinct from each other. We thus see no reason to
disturb the CA’s findings.

The respondent’s money claims

We likewise affirm the CA ruling on the monetary award to Batolina and the other
complainants. The free board and lodging SIP furnished the employees cannot
operate as a set-off for the underpayment of their wages. We held in Mabeza v.
National Labor Relations Commission that the employer cannot simply deduct from
the employee’s wages the value of the board and lodging without satisfying the
following requirements: (1) proof that such facilities are customarily furnished by the
trade; (2) voluntary acceptance in writing by the employees of the deductible
facilities; and (3) proof of the fair and reasonable value of the facilities charged.
As the CA aptly noted, it is clear from the records that SIP failed to comply with
these requirements.

On the collateral issue of the proper computation of the monetary award, we also
find the CA ruling to be in order. Indeed, in the absence of evidence that the
employees worked for 26 days a month, no need exists to re-compute the award for
the respondents who were “explicitly claiming for their salaries and benefits for the
services rendered from Monday to Friday or 5 days a week or a total of 20 days a
month.”

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 SLL INTERNATIONAL CABLES SPECIALIST and SONNY L. LAGON, Petitioners, vs.
NATIONAL LABOR RELATIONS COMMISSION, 4th DIVISION, ROLDAN LOPEZ,
EDGARDO ZUÑIGA and DANILO CAÑETE, Respondents.

G.R. No. 172161 March 2, 2011

Facts: Sometime in 1996, and January 1997, private respondents were hired by
petitioner Lagon as apprentice or trainee cable/lineman. The three were paid the full
minimum wage and other benefits but since they were only trainees, they did not
report for work regularly but came in as substitutes to the regular workers or in
undertakings that needed extra workers to expedite completion of work. Soon after,
they were engaged as private employees for their Islacom project in Bohol. Private
respondents started on March 15, 1997 until December 1997. Upon the completion
of their project, their employment was also terminated. Private respondents received
the amount of P145.00, the minimum prescribed daily wage for Region VII. In July
1997, the amount of P145 was increased to P150.00 and in October of the same
year, the latter was increased to P155.00.

On May 21, 1999, private respondents for the 4th time worked with Lagon's project
in Camarin, Caloocan City with Furukawa Corporation as the general contractor. Their
contract would expire on February 28, 2000, the period of completion of the project.
From May 21, 1997-December 1999, private respondents received the wage of
P145.00. At this time, the minimum prescribed rate for Manila was P198.00. In
January to February 28, the three received the wage of P165.00. The existing rate at
that time was P213.00.

For reasons of delay on the delivery of imported materials from Furukawa

Corporation, the Camarin project was not completed on the scheduled date of
completion. Face[d] with economic problem[s], Lagon was constrained to cut down
the overtime work of its worker[s][,] including private respondents. Thus, when
requested by private respondents on February 28, 2000 to work overtime, Lagon
refused and told private respondents that if they insist, they would have to go home
at their own expense and that they would not be given any more time nor allowed

93
to stay in the quarters. This prompted private respondents to leave their work and
went home to Cebu. On March 3, 2000, private respondents filed a complaint for
illegal dismissal, non-payment of wages, holiday pay, 13th month pay for 1997 and
1998 and service incentive leave pay as well as damages and attorney's fees

Issues: 1.) Whether or not the respondent should be allowed to recover the
differential due to the failure of the petitioner to pay the minimum wage. 2.)
Whether or not value of the facilities that the private respondents enjoyed should be
included in the computation of the "wages" received by them.

Ruling: As a general rule, on payment of wages, a party who alleges payment as a

defense has the burden of proving it. Specifically with respect to labor cases, the
burden of proving payment of monetary claims rests on the employer, the rationale
being that the pertinent personnel files, payrolls, records, remittances and other
similar documents -- which will show that overtime, differentials, service incentive
leave and other claims of workers have been paid -- are not in the possession of the
worker but in the custody and absolute control of the employer.

In this case, petitioners, aside from bare allegations that private respondents received
wages higher than the prescribed minimum, failed to present any evidence, such as
payroll or payslips, to support their defense of payment. Thus, petitioners utterly
failed to discharge the onus probandi.

On whether the value of the facilities should be included in the computation of the
"wages" received by private respondents, Section 1 of DOLE Memorandum Circular
No. 2 provides that an employer may provide subsidized meals and snacks to his
employees provided that the subsidy shall not be less that 30% of the fair and
reasonable value of such facilities. In such cases, the employer may deduct from the
wages of the employees not more than 70% of the value of the meals and snacks
enjoyed by the latter, provided that such deduction is with the written authorization

94
of the employees concerned.

Moreover, before the value of facilities can be deducted from the employees' wages,
the following requisites must all be attendant: first, proof must be shown that such
facilities are customarily furnished by the trade; second, the provision of deductible
facilities must be voluntarily accepted in writing by the employee; and finally, facilities
must be charged at reasonable value.[20] Mere availment is not sufficient to allow
deductions from employees' wages.

These requirements, however, have not been met in this case. SLL failed to present
any company policy or guideline showing that provisions for meals and lodging were
part of the employee's salaries. It also failed to provide proof of the employees'
written authorization, much less show how they arrived at their valuations. At any
rate, it is not even clear whether private respondents actually enjoyed said facilities.

In short, the benefit or privilege given to the employee which constitutes an extra
remuneration above and over his basic or ordinary earning or wage is supplement;
and when said benefit or privilege is part of the laborers' basic wages, it is a facility.
The distinction lie not so much in the kind of benefit or item (food, lodging, bonus
or sick leave) given, but in the purpose for which it is given. In the case at bench, the
items provided were given freely by SLL for the purpose of maintaining the efficiency
and health of its workers while they were working at their respective projects.

For said reason, the cases of Agabon and Glaxo are inapplicable in this case. At any
rate, these were cases of dismissal with just and authorized causes. The present case
involves the matter of the failure of the petitioners to comply with the payment of
the prescribed minimum wage.

The Court sustains the deletion of the award of differentials with respect to

95
respondent Roldan Lopez. As correctly pointed out by the CA, he did not work for
the project in Antipolo.

96
 RICARDO E. VERGARA, JR., Petitioner, vs.COCA-COLA BOTTLERS 
 PHILIPPINES,
INC., Respondent.

G.R. No. 176985 April 1, 2013

Facts: Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola

Bottlers Philippines, Inc. from May 1968 until he retired on January 31, 2002 as a
District Sales Supervisor (DSS) for Las Piñas City, Metro Manila. As stipulated in
respondent's existing Retirement Plan Rules and Regulations at the time, the Annual
Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the
computation of retirement benefits, as follows: Basic Monthly Salary + Monthly
Average Performance Incentive (which is the total performance incentive earned
during the year immediately preceding 12 months) No. of Years in Service.

Claiming his entitlement to an additional PhP 474, 600.00 as Sales Management

Incentives (SMI) and to the amount of PhP 496, 016.67 which respondent allegedly
deducted illegally, representing the unpaid accounts of two dealers within his
jurisdiction, petitioner filed a complaint before the NLRC on June 11, 2002 for the
payment of his "Full Retirement Benefits, Merit Increase, Commission/Incentives,
Length of Service, Actual, Moral and Exemplary Damages, and Attorney's Fees."

(Apparently, Petitioner argued that the granting of SMI to all retired DSSs regardless
of whether or not they qualify to the same had ripened into company practice. They
claimed that the SMI was included in their retirement package even if they did not
meet the sales and collection qualifiers. Therefore, the failure of employer to grant
him his SMI is a violation on the principle of non-diminution of benefits.)

Issue: Whether or not the granting of SMI to all retired DSSs regardless of whether
or not they qualify to the same had ripened into company practice.

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Ruling: Generally, employees have a vested right over existing benefits voluntarily
granted to them by their employer. Thus, any benefit and supplement being enjoyed
by the employees cannot be reduced, diminished, discontinued or eliminated by the
employer. The principle of non-diminution of benefits is actually founded on the
Constitutional mandate to protect the rights of workers, to promote their welfare,
and to afford them full protection. In turn, said mandate is the basis of Article 4 of
the Labor Code which states that "all doubts in the implementation and
interpretation of this Code, including its implementing rules and regulations, shall be
rendered in favor of labor."

There is diminution of benefits when the following requisites are present:

1. The grant or benefit is founded on a policy or has ripened into a practice

over a long period of time;

2. The practice is consistent and deliberate;

3. The practice is not due to error in the construction or application of a

doubtful or difficult question of law; and

4. The diminution or discontinuance is done unilaterally by the employer.

To be considered as a regular company practice, the employee must prove by

substantial evidence that the giving of the benefit is done over a long period of time,
and that it has been made consistently and deliberately. The common denominator
in previously decided cases appears to be the regularity and deliberateness of the
grant of benefits over a significant period of time. It requires an indubitable showing
that the employer agreed to continue giving the benefit knowing fully well that the
employees are not covered by any provision of the law or agreement requiring
payment thereof. In sum, the benefit must be characterized by regularity, voluntary
and deliberate intent of the employer to grant the benefit over a considerable period
of time.

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Upon review of the entire case records, we find no substantial evidence to prove that
the grant of SMI to all retired DSSs regardless of whether or not they qualify to the
same had ripened into company practice. The granting of the SMI in the retirement
package of Velazquez was an isolated incident and could hardly be classified as a
company practice that may be considered an enforceable obligation. To repeat, the
principle against diminution of benefits is applicable only if the grant or benefit is
founded on an express policy or has ripened into a practice over a long period of
time which is consistent and deliberate; it presupposes that a company practice,
policy and tradition favorable to the employees has been clearly established; and
that the payments made by the company pursuant to it have ripened into benefits
enjoyed by them. Certainly, a practice or custom is, as a general rule, not a source of
a legally demandable or enforceable right. Company practice, just like any other fact,
habits, customs, usage or patterns of conduct, must be proven by the offering party
who must allege and establish specific, repetitive conduct that might constitute
evidence of habit or company practice.

ROYAL PLANT WORKERS UNION, Petitioner, vs. COCA-COLA BOTTLERS

PHILIPPINES, INC.-CEBU PLANT, Respondent.

G.R. No. 198783 April 15, 2013

Facts: Under the employ of each bottling plant of Coca-Cola are bottling operators.
In the case of the plant in Cebu City, there are 20 bottling operators who work for its
Bottling Line 1 while there are 12-14 bottling operators who man its Bottling Line 2.
All of them are male and they are members of herein respondent Royal Plant
Workers Union (ROPWU).

In 1974, the bottling operators of then Bottling Line 2 were provided with chairs
upon their request. In 1988, the bottling operators of then Bottling Line 1 followed

99
suit and asked to be provided also with chairs. Their request was likewise granted.
Sometime in September 2008, the chairs provided for the operators were removed
pursuant to a national directive of petitioner. This directive is in line with the "I
Operate, I Maintain, I Clean" program of petitioner for bottling operators, wherein
every bottling operator is given the responsibility to keep the machinery and
equipment assigned to him clean and safe. The program reinforces the task of
bottling operators to constantly move about in the performance of their duties and
responsibilities.

With this task of moving constantly to check on the machinery and equipment
assigned to him, a bottling operator does not need a chair anymore, hence,
petitioner’s directive to remove them. Furthermore, CCBPI rationalized that the
removal of the chairs is implemented so that the bottling operators will avoid
sleeping, thus, prevent injuries to their persons. As bottling operators are working
with machines which consist of moving parts, it is imperative that they should not fall
asleep as to do so would expose them to hazards and injuries. In addition, sleeping
will hamper the efficient flow of operations as the bottling operators would be
unable to perform their duties competently.

Issue: Whether or not the removal of the bottling operators’ chairs was a valid
exercise of management prerogative.

Ruling: Yes. According to the Union, such removal constitutes a violation of the 1)
Occupational Health and Safety Standards which provide that every worker is entitled
to be provided by the employer with appropriate seats, among others; 2) policy of
the State to assure the right of workers to a just and humane condition of work as
provided for in Article 3 of the Labor Code;8 3) Global Workplace Rights Policy of
CCBPI which provides for a safe and healthy workplace by maintaining a productive
workplace and by minimizing the risk of accident, injury and exposure to health risks;
and 4) diminution of benefits provided in Article 100 of the Labor Code.

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The Court has held that management is free to regulate, according to its own
discretion and judgment, all aspects of employment, including hiring, work
assignments, working methods, time, place, and manner of work, processes to be
followed, supervision of workers, working regulations, transfer of employees, work
supervision, lay-off of workers, and discipline, dismissal and recall of workers. The
exercise of management prerogative, however, is not absolute as it must be
exercised in good faith and with due regard to the rights of labor.

In the present controversy, it cannot be denied that CCBPI removed the operators’
chairs pursuant to a national directive and in line with its "I Operate, I Maintain, I
Clean" program, launched to enable the Union to perform their duties and
responsibilities more efficiently. The chairs were not removed indiscriminately. They
were carefully studied with due regard to the welfare of the members of the Union.
The removal of the chairs was compensated by: a) a reduction of the operating hours
of the bottling operators from a two-and-one-half (2 ½)-hour rotation period to a
one-and-a-half (1 ½) hour rotation period; and b) an increase of the break period
from 15 to 30 minutes between rotations.

Apparently, the decision to remove the chairs was done with good intentions as
CCBPI wanted to avoid instances of operators sleeping on the job while in the
performance of their duties and responsibilities and because of the fact that the
chairs were not necessary considering that the operators constantly move about
while working. In short, the removal of the chairs was designed to increase work
efficiency. Hence, CCBPI’s exercise of its management prerogative was made in good
faith without doing any harm to the workers’ rights.

The rights of the Union under any labor law were not violated. There is no law that
requires employers to provide chairs for bottling operators. There was no violation
either of the Health, Safety and Social Welfare Benefit provisions under Book IV of
the Labor Code of the Philippines. As shown in the foregoing, the removal of the
chairs was compensated by the reduction of the working hours and increase in the

101
rest period. The directive did not expose the bottling operators to safety and health
hazards.

The Union should not complain too much about standing and moving about for one
and one-half (1 ½) hours because studies show that sitting in workplaces for a long
time is hazardous to one’s health. The CBA between the Union and CCBPI contains
no provision whatsoever requiring the management to provide chairs for the
operators in the production/manufacturing line while performing their duties and
responsibilities.

The Court completely agrees with the CA ruling that the removal of the chairs did
not violate the general principles of justice and fair play because the bottling
operators’ working time was considerably reduced from two and a half (2 ½) hours
to just one and a half (1 ½) hours and the break period, when they could sit down,
was increased to 30 minutes between rotations. The bottling operators’ new work
schedule is certainly advantageous to them because it greatly increases their rest
period and significantly decreases their working time. A break time of thirty (30)
minutes after working for only one and a half (1 ½) hours is a just and fair work
schedule.

The operators’ chairs cannot be considered as one of the employee benefits covered
in Article 10016 of the Labor Code. In the Court’s view, the term "benefits"
mentioned in the non-diminution rule refers to monetary benefits or privileges given
to the employee with monetary equivalents. Such benefits or privileges form part of
the employees’ wage, salary or compensation making them enforceable obligations.

This Court has already decided several cases regarding the non-diminution rule
where the benefits or privileges involved in those cases mainly concern monetary
considerations or privileges with monetary equivalents. Without a doubt, equating
the provision of chairs to the bottling operators is something within the ambit of

102
"benefits'' in the context of Article 100 of the Labor Code is unduly stretching the
coverage of the law. The interpretations of Article 100 of the Labor Code do not
show even with the slightest hint that such provision of chairs for the bottling
operators may be sheltered under its mantle.

The National Wages & Productivity Commission et al., vs. The Alliance of
Progressive Labor et al.

GR No. 150326, March 12, 2014

Facts: On June 9, 1989, Republic Act No. 6727 was enacted into law. In order to
rationalize wages throughout the Philippines, Republic Act No. 6727 created the
NWPC and the RTWPBs of the different regions.

Article 121 of the Labor Code, as amended by Section 3 of Republic Act No. 6727,
empowered the NWPC to formulate policies and guidelines on wages, incomes and
productivity improvement at the enterprise, industry and national levels; to prescribe
rules and guidelines for the determination of appropriate minimum wage and
productivity measures at the regional, provincial or industry levels; and to review
regional wage levels set by the RTWPBs to determine whether the levels were in
accordance with the prescribed guidelines and national development plans, among
others.

On the other hand, Article 122(b) of the Labor Code, also amended by Section 3 of
Republic Act No. 6727, tasked the RTWPBs to determine and fix minimum wage rates
applicable in their region, provinces or industries therein; and to issue the
corresponding wage orders, subject to the guidelines issued by the NWPC.

Consequently, the RTWPB–NCR issued Wage Order No. NCR–07 on October 14, 1999
imposing an increase of P25.50/day on the wages of all private sector workers and
employees in the NCR and pegging the minimum wage rate in the NCR at

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P223.50/day.6 However, Section 2 and Section 9 of Wage Order No. NCR–07
exempted certain sectors and industries from its coverage.

Feeling aggrieved by their non–coverage by the wage adjustment, the Alliance of

Progressive Labor (APL) and the Tunay na Nagkakaisang Manggagawa sa Royal
(TNMR) filed an appeal with the NWPC assailing Section 2(A) and Section 9(2) of
Wage Order No. NCR–07. They contended that neither the NWPC nor the RTWPB–
NCR had the authority to expand the non–coverage and exemptible categories under
the wage order; hence, the assailed sections of the wage order should be voided.

The NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No.
NCR–07. It observed that the RTWPB’s power to determine exemptible categories
was adjunct to its wage fixing function conferred by Article 122(e) of the Labor Code,
as amended by Republic Act No. 6727; that such authority of the RTWPB was also
recognized in NWPC Guidelines No. 01, Series of 1996. The APL and TNMR assailed
the decisions of the NWPC on certiorari in the CA, contending that the power of the
RTWPB–NCR to determine exemptible categories was not an adjunct to its wage
fixing function. CA favored the respondents and granted the petition for certiorari.
Hence, this appeal by petition for review on certiorari by the NWPC and RTWPB–
NCR.

Issue: Whether or not the RTWPB–NCR had authority.

Ruling: the RTWPB–NCR had the authority to provide additional exemptions from
the minimum wage adjustments embodied in Wage Order No. NCR–07.

The NWPC promulgated NWPC Guidelines No. 001–95 (Revised Rules of Procedure
on Minimum Wage Fixing) to govern the proceedings in the NWPC and the RTWPBs
in the fixing of minimum wage rates by region, province and industry. Section 1 of

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Rule VIII of NWPC Guidelines No. 001–95 recognized the power of the RTWPBs to
issue exemptions from the application of the wage orders subject to the guidelines
issued by the NWPC (this is the rationale behind exemption)

SECTION 2. CATEGORIES OF EXEMPTIBLE ESTABLISHMENTS

Exemption of establishments from compliance with the wage increases and cost of
living allowances prescribed by the Boards may be granted in order to (1) assist
establishments experiencing temporary difficulties due to losses maintain the
financial viability of their businesses and continued employment of their workers; (2)
encourage the establishment of new businesses and the creation of more jobs,
particularly in areas outside the National Capital Region and Export Processing
Zones, in line with the policy on industry dispersal; and (3) ease the burden of micro
establishments, particularly in the retail and service sector, that have a limited
capacity to pay.

The following categories of establishments may be exempted upon application with

and as determined by the Board: (1) Distressed establishments; (2) New business
enterprises (NBEs); (3) Retail/Service establishments employing not more than ten
(10) workers; (4) Establishments adversely affected by natural calamities.

Under the guidelines, the RTWPBs could issue exemptions from the application of
the wage orders as long as the exemptions complied with the rules of the NWPC. In
its rules, the NWPC enumerated four exemptible establishments, but the list was not
exclusive. The RTWPBs had the authority to include in the wage orders
establishments that belonged to, or to exclude from the four enumerated exemptible
categories.

If the exemption was outside of the four exemptible categories, like here, the
exemptible category should be: (1) in accord with the rationale for exemption; (2)
reviewed/approved by the NWPC; and (3) upon review, the RTWPB issuing the wage
order must submit a strong and justifiable reason or reasons for the inclusion of such

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category. It is the compliance with the second requisite that is at issue here.

The NWPC, in arriving at its decision, weighed the arguments of the parties and
ruled that the RTWPB–NCR had substantial and justifiable reasons in exempting the
sectors and establishments enumerated in Section 2(A) and Section 9(2) based on
the public hearings and consultations, meetings, social–economic data and
informations gathered prior to the issuance of Wage Order No. NCR–07. The very
fact that the validity of the assailed sections of Wage Order No. NCR–07 had been
already passed upon and upheld by the NWPC meant that the NWPC had already
given the wage order its necessary legal imprimatur. Accordingly, the requisite
approval or review was complied with.

The RTWPBs are the thinking group of men and women guided by statutory
standards and bound by the rules and guidelines prescribed by the NWPC. In the
nature of their functions, the RTWPBs investigate and study all the pertinent facts to
ascertain the conditions in their respective regions. Hence, they are logically vested
with the competence to determine the applicable minimum wages to be imposed as
well as the industries and sectors to exempt from the coverage of their wage orders.

Lastly, Wage Order No. NCR–07 is presumed to be regularly issued in the absence of
any strong showing of grave abuse of discretion on the part of RTWPB–NCR. The
presumption of validity is made stronger by the fact that its validity was upheld by
the NWPC upon review.

ARIEL L. DAVID, doing business under the name and style "YIELS HOG DEALER,"
Petitioner, vs. JOHN G. MACASIO, Respondent.

G.R. No. 195466 July 2, 2014

Facts: On January 2009, Macasio filed before the LA a complaint against petitioner
Ariel L. David, doing business under the name and style "Yiels Hog Dealer," for non-

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payment of overtime pay, holiday pay and 13th month pay. He also claimed payment
for moral and exemplary damages and attorney’s fees. Macasio also claimed
payment for service incentive leave (SIL).

Macasio alleged before the LA that he had been working as a butcher for David
since January 6, 1995. Macasio claimed that David exercised effective control and
supervision over his work, pointing out that David: (1) set the work day, reporting
time and hogs to be chopped, as well as the manner by which he was to perform his
work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007,
P500.00 in 2006 and P400.00 in 2005; and (3) approved and disapproved his leaves.
Macasio added that David owned the hogs delivered for chopping, as well as the
work tools and implements; the latter also rented the workplace. Macasio further
claimed that David employs about twenty-five (25) butchers and delivery drivers.

In his defense, David claimed that he started his hog dealer business in 2005 and
that he only has ten employees. He alleged that he hired Macasio as a butcher or
chopper on "pakyaw" or task basis who is, therefore, not entitled to overtime pay,
holiday pay and 13th month pay pursuant to the provisions of the Implementing
Rules and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1)
usually starts his work at 10:00 p.m. and ends at 2:00 a.m. of the following day or
earlier, depending on the volume of the delivered hogs; (2) received the fixed
amount of P700.00 per engagement, regardless of the actual number of hours that
he spent chopping the delivered hogs; and (3) was not engaged to report for work
and, accordingly, did not receive any fee when no hogs were delivered.

Issue: Whether or not Respondent Macasio is entitled to overtime pay, holiday pay,
13th month pay, and service incentive leave (SIL).

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Ruling: Respondent Macasio is entitled to such monetary claims except 13th month
pay.

Macasio is engaged on "pakyaw" or task basis. At this point, we note that all three
tribunals – the LA, the NLRC and the CA – found that Macasio was engaged or paid
on "pakyaw" or task basis. This factual finding binds the Court under the rule that
factual findings of labor tribunals when supported by the established facts and in
accord with the laws, especially when affirmed by the CA, is binding on this Court.

A distinguishing characteristic of "pakyaw" or task basis engagement, as opposed to

straight-hour wage payment, is the non-consideration of the time spent in working.
In a task-basis work, the emphasis is on the task itself, in the sense that payment is
reckoned in terms of completion of the work, not in terms of the number of time
spent in the completion of work. Once the work or task is completed, the worker
receives a fixed amount as wage, without regard to the standard measurements of
time generally used in pay computation.

In Macasio’s case, the established facts show that he would usually start his work at
10:00 p.m. Thereafter, regardless of the total hours that he spent at the workplace or
of the total number of the hogs assigned to him for chopping, Macasio would
receive the fixed amount of P700.00 once he had completed his task. Clearly, these
circumstances show a "pakyaw" or task basis engagement that all three tribunals
uniformly found.

In determining whether workers engaged on "pakyaw" or task basis" is entitled to

holiday and SIL pay, the presence (or absence) of employer supervision as regards
the worker’s time and performance is the key: if the worker is simply engaged on
pakyaw or task basis, then the general rule is that he is entitled to a holiday pay and
SIL pay unless exempted from the exceptions specifically provided under Article 94
(holiday pay) and Article 95 (SIL pay) of the Labor Code. However, if the worker
engaged on pakyaw or task basis also falls within the meaning of "field personnel"
under the law, then he is not entitled to these monetary benefits.

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As with holiday and SIL pay, 13th month pay benefits generally cover all employees;
an employee must be one of those expressly enumerated to be exempted. Section 3
of the Rules and Regulations Implementing P.D. No. 851 enumerates the exemptions
from the coverage of 13th month pay benefits. Under Section 3(e), "employers of
those who are paid on xxx task basis, and those who are paid a fixed amount for
performing a specific work, irrespective of the time consumed in the performance
thereof" are exempted.

Note that unlike the IRR of the Labor Code on holiday and SIL pay, Section 3(e) of
the Rules and Regulations Implementing PD No. 851 exempts employees "paid on
task basis" without any reference to "field personnel." This could only mean that
insofar as payment of the 13th month pay is concerned, the law did not intend to
qualify the exemption from its coverage with the requirement that the task worker be
a "field personnel" at the same time.

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 OUR HAUS REALTY DEVELOPMENT CORPORATION, Petitioner, vs. ALEXANDER
PARIAN, JAY C. ERINCO, ALEXANDER CANLAS, BERNARD TENEDERO and JERRY
SABULAO, Respondents.

G.R. No. 204651 August 6, 2014

Facts: Respondents are laborers of petitioner-corporation (construction business).

Because of financial distress, the corporation suspended some projects, which
resulted in giving vacation leaves to the affected workers, including respondents.
Instead of going back to work after their vacation leaves, respondents filed a
complaint with the Labor Arbiter, citing underpayment of wages and Our Haus’
failure to pay their holiday, SIL, 13th month and overtime pays.

One of their contentions, respondent-laborers claim that value of their meals should
not be considered in determining their wage total amount since Our Haus failed to
comply with the requirement of agreement in writing under DOLE Memorandum
Circular No. 2 and that the value of the facilities was not fair and reasonable. Labor
Arbiter ruled in favor of Our Haus, stating that respondents failed to substantiate
their claims and if the values of board and lodging would be taken into
consideration, respondent’s wages would meet the minimum wage rate. On appeal
to the NLRC, the decision was reversed, stating that respondents did not authorize
Our Haus in writing to charge the values of their board and lodging to their wages.

Our Haus moved to reconsider but was denied, so they filed a petition for certiorari
with the CA with a new theory regarding a significant distinction between ‘deduction’
and ‘charging’. They contended that a written authorization is only necessary if the
facility's value will be ‘deducted’ and will not be needed if it will merely be
‘charged’/included in the computation of wages. Thus according to them, they did
not actually deduct the values of the meals and housing benefits. They only
considered these in computing the total amount of wages paid to the respondents
for purposes of compliance with the minimum wage law. CA denied this contention
citing no difference between ‘deduction’ and ‘charging’. Our Haus filed a petition for

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review on certiorari under Rule 45 after their motion for reconsideration was denied.

Issue: Whether or not the facilities value will be deducted or merely included in the
computation of the wages.

Ruling: Petition is denied.

In reality, deduction and charging both operate to lessen the actual take-home pay
of an employee; they are two sides of the same coin. In both, the employee receives
a lessened amount because supposedly, the facility's value, which is part of his wage,
had already been paid to him in kind. As there is no substantial distinction between
the two, the requirements set by law must apply to both.

Requisites of fair and reasonable facilities: (a) proof must be shown that such
facilities are customarily furnished by the trade; (b) the provision of deductible
facilities must be voluntarily accepted in writing by the employee; and (c) The
facilities must be charged at fair and reasonable value.

For the first requisite:

The sinumpaang salaysay presented by Our Haus is (1) self-serving; (2) on a per
project basis; and (3) cannot prove that it was enjoyed by other employees thus
negating its claimed customary nature. Even if the benefit is customarily provided by
the trade, it must still pass the purpose test set by jurisprudence. Under this test, if a
benefit or privilege granted to the employee is clearly for the employer's
convenience, it will not be considered as a facility but a supplement.

Our Haus is engaged in the construction business, a labor-intensive enterprise. The

success of its projects is largely a function of the physical strength, vitality and

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efficiency of its laborers. Its business will be jeopardized if its workers are weak,
sickly, and lack the required energy to perform strenuous physical activities. Thus, by
ensuring that the workers are adequately and well fed, the employer is actually
investing on its business. Even under the purpose test, the subsidized meals and free
lodging provided by Our Haus are actually supplements. Although they also work to
benefit the respondents, an analysis of the nature of these benefits in relation to Our
Haus' business shows that they were given primarily for Our Haus' greater
convenience and advantage. If weighed on a scale, the balance tilts more towards
Our Haus' side. Accordingly, their values cannot be considered in computing the total
amount of the respondents' wages.

For the second requisite:

Oddly, Our Haus only offered these documents when the NLRC had already ruled
that respondents did not accomplish any written authorization, to allow deduction
from their wages. The five kasunduans were also undated, making the SC wonder if
they had really been executed when respondents first assumed their jobs.

For the third requisite:

Our Haus never explained how it came up with the values it assigned for the benefits
it provided; it merely listed its supposed expenses without any supporting document.
The records however, are bereft of any evidence to support Our Haus' meal expense
computation. Without any corroborative evidence, it cannot be said that Our Haus
complied with this third requisite.

Respondents are entitled to other monetary benefits. A party who alleges payment
as a defense has the burden of proving it. Particularly in labor cases, the burden of
proving payment of monetary claims rests on the employer. Records will disclose the
absence of any credible document which will show that respondents had been paid
their 13th month pay, holiday and SIL pays. Our Haus merely presented a hand-
written certification from its administrative officer that its employees automatically

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become entitled to five days of service incentive leave as soon as they pass
probation.

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 EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID,
BONIFACIO MATUNDAN, NORA MENDOZA, et al., Petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, ·SOLID MILLS, INC., and/or PHILIP ANG,
Respondents.

G.R. No. 202961 February 4, 2015

Facts: Petitioners are the employees of respondent Solid Mills Inc. They are
represented by their collective bargaining agent, NAFLU.

Petitioners were allowed to occupy SMI Village (property owned by Solid Mills) out
of liberality and for the convenience of its employees. They further agreed that
petitioners would vacate the lot anytime the company deems fit. On October 2003,
Solid Mills would cease operations due to serious business losses.

Petitioners were sent individual notices to vacate SMI Village. They were asked to
sign a Memorandum of Agreement with Release and Quitclaim; employees who
signed it were considered to have agreed to vacate SMI Village as a condition for the
release of their termination benefits and separation pay. Petitioners however refused
to sign it and demanded their benefits and separation pay.

Thereafter Petitioners Milan, et al filed a complaint before the Labor Arbiter on the
ground that their accrued benefits and separation pay cannot be withheld because it
is based on company policy and practice. Solid Mills countered by saying the
complaint was premature because they have not vacated the property in view of the
Memorandum of Agreement.

The Labor Arbiter favored the petitioners, stating Solid Mills’ illegality of the
withholding of benefits. Solid Mills appealed to the NLRC and reversed pertinent
parts of the decision. Petitioners moved to reconsider but was denied, so they file a

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petition for certiorari with the CA. This was dismissed, hence their present petition.

Issue: Whether or not the benefits of Petitioners may be validly and legally withheld
by Solid Mills Inc.

Ruling: Petition is denied; Solid Mills may validly and legally withhold the benefits.

The Civil Code provides that the employer is authorized to withhold wages for debts
due: Article 1706. Withholding of the wages, except for a debt due, shall not be
made by the employer.

"Debt" in this case refers to any obligation due from the employee to the employer.
It includes any accountability that the employee may have to the employer. There is
no reason to limit its scope to uniforms and equipment, as petitioners would argue.

More importantly, respondent Solid Mills and NAFLU, the union representing
petitioners, agreed that the release of petitioners' benefits shall be "less
accountabilities."

"Accountability," in its ordinary sense, means obligation or debt. The ordinary

meaning of the term "accountability" does not limit the definition of accountability to
those incurred in the worksite. As long as the debt or obligation was incurred by
virtue of the employer-employee relationship, it shall be included in the employee's
accountabilities that are subject to clearance procedures.

Petitioners do not categorically deny respondent Solid Mills' ownership of the

property, and they do not claim superior right to it. What can be gathered from the
findings of the Labor Arbiter, NLRC, and the CA is that respondent Solid Mills
allowed the use of its property for the benefit of petitioners as its employees.

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Petitioners were merely allowed to possess and use it out of respondent Solid Mills'
liberality. The employer may, therefore, demand the property at will.

Withholding of payment by the employer does not mean that the employer may
renege on its obligation to pay employees their wages, termination payments, and
due benefits. The employees' benefits are also not being reduced. It is only subjected
to the condition that the employees return properties properly belonging to the
employer. This is only consistent with the equitable principle that "no one shall be
unjustly enriched or benefited at the expense of another."

Toyota Pasig Inc vs. Vilma S. De Peralta

GR No. 213488, November 7, 2016

Facts: Respondent was an employee of Toyota. She was initially hired as a cashier
and attained the position of Insurance sales executive due to her excellence in the
work as was shown when she was awarded Best Sales Insurance Executive from 2007
to 2011. Issue came when her husband, who was also an employee of petitioner,
organized a collective bargaining unit the members of which, including her husband,
were later dismissed from service. She also suffered the same fate, and according to
respondent, she was then accused of fraud in the processing of several insurance
transactions in that she claimed commissions in those transactions instead of
considering such under the marketing department’s new business accounts. With
this, she was preventively suspended and was later terminated upon her receipt of
the notice of termination.

Respondent then filed a case claiming payment of her earned substantial

commissions, tax rebates, and other benefits dating back from July 2011 to January
2012, amounting to P617,248.08. Petitioner in defense, contended that respondent
was terminated with just cause and that the claims she is asking are unfounded and
unsupported by documents and that such claims do not partake of unpaid

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wages/salaries.

Labor Arbiter found respondent liable for the accusations against her and did not
order the payment of the benefits claimed by respondent, instead it merely required
petitioner to pay the unpaid salary. NLRC and CA agreed with LA that respondent is
guilty of the accusations but it ordered petitioner to pay the claim of P617, 248.08 of
respondent.

Issue: 1.) Whether or not the claims of respondent is included in the definition of
“wages” in the labor code. 2.) Whether or not the claims will be discarded for failure
of respondent to substantiate such claims.

Ruling:

(1) Yes, respondent’s claims fall within the definition of “wages”. Under Art. 97 (f) of
the labor code, “wage paid to an employee shall mean the remuneration of earnings,
however designated, capable of being expressed in terms of money, whether
ascertained on a time, task, piece, or commission basis”. The claims of commissions,
tax rebates for achieved monthly targets, and success share/profit sharing, are given
to respondent as incentives or forms of encouragement in order for her to put extra
effort in performing her duties as an insurance sales executive are included in the
term “commission” which falls within the definition of “wages” under Art. 97(f) of the
labor code. This is for the reason that the nature of the work of a salesman is to
stimulate growth in sales which can be achieved by encouraging such employees to
put more effort in their jobs through commissions. Hence, commissions are
indubitably included in a sales employee’s wages.

(2) No, the claims will not be discarded just because respondent was not able to
produce supporting documents. Under law, once an employee alleges non-payment

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of specific claims in his/her complaint with particularity, the one who pleads payment
has the burden of proving it and even if the employee alleges non-payment, it is still
the employer who has to prove payment rather than the employee to prove non-
payment. Here, the petitioner did not allege payment of the claims or at least allege
that respondent is not entitled to such claims. Hence, since petitioner failed to
overcome the burden, the claims will not be discarded.

SORIANO, ET.AL., petitioner, vs. SECRETARY OF FINANCE, respondents

G.R. Nos. 184450, 184508, 184538, 185234, January 24, 2017, En Banc

Facts:

1. Consolidated petitions seeking to nullify provisions of RR 10-2008 implementing

RA 9504 (granted income tax exemption for MWEs and increase in personal and
additional exemptions for individual taxpayers)
2. Ground: RR is an unauthorized departure from the legislative intent of R.A. 9504
A. Restricts the implementation of the MWEs' income tax exemption only to the
period starting from 6 July 2008, instead of applying the exemption to the
entire year 2008
B. Prorated application of the new set of personal and additional exemptions for
taxable year 2008
C. Imposition of a condition for the availment by MWEs of the exemption provided
by R.A. 9504. Supposedly, in the event they receive other benefits in excess of
P30,000, they can no longer avail themselves of that exemption
• the law provides for the unconditional exemption of MWEs from income tax

Pertinent Rules:

RA 9504

Section 1 (amended Sec. 22 of the NIRC)

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(GG) The term 'statutory minimum wage' shall refer to the rate fixed by the Regional
Tripartite Wage and Productivity Board, as defined by the Bureau of Labor and
Employment Statistics (BLES) of the Department of Labor and Employment (DOLE).

(HH) The term 'minimum wage earner' shall refer to a worker in the private sector
paid the statutory minimum wage, or to an employee in the public sector with
compensation income of not more than the statutory minimum wage in the non-
agricultural sector where he/she is assigned.

Section 2 (amended Sec. 24 of the NIRC)

… minimum wage earners as defined in Section 22(HH) of this Code shall be exempt
from the payment of income tax on their taxable income: Provided, further, That the
holiday pay, overtime pay, night shift differential pay and hazard pay received by
such minimum wage earners shall likewise be exempt from income tax.

RR 10-2008

Sec. 1 (amended Sec. 2.78.1 of RR-2-98)

MWEs receiving 'other benefits' exceeding the P30,000.00 limit shall be taxable on
the excess benefits, as well as on his salaries, wages and allowances, just like an
employee receiving compensation income beyond the SMW.

…an employee who receives/earns additional compensation such as commissions,

honoraria, fringe benefits, benefits in excess of the allowable statutory amount of
P30,000.00, taxable allowances and other taxable income other than the SMW,
holiday pay, overtime pay, hazard pay and night shift differential pay shall not enjoy
the privilege of being a MWE and, therefore, his/her entire earnings are not exempt
from income tax, and consequently, from withholding tax.

119
MWEs receiving other income, such as income from the conduct of trade, business,
or practice of profession, except income subject to final tax, in addition to
compensation income are not exempted from income tax on their entire income
earned during the taxable year…

Sec. 3

For the year 2008, however, being the initial year of implementation of R.A. 9504,
there shall be a transitory withholding tax table for the period from July 6 to
December 31, 2008 (Annex "D") determined by prorating the annual personal and
additional exemptions under R.A. 9504 over a period of six months. Thus, for
individuals, regardless of personal status, the prorated personal exemption is P25,000,
and for each qualified dependent child (QDC), P12,500.

Issues:

1. Whether the increased exemptions should be applied to the entire taxable year.
2. Whether an MWE is exempt for the entire taxable year 2008.
3. Whether Sec. 1 and 3 of the RR are consistent with the law in providing that an
MWE who receives other benefits in excess of the statutory limit of P30k is no
longer entitled to the exemption.

Ruling:

1. The exemptions should be applied to the entire taxable year 2008

• RA 9504 is a piece of social legislation. Its intent is to make the proposed law
immediately applicable— to provide immediate tax relief to the MWEs. Umali
applies.
• In Umali v. Estanislao, Congress, in Jan 1992, enacted RA 7167 which
adjusted the amounts of exemptions to the poverty threshold level. The
Court held that the increased exemptions shall apply to compensation
income received during calendar year 1991 considering that the

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 increased exemptions were already available on or before April 1992, the
date for the filing of ITR. It found that RA 7167 is a piece of social
legislation.
• Umali test— whether the new set of personal and additional tax
exemptions was available at the time of the filing of the ITR
• Not only did RA 9504 take effect before the deadline for the filing of ITR
and payment of taxes for taxable year 2008, it took effect way before the
close of the taxable year.
• The policy of full taxable year treatment, esp. of the personal and additional
exemptions, is clear under Sec. 35 of the 1997 Tax Code.
• Legislative intent: for the state to give the taxpayer the maximum
exemptions that can be availed, notwithstanding the fact the latter’s
actual status would qualify only for a lower exemptions if prorating were
employed
2. The MWE is exempt for the entire taxable year 2008.

• Umali applies. This is a piece of social legislation.

• This premised on the fact of one's status as an MWE; that is, whether the
employee during the entire year of 2008 was an MWE as defined by R.A.
9504.
• When the wages received exceed the minimum wage anytime during the
taxable year, the employee necessarily loses the MWE qualification. Therefore,
wages become taxable as the employee ceased to be an MWE. But the
exemption of the employee from tax on the income previously earned as an
MWE remams.

3. Sec. 1 and 3 of the RR add a requirement not found in the law.

• Nowhere in the provisions of R.A. 9504 would one find the qualifications
prescribed by the assailed provisions of RR 10-2008.
• "Minimum wage" is wage mandated; one that employers may not freely choose
on their own to designate in any which way. The minimum wage exempted by
R.A. 9504 is that which is referred to in the Labor Code. It is distinct and
different from other payments including allowances, honoraria, commissions,

121
 allowances or benefits that an employer may pay or provide an employee.
• R.A. 9504 is explicit as to the coverage of the exemption: the wages that are
not in excess of the minimum wage as determined by the wage boards,
including the corresponding holiday, overtime, night differential and hazard
pays.
• The exemption on benefits granted by law in 1994 are now extended to wages
of the least paid workers under R.A. 9504. Benefits not beyond P30,000 were
exempted; wages not beyond the SMW are now exempted as well.
• What the legislature is exempting is the MWE's minimum wage and other forms
statutory compensation like holiday pay, overtime pay, night shift differential
pay, and hazard pay. Hence, the treatment of bonuses and other benefits that
an employee receives from the employer in excess of the P30,000 ceiling
cannot but be the same as the prevailing treatment prior to R.A. 9504 -
anything in excess ofP30,000 is taxable; no more, no less.
• The proper interpretation of R.A. 9504 is that it imposes taxes only on the
taxable income received in excess of the minimum wage, but the MWEs will
not lose their exemption as such. Workers who receive the statutory minimum
wage their basic pay remain MWEs. The receipt of any other income during
the year does not disqualify them as MWEs. They remain MWEs, entitled to
exemption as such, but the taxable income they receive other than as MWEs
may be subjected to appropriate taxes

Fallo:

DECLARE NULL and VOID the following provisions of Revenue Regulations No. 10-
2008:

• Sections 1 and 3, insofar as they disqualify MWEs who earn purely compensation
income from the privilege of the MWE exemption in case they receive bonuses and
other compensation-related benefits exceeding the statutory ceiling o f P30,000;
• Section 3 insofar as it provides for the prorated application of the personal and
additional exemptions under R.A. 9504 for taxable year 2008, and for the period of
applicability of the MWE exemption to begin only on 6 July 2008.

