1. GOYA, INC., v. GOYA, INC. EMPLOYEES UNION-FFW, G.R. No.

170054 :
January 21, 2013
FACTS:
Petitioner Goya Inc. (Goya) hired contractual employees from PESO Resources
Development Corporation (PESO). This prompted Goya, Inc. Employees UnionFFW (Union) to request for a grievance conference on the ground that the
contractual workers do not belong to the categories of employees stipulated in
their CBA. The Union also argued that hiring contractual employees is contrary
to the union security clause embodied in the CBA.
When the matter remained unresolved, the grievance was referred to the NCMB
for voluntary arbitration. The Union argued that Goya is guilty of ULP for gross
violation of the CBA. The voluntary arbitrator dismissed the Unions charge of
ULP but Goya was directed to observe and comply with the CBA. While the
Union moved for partial consideration of the VA decision, Goya immediately filed
a petition for review before the Court of Appeals to set aside the VAs directive to
observe and comply with the CBA commitment pertaining to the hiring of
casual employees. Goya argued that hiring contractual employees is a valid
management prerogative. The Court of Appeals dismissed the petition.
ISSUE: Whether the act of hiring contractual employees is a valid exercise of
management prerogative?
HELD: The petition must fail.
LABOR LAW: management prerogative; ULP; collective bargaining agreement
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. In this case, a complete and final adjudication of the
dispute between the parties necessarily called for the resolution of the related
and incidental issue of whether the Company still violated the CBA but without
being guilty of ULP as, needless to state, ULP is committed only if there is gross
violation of the agreement.
Goya 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 Goya and
the Union delimit the free exercise of management prerogative pertaining to the
hiring of contractual employees.
A collective bargaining agreement is the law between the parties. A collective
bargaining agreement or CBA 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. As in all
contracts, the parties in a CBA may establish such stipulations, clauses, terms
and conditions as they may deem convenient provided these are not contrary to
law, morals, good customs, public order or public policy. Thus, where the CBA
is clear and unambiguous, it becomes the law between the parties and
compliance therewith is mandated by the express policy of the law.
As repeatedly held, the exercise of management prerogative is not unlimited; it
is subject to the limitations found in law, collective bargaining agreement or the
general principles of fair play and justice.
Petition is DENIED.
2. COCA COLA BOTTLERS INC v. DELA CRUZ, G.R. No. 184977
Rationale:
Where the contractors were merely suppliers of labor, 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.
FACTS:
Respondents Dela Cruz et.al. filed complaints for regularization with money
claims against Coca-Cola Bottlers. The respondents alleged they are route
helpers who go from the Coca- Cola sales offices or plants to customer outlets,
and doing such, their jobs are necessary and desirable in its main business.
They further alleged that they worked under the control and supervision of the
companys supervisors who prepared their work schedules and assignments.
They argued that the petitioners contracts of services with Peerless and
Excellent are in the nature of labor only contracts prohibited by law since
Peerless and Excellent did not have sufficient capital or investment to provide
services to the petitioner. Coca-cola, the petitioner, contended that it entered
into contracts of services with Peerless and Excellent Partners to provide allied

services and that the contractors shall pay the salaries of all personnel
assigned to the petitioner. It claimed that its main business is softdrinks
manufacturing and the respondents tasks of sale and distribution are not part
of the manufacturing process. The petitioner posited that there is no employeremployee relationship between the company and the respondents and the
complaints should be dismissed for lack of jurisdiction. The labor arbiter and
the NLRC dismissed the case. CA reversed the decision and denied the motion
for reconsideration. Thus this petition.
ISSUE:
W/N Excellent and Peerless were independent labor contractors or labor - only
contractors.
HELD: Article 106 which provides:
Whenever, an employer enters into a contract with another person for the
performance of the formers work, the employees of the contractor and of the
latters subcontractor shall be paid in accordance with the provisions of this
Code. x x x
There is labor-only contracting where the person supplying workers to an
employer does not have substantial capital or investment in the form of tools,
equipment, machineries, work premises, among others, and the workers
recruited and placed by such persons are performing activities which are
directly related to the principal business of such employer. In such cases, the
person or intermediary shall be considered merely as an agent of the employer
who shall be responsible to the workers in the same manner and extent as if the
alter were directly employed by him. The CA noted that both the contracts for
Peerless and the Excellent show that their obligation was solely to provide the
company with the services of contractual employees, and nothing more.
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.
3. TEMIC AUTOMOTIVE PHILIPPINES, INC., vs. TEMIC AUTOMOTIVE
PHILIPPINES, INC. EMPLOYEES UNION-FFW, G.R. No. 186965, December 23,
2009

FACTS:
Respondent Temic Automotive Philippines, Inc. Employees Union-FFW (union) is
the exclusive bargaining agent of the petitioner's rank-and-file employees.
The petitioner, engaged in the manufacture of electronic brake systems and
comfort body electronics for automotive vehicles, contracts out some of the work
in the warehouse department to three independent service providers or
forwarders, 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.
This outsourcing arrangement gave rise to a union grievance on the issue of the
scope and coverage of the collective bargaining unit, contending contracting out
services is the same as the workplace activities undertaken by regular company
rank-and-file employees covered by the bargaining unit who work under
company control. The union 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.
The issue was submitted to voluntary arbitration and later, to the jurisdiction of
the Court of Appeals, to which both decided that the regular employees should
be considered regular employees of the company.
ISSUE:
Whether the contracting out arrangement is valid.
HELD:
Yes, the arrangement is valid.
In Meralco v. Quisumbing, the SC joined the universal recognition of
outsourcing as a legitimate activity and held that a company can determine in
its best judgment whether it should contract out a part of its work for as long as
the employer is motivated by good faith; the contracting is not for purposes of

circumventing the law; and does not involve or be the result of malicious or
arbitrary action. In this case, 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, thus negating the presence of bad faith. Also, no evidence was
presented to show abuses and anything detrimental to the status of the regular
employees.
The contract of the forwarding arrangement in the case at bar complies with the
requirements of the Labor Code and its IRR. The company controls its
employees in the means, method and results of their work, in the same manner
that the forwarder controls its own employees in the means, manner and
results of their work. Complications and confusion result because the company
at the same time controls the forwarder in the results of the latters work,
without controlling however the means and manner of the forwarder employees
work.
More importantly, it should be noted that that the forwarding agreements were
already in place when the current CBA was signed. In this sense, the union
accepted the forwarding arrangement, albeit implicitly, when it signed the CBA
with the company. Thereby, the union agreed, again implicitly by its silence and
acceptance, that jobs related to the contracted forwarding activities are not
regular company activities and are not to be undertaken by regular employees
falling within the scope of the bargaining unit but by the forwarders employees.

