Aca Labor Digests Midterms

School of Law and Governance
College of Law
Pelaez Street, Cebu City
Labor
Standards
Volume -1A.Y 2019-2020
Submitted to:
Atty. Jefferson M. Marquez
Submitted by:
Quisaot, Jeseraire Noc L.
EH 405
Labor Standards CASE DIGESTS – VOLUME 1
OCTOBER 2019
Table of Contents
Topic 1: THE APPLICABLE LAWS ............................................................................................................................................................ 4
Topic 2: BASIC PRINCIPLES ........................................................................................................................................................................ 4
1. Sonza v ABS-CBN [GR No 138051 June 10 2004] ................................................................................................................... 4
2. Lazaro v Social Security Commission [435 SCRA 472 (2004)] ......................................................................................... 7
4. ABS-CBN v Nazareno [GR No 164156 (Sep 26, 2006)] ........................................................................................................ 9
5. Francisco v NLRC [500 SCRA 690 [2006]] ...............................................................................................................................11
6. Nogales et al, v Capitol Medical Center et al [GR No 142625, Dec 19, 2006] ...........................................................13
7. Coca-Cola Bottlers Phils v Dr Climaco [GR No 146881, Feb 15, 2007] .......................................................................15
8. Calamba Medical Center v NLRC et al [GR No 176484, Nov 25, 2008] .......................................................................17
9. Escasinas et al, v Shangri-la Mactan Island Resort et al [GR No 178827, Mar 4, 2009] ......................................18
10. Tongko v Manufacturer Life Insurance Co. (Phils), Inc., et al [GR No 167622, Jan 25 2011, En Banc (see
June 29, 2010 Main Decision)] ...........................................................................................................................................................20
11. Semblante et al v CA, et al [GR No 196426, Aug 15, 2011] ............................................................................................23
12. Bernarte v PBA, et al [GR No 192084, Sep 14 2011] ........................................................................................................24
13. Lirio v Genovia [GR No 169757, Nov 23 2011] ...................................................................................................................26
14. Jao v BCC Products Sales, Inc. [GR No 163700, Apr 18 2012] ......................................................................................28
15. Legend Hotel (Manila) v Realuyo [GR No 153511, July 18, 2012]..............................................................................30
16. The New Philippine Skylanders, Inc v Dakila [GR No 199547, Sep 24, 2011] ......................................................32
17. Tesoro, et al v Metro Manila Retreaders Inc, et al [GR No 171482, Mar 12, 2014] ............................................32
18. Royale Homes Marketing Corp v Alcantara [GR No 195190, July 28, 2014] .........................................................34
19. Fuji Television Network Inc v Espiritu [GR 204944-45, Dec 3, 2014]......................................................................36
20. Cabaobas et al, v Pepsi Col [ GR No 176908, Mar 25 2015] ...........................................................................................38
21. Begino, et al v ABS-CBN Corp [GR No 199166, Apr 20, 2015]......................................................................................40
22. SSS v Ubana [GR No 200114, Aug 25, 2015] ........................................................................................................................42
23. Century Properties Inc v Babiano, et al [GR No 220978, July 5, 2016] ....................................................................43
24. Lu v Enopia, GR No 197899, Mar 6, 2017 ..............................................................................................................................45
25. Apelanio vs. Arcanys, Inc., GR No. 227098, November 14, 2018 .................................................................................45
26. Dr. Loreche-Amit vs. Cageyan De Oro Medical Center, GR No. 216635, June 3, 2019 ........................................47
27. Fernandez vs. Kalookan SlaughterHouse Inc., GR No. 225075, June 19, 2019 ......................................................47
Topic 3: Hiring of Employee .....................................................................................................................................................................49
1. PT&T vs. NLR [272 SCRA 596 [1997]] .......................................................................................................................................49
2. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., [G.R. No. 162994, Sept. 17, 2004] ..............50
3. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006 ........................................................................................51
4. Del Monte Phils vs. Velasco [G.R. No. 153477, March 6, 2007] ......................................................................................53
Page 1
5. Yrasuegui vs. Phil Airlines, G.R. No. 168081, October 17, 2008 .....................................................................................53
Topic 4: Wages & Wage Rationalization Act .....................................................................................................................................56
Topic 4-A: Violation of Wage Order ......................................................................................................................................................56
1. S.I.P. Food House et al v Batolina, GR No 192473, Oct 11, 2010 ....................................................................................56
2. SLL International Cables Specialist v NLRC, GR No 172161, Mar 2, 2011 .................................................................58
3. Vergara, Jr v Coca-Cola Bottlers Phils Inc, GR No 176985, Apr 1, 2013 ......................................................................60
4. Royal Plant Workers Union v Coca-Cola Bottlers Phils Inc - Cebu Plant, [GR No 198783, Apr 15, 2013] ...62
5. NWPC, et al v The Alliance of Progressive Labor, et al, GR No 150326, Mar 12, 2014.........................................64
6. David/Yiels Hog Dealer v Macasio, [GR No 195466, July 2, 2014] ................................................................................66
7. Our Haus Realty Development Corp v Parian et al, [GR No 204651, Aug 6, 2014]................................................69
8. Milan et al v NLRC, GR No 202961, Feb 4, 2015 ....................................................................................................................71
9. Toyota Pasig Inc v De Peralta, GR No 213488, Nov 7, 2016 .............................................................................................73
10. Soriano et al v Secretary of Finance, GR Nos 184450, 184508, 184538, 185234, Jan 24, 2017, En Banc 75
11. CCBPI vs. Iloilo Coca-Cola Plant Employees Union, GR No. 195297, December 5, 2018 ...................................78
12. Pablico et al., vs. Cerro/Master Pab Resto Bar, GR No. 227200, June 10, 2019 .....................................................80
Topic 5: Wage Enforcement and Recovery ........................................................................................................................................84
1. Tiger Construction and Development Corp v Abay et al, [GR No 164141, Feb 26, 2010] ..................................84
2. People’s Broadcasting (Bombo Radyo Phils) v Sec of DOLE et al, GR No 179652, Mar 6, 2012, Resolution
on the Main Decision of May 8, 2009 ..............................................................................................................................................85
3. Superior Packaging Corp v Balagsay et al, GR No 178909, October 10, 2012 .........................................................86
4. Department of Labor & Employment vs. Kentex Manufacturing Corp., GR No. 253781, July 8, 2019 ..........87
Topic 6: Wage Protection Provisions & Prohibitions Regarding Wages ..............................................................................90
1. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010 ...........................................................90
2. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November 28, 2011 .........92
3. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013 ..........................................................................93
4. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014 ..........................94
5. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No. 181806, March 12,
2014 ...............................................................................................................................................................................................................96
6. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing 2011 Nina Jewelry
Manufacturing of Metal Arts Inc. vs. Montecillo .........................................................................................................................97
7. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014 .................................................................................99
8. PLDT vs. Estranero, GR No. 192518, October 15, 2014 .................................................................................................. 101
9. Milan et al vs. NLRC, GR No. 202961, Feb. 4, 2015 ............................................................................................................ 102
10. Galang et al., vs. Boie Takeda Chemicals Inc. et al., GR No. 183934, July 20, 2016 ........................................... 104
11. Coca- Cola Bottlers Phils Inc., vs. CCBPI Sta Rosa Plant Employees Union, GR No. 197494, March 25, 2019
....................................................................................................................................................................................................................... 106
Topic 7: Payment of Wages .................................................................................................................................................................... 108
1. Congson vs. NLRC, 243 SCRA 260 [1995] ............................................................................................................................. 108
Page 2
2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996] ..................................................................................................... 110
3. House of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006 ........................................................................................... 113
Topic 8: Conditions of Employment................................................................................................................................................... 114
1. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997] .......................................................................................... 114
2. Sime Darby vs. NLRC, 289 SCRA 86 [1998] .......................................................................................................................... 115
3. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999] ..................................................................................................................... 115
4. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007 ............................................ 117
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008 .................................................................... 119
6. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016 .................................................... 120
7. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016 .............................................................................. 121
Topic 9: Minimum Labor Standard Benefits .................................................................................................................................. 124
1. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002 ................................................................................................ 124
2. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002 ........................................................................................................ 125
3. Lambo vs. NLRC, 317 SCRA 420 ................................................................................................................................................ 126
4. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004.............................................................................................. 128
5. Asian Transmission vs. CA, 425 SCRA 478 [2004] ............................................................................................................ 130
6. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005 ............................................................... 131
7. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005 ............................................................................ 133
8. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006 ................................................................... 135
9. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October 19,
2007, citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420,
June 10, 2004 .......................................................................................................................................................................................... 136
10. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA
533 [1998] ............................................................................................................................................................................................... 138
11. PNCC Skyway Traffic Management and Security Division Workers Organization, GR No. 171231, Feb. 17,
2010 ............................................................................................................................................................................................................ 141
12. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012 .................................... 142
13. Robina Farms Cebu vs. Villa, GR No. 175869, April 18, 2016 .................................................................................... 144
14. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016 ................................................. 146
15. HSY Marketing Ltd., vs. Villastique, GR No. 219569, Aug. 17, 2016 ........................................................................ 147
16. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017 ............................................ 148
Topic 10: Other Special Benefit ............................................................................................................................................................ 149
1. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs. Dela Serna, 228
SCRA 329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995] ........................................................................ 149
2. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No.
