UNIVERSITY OF SAN CARLOS

SCHOOL OF LAW AND GOVERNANCE

COLLEGE OF LAW
Cebu City

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CASE DIGESTS IN LABOR RELATIONS LAW

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In Partial Fulfillment
of the Requirements
in the Course
Labor Relations Law
(LLB 246N)

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NOEL JUN L. LINGANAY

19105334
EH 407
March 2021
TOPIC 1: THE APPLICABLE LAWS
TOPIC 2: BASIC PRINCIPLES
1. Jose Y. Sonza vs. ABS-CBN Broadcasting Corporation, G.R. No. 138051, June 10,
2004

Doctrine: The elements of an employee- employer relationship are selection and engagement
of the employee, the payment of wages, the power of dismissal and 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.

Facts: In May 1994, respondent ABS-CBN Broadcasting Corporation (ABS-CBN) signed an

Agreement with the Mel and Jay Management and Development Corporation (MJMDC).  ABS-
CBN was represented by its corporate officers while MJMDC was represented by Jose Sonza, as
President and General Manager, and Carmela Tiangco, as EVP and Treasurer. Written in the
Agreement as an “AGENT”, MJMDC agreed to provide Sonza’s services exclusively to ABS-CBN
as talent for radio and television. ABS-CBN agreed to pay Sonza a monthly talent fee of P310,
000 for the first year and P317, 000 for the second and third year.

On 1 April 1996, Sonza wrote a letter to ABS-CBN’s President, Eugenio Lopez III about
the recent event concerning his program and career, and that the said violation of the company
has breached the agreement, thus, the notice of rescission of the Agreement was sent.

On 30 April 1996, Sonza filed a complaint against ABS-CBN before the Department of
Labor and Employment, National Capital Region in Quezon City.  Sonza complained that ABS-
CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay,
signing bonus, travel allowances and amounts due under the Employees Stock Option Plan or
ESOP.

On 10 July 1996, ABS-CBN filed a Motion to Dismiss on the ground that no employer-
employee relationship existed between the parties. Sonza filed an Opposition to the motion
on 19 July 1996.

Issue: Whether or not there was employer-employee relationship between a television or

radio station and one of its talents, a program host.

Ruling: There is no employer-employee relationship between Jose Sonza and ABS-CBN. It held
that the elements of an employee- employer relationship are selection and engagement of the
employee, the payment of wages, the power of dismissal and 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.

Applying the control test, Sonza is not an employee but an independent contractor.
Individuals with special skills, expertise or talent enjoy the freedom to offer their services as
independent contractors. Control test is based on the extent of control the hirer exercises over
a worker. A radio broadcast specialist who only needs his talents and skills to perform his job
and works under minimal supervision is an independent contractor. The records do not show
that ABS-CBN exercised any supervision and control over how SONZA utilized his skills and
talent in his shows.

The rules imposed by ABS-CBN on Sonza did not control his performance but these were
merely guidelines towards the achievement of the mutually desired result, which are top-rating
television and radio programs that comply with standards of the industry. Even the exclusivity
clause in the Agreement is not a form of control which ABS-CBN exercised over him. The hiring
of exclusive talents is a practice not designed to control the means and methods of work of the
talent, but simply to protect the investment of the broadcast station.

2. Lazaro vs. Social Security Commission, 435 SCRA 472 [2004]

Doctrine: 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.

Facts: In December 26, 2002, 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 of Daet, Camarines Norte.

In her Complaint, respondent alleged that in July 1995, she applied for employment with
the petitioner. However, after passing the examinations and accomplishing all the requirements
for employment, she was instead referred to DBP Service Corporation for "transitory
employment."

She took the pre-employment examination given by DBP Service Corporation and
passed the same. On May 20, 1996, she was told to report for training to SSS, Naga City branch,
for immediate deployment to SSS Daet branch. On May 28, 1996, she was made to sign a six-
month Service Contract Agreement by DBP Service Corporation, appointing her as clerk for
assignment with SSS Daet branch effective May 27, 1996, with a daily wage of only P171.00.
She was assigned as "Frontliner" of the SSS Members Assistance Section until December 15,
1999. From December 16, 1999 to May 15, 2001, she was assigned to the Membership Section
as Data Encoder.

On December 16, 2001, she was transferred to the SSS Retirees Association as Processor
at the Membership Section until her resignation on August 26, 2002.

As 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. Her May 28, 1996
Service Contract Agreement with DBP Service Corporation was never renewed, but she was
required to work for SSS continuously under different assignments with a maximum daily salary
of only P229.00; at the same time, she was constantly assured of being absorbed into the SSS
plantilla.

Respondent 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, UP-Diliman from May 16 to June 10, 2001, yet she
was not given the proper salary. Because of the oppressive and prejudicial treatment by SSS,
she was forced to resign on August 26, 2002 as she could no longer stand being exploited.

She asserted that she dedicated six years of serving SSS, foregoing more satisfying
employment elsewhere, yet she was merely exploited and given empty and false promises; that
defendants conspired to exploit her and violate civil service laws and regulations and Civil Code
provisions on Human Relations, particularly Articles 19, 20, and 21. As a result, she suffered
actual losses by way of unrealized income, moral and exemplary damages, attorney's fees and
litigation expenses.
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).

Issue: Whether or not the RTC has jurisdiction to hear and decide civil case no. 7304.

Ruling: While the performed 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, "in 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.”

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.

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.

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;
 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.

3. Century Properties, Inc. vs. Edwin J. Babiano & Emma B. Concepcion, et al., GR No.
220978, July 5, 2016

Doctrine: It is axiomatic that the existence of an employer-employee relationship cannot

be negated by expressly repudiating it in the management contract and providing therein that
the "employee" is an independent contractor when the terms of the agreement clearly show
otherwise. For, the employment status of a person is defined and prescribed by law and not by
what the parties say it should be. In determining the status of the management contract, the
"four-fold test" on employment earlier mentioned has to be applied

Facts: Babiano was hired by CPI as Director for Sales who eventually was promoted for VP for
Sales. He is receiving a salary, allowance and sales commission. His employment contract
contains a clauses which bars him from disclosing confidential information to business
competing with CPI while he is employed and after 1 year from termination or resignation,
otherwise his compensation will be forfeited. Concepcion was hired as a Sales Agent who was
promoted to Project Director. She signed a Contract of Agency for Project Director and receives
a monthly subsidy, commission and incentive. She signed two contracts and both stipulated
that no employee employer relationship exist. After receiving that Babiano provided a
competitor with information and being AWOL for 5 days, CPI sent a notice to explain why he
should not be charged with disloyalty, conflict of interest and breach of trust. He tendered his
resignation but later he was terminated 8 days later. He revealed he was accepted as VP in a
competitor company. 2 days before Babiano tendered, Concepcion also tendered.

Babiano and Concepcion filed before the NLRC for non-payment of commissions and
damages against CPI. CPI maintained that the they are just agents tasked with selling projects,
there was due process and termination was based on just cause.

The Labor Arbiter ruled in favor of CPI. On Appeal, the NLRC concurred with the Labor
Arbtiter, that Babiano’s acts constituted just cause for termination however forefeiture is
confiscatory and unreasonable. CPI went to CA, while the affirmed the NLRC ruling, it ruled that
there is a proper money claim from employee-employer relationship. Hence this appeal.

Issue: Whether or not, the Century Properties, Inc. would be liable for unpaid commissions?

Ruling: Yes. There exists an employer-employee relationship. This is proven by (a) CPI hired
and promoted Concepcion (b) the monthly "subsidy" and cash incentives that Concepcion was
receiving from CPI are actually remuneration in the concept of wages (c) CPI had the power to
discipline or even dismiss Concepcion (d) CPI possessed the power of control because in the
performance of her duties as Project Director, she did not exercise independent discretion.

While the employment contract is denominated as "Contract of Agency for Project

Director" the existence of employer-employee relations could not be negated by the mere
expedient of repudiating it in a contract. since there exists an employer-employee relationship
between Concepcion and CPI, thus the CA is correct in ruling that Labor Code, it nonetheless
failed to include all of respondents' earned commissions thus, necessitating the increase in
award of unpaid commissions in Concepcion's favor.

4. Apelanio vs. Arcanys, Inc. GR No. 227098, November 14, 2018

Doctrine: A contract of adhesion is defined as one in which one of the parties imposes a ready-
made form of contract, which the other party may accept or reject, but which the latter cannot
modify. One party prepares the stipulation in the contract, while the other party merely affixes
his signature or his "adhesion" thereto, giving no room for negotiation and depriving the latter
of the opportunity to bargain on equal footing. Nevertheless, these types of contracts have
been declared as binding as ordinary contracts, the reason being that the party who adheres to
the contract is free to reject it entirely

Facts: On April 10, 2012, Apelanio was hired by Arcanys, Inc. as a Usability/Web Design Expert.
He was placedon a "probationary status" for a period of six months. Due to low evaluation
ratings, Arcanys served Apelanio aletter, informing him that Arcanys would not convert his
status into a regular employee. Apelanio was given hisfinal pay and he signed a Waiver, Release
and Quitclaim" in favor of respondents. 
 Apelanioaverred that when his probationary contract was terminated, he was immediat
ely 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 butat 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 the CA erred in its decision

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, the Supreme Court cannot align their view with that
of the NLRC considering that 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.

 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.

5. Dr. Loreche-Amit vs. Cagayan De Oro Medical Center, GR No. 216635, June 3, 2019

Doctrine: 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.

Facts: Dr. Mary Jean Loreche-Amit started working with respondent Cagayan De Oro Medical
Center Inc. (CDMC) sometime in May 1996 when she was engaged by the late Dr. Jose Gaerlan
as associate pathologist in the Department of Laboratories. Upon the demise of Dr. Gaerlan,
CDMC’s board of directors formally appointed her as chief pathologist for five years.

On June 13, 2007, CDMC’s board of directors passed a resolution recalling petitioner’s
appointment as chief pathologist. Petitioner filed a complaint for illegal dismissal against CDMC.

In defense, respondents CDMC, Dr. Francisco Oh and Dr. Hernando Emano averred that
petitioner was not hired by them as she merely assisted Dr. Gaerlan in operating the hospital’s
laboratory. They 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.

Issue: Whether or not the labor tribunals have jurisdiction over the complaint for illegal
dismissal filed by petitioner.

Ruling: 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, National Labor Relations Commission and the Court of Appeals
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.

6. Fernandez vs. Kalookan SlaughterHouse Inc., GR No. 225075, June 19, 2019

Doctrine: Article 136 of the Labor Code, one of the protective laws for women, explicitly
prohibits discrimination merely by reason of marriage of a female employee. It is recognized
that company is free to regulate manpower and employment from hiring to firing, according to
their discretion and best business judgment, except in those cases of unlawful discrimination or
those provided by law.

Facts: PT&T (Philippine Telegraph & Telephone Company) initially hired Grace de Guzman
specifically as reliever for C.F. Tenorio who went on maternity leave. She was again invited for
employment as replacement of Erlina F. Dizon who went on leave on 2 periods. De Guzman was
again asked to join PT&T as a probationary employee. She indicated in the portion of the job
application form under civil status that she was single although she had contracted marriage a
few months earlier.
When petitioner learned later about the marriage, its branch supervisor sent de Guzman a
memorandum requiring her to explain the discrepancy including a reminder about the
company’s policy of not accepting married women for employment. She was dismissed from
the company and Labor Arbiter handed down a decision declaring that petitioner illegally
dismissed de Guzman, who had already gained the status of a regular employee. It was
apparent that she had been discriminated on account of her having contracted marriage in
violation of company policies.

Issue: Whether or not the alleged concealment of civil status can be grounds to terminate the
services of an employee.

Ruling: No. Private respondent’s act of concealing the true nature of her status from PT&T
could not be properly characterized as 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. Thus, could not be a
ground to terminate her services.

Article 136 of the Labor Code, one of the protective laws for women, explicitly prohibits
discrimination merely by reason of marriage of a female employee. It is recognized that
company is free to regulate manpower and employment from hiring to firing, according to their
discretion and best business judgment, except in those cases of unlawful discrimination or
those provided by law.

TOPIC 3: RIGHT TO SECURITY OF TENURE

7. Purefoods vs. NLRC, 283 SCRA 136 [1997]

Doctrine: Art. 137. Prohibited acts. – It shall be unlawful for any employer: xxx (2) To discharge
such woman on account of her pregnancy, while on leave or in confinement due to her
pregnancy; xxx Totality of the infractions rule to justify dismissal not applicable Petitioner puts
much emphasis on respondent’s "long history" of unauthorized absences committed several
years beforehand. The undeniable fact is that during her complained absences, she was
pregnant and suffered related illnesses.

Facts: Del Monte repeatedly warned Velasco in writing due to her absences without
permission. A notice of hearing was sent to her notifying her of the charges filed against her for
violating the Absence Without Official Leave rule. She failed to appear; later on she was
terminated.

She explained that the company doctor advised her to have "rest-in-quarters" on
account of a pregnancy-related sickness. She attempted to file leaves of absence but the
petitioner’s supervisor refused to receive them.

Issue: Was her dismissal valid?

Ruling: If the medical certificate or other proof proffered by the worker fails to correspond
with the dates of absence, then it can be reasonably concluded that, absent any other proof,
such absences are unjustified.
 The Filflex ruling is not applicable, principally because the nature and gravity of the
illness involved in that case – chronic asthmatic bronchitis – are different from the conditions
that are present in the instant case, which is pregnancy and its related illnesses.

The Court took judicial notice of the fact that the condition of asthmatic bronchitis may
be intermittent, in contrast to pregnancy which is a continuing condition accompanied by
various symptoms and related illnesses. Hence, as to the former, if the medical certificate or
other proof proffered by the worker fails to correspond with the dates of absence, then it can
be reasonably concluded that, absent any other proof, such absences are unjustified. This is the
ruling in Filflex which cannot be applied in a straight-hand fashion in cases of pregnancy which
is a long-term condition accompanied by an assortment of related illnesses.

Absences due to pregnancy and related illness justified It did not constitute gross and
habitual neglect. Her being pregnant at the time these absences were incurred is not
questioned and is even admitted by respondent. Medical and health reports abundantly
disclose that during the first trimester of pregnancy, expectant mothers are plagued with
morning sickness, frequent urination, vomiting and fatigue all of which complainant was
similarly plagued with.

It must be emphasized that under company rules, absences may be subsequently

justified. Here, she was able to subsequently justify her absences in accordance with company
rules and policy.

Termination violative of Art 137 Since the sickness was pregnancy-,Del Monte cannot
terminate her services because in doing so, it will be violating Art 137 of the Labor Code which
prohibits an employer to discharge an employee on account of the latter’s pregnancy.

Art. 137. Prohibited acts. – It shall be unlawful for any employer: (2) To discharge such
woman on account of her pregnancy, while on leave or in confinement due to her pregnancy;

Totality of the infractions rule to justify dismissal not applicable Petitioner puts much
emphasis on respondent’s "long history" of unauthorized absences committed several years
beforehand. The undeniable fact is that during her complained absences, she was pregnant and
suffered related illnesses. Again, it must be stressed that respondent’s discharge by reason of
absences caused by her pregnancy is covered by the prohibition under the Labor Code. Since
her last string of absences is justifiable and had been subsequently explained, the petitioner
had no legal bas

8. Mitsubishi Motors Phils vs. Chrysler Phil Labor Union G.R. No. 148738,
June 29, 2004

Doctrine: “[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).”

