Supreme Court Rules on Validity of Exclusivity and Termination Clauses in Avon Contract

SEMBLANTE v.
CA
G.R. No. 196426, August 15, 2011
FACTS:
Petitioners Marticio Semblante (Semblante) and Dubrick Pilar (Pilar) assert that they were
hired by respondents-spouses Vicente and Maria Luisa Loot, the owners of Gallera de
Mandaue (the cockpit), as the official masiador and sentenciador, respectively, of the cockpit
sometime in 1993.
As the masiador, Semblante calls and takes the bets from the gamecock owners and
other bettors and orders the start of the cockfight. He also distributes the winnings after
deducting the arriba, or the commission for the cockpit. Meanwhile, as the sentenciador, Pilar
oversees the proper gaffing of fighting cocks, determines the fighting cocks physical condition
and capabilities to continue the cockfight, and eventually declares the result of the cockfight.
For their services as masiador and sentenciador, Semblante receives PhP 8,000 per
month, while Pilar gets 14,000 per month. Their working days start at 1:00 p.m. and last until
12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit.
Petitioners had both been issued employees identification card that they wear every time they
report for duty.
On November 14, 2003, however, petitioners were denied entry into the cockpit upon the
instructions of respondents, and were informed of the termination of their services effective that
date. This prompted petitioners to file a complaint for illegal dismissal against respondents.
Respondents denied that petitioners were their employees and alleged that they were
associates of respondents independent contractor, Tomas Vega. Respondents claimed that
petitioners have no regular working time or day and they are free to decide for themselves
whether to report for work or not on any cockfighting day.
(LA) In a Decision dated June 16, 2004, Labor Arbiter Julie C. Rendoque found petitioners to
be regular employees of respondents as they performed work that was necessary and
indispensable to the usual trade or business of respondents for a number of years. The Labor
Arbiter also ruled that petitioners were illegally dismissed, and so ordered respondents to pay
petitioners their backwages and separation pay.
(NLRC) On appeal to the NLRC, it held in its Resolution of October 18, 2006 that there was
no employer-employee relationship between petitioners and respondents, respondents having no
part in the selection and engagement of petitioners, and that no separate individual contract
with respondents was ever executed by petitioners.
(CA) The appellate court found for respondents, noting that referees and bet-takers in a
cockfight need to have the kind of expertise that is characteristic of the game to interpret
messages conveyed by mere gestures. Hence, petitioners are akin to independent contractors
who possess unique skills, expertise, and talent to distinguish them from ordinary employees.
Further, respondents did not supply petitioners with the tools and instrumentalities they needed
to perform work. Petitioners only needed their unique skills and talents to perform their job
as masiador and sentenciador.
ISSUE:
Whether or not Semblante and Pilar may be considered as employees.
HELD:
While respondents had failed to post their bond within the 10-day period provided above, it
is evident, on the other hand, that petitioners are NOT employees of respondents, since their
relationship fails to pass muster the four-fold test of employment We have repeatedly mentioned
in countless decisions: (1) the selection and engagement of the employee; (2) the payment of
LABOR LAW REVIEW 1- ATTY. ABAD
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wages; (3) the power of dismissal; and (4) the power to control the employees conduct, which is
the most important element.
As found by both the NLRC and the CA, respondents had no part in petitioners selection
and management;[19] petitioners compensation was paid out of thearriba (which is a percentage
deducted from the total bets), not by petitioners; [20] and petitioners performed their
functions as masiador and sentenciador free from the direction and control of
respondents.[21] In the conduct of their work, petitioners relied mainly on their expertise that is
characteristic of the cockfight gambling, [22] and were never given by respondents any tool
needed for the performance of their work. [23]
Respondents, not being petitioners employers, could never have dismissed, legally or
illegally, petitioners, since respondents were without power or prerogative to do so in the first
place.
WHEREFORE, We DENY this petition and AFFIRM the May 29, 2009 Decision and
February 23, 2010 Resolution of the CA, and the October 18, 2006 Resolution of the NLRC.
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AVON v. LUNA
G.R. No. 153674, December 20, 2006
FACTS:
A complaint dated 1 December 1988 was filed by herein respondent Luna alleging, inter
alia that she began working for Beautifont, Inc. in 1972, first as a franchise dealer and then a
year later, as a Supervisor.
Sometime in 1978, Avon Cosmetics, Inc. (Avon), herein petitioner, acquired and took over the
management and operations of Beautifont, Inc. Nonetheless, respondent Luna continued working
for said successor company.
In 1985, petitioner Avon and respondent Luna entered into an agreement, entitled Supervisors
Agreement, whereby said parties contracted in the manner quoted below:
The Company and the Supervisor mutually agree:
xxxx
5) That the Supervisor shall sell or offer to sell, display or promote only and exclusively
products sold by the Company.
6) Either party may terminate this agreement at will, with or without cause, at any time
upon notice to the other.
x x x x.
By virtue of the execution of the aforequoted Supervisors Agreement, respondent Luna became
part of the independent sales force of petitioner Avon.
Sometime in the latter part of 1988, respondent Luna was invited by a former Avon employee
who was then currently a Sales Manager of Sandr Philippines, Inc., a domestic corporation
engaged in direct selling of vitamins and other food supplements, to sell said products.
Respondent Luna apparently accepted the invitation as she then became a Group Franchise
Director of Sandr Philippines, Inc. concurrently with being a Group Supervisor of petitioner Avon
In a letter dated 11 October 1988, petitioner Avon, through its President and General Manager,
Jose Mari Franco, notified respondent Luna of the termination or cancellation of her Supervisors
Agreement with petitioner Avon (Allegedly because of violation of paragraph 5 pursuant to
paragraph 6 of the same Agreement).
Aggrieved, respondent Luna filed a complaint for damages before the RTC which rendered
judgment in favor of respondent Luna.
The Court of Appeals promulgated the assailed Decision which AFFIRMED RTCs decision in toto
ISSUE:
a) Whether or not paragraph 5 of the Supervisors Agreement is void for being violative of law
and public policy; and
b) Whether or not paragraph 6 of the Supervisors Agreement which authorizes petitioner Avon
to terminate or cancel the agreement at will is void for being contrary to law and public policy.
HELD:
a
This exclusivity clause is more often the subject of critical scrutiny when it is perceived to collide
with the Constitutional proscription against "reasonable restraint of trade or occupation."
Thus, restrictions upon trade may be upheld when not contrary to public welfare and not greater
than is necessary to afford a fair and reasonable protection to the party in whose favor it is
imposed. Even contracts which prohibit an employee from engaging in business in competition
with the employer are not necessarily void for being in restraint of trade.
Page 3
In sum, contracts requiring exclusivity are not per se void. Each contract must be viewed vis-vis all the circumstances surrounding such agreement in deciding whether a restrictive practice
should be prohibited as imposing an unreasonable restraint on competition.
Authorities are one in declaring that a restraint in trade is unreasonable when it is contrary to
public policy or public welfare.
Plainly put, public policy is that principle of the law which holds that no subject or citizen can
lawfully do that which has a tendency to be injurious to the public or against the public good.
Applying the preceding principles to the case at bar, there is nothing invalid or contrary to public
policy either in the objectives sought to be attained by paragraph 5, i.e., the exclusivity clause,
in prohibiting respondent Luna, and all other Avon supervisors, from selling products other than
those manufactured by petitioner Avon.
Such prohibition is neither directed to eliminate the competition like Sandr Phils., Inc. nor
foreclose new entrants to the market.
It was not by chance that Sandr Philippines, Inc. made respondent Luna one of its Group
Franchise Directors. It doesnt take a genius to realize that by making her an important part of its
distribution arm, Sandr Philippines, Inc., a newly formed direct-selling business, would be saving
time, effort and money as it will no longer have to recruit, train and motivate supervisors and
dealers.
The exclusivity clause does not in any way limit its selling opportunities, just the undue use of
the resources of petitioner Avon.
The foregoing premises noted, the Court of Appeals, therefore, committed reversible error in
interpreting the subject exclusivity clause to apply merely to those products in direct competition
to those manufactured and sold by petitioner Avon.
b
Having held that the "exclusivity clause" as embodied in paragraph 5 of the Supervisors
Agreement is valid and not against public policy, we now pass to a consideration of respondent
Lunas objections to the validity of her termination as provided for under paragraph
6("termination clause") of the Supervisors Agreement giving petitioner Avon the right to
terminate or cancel such contract.
Worth stressing is that the right to unilaterally terminate or cancel the Supervisors Agreement
with or without cause is equally available to respondent Luna, subject to the same notice
requirement. Obviously, no advantage is taken against each other by the contracting parties.
WHEREFORE, in view of the foregoing, the instant petition is GRANTED. The Decision dated 20
May 2002 rendered by the Court of Appeals in CA-G.R. CV No. 52550, affirming the judgment of
the RTC of Makati City, Branch 138, in Civil Case No. 88-2595, are hereby REVERSED and SET
ASIDE. Accordingly, let a new one be entered dismissing the complaint for damages. Costs
against respondent Leticia Luna.
Page 4
COCOMANGAS HOTEL BEACH RESORT v. VISCA

G.R. No. 167045
August 29, 2008
FACTS:
The present controversy stemmed from five individual complaints 3 for illegaldismissal filed on
June 15, 1999 by Federico F. Visca (Visca), Johnny G. Barredo, Ronald Q. Tibus, Richard G. Visca
and Raffie G. Visca (respondents) against Cocomangas Hotel Beach Resort and/or its ownermanager, Susan Munro (petitioners) before Sub-Regional Arbitration Branch No. VI of the National
Labor Relations Commission (NLRC) in Kalibo, Aklan.
Respondents alleged that: they were regular employees of petitioners tasked with the
maintenance and repair of the resort facilities; on May 8, 1999,they were informed not to report
for work since the ongoing constructions and repairs would be temporarily suspended because
they caused irritation and annoyance to the resort's guests; when not less than ten workers were
subsequently hired by petitioners to do repairs in two cottages of the resort and two workers
were retained after the completion without respondents being allowed to resume work, they filed
their individual complaints for illegal dismissal.
In their Position Paper, petitioners denied any employer-employee relationship with respondents
and countered that respondent Visca was an independent contractor who was called upon from
time to time when some repairs in the resort facilities were needed and the other respondents
were selected and hired by him.
The Labor Arbiter (LA) dismissed their complaint, holding that respondent Visca was an
independent contractor and the other respondents were hired by him to help him with his
contracted works at the resort; that there was no illegal dismissal but completion of projects; that
respondents were project workers, not regular employees.
Initially, the NLRC rendered a Decision setting aside the Decision of the LA. The NLRC held that
respondents were regular employees of petitioners since all the factors determinative of
employer-employee relationship were present and the work done by respondents was clearly
related to petitioners' resort business.
But on February 27, 2003, the NLRC made a complete turnabout from its original decision and
issued a Resolution13 dismissing the complaint, holding that respondents were not regular
employees but project employees, hired for a short period of time to do some repair jobs in
petitioners' resort business.
The CA reversed the NLRCs Resolution and reinstated the NLRCs Decision. It held respondents
were regular employees, not project workers, since in the years that petitioners repeatedly hired
respondents' services, the former failed to set, even once, specific periods when the employment
relationship would be terminated; that the repeated hiring of respondents established that the
services rendered by them were necessary and desirable to petitioners' resort business; at the
least, respondents were regular seasonal employees, hired depending on the tourist season and
when the need arose in maintaining petitioners' resort for the benefit of guests.
ISSUE:
Whether respondents are regular or project employees.
Page 5
HELD:
The Court is constrained to resolve the issue of whether respondents are regular or permanent
employees due to the conflicting findings of fact of the LA, the NLRC and the CA, thus,
necessitating a review of the evidence on record.
The petitioners were ambivalent in categorizing respondents. In their Position Paper filed before
the LA, petitioners classified respondent Visca as an independent contractor and the other
respondents as his employees; while in their Motion for Reconsideration 31 before the NLRC,
petitioners treated respondents as project employees.
At any rate, after a careful examination of the records, the Court finds that the CA did not err in
finding that respondents were regular employees, not project employees. A project employee is
one whose "employment has been fixed for a specific project or undertaking, the completion or
termination of which has been determined at the time of the engagement of the employee or
where the work or service to be performed is seasonal in nature and the employment is for the
duration of the season." Before an employee hired on a per-project basis can be dismissed, a
report must be made to the nearest employment office, of the termination of the services of the
workers every time completes a project, pursuant to Policy Instruction No. 20.
In the present case, respondents cannot be classified as project employees, since they worked
continuously for petitioners from three to twelve years without any mention of a "project" to
which they were specifically assigned. While they had designations as "foreman," "carpenter"
and "mason," they performed work other than carpentry or masonry.
More importantly, there is no evidence that petitioners reported the termination of respondents'
supposed project employment to the DOLE as project employees. Department Order No. 19, as
well as the old Policy Instructions No. 20, requires employers to submit a report of an employees
termination to the nearest public employment office every time his employment is terminated
due to a completion of a project. Petitioners' failure to file termination reports is an indication
that the respondents were not project employees but regular employees.
The Court is not persuaded by petitioners' submission that respondents' services are not
necessary or desirable to the usual trade or business of the resort. The repeated and continuing
need for their services is sufficient evidence of the necessity, if not indispensability, of their
services to petitioners' resort business.
WHEREFORE, the petition is DENIED. The assailed Decision dated July 30, 2004 and Resolution
dated February 2, 2005 of the Court of Appeals in CA-G.R. SP No. 78620 are AFFIRMED with
MODIFICATION that the award for backwages should be computed from the time compensation
was withheld up to the time of actual reinstatement.
Page 6
ENTITLEMENT OF MONTHLY PAID WORKERS

89. ELIAS VILLUGA, RENATO ABISTADO, JILL MENDOZA, ANDRES ABAD, BENJAMIN
BRIZUELA, NORLITO LADIA, MARCELO AGUILAN, DAVID ORO, NELIA BRIZUELA, FLORA
ESCOBIDO, JUSTILITA CABANIG, and DOMINGO SAGUIT vs. NATIONAL LABOR RELATIONS
COMMISSION (THIRD DIVISION) and BROAD STREET TAILORING and/or RODOLFO
ZAPANTA, G.R. No. L-75038, August 23, 1993
FACTS: Petitioner Elias Villuga was employed as cutter in the tailoring shop owned by private
respondent Rodolfo Zapanta and known as Broad Street Tailoring located at Shaw Boulevard,
Mandaluyong, Metro Manila. As cutter, he was paid a fixed monthly salary of P840.00 and a
monthly transportation allowance of P40.00. In addition to his work as cutter, Villuga was
assigned the chore of distributing work to the shop's tailors or sewers when both the shop's
manager and assistant manager would be absent. He saw to it that their work conformed with
the pattern he had prepared and if not, he had them redone, repaired or resewn.
The other petitioners were either ironers, repairmen and sewers. They were paid a fixed amount
for every item ironed, repaired or sewn, regardless of the time consumed in accomplishing the
task. Petitioners did not fill up any time record since they did not observe regular or fixed hours
of work. They were allowed to perform their work at home especially when the volume of work,
which depended on the number of job orders, could no longer be coped up with.
From February 17 to 22, 1978, petitioner Villuga failed to report for work allegedly due to illness.
For not properly notifying his employer, he was considered to have abandoned his work.
In a complaint dated March 27, 1978, filed with the Regional Office of the Department of Labor,
Villuga claimed that he was refused admittance when he reported for work after his absence,
allegedly due to his active participation in the union organized by private respondent's tailors. He
further claimed that he was not paid overtime pay, holiday pay, premium pay for work done on
rest days and holidays, service incentive leave pay and 13th month pay.
Petitioners Renato Abistado, Jill Mendoza, Benjamin Brizuela and David Oro also claimed that
they were dismissed from their employment because they joined the Philippine Social Security
Labor Union (PSSLU). Petitioners Andres Abad, Norlito Ladia, Marcelo Aguilan, Nelia Brizuela,
Flora Escobido, Justilita Cabaneg and Domingo Saguit claimed that they stopped working
because private respondents gave them few pieces of work to do after learning of their
membership with PSSLU. All the petitioners laid claims under the different labor standard laws
which private respondent allegedly violated.
On May 28, 1979, Labor Arbiter Ernilo V. Pealosa rendered a decision ordering the dismissal of
the complaint for unfair labor practices, illegal dismissal and other money claims except
petitioner Villuga's claim for 13th month pay for the years 1976, 1977 and 1980.
On appeal, the National Labor Relations Commission affirmed the questioned decision in a
resolution.
ISSUES: 1. Whether or not the NLRC abused its discretion when it ruled that
petitioner/complainant, Elias Villuga falls within the category of a managerial employee;
2. Whether or not petitioner Elias Villuga is entitled to overtime pay and services for Sundays and
Legal Holidays;
Page 7
3. Whether or not the NLRC abused its discretion when it ruled that the herein petitioners were
not dismissed by reason of their union activities;
4. Whether or not the NLRC abused its discretion when it ruled that petitioners Andres Abad,
Benjamin Brizuela, Norlito Ladia, Marcelo Aguilan, David Oro, Nelia Brizuela, Flora Escobido,
Justilita Cabaneg and Domingo Saguit were not employees of private respondents but were
contractors.
5. Whether or not the NLRC abused its discretion when it failed to grant petitioners their
respective claims under the provisions of P.D. Nos. 925, 1123 and 851.
RULING:
1. YES. Under Rule 1, Section 2(c), Book III of the Implementing Rules of Labor Code, to be a
member of a managerial staff, the following elements must concur or co-exist, to wit: (1) that his
primary duty consists of the performance of work directly related to management policies; (2)
that he customarily and regularly exercises discretion and independent judgment in the
performance of his functions; (3) that he regularly and directly assists in the management of the
establishment; and (4) that he does not devote his twenty per cent of his time to work other than
those described above.
Applying the above criteria to petitioner Elias Villuga's case, it is undisputed that his primary
work or duty is to cut or prepare patterns for items to be sewn, not to lay down or implement any
of the management policies, as there is a manager and an assistant manager who perform said
functions. It is true that in the absence of the manager the assistant manager, he distributes and
assigns work to employees but such duty, though involving discretion, is occasional and not
regular or customary. He had also the authority to order the repair or resewing of defective item
but such authority is part and parcel of his function as cutter to see to it that the items cut are
sewn correctly lest the defective nature of the workmanship be attributed to his "poor cutting."
Elias Villuga does not participate in policy-making. Rather, the functions of his position involve
execution of approved and established policies. InFranklin Baker Company of the Philippines
v. Trajano, it was held that employees who do not participate in policy-making but are given
ready policies to execute and standard practices to observe are not managerial employees. The
test of "supervisory or managerial status" depends on whether a person possesses authority that
is not merely routinary or clerical in nature but one that requires use of independent judgment. In
other words, the functions of the position are not managerial in nature if they only execute
approved and established policies leaving little or no discretion at all whether to implement said
policies or not.
2. YES. Consequently, the exclusion of Villuga from the benefits claimed under Article 87
(overtime pay and premium pay for holiday and rest day work), Article 94, (holiday pay), and
Article 95 (service incentive leave pay) of the Labor Code, on the ground that he is a managerial
employee is unwarranted. He is definitely a rank and file employee hired to perform the work of
the cutter and not hired to perform supervisory or managerial functions. The fact that he is
uniformly paid by the month does not exclude him from the benefits of holiday pay as held in the
case ofInsular Bank of America Employees Union v. Inciong. He should therefore be paid in
addition to the 13th month pay, his overtime pay, holiday pay, premium pay for holiday and rest
day, and service incentive leave pay.
Page 8
3. As to the dismissal of the charge for unfair labor practices of private respondent consisting of
termination of employment of petitioners and acts of discrimination against members of the
labor union, the respondent Commission correctly held the absence of evidence that Mr. Zapanta
was aware of petitioners' alleged union membership on February 22, 1978 as the notice of union
existence in the establishment with proposal for recognition and collective bargaining negotiation
was received by management only an March 3, 1978. Indeed, self-serving allegations without
concrete proof that the private respondent knew of their membership in the union and
accordingly reacted against their membership do not suffice.
Nor is private respondent's claim that petitioner Villuga abandoned his work acceptable. For
abandonment to constitute a valid cause for dismissal, there must be a deliberate and unjustified
refusal of the employee to resume his employment. Mere absence is not sufficient, it must be
accompanied by overt acts unerringly pointing to the fact that the employee simply does not
want to work anymore. At any rate, dismissal of an employee due to his prolonged absence
without leave by reason of illness duly established by the presentation of a medical certificate is
not justified. In the case at bar, however, considering that petitioner Villuga absented himself for
four (4) days without leave and without submitting a medical certificate to support his claim of
illness, the imposition of a sanction is justified, but surely, not dismissal, in the light of the fact
that this is petitioner's first offense. In lieu of reinstatement, petitioner Villuga should be paid
separation pay where reinstatement can no longer be effected in view of the long passage of
time or because of the realities of the situation. But petitioner should not be granted backwages
in addition to reinstatement as the same is not just and equitable under the circumstances
considering that he was not entirely free from blame.
4. YES. As to the other eleven petitioners, there is no clear showing that they were dismissed
because the circumstances surrounding their dismissal were not even alleged. However, we
disagree with the finding of respondent Commission that the eleven petitioners are independent
contractors.
For an employer-employee relationship to exist, the following elements are generally considered:
"(1) the selection and engagement of the employee;
(2) the payment of wages; (3) the power of dismissal and (4) the power to control the employee's
conduct."
Noting that the herein petitioners were oftentimes allowed to perform their work at home and
were paid wages on a piece-rate basis, the respondent Commission apparently found the second
and fourth elements lacking and ruled that "there is no employer-employee relationship, for it is
clear that respondents are interested only in the result and not in the means and manner and
how the result is obtained."
Respondent Commission is in error. The mere fact that petitioners were paid on a piece-rate basis
is no argument that herein petitioners were not employees. The term "wage" has been broadly
defined in Article 97 of the Labor Code as remuneration or earnings, capable of being expressed
in terms of money whether fixed or ascertained on a time, task, piece or commission basis. . . ."
The facts of this case indicate that payment by the piece is just a method of compensation and
does not define the essence of the relation. The petitioners were allowed to perform their work
at home does not likewise imply absence of control and supervision. The control test calls merely
for the existence of a right to control the manner of doing the work, not the actual exercise of the
right.
Page 9
In determining whether the relationship is that of employer and employee or one of an

independent contractor, "each case must be determined on its own facts and all the features of
the relationship are to be considered." Considering that petitioners who are either sewers,
repairmen or ironer, have been in the employ of private respondent as early as 1972 or at the
latest in 1976, faithfully rendering services which are desirable or necessary for the business of
private respondent, and observing management's approved standards set for their respective
lines of work as well as the customers' specifications, petitioners should be considered
employees, not independent contractors.
Independent contractors are those who exercise independent employment, contracting to do a
piece of work according to their own methods and without being subjected to control of their
employer except as to the result of their work. By the nature of the different phases of work in a
tailoring shop where the customers' specifications must be followed to the letter, it is
inconceivable that the workers therein would not be subjected to control.
5. In Rosario Brothers, Inc. v. Ople, this Court ruled that tailors and similar workers hired in the
tailoring department, although paid weekly wages on piece work basis, are employees not
independent contractors. Accordingly, as regular employees, paid on a piece-rate basis,
petitioners are not entitled to overtime pay, holiday pay, premium pay for holiday/rest day and
service incentive leave pay. Their claim for separation pay should also be defined for lack of
evidence that they were in fact dismissed by private respondent. They should be paid, however,
their 13th month pay under P.D. 851, since they are employees not independent contractors.
The case is hereby REMANDED to the National Labor Relations Commission for the computation
of the claims herein-above mentioned.
Page 10
Abanilla vs COA
From 1983 to 1986, the MCWD Board of Directors issued several resolutions giving the
mentioned benefits and privileges to its personnel including monetization of leave credits,
hospitalization privileges, Christmas bonuses and longevity allowance. In 1989, the MCWD and
MCWD Employees Union executed a CBA providing for the continuous grant of these benefits. On
January 1, 1992, the parties renewed their CBA. On November 13, 1995, an audit team headed
by Bernardita Jabines of the COA-7, one of the respondents, audited the accounts and
transactions of MCWD. As a result, the Regional Director of COA 7, also a respondent, sent MCWD
several notices disallowing the amount of P12,221,120.86 representing hospitalization benefits,
mid-year bonus, 13th month pay, Christmas bonus and longevity pay. MCWD general manager
Dulce Abanilla interposed an appeal to respondent COA at Quezon City citing a COA
Memorandum Circular No. 002-94 providing that "all benefits provided under the duly existing
CBAs entered into prior to March 12, 1992, the date of official entry of judgment of the Supreme
Court ruling in Davao City Water District, et al. vs. CSC and COA, shall continue up to the
respective expiry dates of the benefits or CBA whichever comes earlier." Then, on December 3,
1998, COA denied the petitioner's appeal saying as far as the CBA is concerned the critical
moment is the date of the promulgation itself. Any transaction concluded after this date in
violation of existing laws and regulations applicable to government entities is void and of no
effect, conferring no demandable right, and creating no enforceable obligation. Abanilla then
moved for the reconsideration of the case but was denied by COA in a Resolution dated February
15, 2000, prompting her to file her petition before the SC. She contended that COA acted with
grave abuse of discretion in disallowing the above benefits and privileges and contravened the
Labor Code provision on non-diminution of benefits. But the Solicitor General said in his comment
that "COA did not gravely abuse its discretion in denying petitioner's appeal considering that the
terms and conditions of employment, such as the entitlement of government personnel, like the
affected MCWD employees, to privileges and benefits are governed by the Civil Service Law, the
General Appropriations Act and applicable issuances of the Department of Budget and
Management, not by the Labor Code.
SC ruled that for those who had already received their benefits, they need not refund the
received benefits and privileges as "they acted in good faith under the honest belief that the CBA
authorized such payment.
Page 11
UE DEAN Eleanor Javier vs Pepiano

The petitioners, UE professors Analiza Pepanio and Mariti Bueno, who were hired in 2000 and
1997, respectively, filed a labor case against then UE dean Eleanor Javier, contesting the schools
policy that obligated them to acquire masters degrees as a condition for tenureship.
Pepanio and Bueno said the 1994-1999 collective bargaining agreement (CBA) between UE
management and its faculty provided that the school shall extend semester-to-semester
appointments to college faculty staff like themselves who did not possess the minimum
qualifications such as a masters degree.
In 2001, the new CBA extended probationary full-time appointments to full-time faculty members
who did not yet have the required postgraduate degrees provided that the latter complied with
the requirement within their probationary period.
In 2003, Javier reminded Pepanio and Bueno of the expiration of their probationary status. The
two, however, demanded that they be placed on regular status given the years of service they
had rendered.
The labor arbiter, in 2004, ruled in favor of the professors and ordered their reinstatement. UE,
however, appealed to the National Labor Relations Commission, which reversed the arbiters
decision in 2006.
The professors ran to the Court of Appeals and in 2010 secured a reversal of the NLRC decision.
The UE management then elevated the case to the Supreme Court.
The Supreme Court upheld the policy of CHED and stated that 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 well from ill-prepared
teachers lacking in the required scientific or technical knowledge. They may be required to take
an examination or to possess postgraduate degrees as a prerequisite to employment.
Page 12
Echeverria vs Venutek Medica

Teofilo Cesar N. Echeverria (petitioner) was an employee of Venutek Medika, Inc. (respondent), a
corporation engaged in the business of trade and distribution of hospital supplies and equipment
and an affiliate of the Dispophil Group of Companies (Dispophil Group). At the time of his
termination from employment which is the subject of the present petition, he held the position of
assistant marketing manager with a salary of P23,150 a month.
As a matter of policy, the marketing personnel of the various companies in the Dispophil Group
hold a joint marketing cut-off monthly meeting to review the sales and marketing performance of
the companies and discuss ways and means to improve them. Sheila Vinuya (Sheila), an
assistant regional sales manager, is in charge of conducting the monthly meetings.
Prior to the meeting scheduled on May 2, 2002, petitioner approached Sheila and asked her if he
could join the meeting so he could give a short discussion of his vision of corporate "oneness"
which he believed would help the Dispophil Group generate sales. And he also asked Sheila if he
could invite other division heads. Finding the request reasonable, Sheila agreed to let petitioner
speak after the meeting.
Petitioner thereupon requested Lemford Suarez (Suarez), a product assistant, to invite all product
assistants to attend the May 2, 2002 meeting, informing him that plans and programs to improve
collection and product segmentation would be discussed.1avvphi1.net
During the meeting, Sheila, noting the presence of other product assistants and the absence of
division heads, went to petitioners office to inform him thereof. Petitioner readily admitted that
he no longer invited the division heads.
Out of courtesy to petitioner who gave the impression that his discussion of his vision on
corporate "oneness" was sanctioned by the president and chairman of the Dispophil Group,
Sheila allowed him to speak at the beginning of the meeting.
Petitioner was well-prepared for his discussion, bringing with him slides and other
paraphernalia.In the course of his discussion, it became apparent that his "vision and mission"
differed from that of respondent. Moreover, he made disparaging remarks about one of the
senior officers of respondent, Assistant Vice President Marlene Orozco (Marlene), criticizing her
character, competency and performance, prompting one of the marketing managers to question
his authority to "preside" over the meeting.
After the meeting, he was given an order to submit an explanation in writing why he must not be
subjected to a disciplinary action. Petioner failed to defend his actions and he was terminated by
the respondent for his misconduct during the said meeting.
The SC decided against petitioner held that Misconduct has been defined as an improper or
wrong conduct, and to be categorized as serious, it must be of such grave and aggravated
character and not merely trivial and unimportant.
Page 13
ALIVIADO vs. PROCTER & GAMBLE PHILIPPINES INC.