4. JOEB M. ALIVIADO, et al., vs. PROCTER & GAMBLE PHILS., INC., and
PROMM-GEM INC., G.R. No. 160506 : March 9, 2010
FACTS:
Petitioners worked as merchandisers of P&G from various dates, allegedly
starting as early as 1982 or as late as June 1991, to either May 5, 1992orMarch
11, 1993.
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.
SAPS and Promm-Gem imposed disciplinary measures on erring merchandisers
for reasons such as habitual absenteeism, dishonesty or changing day-off
without prior notice.

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.
In December 1991, 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 the matter of their subsequent dismissal.
On November 29, 1996, the Labor Arbiter dismissed the complaint for lack of
merit and ruled that there was no employer-employee 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 Promm-Gem/SAPS. He further found that PrommGem and SAPS were legitimate independent job contractors. On appeal, the
NLRC dismissed the same. Petitioners filed a motion for reconsideration but the
motion was denied in the November 19, 1998 Resolution.
Petitioners likewise failed to have a favorable decision in the CA hence, this
petition.
ISSUE:
Whether or not Promm-Gem and SAPS are labor-only contractors or legitimate
job contractors?
HELD:
The petition is granted.
LABOR LAW
Article 106 of the Labor Code 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 subcontractor 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.
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, ofP500,000.00 as of 1990. It also has long term assets
worthP432,895.28 and current assets ofP719,042.32.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 used for its promotional/merchandising business. Promm-Gem also has
other clients aside from P&G. Under the circumstances, 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. Promm-Gem 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. Thus, 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 onlyP31,250.00. 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.
It is clear that SAPS having a paid-in capital of onlyP31,250 - has no
substantial capital. SAPS lack of substantial capital is underlined by the
records which show that its payroll for its merchandisers alone for one month
would already total P44,561.00.It had 6-month contracts with P&G. Yet SAPS
failed to show that it could complete the 6-month contracts using its own

capital and investment. Its capital is not even sufficient for one months payroll.
SAPS failed to show that its paid-in capital ofP31,250.00 is sufficient for the
period required for it to generate its needed revenue to sustain its operations
independently. Substantial capital refers to capitalization used in the
performance or completion of the job, work or service contracted out. In the
present case, SAPS has failed to show substantial capital.
Furthermore, the petitioners have been charged with the merchandising and
promotion of the products of P&G, an activity that has already been considered
by the Court as doubtlessly directly related to the manufacturing business,
which is the principal business of P&G. 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.
Where labor-only contracting exists, the Labor Code itself establishes an
employer-employee relationship between the employer and the employees of the
labor-only contractor. The statute establishes this relationship for a
comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the
latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer.
LABOR LAW
In cases of regular employment, the employer shall not terminate the services of
an employee except for a justor authorized cause.
In the instant case, the termination letters given by Promm-Gem to its
employees uniformly specified the cause of dismissal as grave misconduct and
breach of trust.
Misconduct has been defined as improper or wrong conduct; the transgression
of some established and definite rule of action, a forbidden act, a dereliction of
duty, unlawful in character implying wrongful intent and not mere error of
judgment.The misconduct to be serious must be of such grave and aggravated
character and not merely trivial and unimportant.To be a just cause for
dismissal, such misconduct (a) must be serious; (b) must relate to the
performance of the employees duties; and (c) must show that the employee has
become unfit to continue working for the employer.
In the instant case, petitioners-employees of Promm-Gem may have committed
an error of judgment in claiming to be employees of P&G, but it cannot be said
that they were motivated by any wrongful intent in doing so.As such, they are

only found them guilty of only simple misconduct for assailing the integrity of
Promm-Gem as a legitimate and independent promotion firm.A misconduct
which is not serious or grave, as that existing in the instant case, cannot be a
valid basis for dismissing an employee.
Meanwhile, loss of trust and confidence, as a ground for dismissal, must be
based on the willful breach of the trust reposed in the employee by his
employer.Ordinary breach will not suffice.A breach of trust is willful if it is done
intentionally, knowingly and purposely, without justifiable excuse, as
distinguished from an act done carelessly, thoughtlessly, heedlessly or
inadvertently.
Loss of trust and confidence, as a cause for termination of employment, is
premised on the fact that the employee concerned holds a position of
responsibility or of trust and confidence.As such, he must be invested with
confidence on delicate matters, such as custody, handling or care and
protection of the property and assets of the employer.And, in order to constitute
a just cause for dismissal, the act complained of must be work-related and must
show that the employee is unfit to continue to work for the employer. In the
instant case, the petitioners-employees of Promm-Gem have not been shown to
be occupying positions of responsibility or of trust and confidence. Neither is
there any evidence to show that they are unfit to continue to work as
merchandisers for Promm-Gem. Thus, there was no valid cause for the
dismissal of petitioners-employees of Promm-Gem.
While Promm-Gem had complied with the procedural aspect of due process in
terminating the employment of petitioners-employees,i.e., giving two notices and
in between such notices, an opportunity for the employees to answer and rebut
the charges against them, it failed to comply with the substantive aspect of due
process as the acts complained of neither constitute serious misconduct nor
breach of trust.Hence, the dismissal is illegal.
With regard to the petitioners placed with P&G by SAPS, they were given no
written notice of dismissal.The records show that upon receipt by SAPS of P&Gs
letter terminating their Merchandising Services Contact effective March 11,
1993, they in turn verbally informed the concerned petitioners not to report for
work anymore.
Neither SAPS nor P&G dispute the existence of these circumstances.
Parenthetically, unlike Promm-Gem which dismissed its employees for grave
misconduct and breach of trust due to disloyalty, SAPS dismissed its employees
upon the initiation of P&G.It is evident that SAPS does not carry on its own
business because the termination of its contract with P&G automatically meant
for it also the termination of its employees services.It is obvious from its act that