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 COCA-COLA BOTTLERS PHILIPPINES, INC., petitioner, vs. ILOILO COCA-COLA
PLANT EMPLOYEES LABOR UNION (ICCPELU), as represented by WILFREDO L.
AGUIRRE, respondent.

G.R. No. 195297. December 5, 2018

Facts: Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) operates a manufacturing

plant in Ungka, Pavia, Iloilo City, where the aggrieved former employees, as
represented by respondent Iloilo Coca-Cola Plant Employees Labor Union, worked as
regular route drivers and helpers.

The conflict arose due to the CCBPI's policy wherein it required several of its
employees to report for work on certain Saturdays to perform a host of activities,
usually involving maintenance of the facilities. This prerogative was supposedly
consistent with the pertinent provisions in the CBA between CCBPI and its
employees, which stated that management had the sole option to schedule work on
Saturdays on the basis of operational necessity. CCBPI later on informed the
respondent that, as Saturday work involved maintenance-related activities, CCBPI
would then only schedule the day's work as the need arose for these particular
undertakings, particularly on some Saturdays from September to December 2005.

On July 1, 2005, the parties met, with CCBPI's Manufacturing Manager setting forth
the official proposal to stop the work schedule during Saturdays. This proposal was
opposed and rejected by the officers and members of the respondent but the CCBPI
pushed through with the non-scheduling of work on the following Saturday, July 2,
2005.

The respondent submitted to CCBPI its written grievance, stating therein that CCBPI's
act of disallowing its employees to report during Saturday is a violation of the CBA
provisions, specifically Section 1, Article 10 thereof. The respondent also requested a
meeting with CCBPI to discuss the issue. CCBPI response to the request, however,

123
was to merely send a letter reiterating to the respondent that under the set of facts,
management has the option to schedule work on Saturday on the basis of
operational necessity. Further letters on the part of the respondent were responded
to in the same way by CCBPI.

Respondent thus brought its grievances to the office of the NCMB. The parties
pursuant to the provisions of their CBA submitted the case for voluntary arbitration.
The panel comprised of three (3) voluntary arbitrators was charged with resolving
two issues: First, whether or not members of the respondent were entitled to receive
their basic pay during Saturdays under the CBA even if they would not report for
work, and second, whether or not CCBPI could be compelled by the respondent to
provide work to its members during Saturdays under the CBA. On the first issue, the
Panel stated that the Union members are nary entitled to receive their Basic Pay; on
the second issue, the Panel rules that CCBPI cannot be compelled by the Union to
provide works to its members during Saturdays under the CBA.

Unwilling to accept the fndings of the Panel of Arbitrators, the respondent elevated
its case to the CA via a Petition for Review under Rule 43 of the Rules of Court,
which granted the respondent's petition.

CCBPI's Motion for Reconsideration was denied by the CA. Hence, this Petition, to
which the respondent filed a Comment 22 to on June 11, 2011, the latter pleading
responded to by CCBPI via Reply 23 on September 6, 2011.

Issue: Whether scheduling Saturday work has ripened into a company practice, the
removal of which constituted a diminution of benefits, to which CCBPI is likewise
liable to the affected employees for, including the corresponding wage for the
Saturday work which was not performed pursuant to the policy of the Company to
remove Saturday work based on operational necessity.

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Ruling No. In its Decision, the CA held that the fact that CCBPI had been providing
work to its employees every Saturday for several years, a circumstance that proved
Saturday was part of the regular work week, made the grant of Saturday work ripen
into company practice. On the other hand, CCBPI argues that work on a Saturday is
akin to overtime work because employees who are required to perform such work
are given additional compensation or premium in the CBA.

According to Art. 87 of the Labor Code, overtime work is work exceeding eight hours
within the worker's 24-hour workday. What is involved in this case is work
undertaken within the normal hours of work on Saturdays and not work performed
beyond eight hours in one day. Under Article 83 of the same Code:

Article 83. Normal hours of work. — The normal hours of work of any
employee shall not exceed eight (8) hours a day.

Despite the mistaken notion of CCBPI that Saturday work is synonymous to overtime
work, the Court still disagrees with the CA ruling that the previous practice of
instituting Saturday work by CCBPI had ripened into a company practice covered by
Article 100 of the Labor Code.

To note, it is not Saturday work per se which constitutes a benefit to the company's
employees. Rather, the benefit involved in this case is the premium which the
company pays its employees above and beyond the minimum requirements set by
law. The CBA between CCBPI and the respondent guarantees the employees that
they will be paid their regular wage plus an additional 50% thereof for the first eight
(8) hours of work performed on Saturdays. Therefore, the benefit, if ever there is one,
is the premium pay given by reason of Saturday work, and not the grant of Saturday
work itself.

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In Royal Plant Workers Union v. Coca-Cola Bottlers Philippines, Inc.-Cebu Plant, the
Court had the occasion to rule that the term "benefits" mentioned in the non-
diminution rule refers to monetary benefits or privileges given to the employee with
monetary equivalents. Stated otherwise, the employee benefits contemplated by
Article 100 are those which are capable of being measured in terms of money. Thus,
it can be readily concluded from past jurisprudential pronouncements that these
privileges constituted money in themselves or were convertible into monetary
equivalents.

In order for there to be proscribed diminution of benefits that prejudiced the

affected employees, CCBPI should have unilaterally withdrawn the 50% premium pay
without abolishing Saturday work. These are not the facts of the case at bar. CCBPI
withdrew the Saturday work itself, pursuant, as already held, to its management
prerogative. In fact, this management prerogative highlights the fact that the
scheduling of the Saturday work was actually made subject to a condition, i.e., the
prerogative to provide the company's employees with Saturday work based on the
existence of operational necessity.

In Eastern Telecommunications Philippines, Inc. v. Eastern Telecoms Employees Union,

the company therein allegedly postponed the payment of the 14th, 15th, and 16th
month bonuses contained in the CBA, and unilaterally made the payment subject to
availability of funds. Because of its severe financial condition, the company refused to
pay the subject bonuses. The Court, in holding that such act violated the proscription
against diminution of benefits, observed that the CBA provided for the subject
bonuses without qualification — their grant was not made to depend on the
existence of profits. Since no conditions were specified in the CBA for the grant of
the subject benefits, the company could not use its dire financial straits to justify the
omission.

As compared to the factual milieu in the Eastern Telecommunications case, the CBA
between CCBPI and the respondent has no analogous provision which grants that

126
the 50% premium pay would have to be paid regardless of the occurrence of
Saturday work. Thus, the non-payment of the same would not constitute a violation
of the diminution of benefits rule.

Also, even assuming arguendo that the Saturday work involved in this case falls
within the definition of a "benefit" protected by law, the fact that it was made subject
to a condition (i.e., the existence of operational necessity) negates the application of
Article 100 pursuant to the established doctrine that when the grant of a benefit is
made subject to a condition and such condition prevails, the rule on non-diminution
finds no application. Otherwise stated, if Saturday work and its corresponding
premium pay were granted to CCBPI's employees without qualification, then the
company's policy of permitting its employees to suffer work on Saturdays could have
perhaps ripened into company practice protected by the non-diminution rule.

MANUEL B. PABLICO and MASTER'S PAB RESTO BAR, petitioners, vs.

NUMERIANO B. CERRO, JR., MICHAEL CALIGUIRAN, EFREN PANGANIBAN,
GENIUS PAUIG, REYNALIE LIM, GLORIA NAPITAN, RICHARD CARONAN and
MANNY BAGUNO, respondents

G.R. No. 227200. June 10, 2019

Facts: Respondent Numeriano Cerro, Jr. works as a bartender in Master's Pab Resto
Bar (MPRB). At the former's suggestion, the petitioner purchased and took over the
management of MPRB from its original owner, the Feliciano family, on November 18,
2008. On the same day, he promoted Cerro as Officer-in- Charge with a daily wage
of P200.00, and gave the latter the authority to hire additional employees.

Due to several infractions that caused MPRB losses, the petitioner transferred Cerro
to another establishment. On October 18, 2011, respondents Caliguiran, Panganiban,
Pauig, Lim, Napitan, Caronan, and Baguno received text messages, which they
interpreted to mean that they have been terminated from work on account of their

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close association to Cerro. Acting on this, on October 24, 2011, the respondents then
filed a Complaint for illegal dismissal, underpayment of salaries and benefits,
damages and attorney's fees before the NLRC. The Labor Arbiter dismissed their
complaint for lack of merit. However, insofar as Cerro, the LA held that his
suspension is a valid exercise by the employer of disciplinary authority pursuant to
the former's infractions. Anent the other respondents on the other hand, the LA held
that they failed to discharge the burden of proving that they have been terminated.
Finally, on account of the respondents' money claims, the LA found the payrolls
presented by the petitioner as sufficient proof of payment. The NLRC affirmed the LA
Decision with modifications regarding complainants' monetary claims. According to
the NLRC, the respondents are entitled to the following, namely: (1) wage
differentials for 3 years counted backwards from October 2011; and (2) 13th month
pay for a period of 3 years counted backwards from October 2011.

The respondents filed a partial motion for reconsideration, which the NLRC denied.
The petitioner elevated the case to the CA via a petition for certiorari under Rule 65
of the Rules of Court. The CA dismissed the petition for lack of merit. The
subsequent motion for reconsideration was partially granted, wherein it affirmed the
NLRC Decision except for the award of Separation Pay.

Thus, this petition for review on certiorari before the SC.

Issue: Whether or not the NLRC committed a reversible error when it granted the
claim of the employees for wage differential without due regard to the evidence
presented by the petitioner anent the amount of salary being paid to his employees.

Ruling: No, the NLRC did not commit a reversible error. It is a basic principle in
procedure that the burden is upon the person who asserts the truth of the matter
that he has alleged. The Court emphasized in C. Planas Commercial v. NLRC (Second
Division), that in order to be exempted under RA No. 6727 or the Wage
Rationalization Act, two elements must concur — first, it must be shown that the
establishment is regularly employing not more than ten (10) workers, and second,

128
that the establishment had applied for and was granted exemption by the
appropriate Regional Board in accordance with the applicable rules and regulations
issued by the Commission. The conclusion proceeds from the unequivocal language
of the law itself:

Section 4. x x x

xxx xxx xxx

(c) Exempted from the provisions of this Act are x x x

Retail/service establishments regularly employing not more than ten (10)

workers may be exempted from the applicability of this Act upon application
with and as determined by the appropriate Regional Board in accordance with
the applicable rules and regulations issued by the Commission. Whenever an
application for exemption has been duly 􏰆led with the appropriate Regional
Board, action on any complaint for alleged non-compliance with this Act shall
be deferred pending resolution of the application for exemption by the
appropriate Regional Board.

In the event that applications for exemptions are not granted, employees shall
receive the appropriate compensation due them as provided for by this Act
plus interest of one per cent (1%) per month retroactive to the effectivity of
this Act.

The petitioner himself admitted that he did not apply for such exemption, thus, it is
clear that he cannot claim benefits under the law. The petitioner cannot shield
himself from complying with the law by the lone fact that he is just a layman and
cannot be expected to know of the law's requirements. Under our legal system,
ignorance of the law excuses no one from compliance therewith. Furthermore, the

129
policy of the Labor Code, under which R.A. No. 6727 is premised, is to include all
establishments, except a few specific classes, under the coverage of the law. As the
petitioner failed to apply for an exemption, and it is undisputed that the respondents
are MPRB's employees and are paid less than the prescribed minimum wage, the
petitioner's liability for wage differential cannot be denied.

Although inconsequential, with the petitioner's liability already established, it is still

useful to state that the first element is also wanting in the case at bar. Herein, the LA,
the NLRC, and the CA all found that the petitioner is employing more than ten (10)
employees in his establishment. The petitioner counters the foregoing conclusion,
raising in evidence the affidavit issued collectively by its guest relations
officers/waitresses. Employment status is not determined by contract or document
but by the four-fold test, and the attendant circumstances of each case, as supported
by any competent and relevant evidence. Still, the Court finds no reason to disturb
the findings of the labor tribunals as well- settled is the rule that factual findings of
labor officials, who are deemed to have acquired expertise in matters within their
jurisdiction, are generally accorded not only respect but even finality and bind this
Court when supported by substantial evidence. The mere existence of these guest
relations officers/waitresses employed under the same terms and conditions as the
respondents is sufficient to disqualify petitioner and MPRB from the exemption under
R.A. No. 6727.

Tiger Construction and Development Corp vs. Abay et al.

GR No. 164141 February 26, 2010

Facts: On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine
(59) others before the Regional Office of the Department of Labor and Employment
(DOLE), an inspection was conducted by DOLE officials at the premises of petitioner
TCDC. Several labor standard violations were noted, such as deficiencies in record

130
keeping, non-compliance with various wage orders, non-payment of holiday pay, and
underpayment of 13th month pay. The case was then set for summary hearing.

Consistent with Article 129 of the Labor Code of the Philippines in relation to Article
217 of the same Code, this instant case should be referred back to the National
Labor Relations Commission (NLRC) Sub-Arbitration Branch V, Naga City, on the
ground that the aggregate money claim of each worker exceeds the jurisdictional
amount of this Office [which] is (sic) Five Thousand Pesos Only (P5,000.00).

Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas
(Secretary Sto. Tomas), in an apparent reversal of Director Manalo’s endorsement,
issued another inspection authority on August 2, 2002 in the same case. Pursuant to
such authority, DOLE officials conducted another investigation of petitioner’s
premises and the same violations were discovered.

According to petitioner, this July 25, 2002 Order was tantamount to a dismissal on
the ground of lack of jurisdiction, which dismissal had attained finality; hence, all
proceedings before the DOLE regional office after July 25, 2002 were null and void
for want of jurisdiction.

aving the case in her office once more, Director Manalo finally issued an Order dated
January 29, 2003 denying petitioner’s motion for reconsideration for lack of merit

Issue: Whether or not the petitioner can still assail the January 29, 2003 Order of
Director Manalo allegedly on the ground of lack of jurisdiction, after said Order has
attained finality and is already in the execution stage.

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Ruling: The petition lacks merit. Petitioner admits that it failed to appeal the January
29, 2003 Order within the period prescribed by law. It likewise admits that the case
was already in the execution process when it resorted to a belated appeal to the
DOLE Secretary. Petitioner, however, excuses itself from the effects of the finality of
the Order by arguing that it was allegedly issued without jurisdiction and may be
assailed at any time.

Director Manalo’s initial endorsement of the case to the NLRC, on the mistaken
opinion that the claim was within the latter’s jurisdiction, did not oust or deprive her
of jurisdiction over the case. She therefore retained the jurisdiction to decide the
case when it was eventually returned to her office by the DOLE Secretary. Jurisdiction
or authority to try a certain case is conferred by law and not by the interested
parties, much less by one of them, and should be exercised precisely by the person
in authority or body in whose hands it has been placed by the law.

We also cannot accept petitioner’s theory that Director Manalo’s initial endorsement
of the case to the NLRC served as a dismissal of the case, which prevented her from
subsequently assuming jurisdiction over the same. The said endorsement was
evidently not meant as a final disposition of the case; it was a mere referral to
another agency, the NLRC, on the mistaken belief that jurisdiction was lodged with
the latter. It cannot preclude the regional director from subsequently deciding the
case after the mistake was rectified and the case was returned to her by the DOLE
Secretary, particularly since it was a labor case where procedural lapses may be
disregarded in the interest of substantial justice.

In view of the Court’s ruling above that the January 29, 2003 Order was rendered
with jurisdiction and can no longer be questioned (as it is final and executory), we
can no longer entertain petitioner’s half-hearted and unsubstantiated arguments that
the said Order was allegedly based on erroneous computation and included non-
employees. Likewise, we find no more need to address petitioner’s contention that
the CA erred in dismissing its petition on the ground of its belated compliance with

132
the requirement of certification against forum-shopping.

People’s Broadcasting (Bombo Radyo Phils) vs. Sec. of DOLE et al.

GR No. 179652, March 6, 2012 Resolution on the main Decision of May 8, 2009

Facts: Jandeleon Juezan (“Juezan”) filed a complaint before the DOLE against Bombo
Radyo Phils. (“Bombo Radyo”) for illegal deduction, non-payment of service incentive
leave, 13th month pay, premium pay for holiday and rest day and illegal diminution
of benefits, delayed payment of wages and non-coverage of SSS, PAG-IBIG and
Philhealth. On the basis of the complaint, the DOLE conducted a plant level
inspection.

The Labor Inspector in his report wrote,Management representative informed that

(Juezan) complainant is a drama talent hired on a per drama ‘participation basis’
hence no employer-employer relationship existed between them. As proof of this,
management presented photocopies of cash vouchers, billing statement,
employments of specific undertaking, etc. The management has no control of the
talent if he ventures into another contract with other broadcasting industries.

Issue: Whether or not the Secretary of Labor has the power to determine the
existence of an employer-employee relationship.

Ruling: Yes. No limitation in the law was placed upon the power of the DOLE to
determine the existence of an employer-employee relationship. No procedure was
laid down where the DOLE would only make a preliminary finding, that the power
was primarily held by the NLRC.

The law did not say that the DOLE would first seek the NLRC’s determination of the
existence of an employer-employee relationship, or that should the existence of the
employer-employee relationship be disputed, the DOLE would refer the matter to the

133
NLRC. The DOLE must have the power to determine whether or not an employer-
employee relationship exists, and from there to decide whether or not to issue
compliance orders in accordance with Art. 128(b) of the Labor Code, as amended by
RA 7730.

The DOLE, in determining the existence of an employer-employee relationship, has a

ready set of guidelines to follow, the same guide the courts themselves use. The
elements to determine the existence of an employment relationship are: (1) the
selection and engagement of the employee; (2) the payment of wages; (3) the power
of dismissal; (4) the employer’s power to control the employee’s conduct. The use of
this test is not solely limited to the NLRC. The DOLE Secretary, or his or her
representatives, can utilize the same test, even in the course of inspection, making
use of the same evidence that would have been presented before the NLRC.

The determination of the existence of an employer-employee relationship by the

DOLE must be respected. The expanded visitorial and enforcement power of the
DOLE granted by RA 7730 would be rendered nugatory if the alleged employer
could, by the simple expedient of disputing the employer-employee relationship,
force the referral of the matter to the NLRC. The Court issued the declaration that at
least a prima facie showing of the absence of an employer-employee relationship be
made to oust the DOLE of jurisdiction. But it is precisely the DOLE that will be faced
with that evidence, and it is the DOLE that will weigh it, to see if the same does
successfully refute the existence of an employer-employee relationship.

If the DOLE makes a finding that there is an existing employer-employee relationship,

it takes cognizance of the matter, to the exclusion of the NLRC. The DOLE would
have no jurisdiction only if the employer-employee relationship has already been
terminated, or it appears, upon review, that no employer-employee relationship
existed in the first place.

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It must also be remembered that the power of the DOLE to determine the existence
of an employer-employee relationship need not necessarily result in an affirmative
finding. The DOLE may will make the determination that no employer-employee
relationship exists, thus divesting itself of jurisdiction over the case. It must not be
precluded from being able to reach its own conclusions, not by the parties, and
certainly not by this Court.

Under Art. 128(b) of the Labor Code, as amended by RA 7730, the DOLE is fully
empowered to make a determination as to the existence of an employer-employee
relationship in the exercise of its visitorial and enforcement power, subject to judicial
review, not review by the NLRC.

To recapitulate, if a complaint is brought before the DOLE to give effect to the labor
standards provisions of the Labor Code or other labor legislation, and there is a
finding by the DOLE that there is an existing employer-employee relationship, the
DOLE exercises jurisdiction to the exclusion of the NLRC. If the DOLE finds that there
is no employer-employee relationship, the jurisdiction is properly with the NLRC. If a
complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement,
the jurisdiction is properly with the Labor Arbiter, under Art. 217(3) of the Labor
Code, which provides that the Labor Arbiter has original and exclusive jurisdiction
over those cases involving wages, rates of pay, hours of work, and other terms and
conditions of employment, if accompanied by a claim for reinstatement.

If a complaint is filed with the NLRC, and there is still an existing employer-employee
relationship, the jurisdiction is properly with the DOLE. The findings of the DOLE,
however, may still be questioned through a petition for certiorari under Rule 65 of
the Rules of Court.

135
 Superior Packaging Corp., vs. Balagsay et al.

G.R. No. 178909, October 10, 2012

Facts: Petitioner engaged services of Lancer Staffing and Services (provided

respondents as laborers for petitioner). Herein respondents were engaged for 4
months and included tasks such as loading, unloading and segregation of boxes.
Pursuant to a complaint filed by respondents against petitioner Superior Package,
DOLE conducted an inspection of petitioners workplace and found several violations
(non-presentation of payrolls and daily time records; non-submission of annual
report of safety organization; medical/illness reports; no trained first aid) Because
petitioners failed to appear in the summary investigations conducted by DOLE, an
order was issued ordering petitioners to pay PHP840,463.38.

Petitioners moved to reconsider, stating that the respondents are not their
employees, but of Lancer Staffing and Services, but this was denied. The DOLE stated
that petitioners failed to support their claim and even if they were employees of
Lancer they could not escape liability as Section 13 of the Department Order No. 10,
Series of 1997, makes a principal jointly and severally liable with the contractor to
contractual employees to the extent of the work performed when the contractor fails
to pay its employees' wages. The appeal to the SOLE, motion for reconsideration to
the SOLE, petition for certiorari to the CA and motion for reconsideration to the CA
were all denied, hence the present petition. The petitioner objects to the finding that
it is engaged in labor-only contracting and is consequently an indirect employer,
considering that it is beyond the visitorial and enforcement power of the DOLE to
make such conclusion. According to the petitioner, such conclusion may be made
only upon consideration of evidentiary matters and cannot be determined solely
through a labor inspection.

Issue: 1.) Whether or not DOLE has the jurisdiction to inspect in petitioners
workplace, pursuant to its visitorial and enforcement power; 2.) Whether or not
Superior Package Corp. may be held solidarily liable with Lancer Staffing for

136
respondents’ unpaid money claims;

Ruling: Petition is denied. DOLE may inspect the petitioner’s workplace pursuant to
its visitorial and enforcement power; Petitioner may be held solidarily liable;

First Issue:

The DOLE clearly acted within its authority when it determined the existence of an
employer-employee relationship between the petitioner and respondents as it falls
within the purview of its visitorial and enforcement power under Article 128 (b) of
the Labor Code. In People's Broadcasting (Bombo Radyo Phils., Inc.) v. Secretary of
the Department of Labor and Employment, the Court stated that it can be assumed
that the DOLE in the exercise of its visitorial and enforcement power somehow has to
make a determination of the existence of an employer-employee relationship. Such
determination, however, is merely preliminary, incidental and collateral to the DOLE's
primary function of enforcing labor standards provisions. Also, the existence of an
employer-employee relationship is ultimately a question of fact. The determination
made in this case by the DOLE, albeit provisional, and as affirmed by the Secretary of
DOLE and the CA is beyond the ambit of a petition for review on certiorari.

Second Issue:

At the time of the respondents' employment in 1998, the applicable regulation was
DOLE Department Order No. 10, Series of 1997. (“Labor-only contracting is
prohibited and the person acting as contractor [Lancer] shall be considered merely as
an agent or intermediary of the employer [Superior Package] who shall be
responsible to the workers in the same manner and extent as if the latter [Superior
Package] were directly employed by him”)

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The marked disparity between the petitioner's actual capitalization (P25,000.00) and
the resources needed to maintain its business, i.e., "to establish, operate and manage
a personnel service company which will conduct and undertake services for the use
of offices, stores, commercial and industrial services of all kinds," supports the finding
that Lancer was, indeed, a labor-only contractor. Aside from these is the undisputed
fact that the petitioner failed to produce any written service contract that might serve
as proof of its alleged agreement with Lancer.

Finally, a finding that “a contractor is a "labor-only" contractor” is equivalent to

declaring that there is an employer-employee relationship between the principal and
the employees of the supposed contractor, and the "labor-only" contractor is
considered as a mere agent of the principal, the real employer. The former becomes
solidarily liable for all the rightful claims of the employees. Superior Package
therefore, being the principal employer and Lancer, being the labor-only contractor,
are solidarily liable for respondents' unpaid money claims.

DEPARTMENT OF LABOR and EMPLOYMENT (DOLE), petitioner, vs. KENTEX

MANUFACTURING CORPORATION and ONG KING GUAN, respondents

G.R. No. 233781. July 8, 2019

Facts: On May 13, 2015, a fire broke out in the factory located in Valenzuela City
owned by Kentex, which claimed 72 lives and injured a number of workers. As part of
its standard procedures, personnel of the DOLE Caloocan, Malabon, Navotas and
Valenzuela (DOLE-CAMANAVA) Field Office went to Kentex's premises. DOLE-NCR
also assessed Kentex's compliance with the occupational health and safety standards.

In the course of the investigation, it was discovered that Kentex had contracted with
CJC Manpower Services (CJC) for the deployment of workers. The DOLE-NCR directed
Kentex and CJC to attend the mandatory conference set on May 18 and 20, 2015 at
the DOLE-NCR Office. Kentex, its Chairman and Chief Executive Officer Beato Ang,

138
and the corporation's Chief Finance Officer Ong, were made parties to this case
before the DOLE-NCR.

In the meantime, the DOLE Regional Office No. III (DOLE-RO III) conducted its own
Joint Assessment of CJC. The DOLE-RO III discovered that CJC was an unregistered
private recruitment and placement agency, and was non-compliant with the
occupational health and safety standards as well as with labor standards, such as
underpayment of wages and nonpayment of statutory benefits. As a result, the
DOLE-RO III issued a Compliance Order which effectively declared CJC as a labor-
only contractor with Kentex as its principal.

Meanwhile, during the mandatory conference set by the DOLE-NCR, CJC's

representatives admitted, among others, that there was no service contract between
CJC and Kentex, that CJC had deployed 99 workers at the Kentex factory on the day
of the unfortunate incident, and that there were no employment contracts between
CJC and the workers. Kentex and its corporate officers, through counsel, refuted CJC's
claims. They alleged that CJC's workers were originally engaged by Panday
Management and Labor Consultancy which CJC later absorbed. They contended that
while the corporate/business and employment records had all been gutted by fire,
Kentex nevertheless complied with the labor standards particularly on the minimum
wage requirement and with the occupational health and safety standards, as
evidenced by a Certificate of Compliance (COC) signed by the DOLE-NCR Regional
Director Alex Avila.

In its June 26, 2015 Order, the DOLE-NCR rejected the aforementioned arguments of
Kentex and declared that the latter could not invoke the COC because this only
attested to the findings of the compliance officer at the time of the
assessment/inspection, even as Kentex was duty-bound to observe continuing
compliance with the labor standards as well as the occupational health and safety
standards. It also found that CJC was a mere labor-only contractor considering that it
was unregistered with the DOLE Regional Office where it operated. Lastly, it found

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that the workers were underpaid, and computed the monetary claims due them.

Only Ong moved for reconsideration of the foregoing order. However, in a letter
from DOLE-NCR Regional Director Avila, the latter explained that an appeal to the
DOLE Secretary should have been made within 10 days from receipt of the Order
pursuant to Section 1, Rule 11 of Department Order No. 131, Series of 2013.
Moreover, since Ong received the June 26, 2015 Order on the same day, he had only
until July 6, 2015 within which to appeal to the DOLE Secretary. However, Ong never
did; thus, the Compliance Order had attained finality.

After this, Kentex and Ong filed with the CA a Rule 43 Petition assailing the
Compliance Order, the DOLE-NCR Order; and the July 7, 2015 letter of the DOLE-
NCR Regional Director. The CA concluded that Kentex and Ong resorted to the
wrong remedy in filing a Rule 43 Petition, when the proper remedy should have been
a Rule 65 certiorari petition from the decisions/resolutions of the DOLE Secretary. In
fact, nothing from the assailed documents indicative of acts of grave abuse of
discretion amounting to lack or excess of jurisdiction on the part of the DOLE
Secretary was set forth or amply demonstrated. And given the fact that time had
irretrievably lapsed without any appeal being availed of by Kentex and Ong as
prescribed by the procedural rules on labor laws,19 the CA ruled that the assailed
orders had become final and executory. Petitioner filed a Motion for Partial
Reconsideration but was denied. Hence, this Petition.

Issue: Whether or not the June 26, 2015 Order had already become final and
executory in view of the failure of respondents Kentex and Ong to appeal therefrom
to the Secretary of Labor.

Ruling: Yes. Notice ought to be taken of the fact that, at the time the DOLE-NCR
rendered its ruling, Department Order No. 131-13 Series of 2013 was the applicable
rule of procedure. The pertinent provision states:

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 Rule 11, Section 1. Appeal. — The Compliance Order may be appealed to the
O􏰆ce of the Secretary of Labor and Employment by 􏰆ling a Memorandum of
Appeal, furnishing the other party with a copy of the same, within ten (10)
days from receipt thereof. No further motion for extension of time shall be
entertained.

A mere notice of appeal shall not stop the running of the period within which to file
an appeal. Here, instead of filing an appeal with the DOLE Secretary, Ong moved for
a reconsideration of the subject Order; needless to say, this did not halt or stop the
running of the period to elevate the matter to the DOLE Secretary. Indeed, the
DOLE- NCR took no action at all on Ong's motion for reconsideration; in fact, it
categorically informed Ong that his resort to the 􏰆ling of a motion for
reconsideration was procedurally in􏰆firm. The June 26, 2015 Order having become
final, it could no longer be altered or modified by discharging or releasing Ong from
his accountability.

Anent respondents' allegation regarding the DOLE Secretary's partiality, this Court
agrees with the CA, that —

[Kentex and Ong King Guan's] contention that the Secretary has already
prejudged their liability in her pronouncements before the media, such that
an appeal to her would be an exercise in futility, is untenable. We have the
rules. And, as heretofore stated, failure to conform to the rules regarding
appeal will render the judgment final and executory. True, litigation is not a
game of technicalities. It is equally true, however, that every case must be
presented in accordance with the prescribed procedure to ensure an orderly
and speedy administration of justice. The failure, therefore, of petitioners to
comply with the settled procedural rules justifies the dismissal of the present
petition.

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 SHS Perforated Materials, Inc. et al., vs. Diaz

G.R. No. 185814. October 13, 2010.

Facts: Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation

organized and existing under the laws of the Republic of the Philippines and
registered with the Philippine Economic Zone Authority. Petitioner Winfried
Hartmannshenn (Hartmannshenn), a German national, is its president. Thus, the
wages of SHS employees are paid out by ECCP, through its Accounting Services
Department headed by Juliet Taguiang (Taguiang). Manuel F. Diaz (respondent) was
hired by petitioner SHS as Manager for Business Development on probationary
status.

During respondent’s employment, Hartmannshenn was often abroad and, because of

business exigencies, his instructions to respondent were either sent by electronic mail
or relayed through telephone or mobile phone. During meetings with the
respondent, Hartmannshenn expressed his dissatisfaction over respondent’s poor
performance. Respondent acknowledged his poor performance and offered to resign
from the company.

On November 18, 2005, Hartmannshenn arrived in the Philippines from Germany,

and on November 22 and 24, 2005, notified respondent of his arrival through
electronic mail messages and advised him to get in touch with him. Respondent
claimed that he never received the messages. Hartmannshenn instructed Taguiang
not to release respondent’s salary.

Respondent served on SHS a demand letter and a resignation letter. It is precisely

because of illegal and unfair labor practices such as these that I offer my resignation
with neither regret nor remorse.

Appealing for the release of his salary respondent filed a Complaint against the

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petitioners for illegal dismissal; non-payment of salaries/wages and 13th month pay
with prayer for reinstatement and full backwages; exemplary damages, and attorney’s
fees, costs of suit, and legal interest.

Issues: Whether or not the temporary withholding of respondent’s salary/wages by

petitioners was a valid exercise of management prerogative.

Ruling: Withholding respondent’s salary was not a valid exercise of management

prerogative.

Although management prerogative refers to “the right to regulate all aspects of

employment,” it cannot be understood to include the right to temporarily withhold
salary/wages without the consent of the employee.

Any withholding of an employee’s wages by an employer may only be allowed in the

form of wage deductions under the circumstances provided in Article 113 of the
Labor Code, as set forth below:

ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the employer,
and the deduction is to recompense the employer for the amount paid by
him as premium on the insurance;

(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by
the individual worker concerned; and

(c) In cases where the employer is authorized by law or regulations issued

by the Secretary of Labor.

There is constructive dismissal if an act of clear discrimination, insensibility, or

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 disdain by an employer becomes so unbearable on the part of the employee
that it would foreclose any choice by him except to forego his continued
employment. It exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer
involving a demotion in rank and a diminution in pay.

In this case, the withholding of respondent’s salary does not fall under any of the
circumstances provided under Article 113. Neither was it established with certainty
that respondent did not work from November 16 to November 30, 2005. Hence, the
Court agrees with the LA and the CA that the unlawful withholding of respondent’s
salary amounts to constructive dismissal.

NIÑA JEWELRY MANUFACTURING OF METAL ARTS, INC. (otherwise known as

NIÑA MANUFACTURING AND METAL ARTS, INC.) and ELISEA B. ABELLA,
Petitioners, vs. MADELINE C. MONTECILLO and LIZA M. TRINIDAD, Respondents.

G.R. No. 188169, November 28, 2011

Facts: Respondents were employed as goldsmiths by the petitioner Niña Jewelry

Manufacturing of Metal Arts, Inc. There were incidents of theft involving goldsmiths
in Niña Jewelry's employ.

The petitioner imposed a policy for goldsmiths, which were intended to answer for
any loss or damage which Niña Jewelry may sustain by reason of the goldsmiths'
fault or negligence in handling the gold entrusted to them, requiring them to post
cash bonds or deposits in varying amounts but in no case exceeding 15% of the
latter's salaries per week.

The petitioner alleged that the goldsmiths were given the option not to post
deposits, but to sign authorizations allowing the former to deduct from the latter's
salaries amounts not exceeding 15% of their take home pay should it be found that

144
they lost the gold entrusted to them. The deposits shall be returned upon
completion of the goldsmiths' work and after an accounting of the gold received.

The respondents claimed otherwise insisting that petitioner left the goldsmiths with
no option but to post the deposits. The next day after the policy was imposed, the
respondents no longer reported for work and signified their defiance against the new
policy which at that point had not even been implemented yet. The respondents
alleged that they were constructively dismissed by the petitioner as their continued
employments were made dependent on their readiness to post the required deposits.
The respondents then filed a complaint for illegal dismissal and for the award of
separation pay against the petitioner, and later filed their amended complaint which
excluded their earlier prayer for separation pay but sought reinstatement and
payment of back wages, attorney's fees and 13th month pay.

Issues: 1.) Whether or not Niña Jewelry Manufacturing of Metal Arts, Inc. may
impose the policy for their goldsmiths requiring them to post cash bonds or
deposits; 2.) Whether or not there is constructive dismissal.

Ruling: NO, the Niña Jewelry may not impose the policy. Articles 113 and 114 of the
Labor Code are clear as to what are the exceptions to the general prohibition against
requiring deposits and effecting deductions from the employees' salaries.

ART. 113. Wage Deduction — No employer, in his own behalf or in behalf of any
person, shall make any deduction from the wages of his employees, except:

(a)In cases where the worker is insured with his consent by the employer, and
the deduction is to recompense the employer for the amount paid by him as
premium on the insurance;

(b)For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing by

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 the individual worker concerned; and

(c)In cases where the employer is authorized by law or regulations issued by

the Secretary of Labor.

Article 114.Deposits for loss or damage — No employer shall require his worker to
make deposits from which deductions shall be made for the reimbursement of loss
of or damage to tools, materials, or equipment supplied by the employer, except
when the employer is engaged in such trades, occupations or business where the
practice of making deposits is a recognized one, or is necessary or desirable as
determined by the Secretary of Labor in appropriate rules and regulations.

The petitioners failed to prove that their imposition of the new policy upon the
goldsmiths under Niña Jewelry's employ falls under the exceptions specified in
Articles 113 and 114 of the Labor Code.

2) There is NO constructive dismissal. Constructive dismissal occurs when there is

cessation of work because continued employment is rendered impossible,
unreasonable or unlikely; when there is a demotion in rank or diminution in pay or
both; or when a clear discrimination, insensibility, or disdain by an employer becomes
unbearable to the employee. The petitioners did not whimsically or arbitrarily impose
the policy to post cash bonds or make deductions from the workers' salaries.

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 LOCSIN II, petitioner, vs. MEKENI FOOD CORP, respondent.

GR No. 192105 December 9, 2013

Facts: Petitioner Antonio Locsin II was the Regional Sales Manager of respondent
Mekeni Food Corporation. He was hired on February 2004 to oversee the NCR and
Luzon operation. In addition to his compensation and benefit package, a car was
offered to him under which one-half of the cost of the vehicle is to be paid by the
company and the other half to be deducted from petitioner's salary. The car valued
at 280,000 which Locsin paid through salary deductions of 5,000 per month.

On February 2006, Locsin resigned. A total of 112,500.00 had already been deducted
from his monthly salary and applied as part of his share in the car plan. Upon
resignation, petitioner made personal and written follow-ups regarding his unpaid
salaries, commissions, benefits, and offer to purchase his service vehicle. Mekeni
replied that the company car plan benefit applied only to employees who have been
with the company for five years; for this reason, the balance that petitioner should
pay on his service vehicle stood at P116,380.00 if he opts to purchase the same.

On May 3, 2007, petitioner filed against Mekeni and/or its President, Prudencio S.
Garcia, a Complaint for the recovery of monetary claims consisting of unpaid salaries,
commissions, sick/vacation leave benefits, and recovery of monthly salary deductions
which were earmarked for his cost- sharing in the car plan.

Issue: Whether or not petitioner is entitled to a refund of all the amounts applied to
the cost of the service vehicle under the car plan.

Ruling: Any benefit or privilege enjoyed by petitioner from using the service vehicle
was merely incidental and insignificant, because for the most part the vehicle was
under Mekeni's control and supervision. Free and complete disposal is given to the

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petitioner only after the vehicle's cost is covered or paid in full. Until then, the vehicle
remains at the beck and call of Mekeni. Given the vast territory petitioner had to
cover to be able to perform his work effectively and generate business for his
employer, the service vehicle was an absolute necessity, or else Mekeni's business
would suffer adversely. Thus, it is clear that while petitioner was paying for half of
the vehicle's value, Mekeni was reaping the full benefits from the use thereof.

Under Article 22 of the Civil Code, “every person who through an act of performance
by another, or any other means, acquires or comes into possession of something at
the expense of the latter without just or legal ground, shall return the same to him."
Article 2142 of the same Code likewise clarifies that there are certain lawful, voluntary
and unilateral acts which give rise to the juridical relation of quasi-contract, to the
end that no one shall be unjustly enriched or benefited at the expense of another. In
the absence of specific terms and conditions governing the car plan arrangement
between the petitioner and Mekeni, a quasi-contractual relation was created between
them. Consequently, Mekeni may not enrich itself by charging petitioner for the use
of its vehicle which is otherwise absolutely necessary to the full and effective
promotion of its business. It may not, under the claim that petitioner's payments
constitute rents for the use of the company vehicle, refuse to refund what petitioner
had paid, for the reasons that the car plan did not carry such a condition; the
subject vehicle is an old car that is substantially, if not fully, depreciated; the car
plan arrangement benefited Mekeni for the most part; and any personal benefit
obtained by petitioner from using the vehicle was merely incidental.

Conversely, petitioner cannot recover the monetary value of Mekeni's counterpart

contribution to the cost of the vehicle; that is not property or money that belongs to
him, nor was it intended to be given to him in lieu of the car plan. Mekeni's share of
the vehicle's cost was not part of petitioner's compensation package. The vehicle is
an asset that belonged to Mekeni. Just as Mekeni is unjustly enriched by failing to
refund petitioner's payments, so should petitioner not be awarded the value of
Mekeni's counterpart contribution to the car plan, as this would unjustly enrich him
at Mekeni's expense.

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Thus, Mekeni Food Corporation should refund petitioner Antonio Locsin II's
payments under the car plan agreement amounting only to the extent of the
contribution Locsin made, totalling to the amount of P112, 500.00.

T & H SHOPFITTERS CORPORATION/GIN QUEEN CORPORATION, STINNES

HUANG, BEN HUANG and ROGELIO MADRIAGA, Petitioners, vs. T & H
SHOPFITTERS CORPORATION/GIN QUEEN WORKERS UNION, ELPIDIO ZALDIVAR,
et. al. Respondents.

G.R. No. 191714 February 26, 2014

Facts: On September 7, 2004, the T&H Shopfitters Corporation/ Gin Queen

Corporation workers union (THS-GQ Union) filed their Complaint for Unfair Labor
Practice (ULP) by way of union busting, and Illegal Lockout, with moral and
exemplary damages and attorney’s fees, against T&H Shopfitters Corporation (T&H
Shopfitters) and Gin Queen Corporation before the Labor Arbiter (LA).

First Cause:

In their desire to improve their working conditions, respondents and other

employees of held their first formal meeting on November 23, 2003 to discuss the
formation of a union. The following day, seventeen (17) employees were barred from
entering petitioners’ factory premises located in Castillejos, Zambales, and ordered to
transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone (SBFZ)
purportedly because of its expansion. Afterwards, the said seventeen (17) employees
were repeatedly ordered to go on forced leave due to the unavailability of work.

Respondents contended that the affected employees were not given regular work
assignments, while subcontractors were continuously hired to perform their functions.
Respondents sought the assistance of the National Conciliation and Mediation Board.

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Subsequently, an agreement between petitioners and THS-GQ Union was reached.
Petitioners agreed to give priority to regular employees in the distribution of work
assignments. Respondents averred, however, that petitioners never complied with its
commitment but instead hired contractual workers. Instead, Respondents claimed
that the work weeks of those employees in the SBFZ plant were drastically reduced
to only three (3) days in a month.

Second Cause:

On March 24, 2004, THS-GQ Union filed a petition for certification election and an
order was issued to hold the certification election in both T&H Shopfitters and Gin
Queen.

On October 10, 2004, petitioners sponsored a field trip to Iba, Zambales, for its
employees. The officers and members of the THS-GQ Union were purportedly
excluded from the field trip. On the evening of the field trip, a certain Angel
Madriaga, a sales officer of petitioners, campaigned against the union in the
forthcoming certification election.

When the certification election was scheduled on October 11, 2004, the employees
were escorted from the field trip to the polling center in Zambales to cast their
votes. The remaining employees situated at the SBFZ plant cast their votes as well.
Due to the heavy pressure exerted by petitioners, the votes for "no union" prevailed.

Third Cause:

A memorandum was issued by petitioner Ben Huang (Huang), Director for Gin
Queen, informed its employees of the expiration of the lease contract between Gin
Queen and its lessor in Castillejos, Zambales and announced the relocation of its
office and workers to Cabangan, Zambales.