FACTS:
Petitioners worked as merchandisers of P&G from various dates. They all individually signed
employment contracts with either Promm-Gem or SAPS for periods of more or less five months at a
time. They were assigned at different outlets, supermarkets and stores where they handled all the
products of P&G. They received their wages from Promm-Gem or SAPS.
P&G is principally engaged in the manufacture and production of different consumer and health
products, which it sells on a wholesale basis to various supermarkets and distributors. To enhance
consumer awareness and acceptance of the products, P&G entered into contracts with Promm-Gem and
SAPS for the promotion and merchandising of its products.
Petitioners filed a complaint against P&G for regularization, service incentive leave pay and other
benefits with damages. The complaint was later amended to include charges of illegal dismissal
The Labor Arbiter dismissed the complaint for lack of merit and ruled that there was no employeremployee relationship between petitioners and P&G. He found that the selection and engagement of the
petitioners, the payment of their wages, the power of dismissal and control with respect to the means
and methods by which their work was accomplished, were all done and exercised by PrommGem/SAPS. He further found that Promm-Gem and SAPS were legitimate independent job contractors.
On Appeal, NLRC affirmed the decision of the Labor Arbiter. Motion for reconsideration motion was
denied.
CA: affirmed the NLRCs decision with modification. Respondent Procter & Gamble Phils., Inc. is ordered
to pay service incentive leave pay to petitioners. Motion for reconsideration was also denied.
ISSUE:
Whether or not contracting out of a companys core activities is allowed under the Labor Code
and its Implementing Rules.
RULING: YES.
The law and its implementing rules allow contracting arrangements for the performance of
specific jobs, works or services. Indeed, it is management prerogative to farm out any of its activities,
regardless of whether such activity is peripheral or core in nature. However, in order for such
outsourcing to be valid, it must be made to an independent contractor because the current labor rules
expressly prohibit labor-only contracting.
To emphasize, there is labor-only contracting when the contractor or sub-contractor merely
recruits, supplies or places workers to perform a job, work or service for a principal and any of the
following elements are present:
i) The contractor or subcontractor does not have substantial capital or investment
which relates to the job, work or service to be performed and the employees recruited,
supplied or placed by such contractor or subcontractor are performing activities which are
directly related to the main business of the principal; or
ii) The contractor does not exercise the right to control over the performance of the
work of the contractual employee. (Underscoring supplied)
In the instant case, the financial statements of Promm-Gem show that it
has authorized capital stock of P1 million and a paid-in capital, or capital available for operations,
of P500,000.00 as of 1990. It also has long term assets worth P432,895.28 and current assets
of P719,042.32. Promm-Gem has also proven that it maintained its own warehouse and office space
with a floor area of 870 square meters. It also had under its name three registered vehicles which were
Page 14
used for its promotional/merchandising business. Promm-Gem also has other clients aside from P&G.
Under the circumstances, we find that Promm-Gem has substantial investment which relates to the work
to be performed. These factors negate the existence of the element specified in Section 5(i) of DOLE
Department Order No. 18-02.
The records also show that Promm-Gem supplied its complainant-workers with the relevant
materials, such as markers, tapes, liners and cutters, necessary for them to perform their work. PrommGem also issued uniforms to them. It is also relevant to mention that Promm-Gem already considered
the complainants working under it as its regular, not merely contractual or project, employees. This
circumstance negates the existence of element (ii) as stated in Section 5 of DOLE Department Order No.
18-02, which speaks of contractual employees. This, furthermore, negates on the part of Promm-Gem
bad faith and intent to circumvent labor laws which factors have often been tipping points that lead the
Court to strike down the employment practice or agreement concerned as contrary to public policy,
morals, good customs or public order.
Under the circumstances, Promm-Gem cannot be considered as a labor-only contractor. We find
that it is a legitimate independent contractor.
On the other hand, the Articles of Incorporation of SAPS shows that it has a paid-in capital of
only P31,250.00. There is no other evidence presented to show how much its working capital and assets
are. Furthermore, there is no showing of substantial investment in tools, equipment or other assets.
Considering that SAPS has no substantial capital or investment and the workers it recruited are
performing activities which are directly related to the principal business of P&G, we find that the former
is engaged in labor-only contracting.
Page 15
GEORGE ANDERSON, petitioner, vs. THE LABOR RELATIONS COMMISSION, PACIFIC

BUSINESS VENTURES INC. and KAMAL AL BITAR, respondents.
FACTS:
Petitioner was recruited by respondent Pacific Business Ventures, Inc. to work as foreman of the
Fiberglass Division of the Bitar Metal Fabrication Factory in Damman, Kingdom of Saudi Arabia.
The period of employment was two (2) years. After nine (9) months on the job, petitioner was
told by the proprietor and general manager, respondent Kamal Al Bitar, that his services were
being terminated. Four days after his lay off, petitioner returned to the Philippines.
Petitioner filed with the POEA a complaint for illegal dismissal, recovery of salary differential,
vacation leave pay, refund of transportation expenses and recruitment violations.
Private respondents denied petitioners allegations. They alleged that petitioner had been
dismissed for loss of confidence. In a supplemental position paper filed by them, private
respondents claimed that petitioner lacked the leadership and motivation required of the head of
the fiberglass division.
After due hearing, the POEA found petitioner to have been illegally dismissed and, for this
reason, ordered private respondents to pay the balance of petitioners salary for two years and
salary differential.
On Appeal, the NLRC set aside the decision of the POEA and dismissed petitioners complaint.
Petitioner moved for a reconsideration, but his motion was denied.
ISSUE: Whether or not petitioner was illegally dismissed.
RULING: YES.
There is no dispute that loss of confidence constitutes a just cause for terminating an
employer-employee relationship. Proof beyond reasonable doubt is not even required to
terminate employment on this ground. But the loss of confidence cited in this case to justify the
dismissal of petitioner is not based on any act of dishonesty or disloyalty on the part of petitioner
but on alleged lack of leadership, and technical know-how and on the allegation that worse, he
exhibited a negative attitude toward his work.
Kamal Al Bitars affidavit cites no specific acts or omissions constituting unsatisfactory
performance by petitioner of his work. What qualities of leadership and technical knowledge
petitioner was required to possess as supervisor of a fiberglass company has not been specified.
On the contrary, what is established is that before petitioner was hired, Kamal Al Bitar required
him to demonstrate his knowledge and skill and it was only after he had done so was he hired for
the job of supervisor of the fiberglass division. In fact petitioner had already been on the job for
nine months when Kamal Al Bitar terminated petitioners employment. On the other hand, what
negative attitude petitioner had shown toward his work is anybodys guess. There are no specific
instances cited to show petitioners negative attitude toward his work.
Page 16
Indeed, Kamal Al Bitars affidavit contained nothing but general, vague and amorphous
allegations of petitioners unfitness for the job. The NLRC, while citing the affidavit, did not
specify why in its opinion petitioners dismissal was justified. Instead it stressed petitioners
failure to answer the affidavit. The NLRC did not consider the affidavit by evaluating its merit.
It is true that in the cases cited by private respondents this Court upheld the power of the
NLRC to admit on appeal additional evidence to show just cause for dismissal. In those cases,
however, the delay in the submission of the additional evidence was explained. What is more,
the additional evidence clearly proved the employers allegation of just cause for dismissing the
employee.
But in the case at bar, not only was the delay in the submission of Kamal Al Bitars affidavit
not explained but the affidavit belatedly submitted does not show that petitioners dismissal was
indeed for a just cause. To repeat, the only reason the NLRC had for reversing the decision of the
POEA is the fact that petitioner failed to answer the affidavit. But there was a reason for
petitioners failure to do so. It was because a copy of the affidavit was served on him instead of
his counsel. Unaided by counsel, he was unable to refute the allegations in the affidavit. The
service of the affidavit was contrary to the Rules of Procedure of the NLRC which require that if a
party is represented by counsel or an authorized representative, service must be made on his
counsel or representative.
Petitioner complains that he was dismissed without being informed of: the cause of his
dismissal and without being given prior notice as required by the Contract of Employment.
On the other hand, private respondents reply that while no prior notice was given to
petitioner the latter was given separation pay equivalent to one months pay which he accepted.
Private respondents contention is well taken. The employment contract clearly states that in
lieu of prior notice the employee may be given termination pay equal to thirty days pay for every
year of service. This is in addition to the payment to him of his salary for the unexpired portion of
his contract.
The rule is that an employee cannot be dismissed except for cause as provided by
law (i.e., Labor Code, Arts. 282-283) and only after due notice and hearing. If an employee is
dismissed without cause, he has a right to be reinstated without loss of seniority rights and other
privileges and to be paid full backwages, inclusive of allowances and other benefits. If he is
dismissed without notice and hearing, although for a just cause, he will be entitled to the
payment of indemnity.
If the contract is for a fixed term and the employee is dismissed without just cause, he is
entitled to the payment of his salaries corresponding to the unexpired portion of his contract. In
this case, as petitioners contract was for two years and his dismissal was not for a just cause, he
is entitled to be paid his salary for 15 months corresponding the balance of the contract. The
grant to him of a termination pay under his employment contract may be considered indemnity
for his dismissal without prior notice and hearing.
Page 17
BPI VS. BPI Employees Union-Metro Manila

FACTS: BPI-Employees Union Metro Manila, the sole and exclusive bargaining representative of
all regular rank-and-file employees of the petitioner have an existing CBA which provides for loan
benefits and relatively low interests rates.
Thereafter, the petitioner issued a No Negative data Bank Policy for the
implementation/availment of the loan which the respondent objected to, thus, resulting into labor
management dialogues. The issue, not having been resolved, the parties raised it to Voluntary
Arbitration. The Voluntary Arbitration found merit on respondents cause. CA, also affirmed the
decision of VA.
ISSUE: WON the No Negative Data Bank Policy is valid and does not violate the CBA.
HELD: NO. The Collective Bargaining Agreements refers to the negotiated contract between a
legitimate labor organization and the employer concerning wages, hours of work and all other
terms and conditions of employment in a bargaining unit, including mandatory provisions for
grievances and arbitration machineries. As in all other contracts, there must be clear indications
that the parties reached meeting of the minds. Therefore, the terms and conditions of a CBA
constitute the law between the parties.
The CBA in this case does not contain a provision on No Negative Data Bank Policy as a
prerequisite in the entitlement of the benefits it set forth on the employees. Although it can be
ruled that the petitioner can is authorize to issue rules and regulations pertinent to the availment
and administration of the loans under the CBA, the additional rules and regulations must not
impose new conditions which are not contemplated in the CBA and should be within the realm of
reasonableness.
Art. 1702 of the Ne Civil Code stated that; In case of doubt, all labor legislation and all
labor contracts shall be construed in favor of the safety and decent living of the laborer.
Page 18
CIELO vs. NATIONAL LABOR RELATIONS COMMISSION

G.R. No. 78693
January 28, 1991
CRUZ, J.:
FACTS: Petitioner is a truck driver who claims he was illegally dismissed by the private
respondent, the Henry Lei Trucking Company. An agreement was entered into by the parties. The
agreement specifically declared that there was no employer-employee relationship between the
parties. The agreement commenced on June 30, 1984, and to end on December 31, 1984. On
December 22, 1984, however, the petitioner was formally notified by the private respondent of
the termination of his services on the ground of expiration of their contract.
Petitioner claimed he started working for the private respondent on June 16, 1984, and having
done so for more than six months had acquired the status of a regular employee. As such, he
could no longer be dismissed except for lawful cause. He also contended that he had been
removed because of his refusal to sign, as required by the private respondent, an affidavit that
he received his salary and allowances and have no more claim against the company.
The private respondent maintains that the labor laws are not applicable because the relations of
the parties are governed by their voluntary stipulations. The contract having expired, it was the
prerogative of the trucking company to renew it or not as it saw fit. According to its position
paper, the petitioner's refusal to sign the affidavit constituted disrespect or insubordination,
which had "some bearing on the renewal of his contract of employment with the respondent."
HELD: Petitioner was a regular employee.
Under the arrangement, the private respondent hoped to be able to terminate the service of the
driver without the inhibitions of the Labor Code. All it had to do was refuse to renew the
agreements, which, significantly, were uniformly limited to a six-month period. No cause had to
be established because such renewal was subject to the discretion of the parties. In fact, the
private respondent did not even have to wait for the expiration of the contract as it was there
provided that it could be "earlier terminated at the option of either party."
By this clever scheme, the private respondent could also prevent the drivers from becoming
regular employees and thus be entitled to security of tenure and other benefits.
In Brent School, Inc. vs. Zamora, the Court affirmed the general principle that "where from the
circumstances it is apparent that periods have been imposed to preclude acquisition of tenurial
security by the employee, they should be struck down or disregarded as contrary to public policy,
morals, etc." Such circumstances have been sufficiently established in the case at bar and justify
application of the following conclusions:
Accordingly, and since the entire purpose behind the development of legislation culminating in
the present Article 280 of the Labor Code clearly appears to have been, as already observed, to
prevent circumvention of the employee's right to be secure in his tenure, the clause in said
article indiscriminately and completely ruling out all written or oral agreements conflicting with
the concept of regular employment as defined therein should be construed to refer to the
substantive evil that the Code itself has singled out: agreements entered into precisely to
circumvent security of tenure.
The agreement in question had such a purpose and so was null and void ab initio.
Page 19
COCA-COLA BOTTLERS PHILIPPINES, INC., VS. DELA CRUZ

Facts:
Respondents Ricky E. Dela Cruz, Rolando M. Guasis, Manny C. Pugal, Ronnie L. Hermo, Rolando C.
Somero, Jr., Dibson D. Diocares, and Ian Ichapare (respondents) filed two separate complaints for
regularization with money claims against Coca-Cola Bottlers Philippines, Inc., (petitioner or the
company). The complaints were consolidated and subsequently amended to implead Peerless
Integrated Service, Inc. (Peerless) as a party-respondent.
Before the Labor Arbiter, the respondents alleged that they are route helpers assigned to work in
the petitioner's trucks. They go from the Coca - Cola sales offices or plants to customer outlets
such as sari-sari stores, restaurants, groceries, supermarkets and similar establishments; they
were hired either directly by the petitioner or by its contractors, but they do not enjoy the full
remuneration, benefits and privileges granted to the petitioner's regular sales force. They argued
that the services they render are necessary and desirable in the regular business of the
petitioner.
In defense, the petitioner contended that it entered into contracts of services with Peerless and
Excellent Partners Cooperative, Inc. (Excellent) to provide allied services; under these contracts,
Peerless and Excellent retained the right to select, hire, dismiss, supervise, control and discipline
and pay the salaries of all personnel they assign to the petitioner; in return for these services,
Peerless and Excellent were paid a stipulated fee. The petitioner posited that there is no
employer-employee relationship between the company and the respondents and the complaints
should be dismissed for lack of jurisdiction on the part of the National Labor Relations
Commission (NLRC). Peerless did not file a position paper, although nothing on record indicates
that it was ever notified of the amended complaint.
In reply, the respondents countered that they worked under the control and supervision of the
company's supervisors who prepared their work schedules and assignments. Peerless and
Excellent, too, did not have sufficient capital or investment to provide services to the petitioner.
The respondents thus argued that the petitioner's contracts of services with Peerless and
Excellent are in the nature of "labor-only" contracts prohibited by law.
In rebuttal, the petitioner belied the respondents' submission that their jobs are usually
necessary and desirable in its main business. It claimed that its main business is softdrinks
manufacturing and the respondents' tasks of handling, loading and unloading of the
manufactured softdrinks are not part of the manufacturing process. It stressed that its only
interest in the respondents is in the result of their work, and left to them the means and the
methods of achieving this result. It thus argued that there is no basis for the respondents' claim
that without them, there would be over-production in the company and its operations would
come to a halt. The petitioner lastly argued that in any case, the respondents did not present
evidence in support of their claims of company control and supervision so that these claims
cannot be considered and given weight.
Labor Arbiter Lustria dismissed the complaint and ruled that the respondents were the
employees of either Peerless or Excellent and not of the petitioner. On appeal, the CA found that
Peerless and Excellent were engaged in labor-only contracting, a prohibited undertaking.
Issue:
Page 20
Whether Excellent and Peerless were independent contractors or "labor-only" contractors

Ruling:
The CA concluded that other than the petitioners bare allegation, there is no indication in the
records that Peerless and Excellent had substantial capital, tools or investment used directly in
providing the contracted services to the petitioner. Thus, in the handling and delivery of
company products, the contracted personnel used company trucks and equipment in an
operation where company sales personnel primarily handled sales and distribution, merely
utilizing the contracted personnel as sales route helpers.
In plainer terms, the contracted personnel (acting as sales route helpers) were only engaged in
the marginal work of helping in the sale and distribution of company products; they only
provided the muscle work that sale and distribution required and were thus necessarily under
the companys control and supervision in doing these tasks.
Still another way of putting it is that the contractors were not independently selling and
distributing company products, using their own equipment, means and methods of selling and
distribution; they only supplied the manpower that helped the company in the handing of
products for sale and distribution. In the context of D.O. 18-02, the contracting for sale and
distribution as an independent and self-contained operation is a legitimate contract, but the
pure supply of manpower with the task of assisting in sales and distribution controlled by a
principal falls within prohibited labor-only contracting.
Following the lead we gave in Magsalin, the CA concluded that the contracted personnel who
served as route helpers were really engaged in functions directly related to the overall business
of the petitioner. This led to the further CA conclusion that the contracted personnel were under
the companys supervision and control since sales and distribution were in fact not the purported
contractors independent, discrete and separable activities, but were component parts of sales
and distribution operations that the company controlled in its softdrinks business.
Based on these considerations, we fully agree with the CA that Peerless and Excellent
were mere suppliers of labor who had no sufficient capitalization and equipment to undertake
sales and distribution of softdrinks as independent activities separate from the manufacture of
softdrinks, and who had no control and supervision over the contracted personnel. They are
therefore labor-only contractors. Consequently, the contracted personnel, engaged in
component functions in the main business of the company under the latters supervision and
control, cannot but be regular company employees. In these lights, the petition is totally without
merit and hence must be denied.
Page 21
DATOR VS. UNIVERSITY OF SANTO TOMAS

Facts:
Petitioner Roque D.A. Dator was hired by respondent University of Santo Tomas (UST) in June
1983 as Instructor I of the Institute of Religion with a maximum teaching load of 24
units. On December 15, 1995, petitioner was also hired as Graft Investigation Officer II with the
Office of the Ombudsman but he failed to disclose such other employment to respondents, who
discovered the same only during the first semester of School Year 2000-2001.
Thus, on 2000, petitioner was informed that his teaching load would be reduced to 12
hours per week, pursuant to Section 5, Article III of the UST Faculty Code which states that
faculty members who have a full time outside employment other than teaching may not be given
a teaching load in excess of 12 hours per week.
Petitioner asked for reconsideration of the reduction in his teaching load which was granted. He
was given an additional load of three teaching hours. Petitioner again requested for an additional
load of three units but his request was denied by respondent Rev. Fr. Aligan.
Petitioner filed a Complaint-Affidavit to the Chairperson of the Grievance Committee, Dr. Gil
Gamila, President of the University of Sto. Tomas Faculty Union, but the complaint was
dismissed. Petitioner appealed to respondent Rev. Fr. Tamerlane Lana, Rector of respondent UST
but the appeal was denied.
Petitioner thus filed a complaint for Illegal Reduction of Teaching Load and Illegal Change
of Employment Status, Damages, Unpaid Benefits and Attorneys Fees and illegal constructive
dismissal before the Labor Arbiter.
Petitioner claimed that his arbitrary demotion from full-time to part-time faculty member violated
the provisions of the CBA, as well as his right to security of tenure. Likewise, he argued that the
UST Faculty Code which respondents relied upon to reduce his teaching load has been
superseded by the CBA.
The Labor Arbiter ruled in favor of respondents holding that the situation contemplated in
Section 5, Article III of the Faculty Code, when evaluated together with the provisions of the CBA,
constitutes a ground for teaching load reduction. On appeal, the NLRC ordered the restoration of
petitioners faculty member status to full-time. Respondents motion for reconsideration was
denied. Petitioners partial motion for reconsideration with regard to the award for backwages and
damages was likewise denied. Respondents filed a petition for certiorari before the Court of
Appeals which reversed the NLRC decision and sustained the findings of the Labor Arbiter.
Issue:
1
2
Whether or not the reduction of petitioners teaching load is justified

whether petitioner was denied due process
Ruling:
1
We agree with the Court of Appeals ruling that while the CBA provides grounds for reduction of
teaching load, the question of whether a faculty member is considered full-time or part-time is
addressed by the Faculty Code which provides that where the full-time faculty member is at the
same time working as a full-time employee elsewhere, the faculty member is considered parttime and a 12-hour teaching load limitation is imposed.
There is no dispute that petitioner was holding a full-time position with the Office of the
Ombudsman while working as a faculty member in UST. Accordingly, Section 5, Article III of the
Faculty Code applies.
Page 22
While the NLRC correctly viewed the CBA as the primary instrument that governs
the relationship between UST and its unionized faculty members, it disregarded Article XX
of this CBA which reconciles the CBA with the Faculty Code. Article XX states:
ARTICLE XX
FACULTY CODE
The provisions of the Faculty Code of 1981, as amended, which are
not otherwise incorporated in the CBA and which are not in conflict with
any provisions of the latter shall remain in full force and effect.
In the event of conflict between a faculty code provision and the
CBA, the provision of the latter shall prevail. (Emphasis supplied)
Thus, contrary to the NLRCs conclusion, the UST Faculty Code continues to exist and
to apply to UST faculty members, but must give way if its terms are in conflict with what
the CBA provides. The standard in determining the applicable rule and the one that the
NLRC completely missed is whether a conflict exists between the provisions the parties
cited.
2
Moreover, we find that petitioner was not denied due process. It is settled that due process is
simply an opportunity to be heard. In this case, respondents informed petitioner that his teaching
load would be reduced as he was working full-time with the Office of the Ombudsman. Petitioner
asked for reconsideration twice. His first request was granted and he was given an additional
load of three units for School Year 2000-2001. For School Year 2001-2002, petitioner again
requested an additional load of three units but was denied.
Upon denial of his second request, petitioner availed of the grievance procedure provided in the
CBA. Yet again, after his complaint was dismissed, petitioner appealed directly to respondent Fr.
Lana. As observed by the Court of Appeals, petitioner exhausted the internal mechanism of
seeking redress within USTs administrative machinery. Contrary to petitioners claims, he was
accorded due process.
Page 23
AMA COMPUTER COLLEGE, PARAAQUE VS. AUSTRIA

Facts:
Petitioner AMA Computer College, Paraaque (AMA) is an educational institution duly organized
under the laws of the Philippines. The rest of the petitioners are principal officers of AMA.
Respondent Rolando A. Austria (respondent) was hired by AMA on probationary employment as a
college dean on April 24, 2000. On August 22, 2000, respondents appointment as dean was
confirmed by AMAs Officer-in-Charge (OIC), Academic Affairs, in his Memorandum, which reads:
After a thorough evaluation of the performance of Mr. Rolando Austria as Dean, we
are happy to inform you that he is hereby officially confirmed as Dean of AMA
College Paraaque effective April 17, 2000 to September 17, 2000.
In view of this, he will be entitled to a transportation allowance of One Thousand
Five Hundred Sixty Pesos (P1,560.00).
In the event that Mr. Austria gives up the Dean position or fails to meet the
standards of the (sic) based on the evaluation of his immediate superior, he shall be
considered for a faculty position and the appointee agrees that he shall lose the
transportation allowance he enjoys as Dean and be entitled to his faculty rate.
Sometime in August 2000, respondent was charged with violating AMAs Employees Conduct and
Discipline provided in its Orientation Handbook (Handbook), as follows:
1) leaking of test questions;
2) failure to monitor general requirements vital to the operations of the
company; and
3) gross inefficiency.
Eventually, on September 29, 2000, respondent was informed of his dismissal. Respondent filed
a Complaint for Illegal Dismissal, Illegal Suspension, Non-Payment of Salary and 13 th Month Pay
with prayer for Damages and Attorney's Fees against AMA and the rest of the petitioners.
Labor Arbiter held that respondent substantially refuted the charges of gross inefficiency,
incompetence, and leaking of test questions filed against him. But since respondent can no
longer be reinstated beyond September 17, 2000 as his designation as college dean was only
until such date. On appeal, while the NLRC sustained the Labor Arbiter's finding that petitioners
failed to establish the grounds for respondent's dismissal, it held that the Labor Arbiter erred in
declaring that respondent's appointment was only from April 24 to September 17,
2000.Accordingly, the NLRC declared that respondent was a regular employee and that he was
illegally dismissed.
Petitioners went to the CA via Petition for Certiorari under Rule 65. CA held that based on the
Handbook and on respondent's appointment, it can be inferred that respondent was a regular
employee, and as such, his employment can only be terminated for any of the causes provided
under Article 282 of the Labor Code and after observance of the requirements of due process.
Issue:
Whether the nature of respondents employment is that of regular employment?
Ruling:
We held that Article 280 of the Labor Code does not proscribe or prohibit an employment
contract with a fixed period. Even if the duties of the employee consist of activities necessary or
desirable in the usual business of the employer, the parties are free to agree on a fixed period of
Page 24
time for the performance of such activities. There is nothing essentially contradictory between a
definite period of employment and the nature of the employees duties.
The instant case involves respondent's position as dean, and comes within the purview of
the Brent School doctrine.
First. The letter of appointment was clear. Respondent was confirmed as Dean of AMA
College, Paraaque, effective from April 17, 2000 to September 17, 2000. In numerous cases
decided by this Court, we had taken notice, that by way of practice and tradition, the position of
dean is normally an employment for a fixed term. [36] Although it does not appear on record and
neither was it alleged by any of the parties that respondent, other than holding the position of
dean, concurrently occupied a teaching position, it can be deduced from the last paragraph of
said letter that the respondent shall be considered for a faculty position in the event he gives up
his deanship or fails to meet AMA's standards. Such provision reasonably serves the intention set
forth in Brent School that the deanship may be rotated among the other members of the faculty.
Second. The fact that respondent did not sign the letter of appointment is of no moment.
The fact that respondent voluntarily accepted the employment, assumed the position, and
performed the functions of dean is clear indication that he knowingly and voluntarily consented
to the terms and conditions of the appointment, including the fixed period of his deanship. Other
than the handwritten notes made in the letter of appointment, no evidence was ever presented
to show that respondents consent was vitiated, or that respondent objected to the said
appointment or to any of its conditions. Furthermore, in his status as dean, there can be no valid
inference that he was shackled by any form of moral dominance exercised by AMA and the rest
of the petitioners.
Page 25
ROBERTO T. DOMONDON vs. NLRC, VAN MELLE PHILS., INC. and NIELS H.B. HAVE
FACTS: VMPI, a manufacturing company engaged in the production and distribution of
confectionaries and related products, hired petitioner Roberto Domondon on January 8, 1997 as
Materials Manager through its then President and General Manager Victor M. Endaya. Petitioner
claimed that things worked out well for him in the beginning until Endaya was transferred to
China and was replaced by private respondent Have, a Dutch national. According to petitioner,
private respondent Have immediately set a one-on-one meeting with him and requested his
courtesy resignation. Alleging that the decision came from the Asia Regional Office, private
respondent Have wanted to reorganize and put his people in management. Petitioner refused to
resign and life got difficult for him. His decisions were always questioned by private respondent
Have. He was subjected to verbal abuse. His competence was undermined by baseless and
derogatory memos, which lay the bases for his removal from the company. He also did not
receive his 14th month pay.
Petitioner alleges that private respondent Have informed petitioner that things would get
more difficult for him if he does not resign. Private respondent Have threw a veiled threat at
petitioner to the effect that a dignified resignation would be infinitely better than being fired for a
fabricated lawful cause. Private respondent Have offered financial assistance if petitioner would
leave peacefully but the offer must be accepted immediately or it would be withdrawn. Thus,
petitioner signed a ready-made resignation letter without deliberation and evaluation of the
consequences.
On their part, private respondents maintained that with his educational and professional
background, petitioner could not have been coerced and intimidated into resigning from the
company. Instead, they claimed that he voluntarily resigned to embark on management
consultancy in the field of strategic planning and import/export. They stated that petitioner
informed them about his intention to resign and requested a soft landing financial support in the
amount of three hundred thousand (P300,000.00) pesos on top of accrued benefits due him upon
resignation. Private respondents granted the request. Subsequently, however, petitioner
proposed the transfer of ownership of the car assigned to him in lieu of the financial assistance
from the company. Since company policy prohibits disposition of assets without valuable
consideration, the parties agreed that petitioner shall pay for the car with the P300, 000.00 soft
landing financial assistance from private respondent VMPI.
Private respondents averred that petitioner, who was then in charge of the disposition of
the assets of the company, effected the registration of the car in his name. P300,000.00 was
credited to petitioners payroll account but he did not use it to pay for the car as agreed upon.
Repeated demands for payment were unheeded. Private respondent VMPI gave petitioner an
option to apply the P169,368.32 total cash conversion of his sick and vacation leave credits,
13th and 14th months pay less taxes as partial payment for the car and pay the balance
of P130,631.68, or return the car to the company. Petitioner did not exercise either option.
Instead, he filed a complaint for illegal dismissal against private respondents.
ISSUE: Whether the Labor Arbiter has jurisdiction to hear and decide the question on the
transfer of ownership of the car assigned to petitioner.
RULING: This is not an issue of first impression. The jurisdiction of Labor Arbiters is provided
under Article 217(a) of the Labor Code. In all those instances, the matrix is the existence of
an employer-employee relationship. In the case at bar, there is no dispute that petitioner is an
employee of the respondents. Petitioner claims illegal dismissal and prays for reinstatement,
payment of full backwages inclusive of allowances, 14 th month pay, sick and vacation leaves,
Page 26
share in the profits, moral and exemplary damages and attorneys fees. These causes of action
clearly fall within the jurisdiction of the Labor Arbiter, specifically under paragraphs 2, 3 and 4 of
Article 217(a). On the other hand, private respondents made a counterclaim involving the
transfer of ownership of a company car to petitioner. They maintain that he failed to pay for the
car in accordance with their agreement. The issue is whether this claim of private respondents
arose from the employer-employee relationship of the parties pursuant to paragraph 6 of Article
217(a) under the general clause as quoted above.
The records show that the initial agreement of the parties was that petitioner would be
extended a soft-landing financial assistance in the amount of P300,000.00 on top of his accrued
benefits at the time of the effectivity of his resignation. However, petitioner later changed his
mind. He requested that he be allowed to keep the car assigned to him in lieu of the financial
assistance. However, company policy prohibits transfer of ownership of property without valuable
consideration. Thus, the parties agreed that petitioner shall still be extended the P300,000.00
financial support, which he shall use to pay for the subject car. On July 30, 1998, private
respondent VMPI deposited the agreed amount in petitioners account. Despite having registered
the car in his name and repeated demands from private respondents, petitioner failed to pay for
it as agreed upon. Petitioner did not also return the car. Without doubt, the transfer of the
ownership of the company car to petitioner is connected with his resignation and arose out of the
parties employer-employee relations. Accordingly, private respondents claim for damages falls
within the jurisdiction of the Labor Arbiter.
Page 27
DUNCAN ASSOCIATION OF DETAILMAN-PTGWO and PEDRO A. TECSON, petitioners,

vs.
GLAXO WELLCOME PHILIPPINES, INC., Respondent.
FACTS:
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc.
(Glaxo) as medical representative.
Thereafter, Tecson signed a contract of employment which stipulates, among others, that he
agrees to study and abide by existing company rules; to disclose to management any existing or
future relationship by consanguinity or affinity with co-employees or employees of competing
drug companies and should management find that such relationship poses a possible conflict of
interest, to resign from the company. Company's Code of Employee Conduct provides the same
with stipulation that management may transfer the employee to another department in a noncounterchecking position or preparation for employment outside of the company after 6 months.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte
sales area.Subsequently, Tecson entered into a romantic relationship with Bettsy, an employee of
Astra Pharmaceuticals (Astra), a competitor of Glaxo. Bettsy was Astras Branch Coordinator in
Albay. She supervised the district managers and medical representatives of her company and
prepared marketing strategies for Astra in that area. Before getting married, Tecson's District
Manager reminded him several times of the conflict of interest but marriage took place in Sept.
1998. In Jan. 1999, Tecson's superiors informed him of conflict of intrest. Tecson asked for time to
comply with the condition (that either he or Betsy resign from their respective positions). Unable
to comply with condition, Glaxo transferred Tecson to the Butuan-Surigao City-Agusan del Sur
sales area. After his request against transfer was denied, Tecson brought the matter to Glaxo's
Grievance Committee and while pending, he continued to act as medical representative in the
Camarines Sur-Camarines Norte sales area. On Nov. 15, 2000, the National Conciliation and
Mediation Board ruled that Glaxo's policy was valid.
Aggrieved, Tecson filed a Petition for Review with the Court of Appeals assailing the
NCMB Decision. The Court of Appeals denied the Petition for Review. Motion for reconsideration
was also denied.
ISSUE: Whether or not the policy of a pharmaceutical company prohibiting its employees from
marrying employees of any competitor company is valid.
RULING: YES.
Glaxo has a right to guard its trade secrets, manufacturing formulas, marketing strategies and
other confidential programs and information from competitors, especially so that it and Astra are
rival companies in the highly competitive pharmaceutical industry.
The prohibition against personal or marital relationships with employees of competitor
companies upon Glaxos employees is reasonable under the circumstances because relationships
of that nature might compromise the interests of the company. In laying down the assailed
company policy, Glaxo only aims to protect its interests against the possibility that a competitor
company will gain access to its secrets and procedures.
Page 28
That Glaxo possesses the right to protect its economic interests cannot be denied. No less than
the Constitution recognizes the right of enterprises to adopt and enforce such a policy to protect
its right to reasonable returns on investments and to expansion and growth. Indeed, while our
laws endeavor to give life to the constitutional policy on social justice and the protection of labor,
it does not mean that every labor dispute will be decided in favor of the workers. The law also
recognizes that management has rights which are also entitled to respect and enforcement in
the interest of fair play.
The challenged company policy does not violate the equal protection clause of the Constitution
as petitioners erroneously suggest. It is a settled principle that the commands of the equal
protection clause are addressed only to the state or those acting under color of its
authority. Corollarily, it has been held in a long array of U.S. Supreme Court decisions that the
equal protection clause erects no shield against merely private conduct, however, discriminatory
or wrongful. The only exception occurs when the state in any of its manifestations or actions has
been found to have become entwined or involved in the wrongful private conduct. Obviously,
however, the exception is not present in this case. Significantly, the company actually enforced
the policy after repeated requests to the employee to comply with the policy. Indeed, the
application of the policy was made in an impartial and even-handed manner, with due regard for
the lot of the employee.
In any event, from the wordings of the contractual provision and the policy in its employee
handbook, it is clear that Glaxo does not impose an absolute prohibition against relationships
between its employees and those of competitor companies. Its employees are free to cultivate
relationships with and marry persons of their own choosing. What the company merely seeks to
avoid is a conflict of interest between the employee and the company that may arise out of such
relationships.
The Court of Appeals also correctly noted that the assailed company policy which forms part of
respondents Employee Code of Conduct and of its contracts with its employees, such as that
signed by Tescon, was made known to him prior to his employment. Tecson, therefore, was aware
of that restriction when he signed his employment contract and when he entered into a
relationship with Bettsy. Since Tecson knowingly and voluntarily entered into a contract of
employment with Glaxo, the stipulations therein have the force of law between them and, thus,
should be complied with in good faith." He is therefore estopped from questioning said policy.
Page 29
G.R. No. 170054 : January 21, 2013