Facts: This case portrays the peculiar story of an international flight steward who was dismissed
because of his failure to adhere to the weight standards of the airline company.
The proper weight for a man of his height and body structure is from 147 to 166 pounds, the
ideal weight being 166 pounds, as mandated by the Cabin and Crew Administration Manual of
PAL.
In 1984, the weight problem started, which prompted PAL to send him to an extended vacation
until November 1985. He was allowed to return to work once he lost all the excess weight. But
the problem recurred. He again went on leave without pay from October 17, 1988 to February
1989.
Despite the lapse of a ninety-day period given him to reach his ideal weight, petitioner
remained overweight. On January 3, 1990, he was informed of the PAL decision for him to
remain grounded until such time that he satisfactorily complies with the weight standards.
Again, he was directed to report every two weeks for weight checks, which he failed to comply
with.
On April 17, 1990, petitioner was formally warned that a repeated refusal to report for weight
check would be dealt with accordingly. He was given another set of weight check dates, which
he did not report to.
On November 13, 1992, PAL finally served petitioner a Notice of Administrative Charge for
violation of company standards on weight requirements. Petitioner insists that he is being
discriminated as those similarly situated were not treated the same.
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 considered terminated “effective
immediately.”
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.
NLRC affirmed.
CA: the weight standards of PAL are reasonable. Thus, petitioner was legally dismissed because
he repeatedly failed to meet the prescribed weight standards. It is obvious that the issue of
discrimination was only invoked by petitioner for purposes of escaping the result of his
dismissal for being overweight.

ISSUE: Whether or not he was validly dismissed.

HELD: A reading of the weight standards of PAL would lead to no other conclusion than that
they constitute a continuing qualification of an employee in order to keep the job. The dismissal
of the employee would thus fall under Article 282(e) of the Labor Code.
In the case at bar, the evidence on record militates against petitioner’s claims that obesity is a
disease. That he was able to reduce his weight from 1984 to 1992 clearly shows that it is
possible for him to lose weight given the proper attitude, determination, and self-discipline.
Indeed, during the clarificatory hearing on December 8, 1992, petitioner himself claimed that
“[t]he issue is could I bring my weight down to ideal weight which is 172, then the answer is
yes. I can do it now.”

Petitioner has only himself to blame. He could have easily availed the assistance of the
company physician, per the advice of PAL.

In fine, We hold that 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 that
justifies his dismissal from the service. His obesity may not be unintended, but is nonetheless
voluntary. As the CA correctly puts it, “[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).”

9. Quintanar et al., vs. Coca-Cola Bottlers Phils GR No. 210565, June 28, 2016,
En Banc, citing 2003 Magsalin, 2003 Bantolino, 2008 Pacquing, 2009 Agito

Doctrine: The claim that it was a labor-only contractor or a mere agent of GMPC. 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

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 SIPs "contract as GMPC concessionaire," because of

GMPCs decision "to take direct investment in and management of the GMPC canteen;" SIPs
continued refusal to heed GMPCs directives for service improvement; and the alleged
interference of the Pablos two sons with the operation of the canteen. 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.
The respondents alleged before the labor arbiter that they were SIP employees who were
illegally dismissed. To avoid liability, SIP argued that it operated the canteen in behalf of GMPC
since it had no authority by itself to do so. The respondents were not its employees, but
GMPCs, as shown by their identification cards.

The LA ruled that respondents were GMPCs employees and not SIPs. The labor arbiter,
however, opined that even if respondents were considered as SIPs employees, their dismissal
would still not be illegal because the termination of its contract to operate the canteen came as
a surprise and was against its will, rendering the canteens closure involuntary.

Respondents appealed to the NLRC. In its decision, the NLRC found that SIP was the
respondent's employer, but it sustained the labor arbiter's ruling that the employees were not
illegally dismissed as the termination of SIPs concession to operate the canteen constituted an
authorized cause for the severance of employer-employee relations. . As the labor arbiter did,
the NLRC regarded the closure of SIPs canteen operations involuntary, thus, negating the
employee's entitlement to separation pay.

On appeal, the CA, finding substantial evidence in the records supporting the NLRC conclusions,
brushed aside SIPs argument that it could not have been the employer of the respondents
because it was a mere labor-only contractor of GMPC. It sustained the NLRC's findings that SIP
was the respondent's employer. SIP moved for reconsideration but the same was denied.
Hence, this petition.

Issue: Whether or not SIP was the employer of respondents

Ruling: The SC agreed with the CA when it ruled out SIPs claim that it was a labor-only
contractor or a mere agent of GMPC. 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.

That complainants were employees of respondents is further bolstered by the fact that
respondents do not deny that they were the ones who paid complainant's salary. When
complainants charged them of underpayment, respondents even interposed the defense of file
board and lodging given to complainants.
Clearly, no less than respondents, thru their counsel, admitted that complainants herein
were their employees.
 10. Inocentes Jr et al., vs. Syjuco Construction et al., GR No. 240549, August
v27, 2020

Doctrine: 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.

Facts: On 17 June 2008, R.A. 9504 entitled “An Act Amending Sections 22, 24, 34, 35, 51, and
79 of Republic Act No. 8424, as Amended, Otherwise Known as the National Internal Revenue
Code of 1997,” was approved and signed into law by President Arroyo. On 24 September 2008,
the Bureau of Internal Revenue (BIR) issued RR 10-2008, dated 08 July 2008, implementing the
provisions of R.A. 9504.

Petitioners assail the subject RR as an unauthorized departure from the legislative intent
of R.A. 9504. The regulation allegedly restricts the implementation of the minimum wage
earners’ (MWE) income tax exemption only to the period starting from 6 July 2008, instead of
applying the exemption to the entire year 2008. They further challenge the BIR’s adoption of
the prorated application of the new set of personal and additional exemptions for taxable year
2008. They also contest the validity of the RR’s alleged 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. Petitioners contend that the law provides for the unconditional exemption of
MWEs from income tax and, thus, pray that the RR be nullified.

Issues: Whether or not  Sections 1 and 3 of RR 10-2008 are consistent with the law in providing
that an MWE who receives other benefits in excess of the statutory limit of P30,00019 is no
longer entitled to the exemption provided by R.A. 9504

Ruling: To be exempt, one must be an MWE, a term that is clearly defined. Section 22(HH) of
Republic Act No. 8424 says he/she must be one who is paid the statutory minimum wage if
he/she works in the private sector, or not more than the statutory minimum wage in the non-
agricultural sector where he/she is assigned, if he/she is a government 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. In other words, the law exempts from income taxation the most
basic compensation an employee receives – the amount afforded to the lowest paid employees
by the mandate of law. In a way, the legislature grants to these lowest paid employees
additional income by no longer demanding from them a contribution for the operations of
government.
 An administrative agency may not enlarge, alter or restrict a provision of law. The Court
is not persuaded that RR 10-2008 merely clarifies the law. 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 of P30,000
is taxable; no more, no less.
The treatment of this excess cannot operate to disenfranchise the MWE from enjoying
the exemption explicitly granted by R.A. 9504. Moreover, RR 10-2008 does not withdraw the
MWE exemption from those who are earning other income outside of their employer employee
relationship. Section 2.78.1 (B) of RR 10-2008 provides that: 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. This rule, notwithstanding, the SMW,
Holiday pay, overtime pay, night shift differential pay and hazard pay shall still be exempt from
withholding tax.
In sum, 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.

TOPIC 4: MANAGEMENT PREROGATIVE

11. PT&T vs. Court of Appeals, G.R. No. 152057, September 29, 2003

Doctrine: An elective local official may be disciplined, suspended, or removed from office on
any of the following grounds: An elective local official may be removed from office on the
grounds enumerated above by order of the proper court.

Facts: An administrative complaint was filed with the Sangguniang Panlalawigan of Palawan
against then Mayor Alejandro Villapando of San Vicente, Palawan for abuse of authority and
culpable violation of the Constitution for entering into a consultancy agreement with Orlando
Tiape, a defeated mayoralty candidate. Complainants argue that this amounted to appointment
to a government position within the prohibited one-year period under Article IX-B, Sec. 6 of the
1987 Constitution.

In his answer, Villapando invoked Opinion No. 106, s. 1992, of the Department of Justice

dated August 21, 1992, stating that the appointment of a defeated candidate within one year
from the election as a consultant does not constitute an appointment to a government office or
position as prohibited by the Constitution.

The Sangguniang Panlalawigan found respondent guilty and imposed on him the penalty
of dismissal from service. The Office of the President affirmed the decision. Vice-mayor Pablico
took his oath as municipal mayor in place of Villapando.
 The Court of Appeals declared the decisions of the SP and OP void, and ordered Pablico
to vacate the office.

Issue:  May local legislative bodies and/or the Office of the President validly impose the penalty
of dismissal from service on erring elective local officials?

Ruling:Section 60 of the Local Government Code of 1991 provides:

Section 60. Grounds for Disciplinary Actions. – An elective local official may be
disciplined, suspended, or removed from office on any of the following grounds:
An elective local official may be removed from office on the grounds enumerated
above by order of the proper court.

It is clear from the last paragraph of the aforecited provision that the penalty of
dismissal from service upon an erring elective local official may be decreed only by a court of
law.  Thus, in Salalima, et al. v. Guingona, et al., we held that “[t]he Office of the President is
without any power to remove elected officials, since such power is exclusively vested in the
proper courts as expressly provided for in the last paragraph of the aforequoted Section 60.”

Article 124 (b), Rule XIX of the Rules and Regulations Implementing the Local
Government Code, however, adds that – “(b) An elective local official may be removed from
office on the grounds enumerated in paragraph (a) of this Article [The grounds enumerated in
Section 60, Local Government Code of 1991] by order of the proper court or the disciplining
authority whichever first acquires jurisdiction to the exclusion of the other.”  The disciplining
authority referred to pertains to the Sangguniang Panlalawigan/Panlungsod/Bayan and the
Office of the President.

As held in Salalima, this grant to the “disciplining authority” of the power to remove
elective local officials is clearly beyond the authority of the Oversight Committee that prepared
the Rules and Regulations.  No rule or regulation may alter, amend, or contravene a provision of
law, such as the Local Government Code.  Implementing rules should conform, not clash, with
the law that they implement, for a regulation which operates to create a rule out of harmony
with the statute is a nullity. 

12. Divine Word College of Laoag vs. Mina, GR No. 195155, April 13, 2016

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 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.
However, before the hearing could take place, the Director of Regional Office No. V, Ma.
Glenda A. Manalo (Director Manalo), issued an Order on July 25, 2002, which reads:
“in view of the foregoing, this case falls under the original and exclusive
jurisdiction of the National Labor Relations Commission as provided under
Article 217 of the Labor Code of the Philippines.”

On September 30, 2002, Director Manalo issued an Order directing TCDC to pay
P2,123,235.90 to its employees representing underpayment of salaries, 13th month pay, and
underpayment of service incentive leave pay and regular holiday pay. TCDC filed a Motion for
Reconsideration on October 17, 2002 and a Supplemental Pleading to the Motion for
Reconsideration on November 21, 2002, reiterating the argument that Director Manalo had lost
jurisdiction over the matter.

Apparently convinced by petitioner’s arguments, Director Manalo again endorsed the

case to the NLRC Regional Arbitration Branch V (Legaspi City). On January 27, 2003, the NLRC
returned the entire records of the case to Director Manalo on the ground that the NLRC does
not have jurisdiction over the complaint.

Having 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. Since TCDC
did not interpose an appeal within the prescribed period, Director Manalo issued forthwith a
Writ of Execution on February 12, 2003.

Issue: The issue in the case is whether 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.

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.

While it is true that orders issued without jurisdiction are considered null and void and,
as a general rule, may be assailed at any time, the fact of the matter is that in this case, Director
Manalo acted within her jurisdiction. Under Article 128 (b) of the Labor Code, 14 as amended
by Republic Act (RA) No. 7730, 15 the DOLE Secretary and her representatives, the regional
directors, have jurisdiction over labor standards violations based on findings made in the course
of inspection of an employer’s premises. The said jurisdiction is not affected by the amount of
claim involved, as RA 7730 had effectively removed the jurisdictional limitations found in
Articles 129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial and
enforcement powers of the DOLE Secretary, are concerned.16 The last sentence of Article
128(b) of the Labor Code recognizes an exception17 to the jurisdiction of the DOLE Secretary
and her representatives, but such exception is neither an issue nor applicable here.
 13. Claret School of Quezon City vs. Sinday, GR No. 226358, Oct. 9, 2019

Doctrine: A decision that has acquired finality becomes immutable and unalterable. This quality
of immutability precludes the modification of a final judgment, even if the modification is
meant to correct erroneous conclusions of fact and law. And this postulate holds true whether
the modification is made by the court that rendered it or by the highest court in the land. The
orderly administration of justice requires that, at the risk of occasional errors, the
judgments/resolutions of a court must reach a point of finality set by the law. The noble
purpose is to write finis to dispute once and for all. This is a fundamental principle in our justice
system, without which there would be no end to litigations. Utmost respect and adherence to
this principle must always be maintained by those who exercise the power of adjudication. Any
act, which violates such principle, must immediately be struck down. Indeed, the principle of
conclusiveness of prior adjudications is not confined in its operation to the judgments of what
are ordinarily known as courts, but extends to all bodies upon which judicial powers had been
conferred.

Facts: On June 26, 2015, the Department of Labor and Employment (Dole)-National Capital
Region (NCR) issued an order directing respondents Kentex Manufacturing Corp. (Kentex)
and/or Beato C. Ang and/or Ong King Guan to pay Louie Andaya and 56 other similarly situated
employees an aggregate amount of P1,440,641.39.

On July 3, 2015, only Ong moved for reconsideration of the order. The Dole-NCR
director ruled that Ong’s motion for reconsideration was not the proper remedy but an appeal
to the Dole Secretary within 10 days from receipt of the order. From this order, respondents
Kentex and Ong filed with the Court of Appeals (CA) a petition under Rule 43 of the Rules of
Court assailing among others, the order of June 26, 2015. Among the errors they assigned was
the Dole-NCR’s finding that Ong was solidarily liable with Kentex for the monetary awards due
to the workers.

The CA affirmed the June 26, 2015 order of the Dole-NCR but with the modification that
respondent Ong King Guan is not liable for the monetary awards specified in the order.

Issue: Did the CA err in modifying the DOLE-NCR order?

Ruling: Both the Dole-NCR and the CA correctly ruled that 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. Notice ought to be taken of the fact that, at the time the
Dole-NCR rendered its ruling, Department Order 131-13 Series of 201325 was the applicable
rule of procedure.

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 filing of a motion for reconsideration was
procedurally infirm. The June 26, 2015 order having become final, it could no longer be altered
or modified by discharging or releasing Ong from his accountability.

Thus, it is self-evident that the CA committed serious error when it ordered the
discharge or release of Ong from the obligations of Kentex. The reason is elemental in its
simplicity: contrary to settled, unrelenting jurisprudence, it unconsciously and egregiously
sought to alter and modify, as indeed it altered and modified, an already final and executory
verdict.

In the absence of any showing that the CA’s modification or alteration of the subject
order falls within the exceptions to the rule on the immutability of final judgments, the Dole-
NCR’s June 26, 2015 order must be upheld and respected.

TOPIC 5: TERMINATION OF EMPLOYMENT

14. VECO Employees Union-ALU TUCP vs. VECO, GR No. 205575, July 22,
2015

Doctrine: 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.

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
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.
Management prerogative refers “to the right of an employer to regulate all aspects of
employment, such as the freedom to prescribe work assignments, working methods, processes
to be followed, regulation regarding transfer of employees, supervision of their work, lay-off
and discipline, and dismissal and recall of work.” 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 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.

15. Century Properties Inc. vs. Babiano, GR No. 220978, July 5, 2016

Doctrine:
Constructive dismissal has often been defined as a "dismissal in disguise" or "an act amounting
to dismissal but made to appear as if it were not."
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 some cases, while no demotion in rank or diminution in pay may be attendant,
constructive dismissal may still exist when continued employment has become so unbearable
because of acts of clear discrimination, insensibility or disdain by the employer, that the
employee has no choice but to resign. Under these two definitions, what is essentially kicking is
the voluntariness in the employee's separation from employment.