170734, May 14, 2008 ........................................................................................................................................................................ 151
3. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008 ........................................ 153
4. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010 .................................................................................... 155
Page 3
5. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September 12, 2012 ............... 156
6. Padillo vs. Rural Bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013 .............................................................. 157
7. Grace Christian High School vs. Lavandera, GR No. 177845, August 20, 2014 .................................................... 159
8. Goodyear Philippines Inc. vs. Angus, GR No. 185449, November 12, 2015 ........................................................... 160
9. Banco De Oro Unibank vs.Sagaysay,GR No. 214961, Sept 16, 2015 .......................................................................... 161
10. Perez vs. Camparts Industries Inc. GR No. 197557, October 5, 2016 .................................................................... 163
11. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017 ............................................ 165
12. Catotocan vs. Lourdes School of Quezon City, GR No. 213486, April 26, 2017, citing 1996 Pantranco North
Express ...................................................................................................................................................................................................... 166
13. Philippine Airlines vs. Hassaram, GR. No. 217730, June 5, 2017 ............................................................................. 168
14. Laya vs. Court of Appeals, GR No. 205813, January 10, 2018, En Banc ................................................................. 170
15. Maria De Leon Transportation Inc., et al., vs. Macuray, GR No. 214940, June 6, 2018 ................................... 171
Topic 11: Jurisdiction of the Labor Arbiter ..................................................................................................................................... 173
Topic 12: 2011 NLRC Rules of Procedure, amended .................................................................................................................. 173
1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012 ......................................................... 173
2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012 ................................................................... 175
3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012 ............................................................... 177
4. McBurnie vs. Ganzon, GR No. 178034/1718117, October 17, 2013, En Banc ...................................................... 178
5. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014 ................................................... 180
6. Manila Mining Corp., vs. Amor GR No. 182800, April 20, 2015, citing 2015 Mcburnie .................................... 182
7. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015 ..................................................................................... 184
8. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015 ............................................................................... 185
9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675, Sept 23, 2015 ......... 188
10. Quantum Foods, Inc. vs. Esloyo, GR. No. 213696, December 9, 2015, citing 2015 Mcburnie ..................... 190
11. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016 ......................................................................... 192
12. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, September 21, 2016 ..................................... 193
Topic 1: THE APPLICABLE LAWS

Topic 2: BASIC PRINCIPLES
1. Sonza v ABS-CBN [GR No 138051 June 10 2004]
Facts
Page 4
Respondent ABS-CBN Broadcasting Corporation (“ABS-CBN”) signed an Agreement (“Agreement”) with the
Mel and Jay Management and Development Corporation (“MJMDC”). Referred to in the Agreement as “AGENT,”
MJMDC agreed to provide SONZA’s services exclusively to ABS-CBN as talent for radio and television. ABS-CBN
agreed to pay for SONZA’s services a monthly talent fee of P310,000 for the first year and P317,000 for the
second and third year of the Agreement.
On 30 April 1996, SONZA filed a complaint against ABS-CBN before the Department of Labor and Employment,
National Capital Region in Quezon City. SONZA complained that ABS-CBN did not pay his salaries, separation
pay, service incentive leave pay, 13th month pay, signing bonus, travel allowance and amounts due under the
Employees Stock Option Plan (“ESOP”).
ABS-CBN filed a Motion to Dismiss on the ground that no employer-employee relationship existed between the
parties. After due hearing, the Labor Arbiter dismissed the complaint for lack of jurisdiction. On appeal, the
National Labor Relations Commission (NLRC), as well as the Court of Appeals (CA) affirmed the decision of the
Labor Arbiter. Thus, this petition for review on certiorari.
Issue
Whether or not an employer-employee relationship existed between Jay Sonza, as radio and television talent,
and ABS-CBN.
Held
NO. ABS-CBN entered into an agreement with Jay Sonza to procure his peculiar skills and talents as radio and
television talent not as an employee, but as an independent contractor.
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 employer’s power to control the employee on the means and methods by which the work is
accomplished.
As to the element of selection and engagement of employee, 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.
As to the element of payment of wages, Sonza’s talent fees amounting to P317,000 monthly are so huge and out
of the ordinary that they indicate more an independent contractual relationship rather than an employer-
employee relationship. The power to bargain talent fees way above the salary scales of ordinary employees is
a circumstance indicative, but not conclusive, of an independent contractual relationship. Indeed, if SONZA
were ABS-CBN’s employee, there would be no need for the parties to stipulate on benefits such as “SSS,
Medicare, x x x and 13th month pay” which the law automatically incorporates into every employer-employee
contract. Whatever benefits SONZA enjoyed arose from contract and not because of an employer-employee
relationship.
As to the element of power of dismissal, even if ABS-CBN suffered severe business losses, ABS-CBN could not
retrench SONZA because ABS-CBN remained obligated to pay SONZA’s talent fees during the life of the
Agreement. This circumstance indicates an independent contractual relationship between SONZA and ABS-
CBN.
As to the last and most important element of power of control, the Court referred to a US Court of Appeals
decision. Alberty-Vélez v. Corporación De Puerto Rico Para La Difusión Pública (“WIPR”) that held that a
television program host is an independent contractor. Applying the control test to the present case, it is held
that SONZA is not an employee but an independent contractor. 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. First, ABS-
CBN’s sole concern was the quality of the shows and their standing in the ratings. Clearly, ABS-CBN did not
exercise control over the means and methods of performance of SONZA’s work. ABS-CBN’s control was limited
Page 5
only to the result of SONZA’s work, whether to broadcast the final product or not. Second, the general rules
ABS-CBN subjected SONZA are merely guidelines towards the achievement of the mutually desired result,
which are top-rating television and radio programs that comply with standards of the industry. Thus, the rules
did not control SONZA’s performance. Lastly, being an exclusive talent does not by itself mean that SONZA is
an employee of ABS-CBN. In the broadcast industry, exclusivity is not necessarily the same as control.
SONZA seeks the recovery of allegedly unpaid talent fees, 13th month pay, separation pay, service incentive
leave, signing bonus, travel allowance, and amounts due under the Employee Stock Option Plan. Clearly, the
present case does not call for an application of the Labor Code provisions but an interpretation and
implementation of the May 1994 Agreement.
WHEREFORE, the petition is DENIED.
Page 6
2. Lazaro v Social Security Commission [435 SCRA 472 (2004)]

Facts
Private respondent Laudato filed a petition before the SSC for social security coverage and remittance of unpaid
monthly social security contributions against her three employers. Among the respondents was herein
petitioner Angelito L. Lazaro (“Lazaro”), proprietor of Royal Star Marketing (“Royal Star”), which is engaged in
the business of selling home appliances. Petitioner states that 1) Laudato was not a sales supervisor of Royal
Star, but was a mere sales agent whom he paid purely on commission basis.2) Laudato was not subjected to
definite hours and conditions of work. As such, Laudato could not be deemed an employee of Royal Star while
respondents contended that despite her employment as sales supervisor of the sales agents for Royal Star from
April of 1979 to March of 1986, Lazaro had failed during the said period, to report her to the SSC for compulsory
coverage or remit Laudato’s social security contributions.
Issue
Whether or not respondent is an employee, bringing her under the coverage of the Social Security Act.
Held
Ladauto is an employee of Royal Star. It is an accepted doctrine that for the purposes of coverage under the
Social Security Act, the determination of employer-employee relationship warrants the application of the
“control test,” that is, whether the employer controls or has reserved the right to control the employee, not only
as to the result of the work done, but also as to the means and methods by which the same is accomplished.
The fact that Laudato was paid by way of commission does not preclude the establishment of an employer-
employee relationship. The relevant factor remains, as stated earlier, 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. Neither does it follow that a person who does
not observe normal hours of work cannot be deemed an employee. A supervisor is exempt from the observance
of normal hours of work for his compensation is measured by the number of sales he makes.” Laudato oversaw
and supervised the sales agents of the company, and thus was subject to the control of management as to how
she implements its policies and its end results. Royal Star exercised control over its sales supervisors or agents
such as Laudato as to the means and methods through which these personnel performed their work.
Page 7
3. Phil. Global Communication v De Vera [459 SCRA 260 (2005)]

Facts
Petitioner Philippine Global Communications, Inc. (PhilCom), is a corporation engaged in the business of
communication services and allied activities, while respondent Ricardo De Vera is a physician by profession
whom petitioner enlisted to attend to the medical needs of its employees. The parties agreed and formalized
respondents proposal in a document denominated as RETAINERSHIP CONTRACT which will be for a period of
one year subject to annual renewal. The retainership agreement started in 1981. However in 1996 De Vera
received a letter from petitioner informing him of the termination of retainer contract.
This prompted respondent to file a case for illegal dismissal against petitioner.
Issue
Whether or not de Vera is an employee of PhilCom or an independent contractor.
Held
Applying the four fold test, de Vera is not an employee.
a. the selection and engagement of the employee;
-not met since it was respondent himself who sets the parameters of what his duties would be in
offering his services to petitioner.
b. the payment of wages;
not met since respondent had to bill petitioner for his monthly professional fees. It simply runs against
the grain of common experience to imagine that an ordinary employee has yet to bill his employer to
receive his salary.
c. the power of dismissal; and
not met since power to terminate the parties relationship was mutually vested on both. Either may
terminate the arrangement at will, with or without cause.
d. the power to control the employees conduct not met since the parties themselves practically agreed
on every terms and conditions of respondents engagement, which thereby negates the element of
control in their relationship
Other indicia:
a. Respondent was never included in the payroll of the petitioner.
b. Respondent was never deducted any contribution for remittance to the Social Security System (SSS)
c. Respondent was subjected by petitioner to the ten (10%) percent withholding tax for his professional
fee.
Clearly the respondent was engaged in a retainer basis, as shown by their various retainership contracts, so
petitioner can put an end, with or without cause, to their retainership agreement as therein provided.