SAPS had no other clients and had no intention of seeking other clients in order
to further its merchandising business.From all indications SAPS, existed to
cater solely to the need of P&G for the supply of employees in the latters
merchandising concerns only.Under the circumstances prevailing in the instant
case, we cannot consider SAPS as anindependent contractor.
In termination cases, the burden of proof rests upon the employer to show that
the dismissal is for just and valid cause. In the instant case, P&G failed to
discharge the burden of proving the legality and validity of the dismissals of
those petitioners who are considered its employees. Hence, the dismissals
necessarily were not justified and are therefore illegal.
CIVIL LAW
Moral and exemplary damages are recoverable where the dismissal of an
employee was attended by bad faith or fraud or constituted an act oppressive to
labor or were done in a manner contrary to morals, good customs or public
policy.
With regard to the employees of Promm-Gem, there being no evidence of bad
faith, fraud or any oppressive act on the part of the latter, we find no support
for the award of damages.
As for P&G, the records show that it dismissed its employees through SAPS in a
manner oppressive to labor. The sudden and peremptory barring of the
concerned petitioners from work, and from admission to the work place, after
just a one-day verbal notice,andfor no valid cause bellows oppression and utter
disregard of the right to due process of the concerned petitioners.Hence, an
award of moral damages is called for.
Attorneys fees may likewise be awarded to the concerned petitioners who
wereillegallydismissedinbadfaithandwerecompelledtolitigateorincur expenses to
protect their rights by reason of the oppressive act of P&G.
LABOR LAW
Lastly, under Article 279 of the Labor Code, an employee who is unjustly
dismissed from work shall be entitled to reinstatement without loss of seniority
rights and other privileges, inclusive of allowances, and other benefits or their
monetary equivalent from the time the compensation was withheld up to the
time of actual reinstatement. Hence, all the petitioners, having been illegally
dismissed are entitled to reinstatement without loss of seniority rights and with
full back wages and other benefits from the time of their illegal dismissal up to
the time of their actual reinstatement.

The decision and resolution of the Court of Appeals are reversed and set aside.
The case is remanded to the NLRC.
5. Manila Memorial Park vs Ezard D, Lluz, GR no. 20845, February 3, 2016

6. San Miguel Corporation vs. Maerc Integrated Services, Inc., et al.

[GR No. 144672 July 10, 2003]
Facts:
Brought before this court is a petition seeking for a review of the Court of
Appeals' judgment. The facts are as follows. 291 workers filed complaints
against San Miguel Corporation and Maerc Integrated Services, Inc. for illegal
dismissal, underpayment of wages, non-payment of service incentive leave pays
and other labor standards benefits, and for separation pays from 25 June to 24
October 1991. The complainants alleged that they were hired by SMC through
its agent or intermediary Maerc. They were paid on a per piece or pakiao basis
except for a few who worked as checkers and were paid on daily wage basis.
SMC denied liability for the claims and averred that the complainants were not
its employees but of MAERC. When the service contract was terminated,
complainants claimed that SMC stopped them from performing their jobs; that
this was tantamount to their being illegally dismissed by SMC who was their
real employer; and, that MAERC was merely made a tool or a shield by SMC to
avoid its liability under the Labor Code.
On 31 January 1995 the Labor Arbiter rendered a decision holding that MAERC
was an independent contractor. He dismissed the complaints for illegal
dismissal but held that MAERC and SMC were jointly and severally liable to pay
complainants their wage differentials. The National Labor Relations
Commission (NLRC) ruled in its 7 January 1997 decision that MAERC was a
labor-only contractor and that complainants were employees of SMC but still
held SMC to be jointly and severally liable with MAERC for complainants'
separation benefits. On 28 April 2000 the Court of Appeals denied the petition
and affirmed the decision of the NLRC.
Issue:

Whether or not the complainants are employees of petitioner SMC or of

respondent MAERC.
SC Ruling:
Evidence discloses that petitioner played a large and indispensable part in the
hiring of MAERC's workers. It also appears that majority of the complainants
had already been working for SMC long before the signing of the service
contract between SMC and MAERC in 1988.
In labor-only contracting, the statute creates an employer-employee relationship
for a comprehensive purpose: to prevent a circumvention of labor laws. The
contractor is considered merely an agent of the principal employer and the
latter is responsible to the employees of the labor-only contractor as if such
employees had been directly employed by the principal employer. The principal
employer therefore becomes solidarily liable with the labor-only contractor for
all the rightful claims of the employees.
This distinction between job contractor and labor-only contractor, however, will
not discharge SMC from paying the separation benefits of the workers,
inasmuch as MAERC was shown to be a labor-only contractor; in which case,
petitioner's liability is that of a direct employer and thus solidarily liable with
MAERC.
Respondent Maerc Integrated Services, Inc. is declared to be a labor-only
contractor. Accordingly, both petitioner San Miguel Corporation and respondent
Maerc Integrated Services, Inc., are ordered to jointly and severally pay
complainants (private respondents herein) separation benefits and wage
differentials as may be finally recomputed by the Labor Arbiter as herein
directed, plus attorney's fees to be computed on the basis of ten percent (10%)
of the amounts which complainants may recover pursuant to Art. 111 of the
Labor Code, as well as an indemnity fee of P2,000.00 to each complainant.
7. Gallego v. Bayer Phils. G.R. No. 179807, July 31, 2009
Facts:
Gallego was contracted by Bayer Philippines as crop protection technician to
promote and market Bayer products by making farm visits to convince the
farmers to buy their products. Petitioners employment came to a halt,
prompting him to seek another employment, but was reemployed by Product
Image which is actually performing the same task as crop protection technician.
Gallego was directed to submit a resignation letter and was ordered to quit,

calling for him to return all pieces of service equipment, in which he refused. He
continued performing his duties and received compensation. He received a
memorandum that he will be transferred to Luzon and that he heard that
respondents spread rumors that reached the dealers in Antique that he is no
longer connected with Bayer and any transaction with him will not be honored.
Believing he was terminated, he instituted a complaint before the NLRC.
Respondents Bayer and Guillermo denied the existence of employment
relationship, while respondents Product Image and Bergonia admitted that the
petitioner was hired as contractual employee and that he has stopped reporting
for work among other things. The Labor Arbiter declared that respondents were
guilty of illegal dismissal. On appeal by the respondents, the NLRC reversed the
Arbiters decision and contended that petitioner was not dismissed but has
abandoned his employment by failure to report on his duties. Hence, this
petition for review.
Issue:
Whether Product Image is a labor-only contractor and Bayer should be deemed
petitioners principal employer.
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. 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.
The court finds substantial evidence to support that Product Image is a
legitimate job or independent contractor.
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; and (2) Product Image has an independent business and provides
services nationwide to big companies such as Ajinomoto Philippines and Procter
and Gamble Corporation. Product Image also posted a bond 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.
As to the question of Bayer being the employer of petitioner, the existence of an
employer-employee relationship is determined on the basis of four standards,
namely: (1) the manner of selection and engagement of the putative employee;
(2) the mode of payment of wages; (3) the presence or absence of power of
dismissal; and (4) the presence or absence of control of the putative employees
conduct. Most determinative among these factors is the so-called control test.
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.
Surely, it would be foolhardy for any company to completely give the reins and
totally ignore the operations it has contracted out. In fine, Product Image is
ineluctably the employer of petitioner.