Facts:
Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired petitioners
Ernesto Galang and Ma. Olga Jasmin Chan in August 28, 1975 and July 20, 1983, respectively.
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,
20
BTCI explained that the appointment was pursuant to its management prerogative, the
promotion of Villanueva as the National Sales Director caused ill-feelings on petitioners' part.
They believed that Villanueva did not apply for the position; has only three years of experience
in sales; and was reportedly responsible for losses in the marketing department. Petitioners
further resented Villanueva's appointment because they heard that: the appointment was
made only because he threatened to leave the office along with the company's top cardio-
medical doctors

Upon petitioners' retirement, the positions of Regional Sales Manager were abolished, and a
new position of Operations Manager was created. Petitioners filed the complaint for
constructive dismissal and money claims before the NLRC Regional Arbitration Branch. The
NLRC ruled that petitioners failed to prove that they were constructively dismissed.

Issues:
Whether or not there is abuse of exercise of management prerogative;
Petitioners also reiterated that BTCI dismissed them under the guise of management
prerogative, and that Villanueva's appointment as National Sales Director was an abuse of
exercise of such prerogative.
Whether petitioners were constructively dismissed from service; and whether petitioners are
entitled to a higher retirement package.

Ruling:
Petitioners voluntarily retired from the service, thus were not constructively dismissed.
Petitioners were neither demoted nor did they receive a diminution in pay and benefits.
Petitioners also failed to show that employment is rendered impossible, unreasonable or
unlikely.

Our labor laws respect the employer's inherent right to control and manage effectively its
enterprise and do not normally allow interference with the employer's judgment in the conduct
of his business. Management has exclusive prerogatives to determine the qualifications and
fitness of workers for hiring and firing, promotion or reassignment. It is only in instances of
unlawful discrimination, limitations imposed by law and collective bargaining agreement can
this prerogative of management be reviewed.

Managerial positions are offices which can only be held by persons who have the trust of the
corporation and its officers
The promotion of employees to managerial or executive positions rests upon the discretion of
management

Thus, we have repeatedly reminded that the Labor Arbiters, the different Divisions of the NLRC,
and even courts, are not vested with managerial authority
In the absence of any qualification standards that BTCI allegedly gravely abused to refuse to
follow, we cannot substitute our own judgment on the qualifications of Villanueva failed to
prove that their decision to retire is involuntary. Consequently, no constructive dismissal can be
found.

Petitioners were not discriminated against in terms of their retirement package.

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.
 16. Sterling Paper Products Enterprises vs. KMM-Katipunan, GR No. 221493,
August 2, 2017

Facts: Respondent Coca-Cola Bottlers Philippines Inc. (CCBPI) Sta. Rosa Plant Employees Union
is the sole representative of all regular daily paid employees and monthly paid non-commission
earning employees within the Sta. Rosa Laguna plant of petitioner CCBPI.

CCBPI implemented a policy which limits the total amount of loan which its employees
may obtain from the company and other sources such as the Social Security System (SSS), Pag-
Ibig and employees’ cooperative to 50 percent of their respective monthly pay. Respondent
Union interpreted such policy as violative of a provision in the Collective Bargaining Agreement
(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.

The Court of Appeals (CA) affirmed the decision of the Voluntary Arbitrator holding that
such policy is violative of the CBA in the absence of any SSS regulation supporting the same.

Issue: Did the Court of Appeals erred in its decision?

Ruling:
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.

The Terms and Conditions of a Member Loan Application, pursuant to Social Security
Commission Regulation 669, is stipulated at the back of every SSS loan application. It specifies
for the requirements for eligibility of the member and the responsibilities of an employer
relative to loan.

It appears that the qualification of a member-borrower is dependent on the amount of loan to

be taken, updated payment of his contributions and other loans, and age, which should be
below 65 years. On the other hand, the responsibility of an employer is limited to the collection
and remittance of the employee’s amortization: to SSS as it causes the deduction of said
amortizations from the employee’s salary.

Based on said terms and conditions, it does not appear that the employer has the prerogative
to impose other conditions which do not involve its duty to collect and remit amortizations. The
50 percent 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 percent 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 themselves of 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. (Coca-Cola Bottlers Philippines Inc. vs. CCBPI Sta. Rosa Plant
Employees Union, G.R. No. 197484, March 25, 2019).

TOPIC 6: SUSPENSION OF BUSINESS OPERATIONS

17. Ibon vs. Genghis Khan Security Services Inc. GR No. 221085, June 19, 2017

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 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. 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.

18. Seventh Fleet Security Services Inc vs. Loque, GR No. 230005, January 22,
2020

Facts: North Davao Mining Corporation was incorporated in 1974 as a 100% privately-owned

company. As of December 31, 1990 the national government held 81.8% of the common stock
and 100% of the preferred stock of said company.

In May  1992, North Davao completely ceased operations due to serious business reverses.
When it ceased operations, its remaining employees were separated and given the equivalent
of 12.5 days’ pay for every year of service, computed on their basic monthly pay.

However, 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  30
days’ pay for every year of service.

Subsequently, a complaint was filed with respondent LA by respondent Guillema and 271 other
seperated employees for additional separation pay of 17.5 days for every year of service,
among others.

Issue: Is a company which is forced by huge business losses to close its business, legally
required to pay separation benefits to its employees at the time of its closure in an amount
equivalent to the separation pay paid to those who were separated when the company was still
a going concern?  

Ruling:
“Art. 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 under-taking 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 1 month before the intended date thereof. In case of termination due to
the installation of labor saving devices or redundancy, the worker affected thereby shall be
entitled to a separation pay equivalent to at least his 1 month pay or to at least 1 month pay for
every year of service, whichever is higher.  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 1 month pay or
at least ½ month pay for every year of service, whichever is higher.  A fraction of at least 6
months shall be considered  whole year.”

The underscored portion of Art. 283 governs the grant of sepAration benefits “in case of
closures or cessation of operation” of business establishments “NOT due to serious business
losses or financial reverses x x x”. Where, however, the closure was due to business losses – as
in the instant case, in which the aggregate losses amounted to over P20 billion – the Labor Code
does not impose any obligation upon the employer to pay separation benefits, for obvious
reasons.

In the instant case, the company’s practice of giving one month’s pay for every year of service
could no longer be continued precisely because the company could not afford it anymore.  It
was forced to close down on account of accumulated losses of over P20 billion.  North Davao
gave 30-days’ separation pay to its employees when it was still a going concern even if it was
already losing heavily.  As a going concern, its cash flow could still have sustained the payment
of such separation benefits.  But when a business enterprise completely ceases operations, i.e.,
upon its death as a going business concern, its vital lifeblood -its cashflow – literally dries up.
Therefore, the fact that less separation benefits were granted when the company finally met its
business death cannot be characterized as discrimination.  Such action was dictated not by a
discriminatory management option but by its complete inability to continue its business life due
to accumulated losses.  Indeed, one cannot squeeze blood out of a dry stone. Nor water out of
parched land.

TOPIC 7: DISEASE AS GROUND FOR TERMINATION

19. Sy vs. Court of Appeals, G.R. No. 142293, February 27, 2003

Facts: The Heir 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.

In turn, the dealers are paid “Services Fees,” or sales commissions, the amount of which
depends on the volume and value of their sales. Under existing company policy, the dealers
must remit to the petitioner the proceeds of their sales within a designated credit period, which
would either be 38 days for IGSs or 52 days for IBMs, counted from the day the said dealers
acquired the merchandise from the petitioner. To discourage late remittances, the petitioner
imposes a “Credit Administration Charge,” or simply, a penalty charge, on the value of the
unremitted payment.

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 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, 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.

20. Duterte vs. Kingswood Trading Co., G.R. No. 160325, October 4, 2007

Facts: Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios
Hospital Employees Association, sent a letter requesting for the expeditious implementation
and payment by respondent, San Juan De Dios Hospital, of the '40-hours/5-day workweek' with
compensable weekly two (2) days off provided for by Policy Instruction No. 54 issued by the
Secretary of Labor. Said policy instruction purports to implement R.A. No. 5901, otherwise
known as “An Act Prescribing Forty Hours A Week of Labor For Government and Private
Hospitals Or Clinic Personnel.” 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. However, the Labor Arbiter and, subsequently, NLRC dismissed the
complaint. Hence, this petition ascribing grave abuse of discretion on the part of NLRC in
concluding that Policy Instructions No. 54 proceeds from a wrong interpretation of R.A. 5901
and Article 83 of the Labor Code.

Issue: Whether or not Policy Instruction No. 54, entitling a full weekly wage of 7 days upon
completion of 40-hour/5-day workweek, is valid based on existing labor laws.

Ruling: Policy Instruction No. 54 is void, it being inconsistent with and repugnant to the
provision of Article 83 of the Labor Code, as well as to R.A. No. 5901.

A perusal of R. A. No. 5901 reveals nothing therein that gives two days off with pay for health
personnel who complete a 40-hour work or 5-day workweek. In fact, the Explanatory Note of
House Bill No. 16630 (later passed into law as Republic Act No. 5901) explicitly states that the
bill's sole purpose is to shorten the working hours of health personnel and not to dole out a two
days off with pay. Petitioners' position is also negated by the very rules and regulations
promulgated by the Bureau of Labor Standards which implement Republic Act No. 5901.
Section 15 of aforementioned implementing rules grants specific rate of additional
compensation for work performed on Sunday or for work performed in excess of forty hours a
week. Policy Instruction No. 54 unduly extended the statute.

Article 83 merely provides: (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 and petitioner’s
assertion. The Secretary of Labor exceeded his authority by including a two days off with pay in
contravention of the clear mandate of the statute. Administrative interpretation of the law 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.
 21. Villaruel vs. Yeo Han Guan G.R. No. 169191, June 1, 2011

Facts:    Petitioners   Spouses    Nate     are     the     owners/proprietors     of     A.    Nate    Casket  
Maker.     They     employed     respondents     as     carpenters,     mascilladors     and     painters     in
their     casket     making     business     from    1998     until     their     alleged   termination     in     March 
2007.

Respondents     claimed     that     they     worked     from     Monday     to     Saturday,    from   7:00  
a.m.     to     10:00    p.m.     with     no     overtime     pay     and     any     monetary     benefits.

Sometimes     on     March    15,     2007,     petitioners     proposed     a     “Contract     of     Employment”  
but     the     respondents     were     adamant     and     eventually     refused     to     sign     said
contract     as     it     is    unfavorable     to     them.     Later,     petitioners     told     respondents     to     go
home      because     their     employment     has     been     terminated.

Petitioners     claimed     that     respondents     are     pakyaw     workers     who     are     paid   per     job
order.     They     are     “stay-in”    workers     with     free     board     and     lodging.

Issue

Whether     pakyaw     workers     are     considered     regular     employees     even    when     their  
mode     of     compensation     is     on     a     per-piece     basis.

Ruling

YES,    pakyaw     workers     are     considered     regular     employees     for     as     long     as     their  
employers      exercise      power     of     control      over     them.

There     is     no     dispute     that     the     tasks     performed     by     respondents     as     carpenters,  
painters     and     mascilladors     were     necessary     and     desirable     in     the     usual    business     of
the     petitioners     who     are     engaged     in     the     manufacture     and     selling     of     caskets.

The     power     of     control      by     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     signatures     and
the     date     completed.     The     same     could     be     checked     by     petitioners     as     basis     for
the     compensation     for     the     day.

It      should     be     remembered     that     the     control     test     merely     calls     for     the     existence  
of     the     right     to     control,     and     not     necessarily     the     exercise     thereof.   It     is     not
essential     that     the     employers     actually     supervises     the     performance     of     duties     by
the     employees.     It     is     enough     that     the     former     has     a     right     to     wield     the
power.
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     perpiece     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.

TOPIC 8: OTHER CAUSES OF SEVERANCE OF EMPLOYMENT RELATION

22. Lagahit vs. Pacific Concord Container Lines, GR No. 177680, Jan. 13, 2016

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 reconsideration having been denied for lack of merit,
SMC filed a petition for certiorari before the SC

Issues:
(a) 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.
(b) Whether or not SMC was not accorded with due process of law in the issuance of the
compliance order.
(c) 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’rāj (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-ūl-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 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. 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.
 23. Pascual vs. Sitel Phils., Corp., et al., GR No. 240484, March 9, 2020

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.

Held: 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. In light of such admission, petitioner's submission of its
360 divisor in the computation of employees' salaries gains significance.

This ruling was applied in Wellington Investment and Manufacturing Corporation v. Trajano, 43
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 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. In said case, the employees were required to work only from
Monday to Friday and half of Saturday. 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.

TOPIC 9: PRESCRIPTION OF CLAIMS

24. Victory Liner vs. Race, G.R. No. 164820, March 28, 2007

Facts:
Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension,
illegal dismissal, nonpayment of overtime pay, and nonpayment of service incentive leave pay
in the Regional Arbitration Branch No. VII of the NLRC in Cebu City.

On April 21, 2003, Labor Arbiter Violeta Ortiz-Bantug rendered her decision finding that Villa
had not been dismissed from employment.

Although ordering Villa's reinstatement, the Labor Arbiter denied her claim for backwages and
overtime pay because she had not adduced evidence of the overtime work actually performed.
The Labor Arbiter declared that Villa was entitled to service incentive leave pay for the period
of the last three years counted from the filing of her complaint because the petitioner did not
refute her claim thereon.

On February 23, 2005, the NLRC rendered its judgment dismissing the appeal by the petitioner
but granting that of Villa.

The decision of the Labor Arbiter is REVERSED and SET ASIDE and a new one ENTERED declaring
complainant to have been illegally dismissed. Consequently, respondents are hereby directed
to immediately reinstate complainant to her former position without loss of seniority rights and
other privileges within ten (10) days from receipt of this decision and to pay complainant
Overtime Pay.

According to the NLRC, the petitioner's appeal was fatally defective and was being dismissed
outright because it lacked the proper verification and certificate of non-forum shopping.

On September 27, 2006, the CA promulgated its assailed decision dismissing the petition for
certiorari.
WHEREFORE, premises considered, the instant petition is hereby ordered DISMISSED for lack of
merit. The assailed decision is AFFIRMED with MODIFICATION, in that petitioner Lily Ngochua
should not be held liable with petitioner corporation.

The petitioner posits that the CA erroneously affirmed the giving of overtime pay and service
incentive leave pay to Villa; that she did not adduce proof of her having rendered actual
overtime work; that she had not been authorized to render overtime work; and that her
availment of vacation and sick leaves that had been paid precluded her claiming the service
incentive leave pay.

Issue :
Whether or not the burden of proving entitlement to overtime pay rests on the employer?
Whether or not any employee could render overtime work without prior authorization by the
management?

Ruling:

The burden of proving entitlement to overtime pay rests on the employee. Any employee can
render overtime work only when there was a prior authorization by the management. We
partly agree with the petitioner's position.

Firstly, entitlement to overtime pay must first be established by proof that the overtime work
was actually performed before the employee may properly claim the benefit. The burden of
proving entitlement to overtime pay rests on the employee because the benefit is not incurred
in the normal course of business. Failure to prove such actual performance transgresses the
principles of fair play and equity.

And, secondly, the NLRC's reliance on the daily time records (DTRs) showing that Villa had
stayed in the company's premises beyond eight hours was misplaced. The DTRs did not
substantially prove the actual performance of overtime work. The petitioner correctly points
out that any employee could render overtime work only when there was a prior authorization
therefor by the management. Without the prior authorization, therefore, Villa could not validly
claim having performed work beyond the normal hours of work. Moreover, Section 4(c), Rule I,
Book III of the Omnibus Rules Implementing the Labor Code relevantly states as follows:

Section 4. Principles in determining hours worked. – The following general principles shall
govern in determining whether the time spent by an employee is considered hours worked for
purposes of this Rule: If the work performed was necessary, or it benefited the employer, or the
employee could not abandon his work at the end of his normal working hours because he had
no replacement, all time spent for such work shall be considered as hours worked, if the work
was with the knowledge of his employer or immediate supervisor. (bold emphasis supplied)
 25. Reyes vs. NLRC, CCBPI, G.R. No. 180551, Feb. 10, 2009

Facts:
Bernardo has been a part-time employee of the DLS-AU. At the age of 65, the age of
retirement, Bernardo was granted another term of employment. Bernardo's contract with the
university only ceased when he reached the age of 75, the compulsory retirement age. He
asserts his right to claim his retirement benefits.