Page 8
4. ABS-CBN v Nazareno [GR No 164156 (Sep 26, 2006)]

Facts
ABS-CBN Broadcasting Corporation (ABS-CBN) employed Nazareno, Gerzon, Deiparine, and Lerasan
(respondents) as production assistants (PAs) on different dates. They were assigned at the news and public
affairs, for various radio programs in the Cebu Broadcasting Station, with a monthly compensation of P4,000.
They were issued employee’s identification cards and were required to work for a minimum of eight (8) hours
a day including Sundays and holidays. They were under the control and supervision of Assistant Station
Manager Dante J. Luzon, and News Manager Leo Lastimosa.
ABS-CBN and the ABS-CBN Rank-and-File Employees entered into a Collective Bargaining Agreement effective
December 11, 1996 until December, 1999. The respondents were not included in the CBA due to ABS-CBN’s
refusal. Thereafter, ABS-CBN issued a Memorandum which re-assigned the respondents to non-drama
programs causing the revision on their schedules.
Respondents filed a Complaint for Recognition of Regular Employment Status, Underpayment of Overtime Pay,
Holiday Pay, Premium Pay, Service Incentive Pay, Sick Leave Pay, and 13th Month Pay with Damages against
the petitioner before the NLRC. The Labor Arbiter dismissed such petition due to failure of the respondents to
submit their position papers within the reglementary period. Respondent then filed a an Earnest Motion to
Refile Complaint with Motion to Admit Position Paper and Motion to Submit Case For Resolution which the
Labor Arbiter granted.
Respondents, having rendered service for an average of five years, insisted that they belonged to a “work pool”
from which ABS-CBN persons to be given specific assignments and were under its direct supervision and
control regardless of nomenclature. Moreover, they prayed that they will be declared as permanent and regular
employees as a condition precedent for their admission in the existing collective bargaining unit of the
company. Petitioner for its part alleged that the respondents were considered as “program employees” as
distinguished from the regular station employees and that generally they perform leg work for the anchors
during a program or particular production. And that their engagement is coterminous with the completion of
the program which can be renewed or extended. Hence, their compensation is computed on program basis, a
fixed amount for their performance irrespective of the time consumed. Furthermore, it alleged that the Labor
Arbiter has no jurisdiction because it involves the CBA and its interpretation which the respondents were not
covered.
Labor Arbiter ruled in favor of the respondents, declared them as regular employees and thus they were
awarded monetary benefits. However, the Labor Arbiter did not award the monetary benefit under the CBA
because he has no jurisdiction to interpret it.
On appeal, NLRC modifies the decision of the Labor Arbiter. It granted the respondents the monetary benefits
under the CBA because they are considered as regular employees and it ruled that the Labor Arbiter has the
jurisdiction over the complaint of the respondents because they acted in their individual capacity and not as
members of a union. On certiorari, CA affirmed the decision.
Issue
WON the respondents are regular employees and thus they are entitled to thee monetary benefits under the
existing CBA in the company.
Held
Yes. The Court agrees with respondents' contention that where a person has rendered at least one year of
service, regardless of the nature of the activity performed, or where the work is continuous or intermittent, the
employment is considered regular as long as the activity exists, the reason being that a customary appointment
is not indispensable before one may be formally declared as having attained regular status in consonance with
Article 280 of the Labor Code.
Page 9
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. The test is
whether the former is usually necessary or desirable in the usual business or trade of the employer. This can
be determined through the nature of the work in relation to the scheme of the industry. 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 its
necessity to the business. In this case, respondents are considered as regular employees.
Additionally, respondents cannot be considered as project or program employees because no evidence was
presented to show that the duration and scope of the project were determined or specified at the time of their
engagement.
It follows then that respondents are entitled to the benefits provided for in the existing CBA between petitioner
and its rank-and-file employees. Their exclusion from the said CBA on the misplaced belief of the parties to the
said agreement that they are project employees, is therefore not proper. A collective bargaining agreement is a
contract entered into by the union representing the employees and the employer. However, even the non-
member employees are entitled to the benefits of the contract.
Page 10
5. Francisco v NLRC [500 SCRA 690 [2006]]

Facts
In 1995, petitioner was hired by Kasei Corporation as Accountant and Corporate Secretary. In 1996, petitioner
was designated Acting Manager. For five years, petitioner performed the duties of Acting Manager. As of
December 31, 2000 her salary was P27,500.00 plus P3,000.00 housing allowance and a 10% share in the profit
of Kasei Corporation.
In January 2001, petitioner was replaced by Liza R. Fuentes as Manager. Petitioner alleged that she was
required to sign a prepared resolution for her replacement but she was assured that she would still be
connected with Kasei Corporation. Thereafter, Kasei Corporation reduced her salary by P2,500.00 a month
beginning January up to September 2001 for a total reduction of P22,500.00 as of September 2001.
On October 15, 2001, petitioner asked for her salary from Acedo and the rest of the officers but she was
informed that she is no longer connected with the company. Since she was no longer paid her salary, petitioner
did not report for work and filed an action for constructive dismissal before the labor arbiter.
Private respondents averred that petitioner is not an employee of Kasei Corporation. They alleged that
petitioner was hired in 1995 as one of its technical consultants on accounting matters and act concurrently as
Corporate Secretary. As technical consultant, petitioner performed her work at her own discretion without
control and supervision of Kasei Corporation. Petitioner had no daily time record and she came to the office
any time she wanted. The company never interfered with her work except that from time to time, the
management would ask her opinion on matters relating to her profession. Petitioner did not go through the
usual procedure of selection of employees, but her services were engaged through a Board Resolution
designating her as technical consultant. The money received by petitioner from the corporation was her
professional fee subject to the 10% expanded withholding tax on professionals, and that she was not one of
those reported to the BIR or SSS as one of the company's employees. Petitioner's designation as technical
consultant depended solely upon the will of management. As such, her consultancy may be terminated any time
considering that her services were only temporary in nature and dependent on the needs of the corporation.
The Labor Arbiter found that petitioner was an employee of respondent corporation and was illegally
dismissed. They ordered her reinstatement, and in case reinstatement is no longer feasible, for private
respondents to pay petitioner her separation pay plus backwages. On April 15, 2003, the NLRC affirmed with
modification the Decision of the Labor Arbiter. The NLRC did not order the reinstatement of petitioner.
However, upon appeal by the private respondents, the Court of Appeals reversed the decision of the NLRC, in
effect dismissing the complaint of petitioner.
Issue
1) Whether there was an employer-employee relationship between petitioner and private respondent
Kasei Corporation;
2) If the answer to above question is in the affirmative, whether petitioner was illegally dismissed.
Held
1) Yes. To determine whether an employer-employee relationship exists, the Court adopts a two-tiered
test involving: (1) the putative employer's power to control the employee with respect to the means
and methods by which the work is to be accomplished; and (2) the underlying economic realities of
the activity or relationship.
The control test initially found application in the case of Viaña v. Al-Lagadan and Piga, and lately in
Leonardo v. Court of Appeals, where we held that there is an employer-employee relationship when
the person for whom the services are performed reserves the right to control not only the end achieved
but also the manner and means used to achieve that end.
In determining the underlying economic realities of the activity, we consider factors such as: (1) the
extent to which the services performed are an integral part of the employer's business; (2) the extent
of the worker's investment in equipment and facilities; (3) the nature and degree of control exercised
by the employer; (4) the worker's opportunity for profit and loss; (5) the amount of initiative, skill,
Page 11
judgment or foresight required for the success of the claimed independent enterprise; (6) the
permanency and duration of the relationship between the worker and the employer; and (7) the
degree of dependency of the worker upon the employer for his continued employment in that line of
business.
By applying the control test, there is no doubt that petitioner is an employee of Kasei Corporation
because she was under the direct control and supervision of Seiji Kamura, the corporation's Technical
Consultant. Under the broader economic reality test, the petitioner can likewise be said to be an
employee of respondent corporation because she had served the company for six years before her
dismissal, receiving check vouchers indicating her salaries/wages, benefits, 13th month pay, bonuses
and allowances, as well as deductions and Social Security contributions from August 1, 1999 to
December 18, 2000. When petitioner was designated General Manager, respondent corporation made
a report to the SSS signed by Irene Ballesteros. Petitioner's membership in the SSS as manifested by a
copy of the SSS specimen signature card which was signed by the President of Kasei Corporation and
the inclusion of her name in the on-line inquiry system of the SSS evinces the existence of an employer-
employee relationship between petitioner and respondent corporation.
2) On the issue of petitioner’s illegal dismissal, the Court found that the corporation constructively
dismissed petitioner when it reduced her salary by P2,500 a month from January to September 2001.
This amounts to an illegal termination of employment, where the petitioner is entitled to full
backwages. Since the position of petitioner as accountant is one of trust and confidence, and under the
principle of strained relations, petitioner is further entitled to separation pay, in lieu of reinstatement.
Page 12
6. Nogales et al, v Capitol Medical Center et al [GR No 142625, Dec 19, 2006]
Facts
Corazon Nogales who was pregnant with her fourth child was under the exclusive prenatal care of Dr. Estrada
beginning on her fourth month of pregnancy. While Corazon was on her last trimester of pregnancy, Dr. Estrada
noted an increase in her blood pressure and development of leg edema indicating preeclampsia, which is a
dangerous complication of pregnancy. Subsequently, Corazon started to experience mild labor pains prompting
her and Rogelio (her husband) to see the doctor. Dr. Estrada advised her immediate admission to Capitol
Medical Center. Rogelio then executed and signed the “Consent on Admission and Agreement” and “Admission
Agreement”. Corazon then was brought to the labor room of the said hospital. While on labor, Corazon died.
The cause of death was “haemorrhage, postpartum”. Petitioners then file a complaint for damages with the RTC
against Capitol Medical Center, the doctors, and a nurse involved in the operation including Dr. Estrada for the
death of Corazon.