GOYA, INC., Petitioner, v. GOYA, INC. EMPLOYEES UNION-FFW, Respondent.
Facts:
Goya, Inc. hired contractual employees from PESO Resources Development Corporation (PESO) to
perform temporary and occasional services in its factory. This prompted Goya, Inc. Employees
Union-FFW (Union) to request for a grievance conference on the ground that the contractual
workers do not belong to the categories of employees stipulated in the existing CBA. When the
matter remained unresolved, the grievance was referred to the National Conciliation and
Mediation Board (NCMB) for voluntary arbitration.
The Union asserted that the hiring of contractual employees from PESO is not a management
prerogative and in gross violation of the CBA tantamount to ULP. It noted that the contractual
workers engaged have been assigned to work in positions previously handled by regular workers
and Union members, in effect violating Section 4, Article I of the CBA, which provides for three
categories of employees in the Company. The categories of employees under the said provision
of the CBA are: (a) Probationary Employee; (b) Regular Employee; and (c) Casual Employee. With
the hiring of contractual employees, the Union contended that it would no longer have
probationary and casual employees from which it could obtain additional Union members.
In countering the Unions allegations, the Company argued, among others, that Section 4, Article I
of the CBA merely provides for the definition of the categories of employees and does not put a
limitation on the Companys right to engage the services of job contractors or its management
prerogative to address temporary/occasional needs in its operation.
VA Laguesma dismissed the Unions charge of ULP for being purely speculative and for lacking in
factual basis, but the Company was directed to observe and comply with its commitment under
the CBA. While the Union moved for partial reconsideration of the VA Decision, the Company
immediately filed a petition for review before the CA to set aside the directive to observe and
comply with the CBA commitment pertaining to the hiring of casual employees when
necessitated by business circumstances. The CA dismissed the petition.
Issue: WON Goya contract out from PESO in the exercise of its management prerogative despite
the agreement in the CBA.
Ruling:
The CA did not commit serious error when it sustained the ruling that the hiring of contractual
employees from PESO was not in keeping with the intent and spirit of the CBA. The Company
kept on harping that both the VA and the CA conceded that its engagement of contractual
workers from PESO was a valid exercise of management prerogative. It is confused. To
emphasize, declaring that a particular act falls within the concept of management prerogative is
significantly different from acknowledging that such act is a valid exercise thereof. What the VA
and the CA correctly ruled was that the Companys act of contracting out/outsourcing is within
the purview of management prerogative. Both did not say, however, that such act is a valid
exercise thereof. Obviously, this is due to the recognition that the CBA provisions agreed upon by
the Company and the Union delimit the free exercise of management prerogative pertaining to
the hiring of contractual employees. Indeed, the VA opined that "the right of the management to
outsource parts of its operations is not totally eliminated but is merely limited by the CBA," while
the CA held that "this management prerogative of contracting out services, however, is not
without limitation. x x x These categories of employees particularly with respect to casual
Page 30
employees serve as limitation to the Companys prerogative to outsource parts of its operations
especially when hiring contractual employees."
Page 31
Moreno vs San Sebastian College

Facts:
SSC-R employed Moreno as a teaching fellow. In 2000, Moreno was appointed as a full-time
college faculty member. Later on, she became a permanent faculty member. She was also
offered the chairmanship of the Business Finance and Accountancy Department of her college.
However, it was later on discovered that Moreno had unauthorized teaching assignments at the
CEU during the 1st sem of SY 2002-2003 and at the College of the Holy Spirit, Manila during SY
2000-2001 and SY 2001-2002 as well as during the 1st sem of SY 2002-2003. Said activities were
violative of SSC-Rs Faculty Manual and were punishable by suspension or dismissal.
Moreno received a memorandum from the Dean. In reply, she admitted her failure to secure any
written permission before she taught in other schools. Moreno further stated that it was never
her intention to jeopardize her work in SSC-R and that she merely wanted to improve her familys
poor financial conditions. A Special Grievance Committee was then formed which unanimously
found that Moreno violated the prohibition against a full-time faculty having an unauthorized
external
teaching
load.
The
majority
of
the
grievance
committee
members
recommended Morenos dismissal from employment in accordance with the school manual, but
Dean Espejo dissented and called only for a suspension for one semester. SSC-R adopted the
findings and recommendations of the grievance committee and so, her employment was
terminated.
Moreno thus instituted with the NLRC a complaint for illegal termination. LA dismissed Morenos
complaint. NLRC reversed the rulings of the LA. However, the CA annulled the decision of the
NLRC and reinstated the decision of the LA.
Issue: WON Morenos termination is proper by strictly applying the provision of the Faculty
Manual.
Ruling:
Even if dismissal for cause is the prescribed penalty for the misconduct herein committed, in
accordance with the SSC-R Faculty Manual and Morenos employment contract, the Court finds
the same to be disproportionate to the offense. Time and again, we have ruled that while an
employer enjoys a wide latitude of discretion in the promulgation of policies, rules and
regulations on work-related activities of the employees, those directives, however, must always
be fair and reasonable, and the corresponding penalties, when prescribed, must be
commensurate to the offense involved and to the degree of the infraction.
Special circumstances were present in the case at bar which should have been properly taken
into account in the imposition of the appropriate penalty. Moreno, in this case, had readily
admitted her misconduct, which was undisputedly the first she has ever committed against the
school. Her teaching abilities and administrative skills remained apparently unaffected by her
external teaching engagements, as she was found by the grievance committee to be one of the
better professors in the Accounting Department and she was even offered the Chairmanship of
her college. Also, the fact that Moreno merely wanted to alleviate her familys poor financial
conditions is a justification that SSC-R failed to refute. SSC-R likewise failed to prove any
resulting material damage or prejudice on its part as a consequence of Morenos misconduct. The
claim by SSC-R that the imposition of a lesser penalty would set a bad precedent for the other
faculty members who comply with the school policies is too speculative for this Court to even
consider. Finally, the Court notes that in Morenos contract of employment, one of the provisions
therein categorically stated that should a violation of any of the terms and conditions thereof be
Page 32
committed, the penalty that will be imposed would either be suspension or dismissal from
employment. Thus, contrary to its position from the beginning, SSC-R clearly had the discretion
to impose a lighter penalty of suspension and was not at all compelled to dismiss Moreno under
the circumstances, just because the Faculty Manual said so.
Page 33
Viernes vs NLRC
Facts:
Complainants services as meter readers were contracted for hardly a months duration, or from
October 8 to 31, 1990. The said term notwithstanding, the complainants were allowed to work
beyond October 31, 1990, or until January 2, 1991. On January 3, 1991, they were each served
their identical notices of termination dated December 29, 1990. On the same date, the
complainants filed separate complaints for illegal dismissal. They contended that they were not
apprentices but regular employees whose services were illegally and unjustly terminated in a
manner that was whimsical and capricious. On the other hand, Benguet Electric Cooperative
(BENECO) invokes Article 283 of the Labor Code in defense of the questioned dismissal.
LA dismissed the complaint but directed BENECO to extend said contract to each complainant,
with the exception of Viernes(he was extended an appointment as regular employee). NLRC
modified its judgment by declaring complainants dismissal illegal, thus ordering their
reinstatement to their former position as meter readers or to any equivalent position with
payment of backwages limited to one year.
Issue: WON petitioners should be reinstated to their former position as meter readers on
probationary status in spite of its finding that they are regular employees under Article 280 of
the Labor Code.
Ruling:
Reinstatement means restoration to a state or condition from which one had been removed or
separated. In case of probationary employment, Article 281 of the Labor Code requires the
employer to make known to his employee at the time of the latters engagement of the
reasonable standards under which he may qualify as a regular employee. A review of the records
shows that petitioners have never been probationary employees. There is nothing in the letter of
appointment, to indicate that their employment as meter readers was on a probationary basis. It
was not shown that petitioners were informed by the private respondent, at the time of the
latters employment, of the reasonable standards under which they could qualify as regular
employees. Instead, petitioners were initially engaged to perform their job for a limited duration,
their employment being fixed for a definite period, from October 8 to 31, 1990. The principle we
have enunciated in Brent applies only with respect to fixed term employments. While it is true
that petitioners were initially employed on a fixed term basis as their employment contracts were
only for October 8 to 31, 1990, after October 31, 1990, they were allowed to continue working in
the same capacity as meter readers without the benefit of a new contract or agreement or
without the term of their employment being fixed anew. After October 31, 1990, the employment
of petitioners is no longer on a fixed term basis. The complexion of the employment relationship
of petitioners and private respondent is thereby totally changed. Petitioners have attained the
status of regular employees.
Under Article 280 of the Labor Code, a regular employee is one who is engaged to perform
activities which are necessary or desirable in the usual business or trade of the employer, or a
casual employee who has rendered at least one year of service, whether continuous or broken,
with respect to the activity in which he is employed. They were engaged to perform activities
that are necessary to the usual business of private respondent. We agree with the labor arbiters
pronouncement that the job of a meter reader is necessary to the business of private respondent
because unless a meter reader records the electric consumption of the subscribing public, there
could not be a valid basis for billing the customers of private respondent. The fact that the
Page 34
petitioners were allowed to continue working after the expiration of their employment contract is
evidence of the necessity and desirability of their service to private respondents business. In
addition, during the preliminary hearing of the case on February 4, 1991, private respondent
even offered to enter into another temporary employment contract with petitioners. This only
proves private respondents need for the services of herein petitioners. With the continuation of
their employment beyond the original term, petitioners have become full-fledged regular
employees. The fact alone that petitioners have rendered service for a period of less than six
months does not make their employment status as probationary. Since petitioners are already
regular employees at the time of their illegal dismissal from employment, they are entitled to be
reinstated to their former position as regular employees, not merely probationary.
Page 35
HANJIN HEAVY INDUSTRIES vs. IBANEZ| GR 170181 | June 26 2008

FACTS: Felicito Ibanez (tireman), Elmer Gacula (Crane Operator), Elmer Dagotdot (Welder),
Aligwas Carolino (Welder), Ruel Calda (Warehouseman)filed a complaint at the NLRC for illegal
dismissal with prayer for reinstatement and payment of back wages. The group alleged that the
contract they have is good for three months, subject to automatic renewal if there is no notice of
termination from Hanjin, and that the contract would automatically terminate upon the
completion of the project. They further averred that during the time they were dismissed, the
project was still ongoing and Hanjin hired people for the positions that they had vacated. Lastly,
they also allege that they are entitled to a completion bonus as part of the industry practice and
this was substantiated by past payroll payments. Hanjin failed to furnish a copy of the contract
agreements with the dismissed group. Instead it showed the quitclaims that had been executed
by the group that released Hanjin and its representatives from any claims with their
employment. It contained clearance certificates that show that respondents are free from
accountability.
ISSUE: WON the members of the dismissed group are project employees?
HELD: No, Hanjin was unable to prove they were not regular employees The rehiring
of construction workers on a project to project basis does not confer upon them regular
employment status, since their re-hiring is only a natural consequence of the fact that
experienced construction workers are preferred. Employees who are hired for carrying out a
separate job, distinct from the other undertakings of the company, the scope and duration of
which has been determined and made known to the employees at the time of the employment,
are properly treated as project employees and their services may be lawfully terminated upon
the completion of a project. Should the terms of their employment fail to comply with this
standard, they cannot be considered project employees. Hanjin was unable to show the written
contracts it had with the workers. White the absence of the contract does not grant permanent
status it is the burden of the employer to prove that the employees were aware that
their contract with the company is for per project only. While Hanjin submitted a termination
report including the workers names to prove that the services of their services were only
contracted for a per project basis, Hanjin only submitted one report. It was unable to disprove
the allegation of the workers that they were part of a pool that Hanjin contacts once a project is
to be completed. Employers cannot mislead their employees, whose work is necessary and
desirable in the former's line of business, by treating themas though they are part of a work pool
from which workers could be continually drawn and then assigned to various projects and
thereafter denied regular status at any time by the expedient act of filing a Termination Report.
This would constitute a practice in which an employee is unjustly precluded from acquiring
security of tenure, contrary to public policy, morals, good customs and public order. Hanjin
alleged that per Department Order 19, Series of 1993 of DOLE, the payment of completion bonus
is further proof that the workers were only project employees as Hanjin is mandated by law to
pay it to the temporary workers whose contracts are about to end upon the completion of the
project. SC views the completion bonus terminology here reflects the fact that the project has
already been completed and that is the premium they wished to pay. Quitclaims are viewed with
disfavor, especially when a. There is clear proof that the waiver was wangled from an
unsuspecting or gullible person. Where the terms are unconscionable in its face. For quitclaims to
be valid, it must constitute a reasonable settlement commensurate to their legal rights. It does
not preclude them from seeking benefits they were entitled to such as back wages.
Page 36
INTERNATIONAL SCHOOL ALLIANCE OF EDUCATORS (ISAE) vs. QUISUMBING

G.R. No. 128845
June 1, 2000
KAPUNAN, J.:
FACTS: Private respondent International School, Inc. (the School, for short) is a domestic
educational institution established primarily for dependents of foreign diplomatic personnel and
other temporary residents. The School is authorizes to employ its own teaching and
management personnel selected by it either locally or abroad, from Philippine or other
nationalities. Accordingly, the School hires both foreign and local teachers as members of its
faculty, classifying the same into two: (1) foreign-hires and (2) local-hires.
The School grants foreign-hires certain benefits not accorded local-hires. These include housing,
transportation, shipping costs, taxes, and home leave travel allowance. Foreign-hires are also
paid a salary rate twenty-five percent (25%) more than local-hires. The School justifies the
difference on two "significant economic disadvantages" foreign-hires have to endure, namely: (a)
the "dislocation factor" and (b) limited tenure.
When negotiations for a new CBA were held, petitioner contested the difference in salary rates
between foreign and local-hires. This issue, as well as the question of whether foreign-hires
should be included in the appropriate bargaining unit, eventually caused a deadlock between the
parties. Petitioner claims that the point-of-hire classification employed by the School is
discriminatory to Filipinos and that the grant of higher salaries to foreign-hires constitutes racial
discrimination.
The School disputes these claims and gives a breakdown of its faculty members, numbering 38
in all, with nationalities other than Filipino, who have been hired locally and classified as local
hires.
HELD:
Discrimination, particularly in terms of wages, is frowned upon by the Labor Code. Article 135, for
example, prohibits and penalizes the payment of lesser compensation to a female employee as
against a male employee for work of equal value. Article 248 declares it an unfair labor practice
for an employer to discriminate in regard to wages in order to encourage or discourage
membership in any labor organization.
Notably, the International Covenant on Economic, Social, and Cultural Rights, supra, in Article 7
thereof, provides:
The States Parties to the present Covenant recognize the right of everyone to the enjoyment of
just and favourable conditions of work, which ensure, in particular:
a. Remuneration which provides all workers, as a minimum, with:
(i) Fair wages and equal remuneration for work of equal value without distinction of any kind, in
particular women being guaranteed conditions of work not inferior to those enjoyed by men, with
equal pay for equal work;
xxx
xxx
xxx
The foregoing provisions impregnably institutionalize in this jurisdiction the long honored legal
truism of "equal pay for equal work." Persons who work with substantially equal qualifications,
skill, effort and responsibility, under similar conditions, should be paid similar salaries. This rule
applies to the School, its "international character" notwithstanding.
The School contends that petitioner has not adduced evidence that local-hires perform work
equal to that of foreign-hires. The Court finds this argument a little cavalier. If an employer
accords employees the same position and rank, the presumption is that these employees
perform equal work. This presumption is borne by logic and human experience. If the employer
pays one employee less than the rest, it is not for that employee to explain why he receives less
or why the others receive more. That would be adding insult to injury. The employer has
discriminated against that employee; it is for the employer to explain why the employee is
treated unfairly.
The employer in this case has failed to discharge this burden. There is no evidence here that
foreign-hires perform 25% more efficiently or effectively than the local-hires. Both groups have
similar functions and responsibilities, which they perform under similar working conditions.
Page 37
The School cannot invoke the need to entice foreign-hires to leave their domicile to rationalize
the distinction in salary rates without violating the principle of equal work for equal pay.
"Salary" is defined in Black's Law Dictionary (5th ed.) as "a reward or recompense for services
performed." Similarly, the Philippine Legal Encyclopedia states that "salary" is the
"[c]onsideration paid at regular intervals for the rendering of services." In Songco v. National
Labor Relations Commission, 24 we said that:
"salary" means a recompense or consideration made to a person for his pains or industry in
another man's business. Whether it be derived from "salarium," or more fancifully from "sal," the
pay of the Roman soldier, it carries with it the fundamental idea of compensation for services
rendered. (Emphasis supplied.)
While we recognize the need of the School to attract foreign-hires, salaries should not be used as
an enticement to the prejudice of local-hires. The local-hires perform the same services as
foreign-hires and they ought to be paid the same salaries as the latter. For the same reason, the
"dislocation factor" and the foreign-hires' limited tenure also cannot serve as valid bases for the
distinction in salary rates. The dislocation factor and limited tenure affecting foreign-hires are
adequately compensated by certain benefits accorded them which are not enjoyed by local-hires,
such as housing, transportation, shipping costs, taxes and home leave travel allowances.
Page 38
REPUBLIC OF THE PHILIPPINES, represented by the SOCIAL SECURITY COMMISSION

and SOCIAL SECURITY SYSTEM,
v.
ASIAPRO COOPERATIVE,
Facts:
Respondent cooperative entered into several Service Contracts with Stanfilco - a division
of DOLE Philippines, Inc. and a company based in Bukidnon. The owners-members do not receive
compensation or wages from the respondent cooperative. Instead, they receive a share in the
service surplus which the respondent cooperative earns from different areas of trade it engages
in. The owners-members get their income from the service surplus generated by the quality and
amount of services they rendered, which is determined by the Board of Directors of the
respondent cooperative.
Petitioner SSS through its Vice-President for Mindanao Division, Atty. Eddie A. Jara, sent a
letter to the respondent, informing the latter that based on the Service Contracts it executed
with Stanfilco, respondent cooperative is actually a manpower contractor supplying employees to
Stanfilco and for that reason, it is an employer of its owners-members working with Stanfilco.
Thus, respondent cooperative should register itself with petitioner SSS as an employer and make
the corresponding report and remittance of premium contributions in accordance with the Social
Security Law of 1997. Respondent cooperative, through its counsel, sent a reply to petitioner SSS
letter asserting that it is not an employer because its owners-members are the cooperative itself;
hence, it cannot be its own employer. Again, petitioner sent a letter reiterating its previous
contention and demand. Respondent cooperative continuously ignored the demand of petitioner
SSS.
Petitioner SSS filed a Petition before petitioner SSC against the respondent cooperative and
Stanfilco. Respondent cooperative filed its Answer with Motion to Dismiss alleging that no
employer-employee relationship exists between it and its owners-members, thus, petitioner SSC
has no jurisdiction over the respondent cooperative. Stanfilco, on the other hand, filed an Answer
with Cross-claim against the respondent cooperative. The motion however was denied as well as
the motion for reconsideration. On appeal, the CA ruled in favor of the Respondent on
jurisdictional ground.
Issue:
1. Whether there is an employeeemployer relationship between respondent cooperative
and its members owners.
2. Whether the petitioner SSC has jurisdiction over the petition-complaint filed before it by
petitioner SSS against the respondent cooperative not the NLRC.
Held:
1. YES.
First. It is expressly provided in the Service Contracts that it is the respondent cooperative
which has the exclusive discretion in the selection and engagement of the owners-members as
well as its team leaders who will be assigned at Stanfilco.
Page 39
Second. Wages are defined as remuneration or earnings, however designated, capable of

being expressed in terms of money, whether fixed or ascertained, on a time, task, piece or
commission basis, or other method of calculating the same, which is payable by an employer to
an employee under a written or unwritten contract of employment for work done or to be done,
or for service rendered or to be rendered. In this case, the weekly stipends or the so-called
shares in the service surplus given by the respondent cooperative to its owners-members were in
reality wages, as the same were equivalent to an amount not lower than that prescribed by
existing labor laws, rules and regulations, including the wage order applicable to the area and
industry; or the same shall not be lower than the prevailing rates of wages. It cannot be doubted
then that those stipends or shares in the service surplus are indeed wages, because these are
given to the owners-members as compensation in rendering services to respondent cooperatives
client, Stanfilco.
Third. It is also stated in the above-mentioned Service Contracts that it is the respondent
cooperative which has the power to investigate, discipline and remove the owners-members and
its team leaders who were rendering services at Stanfilco.
Fourth. As earlier opined, of the four elements of the employer-employee relationship, the
control test is the most important. In the case at bar, it is the respondent cooperative which has
the sole control over the manner and means of performing the services under the Service
Contracts with Stanfilco as well as the means and methods of work. Also, the respondent
cooperative is solely and entirely responsible for its owners-members, team leaders and other
representatives at Stanfilco. All these clearly prove that, indeed, there is an employer-employee
relationship between the respondent cooperative and its owners-members.
It is true that the Service Contracts executed between the respondent cooperative and
Stanfilco expressly provide that there shall be no employer-employee relationship between the
respondent cooperative and its owners-members. This Court, however, cannot give the said
provision force and effect. The existence of an employer-employee relationship cannot be
negated by expressly repudiating it in a contract, when the terms and surrounding circumstances
show otherwise. The employment status of a person is defined and prescribed by law and not by
what the parties say it should be.
2. YES.
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. - (a) x x x.
xxxx
6. Except claims for Employees Compensation, Social Security, Medicare and
maternity
benefits, all other claims, arising from employer-employee relations, including those
of persons in domestic or household service, involving an amount exceeding five thousand
pesos (P5,000.00) regardless of whether accompanied with a claim for reinstatement.
The question on the existence of an employer-employee relationship for the purpose of
determining the coverage of the Social Security System is explicitly excluded from the
jurisdiction of the NLRC and falls within the jurisdiction of the SSC which is primarily charged with
the duty of settling disputes arising under the Social Security Law of 1997. As an incident to the
issue of compulsory coverage, it may inquire into the presence or absence of an employeremployee relationship without need of waiting for a prior pronouncement or submitting the issue
to the NLRC for prior determination.
Page 40
Page 41
MACARTHUR MALICDEM and HERMENIGILDO FLORES,

vs.
MARULAS INDUSTRIAL CORPORATION and MIKE MANCILLA,
Facts:
Malicdem and Flores were hired by Marulas as extruder operators. Their employment
contracts were for a period of one (1) year. Every year thereafter, they would sign a
Resignation/Quitclaim in favor of Marulas a day after their contracts ended, and then sign
another contract for one (1) year. Until one day, Flores was told not to report for work anymore
after being asked to sign a paper by Marulas' HR Head to the effect that he acknowledged the
completion of his contractual status. Malicdem was also terminated after signing a similar
document. Thus, both claimed to have been illegally dismissed. Thus, they lodged a complaint
against Marulas and Mancilla for illegal dismissal where the Labor Arbiter (LA) rendered a
decision in favor of the respondents, finding no illegal dismissal. The LA, however, ordered
Marulas to pay Malicdem and Flores their respective wage differentials. NLRC partially granted
their appeal with the award of payment of 13th month pay, service incentive leave and holiday
pay for three (3) years. On appeal to the CA their petition was however denied.
Issue:
Whether petitioner may be consider as a regular employee.
Held:
In the earlier case of Maraguinot, Jr. v. NLRC, it was ruled that a project or work pool
employee, who has been: (1) continuously, as opposed to intermittently, rehired by the same
employer for the same tasks or nature of tasks; and (2) those tasks are vital, necessary and
indispensable to the usual business or trade of the employer, must be deemed a regular
employee.
The test to determine whether employment is regular or not is the reasonable connection
between the particular activity performed by the employee in relation to the usual business or
trade of the employer. If the employee has been performing the job for at least one year, even if
the performance is not continuous or merely intermittent, the law deems the repeated and
continuing need for its performance as sufficient evidence of the necessity, if not indispensability
of that activity to the business.
Guided by the foregoing, the Court is of the considered view that there was clearly a
deliberate intent to prevent the regularization of the petitioners. To begin with, there is no actual
project. The only stipulations in the contracts were the dates of their effectivity, the duties and
responsibilities of the petitioners as extruder operators, the rights and obligations of the parties,
and the petitioners compensation and allowances. As there was no specific project or
undertaking to speak of, the respondents cannot invoke the exception in Article 280 of the Labor
Code. This is a clear attempt to frustrate the regularization of the petitioners and to circumvent
the law.
Next, granting that they were project employees, the petitioners could only be considered as
regular employees as the two factors enumerated in Maraguinot, Jr., are present in this case. It is
undisputed that the petitioners were continuously rehired by the same employer for the same
position as extruder operators. As such, they were responsible for the operation of machines that
Page 42
produced the sacks. Hence, their work was vital, necessary and indispensable to the usual
business or trade of the employer.
Page 43
HACIENDA FATIMA and/or PATRICIO VILLEGAS, ALFONSO VILLEGAS and CRISTINE

SEGURA
vs.
NATIONAL FEDERATION OF SUGARCANE WORKERS-FOOD AND GENERAL TRADE
Facts:
Respondents organized themselves into a union. Thus, when the union was certified as the
collective bargaining representative in the certification elections, petitioner under the pretext
that the result was on appeal, refused to sit down with the union for the purpose of entering into
a collective bargaining agreement. Moreover, the workers including complainants were not given
work for more than one month. In protest, complainants staged a strike which was however
settled upon the signing of a Memorandum of Agreement. However, petitioner reneged on its
commitment to sit down and bargain collectively. Instead, respondent employed all means
including the use of private armed guards to prevent the organizers from entering the premises.
Thereafter, petitioner did not any more give work assignments to the complainants forcing the
union to stage a strike. But due to the conciliation efforts by the DOLE, another Memorandum of
Agreement was signed. When petitioner again reneged on its commitment; complainants filed
the complaint. Petitioner countered having complainant refusing to work and being choosy in the
kind of work they have to perform.
Issue:
Whether respondents may be consider as a seasonal employee.
Held:
For respondents to be excluded from those classified as regular employees, it is not
enough that they perform work or services that are seasonal in nature. They must have also
been employed only for the duration of one season. The evidence proves the existence of the
first, but not of the second, condition. The fact that respondents repeatedly worked as sugarcane
workers for petitioners for several years is not denied by the latter. Evidently, petitioners
employed respondents for more than one season. Therefore, the general rule of regular
employment is applicable.
In Abasolo v. National Labor Relations Commission,
13
the Court issued this clarification:
"[T]he test of whether or not an employee is a regular employee has been laid down
in De Leon v. NLRC, in which this Court held:
"The primary standard, therefore, of determining regular employment is the
reasonable connection between the particular activity performed by the employee in
relation to the usual trade or business of the employer. The test is whether the
former is usually necessary or desirable in the usual trade or business of the
employer. The connection can be determined by considering the nature of the work
performed and its relation to the scheme of the particular business or trade in its
entirety. Also if the employee has been performing the job for at least a year, even if
the performance is not continuous and merely intermittent, the law deems repeated
and continuing need for its performance as sufficient evidence of the necessity if not
indispensability of that activity to the business. Hence, the employment is
considered regular, but only with respect to such activity and while such activity
exists.
xxx
xxx
xxx
Page 44
". . . [T]he fact that [respondents] do not work continuously for one whole year but
only for the duration of the . . . season does not detract from considering them in
regular employment since in a litany of cases this Court has already settled that
seasonal workers who are called to work from time to time and are temporarily laid
off during off-season are not separated from service in said period, but merely
considered on leave until re-employed." 14
Page 45
Legend Hotel (manila), Owned by Titanium Corporation

vs. Hernani S. Realuyo, also known as Joey Roa
G.R. No. 153511, July 18, 2012
FACTS
This labor case for illegal dismissal involves a pianist employed to perform in the
restaurant of a hotel. Realuyo, whose stage name was Joey R. Roa, filed a complaint for alleged
unfair labor practice, constructive illegal dismissal, and the underpayment/ nonpayment of his
premium pay for holidays, separation pay, service incentive leave pay, and 13 th month pay. He
prayed for attorneys fees, moral damages of P100,000.00 and exemplary damages for
P100,000.00. Roa averred that he had worked as a pianist at the Legend Hotels Tanglaw
Restaurant from September 1992 with an initial rate of P400.00/night; and that it had increased
to P750.00/night. During his employment, he could not choose the time of performance, which
had been fixed from 7:00PM to 10:00 pm for three to six times a week. The management had
notified him that as a cost-cutting measure, his services as a pianist would no longer be required
effective July 30, 1999. In its defense, petitioner denied the existence of an employer-employee
relationship with Roa, insisting that he had been only a talent engaged to provide live music at
Legend Hotels Madison Coffee Shop for three hours/ day on two days each week; and stated that
the economic crisis that had hit the country constrained management to dispense with his
services. The Labor Arbiter (LA) dismissed the complaint for lack of merit upon finding that the
parties had no employer-employee relationship, because Roa was receiving talent fee and not
salary, which was reinforced by the fact that Roa received his talent fee nightly, unlike the
regular employees of the hotel who are paid monthly.
NLRC affirmed the LAs decision on May 31, 2001. CA set aside the decision of the NLRC.
CA held that the dismissal was due to retrenchment in order to avoid or minimize business
losses, which is recognized by law under Art. 283 of the Labor Code.
ISSUES
Whether there was employer-employee relationship between the two, and if so, whether
Roa was validly terminated
RULING
The issue of whether or not an employer-employee relationship existed between petitioner
and respondent is essentially a question of fact. The factors that determine the issue include who
has the power to select the employee, who pays the employees wages, who has the power to
dismiss the employee, and who exercises control of the methods and results by which the work
of the employee is accomplished. Although no particular form of evidence is required to prove
the existence of the relationship, and any competent and relevant evidence to prove the
relationship may be admitted, a finding that the relationship exists must nonetheless rest on
substantial evidence, which is that amount of relevant evidence that a reasonable mind might
accept as adequate to justify a conclusion.
First of all, petitioner actually wielded the power of selection at the time it entered into the
service contract dated September 1, 1992 with respondent. This is true, notwithstanding
petitioners insistence that respondent had only offered his services to provide live music at
petitioners Tanglaw Restaurant, and despite petitioners position that what had really transpired
was a negotiation of his rate and time of availability. The power of selection was firmly evidenced
by, among others, the express written recommendation dated January 12, 1998 by Christine
Velazco, petitioners restaurant manager, for the increase of his remuneration.
Page 46
Validity of Termination
Retrenchment is one of the authorized causes for the dismissal of employees recognized
by the Labor Code. It is a management prerogative resorted to by employers to avoid or to
minimize business losses. On this matter, Article 283 of the Labor Code states:
Article 283. Closure of establishment and reduction of personnel. The employer
may also terminate the employment of any employee due to the installation of
labor-saving devices, redundancy, retrenchment to prevent losses or the closing or
cessation of operation of the establishment or undertaking unless the closing is for
the purpose of circumventing the provisions of this Title, by serving a written notice
on the workers and the Ministry of Labor and Employment at least one (1) month
before the intended date thereof. xxx. In case of retrenchment to prevent losses and
in cases of closures or cessation of operations of establishment or undertaking not
due to serious business losses or financial reverses, the separation pay shall be
equivalent to one (1) month pay or at least one-half (1/2) month pay for every year
of service, whichever is higher. A fraction of at least six (6) months shall be
considered one (1) whole year.
The Court has laid down the following standards that an employer should meet to justify
retrenchment and to foil abuse, namely:
(a) The expected losses should be substantial and not merely de minimis in extent;
(b) The substantial losses apprehended must be reasonably imminent;
(c) The retrenchment must be reasonably necessary and likely to effectively prevent the
expected losses; and
(d) The alleged losses, if already incurred, and the expected imminent losses sought to be
forestalled must be proved by sufficient and convincing evidence.
As to the last standard of sufficient and convincing evidence not every loss incurred or
expected to be incurred by an employer can justify retrenchment. The employer must prove,
among others, that
the losses are substantial and that the retrenchment is reasonably
necessary to avert such losses. Thus, by its failure to present sufficient and convincing evidence
to prove that retrenchment was necessary, respondents termination due to retrenchment is not
allowed.
Page 47
Tongko v. Manufacturers LIfe Insurance Co. (Phils.), Inc.