Issue:
Whether or not Bernardo is entitled to the retirement benefits.

Ruling:
Bernardo is entitled to the retirement benefits. According to Article 302 of the Labor Code, as
amended by RA No 7641, any employee may be retired upon reaching the retirement age and
that he shall be entitled to receive retirement benefits under the existing laws. Further,
according to section 1 of Book VI Rule 2 of the Rules Implementing the Labor Code, the same
rule shall apply 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 under Section 2 hereof. The exemptions do not cover the part-time
employees.

Applying the principle of “expressio unio est expulsio alterius” which is that the express mention
of one person, thing, or consequence implies the exclusion of all others, Bernardo's claim for
retirement benefits cannot be denied on the ground that he was a part-time employee.

26. University of East vs. University of East Employees Asso. G.R. No. 179593,
September 14, 2011

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 average monthly sales commission of thirty one thousand eight
hundred forty six and 97/100 (Php31,846.97) should be included in the computation of his
retirement benefits and 13th month pay.

Ruling: This Court has held, in Philippine Duplicators that, 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 commission 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 fine, whether or not a commission forms part of the basic salary depends upon the
circumstances or conditions for its payment, which indubitably are factual in nature for they
will require a re-examination and calibration of the evidence on record.

As to the main issue whether petitioner's commissions be considered in the computation of his
retirement benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code,
as amended by Republic Act No. 7641, otherwise known as The New Retirement Law, 22
provides: Retirement. — Any employee may be retired upon reaching the retirement age
established in the collective bargaining agreement or other applicable employment contract…
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 the said establishment, may retire and shall be
entitled to 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 (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.

Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in
computing his retirement benefits is his latest salary rate of P10,919.22 as the commissions he
received are in the form of profit-sharing payments specifically excluded by the foregoing rules.
Case law has it that when these earnings and remuneration are closely akin to fringe benefits,
overtime pay or profit-sharing statements, they are properly excluded in computing retirement
pay. However, sales commissions which are effectively an integral portion of the basic salary
structure of an employee, shall be included in determining the retirement pay.

At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary
corresponding to his position as Unit Manager. Thus, as correctly ruled by public respondent
NLRC, the "overriding commissions" paid to him by Universal Robina Corp. could not have been
'sales commissions' in the same sense that Philippine Duplicators paid its salesmen sales
commissions. Unit Managers are not salesmen; they do not effect any sale of article at all.
Therefore, any commission which they receive is certainly not the basic salary which measures
the standard or amount of work of complainant as Unit Manager. Accordingly, the additional
payments made to petitioner were not in fact sales commissions but rather partook of the
nature of profit-sharing business. Certainly, from the foregoing, the doctrine in Boie-Takeda
Chemicals and Philippine Fuji Xerox Corporation, which pronounced that commissions are
additional pay that does not form part of the basic salary, applies to the present case. Aside
from the fact that as unit manager petitioner did not enter into actual sale transactions, but
merely supervised the salesmen under his control, the disputed commissions were not regularly
received by him. Only when the salesmen were able to collect from the sale transactions can
petitioner receive the commissions. Conversely, if no collections were made by the salesmen,
then petitioner would receive no commissions at all. In fine, the commissions which petitioner
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. Hence, petition is denied.

27. Mejares et al., vs. Hyatt Taxi Services Inc., GR No. 242364, June 17, 2020

The case stemmed from a Complaint filed by Hassaram 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.

Before the Labor Arbiter (LA), Hassaram argued that he was not covered by the Secretary's Return to
Work Order; hence, PAL had no valid ground for his dismissal. He asserted that on 9 June 1998, he was
already on his way to Taipei to report for work at Eva Air, pursuant to a four-year contract approved by
PAL itself. Petitioner further claimed that his arrangement with PAL allowed him to go on leave without
pay while working for Eva Air, with the right to accrue seniority and retire from PAL during the period of
his leave.

In its Position Paper, PAL contended that (a) the LA had no jurisdiction over the case, which was a mere
off-shoot of ALPAP's strike, a matter over which the Secretary of Labor had already assumed jurisdiction;
(b) the Complaint should be considered barred by res judicata, forum shopping, and prescription; (c) the
case should be suspended while PAL was under receivership; and (d) if at all, Hassaram was entitled only
to retirement benefits of P5,000 for every year of service pursuant to the Collective Bargaining
Agreement (CBA) between PAL and ALPAP

Issue: Whether Hassaram is entitled to receive retirement benefits under Article 287 of the
Labor Code

Ruling:
Parenthetically, we note the declaration of the CA that the agreement had already expired two
years before Hassaram's claim. This declaration appears to be inaccurate, as the RTC and the CA
themselves declared that the CBA expired only on 31 December 2000, while Hassaram had
applied for retirement earlier, on 31 August 2000. The provisions of the CBA are therefore
applicable as they would allow Hassaram to claim the following benefits under two separate
plans provided under the CBA: (a) the amount of P5,000 for every year of service under the
PAL-ALPAP Retirement Plan; and (b) an equity equivalent to 240% of his gross monthly salary
for every year of employment pursuant to the Plan.

In contrast, Article 287 would entitle a retiring pilot to the equivalent of only 22.5 days of his
monthly salary for every year of service. This scheme was thus considered by the Court as
inferior to the retirement plans granted by PAL to the latter's pilots in Elegir and PAL:

In sum, therefore, the petitioner will receive the following retirement benefits:
(1) P125,000.00 (25 years x P5,000.00) for his 25 years of service to PAL under
the PAL-ALPAP Retirement Plan, and;
(2) 240% of his gross monthly salary for every year of his employment or, more
specifically, the summation of PAL's monthly contribution of an amount
equivalent to 20% of his actual monthly salary, under the PAL Pilots' Retirement
Benefit Plan.

On the other hand, 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. To stress, 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.
[55] (Emphasis supplied and citations omitted)

TOPIC 10: JURISDICTION OF THE LABOR ARBITER

28. Tolosa vs. NLRC, G.R. No. 149578, April 10, 2003

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. Among others, the terms
and conditions of his appointment are as follows; (sic)

"3. As a Senior Officer of the Bank, you are entitled to the following executive ben[e]fits:
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.

Entitlement to any and all other basic and fringe benefits enjoyed by the officers; core of the
Bank relative to Insurance covers, Healthcare Insurance, vacation and sick leaves, among
others."

On the other hand, private respondent has its Retirement Plan Rules and Regulations which
provides among others, as follows:

Issue: whether the petitioner was validly retired by PVB at age 60.

Ruling: As a general rule, second and subsequent motions for reconsideration are
forbidden. Nevertheless, there are situations in which exceptional circumstances warrant
allowing such motions for reconsideration, and for that reason the Court has recognized several
exceptions to the general rule. We have extensively expounded on the exceptions in McBurnie
v. Ganzon, where we observed:

At the outset, the Court emphasizes that second and subsequent motions for reconsideration
are, as a general rule, prohibited. Section 2, Rule 52 of the Rules of Court provides that "no
second motion for reconsideration of a judgment or final resolution by the same party shall be
entertained." The rule rests on the basic tenet of immutability of judgments. "At some point, a
decision becomes final and executory and, consequently, all litigations must come to an end."

The general rule, however, against second and subsequent motions for reconsideration admits
of settled exceptions. For one, the present Internal Rules of the Supreme Court, particularly
Section 3, Rule 15 thereof, provides:
Sec. 3. Second motion for reconsideration. - The Court shall not entertain a second motion for
reconsideration, and any exception to this rule can only be granted in the higher interest of
justice by the Court en banc upon a vote of at least two-thirds of its actual membership. There
is reconsideration "in the higher interest of justice" when the assailed decision is not only
legally erroneous, but is likewise patently unjust and potentially capable of causing
unwarranted and irremediable injury or damage to the parties. A second motion for
reconsideration can only be entertained before the ruling sought to be reconsidered becomes
final by operation of law or by the Court's declaration.

29. Austria vs. NLRC, 312 SCRA 413

Facts: Respondent Daniel M. Macuray was employed as a bus driver of petitioner Maria De
Leon Transportation Inc.

He alleged that in November 2009, petitioner’s dispatcher did not assign a bus to him, for no
apparent reason. For one month, he continually returned to follow up if a bus had already been
assigned to him. Subsequently, when he returned to the company premises, the bus dispatcher
informed him that he was already considered awol (absent without leave).

Thus, he filed a case for illegal dismissal against petitioner asking for money claims, damages
and attorney’s fees.

Petitioner, on the other hand, denied having dismissed respondent from the service. It received
information that respondent was already engaged in driving his family truck. The bus dispatcher
from whom he inquired about his status had no power to terminate or declare him awol. He
had not actually approached management to inquire about his employment status, even
though he knew that the assistant manager, corporate secretary and director of the bus
company resided with his family within the bus company’s station and compound in San
Nicolas, Ilocos Norte.

Issue: Whose contention finds merit?

Ruling: That of petitioner. The Court is inclined to believe petitioner’s allegations: respondent
left 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.

Respondent did not show that he met with management to inquire on his status. On the other
hand, it appears that the assistant manager, corporate secretary and director of the bus
company, Elias Dimaya, resided with his family within the bus company’s station and compound
in San Nicolas, Ilocos Norte.
Having worked for the bus company for 18 years, respondent should have known this fact, and
he could have visited with Elias Dimaya at anytime, if his employment was so important that it
meant his own survival and that of his family. Apparently, however, it would appear that this
was not the case, for the simple reason that respondent had found employment elsewhere.

Thus, respondent’s failure to show that his follow-ups were properly directed at management
bolsters petitioner’s claim that no follow-ups were made by him. The logical explanation for this
is that he found employment elsewhere and thus opted to stop reporting for work, as was the
practice of other bus drivers working for petitioner.

At any rate, even assuming that respondent was indeed told by respondent’s bus dispatcher
Roger Pasion that he was awol, this was not tantamount to dismissal, actual or constructive.

An ordinary bus dispatcher has no power to dismiss an employee; in a typical bus company, a
driver might even be of more significance than an ordinary dispatcher. Bus drivers are a more
valuable resource than a dispatcher; without the former, the latter is useless. Without a driver,
there could be no bus to dispatch or trip to schedule. It cannot therefore be said that an
ordinary dispatcher is superior to a bus driver; at most, they are equal in rank.

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.

30. Eviota vs. Court of Appeals, 407 SCRA 394

Facts: From a decision dated Dec. 27, 2007 of the Labor Arbiter (LA) finding respondents
Marcelino Esloyo and Glen Magsila to have been illegally dismissed and granting a total
monetary judgment of P1,817,856.71, petitioner Quantum Foods, Inc. (QFI) filed a notice of
appeal and memorandum of appeal before the National Labor Relations Commission (NLRC) on
Feb. 8, 2008. The memorandum was 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). Subsequently, but before the
NLRC could act on the motion to reduce bond, QFI posted a surety bond from an accredited
insurance company fully covering the monetary judgment, which respondents vehemently
opposed.

In a decision dated Feb. 20, 2009, the NLRC denied respondents’ motion to dismiss and gave
due course to QFI’s appeal, holding, among others, that 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. On a petition for certiorari, the Court of
Appeals (CA), in a decision dated Jan. 18, 2011, reversed and set aside the NLRC’s ruling and
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.
Issue: Did the Court of Appeals err?

Ruling:
In Nicol v. Footjoy Industrial Corp., 555 Phil. 275 (2007), the Court summarized the guidelines
under which the NLRC must exercise its discretion in considering an appellant’s motion for
reduction of bond in this wise:

“The bond requirement on appeals involving monetary awards has been and may be relaxed in
meritorious cases. These cases include instances in which (1) there was substantial compliance
with the Rules, (2) surrounding facts and circumstances constitute meritorious grounds to
reduce the bond, (3) a liberal interpretation of the requirement of an appeal bond would serve
the desired objective of resolving controversies on the merits, or (4) the appellants, at the very
least, exhibited their willingness and/or good faith by posting a partial bond during the
reglementary period.”

As to what constitutes “a reasonable amount of bond” that must accompany the motion to
reduce bond in order to suspend the period to perfect an appeal, the Court, in McBurnie v.
Ganzon, G.R. Nos. 178034, 178117, and 186984-85, October 17, 2013, 707 SCRA 646, 679,
pronounced:

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 percent 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. 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. (Emphasis and underscoring supplied)

Hence, the posting of a P400,000.00 cash bond equivalent to more than 20 percent of
the monetary judgment, together with the Motion to Reduce Bond within the
reglementary period was sufficient to suspend the period to perfect the 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.

In determining the reasonable amount of appeal bonds, however, the Court primarily
considers the merits of the motions and the appeals. Thus, in Rosewood Processing,
Inc. v. NLRC, 352 Phil. 1013(1998), the Court considered the posting of a P50,000.00
bond together with the motion to reduce bond as substantial compliance with the legal
requirements of an appeal from a P789,154.39 monetary award “considering the clear
merits which appear, res ipsa loquitor, in the appeal from the labor arbiter’s decision
and the petitioner’s substantial compliance with rules governing appeals.”

It should be emphasized that the NLRC has full discretion to grant or deny the motion
to reduce bond, and its ruling will not be disturbed unless tainted with grave abuse of
discretion. Verily, an act of a court or tribunal can only be considered to be tainted with
grave abuse of discretion when such act is done in a capricious or whimsical exercise of
judgment as is equivalent to lack of jurisdiction, which clearly is not extant with respect
to the NLRC’s cognizance of QFI’s appeal. Far from having gravely abused its discretion,
the NLRC correctly preferred substantial justice over the rigid and stringent application
of procedural rules. This, by all means, is not a case of grave abuse of discretion calling
for the issuance of a writ of certiorari, warranting the reversal of the CA’s ruling
granting the certiorari petition and the remand of the case to the C A for appropriate
action

31. Gesolgon et al., vs. Cyberone Ph Inc et al., GR No. 210741, October 14, 2020

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.

Sometime in May 2010, he allegedly received a text message from one Jenny Mallari (Mallari)
informing him that Nestor Dischoso (Dischoso) and Chief Hotel Engineer Jaime Villareal (Engr.
Villareal), both officers of petitioner FDC, were receiving commissions from company
transactions.

On June 15, 2010, FDC's Safety and Security Department brought Engr. Villareal and Mallari to
the National Bureau of Investigation (NBI) Office for questioning. During the inquiry, Mallari
denied that Engr. Villareal asked for commissions from her and revealed that she merely
fabricated the story against Engr. Villareal so that she can ask money from respondent.

On October 2, 2010, respondent received a Show Cause/Preventive Suspension Order from

petitioner FDC's Human Resources Department, informing him of the complaint filed by Engr.
Villareal and directing him to explain why no disciplinary action should be taken against him for
violating the provisions of the Company Code of Conduct on Dishonesty.

Respondent did not deny the allegations against him and, instead, admitted that he gave
money to Mallari because "it is a common practice in Fontana to give money to informants for
vital information."
 Thus, petitioner FDC approved the recommendation of the Investigating Panel and terminated
respondent's employment after finding him guilty of acts of dishonesty in the form of "bribery
in any form or manner" under Rule 1, Section 4 of petitioner FDC's Code of Conduct, which
carries the maximum penalty of dismissal. The Decision and the Notice of Termination were
served on November 2, 2010. 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 backwages against petitioner FDC
and its officers. The case was docketed as NLRC Case No. RAB-III-11-16967-10.

Issue: The pivotal issue in this case is whether the CA gravely erred in not dismissing the
petition in CA-G.R. SP No. 125945 for deliberate forum shopping.

Ruling:
Respondent is guilty of forum shopping.

There is forum shopping when a party repetitively avails of several judicial remedies in different
courts, 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 abuses
their processes. It degrades the administration of justice and adds to the already congested
court dockets.