When the respondents, visited the site in Cabangan, discovered that it was a

150
"talahiban" or grassland. The said union officers and members were made to work as
grass cutters in Cabangan, under the supervision of a certain Barangay Captain Greg
Pangan. Due to these circumstances, the employees assigned in Cabangan did not
report for work. The other employees who likewise failed to report in Cabangan were
meted out with suspension.

In its defense, Petitioners also stress that they cannot be held liable for ULP for the
reason that there is no employer-employee relationship between the former and
respondents. Further, Gin Queen avers that its decision to implement an enforced
rotation of work assignments for respondents was a management prerogative
permitted by law, justified due to the decrease in orders from its customers; they had
to resort to cost cutting measures to avoid anticipated financial losses. Thus, it
assigned work on a rotational basis. It explains that its failure to present concrete
proof of its decreasing orders was due to the impossibility of proving a negative
assertion. It also asserts that the transfer from Castillejos to Cabangan was made in
good faith and solely because of the expiration of its lease contract in Castillejos. It
was of the impression that the employees, who opposed its economic measures,
were merely motivated by spite in filing the complaint for ULP against it.

Issue: Whether ULP acts were committed by petitioners against respondents.

Ruling: ULP were committed by petitioners against respondents.

Petitioners are being accused of violations of paragraphs (a), (c), and (e) of Article
257 (formerly Article 248) of the Labor Code,13 to wit:

Article 257. Unfair labor practices of employers.––It shall be unlawful for an employer
to commit any of the following unfair labor practices:

(a) To interfere with, restrain or coerce employees in the exercise of their right

151
 to self-organization; x x x x

(c) To contract out services or functions being performed by union members

when such will interfere with, restrain, or coerce employees in the exercise of
their right to self-organization; x x x x

(e) To discriminate in regard to wages, hours of work, and other terms and
conditions of employment in order to encourage or discourage membership
in any labor organization. x x x

The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for
its employees, to the exclusion of union members, before the scheduled certification
election; 2) the active campaign by the sales officer of petitioners against the union
prevailing as a bargaining agent during the field trip; 3) escorting its employees after
the field trip to the polling center; 4) the continuous hiring of subcontractors
performing respondents’ functions; 5) assigning union members to the Cabangan site
to work as grass cutters; and 6) the enforcement of work on a rotational basis for
union members, taken together, reasonably support an inference that, indeed, such
were all orchestrated to restrict respondents’ free exercise of their right to self-
organization.

The Court is of the considered view those petitioners’ undisputed actions prior and
immediately before the scheduled certification election, while seemingly innocuous,
unduly meddled in the affairs of its employees in selecting their exclusive bargaining
representative.

WESLEYAN UNIVERSITY-PHILIPPINES, Petitioner, vs. WESLEYAN UNIVERSITY-

PHILIPPINES FACULTY and STAFF ASSOCIATION, Respondent.

G.R. No. 181806 March 12, 2014

Facts: Petitioner Wesleyan University Philippines is a non-stock, non-profit

educational institution duly organized and existing under the laws of the Philippines.

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On the other hand, Respondent Wesleyan University - Philippines Faculty and Staff
Association is a duly registered labor organization acting as the sole and exclusive
bargaining agent of all rank-and-file faculty and staff employees of petitioner.

In December 2003, the parties signed a 5-year CBA effective June 1, 2003 until May
31, 2008.

On August 16, 2005, petitioner, through its President, Atty. Maglaya, issued a
Memorandum providing guidelines on the implementation of vacation and sick leave
credits as well as vacation leave commutation which stipulated that (1) vacation and
sick leave credits are not automatic as leave credits and that they would have to be
earned monthly and (2) only the vacation leave is commuted or monetized to cash
which is effected after the second year of continuous service of an employee.

Respondents questioned the guidelines for being violative of existing practices and
the CBA which provide that all covered employees are entitled to 15 days SL and 15
days VL with pay every year and that after the second year of service, all unused
vacation leave shall be converted to cash and paid to the employee at the end of
each school year, not later than August 30 of each year. Respondent filed a grievance
complaint on the implementation of the vacation and sick leave policy.

Petitioner also announced its plan of implementing a one-retirement policy which

was unacceptable to respondent. Respondent submitted affidavits to prove that there
is an established practice of giving two retirement benefits, one from the Private
Education Retirement Annuity Association (PERAA) Plan and another from the CBA
Retirement Plan.

The Voluntary Arbitrator rendered a decision declaring the one-retirement policy and
the Memorandum dated August 16, 2005 contrary to law. The Court of Appeals also

153
affirmed the ruling of the Voluntary Arbitrator.

Petitioner argues that there is only one retirement plan as the CBA Retirement Plan
and the PERAA Plan are one and the same. It maintains that there is no established
company practice or policy of giving two retirement benefits to its employees.
Respondent belies the claims of petitioner and asserts that there are two retirement
plans as the PERAA Retirement Plan, which has been implemented for more than 30
years, is different from the CBA Retirement Plan. Respondent further avers that it has
always been a practice of petitioner to give two retirement benefits and that this
practice was established by substantial evidence as found by both the Voluntary
Arbitrator and the CA.

Issue: Whether or not the respondents are entitled to two retirement plans.

Ruling: Under Article 100 of the Labor Code, the Principle of Non-Diminution of
Benefits explicitly prohibits employers from eliminating or reducing the benefits
received by their employees. This rule, however, applies only if the benefit is based
on an express policy, a written contract, or has ripened into company practice. To be
considered as a company practice, it must be consistently and deliberately made by
the employer over a long period of time.

In the instant case, respondent was able to present substantial evidence in the form
of affidavits to support its claim that there are two retirement plans already
established in the establishment. Based on the affidavits, petitioner has been giving
two retirement benefits as early as 1997. Petitioner, on the other hand, failed to
present any evidence to rebut the veracity of the presented affidavits. Petitioner's
assertion that there is only one retirement plan as the CBA Retirement Plan and the
PERAA Plan are one and the same is not supported by any evidence.

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The Memorandum dated August 16, 2005 is contrary to the existing CBA because it
limits the available leave credits of an employee at the start of the school year. The
Memorandum imposes a limitation not agreed upon by the parties nor stated in the
CBA, so it must be annulled.

Therefore, the petition is denied.

BLUER THAN BLUE JOINT VENTURES COMPANY/MARY ANN DELA VEGA,

Petitioners, vs. GLYZA ESTEBAN, Respondent.

G.R. No. 192582 April 7, 2014

citing 2011 Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo

Facts: The respondent was employed as a sales clerk and assigned at the petitioner’s
boutique. Her primary tasks were attending to all customer needs, ensuring efficient
inventory, coordinating orders from clients, cashiering and reporting to the
accounting department. The petitioner learned that some of their employees had
access to their POS system with the use of a universal password given to them by a
certain Elmer Flores, who in turn learned of the password from the respondent. The
petitioner then conducted an investigation and asked the petitioner to explain why
she should not be disciplinarily dealt with.

During the investigation the respondent was placed under preventive suspension.
After investigation the petitioner terminated the respondent on the grounds of loss
of trust or confidence. This respondent was given her final wage and benefits less the
inventory variance incurred by the store. This urged the respondent to file a
complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation
pay.

The labor arbiter ruled in her favor awarding her backwages. The petitioner appealed
the decision in the NLRC and the decision was reversed. However, upon the

155
respondent’s petition for certiorari in the court of appeals the decision was
reinstated. Hence, this petition.

Issue: Whether the negative sales variance could be validly deducted from the
respondent’s wage.

Ruling: No, it cannot be deducted in this case.

Article 113 of the Labor Code provides that no employer, in his own behalf or in
behalf of any person, shall make any deduction from the wages of his employees,
except in cases where the employer is authorized by law or regulations issued by the
Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides:

SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a
trade, occupation or business where the practice of making deductions or requiring
deposits is recognized to answer for the reimbursement of loss or damage to tools,
materials, or equipment supplied by the employer to the employee, the employer
may make wage deductions or require the employees to make deposits from which
deductions shall be made, subject to the following conditions:

1. That the employee concerned is clearly shown to be responsible for the

loss or damage;

2. That the employee is given reasonable opportunity to show cause why

deduction should not be made;

3. That the amount of such deduction is fair and reasonable and shall not
exceed the actual loss or damage; and

4. That the deduction from the wages of the employee does not exceed 20
percent of the employee's wages in a week.

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In this case, the petitioner failed to sufficiently establish that Esteban was responsible
for the negative variance it had in its sales for the year 2005 to 2006 and that
Esteban was given the opportunity to show cause the deduction from her last salary
should not be made.

Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v.
Montecillo, that:

[T]he petitioners should first establish that the making of deductions from the
salaries is authorized by law, or regulations issued by the Secretary of Labor. Further,
the posting of cash bonds should be proven as a recognized practice in the jewelry
manufacturing business, or alternatively, the petitioners should seek for the
determination by the Secretary of Labor through the issuance of appropriate rules
and regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business. The petitioners failed in this respect. It bears
stressing that without proofs that requiring deposits and effecting deductions are
recognized practices, or without securing the Secretary of Labor's determination of
the necessity or desirability of the same, the imposition of new policies relative to
deductions and deposits can be made subject to abuse by the employers. This is not
what the law intends.

NETLINK COMPUTER INCORPORATED, Petitioner, vs. ERIC DELMO, Respondent

G.R. No. 160827 June 18, 2014

Facts: Since November 3, 1991, Mr. Eric Delmo was hired as an account manager for
Netlink Computer, Inc. Products and Services. His job requires him to canvass and
source clients. His performance is compensated by commissions of both Philippine
Peso and U.S Dollars. Mr. Delmo was able to generate sales which entitled him to
those commissions. Mr. Delmo’s work required him in the field most of the time and
with his colleagues they are not required to accomplish time cards. His request for

157
his commissions was denied by Netlink. Instead, they gave him partial cash advances
chargeable to the commissions. Then, Netlink forced to Mr. Delmo to resign by
issuing several memoranda detailing his infractions of the company’s attendance
policy.

On November 28, 1996, Mr. Delmo was refused entry into the company premises. He
filed, then, a complaint for illegal dismissal. As a response, the company countered
that Mr. Delmo is required to have his attendance recorded per company policies.
The company, furthermore, stated that his performance is dismal and he is
outperformed by other account managers.

Issue: Whether or not the payment of commission by U.S Dollar as a company

practice/policy is protected by the non-diminution rule.

Ruling: As a general rule, all obligations shall be paid in Philippine currency.

However, the contracting parties may stipulate that foreign currencies may be used
for settling obligations. This is pursuant to Republic Act No. 8183,which provides as
follows:

1. All monetary obligations shall be settled in the Philippine currency which is legal
tender in the Philippines. However, the parties may agree that the obligation or
transaction shall be settled in any other currency at the time of payment.

As established in Asia World Recruitment, Inc. v. NLRC, the real value of the foreign
exchange-incurred obligation up to the date of its payment should be preserved.
Though there was no written contract for the U.S Dollars commission, the payment
of which is still mandated because it is an established practice as a company policy
which is protected by the non-diminution rule. The principle of non-diminution of
benefits, which has been incorporated in Article 100of the Labor Code, forbade

158
Netlink from unilaterally reducing, diminishing, discontinuing or eliminating the
practice. Verily, the phrase "supplements, or other employee benefits" in Article 100
is construed to mean the compensation and privileges received by an employee
aside from regular salaries or wages.

With regard to the length of time the company practice should have been observed
to constitute a voluntary employer practice that cannot be unilaterally reduced,
diminished, discontinued or eliminated by the employer, we find that jurisprudence
has not laid down any rule requiring a specific minimum number of years. Several
jurisprudence varies on the number of required years for a practice to ripen.

With the payment of US dollar commissions having ripened into a company practice,
there is no way that the commissions due to Delmo were to be paid in US dollars or
their equivalent in Philippine currency determined at the time of the sales. To rule
otherwise would be to cause an unjust diminution of the commissions due and
owing to Delmo.

PHILIPPINE LONG DISTANCE TELEPHONE COMPANY AND/OR Ernani

Tumimbang, Petitioners, v. Henry Estranero

GR No. 192518, October 15, 2014

Facts: On July 1, 1995, PLDT employed the respondent as an Auto-

Mechanic/Electrician Helper with a monthly salary of P15, 000 at the time of his
separation from the service in 2003.

In the year 1995, PLDT adopted a company-wide Manpower Reduction Program

(MRP), aimed at reducing its work force. To commence with its program, PLDT
offered the affected employees an attractive redundancy pay consisting of 100% of
their basic monthly salary for every year of service, in addition to their retirement
benefits, if entitled. For those who were not qualified to the retirement benefits, they

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were offered separation or redundancy package of 200% of their basic monthly
salary for every year of service. Among those gravely affected by the MRP was the
Fleet Management Division where the respondent was assigned. Attracted by the
separation pay offered by the company, the respondent expressed his conformity to
his inclusion in the MRP in April 25, 2003. He was then made to sign a deed
denominated as a Receipt, Release and Quitclaim for his severance from
employment, thus availed of the offered personnel reduction program. Thereafter,
PLDT proceeded to compute the respondent's redundancy/separation benefits.

Since his length of service was seven (7) years, eleven (11) months and fifteen (15)
days, which was rounded to 8 years, the respondent was entitled to 200% of his
basic monthly salary for every year of service by way of redundancy pay equivalent
to P240, 000.00 plus other benefits and bonuses equivalent to P27, 028.37 for a total
of P267,028.37.

However, the respondent had outstanding liabilities arising from various loans he
obtained from different entities, namely: the Home Development Mutual Fund
(HDMF), PLDT Employees Credit Cooperative, Inc., PLDT Service Cooperative, Inc.,
Social Security System (SSS), and the Manggagawa ng Komunikasyon sa Pilipinas,
which summed to P267, 028.37. Thus, PLDT deducted the said amount from the
payment that the respondent was supposed to receive as his redundancy pay. As a
result his take home pay was in the amount of “zero pesos”. This prompted the
respondent to retract his availment of the separation pay package offered to him
through a letter addressed to the company dated May 8, 2003. Despite said
retraction, however, the respondent was no longer allowed to report for work.

The respondent filed a complaint for illegal dismissal with reinstatement, as well as
moral and exemplary damages plus attorney's fees against PLDT and Ernani
Tumimbang (petitioners), the Division Head of the Fleet Management Division where
the respondent was assigned.

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The Labor Arbiter (LA) rendered a decision in favor of Estrañero ordering PLDT to pay
him P267,038.37 as separation pay. The LA sustained the validity of PLDT's
redundancy program as an authorized cause to terminate the employment of the
respondent, and his entitlement to the redundancy/separation pay pursuant to the
MRP, being more advantageous than the benefits allowed under the law. The LA,
however, ruled that the office lacks jurisdiction to pass upon the issue of PLDT's act
in deducting the total outstanding loans which the respondent obtained from
different entities since the same does not involve an employer-employee relationship,
and may only be enforced by PLDT through a separate civil action in the regular
courts. On appeal to the NLRC and eventually to the CA, the decision of the LA was
also affirmed.

Issue: Whether or not PLDT can validly deduct the respondent's outstanding loan
obligation from his redundancy pay.

Ruling: It is clear in Article 113 of the Labor Code that no employer, in his own
behalf or in behalf of any person, shall make any deduction from the wages of his
employees, except in cases where the employer is authorized by law or regulations
issued by the Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides that deductions from the wages
of the employees may be made by the employer when such deductions are
authorized by law, or when the deductions are with the written authorization of the
employees for payment to a third person. Thus, any withholding of an employee's
wages by an employer may only be allowed in the form of wage deductions under
the circumstances provided in Article 113 of the Labor Code, as well as the Omnibus
Rules implementing it. Further, Article 116 of the Labor Code clearly provides that it
is unlawful for any person, directly or indirectly, to withhold any amount from the
wages of a worker without the worker's consent.

In this case, the deductions made to the respondent's redundancy pay do not fall
under any of the circumstances provided under Article 113, nor was it established

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with certainty that the respondent has consented to the said deductions or that the
petitioners had authority to make such deductions. Furthermore, the petitioners may
not offset the outstanding loans of the respondent against the latter's monetary
benefits. The records expressly revealed that the respondent has obtained various
loans from different entities and not with PLDT. Accordingly, set-off or legal
compensation cannot take place between PLDT and the respondent because they are
not mutually creditor and debtor of each other. Thus, there can be no valid set-off
because the respondent's creditor is not PLDT.

The Court further agrees with the labor tribunals that the petitioners cannot offset
the outstanding balance of the respondent's loan obligation with his redundancy pay
because the balance on the loan does not come within the scope of jurisdiction of
the LA. The demand for payment of the said loans is not a labor, but a civil dispute.
It involves debtor-creditor relations, rather than employee-employer relations.
Evidently, the respondent's unpaid balance on his loans cannot be offset against the
redundancy pay due to him.

The Court rules that PLDT has no legal right to withhold the respondent's
redundancy pay and other benefits to recompense for his outstanding loan
obligations to different entities. The respondent's entitlement to his redundancy pay
is mandated by law which the petitioners cannot unjustly deny.

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 EMER MILAN, RANDY MASANGKAY, WILFREDO JAVIER, RONALDO DAVID,
BONIFACIO MATUNDAN, NORA MENDOZA, et al., Petitioners, vs. NATIONAL
LABOR RELATIONS COMMISSION, SOLID MILLS, INC.,

and/or PHILIP ANG, Respondents.

G.R. No. 202961 February 4, 2015

Facts: Petitioners are respondent Solid Mills, Inc.'s (Solid Mills) employees. They are
represented by the National Federation of Labor Unions (NAFLU), their collective
bargaining agent. As Solid Mills' employees, petitioners and their families were
allowed to occupy SMI Village, a property owned by Solid Mills. According to Solid
Mills, this was "out of liberality and for the convenience of its employees and on the
condition that the employees would vacate the premises anytime the Company
deems fit."

In September 2003, petitioners were informed that effective October 10, 2003, Solid
Mills would cease its operations due to serious business losses. The memorandum of
agreement provided for Solid Mills' grant of separation pay less accountabilities,
accrued sick leave benefits, vacation leave benefits, and 13th month pay to the
employees. By October 10, 2003, petitioners were no longer allowed to report for
work. They were required to sign a memorandum of agreement with release and
quitclaim before their vacation and sick leave benefits, 13th month pay, and
separation pay would be released. Petitioners refused to sign the documents and
demanded to be paid their benefits and separation pay.

Hence, petitioners filed complaints before the Labor Arbiter for alleged non-payment
of separation pay, accrued sick and vacation leaves, and 13th month pay. They
argued that their accrued benefits and separation pay should not be withheld
because their payment is based on company policy and practice. On the other hand,
Solid Mills argued that petitioners' complaint was premature because they had not
vacated its property. The Labor Arbiter ruled in favor of petitioners. According to the

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Labor Arbiter, Solid Mills illegally withheld petitioners' benefits and separation pay.

Solid Mills appealed to the National Labor Relations Commission. The National Labor
Relations Commission ruled that because of petitioners' failure to vacate Solid Mills'
property, Solid Mills was justified in withholding their benefits and separation pay.
Solid Mills granted the petitioners the privilege to occupy its property on account of
petitioners' employment. It had the prerogative to terminate such privilege. The
Court of Appeals likewise agreed with the National Labor Relations Commission's
deletion of interest since it found that Solid Mills' act of withholding payment of
benefits and separation pay was proper. Petitioners' terminal benefits and pay were
withheld because of petitioners' failure to vacate Solid Mills' property.

Issue: Whether or not employer Solid Mill’s withholding of terminal pay and benefits
of respondent-employees valid pending return of the employee’s properties

Ruling: Yes. The Court held that requiring clearance before the release of last
payments to the employee is a standard procedure among employers, whether
public or private. Clearance procedures are instituted to ensure that the properties,
real or personal, belonging to the employer but are in the possession of the
separated employee, are returned to the employer before the employee's departure.
As a general rule, employers are prohibited from withholding wages from employees.
The Labor Code provides:

Art. 116. Withholding of wages and kickbacks prohibited. The Labor Code also
prohibits the elimination or diminution of benefits.

The Labor Code also prohibits the elimination or diminution of benefits. Thus:

Art. 100. Prohibition against elimination or diminution of benefits. — Nothing in this

164
Book shall be construed to eliminate or in any way diminish supplements, or other
employee benfits being enjoyed at the time of promulgation of this Code.

However, our law supports the employers' institution of clearance procedures before
the release of wages. As an exception to the general rule that wages may not be
withheld and benefits may not be diminished, the Labor Code provides:

Article 1706. Withholding of the wages, except for a debt due, shall not be made by
the employer.

"Debt" in this case refers to any obligation due from the employee to the employer.
It includes any accountability that the employee may have to the employer. There is
no reason to limit its scope to uniforms and equipment, as petitioners would argue.
More importantly, respondent Solid Mills and NAFLU, the union representing
petitioners, agreed that the release of petitioners' benefits shall be "less
accountabilities."

"Accountability," in its ordinary sense, means obligation or debt. The ordinary

meaning of the term "accountability" does not limit the definition of accountability to
those incurred in the worksite. As long as the debt or obligation was incurred by
virtue of the employer-employee relationship, generally, it shall be included in the
employee's accountabilities that are subject to clearance procedures. What can be
gathered from the findings of the Labor Arbiter, National Labor Relations
Commission, and the Court of Appeals is that respondent Solid Mills allowed the use
of its property for the benefit of petitioners as its employees. The return of the
property's possession became an obligation or liability on the part of the employees
when the employer-employee relationship ceased. Withholding of payment by the
employer does not mean that the employer may renege on its obligation to pay
employees their wages, termination payments, and due benefits. The employees'
benefits are also not being reduced. It is only subjected to the condition that the

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employees return properties properly belonging to the employer. This is only
consistent with the equitable principle that "no one shall be unjustly enriched or
benefited at the expense of another."

For these reasons, we cannot hold that petitioners are entitled to interest of their
withheld separation benefits. These benefits were properly withheld by respondent
Solid Mills because of their refusal to return its property. Clearly, in this case, it is for
the workers to return their housing in exchange for the release of their benefits. This
is what they agreed upon. It is what is fair in the premises.

ERNESTO GALANG and MA. OLGA JASMIN CHAN v. BOIE TAKEDA CHEMICALS

GR No. 183934, July 20, 2016

Facts: Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired
petitioners Ernesto Galang and Ma. Olga Jasmin Chan. Through the years, petitioners
rose from the ranks and were promoted to Regional Sales Managers in 2000.
Petitioners held these positions until their separation from BTCI on May 1, 2004.

As Regional Sales Managers, they belong to the sales department of BTCI. They
primarily managed regional sales budget and target, and were responsible for market
share and company growth within their respective regions. Within the organizational
hierarchy, they reported to the National Sales Director.In 2002, when the National
Sales Director position became vacant (alter the retirement of MelchorBarretto),
petitioners assumed and shared (with the general manager) the functions and

166
responsibilities of this higher position, and reported directly to the General Manager.

Petitioners were informed that BTCI promoted Villanueva as National Sales Director.
BTCI explained that the appointment was pursuant to its management prerogative,
and that it arrived at such decision only "after careful assessment of the situation, the
needs of the position and the qualifications of the respective candidates." The
promotion of Villanueva as the National Sales Director caused ill-feelings on
petitioners' part.

After Villanueva's promotion, petitioners claimed that Nomura threatened to dismiss

them from office if they failed to perform well under the newly appointed National
Sales Director. This prompted petitioners to inquire if they could avail of early
retirement package due to health reasons. Specifically, they requested Nomura if
they could avail of the early retirement package of 150% plus 120% of monthly
salary for every year of service tax free, and lull ownership of service vehicle tax free.
They claimed that this is the same retirement package given to previous retirees
namely, former Regional Sales Director Jose Sarmiento, Jr. (Sarmiento), and former
National Sales Director Melchor Barretto. Nomura, however, insisted that such
retirement package does not exist and Sarmiento's case was exceptional since he was
just a few years shy from the normal retirement age.

Issue: Whether petitioners are entitled to a higher retirement package.

Ruling: Petitioners were not discriminated against in terms of their retirement

package.

The entitlement of employees to retirement benefits must specifically be granted

under existing laws, a collective bargaining agreement or employment contract, or an
established employer policy. Based on both parties' evidence, petitioners are not

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covered by any agreement. There is also no dispute that petitioners received more
than what is mandated by Article 287 of the Labor Code. Petitioners, however, claim
that they should have received a larger pay because BTCI has given more than what
they received to previous retirees. In essence, they claim that they were discriminated
against because BTCI did not give them the package of 150% of monthly salary for
every year of service on top of the normal retirement package.

To prove that their claim on the additional grant of 150% of salary, petitioners
presented evidence showing that former employees received significantly larger
retirement benefits. However, the cases of Ducay, Arada, and Rafael cannot be used
as precedents to prove this specific company practice because these employees were
not shown to be similarly situated in terms of rank, nor are the applicable retirement
packages corresponding to their ranks alike. Also, these employees, including
Sarmiento, all retired in the same year of 2001, or only within a one-year period.
Definitely, a year cannot be considered long enough to constitute the grant of
retirement benefits to these employees as company practice. It cannot therefore be
disputed that petitioners already received the benefits as specified in the CBA
between BTC1 and BTCI Supervisory Union.

Petitioner Chan, for her 21 years of service, received a total of P1,764,000.00 as

retirement benefits following the formula of P70,000.00 x 120% x 21 years. Petitioner
Galang, for his 29 years of service, received a total of P3,248,000.00 as retirement
benefits following the formula of P70,000.00 x 160% x 29 years.

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 COCA-COLA BOTTLERS PHILIPPINES, INC., petitioner, vs. CCBPI STA. ROSA
PLANT EMPLOYEES UNION, respondent

G.R. No. 197494. March 25, 2019

Facts: Coca-Cola Bottlers Philippines, Inc. (CCBPI) is engaged in the business of

manufacturing, distributing, and marketing beverage products while CCBPI Sta. Rosa
Plant Employees' Union is a recognized labor union organized and registered with
the DOLE and the sole representative of all regular daily paid employees and
monthly paid non-commission earning employees within petitioner's Sta. Rosa,
Laguna plant.

A dispute arose when petitioner implemented a policy which limits the total amount
of loan which its employees may obtain from the company and other sources to 50%
of their respective monthly pay. As interpreted by the Union this is violative of the
CBA, which states that petitioner shall process all SSS loans of its employees, in spite
of any outstanding company loan of said employees, subject to SSS rules and
regulations. After conciliation efforts failed, respondent Union submitted the matter
before the Voluntary Arbitrator on October 5, 2009.

Petitioner argued that the company policy is in compliance with the Labor Code
considering that it ensures that the employees' wages are directly paid to the
employees themselves and not to third party creditors. The Voluntary Arbitrator, in
ruling in favor of the respondent Union, maintained that Section 2, Article 14 of the
CBA is clear when it provided that petitioner shall process all SSS loans, subject only
to SSS rules and regulations.

Petitioner, in elevating the matter before the CA via Rule 43 of the Rules of Court,
insisted that it did not violate the CBA in enforcing the company policy as the
limitation was aimed to protect and promote the welfare of the employees and
prevent them from becoming saddled with indebtedness. CA affirmed the Decision

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the Voluntary Arbitrator because it observed that such company policy is violative of
the CBA in the absence of any SSS regulation supporting the same.

Petitioner filed a Motion for Reconsideration which was denied. Hence, this petition
before the SC.

Issue: Whether or not petitioner's company policy which limits the availment of loans
depending on the average take home pay of its employees violates a provision in the
CBA.

Ruling: Yes, it such limitation violated a provision in the CBA. It is a familiar and
fundamental doctrine in labor law that the CBA is the law between the parties and
they are obliged to comply with its provisions. As in all contracts, the parties in a
CBA may establish such stipulations, clauses, terms and conditions as they may deem
convenient provided these are not contrary to law, morals, good customs, public
order, or public policy. Thus, where the CBA is clear and unambiguous, it becomes
the law between the parties and compliance therewith is mandated by the express
policy of the law.

The concerned CBA provision provides:

Article XIII

xxx xxx xxx

SECTION 2. SSS Salary Loans. — The COMPANY shall process all SSS loan
applications, notwithstanding the fact that the employee concerned may have
outstanding COMPANY loans, subject to SSS rules and regulations.

On the other hand, the company policy puts a cap relative to the loan availment by

170
the employees depending on the employees' monthly basic net pay. In other words,
petitioner shall disapprove the loan application of an employee whose net take home
pay falls below 50% of his average monthly basic pay.

A plain reading of the CBA provision provides for the commitment of the petitioner
to process SSS salary loans, in particular, of its employees. The only limitation is the
application of SSS rules and regulations pertaining to the same. Undoubtedly, the
company policy is not an SSS rule or regulation. Hence, it is important to discuss
whether said company policy is sanctioned under SSS rules and regulations.

Based on the Terms and Conditions of a Member Loan Application, pursuant to

Social Security Commission Regulation No. 669, which is stipulated at the back of
every SSS loan application, the qualification of a member-borrower is dependent on
the amount of loan to be taken, updated it does not appear that the employer has
the prerogative to impose other conditions which does not involve its duty to collect
and remit amortizations. The 50% net take home pay requirement, in effect, further
adds a condition for an employee to obtain an SSS salary loan, on top of the
requirements issued by the SSS. Hence, when petitioner requires that the employee
should have at least 50% net take home pay before it processes a loan application,
the same violates the CBA provision when a qualified employee chooses to apply for
an SSS loan.

With these, we rule that the company policy violated the provision of the CBA as it
imposes a restriction with respect to the right of the employees under the CBA to
avail SSS salary loans.

While petitioner's cause for putting a limitation on the availment of loans, i.e., to
promote the welfare of the employees and their families by securing that the salary
of the concerned employee shall be taken home to his family, is sympathetic, we
cannot subscribe to the same for being in contravention with the prohibition on
interfering with the disposal of wages under Article 112 of the Labor Code:

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 Art. 112. Non-interference in disposal of wages. —No employer shall limit or
otherwise interfere with the freedom of any employee to dispose of his
wages. He shall not in any manner force, compel, or oblige his employees to
purchase merchandise, commodities or other property from any other person,
or otherwise make use of any store or services of such employer or any other
person.

With the implementation of the company policy, an employee, who is qualified to

avail an SSS salary loan and chooses to dispose of his salary through payment of
monthly amortizations, may not be able to do so should such amortizations be over
the 50% cap. In carrying out the 50% cap policy, petitioner effectively limits its
employees on the utilization of their salaries when it is apparent that as long as the
employee is qualified to avail the same, he/she may apply for an SSS loan.

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 DOMINICO C. CONGSON, petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, NOE BARGO, ROGER HIMENO, RAYMUNDO BADAGOS, PATRICIO
SALVADOR, SR., NEHIL BARGO, JOEL MENDOZA, and EMMANUEL CALIXIHAN,
respondents.

G.R. No. 114250 April 5, 1995

Facts: Dominico C. Congson is the registered owner of Southern Fishing Industry.

Respondents were hired as piece-rate employees uniformly paid at a rate of P1.00
per tuna weighing thirty (30) to eighty (80) kilos per movement. They work for 7 days
a week. Due to alleged scarcity of tuna, Congson notified his proposal to reduce the
rate-per-tuna movement. When they reported the following day, they found out that
they were already replaced with new set of workers. They wanted to have a dialogue
with the management, but they waited in vain.

Thus, they filed a case before NLRC for underpayment of wages (violation of the
minimum wage law) and non-payment of overtime pay, 13th month pay, holiday pay,
rest day pay, and five (5)-day service incentive leave pay; and for constructive
dismissal.

Petitioner conceded that his payment of wages falls below the minimum wage law.
He averred that NLRC should have considered as forming a substantial part of
private respondents' total wages the cash value of the tuna liver and intestines
private respondents were entitled to retrieve. He argued that the combined value of
the cash wage and monetary value of the tuna liver and intestines clearly exceeded
the minimum wage fixed by law.

Both the Labor Arbiter and the NLRC ruled in favor of the respondents.

Issue: Whether or not the form of payment by Congson is valid pursuant to Article

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102 of the Labor Code.

Ruling: Petitioner's practice of paying the private respondents the minimum wage by
means of legal tender combined with tuna liver and intestines runs counter to the
above cited provision of the Labor Code. The fact that said method of paying the
minimum wage was not only agreed upon by both parties in the employment
agreement but even expressly requested by private respondents, does not shield
petitioner.

Article 102 of the Labor Code is clear.

ARTICLE 102. Forms of Payment. — No employer shall pay the wages of an

employee by means of promissory notes, vouchers, coupons, tokens, tickets, chits, or
any object other than legal tender, even when expressly requested by the employee.
Payment of wages by check or money order shall be allowed when such manner of
payment is customary on the date of effectivity of this Code, or is necessary because
as specified in appropriate regulations to be issued by the Secretary of Labor or as
stipulated in a collective bargaining agreement.

Wages shall be paid only by means of legal tender. The only instance when an
employer is permitted to pay wages informs other than legal tender, that is, by
checks or money order, is when the circumstances prescribed in the second
paragraph of Article 102 are present.

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 NORTH DAVAO MINING CORPORATION and ASSET PRIVATIZATION TRUST,
petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, LABOR ARBITER
ANTONIO M. VILLANUEVA and WILFREDO GUILLEMA, respondents.

G.R. No. 112546 March 13, 1996

Facts: Due to financial losses, North Davao Mining Corporation laid off workers.
Respondent Wilfredo Guillema is one among several employees of North Davao who
were separated by reason of the company’s closure on May 31, 1992. It appears that,
during the life of the petitioner corporation, from the beginning of its operations in
1981 until its closure in 1992, it had been giving separation pay equivalent to thirty
(30) days’ pay for every year of service.

Moreover, inasmuch as the region where North Davao operated was plagued by
insurgency and other peace and order problems, the employees had to collect their
salaries at a bank in Tagum, Davao del Norte, some 58 kilometers from their
workplace and about 2 ½hours’ travel time by public transportation; this
arrangement lasted from 1981 up to 1990.

Issue: Whether or not time spent in collecting wages in a place other than the place
of employment is compensable notwithstanding that the same is done during official
time.

Ruling: The Supreme Court, affirming the decision of the Labor Arbiter, finds that the
hours spent by complainants in collecting salaries at a bank in Tagum, Davao del
Norte shall be considered compensable hours worked.

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Considering further the distance between Amacan, Maco to Tagum which is 2½
hours by travel and the risks in commuting all the time in collecting complainants’
salaries, would justify the granting of backwages equivalent to two (2) days in a
month as prayed for. Corollary, we likewise hold respondents liable for the
transportation expenses incurred by complainants at P40.00 round trip fare during
pay days.

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 HOUSE OF SARA LEE, Petitioner, vs. CYNTHIA F. REY, Respondent.

G.R. No. 149013 August 31, 2006

Facts: The House of Sara Lee is engaged in the direct selling of a variety of product
lines for men and women, including cosmetics, intimate apparels, perfumes, ready to
wear clothes and other novelty items, through its various outlets nationwide. In the
pursuit of its business, the petitioner engages and contracts with dealers to sell the
aforementioned merchandise. These dealers, known either as “Independent Business
Managers” (IBMs) or “Independent Group Supervisors” (IGSs), depending on whether
they sell individually or through their own group, would obtain at discounted rates
the merchandise from the petitioner on credit or then sell the same products to their
own customers at fixed prices also determined by the petitioner.

The dealers under this system earn income through a profit margin between the
discounted purchase price they pay on credit to the petitioner and the fixed selling
price their customers will have to pay. On top of this margin, the dealer is given the
Service Fee, a sales commission, based on the volume of sales generated by him or
her. Due to the sheer volume of sales generated by all of its outlets, the petitioner
has found the need to strictly monitor the 38- or 52-day “rolling due date” of each
of its IBMs and IGSs through the employment of “Credit Administration Supervisors”
(CAS) for each branch. The primary duty of the CAS is to strictly monitor each of
these deadlines, to supervise the credit and collection of payments and outstanding
accounts due to the petitioner from its independent dealers and various customers,
and to screen prospective IBMs. To discharge these responsibilities, the CAS is
provided with a computer equipped with control systems through which data is
readily generated. Under this organizational setup, the CAS is under the direct and
immediate supervision of the Branch Operations Manager (BOM).

Cynthia Rey at the time of her dismissal from employment, held the position of
Credit Administration Supervisor or CAS at the Cagayan de Oro City branch of the
petitioner. She was first employed by the petitioner as an Accounts Receivable Clerk

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at its Caloocan City branch. In November 1993, respondent was transferred to the
Cagayan de Oro City branch retaining the same position. In January 1994,
respondent was elevated to the position of CAS. At that time, the Branch Operations
Manager or BOM of the Cagayan de Oro City branch was a certain Mr. Jeremiah
Villagracia. In March 1995, respondent was temporarily assigned to the Butuan City
branch.

Sometime in June 1995, while respondent was still working in Butuan City, she
allegedly instructed the Accounts Receivable Clerk of the Cagayan de Oro outlet to
change the credit term of one of the IBMs of the petitioner who happens to be
respondent’s sister-in-law, from the 52-day limit to an “unauthorized” term of 60
days. The respondent made the instruction just before the computer data for the
computation of the Service Fee accruing to Ms. Rey-Petilla was about to be
generated. Ms. Mendoza then reported this allegedly unauthorized act of
respondent to her Branch Operations Manager, Mr. Villagracia. Acting on the report,
as the petitioner alleges, BOM Villagracia discreetly verified the records and
discovered that it was not only the 52-day credit term of IBM Rey-Petilla that had
been extended by the respondent, but there were several other IBMs whose credit
terms had been similarly extended beyond the periods allowed by company policy.
BOM Villagracia then summoned the respondent and required her to explain the
unauthorized credit extensions.

Issue: Whether or not the respondent is entitled to 13th month pay.

Ruling: The award of 13th month pay must be deleted. Respondent is not a rank-
and-file employee and is, therefore, not entitled to thirteenth-month pay. However,
the NLRC and the CA are correct in refusing to award 14th and 15th month pay as
well as the “monthly salary increase of 10 percent per year for two years based on
her latest salary rate.” The respondent must show that these benefits are due to her
as a matter of right. Mere allegations by the respondent do not suffice in the
absence of proof supporting the same. With respect to salary increases in particular,

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the respondent must likewise show that she has a vested right to the same, such that
her salary increases can be made a component in the computation of back wages.
What is evident is that salary increases are a mere expectancy. They are by nature
volatile and dependent on numerous variables, including the company’s fiscal
situation, the employee’s future performance on the job, or the employee’s
continued stay in a position. In short, absent any proof, there is no vested right to
salary increases.

SAN JUAN DE DIOS HOSPITAL EMPLOYEES ASSOCIATION-AFW/MA. CONSUELO

MACQUILING LEONARDO MARTINEZ, DOMINGO ELA, JR., RODOLFO CALUCIN,
JR., PERLA MENDOZA, REX RAPHAEL REYES, ROGELIO BELMONTE, and 375 other
EMPLOYEE-UNION MEMBERS, petitioners, vs. NATIONAL LABOR RELATIONS
COMMISSION, and SAN JUAN DE DIOS HOSPITAL, respondents.

G.R. No. 126383 November 28, 1997

Facts: Petitioners, the rank-and-file employee-union officers and members of San

Juan De Dios Hospital Employees Association sent a letter requesting and pleading
for the expeditious implementation and payment by respondent Juan De Dios
Hospital of the ’40 HOURS/5-DAY WORKWEEK’ with compensable weekly two (2)
days off provided for by Republic Act 5901 as clarified for enforcement by the
Secretary of Labor’s Policy Instructions No. 54. RA 5901 seeks to reduce the number
of hospital personnel, considering the nature of their work, and at the same time
guarantee the payment to them of a full weekly wage for seven (7) days.

Respondent hospital failed to give a favorable response; thus, petitioners filed a

complaint regarding their claims for statutory benefits under the above-cited law and
policy issuance. Both Labor Arbiter and NLRC dismissed the complaint.

Issue: Whether or not the Policy Instructions No. 54 issued by then Labor Secretary
(now Senator) Franklin M. Drilon is valid.

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Ruling: The interpretation of Labor Secretary Drilon is not valid.

A cursory reading of Article 83 of the Labor Code betrays petitioners’ position that
“hospital employees” are entitled to “a full weekly salary with paid two (2) days’ off if
they have completed the 40-hour/5-day workweek”.

What Article 83 merely provides are:

(1) the regular office hour of eight hours a day, five days per week for health
personnel, and

(2) where the exigencies of service require that health personnel work for six
days or forty-eight hours then such health personnel shall be entitled to an
additional compensation of at least thirty percent of their regular wage for
work on the sixth day.

There is nothing in the law that supports then Secretary of Labor’s assertion that
“personnel in subject hospitals and clinics are entitled to a full weekly wage for seven
(7) days if they have completed the 40-hour/5-day workweek in any given
workweek”.

Needless to say, the Secretary of Labor exceeded his authority by including a two
days off with pay in contravention of the clear mandate of the statute. Such act the
Court shall not countenance. Administrative interpretation of the law, we reiterate, is
at best merely advisory, and the Court will not hesitate to strike down an
administrative interpretation that deviates from the provision of the statute.

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 SIME DARBY PILIPINAS INC, petitioner, vs. NLRC (2nd Division) and SIME DARBY
SALARIED EMPLOYEES ASSOCIATION (ALCU0TUCP), respondents.

G.R. No. 119205 April 15, 1998

Facts: Prior to the present controversy, the factory employees of Sime Darby
Pilipinas, Inc. enjoyed a 30-minute paid “on call” lunch break in their daily work
schedule of 7:45 am to 3:45 pm. The petitioner company passed a memorandum
dated Aug 12 1992 advising all factory-based workers, except those in the
Warehouse and Quality Assurance Department, of a change in work schedule that
discontinued the 30-minute paid “on call” lunch break and set an uninterrupted 1
hour lunch break in lieu thereof.

Private respondents then filed a complaint for unfair labor practice, discrimination,
and evasion of liability with the Labor Arbiter who dismissed the complaint, ruling
that the elimination of the 30-minute lunch break was a valid exercise of
management prerogative. Appeal was made to respondent NLRC who reversed the
decision of the Labor Arbiter, declaring that the new work schedule deprived the
employees of the benefits of a time-honored company practice and that such change
also resulted in an unjust diminution of employee benefits.

The OSG recommended the present petition to be granted, alleging that the new
memorandum containing the work schedule was not discriminatory not did it
constitute unfair labor practice.

Issue: Whether or not the memorandum dated Aug 14, 1992 discontinuing the 30-
minute paid “on call” lunch break constituted unfair labor practice and diminution of
benefits

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Ruling: The Supreme Court sustained petitioner, holding that it is clearly a
management prerogative to fix the work schedules of company employees. Under
the old schedule, the employees are compensated during their 30-minute lunch
break, but in essence it is still working time since the workers could be called upon
to work. Whereas in the new schedule, the employees are given a longer break of 1
hour, though uncompensated, it is uninterrupted as workers on their break are no
longer “on call”. The change in schedule would improve company productivity as well
as enhance the comfort of workers who could enjoy an uninterrupted break.