570 SCRA 503
FACTS
The contractual relationship between Tongko and Manulife had two basic phases. The first
phase began on July 1, 1977, under a Career Agents Agreement, which provided that the Agent
is an independent contractor and nothing contained herein shall be construed or interpreted as
creating an employer-employee relationship between the Company and the Agent. The second
phase started in 1983 when Tongko was named Unit Manager in Manulifes Sales Agency
Organization. In 1990, he became a Branch Manager. In 1996), Tongko became a Regional Sales
Manager. Tongkos gross earnings consisted of commissions, persistency income, and
management overrides. Since the beginning, Tongko consistently declared himself self-employed
in his income tax returns. Under oath, he declared his gross business income and deducted his
business expenses to arrive at his taxable business income. Respondent Renato Vergel de Dios,
sales manager, wrote Tongko a letter dated November 6, 2001 on concerns that were brought up
during the Metro North Sales Managers Meeting, expressing dissatisfaction of Tongkos
performance in their agent recruiting business, which resulted in some changes on how Tongko
would conduct his duties, including that Tongko hire at his expense a competent assistant to
unload him of routine tasks, which he had been complaining to be too taxing for him. On
December 18, 2001, de Dios wrote Tongko another letter which served as notice of termination of
his Agency Agreement with the company effective fifteen days from the date of the letter. Tongko
filed an illegal dismissal complaint with the National Labor Relations Commission (NLRC), alleging
that despite the clear terms of the letter terminating his Agency Agreement, that he was
Manulifes employee before he was illegally dismissed. The labor arbiter decreed that no
employer-employee relationship existed between the parties. The NLRC reversed the labor
arbiters decision on appeal; it found the existence of an employer-employee relationship and
concluded that Tongko had been illegally dismissed. The Court of Appeals found that the NLRC
gravely abused its discretion in its ruling and reverted to the labor arbiters decision that no
employer-employee relationship existed between Tongko and Manulife.
ISSUE
Whether there is an employer-employee relationship between Tongko and Manulife
HELD
In the determination of whether an employer-employee relationship exists between 2
parties, this court applies the four-fold test to determine the existence of the elements of such
relationship. Jurisprudence is firmly settled that whenever the existence of an employment
relationship is in dispute, four elements constitute the reliable yardstick:
(a) the selection and engagement of the employee;
(b) the payment of wages;
(c) the power of dismissal; and
(d) the employers power to control the employees conduct.
It is the so-called control test which constitutes the most important index of existence of
the employer-employee relationship that is, whether the employer controls or has reserved the
right to control the employee not only as to the result of the work to be done but also as to the
means and methods by which the same is to be accomplished. Stated otherwise, an employerLABOR LAW REVIEW 1- ATTY. ABAD
Page 48
employee relationship exists where the person for whom the services are performed reserves the
right to control not only the end to be achieved but also the means to be used in reaching such
end.
In the case at bar, the absence of evidence showing Manulifes control over Tongkos
contractual duties points to the absence of any employer-employee relationship between Tongko
and Manulife. In the context of the established evidence, Tongko remained an agent all along;
although his subsequent duties made him a lead agent with leadership role, he was nevertheless
only an agent whose basic contract yields no evidence of means-and-manner control. Claimant
clearly failed to substantiate his claim of employment relationship by the quantum of evidence
the Labor Code requires. Tongkos failure to comply with the guidelines of de Dios letter, as a
ground for termination of Tongkos agency, is a matter that the labor tribunals cannot rule upon
in the absence of an employer-employee relationship. Jurisdiction over the matter belongs to the
courts applying the laws of insurance, agency and contracts.
We REVERSE our Decision of November 7, 2008, GRANT Manulifes motion for
reconsideration and, accordingly, DISMISS Tongkos petition.
Page 49
International Catholic Migration Commission vs.

National Labor Relations Commission and
Bernadette Galang
169 SCRA 606
FERNAN, C.J.
FACTS
Petitioner International Catholic Migration Commission (ICMC), a non-profit organization
dedicated to refugee service at the Philippine Refugee Processing Center in Morong, Bataan
engaged the services of private respondent Bernadette Galang as a probationary cultural
orientation teacher with a monthly salary of P2,000.00. Three (3) months thereafter, private
respondent was informed, orally and in writing, that her services were being terminated for her
failure to meet the prescribed standards of petitioner as reflected in the performance evaluation
of her supervisors during the teacher evaluation program she underwent along with other newlyhired personnel.
Private respondent returned to Morong, Bataan on board the service bus of petitioner to
accomplish the clearance requirements. In the evening of that same day, she was found at the
Freedom Park of Morong wet and shivering from the rain and acting bizarrely. She was then taken
to petitioner's hospital where she was given the necessary medical attention.
Her father received, on her behalf, the proportionate amount of her 13th month pay and
the equivalent of her two week pay. Subsequently, respondent filed a complaint for illegal
dismissal, unfair labor practice and unpaid wages against petitioner with the then Ministry of
Labor and Employment, praying for reinstatement with backwages, exemplary and moral
damages.
After the parties submitted their respective position papers and other pleadings, Labor
Arbiter rendered his decision dismissing the complaint for illegal dismissal as well as the
complaint for moral and exemplary damages but ordering the petitioner to pay private
respondent the sum of P6,000.00 as payment for the last three (3) months of the agreed
employment period pursuant to her verbal contract of employment. Both parties appealed the
decision to the National Labor Relations Commission. The NLRC, sustained the decision of the
Labor Arbiter and thus dismissed both appeals for lack of merit.
Dissatisfied, petitioner filed the instant petition.
ISSUE
Whether or not an employee who was terminated during the probationary period of her
employment is entitled to her salary for the unexpired portion of her six-month probationary
employment
RULING
Page 50
No. Galang was terminated during her probationary period of employment for failure to
qualify as a regular member of petitioners teaching staff in accordance with its reasonable
standards. Galang was found by petitioner to be deficient in classroom management, teacherstudent relationship and teaching techniques. Failure to qualify as a regular employee in
accordance with the reasonable standards of the employer is a just cause for terminating a
probationary employee specifically recognized under Article 282 (now Article 281) of the Labor
Code.
The labor arbiters decision is erroneous. The award of salary for the unexpired portion of
the probationary employment on the ground that a probationary employment for 6months is an
employment for a "definite period" which requires the employer to exhaust the entire
probationary period to give the employee the opportunity to meet the required standards.
A probationary employee is one who is on trial by an employer during which the employer
determines whether or not he is qualified for permanent employment. A probationary
appointment is made to afford the employer an opportunity to observe the fitness of a
probationer while at work, and to ascertain whether he will become a proper and efficient
employee. The word probationary, as used to describe the period of employment, implies the
purpose of the term or period, but not its length.
Being in the nature of a trial period the essence of a probationary period of employment
fundamentally lies in the purpose or objective sought to be attained by both the employer and
the employee during said period. The length of time is immaterial in determining the correlative
rights of both in dealing with each other during said period.
It is within the exercise of the right to select his employees that the employer may set or
fix a probationary period within which the latter may test and observe the conduct of the former
before hiring him permanently. As the law now stands, Article 281 of the Labor Code gives ample
authority to the employer to terminate a probationary employee 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. Nothing would preclude the employer
from extending a regular or a permanent appointment to an employee once the employer finds
that the employee is qualified for regular employment even before the expiration of the
probationary period.
There was no showing, as borne out by the records, that there was circumvention of the
rights of Galang when she was informed of her termination. Her dismissal does not appear to us
as arbitrary, fanciful or whimsical. She was duly notified, orally and in writing, that her services
were terminated for failure to meet the prescribed standards of petitioner as reflected in the
performance evaluation conducted by her supervisors during the teacher evaluating program.
The dissatisfaction of petitioner over the performance of private respondent in this regard is a
legitimate exercise of its prerogative to select whom to hire or refuse employment for the
success of its program or undertaking.
The lower court abused its discretion when it ordered ICMC to Galang her salary for the
unexpired three-month portion of her six-month probationary employment when she was validly
terminated during her probationary employment. To sanction such action would not only be
unjust, but oppressive on the part of the employer.
The petition is GRANTED. The Resolution of the NLRC is REVERSED and SET ASIDE insofar
as it ordered petitioner to pay private respondent her P6,000.00salary for the unexpired portion
of her six-month probationary employment. No cost.
Page 51
Page 52
Magsalin, et al. vs. National Organization of Working Men, et al.,

403 SCRA 199
FACTS
Coca-Cola Bottlers Phils., Inc., herein petitioner, engaged the services of respondent
workers as "sales route helpers" for a limited period of five months. After five months,
respondent workers were employed by Petitioner Company on a day-to-day basis. According to
Petitioner Company, respondent workers were hired to substitute for regular sales route helpers
whenever the latter would be unavailable or when there would be an unexpected shortage of
manpower in any of its work places or an unusually high volume of work. The practice was for
the workers to wait every morning outside the gates of the sales office of Petitioner Company. If
thus hired, the workers would then be paid their wages at the end of the day.
Ultimately, respondent workers asked Petitioner Company to extend to them regular
appointments. Petitioner Company refused. Subsequently, the respondents filed with the NLRC a
complaint for the regularization of their employment with Petitioner Company. Claiming that
Petitioner Company meanwhile terminated their services, respondent workers filed a notice of
strike and a complaint for illegal dismissal and unfair labor practice with the NLRC. The parties,
later on, agreed to submit the controversy, for voluntary arbitration but the VA dismissed the
complaint on the ground that the respondent workers were not employees of Coca-cola.
ISSUE
Whether or not the nature of work of respondents in the company is of such nature as to
be deemed necessary and desirable in the usual business or trade of petitioner that could qualify
them to be regular employees.
HELD
The SC ruled that he 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. If, as so argued by petitioner company, only those
whose work are directly involved in the production of softdrinks may be held performing
functions necessary and desirable in its usual business or trade, there would have then been no
need for it to even maintain regular truck sales route helpers. The nature of the work performed
must be viewed from a perspective of the business or trade in its entirety and not on a confined
scope.
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. The Court of Appeals has found each of respondents to
have worked for at least one year with Petitioner Company. While this Court, in Brent School, Inc.
vs. Zamora, has upheld the legality of a fixed-term employment, it has done so, however, with a
stern admonition that where from the circumstances it is apparent that the period has been
imposed to preclude the acquisition of tenurial security by the employee, then it should be struck
down as being contrary to law, morals, good customs, public order and public policy. The
pernicious practice of having employees, workers and laborers, engaged for a fixed period of few
months, short of the normal six-month probationary period of employment, and, thereafter, to be
hired on a day-to-day basis, mocks the law. Any obvious circumvention of the law cannot be
countenanced.
Page 53
The fact that respondent workers have agreed to be employed on such basis and to forego
the protection given to them on their security of tenure, demonstrate nothing more than the
serious problem of impoverishment of so many of our people and the resulting unevenness
between labor and capital. A contract of employment is impressed with public interest. The
provisions of applicable statutes are deemed written into the contract, and the parties are not at
liberty to insulate themselves and their relationships from the impact of labor laws and
regulations by simply contracting with each other. Petition is dismissed.
Page 54
B. EMPLOYER-EMPLOYEE RELATIONSHIP (WHO HAS THE BURDEN OF PROVING

EXISTENCE OF AN EMPLOYER-EMPLOYEE RELATIONSHIP)
7. BITOY JAVIER (DANILO P. JAVIER), vs. FLY ACE CORPORATION/FLORDELYN
CASTILLO, G.R. No. 192558, February 15, 2012
Facts: On May 23, 2008, Javier filed a complaint before the NLRC for underpayment of salaries
and other labor standard benefits. He alleged that he was an employee of Fly Ace since
September 2007, performing various tasks at the respondents warehouse such as cleaning and
arranging the canned items before their delivery to certain locations, except in instances when
he would be ordered to accompany the companys delivery vehicles, as pahinante; that he
reported for work from Monday to Saturday from 7:00 oclock in the morning to 5:00 oclock in
the afternoon; that during his employment, he was not issued an identification card and payslips
by the company; that on May 6, 2008, he reported for work but he was no longer allowed to
enter the company premises by the security guard upon the instruction of Ruben Ong (Mr. Ong),
his superior; that after several minutes of begging to the guard to allow him to enter, he saw Ong
whom he approached and asked why he was being barred from entering the premises; that Ong
replied by saying, "Tanungin mo anak mo;" that he then went home and discussed the matter
with his family; that he discovered that Ong had been courting his daughter Annalyn after the
two met at a fiesta celebration in Malabon City; that Annalyn tried to talk to Ong and convince
him to spare her father from trouble but he refused to accede; that thereafter, Javier was
terminated from his employment without notice; and that he was neither given the opportunity
to refute the cause/s of his dismissal from work.
To support his allegations, Javier presented an affidavit of one Bengie Valenzuela who alleged
that Javier was a stevedore or pahinante of Fly Ace from September 2007 to January 2008. The
said affidavit was subscribed before the Labor Arbiter (LA).
For its part, Fly Ace averred that it was engaged in the business of importation and sales of
groceries. Sometime in December 2007, Javier was contracted by its employee, Mr. Ong, as extra
helper on a pakyaw basis at an agreed rate of P 300.00 per trip, which was later increased
to P 325.00 in January 2008. Mr. Ong contracted Javier roughly 5 to 6 times only in a month
whenever the vehicle of its contracted hauler, Milmar Hauling Services, was not available. On
April 30, 2008, Fly Ace no longer needed the services of Javier. Denying that he was their
employee, Fly Ace insisted that there was no illegal dismissal. 8 Fly Ace submitted a copy of its
agreement with Milmar Hauling Services and copies of acknowledgment receipts evidencing
payment to Javier for his contracted services bearing the words, "daily manpower (pakyaw/piece
rate pay)" and the latters signatures/initials.
Ruling of the Labor Arbiter: The LA dismissed the complaint for lack of merit on the ground
that Javier failed to present proof that he was a regular employee of Fly Ace.
Ruling of the NLRC: On appeal with the NLRC, Javier was favored. Finding Javier to be a regular
employee, the NLRC ruled that he was entitled to a security of tenure. For failing to present proof
of a valid cause for his termination, Fly Ace was found to be liable for illegal dismissal of Javier
who was likewise entitled to backwages and separation pay in lieu of reinstatement.
Ruling of the Court of Appeals: The CA annulled the NLRC findings that Javier was indeed a
former employee of Fly Ace and reinstated the dismissal of Javiers complaint as ordered by the
Page 55
LA. The CA exercised its authority to make its own factual determination anent the issue of the
existence of an employer-employee relationship between the parties.
Issues:
1. Whether the CA erred in holding that the petitioner was not a regular employee of fly ace.
2. Whether the CA erred in holding that the petitioner is not entitled to his monetary claims.
RULING: 1. The Court affirms the assailed CA decision.

It must be noted that the issue of Javiers alleged illegal dismissal is anchored on the existence of
an employer-employee relationship between him and Fly Ace. This is essentially a question of
fact. Generally, the Court does not review errors that raise factual questions. However, when
there is conflict among the factual findings of the antecedent deciding bodies like the LA, the
NLRC and the CA, "it is proper, in the exercise of Our equity jurisdiction, to review and reevaluate the factual issues and to look into the records of the case and re-examine the
questioned findings."26 In dealing with factual issues in labor cases, "substantial evidence that
amount of relevant evidence which a reasonable mind might accept as adequate to justify a
conclusion is sufficient."
As the records bear out, the LA and the CA found Javiers claim of employment with Fly Ace as
wanting and deficient. The Court is constrained to agree. Although Section 10, Rule VII of the
New Rules of Procedure of the NLRC 28 allows a relaxation of the rules of procedure and evidence
in labor cases, this rule of liberality does not mean a complete dispensation of proof. Labor
officials are enjoined to use reasonable means to ascertain the facts speedily and objectively
with little regard to technicalities or formalities but nowhere in the rules are they provided a
license to completely discount evidence, or the lack of it. The quantum of proof required,
however, must still be satisfied. Hence, "when confronted with conflicting versions on factual
matters, it is for them in the exercise of discretion to determine which party deserves credence
on the basis of evidence received, subject only to the requirement that their decision must be
supported by substantial evidence." 29 Accordingly, the petitioner needs to show by substantial
evidence that he was indeed an employee of the company against which he claims illegal
dismissal.
Expectedly, opposing parties would stand poles apart and proffer allegations as different as chalk
and cheese. It is, therefore, incumbent upon the Court to determine whether the party on whom
the burden to prove lies was able to hurdle the same. "No particular form of evidence is required
to prove the existence of such employer-employee relationship. Any competent and relevant
evidence to prove the relationship may be
admitted.http://www.lawphil.net/judjuris/juri2009/may2009/gr_179652_2009.html - fnt31 Hence,
while no particular form of evidence is required, a finding that such relationship exists must still
rest on some substantial evidence. Moreover, the substantiality of the evidence depends on its
quantitative as well as its qualitative aspects."30Although substantial evidence is not a function of
quantity but rather of quality, the x x x circumstances of the instant case demand that
something more should have been proffered. Had there been other proofs of employment, such
Page 56
as x x x inclusion in petitioners payroll, or a clear exercise of control, the Court would have
affirmed the finding of employer-employee relationship."
In sum, the rule of thumb remains: the onus probandi falls on petitioner to establish or
substantiate such claim by the requisite quantum of evidence. 32 "Whoever claims entitlement to
the benefits provided by law should establish his or her right thereto x x x." 33 Sadly, Javier failed
to adduce substantial evidence as basis for the grant of relief.
In this case, the LA and the CA both concluded that Javier failed to establish his employment with
Fly Ace. By way of evidence on this point, all that Javier presented were his self-serving
statements purportedly showing his activities as an employee of Fly Ace. Clearly, Javier failed to
pass the substantiality requirement to support his claim. Hence, the Court sees no reason to
depart from the findings of the CA.
While Javier remains firm in his position that as an employed stevedore of Fly Ace, he was made
to work in the company premises during weekdays arranging and cleaning grocery items for
delivery to clients, no other proof was submitted to fortify his claim. The lone affidavit executed
by one Bengie Valenzuela was unsuccessful in strengthening Javiers cause. In said document, all
Valenzuela attested to was that he would frequently see Javier at the workplace where the latter
was also hired as stevedore.34 Certainly, in gauging the evidence presented by Javier, the Court
cannot ignore the inescapable conclusion that his mere presence at the workplace falls short in
proving employment therein. The supporting affidavit could have, to an extent, bolstered Javiers
claim of being tasked to clean grocery items when there were no scheduled delivery trips, but no
information was offered in this subject simply because the witness had no personal knowledge of
Javiers employment status in the company. Verily, the Court cannot accept Javiers statements,
hook, line and sinker.
The Court is of the considerable view that on Javier lies the burden to pass the well-settled tests
to determine the existence of an employer-employee relationship, viz: (1) the selection and
engagement of the employee; (2) the payment of wages; (3) the power of dismissal; and (4) the
power to control the employees conduct. Of these elements, the most important criterion is
whether the employer controls or has reserved the right to control the employee not only as to
the result of the work but also as to the means and methods by which the result is to be
accomplished.35
In this case, Javier was not able to persuade the Court that the above elements exist in his
case.1avvphi1 He could not submit competent proof that Fly Ace engaged his services as a
regular employee; that Fly Ace paid his wages as an employee, or that Fly Ace could dictate what
his conduct should be while at work. In other words, Javiers allegations did not establish that his
relationship with Fly Ace had the attributes of an employer-employee relationship on the basis of
the above-mentioned four-fold test. Worse, Javier was not able to refute Fly Aces assertion that it
had an agreement with a hauling company to undertake the delivery of its goods. It was also
baffling to realize that Javier did not dispute Fly Aces denial of his services exclusivity to the
company. In short, all that Javier laid down were bare allegations without corroborative proof.
Fly Ace does not dispute having contracted Javier and paid him on a "per trip" rate as a
stevedore, albeit on apakyaw basis. The Court cannot fail to note that Fly Ace presented
documentary proof that Javier was indeed paid on a pakyaw basis per the acknowledgment
receipts admitted as competent evidence by the LA. Unfortunately for Javier, his mere denial of
the signatures affixed therein cannot automatically sway us to ignore the documents because
Page 57
"forgery cannot be presumed and must be proved by clear, positive and convincing evidence and
the burden of proof lies on the party alleging forgery." 36
WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals and its Resolution,
are hereby AFFIRMED.
Page 58
4.5 EFFECT OF DOLE CERTIFICATION AS LEGITIMATE JOB CONTRACTOR

26. RAMY GALLEGO, vs BAYER PHILIPPINES, INC., DANPIN GUILLERMO, PRODUCT
IMAGE MARKETING, INC., and EDGARDO BERGONIA, G.R. No. 179807, July 31, 2009
FACTS: Ramy Gallego (petitioner) was contracted in April 1992 by Bayer Philippines, Inc.
(BAYER) as crop protection technician to promote and market BAYER products.1 Under the
supervision of Aristeo Filipino, BAYER sales representative for Panay Island, petitioner made farm
visits to different municipalities in Panay Island to convince farmers to buy BAYER products. 2
In 1996, petitioners employment with BAYER came to a halt, prompting him to seek employment
with another company. BAYER eventually reemployed petitioner, however, in 1997 through
Product Image and Marketing Services, Inc. (PRODUCT IMAGE) of which respondent Edgardo
Bergonia (Bergonia) was the President and General Manager, performing the same task as that
of crop protection technician promoting BAYER products to farmers and dealers in Panay Island
solely for the benefit of BAYER. 3
By petitioners claim, in October, 2001, he was directed by Pet Pascual, the newly assigned
BAYER sales representative, to submit a resignation letter, but he refused; and that in January,
2002, he was summoned by his immediate supervisors including respondent Danpin Guillermo
(Guillermo), BAYER District Sales Manager for Panay, and was ordered to quit his employment
which called for him to return all pieces of service equipment issued to him, but that again he
refused.4
Still by petitioners claim, he continued performing his duties and receiving compensation until
the end of January, 2002; that on April 7, 2002, he received a memorandum that his area of
responsibility would be transferred to Luzon, of which memorandum he sought reconsideration
but to no avail; and that Guillermo and Bergonia spread rumors that reached the dealers in
Antique to the effect that he was not anymore connected with BAYER and any transaction with
him would no longer be honored as of April 30, 2002. 5
Believing that his employment was terminated, petitioner lodged on June 6, 2002 a complaint for
illegal dismissal with the National Labor Relations Commission (NLRC) against herein respondents
Bayer, Guillermo, Product Image, and Bergonia, with claims for reinstatement, backwages and/or
separation pay, unpaid wages, holiday pay, premium pay, service incentive leave and
allowances, damages and attorneys fees.6
Respondents BAYER and Guillermo denied the existence of an employer-employee relationship
between BAYER and petitioner, explaining that petitioners work at BAYER was simply occasioned
by the Contract of Promotional Services that BAYER had executed with PRODUCT IMAGE whereby
PRODUCT IMAGE was to promote and market BAYER products on its (PRODUCT IMAGE) own
account and in its own manner and method. They added that as an independent contractor,
PRODUCT IMAGE retained the exclusive power of control over petitioner as it assigned full-time
supervisors to exercise control and supervision over its employees assigned at BAYER. 7
Respondents PRODUCT IMAGE and Bergonia, on the other hand, admitted that petitioner was
hired as an employee of PRODUCT IMAGE on April 7, 1997 on a contractual basis to promote and
market BAYER products pursuant to the Contract of Promotional Services forged between it and
BAYER. They alleged that petitioner was a field worker who had no fixed hours and worked under
minimal supervision, his performance being gauged only by his accomplishment reports duly
certified to by BAYER acting as his de facto supervisor; 8 that petitioner was originally assigned to
Iloilo but later transferred to Antique; that petitioner was not dismissed, but went on official leave
from January 23 to 31, 2002, and stopped reporting for work thereafter; and that petitioner was
supposed to have been reassigned to South Luzon effective March 15, 2002 in accordance with a
personnel reorganization program, but he likewise failed to report to his new work station. 9
Page 59
The Labor Arbiter declared respondents, Bayer Phil. Inc./Danpin Guillermo and Product Image
Marketing Services, Inc./Edgardo Begornia [sic] guilty of Illegal Dismissal.
On appeal by respondents, the NLRC reversed the Decision of the Labor Arbiter and
dismissed petitioners complaint by Decision of February 22, 2006, 11 holding that as an
independent contractor, PRODUCT IMAGE was the employer of petitioner but there was no
evidence that petitioner was dismissed by either PRODUCT IMAGE or BAYER. Sustaining
PRODUCT IMAGEs claim of abandonment, it held that an employee is deemed to have
abandoned his job if he failed to report for work after the expiration of a duly approved leave of
absence or if, after being transferred to a new assignment, he did not report for work anymore.
The appellate court dismissed petitioners petition for failure to attach to it the complaint and the
parties respective position papers filed with the Labor Arbiter. His Motion for Reconsideration
having been denied by Resolution of August 14, 2007, petitioner comes before this Court via the
present Petition for Review on Certiorari.
ISSUE: In the main, the substantive issues are: whether PRODUCT IMAGE is a labor-only
contactor and BAYER should be deemed petitioners principal employer; and whether petitioner
was illegally dismissed from his employment.
RULING: Permissible job contracting or subcontracting refers to an arrangement whereby a
principal agrees to farm out with a contractor or subcontractor the performance of a specific job,
work, or service within a definite or predetermined period, regardless of whether such job, work
or, service is to be performed or completed within or outside the premises of the
principal.25 Under this arrangement, the following conditions must be met: (a) the contractor
carries on a distinct and independent business and undertakes the contract work on his account
under his own responsibility according to his own manner and method, free from the control and
direction of his employer or principal in all matters connected with the performance of his work
except as to the results thereof; (b) the contractor has substantial capital or investment; and (c)
the agreement between the principal and contractor or subcontractor assures the contractual
employees entitlement to all labor and occupational safety and health standards, free exercise
of the right to self-organization, security of tenure, and social welfare benefits. 26
In distinguishing between permissible job contracting and prohibited labor-only contracting, 27 the
totality of the facts and the surrounding circumstances of the case are to be considered, 28 each
case to be determined by its own facts, and all the features of the relationship assessed. 29
In the case at bar, the Court finds substantial evidence to support the finding of the NLRC that
PRODUCT IMAGE is a legitimate job contractor.
The Court notes that PRODUCT IMAGE was issued by the Department of Labor and Employment
(DOLE) Certificate of Registration Numbered NCR-8-0602-176 for having complied with the
requirements as provided for under the Labor Code, as amended, and its implementing Rules
and having paid the registration fee in the amount of ONE HUNDRED (P100) PESOS per Official
Receipt Number 6530485Y, dated 21 June 2002. 30
The DOLE certificate having been issued by a public officer, it carries with it the presumption that
it was issued in the regular performance of official duty. 31 Petitioners bare assertions fail to rebut
this presumption. Further, since the DOLE is the agency primarily responsible for regulating the
business of independent job contractors, the Court can presume, in the absence of evidence to
the contrary, that it had thoroughly evaluated the requirements submitted by PRODUCT IMAGE
before issuing the Certificate of Registration.
Independently of the DOLEs Certification, among the circumstances that establish the status of
PRODUCT IMAGE as a legitimate job contractor are: (1) PRODUCT IMAGE had, during the period in
question, a contract with BAYER for the promotion and marketing of BAYER products; 32 (2)
PRODUCT IMAGE has an independent business and provides services nationwide to big
Page 60
companies such as Ajinomoto Philippines and Procter and Gamble Corporation; 33 and (3)
PRODUCT IMAGEs total assets from 1998 to 2000 amounted to P405,639,P559,897,
and P644,728, respectively.34 PRODUCT IMAGE also posted a bond in the amount of P100,000 to
answer for any claim of its employees for unpaid wages and other benefits that may arise out of
the implementation of its contract with BAYER. 35
PRODUCT IMAGE cannot thus be considered a labor-only contractor.
The existence of an employer-employee relationship is determined on the basis of four
standards, namely: (a) the manner of selection and engagement of the putative employee; (b)
the mode of payment of wages; (c) the presence or absence of power of dismissal; and (d) the
presence or absence of control of the putative employees conduct. Most determinative among
these factors is the so-called "control test." 36
The presence of the first requisite which refers to selection and engagement is evidenced by a
document entitled Job Offer, whereby PRODUCT IMAGE offered to hire petitioner as crop
protection technician effective April 7, 1997, which offer petitioner accepted. 37
On the second requisite regarding the payment of wages, it was PRODUCT IMAGE that paid the
wages and other benefits of petitioner, pursuant to the stipulation in the contract between
PRODUCT IMAGE and BAYER that BAYER shall pay PRODUCT IMAGE an amount based on services
actually rendered without regard to the number of personnel employed by PRODUCT IMAGE; and
that PRODUCT IMAGE shall faithfully comply with the provisions of the Labor Code and hold
BAYER free and harmless from any claim of its employees arising from the contract. 38
As to the third requisite which relates to the power of dismissal, and the fourth requisite which
relates to the power of control, both powers are vested in PRODUCT IMAGE. The Contract of
Promotional Services provides that PRODUCT IMAGE shall have the power to discipline its
employees assigned at BAYER, such that no control whatsoever shall be exercised by BAYER over
those personnel on the manner and method by which they perform their duties, 39 and that all
directives, complaints, or observations of BAYER relating to the performance of the employees of
PRODUCT IMAGE shall be addressed to the latter. 40
If at all, the only control measure retained by BAYER over petitioner was to act as his de facto
supervisor in certifying to the veracity of the accomplishment reports he submitted to PRODUCT
IMAGE. This is by no means the kind of control that establishes an employer-employee
relationship as it pertains only to the results and not the manner and method of doing the work.
It would be a rare contract of service that gives untrammelled freedom to the party hired and
eschews any intervention whatsoever in his performance of the engagement. 41 Surely, it would
be foolhardy for any company to completely give the reins and totally ignore the operations it
has contracted out.42
In fine, PRODUCT IMAGE is ineluctably the employer of petitioner.
Respecting the issue of illegal dismissal, the Court appreciates no evidence that petitioner was
dismissed. What it finds is that petitioner unilaterally stopped reporting for work before filing a
complaint for illegal dismissal, based on his belief that Guillermo and Bergonia had spread
rumors that his transactions on behalf of BAYER would no longer be honored as of April 30, 2002.
This belief remains just that it is unsubstantiated. While in cases of illegal dismissal, the
employer bears the burden of proving that the dismissal is for a valid or authorized cause, the
employee must first establish by substantial evidence the fact of dismissal. 43
WHEREFORE, the petition is, in light of the foregoing, DENIED. SO ORDERED.
Page 61
PROBATIONARY EMPLOYEES: EXTENDED PROBATIONARY PERIOD; WHEN ALLOWED