The question as to whether an action survives or not depends on the nature of the action and
the damage sued for. In the causes of action which survive, the wrong complained of affects
primarily and principally property and property rights, the injuries to the person being merely
incidental, while in the causes of action which do not survive, the injury complained of is to the
person, the property and rights of property affected being incidental.

Since the property and property rights of the respondent is only incidental to his complaint for
illegal dismissal, the same does not survive his death. Nonetheless, considering the foregoing
disposition dismissing respondent's petition before the CA and ergo his complaint for illegal
dismissal, the Court can proceed with the resolution of the petition even without the need for
substitution of the heirs of respondent.

TOPIC 11. 2011 NLRC RULES OF PROCEDURE

32. Guillermo vs. Uson, GR No. 198967, March 7, 2016

Facts:
Complainants allege that they are former employees directly hired by respondent Coca-Cola
assigned as regular Route Helpers under the direct supervision of the Route Sales Supervisors.

After working for quite some time as directly-hired employees of Coca-Cola, complainants were
allegedly... transferred successively as agency workers to the following manpower agencies,
namely, Lipercon Services, Inc., People's Services, Inc., ROMAC, and the latest being respondent
Interserve Management and Manpower Resources, Inc.

Complainants allege that the Department of Labor and Employment (DOLE) conducted an
inspection of Coca-Cola to determine whether it is complying with the various mandated labor
standards, and relative thereto, they were declared to be regular employees of Coca-Cola
As soon as respondents learned of the filing of the claims with DOLE, they were dismissed...
they filed their complaint for illegal dismissal.

Issues: whether the petitioners were illegally dismissed from their employment with Coca-Cola

Ruling: The Court finds for the petitioners.it cannot be said that route-helpers, such as the
petitioners no longer enjoy the employee-employer relationship they had with Coca-Cola since
they became employees of Interserve.

The argument of petitioner that its usual business or trade is softdrink manufacturing and that
the work assigned to respondent workers as sales route helpers so involves merely
"postproduction activities," one which is not indispensable in the manufacture of its products,...
scarcely can be persuasive.

The repeated rehiring of respondent workers and the continuing need for their services clearly
attest to the necessity or desirability of their services in the regular conduct of the business or
trade of Petitioner Company.

Interserve did not have substantial capital or investment in the form of tools, equipment,
machineries, and work premises; and respondents, its supposed employees, performed work
which was directly related to the principal business of petitioner.

The petitioners were made to suffer under the prohibited practice of labor-only contracting.
even if the Court would indulge Coca-Cola and admit that Interserve had more... than sufficient
capital or investment in the form of tools, equipment, machineries, work premises, still, it
cannot be denied that the petitioners were performing activities which were directly related to
the principal business of such employer.
even if Interserve were to be considered as a legitimate job contractor, Coca-Cola failed to
rebut the allegation that petitioners were transferred from being its employees to become the
employees of ISI, Lipercon, PSI, and ROMAC, which were labor-only... contractors. Well-settled
is the rule that "the contractor, not the employee, has the burden of proof that it has the
substantial capital, investment, and tool to engage in job contracting."
In this case, the said burden of proof lies with Coca-Cola... although it was not the contractor
itself, but it was the one invoking the supposed status of these entities as independent job
contractors.

33. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, September 21, 2016

Facts:
Nuvoland, a corporation formed primarily "to own, use, improve, develop, subdivide, sell,
exchange, lease and hold for investment or otherwise, real estate of all kinds, including
buildings, houses, apartments and other structures," was registered with the Securities and
Exchange Commission (SEC) on August 9, 2006. Respondent Ramon Bienvenida (Bienvenida)
was the principal stockholder and member of the Board of Directors while Raul Martinez
(Martinez) was its President.

Silvericon, on the other hand, was registered with the SEC on December 19, 2006. Its Articles of
Incorporation described it as a "corporation organized 'to own, use, improve, develop,
subdivide, sell, exchange, lease and hold for investment or otherwise, real estate of all kinds,
including buildings, houses, apartments and other structures.'"

Sometime in 2007, Martinez recruited petitioner Edward de Castro (De Castro), a sales and
marketing professional in the ;eld of real estate, to handle its sales and marketing operations,
including the hiring and supervision of the sales and marketing personnel. To formalize this
undertaking, De Castro was made to sign a Memorandum of Agreement (MOA), denominated
as Shareholders Agreement, wherein Martinez proposed to create a new corporation, through
which the latter's compensation, bene;ts and commissions, including those of other sales
personnel, would be coursed. It was stipulated in the said MOA that the new corporation
would have an authorized capital stock of P4,000,000.00, of which P1,000,000.00 was
subscribed and paid equally by the Martinez Group and the De Castro Group.

Thereafter, the Sales and Marketing Agreement (SMA), dated February 26, 2008, was
purportedly executed by Nuvoland and Silvericon, stipulating that all payments made for the
condominium projects of Nuvoland were to be given directly to it. Clients secured by the sales
and marketing personnel would issue checks payable to Nuvoland while the cash payments, as
the case may be, were deposited to Nuvoland's account. Meanwhile, the corresponding sales
commission of the sales personnel were issued to them by Nuvoland, with Martinez signing on
behalf of the said company. In a Letter, dated December 12, 2008 and signed by Bienvenida,
Nuvoland terminated the SMA on the ground that Silvericon personnel committed an
unauthorized walkout and abandonment of the Nuvo City Showroom for two (2) days. In the
same letter, Nuvoland demanded that Silvericon make a full accounting of all its uses of the
marketing advances from Nuvoland. It, however, assured that all sales commissions earned by
Silvericon personnel would be released as per existing policy.
After the issuance of the said termination letter, De Castro and all the sales and marketing
personnel of Silvericon were barred from entering the of;ce premises. Nuvoland, eventually,
was able to secure the settlement of all sales and marketing personnel's commissions and
wages with the exception of those of De Castro and Platon. The claims of one of Silvericon's
senior manager were settled during the pendency of a complaint with the LA.

As to the substantive issues, the Court is faced with divergent views in the arguments raised.
On one hand, the petitioners strongly urge the Court to consider numerous factors that would
justify the piercing of the corporate veil showing that Silvericon was just a business conduit of
Nuvoland. On the other, the respondents vehemently deny the existence of an employer-
employee relationship between Nuvoland and the petitioners. This absence of a juridical tie,
according to Nuvoland, necessarily directs the claims of the petitioners to Silvericon as their
employer, being an independent contractor

In order to determine whether a dispute constitutes an intra-corporate controversy or not, the

Court considers two elements instead, namely: (a) the status or relationship of the parties; and
(b) the nature of their controversy. Concurrence of these two renders a case as an intra-
corporate dispute.

Under the nature-of-the-controversy test, the dispute must not only be rooted in the existence
of an intra-corporate relationship, but must also refer to the enforcement of the parties'
correlative rights and obligations under the Corporation Code, as well as the internal and intra-
corporate regulatory rules of the corporation. The combined application of the relationship test
and the nature-of-the-controversy test has, consequently, become the norm in determining
whether a case is an intra-corporate controversy or purely civil in character. In the absence of
any one of these factors, the case cannot be considered an intra-corporate dispute and the RTC
acting as a special commercial court cannot acquire any jurisdiction. The criteria for
distinguishing between corporate officers who may be ousted from office at will, on one hand,
and ordinary corporate employees, who may only be terminated for just cause, on the other
hand, do not depend on the nature of the services performed, but on the manner of creation of
the office.
As it had been determined that Silvericon was a mere subterfuge for Nuvoland's sales and
marketing activities, the circumstances surrounding the nature of De Castro's hiring and the
very nature of his claims must be fully considered to determine jurisdiction. It must be
remembered that De Castro was hired by Martinez and Bienvenida to be the President and
COO of Silvericon. This appears in the SMA, which the Court has interpreted as a ruse to
conceal Nuvoland's labor-contracting activities. As previously discussed, the contrived
cancellation of the SMA was, in effect, a termination of its personnel assigned to Silvericon.
Equally important for contemplation is the nature of the petitioners' claims and arguments
which not only demonstrates a ;rm avowal of labor-only contracting on the part of Nuvoland
and Silvericon but also shows that the ultimate issue to be resolved is not rooted in a corporate
issue governed by the Corporation Code and its implementing rules, but a labor problem, the
resolution of which is covered by labor laws and DOLE issuances.
The records are bereft of any evidence at all that respondents Martinez and Bienvenida acted
with malice, ill will or bad faith when the SMA was terminated. Hence, the said individual
officers cannot be held solidarily liable for the money claims due the petitioners.

34. Gabriel vs. Petron Corp. et al., GR No. 194575, April 11, 2018

Facts: The instant case arose from an amended complaint dated July 6, 2012 for illegal
dismissal, damages, and attorney's fees filed by respondents against, inter alia, ODSI and NPI.
Respondents alleged that on various dates, ODSI and NPI hired them to sell various NPI
products in the assigned covered area. After some time, respondents demanded that they be
considered regular employees of NPI, but they were directed to sign contracts of employment
with ODSI instead. When respondents refused to comply with such directives, NPI and ODSI
terminated them from their position. Thus, they were constrained to file the complaint,
claiming that: (a) ODSI is a labor-only contractor and, thus, they should be deemed regular
employees of NPI; and (b) there was no just or authorized cause for their dismissal.

For its part, ODSI averred that it is a company engaged in the business of buying, selling,
distributing, and marketing of goods and commodities of every kind and it enters into all kinds
of contracts for the acquisition thereof. ODSI admitted that on various dates, it hired
respondents as its employees and assigned them to execute the Distributorship Agreement it
entered with NPI.

Issues: The essential issues for the Court's resolution are whether or not the CA correctly ruled
that: (a) NPI was accorded due process by the tribunals a quo; and (b) ODSI is a labor-only
contractor of NPI, and consequently, NPI is respondents' true employer and, thus, deemed
jointly and severally liable with ODSI for respondents' monetary claims.

Ruling:
To justify the grant of the extraordinary remedy of certiorari, the petitioner must
satisfactorily show that the court or quasi-judicial authority gravely abused the discretion
conferred upon it. Grave abuse of discretion connotes a capricious and whimsical exercise of
judgment, done in a despotic manner by reason of passion or personal hostility, the character
of which being so patent and gross as to amount to an evasion of positive duty or to a virtual
refusal to perform the duty enjoined by or to act at all in contemplation of law.

The observance of fairness in the conduct of any investigation is at the very heart of procedural
due process. The essence of due process is to be heard, and, as applied to administrative
proceedings, this means a fair and reasonable opportunity to explain one's side, or an
opportunity to seek a reconsideration of the action or ruling complained of. Administrative due
process cannot be fully equated with due process in its strict judicial sense, for in the former a
formal or trial-type hearing is not always necessary, and technical rules of procedure are not
strictly applied.
However, a closer examination of the Distributorship Agreement reveals that the relationship of
NPI and ODSI is not that of a principal and a contractor (regardless of whether labor-only or
independent), but that of a seller and a buyer/re-seller. As stipulated in the Distributorship
Agreement, NPI agreed to sell its products to ODSI at discounted prices, which in turn will be re-
sold to identified customers, ensuring in the process the integrity and quality of the said
products based on the standards agreed upon by the parties. As aptly explained by NPI, the
goods it manufactures are distributed to the market through various distributors, e.g., ODSI,
that in turn, re-sell the same to designated outlets through its own employees such as the
respondents.

Therefore, the reselling activities allegedly performed by the respondents properly pertain to
ODSI, whose principal business consists of the "buying, selling, distributing, and marketing
goods and commodities of every kind" and "[entering] into all kinds of contracts for the
acquisition of such goods [and commodities]." Thus, contrary to the CA's findings, the
aforementioned stipulations in the Distributorship Agreement hardly demonstrate control on
the part of NPI over the means and methods by which ODSI performs its business, nor were
they intended to dictate how ODSI shall conduct its business as a distributor

Verily, it was only reasonable for NPI — it being a local arm of one of the largest manufacturers
of foods and grocery products worldwide — to require its distributors, such as ODSI, to meet
various conditions for the grant and continuation of a distributorship agreement for as long as
these conditions do not control the means and methods on how ODSI does its distributorship
business, as shown in this case. This is to ensure the integrity and quality of the products which
will ultimately fall into the hands of the end consumer.

Thus, the foregoing circumstances show that ODSI was not a labor-only contractor of NPI;
hence, the latter cannot be deemed the true employer of respondents. As a consequence, NPI
cannot be held jointly and severally liable to ODSI's monetary obligations towards respondents.

35. Maricalum mining Corp., vs. Florentino et al, GR No. 221831, July 23, 2018

Facts:
Bisudeco-Philsucor Corfarm Workers Union is composed of workers of Bicolandia Sugar
Development Corporation (BISUDECO), a sugar plantation mill located in Himaao, Pili,
Camarines Sur. Asset Privatization Trust (APT), a public trust was created under Proclamation
No. 50, as amended, mandated to take title to and possession of, conserve, provisionally
manage and dispose of non-performing assets of the Philippine government identified for
privatization or disposition. Pursuant to Section 23 of Proclamation No. 50, former President
Corazon Aquino issued Administrative Order No.14 identifying certain assets of government
institutions that were to be transferred to the National Government. Among the assets
transferred was the financial claim of the Philippine National Bank against BISUDECO in the
form of a secured loan.
Consequently, by virtue of a Trust Agreement executed between the National Government and
APT on February 27, 1987, APT was constituted as trustee over BISUDECO’s account with the
PNB.

Sometime later, BISUDECO contracted the services of Philippine Sugar Corporation (Philsucor)
to take over the management of the sugar plantation and milling operations until August 31,
1992.Meanwhile, because of the continued failure of BISUDECO to pay its outstanding loan
with PNB, its mortgaged properties were foreclosed and subsequently sold in a public auction
to APT, as the sole bidder. On April 2, 1991, APT was issued a Sheriff ‘s Certificate of Sale.

The union filed a complaint for unfair labor practice, illegal dismissal, illegal deduction and
underpayment of wages and other labor standard benefits plus damages. In the meantime, APT
‘s Board of Trustees issued a resolution accepting the offer of Bicol-Agro-Industrial Cooperative
(BAPCI) to buy the sugar plantation and mill. Again, on September 23, 1992, the board passed
another resolution authorizing the payment of separation benefits to BISUDECO ‘s employees in
the event of the company’s privatization.

Then, on October 30, 1992, BAPCI purchased the foreclosed assets of BISUDECO from APT and
took over its sugar milling operations under the trade name Peafrancia Sugar Mill (Pensumil).
The unionalleged that when Philsucor initially took over the operations of the company, it
retained BISUDECO ‘s existing personnel under the same terms and conditions of employment.
Nonetheless, at the start of the season sometime in May1991, Philsucor started recalling
workers back to work, to the exception of the union members. Management told them that
they will be re-hired only if they resign from the union. Just the same, thereafter, the company
started to employ the services of outsiders under the pacqiao system.

Issue:
Whether APT is liable to pay petitioners’ monetary claims, including back wages from May 1,
1991, to October 30, 1992 (the date of the sale of BISUDECO assets to BAPCI).

Ruling:
Pursuant to Administrative Order No. 14, Series of 1987, PNB ‘s assets, loans and receivables
from its borrowers were transferred to APT as trustee of the national government. Among the
liabilities transferred to APT was PNB ‘s financial claim against BISUDECO, not the latter ‘s assets
and chattel.

BISUDECO remained the owner of the mortgaged properties in August 1988, when the
Philippine Sugar Corporation (Philsucor) undertook the operation and management of the sugar
plantation until August 31,1992, under a so-called Contract of Lease between the two
corporations. At the time, APT was merely a secured creditor of BISUDECO.