The Supreme Court also reiterated the policy that while social justice and the
protection of the working class is ensured by the Constitution, the same fundamental
law also protects the right of the management to regulate all aspects of employment
as well as to retain the prerogative of changing work schedules according to the
exigencies of the enterprise. So long as this prerogative is exercised in good faith,
the Court upholds such exercise.

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 PHILIPPINE AIRLINES, INC., petitioner, vs. NATIONAL LABOR RELATIONS
COMMISSION, LABOR ARBITER ROMULUS PROTACIO and DR. HERMINIO A.
FABROS, respondents.

G.R. No. 132805 February 2, 1999

Facts: Dr. Fabros (private respondent) was employed as flight surgeon at petitioner
company (PAL). He was assigned at (PAL Medical Clinic at Nichols) and was on duty
from 4:00 in the afternoon until 12:00 midnight.

On February 17, 1994, at around 7:00 in the evening, private respondent left the
clinic to have his dinner at his residence, which was about five-minute drive away. A
few minutes later, the clinic received an emergency call from the PAL Cargo Services.
One of its employees, Mr. Manuel Acosta, had suffered a heart attack. Upon
receiving the call the nurse on duty, Mr. Merlino Eusebio, called private respondent
at home to inform him of the emergency. The patient arrived at the clinic at 7:50 in
the evening and was rushed by Mr. Eusebio to the hospital. When private respondent
reached the clinic at around 7:51 in the evening, Mr. Eusebio had already left with
the patient. Mr. Acosta died the following day.

Upon learning about the incident, PAL Medical Director Dr. Godofredo B. Banzon
ordered the Chief Flight Surgeon to conduct an investigation. The Chief Flight
Surgeon, in turn, required private respondent to explain why no disciplinary sanction
should be taken against him.

In his explanation, private respondent asserted that he was entitled to a thirty-minute

meal break; that he immediately left his residence upon being informed by Mr.
Eusebio about the emergency and he arrived at the clinic a few minutes later; that
Mr. Eusebio panicked and brought the patient to the hospital without waiting for
him.

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Finding private respondent’s explanation unacceptable, the management charged
private respondent with abandonment of post while on duty.

Petitioner argues that being a full-time employee, private respondent is obliged to

stay in the company premises for not less than eight (8) hours. Hence, he may not
leave the company premises during such time, even to take his meals.

Issue: Whether or not being a full-time employee, private respondent is obliged to

stay in the company premises for not less than eight (8) hours.

Ruling: NO. Employees are not prohibited from going out of the premises as long as
they return to their post on time.

Articles 83 and 85 of the Labor Code read:

Art. 83. Normal hours of work.—The normal hours of work of any employee shall
not exceed eight (8) hours a day.

Health personnel in cities and municipalities with a population of at least one million
(1,000,000) or in hospitals and clinics with a bed capacity of at least one hundred
(100) shall hold regular office hours for eight (8) hours a day, for five (5) days a week,
exclusive of time for meals, except where the exigencies of the service require that
such personnel work for six (6) days or forty-eight (48) hours, in which case they shall
be entitled to an additional compensation of at least thirty per cent (30%) of their
regular wage for work on the sixth day. For purposes of this Article, “health
personnel” shall include: resident physicians, nurses, nutritionists, dieticians,

184
pharmacists, social workers, laboratory technicians, paramedical technicians,
psychologists, midwives, attendants and all other hospital or clinic personnel.

Art. 85. Meal periods.—Subject to such regulations as the Secretary of Labor may
prescribe, it shall be the duty of every employer to give his employees not less than
sixty (60) minutes time-off for their regular meals.

Section 7, Rule I, Book III of the Omnibus Rules Implementing the Labor Code further
states:

Sec. 7. Meal and Rest Periods.—Every employer shall give his employees, regardless
of sex, not less than one (1) hour time-off for regular meals, except in the following
cases when a meal period of not less than twenty (20) minutes may be given by the
employer provided that such shorter meal period is credited as compensable hours
worked of the employee:

1. Where the work is non-manual work in nature or does not involve

strenuous physical exertion;

2. Where the establishment regularly operates not less than sixteen hours a
day;

3. In cases of actual or impending emergencies or there is urgent work to be

performed on machineries, equipment or installations to avoid serious loss
which the employer would otherwise suffer; and

4. Where the work is necessary to prevent serious loss of perishable goods.

Rest periods or coffee breaks running from five (5) to twenty (20) minutes shall be
considered as compensable working time.

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Thus, the eight-hour work period does not include the meal break. Nowhere in the
law may it be inferred that employees must take their meals within the company
premises. Employees are not prohibited from going out of the premises as long as
they return to their posts on time.

Private respondent’s act, therefore, of going home to take his dinner does not
constitute abandonment.

186
 LINTON COMMERCIAL CO., INC. and DESIREE ONG, Petitioners, vs. ALEX A.
HELLERA, et. al. Respondents.

G.R. No. 163147 October 10, 2007

Facts: On 17 December 1997, Linton issued a memorandum addressed to its

employees informing them of the company's decision to suspend its operations from
December 18, 1997 to January 5, 1998 due to the currency crisis that affected its
business operations. Linton submitted an establishment termination report to the
Department of Labor and Employment (DOLE) regarding the temporary closure of
the establishment covering the said period. The company's operation was to resume
on January 6, 1998.

On January 7, 1997, Linton issued another memorandum informing them that

effective January 12, 1998, it would implement a new compressed workweek of three
(3) days on a rotation basis. In other words, each worker would be working on a
rotation basis for three working days only instead for six days a week. On the same
day, Linton submitted an establishment termination report concerning the rotation of
its workers. Linton proceeded with the implementation of the new policy without
waiting for its approval by DOLE. Aggrieved, sixty-eight (68) workers (workers) filed a
Complaint for illegal reduction of workdays.

Issue: Whether or not there was an illegal reduction of work when Linton
implemented a compressed workweek by reducing from six to three the number of
working days with the employees working on a rotation basis.

Ruling: The compressed workweek arrangement was unjustified and illegal.

The Bureau of Working Conditions of the DOLE, moreover, released a bulletin

providing for in determining when an employer can validly reduce the regular

187
number of working days. The said bulletin states that a reduction of the number of
regular working days is valid where the arrangement is resorted to by the employer
to prevent serious losses due to causes beyond his control, such as when there is a
substantial slump in the demand for his goods or services or when there is lack of
raw materials. Although the bulletin stands more as a set of directory guidelines than
a binding set of implementing rules, it has one main consideration, consistent with
the ruling in Philippine Graphic Arts Inc., in determining the validity of reduction of
working hours — that the company was suffering from losses.

Certainly, management has the prerogative to come up with measures to ensure

profitability or loss minimization. However, such privilege is not absolute.
Management prerogative must be exercised in good faith and with due regard to the
rights of labor. As previously stated, financial losses must be shown before a
company can validly opt to reduce the work hours of its employees. However, to
date, no definite guidelines have yet been set to determine whether the alleged
losses are sufficient to justify the reduction of work hours. If the standards set in
determining the justifiability of financial losses under Article 283 (i.e., retrenchment)
or Article 286 (i.e., suspension of work) of the Labor Code were to be considered,
petitioners would end up failing to meet the standards. On the one hand, Article 286
applies only when there is a bona fide suspension of the employer's operation of a
business or undertaking for a period not exceeding six (6) months.

Records show that Linton continued its business operations during the effectivity of
the compressed workweek, which spanned more than the maximum period. On the
other hand, for retrenchment to be justified, any claim of actual or potential business
losses must satisfy the following standards: (1) the losses incurred are substantial and
not de minimis; (2) the losses are actual or reasonably imminent; (3) the
retrenchment is reasonably necessary and is likely to be effective in preventing the
expected losses; and (4) the alleged losses, if already incurred, or the expected
imminent losses sought to be forestalled, are proven by sufficient and convincing
evidence. Linton failed to comply with these standards.

188
BISIG MANGGAGAWA SA TRYCO and/or FRANCISCO SIQUIG, as Union President,
JOSELITO LARIÑO, VIVENCIO B. BARTE, SATURNINO EGERA and SIMPLICIO AYA-
AY, petitioners, vs. NATIONAL LABOR RELATIONS COMMISSION, TRYCO
PHARMA CORPORATION, and/or WILFREDO C. RIVERA, respondents.

G.R. No. 151309 October 15, 2008

Facts: Petitioners Larino, Barte, Egera and Aya-ay are Tryco Pharma Corporation’s
regular employees. The petitioners are members of Bisig Manggagawa sa
Tryco(BMT), the exclusive bargaining representative of the rank-and-file employes.

Tryco and petitioners then signed a Memorandum of Agreement providing for a

compressed workweek schedule to be implemented in the company pursuant to
Department of Labor and Employment Department Order (D.O.) No. 21, Series of
1990, Guidelines on the Implementation of Compressed Workweek.

As provided in the MOA, 8:00 a.m. to 6:12 p.m., from Monday to Friday, shall be
considered as the regular working hours, and no overtime pay shall be due and
payable to the employee for work rendered during those hours. The MOA specially
stated that the employee waives the right to claim overtime pay for work rendered
after 5:00 p.m. until 6:12 p.m. from Monday to Friday considering that the
compressed workweek schedule is adopted in lieu of the regular workweek schedule
which also consists of 46 hours. However, should an employee be permitted or
require to work beyond 6:12 pm, such employee shall be entitled to overtime pay.

Tryco informed the Bureau of Working Conditions of the Department of Labor and
Employment of the implementation of a compressed workweek in the company.

Tryco then received a letter from the Bureau of Animal Industry of the Department of
Agriculture that its production should be conducted in Bulacan and not in Caloocan.

189
Tryco then ISSUEd a Memorandum ordering petitioners to report to the company’s
plant site in Bulacan. However, petitioners refused.

BMT opposed the transfer contending that it constitutes unfair labor practice
declared a strike.

Petitioners then filed separate complaints for illegal dismissal, underpayment of

wages, nonpayment of OT pay and service incentive leave and refusal to bargain
against Tryco alleging that it acted in bad faith in ordering the transfer of petitioners
to paralyze the union.

Respondent in its defense aver that petitioners were not dismissed but they refused
to comply with the management directive for them to report to Bulacan due to the
letter reminder from the Bureau of Animal Industry.

Issue: Whether or not the Memorandum of Agreement providing for compressed

workweek is unenforceable as it is contrary to law.

Ruling: No, the MOA is enforceable and binding against the petitioners.

D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that
the employees will derive from the adoption of a compressed workweek scheme,
thus:

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“The compressed workweek scheme was originally conceived for establishments
wishing to save on energy costs, promote greater work efficiency and lower the rate
of employee absenteeism, among others. Workers favor the scheme considering that
it would mean savings on the increasing cost of transportation fares for at least one
(1) day a week; savings on meal and snack expenses; longer weekends, or an
additional 52 off-days a year, that can be devoted to rest, leisure, family
responsibilities, studies and other personal matters, and that it will spare them for at
least another day in a week from certain inconveniences that are the normal
incidents of employment, such as commuting to and from the workplace, travel time
spent, exposure to dust and motor vehicle fumes, dressing up for work, etc. Thus,
under this scheme, the generally observed workweek of six (6) days is shortened to
ve (5) days but prolonging the working hours from Monday to Friday without the
employer being obliged for pay overtime premium compensation for work
performed in excess of eight (8) hours on weekdays, in exchange for the benefits
above cited that will accrue to the employees.”

Moreover, the adoption of a compressed workweek scheme in the company will help
temper any inconvenience that will be caused the petitioners by their transfer to a
farther workplace.

Notably, the MOA complied with the following conditions set by the DOLE, under
D.O. No. 21, to protect the interest of the employees in the implementation of a
compressed workweek scheme:

1.The employees voluntarily agree to work more than eight (8) hours a day
the total in a week of which shall not exceed their normal weekly hours of
work prior to adoption of the compressed workweek arrangement;

2. There will not be any diminution whatsoever in the weekly or monthly

takehome pay and fringe benefits of the employees;

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 3. If an employee is permitted or required to work in excess of his normal
weekly hours of work prior to the adoption of the compressed workweek
scheme, all such excess hours shall be considered overtime work and shall be
compensated in accordance with the provisions of the Labor Code or
applicable Collective Bargaining Agreement (CBA);

4. Appropriate waivers with respect to overtime premium pay for work

performed in excess of eight (8) hours a day may be devised by the parties to
the agreement.

5. The effectivity and implementation of the new working time arrangement

shall be by agreement of the parties.

Thus, the MOA is enforceable and a valid undertaking.

HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA, EDILBERTO ANIA,

MICHAEL ADANO, JAIME BOLO, RUBEN E. GULA, ANTONIO CUADERNO and
JOVITO CATANGUI, Petitioners, vs. PHILTRANCO SERVICE ENTERPRISES
INC./CENTURION SOLANO, Manager, Respondents.

G.R. No. 211141 June 29, 2016

Facts: The petitioners were employed by the respondents (on various dates from
2006 to 2010) as bus drivers and/or conductors with travel routes of Manila (Pasay)
to Bicol, Visayas and Mindanao, and vice versa.

On July 4, 2011, the petitioners filed a case against the respondents alleging that: (1)
they were already qualified for regular employment status since they have been
working with the respondents for several years; (2) they were paid only P404.00 per
round trip, which lasts from two to five days, without overtime pay and below the
minimum wage rate; (3) they cannot be considered as field personnel because their

192
working hours are controlled by the respondents from dispatching to end point and
their travel time is monitored and measured by the distance because they are in the
business of servicing passengers where time is of the essence; and (4) they had not
been given their yearly five-day SIL since the time they were hired by the
respondents.

In response, the respondents asserted that: (1) the petitioners were paid on a fixed
salary rate of P0.49 centavos per kilometer run, or minimum wage, whichever is
higher; (2) the petitioners are seasonal employees since their contracts are for a fixed
period and their employment was dependent on the exigency of the extraordinary
public demand for more buses during peak months of the year; and (3) the
petitioners are not entitled to overtime pay and SIL pay because they are field
personnel whose time outside the company premises cannot be determined with
reasonable certainty since they ply provincial routes and are left alone in the field
unsupervised.

The Labor Arbiter ruled in favor of the respondents who were able to prove that
petitioners were paid with a fixed salary or minimum wage, whichever is higher. It
also held that employees were not entitled to holiday pay and SIL as field personnel.

The NLRC held that the petitioners are not field personnel considering that they ply
specific routes with fixed time schedules determined by the respondents; thus, they
are entitled to minimum wage, SIL pay, and overtime benefits.

The CA reversed the NLRC and reinstated the Labor Arbiter.

Issue: Whether the petitioners as bus drivers and/or conductors are field personnel,
and thus entitled to overtime pay and SIL pay.

193
Ruling: The bus drivers and/or conductors are regular employees.

It is necessary to stress that the definition of a "field personnel" is not merely

concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the employer.
Field personnel are those who regularly perform their duties away from the principal
place of business of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.

Thus, in order to conclude whether an employee is a field employee, it is also

necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employee's time and performance are constantly supervised by
the employer

The NLRC properly concluded that they are not field personnel but regular
employees who perform tasks usually necessary and desirable to the respondents'
business. Evidently, the petitioners are not field personnel as defined above and the
NLRC's finding in this regard is supported by the established facts of this case: (1)
the petitioners, as bus drivers and/or conductors, are directed to transport their
passengers at a specified time and place; (2) they are not given the discretion to
select and contract with prospective passengers; (3) their actual work hours could be
determined with reasonable certainty, as well as their average trips per month; and
(4) the respondents supervised their time and performance of duties.

Thus, they are consequently entitled to the benefits accorded to regular employees
of the respondents, including overtime pay and SIL pay.

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 HSY MARKETING LTD. CO., petitioner, v. VIRGILIO 0. VILLASTIQUE, respondent.

G.R. No. 219569 August 17, 2016

Facts: On January 3, 2003, petitioner hired respondent as a field driver for Fabulous
Jeans & Shirt & General Merchandise (Fabulous Jeans), tasked to deliver ready-to-
wear items and/or general merchandise for a daily compensation of P370.00.

On January 10, 2011, respondent figured in an accident when the service vehicle (a
2010-model Mitsubishi Strada pick up) he was driving in Iligan City bumped a
pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15,
which respondent was asked to reimburse, but to no avail.

On February 24, 2011, respondent was allegedly required to sign a resignation letter,
which he refused to do. A couple of days later, he tried to collect his salary for that
week but was told that it was withheld because of his refusal to resign. Convinced
that he was already terminated on February 26, 2011, he lost no time in filing a
complaint for illegal dismissal with money claims against petitioner, Fabulous Jeans,
and its owner, Alexander G. Arqueza.

The Labor Arbiter dismissed the complaint for illegal dismissal as there was no
substantial evidence presented that respondent was dismissed. The Labor Arbiter
ruled however that because there was strained relationship between petitioner and
respondent, reinstatement was no longer feasible and petitioner was asked to deliver
separation pay and service incentive leave pay to respondent. NLRC and CA affirmed
the Labor Arbiter’s RULING.

Issue: Whether or not Villatisque, as a company driver, falls under the definition of a
regular employee and is thus entitled to service incentive leave pay.

195
Ruling: Yes, respondent Villatisque is a regular employee and should be awarded his
SIL.

A regular employee’s task is necessary and desirable to the usual trade and business
of the company, and is thus entitled to the benefits including SIL. Villatisque is not a
field employee but rather a regular since he is expected to deliver goods at a
specified time and place and is under the control and supervision of HSY Marketing.
Company drivers who are under the control and direct supervision of management
officers – like respondent herein – are regular employees entitled to benefits
including SIL.

The Court likewise upholds the unanimous conclusion of the lower tribunals that
respondent had not been dismissed at all. Other than the latter's unsubstantiated
allegation of having been verbally terminated from his work, no substantial evidence
was presented to show that he was indeed dismissed or was prevented from
returning to his work. In the absence of any showing of an overt or positive act
proving that petitioner had dismissed respondent, the latter's claim of illegal
dismissal cannot be sustained, as such supposition would be self-serving, conjectural,
and of no probative value.

Hence, since there is no dismissal or abandonment to speak of, the appropriate

course of action is to reinstate the employee (in this case, herein respondent)
without, however, the payment of backwages. If respondent voluntarily chooses not
to return to work, he must then be considered as having resigned from employment.
This is without prejudice, however, to the willingness of both parties to continue with
their former contract of employment or enter into a new one whenever they so
desire.

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While petitioner should not be adjudged liable for separation pay, the Court
nonetheless sustains the award of service incentive leave pay in favor of respondent;
in accordance with the finding of the CA that respondent was a regular employee of
petitioner and is, therefore, entitled to such benefit.

A. NATE CASKET MAKER AND/OR ARMANDO AND ANELY NATE, Petitioners, v.

ELIAS V. ARANGO, EDWIN M. MAPUSAO, JORGE C. CARIÑO, JERMIE MAPUSAO,
WILSON A. NATE, EDGAR A. NATE, MICHAEL A. MONTALES, CELSO A. NATE,
BENJES A. LLONA AND ALLAN A. MONTALES, Respondent.

G.R. No. 192282 October 05, 2016

Facts: Petitioners Armando and Anely Nate are the owners/proprietors of A. Nate
Casket Maker. They employed respondents on various dates as
carpenters,mascilladors and painters in their casket-making business from 1998 until
their alleged termination in March 2007. Petitioners alleged that respondents are
pakyaw workers who are paid per job order. On February 3, 2007, they met with
respondents in order to present a proposed employment agreement which would
change the existing pakyaw system to "contractual basis" and would provide for
vacation leave and sick leave pay and other benefits given to regular employees.

On the other hand, respondents then alleged that when they were adamant and
eventually refused to sign the contract, petitioners told them to go home because
their employment has been terminated.

Respondents filed a Complaint for illegal dismissal and non-payment of separation

pay against petitioners including claims for underpayment of wages, non-payment of
overtime pay, holiday pay, 5-day service incentive leave pay and 13th month pay.

The Labor Arbiter dismissed the complaint for lack of merit. While the Labor Arbiter
acknowledged that respondents being pakyaw workers are considered regular

197
employees, he ruled that petitioners did not terminate the services of respondents.
On the issue of underpayment, the Labor Arbiter held that respondents were earning
more than the minimum wage per day; and as pakyaw workers, though they are
deemed regular workers, they are not entitled to overtime pay, holiday pay, service
incentive leave pay and 13th month pay citing the case of field personnel and those
paid on purely commission basis. The decision of the Labor Arbiter was affirmed by
the NLRC.

The CA reversed and set aside the decision of the NLRC.

Issue: Whether or not respondents, being pakyaw workers, are considered regular
employees which would not warrant their dismissal without payment of back wages
and other benefits.

Ruling: Yes. Respondents being pakyaw workers are considered regular employees
and their dismissal is illegal and they must be paid with their back wages and
corresponding benefits.

There is no dispute that the tasks performed by respondents as carpenters, painters,

and mascilladors were necessary and desirable in the usual business of petitioners
who are engaged in the manufacture and selling of caskets. We have to also
consider the length of time that respondents worked for petitioners, commencing on
various dates from 1998 to 2007. In addition, the power of control of petitioners over
respondents is clearly present in this case. Respondents follow the steps in making a
casket, as instructed by the petitioners, like carpentry, mascilla, rubbing and painting.
They had their own notebooks where they listed the work completed with their
signature and the date finished. The same would be checked by petitioners as basis

198
for the compensation for the day. Thus, petitioners wielded control over the
respondents in the discharge of their work.

Hence, pakyaw workers are considered regular employees for as long as their
employers exercise control over them. Thus, while respondents' mode of
compensation was on a per-piece basis, the status and nature of their employment
was that of regular employees.

As regular employees, respondents were entitled to security of tenure and could be

dismissed only for just or authorized causes and after the observance of due process.

Petitioners violated respondents' rights to security of tenure and constitutional right

to due process in not even serving them with a written notice of termination which
would recite any valid or just cause for their dismissal. Respondents were merely told
that their services are terminated.

Thus, the Court of Appeals correctly ruled that private respondents were illegally
dismissed.

Under Article 279 of the Labor Code, an employee unjustly dismissed from work is
entitled to reinstatement and backwages, among others. Reinstatement restores the
employee who was unjustly dismissed to the position from which he was removed,
that is, to his status quo ante dismissal, while the grant of backwages allows the
same employee to recover from the employer that which he had lost by way of
wages as a result of his dismissal.

These twin remedies — reinstatement and payment of backwages — make the

dismissed employee whole who can then look forward to continued employment.
Thus, do these two remedies give meaning and substance to the constitutional right

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of labor to security of tenure. Respondents are, therefore, entitled to reinstatement
with full backwages pursuant to Article 279 of the Labor Code, as amended by R.A.
No. 6715.

SAN MIGUEL CORPORATION, petitioner, vs. THE HONORABLE COURT OF

APPEALS-FORMER THIRTEENTH DIVISION, HON. UNDERSECRETARY JOSE M.
ESPAÑOL, JR., Hon. CRESENCIANO B. TRAJANO, and HON. REGIONAL DIRECTOR
ALLAN M. MACARAYA, respondents.

G.R. No. 146775 January 30, 2002

Facts: On 17 October 1992, the Department of Labor and Employment (DOLE), Iligan
District Office, conducted a routine inspection in the premises of San Miguel
Corporation (SMC) in Sta. Filomena, Iligan City. It was discovered that there was
underpayment by SMC of regular Muslim holiday pay to its employees. DOLE sent a
copy of the inspection result to SMC and it was received by and explained to its
personnel officer Elena dela Puerta.

SMC contested the findings and DOLE conducted summary hearings on 19

November 1992, 28 May 1993 and 4 and 5 October 1993. Still, SMC failed to submit
proof that it was paying regular Muslim holiday pay to its employees. Hence, Alan M.
Macaraya, Director IV of DOLE Iligan District Office issued a compliance order, dated
17 December 1993, directing SMC to consider Muslim holidays as regular holidays
and to pay both its Muslim and non-Muslim employees holiday pay within thirty (30)
days from the receipt of the order.

SMC appealed to the DOLE main office in Manila. However, the appeal was dismissed
for lack of merit and the order of Director Macaraya was affirmed. SMC went to SC
for relief via a petition for certiorari, which the Court referred to the Court of
Appeals. The appellate court modified the order with regards the payment of Muslim
holiday pay from 200% to 150% of the employee's basic salary. Its motion for

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reconsideration having been denied for lack of merit, SMC filed a petition for
certiorari before the SC

Issues: 1.) Whether or not public respondents seriously erred and committed grave
abuse of discretion when they granted Muslim Holiday Pay to non-Muslim
employees of SMC. 2.) Whether or not SMC was not accorded with due process of
law in the issuance of the compliance order. 3.) Whether or not regional director
Macaraya, undersecretary Trajano and undersecretary Espanol have jurisdiction in
issuing the assailed compliance orders.

Ruling: The court ruled the issues in negative. Muslim holidays are provided under
Articles 169 and 170, Title I, Book V, of Presidential Decree No. 1083, otherwise
known as the Code of Muslim Personal Laws, which states:

Art. 169. Official Muslim holidays. - The following are hereby recognized as
legal Muslim holidays:

a) ‘Amun Jadīd (New Year), which falls on the first day of the first lunar month
of Muharram;

b) Maulid-un-Nabī (Birthday of the Prophet Muhammad), which falls on the

twelfth day of the third lunar month of Rabi-ul-Awwal;

c) Lailatul Isrā Wal Mi’rā j (Nocturnal Journey and Ascension of the Prophet
Muhammad), which falls on the twenty-seventh day of the seventh lunar
month of Rajab;

d) ‘Īd-ul-Fitr (Hari Raya Puasa), which falls on the first day of the tenth lunar
month of Shawwal, commemorating the end of the fasting season; and

e) ‘Īd-ū l-Adhā (Hari Raya Haji),which falls on the tenth day of the twelfth
lunar month of Dhū ’l-Hijja.

Art. 170. Provinces and cities where officially observed. - (1) Muslim holidays
shall be officially observed in the Provinces of Basilan, Lanao del Norte, Lanao

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 del Sur, Maguindanao, North Cotabato, Iligan, Marawi, Pagadian, and
Zamboanga and in such other Muslim provinces and cities as may hereafter
be created; (2) Upon proclamation by the President of the Philippines, Muslim
holidays may also be officially observed in other provinces and cities.

The foregoing provisions should be read in conjunction with Article 94 of the Labor
Code, which provides:

Art. 94. Right to holiday pay. –

a) Every worker shall be paid his regular daily wage during regular holidays,
except in retail and service establishments regularly employing less than ten
(10) workers;

b) The employer may require an employee to work on any holiday but such
employee shall be paid a compensation equivalent to twice his regular rate.

Petitioner asserts that Article 3(3) of Presidential Decree No. 1083 provides that "the
provisions of this Code shall be applicable only to Muslims." However, there should
be no distinction between Muslims and non-Muslims as regards payment of benefits
for Muslim holidays. Wages and other emoluments granted by law to the working
man are determined on the basis of the criteria laid down by laws and certainly not
on the basis of the worker’s faith or religion. In addition, the 1999 Handbook on
Workers’ Statutory Benefits, categorically stated: Considering that all private
corporations, offices, agencies, and entities or establishments operating within the
designated Muslim provinces and cities are required to observe Muslim holidays,
both Muslim and Christians working within the Muslim areas may not report for work
on the days designated by law as Muslim holidays.

On the question regarding the jurisdiction of the Regional Director Allan M.

Macaraya, Article 128, Section B of the Labor Code, as amended by Republic Act No.

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7730, provides: Article 128. Visitorial and enforcement power. -

(b) Notwithstanding the provisions of Article 129 and 217 of this Code to the
contrary, and in cases where the relationship of employer-employee still exists, the
Secretary of Labor and Employment or his duly authorized representatives shall have
the power to issue compliance orders to give effect to the labor standards provisions
of this Code and other labor legislation based on the findings of labor employment
and enforcement officers or industrial safety engineers made in the course of the
inspection. The Secretary or his duly authorized representative shall issue writs of
execution to the appropriate authority for the enforcement of their orders, except in
cases where the employer contests the findings of the labor employment and
enforcement officer and raises issues supported by documentary proofs which were
not considered in the course of inspection.

In the case before us, Regional Director Macaraya acted as the duly authorized
representative of the Secretary of Labor and Employment and it was within his power
to issue the compliance order to SMC. In addition, the Court agrees with the Solicitor
General that the petitioner did not deny that it was not paying Muslim holiday pay
to its non-Muslim employees. Indeed, petitioner merely contends that its non-Muslim
employees are not entitled to Muslim holiday pay. Hence, the issue could be
resolved even without documentary proofs. In any case, there was no indication that
Regional Director Macaraya failed to consider any documentary proof presented by
SMC in the course of the inspection.

Anent the allegation that petitioner was not accorded due process, the court finds
that SMC was furnished a copy of the inspection order and it was received by and
explained to its Personnel Officer. Further, a series of summary hearings were
conducted by DOLE on 19 November 1992, 28 May 1993 and 4 and 5 October 1993.
Thus, SMC could not claim that it was not given an opportunity to defend itself.

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 ROLANDO Y. TAN, petitioner, vs. LEOVIGILDO LAGRAMA and THE HONORABLE
COURT OF APPEALS, respondents.

G.R. No. 151228 August 15, 2002

Facts: Petitioner Rolando Tan is the president of Supreme Theater Corporation and
the general manager of Crown and Empire Theaters in Butuan City. Private
respondent Leovigildo Lagrama is a painter, making ad billboards and murals for the
motion pictures shown at the Empress, Supreme, and Crown Theaters for more than
10 years, from September 1, 1988 to October 17, 1998.

On October 17, 1998, private respondent Lagrama was summoned by Tan and
upbraided: "Nangihi na naman ka sulod sa imong drawinganan." ("You again
urinated inside your work area.") When Lagrama asked what Tan was saying, Tan told
him, "Ayaw daghang estorya. Dili ko gusto nga mo-drawing ka pa. Guikan karon,
wala nay drawing. Gawas." ("Don't say anything further. I don't want you to draw
anymore. From now on, no more drawing. Get out.")

Lagrama denied the charge against him. He claimed that he was not the only one
who entered the drawing area and that, even if the charge was true, it was a minor
infraction to warrant his dismissal. However, everytime he spoke, Tan shouted
"Gawas" ("Get out"), leaving him with no other choice but to leave the premises.
Lagrama filed a complaint with the National Labor Relations Commission (NLRC) in
Butuan City. He alleged that he had been illegally dismissed and sought
reinvestigation and payment of 13th month pay, service incentive leave pay, salary
differential, and damages.

As no amicable settlement had been reached, Labor Arbiter Rogelio P. Legaspi

directed the parties to file their position papers. It declared that the dismissal illegal
and order the payment of monetary benefits. Tan appealed to the NLRC and
reversing the decision of the Labor Arbiter.

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Issue: Whether or not the respondent was illegally dismissed and thus entitled to
payment of benefits provided by law.

Ruling: The respondent was illegally dismissed and entitled to benefits. The
Implementing Rules of the Labor Code provide that no worker shall be dismissed
except for a just or authorized cause provided by law and after due process. This
provision has two aspects: (1) the legality of the act of dismissal, that is, dismissal
under the grounds provided for under Article 282 of the Labor Code and (2) the
legality in the manner of dismissal. The illegality of the act of dismissal constitutes
discharge without just cause, while illegality in the manner of dismissal is dismissal
without due process.

In this case, by his refusal to give Lagrama work to do and ordering Lagrama to get
out of his sight as the latter tried to explain his side, petitioner made it plain that
Lagrama was dismissed. Urinating in a work place other than the one designated for
the purpose by the employer constitutes violation of reasonable regulations intended
to promote a healthy environment under Art. 282(1) of the Labor Code for purposes
of terminating employment, but the same must be shown by evidence. Here there is
no evidence that Lagrama did urinate in a place other than a rest room in the
premises of his work.

Instead of ordering his reinstatement as provided in Art. 279 of the Labor Code, the
Labor Arbiter found that the relationship between the employer and employee has
been so strained that the latter's reinstatement would no longer serve any purpose.
The parties do not dispute this finding. Hence, the grant of separation pay in lieu of
reinstatement is appropriate.

This is of course in addition to the payment of backwages which, in accordance with

the ruling in Bustamante v. NLRC should be computed from the time of Lagrama's

205
dismissal up to the time of the finality of this decision, without any deduction or
qualification. The Bureau of Working Conditions classifies workers paid by results into
two groups, namely; (1) those whose time and performance is supervised by the
employer, and (2) those whose time and performance is unsupervised by the
employer. The first involves an element of control and supervision over the manner
the work is to be performed, while the second does not. If a piece worker is
supervised, there is an employer-employee relationship, as in this case. However,
such an employee is not entitled to service incentive leave pay since, as pointed out
in Makati Haberdashery v. NLRC 33 and Mark Roche International v. NLRC, he is paid
a fixed amount for work done, regardless of the time he spent in accomplishing such
work.

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 AVELINO LAMBO and VICENTE BELOCURA, petitioners, vs. LABOR RELATIONS
COMMISSION and J.C. TAILOR SHOP and/or JOHNNY CO, respondents.

G.R. No. 111042 October 26, 1999

Facts: Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by
private respondents J.C. Tailor Shop and/or Johnny Co on September 10, 1985 and
March 3, 1985, respectively. They worked from 8:00 a.m. to 7:00 p.m. daily, including
Sundays and holidays. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of
suits they made. Regardless of the number of pieces they finished in a day, they
were each given a daily pay of at least P64.00.

On January 17, 1989, petitioners filed a complaint against private respondents for
illegal dismissal and sought recovery of overtime pay, holiday pay, premium pay on
holiday and rest day, service incentive leave pay, separation pay, 13th month pay,
and attorney’s fees. After hearing, Labor Arbiter found private respondents guilty of
illegal dismissal and accordingly ordered them to pay petitioners’ claims. On appeal,
the NLRC reversed the decision of the Labor Arbiter. The NLRC held petitioners guilty
of abandonment of work and accordingly dismissed their claims except that for 13th
month pay.

Petitioners allege that they were dismissed by private respondents as they were
about to file a petition with the Department of Labor and Employment (DOLE) for
the payment of benefits such as Social Security System (SSS) coverage, sick leave and
vacation leave. They deny that they abandoned their work.

Issue: Whether or not the petitioners are entitled to the minimum benefits provided
by law?

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Ruling: Yes. The petitioners are entitled to the minimum benefits provided by law.
There is no dispute that petitioners were employees of private respondents although
they were paid not on the basis of time spent on the job but according to the
quantity and the quality of work produced by them. There are two categories of
employees paid by results:

(1) Those whose time and performance are supervised by the employer. Here, there
is an element of control and supervision over the manner as to how the work is to
be performed. A piece-rate worker belongs to this category especially if he performs
his work in the company premises.

(2) Those whose time and performance are unsupervised. Here, the employer’s
control is over the result of the work. Workers on pakyao and takay basis belong to
this group. Both classes of workers are paid per unit accomplished.

Piece-rate payment is generally practiced in garment factories where work is done in

the company premises, while payment on pakyao and takay basis is commonly
observed in the agricultural industry, such as in sugar plantations where the work is
performed in bulk or in volumes difficult to quantify. The petitioners belong to the
first category, i.e., supervised employees.

In this case, private respondents exercised control over the work of petitioners. As
tailors, petitioners worked in the company’s premises from 8:00 a.m. to 7:00 p.m.
daily, including Sundays and holidays. The mere fact that they were paid on a piece-
rate basis does not negate their status as regular employees of private respondents.
The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or
earnings, capable of being expressed in terms of money whether fixed or ascertained
on a time, task, piece or commission basis. Payment by the piece is just a method of
compensation and does not define the essence of the relations. Nor does the fact
that petitioners are not covered by the SSS affect the employer-employee

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relationship.

As petitioners were illegally dismissed, they are entitled to reinstatement with back
wages. The Arbiter applied the rule in the Mercury Drug case, according to which the
recovery of back wages should be limited to three years without qualifications or
deductions. Any award in excess of three years is null and void as to the excess. The
Labor Arbiter correctly ordered private respondents to give separation pay.
Considerable time has elapsed since petitioners’ dismissal, so that reinstatement
would now be impractical and hardly in the best interest of the parties. In lieu of
reinstatement, separation pay should be awarded to petitioners at the rate of one
month salary for every year of service, with a fraction of at least six (6) months of
service being considered as one (1) year. The awards for overtime pay, holiday pay
and 13th month pay are in accordance with our finding that petitioners are regular
employees, although paid on a piece-rate basis. Hence, decision of the NLRC is set
aside.

R & E TRANSPORT, INC., and HONORIO ENRIQUEZ, petitioners, vs. AVELINA P.

LATAG, representing her deceased husband, PEDRO M. LATAG, respondents.

G.R. No. 155214 February 13, 2004

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Facts: Pedro Latag was a regular employee of La Mallorca Taxi since March 1, 1961.
However, he was transferred to the petitioner R & E Transport, Inc. upon cessation of
La Mallorca’s business operations. In January 1995, he got sick and was forced to
apply for partial disability with the SSS, which was then granted. Upon recovery, he
reported back to work in September 1998 but was no longer allowed on account of
his old age. Latag asked the petitioner, through its administrative officer for his
retirement pay pursuant to Republic Act 7641 but he was ignored. Latag filed a case
for payment of his retirement pay before the NLRC.

Upon Pedro Latag’s death on April 30, 1999, he was substituted by his wife, the
respondent Avelina Latag. Labor Arbiter rendered a decision in favour of Latag.
Petitioner filed the quitclaim and motion to dismiss where the Labor Arbiter issued
an order for Writ of Execution. Petitioners interposed an appeal before NLRC. Appeal
was dismissed for failure to post a cash or surety bond, as mandated by law.

Issue: Whether or not Latag is entitled to retirement benefits considering she signed
a waiver of quitclaim.

Ruling: The Supreme Court ruled that the respondent is entitled to retirement
benefits despite of the waiver of quitclaims. This is not to say that all quitclaims are
invalid per se. Courts, however, are wary of schemes that frustrate workers' rights and
benefits, and look with disfavor upon quitclaims and waivers that bargain these away.

Undisputably, Pedro M. Latag was credited with 14 years of service with R & E
Transport, Inc. Article 287 of the Labor Code, as amended by Republic Act No. 7641,
30 provides: Retirement. — In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee
upon reaching the age of sixty (60) years or more, but not beyond sixty-five (65)
years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in said establishment, may retire and shall be entitled to

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retirement pay equivalent to at least one-half (1/2) month salary for every year of
service, a fraction of at least six (6) months being considered as one whole year.
Unless the parties provide for broader inclusions, the term one half-month salary
shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service incentive leaves.

The rules implementing the New Retirement Law similarly provide the above-
mentioned formula for computing the one-half month salary. Since Pedro was paid
according to the "boundary" system, he is not entitled to the 13th month 32 and the
service incentive pay; hence, his retirement pay should be computed on the sole
basis of his salary.

It is accepted that taxi drivers do not receive fixed wages, but retain only those sums
in excess of the "boundary" or fee they pay to the owners or operators of their
vehicles. Thus, the basis for computing their benefits should be the average daily
income. In this case, the CA found that Pedro was earning an average of five
hundred pesos (P500) per day. We thus compute his retirement pay as follows: P500
x 15 days x 14 years of service equals P105,000. Hence, it is clear that the late Pedro
M. Latag is entitled to retirement benefits.

ASIAN TRANSMISSION CORPORATION, petitioner, vs. The Hon. COURT OF

APPEALS, Thirteenth Division, HON. FROILAN M. BACUNGAN as Voluntary
Arbitrator, KISHIN A. LALWANI, Union, Union representative to the Panel
Arbitrators; BISIG NG ASIAN TRANSMISSION LABOR UNION (BATLU); HON.
BIENVENIDO T. LAGUESMA in his capacity as Secretary of Labor and
Employment; and DIRECTOR CHITA G. CILINDRO in her capacity as Director of
Bureau of Working Conditions, respondents.

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 G.R. No. 144664 March 15, 2004

Facts: The Department of Labor and Employment (DOLE), through Undersecretary

Cresenciano B. Trajano, issued an Explanatory Bulletin dated March 11, 1993 wherein
it clarified, inter alia, that employees are entitled to 200% of their basic wage on April
9, 1993, whether unworked, which[,] apart from being Good Friday [and, therefore, a
legal holiday], is also Araw ng Kagitingan [which is also a legal holiday].

Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both
Maundy Thursday and Araw ng Kagitingan.

Despite the explanatory bulletin, petitioner, Asian Transmission Corporation, opted to

pay its daily paid employees only 100% of their basic pay on April 9, 1998.
Respondent Bisig ng Asian Transmission Labor Union (BATLU) protested.

The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union
(BATLU), and held that Article 94 of the Labor Code provides for holiday pay for
every regular holiday, the computation of which is determined by a legal formula
which is not changed by the fact that there are two holidays falling on one day, like
on April 9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy
Thursday.

In the assailed decision, the Court of Appeals upheld the findings of the Voluntary
Arbitrator.

Issue: Whether or not daily-paid employees are entitled to be paid for two regular
holidays which fall on the same day.

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Ruling: The Court dismissed the petition and ruled that petitioners should pay its
employees “200% and not just 100% of their regular daily wages for the unworked
April 9, 1998 which covers two regular holidays, namely, Araw ng Kagitingan and
Maundy Thursday.”

Holiday pay is a legislated benefit enacted as part of the Constitutional imperative

that the State shall afford protection to labor. Its purpose is not merely "to prevent
diminution of the monthly income of the workers on account of work interruptions.
In other words, although the worker is forced to take a rest, he earns what he should
earn, that is, his holiday pay."

The provision is mandatory, regardless of whether an employee is paid on a monthly

or daily basis. Unlike a bonus, which is a management prerogative, holiday pay is a
statutory benefit demandable under the law.

AUTO BUS TRANSPORT SYSTEMS, INC., petitioner, vs. ANTONIO BAUTISTA,

respondent.

G.R. No. 156367 May 16, 2005

Facts: Respondent Antonio Bautista has been employed by petitioner Auto Bus
Transport Systems, Inc., since May 1995, as driver-conductor with travel routes
Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and Manila-Tabuk via
Baguio. Respondent was paid on commission basis, seven percent (7%) of the total
gross income per travel, on a twice a month basis.

On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe,
Nueva Vizcaya, the bus he was driving accidentally bumped the rear portion of
Autobus No. 124, as the latter vehicle suddenly stopped at a sharp curve without

213
giving any warning. Respondent averred that the accident happened because he was
compelled by the management to go back to Roxas, Isabela, although he had not
slept for almost twenty-four (24) hours, as he had just arrived in Manila from Roxas,
Isabela.

Respondent further alleged that he was not allowed to work until he fully paid the
amount of P75,551.50, representing thirty percent (30%) of the cost of repair of the
damaged buses and that despite respondent's pleas for reconsideration, the same
was ignored by management. After a month, management sent him a letter of
termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal
Dismissal with Money Claims for nonpayment of 13th month pay and service
incentive leave pay against Autobus.