48. ILUMINADA VER BUISER, MA. CECILIA RILLOACUA and MA. MERCEDES P.
INTENGAN, vs. HON. VICENTE LEOGARDO, JR., in his capacity as Deputy Minister of the
Ministry of Labor & Employment, and GENERAL TELEPHONE DIRECTORY, CO., G.R. No.
L-63316 July 31, 1984
FACTS: Petitioners were employed by the private respondent GENERAL TELEPHONE DIRECTORY
COMPANY as sales representatives and charged with the duty of soliciting advertisements for
inclusion in a telephone directory.
The records show that petitioners Iluminada Ver Buiser and Ma. Mercedes P. Intengan entered
into an "Employment Contract (on Probationary Status)" on May 26, 1980 with private
respondent, a corporation engaged in the business of publication and circulation of the directory
of the Philippine Long Distance Telephone Company. Petitioner Ma. Cecilia Rillo-Acuna entered
into the same employment contract on June 11, 1980 with the private respondent.
Among others, the "Employment Contract (On Probationary Status)" included the following
common provisions:
l. The company hereby employs the employee as telephone representative on a
probationary status for a period of eighteen (18) months, i.e. from May 1980 to October
1981, inclusive. It is understood that darung the probationary period of employment, the
Employee may be terminated at the pleasure of the company without the necessity of
giving notice of termination or the payment of termination pay.
The Employee recognizes the fact that the nature of the telephone sales representative's
job is such that the company would be able to determine his true character, conduct and
selling capabilities only after the publication of the directory, and that it takes about
eighteen (18) months before his worth as a telephone saw representative can be fully
evaluated inasmuch as the advertisement solicited by him for a particular year are
published in the directory only the following year.
Corollary to this, the private respondent prescribed sales quotas to be accomplished or met by
the petitioners. Failing to meet their respective sales quotas, the petitioners were dismissed from
the service by the private respondent. The records show that the private respondent terminated
the services of petitioners Iluminada Ver Buiser and Cecilia Rillo-Acuna on May 14, 1981 and
petitioner Ma. Mercedes P. Intengan on May 18, 1981 for their failure to meet their sales quotas.
Thus, on May 27, 1981, petitioners filed with the National Capital Region, Ministry of Labor and
Employment, a complaint for illegal dismissal with claims for backwages, earned commissions
and other benefits, docketed as Case No. NCR-STF-5-2851-81.
The Regional Director of said ministry, in an Order dated September 21, 1982, dismissed the
complaints of the petitioners, except the claim for allowances which private respondent was
ordered to pay. A reconsideration of the Order was sought by the petitioners in a motion filed on
September 30, 1982. This motion, however, was treated as an appeal to the Minister of Labor.
On appeal, Deputy Minister Vicente Leogardo, Jr. of the Ministry of Labor issued an Order dated
January 7, 1983, affirming the Regional Director's Order dated September 21, 1982, wherein it
ruled that the petitioners have not attained permanent status since private respondent was
Page 62
justified in requiring a longer period of probation, and that the termination of petitioners' services
was valid since the latter failed to meet their sales quotas.
ISSUES:
1. Whether the Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of
discretion amounting to lack of jurisdiction in ruling that the probationary employment of
petitioners herein is eighteen (18) months instead of the mandated six (6) months under the
Labor Code, and in consequently further ruling that petitioners are not entitled to security of
tenure while under said probation for 18 months.
2. Whether the Hon. Regional Director and the Hon. Deputy Minister committed grave abuse of
discretion amounting to lack of jurisdiction in ruling that petitioners were dismissed for a just and
valid cause.
RULING: No. Petitioners contend that under Articles 281-282 of the Labor Code, having served
the respondent company continuously for over six (6) months, they have become automatically
regular employees notwithstanding an agreement to the contrary. Articles 281-282 read thus:
Art. 282. Probationary Employment. Probationary employment shall not exceed six (6)
months from the date the employee started working, unless it iscCovered by an
apprenticeship agreement stipulating a longer period. 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. (As
amended by PD 850).
Art. 281. Regular and Casual Employment. The provisions of written agreement to the
contrary notwithstanding and regardless of the oral agreements of the parties, an
employment shall be deemed to be regular where the employee has been engaged to
perform activities which are usually necessary or desirable in the usual business or trade
of the employer, except where the employment has been fixed for a specific project or
undertaking the completion or termination of which has been determined at the time of
the engagement of the employee or where the work or services to be performed is
seasonal in nature and the employment is for the duration of the season.
An employment shall be deemed to be casual if it is not covered by the preceeding
paragraph. Provided, That, any employee who has rendered at least one year of service,
whether such service is continuous or broken, shall be considered a regular employee with
respect to the activity in which he is employed and his employment shall continue while
such actually exists. (As amended by PD 850).
It is petitioners' submission that probationary employment cannot exceed six (6) months, the
only exception being apprenticeship and learnership agreements as provided in the Labor Code;
that the Policy Instruction of the Minister of Labor and Employment nor any agreement of the
parties could prevail over this mandatory requirement of the law; that this six months
prescription of the Labor Code was mandated to give further efficacy to the constitutionallyguaranteed security of tenure of workers; and that the law does not allow any discretion on the
part of the Minister of Labor and Employment to extend the probationary period for a longer
period except in the aforecited instances. Finally, petitioners maintain that since they are regular
Page 63
employees, they can only be removed or dismissed for any of the just and valid causes
enumerated under Article 283 of the Labor Code.
We reject petitioners' contentions. They have no basis in law.
Generally, the probationary period of employment is limited to six (6) months. The exception to
this general rule is When the parties to an employment contract may agree otherwise, such as
when the same is established by company policy or when the same is required by the nature of
work to be performed by the employee. In the latter case, there is recognition of the exercise of
managerial prerogatives in requiring a longer period of probationary employment, such as in the
present case where the probationary period was set for eighteen (18) months, i.e. from May,
1980 to October, 1981 inclusive, especially where the employee must learn a particular kind of
work such as selling, or when the job requires certain qualifications, skills, experience or training.
Policy Instruction No. 11 of the Minister of Labor and Employment has clarified any and all doubts
on the period of probationary employment. It states as follows:
Probationary Employment has been the subject of misunderstanding in some quarter.
Some people believe six (6) months is the probationary period in all cases. On the other
hand employs who have already served the probationary period are sometimes required to
serve again on probation.
Under the Labor Code, six (6) months is the general probationary period ' but the
probationary period is actually the period needed to determine fitness for the job. This
period, for lack of a better measurement is deemed to be the period needed to learn the
job.
The purpose of this policy is to protect the worker at the same time enable the employer
to make a meaningful employee selection. This purpose should be kept in mind in
enforcing this provision of the Code. This issuance shall take effect immediately.
In the case at bar, it is shown that private respondent Company needs at least eighteen (18)
months to determine the character and selling capabilities of the petitioners as sales
representatives. The Company is engaged in advertisement and publication in the Yellow Pages
of the PLDT Telephone Directories. Publication of solicited ads are only made a year after the sale
has been made and only then win the company be able to evaluate the efficiency, conduct, and
selling ability of its sales representatives, the evaluation being based on the published ads.
Moreover, an eighteen month probationary period is recognized by the Labor Union in the private
respondent company, which is Article V of the Collective Bargaining Agreement, ... thus:
Probationary Period New employees hired for regular or permanent shall undergo a
probationary or trial period of six (6) months, except in the cases of telephone or sales
representatives where the probationary period shall be eighteen (I 8) months.
And as indicated earlier, the very contracts of employment signed and acquiesced to by the
petitioners specifically indicate that "the company hereby employs the employee as telephone
sales representative on a probationary status for a period of eighteen (18) months, i.e. from May
1980 to October 1981, inclusive. This stipulation is not contrary to law, morals and public policy.
Page 64
We, therefore, hold and rule that the probationary employment of petitioners set to eighteen (18)
months is legal and valid and that the Regional Director and the Deputy Minister of Labor and
Employment committed no abuse of discretion in ruling accordingly.
2. On the second assignment of error that public respondent committed grave abuse of
discretion in ruling that petitioners were dismissed for a just and valid cause, this is not the first
time that this issue has been raised before this Court. Earlier, in the case of "Arthur Golez vs. The
National Labor Relations Commission and General Telephone Directory Co. "G.R. No. L-64459, July
25, 1983, the petition for certiorari which raised the same issue against the herein private
respondent was dismissed by this Court for lack of merit.
The practice of a company in laying off workers because they failed to make the work quota has
been recognized in this jurisdiction. (Philippine American Embroideries vs. Embroidery and
Garment Workers, 26 SCRA 634, 639). In the case at bar, the petitioners' failure to meet the sales
quota assigned to each of them constitute a just cause of their dismissal, regardless of the
permanent or probationary status of their employment. Failure to observe prescribed standards
of work, or to fulfill reasonable work assignments due to inefficiency may constitute just cause
for dismissal. Such inefficiency is understood to mean failure to attain work goals or work quotas,
either by failing to complete the same within the alloted reasonable period, or by producing
unsatisfactory results. This management prerogative of requiring standards availed of so long as
they are exercised in good faith for the advancement of the employer's interest.
Petitioners anchor their claim for commission pay on the Collective Bargaining Agreement (CBA)
of September 1981, in support of their third assignment of error. Petitioners cannot avail of this
agreement since their services had been terminated in May, 1981, at a time when the CBA of
September, 1981 was not yet in existence.
In fine, there is nothing in the records to show any abuse or misuse of power properly vested in
the respondent Deputy Minister of Labor and Employment. For certiorari to lie, "there must be
capricious, arbitrary and whimsical exercise of power, the very antithesis of the judicial
prerogative inaccordance with centuries of both civil and common law traditions." (Panaligan vs.
Adolfo, 67 SCRA 176, 180). The "abuse of discretion must be grave and patent, and it must be
shown that the discretion was exercised arbitrarily or despotically." (Palma and Ignacio vs. Q. &
S., Inc., et al., 17 SCRA 97, 100; Philippine Virginia Tobacco Administration vs. Lucero, 125 SCRA
337, 343).
WHEREFORE, the petition is DISMISSED for lack of merit.
Page 65
MANAGERIAL EMPLOYEES VS SUPERVISORY EMPLOYEES

68. RURAL BANK OF CANTILAN, INC., and WILLIAM HOTCHKISS III, vs. ARJAY RONNEL
H. JULVE, G.R. No. 169750, February 27, 2007
FACTS: On August 1, 1997, the Rural Bank of Cantilan, Inc., petitioner, hired respondent as a
management trainee. Later, he was appointed as planning and marketing officer.
On June 18, 2001, William Hotchkiss III (also a petitioner), president of petitioner bank, issued a
memorandum addressed to all its branch managers informing them of the abolition of the
positions of planning and marketing officer and remedial officer; that this was undertaken in
accordance with the banks Personnel Streamlining Program; and that the operations officer shall
absorb the functions of the abolished offices.
On July 18, 2001, Hotchkiss sent respondent a memorandum stating that he has been appointed
bookkeeper I at the banks branch in Madrid, Surigao del Sur effective immediately with the
same salary corresponding to his old position. Initially, respondent agreed to accept the
appointment, but eventually, he changed his mind and made the following notation on Hotchkiss
memorandum, thus:
I am withdrawing my signature on this appointment because I feel that this is a demotion (on the
position itself and allowances) and not a lateral transfer as what the President told me yesterday.
I believe I do not deserve a demotion.
Thank you.
On August 9, 2001, Hotchkiss appointed respondent as bookkeeper I and assistant branch head
of the Madrid branch. However, he did not report for work.
On September 11, 2001, Hotchkiss directed respondent to explain why he should not be
sanctioned for his failure to assume his new post at the Madrid branch.1awphi1.net
The following day, respondent submitted his written explanation, which partly reads:
I regret to say that I am not accepting the position of Asst. Branch Head of RBCI-Madrid Branch
for the very reason that the papers were not left with me by the Admin. Officer after she let me
read them. Considering that Asst. Branch Head is a newly-created position, I requested her for a
copy of the said papers first so I can thoroughly study them before making my decision. But she
immediately took them back from me after I told her about this.
On September 14, 2001, respondent filed with the Regional Arbitration Branch No. XIII, National
Labor Relations Commission (NLRC), Butuan City, a complaint for constructive dismissal against
petitioners, docketed as NLRC Case No. RAB-13-09-00276-2001.
On January 14, 2002, the Labor Arbiter rendered a Decision Declaring complainant as
constructively illegally dismissed; Ordering respondents to reinstate complainant to his former or
equivalent position without loss of seniority rights with full backwages from the time his salary
was withheld from him up to the time he is actually reinstated; to pay complainant his partial
backwages in the amount of P57,165.33 computed up to the date of this decision as follows and:
ordering respondents to pay complainant moral and exemplary damages in the total amount
Page 66
of P100,000.00 plus P15,718.53, as attorneys fees which is equivalent to 10% of the total
monetary award.
On appeal by petitioners, the NLRC, in its Resolution dated November 19, 2002, set aside the
Labor Arbiters judgment.
On September 23, 2004, the Court of Appeals rendered its Decision granting the petition,
granting the instant Petition. The NLRC Resolutions dated 19 November 2002 and 26 February
2003 are hereby ANNULLED and SET ASIDE. The Labor Arbiters Decision dated 14 January 2002
is hereby REINSTATED.
ISSUE: Whether the Court of Appeals erred in holding that respondent was constructively
dismissed from employment.
HELD: In resolving this issue, we rely on the following guide posts:
Under the doctrine of management prerogative, every employer has the inherent right to
regulate, according to his own discretion and judgment, all aspects of employment, including
hiring, work assignments, working methods, the time, place and manner of work, work
supervision, transfer of employees, lay-off of workers, and discipline, dismissal, and recall of
employees.2 The only limitations to the exercise of this prerogative are those imposed by labor
laws and the principles of equity and substantial justice.
While the law imposes many obligations upon the employer, nonetheless, it also protects the
employers right to expect from its employees not only good performance, adequate work, and
diligence, but also good conduct and loyalty. 3 In fact, the Labor Code does not excuse employees
from complying with valid company policies and reasonable regulations for their governance and
guidance.
Concerning the transfer of employees, these are the following jurisprudential guidelines: (a) a
transfer is a movement from one position to another of equivalent rank, level or salary without
break in the service or a lateral movement from one position to another of equivalent rank or
salary;4 (b) the employer has the inherent right to transfer or reassign an employee for legitimate
business purposes;5 (c) a transfer becomes unlawful where it is motivated by discrimination or
bad faith or is effected as a form of punishment or is a demotion without sufficient cause; 6 (d) the
employer must be able to show that the transfer is not unreasonable, inconvenient, or prejudicial
to the employee.7
Constructive dismissal is defined as "quitting when continued employment is rendered
impossible, unreasonable, or unlikely as the offer of employment involves a demotion in rank and
diminution of pay."8
In light of the above guidelines, we agree with the NLRC in ruling that respondent was not
constructively dismissed from employment.
Respondent contends that the abolition of his position as planning and marketing officer and his
appointment as bookkeeper I and assistant branch head of the Madrid Branch is a demotion.
However, a look at the functions of his new position shows the contrary. The bookkeeper and
assistant branch head is not only charged with preparing financial reports and monthly bank
reconciliations, he is also the head of the Accounting Department of a branch. Under any
Page 67
standard, these are supervisory and administrative tasks which entail great responsibility.
Moreover, respondents transfer did not decrease his pay.
Nor was respondents transfer motivated by ill-will or prejudice on the part of petitioners. His
position was not the only one abolished pursuant to the banks Personnel Streamlining Program.
We recall that the position of remedial officer was likewise abolished. Petitioners reason was to
acquire savings from the salaries it would pay to full-time personnel in these positions.
Finally, we note that despite respondents refusal to accept the new appointment, petitioners did
not dismiss him. Rather, it was he who opted to terminate his employment when he purposely
failed to report for work.
In fine, we hold that the Court of Appeals erred when it concluded that respondent was
constructively dismissed from employment.
WHEREFORE, we GRANT the petition and REVERSE the Decision of the Court of Appeals in CAG.R. SP No. 77206. The Resolutions of the NLRC dated November 19, 2002 and February 26,
2003, dismissing respondents complaint are AFFIRMED. SO ORDERED.
Page 68
Mitisubishi Motors Union (MMPSEU) vs Misubishi Motors (MM)

The parties had a CBA- covered employees pay part of the hospitalization insurance premium
through monthly salary deduction while the company, upon hospitalization of the covered
employees dependents. Conflict arises when a portion of the hospitalization expenses of the
covered employees were paid/shouldered by the dependents own hospital insurance.
There were 3 occasions were an employee claims for reimbursement after they were hospitalized
and claimed insurance benefits from insurance companies apart from the employers. The
employer in return just pays for a certain amount after deducting from the total medical
expenses the amount paid by medicard. So what they wanted is the full recovery of payment.
MM denies saying that double insurance will result.
Their contention is that nowhere in the CBA is a provision prohibiting employees from obtaining
other insurance or declares that medical expenses can only be availed of upon presentation of
original receipts. And that they are entitled to full reimbursement of medical expenses incurred
by their dependents regardless of any amounts paid by the latters health insurance provider.
MM argued that the same will result to double indemnity which is proscribed by the Insurance
Code.
ISSUE: Proper construction of the CBA.
RULING: The condition that payment should be direct to the hospital and doctor implies that MM
is only liable to pay medical expenses actually shouldered by the employees dependents. It
follows that MMs liability is limited, that it, it does not include the amounts paid by other health
insurance providers. This condition is intended to thwart not only fraudulent claims but also
double claims for the same loss of the dependents covered employees.
The CBA is a contract between the parties and as such, it should be strictly construed for
purpose of limiting the amount of the employers liability. The terms of the subject provision are
clear and provide no room for any other interpretation. In short, the terms must be taken in their
plain, ordinary, and popular sense.
Page 69
ABS CBN vs NAZARENO

Petitioner employed respondents as production assistants on different dates. They were assigned
to the news and public affairs for various radio programs. They have an I.D. and are required to
work for a minimum of eight hours a day. They were also under the control and supervision of
Assistant Station Manager Luzon.
Later on, there is a MEMO transferring them to Non-drama programs.
They are actually excluded from the CBA. Later on they filed a complaint for recognition of
Regular employment status > dismissed for failing to file a position paper.
Respondents maintain that they belong to a work pool from which petitioner chose persons to
be given specific assignments at its discretion and that they are under the full control and
supervision of the Petitioner regardless of the nomenclature.
ABS CBN contends that they are program employees and as such their engagement is
coterminous with the completion of the program and may be expected / renewed when the
program is on going.
Distinction with SONZA case
The test is the reasonable connection between the particular activity performed by the employee
in relation to the usual trade or business of the employer. Check the nature of the work
performed and its relation to the scheme of the particular business.
Jose Sonza is an independent contractor. He was hired because of his peculiar skills, talent and
celebrity status. If Sonza did not possess such unique skils, talent and status ABS would not have
entered into an Agreement with him.
All the wages, talent fees and benefits paid to Sonza were the results of an agreement between
the parties. He alone possesses enough bargaining power to demand and receive such huge
talent fees.
Futher: Employer employee relationship was proven.
First: no particular skill or talent or celebrity status is needed because they were hired by the
petitioners personnel department.
Second: Respondents did not have the power to bargain for huge talent fees.
Third: They can always be discharged if their work is unsatisfactory.
Thus, the degree of control exercised by ABS negates the allegation that respondents are
independent contractors.
Page 70
PHILEX GOLD vs PHILEX BULAWAN

Respondent Union recognized Union of PhilexGOld. Theres a CBA. After signing the CBA,
PHilexGold made employees of Philex Mining Corporation from Padacal Benguet as its regular
supervisory employees. So some of the so called Ex-padaca supervisors began to work in
Bulawan Mines.
It turned out that Ex padacal supervisors were maintained under a confidential payroll, receiving
different salary benefits and higher salaries compared to the locally hired supervisors of similar
rank.
Union filed a complait against Philex Gold with NCMB > ruled in favor of the Union.
Discriminatory yung wage policy.
CA > in favour of Union. It used the principle Equal pay for Equal Work
ISSUE: WON the doctrine of equal pay for equal work should not remove management
prerogative to institute difference in salary on the basis of the seniority, skill, experience and the
dislocation factor in the same class of supervisory workers doing the same kind of work. (Guys,
eto na rin yung contention ng PhilexGold- may valid factors daw that exists to justify the
classification)
RULING: No. Petitioners even admitted that the same class of workers are doing the same kind
of of work. This means that an exPadcal Supervisor and a locally hired supervisor of equal rank
do t the same kind of work. If an employer accords employees the same position and rank, the
presumption if that thee employees perform equal work.
Here, Petitioners failed to adduce evidence to show that an exPadcal Supervisor and a locally
hired supervisor of the same rank are initially paid the same basic salary for doing the same kind
of work. They failed to differentiate the basic salary from any kind of salary increase or additional
benefit which may have been given to exPadcal supervisors due to their seniority, experience
and other factors.
While the law recognizes and safeguards the right of an employer to exercise what are clearly
management prerogatives, such right should not be abused and used as a tool of oppression
against labor. The companys prerogative must be exercised in good faith and with due regard to
the rights of labor. They are not absolute prerogatives but are subject to legal limits, collective
bargaining agreements and the general principles of fair play and justice.
Page 71
INTEGRATED CONTRACTOR and PLUMBING WORKS vs NLRC and SOLON

Petitioner is a plumbing contractor. Its business depends on the number and frequency of the
projects it is able to contact with its clients. Respondent Solon worked for petitioner. Heres his
work:
December 14, 1994 up to January 14, 1995 St. Charbel Warehouse

February 1, 1995 up to April 30, 1995 St. Charbel Warehouse
May 23, 1995 up to June 23, 1995 St. Charbel Warehouse
August 15, 1995 up to October 31, 1995 St. Charbel Warehouse
November 2, 1995 up to January 31, 1996 St. Charbel Warehouse
May 13, 1996 up to June 15, 1996 Ayala Triangle
August 27, 1996 up to November 30, 1996 St. Charbel Warehouse [4]
July 14, 1997 up to November 1997 ICPWI Warehouse
November 1997 up to January 5, 1998 Cathedral Heights
Later on, when he was about to log out from work, he was instructed that it was his last day from
work as he had been terminated. He went to Petitioners office and inquired and when hes about
to sign a clearance he found out that allegedly he resigned.
He then filed a claim for illegal dismissal.
LA- he is a regular employee.
NLRC affirmed LAs decision.
Contention: Petitioner asserts that respondent is a project employee. Thus, when a project was
completed and private respondent was no re-assigned to another project, petitioner did not
violate any law.
ISSUE: WON respondent is a project employee of the petitioner or a regular employee.
RULING: He is a regular employee. The test is the reasonable connection between the particular
activity performed by the employee in relation to the usual business or trade of the employer.
Also, if the employee has been performing the job for at least one year, even if the performance
is not continuous or merely intermittent, the law deems the repeated and continuing need for its
performance as sufficient evidence of the necessity, if not indispensability of that activity to the
business. Thus, we held that where the employment of project employees is extended long after
the supposed project has been finished, the employees are removed from the scope of project
employees and are considered regular employees.
While length of time may not be the controlling test for project employment, it is vital in
determining if the employee was hired for a specific undertaking or tasked to perform functions
vital, necessary and indispensable to the usual business or trade of the employer. Here, private
respondent had been a project employee several times over. His employment ceased to be
coterminous with specific projects when he was repeatedly re-hired due to the demands of
Page 72
petitioners business. Where from the circumstances it is apparent that periods have been
imposed to preclude the acquisition of tenurial security by the employee, they should be struck
down as contrary to public policy, morals, good customs or public order.
Further, Policy Instructions No. 20 requires employers to submit a report of an employees
termination to the nearest public employment office every time his employment was terminated
due to a completion of a project. The failure of the employer to file termination reports is an
indication that the employee is not a project employee.
Page 73
GRANDTEQ INDUSTRIAL STEEL PRODUCTS INC. VS. MARGALLO

Facts: Margallo availed herself of a car loan program offered to her by Grandteq as a reward for
being Salesman of the Year. She paid the down payment of P201,000 out of her own pocket,
while the monthly amortizations were to be paid by her and Grandteq. Subsequently, Margallo
received a letter from the Abelardo Gonzales, President, and Ronaldo De Leon, VP for
Administration, asking for explanation as to the four tool steel that she allegedly shipped to
another company. She denied the allegation, stating that she was merely following the orders of
a superior. However, Margallo was made to resign with the promise that she would still be paid
her commissions and other benefits, as well as be reimbursed her car loan payments. However,
Margallo claimed that she was never paid her money claims.
She filed a complaint against Grandteq with the LA for recovery of sales commission, cash
incentive and car loan payment. Grandteq opposed her claims, stating that Margallo had no right
to the refund of her car loan payment because the car loan agreement that she executed with
Grandteq stated that in the event that Margallo resigned or was terminated for cause during the
effectivity of the same, her car loan payments would be forfeited in favor of Grandteq, and
Grandteq would regain possession of the car. The LA dismissed all of Margallos claims. On
appeal, the NLRC reversed the decision of the LA and granted Margallos claims. Grandteq
brought the case to the CA, which affirmed the decision of the NLRC.
Issue: WON the car loan agreement between Grandteq and Margallo is valid
Ruling: Generally speaking, contracts are respected as the law between the contracting parties.
The contracting parties may establish such stipulations, clauses, terms and conditions as they
may deem convenient, provided they are not contrary to law, morals, good customs, public order
or public policy.
The provisions in question plainly are contrary to the fundamental principles of justice and
fairness. It must be remembered that Margallo herself paid for the down payment and her share
in the monthly amortization of the car. However, she did not get to leave with the car when she
resigned from Grandteq. In effect, Margallo parted with her hard-earned money for nothing,
being left, as she is, with an empty bag. The inequitableness in the conduct of Grandteq and
Gonzales is heightened by the fact that after they regained possession of the car, they resold the
same to another employee under a similar contract bearing the same terms and conditions
signed by Margallo. The principle against unjust enrichment obliges Grandteq and Gonzales to
refund to Margallo the car loan payments she had made, since she has not actually acquired the
car. To relieve Grandteq and Gonzales of their obligation to reimburse Margallo would, indeed, be
to sanction unjust enrichment in favor of the first two and cause unjust poverty to the latter.
The Constitution and the Labor Code mandate the protection of labor. Hence, as a matter of
judicial policy, this Court has, in a number of instances, leaned backwards to protect labor and
the working class against the machinations and incursions of their more financially entrenched
employers.
Although not strictly a labor contract, the car loan agreement herein involves a benefit extended
by the employers, Grandteq and Gonzales, to their employee, Margallo. It should benefit, and not
unduly burden, Margallo. The Court cannot, in any way, uphold a car loan agreement that
threatens the employee with the forfeiture of all the car loan payments he/she had previously
made, plus loss of the possession of the car, should the employee wish to resign; otherwise, said
agreement can then be used by the employer as an instrument to either hold said employee
hostage to the job or punish him/her for resigning.
Page 74
Page 75
ROYAL PLANT WORKERS UNION VS. COCA-COLA BOTTLERS PHILS.

Facts: The bottling operators of then Bottling Line 2 were provided with chairs upon their
request. The bottling operators of then Bottling Line 1 followed suit and asked to be provided
also with chairs. Their request was likewise granted. Subsequently, the chairs provided for the
operators were removed pursuant to a national directive of petitioner. This directive is in line with
the "I Operate, I Maintain, I Clean" program of petitioner for bottling operators, wherein every
bottling operator is given the responsibility to keep the machinery and equipment assigned to
him clean and safe. The program reinforces the task of bottling operators to constantly move
about in the performance of their duties and responsibilities. With this task of moving constantly
to check on the machinery and equipment assigned to him, a bottling operator does not need a
chair anymore, hence, petitioners directive to remove them. Furthermore, CCBPI rationalized
that the removal of the chairs is implemented so that the bottling operators will avoid sleeping,
thus, prevent injuries to their persons.
The bottling operators took issue with the removal of the chairs. Through the representation of
herein respondent, they initiated the grievance machinery of the Collective Bargaining
Agreement (CBA). Even after exhausting the remedies contained in the grievance machinery, the
parties were still at a deadlock with petitioner still insisting on the removal of the chairs and
respondent still against such measure. As such, respondent sent a Notice to Arbitrate to
petitioner stating its position to submit the issue on the removal of the chairs for arbitration.
Nevertheless, before submitting to arbitration the issue, both parties availed of the
conciliation/mediation proceedings before the NCMB. They failed to arrive at an amicable
settlement.
Thus, the process of arbitration continued and the parties appointed the chairperson and
members of the Arbitration Committee as outlined in the CBA. The Arbitration Committee
rendered a decision in favor of the Royal Plant Workers Union (the Union) and against CCBPI. Not
contented with the Arbitration Committees decision, CCBPI filed a petition for review under Rule
43 before the CA. The CA rendered a contrasting decision which nullified and set aside the
decision of the Arbitration Committee.
Issue: Was the removal of the bottling operators chairs from CCBPIs production/manufacturing
lines a valid exercise of a management prerogative?
Ruling: The Court has held that management is free to regulate, according to its own discretion
and judgment, all aspects of employment, including hiring, work assignments, working methods,
time, place, and manner of work, processes to be followed, supervision of workers, working
regulations, transfer of employees, work supervision, lay-off of workers, and discipline, dismissal
and recall of workers. The exercise of management prerogative, however, is not absolute as it
must be exercised in good faith and with due regard to the rights of labor.
In the present controversy, it cannot be denied that CCBPI removed the operators chairs
pursuant to a national directive and in line with its "I Operate, I Maintain, I Clean" program,
launched to enable the Union to perform their duties and responsibilities more efficiently. The
chairs were not removed indiscriminately. They were carefully studied with due regard to the
welfare of the members of the Union. The removal of the chairs was compensated by: a) a
reduction of the operating hours of the bottling operators from a two-and-one-half (2 )-hour
rotation period to a one-and-a-half (1 ) hour rotation period; and b) an increase of the break
period from 15 to 30 minutes between rotations.
Page 76
Apparently, the decision to remove the chairs was done with good intentions as CCBPI wanted to
avoid instances of operators sleeping on the job while in the performance of their duties and
responsibilities and because of the fact that the chairs were not necessary considering that the
operators constantly move about while working. In short, the removal of the chairs was designed
to increase work efficiency. Hence, CCBPIs exercise of its management prerogative was made in
good faith without doing any harm to the workers rights.
The rights of the Union under any labor law were not violated. There is no law that requires
employers to provide chairs for bottling operators. The CA correctly ruled that the Labor Code,
specifically Article 132 thereof, only requires employers to provide seats for women. No similar
requirement is mandated for men or male workers. It must be stressed that all concerned
bottling operators in this case are men.
There was no violation either of the Health, Safety and Social Welfare Benefit provisions under
Book IV of the Labor Code of the Philippines. As shown in the foregoing, the removal of the chairs
was compensated by the reduction of the working hours and increase in the rest period. The
directive did not expose the bottling operators to safety and health hazards.
The operators chairs cannot be considered as one of the employee benefits covered in Article
100 of the Labor Code. In the Courts view, the term "benefits" mentioned in the non-diminution
rule refers to monetary benefits or privileges given to the employee with monetary equivalents.
Such benefits or privileges form part of the employees wage, salary or compensation making
them enforceable obligations.
Page 77
PINES CITY EDUCATIONAL CENTER VS. NLRC

Facts: Private respondents were all employed as teachers on probationary basis by petitioner
Pines City Educational Center, represented in this proceedings by its President, Eugenio Baltao.
With the exception of Jane Bentrez who was hired as a grade school teacher, the remaining
private respondents were hired as college instructors. All the private respondents, except Roland
Picart and Lucia Chan, signed contracts of employment with petitioner for a fixed duration. Due
to the expiration of private respondents' contracts and their poor performance as teachers, they
were notified of petitioners' decision not to renew their contracts anymore.
Private respondents filed a complaint for illegal dismissal before the Labor Arbiter, alleging that
their dismissals were without cause and in violation of due process. Except for private
respondent Leila Dominguez who worked with petitioners for one semester, all other private
respondents were employed for one to two years. They were never informed in writing by
petitioners regarding the standards or criteria of evaluation so as to enable them to meet the
requirements for appointment as regular employees. They were merely notified in writing by
petitioners, of the termination of their respective services on account of their below-par
performance as teachers. For their part, petitioners contended that private respondents'
separation from employment, apart from their poor performance, was due to the expiration of
the periods stipulated in their respective contracts.
The Labor Arbiter rendered judgment in favor of private respondents. On appeal to the National
Labor Relations Commission, the decision was affirmed in toto.
Issue: WON private respondents were illegally dismissed
Ruling: Insofar as the private respondents who knowingly and voluntarily agreed upon fixed
periods of employment are concerned, their services were lawfully terminated by reason of the
expiration of the periods of their respective contracts. These are Dangwa Bentrez, Apollo Ribaya,
Sr., Ruperta Ribaya, Virginia Boado, Cecilia Emocling, Jose Bentrez, Leila Dominguez and Rose
Ann Bermudez. Thus, public respondent committed grave abuse of discretion in affirming the
decision of the Labor Arbiter ordering the reinstatement and payment of full backwages and
other benefits and privileges.
With respect to private respondents Roland Picart and Lucia Chan, both of whom did not sign any
contract fixing the periods of their employment nor to have knowingly and voluntarily agreed
upon fixed periods of employment, petitioners had the burden of proving that the termination of
their services was legal. As probationary employees, they are likewise protected by the security
of tenure provision of the Constitution. Consequently, they cannot be removed from their
positions unless for cause.
Page 78
PROTACIO VS. LAYANG MANANGHAYA & CO.