TOPIC 12: RIGHT TO SELF-ORGANIZATION

36. HSBC Employees Union vs. NLRC, GR No. 156635, Jan. 11, 2016
Facts:
Respondent Zamora had been in the employ of petitioner PAL since 9 February 1981 when the
former was hired as a Cargo Representative at petitioner PAL ‘s Import Operations Division.
Respondent Zamora was then dismissed from service for having been found by petitioner PAL ‘s
management to be liable for insubordination, neglect of customer, disrespect for authority and
absence without official leave. On 12 March 1996, respondent Zamora filed a complaint against
petitioners PAL and Francisco X. Yngente IV before the NLRC for illegal dismissal, unfair labor
practice, non-payment of wages, damages and attorney‘s fees. On 1 February 2005, the Court
of Appeals promulgated an Amended Decision modifying its 13 August 2004 Decision but at the
same time resolving petitioner PAL's Motion for Reconsideration in this wise:

Wherefore, this Court's August 13, 2004 decision is hereby amended, the dispositive portion to
read as follows: wherefore, in view of the foregoing, the petition is granted. The NLRC
resolution dated April 27, 2001 is modified.

Considering that petitioner is a detention prisoner making reinstatement impossible, PAL is

hereby ordered to pay petitioner Zamora his separation pay, in lieu of reinstatement, to be
computed at one-month salary for every year of service from February 9, 1981 and back wages
to be computed from December 19, 1995, both up to October 1, 2000, the date of his
incarceration.

Considering that PAL is still under receivership, the monetary claims of petitioner Zamora must
be presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits.
The Court of Appeals took into account respondent Zamora's incarceration when it recalled its
order of reinstatement. Anent its earlier pronouncement against the suspension of the
proceedings of the case owing to the present rehabilitation of petitioner PAL, the appellate
court only had this to say: However, since PAL is still under receivership, the provisions of PD
902-A, should apply. The enforcement of the monetary claims of petitioner should be brought
before the PAL Rehabilitation Receiver for proper disposition.

Issue: Whether or not respondent Zamora ‘s monetary claim should be presented to the PAL
rehabilitation receiver, subject to the rules on preference of credits.

Ruling: No. The relevant law dealing with the suspension of actions for claims against
corporations is Presidential Decree No. 902-A, 52 as amended. The term "claim," as
contemplated in Sec. 6 (c) of Presidential Decree No. 902-A, refers "to debts or demands of a
pecuniary nature. It means 'the assertion of a right to have money paid. It is plain from the
foregoing provisions of law that "upon the appointment [by the SEC] of a management
committee or a rehabilitation receiver “all actions for claims against the corporation pending
before any court, tribunal or board shall ipso jure be suspended.

The law is clear: upon the creation of a management committee or the appointment of a
rehabilitation receiver, all claims for actions "shall be suspended accordingly." No exception in
favor of labor claims is mentioned in the law. Since the law makes no distinction or exemptions,
neither should this Court.

Otherwise stated, no other action may be taken in, including the rendition of judgment during
the state of suspension— what are automatically stayed or suspended are the proceedings of
an action or suit and not just the payment of claims during the execution stage after the case
had become final and executory.

The suspension of action for claims against a corporation under rehabilitation receiver or
management committee embraces all phases of the suit, be it before the trial court or any
tribunal or before this Court. Furthermore, the actions that are suspended cover all claims
against a distressed corporation whether for damages founded on a breach of contract of
carriage, labor cases, collection suits or any other claims of a pecuniary nature. As to the
appellate court's amended directive that "the monetary claims of petitioner Zamora must be
presented to the PAL Rehabilitation Receiver, subject to the rules on preference of credits," the
same is erroneous for there has been no declaration of bankruptcy or judicial liquidation. Thus,
the rules on preference of credits does not apply.

37. Peninsula Employees Union vs. Esquivel GR No. 218454, Dec. 1, 2016

Facts:
Petitioner filed against Undaloc Construction and/or Engineer CiriloUndaloc for illegal dismissal,
underpayment of wages and nonpayment of statutory benefits. Respondent Undaloc
Construction, a single proprietorship owned by Cirilo Undaloc, is engaged in road construction
business in Cebu City.

Petitioner had been employed as watchman from 1 May 1995 to 30 May 1998 when he was
terminated on the ground that the project he was assigned to was already finished, he being
allegedly a project employee. Petitioner asserted he was a regular employee having been
engaged to perform works which are “usually necessary or desirable” in respondents’ business.
He claimed that from 1 May to 31 August 1995 and from 1 September to 31 December 1995,
his daily wage rate was only P80.00 and P90.00, respectively, instead of P121.87 as mandated
by Wage Order No. ROVII-03. From 1 March 1996 to 30 May 1998, his daily rate was P105.00.
He further alleged that he was made to sign two payroll sheets, the first bearing the actual
amount he received wherein his signature was affixed to the last column opposite his name,
and the second containing only his name and signature. To buttress this allegation, petitioner
presented the payroll sheet covering the period from 4 to 10 December 1995 in which the
entries were written in pencil. He also averred that his salary from 18 to 30 May 1998 was
withheld by respondents.

Respondent Cirilo Undaloc maintained that petitioner was hired as a project employee on 1
May 1995 and was assigned as watchman from one project to another until the termination of
the project on 30 May 1998. Refuting the claim of underpayment, respondent presented the
payroll sheets from 2 September to 8 December 1996, 26 May to 15 June 1997, and 12 January
to 31 May 1998.

Issue:
Whether petitioner was entitled to the award of salary differential and attorney’s fees.

Ruling:
While the SC adhered to the position of the appellate court that the “tendency” to alter the
entries in the payrolls was not substantiated, it did subscribe to the total deletion of the award
of salary differential and attorney’s fees.

The Labor Arbiter erred in his computation, it granted a higher salary differential. He fixed the
daily wage rate actually received by petitioner at P105.00 without taking into consideration the
P141.00 rate indicated in the typewritten payroll sheets submitted by respondents. Moreover,
the Labor Arbiter misapplied the wage orders when he wrongly categorized respondent as
falling within the first category. Based on the stipulated number of employees and audited
financial statements, respondents should have been covered by the second category (which is
lower).

The total salary differential that petitioner is lawfully entitled to amounts to P6,578.00.
However, pursuant to Section 12 of Republic Act (R.A.) No. 6727, as amended by R.A. No. 8188.
Respondents are required to pay double the amount owed to petitioner, bringing their total
liability to P13,156.00.

Section 12. Any person, corporation, trust, firm, partnership, association or entity which refuses
or fails to pay any of the prescribed increases or adjustments in the wage rates made in
accordance with this Act shall be punished by a fine not less than Twenty-five thousand pesos
(P25,000.00) nor more than One hundred thousand pesos (P100,000.00) or imprisonment of
not less than two (2) years nor more than four (4) years, or both such fine and imprisonment at
the discretion of the court: Provided, That any person convicted under this Act shall not be
entitled to the benefits provided for under the Probation Law.
 
The employer concerned shall be ordered to pay an amount equivalent to double the unpaid
benefits owing to the employees: Provided, That payment of indemnity shall not absolve the
employer from the criminal liability imposable under this Act.

If the violation is committed by a corporation, trust or firm, partnership, association or any

other entity, the penalty of imprisonment shall be imposed upon the entity’s responsible
officers, including, but not limited to, the president, vice president, chief executive officer,
general manager, managing director or partner. (Emphasis supplied)

The award of attorney’s fees is warranted under the circumstances of this case. Under Article
2208 of the New Civil Code, attorney's fees can be recovered in actions for the recovery of
wages of laborers and actions for indemnity under employer's liability laws but shall not exceed
10% of the amount awarded. The fees may be deducted from the total amount due the winning
party.

38. Societe Internationale de Telecommunications vs. Huliganga, GR No.

215504, August 20, 2018

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).

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. 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.

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.
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 "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.

Issues:
Whether ULP acts were committed by petitioners against respondents, b) Whether or not the
respondents are entitled to attorney’s fees

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.

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.
However, the respondents are not entitled to Attorney’s Fees. The applicable law in this case is
Article 111 of the Labor Code. Pursuant thereto, the award of Attorney’s Fees is limited to cases
of unlawful withholding of wages. In this case, the Court cannot find any claim or proof that
petitioners unlawfully withtheld the wages of respondents.

TOPIC 13: RIGHTS OF LEGITIMATE LABOR ORGANIZATION

39. Edco Workers free Labor Union et al., vs. Universal Robina Corp., GR No
220383, October 5, 2016 Main & July 5, 2019 Resolution
Facts:
The 43 petitioners are deaf-mutes who were hired on various periods from 1988 to 1993 by
respondent Far East Bank and Trust Co. as Money Sorters and Counters through a uniformly
worded agreement called "Employment Contract for Handicapped Workers". The said
agreement provides for the manner of how they are hired and be rehired, the amount of their
wages (P118.00 per day), period of employment (5 days a week, 8 hours a day, training for 1
month, 6 months period) and the manner and methods of how their works are to be done (Sort
out bills according to color; Count each denomination per hundred, either manually or with the
aid of a counting machine; Wrap and label bills per hundred; Put the wrapped bills into bundles;
and Submit bundled bills to the bank teller for verification.) Many of their employments were
renewed every six months. Claiming that they should be considered as regular employees they
filed a complaint for illegal dismissal and recovery of various benefits.

Labor arbiter’s decision: complaint is dismissed for lack of merit (the terms of the contract shall
be the law between the parties.). Affirmed by the NLRC (Art. 280 is not controlling herein but
Art. 80) (the Magna Carta for Disabled Persons was not applicable, "considering the prevailing
circumstances of the case.") and denied motion for reconsideration.

Issues:
Does petitioners considered as regular employees?

Law:
Art.78 & 80 of the Labor Code and the Magna Carta for Disabled Persons.

Ruling:
Yes. The petition is meritorious. However, only the employees, who worked for more than six
months and whose contracts were renewed are deemed regular. Hence, their dismissal from
employment was illegal.

The stipulations in the employment contracts indubitably conform with Article 80, however, the
application of Article 280 of the Labor Code is justified because of the advent of RA No. 7277
(the Magna Carta for Disabled Persons) which mandates that a qualified disabled employee
should be given the same terms and conditions of employment as a qualified able-bodied
person (compensation, privileges, benefits, fringe benefits, incentives or allowances) 27 of the
petitioners are considered regular employees by provision of law regardless of any agreement
between the parties as embodied in article 280 in relation to article 281 of the Labor Code.

The test is whether the former is usually necessary or desirable in the usual business or trade of
the employer. Hence, the employment is considered regular, but only with respect to such
activity, and while such activity exist. Without a doubt, the task of counting and sorting bills is
necessary and desirable to the business of respondent bank.

When the bank renewed the contract after the lapse of the six-month probationary period, the
employees thereby became regular employees. No employer is allowed to determine
indefinitely the fitness of its employees. Those who have worked for only 6 months and
employments were not renewed are not considered regular employees.

Opinion:
The Court correctly finds that 27 of the handicapped workers are regular employees. The test is
whether the activity is usually necessary or desirable in the usual business or trade of the
employer. The employment is considered regular, but only with respect to such activity, and
while such activity exist. Without a doubt, the task of counting and sorting bills is necessary and
desirable to the business of respondent bank. As regular employees, the twenty-seven
petitioners are entitled to security of tenure; that is, their services may be terminated only for a
just or authorized cause.

40. Frondozo et al., vs. Manila Electric Company, GR No. 178379, August 22,
2017, En Banc

Facts:
Seeking relief through the extraordinary writ of certiorari, petitioner Philippine
Telegraph and Telephone Company (hereafter, PT&T) invokes the alleged concealment of
civil status and defalcation of company funds as grounds to terminate the services of an
employee. That employee, herein private respondent Grace de Guzman, contrarily argues
that what really motivated PT&T to terminate her services was her having contracted marriage
during her employment, which is prohibited by petitioner in its company policies. She thus
claims that she was discriminated against in gross violation of law, such a proscription by an
employer being outlawed by Article 136 of the Labor Code.

Issue: Whether or not the policy of not accepting or considering as disqualified from work
any woman worker who contracts marriage is valid?

Ruling:
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. The Constitution, cognizant of the disparity in rights between men and women in
almost all phases of social and political life, provides a gamut of protective provisions.
Acknowledged as paramount in the due process scheme is the constitutional guarantee
of protection to labor and security of tenure. Thus, an employer is required, as a condition sine
qua non prior to severance of the employment ties of an individual under his employ, to
convincingly establish, through substantial evidence, the existence of a valid and just cause in
dispensing with the services of such employee, one’s labor being regarded as constitutionally
protected property. The government, to repeat, abhors any stipulation or policy in the nature
of that adopted by petitioner PT&T. The Labor Code states, in no uncertain terms, as follows:

Art. 136. Stipulation against marriage. - It shall be unlawful for an employer to require
as a condition of employment or continuation of employment that a woman 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 marriage.

In the case at bar, it can easily be seen from the memorandum sent to private respondent by
the branch supervisor of the company, with the reminder, that fully aware that the company is
not accepting married women employee (sic), as it was verbally instructed to you. Again, in the
termination notice sent to her by the same branch supervisor, private respondent was made
to understand that her severance from the service was not only by reason of her
concealment of her married status but, over and on top of that, was her violation of the
company’s policy against marriage ( and even told you that married women employees are not
applicable [sic] or accepted in our company.

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, b ut 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.

41. Hongkong Bank Independent Labor Union vs. Hongkong and Shanghai
Banking Corp., Ltd., GR No. 218390, February 28, 2018

Facts:
Velasco started working with Del Monte Philippines (petitioner) on October 21, 1976 as a
seasonal employee and was regularized on May 1, 1977. Her latest assignment was as
Field Laborer. On June 16, 1987, respondent was warned in writing due to her absences. On
May 4, 1991, respondent, thru a letter, was again warned in writing by petitioner about her
absences without permission and a forfeiture of her vacation leave entitlement for the year
1990 -1991 was imposed against her.

On September 14, 1992, another warning letter was sent to respondent regarding her
absences without permission during the year 1991-1992. Her vacation entitlement for the said
employment year affected was consequently forfeited. In view of the said alleged absences
without permission, on September 17, 1994, a notice of hearing was sent t to
respondent notifying her of the charges filed against her for violating the Absence Without
Official Leave rule: that is for excessive absence without permission on August 15-18, 29-
31 and September 1-10, 1994.
Respondent having failed to appear on September 23, 1994 hearing, another notice of
hearing was sent to her resetting the investigation on September 30, 1994. It was again
reset to October 5, 1994. After hearing, the petitioner terminated the services of respondent
effective January 16, 1994 due to excessive absences without permission.

Issue: Whether or not the employment of respondent had been terminated on account of her
pregnancy, and therefore violates the Labor Code which prohibits an employer to discharge an
employee on account of the latter's pregnancy.

Ruling:
Respondent's sickness was pregnancy-related and, therefore, the petitioner cannot terminate
respondent's services because in doing so, petitioner will, in effect, be violating the Labor
Code which prohibits an employer to discharge an employee on account of the latter's
pregnancy.

Article 137 of the Labor Code provides: that it shall be unlawful for any employer: (1) To
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; (2) To discharge such woman on account of her
pregnancy, while on leave or in confinement due to her pregnancy; or (3) To discharge or
refuse the admission of such woman upon returning to her work for fear that she may again be
pregnant. Respondent was able to subsequently justify her absences in accordance with
company rules and policy; that the respondent was pregnant at the time she incurred the
absences; that this fact of pregnancy and its related illnesses had been duly proven through
substantial evidence; that the respondent attempted to file leaves of absence but the
petitioner’s supervisor refused to receive them; that she could not have filed prior leaves due
to her continuing condition; and that the petitioner, in the last analysis, dismissed the
respondent on account of her pregnancy, a prohibited act.

Petitioner terminated the services of respondent on account of her pregnancy which

justified her absences and, thus, committed a prohibited act rendering the dismissal illegal.