On 29 September 2000, based on the pleadings and supporting evidence presented

by the parties, Labor Arbiter decided that the complaint be dismissed where the
respondent must pay to the complainant

Issue: Whether or not respondent is entitled to service incentive leave.

Ruling: The respondent is entitled to service incentive leave.

The disposition of the issue revolves around the proper interpretation of Article 95 of
the Labor Code vis-à-vis Section 1(D), Rule V, Book III of the Implementing Rules and
Regulations of the Labor Code which provides: RIGHT TO SERVICE INCENTIVE LEAVE,
(a) Every employee who has rendered at least one year of service shall be entitled to
a yearly service incentive leave of five days with pay.

Moreover, Book III, Rule V: SERVICE INCENTIVE LEAVE also states that this rule shall
apply to all employees except: (d) Field personnel and other employees whose

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performance is unsupervised by the employer including those who are engaged on
task or contract basis, purely commission basis, or those who are paid in a fixed
amount for performing work irrespective of the time consumed in the performance
thereof;

A careful examination of said provisions of law will result in the conclusion that the
grant of service incentive leave has been delimited by the Implementing Rules and
Regulations of the Labor Code to apply only to those employees not explicitly
excluded by Section 1 of Rule V. According to the Implementing Rules, Service
Incentive Leave shall not apply to employees classified as "field personnel."

The phrase "other employees whose performance is unsupervised by the employer"

must not be understood as a separate classification of employees to which service
incentive leave shall not be granted. Rather, it serves as an amplification of the
interpretation of the definition of field personnel under the Labor Code as those
"whose actual hours of work in the field cannot be determined with reasonable
certainty."

The same is true with respect to the phrase "those who are engaged on task or
contract basis, purely commission basis." Said phrase should be related with "field
personnel," applying the rule on ejusdem generis that the general and unlimited
terms are restrained and limited by the particular terms that they follow. Hence,
employees engaged on task or contract basis or paid on purely commission basis are
not automatically exempted from the grant of service incentive leave, unless, they fall
under the classification of field personnel.

What must be ascertained in order to resolve the issue of propriety of the grant of
service incentive leave to respondent is whether or not he is field personnel?

215
According to Article 82 of the Labor Code, "field personnel" shall refer to non-
agricultural employees who regularly perform their duties away from the principal
place of business or branch office of the employer and whose actual hours of work
in the field cannot be determined with reasonable certainty. This definition is further
elaborated in the Bureau of Working Conditions (BWC), Advisory Opinion to
Philippine Technical-Clerical Commercial Employees Association 10 which states that:

As a general rule, field personnel are those whose performance of their job/service is
not supervised by the employer or his representative, the workplace being away from
the principal office and whose hours and days of work cannot be determined with
reasonable certainty; hence, they are paid specific amount for rendering specific
service or performing specific work. If required to be at specific places at specific
times, employees including drivers cannot be said to be field personnel despite the
fact that they are performing work away from the principal office of the employee.

At this point, it is necessary to stress that the definition of a "field personnel" is not
merely concerned with the location where the employee regularly performs his duties
but also with the fact that the employee's performance is unsupervised by the
employer. As discussed above, field personnel are those who regularly perform their
duties away from the principal place of business of the employer and whose actual
hours of work in the field cannot be determined with reasonable certainty. Thus, in
order to conclude whether an employee is a field employee, it is also necessary to
ascertain if actual hours of work in the field can be determined with reasonable
certainty by the employer. In so doing, an inquiry must be made as to whether or
not the employee's time and performance are constantly supervised by the employer.
Respondent is not a field personnel but a regular employee who performs tasks
usually necessary and desirable to the usual trade of petitioner's business.
Accordingly, respondent is entitled to the grant of service incentive leave.

The clear policy of the Labor Code is to grant service incentive leave pay to workers
in all establishments, subject to a few exceptions. Section 2, Rule V, Book III of the

216
Implementing Rules and Regulations provides that "every employee who has
rendered at least one year of service shall be entitled to a yearly service incentive
leave of five days with pay."

Service incentive leave is a right which accrues to every employee who has served
"within 12 months, whether continuous or broken reckoned from the date the
employee started working, including authorized absences and paid regular holidays
unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said
period shall be considered as one year." It is also "commutable to its money
equivalent if not used or exhausted at the end of the year." In other words, an
employee who has served for one year is entitled to it. He may use it as leave days
or he may collect its monetary value. To limit the award to three years, as the
solicitor general recommends, is to unduly restrict such right.

SAN MIGUEL CORPORATION, Petitioner, vs. CAROLINE C. DEL ROSARIO,

Respondent.

G.R. Nos. 168194 & 168603 December 13, 2005

Facts: On April 17, 2000, respondent was employed by petitioner as key account
specialist. On March 9, 2001, petitioner informed respondent that her probationary
employment will be severed at the close of the business hours of March 12, 2001. On
March 13, 2001, respondent was refused entry to petitioner’s premises. On June 24,
2002, respondent filed a complaint against petitioner for illegal dismissal and
underpayment/non-payment of monetary benefits.

Issue: Whether or not respondent is a regular employee of petitioner.

Ruling: Yes. In termination cases, like the present controversy, the burden of proving

217
the circumstances that would justify the employee’s dismissal rests with the
employer. The best proof that petitioner should have presented to prove the
probationary status of respondent is her employment contract. None, having been
presented, the continuous employment of respondent as an account specialist for
almost 11 months, from April 17, 2000 to March 12, 2001, means that she was a
regular employee and not a temporary reliever or a probationary employee.

And while it is true that by way of exception, the period of probationary employment
may exceed six months when the parties so agree, such as when the same is
established by company policy, or when it is required by the nature of the work,
none of these exceptional circumstance were proven in the present case. Hence,
respondent whose employment exceeded six months is undoubtedly a regular
employee of petitioner.

Moreover, even assuming that the employment of respondent from April 7, 2000 to
September 3, 2000, is only temporary, and that the reckoning period of her
probationary employment is September 4, 2000, she should still be declared a
regular employee because by the time she was dismissed on March 12, 2001, her
alleged probationary employment already exceeded six months, i.e., six months and
eight days to be precise. A worker was found to be a regular employee
notwithstanding the presentation by the employer of a Payroll Authority indicating
that said employee was hired on probation, since it was shown that he was
terminated four days after the 6th month of his purported probationary employment.

Neither will petitioner’s belated claim that respondent became a probationary

employee starting October 1, 2000 work against respondent. As earlier stated, the
payroll authorities indicating that respondent’s probationary status became effective
as of such date are of scant evidentiary value since it does not show the conformity
of respondent. At any rate, in the interpretation of employment contracts, whether
oral or written, all doubts must be resolved in favor of labor.

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Hence, the contract of employment in the instant case, which appears to be an oral
agreement since no written form was presented by petitioner, should be construed
as one vesting respondent with a regular status and security of tenure.

Regarding the argument of redundancy, Redundancy, for purposes of the Labor

Code, exists where the services of an employee are in excess of what is reasonably
demanded by the actual requirements of the enterprise. Succinctly put, a position is
redundant where it is superfluous, and superfluity of a position or positions may be
the outcome of a number of factors, such as overhiring of workers, decreased
volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.

The determination that the employee’s services are no longer necessary or

sustainable and, therefore, properly terminable is an exercise of business judgment of
the employer. The wisdom or soundness of this judgment is not subject to
discretionary review of the Labor Arbiter and the NLRC, provided there is no violation
of law and no showing that it was prompted by an arbitrary or malicious act. In
other words, it is not enough for a company to merely declare that it has become
overmanned. It must produce adequate proof of such redundancy to justify the
dismissal of the affected employees.

The following evidence may be proffered to substantiate redundancy: the new

staffing pattern, feasibility studies/proposal, on the viability of the newly created
positions, job description and the approval by the management of the restructuring.

In the case at bar, petitioner presented an affidavit of its Sales Manager and a
memorandum of the company both to the effect that there is a need to redeploy its
regular employees and terminate the employment of temporary employees, in view
of an excess in manpower. These documents, however, do not satisfy the
requirement of substantial evidence that a reasonable mind might accept as

219
adequate to support a conclusion.

Moreover, the lingering doubt as to the existence of redundancy or of petitioner’s so

called “restructuring, realignment or reorganization” which resulted in the dismissal
of not only probationary employees but also of regular employees, is highlighted by
the non-presentation by petitioner of the required notice to the DOLE and to the
separated employees. If there was indeed a valid redundancy effected by petitioner,
these notices and the proof of payment of separation pay to the dismissed regular
employees should have been offered to establish that there was excess manpower in
petitioner’s GMA-KAG caused by a decline in the sales volume.

In balancing the interest between labor and capital, the prudent recourse in
termination cases is to safeguard the prized security of tenure of employees and to
require employers to present the best evidence obtainable, especially so because in
most cases, the documents or proof needed to resolve the validity of the
termination, are in the possession of employers. A contrary ruling would encourage
employers to prevent the regularization of an employee by simply invoking a feigned
or unsubstantiated redundancy program.

Granting that petitioner was able to substantiate the validity of its reorganization or
restructuring, it nevertheless, failed to effect a fair and reasonable criterion in
dismissing respondent. The criteria in implementing a redundancy are: (a) less
preferred status, e.g. temporary employee; (b) efficiency; and (c) seniority.

It is evident from the foregoing that the criterion allegedly used by petitioner in
reorganizing its sales unit was the employment status of the employee. However, in
the implementation thereof, petitioner erroneously classified respondent as a
probationary employee, resulting in the dismissal of the latter. Verily, the absence of
criteria and the erroneous implementation of the criterion selected, both render
invalid the redundancy because both have the ultimate effect of illegally dismissing

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an employee.

Considering that respondent was illegally dismissed, she is entitled not only to
reinstatement but also to payment of full back wages, computed from the time her
compensation was actually withheld from her on March 13, 2001, up to her actual
reinstatement. As a regular employee of petitioner from the date of her employment
on April 17, 2000, she is likewise entitled to other benefits, i.e., service incentive leave
pay and 13th month pay computed from such date also up to her actual
reinstatement.

Respondent is not, however, entitled to holiday pay because the records reveal that
she is a monthly paid regular employee. Under Section 2, Rule IV, Book III of the
Omnibus Rules Implementing the Labor Code, employees who are uniformly paid by
the month, irrespective of the number of working days therein, shall be presumed to
be paid for all the days in the month whether worked or not.

Anent attorney’s fees, in actions for recovery of wages or where an employee was
forced to litigate and thus incurred expenses to protect his rights and interests, a
maximum of 10% of the total monetary award by way of attorney’s fees is justifiable
under Article 111 of the Labor Code, Section 8, Rule VIII, Book III of its Implementing
Rules, and paragraph 7, Article 2208 of the Civil Code. The award of attorney’s fees
is proper and there need not be any showing that the employer acted maliciously or
in bad faith when it withheld the wages. There need only be a showing that the
lawful wages were not paid accordingly, as in the instant controversy.

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CHARLITO PEÑARANDA, Petitioner, vs. BAGANGA PLYWOOD CORPORATION and
HUDSON CHUA, Respondents.

G.R. No. 159577 May 3, 2006

Facts: Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an

employee of Baganga Plywood Corporation (BPC) to take charge of the operations
and maintenance of its steam plant boiler. In May 2001, Peñaranda filed a Complaint
for illegal dismissal with money claims against BPC and its general manager, Hudson
Chua, before the NLRC.

After the parties failed to settle amicably, the labor arbiter directed the parties to file
their position papers and submit supporting documents.

Peñaranda alleges that he was employed by respondent Banganga on March 15,

1999 with a monthly salary of P5,000.00 as Foreman/Boiler Head/Shift Engineer until
he was illegally terminated on December 19, 2000. he alleges that his services were
terminated without the benefit of due process and valid grounds in accordance with
law. Furthermore, he was not paid his overtime pay, premium pay for working during
holidays/rest days, night shift differentials and finally claimed for payment of
damages and attorney's fees having been forced to litigate the present complaint.

Respondent BPC is a domestic corporation duly organized and existing under

Philippine laws and is represented herein by its General Manager HUDSON CHUA,
the individual respondent. Respondents allege that complainant's separation from
service was done pursuant to Art. 283 of the Labor Code. The respondent BPC was
on temporary closure due to repair and general maintenance and it applied for
clearance with the Department of Labor and Employment, Regional Office No. XI, to
shut down and to dismiss employees. And due to the insistence of herein
complainant he was paid his separation benefits.

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Consequently, when respondent BPC partially reopened in January 2001, Peñaranda
failed to reapply.

The labor arbiter ruled that there was no illegal dismissal and that petitioner's
Complaint was premature because he was still employed by BPC. Petitioner’s money
claims for illegal dismissal was also weakened by his quitclaim and admission during
the clarificatory conference that he accepted separation benefits, sick and vacation
leave conversions and thirteenth month pay.

Issue: Whether or not Peñaranda is a regular, common employee entitled to

monetary benefits under Art. 82 of the Labor Code and is entitled to the payment of
overtime pay and other monetary benefits.

Ruling: The petitioner is not entitled to overtime pay and other monetary benefits.

The Court disagrees with the NLRC's finding that petitioner was a managerial
employee. However, petitioner was a member of the managerial staff, which also
takes him out of the coverage of labor standards. Like managerial employees, officers
and member of the managerial staff are not entitled to the provisions of law on
labor standards.

The Implementing Rules of the Labor Code define members of a managerial staff as
those with the following duties and responsibilities:

1. The primary duty consists of the performance of work directly related to

management policies of the employer;

2. Customarily and regularly exercise discretion and independent judgment;

3. Regularly and directly assist a proprietor or a managerial employee whose

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 primary duty consists of the management of the establishment in which he is
employed or subdivision thereof; or (ii) execute under general supervision
work along specialized or technical lines requiring special training, experience,
or knowledge; or (iii) execute under general supervision special assignments
and tasks; and

4. Who do not devote more than 20 percent of their hours worked in a

workweek to activities which are not directly and closely related to the
performance of the work described in paragraphs (1), (2), and (3) above.

The petitioner’s work involves:

1. To supply the required and continuous steam to all consuming units at

minimum cost.

2. To supervise, check and monitor manpower workmanship as well as

operation of boiler and accessories.

3. To evaluate performance of machinery and manpower.

4. To follow-up supply of waste and other materials for fuel.

5. To train new employees for effective and safety white working.

6. Recommend parts and suppliers purchases.

7. To recommend personnel actions such as: promotion, or disciplinary action.

8. To check water from the boiler, feedwater and softener, regenerate softener
if beyond hardness limit.

9. Implement Chemical Dosing.

10. Perform other task as required by the superior from time to time.

The foregoing enumeration, particularly items, 1, 2, 3, 5 and 7 illustrates that

petitioner was a member of the managerial staff. His duties and responsibilities
conform to the definition of a member of a managerial staff under the Implementing

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Rules.

Petitioner supervised the engineering section of the steam plant boiler. His work
involved overseeing the operation of the machines and the performance of the
workers in the engineering section. This work necessarily required the use of
discretion and independent judgment to ensure the proper functioning of the steam
plant boiler. As supervisor, petitioner is deemed a member of the managerial staff.

Noteworthy, even petitioner admitted that he was a supervisor. In his Position Paper,
he stated that he was the foreman responsible for the operation of the boiler. The
term foreman implies that he was the representative of management over the
workers and the operation of the department. Petitioner's evidence also showed that
he was the supervisor of the steam plant. His classification as supervisors is further
evident from the manner his salary was paid. He belonged to the 10% of
respondent's 354 employees who were paid on a monthly basis; the others were paid
only on a daily basis.

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 Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU

G.R. No. 1577745. October 19, 2007. Citing Wellington Investment vs. Trajano, 245
SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June 10, 2004

Facts: On April 6, 1998, Leyte IV Electric Cooperative, Inc. (petitioner) and Leyeco IV
Employees Union-ALU (respondent) entered into a Collective Bargaining Agreement
(CBA) covering petitioner rank-and-file employees, for a period of five (5) years
effective January 1, 1998. On June 7, 2000, respondent, through its Regional Vice-
President, Vicente P. Casilan, sent a letter to petitioner demanding holiday pay for all
employees, as provided for in the CBA.Petitioner, on the other hand, in its Position
Paper, insisted payment of the holiday pay in compliance with the CBA provisions,
stating that payment was presumed since the formula used in determining the daily
rate of pay of the covered employees is Basic Monthly Salary divided by 30 days or
Basic Monthly Salary multiplied by 12 divided by 360 days, thus with said formula,
the employees are already paid their regular and special days, the days when no
work is done, the 51 un-worked Sundays and the 51 un-worked Saturdays.

Issue: Whether or not Leyte IV Electric Cooperative is liable for underpayment of

holiday pay.

Ruling: Leyte IV Electric Cooperative is not liable for underpayment of holiday pay.
The Voluntary Arbitrator gravely abused its discretion in giving a strict or literal
interpretation of the CBA provisions that the holiday pay be reflected in the payroll
slips. Such literal interpretation ignores the admission of respondent in its Position
Paper that the employees were paid all the days of the month even if not worked.

This ruling was applied in Wellington Investment and Manufacturing Corporation v.

Trajano, Producers Bank of the Philippines v. National Labor Relations Commission. In
this case, the monthly salary was fixed by Wellington to provide for compensation for
every working day of the year including the holidays specified by law — and

226
excluding only Sundays. In fixing the salary, Wellington used what it called the "314
factor"; that is, it simply deducted 51 Sundays from the 365 days normally
comprising a year and used the difference, 314, as basis for determining the monthly
salary. The monthly salary thus fixed actually covered payment for 314 days of the
year, including regular and special holidays, as well as days when no work was done
by reason of fortuitous cause, such as transportation strike, riot, or typhoon or other
natural calamity, or cause not attributable to the employees.

It was also applied in Odango v. National Labor Relations Commission, where Court
ruled that the use of a divisor that was less than 365 days cannot make the employer
automatically liable for underpayment of holiday pay. Thus, the minimum allowable
divisor is 287, which is the result of 365 days, less 52 Sundays and less 26 Saturdays
(or 52 half Saturdays). Any divisor below 287 days meant that the employees were
deprived of their holiday pay for some or all of the ten legal holidays. The 304-day
divisor used by the employer was clearly above the minimum of 287 days.

In this case, the employees are required to work only from Monday to Friday. Thus,
the minimum allowable divisor is 263, which is arrived at by deducting 51 un-worked
Sundays and 51 un-worked Saturdays from 365 days. Considering that petitioner
used the 360-day divisor, which is clearly above the minimum, indubitably,
petitioner's employees are being given their holiday pay. Thus, the Voluntary
Arbitrator should not have simply brushed aside petitioner's divisor formula. In
granting respondent's claim of non-payment of holiday pay, a "double burden" was
imposed upon petitioner because it was being made to pay twice for its employees'
holiday pay when payment thereof had already been included in the computation of
their monthly salaries.

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 BAHIA SHIPPING SERVICES, INC., petitioner, vs. REYNALDO CHUA, respondent

G.R. No. 162195 April 8, 2008 citing Cagampan vs. NLRC, 195 SCRA 533 [1998]

Facts: Reynaldo Chua, herein respondent, was under the employ of Bahia Shipping
Services, Inc., herein petitioner, as a restaurant waiter on board the M/S Black Watch
, a luxury cruise ship liner. His employment is pursuant to a Philippine Overseas
Employment Administration (POEA) approved employment contract dated October 9,
1996 for a period of nine (9) months from October 18, 1996 to July 17, 1997.

On October 18, 1996, respondent, on board the cruise ship, left Manila for Heathrow,
England. About four months into his employment, or on February 15, 1997,
responded reported to work an hour and a half (1 ½) late. Due to the incident,
respondent was issued a warning-termination form by the master of the cruise ship,
Thor Fleten on February 17, 1997, who likewise conducted an inquisitorial hearing to
investigate the incident on March 8, 1997.

Thereafter, on March 9, 1997, respondent was dismissed from service on the strength
of an unsigned and undated notice of dismissal. Attached to the dismissal notice is
the alleged minutes or records of the investigation and hearing.

On March 24, 1997, respondent filed a complaint for illegal dismissal and other
monetary claims. He claims that he was underpaid in the amount of US$110.00 per
month for a period of five (5) months, since he was only paid US$300.00 per month,
instead of US$410.00 per month, which was stipulated in his contract. Aside from
underpayment, he alleged that US$20.00 per month was also deducted from his
salary by petitioner for union dues.

Issue: In the computation of the award, should the “guaranteed overtime” pay per
month be included as part of his salary?

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Ruling: There is no factual or legal basis in the inclusion of his "guaranteed
overtime" pay into his monthly salary computation for the entire unexpired period of
his contract.

The Court ruled in Cagampan v. National Labor Relations Commission, that although
an overseas employment contract may guarantee the right to overtime pay,
entitlement to such benefit must first be established, otherwise the same cannot be
allowed.

Petitioner’s contention that there is no factual or legal basis for the inclusion of said
amount since respondent‘s repatriation is well-taken.

PNCC SKYWAY TRAFFIC MANAGEMENT AND SECURITY DIVISION WORKERS

ORGANIZATION (PSTMSDWO), represented by its President, RENE SORIANO,
Petitioner, vs. PNCC SKYWAY CORPORATION, Respondent.

G.R. No. 171231 February 17, 2010

Facts: Petitioner PNCC Skyway Corporation Traffic Management and Security Division
Workers' Organization (PSTMSDWO) is a labor union duly registered with the
Department of Labor and Employment (DOLE). Respondent PNCC Skyway
Corporation is a corporation duly organized and operating under and by virtue of
the laws of the Philippines. On November 15, 2002, petitioner and respondent
entered into a Collective Bargaining Agreement (CBA) incorporating the terms and
conditions of their agreement which included vacation leave and expenses for
security license provisions.

A memorandum was passed by the respondents scheduling the leaves of the

laborers. Petitioner objected to the implementation of this memorandum and

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contended that their union members have the preference in scheduling their
vacation leave. On the other hand, respondent argued that Article VIII, Section 1 (b)
gives the management the final say regarding the vacation leave schedule of its
employees. Respondent may take into consideration the employees' preferred
schedule, but the same is not controlling.

Issue: Whether or not it is the prerogative of PNCC to schedule leaves of its

employees.

Ruling: Yes. The rule is that where the language of a contract is plain and
unambiguous, its meaning should be determined without reference to extrinsic facts
or aids. The intention of the parties must be gathered from that language, and from
that language alone. Stated differently, where the language of a written contract is
clear and unambiguous, the contract must be taken to mean that which, on its face,
it purports to mean, unless some good reason can be assigned to show that the
words used should be understood in a different sense.

In the case at bar, the contested provision of the CBA is clear and unequivocal.
Article VIII, Section 1 (b) of the CBA categorically provides that the scheduling of
vacation leave shall be under the option of the employer. The preference requested
by the employees is not controlling because respondent retains its power and
prerogative to consider or to ignore said request. Thus, if the terms of a CBA are
clear and leave no doubt upon the intention of the contracting parties, the literal
meaning of its stipulation shall prevail. In fine, the CBA must be strictly adhered to
and respected if its ends have to be achieved, being the law between the parties.

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 RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, Petitioners, vs.
DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR., Respondents.

G.R. No. 198662 September 12, 2012

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on
June 15, 1977 and June 1, 1983, respectively, by RMN. They eventually became
account managers, soliciting advertisements and servicing various clients of RMN.

The respondents’ services were terminated as a result of RMN’s

reorganization/restructuring; they were given their separation pay – P 631,250.00 for
Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed
release/quitclaim affidavits.

Dissatisfied with their separation pay, the respondents filed separate complaints
(which were later consolidated) against RMN and its President, Eric S. Canoy, for
illegal dismissal with several money claims, including attorney’s fees. They indicated
that their monthly salary rates were P 60,000.00 for Ybarola and P 40,000.00 for
Rivera.

The respondents argued that the release/quitclaim they executed should not be a
bar to the recovery of the full benefits due them; while they admitted that they
signed release documents, they did so due to dire necessity.

The petitioners denied liability, contending that the amounts the respondents
received represented a fair and reasonable settlement of their claims, as attested to
by the release/quitclaim affidavits which they executed freely and voluntarily. They
belied the respondents’ claimed salary rates, alleging that they each received a
monthly salary of P 9,177.00, as shown by the payrolls.

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The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but
ordered the payment of additional separation pay to the respondents – P 490,066.00
for Ybarola and P 429,517.55 for Rivera.

On appeal by the petitioners to the National Labor Relations Commission (NLRC), the
NLRC set aside the labor arbiter’s decision and dismissed the complaint for lack of
merit. It ruled that the withholding tax certificate cannot be the basis of the
computation of the respondents’ separation pay as the tax document included the
respondents’ cost-of-living allowance and commissions; as a general rule,
commissions cannot be included in the base figure for the computation of the
separation pay.

The CA granted the petition and set aside the assailed NLRC dispositions. It
reinstated the labor arbiter’s separation pay award, rejecting the NLRC’s ruling that
the respondents’ commissions are not included in the computation of their
separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these
commissions, therefore, were part of their salary.

The appellate court declared the release/quitclaim affidavits executed by the

respondents invalid for being against public policy, citing two reasons: (1) the terms
of the settlement are unconscionable; the separation pay the respondents received
was deficient by at least P 400,000.00 for each of them; and (2) the absence of
voluntariness when the respondents signed the document, it was their dire
circumstances and inability to support their families that finally drove them to accept
the amount the petitioners offered. Significantly, they dallied and it took them three
months to sign the release/quitclaim affidavits.

Issue: Whether or not the release/quitclaim affidavits are invalid for being against
public policy.

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Ruling: Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid
for being against public policy for two reasons: (1) the terms of the settlement are
unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee; they
were given only half of the amount they were legally entitled to; and (2) the absence
of voluntariness when the employees signed the document, it was their dire
circumstances and inability to support their families that finally drove them to accept
the amount offered. Without jobs and with families to support, they dallied in
executing the quitclaim instrument, but were eventually forced to sign given their
circumstances. To be sure, a settlement under these terms is not and cannot be a
reasonable one, given especially the respondent’s length of service – 25 years for
Ybarola and 19 years for Rivera.

ROBINA FARMS CEBU/UNIVERSAL ROBINA CORPORATION, Petitioner, vs.

ELIZABETH VILLA, Respondent.

G.R. No. 175869 April 18, 2016

Facts: Employer Robina Farms is appealing the decision of the NLRC making it liable
for illegal dismissal of Elizabeth Villa.

Respondent Villa brought an action against petitioner Robina Farms for illegal
suspension, illegal dismissal, nonpayment of overtime benefits and nonpayment of
service incentive leave.

Respondent was a sales clerk with the company since August 1981. In the later part
of 2001, petitioner enticed her to avail of the company’s special retirement program.
On March 2, 2002 she received a memorandum from Lily Ngochua requiring her to

233
explain her failure to issue invoices for unhatched eggs for the months of January
and February of that year. She explained that the delivery receipts were delayed and
overlooked; despite her explanation she was suspended for 10 days of March 8, 2002
to March 19, 2002.

When she returned, she was advised to cease working because her application for
retirement had been approved; and then subsequently disapproved; and she was
then advised to tender her resignation with a request for financial assistance. She
manifested her intention to return to work, but petitioner had replaced her with
another employee, confiscated her gate pass and prevented her from entering the
premises ever again.

The petitioner asserts that she violated the company rule on “timely issuance of the
invoices”. She was suspended because the delay resulted in a delay of payment by
the buyers, which depended on the receipt of the invoices. Her application for
retirement was denied because “management did not approve the benefits
equivalent to 86% of her salary rate she applied for, but only 1/2 month for every
year of service.

Issue: Whether Villa was 1.) illegally dismissed, 2.) entitled to overtime, and 3.)
entitled to service incentive leave.

Ruling:

1.Yes, she was illegally dismissed. The advice of Ngochua and De Guzman for Villa to
resign and instead to request for financial assistance was a strong and unequivocal
indication of the petitioners desire to sever the employer-employee relationship.

The desire of Villa to retire does not evidence of her intention to sever the
relationship as it was enticed to her as a promo. In that she believed she receive a

234
greater benefit from petitioner company’s offer. Hence, her consent cannot be
deemed to have been knowingly and freely given.

2. No, she is not entitled to overtime pay.

Entitlement to overtime pay must be “established by proof” that overtime work was
actually performed. The burden of proof rests on the employee. Daily Time Records
(DTR) does not substantially prove actual performance beyond eight (8) hours. There
must be “prior authorization“, without which invalidates the claim to the benefit

Section 4 (c) Omnibus Rules Implementing the Labor Code states that: “If the work
performed was necessary, or if benefitted the employer, or the employee could not
abandon his work at the end of normal working hours because he had no
replacement, all the time spent for such work shall be considered as hours worked, if
work was with the knowledge of the employer or his immediate supervisor.”

(3) Yes, she is entitled to Service Incentive Leave.

Grant of vacation or sick leave with pay of at least five days could be credited as
compliance with the duty to pay service incentive leave. However, the employer must
still prove it fully paid the accrued service incentive leave pay.

Evidence of the pay should have been presented at before the decision of the Labor
Arbiter, not after it of during appeal. Such practice is not tolerated.

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 HILARIO DASCO, REYMIR PARAFINA, RICHARD PARAFINA, EDILBERTO ANIA,
MICHAEL ADANO, JAIME BOLO, RUBEN E. GULA, ANTONIO CUADERNO and
JOVITO CATANGUI, Petitioners, vs. PHILTRANCO SERVICE ENTERPRISES
INC./CENTURION SOLANO, Manager, Respondents.

G.R. No. 211141 June 29, 2016

Facts: The petitioners were employed by the respondents (on various dates from
2006 to 2010) as bus drivers and/or conductors with travel routes of Manila (Pasay)
to Bicol, Visayas and Mindanao, and vice versa.

On July 4, 2011, the petitioners filed a case against the respondents alleging that: (1)
they were already qualified for regular employment status since they have been
working with the respondents for several years; (2) they were paid only P404.00 per
round trip, which lasts from two to five days, without overtime pay and below the
minimum wage rate; (3) they cannot be considered as field personnel because their
working hours are controlled by the respondents from dispatching to end point and
their travel time is monitored and measured by the distance because they are in the
business of servicing passengers where time is of the essence; and (4) they had not
been given their yearly five-day SIL since the time they were hired by the
respondents.

In response, the respondents asserted that: (1) the petitioners were paid on a fixed
salary rate of P0.49 centavos per kilometer run, or minimum wage, whichever is
higher; (2) the petitioners are seasonal employees since their contracts are for a fixed
period and their employment was dependent on the exigency of the extraordinary
public demand for more buses during peak months of the year; and (3) the
petitioners are not entitled to overtime pay and SIL pay because they are field
personnel whose time outside the company premises cannot be determined with
reasonable certainty since they ply provincial routes and are left alone in the field
unsupervised.

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The Labor Arbiter ruled in favor of the respondents who were able to prove that
petitioners were paid with a fixed salary or minimum wage, whichever is higher. It
also held that employees were not entitled to holiday pay and SIL as field personnel.

The NLRC held that the petitioners are not field personnel considering that they ply
specific routes with fixed time schedules determined by the respondents; thus, they
are entitled to minimum wage, SIL pay, and overtime benefits.

The CA reversed the NLRC and reinstated the Labor Arbiter.

Issue: Whether the petitioners as bus drivers and/or conductors are field personnel,
and thus entitled to overtime pay and SIL pay.

Ruling: The bus drivers and/or conductors are regular employees.

It is necessary to stress that the definition of a "field personnel" is not merely

concerned with the location where the employee regularly performs his duties but
also with the fact that the employee's performance is unsupervised by the employer.
Field personnel are those who regularly perform their duties away from the principal
place of business of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty.

Thus, in order to conclude whether an employee is a field employee, it is also

necessary to ascertain if actual hours of work in the field can be determined with
reasonable certainty by the employer. In so doing, an inquiry must be made as to
whether or not the employee's time and performance are constantly supervised by

237
the employer

The NLRC properly concluded that they are not field personnel but regular
employees who perform tasks usually necessary and desirable to the respondents'
business. Evidently, the petitioners are not field personnel as defined above and the
NLRC's finding in this regard is supported by the established facts of this case: (1)
the petitioners, as bus drivers and/or conductors, are directed to transport their
passengers at a specified time and place; (2) they are not given the discretion to
select and contract with prospective passengers; (3) their actual work hours could be
determined with reasonable certainty, as well as their average trips per month; and
(4) the respondents supervised their time and performance of duties.

Thus, they are consequently entitled to the benefits accorded to regular employees
of the respondents, including overtime pay and SIL pay.

HSY MARKETING LTD. CO., petitioner, v. VIRGILIO 0. VILLASTIQUE, respondent.

G.R. No. 219569 August 17, 2016

Facts: On January 3, 2003, petitioner hired respondent as a field driver for Fabulous
Jeans & Shirt & General Merchandise (Fabulous Jeans), tasked to deliver ready-to-

238
wear items and/or general merchandise for a daily compensation of P370.00.

On January 10, 2011, respondent figured in an accident when the service vehicle (a
2010-model Mitsubishi Strada pick up) he was driving in Iligan City bumped a
pedestrian, Ryan Dorataryo (Dorataryo). Fabulous Jeans shouldered the
hospitalization and medical expenses of Dorataryo in the amount of P64,157.15,
which respondent was asked to reimburse, but to no avail.

On February 24, 2011, respondent was allegedly required to sign a resignation letter,
which he refused to do. A couple of days later, he tried to collect his salary for that
week but was told that it was withheld because of his refusal to resign. Convinced
that he was already terminated on February 26, 2011, he lost no time in filing a
complaint for illegal dismissal with money claims against petitioner, Fabulous Jeans,
and its owner, Alexander G. Arqueza.

The Labor Arbiter dismissed the complaint for illegal dismissal as there was no
substantial evidence presented that respondent was dismissed. The Labor Arbiter
ruled however that because there was strained relationship between petitioner and
respondent, reinstatement was no longer feasible and petitioner was asked to deliver
separation pay and service incentive leave pay to respondent. NLRC and CA affirmed
the Labor Arbiter’s RULING.

Issue: Whether or not Villatisque, as a company driver, falls under the definition of a
regular employee and is thus entitled to service incentive leave pay.

Ruling: Yes, respondent Villatisque is a regular employee and should be awarded his
SIL.

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A regular employee’s task is necessary and desirable to the usual trade and business
of the company, and is thus entitled to the benefits including SIL. Villatisque is not a
field employee but rather a regular since he is expected to deliver goods at a
specified time and place and is under the control and supervision of HSY Marketing.
Company drivers who are under the control and direct supervision of management
officers – like respondent herein – are regular employees entitled to benefits
including SIL.

The Court likewise upholds the unanimous conclusion of the lower tribunals that
respondent had not been dismissed at all. Other than the latter's unsubstantiated
allegation of having been verbally terminated from his work, no substantial evidence
was presented to show that he was indeed dismissed or was prevented from
returning to his work. In the absence of any showing of an overt or positive act
proving that petitioner had dismissed respondent, the latter's claim of illegal
dismissal cannot be sustained, as such supposition would be self-serving, conjectural,
and of no probative value.

Hence, since there is no dismissal or abandonment to speak of, the appropriate

course of action is to reinstate the employee (in this case, herein respondent)
without, however, the payment of backwages. If respondent voluntarily chooses not
to return to work, he must then be considered as having resigned from employment.
This is without prejudice, however, to the willingness of both parties to continue with
their former contract of employment or enter into a new one whenever they so
desire.

While petitioner should not be adjudged liable for separation pay, the Court
nonetheless sustains the award of service incentive leave pay in favor of respondent;
in accordance with the finding of the CA that respondent was a regular employee of
petitioner and is, therefore, entitled to such benefit.

240
 DE LA SALLE ARANETA UNIVERSITY, PETITIONER, vs. JUANITO C. BERNARDO,
RESPONDENT.

G.R. No. 190809, February 13, 2017

Facts: On February 26, 2004, Bernardo filed a complaint against DLS-AU and its
owner/manager, Dr. Oscar Bautista (Dr. Bautista), for the payment of retirement
benefits.

Bernardo alleged that he started working as a part-time professional lecturer at DLS-

AU (formerly known as the Araneta University Foundation) on June 1, 1974 for an
hourly rate of P20.00. Bernardo taught for two semesters and the summer for the
school year 1974-1975. Bernardo then took a leave of absence from June 1, 1975 to
October 31, 1977 when he was assigned by the Philippine Government to work in
Papua New Guinea.

When Bernardo came back in 1977, he resumed teaching at DLS-AU until October
12, 2003, the end of the first semester for school year 2003-2004. Bernardo's
teaching contract was renewed at the start of every semester and summer.

However, on November 8, 2003, DLS-AU informed Bernardo through a telephone call

that he could not teach at the school anymore as the school was implementing the
retirement age limit for its faculty members. As he was already 75 years old,
Bernardo had no choice but to retire. At the time of his retirement, Bernardo was
being paid P246.50 per hour.

Bernardo immediately sought advice from the DOLE regarding his entitlement to
retirement benefits after 27 years of employment. In letters dated January 20, 2004
and February 3, 200, the DOLE, through its Public Assistance Center and Legal

241
Service Office, opined that Bernardo was entitled to receive benefits under Republic
Act No. 7641, otherwise known as the "New Retirement Law," and its Implementing
Rules and Regulations.

Yet, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo was not
entitled to any kind of separation pay or benefits. Dr. Bautista explained to Bernardo
that as mandated by the DLS-AU's policy and Collective Bargaining Agreement (CBA),
only full-time permanent faculty of DLS-AU for at least five years immediately
preceding the termination of their employment could avail themselves of the post­-
employment benefits. As part-time faculty member, Bernardo did not acquire
permanent employment under the Manual of Regulations for Private Schools, in
relation to the Labor Code, regardless of his length of service.

Issues: 1.) Are part-time employees excluded from the coverage of those entitled to
retirement benefits under RA 7641? 2.) Has a claim for retirement benefits filed
beyond the period provided for under Art. 291 of the Labor Code prescribed?

Ruling: 1) Yes. Bernardo’s employment with DLS-AU had always been for a fixed-
term and his contracts of employment with the school were valid, legal, and binding.
Based on RA 7641, its Implementing Rules and Secretary Quisumbing’s Labor
Advisory, Bernardo, as a part-time employee of DLS-AU, is entitled to retirement
benefits. The general coverage of RA 7641 is broad enough to encompass all private
sector employees, and part-time employees are not among those specifically
exempted from the law.

2) Bernardo’s right to retirement benefits and the obligation of DLS-AU to pay such
benefits are already established under Article 302 [287] of the Labor Code, as
amended by RA 7641. However, there was a violation of Bernardo’s right only after
DLS-AU informed him that the university no longer intended to offer him another
contract of employment, and already accepting his separation from service, Bernardo

242
sought his retirement benefits, but was denied by the school. Therefore, the cause of
action for Bernardo’s retirement benefits only accrued after the refusal of DLS-AU to
pay him the same, clearly expressed in Dr. Bautista’s letter dated February 12, 2004.
Hence, Bernardo’s complaint, filed with the NLRC on February 26, 2004, was filed
within the three-year prescriptive period provided under Article 291 of the Labor
Code.

243
 ROGELIO REYES, Petitioner, vs. NLRC, Fifth Division, and UNIVERSAL ROBINA
CORPORATION GROCERY DIVISION, Respondents.

G.R. No. 160233 August 8, 2007

citing Boie Takeda Chemicals vs. Dela Serna, 228 SCRA 329 [1993] & Phil. Duplicators
vs. NLRC, 241 SCRA 380 [1995]

Facts: Petitioner was employed as a salesman at private respondent's Grocery

Division in Davao City on August 12, 1977. He was eventually appointed as unit
manager of Sales Department-South Mindanao District, a position he held until his
retirement on November 30, 1997. Thereafter, he received a letter regarding the
computation of his separation pay. Insisting that his retirement benefits and 13th
month pay must be based on the average monthly salary of P42,766.19, which
consists of P10,919.22 basic salary and P31,846.97 average monthly commission,
petitioner refused to accept the check issued by private respondent in the amount of
P200,322.21. Instead, he filed a complaint before the arbitration branch of the NLRC
for retirement benefits, 13th month pay, tax refund, earned sick and vacation leaves,
financial assistance, service incentive leave pay, damages and attorney's fees.

Petitioner contends that the commissions form part of the basic salary, citing the
case of Philippine Duplicators, Inc. v. National Labor Relations Commission, wherein
the Court held that commissions earned by salesmen form part of their basic salary.
Private respondent counters that petitioner knew that the overriding commission is
not included in the basic salary because it had not been considered as such for a
long time in the computation of the 13th month pay, leave commissions, absences
and tardiness.

Issue: Whether or not the overriding commission is included in the computation of

the retirement benefits and 13th month pay?

244
Ruling: The Court in the Resolution dated February 15, 1995 in the Philippine
Duplicators case had clarified any seeming inconsistencies between Philippine
Duplicators and Boie-Takeda.

The Court thus clarified that in Philippine Duplicators, the salesmen’s commissions,
comprising a pre- determined percentage of the selling price of the goods sold by
each salesman, were properly included in the term basic salary for purposes of
computing the 13th month pay. The salesmen’s commissions are not overtime
payments, nor profit-sharing payments nor any other fringe benefit, but a portion of
the salary structure which represents an automatic increment to the monetary value
initially assigned to each unit of work rendered by a salesman.

Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical

representatives of Boie-Takeda Chemicals or by the rank and file employees of
Philippine Fuji Xerox Co., were excluded from the term basic salary because these
were paid to the medical representatives and rank-and-file employees as productivity
bonuses, which are generally tied to the productivity, or capacity for revenue
production, of a corporation and such bonuses closely resemble profit-sharing
payments and have no clear direct or necessary relation to the amount of work
actually done by each individual employee. Further, commissions paid by the Boie-
Takeda Company to its medical representatives could not have been sales
commissions in the same sense that Philippine Duplicators paid the salesmen their
sales commissions. Medical representatives are not salesmen; they do not effect any
sale of any article at all.

In this case, SC ruled that commissions should be excluded. The commissions which
Reyes received were not part of his salary structure but were profit-sharing payments
and had no clear, direct or necessary relation to the amount of work he actually
performed. The collection made by the salesmen from the sale transactions was the
profit of private respondent from which petitioner had a share in the form of a
commission.

245
 ARCO METAL PRODUCTS, CO., INC., and MRS. SALVADOR UY, petitioners, vs.
SAMAHAN NG MGA MANGGAGAWA SA ARCO METAL-NAFLU (SAMARM-
NAFLU), respondent.

G.R. No. 170734 May 14, 2008

Facts: Petitioner is a company engaged in the manufacture of metal products,

whereas respondent is the labor union of petitioner’s rank and file employees.
Sometime in December 2003, petitioner paid the 13th month pay, bonus, and leave
encashment of three union members in amounts proportional to the service they
actually rendered in a year, which is less than a full twelve (12) months. Respondent
protested the prorated scheme, claiming that on several occasions petitioner did not
prorate the payment of the same benefits to seven (7) employees who had not
served for the full 12 months. According to respondent, the prorated payment
violates the rule against diminution of benefits under Article 100 of the Labor Code.
Thus, they filed a complaint before the National Conciliation and Mediation Board
(NCMB).