Facts: Respondent firm hired petitioner as Tax Manager, and he was subsequently promoted to
the position of Senior Tax Manager, and again to the position of Tax Principal. However, petitioner
tendered his resignation, and he sent a letter to respondent firm demanding the immediate
payment of his 13th month pay, and the cash commutation of his leave credits. Petitioner sent to
respondent firm two more demand letters for payment of his reimbursement claims under pain of
legal action. Respondent firm failed to act upon the demand letters. Thus, petitioner filed before
the NLRC a complaint for the payment of his money claims. During the pendency of the case
before the LA, respondent firm on three occasions sent check payments to petitioner, covering
petitioners money claims. Petitioner acknowledged the receipt of the 13 th month pay but
disputed the computation of the cash value of his vacation leave credits and reimbursement
claims.
The LA rendered a decision ordering respondents to jointly and solidarily pay petitioner.
Respondent firm appealed to the NLRC, which affirmed the decision of the LA with modification
as to the amount of reimbursement claims to be awarded. Respondents elevated the matter to
the Court of Appeals via a petition for certiorari. The Court of Appeals further reduced the total
money award to petitioner.
Issue: WON petitioner is entitled to the year-end lump sum pay claim
Ruling: The evidence on record establishes that aside from the basic monthly compensation,
petitioner received a yearly lump sum amount during the first two years of his employment, with
the payments made to him after the annual net incomes of the firm had been determined. Thus,
the amounts thereof varied and were dependent on the firms cash position and financial
performance. In one of the letters of respondent Mananghaya to petitioner, the amount was
referred to as petitioners "share in the incentive compensation program."
While the amount was drawn from the annual net income of the firm, the distribution thereof to
non-partners or employees of the firm was not, strictly speaking, a profit-sharing arrangement
between petitioner and respondent firm contrary to the Court of Appeals finding. The payment
thereof to non-partners of the firm like herein petitioner was discretionary on the part of the
chairman and managing partner coming from their authority to fix the compensation of any
employee based on a share in the partnerships net income. The distribution being merely
discretionary, the year-end lump sum payment may properly be considered as a year-end bonus
or incentive. Contrary to petitioners claim, the granting of the year-end lump sum amount was
precisely dependent on the firms net income; hence, the same was payable only after the firms
annual net income and cash position were determined.
By definition, a "bonus" is a gratuity or act of liberality of the giver. It is something given in
addition to what is ordinarily received by or strictly due the recipient. A bonus is granted and
paid to an employee for his industry and loyalty which contributed to the success of the
employers business and made possible the realization of profits. Generally, a bonus is not a
demandable and enforceable obligation. It is so only when it is made part of the wage or salary
or compensation. When considered as part of the compensation and therefore demandable and
enforceable, the amount is usually fixed. If the amount would be a contingent one dependent
upon the realization of the profits, the bonus is also not demandable and enforceable.
In the instant case, petitioners claim that the year-end lump sum represented the balance of his
total compensation package is incorrect. The fact remains that the amounts paid to petitioner on
the two occasions varied and were always dependent upon the firms financial position.
Page 79
In one case, the Court held that if the bonus is paid only if profits are realized or a certain
amount of productivity achieved, it cannot be considered part of wages. If the desired goal of
production is not obtained, of the amount of actual work accomplished, the bonus does not
accrue. Only when the employer promises and agrees to give without any conditions imposed for
its payment, such as success of business or greater production or output, does the bonus
become part of the wage. Petitioners assertion that he was responsible for generating revenues
amounting to more than P7 million remains a mere allegation in his pleadings. The records are
absolutely bereft of any supporting evidence to substantiate the allegation.
The granting of a bonus is basically a management prerogative which cannot be forced upon the
employer who may not be obliged to assume the onerous burden of granting bonuses or other
benefits aside from the employees basic salaries or wages. Respondents had consistently
maintained from the start that petitioner was not entitled to the bonus as a matter of right. The
payment of the year-end lump sum bonus based upon the firms productivity or the individual
performance of its employees was well within respondent firms prerogative. Thus, respondent
firm was also justified in declining to give the bonus to petitioner on account of the latters
unsatisfactory performance.
Petitioner failed to present evidence refuting respondents allegation and proof that they
received a number of complaints from clients about petitioners "poor services." For purposes of
determining whether or not petitioner was entitled to the year-end lump sum bonus, respondents
were not legally obliged to raise the issue of substandard performance with petitioner, unlike
what the Labor Arbiter had suggested. Of course, if what was in question was petitioners
continued employment vis--vis the allegations of unsatisfactory performance, then respondent
firm was required under the law to give petitioner due process to explain his side before
instituting any disciplinary measure. However, in the instant case, the granting of the year-end
lump sum bonus was discretionary and conditional, thus, petitioner may not question the basis
for the granting of a mere privilege.
Page 80
LOLITA R. LACUESTA vs. ATENEO DE MANILAUNIVERSITY

FACTS: Respondent Ateneo hired, on a contractual basis, petitioner Lolita R. Lacuesta as a
part-time lecturer for the 2nd semester of school year 1988-1989. She was re-hired, still on a
contractual basis, for the 1st and 2nd semesters of school year 1989-1990. Petitioner was
appointed as full-time instructor on probation effective June 1, 1990 until March 31,
1991. Her contract as faculty on probation was renewed on April 1, 1991 until March 31, 1992
and again from April 1, 1992 until March 31, 1993. During years she was on probation status. In a
letter dated January 27, 1993, respondent notified petitioner that her contract would no
longer be renewed because she did not integrate well with the English Department and
that she was not being terminated, but her contract would simply expire; hence, Lacuestas
petition.
Petitioner contends that Articles 280 and 281 of the Labor Code, not the Manual of Regulations
for Private Schools, is the applicable law to determine whether or not an employee in an
educational institution has acquired regular or permanent status. She argues that (1) under
Article 281, probationary employment shall not exceed six (6) months from date of employment
unless a longer period had been stipulated by an apprenticeship agreement; (2) under Article
280, if the apprenticeship agreement stipulates a period longer than one year and the employee
rendered at least one year of service, whether continuous or broken, the employee shall be
considered as regular employee with respect to the activity in which he is employed while such
activity exists; and (3) it is with more reason that petitioner be made regular since she had
rendered services as part-time and full-time English teacher for four and a half years, services
which are necessary and desirable to the usual business of Ateneo.
Respondents, for their part, contend that the Manual of Regulations for Private Schools is
controlling. In the Manual, full-time teachers who have rendered three consecutive years of
satisfactory service shall be considered permanent. Respondents also claim that the petitioner
was not terminated but her employment contract expired at the end of the probationary period.
Further, institutions of higher learning, such as respondent Ateneo, enjoy the freedom to choose
who may teach according to its standards. Respondents also argue that the quitclaim, discharge
and release by petitioner is binding and should bar her complaint for illegal dismissal.
ISSUE: 1) Whether the Labor Code, and not the Manual of Regulations for Private Schools, is the
applicable law to determine whether or not an employee in an educational institution has
acquired regular or permanent status; 2)Whether or not petitioner has already acquired
permanent employment and was illegally dismissed.
RULING: 1) The Manual of Regulations for Private Schools, and not the Labor Code, determines
whether or not a faculty member in an educational institution has attained regular or permanent
status. In University of Santo Tomas v. National Labor Relations Commission the Court en
banc said that under Policy Instructions No. 11 issued by the Department of Labor and
Employment, the probationary employment of professors, instructors and teachers shall be
subject to the standards established by the Department of Education and Culture. Said standards
are embodied in paragraph 75 (now Section 93) of the Manual of Regulations for Private Schools.
Section 93 of the 1992 Manual of Regulations for Private Schools provides that full-time teachers
who have satisfactorily completed their probationary period shall be considered regular or
permanent.
2) The requisites to acquire permanent employment, or security of tenure, are (1) the
teacher is a full-time teacher; (2) the teacher must have rendered three consecutive
years of service; and (3) such service must have been satisfactory. Only when one has served
Page 81
as a full-time teacher can he acquire permanent or regular status. The petitioner

was a part-time lecturer before she was appointed as a full-time instructor on probation. As a
part-time lecturer, her employment as such had ended when her contract expired. Thus, the
three semesters she served as part-time lecturer could not be credited to her in computing the
number of years she has served to qualify her for permanent status.
Moreover, completing the probation period does not automatically qualify her
to become a permanent employee of the university. Petitioner could only qualify to
become a permanent employee upon fulfilling the reasonable standards for permanent
employment as faculty member. Consistent with academic freedom and constitutional
autonomy, an institution of higher learning has the prerogative to provide standards for its
teachers and determine whether these standards have been met. In the instant case,
petitioner, did not attain permanent status and was not illegally dismissed.
Page 82
Holiday Inn vs. NLRC
GR No. 109114
Sep. 14, 1993
FACTS: Elena Honasan applied for employment with Holiday Inn and on April 15, 1991 was
accepted for on-the-job training as telephone operator for 3 weeks. After her training, she was
subsequently hired on a probationary basis for a period of six months ending Nov. 12, 1991. Her
employment contract stipulated that the Hotel could terminate her probationary employment at
any time prior to the expiration of the six-month period in the event of her failure (a) to learn or
progress in her job; (b) to faithfully observe and comply with the hotel rules and the instructions
and orders of her superiors; or (c) to perform her duties according to hotel standards.
On November 8, 1991, four days before the expiration of the stipulated deadline, Holiday Inn
notified her of her dismissal, on the ground that her performance had not come up to the
standards of the Hotel.
She filed a complaint for illegal dismissal contending that she was already a regular employee at
the time of her separation and is thus entitled to security of tenure. The Labor Arbiter dismissed
the complaint. On appeal, the NLRC reversed the ruling and ordered the petitioner to reinstate
Honasan. hence, this petition.
ISSUE: Whether or not Honasan is a regular employee.
CASE FOR THE COMPANY
The NLRC erred in holding that Honasan was already a regular employee at the time of her
dismissal, which was made 4 days before the expiration of the probationary period.
CASE FOR THE EMPLOYEE
She is a regular employee and is entitled to security of tenure.
RULING: The petition is dismissed and the NLRC's ruling was sustained. Honasan was placed by
the petitioner on probation twice, first during her on-the-job training for three weeks, and next
during another period of six months, ostensibly in accordance with Article 281. Her probation
clearly exceeded the period of six months prescribed by this article.
Probation is the period during which the employer may determine if the employee is qualified for
possible inclusion in the regular force. In the case at bar, the period was for three weeks, during
Honasan's on-the-job training. When her services were continued after this training, the
petitioners in effect recognized that she had passed probation and was qualified to be a regular
employee. Honasan was certainly under observation during her three-week on-the-job training. If
her services proved unsatisfactory then, she could have been dropped as early as during that
period. But she was not. On the contrary, her services were continued, presumably because they
were acceptable, although she was formally placed this time on probation.
Even if it be supposed that the probation did not end with the three-week period of on-thejob training, there is still no reason why that period should not be included in the stipulated sixmonth period of probation. Honasan was accepted for on-the-job training on April 15, 1991.
Assuming that her probation could be extended beyond that date, it nevertheless could continue
only up to October 15, 1991, after the end of six months from the earlier date. Under this more
lenient approach, she had become a regular employee of Holiday Inn and acquired full security of
tenure as of October 15, 1991.
Page 83
PEOPLES BROADCASTING (BOMBO RADYO PHILS., INC.) v. THE SECRETARY OF THE

DEPARTMENT OF LABOR AND EMPLOYMENT, et. al. G.R. No. 179652
The Department of Labor and Employment is fully empowered to make a determination as to the
existence of an employer-employee relationship in the exercise of its visitorial and enforcement
power.
FACTS: Respondent Jandeleon Juezan (Juezan) filed with the Department of Labor and
Employment (DOLE) a complaint against Bombo Radyo Phil. Inc. (Bombo Radyo) for illegal
deduction; nonpayment of service incentive leave, 13th month pay, premium pay for holiday and
rest day; illegal diminution of benefits; delayed payment of wages; and non coverage of SSS,
PAG-IBIG and Philhealth. After the conduct of summary investigations, the DOLE Regional
Director held that Juezan was an employee of Bombo Radyo, and was therefore entitled to his
money claims. Bombo Radyo appealed the decision, but the DOLE dismissed the same. The
Court of Appeals (CA) affirmed such dismissal. When the matter reached the Supreme Court, the
CA decision was reversed and set aside. The Court found that there was no employer-employee
relationship between Bombo Radyo and Juezan. It was held that while the DOLE may make a
determination of the existence of an employer-employee relationship, this function could not be
co-extensive with the visitorial and enforcement power provided in Art. 128(b) of the Labor Code,
as amended by RA 7730. The National Labor Relations Commission (NLRC) was held to be the
primary agency in determining the existence of an employer-employee relationship. From this
decision, the Public Attorneys Office (PAO) filed a Motion for Clarification of Decision (with Leave
of Court). The PAO sought to clarify as to when the visitorial and enforcement power of the DOLE
can be considered as co-extensive with the power to determine the existence of an employeremployee relationship. The Court treated the Motion for Clarification as a second motion for
reconsideration, granting said motion and reinstating the petition.
ISSUE: Whether or not the Department of Labor and Employment has the power to determine
the existence of employer-employee relationship in its exercise of its visitorial and its
enforcement power
HELD: No limitation in the law was placed upon the power of the DOLE to determine the
existence of an employer-employee relationship. No procedure was laid down where the DOLE
would only make a preliminary finding, that the power was primarily held by the NLRC. The law
did not say that the DOLE would first seek the NLRCs determination of the existence of an
employer-employee relationship, or that should the existence of the employer-employee
relationship be disputed, the DOLE would refer the matter to the NLRC. The DOLE must have the
power to determine whether or not an employer-employee relationship exists, and from there to
decide whether or not to issue compliance orders in accordance with Art. 128(b) of the Labor
Code, as amended by RA 7730.
The determination of the existence of an employer-employee relationship by the DOLE must be
respected. The expanded visitorial and enforcement power of the DOLE granted by RA 7730
would be rendered nugatory if the alleged employer could, by the simple expedient of disputing
the employer- employee relationship, force the referral of the matter to the NLRC. The Court
issued the declaration that at least a prima facie showing of the absence of an employeremployee relationship be made to oust the DOLE of jurisdiction. But it is precisely the DOLE that
will be faced with that evidence, and it is the DOLE that will weigh it, to see if the same does
successfully refute the existence of an employer-employee relationship.
Page 84
SAN MIGUEL BREWERY V. OPLE

Facts: In 1979, A CBA was entered into by petitioner and private respondent San Miguel
Corporation. The company introduced a new marketing scheme known as Complementary
Distribution System (CDS) whereby its beer products were offered for sale directly to
wholesalers through San Miguels sales offices. The labor union filed a complaint for ULP on the
ground that the CDS is contrary to the existing marketing scheme whereby the wholesalers had
to buy beer products from the route salesmen, not from the company and thus violates the CBA
thereby
reducing
the
take
home
pay
of
the
salesmen.
The
Minister
of
Labor
dismissed
the
unions
notice
of
strike.
Issue:
Whether
or
not
the
CDS
is
valid
exercise
of
management
prerogative
Held: Yes. Except as limited by special laws, an ER is free to regulate, according to his own
discretion and judgment, all aspects of employment. Every business enterprise endeavors to
increase its profits. In the process, it may adopt or devise means designed towards that goal. So
long as the companys management prerogatives are exercised in good faith for the
advancement of the employers interest and not for the purpose of defeating or circumventing
the rights of the employees under special laws and under valid agreements, the Court will uphold
them.
Gaa vs. CA
FACTS: Respondent Europhil Industries Corporation was formerly one of the tenants in Trinity
Building at T.M. Kalaw Street, Manila, while petitioner Rosario A. Gaa was then the building
administrator. On December 12, 1973, Europhil Industries commenced an action (Civil Case No.
92744) in the Court of First Instance of Manila for damages against petitioner "for having
perpetrated certain acts that Europhil Industries considered a trespass upon its rights, namely,
cutting of its electricity, and removing its name from the building directory and gate passes of its
officials and employees." On June 28, 1974, said court rendered judgment in favor of respondent
Europhil Industries, ordering petitioner to pay the former the sum of P10,000.00 as actual
damages, P5,000.00 as moral damages, P5,000.00 as exemplary damages and to pay the costs.
A Notice of Garnishment was issued upon El Grande Hotel, where petitioner was then employed,
garnishing her "salary, commission and/or remuneration." Petitioner then filed with the Court of
First Instance of Manila a motion to lift said garnishment on the ground that her "salaries,
commission and, or remuneration are exempted from execution under Article 1708 of the New
Civil Code. Petitioner filed with the Court of Appeals a petition for certiorari against filed with the
Court of Appeals a petition for certiorari against said order. The Court of Appeals dismissed the
petition for certiorari.
ISSUE: WON the petitioner is not a mere laborer as contemplated under Article 1708.
HELD: YES. It is beyond dispute that petitioner is not an ordinary or rank and file laborer but "a
responsibly place employee," of El Grande Hotel, "responsible for planning, directing, controlling,
and coordinating the activities of all housekeeping personnel" so as to ensure the cleanliness,
maintenance and orderliness of all guest rooms, function rooms, public areas, and the
Page 85
surroundings of the hotel. Considering the importance of petitioner's function in El Grande Hotel,
it is undeniable that petitioner is occupying a position equivalent to that of a managerial or
supervisory position. Article 1708 used the word "wages" and not "salary" in relation to "laborer"
when it declared what are to be exempted from attachment and execution. The term "wages" as
distinguished from "salary", applies to the compensation for manual labor, skilled or unskilled,
paid at stated times, and measured by the day, week, month, or season, while "salary" denotes a
higher degree of employment, or a superior grade of services, and implies a position of office: by
contrast, the term wages " indicates considerable pay for a lower and less responsible character
of employment, while "salary" is suggestive of a larger and more important service. The
legislature did not intend the exemption in Article 1708 of the New Civil Code to operate in favor
of any but those who are laboring men or women in the sense that their work is manual. Persons
belonging to this class usually look to the reward of a day's labor for immediate or present
support, and such persons are more in need of the exemption than any others. Petitioner Rosario
A. Gaa is definitely not within that class
Page 86
Manliguez vs CA
Facts:
DOLE (region VII) ordered Inductocast cebu to pay former employees a total of 232, 908.00 as
judgment award. As a consequence of the judgment the labor department sheriff levied on the
buildings and improvements located in a lot in Tipolo, Mandaue City. Subsequently, the
properties were sold in a public auction.
Petitioners then filed with the RTC of Cebu a complaint seeking to lift the levy over the said
properties and annulment of sale of the Tipolo Properties. They alleged that they are the lawful
owners of the lot and that they entered into a lease agreement with Inductocast which provided
that except for machineries and equipment, all improvements introduced in the leased premises
shall be automatically owned by the petitioners upon termination of the contract. The lease
agreement was terminated due to non payment of rentals by Inductocast Cebu. Petitioner took
possession of the property thereafter. They also alleged that they became aware of the labor
dispute after the auction sale.
Atty. Danilo Pilapil, claiming that he was the respondent in the complaint, filed a motion to
dismiss on the ground that the trial court had no jurisdiction over the case. The buyers of the
Tipolo properties also filed a motion to dismiss as intervenors in the case. However, the said
motion was denied but upon motion for reconsideration of the intervenors, the RTC granted the
motion and dismissed the case. It held that the case was more of a quashal of the levy and
certificate of sale and since they are connected with the labor dispute the jurisdiction is with the
NLRC. Petitioners appealed the order to the CA, but the same was dismissed. Hence this petition
Issue: Whether or not NLRC had jurisction over the subject matter and nature of the case.
Ruling:
The Court held in the negative. It is evident that the Civil case filed by petitioners filed is a civil
case and no Employee- Employer relationship exists between petitioners and other parties. Also
no issue may be resolved by reference to the Labor code or any CBA. It was not brought to
reverse or modify the judgment of the DOLE, neither did it question the writ of execution against
inductoscast.
What was litigated was the issue of ownership over the tipolo properties. Clearly it is the RTC and
not the the labor department which can take cognizance of the case.
IN VIEW WHEREOF, petition is GRANTED
Page 87
G.R. No. 183572
April 13, 2010
YOLANDA M. MERCADO, CHARITO S. DE LEON, DIANA R. LACHICA, MARGARITO M.

ALBA, JR., and FELIX A. TONOG, Petitioners,
vs.
AMA COMPUTER COLLEGE-PARAAQUE CITY, INC. , Respondent.
FACTS:
AMACC is an educational institution engaged in computer-based education in the country.
The petitioners were faculty members who started teaching at AMACC on May 25, 1998. The
petitioner Mercado was engaged as a Professor 3, while petitioner Tonog was engaged as an
Assistant Professor 2. On the other hand, petitioners De Leon, Lachica and Alba, Jr., were all
engaged as Instructor 1. The petitioners executed individual Teachers Contracts for each of the
trimesters that they were engaged to teach, with the common stipulation that they agreed to
accept a non-tenured appointment to work in the College of xxx effective xxx to xxx or for the
duration of the last term that the TEACHER is given a teaching load based on the assignment
duly approved by the DEAN/SAVP-COO.
For the school year 2000-2001, AMACC-Paranaque City implemented new faculty screening
guidelines. Under the new screening guidelines, teachers were to be hired or maintained based
on extensive teaching experience, capability, potential, high academic qualifications and
research background. The performance standards under the new screening guidelines were also
used to determine the present faculty members entitlement to salary increases. The petitioners
failed to obtain a passing rating based on the performance standards; hence AMACC did not give
them any salary increase.
Because of AMACCs action on the salary increases, the petitioners filed a complaint with the
Arbitration Branch of the NLRC for underpayment of wages, non-payment of overtime and
overload compensation, 13th month pay, and for discriminatory practices.
The petitioners individually received a memorandum from AMACC informing them that with the
expiration of their contract to teach, their contract would no longer be renewed. Hence,
petitioners amended their labor arbitration complaint to include the charge of illegal dismissal
against AMACC.
AMACC contended in response that the petitioners worked under a contracted term under a nontenured appointment and were still within the three-year probationary period for teachers. Their
contracts were not renewed for the following term because they failed to pass the Performance
Appraisal System for Teachers (PAST) while others failed to comply with the other requirements
for regularization, promotion, or increase in salary. This move, according to AMACC, was justified
since the school has to maintain its high academic standards.
The Labor Arbiter ruled that the petitioners had been illegally dismissed and ordered AMACC to
reinstate them to their former positions without loss of seniority rights and to pay them full back
wages, attorneys fees and 13th month pay. The LA ruled that Article 281 of the Labor Code on
probationary employment applied to the case. Significantly, the LA found no "discrimination in
the adjustments for the salary rate of the faculty members based on the performance and other
qualification which is an exercise of management prerogative."
Page 88
On appeal, the NLRC denied AMACCs appeal for lack of merit. The NLRC, however, observed that
the applicable law is Section 92 of the Manual of Regulations for Private Schools (which
mandates a probationary period of nine consecutive trimesters of satisfactory service for
academic personnel in the tertiary level where collegiate courses are offered on a trimester
basis), not Article 281 of the Labor Code (which prescribes a probationary period of six months)
as the LA ruled. Despite this observation, the NLRC affirmed the LAs finding of illegal dismissal
since the petitioners were terminated on the basis of standards that were only introduced near
the end of their probationary period.
In a decision issued by the CA, it granted AMACCs petition for certiorari and dismissed the
petitioners complaint for illegal dismissal. The CA ruled that under the Manual for Regulations for
Private Schools, teaching personnel in a private educational institution (1) must be a full time
teacher; (2) must have rendered three consecutive years of service; and (3) such service must
be satisfactory before he or she can acquire permanent status.
The CA noted that the petitioners had not completed three (3) consecutive years of service (i.e.
six regular semesters or nine consecutive trimesters of satisfactory service) and were still within
their probationary period; their teaching stints only covered a period of two (2) years and three
(3) months when AMACC decided not to renew their contracts on September 7, 2000.
The CA disagreed with the NLRCs ruling that the new guidelines for the school year 2000-20001
could not be imposed on the petitioners and their employment contracts. The appellate court
opined that AMACC has the inherent right to upgrade the quality of computer education it offers
to the public; part of this pursuit is the implementation of continuing evaluation and screening of
its faculty members for academic excellence. The CA noted that the nature of education AMACC
offers demands that the school constantly adopt progressive performance standards for its
faculty to ensure that they keep pace with the rapid developments in the field of information
technology.
Finally, the CA found that the petitioners were hired on a non-tenured basis and for a fixed and
predetermined term based on the Teaching Contract exemplified by the contract between the
petitioner Lachica and AMACC.
ISSUE:
Whether or not petitioners were illegally dismissed
Whether or not teachers probationary status be disregarded because the contracts

were fixed-term
RULING:
Yes. The common practice is for the employer and the teacher to enter into a contract,
effective for one school year. At the end of the school year, the employer has the option not to
renew the contract, particularly considering the teachers performance. If the contract is not
renewed, the employment relationship terminates. If the contract is renewed, usually for another
school year, the probationary employment continues. Again, at the end of that period, the parties
may opt to renew or not to renew the contract. If renewed, this second renewal of the contract
for another school year would then be the last year since it would be the third school year of
probationary employment. At the end of this third year, the employer may now decide whether
to extend a permanent appointment to the employee, primarily on the basis of the employee
having met the reasonable standards of competence and efficiency set by the employer. For the
entire duration of this three-year period, the teacher remains under probation. Upon the
Page 89
expiration of his contract of employment, being simply on probation, he cannot automatically

claim security of tenure and compel the employer to renew his employment contract. It is when
the yearly contract is renewed for the third time that Section 93 of the Manual becomes
operative, and the teacher then is entitled to regular or permanent employment status.
It is important that the contract of probationary employment specify the period or term of its
effectivity. The failure to stipulate its precise duration could lead to the inference that the
contract is binding for the full three-year probationary period.
Academic and Management Prerogative
Last but not the least factor in the academic world, is that a school enjoys academic freedom a
guarantee that enjoys protection from the Constitution no less. Section 5(2) Article XIV of the
Constitution guarantees all institutions of higher learning academic freedom.
The institutional academic freedom includes the right of the school or college to decide and
adopt its aims and objectives, and to determine how these objections can best be attained, free
from outside coercion or interference, save possibly when the overriding public welfare calls for
some restraint. The essential freedoms subsumed in the term "academic freedom" encompass
the freedom of the school or college to determine for itself: (1) who may teach; (2) who may be
taught; (3) how lessons shall be taught; and (4) who may be admitted to study.
It is the prerogative of the school to set high standards of efficiency for its teachers since quality
education is a mandate of the Constitution. As long as the standards fixed are reasonable and not
arbitrary, courts are not at liberty to set them aside. Schools cannot be required to adopt
standards which barely satisfy criteria set for government recognition.
The same academic freedom grants the school the autonomy to decide for itself the terms and
conditions for hiring its teacher, subject of course to the overarching limitations under the Labor
Code. Academic freedom, too, is not the only legal basis for AMACCs issuance of screening
guidelines. The authority to hire is likewise covered and protected by its management
prerogative the right of an employer to regulate all aspects of employment, such as hiring, the
freedom to prescribe work assignments, working methods, process to be followed, regulation
regarding transfer of employees, supervision of their work, lay-off and discipline, and dismissal
and recall of workers. Thus, AMACC has every right to determine for itself that it shall use fixedterm employment contracts as its medium for hiring its teachers. It also acted within the terms of
the Manual of Regulations for Private Schools when it recognized the petitioners to be merely on
probationary status up to a maximum of nine trimesters.
The Conflict: Probationary Status
and Fixed-term Employment
The fixed-term character of employment essentially refers to the period agreed upon between
the employer and the employee; employment exists only for the duration of the term and ends
on its own when the term expires. In a sense, employment on probationary status also refers to a
period because of the technical meaning "probation" carries in Philippine labor law a maximum
period of six months, or in the academe, a period of three years for those engaged in teaching
jobs. Their similarity ends there, however, because of the overriding meaning that being "on
probation" connotes, i.e., a process of testing and observing the character or abilities of a person
who is new to a role or job.
Page 90
Understood in the above sense, the essentially protective character of probationary status for
management can readily be appreciated. But this same protective character gives rise to the
countervailing but equally protective rule that the probationary period can only last for a specific
maximum period and under reasonable, well-laid and properly communicated standards.
Otherwise stated, within the period of the probation, any employer move based on the
probationary standards and affecting the continuity of the employment must strictly conform to
the probationary rules.
Under the given facts where the school year is divided into trimesters, the school apparently
utilizes its fixed-term contracts as a convenient arrangement dictated by the trimestral system
and not because the workplace parties really intended to limit the period of their relationship to
any fixed term and to finish this relationship at the end of that term. If we pierce the veil, so to
speak, of the parties so-called fixed-term employment contracts, what undeniably comes out at
the core is a fixed-term contract conveniently used by the school to define and regulate its
relations with its teachers during their probationary period.1avvphi1
To be sure, nothing is illegitimate in defining the school-teacher relationship in this manner. The
school, however, cannot forget that its system of fixed-term contract is a system that operates
during the probationary period and for this reason is subject to the terms of Article 281 of the
Labor Code. Unless this reconciliation is made, the requirements of this Article on probationary
status would be fully negated as the school may freely choose not to renew contracts simply
because their terms have expired. The inevitable effect of course is to wreck the scheme that the
Constitution and the Labor Code established to balance relationships between labor and
management.
Given the clear constitutional and statutory intents, we cannot but conclude that in a situation
where the probationary status overlaps with a fixed-term contract not specifically used for the
fixed term it offers, Article 281 should assume primacy and the fixed-period character of the
contract must give way. This conclusion is immeasurably strengthened by the petitioners and
the AMACCs hardly concealed expectation that the employment on probation could lead to
permanent status, and that the contracts are renewable unless the petitioners fail to pass the
schools standards.
To highlight what we mean by a fixed-term contract specifically used for the fixed term it offers, a
replacement teacher, for example, may be contracted for a period of one year to temporarily
take the place of a permanent teacher on a one-year study leave. The expiration of the
replacement teachers contracted term, under the circumstances, leads to no probationary
status implications as she was never employed on probationary basis; her employment is for a
specific purpose with particular focus on the term and with every intent to end her teaching
relationship with the school upon expiration of this term.
If the school were to apply the probationary standards (as in fact it says it did in the present
case), these standards must not only be reasonable but 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. As
explained above, the details of this finding of just cause must be communicated to the affected
teachers as a matter of due process.
Page 91
In lieu of reinstatement, AMA Computer College-Paraaque City, Inc. is hereby DIRECTED to pay
separation pay computed on a trimestral basis from the time of separation from service up to the
end of the complete trimester preceding the finality of this Decision.
Page 92
MORALES v HARBOUR CENTRE PORT TERMINAL