Trial court found Dr. Estrada to be solely liable for damages. On the part of the other doctors, the nurse and the
hospital, the court finds no legal justification to find them civilly liable. Petitioners then appealed the trial court
decision. The Court of Appeals affirmed the trial court decision. It held that Dr. Estrada is an independent
contractor-physician. It also held that the mere fact that a hospital permitted a physician to practice medicine
and use its facilities is not sufficient to render the hospital liable for the physician’s negligence. A hospital is not
responsible for the negligence of a physician who is an independent contractor. The court similarly applied the
‘borrowed servant doctrine’ for the liability of the other doctors and nurses stating that since Rogelio engaged
Dr. Estrada as the attending physician of his wife, any liability for the malpractice must be Dr. Estrada’s sole
responsibility.
Issue
1) Whether there exists an employer-employee relationship on the part of Dr. Estrada and Capitol
Medical Center
2) Whether or not Capitol Medical Center is vicariously liable for the negligence of Dr. Estrada.
Held
1) No. There is no employer-employee relationship between Dr. Estrada and respondent hospital. The
court took note that there are times where there might be an employer-employee relationship that
exists between the physician and the hospital. In the case in Ramos v. Court of Appeals as cited,
hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their
work within the hospital premises. Doctors who apply for “consultant” slots, visiting or attending are
required to submit different documents as requirements that would be scrutinized by members of the
hospital. After the physicians are accepted, they are also required to do tasks and responsibilities for
the privilege of being able to maintain a clinic in the hospital and/or for the privilege of admitting
patients into the hospitals. In other words, private hospitals like hire, fire, and exercise real control
over their attending and visiting “consultant” staff. While they are not technically employees, a point
which respondent hospital asserts in denying all responsibility for the patient’s condition, the control
exercised, the hiring and the right to terminate consultants all fulfill the important hallmarks of an
employer-employee relationship, with the exception of the payment of wages. The control test is
determining. For the purpose of allocating responsibility in medical negligence cases, an employer-
employee relationship exists between hospitals and their attending and visiting physicians.
This degree of control is however absent in the case of CMC and Dr. Estrada. The court finds no single
evidence pointing to CMC’s exercise of control over Dr. Estrada’s treatment and management of
Corazon’s condition. Throughout Corazon’s pregnancy up to her delivery, she was under the exclusive
care and attendance of Dr. Estrada. There was no showing that CMC had a part in diagnosing Corazon’s
condition. While Dr. Estrada enjoyed staff privileges at CMC, such fact alone did not make him an
employee of CMC. CMC merely allowed Dr. Estrada to use its facilities. Considering these
circumstances, Dr. Estrada is not an employer of CMC but an independent contractor.
2) Yes. The hospital is liable for the negligence of Dr. Estrada.
Page 13
Although in general, a hospital is not liable for the negligence of an independent contractor-physician.
There is however exception to this principle. That is when the physician is the “ostensible” agent of the
hospital. Applying the “doctrine of apparent authority”, a hospital can be held vicariously liable for the
negligent acts of a physician providing care at the hospital, regardless of whether the physician is an
independent contractor, unless the patient knows or should have known that the physician is an
independent contractor.
Doctrine of apparent authority essentially involves two factors to determine the liability of an
independent-contractor physician. First factor focuses on the hospital’s manifestations and is
sometimes described as an inquiry whether the hospital acted in a manner which would lead a
reasonable person to conclude that the individual who was alleged to be negligent was an employee of
the said hospital. The hospital need not make express representations to the patient that the treating
physician is an employee of the hospital; rather a representation may be general and implied. In the
case, the hospital through its acts impliedly held out Dr. Estrada as a member of its medical staff. Firstly,
CMC has granted staff privileges to Dr. Estrada, extended its health and medical facilities to him, and
upon his request, readily accommodated Corazon for admission and updated Dr. Estrada of her
condition. Secondly, CMC also asked Rogelio to sign the Consent and Admission on Agreement as well
as the release forms which reinforced Rogelio’s belief that Dr. Estrada was a member of the hospital’s
staff. Thirdly, Dr. Estrada’s referral of Corazon’s vaginal bleeding to Dr. Espinola who was then the
head of the Obstetrics department of CMC gave the impression that Dr. Estrada was a member of CMC’s
medical staff collaborating with other CMC-employed specialists in treating Corazon.
The second factor focuses on the patient’s reliance. Records of the case shows that spouses Nogales
had relied upon a perceived employment relationship with CMC in accepting Dr. Estrada’s services.
They choose the doctor because of his “connection with a reputable hospital”.
Page 14
7. Coca-Cola Bottlers Phils v Dr Climaco [GR No 146881, Feb 15, 2007]

Facts
Respondent Dr. Dean N. Climaco is a medical doctor who was hired by petitioner Coca-Cola Bottlers Phils., Inc.
by virtue of a Retainer Agreement. Pursuant to this agreement, he was provided with a Comprehensive Medical
Plan containing the duties and responsibilities of respondent. The Retainer Agreement, which began on January
1, 1988, was renewed annually. The last one expired on December 31, 1993. Despite the non-renewal of the
Retainer Agreement, respondent continued to perform his functions as company doctor to Coca-Cola.
As early as September 1992, petitioner made inquiries regarding his status with petitioner company. He wrote
a letter addressed to Dr. Willie Sy, the Acting President and Chairperson of the Committee on Membership,
Philippine College of Occupational Medicine, who then wrote a letter to the Personnel Officer of petitioner,
stating that respondent should be considered as a regular part-time physician, having served the company
continuously for four (4) years. He also stated that respondent must receive all the benefits and privileges of
an employee under Article 157 (b) of the Labor Code.
Petitioner company, however, did not take any action. Hence, respondent made another inquiry directed to the
Assistant Regional Director of the Department of Labor and Employment (DOLE) in Bacolod City, who referred
the inquiry to the Legal Service of the DOLE in Manila. Director Dennis P. Ancheta, Legal Service, DOLE, stated
that he believed that an employer-employee relationship existed between petitioner and respondent based on
the Retainer Agreement and the Comprehensive Medical Plan, and the application of the "four-fold" test.
However, Director Ancheta emphasized that the existence of employer-employee relationship is a question of
fact and that their opinion was strictly advisory.
Petitioner also made an inquiry to the Social Security System (SSS). Mr. Romeo R. Tupas, OIC-FID of SSS-Bacolod
City, wrote a letter to the Personnel Officer of petitioner company informing them that the legal staff of his
office was of the opinion that the services of respondent partook of the nature of work of a regular company
doctor and that he was, therefore, subject to social security coverage.
Respondent inquired from the management of petitioner company whether it was agreeable to recognizing
him as a regular employee. The management refused to do so. Hence, on February 24, 1994, respondent filed a
Complaint before the NLRC, Bacolod City, seeking recognition as a regular employee of petitioner company and
prayed for the payment of all benefits of a regular employee, including 13th Month Pay, Cost of Living Allowance,
Holiday Pay, Service Incentive Leave Pay, and Christmas Bonus.
While the complaint was pending before the Labor Arbiter (LA), respondent received a letter dated March 9,
1995 from petitioner company concluding their retainership agreement effective thirty (30) days from receipt
thereof. This prompted respondent to file a complaint for illegal dismissal against petitioner company with the
NLRC.
The Labor Arbiter found that petitioner company lacked the power of control over respondent's performance
of his duties, and recognized as valid the Retainer Agreement between the parties. Thus, the Labor Arbiter
dismissed respondent's complaint seeking recognition as a regular employee. In another decision, the Labor
Arbiter also dismissed the complaint for illegal dismissal in view of the previous finding in the first case that
petitioner is not an employee of Coca-Cola Bottlers Phils., Inc. Respondent then appealed both decisions to the
NLRC, Fourth Division, Cebu City.
The NLRC dismissed the appeal in both cases for lack of merit. It declared that no employer-employee
relationship existed between petitioner company and respondent based on the provisions of the Retainer
Agreement which contract governed respondent's employment.
Undaunted, respondent appealed to the Court of Appeals which then reversed the decisions of the LA and NLRC.
The CA ruled that an employer-employee relationship existed between petitioner company and respondent
after applying the four-fold test. All elements of the four-fold test were present. Moreover, the Court of Appeals
declared that respondent should be classified as a regular employee having rendered six years of service as
plant physician by virtue of several renewed retainer agreements. It also held that the termination of
Page 15
respondent's services without any just or authorized cause constituted illegal dismissal. In a Resolution
promulgated on January 30, 2001, the Court of Appeals also stated that respondent was a "regular part-time
employee and should be accorded all the proportionate benefits due to this category of employees of petitioner
Corporation.”
Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.
Issues
1) Whether or not there exists an employer-employee relationship between the petitioner company and
respondent
2) Whether or not the termination of respondent's employment is illegal
Held
1) NO. There is no employer-employee relationship between the parties.
The Court, in determining the existence of an employer-employee relationship, has invariably adhered
to the four-fold test: (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, or the so-called "control
test," considered to be the most important element.
The SC agreed with the finding of the Labor Arbiter and the NLRC that the circumstances of this case
showed that no employer-employee relationship existed between the parties. The Labor Arbiter and
the NLRC correctly found that petitioner company lacked the power of control over the performance
by respondent of his duties. Petitioner company, through the Comprehensive Medical Plan, provided
guidelines merely to ensure that the end result was achieved, but did not control the means and
methods by which respondent performed his assigned tasks.
The Labor Arbiter also correctly found that the provision in the Retainer Agreement that respondent
was on call during emergency cases did not make him a regular employee. The schedule of work and
the requirement to be on call for emergency cases do not amount to such control, but are necessary
incidents to the Retainership Agreement.