Issue: Whether or not the grant of 13th month pay, bonus, and leave encashment in
full regardless of actual service rendered constitutes voluntary employer practice and,
consequently, whether or not the prorated payment of the said benefits constitute
diminution of benefits under Article 100 of the Labor Code.

Ruling: Any benefit and supplement being enjoyed by employees cannot be

reduced, diminished, discontinued or eliminated by the employer. The principle of
non-diminution of benefits is founded on the Constitutional mandate to "protect the
rights of workers and promote their welfare and to afford labor full protection. Said
mandate in turn is the basis of Article 4 of the Labor Code which states that all
doubts in the implementation and interpretation of this Code, including its
implementing rules and regulations shall be rendered in favor of labor.

246
Jurisprudence is replete with cases which recognize the right of employees to
benefits which were voluntarily given by the employer and which ripened into
company practice. Thus in DavaoFruits Corporation v. Associated Labor Unions, et al.
where an employer had freely and continuously included in the computation of the
13th month pay those items that were expressly excluded by the law, we held that
the act which was favorable to the employees though not conforming to law had
thus ripened into a practice and could not be withdrawn, reduced, diminished,
discontinued or eliminated. In Sevilla Trading Company v. Semana, we ruled that the
employer’s act of including non-basic benefits in the computation of the 13th month
pay was a voluntary act and had ripened into a company practice which cannot be
peremptorily withdrawn.

In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy
of freely, voluntarily and consistently granting full benefits to its employees
regardless of the length of service rendered. True, there were only a total of seven
employees who benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a minimum number
of years within which a company practice must be exercised in order to constitute
voluntary company practice. Thus, it can be six (6) years, three (3) years, or even as
short as two (2) years. Petitioner cannot shirk away from its responsibility by merely
claiming that it was a mistake or an error, supported only by an affidavit of its
manufacturing group head. Hence, petition was denied.

UNIVERSAL ROBINA SUGAR MILLING CORPORATION (URSUMCO) and/or

RENATO CABATI, as Manager, Petitioners, vs. AGRIPINO CABALLEDA and
ALEJANDRO CADALIN, Respondents.

G.R. No. 156644 July 28, 2008

247
Facts: Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a
domestic corporation engaged in the sugar milling business and petitioner Renato
Cabati is URSUMCO's manager. Respondent Agripino Caballeda (Agripino) worked as
welder for URSUMCO from March 1989 until June 23, 1997 with a salary of P124.00
per day, while respondent Alejandro Cadalin (Alejandro) worked for URSUMCO as
crane operator from 1976 up to June 15, 1997 with a salary of P209.30 per day.

On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a

Memorandum establishing the company policy on “Compulsory Retirement”
(Memorandum) of its employees. The memorandum provides that all employees
corporate-wide who attain 60 years of age on or before April 30, 1991 shall be
considered retired on May 31, 1991.

On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a
legitimate labor organization and the recognized sole and exclusive bargaining
representative of all the monthly and daily paid employees of URSUMCO, of which
Alejandro was a member, entered into a Collective Bargaining Agreement (CBA).
Article XV of the said CBA particularly provided that the retirement benefits of the
members of the collective bargaining unit shall be in accordance with law.

Agripino and Alejandro (respondents), having reached the age of 60, were allegedly
forced to retire by URSUMCO. Agripino averred that URSUMCO illegally dismissed
him from employment on June 24, 1997 when he was forced to retire upon reaching
the age of sixty (60) years old. Upon the termination of his employment, he
accepted his separation pay and applied for retirement benefits with the Social
Security System (SSS). Earlier, on April 15, 1997, Alejandro turned 60 years old. On
May 28, 1997, he filed his application for retirement with URSUMCO, attaching his
birth and baptismal certificates. On July 23, 1997, he accepted his retirement benefits
and executed a quitclaim in favor of URSUMCO.

248
Thereafter, on August 6, 1997, Agripino filed a Complaint for illegal dismissal,
damages and attorney’s fees before the Labor Arbiter (LA) of Dumaguete City. He
alleged that his compulsory retirement was in violation of the provisions of Republic
Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.

On August 26, 1997, Alejandro likewise filed a Complaint for illegal dismissal,
underpayment of retirement benefits, damages and attorney’s fees before the LA,
alleging that he was given only 15 days per year of service by way of retirement
benefits and further assails that his compulsory retirement was discriminatory
considering that there were other workers over sixty (60) years of age who were
allowed to continuously report for work.

Issue: Whether respondents were illegally terminated on account of compulsory

retirement or the same voluntarily retired.

Ruling: SC ruled in favor of the respondents.

Retirement is the result of a bilateral act of the parties, a voluntary agreement

between the employer and the employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the former. The age of retirement is
primarily determined by the existing agreement between the employer and the
employees. However, in the absence of such agreement, the retirement age shall be
fixed by law. Under Art. 287 of the Labor Code as amended, the legally mandated
age for compulsory retirement is 65 years, while the set minimum age for optional
retirement is 60 years.

In this case, it may be stressed that the CBA does not per se specifically provide for
the compulsory retirement age nor does it provide for an optional retirement plan.

249
It merely provides that the retirement benefits accorded to an employee shall be in
accordance with law. Thus, we must apply Art. 287 of the Labor Code which
provides for two types of retirement: (a) compulsory and (b) optional. The first takes
place at age 65, while the second is primarily determined by the collective bargaining
agreement or other employment contract or employer's retirement plan. In the
absence of any provision on optional retirement in a collective bargaining
agreement, other employment contract, or employer's retirement plan, an employee
may optionally retire upon reaching the age of 60 years or more, but not beyond 65
years, provided he has served at least five years in the establishment concerned. That
prerogative is exclusively lodged in the employee.

Indubitably, the voluntariness of the respondents' retirement is the meat of the

instant controversy. Petitioners postulate that respondents voluntarily retired
particularly when Alejandro filed his application for retirement, submitted all the
documentary requirements, accepted the retirement benefits and executed a
quitclaim in favor of URSUMCO. Respondents claim otherwise, contending that they
were merely forced to comply as they were no longer given any work assignment
and considering that the severance of their employment with URSUMCO is a
condition precedent for them to receive their retirement benefits.

Generally, the law looks with disfavor on quitclaims and releases by employees who
have been inveigled or pressured into signing them by unscrupulous employers
seeking to evade their legal responsibilities and frustrate just claims of employees.
They are frowned upon as contrary to public policy. A quitclaim is ineffective in
barring recovery of the full measure of a worker's rights, and the acceptance of
benefits therefrom does not amount to estoppels.

To be precise, only Alejandro was able to claim a partial amount of his retirement
benefit. Thus, it is clear from the decisions of the LA, NLRC and CA that petitioners
are still liable to pay Alejandro the differential on his retirement benefits. On the
other hand, Agripino was actually and totally deprived of his retirement benefit.

250
Moreover, the petitioners, not the respondents, have the burden of proving that the
quitclaim was voluntarily entered into. In previous cases, we have considered, among
others, the educational attainment of the employees concerned in upholding the
validity of the quitclaims which they have executed in favor of their employers.

LOURDES A. CERCADO, Petitioner, vs. UNIPROM, INC., Respondent.

G.R. No. 188154 October 13, 2010

Facts: Petitioner Lourdes cerdaco was an employee of UNIPROM Inc. for 22 years
since December 15, 1978. When respondent came up with a retirement plan,
sometime in 1980 and then amended in 2001, which provides that any employee
with a minimum of 20 years of service, regardless of age, may be retired at the
option of the employer. In December 2000, UNIPROM implemented a company-wide
retirement program, including herein petitioner. She was offered an early retirement
package amounting to P171, 982.90 but Cercado rejected the offer.

UNIPROM exercised its option under the retirement plan and decided to retire
petitioner effective February 15, 2001 so she was no longer given any work
assignment after the said date. This prompted the petitioner to file a complaint for
illegal dismissal before the Labor Arbiter, alleging that UNIPROM did not have abona
fide retirement plan, and even if there was, she didn‘t consent thereto. Respondent
averred that Cercado was automatically covered by the retirement plan when she
agreed to the company‘s rules and regulations, and that her retirement was an
exercise of management prerogative.

Issues: 1.) Whether or not UNIPROM has a bona fide retirement plan; 2.) Whether or
not petitioner was validly retired pursuant thereto

251
Ruling: Petition is meritorious.

Retirement is the result of a bilateral act of the parties, a voluntary agreement

between the employer and the employee whereby the latter, after reaching a certain
age, agrees to sever his or her employment with the former.

1.) Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as
amended by R.A 7641, pegs the age for compulsory retirement at 65 years old, while
the minimum age for optional retirement is set at 60 years. However, an employer is
free to impose a retirement age earlier than the foregoing mandates. This has been
upheld in numerous cases as a valid exercise of management prerogative.

In this case, petitioner was retired by UNIPROM at the age of 47, after having served
the company for 22 years, pursuant to the company‘s retirement plan, which
provides that employees who have rendered at least 20 years of service can be
retired at the option of the company. Respondent‘s retirement plan can be
expediently stamped with validity and justified under the all-encompassing phrase
―management prerogative‖ .

2.) No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic
that a retirement plan giving the employer the option to retire its employees below
the ages provided by law must be assented to and accepted by the latter, otherwise
its adhesive imposition will amount to a deprivation of property without due process.
In decided cases, the retirement plans were either embodied in the CBA, or
established after consultations and negotiations with the employees’ bargaining
representative. The consent of the employees to be retired even before the statutory
retirement age of 65 years was thus clear and unequivocal. Acceptance by the
employees of an early retirement age must be explicit, voluntary, free and
uncompelled.

252
 RADIO MINDANAO NETWORK, INC. and ERIC S. CANOY, Petitioners, vs.
DOMINGO Z. YBAROLA, JR. and ALFONSO E. RIVERA, JR., Respondents.

G.R. No. 198662 September 12, 2012

Facts: Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on
June 15, 1977 and June 1, 1983, respectively, by Radio Mindanao Network (RMN).
They eventually became account managers, soliciting advertisements and servicing
various clients of RMN.

On September 15, 2002, the respondents' services were terminated as a result of

RMN's reorganization/restructuring; they were given their separation pay —
P631,250.00 for Ybarola, and P481,250.00 for Rivera. Sometime in December 2002,
they executed release/quitclaim affidavits. Dissatisfied with their separation pay, the
respondents filed separate complaints (which were later consolidated) against RMN
and its President, Eric S. Canoy, for illegal dismissal with several money claims,
including attorney's fees. They indicated that their monthly salary rates were
P60,000.00 for Ybarola and P40,000.00 for Rivera.

Issue: Whether the amounts the respondents received represented a fair and
reasonable settlement of their claims

Ruling: The petitioners insist that the respondents' commissions were not part of
their salaries, because they failed to present proof that they earned the commission
due to actual market transactions attributable to them. They submit that the
commissions are profit-sharing payments which do not form part of their salaries. We
are not convinced. If these commissions had been really profit-sharing bonuses to
the respondents, they should have received the same amounts.

Yet, as the NLRC itself noted, Ybarola and Rivera received P372,173.11 and

253
P586,998.50 commissions, respectively, in 2002. The variance in amounts the
respondents received as commissions supports the CA's finding that the salary
structure of the respondents was such that they only received a minimal amount as
guaranteed wage; a greater part of their income was derived from the commissions
they get from soliciting advertisements; these advertisements are the "products" they
sell. As the CA aptly noted, this kind of salary structure does not detract from the
character of the commissions being part of the salary or wage paid to the employees
for services rendered to the company, as held in Philippine Duplicators, Inc. v. NLRC.

The petitioners' reliance on our ruling in Talam v. National Labor Relations

Commission, regarding the "proper appreciation of quitclaims," as they put it, is
misplaced. While Talam, in the cited case, and Ybarola and Rivera, in this case, are
not unlettered employees, their situations differ in all other respects. In Talam, the
employee received a valuable consideration for his less than two years of service with
the company; he was not shortchanged and no essential unfairness took place. In
this case, as the CA noted, the separation pay the respondents each received was
deficient by at least P400, 000.00; thus, they were given only half of the amount they
were legally entitled to. To be sure, a settlement under these terms is not and cannot
be a reasonable one, given especially the respondents' length of service — 25 years
for Ybarola and 19 years for Rivera. The CA was correct when it opined that the
respondents were in dire straits when they executed the release/quitclaim affidavits.
Without jobs and with families to support, they dallied in executing the quitclaim
instrument, but were eventually forced to sign given their circumstances.

254
 ELEAZAR S. PADILLO, Petitioner vs. RURAL BANK OF NABUNTURAN, INC. and
MARK S. OROPEZA, Respondents.

G.R. No. 199338 January 21, 2013

Facts: On October 1, 1977, petitioner, the late Eleazar Padillo (Padillo), was employed
by respondent Rural Bank of Nabunturan, Inc. (Bank) as its SA Bookkeeper. Due to
liquidity problems which arose sometime in 2003, the Bank took out
retirement/insurance plans with Philippine American Life and General Insurance
Company (Philam Life) for all its employees in anticipation of its possible closure and
the concomitant severance of its personnel.

In this regard, the Bank procured Philam Plan Certificate of Full Payment No. 88204,
Plan Type 02FP10SC, Agreement No. PP98013771 (Philam Life Plan) in favor of
Padillo for a benefit amount of P100,000.00 and which was set to mature on July 11,
2009. During the latter part of 2007, Padillo suffered a mild stroke due to
hypertension which consequently impaired his ability to effectively pursue his work.
On September 10, 2007, he wrote a letter addressed to respondent Oropeza, the
president of the bank, expressing his intention to avail of an early retirement
package. Despite several follow-ups, his request remained unheeded.

On October 3, 2007, Padillo was separated from employment due to his poor and
failing health as reflected in a Certification dated December 4, 2007 issued by the
Bank. Not having received his claimed retirement benefits, Padillo filed with the NLRC
a complaint for the recovery of unpaid retirement benefits.

Issue: Whether or not Padillo is entitled to claim for separation and retirement
benefits under the Labor Code?

255
Ruling: The Labor Code provision on termination on the ground of disease under
Article 297 does not apply in this case, considering that it was the petitioner and not
the Bank who severed the employment relations. It was Padillo who voluntarily
retired and that he was not terminated by the Bank.

Under article 300 of the labor code, in the absence of any applicable agreement, an
employee must (1) retire when he is at least sixty (60) years of age and (2) serve at
least (5) years in the company to entitle him/her to a retirement benefit of at least
one-half (1/2) month salary for every year of service, with a fraction of at least six (6)
months being considered as one whole year. Notably, these age and tenure
requirements are cumulative and non-compliance with one negates the employee's
entitlement to the retirement benefits under Article 300 of the Labor Code.

In this case, it is undisputed that there exists no retirement plan, collective bargaining
agreement or any other equivalent contract between the parties which set out the
terms and condition for the retirement of employees, with the sole exception of the
Philam Life Plan which premiums had already been paid by the Bank. In the absence
of any applicable contract or any evolved company policy, Padillo should have met
the age and tenure requirements set forth under Article 300 of the Labor Code to be
entitled to the retirement benefits provided therein.

Unfortunately, while Padillo was able to comply with the five (5) year tenure
requirement — as he served for twenty-nine (29) years — he, however, fell short with
respect to the sixty (60) year age requirement given that he was only fifty-five (55)
years old when he retired. Therefore, without prejudice to the proceeds due under
the Philam Life Plan, petitioners' claim for retirement benefits must be denied.

256
GRACE CHRISTIAN HIGH SCHOOL, represented by its Principal, DR. JAMES TAN,
Petitioner, vs. FILIPINAS A. LAVANDERA, Respondent.

G.R. No. 177845 August 20, 2014

Facts: Filipinas was employed by petitioner Grace Christian High School (GCHS) as
high school teacher since June 1977, with a monthly salary of 18,662.00 as of May
31, 2001.

On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal,
non-payment of service incentive leave (SIL) pay, separation pay, service allowance,
damages, and attorney’s fees against GCHS and/or its principal, Dr. James Tan. She
alleged that on May 11, 2001, she was informed that her services were to be
terminated effective May 31, 2001, pursuant to GCHS’ retirement plan which gives
the school the option to retire a teacher who has rendered at least 20 years of
service, regardless of age, with a retirement pay of one-half (½) month for every year
of service. At that time, Filipinas was only 58 years old and still physically fit to work.
She pleaded with GCHS to allow her to continue teaching but her services were
terminated, contrary to the provisions of Republic Act No. (RA) 7641, otherwise
known as the “Retirement Pay Law.”

The Labor Arbiter dismissed the illegal dismissal case but found the retirement
benefits payable under GCHS plan to be deficient. NLRC reversed LA’s award and
held that retirement pay should be computed based on her monthly salary at the
time of her retirement. CA modified NLRC’s decision and ruled that the computation
of “one-half month salary” by equating it to”22.5 days”.

Issue: Whether or not the multiplier “22.5 days” is to be used in computing the
retirement pay differentials of Filipinas.

257
Held: Yes. RA 7641, which was enacted on December 9, 1992, amended Article 287
of the Labor Code, providing for the rules on retirement pay to qualified private
sector employees in the absence of any retirement plan in the establishment. The
said law states that “an employee’s retirement benefits under any collective
bargaining agreement (CBA) and other agreements shall not be less than those
provided” under the same – that is, at least one-half (1/2) month salary for every
year of service, a fraction of at least six (6) months being considered as one whole
year – and that “unless the parties provide for broader inclusions, the term one-half
(1/2) month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th
month pay and the cash equivalent of not more than five (5) days of service
incentive leaves.”

Applicability of the 1/2 month salary provision

1. There is no CBA or other applicable agreement providing for retirement

benefits to employees, or

2. There is a CBA or other applicable agreement providing for retirement

benefits but it is below the requirement set by law.

Verily, the determining factor in choosing which retirement scheme to apply is still
superiority in terms of benefits provided.

In the present case, GCHS has a retirement plan for its faculty and non-faculty
members, which gives it the option to retire a teacher who has rendered at least 20
years of service, regardless of age, with a retirement pay of one-half (1/2) month for
every year of service. Considering, however, that GCHS computed Filipinas’ retirement
pay without including one-twelfth (1/12) of her 13th month pay and the cash
equivalent of her five (5) days SIL, both the NLRC and the CA correctly ruled that
Filipinas’ retirement benefits should be computed in accordance with Article 287 of
the Labor Code, as amended by RA 7641, being the more beneficent retirement
scheme. They differ, however, in the resulting benefit differentials due to divergent

258
interpretations of the term “one-half (1/2) month salary” as used under the law.

Moreover, the Court held that the award of legal interest at the rate of 6% per
annum on the amount of P68,150.00 representing the retirement pay differentials
due Filipinas should be reckoned from the rendition of the LA’s Decision on March
26, 2002 and not from the filing of the illegal dismissal complaint.

GOODYEAR PHILIPPINES, INC. and REMEGIO M. RAMOS, Petitioners, vs. MARINA

L. ANGUS, Respondent.

G.R. No. 185449 November 12, 2014

Facts: Angus was employed by Goodyear on November 16, 1966 and occupied the
position of Secretary to the Manager of Quality and Technology. In order to maintain
the viability of its operations in the midst of economic reversals, Goodyear
implemented cost-saving measures which included the streamlining of its workforce.
Angus’ position was declared as redundant or “no longer necessary”. In a letter by
the HR:

“As Company practice, termination due to redundancy or retrenchment is

paid at 45 days' pay per year of service. Considering, that you have
rendered 34.92 years of service to the Company as of October 18, 2001,
and have reached the required minimum age of 55 to qualify for early
retirement, Management has decided to grant you early retirement benefit
at 47 days' per year of service.”

“The Company will pay you the following termination benefits on October
18, 2001: 47 days' pay per year of service (which will come from the
Pension Fund), fractions of 13th and 14th months pay, longevity pay,
emergency leave and any earned and unused vacation and/or sick leave.
The refund of your contributions to the Goodyear Savings Plan, as well as

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 the Company's share will be handled separately by Security Bank
Corporation, the Administrator of said Plan.”

Upon receipt, Angus responded through a letter of even date;

Dear Sirs:

With reference to the attached letter dated September 18, 2001, I accept
Management decision to avail early retirement benefit. However, I do not
agree on the terms stated therein. I suggest I be given a premium of
additional 3 days for every year of service which is only 6.3% or a total of
50 days. I gathered it is Philippine industry's practice to give premium to
encourage employees to avail of the early retirement benefit.

Acceptance of this proposal will make my separation from Goodyear

pleasant.

On November 20, 2001, Angus accepted the checks which covered payment of her
retirement benefits computed at 47 days' pay per year of service and other company
benefits. However, she put the following annotation in the acknowledgement receipt
thereof:

Received under protest — amount is not acceptable. Acceptance is on

condition that I will be given a premium of additional 3 days for every
year of service.

Since my service was terminated due to redundancy, I now claim my

separation pay as mandated by law. This is a separate claim from my early
retirement benefit.

Allegedly because of the above-quoted annotation, and also of Angus' refusal to sign

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a Release and Quitclaim, petitioners took back the checks.

In response, Ramos wrote her a letter explaining that the company has already
offered her the most favorable separation benefits due to redundancy, that is, 47
days' pay per year of service instead of the applicable rate of 45 days' pay per year
of service.

Angus reiterated her claim for both termination pay and early retirement benefits.

On January 17, 2002, Angus finally accepted a check in the amount of P1,958,927.89
purportedly inclusive of all termination benefits computed at 47 days' pay per year of
service. She likewise executed a Release and Quitclaim in favor of Goodyear.

On February 5, 2002, Angus filed with the Labor Arbiter a complaint for illegal
dismissal with claims for separation pay, damages and attorney's fees against
petitioners.

In her Position Paper, Angus claimed that her termination by reason of redundancy
was effected in violation of the Labor Code for it was not timely reported to the
DOLE and no separation pay was given to her; that the separation pay to which she
is entitled by law is entirely different from the retirement benefits that she received;
that nothing in the company's Retirement Plan under the CBA, the CBA itself or the
Employment Contract prohibits the grant of more than one kind of separation pay;
and, that she was only forced to sign a quitclaim after accepting her retirement
benefits.

On the other hand, petitioners asseverated in their Position Paper that Angus was
validly dismissed for an authorized cause; that she voluntarily accepted her
termination benefits and freely executed the corresponding quitclaim; that her

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receipt of early retirement benefits equivalent to 47 days' pay for every year of
service, which amount is higher than the regular separation pay, had effectively
barred her from recovering separation pay due to redundancy.

Issue: Is the petitioner entitled to separation pay AND early retirement benefit?

Ruling: Angus is entitled to both separation pay and early retirement benefit due to
the absence of a specific provision in the CBA prohibiting recovery of both.

An employee is entitled to recover both separation pay and retirement benefits in

the absence of a specific prohibition in the Retirement Plan or CBA. An employee's
right to receive separation pay in addition to retirement benefits depends upon the
provisions of the company's Retirement Plan and/or CBA.

Petitioners allege that there is a provision in the last CBA against the recovery of
both retirement benefits and separation pay. To support their claim, petitioners
submitted a copy of what appears to be a portion of the company CBA entitled
"Retirement Plan, Life Insurance, Physical Disability Pay and Resignation Pay." Section
1, Article XI thereof provides that the availment of retirement benefits precludes
entitlement to any separation pay.

Angus presented the parties' 2001-2004 CBA, it did not contain any restriction on the
availment of benefits under the company's Retirement Plan AND of separation pay.

The amount Angus received from petitioners represented only her retirement pay
and not separation.

Petitioners also argue that Angus is not entitled to retirement pay because she does

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not meet the requirements enumerated in the Retirement Plan provision of the CBA.
The Court disagrees. While it is obvious that Angus is not entitled to compulsory
retirement as she has not yet reached the age of 60, there is no denying, that she is
qualified for early retirement. Under the provision of the Retirement Plan of the CBA,
a worker who is at least 50 years old and with at least 15 years of service, and who
has been recommended by the President of the Union for early retirement and duly
approved by the Human Resources Director, shall be entitled to lump sum retirement
benefits. Angus has met all these requirements.

Retirement benefits and separation pay are not mutually exclusive. Retirement
benefits are a form of reward for an employee's loyalty and service to an employer
and are earned under existing laws, CBAs, employment contracts and company
policies. Separation pay is that amount which an employee receives at the time of
his severance from employment, designed to provide the employee with the
wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 of the Labor
Code or in illegal dismissal cases when reinstatement is not feasible. In the case at
bar, Article 283 clearly entitles Angus to separation pay apart from the retirement
benefits she received from petitioner.

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 BANCO DE ORO UNIBANK, INC., Petitioner, v. GUILLERMO C. SAGAYSAY,
Respondent.

G.R. No. 214961, September 16, 2015

Facts: On May 16, 2006, respondent Guillermo Sagaysay was hired by petitioner
Banco De Oro Unibank, Inc., (BDO) as Senior Accounting Assistant 5 in its San Jose,
Nueva Ecija, branch as a result of a merger with United Overseas Bank (UOB), with
BDO as the surviving bank. Sagaysay was previously employed in UOB from 2004 to
2006 or for two (2) years. Prior thereto, he worked for Metropolitan Bank and Trust
Co. (Metrobank) from 1976 to 2004 for a period of 28 years.

On January 8, 2010 BDO informed Sagaysay that, pursuant to the retirement policy
of the bank which mandated its retirement age to be sixty (60), he would be formally
retired effective September 1, 2010, a few days after his 60th birthday. Sagaysay sent
several requests to extend his employment but these requests were denied. Sagaysay
then signed Release, Waiver and Quitclaim, dated October 22, 2010, for and in
consideration of P98,376.14.

On January 10, 2011, Sagaysay filed a complaint for illegal dismissal with prayer for
reinstatement and payment of backwages, moral damages, exemplary damages, and
attorney's fee against BDO before the Labor Arbiter (LA). He claimed that despite his
appeal, BDO compulsory retired him on September 1, 2010. As a result, he and his
family suffered damages in the amount of P2,225,403.00 which he would have
received if he was made to retire at the age of sixty-five.

The Labor Arbiter ruled that Sagaysay was illegally dismissed because he was forced
to avail of an optional retirement at the age of sixty (60) which was contrary to the
provisions of Article 287 of the Labor Code. The NLRC reversed and set aside the
ruling of the LA and concluded that when Sagaysay accepted his employment with
BDO, he assented to the provisions of the retirement plan. The CA rendered the

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assailed decision which reversed the NLRC ruling. It opined that Sagaysay was forced
to participate in the retirement plan. Equally, the quitclaim he executed was not
given credence because his subsequent filing of a complaint for illegal dismissal
manifested that he had no intention to relinquish his employment

Issue: Whether the retirement plan is valid and effective and the mandatory
retirement age of 60 is also binding.

Ruling: The petition essentially centers on whether the June 1, 1994 retirement plan
is valid and effective against Sagaysay. To resolve this issue, a review of the relevant
laws and jurisprudence regarding the compulsory retirement age is warranted.

Article 287 of the Labor Code is the primary provision which governs the age of
retirement. Doubtless, under this provision, the retirement age is primarily
determined by the existing agreement or employment contract. Only in the absence
of such an agreement shall the retirement age be fixed. Retirement plans allowing
employers to retire employees who have not yet reached the compulsory retirement
age of 65 years are not per se repugnant to the constitutional guaranty of security of
tenure. By its express language, the Labor Code permits employers and employees to
fix the applicable retirement age at 60 years or below, provided that the employees'
retirement benefits under any CBA and other agreements shall not be less than those
provided therein.

After a judicious study of records, the Court is convinced that Sagaysay was
undeniably informed and had consented to the retirement plan of BDO before his
compulsory retirement.

For four years, from the time he was employed until his retirement and having actual
knowledge of the BDO retirement plan, Sagaysay had every opportunity to question
the same, if indeed he knew it would not be beneficial to him. Yet, he did not
express his dissent. In fact, he recognized in one of his emails that "the time has

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come that BDO Retirement Program will be implemented to those reaching the age
of sixty (60).

The NLRC ruling is reinstated.

MAUREEN P. PEREZ, Petitioner, v. COMPARTS INDUSTRIES, INC., Respondent.

G.R. No. 197557, October 05, 2016

Facts: Perez (petitioner) started her employment with CII (respondent) on 16 July
1988 and became a regular employee thereof on 01 September 1988. After years of
working and after several promotions, she was eventually appointed as Marketing
Manager. She held this position from 1998 up to 10 January 2009, the date when she
resigned from her work.

CII has a retirement program for its managerial employees or officers covered by
"Comparts Industries, Inc. Employees Retirement Plan" (Retirement Plan) that took
effect on 01 June 1999 and was amended on 25 January 2001. Included therein are
provisions relating to optional or early retirement and optional retirement benefits.

Prior to her resignation, Perez manifested to CII sometime in November 2007 her
intention to avail of the optional retirement program since she was already qualified
to retire under it. Her application was denied. In January 2008, while vacationing in
the United States of America (USA), she again filed an application for optional
retirement to take advantage of a job offered to her in the said country. Still, her
application was denied. CII justified its denial of Perez's application saying that, under
the Retirement Plan, it has the option to grant or deny her application for optional
retirement and considering that it is experiencing financial crisis, it has no choice but
to disallow her intention.

Perez maintains that she is entitled to separation pay: (1) primarily through the

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optional retirement program under the Retirement Plan having rendered more than
twenty (20) years of service to CII, (2) through a similar optional retirement program
under the CBA which has been likewise extended to other managerial/middle
management employees in several instances, or (3) a retrenchment program
undertaken by CII because of the global financial crisis.

Issue: Whether or not petitioner is entitled to optional retirement program.

Ruling: First and foremost, the Court emphasized that termination of employment by
the employee, as in this instance, does not entitle the employee to separation pay.
Separation pay is that amount which an employee receives at the time of his
severance from employment, designed to provide the employee with the wherewithal
during the period that he is looking for another employment and is recoverable only
in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal
dismissal cases when reinstatement is not feasible.

Second, in the matter of Perez's entitlement to optional retirement benefits, the

Court agrees with the NLRC and the appellate court that as a managerial employee,
she is covered by the Retirement Plan for CII Officers which took effect in 1999 and
was amended in 2001.

A Retirement Plan in a company partakes the nature of a contract, with the employer
and the employee as the contracting parties. It creates a contractual obligation in
which the promise to pay retirement benefits is made in, consideration of the
continued faithful service of, the employee for the requisite period. Being a contract,
the employer and employee may establish such stipulations, clauses, terms and
conditions as they may deem convenient.

Observably, as stipulated in the Retirement Plan, it is not enough that an employee

267
of CII who wants to optionally retire meets the conditions for optional retirement. CII
has to give its consent for the optional retirement to operate. In this case, Perez's
application for optional retirement was denied several times as CII still needs her
services. Perez's unilateral act of retiring without the consent of CII does not bind the
latter with the provisions of the Retirement Plan. Therefore, CII is not liable to give
Perez the optional retirement benefits provided therein.

Clearly, the age of retirement is primarily determined by the existing agreement or

employment contract. In the absence of such agreement, the retirement age shall be
fixed by law. Under the law, the mandated compulsory retirement age is set at 65
years, while the minimum age for optional retirement is set at 60 years.

DE LA SALLE ARANETA UNIVERSITY, petitioner, vs. JUANITO C. BERNARDO,

respondent

G.R. No. 190809, February 13, 2017

Facts: On June 1, 1974, Juanito Bernardo (Bernardo) started working as a part-time

professional lecturer at DLS-AU for an hourly rate of P20.00. He taught for two
semesters and the summer for the school year 1974-1975. He then took a leave of
absence from June 1, 1975 for October 31, 1977 when he was assigned by the
Philippine Government to work in Papua New Guinea. He came back in 1977 and
resumed teaching at DLS-AU until October 12, 2003. However, on November 8, 2003,
the school informed Bernardo that he could not teach at the school anymore
because they were implementing the retirement age limit for its faculty members.
Since, Bernardo was already 75 years old, he had no choice but to retire. At the time
of his retirement, he was being paid P256.50 per hour. He immediately sought advice
from DOLE.

DOLE

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Bernardo was entitled to receive befits under RA No. 7641 or the New Retirement
Law and its Implementing Rules and Regulations.

However, Dr. Bautista, the owner/manager of DLS-AU, believes otherwise. He

explained that under the DLS-AU’s policy and CBA, only full-time permanent faculty
of DLS-AU for at least five years immediately preceding the termination of their
employment could avail themselves of the post-employment benefits.

Furthermore, Bernardo, as a part-time employee, was not entitled to retirement

benefits pursuant to any retirement plan, CBA, or employment contract. Their
contract was for a fixed term i.e., one semester.

Labor Arbiter

It dismissed Bernardo’s complaint on the ground of prescription because he is

already 75 years old, and is way past the compulsory retirement age. For failure to
claim the retirement benefits/pay to which he claims to be entitled within 3 years
from the time he reached the age of 65, his claim should be forever barred.

National Labor Relations Commission

It reversed the Labor Arbiter’s ruling and found that Bernardo timely filed his
complaint for retirement benefits. DLS-AU and Dr. Bautista, knowing fully well that
Bernardo already reached the compulsory age of retirement, still extended Bernardo’s
employment.

Thus, Bernardo’s cause of action accrued only on November 8, 2003. The petitioners
are estopped from applying the prescriptive period because they are the ones who

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permitted Bernardo to work beyond retirement age.

Court of Appeals

It affirmed the NLRC judgment. One of the things that CA agreed to is that, part-
time employees are not among those excluded from enjoying retirement benefits.

Issue: Is Bernardo still entitled to claim his retirement benefits?

Ruling: Yes, as a part-time employee with fixed-term employment, Bernardo is

entitled to retirement benefits.

In Aquino v. NLRC, Supreme Court held that retirement benefits are intended to help
the employee enjoy the remaining years of his life, lessening the burden of worrying
for his financial support, and are a form of reward for his loyalty and service to the
employer. Retirement benefits, where not mandated by law, may be granted by
agreement of the employees and their employer or as a voluntary act on the part of
the employer.

In this case, since Bernardo has not been granted retirement benefits under any
agreement with or by voluntary act of DLS-AU, Bernardo can claim retirement
benefits by mandate of any law.

RA 7641 is a curative social legislation. It precisely intends to give the minimum

retirement benefits to employees not entitled to the same under their CBA or other
agreements. It also applies to establishments with existing CBA or voluntary
retirement plans whose benefits are less than those prescribed in said law.

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Furthermore, RA No. 7641 states that “any employee may be retired upon reaching
the retirement age xxx;” and as provided under the Guidelines for the Effective
Implementation of RA No. 7641 which includes in its coverage, 7“part-time
employees, employees of service and other job contractors and domestic helpers or
persons in the personal service of another.” The Implementing Rules provide that it
also applies to “all employees in the private sector, regardless of their position,
designation or status and irrespective of the method by which their wages are paid,
except to those specifically exempted xxx.”

DLS-AU not only kept its silence that Bernardo had already reached the compulsory
retirement age of 65 years old, but even continuously offered him contracts of
employment for the next 10 years. Bernardo’s right to retirement benefits and the
obligation of DLS-AU to pay such are already established under Article 302 [287] of
the Labor Code, as amended by RA No. 7641.

Editha M. Catotocan, petitioner, vs. Lourdes School of Quezon City, Inc./Lourdes

School, Inc. and Rev. Fr. Cesar F. Acuin, OFM CAP, Rector, respondents.

G.R. No. 213486 April 26, 2017

Facts: Petitioner Catotocan started her employment in Lourdes School of Quezon

City (LSQC) in 1971 as a music teacher. By the school year 200-2006, she had already
served for 35 years.

LSQC has a retirement plan providing for retirement at 60 years old or separation
pay depending on the number of years of service. In relation to its retirement policy,
LSQC issued Administrative Order No. 2003-004. The said order provides that “An
employee may apply for retirement or be retired by the school when he/she reaches
the age of sixty (60) years or when he/she completes thirty (30) years of service,

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whichever comes first.”

Petitioner and other co-employees assailed the said order. They argued that they do
not deserve to be retired and be rehired when they are, in fact, very much capable of
doing their duties and responsibilities.

LSQC retired Petitioner sometime in June 2006 after completing 35 years of service.
Full retirement benefits were given to her computed based on the latest salary
multiplied by the total years of service. Under the school's retirement policy, 60% of
her retirement benefit was paid in lump sum by the trustee bank, and the balance
was to be paid in equal monthly pensions over the next three (3) years. 60% of that
amount, or Five Hundred Seventy-One Thousand Seven Hundred and One Philippine
Pesos (Php571,701.00) was credited to her savings account, which she opened in
accordance with the school's retirement policy.

Petitioner was told that if she desires, she may signify in writing her intent to
continue serving the school on a contractual basis. She responded by submitting a
"Letter of Intent" on February 14, 2006. Petitioner was rehired for two school years as
a guidance counselor. When she re-applied for the third time, LSQC no longer
considered her application. Petitioner filed a complaint for illegal dismissal. Both LA
and NLRC dismissed Catotocan’s complaint. Likewise, the CA dismissed the petition.

Issue: Whether or not the receipt of Catotocan of her retirement benefits will not
stop her from pursuing an illegal dismissal complaint against LSQC.

Ruling: SC denied the petition. LSQC’s retirement plan is not per se repugnant to the
constitutional guaranty of security of tenure. By its express language, the Labor Code
permits employers and employees to fix the applicable retirement age at 60 years or
below, provided that the employees' retirement benefits under any CBA and other

272
agreements shall not be less than those provided therein.

Catotocan's subsequent actions after her "retirement" are actually tantamount to her
consent to LSQC's retirement policy of retiring her from service upon serving the
school for at least thirty (30) continuous years.

(1) after being notified that she was being retired from service by LSQC, she
opened a savings account with BDO, the trustee bank;

(2) she accepted all the proceeds of her retirement package: the lump sum
and all the monthly payments credited to her account until June 2009; and

(3) upon acceptance of the retirement benefits, there was no notation that
she is accepting the retirement benefits under protest or without prejudice to
the filing of an illegal dismissal case.

Moreover, petitioner’s correspondence with the respondent following her

"retirement” shows her voluntary assent to the latter’s retirement policy. Said letter
stipulates that “re-hiring was exclusive only for those employees who have availed of
the retirement benefits or who have been retired by the school but who has not yet
reached 65 years of age.

Thus, since petitioner has availed of this contractual employment which is exclusively
offered only to LSQC's qualified retirees for three (3) consecutive years following her
retirement, she can no longer dispute that she has indeed legitimately retired from
employment, and was not illegally dismissed.

Furthermore, petitioner’s availment of the re-hiring program of LSQC for qualified

retirees for 3 consecutive years is a supervening event that would reveal that she has
already voluntarily and freely signified her consent to the retirement policy despite
her initial opposition to it.

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 PHILIPPINE AIRLINES, INC., petitioner, vs. ARJAN T. HASSARAM, respondent

G. R. No. 217730, June 05, 2017

Facts: Hassaram filed a case against PAL for illegal dismissal and the payment of
retirement benefits, damages, and attorney's fees. He claimed that he had applied for
retirement from PAL in August 2000 after rendering 24 years of service as a pilot, but
that his application was denied. Instead, PAL informed him that he had lost his
employment in the company as of 9 June 1998, in view of his failure to comply with
the Return to Work Order Issued by the Secretary of Labor against members of the
Airline Pilots Association of the Philippines (ALPAP) on 7 June 1998.

Hassaram argued that he was not covered by the Secretary's Return to Work Order;
hence, PAL had no valid ground for his dismissal. In the course of the trial it was
found that Hassaram's purported receipt of retirement benefits in the amount of
P4,456,817.75 pursuant to the PAL-ALPAP Plan.

PAL likewise alleged that, as a consequence of this newly discovered payment, any
claim made by Hassaram for retirement benefits should be deemed extinguished.

Issues: 1.) Whether the amount received by Hassaram under the PAL-ALPAP
Retirement Plan should be deemed part of his retirement pay together with PAL
Pilots' Retirement Benefit Plan which is another retirement plan aside from PAL-
ALPAP; 2.)Whether Hassaram is entitled to receive retirement benefits under Article
287 of the Labor Code.

Ruling: The Supreme Court ruled that Hassaram is entitled to both retirement plans
but seeing Hassaram has received his benefits under the Plan, he is now entitled to
claim only his remaining benefits under the CBA, i.e., the amount of P120,000 (24
years x P5,000) for his 24 years of service to the company. Since the PAL-ALPAP

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retirement fund raised from contributions exclusively from [PAL] of amounts
equivalent to 20% of each pilot's gross monthly pay, pilot gets an amount equivalent
to 240% of his gross monthly income for every year of service he rendered to
petitioner. This is in addition to the amount of not less than P100,000.00 that he shall
receive under the 1967 Retirement Plan.

As to the issue of whether or not Hassaram is entitled to receive retirement benefits

under Article 287 of the Labor Code, the petitioner would only be receiving a
retirement pay equivalent to at least one-half (1/2) of his monthly salary for every
year of service, a fraction of at least six (6) months being considered as one whole
year. Which means that, one-half (1/2) month salary means 22.5 days: 15 days plus
2.5 days representing one-twelfth (1/12) of the 13th month pay and the remaining 5
days for service incentive leave.

Comparing the benefits under the two (2) retirement schemes, it can readily be
perceived that the 22.5 days’ worth of salary for every year of service provided under
Article 287 of the Labor Code cannot match the 240% of salary or almost two and a
half worth of monthly salary per year of service provided under the PAL Pilots'
Retirement Benefit Plan, which will be further added to the P125,000.00 to which the
petitioner is entitled under the PAL-ALPAP Retirement Plan. Clearly then, it is to the
petitioner's advantage that PAL's retirement plans were applied in the computation
of his retirement benefits.

ALFREDO F. LAYA, JR., petitioner, vs. PHILIPPINE VETERANS BANK and RICARDO
A. BALBIDO, JR., respondents
 G.R. No. 205813, January 10, 2018

Facts: On 1 June 2001, petitioner Alfredo F. Laya, Jr. was hired by respondent
Philippine Veterans Bank as its Chief Legal Counsel with a rank of Vice President.

As a Senior benefit of a bank, he was entitled to the following benefits:

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On the other hand, Private respondent has its Retirement Plan Rules and Regulations
which provides among others, as follows:

• Car Plan limit of P700,000.00, without equity on your part; a gasoline

subsidy of 300 liters per month and subject further to The Car Plan Policy of
the Bank.

• Membership in a professional organization in relation to your profession

and/or assigned functions in the Bank.

• Membership in the Provident Fund Program/Retirement Program.

xxx

Private respondent has its Retirement Plan Rules and Regulations which provides
among others, as follows:

Section 1. Normal Retirement. The normal retirement date of a Member shall

be the first day of the month coincident with or next following his attainment
of age 60.

Section 2. Early Retirement. A Member may, with the approval of the Board of
Directors, retire early on the first day of any month coincident with or
following his attainment of age 50 and completion of at least 10 years of
Credited Service.