TOPIC 14: UNFAIR LABOR PRACTICE

42. General Milling Corp. vs. Court of Appeals, G.R. No. 146728, February 11,
2004
Facts:
The present controversy began when private respondent, Erlinda Castaneda instituted on
March 2, 1998 a complaint for illegal dismissal, underpayment of wages, non-payment of
overtime services, non-payment of service incentive leave pay and non-payment of 13th month
pay against Remington before the NLRC, National Capital Region, Quezon City. The complaint
impleaded Mr. Antonio Tan in his capacity as the Managing Director of Remington.
Erlinda alleged that she started working in August 1983 as company cook with a salary of Php
4,000.00 for Remington, a corporation engaged in the trading business; that she worked for six
(6) days a week, starting as early as 6:00 a.m. because she had to do the marketing and would
end at around 5:30 p.m., or even later, after most of the employees, if not all, had left the
company premises; that she continuously worked with Remington until she was
unceremoniously prevented from reporting for work when Remington transferred to a new site
in Edsa, Caloocan City.

She averred that she reported for work at the new site in Caloocan City on January 15, 1998,
only to be informed that Remington no longer needed her services. Erlinda believed that her
dismissal was illegal because she was not given the notices required by law; hence, she filed her
complaint for reinstatement without loss of seniority rights, salary differentials, service
incentive leave pay, 13th month pay and 10% attorney's fees.

Remington denied that it dismissed Erlinda illegally. It posited that Erlinda was a domestic
helper, not a regular employee; Erlinda worked as a cook and this job had nothing to do with
Remington's business of trading in construction or hardware materials, steel plates and wire
rope products. It also contended that contrary to Erlinda's allegations that the (sic) she worked
for eight (8) hours a day, Erlinda's duty was merely to cook lunch and "merienda", after which
her time was hers to spend as she pleased. Remington also maintained that it did not exercise
any degree of control and/or supervision over Erlinda's work as her only concern was to ensure
that the employees' lunch and "merienda" were available and served at the designated time.
Remington likewise belied Erlinda's assertion that her work extended beyond 5:00 p.m. as she
could only leave after all the employees had gone.

The truth, according to Remington, is that Erlinda did not have to punch any time card in the
way that other employees of Remington did; she was free to roam around the company
premises, read magazines, and to even nap when not doing her assigned chores. Remington
averred that the illegal dismissal complaint lacked factual and legal bases. Allegedly, it was
Erlinda who refused to report for work when Remington moved to a new location in Caloocan
City.
Labor Arbiter.

Decision of the Labor Arbiter on January 19, 1999, the labor arbiter dismissed the complaint
and ruled that the respondent was a domestic helper under the personal service of Antonio
Tan, finding that her work as a cook was not usually necessary and desirable in the ordinary
course of trade and business of the petitioner corporation, which operated as a trading
company, and that the latter did not exercise control over her functions. On the issue of illegal
dismissal, the labor arbiter found that it was the respondent who refused to go with the family
of Antonio Tan when the corporation transferred office and that, therefore, respondent could
not have been illegally dismissed.

Respondent appealed the decision to the NLRC.

Issues: Whether or not, respondent is a domestic helper or a regular employee of the
company.
Whether or not, respondent was illegally dismissed.

Ruling:
Respondent is a regular employee of the company. There was no allegation by respondent that
complainant had ever worked in the residence of Mr. Tan. What is clear from the facts narrated
by the parties is that complainant continuously did her job as a cook in the office of respondent
serving the needed food for lunch and merienda of the employees. Thus, her work as cook
inured not for the benefit of the family members of Mr. Tan but solely for the individual
employees of respondent.

Complainant's work schedule and being paid a monthly salary of P4,000.00 are clear indication
that she is a company employee who had been employed to cater to the food needed by the
employees which were being provided by respondent to form part of the benefit granted them.

In Apex Mining Company, Inc. v. NLRC, this Court held that a househelper in the staff houses of
an industrial company was a regular employee of the said firm. We ratiocinated that:

Under Rule XIII, Section 1(b), Book 3 of the Labor Code, as amended, the terms "househelper"
or "domestic servant" are defined as follows:

"The term 'househelper' as used herein is synonymous to the term 'domestic servant' and shall
refer to any person, whether male or female, who renders services in and about the employer's
home and which services are usually necessary or desirable for the maintenance and
enjoyment thereof, and ministers exclusively to the personal comfort and enjoyment of the
employer's family."

The foregoing definition clearly contemplates such househelper or domestic servant who is
employed in the employer's home to minister exclusively to the personal comfort and
enjoyment of the employer's family. Such definition covers family drivers, domestic servants,
laundry women, yayas, gardeners, houseboys and similar househelps.

The mere fact that the househelper or domestic servant is working within the premises of the
business of the employer and in relation to or in connection with its business, as in its
staffhouses for its guest or even for its officers and employees, warrants the conclusion that
such househelper or domestic servant is and should be considered as a regular employee of the
employer and not as a mere family househelper or domestic servant as contemplated in Rule
XIII, Section 1(b), Book 3 of the Labor Code, as amended

As a regular employee, respondent enjoys the right to security of tenure under Article 279 38 of
the Labor Code and may only be dismissed for a just 39 or authorized 40 cause, otherwise the
dismissal becomes illegal and the employee becomes entitled to reinstatement and full
backwages computed from the time compensation was withheld up to the time of actual
reinstatement.

Abandonment is the deliberate and unjustified refusal of an employee to resume his

employment. It is a form of neglect of duty; hence, a just cause for termination of employment
by the employer under Article 282 of the Labor Code, which enumerates the just causes for
termination by the employer. For a valid finding of abandonment, these two factors should be
present: (1) the failure to report for work or absence without valid or justifiable reason; and (2)
a clear intention to sever employer-employee relationship, with the second as the more
determinative factor which is manifested by overt acts from which it may be deduced that the
employee has no more intention to work. The intent to discontinue the employment must be
shown by clear proof that it was deliberate and unjustified. This, the petitioner failed to do in
the case at bar.

43. Standard Chartered Bank Employees Union vs. Confesor, G.R. No. 114974,
June 16, 2004

Facts:
On 22 April 2003, respondent, Lina B. Vargas, filed against Nathaniel Bakeshop and its owner,
Fernando Co, a complaint for underpayment or non-payment of wages and holiday pay. The
complaint was later amended to include illegal dismissal as a cause of action and the non-
payment of service incentive leave.

Respondent alleged that she started working at the bakeshop in October 1994 as a baker and
worked from 8:00am to 8:30pm, Monday to Saturday. Aside from baking, respondent also
serve the customers and supervised the other workers in the absence of the owner.
Furthermore, respondent claimed that she sometimes cooked and did the chores of the
housemaid whenever the latter was not available. Respondent has a salary of P202/day, which
she received every Saturday afternoon. During the period of her employment, respondent was
not given a pay slip and she was never asked to sign a payroll.

On April 6, 2003, petitioner Co’s wife, Nely Co, told respondent to cook their lunch because the
housemaid was ironing clothes. Since respondent was busy preparing customer’s orders, she
lost track of time and was unable to cook lunch as instructed. Irate at respondent’s failure to
cook, Nely Co cussed respondent and told her to leave and never to return because she was not
needed anymore. Respondent was so humiliated and could no longer bear the treatment she
received from her employers that she decided to take her salary and leave that same day.
Respondent later filed the complaint against Nathaniel Bakeshop and its owner, Fernando Co.

Issue:

1. Whether or not respondent was an employee or a mere house help of the petitioner.
2. Whether or not respondent was illegally dismissed.
Ruling:

1. The respondent of is an employee of the petitioner.

The evidence show that respondent is working within the premises of the business of Co and in
relation or in connection with such business. The place of business of Co and his residence is
located at the place. Thus, Co exercises control and supervision over petitioners functions. Even
if respondent was actually working as domestic servant in Co’s residence, her act of taking
orders, would warrant the conclusion that respondent should be considered as a regular
employee and not as a mere family house helper or domestic servant of Co.

2. The respondent was illegally dismissed.

Since petitioner is an employee of private respondents, she is entitled to security of tenure.

Assuming further that respodent abandoned her job, the Supreme Court held in Ultra Villa Food
Haus and/or Rosie Tio vs. NLRC that to constitute abandonment, two requisites must concur:
(1) the failure to report to work or absence without valid or justifiable reason, and (2) a clear
intention to sever the employer-employee relationship as manifested by some overt acts, with
the second requisite as the more determinative factor. The burden of proving abandonment as
a just cause for dismissal is on the employer. Petitioner failed to discharge this burden. The only
evidence adduced by petitioner to prove abandonment was the affidavits of their househelpers
and employees.

44. Phil Electric Corp., vs. Court of Appeals, GR No. 168612, Dec. 10, 2014

Facts:
In 1992, DECS issued the Revised Manual for Regulations for Private Schools. Article XI, Section
44, par 1a, of which requires college faculty members to have a master’s degree as a minimum
educational qualification for acquiring regular status.

In 1994, petitioner University of the East (UE) and the UE Faculty Association executed a five-
year CBA with effect up to 1999 which provided, that UE shall extend only semester-to-
semester appointments to college faculty staffs who did not possess the minimum
qualifications. Those with such qualifications shall be given probationary appointments and
their performance on a full-time or full-load basis shall be reviewed for every semester.

UE hired respondent Mariti D. Bueno in 1997 and respondent Analiza F. Pepanio in 2000, both
on a sem-to-sem basis to teach in its college.

Pursuant to the new CBA, UE extended probationary appointments to respondents. In October

2003, the Dean of UE College of Arts and Sciences, petitioner Eleanor Javier, sent notices to
probationary faculty members, reminding them of their expiration of probationary status of
those lacking post graduate qualification by the end of the first semester of SY 2003-2004.
Pepanio replied that she was enrolled at the Polytechnic University of the Philippines Graduate
School. Bueno replied that she was not interested in acquiring tenure as she was returning to
her province.

Bueno later wrote UE, demaning that it consider her a regular employee based on her six-and-
a-half-year service on a full-load basis, given that UE hired her in 1997 when what was in force
was still the 1994 CBA. Pepanio made the same demands, respondents filed cases of illegal
dismissal against the school before the LA office.

Issue: Whether of not UE illegally dismissed Bueno and Pepanio.

Ruling:
in 1994, the legislature transferred the power to prescribe such qualifications to the CHED.
CHED’s charter authorized it to set minimum standards for programs and institutions of higher
learning.

The manual of Regulations continued to apply to colleges and universities and suppletory to the
Joint Order until 2010 when CHED issued Revised Manual of Regulations which specifically
applies only to institutions involved in tertiary education.

The requirement of a masteral degree for tertiary education teachers is not unreasonable. The
operation of educational institutions involves public interest. The government has a right to
ensure that only qualified persons, in possession of sufficient academic knowledge and teaching
skills, are allowed to teach in such institutions. Government regulation in this field of human
activity is desirable for protecting, not only the students, but the public as we;; from ill-
prepared teachers, who are lacking the required scientific or technical knowledge. They may be
required to take an examination or to possess postgraduate degrees as prerequisite to
employment.

Respondents were each given only semester-to-semester appointments from the beginning of
their employment with UE precisely because they lacked the required master’s degree. It was
only when UE and the faculty union signed their 2001 CBA that the school extended petitioners
a conditional probationary status subject to their obtaining a master’s degree within their
probationary period. It is clear therefore, that the parties intended to subject respondents’
permanent status appointments to the standards set by the law and the university.

Here UE gave respondents Bueno and Pepanio more than ample of opportunities to acquire the
postgraduate degree but they did not take advantage of such opportunities. Justice, fairness,
and due process demand that an employer should not be penalized for situations where it had
little of no participation or control.

45. Zambrano et al., vs. Phil Carpet Corp. GR No. 224099, June 21, 2017

Facts:
Petitioner Colegio del Santisimo Rosario (CSR) hired respondent as a high school teacher on
probationary basis for the school years 1992-1993, 1993-1994 and 1994-1995. On April 5, 1995,
CSR, through petitioner Sr. Zenaida S. Mofada, OP (Mofada), decided not to renew respondent's
services.
Thus, on July 13, 1995, respondent filed a Complaint for illegal dismissal. He alleged that since
he had served three consecutive school years which is the maximum number of terms allowed
for probationary employment, he should be extended permanent employment. Citing
paragraph 75 of the 1970 Manual of Regulations for Private Schools (1970 Manual).

On the other hand, petitioners argued that respondent knew that his Teacher's Contract for
school year 1994-1995 with CSR would expire on March 31, 1995. Accordingly, respondent was
not dismissed but his probationary contract merely expired and was not renewed. Petitioners
also claimed that the "three years" mentioned refer to "36 months," not three school years.
Since respondent served for only three school years of 10 months each or 30 months, then he
had not yet served the "three years" or 36 months mentioned in the Manual.

Issue: Whether or not an elementary teacher hired for three consecutive school years as a
probationary employee automatically and/or by law becomes a permanent employee upon
completion of his third year of probation.

Ruling:
Petition denied. In Mercado v. AMA Computer College-Parañaque City, Inc. , it was decided that
cases dealing with employment on probationary status of teaching personnel are not governed
solely by the Labor Code as the law is supplemented, with respect to the period of probation,
by special rules found in the Manual of Regulations for Private Schools (the Manual). With
regard to the probationary period, Section 92 of the 1992 Manual provides:

Section 92. Probationary Period. — Subject in all instances to compliance with

the Department and school requirements, the probationary period for academic
personnel shall not be more than three consecutive years of satisfactory service
for those in the elementary and secondary levels, six consecutive regular
semesters of satisfactory service for those in the tertiary level, and nine
consecutive trimesters of satisfactory service for those in the tertiary level where
collegiate courses are offered on a trimester basis.

In this case, petitioners' teachers who were on probationary employment were made to enter
into a contract effective for one school year. Thereafter, it may be renewed for another school
year, and the probationary employment continues. At the end of the second fixed period of
probationary employment, the contract may again be renewed for the last time. Such
employment for fixed terms during the teachers' probationary period is an accepted practice in
the teaching profession.

However, this scheme "of fixed-term contract is a system that operates during the probationary
period and for this reason is subject to Article 281 of the Labor Code," which provides:
 . . . The services of an employee who has been engaged on a probationary basis
may be terminated for a just cause or when he fails to qualify as a regular
employee in accordance with reasonable standards made known by the
employer to the employee at the time of his engagement. An employee who is
allowed to work after a probationary period shall be considered a regular
employee.

That teachers on probationary employment also enjoy the protection afforded by Article 281 of
the Labor Code is supported by Section 93 of the 1992 Manual which provides:

Sec. 93. Regular or Permanent Status. — Those who have served the
probationary period shall be made regular or permanent. Full-time teachers who
have satisfactorily completed their probationary period shall be considered
regular or permanent.

The above provision clearly provides that full-time teachers become regular or permanent
employees once they have satisfactorily completed the probationary period of three school
years. The use of the term satisfactorily necessarily connotes the requirement for schools to set
reasonable standards to be followed by teachers on probationary employment. For how else
can one determine if probationary teachers have satisfactorily completed the probationary
period if standards therefor are not provided? As such, "no vested right to a permanent
appointment shall accrue until the employee has completed the prerequisite three-year period
necessary for the acquisition of a permanent status. However, mere rendition of service for
three consecutive years does not automatically ripen into a permanent appointment. It is also
necessary that the employee be a full-time teacher, and that the services he rendered are
satisfactory."

However, for teachers on probationary employment, in which case a fixed term contract is not
specifically used for the fixed term it offers, it is incumbent upon the school to have not only set
reasonable standards to be followed by said teachers in determining qualification for regular
employment, the same must have also been communicated to the teachers at the start of the
probationary period, or at the very least, at the start of the period when they were to be
applied. These terms, in addition to those expressly provided by the Labor Code, would serve as
the just cause for the termination of the probationary contract. The specific details of this
finding of just cause must be communicated to the affected teachers as a matter of due
process. Corollary, should the teachers not have been apprised of such reasonable standards at
the time specified, they shall be deemed regular employees.