2) NO. Respondent was not illegally dismissed.

SC stated that the Retainership Agreement granted to both parties the power to terminate their
relationship upon giving a 30-day notice. Hence, petitioner company did not wield the sole power of
dismissal or termination. It further added that there was nothing wrong with the employment of
respondent as a retained physician of petitioner company. The Retainership Agreement clearly stated
that no employer-employee relationship existed between the parties and that it was only for a period
of 1 year but it was renewed on a yearly basis.
Considering that there is no employer-employee relationship between the parties, the termination of
the Retainership Agreement, which is in accordance with the provisions of the Agreement, does not
constitute illegal dismissal of respondent.
Petition is GRANTED.
Page 16
8. Calamba Medical Center v NLRC et al [GR No 176484, Nov 25, 2008]

Facts
Petitioner is a privately owned hospital which engaged the services of the respondent spouses Ronald Lanzanas
and Merceditha Lanzanas, as resident physicians. The problem arose when Dr. Ronald was suspended by the
medical director when he was caught in the telephone discussing the low “census” of the admission of patients
to the hospital which was deemed to be inimical to the hospital’s interest. Subsequently, Dr. Merceditha was
not given any work schedule.
Meanwhile, the rank-and –file employees union went on strike due to unsolved grievances over the terms and
conditions of their employment. The DOLE Secretary then certified the labor dispute to the NLRC for
compulsory arbitration and issued return-to-work Order. The medical director later on echoed the said order
through a memorandum but excluded those terminated or those serving disciplinary action.
The medical director sent Dr. Ronald a notice of termination on the grounds that he failed to report to work
despite the DOLE order and his participation in the said rank-and-file strike even though his position is
managerial in nature. Such participation is expressly prohibited by the New Labor Code and which prohibition
was sustained by the Med-Arbiter’s Order.
Both respondent spouses then filed a complaint for illegal dismissal before the Labor Arbiter. Their cases were
consolidated. The petitioner contended that there is no employer-employee relationship since respondents’
position is managerial. Therefore, they are prohibited from joining the rank-and-file union.
The LA dismissed the said complaints for want of jurisdiction for lack of employer-employee relationship
between the parties. On appeal however, the NLRC reversed the LA decision. Petitioner’s motion for
reconsideration was denied hence the case was elevated to the CA.
CA favored the petitioners and set aside the NLRC ruling. Upon filing of motion for reconsideration CA amended
its decision reinstating the NLRC decision on the ground that there exists an employer-employee relationship
between the parties. Hence this petition.
Issue
Whether or not there exists an employer-employee relationship between the parties
Held
Yes, there exists an employer-employee relationship since the fourth element of the four-fold test which is the
control test is present in this case. Dr. Ronald was neither managerial nor supervisory employee but part of the
rank-and-file. Hence, his dismissal is illegal because he is not barred from being a member of the union.
Under the control test, an employment relationship exists between the physician and a hospital if the hospital
controls both the means and details of the process by which the physician is to accomplished his task.
In the present case, although the petitioner claims that the twice-a-week reporting schedule allows the
respondents to freely practice their profession elsewhere the rest of the week, the Supreme Court held that the
petitioner maintained specific work-schedules and that he still exercises control over them. The respondents
cannot operate without the petitioner’s approval or consent. Also, the share of the respondents in some hospital
fees does not indicate managerial status since such merely constitute additional incentive or compensation
which is allowed under the Labor Code. Their job is also routinary in nature and consequently they cannot be
considered supervisory employees. In short, they are not barred from joining the union of the rank-and-file.
The ID cards, the payslips, BIR W-2 and the SSS and the Philhealth program are incontrovertible evidence of
the employment status of the respondents. Notably, the SSS Law is premised on the existence of an employer-
employee relationship.
As for the case of Dr Merceditha, her termination based on her conjugal relationship is not analogous to any
cases enumerated in Article 282 of the Labor Code. Hence, her dismissal was also illegal.
The SC affirmed the decision of CA that there exists an employer-employee relationship.
Page 17
9. Escasinas et al, v Shangri-la Mactan Island Resort et al [GR No 178827, Mar 4, 2009]
Facts
Registered nurses Jeromie D. Escasinas and Evan Rigor Singco (petitioners) were engaged by Dr. Pepito
(respondent doctor) to work in her clinic at respondent Shangri-la's Mactan Island Resort (Shangri-la) of which
she was a retained physician.
Petitioners filed with the NLRC a complaint for regularization, underpayment of wages, non-payment of holiday
pay, night shift differential and 13th month pay differential against respondents, claiming that they are regular
employees of Shangri-la.
Shangri-la claimed, however, that petitioners were not its employees but of respondent doctor whom it
retained via Memorandum of Agreement pursuant to Article 157 of the Labor Code, as amended, and that
respondent doctor is a legitimate contractor who has the power to hire and supervise the work of nurses under
her.
Respondent doctor for her part claimed that petitioners were already working for the previous retained
physicians of Shangri-la before she was retained by Shangri-la; and that she maintained petitioners' services
upon their request.
The Labor Arbiter declared petitioners to be regular employees of Shangri-la. It noted that they usually perform
work which is necessary and desirable to Shangri-la's business; that they observe clinic hours and render
services only to Shangri-la's guests and employees; and that respondent doctor was Shangri-la's "in-house"
physician, hence, also an employee;
However, on appeal, the NLRC rendered a decision finding that no employer-employee relationship exists
between petitoner and Shangri-la. Likewise, the Court of Appeals affirmed the NLRC decision.
Petitioners insist that under the Labor Code, Shangri-la is required to hire a full-time registered nurse, hence,
their engagement should be deemed as regular employment and that respondent doctor is a labor-only
contractor.
Issue
1) Is there an employer-employee relationship between petitioners and Shangri-la?
2) Is respondent doctor a legitimate independent contractor?
Held
1) No, they are not employees of Shangri-la. Art. 157 of the Labor Code does not require the engagement
of full-time nurses as regular employees of a company employing not less than 50 workers. In cases of
hazardous workplaces, no employer shall engage the services of a physician or dentist who cannot stay
in the premises of the establishment for at least two (2) hours, in the case of those engaged on part-
time basis, and not less than eight (8) hours in the case of those employed on full-time basis. Where
the undertaking is nonhazardous in nature, the physician and dentist may be engaged on retained
basis, subject to such regulations as the Secretary of Labor may prescribe to insure immediate
availability of medical and dental treatment and attendance in case of emergency.
Under the foregoing, Shangri-la which employs more than 200 workers is mandated to furnish its
employees services of a full-time registered nurse, a part-time physician and dentist, and an emergency
clinic which means that it should provide or make available such medical and allied services to its
employees, but Shangri-la does not necessarily have to hire or employ.
Existence of an employer- employee relationship is established by the presence of the following
determinants: (1) the selection and engagement of the workers; (2) power of dismissal; (3) the
payment of wages by whatever means; and (4) the power to control the worker's conduct, with the
latter assuming primacy in the overall consideration.
With respect to the supervision and control of the nurses and clinic staff, it is not disputed that a
document, "Clinic Policies and Employee Manual" claimed to have been prepared by respondent doctor
exists, to which petitioners gave their conformity and in which they acknowledged their co-terminus
Page 18
employment status. It is thus presumed that said document, and not the employee manual being
followed by Shangri-la’s regular workers, governs how they perform their respective tasks and
responsibilities.
Since Shangri-la does not control how the work performed by petitioners should be done, the former
cannot be considered as the petitioners’ employer. On the other hand, respondent doctor who
supervises and controls petitioners’ work should be considered as their employer.
2) Yes, respondent doctor is a legitimate independent contractor. That Shangri-la provides the clinic
premises and medical supplies for use of its employees and guests does not necessarily prove that
respondent doctor lacks substantial capital and investment. Besides, the maintenance of a clinic and
provision of medical services to its employees is required under Art. 157, which are not directly related
to Shangri-la's principal business - operation of hotels and restaurants.
Page 19
10. Tongko v Manufacturer Life Insurance Co. (Phils), Inc., et al [GR No 167622, Jan 25 2011, En Banc (see June
29, 2010 Main Decision)]
Facts
Manufacturers Life Insurance Co. (Phils.), Inc. (Manulife) is a domestic corporation engaged in life insurance
business. Renato A. Vergel De Dios was, during the period material, its President and Chief Executive Officer.
Gregorio V. Tongko started his professional relationship with Manulife on July 1, 1977 by virtue of a Career
Agent's Agreement (Agreement) he executed with Manulife.
In the Agreement, it is provided that:
It is understood and agreed that the Agent is an independent contractor and nothing contained herein shall be
construed or interpreted as creating an employer-employee relationship between the Company and the Agent.
The Company may terminate this Agreement for any breach or violation of any of the provisions hereof by the
Agent by giving written notice to the Agent within fifteen (15) days from the time of the discovery of the breach.
No waiver, extinguishment, abandonment, withdrawal or cancellation of the right to terminate this Agreement
by the Company shall be construed for any previous failure to exercise its right under any provision of this
Agreement.
Either of the parties hereto may likewise terminate his Agreement at any time without cause, by giving to the
other party fifteen (15) days notice in writing.