Section 3. Late Retirement. A Member may, with the approval of the Board of
Directors, extend his service beyond his normal retirement date but not
beyond age 65. Such deferred retirement shall be on a case by case and
yearly extension basis.

On 14 June, 2007, petitioner was informed thru letter by the private respondent of
his retirement effective on 1 July 2007.

On 21 June 2007 petitioner wrote Col. Emmanuel V. De Ocampo, Chairman of

respondent bank, requesting for an extension of his tenure for two (2) more years
pursuant to the Bank's Retirement Plan (Late Retirement).

276
However on 18 July 2007, petitioner was informed thru its president Ricardo A.
Balbido Jr. that his request for an extension of tenure was denied.

According to the petitioner, he was made aware of the retirement plan of (PVB) only
after he had long been employed and was shown a photocopy of the Retirement
Plan Rules and Regulations, but PVB's President Ricardo A. Balbido, Jr. had told him
then that his request for extension of his service would be denied "to avoid
precedence." 4

PVB certified his retirement from the service as of July 1, 2007 on March 6, 2008. 6

On December 24, 2008, the petitioner filed his complaint for illegal dismissal against
PVB and Balbido, Jr. in the NLRC to protest his unexpected retirement.

On August 28, 2009, the Labor Arbiter rendered a decision dismissing the complaint
for illegal dismissal

On June 21, 2010, the NLRC affirmed the dismissal of the petitioner's complaint

Issue: Whether or not the petitioner was validly retired by PVB at age 60.

Ruling: No, petitioner Alfredo Laya was not validly retired at age 60.

The retirement of employees in the private sector is governed by Article 287 of the
Labor Code:

Art. 287. Retirement.Any employee may be retired upon reaching the

retirement age established in the collective bargaining agreement or other
applicable employment contract.

In case of retirement, the employee shall be entitled to receive such

retirement benefits as he may have earned under existing laws and any

277
 collective bargaining agreement and other agreements: Provided, however,
That an employee's retirement benefits under any collective bargaining and
other agreements shall not be less than those provided therein.

In the absence of a retirement plan or agreement providing for retirement

benefits of employees in the establishment, an employee upon reaching the
age of sixty (60) years or more, but not beyond (65) years which is hereby
declared the compulsory retirement age, who has served at least (5) years in
the said establishment, may retire and shall be entitled to retirement pay x x
x.

Under the provision, the employers and employees may agree to fix the retirement
age for the latter, and to embody their agreement in either their collective
bargaining agreements (CBAs) or their employment contracts. Retirement plans
allowing employers to retire employees who have not yet reached the compulsory
retirement age of 65 years are not per se repugnant to the constitutional guaranty of
security of tenure, provided that the retirement benefits are not lower than those
prescribed by law. 67

The CA concluded that the petitioner had agreed to be bound by the retirement plan
of PVB when he accepted the letter of appointment as its Chief Legal Counsel.
However, based on the clear circumstances herein the CA erred in so concluding.

The petitioner's letter of appointment pertinently stated:

3. As a Senior Officer of the Bank, you are entitled to the following executive
benefits:

• Car Plan limit of P700,000.00, without equity on your part; a gasoline

subsidy of 300 liters per month and subject further to The Car Plan Policy of
the Bank.

• Membership in a professional organization in relation to your profession

and/or assigned functions in the Bank.

• Membership in the Provident Fund Program/Retirement Program.

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 • xxx

Obviously, the mere mention of the retirement plan in the letter of appointment did
not sufficiently inform the petitioner of the contents or details of the retirement
program. To construe from the petitioner's acceptance of his appointment that he
had acquiesced to be retired earlier than the compulsory age of 65 years would,
therefore, not be warranted. This is because retirement should be the result of the
bilateral act of both the employer and the employee based on their voluntary
agreement that the employee agrees to sever his employment upon reaching a
certain age.

That the petitioner might be well aware of the existence of the retirement program
at the time of his engagement did not suffice. His implied knowledge, regardless of
duration, did not equate to the voluntary acceptance required by law in granting an
early retirement age option to the employee. The law demanded more than a passive
acquiescence on the part of the employee, considering that his early retirement age
option involved conceding the constitutional right to security of tenure.

A perusal of PVB's retirement plan shows that under its Article III all the regular
employees of PVB were automatically admitted into membership, thus:

ARTICLE III MEMBERSHIP IN THE PLAN

Section 1. Eligibility at Effective Date. Any Employee of the Bank as of January

1, 1996 shall automatically be a Member of the Plan as of such date.

Section 2. Eligibility after Effective Date. Any person who becomes an

Employee after January 1, 1996 shall automatically become a Member of the
Plan on the date he becomes a regular

permanent Employee, provided he is less than 55 years old as of such date.

Section 3. Continuation/Termination of Membership. Membership in the Plan

shall be concurrent with employment with the Bank, and shall cease
automatically upon termination of the Member's service with the Bank for any
reason whatsoever.

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Having thus automatically become a member of the retirement plan through his
acceptance of employment as Chief Legal officer of PVB, the petitioner could not
withdraw from the plan except upon his termination from employment.

It is also notable that the retirement plan had been in existence since January 1,
1996, or more than five years prior to the petitioner's employment by PVB. The plan
was established solely by the PVB, and approved by its president. As such, the plan
was in the nature of a contract of adhesion, in respect to which the petitioner was
reduced to mere submission by accepting his employment, and automatically
became a member of the plan. With the plan being a contract of adhesion, to
consider him to have voluntarily and freely given his consent to the terms thereof as
to warrant his being compulsorily retired at the age of 60 years is factually
unwarranted.

To stress, company retirement plans must not only comply with the standards set by
the prevailing labor laws but must also be accepted by the employees as
commensurate to their faithful services to the employer within the requisite period.
Although the employer could be free to impose a retirement age lower than 65 years
for as long its employees consented, the retirement of the employee whose intent to
retire was not clearly established, or whose retirement was involuntary is to be
treated asadischarge.82

With the petitioner having been thus dismissed pursuant to the retirement provision
that he had not knowingly and voluntarily agreed to, PVB was guilty of illegal
dismissal as to him. Being an illegally dismissed employee, he was entitled to the
reliefs provided under Article 279 of the Labor Code, to wit:

Article 279. Security of tenure. — In cases of regular employment, the

employer shall not terminate the services of an employee except for a just
cause or when authorized by this Title. An employee who is unjustly dismissed
from work shall be entitled to reinstatement without loss of seniority rights
and other privileges and to his full backwages, inclusive of allowances, and to
his other benefits or their monetary equivalent computed from the time his
compensation was withheld from him up to the time of his actual
reinstatement.

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Considering that the petitioner's reinstatement is no longer feasible because of his
having meanwhile reached the compulsory retirement age of 65 years by June 11,
2012, he should be granted separation pay.

Maria De Leon Transportation, Inc., represented by Ma. Victoria D. Ronquillo,

petitioner vs. Daniel M. Macuray, respondent

G.R. No. 214940. June 6, 2018

Facts: On November 21, 2011, Daniel Macuray filed a Complaint for illegal dismissal
against Maria De Leon Transporation Inc. before the Regional Arbitration Branch of
Fernando City, La Union.

In April 1991, Daniel Macuray was employed as a bus driver of MDLT, engaged in
public transportation; He plied the Laoag-Manila-Laoag route and receives a monthly
pay/commission of P200,000.00; he has been working for the company for 18
years) In November 2009, Petitioner’s dispatcher did not assign a bus to him, for no
apparent reason. For a period of 1 month, he continually followed up if a bus had
already been assigned to him. When he returned to the company premises, the bus
dispatcher informed him that he was already considered AWOL (Absent without
leave), without giving any reason therefore. He went back to follow up his status for
about 6 months in 2010, but nobody arended to him. He was no given any notice or
explanation regarding this employment status. He considers himself illegally
dismissed. During this time, he was already 62 yrs old and not receiving benefits. He
is being charged for the cost of the gasoline for the bus he would drive. Petitioner
owed him 3 months salary for the year 2009. He prays he be awarded backwages,
separation pay, retirement pay, 13th month pay, damages, atty’s fees, and cost of
suit. 


According to the MDLT, Macuray was hired on commission basis, “no work, no pay”

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and “per travel, per trip” basis. He was paid on an average of P10,000.00 commission
per month without salary. He permanently abandonded his employment since March
31,2009, after he failed to report to work. He was already engaged in driving his
family truck and was seen doing so in public roads and highways. Illegal dismissal is
not true. No dismissal or termination of his service, no instruction to do so. Bus
dispatcher had no authority/ power to terminate or declare him AWOL. He had not
approach the management to inquire about his employment status, even though he
and the asst. Manager, corporate secretary, and director of the bus company resided
with his family within the company’s station and compound in Ilocos
Norte. Macuray’s claim for illegal dismissal is contrary to his documentary evidence
w/c showed that he continued working until march 2009, after w/c he completely
abandoned his employment. In a joint affidavit, petitioner had not made any inquiry
and follow up about his employment until mid-2010. There is no illegal dismissal;
thus, not entitled to monetary claims. Respondent never refuted the claim that he
abandoned his employment. It was a commmon practice for bus drivers of the
company to simply stop reporting to work for short periods of time, or years, after
which they would asked to be allowed to drive petitioner’s buses once more, w/c
management allowed after the absentee drivers gave satisfactory and reasonable
explanations for their absences. This practice was impliedly sanctioned in order to
give the drivers opportunity to take time off from the stress and boredom for driving
long trips. 


Furthermore, they claim that Macuray’s allegations were not true. He refused to
divulge the identity of the bus dispatcher who informed him that he was considered
AWOL. There is no truth in the allegations that the cost of the gasoline for every bus
trip was charged to him, as it was shouldered by the petitioner. Respondent prayed
the dismissal of the case. 


The Labor Arbiter dismissed the case. It ruled that:

• No certainty as to his date of his dismissal.

• Claim for illegal dismissal is not founded. No showing in the complaint of any sign
of whimper or protest.
• No substantial evidence on claim of unpaid fuel expenses. No accounting of such

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 and the complaint did not even claim that the unpaid gasoline expenses were
charged to him.
• Complaint failed to present evidence of unreasonable or oppressive maltreatment
received from respondent.
• An informal voluntary termination is recognized under the law as an authorized
ground for dismissal. Compliance with the two (2) notice requirement of due
process is not necessary. Not entitled to backwages and separation pay.
Hence, dismissal is not illegal. 

The NLRC modified the Judgement of LA. Award for financial assistance P50,000.00
as Financial Assistance. Although absence without valid or justifiable reason is an
element of abandonment, settled is the rule, however, that mere absence or failure
to report for work is not tantamount to abandonment of work. Conclusion that
petitioner abandonded his work lacks factual basis. Reinstatment as bus driver is no
longer possible for peitioner’s age. Separation pay cannot be awarded to him
because he was not dismissed by respondent. As a measure of Social Justice and
equitable concession, fianncial assistance should be awarded. 


The CA ruled the petition as meritorious. According to the appellate court, Onus
Probandi rests on the employer to prove dismissal of an employeefor valid cause.
Contrary, Facts bear marks of constructive dismissal. Labor Arbiter’s finding that there
was an informal voluntary termination has no basis. There was no rhyme nor reason
why he would suddenly not be assigned a bus to drive and no reason why he would
suddenly voluntarily stop working while nearing his retirement. Reinstatment is no
longer possible. Petitioner was performing a job that has intimate connection to the
business of teh respondent company. Entitled to separation pay equivalent to 1
month salary for every year of service. There is basis for a grant for backwages for
being illegally dismissed. Computed from Nov. 2009 until Dec. 28,2012 Petitioner is
entitled to Retirement pay (Art. 287 LC, as amended by RA 7641). Petitioner, who is
paid on purely commission basis, is however not entitled to a 13th month pay, being
among those specifically enumerated by law as not covered by PD No. 851. 


Issue: Whether or not Macuray was illegally dismissed.

Ruling: No. The Court is inclined to believe petitioner's allegations: respondent left

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his work as bus driver to work for his family's trucking business. There is no truth to
the allegation that respondent was dismissed, actually or constructively. He claims
that the dispatcher informed him that he was AWOL; however, a mere bus dispatcher
does not possess the power to fire him from work — this is a prerogative belonging
to management.

The fact that respondent made no sincere effort to meet with the management of
the bus company gives credence to petitioner's allegation that he was never fired
from work. However, it cannot be said that respondent abandoned his employment.

Since respondent was not dismissed from work, petitioner may not be held liable for
his (respondent's) monetary claims, except those that were actually owing to him by
way of unpaid salary/commission, and retirement benefits, which are due to him for
the reason that he reached the age of retirement while under petitioner's employ.

As to unpaid salaries/commissions, it appears from the record that petitioner failed

to pay respondent three months' worth, that is, for the period January to March,
2009 — which, at P10,000.00 per month — amounts to P30,000.00. Indeed, this could
be one of the reasons why respondent stopped reporting after March 31, 2009, as he
complained of petitioner's failure to pay his salaries/commissions for the said period.

Respondent is entitled for retirement benefits, considering he was not dismissed

from work either for cause or by resignation or abandonment. In the absence of a
retirement plan or agreement in Maria De Leon Transportation, Inc., the Court hereby
declares that respondent is entitled to one month's salary for every year of service
P10,000.00 x 18 = P180,000.00. Furthermore, the Court stated:

. . .in actions for the recovery of wages of household helpers, laborers and skilled
workers" and "in any other case where the court deems it just and equitable that

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attorney's fees and expenses of litigation should be recovered


LOCKHEED DETECTIVE AND WATCHMAN AGENCY, INC., petitioner vs.

UNIVERSITY OF THE PHILIPPINES, respondent

G.R. No. 185918 April 18, 2012

Facts: Petitioner Lockheed Detective and Watchman Agency, Inc. entered into a
contract for security services with respondent University of the Philippines.

In 1998, several security guards assigned to UP filed separate complaints against

Lockheed and UP for payment of underpaid wages, 25% overtime pay, premium pay
for rest days and special holidays, holiday pay, service incentive leave pay, night shift
differentials, 13th month pay, refund of cash bond, refund of deductions for the
Mutual Benefits Aids System (MBAS), unpaid wages from December 16-31, 1998, and
attorney’s fees.

The Labor Arbiter held Lockheed and UP solidarily liable for the unpaid legislated
salary increases of the latter’s security guards for the years 1996 to 1998, in the total
amount of P13,066,794.14.

On appeal, NLRC modified the LA’s decision but only with respect to the amount. As
the parties did not appeal the NLRC decision, the same became final and executory
on October 26, 2002.

Subsequently, a Notice of Garnishment was issued to PNB (Diliman Branch) for the
satisfaction of the award of P12, 142,522.69 (inclusive of execution fee). UP filed an
Urgent Motion to Quash Garnishment but was later denied by LA. Said amount was
then withdrawn by the Sheriff from UP’s PNB account.

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UP appealed to CA arguing mainly that NLRC erred in ordering the garnishment of
its funds since it is considered as public funds. CA dismissed the contention of UP.
Citing Republic v. COCOFED, it ruled that the funds sought to be garnished do not
seem to fall within the stated definition. However, upon UP’s Motion for
Reconsideration, CA amended its decision. It held that without departing from its
findings that the funds covered in the savings account sought to be garnished do
not fall within the classification of public funds, it reconsiders the dismissal of the
petition in light of the ruling in the case of NEA v. Morales which mandates that all
money claims against the government must first be filed with the Commission on
Audit (COA). Further, CA cited MIAA v. CA which held that UP ranks with MIAA, a
government instrumentality exercising corporate powers but not organized as a stock
or non-stock corporation.

Lockheed moved to reconsider the amended CA decision but it was denied.

Issue: Whether or not the funds of UP were properly garnished?

Ruling: No, the funds of respondent were not properly garnished.

The Court finds that the CA correctly applied the NEA case. Like NEA, UP is a juridical
personality separate and distinct from the government and has the capacity to sue
and be sued. Thus, also like NEA, it cannot evade execution, and its funds may be
subject to garnishment or levy. However, before execution may be had, a claim for
payment of the judgment award must first be filed with the COA.

The Court also dismissed the argument of Lockheed claiming that that there is
nothing that can be done since the funds of UP had already been garnished, since
the garnishment was erroneously carried out and did not go through the proper

286
procedure (the filing of a claim with the COA). The Court said that UP is entitled to
reimbursement of the full amount garnished plus interest of 6% per annum, to be
computed from September 12, 2005 up to the finality of the decision, and 12%
interest on the entire amount from date of finality of said decision until fully paid.

MARIETTA N. PORTILLO, petitoner, vs. RUDOLF LIETZ, INC., RUDOLF LIETZ and
COURT OF APPEALS, respondents

G.R. No. 196539, October 10, 2012

Facts: On May 3, 1991, Portillo was hired by the respondent. In their letter of
agreement, the Portillo has been prohibited from engaging “in any other gainful
employment by yourself or with any other company either directly or indirectly
without written consent of [Lietz Inc.]…a breach of which will render you liable to
[Lietz Inc.] for liquidated damages”. Portillo conformed to such agreement.

On February 1, 2002, on her 10th year with the company, she was promoted to Sales
Representative and received a corresponding increase in basic monthly salary and
sales quota. In this regard, Portillo signed another letter agreement containing a
"Goodwill Clause:"

It remains understood and you agreed that, on the termination of your

employment by act of either you or [Lietz Inc.], and for a period of
three (3) years thereafter, you shall not engage directly or indirectly as
employee, manager, proprietor, or solicitor for yourself or others in a
similar or competitive business or the same character of work which
you were employed by [Lietz Inc.] to do and perform. Should you
breach this good will clause of this Contract, you shall pay [Lietz Inc.]
as liquidated damages the amount of 100% of your gross
compensation over the last 12 months, it being agreed that this sum is
reasonable and just.

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On June 6, 2005, three years thereafter, Portillo resigned from Lietz Inc. During her
exit interview, she declared that she intended to engage in business—a rice
dealership, selling rice in wholesale. On June 15, 2005, Lietz Inc. accepted her
resignation and reminded her of the terms of the Goodwill Clause in the last
agreement she signed. Portillo noted that no such clause was present when she
signed her latest February 2004 contract. In its answer, Lietz Inc. stated:

The documentation you pertain to is an internal memorandum of your

salary increase, not an employment contract. The absence of the three-
year prohibition clause in this document (or any document for that
matter) does not cancel the prohibition itself. We did not, have not,
and will not issue any cancellation of such in the foreseeable future[.]
[T]hus[,] regretfully, it is erroneous of you to believe otherwise.

Subsequently, Lietz Inc. learned that Portillo had been hired by Ed Keller Philippines,
Ltd. to head its Pharma Raw Material Department. Ed Keller Ltd. is purportedly a
direct competitor of Lietz Inc.

Meanwhile, Portillo’s demands from Lietz Inc. for the payment of her remaining
salaries and commissions went unheeded. On September 14, 2005, Portillo filed a
complaint with the NLRC for non-payment of 1½ months’ salary, two (2) months’
commission, 13th month pay, plus moral, exemplary and actual damages and
attorney’s fees.

In its position paper, Lietz Inc. admitted liability for Portillo’s money claims in the
total amount of P110,662.16. However, it raised the defense of legal compensation:
Portillo’s money claims should be offset against her liability for liquidated damages
in the amount of ₱869,633.097 for her alleged breach of the "Goodwill Clause".

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The Labor Arbiter ruled in favor of Portillo. NLRC confirmed LA’s decision and
subsequently denied the Motion for Reconsideration of respondent.

On appeal, CA initially dismissed the petition and affirmed NLRC ruling. However,
upon Motion for Reconsideration, the CA ordered legal compensation or set-off her
monetary award against her liability for violation of the Goodwill Clause.The Court of
Appeals anchors its modified ruling on the ostensible causal connection between
Portillo’s money claims and Lietz Inc.’s claim for liquidated damages, both claims
apparently arising from the same employment relations.

Issue: Should the claims of Portillo against Lietz for unpaid wages, commissions, etc.
be offset against her liability to Lietz for damages from breach of the “Goodwill
Clause” in the contract?

Ruling: No, it should not. Upon the facts and issues involved, jurisdiction over the
present controversy must be held to belong to the civil Courts.

Stated differently, petitioner seeks protection under the civil laws and claims no
benefits under the Labor Code. The primary relief sought is for liquidated damages
for breach of a contractual obligation. The other items demanded are not labor
benefits demanded by workers generally taken cognizance of in labor disputes, such
as payment of wages, overtime compensation or separation pay. The items claimed
are the natural consequences flowing from breach of an obligation, intrinsically a civil
dispute. Citing San Miguel Corporation v. NLRC, the Court noted that the "money
claims of workers" referred to in paragraph 3 of Article 217 (as amended) embraces
money claims which arise out of or in connection with the employer-employee
relationship, or some aspect or incident of such relationship. Put a little differently,
that money claims of workers which now fall within the original and exclusive
jurisdiction of Labor Arbiters are those money claims which have some reasonable
causal connection with the employer-employee relationship.

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This "reasonable causal connection with the employer-employee relationship" is a
requirement not only in employees’ money claims against the employer but is,
likewise, a condition when the claimant is the employer.

It is clear, therefore, that while Portillo’s claim for unpaid salaries is a money claim
that arises out of or in connection with an employer-employee relationship, Lietz
Inc.’s claim against Portillo for violation of the goodwill clause is a money claim
based on an act done after the cessation of the employment relationship. And, while
the jurisdiction over Portillo’s claim is vested in the labor arbiter, the jurisdiction over
Lietz Inc.’s claim rests on the regular courts.

The Court of Appeals was misguided. Its conclusion was incorrect.

There is no causal connection between the petitioner employees’ claim for unpaid
wages and the respondent employers’ claim for damages for the alleged "Goodwill
Clause" violation. Portillo’s claim for unpaid salaries did not have anything to do with
her alleged violation of the employment contract as, in fact, her separation from
employment is not "rooted" in the alleged contractual violation. She resigned from
her employment. She was not dismissed. Portillo’s entitlement to the unpaid salaries
is not even contested. Indeed, Lietz Inc.’s argument about legal compensation
necessarily admits that it owes the money claimed by Portillo.

As it is, petitioner does not ask for any relief under the Labor Code. It merely seeks
to recover damages based on the parties' contract of employment as redress for
respondent's breach thereof. Such cause of action is within the realm of Civil Law,
and jurisdiction over the controversy belongs to the regular courts.

For sure, a plain and cursory reading of the complaint will readily reveal that the
subject matter is one of claim for damages arising from a breach of contract, which

290
is within the ambit of the regular court’s jurisdiction.

BUILDING CARE CORPORATION/LEOPARD SECURITY AND INVESTIGATION

AGENCY and/or RUPERTO PROTACIO, petitioner vs. 
 MYRNA MACARAEG,
respondents

G.R. No. 198357, December 10, 2012

Facts: Petitioners are in the business of providing security services to their clients.
They hired respondent as a security guard beginning August 25, 1996 and assigned
her at Genato Building in Caloocan City. On March 9, 2008, respondent was relieved
of her post. She was re-assigned to Bayview Park Hotel from March 9-13, 2008, but
after said period, she was allegedly no longer given any assignment. Thus, on
September 9, 2008, respondent filed a complaint against petitioners for illegal
dismissal, underpayment of salaries, non-payment of separation pay and refund of
cash bond. Conciliation and mediation proceedings failed, so the parties
were ordered to submit their respective position papers.

Respondent claimed that petitioners failed to give her an assignment for more than
nine months, amounting to constructive dismissal, and this compelled her to file
the complaint for illegal dismissal.

On the other hand, petitioners alleged that respondent was relieved from her post as
requested by the client because of her habitual tardiness, persistent borrowing of
money from employees and tenants of the client, and sleeping on the job. She was
directeed to explain why she committed such infractions, but respondent failed to
heed such order. Respondent was nevertheless temporarily assigned to Bayview Park
Hotel from March 9-13, 2008, but she also failed to meet said client's standards and
her posting thereat was not extended.

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Respondent filed an administrative complaint against the agency in PNP-Security
Agencies and Guard Supervision Division but she failed to attend the hearings.
Petitioners brought to the hearing new supposed new assignment order but it was
not personally delivered to her due to her absence. Petitioners likewise sent her a
letter directing her to report to headquarters for new assignment but respondent did
not comply.

Instead, she filed an illegal dismissal complaint with the Labor Arbiter. LA dismissed
her complaint for lack of merit but ordered petitioners to pay her a P5,000 financial
assistance.

NLRC dismissed her appeal because it was filed out of time and declared that the
Labor Arbiter's Decision had become final and executory on June 16, 2009.

CA, on the other hand, reversed NLRC ruling and declared petitioner to have been
illegally dismissed. It likewise directed petitioner to reinstate respondent and pay her
backwages and other monetary benefits.

Issue: Whether the CA erred in liberally applying the rules of procedure and ruling
that respondent's appeal should be allowed and resolved on the merits despite
having been filed out of time.

Ruling:The Court cannot sustain the CA's Decision. It should be emphasized that the
resort to a liberal application, or suspension of the application of procedural rules,
must remain as the exception to the well-settled principle that rules must be
complied with for the orderly administration of justice. In Marohomsalic v. Cole, the
Court stated:

“While procedural rules may be relaxed in the interest of justice, it is

well-settled that these are tools designed to facilitate the adjudication

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 of cases. The relaxation of procedural rules in the interest of justice
was never intended to be a license for erring litigants to violate the
rules with impunity. Liberality in the interpretation and application of
the rules can be invoked only in proper cases and under justifiable
causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the
prescribed procedure to ensure an orderly and speedy administration
of justice.”

The relaxation of procedural rules in the interest of justice was never intended to be
a license for erring litigants to violate the rules with impunity. Liberality in the
interpretation and application of the rules can be invoked only in proper cases and
under justifiable causes and circumstances. While litigation is not a game of
technicalities, every case must be prosecuted in accordance with the prescribed
procedure to ensure an orderly and speedy administration of justice.

In this case, the justifications given by the CA for its liberality by choosing to
overlook the belated filing of the appeal are, the importance of the issue raised, i.e.,
whether respondent was illegally dismissed; and the belief that respondent should be
"afforded the amplest opportunity for the proper and just determination of his cause,
free from the constraints of technicalities," considering that the belated filing of
respondent's appeal before the NLRC was the fault of respondent's former counsel.
Note, however, that neither respondent nor her former counsel gave any explanation
or reason citing extraordinary circumstances for her lawyer's failure to abide by the
rules for filing an appeal. Respondent merely insisted that she had not been remiss
in following up her case with said lawyer. It is, however, an oft-repeated ruling that
the negligence and mistakes of counsel bind the client. A departure from this rule
would bring about never-ending suits, so long as lawyers could allege their own fault
or negligence to support the client’s case and obtain remedies and reliefs already
lost by the operation of law.The only exception would be, where the lawyer's gross
negligence would result in the grave injustice of depriving his client of the due
process of law. In this case, there was no such deprivation of due process.

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Respondent was able to fully present and argue her case before the Labor Arbiter.
She was accorded the opportunity to be heard. Her failure to appeal the Labor
Arbiter's Decision cannot, therefore, be deemed as a deprivation of her right to due
process.

The right to appeal is not a natural right or part of due process; it is merely a
statutory privilege and may be exercised only in the manner and in accordance with
the provisions of law. Thus, one who seeks to avail of the right to appeal must
strictly comply with the requirements of the rules, and failure to do so leads to the
loss of the right to appeal.

It should also be borne in mind that the right of the winning party to enjoy the
finality of the resolution of the case is also an essential part of public policy and the
orderly administration of justice. Hence, such right is just as weighty or equally
important as the right of the losing party to appeal or seek reconsideration within
the prescribed period.When the Labor Arbiter's Decision became final, petitioners
attained a vested right to said judgment.

The Court will not override the finality and immutability of a judgment based only on
the negligence of a party’s counsel in timely taking all the proper recourses from the
judgment. To justify an override, the counsel’s negligence must not only be gross but
must also be shown to have deprived the party the right to due process.

In sum, the Court cannot countenance relaxation of the rules absent the showing of
extraordinary circumstances to justify the same. In this case, no compelling reasons
can be found to convince this Court that the CA acted correctly by according
respondent such liberality.

ANDREW JAMES MCBURNIE, petitioner, vs. EULALIO GANZON, EGI-MANAGERS,

INC. and E. GANZON, INC., respondents

294
 GR No. 178034/178117, October 17, 2013

Facts: On October 4, 2002, McBurnie, an Australian national, instituted a complaint

for illegal dismissal and other monetary claims against the respondents. He claimed
that in May 11, 1999, he signed a five-year employment agreement with the
company EGI as an Executive Vice-President who shall oversee the management of
the company’s hotels and resorts within the Philippines. He performed work for the
company until sometime in November 1999, when he figured in an accident that
compelled him to go back to Australia. While in Australia, he was informed by
respondent Ganzon that his services were no longer needed because the project
would no longer push through.

The respondents opposed and contended that their agreement with McBurnie was to
jointly invest in and establish a company for the management of hotels. They did not
intend to create an employer-employee relationship, and the contract that was being
invoked by McBurnie was solely for the purpose of allowing McBurnie to obtain an
alien work permit in the Philippines. At the time McBurnie left for Australia for his
medical treatment, he had not yet obtained a work permit.

On September 30, 2004, the LA declared McBurnie as having been illegally dismissed
from employment and directed respondents to pay him $985,162.00 as salary and
benefits for the unexpired term of their employment contract, P2,000,000.00 as moral
and exemplary damages and 10% attorney’s fees.

Respondent appealed to NLRC, filed a Motion to Reduce Bond and posted an appeal
bond in the amount of P100,000.00. Mainly, they contended in their Motion to
Reduce Bond that the monetary awards of the LA were null and a P60M is excessive.
NLRC denied their motion citing Article 223 of the Labor Code and required them to
post an additional bond of P54,083,910.00.Meanwhile, for their failure to post the
required bond, NLRC dismissed their appeal.

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On the other hand, respondents elevated the matter to CA “With Urgent Prayers for
the Immediate Issuance of a Temporary Restraining Order and a Writ of Preliminary
Injunction”. This was granted. On October 27, 2008, it granted the respondent’s
motion to reduce bond – P10M.Ruling on the merits, CA ruled that the NLRC
committed grave abuse of discretion in immediately denying the motion without
fixing an appeal bond in an amount that was reasonable, as it denied the
respondents of their right to appeal from the decision of the LA. The CA explained
that "(w)hile Art. 223 of the Labor Code requiring bond equivalent to the monetary
award is explicit, Section 6, Rule VI of the NLRC Rules of Procedure, as amended,
recognized as exception a motion to reduce bond upon meritorious grounds and
upon posting of a bond in a reasonable amount in relation to the monetary award."

McBurnie sought reconsideration of the issuance of the writ of preliminary injunction,

but this was denied by the CA. He then filed with the Court a Petition for Review on
Certiorari20 docketed as G.R. Nos. 178034 and 178117, assailing the CA Resolutions
that granted the respondents’ application for the injunctive writ. These were
subsequently denied due to procedural matters.

In the meantime, the NLRC, acting on the CA’s order of remand, accepted the appeal
from the LA’s decision, and in its Decision dated November 17, 2009, reversed and
set aside the Decision of the LA, and entered a new one dismissing McBurnie’s
complaint. It explained that based on records, McBurnie was never an employee of
any of the respondents, but a potential investor in a project that included said
respondents, barring a claim of dismissal, much less, an illegal dismissal. Granting
that there was a contract of employment executed by the parties, McBurnie failed to
obtain a work permit which would have allowed him to work for any of the
respondents. In the absence of such permit, the employment agreement was void
and thus, could not be the source of any right or obligation.

Court Decision dated September 18, 2009

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The SC Third Division reversed and set aside the CA Decision dated October 27,
2008. The Court explained that the respondents’ failure to post a bond equivalent in
amount to the LA’s monetary award was fatal to the appeal. Although an appeal
bond may be reduced upon motion by an employer, the following conditions must
first be satisfied: (1) the motion to reduce bond shall be based on meritorious
grounds; and (2) a reasonable amount in relation to the monetary award is posted by
the appellant. Unless the NLRC grants the motion to reduce the cash bond within the
10-day reglementary period to perfect an appeal from a judgment of the LA, the
employer is mandated to post the cash or surety bond securing the full amount
within the said 10-day period. This decision became final and an Entry of Judgment
has been made.

On September 4, 2012, the Court en banc issued a Resolution accepting the case
from the Third Division. It also issued a temporary restraining order (TRO) enjoining
the implementation of the LA’s Decision dated September 30, 2004.

Issues: 1.) Did NLRC erred in denying the respondent’s motion to reduce bond? 2.)
Whether or not the respondent’s motion for reconsideration has merit?

Ruling:1. Yes. Citing Garcia v. KJ Commercial, the Court clarified that that the filing of
a motion to reduce bond, coupled with compliance with the two conditions namely,
(1) a meritorious ground, and (2) posting of a bond in a reasonable amount, shall
suffice to suspend the running of the period to perfect an appeal from the labor
arbiter’s decision to the NLRC. To require the full amount of the bond within the 10-
day reglementary period would only render nugatory the legal provisions which allow
an appellant to seek a reduction of the bond.

The NLRC has full discretion to grant or deny the motion to reduce bond, and it may
rule on the motion beyond the 10-day period within which to perfect an appeal.
Obviously, at the time of the filing of the motion to reduce bond and posting of a
bond in a reasonable amount, there is no assurance whether the appellant’s motion
is indeed based on "meritorious ground" and whether the bond he or she posted is

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of a "reasonable amount." Thus, the appellant always runs the risk of failing to
perfect an appeal.

In any case, the rule that the filing of a motion to reduce bond shall not stop the
running of the period to perfect an appeal is not absolute. In Intertranz Container
Lines, Inc. v. Bautista, the Court held:

"Jurisprudence tells us that in labor cases, an appeal from a decision

involving a monetary award may be perfected only upon the posting
of cash or surety bond. The Court, however, has relaxed this
requirement under certain exceptional circumstances in order to
resolve controversies on their merits. These circumstances include: (1)
fundamental consideration of substantial justice; (2) prevention of
miscarriage of justice or of unjust enrichment; and (3) special
circumstances of the case combined with its legal merits, and the
amount and the issue involved.

By such haste of the NLRC in peremptorily denying the respondents’ motion without
considering the respondents’ arguments, it effectively denied the respondents of
their opportunity to seek a reduction of the bond even when the same is allowed
under the rules and settled jurisprudence. It was equivalent to the NLRC’s refusal to
exercise its discretion, as it refused to determine and rule on a showing of
meritorious grounds and the reasonableness of the bond tendered under the
circumstances. Time and again, the Court has cautioned the NLRC to give Article 223
of the Labor Code, particularly the provisions requiring bonds in appeals involving
monetary awards, a liberal interpretation in line with the desired objective of
resolving controversies on the merits.

At the time of a motion to reduce appeal bond’s filing, the question of what
constitutes "a reasonable amount of bond" that must accompany the motion may be

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subject to differing interpretations of litigants.

It is in this light that the Court finds it necessary to set a parameter for the litigants’
and the NLRC’s guidance on the amount of bond that shall hereafter be filed with a
motion for a bond’s reduction. To ensure that the provisions of Section 6, Rule VI of
the NLRC Rules of Procedure that give parties the chance to seek a reduction of the
appeal bond are effectively carried out, without however defeating the benefits of
the bond requirement in favor of a winning litigant, all motions to reduce bond that
are to be filed with the NLRC shall be accompanied by the posting of a cash or
surety bond equivalent to 10% of the monetary award that is subject of the appeal,
which shall provisionally be deemed the reasonable amount of the bond in the
meantime that an appellant’s motion is pending resolution by the Commission. In
conformity with the NLRC Rules, the monetary award, for the purpose of computing
the necessary appeal bond, shall exclude damages and attorney’s fees.94 Only after
the posting of a bond in the required percentage shall an appellant’s period to
perfect an appeal under the NLRC Rules be deemed suspended.

In all cases, the reduction of the appeal bond shall be justified by meritorious
grounds and accompanied by the posting of the required appeal bond in a
reasonable amount.For the purpose of determining a "meritorious ground", the NLRC
is not precluded from receiving evidence, or from making a preliminary
determination of the merits of the appellant’s contentions. In dismissing outright the
motion to reduce bond filed by petitioners, NLRC abused its discretion. It should
have fixed an appeal bond in a reasonable amount. Said dismissal deprived
petitioners of their right to appeal the Labor Arbiter’s decision.

2. Yes. In finding merit in the respondents’ motion for reconsideration, we also take
into account the unwarranted results that will arise from an implementation of the
Court’s Decision dated September 18, 2009.We emphasize, moreover, that although a
remand and an order upon the NLRC to give due course to the appeal would have
been the usual course after a finding that the conditions for the reduction of an

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appeal bond were duly satisfied by the respondents, given such results, the Court
finds it necessary to modify the CA’s order of remand, and instead rule on the
dismissal of the complaint against the respondents.

Without the reversal of the Court’s Decision and the dismissal of the complaint
against the respondents, McBurnie would be allowed to claim benefits under our
labor laws despite his failure to comply with a settled requirement for foreign
nationals.

Considering that McBurnie, an Australian, alleged illegal dismissal and sought to

claim under our labor laws, it was necessary for him to establish, first and foremost,
that he was qualified and duly authorized to obtain employment within our
jurisdiction. A requirement for foreigners who intend to work within the country is an
employment permit, as provided under Article 40, Title II of the Labor Code.
Furthermore, as has been previously discussed, the NLRC has ruled in its Decision
dated November 17, 2009 on the issue of illegal dismissal. It declared that McBurnie
was never an employee of any of the respondents:

All these facts and circumstances prove that McBurnie was never an
employee of Eulalio Ganzon or the respondent companies, but a
potential investor in a project with a group including Eulalio Ganzon
and Martinez but said project did not take off because of lack of
funds.

McBurnie further claims that in conformity with the provision of the

employment contract pertaining to the obligation of the respondents
to provide housing, respondents assigned him Condo Unit # 812 of
the Makati Cinema Square Condominium owned by the respondents.
He was also allowed to use a Hyundai car. If it were true that the
contract of employment was for working visa purposes only, why did

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 the respondents perform their obligations to him?

There is no question that respondents assigned him Condo Unit # 812

of the MCS, but this was not free of charge. If it were true that it is
part of the compensation package as employee, then McBurnie would
not be obligated to pay anything, but clearly, he admitted in his letter
that he had to pay all the expenses incurred in the apartment.

Assuming for the sake of argument that the employment contract is

valid between them, record shows that McBurnie worked from
September 1, 1999 until he met an accident on the last week of
October. During the period of employment, the respondents must
have paid his salaries in the sum of US$26,000.00, more or less.

However, McBurnie failed to present a single evidence that [the

respondents] paid his salaries like payslip, check or cash vouchers duly
signed by him or any document showing proof of receipt of his
compensation from the respondents or activity in furtherance of the
employment contract. Granting again that there was a valid contract of
employment, it is undisputed that on November 1, 1999, McBurnie left
for Australia and never came back.

More importantly, the NLRC’s findings on the contractual relations between McBurnie
and the respondents are supported by the records.

First, before a case for illegal dismissal can prosper, an employer-employee

relationship must first be established.122 Although an employment agreement forms
part of the case records, respondent Ganzon signed it with the notation "per my
note.Second, McBurnie failed to present any employment permit which would have

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authorized him to obtain employment in the Philippines.Third, besides the
employment agreement, McBurnie failed to present other competent evidence to
prove his claim of an employer-employee relationship.Given the parties’ conflicting
claims on their true intention in executing the agreement, it was necessary to resort
to the established criteria for the determination of an employer-employee
relationship. The rule of thumb remains: the onus probandi falls on the claimant to
establish or substantiate the claim by the requisite quantum of evidence. Whoever
claims entitlement to the benefits provided by law should establish his or her right
thereto. McBurnie failed in this regard.

As previously observed by the NLRC, McBurnie even failed to show through any
document such as payslips or vouchers that his salaries during the time that he
allegedly worked for the respondents were paid by the company. In the absence of
an employer-employee relationship between McBurnie and the respondents,
McBurnie could not successfully claim that he was dismissed, much less illegally
dismissed, by the latter. Even granting that there was such an employer-employee
relationship, the records are barren of any document showing that its termination
was by the respondents’ dismissal of McBurnie.

INDOPHIL TEXTILE MILLS, INC., petitioner vs. ENGR. SALVADOR 
 ADVIENTO,

respondent

G.R. No. 171212 August 4, 2014

Facts: Petitioner Indophil Textile Mills, Inc. is a domestic corporation engaged in the
business of manufacturing thread for weaving.On August 21, 1990, petitioner hired
respondent Engr. Salvador Adviento as Civil Engineer to maintain its facilities in
Lambakin, Marilao, Bulacan.

On August 7, 2002, respondent consulted a physician due to recurring weakness and

dizziness. Few days later, he was diagnosed with Chronic Poly Sinusitis, and
thereafter, with moderate, severe and persistent Allergic Rhinitis. Accordingly,

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respondent was advised by his doctor to totally avoid house dust mite and textile
dust as it will transmute into health problems.Distressed, respondent filed a
complaint against petitioner with the NLRC San Fernando, Pampanga, for alleged
illegal dismissal and for the payment of backwages, separation pay, actual damages
and attorney’s fees. The said case is still pending with NLRC at the time this instant
petition is filed.

Subsequently, respondent filed another Complaint with the RTC of Aparri, Cagayan,
alleging that he contracted such occupational disease by reason of the gross
negligence of petitioner to provide him with a safe, healthy and workable
environment Being the only breadwinner in the family, he made several attempts to
apply for a new job, but to his dismay and frustration, employers who knew ofhis
present health condition discriminated against him and turned down his application.

In reply, petitioner moved to dismiss the complaint because RTC has no jurisdiction
over the subject matterbecause the same falls under the original and exclusive
jurisdiction of the Labor Arbiter under Article 217(a)(4) of the Labor Code; and there
is another action pending with the Regional Arbitration Branch III of the NLRC in San
Fernando City, Pampanga, involving the same parties for the same cause.

On December 29, 2003, RTC denied petitioner’s motion and sustained its jurisdiction
over the case. On appeal, CA denied likewise dismissed petitioner’s motion for lack
of merit.

Issue: Whether or not the RTC has jurisdiction over the subject matter of
respondent’s complaint praying for moral damages, exemplary damages,
compensatory damages, anchored on petitioner’s alleged gross negligence in failing
to provide a safe and healthy working environment for respondent.

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Ruling: Yes, it has jurisdiction. The Court is not convinced with petitioner’s argument
that “respondent’s claim for damages is anchored on the alleged gross negligence of
petitioner as an employer to provide its employees, including herein respondent, with
a safe, healthy and workable environment; hence, it arose from an employer-
employee relationship”.

The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code,
as amended by Section 9 of Republic Act (R.A.) No. 6715. While we have upheld the
present trend to refer worker-employer controversies to labor courts in light of the
said provision, we have also recognized that not all claims involving employees can
be resolved solely by our labor courts, specifically when the law provides otherwise.
For this reason, we have formulated the "reasonable causal connection rule", wherein
if there is a reasonable causal connection between the claim asserted and the
employer-employee relations, then the case is within the jurisdiction of the labor
courts; and in the absence thereof, it is the regular courts that have jurisdiction.