TOPIC 15: REVISED GUIDELINES OF THE NCMB FOR THE CONDUCT OF

VOLUNTARY ARBITRATION PROCEEDINGS

46. Sanyo Philippine Workers Union-PSSLU vs. Canizares, 211 SCRA 361
[1992]
Facts:
Captain Virgilio Tolosa was master of the vessel M/V Donna owned by Quana-Kaiun, and was
hired through its manning agent, Asia Bulk Transport Phils., Inc. (Asia Bulk). During channeling
activities upon the vessel’s departure from Yokohama on November 6, 1992, Capt. Tolosa was
drenched with rainwater. Subsequently, he contracted fever on November 11 which was later
on accompanied by loose bowel movement for the succeeding 12 days. His condition was
reported to Asia Bulk and the US Coast Guard Headquarters in Hawaii on November 15.
However, before he could be evacuated, he died on November 18, 1992.

Evelyn Tolosa, the widow, filed a complaint before the POEA for damages against Pedro Garate,
Chief Mate of the vessel, Mario Asis, Second Mate, Asia Bulk and Quana-Kaiun. The case was
transferred to the NLRC. The Labor Arbiter ruled in favor of the widow, awarding actual
damages plus legal interest, as well as moral and exemplary damages and attorney’s fees. On
appeal to the NLRC, the decision of the Labor Arbiter was vacated and the complaint was
dismissed for lack of jurisdiction over the subject matter of the action pursuant to the
provisions of the Labor Code, as amended. Sustaining the NLRC, the CA ruled that the labor
commission had no jurisdiction over the subject matter of the action filed by petitioner. Her
cause did not arise from an employer-employee relation, but from a quasi-delict or tort. Under
Article 217 (a)(4) of the Labor Code which allows an award of damages incident to an employer-
employee relation, the damages awarded were not proper as she is not an employee, but
merely the wife of an employee.

Issues:
(1) Whether or not the Labor Arbiter and the NLRC had jurisdiction over petitioner’s action.
(2) Whether or not the monetary award granted by the Labor arbiter has already reached
finality.

Ruling:
(1) The Court affirmed that the claim for damages was filed not for claiming damages under the
Labor Code but under the Civil Code. The Court was convinced that the allegations were based
on a quasi-delict or tort. Also, she had claimed for actual damages for loss of earning capacity
based on a life expectancy of 65 years, which is cognizable under the Civil Code and can be
recovered in an action based on a quasi-delict. Though damages under a quasi-delict may be
recoverable under the jurisdiction of labor arbiters and the NLRC, the relief must be based on
an action that has reasonable casual connection with the Labor Code, labor statutes or CBA’s. It
must be noted that a worker’s loss of earning capacity and backlisting are not to be equated
with wages, overtime compensation or separation pay, and other labor benefits that are
generally cognized in labor disputes. The loss of earning capacity is a relief or claim resulting
from a quasi-delict or a similar cause within the realm of Civil Law.

In the present case, Evelyn Tolosa’s claim for damages is not related to any other claim under
Article 217, other labor statutes, or CBA’s. She cannot anchor her claim for damages to Article
161 of the Labor Code, which does not grant or specify a claim or relief. This provision is only a
safety and health standard under Book IV of the same Code. The enforcement of this labor
standard rests with the labor secretary. It is not the NLRC but the regular courts that have
jurisdiction over action for damages, in which the employer-employee relation is merely
incidental, and in which the cause of action proceeds from a different source of obligation such
as a tort.

(2) On the finality of the award, the Court ruled that issues not raised in the court below cannot
be raised for the first time on appeal. Thus, the issue being not brought to the attention of the
Court of Appeals first, this cannot be considered by the Supreme Court. It would be tantamount
to denial of the right to due process against the respondents to do so.

47. Navarro III vs. Damasco, 246 SCRA 260 [1995]

Facts: Petitioner Navarro, a typist of BUSCO SUGAR MILLING CO, went to visit Mercie Baylas,
whom he was courting, in the company’s ladies’ dormitory. Upon seeing him, Baylas ran
towards her room but lost her balance; petitioner overcame her, embraced her, put himself on
top of her and started kissing her until other employees responded to Baylas' flee for help. The
company put Navarro under preventive suspension because of the incident and he was meted
out the penalty of dismissal upon the recommendation of the investigator for violating the
company's Code of Conduct against acts of immorality and gross discourtesy to a co-employee
inside company premises.

The President of the Mindanao Sugar Workers Union, for and in behalf of petitioner, and the
Personnel Officer of the company agreed to submit the case of petitioner to voluntary
arbitration. Counsel for petitioner, during the initial conference with the Voluntary Arbitrator,
questioned whether the grievance procedure in the CBA before bringing the case before the
Voluntary Arbitrator had been followed. The parties, however, also agreed to submit the case
for decision based on their position papers. The Voluntary Arbitrator rendered a decision
dismissing petitioner from employment and holding that the company did not violate the
provisions of the grievance procedure under the CBA.

Petitioner contends that the grievance procedure provided for in the CBA was not followed;
hence, the Voluntary Arbitrator exceeded his authority when he took cognizance of the labor
case. Petitioner also claims that he was denied due process of law because no hearing was held
and he was not given an opportunity to cross-examine the witnesses.
Issues:
1. WON the case of petitioner should have been brought to the company’s grievance machinery
prior to the Voluntary Arbitrator.
2. WON petitioner was denied due process.
Held:
1. It is the policy of the State to promote voluntary arbitration as a mode of settling labor
disputes. The instant case is not a grievance that must be submitted to the grievance
machinery. What are subject of the grievance procedure for adjustment and resolution are
grievances arising from the interpretation or implementation of the CBA. The acts of petitioner
involved a violation of the Code of Employee Discipline, particularly the provision penalizing the
immoral conduct of employees. Consequently, there was no justification for petitioner to
invoke the grievance machinery provisions of the Collective Bargaining Agreement.
Also, the case of petitioner was submitted to voluntary arbitration by agreement of the
president of the labor union to which petitioner belongs, and his employer, through its
personnel officer. Petitioner himself voluntarily submitted to the jurisdiction of the Voluntary
Arbitrator when he, through his counsel, filed his position paper with the Voluntary Arbitrator
and even submitted additional documentary evidence.
2. Petitioner was not denied due process. Due process in administrative proceedings is an
opportunity to explain one’s side or an opportunity to seek a reconsideration of the action or
ruling complained of. A formal or trial-type hearing is not at all times and in all instances
essential. The requirements are satisfied where the parties are afforded fair and reasonable
opportunity to explain their side of the controversy at hand.
Concerning the allegation that petitioner was not allowed to cross-examine the witnesses, the
record shows that the parties had agreed not to cross-examine their witnesses anymore.
WHEREFORE, the Decision of the respondent Voluntary Arbitrator is AFFIRMED

48. Estate of Dulay vs. Aboitiz Jebsen Maritime Inc. et al., G.R. No. 172642,
June 13, 2012

Facts:
Nelson R. Dulay was employed by General Charterers Inc. (GCI), a subsidiary of co-petitioner Ab
oitiz Jebsen Maritime Inc. 25 days after the completion of his employment contract, Nelson die
d due to acute renal failure secondary to septicemia. At the time of his death, Nelson was a bon
a fide member of the Associated Marine Officers and Seaman’s Union of the Philippines (AMOS
UP), GCI’s collective bargaining agent. Nelson’s widow, Merridy Jane, thereafter claimed for dea
th benefits through the grievance procedure of the CBA between AMOSUP and GCI. However, t
he grievance procedure was “declared deadlocked” as petitioners refused to grant the benefits 
sought by the widow. The wife then filed a complaint with the NLRC Sub-Regional Arbitration ag
ainst GCI for death and medical benefits and damages. Nelson’s brother, only received P20,000.
00 from respondents pursuant to the CBA. Merridy Jane contended that she is entitled to the ag
gregate sum of $90,000.00 instead.
The CA ruled that while the suit filed by Merridy Jane is a money claim, the same basically invol
ves the interpretation and application of the provisions in the subject CBA. As such, jurisdiction 
belongs to the voluntary arbitrator and not the labor arbiter.
 
ISSUE:
Whether or not claim for death benefits of an overseas employee should be with the Labor Arbi
ter considering that such granting involves interpretation and application of the provisions in th
e CBA.
 
RULING:
No. The Supreme Court held that it is true that R.A. 8042 is a special law governing overseas Fili
pino workers. However, a careful reading of this special law would readily show that there is no 
specific provision thereunder which provides for jurisdiction over disputes or unresolved grieva
nces regarding the interpretation or implementation of a CBA. Section 10 of R.A. 8042, which is 
cited by petitioner, simply speaks, in general, of “claims arising out of an employer-employee re
lationship or by virtue of any law or contract involving Filipino workers for overseas deployment 
including claims for actual, moral, exemplary and other forms of damages.” On the other hand, 
Articles 217(c) and 261 of the Labor Code are very specific in stating that voluntary arbitrators h
ave jurisdiction over cases arising from the interpretation or implementation of collective bargai
ning agreements. Stated differently, the instant case involves a situation where the special statu
te (R.A. 8042) refers to a subject in general, which the general statute (Labor Code) treats in par
ticular.
Furthermore, Article 13.1 of the CBA provides that in case of dispute or conflict in the interpreta
tion or application of any of the provisions of this Agreement, or enforcement of Company polic
ies, the same shall be settled through negotiation, conciliation or voluntary arbitration. Therefor
e, it is clear that the parties, in the first place, really intended to bring to conciliation or voluntar
y arbitration any dispute or conflict in the interpretation or application of the provisions of their 
CBA. It is settled that when the parties have validly agreed on a procedure for resolving grievanc
es and to submit a dispute to voluntary arbitration then that procedure should be strictly obser
ved.

49. Baronda vs. CA, GR No. 161006, October 14, 2015

FACTS:Respondent Hideco Sugar Milling Co., Inc. employed the petitioner as a mud press truck
driver. He hit HIDECO's transmission lines while operating a dump truck, causing a total factory
blackout. Power was eventually restored but the restoration cost HIDECO. Following the
incident, HIDECO served a notice of offense requiring him to explain the incident within three
days from notice. He complied. Thereafter, the management conducted its investigation, and,
finding him guilty of negligence, recommended his dismissal. The resident manager served a
termination letter and informed him of the decision to terminate his employment effective at
the close of office hours of that day. Hence, HIDECO no longer allowed him to report to work on
the next day. The petitioner, along with another employee also dismissed by HIDECO, filed in
the Office of the Voluntary Arbitrator of the National Conciliation and Mediation Board in
Tacloban City a complaint for illegal dismissal against HIDECO.
Voluntary Arbitrator Antonio C. Lopez, Jr. handled the case and eventually rendered his
decision by finding the petitioner's dismissal illegal, and ordering his reinstatement. Voluntary
Arbitrator Lopez, Jr. deemed the petitioner's separation from the service as a suspension from
work without pay, and commanded him to pay on installment basis the damages sustained by
HIDECO incident he had caused. HIDECO filed a motion for reconsideration but the Voluntary
Arbitrator denied the motion. Accepting the outcome, HIDECO subsequently reinstated the
petitioner. The petitioner filed his manifestation with motion for the issuance of the writ of
execution in the Office of the Voluntary Arbitrator praying for the execution of the decision, and
insisting on being entitled to backwages and other benefits. HIDECO opposed the petitioner's
motion for execution and simultaneously presented its own motion for execution to enforce
the decision of the Voluntary Arbitrator directing the petitioner to pay the actual damages. The
Voluntary Arbitrator denied the petitioner's motion for execution on the ground that the
decision did not award any backwages and granted HIDECO's motion for execution.
ISSUE: Whether or not the reinstatement aspect of the Voluntary Arbitrator's decision was
executory pending appeal.
HELD: YES
The timely filing of a motion for reconsideration or of an appeal forestalls the finality of the
decision or award of the Voluntary Arbitrator the reinstatement aspect of the Voluntary
Arbitrator's decision or award remains executory regardless of the filing of such motion for
reconsideration or appeal.The immediate reinstatement of the employee pending the appeal
has been introduced by Section 12 of Republic Act No. 6715, which amended Article 223 of
the Labor Code. The duties and responsibilities of the State are imposed not so much to express
sympathy for the workingman as to forcefully and meaningfully underscore labor as a primary
social and economic force, which the Constitution also expressly affirms with equal intensity.
Labor is an indispensable partner for the nation's progress and stability.

We see no reason to obstruct the reinstatement decreed by the Voluntary Arbitrator, or to

treat it any less than the reinstatement that is ordered by the Labor Arbiter. Voluntary
arbitration really takes precedence over other dispute settlement devices. Such primacy of
voluntary arbitration is mandated by no less than the Philippine Constitution and is ingrained as
a policy objective of our labor relations law.The reinstatement order by the Voluntary
Arbitrator should have the same authority, force and effect as that of the reinstatement order
by the Labor Arbiter not only to encourage parties to settle their disputes through this mode,
but also, and more importantly, to enforce the constitutional mandate to protect labor, to
provide security of tenure, and to enhance social justice.
 50. Suelo Jr vs. MST Marine Services (Phils) Inc., et al., GR. No. 252914,
November 9, 2020

FACTS: On May 10, 2016, petitioner Suelo was hired by respondent MST Marine Services as
second engineer for a six-month period. On October 29, 2016, he was brought to Singapore
General Hospital due to severe headache, slurring of speech, neck pain and history of loss of
consciousness. He was diagnosed with uncontrolled hypertension and his xray results revealed
degenerative change at C5-6 and C6-7 levels. Subsequently, he was given medications, declared
unfit for all marine duties and signed off in Singapore on medical grounds. He arrived in the
Philippines on November 4, 2016 and immediately flew to his hometown in Iloilo. Suelo alleged
that MST did not allow him to report to its Manila office and refused to refer him to a company-
designated physician. Instead, MST allegedly asked him to seek medical treatment subject to
reimbursement. However, he averred that his reimbursement was denied. He then filed a
complaint for permanent and total disability benefits, damages and attorneys fees before the
National Conciliation and Mediation Board.

MST, for its part, argued that it was petitioner who refused to undergo treatment with the
company-designated physician, thereby forfeiting his right to claim disability benefits and sick
wages.

The Panel of Voluntary Arbitrators ruled, among others, that Suelo cannot claim medical
reimbursement since he failed to submit any evidence of his medical expenses.

Suelo’s motion for reconsideration (MR) was denied. He received a copy of the order of the
denial of the MR on July 12, 2019. On July 22, 2019, Suelo moved for a 20-day extension within
which to file a Petition for Review before the CA or until August 11, 2019. On August 9, 2019,
Suelo filed his Petition for Review under Rule 43 before the CA.

The CA dismissed the Petition outright citing procedural infirmities such as (a) it was filed two
days late and (b) the affidavit of service was inaccurate since it stated that the service upon
adverse parties was done personally, when in fact it was served through registered mail. The CA
denied Suelo’s MR. Hence, this petition.

ISSUE: Whether the CA erred in dismissing outright the Petition based on procedural infirmities.

HELD: Yes.
In the recent case of Chin v. Maersk-Filipinas Crewing, Inc., 19 (Chin) citing Guagua National
Colleges v. CA,20 (Guagua National Colleges) the Court categorically declared that the correct
period to appeal the decision or award of the Voluntary Arbitrators or Panel of Arbitrators to
the CA via a Rule 43 petition for review is the fifteen ( 15)-day period set forth in Section 421
thereof reckoned from the notice or receipt of the VA's resolution on the motion for
reconsideration, and that the ten ( l 0)-day period provided in Article 276 of the Labor Code
refers to the period within which an aggrieved party may file said motion for reconsideration

Under Section 4, Rule 43 of the Rules of Court, upon proper motion and the payment of the full
amount of the docket fees before the expiration of the reglementary period, the CA may grant
an additional period of fifteen (15) days only within which to file the petition for review, and no
further extension shall be granted except for the most compelling reason and in no case shall it
exceed fifteen (15) days.

ln this case, records reveal that petitioner received a copy of the VA' s Decision denying his
motion for reconsideration on July 12, 2019. Thus, he had fifteen (15) days therefrom or until
July 27, 2019 within which to file the petition, or to move for a 15-day extension of time to file
the same. Assuming that an extension is granted, he had until August 11, 2019, reckoned from
the expiration of the reglementary period on July 27, 2019, within which to file his petition.