G.R. No. 174208, January 25, 2012, PEREZ, J.
FACTS: Petitioner Jonathan Morales was hired by respondent as an accountant and acting
finance officer. He was later promoted to Division Manager of the Accounting Department. After
the respondents transfer to its new office at Tondo, Manila, petitioner received an inter-office
memorandum reassigning him to Operations Cost Accounting tasked with the duty of monitoring
and evaluating all consumable requests, gears and equipment related to the operations of
respondent and of interacting with its subcontractor, Bulk Fleet Marine Corporation. Morales
wrote to respondents administration manager, Danilo Singson and expressed his opposition to
his reassignment stating that it is considered as a clear demotion because the position to which
he was transferred was not even included in respondents plantilla. Singson, in response, issued
a memorandum stating that the transfer of employees is a management prerogative. Petitioner
was absent from work and was sent notices of warning. Petitioner filed a complaint against
respondent for constructive dismissal alleging that his reassignment was a demotion and
operated as a termination from employment. For its part, respondent contended that Morales
abandoned his employment and was not constructively dismissed.
The LA dismissed petitioners complaint and held that the reassignment was a valid
exercise of respondents management prerogative which cannot be construed as constructive
dismissal absent showing that the same was done in bad faith and resulted to the diminution of
his salary and benefits. On appeal to the NLRC, the decision of the LA was reversed. Respondent
appealed to the CA where the NLRCs decision was reversed.
ISSUE: WON the change in petitioners position constitutes constructive dismissal
RULING: Yes. Constructive dismissal exists where there is cessation of work because "continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in
rank or a diminution in pay" and other benefits. Aptly called a dismissal in disguise or an act
amounting to dismissal but made to appear as if it were not, constructive dismissal may,
likewise, exist if an act of clear discrimination, insensibility, or disdain by an employer becomes
so unbearable on the part of the employee that it could foreclose any choice by him except to
forego his continued employment. In cases of a transfer of an employee, the rule is settled that
the employer is charged with the burden of proving that its conduct and action are for valid and
legitimate grounds such as genuine business necessity and that the transfer is not unreasonable,
inconvenient or prejudicial to the employee. If the employer cannot overcome this burden of
proof, the employees transfer shall be tantamount to unlawful constructive dismissal.
Our perusal of the record shows that respondent miserably failed to discharge the
foregoing onus. While there was a lack of showing that the transfer or reassignment entailed a
diminution of salary and benefits, one fact that must not be lost sight of was that Morales was
already occupying the position of Division Manager at HCPTIs Accounting Department as a
consequence of his promotion to said position. Concurrently appointed as member of HCPTIs
Management Committee (MANCOM), Morales was subsequently reassigned by HCPTI from
managerial accounting to Operations Cost Accounting without any mention of the position to
which he was actually being transferred. That the reassignment was a demotion is, however,
evident from Morales new duties which, far from being managerial in nature, were very simply
and vaguely described as inclusive of monitoring and evaluating all consumables requests,
gears and equipments related to [HCPTIs] operations as well as close interaction with [its] subcontractor Bulk Fleet Marine Corporation. Morales demotion is evident from the fact that his
reassignment entailed a transfer from a managerial position to one which was not even included
in the corporations plantilla.
Admittedly, the right of employees to security of tenure does not give them vested rights
to their positions to the extent of depriving management of its prerogative to change their
assignments or to transfer them. By management prerogative is meant 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 workers. Although
jurisprudence recognizes said management prerogative, it has been ruled that the exercise
thereof, while ordinarily not interfered with, is not absolute and is subject to limitations imposed
Page 93
by law, collective bargaining agreement, and general principles of fair play and justice. Thus, an
employer may transfer or assign employees from one office or area of operation to another,
provided there is no demotion in rank or diminution of salary, benefits, and other privileges, and
the action is not motivated by discrimination, made in bad faith, or effected as a form of
punishment or demotion without sufficient cause. Indeed, having the right should not be
confused with the manner in which that right is exercised.
Page 94
Note: G.R. No. 31341 & 43, Mar 31 1996(1976) is the one cited in our syllabus. But I think the
following case should be the real case based on the topic of overtime since theres no overtime
issue in the case cited (based on G.R. No.) in the syllabus. Just check it if you wish to confirm
PHILIPPINE AIR LINES EMPLOYEES ASSOCIATION (PALEA) v. PHILIPPINE AIR LINES, INC.
(PAL)
[G.R. No. L-18559. June 30, 1964.]
FACTS:
On January 4, 1956, plaintiff PALEA whose members are regular employees of defendant
PAL and the latter entered into a collective bargaining contract effective up to January 4, 1959,
stipulating, inter alia, that the regular working hours of said employees shall be on the basis of
forty-eight (48) hours a week. Soon after the approval of Republic Act No. 1880, on June 22,
1957, providing that the "legal number of hours of labor", except for "schools, courts, hospitals
and health clinics . . . shall his eight (8) hours a day, for five (5) days a week or a total of forty
(40) hours a week exclusive of time for lunch", and that said Act "shall also be applicable to all
laborers employed in government-owned and controlled corporations", plaintiff made
representations with the defendant for the extension, to the members of the former, of the
benefits of said Act, upon the theory that the PAL is a government controlled corporation, over
54% of its authorized capital stock being admittedly owned by the National Development Co.
otherwise known as the NDC which is wholly owned and controlled by the government.
As these representations did not meet with the approval of the PAL, which contended that
it is not a government owned and controlled corporation, plaintiff began this suit in the Court of
First Instance of Manila, on August 7, 1958, and prayed in its complaint that the PAL be declared
a government controlled corporation subject to the provisions of said Act, and compelled to
shorten the hours of work for its employees and daily wagers, from 48 to 40 hours a week, from
Monday thru Friday, at the rate of eight (8) hours a day, "but, if the exigencies of the service
demands, to pay the overtime rates for services rendered or to be rendered beyond the 40 hours
a week required by said Republic Act No. 1880".
In its answer, defendant admitted the main allegations of fact in the complaint, and averred, by
way of affirmative defenses: (1) that it is not a government owned and controlled corporation; (2)
that, under its aforementioned collective bargaining agreement with plaintiff, the regular
schedule of hours of work of its members shall be on the basis of 48 hours a week and only work
performed in excess of eight (8) hours daily from Monday to Saturday and work performed on
Sundays and legal holidays shall be compensated for at overtime rates; xxx
In due course, thereafter, the lower court rendered a decision,
- declaring the defendant, Philippine Air Lines, Inc. otherwise known as PAL as a
government-controlled corporation and, therefore, falling within the purview of Republic Act No.
1880
- ordering the defendant to comply with the provisions of Republic Act No. 1880 by
shortening the hours of work a week for its employees and daily wagers from 48 hours to 40
hours, and from Monday through Friday at the rate of 8 hours of work a day; but if the exigencies
of the service demand, it may require the members of the plaintiff union to work beyond 40
hours a week by paying them their basic rate of compensation only, pursuant to Section 4 of the
Eight- Hour Labor Law;
xxx
Both parties seek a review of said decision upon a joint record on appeal.
ISSUE:
Page 95
1. Are the working hours of PAL employees governed by their collective bargaining agreement
with plaintiff or by Republic Act No. 1880?
2. What shall be the rate of the additional compensation due for services rendered on Saturdays,
in excess of 40 hours a week?
HELD:
We are not prepared to disturb the aforementioned conclusion of His Honor, the trial Judge.
1. Defendant insists that the collective bargaining agreement controls, because the stipulation
does not conflict with Republic Act No. 1880 which fixes the minimum, not the maximum number
of hours of work a week.
The argument is specious, because the issue between the parties is not whether PAL
employees may be required to work 48 hours a week. Plaintiff admits that its members may be
so required, and they are willing to render said work. The issue is whether, since July 1, 1957,
they are entitled to their basic pay by rendering service for merely 40 hours a week and should,
accordingly, be given additional compensation for work done on Saturdays, in excess of 40 hours
a week. In this respect, said agreement is inconsistent with Republic Act No. 1889, because the
former resolves the issue in the negative, whereas Republic Act No. 1880 explicitly ordains that
there shall be "no diminution" in the compensation of workers "on account of the reduction" in
the number of days or hours of work in a week pursuant to the provisions of said Act.
It being obvious that the same has been passed in the exercise of the police power of the state,
the validity of which is not impugned by the defendant, and that it must prevail over the
provisions of the aforementioned agreement, insofar as inconsistent therewith, it follows that the
lower court did not err in finding that defendant is subject to the provisions of Republic Act No.
1880 and in requiring the submission of a list of workers who had, since July 1, 1957, rendered
services on Saturdays, in excess of 40 hours a week, for payment of the corresponding additional
compensation.
2.
Plaintiff contends that for such services, its members are entitled to twice their pay at the
basic rate, plus the 25% overtime compensation prescribed in Commonwealth Act No. 444. The
case of the Manila Hotel Co. v. Manila Hotel Employees Association, G. R. No. L- 9190 (November
23, 1960), cited in support of this contention, is not in point. That case refers to employees who,
under their collective bargaining contract, had a right to one off-day a week with full
compensation at the basic rate. Accordingly, when required to work on such day, they were
entitled, in addition to such basic pay, to the regular pay for the work on that day, plus a 25% for
overtime under Commonwealth Act No. 444. No stipulation analogous to the one adverted to
above exists between the parties in the case at bar.
Upon the other hand, we are not concerned with work rendered on Sundays and regular legal
holidays, for, admittedly, the collective bargaining agreement between the parties herein
stipulated therefor the payment of compensation at overtime rates. The issue before us refers to
work on Saturdays, in excess of the 40-hour-a-week provision of Republic Act No. 1880. Inasmuch
as Section 4 of Commonwealth Act No. 444 explicitly authorizes public utilities performing some
public service such as, among others, providing transportation (to which class defendant
admittedly belongs) to require its employees or laborers to work on Sundays and legal
holidays without paying the overtime rates, it is obvious that the lower court was justified in
fixing the compensation due to PAL employees for services rendered on Saturdays, not
exceeding eight (8) hours at the basic rates.
WHEREFORE the decision appealed from is hereby affirmed, without special pronouncement as to
the costs in this instance. It is so ordered.
Page 96
PHILIPPINE JOURNALISTS v JOURNAL EMPLOYEES UNION

G.R. No. 192601, June 3, 2013, BERSAMIN, J.
FACTS: Respondent Michael Alfante was hired by petitioner Philippine Journalists, Inc., as
computer technician for the Management Information System under Neri Torrecampo. Rico
Pagkalinawan replaced Torrecampo, which Alfante and three other co-employees opposed.
Pagkalinawan took offense of their objection and addressed to the respondent a series of
memoranda for alleged infractions. Respondent was dismissed from the service on the ground of
poor performance. Alfante filed a case for illegal dismissal and money claims.
The LA dismissed the case. On appeal to the NLRC, the latter also denied the petition
prompting the respondents to elevate the case to the CA. The CA modified NLRCs decision,
granting respondent funeral and bereavement aid but imposing, among others, the condition
that he should present conclusive proof that the deceased was his parent.
Petitioner, in this case, maintained that under the CBA, funeral and bereavement aid
should be granted upon the death of a legal dependent of a regular employee. Furthermore,
petitioner insists that notwithstanding the silence of the CBA, the term legal dependent should
follow the definition of it under Social the Security Law, so that in the case of a married regular
employee, his or her legal dependents include only his or her spouse and children, and in the
case of a single regular employee, his or her legal dependents include only his or her parents and
siblings, 18 years old and below; and that the term dependents has the same meaning as
beneficiaries as used in the CBA.
On the other hand, Respondent contended that the CBA was a bilateral contractual
agreement that could not be unilaterally changed by any party during its lifetime and that the
grant of burial benefits had already become a company practice favorable to the employees
which can no longer be reduced, diminished, discontinued or eliminated by petitioner.
ISSUE: WON the CA erred in granting respondent funeral and bereavement aid
RULING: No. The coverage of the term legal dependent as used in a stipulation in a collective
bargaining agreement (CBA) granting funeral or bereavement benefit to a regular employee for
the death of a legal dependent, if the CBA is silent about it, is to be construed as similar to the
meaning that contemporaneous social legislations have set. This is because the terms of such
social legislations are deemed incorporated in or adopted by the CBA.
Social legislations contemporaneous with the execution of the CBA have given a meaning
to the term legal dependent. The civil status of the employee as either married or single is not
the controlling consideration in order that a person may qualify as the employees legal
dependent. What is rather decidedly controlling is the fact that the spouse, child, or parent is
actually dependent for support upon the employee.
The differentiation among the legal dependents is significant only in the event the CBA has
prescribed a hierarchy among them for the granting of a benefit; hence, the use of the terms
primary beneficiaries and secondary beneficiaries for that purpose. But considering that Section
4, Article XIII of the CBA has not included that differentiation; petitioner had no basis to deny the
claim for funeral and bereavement aid of Alfante for the death of his parent whose death and
fact of legal dependency on him could be substantially proved.
Page 97
PNOC-Energy Development Corporation v. NLRC

G.R. No. 169353, April 13, 2007, CALLEJO, SR., J.
FACTS: Petitioner PNOC-Energy Development Corporation is a government-owned and controlled
corporation engaged in the exploration, development, and utilization of energy. It undertakes
several projects in areas where geothermal energy has been discovered. Petitioners Southern
Negros Geothermal Production Field in Negros Oriental is divided into two phases: Palinpinon I
(PAL I) and Palinpinon II (PAL II). To augment its manpower requirement occasioned by the
increased activities in the development of PAL II, petitioner hired employees in the Administration
and Maintenance Section and the termination/expiration of their respective employment were
specified in their initial employment contracts, which, however, were renewed and extended on
their respective expiry dates. Petitioner submitted reports to the DOLE-Regional Sub-Branch No.
VII in Dumaguete City, stating that six of its employees were being terminated. It thereafter
furnished the employees uniformly worded notices of termination, stating that they were being
terminated from employment due to the substantial completion of the civil works phase of PAL II.
Six employees, herein respondents, filed before the National Labor Relations Commission (NLRC)
a complaint for illegal dismissal against petitioner. Petitioner contended that respondents were
contractual employees; as such, they cannot claim to have been illegally dismissed because
upon the expiration of the term of the contract or the completion of the project, their employeremployee relationship also ended.
The LA dismissed the complaint and ruled that respondents were not dismissed from work
and the employer-employee relationship between the parties was severed upon the expiration of
the respective contracts of respondents and the completion of the projects concerned. On
appeal, the decision of the LA was reversed by the NLRC and ruled that respondents were regular
non-project employees for having worked for more than one year in positions that required them
to perform activities necessary and desirable in the normal business or trade of petitioner. The
NLRC further ruled that the employment contracts of respondents were not for a specific project
or for a fixed period and the dismissals made under the pretext of project completion were
illegal, being founded on an invalid, unjust, and unauthorized cause. The CA affirmed the NLRCs
decision.
In this case, Petitioner argues that respondents are project employees because they were
hired for a specific project or undertaking, the completion or termination of which had been
determined at the time of their engagement. Their contracts clearly indicated the completion or
termination of the specific project or of the specific phase thereof at the time they were engaged.
For their part, respondents posit that they were undeniably performing activities which are
necessary or desirable in the usual trade or business of petitioner, hence, regular employees of
petitioner.
ISSUE: WON respondents were regular employees or project employees
RULING: Respondents were regular employees. The applicable formula to ascertain whether an
employment should be considered regular or non-regular is the reasonable connection between
the particular activity performed by the employee in relation to the usual business or trade of the
employer.
As defined, project employees are those workers hired (1) for a specific project or
undertaking, and (2) the completion or termination of such project or undertaking has been
determined at the time of the engagement of the employee. However, petitioner failed to
substantiate its claim that respondents were hired merely as project employees. A perusal of the
records of the case reveals that the supposed specific project or undertaking of petitioner was
not satisfactorily identified in the contracts of respondents.
The alleged projects stated in the employment contracts were either too vague or
imprecise to be considered as the specific undertaking contemplated by law. Petitioners act of
repeatedly and continuously hiring respondents to do the same kind of work belies its contention
that respondents were hired for a specific project or undertaking. The absence of a definite
duration for the project/s has led the Court to conclude that respondents are, in fact, regular
employees.
Page 98
G.R. No. 181881
October 18, 2011
BRICCIO "Ricky" A. POLLO, Petitioner,

vs.
CHAIRPERSON KARINA CONSTANTINO-DAVID, DIRECTOR IV RACQUEL DE GUZMAN
BUENSALIDA, DIRECTOR IV LYDIA A. CASTILLO, DIRECTOR III ENGELBERT ANTHONY D.
UNITE AND THE CIVIL SERVICE COMMISSION, Respondents.
Pollo is a former Supervising Personnel Specialist of the CSC Regional Office No. IV and
also the OIC of the Public Assistance and Liaison Division (PALD) under the "Mamamayan Muna
Hindi Mamaya Na" program of the CSC.
On January 3, 2007, an unsigned letter-complaint was received by CSC Chairperson Karina
Constantino. The letter provides that one of the employees of CSC is lawyering for many who
have pending cases in the CSC. Chairperson David immediately formed a team of four personnel
with background in IT and directed them to conduct an investigation and specifically "to back up
all the files in the computers found in the Mamamayan Muna (PALD) and Legal divisions." The
team proceeded at once to the CSC-ROIV office at Panay Avenue, Quezon City. Upon their arrival
thereat, the team informed the officials of the CSC-ROIV, respondents Director IV Lydia Castillo
and Director III Engelbert Unite of Chairperson Davids directive.
The backing-up of all files in the hard disk of computers at the PALD and Legal Services Division
(LSD) was witnessed by several employees, together with Directors Castillo and Unite who
closely monitored said activity. The next day, all the computers in the PALD were sealed and
secured for the purpose of preserving all the files stored therein. Several diskettes containing the
back-up files sourced from the hard disk of PALD and LSD computers were turned over to
Chairperson David. The contents of the diskettes were examined by the CSCs Office for Legal
Affairs (OLA). It was found that most of the files in the 17 diskettes containing files copied from
the computer assigned to and being used by the petitioner, numbering about 40 to 42
documents, were draft pleadings or letters in connection with administrative cases in the CSC
and other tribunals. On the basis of this finding, Chairperson David issued the Show-Cause Order
requiring the petitioner, who had gone on extended leave, to submit his explanation or counteraffidavit within five days from notice.
Petitioner denied that he is the person referred to in the anonymous letter-complaint which
had no attachments to it, because he is not a lawyer and neither is he "lawyering" for people
with cases in the CSC. He pointed out that though government property, the temporary use and
ownership of the computer issued under a Memorandum of Receipt (MR) is ceded to the
employee who may exercise all attributes of ownership, including its use for personal purposes.
In view of the illegal search, the files/documents copied from his computer without his consent is
thus inadmissible as evidence, being "fruits of a poisonous tree."
CSC issued a resolution charging him with Dishonesty, Grave Misconduct, Conduct
Prejudicial to the Best Interest of the Service and Violation of R.A. No. 6713. Since the charges fall
under Section 19 of the URACC, petitioner was likewise placed under 90 days preventive
suspension effective immediately upon receipt of the resolution.
Petitioner assailed the formal charge as without basis having proceeded from an illegal
search which is beyond the authority of the CSC Chairman, such power pertaining solely to the
court.
Page 99
On April 17, 2007, petitioner received a notice of hearing from the CSC setting the formal
investigation. However, in view of the absence of petitioner and his counsel, petitioner was
deemed to have waived his right to the formal investigation which then proceeded ex parte. CSC
issued a resolution dismissing the petitioner from service.
On appeal, the CA dismissed the petition for certiorari after finding no grave abuse of discretion
committed by respondents CSC officials.
ISSUE:
Whether or not the search conducted in the office computer and copying of personal
files are valid exercise of management prerogative.
RULING: YES.
Even when employers conduct an investigation, they have an interest substantially
different from "the normal need for law enforcement." x x x Public employers have an interest in
ensuring that their agencies operate in an effective and efficient manner, and the work of these
agencies inevitably suffers from the inefficiency, incompetence, mismanagement, or other workrelated misfeasance of its employees. Indeed, in many cases, public employees are entrusted
with tremendous responsibility, and the consequences of their misconduct or incompetence to
both the agency and the public interest can be severe. In contrast to law enforcement officials,
therefore, public employers are not enforcers of the criminal law; instead, public employers have
a direct and overriding interest in ensuring that the work of the agency is conducted in a proper
and efficient manner. In our view, therefore, a probable cause requirement for searches of
the type at issue here would impose intolerable burdens on public employers. The
delay in correcting the employee misconduct caused by the need for probable cause
rather than reasonable suspicion will be translated into tangible and often irreparable
damage to the agencys work, and ultimately to the public interest. x x x
In sum, we conclude that the "special needs, beyond the normal need for law
enforcement make theprobable-cause requirement impracticable," x x x for
legitimate, work-related noninvestigatory intrusions as well as investigations of workrelated misconduct. A standard of reasonableness will neither unduly burden the efforts of
government employers to ensure the efficient and proper operation of the workplace, nor
authorize arbitrary intrusions upon the privacy of public employees. We hold, therefore,
that public employer intrusions on the constitutionally protected privacy interests of
government employees for noninvestigatory, work-related purposes, as well as
for investigations of work-related misconduct,should be judged by the standard of
reasonableness under all the circumstances. Under this reasonableness standard, both the
inception and the scope of the intrusion must be reasonable:
"Determining the reasonableness of any search involves a twofold inquiry: first, one must
consider whether theaction was justified at its inception, x x x ; second, one must determine
whether the search as actually conducted was reasonably related in scope to the circumstances
which justified the interference in the first place," x x x
Ordinarily, a search of an employees office by a supervisor will be "justified at its
inception" when there are reasonable grounds for suspecting that the search will turn
up evidence that the employee is guilty of work-related misconduct, or that the
search is necessary for a noninvestigatory work-related purpose such as to retrieve a
needed file. x x x The search will be permissible in its scope when "the measures
Page 100
adopted are reasonably related to the objectives of the search and not excessively
intrusive in light of the nature of the [misconduct]."
The CSC in this case had implemented a policy that put its employees on notice that they have
no expectation of privacy in anything they create, store, send or receive on the office
computers, and that the CSC may monitor the use of the computer resources using both
automated and human means. This implies that on-the-spot inspections may be done to ensure
that the computer resources were used only for such legitimate business purposes.
The search of petitioners computer files was conducted in connection with investigation of workrelated misconduct prompted by an anonymous letter-complaint addressed to Chairperson David
regarding anomalies in the CSC-ROIV where the head of the Mamamayan Muna Hindi Mamaya Na
division is supposedly "lawyering" for individuals with pending cases in the CSC.
A search by a government employer of an employees office is justified at inception when there
are reasonable grounds for suspecting that it will turn up evidence that the employee is guilty of
work-related misconduct.
Even conceding for a moment that there is no such administrative policy, there is no doubt in the
mind of the Commission that the search of Pollos computer has successfully passed the test of
reasonableness for warrantless searches in the workplace as enunciated in the above-discussed
American authorities. It bears emphasis that the Commission pursued the search in its
capacity as a government employer and that it was undertaken in connection with an
investigation involving a work-related misconduct, one of the circumstances exempted
from the warrant requirement. At the inception of the search, a complaint was received
recounting that a certain division chief in the CSCRO No. IV was "lawyering" for parties having
pending cases with the said regional office or in the Commission. The nature of the
imputation was serious, as it was grievously disturbing. If, indeed, a CSC employee was
found to be furtively engaged in the practice of "lawyering" for parties with pending cases before
the Commission would be a highly repugnant scenario, then such a case would have shattering
repercussions. It would undeniably cast clouds of doubt upon the institutional integrity of the
Commission as a quasi-judicial agency, and in the process, render it less effective in fulfilling its
mandate as an impartial and objective dispenser of administrative justice. It is settled that a
court or an administrative tribunal must not only be actually impartial but must be seen to be so,
otherwise the general public would not have any trust and confidence in it.
Considering the damaging nature of the accusation, the Commission had to act fast, if
only to arrest or limit any possible adverse consequence or fall-out. Thus, on the same date that
the complaint was received, a search was forthwith conducted involving the computer resources
in the concerned regional office. That it was the computers that were subjected to the
search was justified since these furnished the easiest means for an employee to
encode and store documents. Indeed, the computers would be a likely starting point
in ferreting out incriminating evidence. Concomitantly, the ephemeral nature of
computer files, that is, they could easily be destroyed at a click of a button,
necessitated drastic and immediate action. Pointedly, to impose the need to comply with
the probable cause requirement would invariably defeat the purpose of the wok-related
investigation.
Page 101
G.R. No. 141093
February 20, 2001
PRUDENTIAL BANK and TRUST COMPANY, petitioner,

vs.
CLARITA T. REYES, respondent.
FACTS:
Clarita Tan Reyes was the Assistant Vice President of Prudential Bank and Trust Company.
She was tasked with the duties to collect checks drawn against overseas banks payable in
foreign currency and to ensure the collection of foreign bills or checks purchased.
The auditors of the Bank discovered that two checks were not sent out for collection to
Hongkong Shanghai Banking Corporation on the alleged order of Reyes until the said checks
became stale. The Bank created a committee to investigate the findings of the auditors involving
the two checks. The president of the Bank issued a memorandum to Reyes informing her of the
findings of the auditors and asked her to give her side. In a letter to the president, Reyes stated
that in view of the refusal of the Bank that she be furnished copies of the pertinent documents
she is requesting and the refusal to grant her a reasonable period to prepare her answer, she
was constrained to make a general denial of any misfeasance or malfeasance on her part and
asked that a formal investigation be made. As the complainant failed to attend and participate in
the formal investigation conducted by the Committee despite due notice, the Committee
proceeded with its hearings and heard the testimonies of several witnesses. After a review of the
Committee's findings, the Board of Directors of the Bank resolved not to re-elect complainant any
longer to the position of assistant president pursuant to the Bank's By-laws. Reyes was informed
of her termination of employment from the Bank by Senior Vice President Benedicto L. Santos.
Reyes filed a complaint for illegal dismissal before the Labor Arbiter. The LA ruled that the
dismissal of complainant was without factual and legal basis. Aggrieved, the Bank appealed to
the NLRC which reversed the Labor Arbiter's decision. Private respondent sought reconsideration
which, however, was denied by the NLRC.
On appeal to the Court of Appeals, the appellate court found that the NLRC committed
grave abuse of discretion in ruling that the dismissal of Reyes is valid.
Not satisfied with the ruling, private respondent commenced a petition for certiorari
before the Supreme Court. The Bank alleged that the dispute is an intra-corporate controversy
concerning the non-election of private respondent to the position of Assistant Vice-President of
the Bank which falls under the exclusive and original, jurisdiction of the Securities and Exchange
Commission.
ISSUE: (1) Whether the NLRC has jurisdiction over the complaint for illegal dismissal;
(2) Whether complainant Reyes was illegally dismissed
RULING:
1
Yes. Private respondent was appointed Accounting Clerk by the Bank on July 14, 1963.
From that position she rose to become supervisor. Then in 1982, she was appointed
Assistant Vice-President which she occupied until her illegal dismissal on July 19, 1991.
The bank's contention that she merely holds an elective position and that in effect she is
Page 102
not a regular employee is belied by the nature of her work and her length of service with
the Bank. As stated, she rose from the ranks and has been employed with the Bank since
1963 until the termination of her employment in 1991. As Assistant Vice President of the
foreign department of the Bank, she is tasked to collect checks drawn against overseas
banks payable in foreign currency and to ensure the collection of foreign bills or checks
purchased, including the signing of transmittal letters covering the same. It has been
stated that "the primary standard of determining regular employment is the reasonable
connection between the particular activity performed by the employee in relation to the
usual trade or business of the employer. Additionally, "an employee is regular because of
the nature of work and the length of service, not because of the mode or even the reason
for hiring them." As Assistant Vice-President of the Foreign Department of the Bank she
performs tasks integral to the operations of the bank and her length of service with the
bank totaling 28 years speaks volumes of her status as a regular employee of the bank. In
fine, as a regular employee, she is entitled to security of tenure; that is, her services may
be terminated only for a just or authorized cause. This being in truth a case of illegal
dismissal, it is no wonder then that the Bank endeavored to the very end to establish loss
of trust and confidence and serious misconduct on the part of private respondent but, as
will be discussed later, to no avail.
Yes. Respondent Bank heavily relied on the testimony and affidavit of Remittance Clerk
Joven' in trying to establish loss of confidence. However, Joven's allegation that petitioner
instructed her to hold the subject two dollar checks amounting to $224,650.00 falls short
of the requisite proof to warrant petitioner's dismissal. Except for Joven's bare assertion to
withhold the dollar checks per petitioner's instruction, respondent Bank failed to adduce
convincing evidence to prove bad faith and malice. It bears emphasizing that respondent
Bank's witnesses merely corroborate Joven's testimony. Upon this point, the rule that proof
beyond reasonable doubt is not required to terminate an employee on the charge of loss
of confidence and that it is sufficient that there is some basis for such loss of confidence, is
not absolute. The right of an employer to dismiss employees on the ground that it has lost
its trust and confidence in him must not be exercised arbitrarily and without just cause.
For loss of trust and confidence to be valid ground for an employee's dismissal, it must be
substantial and not arbitrary, and must be founded on clearly established facts sufficient
to warrant the employee's separation from work (Labor vs. NLRC, 248 SCRA 183).
Page 103
Case Title: Smart Communication v. Astorga