In the case at bench, we find that such connection is nil. It is obvious from the
complaint that the plaintiffs have not alleged any unfair labor practice. Theirs is a
simple action for damages for tortious acts allegedly committed by the defendants.
Such being the case, the governing statute is the Civil Code and not the Labor
Code.True, the maintenance of a safe and healthy workplace is ordinarily a subject of
labor cases. More, the acts complained of appear to constitute matters involving
employee-employer relations since respondent used to be the Civil Engineer of
petitioner. However, it should be stressed that respondent’s claim for damages is
specifically grounded on petitioner’s gross negligence to provide a safe, healthy and
workable environment for its employees − a case of quasi-delict. This is easily
ascertained from a plain and cursory reading of the Complaint, which enumerates the
acts and/or omissions of petitioner relative to the conditions in the workplace.It is a
basic tenet that jurisdiction over the subject matter is determined upon the
allegations made in the complaint, irrespective of whether or not the plaintiff is
entitled to recover upon the claim asserted therein, which is a matter resolved only
after and as a result of a trial.

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 MANILA MINING CORPORATION, petitioner, vs. 
 LOWITO AMOR, ET. AL.,
respondent

G.R. No. 182800 April 20, 2015

citing 2015 McBurnie

Facts: Respondents were regular employees of petitioner Manila Mining Corporation,

a domestic corporation which operated a mining pit for gold and copper ore in
Placer, Surigao del Norte. In compliance with environmental laws, petitioner
maintained TP No. 7, a tailings containment facility required for the storage of waste
materials generated by its mining operations. On December 2000, petitioner
temporarily shut down its operation because TP No. 7 already reached its maximum
level. DENR-EMB issued a 6-month temporary authority to continue its operation but
petitioner failed to renew it after the lapse of 6 months.

On July 27, 2001, petitioner informed its employees and DOLE of the temporary
suspension of its operations for six months and the temporary lay-off of two-thirds
of its employees. After the lapse of said period, petitioner notified the DOLE that it
was extending the temporary shutdown for another six months. Adversely affected by
petitioner’s continued failure to resume its operations, respondents filed the
complaint for constructive dismissal and monetary claims in NLRC Regional
Arbitration Branch.

On October 25, 2004, Executive LA Pelaez rendered a decision in favor of the

respondents. LA ordered petitioner to pay respondents their separation pay, moral
and exemplary damages plus attorney’s fees (P2,138,190.02).

Petitioner appealed to NLRC to reduce the bond, citing financial losses. Respondents,
on the other hand, moved to dismiss the appeal noting the 65-days lapse of
reglementary period for the appeal. Without ruling on the procedural issue raised by

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respondents, NLRC reversed LA decision and ruled that under Article 283 of the
Labor Code, respondents were not even entitled to separation pay considering the
eventual closure of their employer’s business due to serious business losses or
financial reverses.

On appeal, CA nullified NLRC’s decision and reinstated LA’s decision.

Issue: Whether or not CA gravely abused its discretion inimmediately setting aside
the decision of the NLRC without reviewing the merits of the case.

Ruling: No. The right to appeal is not a natural right or a part of due process; it is
merely a statutory privilege, and may be exercised only in the manner and in
accordance with the provisions of law. Alongside the requirement that "the appellant
shall furnish a copy of the memorandum of appeal to the other party”, appeals from
decisions of the Labor Arbiter, Article 223 provides that, "(d)ecisions, awards, or
orders of the Labor Arbiter are final and executory unless appealed to the [NLRC] by
any or both parties within ten (10) calendar days from the receipt of such decisions,
awards or orders." In case of a judgment involving a monetary award, the same
provision mandates that, "an appeal by the employer may be perfected only upon
the posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the [NLRC] in the amount equivalent to the monetary award in the
judgment appealed from”.

The issue that has be devilled labor litigation for long has been clarified by the ruling
in McBurnie v. Ganzon, et al. which built on and extended the ruling that while it is
true that reduction of the appeal bond has been allowed in meritorious cases on the
principle that substantial justice is better served by allowing appeals on the merits, it
has been ruled that the employer should comply with the following conditions: (1)
the motion to reduce the bond shall be based on meritorious grounds; and (2) a
reasonable amount in relation to the monetary award is posted by the appellant,

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otherwise the filing of the motion to reduce bond shall not stop the running of the
period to perfect an appeal. Citing McBurnie, the Court said:

Furthermore, on the matter of the filing and acceptance of motions to

reduce appeal bond, as provided in Section 6, Rule VI of the 2011 NLRC
Rules of Procedure, the Court hereby RESOLVES that henceforth, the
following guidelines shall be observed:

(a) The filing of a motion to reduce appeal bond shall be entertained by

the NLRC subject to the following conditions: (1) there is meritorious
ground; and (2) a bond in a reasonable amount is posted;

(b) For purposes of compliance with condition no. (2), a motion shall be
accompanied by the posting of a provisional cash or surety bond
equivalent to ten percent (10), of the monetary award subject of the
appeal, exclusive of damages and attorney's fees;

(c) Compliance with the foregoing conditions shall suffice to suspend the
running of the 10-day reglementary period to perfect an appeal from
the labor arbiter's decision to the NLRC;

(d) The NLRC retains its authority and duty to resolve the motion to
reduce bond and determine the final amount of bond that shall be
posted by the appellant, still in accordance with the standards of
meritorious grounds and reasonable amount; and

(e) In the event that the NLRC denies the motion to reduce bond, or
requires a bond that exceeds the amount of the provisional bond, the
appellant shall be given a fresh period of ten (10) days from notice of
the NLRC order within which to perfect the appeal by posting the
required appeal bond.39

In this case, we see that with no proof to substantiate its claim, petitioner moved for

307
a reduction of the appeal bond on the proferred basis of serious losses and reverses
it supposedly sustained in the years prior to the rendition of the Labor Arbiter's
decision.

The first condition may be left for the nonce. As to the second condition, we may
consider that the amount of P100,000.00 supposedly posted was provisional bond
sufficient to suspend the running of the 10-day reglementary period to perfect an
appeal from the Labor Arbiter's decision. That would however not improve
petitioner's position one bit. Respondent correctly called attention to the fact that
the check submitted by petitioner was dishonored upon presentment for payment,
thereby rendering the tender thereof ineffectual. Although the NLRC chose not to
address the issue of the perfection of the appeal as well as the reduction of the
bond in its Resolution dated 25 April 2005, the record shows that petitioner only
manifested its deposit of the funds for the check 24 days before the resolution of its
appeal or 116 days after its right to appeal the Labor Arbiter’s decision had expired.

Therefore, the CA cannot be faulted for no longer discussing the merits of

petitioner’s case.1avvphi1 Although appeal is an essential part of our judicial process,
it has been held, time and again, that the right thereto is not a natural right or a part
of due process but is merely a statutory privilege. Thus, the perfection of an appeal
in the manner and within the period prescribed by law is not only mandatory but
also jurisdictional and failure of a party to conform to the rules regarding appeal will
render the judgment final and executory. Once a decision attains finality, it becomes
the law of the case and can no longer be revised, reviewed, changed or altered. The
basic rule of finality of judgment is grounded on the fundamental principle of public
policy and sound practice that, at the risk of occasional error, the judgment of courts
and the award of quasi-judicial agencies must become final at some definite date
fixed by law.

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 TOYOTA ALABANG, INC., petitioner, vs. EDWIN GAMES, respondents

G.R. No. 206612, August 17, 2015

Facts: Respondent Games, worked as a foreman for petitioner, allegedly stole its
vehicle lubricants. Subsequently, it charged him with qualified theft before the trial
court. Two years thereafter, or on 24 August 2007, Games filed a Complainant for
illegal dismissal, non-payment of benefits, and damages against petitioner.

The latter, through counsel, failed to file its Position Paper on the date set on 15
November 2007. 


On 5 February 2008, the LA ruled against petitioner and ordered the latter to pay
Games P535,553.07 for his separation pay, back wages, service incentive leave pay
and attorney's fees resulting from his illegal dismissal. Petitioner no longer filed a
motion for reconsideration. As a result, the LA's ruling became final and executory.

The LA issued a Writ of Execution, which petitioner sought to quash. It prayed that
the proceedings be reopened, explaining that it had failed to present evidence
because of its counsel's negligence in filing the appropriate pleadings. The LA denied
the claims of petitioner. Aggrieved, the latter appealed before the NLRC.

The appeal of petitioner was denied due course because it had failed to show proof
of its security deposit for the appeal. According to the NLRC, the bonding company's
mere declaration in the Certification of Security Deposit that the bond was fully
secured was not tantamount to a faithful compliance with the rule, because there
must first be an accompanying assignment of the employer's bank deposit.

On the merits, the NLRC dismissed the case on the basis of the rule that no appeal
may be taken from an order of execution of a final judgment. For the NLRC,
petitioner's failure to appeal the LA Decision already made the ruling final and

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executory.

Petitioner elevated the case to the CA via a Petition for Certiorari, but the action was
dismissed. Firstly, the CA ruled that the NLRC did not gravely abuse its discretion in
denying the appeal, given that petitioner had failed to comply faithfully with the
bond requirement. Secondly, it echoed the ruling of the NLRC that a final judgment
is no longer appealable. Thirdly, the CA found that petitioner's own negligence had
caused it to lose its right to appeal.

Aggrieved, petitioner filed a Petition for Review on Certiorari with Urgent Prayer for
Injunctive Relief before this Court. It disputed the finding that it did not show proof
of its security deposit for the appeal bond. It also insisted that its counsel's gross
negligence justified the reopening of the proceedings below.

Issues: 1.)Whether or not CA erred in dismissing the petitioners complaint; 2.)

Whether or not the NLRC gravely abused its discretion in requiring petitioner to post
an appeal bond; 3.) Whether or not an appeal bond must be accompanied by a
"proof of security deposit or collateral securing the bond."

Ruling: This Court maintains that the CA correctly refused to reopen the proceedings
below. The reopening of a case is an extraordinary remedy, which, if abused, can
make a complete farce of a duly promulgated decision that has long become final
and executory. Hence, there must be good cause on the movant's part before it can
be granted.
 
 In this case, petitioner itself was negligent in advancing its case. As
found by the appellate court, petitioner was present during the mandatory
conference hearing in which the latter was informed by the LA of the need to file a
Position Paper on 15 November 2007. However, petitioner not only reneged on the
submission of its Position Paper, but even failed to move for the filing of the
pleading at any point before the LA resolved the case on 5 February 2008.

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Moreover, petitioner had failed to exhibit diligence when it did not attend the
hearing on 11 January 2008, or any of the proceedings thereafter, despite its
manifestation that it no longer had any legal representative. Given the instances of
negligence by petitioner itself, the Court finds that the CA justly refused to reopen
the case in the former's favor. Definitely, petitioner cannot now be allowed to claim
denial of due process when it was petitioner who was less than vigilant of its rights.

The NLRC did not commit any mistake in requiring petitioner to post an appeal
bond. The paraphrased proposition that "an appeal bond is not required in appeals
from decisions of the LA denying a motion to quash a writ of execution" lacks any
citation sourced from a statute or case law. Article 223 of the Labor Code and
Section 6, Rule VI of the 2011 NLRC Rules of Procedure, uniformly state thus:

In case the decision of the Labor Arbiter or the Regional Director involves a
monetary award, an appeal by the employer may be perfected only upon the
posting of a bond, which shall either be in the form of cash deposit or surety bond
equivalent in amount to the monetary award, exclusive of damages and attorney's
fees. (Emphasis supplied)


 Evidently, the above rules do not limit the appeal bond requirement only to certain
kinds of rulings of the LA. Rather, these rules generally state that in case the ruling of
the LA involves a monetary award, an employer's appeal may be perfected only
upon the posting of a bond. Therefore, absent any qualifying terms,so long as the
decision of the LA involves a monetary award, as in this case, that ruling can only be
appealed after the employer posts a bond.


 Clearly, this construction is but proper considering the avowed purpose of appeal
bonds demanded by the law from employers in labor cases. If we are to construe
otherwise, then an aggrieved party may simply seek the quashal of a writ of
execution, instead of going through the normal modes of appeal, to altogether avoid
paying for an appeal bond. This ruse will then circumvent the requirement of both
labor rules and jurisprudence16to post an appeal bond before contesting the LA's
grant of monetary award. Hence, the first point is not only incorrect, but also

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dangerous. 


According to the NLRC and the CA, the bonding company's mere declaration in the
Certification of Security Deposit that the bond is fully secured is not tantamount to a
faithful compliance with the rule, because there must first be an accompanying
assignment of the employer's bank deposit. On the other hand, the dissent sees this
declaration as an act that satisfies Section 6, Rule VI of the 2011 NLRC Rules of
Procedure. For this reason, he opines that the NLRC should have entertained the
appeal of petitioner.


 Notwithstanding this issue, the NLRC has given a well-founded reason for refusing
to entertain petitioner's appeal, namely, no appeal may be taken from an order of
execution of a final and executory judgment.An appeal is not a matter of right, but is
a mere statutory privilege.


 In this case, petitioner elevated to the NLRC an already final and executory
decision of the LA. To recall, after petitioner learned of its former counsel's
negligence in filing a Position Paper before the LA, it nonetheless failed to file a
motion reconsideration to question the ruling of the LA that it illegally dismissed
Games. At that point, the Decision was already final and executory, so the LA
dutifully issued a Writ of Execution. Petitioner sought the quashal of the writ of
execution and the reopening of its case only at that stage; and only after it was
rebuffed by the LA did petitioner appeal before the NLRC. Based on the timeline,
therefore, the LA's adverse Decision had become final and executory even prior to
petitioner's appeal before the NLRC contesting the denial of the Motion to Quash
the Writ of Execution. Consequently, the NLRC dismissed the appeal based on its
clear prohibition under Section 5, Rule V of the 2011 NLRC Rules of Procedure.

The NLRC's reasoning that no appeal may be taken from an order of execution of a
final and executory judgment is also rooted in case law. Jurisprudence dictates that a
final and executory decision of the LA can no longer be reversed or modified. After
all, just as a losing party has the right to file an appeal within the prescribed period,
so does the winning party have the correlative right to enjoy the finality of the
resolution of the case. On this basis, the CA did not grievously err when it concluded

312
that the ruling of the NLRC denying petitioner's appeal was not baseless, arbitrary,
whimsical or despotic.

SOCIAL SECURITY SYSTEM, petitioner, vs. DEBBIE UBAÑA, respondent

G.R. No. 200114, August 24, 2015

Facts: In her complaint for damages against the Social Security System (SSS), the
DBP Service Corporation, and the SSS Retirees Association, respondent Ubana
alleged that in July 1995 she applied for employment with the SSS. Despite passing
all the examinations and submitting the requirements, she was referred to the DBP
Service Corporation, passed the pre-employment examination and was referred to
SSS Naga for training and immediate deployment to SSS Daet.

She was made to sign a six-month Service Contract in May, 1996; and when she
reported to the SSS Daet Branch, she was assigned to various sections and divisions
as Processor and Data Encoder. Her salary was only P229.00 daily compared to a
regular SSS Processor who receives P846.45 daily. While her service contract with the
DBP Service Corporation was never renewed, she continued to be employed by the
SSS; she was continually assured of being absorbed into the SSS; in fact she was
qualified for the position as she passed the required training.

Because of the oppressive and prejudicial treatment of the SSS, she was forced to
resign in August, 2002 as she could not stand anymore the exploitation, the agony of
dissatisfaction, anxiety, demoralization, and injustice. Respondent Ubana therefore
alleges that the defendants conspired to exploit her and violate civil service rules and
regulations and Civil Code provisions on Human relations, specifically Articles 19, 20
and 21. Thus, she prayed for actual damages by way of unrealized income, moral
and exemplary damages, and attorney’s fees.

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The defendants filed a motion to dismiss for lack of jurisdiction, averring that the
complaint was predicated on the claims that arose out of employer-employee
relations, thus cognizable by the NLRC. At first, the RTC granted the motion to
dismiss, but on motion for reconsideration by the respondent, the RTC reversed itself
and denied the motion to dismiss. It held that a perusal of the complaint filed by
Debbie substantially alleges that the case is for Damages. Having denied the
existence of employer-employee relationship between it and Debbie, and the case is
for damages, the regular trial courts, not the CSC has jurisdiction over the case.

SSS moved to reconsider, but the RTC denied, hence it filed a petition for certiorari
with the CA which likewise dismissed the case.

Issue:Whether or not the RTC has jurisdiction over the complaint filed by Debbie.

Ruling:The Court denies the Petition.

In Home Development Mutual Fund v. Commission on Audit, it was held that while
they performed the work of regular government employees, DBP Service Corporation
personnel are not government personnel, but employees of DBP Service Corporation
acting as an independent contractor. Applying the foregoing pronouncement to the
present case, it can be said that during respondent’s stint with petitioner, she never
became an SSS employee, as she remained an employee of DBP Service Corporation
and SSS Retirees Association – the two being independent contractors with
legitimate service contracts with SSS.

Indeed, “[i]n legitimate job contracting, no employer-employee relation exists

between the principal and the job contractor’s employees. The principal is
responsible to the job contractor’s employees only for the proper payment of
wages.”

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In her Complaint, respondent acknowledges that she is not petitioner’s employee,
but that precisely she was promised that she would be absorbed into the SSS
plantilla after all her years of service with SSS; and that as SSS Processor, she was
paid only P229.00 daily or P5,038.00 monthly, while a regular SSS Processor receives
a monthly salary of P18,622.00, or P846.45 daily wage. In its pleadings, petitioner
denied the existence of an employer-employee relationship between it and
respondent; in fact, it insists on the validity of its service agreements with DBP
Service Corporation and SSS Retirees Association – meaning that the latter, and not
SSS, are respondent’s true employers. Since both parties admit that there is no
employment relation between them, then there is no dispute cognizable by the
NLRC. Thus, respondent’s case is premised on the claim that in paying her only
P229.00 daily – or P5,038.00 monthly – as against a monthly salary of P18,622.00, or
P846.45 daily wage, paid to a regular SSS Processor at the time, petitioner exploited
her, treated her unfairly, and unjustly enriched itself at her expense.

For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to
acquire jurisdiction over a dispute, there must be an employer-employee relation
between the parties thereto.

x x x It is well settled in law and jurisprudence that where no employer-employee

relationship exists between the parties and no issue is involved which may be
resolved by reference to the Labor Code, other labor statutes or any collective
bargaining agreement, it is the Regional Trial Court that has jurisdiction, x x x The
action is within the realm of civil law hence jurisdiction over the case belongs to the
regular courts. While the resolution of the issue involves the application of labor
laws, reference to the labor code was only for the determination of the solidary
liability of the petitioner to the respondent where no employer-employee relation
exists. Article 217 of the Labor Code as amended vests upon the labor arbiters
exclusive original jurisdiction only over the following:

Unfair labor practices;

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 Termination disputes;

If accompanied with a claim for reinstatement, those cases that workers may file
involving wages, rates of pay, hours of work and other terms and conditions of
employment;

Claims for actual, moral, exemplary and other forms of damages arising from
employer-employee relations;

Cases arising from any violation of Article 264 of this Code, including questions
involving legality of strikes and lockouts; and

Except claims for Employees Compensation, Social Security, Medicare and

maternity benefits, all other claims, arising from employer- employee relations,
including those of persons in domestic or household service, involving an amount
exceeding five thousand pesos (P5,000.00) regardless of whether accompanied
with a claim for reinstatement.

In all these cases, an employer-employee relationship is an indispensable

jurisdictional requisite x x x.

Since there is no employer-employee relationship between the parties herein, then

there is no labor dispute cognizable by the Labor Arbiters or the NLRC.

There being no employer-employee relation or any other definite or direct contract

between respondent and petitioner, the latter being responsible to the former only
for the proper payment of wages, respondent is thus justified in filing a case against
petitioner, based on Articles 19 and 20 of the Civil Code, to recover the proper salary
due her as SSS Processor. At first glance, it is indeed unfair and unjust that as,
Processor who has worked with petitioner for six long years, she was paid only
P5,038.00 monthly, or P229.00 daily, while a regular SSS employee with the same
designation and who performs identical functions is paid a monthly salary of
P18,622.00, or P846.45 daily wage. Petitioner may not hide under its service contracts

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to deprive respondent of what is justly due her. As a vital government entity charged
with ensuring social security, it should lead in setting the example by treating
everyone with justice and fairness. If it cannot guarantee the security of those who
work for it, it is doubtful that it can even discharge its directive to promote the social
security of its members in line with the fundamental mandate to promote social
justice and to insure the well-being and economic security of the Filipino people.

In this jurisdiction, the “long honored legal truism of ‘equal pay for equal work'” has
been “impregnably institutionalized;” “[p]ersons who work with substantially equal
qualifications, skill, effort and responsibility, under similar conditions, should be paid
similar salaries.” “That public policy abhors inequality and discrimination is beyond
contention. Our Constitution and laws reflect the policy against these evils. The
Constitution in the Article on Social Justice and Human Rights exhorts Congress to
‘give highest priority to the enactment of measures that protect and enhance the
right of all people to human dignity, reduce social, economic, and political
inequalities.’ The very broad Article 19 of the Civil Code requires every person, ‘in the
exercise of his rights and in the performance of his duties, [to] act with justice, give
everyone his due, and observe honesty and good faith”.

ILAW BUKLOD NG MANGGAGAWA NESTLE PHILIPPINES CHAPTER, petitioner, vs.

NESTLE PHILIPPINES, respondent

GR No. 198675, Sept 23, 2015


 Facts: The petitioner union staged a strike against Nestle Philippines Inc.
company's Ice Cream and Chilled Products Division on the following grounds: alleged
violation of the collective bargaining agreement (CBA), dismissal of union officers and
members, discrimination and other unfair labor practice (ULP) acts. However, after a
series of conciliation meetings and discussions between the parties, they agreed to
resolve their differences and came up with a compromise which was embodied in a
Memorandum of Agreement (MOA). After a lapse of more than eleven (11) years
from the time of execution of the subject MOA, petitioners filed with the NLRC a
Motion for Writ of Execution contending that they have not been paid the amounts

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they are entitled to in accordance with the MOA. Respondent filed its Opposition to
the Motion for Writ of Execution contending that petitioners' remedy is already
barred by prescription because, under the 2005 Revised Rules of the NLRC, a
decision or order may be executed on motion within five (5) years from the date it
becomes final and executory and that the same decision or order may only be
enforced by independent action within a period often (10) years from the date of its
finality.Petitioners' basic contention is that respondent cannot invoke the defense of
prescription because it is guilty of deliberately causing delay in paying petitioners'
claims and that petitioners, on the other hand, are entitled to protection under the
law because they had been vigilant in exercising their right as provided for under the
subject MOA.

Issue: Whether or not the Petitioners' demand to be paid has prescribed

Ruling: No, it has not. The compromise agreement between petitioner and
respondent was executed on August 4, 1998 and was subsequently approved via the
NLRC Decision dated October 12, 1998. However, considering petitioners' allegation
that the terms and conditions of the agreement have not been complied with by
respondent, petitioners should have moved for the issuance of a writ of execution.

It is settled that when a compromise agreement is given judicial approval, it becomes

more than a contract binding upon the parties. Having been sanctioned by the court,
it is entered as a determination of a controversy and has the force and effect of a
judgment. It is immediately executory and not appealable, except for vices of consent
or forgery.The non-fulfillment of its terms and conditions justifies the issuance of a
writ of execution; in such an instance, execution becomes a ministerial duty of the
court. A decision on a compromise agreement is final and executor and has the force
of law and is conclusive between the parties. It becomes a judgment that is subject
to execution in accordance with the Rules.

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Section 8, Rule XI, 2005 Revised Rules of Procedure of the NLRC provides that a
judgment may be executed on motion within five years from the date of its entry or
from the date it becomes final and executory. After the lapse of such time, and
before it is barred by the statute of limitations, a judgment may be enforced by
action. If the prevailing party fails to have the decision enforced by a mere motion
after the lapse of five years from the date of its entry (or from the date it becomes
final and executory), the said judgment is reduced to a mere right of action in favor
of the person whom it favors and must be enforced, as are all ordinary actions, by
the institution of a complaint in a regular form.

In the present case, the five-and ten-year periods provided by law and the rules are
more than sufficient to enable petitioners to enforce their right under the subject
MOA. In this case, it is clear that the judgment of the NLRC, having been based on a
compromise embodied in a written contract, was immediately executory upon its
issuance on October 12, 1998. Thus, it could have been executed by motion within
five (5) years. It was not. Nonetheless, it could have been enforced by an
independent action within the next five (5) years, or within ten (10) years from the
time the NLRC Decision was promulgated. It was not.

Therefore, petitioners' right to have the NLRC judgment executed by mere motion as
well as their right of action to enforce the same judgment had prescribed by the
time they filed their Motion for Writ of Execution on January 25, 2010.

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 QUANTUM FOODS, INC., petitioner, vs. ESLOYO, respondent
 GR. No. 213696,
December 9, 2015 
 citing 2015 McBurnie

Facts:Petitioner, Quantum Foods, Inc. (QFI) is a domestic corporation engaged in the

distribution and selling of food products nationwide. It hired respondent, Esloyo as
Major Accounts Representative, and Magsila as Key Accounts Representative. Esloyo
and Magsila were each required to post a cash bond in the amount of P10,000.00
and P7,000.00, respectively. However, later on, both were terminated, Esloyo for
alleged misbehavior and violations of various company rules and regulations, such as
sexual harassment, misappropriation of company funds/ property,
falsification/padding of reports and serious misconduct, and Magsila was retrenched
because QFI decided to reorganize its sales force nationwide following a drastic drop
in net income.

Esloyo asserted that his dismissal was illegal, claiming that: (a) the charges were all
fabricated; (b) no formal investigation was conducted; and (c) he was not given the
opportunity to confront his accusers. Magsila, on the other hand, averred that there
was no valid retrenchment as the losses claimed by QFI were unsubstantiated and
that he was merely replaced

The Labor Arbiter found respondents to have been illegally dismissed.

QFI filed its Notice of Appeal and Memorandum of Appeal before the NLRC,
accompanied by: (a) a Motion to Reduce Bond averring that it was encountering
difficulty raising the amount of the bond and finding an insurance company that can
cover said amount during the short period of time allotted for an appeal; and (b) a
cash bond in the amount of P400,000.00 (partial bond).


Respondents filed a motion to dismiss the appeal for QFI's failure: (a) to attach a
Verification and Certification of Non-Forum Shopping as required by the New Rules
and Procedure of the NLRC; and (b) to post a bond in an amount equivalent to the

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monetary judgment as mandated by law.

The NLRC denied respondents' motion to dismiss and gave due course to QFI's
appeal, holding that: (a) the lack of verification was a formal defect that could be
cured by requiring an oath; (b) the belated filing of the certificate of non-forum
shopping may be allowed under exceptional circumstances as technical rules of
procedure should be used to promote, not frustrate justice; and (c) there was
substantial compliance with the bond requirement, and merit in QFI's appeal that
would justify a liberal application of the requirement on the timely filing of the
appeal bond.

The CA reversed and set aside the NLRC's ruling and reinstated the LA's Decision. It
ruled that QFI's failure to post the required bond in an amount equivalent to the
monetary judgment impeded the perfection of its appeal, and rendered the LA's
Decision final and executory.Thus, the NLRC was bereft of jurisdiction and abused its
discretion in entertaining the appeal.It also held that the posting of the partial bond
together with the Motion to Reduce Bond did not stop the running of the period to
perfect the appeal, considering that: (a) the grounds relied upon by QFI are not
meritorious; and (b) the partial bond posted was not reasonable in relation to the
monetary judgment

Issue:Whether or not the CA erred in ascribing grave abuse of discretion on the part
of the NLRC in giving due course to QFI's appeal holding that: (a) the lack of
verification was a formal defect that could be cured by requiring an oath; (b) the
belated filing of the certificate of non-forum shopping may be allowed under
exceptional circumstances as technical rules of procedure should be used to
promote, not frustrate justice;and (c) there was substantial compliance with the bond
requirement, and merit in QFI's appeal that would justify a liberal application of the
requirement on the timely filing of the appeal bond

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Ruling: Yes, there was grave abuse of discretion on the part of the NLRC in giving
due course to QFI's appeals: Art. 229 of the Labor Code provides that decisions,
awards, or orders of the Labor Arbiter are final and executory unless appealed to the
Commission by any or both parties within ten (10) calendar days from receipt of such
decisions, awards, or orders. Such appeal may be entertained only on any of the
provided grounds. And an appeal by the employer may be perfected only upon the
posting of a cash or surety bond issued by a reputable bonding company duly
accredited by the Commission in the amount equivalent to the monetary award in
the judgment appealed from.

Posting of a cash or surety bond is indispensable to the perfection of an appeal in

cases involving monetary awards from the decision of the LA,in several cases, the
Court has relaxed this stringent requirement whenever justified. Thus, the Rules -
specifically Section 6, Rule VI - thereof, allow the reduction of the appeal bond upon
a showing of: (a) the existence of a meritorious ground for reduction, and (b) the
posting of a bond in a reasonable amount in relation to the monetary award:

SEC. 6.Bond. - In case the decision of the Labor Arbiter or the Regional Director
involves a monetary award, an appeal by the employer may be perfected only upon
the posting of a bond, which shall either be in the form of cash deposit or surety
bond equivalent in amount to the monetary award, exclusive of damages and
attorney's fees.

Case law has held that for purposes of justifying the reduction of the appeal bond,
the merit referred to may pertain to (a) an appellant's lack of financial capability to
pay the full amount of the bond, or (b) the merits of the main appeal such as when
there is a valid claim that there was no illegal dismissal to justify the award, the
absence of an employer-employee relationship, prescription of claims, and other
similarly valid issues that are raised in the appeal.

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In this case, the NLRC held that a liberal application of the requirement on the timely
filing of the appeal bond is justified, finding that (a) the posting of a P400,000.00
cash bond within the reglementary period to appeal and the subsequent posting of a
surety bond constitute substantial compliance of the bond requirement; and (b) there
is merit in QFI's appeal. The posting of the said partial bond coupled with the
subsequent posting of a surety bond in an amount equivalent to the monetary
judgment also signified QFI's good faith and willingness to recognize the final
outcome of its appeal.

DELA ROSA LINER INC ET. AL., petitioner vs. BORELA, ET. AL., respondent

GR No. 207286, July 29, 2016

Facts:On September 23, 2011, respondents Calixto Borela, bus driver, and Estelo
Amarille, conductor, filed separate complaints against petitioners Dela Rosa Liner,
Inc., a public transport company, Rosauro Dela Rosa, Sr., and Nora Dela Rosa, for
underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive
leave pay, 13th month pay, sick leave and vacation leave, night shift differential,
illegal deductions, and violation of Wage Order Nos. 13, 14, 15 and 16.

In a motion dated October 26, 2011, the petitioners asked the labor arbiter to
dismiss the case for forum shopping. They alleged that on September 28, 2011, the
CA 13th Division disposed of a similar case between the parties after they entered
into a compromise agreement which covered all claims and causes of action they
had against each other in relation to the respondents' employment.

The respondents opposed the motion, contending that the causes of action in the
present case are different from the causes of action settled in the case the
petitioners cited.

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Labor Arbiter (LA) Danna A. Castillon, in an order dated November 24, 2011, upheld
the petitioners' position and dismissed the complaint on grounds of forum shopping.
Respondents appealed the LA's ruling, and the NLRC 1st Division granted the
appeal.The NLRC held that the respondents could not have committed forum
shopping as there was no identity of causes of action between the two cases.

The first complaint, the NLRC pointed out, charged the petitioners with illegal
dismissal and unfair labor practice; while the second complaint was based on the
petitioners' alleged nonpayment/underpayment of their salaries and monetary
benefits, and violation of several wage orders. The petitioners moved for
reconsideration, but the NLRC denied their motion, prompting them to file with the
CA a petition for certiorari.

CA 15th Division denied the petition; it found no grave abuse of discretion in the
NLRC ruling that the respondents did not commit forum shopping when they filed
their second complaint. The NLRC likewise held that neither was the case barred by
res judicata arising from the CA judgment in the first case.

The appeals court explained that the first case involved the issues of whether
respondents had been illegally dismissed and whether petitioners should be liable for
unfair labor practice. The labor arbiter dismissed the first complaint for lack of merit
in his decision of November 6, 2008. On the respondents' appeal against the LA
ruling in this first case, the NLRC 6th Division reversed the dismissal of the complaint.
It awarded respondents back wages (P442, 550.00) for Borela and P215,775.00 for
Amarille), damages (P10,000.00 each in moral and exemplary damages for Borela),
and moral and exemplary damages (P25,000.00 each for Amarille), plus 10%
attorney's fees for each of them.

On the petitioners' motion for reconsideration of the NLRC issued a new ruling that
followed the LA's ruling, with modification. It awarded the respondents financial

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assistance of P10,000.00 each, in consideration of their long years of service to the
company.

The respondents sought relief from the CA through a petition for certiorari (CA-G.R.
SP No. 118038). Thereafter, the parties settled the case (involving the first complaint)
amicably through the compromise agreement adverted to earlier. Under the terms of
this agreement, "(t)he parties has (sic) agreed to terminate the case now pending
before the Court of Appeals and that both parties further agree that no further
action based on the same grounds be brought against each other, and this
Agreement applies to all claims and damages or losses either party may have against
each other whether those damages or losses are known or unknown, foreseen
orunforeseen."

Based on this agreement, Borela and Amarille received from respondents P350,000.00
and P150,000.00, respectively, and executed a quitclaim. In this manner, the parties
resolved the first case.

To go back to the present case CA-G.R. SP No. 128188, which arose from the second
complaint the respondents subsequently filed), the CA 15th Division upheld the
NLRC's (1st Division) decision and ruled out the presence of forum shopping and res
judicata as bars to the respondents' subsequent money claims against the
petitioners. The petitioners moved for reconsideration, but the CA denied the motion.

Issue:The petitioners now ask the Court to nullify the CA judgment in CA-G.R. SP No.
128188 (arising from the second complaint), contending that the appellate court
erred in upholding the NLRC ruling that there was no forum shopping nor res
judicata that would bar the second complaint.

The respondents pray for the denial of the petition for having been filed out of time

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and for lack of merit.

They argue that the petition should not prosper as it was belatedly filed.

Respondents contend that their second complaint involved two causes of action: (1)
their claim for sick leave, vacation leave, and 13th-month pay under the collective
bargaining agreement of the company; and (2) the petitioners' noncompliance with
wage orders since the year 2000 until the present.

Ruling: The petition is dismissed for lack of merit.

The petition for review on certiorari is timely filed pursuant to Rule 45, Section 2 of
the Rules of Court. The last day for filing of the petition, as respondents claim, fell on
June 12, 2013, Independence Day, a legal holiday. The filing of the petition therefore
on June 13, 2013, a working day, fully complied with the rules.

The CA 15th Division committed no reversible error when it affirmed the NLRC ruling
that the second complaint is not barred by the rule on forum shopping nor by the
principle of res judicata. In other words, no grave abuse of discretion could be
attributed to the NLRC when it reinstated the second complaint.

Contrary to the petitioners' submission, respondents' second complaint (CA-G.R. SP

No. 128188), a money claim, is not a "similar case" to the first complaint (CA-G.R. SP
No. 118038). Thus, the filing of the second complaint did not constitute forum
shopping and the judgment in the first case is not a res judicata ruling that bars the
second complaint.

The elements of forum shopping are: (1) identity of parties; (2) identity of rights
asserted and relief prayed for, the relief being founded on the same facts; and (3)

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identity of the two preceding particulars such that any judgment rendered in the
other action will, regardless of which party is successful, amount to res judicata in the
action under consideration.

We concur with the CA that forum shopping and res judicata are not applicable in
the present case. There is no identity of rights asserted and reliefs prayed for, and
the judgment rendered in the previous action will not amount to res judicata in the
action now under consideration. There is also no identity of causes of action in the
first complaint and in the second complaint.

The NLRC's and CA's conclusion that there is no identity of causes of action between
the respondents' two complaints against the petitioners is sufficient. The first
complaint involved illegal dismissal/suspension, unfair labor practice with prayer for
damages and attorney's fees; while the second complaint (the subject of the present
appeal) involves claims for labor standards benefits — the petitioners' alleged
violation of Wage Orders Nos. 13, 14, 15 and 16; nonpayment of respondents' sick
and vacation leave pays, 13th-month pay, service incentive leave benefit, overtime
pay, and night shift differential.

The same facts or evidence would not support both action, that is, the facts or the
evidence that would determine whether respondents were illegally dismissed, illegally
suspended, or had been the subject of an unfair labor practice act by the petitioners
are not the same facts or evidence that would support the charge of non-compliance
with labor standards benefits and several wage orders. Thus, there is no basis for
petitioners' claim that "the same action had been settled . . . .” and the petitioners'
argument that "The Compromise Agreement covered all claims and causes of action
that the parties may have against each other in relation to the private respondents'
employment."

While the parties agreed that no further action shall be brought by the parties
against each other, they pointedly stated that they referred to actions on the same
grounds. The phrase same grounds can only refer to the grounds raised in the first

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complaint and not to any other grounds. The compromise agreement's application
"to all claims and damages or losses either party may have against each other
whether those damages or losses are known or unknown, foreseen or unforeseen,” is
also too sweeping and effectively excludes any claims by the respondents against the
petitioners, including those that by law and jurisprudence cannot be waived without
appropriate consideration such as nonpayment or underpayment of overtime pay
and wages.

In labor law, respondents' claim for 13th-month pay, overtime pay, and statutory
wages (under Wages Orders 13, 14, 15 and 16), among others, cannot simply be
generally waived as they are granted for workers' protection and welfare; it takes
more than a general waiver to give up workers' rights to these legal entitlements.

Lastly, the petitioners' insinuation, that the respondents are not and should not be
entitled to anything more, because they had already "received a considerable amount
for the settlement" (P350,000.00 for Borela and P150,000.00 for Amarille), should be
placed and understood in its proper context. The illegal dismissal case where the
compromise agreement took place, the NLRC 6th Division (acting on the appeal from
theLA's ruling) awarded Borela P442,550.00 in backwages; P20,000.00 in moral and
exemplary damages, plus 10% attorney's fees; and to Amarille P215,775.00 in back
wages and P50,000.00 in moral and exemplary damages, plus 10% attorney's fees.

Although the NLRC reconsidered these awards and eventually granted financial
assistance of P10,000.00 each to Borela and Amarille, it is reasonable to regard the
amounts they received as a fair compromise in the settlement of the first complaint
in relation with the initial NLRC award, indicated above, before its reconsideration.
The parties, especially the respondents, could not have considered the P10,000.00
financial assistance or their labor standards claims, particularly the alleged violation
of the wage orders, as a factor in their effort to settle the case amicably. The
compromise agreement, it should be emphasized, was executed on September 8,
2011, while the labor standards complaint was filed only on September 23, 2011.

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FONTANA DEVELOPMENT CORP. et. al., petitioner vs. SASCHA 
 VUKASINOVIC,
respondent

GR No. 222424, September 21, 2016

Facts: In July 2009, respondent Sascha Vukasinovic was hired by petitioner Fontana
Development Corporation (FDC) as its Director for Business Development for one
year. His employment was renewed for another year at the end of his first contract.

In May 2010, respondent allegedly received a text message from one Jenny Malllari
informing him that some officers of FDC were receiving commissions from company
transactions.

Thereafter, respondent met with Mallari and offered her money in exchange for
evidence that will support her allegations. She handed over a photocopy of a check
as a proof but the check had an alteration so respondent asked her to execute an
affidavit and provide more proof.

Mallari eventually gave respondent two invoices issued by one of the suppliers of
petitioner FDC as proof, and again respondent discovered discrepancies. Respondent,
then recommended to FDC’s General Manager to conduct further investigations on
the alleged corruptions.

During the inquiry, Mallari denied the said allegations stated by her and revealed
that she merely fabricated the story so that she can ask money from respondent.

Following the turn of events, petitioner received a complaint that respondent paid
Mallari a substantial amount of money to concoct a story depicting the officer as a
corrupt employee.

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Respondent received a Show Cause/Preventive Suspension Order from FDC.
Respondent did not deny the allegations against him, and instead, admitted that he
gave money to Mallari because “it is a common practice in FDC to give money to
informants for vital information.”

FDC approved the recommendation of the Panel and terminated respondent.

Respondent, however, refused to acknowledge its receipt, and instead filed a
complaint for illegal dismissal, illegal suspension, regularization, non-payment of
salaries, service incentive leave, 13th month pay, actual, moral and exemplary
damages, attorney’s fees and demands for his reinstatement with full back wages
against petitioner FDC and its officers.

The Labor Arbiter dismissed the complaint for lack of factual or legal basis and ruled
that respondent cannot be regularized as he is an employee with a legal and valid
fixed-term employment and that his dismissal was for a just cause.

Respondent appealed to the NLRC which affirmed the decision of the Labor Arbiter.

Respondent then filed a petition for certiorari with the CA which agreed with the CA
that respondent’s employment has not ripened into regular employment and that he
was validly dismissed. However, it was modified when CA awarded the unpaid
salaries to respondent.

Petitioners filed a petition for reviewcontending that the CA erred in not dismissing
outright respondent’s petition and claimed that given the final decision, the CA
should have refused to take cognizance of the case.

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Issue: Whether or not the CA gravely erred in not dismissing the petition for
deliberate forum shopping.

Ruling: Yes. The respondent is guilty of forum shopping.

There is forum shopping when a party repetitively avails of several judicial remedies
in different court, simultaneously or successively, all substantially founded on the
same transactions and the same essential facts and circumstances, and all raising
substantially the same issues either pending in or already resolved adversely by some
other court. Forum shopping is an act of malpractice that is prohibited and
condemned because it trifles with the courts and buses their processes.

The test for determining the existence of forum shopping is whether a final judgment
in one case amounts to res judicata in another or whether the following elements of
litis pendentia are present: (a) identity of parties, or at least such parties as
representing the same interests in both actions; (b) identity of rights asserted and
reliefs prayed for, the relief being founded on the same facts; and (c) the identity of
the two preceding particulars, such that any judgment rendered in the other action
will, regardless of which party is successful, amount to res judicata in the action
under consideration. Said requisites are also constitutive of the requisites for auter
action pendant or lis pendens.

In the instant case, there is no doubt that all the elements of litis pedentia have
already been established, as this was already settled with finality.

It is well-settled that once there is a finding of forum shopping, the penalty is

summary dismissal not only of the petition pending before this Court, but also of the
other case that is pending in a lower court.

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The purpose of the rule is to avoid multiplicity of suits and to prevent a party from
instituting two or more actions or proceedings involving the same parties for the
same cause of action on the supposition the one or the other court would make a
favorable disposition.

Furthermore, Rule 7, Section 5 of the Rules of Court mandates that a willful and
deliberate forum shopping shall be a ground for summary dismissal of a case with
prejudice.

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