In 1983, Tongko was named as a Unit Manager in Manulife's Sales Agency Organization. In 1990, he became a
Branch Manager. As the CA found, Tongko's gross earnings from his work at Manulife, consisting of
commissions, persistency income, and management overrides. The problem started sometime in 2001, when
Manulife instituted manpower development programs in the regional sales management levels. So in 2001, De
Dios addressed a letter to Tongko, then one of the Metro North Managers, regarding meetings wherein De Dios
found Tongko's views and comments to be unaligned with the directions the company was taking. De Dios also
expressed his concern regarding the Metro North Managers' interpretation of the company's goals. He
maintains that Tongko's allegations are unfounded. Some allegations state that some Managers are unhappy
with their earnings, that they're earning less than what they deserve and that these are the reasons why
Tonko's division is unable to meet agency development objectives. However, not a single Manager came forth
to confirm these allegations. Finally, De Dios related his worries about Tongko's inability to push for company
development and growth.
De Dios subsequently sent Tongko a letter of termination in accordance with Tongko's Agents Contract. Tongko
filed a complaint with the NLRC against Manulife for illegal dismissal, alleging that he had an employer-
employee relationship with De Dios instead of a revocable agency by pointing out that the latter exercised
control over him through directives regarding how to manage his area of responsibility and setting objectives
for him relating to the business. Tongko also claimed that his dismissal was without basis and he was not
afforded due process. The NLRC ruled that there was an employer-employee relationship as evidenced by De
Dios's letter which contained the manner and means by which Tongko should do his work.
NLRC ruled in favor of Tongko, affirming the existence of the employer-employee relationship.
The Court of Appeals, however, set aside the NLRC's ruling. It applied the four-fold test for determining control
and found the elements in this case to be lacking, basing its decision on the same facts used by the NLRC. It
found that Manulife did not exert control over Tongko, there was no employer-employee relationship and thus
the NLRC did not have jurisdiction over the case.
The Supreme Court, in 2008, reversed the ruling of the Court of Appeals and ruled in favor of Tongko. However,
the Supreme Court issued another Resolution dated June 29, 2010, reversing its decision. Tongko filed a motion
for reconsideration, which is now the subject of the instant case.
Issue
Whether or not the Supreme Court correctly reversed its 2008 decision thus declaring the absence of an
employer-employee relationship between Manulife and Tongko
Page 20
Held
YES, the Supreme Court is correct in reversing its 2008 decision thereby declaring that there is no employer-
employee relationship between Manulife and Tongko since Petitioner Tongko failed to to show that the control
Manulife exercised over him was the control required to exist in an employer-employee relationship;|||
Control over the performance of the task of one providing service — both with respect to the means and
manner, and the results of the service — is the primary element in determining whether an employment
relationship exists.
Petitioner Tongko asserts in his Motion that Manulife's labor law control over him was demonstrated (1) when
it set the objectives and sales targets regarding production, recruitment and training programs; and (2) when
it prescribed the Code of Conduct for Agents and the Manulife Financial Code of Conduct to govern his activities.
SC found no merit in these contentions.
There are built-in elements of control specific to an insurance agency, which do not amount to the elements
of control that characterize an employment relationship governed by the Labor Code. The Insurance Code
provides definite parameters in the way an agent negotiates for the sale of the company's insurance products,
his collection activities and his delivery of the insurance contract or policy. In addition, the Civil Code defines
an agent as a person who binds himself to do something in behalf of another, with the consent or authority
of the latter. Article 1887 of the Civil Code also provides that in the execution of the agency, the agent shall
act in accordance with the instructions of the principal.
All these, read without any clear understanding of fine legal distinctions, appear to speak of control by the
insurance company over its agents. They are, however, controls aimed only at specific results in undertaking
an insurance agency, and are, in fact, parameters set by law in defining an insurance agency and the attendant
duties and responsibilities an insurance agent must observe and undertake. They do not reach the level of
control into the means and manner of doing an assigned task that invariably characterizes an employment
relationship as defined by labor law. From this perspective, the petitioner's contentions cannot prevail.
To reiterate, guidelines indicative of labor law "control" do not merely relate to the mutually desirable result
intended by the contractual relationship; they must have the nature of dictating the means and methods to
be employed in attaining the result. Tested by this norm, Manulife's instructions regarding the objectives
and sales targets, in connection with the training and engagement of other agents, are among the directives
that the principal may impose on the agent to achieve the assigned tasks. They are targeted results that
Manulife wishes to attain through its agents. Manulife's codes of conduct, likewise, do not necessarily intrude
into the insurance agents' means and manner of conducting their sales. Codes of conduct are norms or
standards of behavior rather than employer directives into how specific tasks are to be done. These codes, as
well as insurance industry rules and regulations, are not per se indicative of labor law control under our
jurisprudence.
The duties that the petitioner enumerated in his Motion are not supported by evidence and, therefore,
deserve scant consideration. Even assuming their existence, however, they mostly pertain to the duties of an
insurance agent such as remitting insurance fees to Manulife, delivering policies to the insured, and after-
sale services. For agents leading other agents, these include the task of overseeing other insurance agents,
the recruitment of other insurance agents engaged by Manulife as principal, and ensuring that these other
agents comply with the paperwork necessary in selling insurance. That Manulife exercises the power to
assign and remove agents under the petitioner's supervision is in keeping with its role as a principal in an
agency relationship; they are Manulife agents in the same manner that the petitioner had all along been a
Manulife agent.
The petitioner also questions Manulife's act of investing him with different titles and positions in the course
of their relationship, given the respondents' position that he simply functioned as an insurance agent.
Under this scheme — an arrangement that pervades the insurance industry — petitioner in effect became a
"lead agent" and his own commissions increased as they included his share in the commissions of the other
agents; he also received greater reimbursements for expenses and was allowed to use Manulife's facilities.
His designation also changed from unit manager to branch manager and then to regional sales manager, to
reflect the increase in the number of agents he recruited and guided, as well as the increase in the area where
these agents operated. However, these arrangements, and the titles and positions the petitioner was invested
Page 21
with, did not change his status from the insurance agent that he had always been (as evidenced by the
Agreement that governed his relationship with Manulife from the start to its disagreeable end). The
petitioner simply progressed from his individual agency to being a lead agent who could use other agents in
selling insurance and share in the earnings of these other agents.
Thus, there is absolutely no evidence of labor law control which would qualify the parties’ relationship into
one of an employer-employee relationship.
Page 22
11. Semblante et al v CA, et al [GR No 196426, Aug 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.
Semblante receives PhP 2,000 per week or a total of PhP 8,000 per month, while Pilar gets PhP 3,500 a week
or PhP 14,000 per month. They work every Tuesday, Wednesday, Saturday, and Sunday every week, excluding
monthly derbies and cockfights held on special holidays. Their working days start at 1:00 p.m. and last until
12:00 midnight, or until the early hours of the morning depending on the needs of the cockpit. Petitioners had
both been issued employees’ identification card.
Petitioners were, on November 14, 2003, however 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 with the Labor Arbiter.
The Labor Arbiter ruled in favor of petitioners. Upon appeal to the NLRC however, this was reversed, with the
Commission ruling that there was no employer-employee relationship between petitioners and respondents.
The petitioners were akin to independent contractors. This was affirmed by the Court of Appeals. Thus, this
petition for review on certiorari.
Issue
Whether or not there exists an employer-employee relationship between respondents as the owner of the
cockpit, and petitioners who were the masiador and sentenciador of the said cockpit.
Held
No. The petitioners are not employees of the respondents but are independent contractors.
It is evident that petitioners are not employees of respondents, since their relationship fails to pass muster the
four-fold test of employment the Court has repeatedly mentioned in countless decisions:
(1) the selection and engagement of the employee;
(2) the payment of wages;
(3) the power of dismissal; and
(4) the power to control the employee’s conduct, which is the most important element.
Anent the four fold test, respondents had no part in petitioners’ selection and management; petitioners’
compensation was paid out of the arriba; 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.
In view of the foregoing, the petitioners are thus not employees of respondents and could not have been illegally
dismissed.
WHEREFORE, petition is hereby DENIED.
Page 23
12. Bernarte v PBA, et al [GR No 192084, Sep 14 2011]

Facts
Petitioner Jose Mel Bernarte aver that he was invited to join the Philippine Basketball Association (hereinafter
“PBA”) as referee. Initially, he was made to sign contracts on a year-to-year basis; however during the term of
respondent Commissioner Eala, changes were made on the terms of their employment.
Bernarte was not made to sign a contract during the first conference of the Filipino All-Filipino Cup, but during
the second conference of the All-Filipino Cup. Sometime later, he received a letter from the Office of the
Commissioner advising him that his contract would not be renewed due to his unsatisfactory performance on
and off court. He then filed a complaint before the Labor Arbiter for illegal dismissal.
Respondents aver, nonetheless, that the petitioner entered into contracts of retainer with the PBA in 2003.
After the expiration of the second contact, PBA decided not to renew his contract. Respondent argued that the
the petitioner were not illegally dismissed because he was not an employee of the PBA.
The Labor Arbiter (hereinafter “LA”) declared that the petitioner was an employee of the PBA and ruled that
the dismissal was illegal. National Labor Relations Commission (hereinafter “NLRC”) affirmed the ruling of the
LA. Aggrieved, the respondents then filed a petition for certiorari with the Court of Appeals (hereinafter CA)
which reversed the decisions of the LA and the NLRC. CA found petitioner an independent contractor since
respondents did not exercise any form of control over the means and methods by which petitioner performed
his work as a basketball referee.
Petitioner then filed a petition for review with the Supreme Court.
Issue
Whether or not Bernante is an employee of the Philippine Basketball Association, which in turn determines
whether petitioner was illegally dismissed
Held
No. Bernante is not an employee of the Philippine Basketball Association; therefore, he was not illegally
dismissed.
The existence of an employer-employee relationship is ultimately a question of fact. As a general rule, the Court
cannot review facts found by the lower courts. However, this rule admits of exceptions, one of which is where
there are conflicting findings of fact between the Court of Appeals, on one hand, and the NLRC and Labor
Arbiter, on the other, such as in the present case.