8. GARDEN OF MEMORIES PARK and LIFE PLAN, INC. and PAULINA T.

REQUIO, vs. NATIONAL LABOR RELATIONS COMMISSION, SECOND
DIVISION, LABOR ARBITER FELIPE T. GARDUQUE II and HILARIA CRUZ G.R.
160278, February 8, 2012.
TOPIC:
A petition for review under Rule 45 of the ROC seeking nullification on the
resolution of the CA affirming the decision of NLRC in finding the petitioner as
the employer of the respondent and ordered liable for the money claims of
respondent Cruz.
FACTS:

Petitioner is engaged in business of operating a memorial park in Pateros, MM,

and selling memorial plan and services, Respondent, likewise, is a worker in
Garden of Memories Park from 1991 up to Feb. 1998.
On March 13, 1998 Respondent filed a complaint of illegal dismissal,
underpayment of wages, non-inclusion of SSS and so on against the petitioner
before the DOLE. Petitioner denied the employment of respondent, but likewise,
impleaded Paulina T. Requino as it was the service contractor and employer of
Cruz.
It was due to misunderstanding with a co-worker why he was dismissed without
due process and valid cause. Both petitioner denied the fact that Cruz was
their employee either, and argued that respondent has abandoned his work.
Upon judgement of the LA, it was declared that both petitioners are held jointly
and severally liable for the monetary claims of Cruz and order payment.
Petitioners both appealed at NLRC but was denied even on the MR due to lack
of merit. They then elevated the appeal at the CA but was also affirmed the
decision made by NLRC, hence this petition for certiorari due to GAOD and
Acted in Excess of Jurisdiction for the following issues, to wit:
ISSUES:
1.
2.
3.

WON Petitioner Requino was engaged in Labor-only contracting;

WON there exists an employee-employer relationship between Gardens
and respondent Cruz; and
WON respondent Cruz has abandon his work at the Gardens.

RULING/HELD:
First Issue:
Sec. 5 of Rule VIII-A of the Omnibus Rule implementing the Labor Codes,
provides that labor contracting shall refer to an arrangement where the
contractor or subcontractor merely recruits, supplies or places workers to
perform a job, work or service for a principal and the elements of determinating
this are present, 1) capitalization requirements and 2) the power of control over
to his employee which Requino are wanting. The Courts find this absent in
Requinos favor, hence, hes only doing as a mere agent of the Garden of
Memories and not as an employer of respondent Cruz, which was supported by
Service Contract Agreement between both the petitioners.
Second Issue:

Consequently, due to the findings made by the court upon declaring that
Requino was only doing as agent of the Gardens.
As such, Gardens is the
principal employer of the respondent Cruz, he was hired as a Utility Worker
tasked to clean, sweep and water the lawn of the memorial park. She
performed activities which were necessary or desirable to its principal trade or
business. Thus, she was a regular employee of Gardens of Memories and
cannot be dismissed except for just and authorized causes when respondent
Cruz did not abandon her work but was illegally dismissed as described on the
Third Issue. Therefore, the petition is denied and the assailed decision /
resolutions of the CA were affirmed by the Supreme Court.
9. MARTICIO SEMBLANTE and DUBRICK PILAR, vs. COURT OF APPEALS,
19THDIVISION, now SPECIAL FORMER 19TH DIVISION, GALLERA DE
MANDAUE /SPOUSES VICENTE and MARIA LUISA LOOT,G.R. No. 196426,
August 15, 2011
FACTS:
PETITIONERS Marticio Semblante and Dubrick Pilar were hired by private
respondents Vicente and Maria Luisa Loot as official masiador and
sentenciador, respectively, of their Gallera de Mandaue, a cockpit.
As the masiador, Semblante would call and take the bets from the gamecock
owners and other bettors and order the start of the cockfight. He would also
distribute the winnings after deducting the arriba, or the commission for the
cockpit. As the sentenciador, Pilar would oversee the proper gaffing of fighting
cocks determine the fighting cocks physical condition and capabilities to
continue the cockfight, and eventually declare the result of the cockfight.
For their services as masiador and sentenciador, Semblante was paid P2,000
per week or P8,000 per month, while Pilar was paid P3,500 a week or P14,000 a
month. They worked every Tuesday, Wednesday, Saturday and Sunday every
week, excluding monthly derbies and cockfights held on special holidays.
In a complaint for illegal dismissal, the Labor Arbiter found petitioners to be
regular employees of respondents. In their appeal to the National Labor
Relations Commission (NLRC), respondents belatedly put up an appeal bond.
The NLRC after a Motion for Reconsideration by respondents, entertained the
appeal and found that there was no employer-employee relationship between
petitioners and respondents. The Court of Appeals (CA) upheld the decision of
the NLRC. Can the decision be justified?
Ruling:

Yes. 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 fourfold test of employment We have repeatedly mentioned in countless decisions:
(1) the selection and engagement of the employee; (2) the payment of wages; (3)
the power of dismissal; and (4) the power to control the 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; petitioners compensation was paid out of the arriba
(which is a percentage deducted from the total bets), not by petitioners; and
petitioners performed their functions as masiador and sentenciador free from
the direction and control of respondents. In the conduct of their work,
petitioners relied mainly on their expertise that is characteristic of the
cockfight gambling, and were never given by respondents any tool needed for
the performance of their work.
Respondents, not being petitioners employers, could never have dismissed,
legally or illegally, petitioners, since respondents were without power or
prerogative to do so in the first place. The rule on the posting of an appeal bond
cannot defeat the substantive rights of respondents to be free from an
unwarranted burden of answering for an illegal dismissal for which they were
never responsible. (Marticio Semblante and Dubrick Pilar vs. CA, G.R. No.
196426, Aug. 15, 2011).
10. Emmanuel Babas et. al. v Lorenzo Shipping Corporation (G.R. No. 186091)
FACTS:
Lorenzo Shipping Corporation (LSC) is a duly organized domestic corporation
engaged in the shipping industry. LSC entered into a General Equipment
Maintenance Repair and Management Services Agreement (Agreement) with
Best Manpower Services, Inc. (BMSI). Under the Agreement, BMSI undertook to
provide maintenance and repair services to LSCs container vans, heavy
equipment, trailer chassis, and generator sets. BMSI further undertook to
provide checkers to inspect all containers received for loading to and/or
unloading from its vessels.
Simultaneous with the execution of the Agreement, LSC leased its equipment,
tools, and tractors to BMSI. The period of lease was coterminous with the
Agreement.