G.R. No: 148132
January 28, 2008
Facts:
Regina M. Astorga (Astorga) was employed by respondent Smart Communications,
Incorporated (SMART) on May 8, 1997 as District Sales Manager of the Corporate Sales Marketing
Group/ Fixed Services Division (CSMG/FSD). She was receiving a monthly salary of P33,650.00. As
District Sales Manager, Astorga enjoyed additional benefits, namely, annual performance
incentive equivalent to 30% of her annual gross salary, a group life and hospitalization insurance
coverage, and a car plan in the amount of P455,000.00.
In February 1998, SMART launched an organizational realignment to achieve more efficient
operations. This was made known to the employees on February 27, 1998. Part of the
reorganization was the outsourcing of the marketing and sales force. Thus, SMART entered into a
joint venture agreement with NTT of Japan, and formed SMART-NTT Multimedia, Incorporated
(SNMI). Since SNMI was formed to do the sales and marketing work, SMART abolished the
CSMG/FSD, Astorgas division.
To soften the blow of the realignment, SNMI agreed to absorb the CSMG personnel who
would be recommended by SMART. SMART then conducted a performance evaluation of CSMG
personnel and those who garnered the highest ratings were favorably recommended to SNMI.
Astorga landed last in the performance evaluation, thus, she was not recommended by SMART.
SMART, nonetheless, offered her a supervisory position in the Customer Care Department, but
she refused the offer because the position carried lower salary rank and rate.
Despite the abolition of the CSMG/FSD, Astorga continued reporting for work. But on March
3, 1998, SMART issued a memorandum advising Astorga of the termination of her employment
on ground of redundancy, effective April 3, 1998. Astorga received it on March 16, 1998.
The termination of her employment prompted Astorga to file a Complaint for illegal
dismissal, non-payment of salaries and other benefits with prayer for moral and exemplary
damages against SMART and Ann Margaret V. Santiago (Santiago).
Contentions of the Astorga:
On illegal dismissal case:
That abolishing CSMG and, consequently, terminating her employment was illegal for it
violated her right to security of tenure. She also posited that it was illegal for an employer, like
SMART, to contract out services which will displace the employees, especially if the contractor is
an in-house agency.
Contentions of the Smart:
On illegal dismissal case:
That there was valid termination. It argued that Astorga was dismissed by reason of
redundancy, which is an authorized cause for termination of employment, and the dismissal was
effected in accordance with the requirements of the Labor Code. The redundancy of Astorgas
position was the result of the abolition of CSMG and the creation of a specialized and more
technically equipped SNMI, which is a valid and legitimate exercise of management prerogative.
xxx
xxx
xxx
In the meantime, on May 18, 1998, SMART sent a letter to Astorga demanding that she pay the
current market value of the Honda Civic Sedan which was given to her under the companys car
plan program, or to surrender the same to the company for proper disposition. Astorga, however,
failed and refused to do either, thus prompting SMART to file a suit for replevin with the Regional
Trial Court of Makati (RTC) on August 10, 1998. The case was docketed as Civil Case No. 98-1936
and was raffled to Branch 57.
Page 104
Astorga moved to dismiss the complaint on grounds of (i) lack of jurisdiction; (ii) failure to
state a cause of action; (iii) litis pendentia; and (iv) forum-shopping. Astorga posited that the
regular courts have no jurisdiction over the complaint because the subject thereof pertains to a
benefit arising from an employment contract; hence, jurisdiction over the same is vested in the
labor tribunal and not in regular courts.
Issues:
1 Whether or not the dismissal of the replevin case was proper?
2 Whether or not Astorgas dismissal was valid?
Held:
1 No. The dismissal of the replevin case was not proper. SMARTs demand for payment of
the market value of the car or, in the alternative, the surrender of the car, is not a labor,
but a civil, dispute. It involves the relationship of debtor and creditor rather than
employee-employer relations. As such, the dispute falls within the jurisdiction of the
regular courts.
Replevin is an action whereby the owner or person entitled to repossession of goods
or chattels may recover those goods or chattels from one who has wrongfully distrained or
taken, or who wrongfully detains such goods or chattels. It is designed to permit one
having right to possession to recover property in specie from one who has wrongfully
taken or detained the property. The term may refer either to the action itself, for the
recovery of personalty, or to the provisional remedy traditionally associated with it, by
which possession of the property may be obtained by the plaintiff and retained during the
pendency of the action.
In Basaya, Jr. v. Militante, this Court, in upholding the jurisdiction of the RTC over the
replevin suit, explained:
Replevin is a possessory action, the gist of which is the right of
possession in the plaintiff. The primary relief sought therein is the
return of the property in specie wrongfully detained by another person.
It is an ordinary statutory proceeding to adjudicate rights to the title or
possession of personal property. The question of whether or not a party
has the right of possession over the property involved and if so,
whether or not the adverse party has wrongfully taken and detained
said property as to require its return to plaintiff, is outside the pale of
competence of a labor tribunal and beyond the field of specialization of
Labor Arbiters.
xxx
xx x
xxx
The labor dispute involved is not intertwined with the issue in
the Replevin Case. The respective issues raised in each forum can be
resolved independently on the other. In fact in 18 November 1986, the
NLRC in the case before it had issued an Injunctive Writ enjoining the
petitioners from blocking the free ingress and egress to the Vessel and
ordering the petitioners to disembark and vacate. That aspect of the
controversy is properly settled under the Labor Code. So also with
petitioners right to picket. But the determination of the question of
who has the better right to take possession of the Vessel and whether
petitioners can deprive the Charterer, as the legal possessor of the
Vessel, of that right to possess in addressed to the competence of Civil
Courts.
Page 105
In thus ruling, this Court is not sanctioning split jurisdiction but defining avenues of
jurisdiction as laid down by pertinent laws.
( To state otherwise there is no Reasonable Causal Connection between the replevin
case field by Smart and the illegal dismissal case filed by Astorga.
2
Yes. The dismissal of Astorga was valid. Astorga was terminated due to redundancy, which
is one of the authorized causes for the dismissal of an employee. The nature of
redundancy as an authorized cause for dismissal is explained in the leading case of
Wiltshire File Co., Inc. v. National Labor Relations Commission, viz:
x x x redundancy in an employers personnel force necessarily or even
ordinarily refers to duplication of work. That no other person was
holding the same position that private respondent held prior to
termination of his services does not show that his position had not
become redundant. Indeed, in any well organized business enterprise,
it would be surprising to find duplication of work and two (2) or more
people doing the work of one person. We believe that redundancy, for
purposes of the Labor Code, exists where the services of an employee
are in excess of what is reasonably demanded by the actual
requirements of the enterprise. Succinctly put, a position is redundant
where it is superfluous, and superfluity of a position or positions may
be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line
or service activity previously manufactured or undertaken by the
enterprise.
The characterization of an employees services as superfluous or no longer necessary and,

therefore, properly terminable, is an exercise of business judgment on the part of the employer.
The wisdom and soundness of such characterization or decision is not subject to discretionary
review provided, of course, that a violation of law or arbitrary or malicious action is not shown.36
Astorga claims that the termination of her employment was illegal and tainted with bad
faith. She asserts that the reorganization was done in order to get rid of her. But except for her
barefaced allegation, no convincing evidence was offered to prove it. This Court finds it
extremely difficult to believe that SMART would enter into a joint venture agreement with NTT,
form SNMI and abolish CSMG/FSD simply for the sole purpose of easing out a particular
employee, such as Astorga. Moreover, Astorga never denied that SMART offered her a
supervisory position in the Customer Care Department, but she refused the offer because the
position carried a lower salary rank and rate. If indeed SMART simply wanted to get rid of her, it
would not have offered her a position in any department in the enterprise.
Astorga also states that the justification advanced by SMART is not true because there was
no compelling economic reason for redundancy. But contrary to her claim, an employer is not
precluded from adopting a new policy conducive to a more economical and effective
management even if it is not experiencing economic reverses. Neither does the law require that
the employer should suffer financial losses before he can terminate the services of the employee
on the ground of redundancy.
Page 106
SONZA v ABS CBN BROADCASTING CORPORATION

G.R. No. 138051, June 10, 2004, CARPIO, J.
FACTS: Respondent ABS CBN entered into an agreement with Mel and Jay Management and
Development Corporation (MJMDC). ABS-CBN was represented by its corporate officers while
MJMDC was represented by Sonza, as President and General Manager, and Carmela Tiangco, as
EVP and Treasurer. Referred to in the Agreement as agent, MJMDC agreed to provide Jose
Sonzas services exclusively to ABS CBN as talent for radio and television, and for its part, ABS
CBN agreed to pay a monthly talent fee of P310,000.00, and P317,000.00 for the first year and
for the second and third year.
Sonza wrote a letter to ABS CBNs President, Eugenio Lopez, rescinding the contract.
Sonza filed a complaint against ABS CBN before the DOLE-NCR in QC. SONZA complained that
ABS CBN did not pay his salaries, separation pay, service incentive leave pay, 13th month pay,
signing bonus, travel allowance and amounts due under the Employees Stock Option Plan.
The LA dismissed the complaint for lack of jurisdiction on the ground that no employeremployee relationship existed between Sonza and ABS-CBN. The NLRC and CA likewise, affirmed
the decision on appeal.
In this case, Sonza contends that the LA has jurisdiction over the case because he was an
employee of ABS CBN. For its part, ABS CBN insists that the LA has no jurisdiction because Sonza
was an independent contractor.
ISSUE: WON Sonza is an employee of ABS CBN?
RULING: No. Sonza is an independent contractor. Case law has consistently held that the
elements of an employer-employee relationship are: (a) the selection and engagement of the
employee; (b) the payment of wages; (c) the power of dismissal; and (d) the employers 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.
Independent contractors often present themselves to possess unique skills, expertise or
talent to distinguish them from ordinary employees. The specific selection and hiring of
Sonza, because of his unique skills, talent and celebrity status not possessed by ordinary
employees, is a circumstance indicative, but not conclusive, of an independent contractual
relationship. If Sonza did not possess such unique skills, talent and celebrity status, ABS CBN
would not have entered into the Agreement with SONZA but would have hired him through its
personnel department just like any other employee.
Applying the control test to the present case, we find that Sonza is not an employee but an
independent contractor. The control test is the most important test our courts apply in
distinguishing an employee from an independent contractor. This test is based on the extent of
control the hirer exercises over a worker. The greater the supervision and control the hirer
exercises, the more likely the worker is deemed an employee. The converse holds true as well
the less control the hirer exercises, the more likely the worker is considered an independent
contractor. Here, ABS-CBN engaged Sonzas services specifically to co-host the Mel & Jay
programs. ABS-CBN did not assign any other work to Sonza. To perform his work, he only needed
his skills and talent. How he delivered his lines, appeared on television, and sounded on radio
were outside ABS-CBNs control. He did not have to render eight hours of work per day. The
Agreement required him to attend only rehearsals and tapings of the shows, as well as pre- and
post-production staff meetings. ABS-CBN could not dictate the contents of his script. However,
the Agreement prohibited him from criticizing in his shows ABS-CBN or its interests. The clear
implication is that Sonza had a free hand on what to say or discuss in his shows provided he did
not attack ABS-CBN or its interests.
Page 107
STAR PAPER CORPORATION vs. SIMBOL

G.R. No. 164774
April 12, 2006
PUNO, J.:
FACTS: Petitioner Star Paper (the company) is a corporation engaged in trading principally of
paper products. The company has a policy which reads as follows:
1. New applicants will not be allowed to be hired if in case he/she has [a] relative, up to [the] 3rd
degree of relationship, already employed by the company.
2. In case of two of our employees (both singles [sic], one male and another female) developed a
friendly relationship during the course of their employment and then decided to get married, one
of them should resign to preserve the policy stated above.
Simbol, Comia and Estrella were hired by the company on different dates. While working they
met their respective significant other who also working in the company and later on got married.
All of them were reminded that pursuant to a company policy of one them should resign. They
filed later on a dismissal case and averred that the a company policy is illegal and contravenes
Article 136 of the Labor Code.
HELD:
Petitioners sole contention that "the company did not just want to have two (2) or more of its
employees related between the third degree by affinity and/or consanguinity" is lame. That the
second paragraph was meant to give teeth to the first paragraph of the questioned rule is
evidently not the valid reasonable business necessity required by the law.
It is significant to note that in the case at bar, respondents were hired after they were found fit
for the job, but were asked to resign when they married a co-employee. Petitioners failed to show
how the marriage of Simbol, then a Sheeting Machine Operator, to Alma Dayrit, then an
employee of the Repacking Section, could be detrimental to its business operations. Neither did
petitioners explain how this detriment will happen in the case of Wilfreda Comia, then a
Production Helper in the Selecting Department, who married Howard Comia, then a helper in the
cutter-machine. The policy is premised on the mere fear that employees married to each other
will be less efficient. If we uphold the questioned rule without valid justification, the employer
can create policies based on an unproven presumption of a perceived danger at the expense of
an employees right to security of tenure.
Petitioners contend that their policy will apply only when one employee marries a co-employee,
but they are free to marry persons other than co-employees. The questioned policy may not
facially violate Article 136 of the Labor Code but it creates a disproportionate effect and under
the disparate impact theory, the only way it could pass judicial scrutiny is a showing that it is
reasonable despite the discriminatory, albeit disproportionate, effect. The failure of petitioners to
prove a legitimate business concern in imposing the questioned policy cannot prejudice the
employees right to be free from arbitrary discrimination based upon stereotypes of married
persons working together in one company.
Lastly, the absence of a statute expressly prohibiting marital discrimination in our jurisdiction
cannot benefit the petitioners. The protection given to labor in our jurisdiction is vast and
extensive that we cannot prudently draw inferences from the legislatures silence41 that married
persons are not protected under our Constitution and declare valid a policy based on a prejudice
or stereotype. Thus, for failure of petitioners to present undisputed proof of a reasonable
business necessity, we rule that the questioned policy is an invalid exercise of management
prerogative.
Page 108
Temic Automotive Phils. vs. Temic Automotive Phils. Employees Union

FACTS: The petitioner is a corporation engaged in the manufacture of electronic brake systems
and comfort body electronics for automotive vehicles. Respondent Temic Automotive Philippines,
Inc. Employees Union-FFW (union) is the exclusive bargaining agent of the petitioner's rank-andfile employees. On May 6, 2005, the petitioner and the union executed a collective bargaining
agreement (CBA) for the period January 1, 2005 to December 31, 2009.
By practice established since 1998, the petitioner contracts out some of the work in the
warehouse department, specifically those in the receiving and finished goods sections, to three
independent service providers or forwarders (forwarders), namely: Diversified Cargo Services,
Inc. (Diversified), Airfreight 2100 (Airfreight) and Kuehne & Nagel, Inc. (KNI). These forwarders
also have their own employees who hold the positions of clerk, material handler, system encoder
and general clerk. The regular employees of the petitioner and those of the forwarders share the
same work area and use the same equipment, tools and computers all belonging to the
petitioner.
The union thus demanded that the forwarders' employees be absorbed into the
petitioner's regular employee force and be given positions within the bargaining unit. The
petitioner, on the other hand, on the premise that the contracting arrangement with the
forwarders is a valid exercise of its management prerogative, posited that the union's position is
a violation of its management prerogative to determine who to hire and what to contract out,
and that the regular rank-and-file employees and their forwarders employees serving as its
clerks, material handlers, system encoders and general clerks do not have the same functions as
regular company employees.
Voluntary arbitrator found that the petitioner went beyond the limits of the legally
allowable contracting out because the forwarders' employees encroached upon the functions of
the petitioner's regular rank-and-file workers. CA fully affirmed the voluntary arbitrators decision
ISSUES: 1. Whether or not the company validly contracted out or outsourced the
services involving forwarding, packing, loading and clerical activities related
thereto; and
2. Whether or not the functions of the forwarders' employees are functions

being performed by regular rank-and-file employees covered by the
bargaining unit.
HELD: YES. Both the voluntary arbitrator and the CA recognized that the petitioner was within
its right in entering the forwarding agreements with the forwarders as an exercise of its
management prerogative. The petitioner's declared objective for the arrangement is to achieve
greater economy and efficiency in its operations a universally accepted business objective and
standard that the union has never questioned.
The forwarding arrangement has been in place since 1998 and no evidence has been
presented showing that any regular employee has been dismissed or displaced by the forwarders
employees since then. No evidence likewise stands before us showing that the outsourcing has
resulted in a reduction of work hours or the splitting of the bargaining unit effects that under the
Page 109
implementing rules of Article 106 of the Labor Code can make a contracting arrangement
illegal. The other requirements of Article 106, on the other hand, are simply not material to the
present petition. Thus, on the whole, we see no evidence or argument effectively showing that
the outsourcing of the forwarding activities violate our labor laws, regulations, and the parties
CBA, specifically that it interfered with, restrained or coerced employees in the exercise of their
rights to self-organization as provided in Section 6, par. (f) of the implementing rules. The only
exception, of course, is what the union now submits as a voluntary arbitration issue i.e., the
failure to recognize certain forwarder employees as regular company employees and the effect
of this failure on the CBAs scope of coverage which issue we fully discuss below.
When these CBA provisions were put in place, the forwarding agreements had been in
place so that the forwarders employees were never considered as company employees who
would be part of the bargaining unit. To be precise, the forwarders employees and their positions
were not part of the appropriate bargaining unit as already constituted. In fact, even now, the
union implicitly recognizes forwarding as a whole as a legitimate non-company activity by simply
claiming as part of their unit the forwarders employees undertaking allied support activities.
(2.) NO. It is in the appreciation of these forwarder services as one whole package of interrelated services that we discern a basic misunderstanding that results in the error of equating
the functions of the forwarders employees with those of regular rank-and-file employees of the
company.
WHEREFORE, premises considered, we hereby NULLIFY and SET ASIDE the assailed
Court of Appeals Decision in CA-G.R. SP No. 99029 dated October 28, 2008, together with the
Voluntary Arbitrators Decision of May 1, 2007 declaring the employees of forwarders Diversified
Cargo Services, Inc., Airfreight 2100 and Kuehne & Nagel, Inc., presently designated and
functioning as clerks, material handlers, system or data encoders and general clerks, to be
regular company employees. No costs.
Page 110
Title of the Case: WILTSHIRE FILE CO., INC., v. NLRC and VICENTE T. ONG
G.R. No: 82249 ;February 7, 1991
Facts:
Private respondent Vicente T. Ong was the Sales Manager of petitioner Wiltshire File Co.,
Inc. ("Wiltshire") from 16 March 1981 up to 18 June 1985. As such, he received a monthly salary
of P14,375.00 excluding commissions from sales which averaged P5,000.00 a month. He also
enjoyed vacation leave with pay equivalent to P7,187,50 per year, as well as hospitalization
privileges to the extent of P10,000.00 per year.
Contentions of the respondent Ong:
Private respondent Ong filed, on 21 October 1985, a complaint before the Labor Arbiter for
illegal dismissal alleging that his position could not possibly be redundant because nobody (save
himself) in the company was then performing the same duties. Private respondent further
contended that retrenching him could not prevent further losses because it was in fact through
his remarkable performance as Sales Manager that the Company had an unprecedented increase
in domestic market share the preceding year. For that accomplishment, he continued, he was
promoted to Marketing Manager and was authorized by the President to hire four (4) Sales
Executives five (5) months prior to his termination.
Contentions of the petitioner:
In its answer, petitioner company alleged that the termination of respondent's services
was a cost-cutting measure: that in December 1984, the company had experienced an unusually
low volume of orders: and that it was in fact forced to rotate its employees in order to save the
company. Despite the rotation of employees, petitioner alleged; it continued to experience
financial losses and private respondent's position, Sales Manager of the company, became
redundant.
In this Petition for Certiorari, it is submitted that private respondent's dismissal was
justified and not illegal. Petitioner maintains that it had been incurring business losses beginning
1984 and that it was compelled to reduce the size of its personnel force. Petitioner also contends
that redundancy as a cause for termination does not necessarily mean duplication of work but a
"situation where the services of an employee are in excess of what is demanded by the needs of
an undertaking . . ."
Decision of the NLRC:
In a decision dated 11 March 1987, the Labor Arbiter declared the termination of private
respondent's services illegal and ordered petitioner to pay private respondent backwages in the
amount of P299,000.00, unpaid salaries in the amount of P22,352.11, accumulated sick and
vacation leaves in the amount of P12,543.91, hospitalization benefit package in the amount of
P10,000.00, unpaid commission in the amount of P57,500,00, moral damages in the amount of
P100,000.00 and attorney's fees in the amount of P51,639.60.
Issues:
1
2
Whether or not the petitioner had serious financial difficulties?

Whether or not the dismissal of the private respondent Ong is valid on the ground
retrenchment.
Page 111
Held:
1
Yes, petitioner had serious financial difficulties. Having reviewed the record of this case, the
Court has satisfied itself that indeed petitioner had serious financial difficulties before, during
and after the termination of the services of private respondent. For one thing, the audited
financial statements of the petitioner for its fiscal year ending on 31 July 1985 prepared by a firm
of independent auditors, showed a net loss in the amount of P4,431,321.00 and a total deficit or
capital impairment at the end of year of P6,776,493.00.
In the preceding fiscal year (1983-1984), while the company showed a net after tax income of
P843,506.00, it actually suffered a deficit or capital impairment of P2,345,172.00. Most
importantly, petitioner Wiltshire finally closed its doors and terminated all operations in the
Philippines on January 1987, barely two (2) years after the termination of private respondent's
employment. We consider that finally shutting down business operations constitutes strong
confirmatory evidence of petitioner's previous financial distress. The Court finds it very difficult to
suppose that petitioner Wiltshire would take the final and irrevocable step of closing down its
operations in the Philippines simply for the sole purpose of easing out a particular officer or
employee, such as the private respondent.
Yes, the dismissal of the private respondent Ong is valid on the ground of retrenchment. We note
that while the letter informing private respondent of the termination of his services used the
word "redundant", that letter also referred to the company having "incurred financial losses
which in fact has compelled it to resort to retrenchment to prevent further losses".
We do not believe that redundancy in an employer's personnel force necessarily or even
ordinarily refers to duplication of work. That no other person was holding the same position that
private respondent held prior to the termination of his services, does not show that his position
had not become redundant. Indeed, in any well-organized business enterprise, it would be
surprising to find duplication of work and two (2) or more people doing the work of one person.
We believe that redundancy, for purposes of our Labor Code, exists where the services of an
employee are in excess of what is reasonably demanded by the actual requirements of the
enterprise. Succinctly put, a position is redundant where it is superfluous, and superfluity of a
position or positions may be the outcome of a number of factors, such as overhiring of workers,
decreased volume of business, or dropping of a particular product line or service activity
previously manufactured or undertaken by the enterprise.
The employer has no legal obligation to keep in its payroll more employees than are
necessarily for the operation of its business.
It is of no legal moment that the financial troubles of the company were not of private
respondent's making. Private respondent cannot insist on the retention of his position upon the
ground that he had not contributed to the financial problems of Wiltshire. The characterization of
private respondent's services as no longer necessary or sustainable, and therefore properly
terminable, was an exercise of business judgment on the part of petitioner company. The wisdom
or soundness of such characterization or decision was not subject to discretionary review on the
part of the Labor Arbiter nor of the NLRC so long, of course, as violation of law or merely arbitrary
and malicious action is not shown.
The determination of the continuing necessity of a particular officer or position in a business
corporation is management's prerogative, and the courts will not interfere with the exercise of
Page 112
such so long as no abuse of discretion or merely arbitrary or malicious action on the part of
management is shown.
Page 113
ERNESTO G. YMBONG vs. ABS-CBN BROADCASTING CORPORATION, VENERANDA SY

AND DANTE LUZON
FACTS: Petitioner Ernesto G. Ymbong started working for ABS-CBN in 1993 at its regional
station in Cebu as a television talent, co-anchoring Hoy Gising and TV Patrol Cebu. His
stint in ABS-CBN later extended to radio when ABS-CBN Cebu launched its AM station in 1995.
Like Ymbong, Leandro Patalinghug also worked for ABS-CBN Cebu. Starting 1995, he
worked as talent, director and scriptwriter for various radio programs aired.
On January 1, 1996, the ABS-CBN Head Office in Manila issued Policy on Employees Seeking
Public Office. The pertinent portions read:
1. Any employee who intends to run for any public office position, must file his/her
letter of resignation, at least thirty (30) days prior to the official filing of the certificate of
candidacy either for national or local election.
xxxx
3. Further, any employee who intends to join a political group/party or even with no
political affiliation but who intends to openly and aggressively campaign for a
candidate or group of candidates (e.g. publicly speaking/endorsing candidate, recruiting
campaign workers, etc.) must file a request for leave of absence subject to
managements approval. For this particular reason, the employee should file the leave request
at least thirty (30) days prior to the start of the planned leave period.
Luzon, however, admitted that upon double-checking of the exact text of the policy he saw that
the policy actually required suspension for those who intend to campaign for a political party or
candidate and resignation for those who will actually run in the elections.
After the issuance of the Memorandum, Ymbong got in touch with Luzon.
Luzon claims that Ymbong approached him and told him that he would leave radio for a couple of
months because he will campaign for the administration ticket. It was only after the elections
that they found out that Ymbong actually ran for public office himself at the eleventh hour.
Ymbong, on the other hand, claims that in accordance with the Memorandum, he informed Luzon
through a letter that he would take a few months leave of absence because he was running for
councilor of Lapu-Lapu City.
As regards Patalinghug, Patalinghug approached Luzon and advised him that he will run as
councilor for Naga. According to Luzon, he clarified to Patalinghug that he will be considered
resigned and not just on leave once he files a certificate of candidacy. Thus, Patalinghug wrote
Luzon his resignation letter.
Unfortunately, both Ymbong and Patalinghug lost in the May 1998 elections.
Later, Ymbong and Patalinghug both tried to come back to ABS-CBN Cebu. According to Luzon,
he informed them that they cannot work there anymore because of company policy.
ABS-CBN, however, agreed out of pure liberality to give them a chance to wind up their
participation in the radio drama since it was rating well and to avoid an abrupt ending.
The agreed winding-up, however, dragged on for so long prompting Luzon to issue
to Ymbong a memorandum stating that his involvement as narrator of the drama continues
until its director wraps it up one week upon receipt of a separate memo.
Ymbong in contrast contended that after the expiration of his leave of absence, he
reported back to work as a regular talent and in fact continued to receive his salary.
On he received a memorandum stating that his services are being terminated immediately,
much to his surprise. Thus, he filed an illegal dismissal. He argued that the ground cited by ABSCBN for his dismissal was not among those enumerated in the Labor Code. And even
granting without admitting the existence of the company policy supposed to have been violated,
Ymbong averred that it was necessary that the company policy meet certain requirements before
Page 114
willful disobedience of the policy may constitute a just cause for termination. Ymbong further
argued that the company policy violates his constitutional right to suffrage. Patalinghug likewise
filed an illegal dismissal complaint against ABS-CBN.
ABS-CBN prayed for the dismissal of the complaints arguing that there is no employer-employee
relationship between the company and Ymbong and Patalinghug.
ISSUES: 1) Whether Ymbong, by seeking an elective post, is deemed to have resigned and not
dismissed by ABS-CBN; 2) Whether such policy is valid
RULING: We have consistently held that so long as a companys management prerogatives are
exercised in good faith for the advancement of the employers interest and not for the purpose of
defeating or circum circumventing the rights of the employees under special laws or under valid
agreements, this Court will uphold them. It is well within its rights to ensure that it maintains its
objectivity and credibility and freeing itself from any appearance of impartiality so that the
confidence of the viewing and listening public in it will not be in any way eroded. Even as the law
is solicitous of the welfare of the employees, it must also protect the right of an employer to
exercise what are clearly management prerogatives. The free will of management to conduct its
own business affairs to achieve its purpose cannot be denied.
It is worth noting that such exercise of management prerogative has earned a stamp of approval
from no less than our Congress itself when on February 12, 2001, it enacted Republic Act No.
9006, otherwise known as the Fair Election Act. Section 6.6 thereof reads:
6.6. Any mass media columnist, commentator, announcer, reporter, on-air
correspondent or personality who is a candidate for any elective public office or is a
campaign volunteer for or employed or retained in any capacity by any candidate or
political party shall be deemed resigned, if so required by their employer, or shall take
a leave of absence from his/her work as such during the campaign period: Provided, That any
media practitioner who is an official of a political party or a member of the campaign staff of a
candidate or political party shall not use his/her time or space to favor any candidate or political
party.
We find no merit in Ymbongs argument that his automatic termination x x x was a blatant
[disregard] of [his] right to due process as he was never asked to explain why he did not tender
his resignation before he ran for public office as mandated by [the subject company policy].
Ymbongs overt act of running for councilor of Lapu-Lapu City is tantamount to resignation on his
part. He was separated from ABS-CBN not because he was dismissed but because he
resigned. Since there was no termination to speak of, the requirement of due process in dismissal
cases cannot be applied to Ymbong. Thus, ABS-CBN is not duty-bound to ask him to explain why
he did not tender his resignation before he ran for public office as mandated by the subject
company policy.
Page 115
Yrasuegui v. PAL, 569 SCRA 467 (2008)

Facts: Petitioner was a former international flight steward of PAL, herein respondent. Petitioner
was dismissed because of his failure to adhere to the weight standards of the airline company.
Petitioner claims that he was illegally dismissed.
Held: SC upheld the legality of dismissal. Separation pay, however, should be awarded in favor
of the employee as an act of social justice or based on equity. This is so because his dismissal is
not for serious misconduct. Neither is it reflective of his moral character.
The obesity of petitioner, when placed in the context of his work as flight attendant,
becomes an analogous cause under Article 282(e) of the Labor Code. His obesity may not be
unintended, but is nonetheless voluntary. Voluntariness 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).
Bona fide occupational qualification (BFOQ)
Employment in particular jobs may not be limited to persons of a particular sex, religion, or
national origin unless the employer can show that sex, religion, or national origin is an actual
qualification for performing the job. Argument that BFOQ is a statutory defense must fail
The Constitution, the Labor Code, and RA No. 7277or the Magna Carta for Disabled Persons
contain provisions similar to BFOQ.
(1) the employer must show that it adopted the standard for a purpose rationally connected to
the performance of the job; Test (US jurisprudence) in determining whether an employment
policy is justified.
(2) the employer must establish that the standard is reasonably necessary to the
accomplishment of that work-related purpose; and
(3) the employer must establish that the standard is reasonably necessary in order to accomplish
the legitimate work-related purpose. In Star Paper Corporation v. Simbol, this Court held that in
order to justify a BFOQ, the employer must prove:
(1)the employment qualification is reasonably related to the essential operation of the job
involved; and
(2)that there is factual basis for believing that all or substantially all persons meeting the
qualification would be unable to properly perform the duties of the job.
In short, the test of reasonableness of the company policy is used because it is parallel to BFOQ.
BFOQ is valid provided it reflects an inherent quality reasonably necessary for satisfactory job
performance. The weight standards of PAL are reasonable. A common carrier, from the nature of
its business and for reasons of public policy, is bound to observe extraordinary diligence for the
safety of the passengers it transports.
The primary objective of PAL in the imposition of the weight standards for cabin crew is
flight safety. It cannot be gainsaid that cabin attendants must maintain agility at all times in
order to inspire passenger confidence on their ability to care for the passengers when something
goes wrong.
Entitled to separation pay, even if terminated for just cause Exceptionally, separation pay is
granted to a legally dismissed employee as an act social justice, or based on equity. Provided
the dismissal:
(1) was not for serious misconduct; and
(2) does not reflect on the moral character of the employee.
Thus, he was granted separation pay equivalent to one-half (1/2) months pay for every year of
service.
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Supreme Court Rules on Validity of Exclusivity and Termination Clauses in Avon Contract

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