To determine the existence of an employer-employee relationship, case law has consistently applied the four-
fold test, to wit: (a) the selection and engagement of the employee; (b) the payment of wages; (c) the power of
dismissal; and (d) the employer's power to control the employee on the means and methods by which the work
is accomplished. The so-called “control test” is the most important indicator of the presence or absence of an
employer-employee relationship.
Petitioner asserts that he is an employee of respondents since the latter exercise control over the performance
of his work. Petitioner cites the following stipulations in the retainer contract which evidence control:
(1) respondents classify or rate a referee;
(2) respondents require referees to attend all basketball games organized or authorized by the PBA, at
least one hour before the start of the first game of each day;
(3) respondents assign petitioner to officiate ballgames, or to act as alternate referee or substitute;
(4) referee agrees to observe and comply with all the requirements of the PBA governing the conduct
of the referees whether on or off the court;
(5) referee agrees (a) to keep himself in good physical, mental, and emotional condition during the life
of the contract; (b) to give always his best effort and service, and loyalty to the PBA, and not to
officiate as referee in any basketball game outside of the PBA, without written prior consent of the
Page 24
Commissioner; (c) always to conduct himself on and off the court according to the highest standards
of honesty or morality; and
(6) imposition of various sanctions for violation of the terms and conditions of the contract.
The aforementioned stipulations hardly demonstrate control over the means and methods by which petitioner
performs his work as a referee officiating a PBA basketball game. They do not pertain to, much less dictate, how
and when petitioner will blow the whistle and make calls; however on the contrary, they merely serve as rules
of conduct or guidelines in order to maintain the integrity of the professional basketball league.
Once in the playing court, the referees exercise their own independent judgment, based on the rules of the
game, as to when and how a call or decision is to be made. The referees decide whether an infraction was
committed, and the PBA cannot overrule them once the decision is made on the playing court. The referees are
the only, absolute, and final authority on the playing court. Respondents or any of the PBA officers cannot and
do not determine which calls to make or not to make and cannot control the referee when he blows the whistle
because such authority exclusively belongs to the referees. The very nature of petitioner's job of officiating a
professional basketball game undoubtedly calls for freedom of control by respondents.
Unlike regular employees who ordinarily report for work eight hours per day for five days a week, petitioner
is required to report for work only when PBA games are scheduled or three times a week at two hours per
game. In addition, there are no deductions for contributions to the Social Security System, Philhealth or Pag-
Ibig, which are the usual deductions from employees' salaries. These undisputed circumstances buttress the
fact that petitioner is an independent contractor, and not an employee of respondents.
In addition, the fact that PBA repeatedly hired petitioner does not by itself prove that petitioner is an employee
of the former. For a hired party to be considered an employee, the hiring party must have control over the
means and methods by which the hired party is to perform his work, which is absent in this case.
If PBA decides to discontinue petitioner's services at the end of the term fixed in the contract, whether for
unsatisfactory services, or violation of the terms and conditions of the contract, or for whatever other reason,
the same merely results in the non-renewal of the contract, as in the present case. The non-renewal of the
contract between the parties does not constitute illegal dismissal of petitioner by respondents.
Page 25
13. Lirio v Genovia [GR No 169757, Nov 23 2011]

Facts
Respondent Genovia alleged, among others, that he was hired as studio manager by petitioner Lirio, owner of
Celkor Ad Sonicmix Recording Studio (Celkor). He was employed to manage and operate Celkor and to promote
and sell the recording studio's services to music enthusiasts and other prospective clients. He received a
monthly salary of P7,000.00. They also agreed that he was entitled to an additional commission of P100.00 per
hour as recording technician. He was made to report for work from Monday to Friday from 9:00 a.m. to 6 p.m.
On Saturdays, he was required to work half-day only, but most of the time, he still rendered eight hours of work
or more.
Respondent stated that a few days after he started working as a studio manager, petitioner approached him
and told him about his project to produce an album for his 15-year-old daughter, Celine Mei Lirio. Petitioner
asked respondent to compose and arrange songs for Celine and promised that he would draft a contract to
assure respondent of his compensation for such services. The technical aspect in producing the album, such as
digital editing, mixing and sound engineering would be performed by respondent in his capacity as studio
manager for which he was paid on a monthly basis.
Respondent alleged that before the end of September 2001, he reminded petitioner about his compensation as
composer and arranger of the album. Petitioner verbally assured him that he would be duly compensated. On
February 26, 2002, respondent again reminded petitioner about the contract on his compensation as composer
and arranger of the album. Petitioner told respondent that since he was practically a nobody and had proven
nothing yet in the music industry, respondent did not deserve a high compensation, and he should be thankful
that he was given a job to feed his family. Petitioner informed respondent that he was entitled only to 20% of
the net profit, and not of the gross sales of the album, and that the salaries he received and would continue to
receive as studio manager of Celkor would be deducted from the said 20% net profit share. Respondent
objected and insisted that he be properly compensated. On March 14, 2002, petitioner verbally terminated
respondent's services, and he was instructed not to report for work.Respondent asserts that he was illegally
dismissed as he was terminated without any valid grounds, and no hearing was conducted before he was
terminated. Respondent prayed for his reinstatement without loss of seniority rights, or, in the alternative, that
he be paid separation pay, backwages and overtime pay; and that he be awarded unpaid commission in the
amount of P2,000.00 for services rendered as a studio technician as well as moral and exemplary damages.
In defense, petitioner stated that respondent was not hired as studio manager, composer, technician or as an
employee in any other capacity of Celkor. He looked for a composer/arranger who would compose the songs
for the album of his daughter. In July 2001, Bob Santiago, his son-in--law, introduced him to respondent, who
claimed to be an amateur composer, an arranger with limited experience and musician without any formal
musical training. Respondent verbally agreed with petitioner to co-produce the album. Petitioner asserted that
from the aforesaid terms and conditions, his relationship with respondent is one of an informal partnership
under Article 1767 of the New Civil Code, since they agreed to contribute money, property or industry to a
common fund with the intention of dividing the profits among themselves. Petitioner had no control over the
time and manner by which respondent composed or arranged the songs, except on the result thereof.
Respondent reported to the recording studio between 10:00 a.m. and 12:00 noon. Hence, petitioner contended
that no employer-employee relationship existed between him and the respondent, and there was no illegal
dismissal to speak of.
On October 31, 2003, Labor Arbiter Renaldo O. Hernandez rendered a decision, finding that an employer-
employee relationship existed between petitioner and respondent. Upon appeal, the NLRC stated that
respondent failed to prove his employment tale with substantial evidence. Upon filing a petition for certiorari
with the Court of Appeals, the appellate court rendered a decision reversing and setting aside the resolution of
the NLRC, and reinstating the decision of the Labor Arbiter, with modification in regard to the award of
commission and damages. Hence, petitioner Lirio filed this petition.
Issue
Whether or not employer-employee relationship existed between petitioner and respondent.
Page 26
Held
Before a case for illegal dismissal can prosper, it must first be established that an employer-employee
relationship existed between petitioner and respondent.The elements to determine the existence of an
employment relationship are: (a) the selection and engagement of the employee; (b) the payment of wages; (c)
the power of dismissal; and (d) the employer's power to control the employee's conduct. The most important
element is the employer's control of the employee's conduct, not only as to the result of the work to be done,
but also as to the means and methods to accomplish it.
The documentary evidence (payroll and two petty cash vouchers) presented by respondent showed that
petitioner hired respondent as an employee and he was paid monthly wages of P7,000.00. Petitioner wielded
the power to dismiss as respondent stated that he was verbally dismissed by petitioner. Petitioner also stated
in his Position Paper that it was agreed that he would help and teach respondent how to use the studio
equipment. In such case, petitioner certainly had the power to check on the progress and work of respondent.
On the other hand, petitioner failed to prove that his relationship with respondent was one of partnership. Such
claim was not supported by any written agreement.
In termination cases, as stated in Article 277 (b), the burden is upon the employer to show by substantial
evidence that the termination was for lawful cause and validly made. For an employee's dismissal to be valid,
(a) the dismissal must be for a valid cause, and (b) the employee must be afforded due process. Petitioner failed
to comply with these legal requirements; hence, the Court of Appeals correctly affirmed the Labor Arbiter's
finding that respondent was illegally dismissed, and entitled to the payment of backwages, and separation pay
in lieu of reinstatement.
Page 27
14. Jao v BCC Products Sales, Inc. [GR No 163700, Apr 18 2012]
Facts
Petitioner maintained that respondent BCC Product Sales, Inc. (BCC) and its President, respondent Terrance Ty
(Ty), employed him as comptroller starting from September 1995 with a monthly salary of P20,000.00 to
handle the financial aspect of BCC's business; that on October 19, 1995, the security guards of BCC, acting upon
the instruction of Ty, barred him from entering the premises of BCC where he then worked; that his attempts
to report to work in November and December 12, 1995 were frustrated because he continued to be barred
from entering the premises of BCC; and that he filed a complaint dated December 28, 1995 for illegal dismissal,
reinstatement with full backwages, non-payment of wages, damages and attorney's fees.
Respondents countered that petitioner was not their employee but the employee of Sobien Food Corporation
(SFC), the major creditor and supplier of BCC; and that SFC had posted him as its comptroller in BCC to oversee
BCC's finances and business operations and to look after SFC's interests or investments in BCC.; that their
issuance of the ID to petitioner was only for the purpose of facilitating his entry into the BCC premises in
relation to his work of overseeing the financial operations of BCC for SFC; that the ID should not be considered
as evidence of petitioner's employment in BCC; that petitioner executed an affidavit in March 1996, 20 stating,
among others, as follows:
1. I am a CPA (Certified Public Accountant) by profession but presently associated with, or employed by,
Sobien Food Corporation with the same business address as abovestated;
2. In the course of my association with, or employment by, Sobien Food Corporation (SFC, for short), I have
been entrusted by my employer to oversee and supervise collections on account of receivables due SFC
from its customers or clients; for instance, certain checks due and turned over by one of SFC's customers
is BCC Product Sales, Inc., operated or run by one Terrance L. Ty, (President and General manager).