BMSI then hired petitioners on various dates to work at LSC as checkers,

welders, utility men, clerks, forklift operators, motor pool and machine shop
workers, technicians, trailer drivers, and mechanics.
In September 2003, petitioners filed with the Labor Arbiter (LA) a complaint for
regularization against LSC and BMSI. On October 1, 2003, LSC terminated the
Agreement, effective October 31, 2003. Consequently, petitioners lost their
employment.
BMSI asserted that it is an independent contractor. It averred that it was
willing to regularize petitioners; however, some of them lacked the requisite
qualifications for the job. LSC averred that petitioners were employees of BMSI
and were assigned to LSC by virtue of the Agreement. BMSI is an independent
job contractor with substantial capital or investment in the form of tools,
equipment, and machinery necessary in the conduct of its business. The
Agreement between LSC and BMSI constituted legitimate job contracting. Thus,
petitioners were employees of BMSI and not of LSC.
The Labor Arbiter dismissed petitioners complaint on the ground that
petitioners were employees of BMSI. It was BMSI which hired petitioners, paid
their wages, and exercised control over them. The NLRC reversed the Labor
Arbiter
Issue:
Whether or not respondent was engaged in labor-only contracting.
Held:
Yes. In De Los Santos v. NLRC, the character of the business, i.e., whether as
labor-only contractor or as job contractor, should be measured in terms of, and
determined by, the criteria set by statute. The parties cannot dictate by the
mere expedience of a unilateral declaration in a contract the character of their
business.
The Court has observed that:
First, petitioners worked at LSCs premises, and nowhere else. Other than the
provisions of the Agreement, there was no showing that it was BMSI which
established petitioners working procedure and methods, which supervised
petitioners in their work, or which evaluated the same. There was absolute lack
of evidence that BMSI exercised control over them or their work.

Second, LSC was unable to present proof that BMSI had substantial capital.
There was no proof pertaining to the contractors capitalization, nor to its
investment in tools, equipment, or implements actually used in the performance
or completion of the job, work, or service that it was contracted to render. What
is clear was that the equipment used by BMSI were owned by, and merely
rented from, LSC.
Third, petitioners performed activities which were directly related to the main
business of LSC. The work of petitioners as checkers, welders, utility men,
drivers, and mechanics could only be characterized as part of, or at least clearly
related to, and in the pursuit of, LSCs business.
Lastly, BMSI had no other client except for LSC, and neither BMSI nor LSC
refuted this finding, thereby bolstering the NLRC finding that BMSI is a laboronly contractor.
The CA erred in considering BMSIs Certificate of Registration as sufficient proof
that it is an independent contractor. Jurisprudence states that a Certificate of
Registration issued by the Department of Labor and Employment is not
conclusive evidence of such status. The fact of registration simply prevents the
legal presumption of being a mere labor-only contractor from arising.
*LSC is ordered to reinstate the petitioners to their former positions. Petitioners
are declared as regular employees of LSC.
NOTES:

Labor-only contracting
a prohibited act - is an arrangement where the
contractor or subcontractor merely recruits, supplies, or places workers to
perform a job, work, or service for a principal.
Elements:
(a) the contractor or subcontractor does not have substantial capital or
investment to actually perform the job, work, or service under its own account
and responsibility
(b) the employees recruited, supplied, or placed by such contractor or
subcontractor perform activities which are directly related to the main business
of the principal.[20]
Permissible job contracting or subcontracting an arrangement whereby a
principal agrees to put out or farm out with the contractor or subcontractor the
performance or completion of a specific job, work, or service within a definite or

predetermined period, regardless of whether such job, work, or service is to be

performed or completed within or outside the premises of the principal.
Conditions:
(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 the 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.

11. Tabas vs. California Manufacturing Co., Inc. [169 SCRA 497, GR 80680]
(Labor Standards Both employer and labor only contractor may be liable)
Facts:
Petitioners filed a petition in the NLRC for reinstatement and payment of
various benefits against California Manufacturing Company. The respondent
company then denied the existence of an employer-employee relationship
between the company and the petitioners.
Pursuant to a manpower supply agreement, it appears that the petitioners prior
their involvement with California Manufacturing Company were employees of
Livi Manpower service, an independent contractor, which assigned them to work
as promotional merchandisers. The agreement provides that:
California has no control or supervisions whatsoever over [Livis] workers with
respect to how they accomplish their work or perform [Californias] obligation It
was further expressly stipulated that the assignment of workers to California
shall be on a seasonal and contractual basis; that [c]ost of living allowance
and the 10 legal holidays will be charged directly to [California] at cost ; and
that [p]ayroll for the preceding [sic] week [shall] be delivered by [Livi] at
[Californias] premises.
Issue: WON principal employer is liable.

Held:
Yes. The existence of an employer-employee relation cannot be made the subject
of an agreement.
Based on Article 106, labor-only contractor is considered merely as an agent
of the employer, and the liability must be shouldered by either one or shared by
both.
There is no doubt that in the case at bar, Livi performs manpower services,
meaning to say, it contracts out labor in favor of clients. We hold that it is one
notwithstanding its vehement claims to the contrary, and notwithstanding the
provision of the contract that it is an independent contractor. The nature of
ones business is not determined by self-serving appellations one attaches
thereto but by the tests provided by statute and prevailing case law. The bare
fact that Livi maintains a separate line of business does not extinguish the
equal fact that it has provided California with workers to pursue the latters own
business. In this connection, we do not agree that the petitioners had been
made to perform activities which are not directly related to the general business
of manufacturing, Californias purported principal operation activity. Livi, as
a placement agency, had simply supplied California with the manpower
necessary to carry out its (Californias) merchandising activities, using its
(Californias) premises and equipment.
12.SMC vs NLRC
13. Pepsi vs. Galang (September 24, 1991)
FACTS:
The private respondents were employees of the petitioner who were suspected of
complicity in the irregular disposition of empty Pepsi Cola bottles. On July 16,
1987, the petitioners filed a criminal complaint for theft against them but this
was later withdrawn and substituted with a criminal complaint for falsification
of private documents. After a preliminary investigation conducted by the
Municipal Trial Court of Tanauan, Leyte, the complaint was dismissed.
Allegedly after an administrative investigation, the private respondents were
dismissed by the petitioner company on November 23, 1987. As a result, they
lodged a complaint for illegal dismissal with the Regional Arbitration Branch of
the NLRC in Tacloban City and decisions mandateed reinstatement with
damages. In addition, they instituted in the Regional Trial Court of Leyte, a

separate civil complaint against the petitioners for damages arising from what
they claimed to be their malicious prosecution.
The petitioners moved to dismiss the civil complaint on the ground that the trial
court had no jurisdiction over the case because it involved employee-employer
relations that were exclusively cognizable by the labor arbiter. The motion was
granted .On July 6, 1989, however, the respondent judge, acting on the motion
for reconsideration, reinstated the complaint, saying it was distinct from the
labor case for damages now pending before the labor courts. The petitioners
then came to this Court for relief.
ISSUE:
Whether or not it is the Labor Arbiter has jurisdiction over the claim for
damages arising from the malicious prosecution of the petitioner company.
RULING:
No. It must be stressed that not every controversy involving workers and their
employers can be resolved only by the labor arbiters. This will be so only if there
is a reasonable causal connection between the claim asserted and employeeemployer relations to put the case under the provisions of Article 217. Absent
such a link, the complaint will be cognizable by the regular courts of justice in
the exercise of their civil and criminal jurisdiction. The case now before the
Court involves a complaint for damages for malicious prosecution which was
filed with the Regional Trial Court of Leyte by the employees of the defendant
company. It does not appear that there is a reasonable causal connection
between the complaint and the relations of the parties as employer and
employees. The complaint did not arise from such relations and in fact could
have arisen independently of an employment relationship between the parties.
No such relationship or any unfair labor practice is asserted. What the
employees are alleging is that the petitioners acted with bad faith when they
filed the criminal complaint which the Municipal Trial Court said was intended
to harass the poor employees and the dismissal of which was affirmed by the
Provincial Prosecutor for lack of evidence to establish even a slightest
probability that all the respondents.
14. Medina vs. Castro Bartolome (116 SCRA 597 G.R No. 59825)
FACTS:
Cosme de Aboitiz, acting in his capacity as President and Chief Executive
Officer of the defendant Pepsi-Cola Bottling Company of the Philippines, Inc.,
went to the Pepsi-Cola Plant in Muntinlupa, Metro Manila and without any

provocation, shouted and maliciously humiliated Ernesto Medina and Jose G.

Ong:
GOD DAMN IT. YOU FUCKED ME UP ... YOU SHUT UP! FUCK YOU! YOU
ARE BOTH SHIT TO ME! YOU ARE FIRED (referring to Ernesto Medina).
YOU TOO ARE FIRED! '(referring to Jose Ong)
for having allegedly delayed the use of promotional crowns effected on the very
day that plaintiffs were awarded rings of loyalty to the Company, 5 days before
Christmas and on the day when the employees' Christmas party was held so
that when Medina and Ong went home that day and found their wives and
children already dressed up for the party, they didn't know what to do and so
they cried unashamedly.
A joint criminal complaint for oral defamation against Aboitiz was filed.
Provincial Fiscal: dismissed the complaint since uttered not to slander but to
express anger and displeasure.
Petition for Review with the office of the Secretary of Justice (now Ministry of
Justice): reversed the decision of the Fiscal.
Aboitiz filed a motion to dismiss on the ground of lack of jurisdiction but it was
dismissed since the complaint for civil damages is clearly not based on an
employer-employee relationship but on the manner of plaintiffs' dismissal and
the effects flowing therefrom
This case was filed on May 10, 1979. The amendatory decree, P.D. 1367, which
took effect on May 1, 1978 and which provides that Regional Directors shall not
indorse and Labor Arbiters shall not entertain claims for moral or other forms of
damages, now expressly confers jurisdiction on the courts in these cases,
specifically under the plaintiff's causes of action already settled by
jurisprudence that mere asking for reinstatement does not remove from the CFI
jurisdiction over the damages.
The case must involve unfair labor practices to bring it within the jurisdiction of
the CIR (now NLRC)
A second motion to dismiss was filed because of the promulgation of P.D. No.
1691 amending Art. 217 of the Labor Code of the Philippines and Batasan
Pambansa Bldg. 70 which took effect on May 1, 1980, amending Art. 248 of the
Labor Code.

Jurisdiction over employee-employer relations and claims of workers have been

removed from the Courts of First Instance
ISSUE: W/N the Labor Code has any relevance to the reliefs sought
HELD:
NO. Petition is granted.
Simple action for damages for tortuous acts is governed by the Civil Code and
not the Labor Code
15. Aklan Electric Coop. vs NLRC (323 scra 258)
FACTS:
January 22, 1991 by way of a resolution of the Board of Directors of AKELCO it
allowed the temporary holding of office at Amon Theater, Kalibo, Aklan upon
the recommendation of Atty. Leovigildo Mationg, then project supervisor, on the
ground that the office at Lezo, Aklan was dangerous and unsafe. Majority of the
employees including the herein complainants, continued to report for work at
Lezo, Aklan and were paid of their salaries.
The complainants claimed that transfer of office from Lezo, Aklan to Kalibo,
Aklan was illegal because it failed to comply with the legal requirements under
P.D. 269, thus the they remained and continued to work at the Lezo Office until
they were illegally locked out therefrom by the respondents.
Despite the illegal lock out however, complainants continued to report daily to
the location of the Lezo Office, prepared to continue in the performance of their
regular duties. Complainants who continuously reported for work at Lezo, Aklan
were not paid their salaries from June 1992 up to March 18, 1993.
LA dismissed the complaints. NLRC reversed and set aside the LAs decision
and RULING that private respondents are entitled to unpaid wages.
ISSUE:
Are the refusal of private respondents to work under the lawful orders of
AKELCO management are covered by the no work, no pay principle?

HELD:
The above bases of the NLRC does not constitute substantial evidence to
support the conclusion that private respondents are entitled to the payment of
wages from June 16, 1992 to March18, 1993.
Substantial evidence is that amount of relevant evidence which a reasonable
mind might accept as adequate to justify a conclusion. These evidences relied
upon by public respondent did not establish the fact that private respondents
actually rendered services in the Kalibo office during the stated period.
It has been established that the petitioners business office was transferred to
Kalibo and all its equipments, records and facilities were transferred thereat
and that it conducted its official business in Kalibo during the period in
question. It was incumbent upon private respondents to prove that they indeed
rendered services for petitioner, which they failed to do.
It would neither be fair nor just to allow private respondents to recover
something they have not earned and could not have earned because they did
not render services at the Kalibo office during the stated period.
16.INT'L. SCHOOL ALLIANCE VS. QUISUMBING [333 SCRA 13; G.R. NO. 128845;
1 JUN 2000]
Facts:
Receiving salaries less than their counterparts hired abroad, the local-hires of
private respondent School, mostly Filipinos, cry discrimination. We agree. That
the local-hires are paid more than their colleagues in other schools is, of
course, beside the point. The point is that employees should be given equal pay
for work of equal value.
Private respondent International School, Inc. (the School, for short), pursuant
to Presidential Decree 732, is a domestic educational institution established
primarily for dependents of foreign diplomatic personnel and other temporary
residents. To enable the School to continue carrying out its educational
program and improve its standard of instruction, Section 2(c) of the same
decree authorizes the School to employ its own teaching and management
personnel selected by it either locally or abroad, from Philippine or other
nationalities, such personnel being exempt from otherwise applicable laws and
regulations attending their employment, except laws that have been or will be
enacted for the protection of employees.

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.
Issue:
Whether or Not the grants provided by the school to foreign hires and not to
local hires discriminative of their constitutional right to the equal protection
clause.
Held:
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 employeesperform 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.
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 localhires 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 Constitution enjoins the State to "protect the rights of workers and promote
their welfare," "to afford labor full protection." The State, therefore, has the right
and duty to regulate the relations between labor and capital. These relations are

not merely contractual but are so impressed with public interest that labor
contracts, collective bargaining agreements included, must yield to the common
good. Should such contracts contain stipulations that are contrary to public
policy, courts will not hesitate to strike down these stipulations.
In this case, we find the point-of-hire classification employed by respondent
School to justify the distinction in the salary rates of foreign-hires and local
hires to be an invalid classification. There is no reasonable distinction between
the services rendered by foreign-hires and local-hires.
Wherefore, the petition is given due course. The petition is hereby granted in
part. The orders of the secretary of labor and employment dated June 10, 1996
and march 19, 1997, are hereby reversed and set aside insofar as they uphold
the practice of respondent school of according foreign-hires higher salaries than
local-hires.
17.Philtranco Service Enterprises, Inc. and Rogaciones Manilhig v. CA and Heirs of
late Ramon Acuesta, G.R. No. 120553 June 17, 1997
18.SEVILLA TRADING COMPANY vs. A.V.A. TOMAS E. SEMANA, SEVILLA
TRADING WORKERS UNIONSUPER, G.R. No. 152456 : April 28, 2004
FACTS:
On appeal is the Decision of the Court of Appeals (CA) sustaining the
sustaining the Decision of Accredited Voluntary Arbitrator Tomas E. Semana.
For two to three years prior to 1999, petitioner Sevilla Trading Company
(Petitioner), a domestic corporation engaged in trading business, organized and
existing under Philippine laws, added to the base figure, in its computation of
the 13th-month pay of its employees, the amount of other benefits received by
the employees which are beyond the basic pay.
Petitioner claimed that it entrusted the preparation of the payroll to its office
staff, including the computation and payment of the 13th-month pay and other
benefits. When it changed its person in charge of the payroll in the process of
computerizing its payroll, and after audit was conducted, it allegedly discovered
the error of including non-basic pay or other benefits in the base figure used in
the computation of the 13th-month pay of its employees. It cited the Rules and
Regulations Implementing P.D. No. 851 which stated:
Basic salary shall include all remunerations or earnings paid by an
employer to an employee for services rendered but may not include costof-living allowances granted pursuant to P.D. No. 525 or Letter of

Instruction No. 174, profit-sharing payments, and all allowances and

monetary benefits which are not considered or integrated as part of the
regular or basic salary of the employee at the time of the promulgation of
the Decree on December 16, 1975.
Petitioner then effected a change in the computation of the thirteenth month
pay, as follows:
13th-month pay = net basic pay
Hence, the new computation reduced the employees thirteenth month pay. The
daily piece-rate workers represented by private respondent Sevilla Trading
Workers Union SUPER (Union, for short), a duly organized and registered union,
through the Grievance Machinery in their Collective Bargaining Agreement,
contested the new computation and reduction of their thirteenth month pay.
The parties failed to resolve the issue.
The Union alleged that petitioner violated the rule prohibiting the elimination or
diminution of employees benefits as provided for in Art. 100 of the Labor Code,
as amended. They claimed that paid leaves, like sick leave, vacation leave,
paternity leave, union leave, bereavement leave, holiday pay and other leaves
with pay in the CBA should be included in the base figure in the computation of
their 13th-month pay.
ISSUE:
WON a voluntary act of the employerwhich was favorable to the employees
though not conforming to law, has ripened into a practice and therefore can be
withdrawn, reduced, diminished, discontinued or eliminated?
HELD:
NO. As such the SC affirms the decision of the Accredited Voluntary Arbitrator
Tomas E. Semana granting to pay corresponding back wages to all covered and
entitled employees arising from the exclusion of said benefits in the
computation of 13th-month pay.
RATIO DECIDENDI:
With regard to the length of time the company practice should have been
exercised to constitute voluntary employer practice which cannot be unilaterally
withdrawn by the employer, we hold that jurisprudence has not laid down any
rule requiring a specific minimum number of years. In the above quoted case of
Davao Fruits Corporation vs. Associated Labor Unions, the company practice

lasted for six (6) years. In another case, Davao Integrated Port Stevedoring
Services vs. Abarquez, the employer, for three (3) years and nine (9) months,
approved the commutation to cash of the unenjoyed portion of the sick leave
with pay benefits of its intermittent workers. While in Tiangco vs. Leogardo, Jr.
the employer carried on the practice of giving a fixed monthly emergency
allowance from November 1976 to February 1980, or three (3) years and four (4)
months. In all these cases, this Court held that the grant of these benefits has
ripened into company practice or policy which cannot be peremptorily
withdrawn. In the case at bar, petitioner Sevilla Trading kept the practice of
including non-basic benefits such as paid leaves for unused sick leave and
vacation leave in the computation of their 13th-month pay for at least two (2)
years. This, we rule likewise constitutes voluntary employer practice which
cannot be unilaterally withdrawn by the employer without violating Art. 100 of
the Labor Code.
19. De la Salle University, Petitioner, v. De la Salle University Employees
Association, G.R. No. 169254 : August 23, 2012
FACTS:
On May 30, 2000, some of De La Salle University Employees Association
(DLSUEA-NAFTEU) members headed by Belen Aliazas (the Aliazas faction) filed
a petition for the election of union officers in the Bureau of Labor Relations
(BLR). They alleged therein that there has been no election for DLSUEANAFTEUs officers since 1992 in supposed violation of the unions constitution
and by-laws which provided for an election of officers every three years. It would
appear that DLSUEA-NAFTEU repeatedly voted to approve the hold-over of the
previously elected officers led by Baylon Baez (Baez faction).
When the matter was eventually elevated to the BLR Director, the latter ruled
that the Baez factions tenure in office is valid and subsisting until their
successors have been duly elected and qualified.
Thereafter, DLSUEA-NAFTEU entered into a five-year CBA with De La Salle
University (DLSU). The Aliazas faction wrote a letter to DLSU requesting it to
place in escrow the union dues and other fees deducted from the salaries of
employees pending the resolution of the intra-union conflict. DLSUEA-NAFTEU
filed a complaint for unfair labor practice in the NLRC alleging that DLSU
violated Article 248(a) and (g) of the Labor Code. DLSUEA-NAFTEU asserted
that that the creation of escrow accounts was not an act of neutrality as it was
influenced by the Aliazas factionss letter and was an act of interference with
the internal affairs of the union. The Labor Arbiter dismissed the complaint for
unfair labor practice.

Subsequently, DLSUEA-NAFTEU sent a letter to DLSU requesting for the

renegotiation of the economic terms for the fourth and fifth years of the then
current CBA. DLSU denied the request prompting DLSUEA-NAFTEU to file a
notice of strike. The Secretary of Labor assumed jurisdiction and found DLSU
guilty of unfair labor practice.
Consequently, DLSUEA-NAFTEU reiterated its demand on DLSU to bargain
collectively pursuant to the aforementioned Decision of the Secretary of Labor.
Again, DLSU declined the request. Thus, DLSUEA-NAFTEU filed another notice
of strike. The Secretary of Labor cited his earlier decision and ruled that DLSU
is guilty of unfair labor practice. In accordance with the said decision, DLSU
turned over to DLSUEA-NAFTEU the collected union dues and agency fees from
employees which were previously placed in escrow.
Aggrieved, DLSU appealed to the Court of Appeals (CA). The CA dismissed the
petition. When the matter was elevated to the Supreme Court, the Court
affirmed the CA. DLSU moved to reconsider but the Court denied the same.
Thus, the decision attained finality. Meanwhile, DLSUEA-NAFTEU was ordered
to file a comment, and, subsequently, this petition was given due course.
ISSUE:
Whether or not DLSU is guilty of unfair labor practice when it refused to
bargain collectively with DLSUEA-NAFTEU in light of the intra-union dispute
between DLSUEA-NAFTEU two opposing factions?

HELD:
The petition is denied.
Inevitably, G.R. No. 168477 and this petition seek only one relief, that is, to
absolve petitioner from respondents charge of committing an unfair labor
practice, or specifically, a violation of Article 248(g) in relation to Article 252 of
the Labor Code. In other words, our previous affirmance of the Court of
Appeals finding that petitioner erred in suspending collective bargaining
negotiations with the union and in placing the union funds in escrow
considering that the intra-union dispute between the Aliazas and Baez
factions was not a justification therefor is binding herein.
The law of the case has been defined as the opinion delivered on a former
appeal. It means that whatever is once irrevocably established as the controlling
legal rule or decision between the same parties in the same case continues to be
the law of the case, whether correct on general principles or not, so long as the

facts on which such decision was predicated continue to be the facts of the case
before the court.
Neither can petitioner seek refuge in its defense that as early as November 2003
it had already released the escrowed union dues to respondent and normalized
relations with the latter. The fact remains that from its receipt of the July 28,
2003 Decision of the Secretary of Labor in OS-AJ-0015-2003 until its receipt of
the November 17, 2003 Decision of the Secretary of Labor in OS-AJ-0033-2003,
petitioner failed in its duty to collectively bargain with respondent union
without valid reason.
Petition is DENIED.
20.Alex Gurango vs. Best Chemicals and Plastics, Inc., et. al., G.R. No. 174593,
Aug. 25, 2010
FACTS:
PETITIONER Alex Gurango worked as boiler operator in respondent Best
Chemicals and Plastics, Inc. (BCPI). In a memorandum of May 2, 2003, BCPI
prohibited its employees from bringing personal items to their work area. Erring
employees would be suspended for six days.
At 4:00 a.m. of May 5, 2003, while Gurango was on his way out of his work
area, he was detected by security guard Romeo Albao to have in his pocket a
camera without film. Albao pulled Gurango, grabbed his pocket and tried to
confiscate the camera, to which the latter physically resisted. Consequently,
Gurango was dismissed from the service for engaging in a fistfight and violating
company policy.
Issue: Was the dismissal justified?
Ruling: No.
In the present case, aside from Albaos statement, BCPI did not present any
evidence to show that Gurango engaged in a fistfight. Moreover, there is no
showing that Gurangos actions were performed with wrongful intent.
In order to constitute serious misconduct that will warrant the dismissal of an
employee under paragraph (a) of Article 282 of the Labor Code, it is not
sufficient that the act or conduct complained of has violated some established
rules or policies. It is equally important and required that the act or conduct
must have been performed with wrongful intent.

The surrounding circumstances show that Gurango did not engage in a

fistfight: 1) in his 9 May 2003 letter to BCPI, Juanitas corroborated Gurangos
version of the facts; 2) nobody corroborated Albaos version of the facts; 3) in his
medical report, Dr. Aguinaldo found that Gurango suffered physical injuries; 4)
Gurango filed with the MCTC a complaint against Albao and two others for
slight physical injury; 5) the labor arbiter found Gurangos statement credible
and unblemished; 6) the Labor Arbiter found Albaos statement contradictory;
7) the labor arbiter stated, I am convinced Albao lied in his statement; 8) the
NLRC found that Gurango did not start a fight; 9) the NLRC found Albaos
statement unbelievable and exaggerated; and 10) the Court of Appeals reversal
of the findings of fact of the Labor Arbiter and the NLRC is baseless.
21.Lilia Labadan vs. Forest Hills Academy, G.R. No. 172295, December 23, 2008
Facts:
In this case the petitioner, Lilia Labadan was hired by private respondent,
Forest Hills Academy.
The petitioner, in light of the study of Labor Standards not only ask for her
illegal dismissal but also for the illegal deduction made by the academy in view
of tithes given to the Seventh Day Adventist church. The petitioner alleged that
such deduction is unlawful.
The defense contends that Seventh Day Adventist Church requires its members
to pay tithes equivalent to 10% of their salaries, and petitioner was hired on
account of her being a member thereof, and petitioner never questioned the
deduction of the tithe from her salary.
Issue:
Whether or not such deduction made by the academy is unlawful.
Held:
It was held by the Supreme Court that such deduction was unlawful.
Article 113 of the Labor Code instructs:
No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:

(a) In cases where the worker is insured with his consent by the
employer, and the deduction is to recompense the employer for the
amount paid by him as premium on the insurance;
(b) For union dues, in cases where the right of the worker or his union to
check-off has been recognized by the employer or authorized in writing
by the individual worker concerned; and
(c) In cases where the employer is authorized by law or regulations issued
by the Secretary of Labor,
as does Rule VIII, Section 10 of the Rules Implementing Book III of the Labor
Code reading:
SEC. 10. Deductions from the wages of the employees may be made by
the employer in any of the following cases:
(a) When the deductions are authorized by law, including
deductions for the insurance premiums advanced by the employer
in behalf of the employee as well as union dues where the right to
check-off has been recognized by the employer or authorized in
writing by the individual employee himself;
(b) When the deductions are with the written authorization of the
employees for payment to a third person and the employer agrees
to do so, provided that the latter does not receive any pecuniary
benefit, directly or indirectly, from the transaction.
In the absence then of petitioners written conformity to the deduction of the
10% tithe from her salary, the deduction made by Forest Hills was illegal.
22. Cocoplans, inc. v. Villapando, G.R. No.183129, may 30, 2016