Petitioner counters, however, that the affidavit did not establish the absence of an employer-employee
relationship between him and respondents because it had been executed in March 1996, or after his
employment with respondents had been terminated on December 12, 1995; and that the affidavit referred to
his subsequent employment by SFC following the termination of his employment by BCC.
Issue
Whether or not an employer-employee relationship existed between petitioner and BCC.
Held
In determining the presence or absence of an employer-employee relationship, the Court has consistently
looked for the following incidents, to wit: (a) the selection and engagement of the employee; (b) the payment
of wages; (c) the power of dismissal; and (d) the employer's power to control the employee on the means and
methods by which the work is accomplished. The last element, the so-called control test, is the most important
element.
Petitioner presented no document setting forth the terms of his employment by BCC. The failure to present
such agreement on terms of employment may be understandable and expected if he was a common or ordinary
laborer who would not jeopardize his employment by demanding such document from the employer, but may
not square well with his actual status as a highly educated professional.
Petitioner's admission that he did not receive his salary for the three months of his employment by BCC, as his
complaint for illegal dismissal and non-payment of wages and the criminal case for estafa he later filed against
the respondents for non-payment of wages indicated, further raised grave doubts about his assertion of
employment by BCC. If the assertion was true, we are puzzled how he could have remained in BCC's employ in
that period of time despite not being paid the first salary of P20,000.00/month. Moreover, his name did not
appear in the payroll of BCC despite him having approved the payroll as comptroller.
Page 28
Lastly, the confusion about the date of his alleged illegal dismissal provides another indicium of the insincerity
of petitioner's assertion of employment by BCC. In the petition for review on certiorari, he averred that he had
been barred from entering the premises of BCC on October 19, 1995, 27 and thus was illegally dismissed. Yet,
his complaint for illegal dismissal stated that he had been illegally dismissed on December 12, 1995 when
respondents' security guards barred him from entering the premises of BCC, 28 causing him to bring his
complaint only on December 29, 1995, and after BCC had already filed the criminal complaint against him. The
wide gap between October 19, 1995 and December 12, 1995 cannot be dismissed as a trivial inconsistency
considering that the several incidents affecting the veracity of his assertion of employment by BCC earlier noted
herein transpired in that interval.
With all the grave doubts thus raised against petitioner's claim, we need not dwell at length on the other proofs
he presented, like the affidavits of some of the employees of BCC, the ID, and the signed checks, bills and
receipts. Suffice it to be stated that such other proofs were easily explainable by respondents and by the
aforestated circumstances showing him to be the employee of SFC, not of BCC.
Page 29
15. Legend Hotel (Manila) v Realuyo [GR No 153511, July 18, 2012]
Facts
This labor case for illegal dismissal involves a pianist employed to perform in the restaurant of a hotel. On
August 9, 1999, respondent, 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 Php13,111 month pay.
Respondent averred that he had worked as a pianist at the Legend Hotel’s Tanglaw Restaurant from September
1992 with an initial rate of P400.00/night that was given to him after each night’s performance; that his rate
had increased to P750.00/night; and that during his employment, he could not choose the time of performance,
which had been fixed from 7:00 pm to 10:00 pm for three to six times/week. He added that the Legend Hotel’s
restaurant manager had required him to conform with the venue’s motif; that he had been subjected to the
rules on employees’ representation checks and chits, a privilege granted to other employees; that on July 9,
1999, the management had notified him that as a cost-cutting measure his services as a pianist would no longer
be required effective July 30, 1999; that he disputed the excuse, insisting that Legend Hotel had been lucratively
operating as of the filing of his complaint; and that the loss of his employment made him bring his complaint.
The labour arbiter dismissed Respondent’s complaint agreeing with Petitioner that there was no employee-
employer relationship. Respondent appealed with the NLRC which in turn affirmed the labor arbiter’s decision.
Respondent filed a motion for certiorari in the Court of Appeals which reversed the decision of the NLRC and
granted respondent’s petition.
Issue
Whether there exists an employer-employee relationship
Held
Employer-employee relationship existed between the parties. 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 employee’s 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.
A review of the circumstances reveals that respondent was, indeed, petitioner’s employee. He was undeniably
employed as a pianist in petitioner’s Madison Coffee Shop/Tanglaw Restaurant from September 1992 until his
services were terminated on July 9, 1999.
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 petitioner’s insistence that respondent
had only offered his services to provide live music at petitioner’s Tanglaw Restaurant, and despite petitioner’s
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, petitioner’s restaurant manager, for the increase of his remuneration.
Secondly, petitioner argues that whatever remuneration was given to respondent were only his talent fees that
were not included in the definition of wage under the Labor Code. Respondent was paid P400.00 per three
hours of performance from 7:00 pm to 10:00 pm, three to six nights a week. Such rate of remuneration was
later increased to P750.00 upon restaurant manager Velazco’s recommendation. There is no denying that the
remuneration denominated as talent fees was fixed on the basis of his talent and skill and the quality of the
Page 30
music he played during the hours of performance each night, taking into account the prevailing rate for similar
talents in the entertainment industry.
Page 31
16. The New Philippine Skylanders, Inc v Dakila [GR No 199547, Sep 24, 2011]
Facts
In May 1997, Respondent Dakila was rehired by petitioner corporation as consultant under a Contract for
Consultancy Services dated April 30, 1997 after he was terminated when the corporation was sold. Thereafter,
in April 19, 2007, respondent Dakila informed petitioners of his compulsory retirement effective May 2, 2007
and sought for the payment of his retirement benefits pursuant to the Collective Bargaining Agreement. His
request, however, was not acted upon. Instead, he was terminated from service effective May 1, 2007.
Consequently, respondent filed a complaint against the petitioners for constructive illegal dismissal, non-
payment of retirement benefits, under/non-payment of wages and other benefits of a regular employee, and
damages. He averred that the consultancy contract was a scheme to deprive him of the benefits of
regularization, claiming to have assumed tasks necessary and desirable in the trade or business of petitioners
and under their direct control and supervision.
On the other hand, petitioners asserted that respondent was a consultant and not their regular employee. The
latter was not included in petitioners’ payroll and paid a fixed amount under the consultancy contract. He was
not required to observe regular working hours and was free to adopt means and methods to accomplish his
task except as to the results of the work required of him. Hence, no employer-employee relationship existed
between them. Moreover, respondent terminated his contract in a letter dated April 19, 2007, thus, negating
his dismissal.
LA and NLRC: found that the respondent was illegally dismissed

CA; dismissed the petition for failure to show that the NLRC committed grave abuse of discretion in affIrming
the LA's Decision.
Issue
Whether or not Dakila was illegally dismissed.
Held
Yes, Dakila was illegally dismissed. The issue of illegal dismissal is premised on the existence of an employer-
employee relationship between the parties herein. It is essentially a question of fact, beyond the ambit of a
petition for review on certiorari under Rule 45 of the Rules of Court unless there is a clear showing of palpable
error or arbitrary disregard of evidence which does not obtain in this case.
Following Article 279 of the Labor Code, an employee who is unjustly dismissed from work is entitled to
reinstatement without loss of seniority rights and other privileges and to his full backwages computed from
the time he was illegally dismissed. However, considering that respondent Dakila was terminated on May 1,
2007, or one (1) day prior to his compulsory retirement on May 2, 2007, his reinstatement is no longer feasible.
Accordingly, the NLRC correctly held him entitled to the payment of his retirement benefits pursuant to the
CBA. On the other hand, his backwages should be computed only for days prior to his compulsory retirement
which in this case is only a day.
Page 32
17. Tesoro, et al v Metro Manila Retreaders Inc, et al [GR No 171482, Mar 12, 2014]
Facts
The petitioners used to work as salesmen for the respondents, collectively called “Bandag”.
The petitioners quit their jobs as salesmen and entered into separate Service Franchise Agreements (SFAs)
with Bandag for the operation of their respective franchises. Under the SFAs, Bandag would provide funding
support to the petitioners’ subject to a regular or periodic liquidation of their revolving funds. The expenses
out of these funds would be deducted from petitioners’ sales to determine their income.
The petitioners evidently began to default on their obligations to submit periodic liquidations of their
operational expenses in relation to the revolving funds Bandag provided them.
Bandag terminated their respective SFA.
The petitioners filed a complaint for constructive dismissal, non-payment of wages, incentive pay, 13th month
pay and damages against Bandag with the National Labor Relations Commission (NLRC).
The petitioners contended that they remained the employees of Bandag and the SFA was a circumvention of
their status as regular employees.
The respondents contended that the petitioners freely resigned from their employment and decided to avail
themselves of the opportunity to be independent entrepreneurs. Thus, no employer-employee relationship
existed between the parties.
The Labor Arbiter rendered a decision, dismissing the complaint on the ground that no employer-employee
relationship existed between the parties.
The NLRC affirmed the decision of the Labor Arbiter.
The Court of Appeals upon a special civil action for certiorari initiated by the petitioner dismissed the complaint
for lack of merit.
Issue
Whether or not petitioners remained to be Bandag’s salesmen under the franchise scheme it entered into with
them.
Held
The Supreme Court dismissed the petition and affirmed the decision of the Court of Appeals applying the
control test, the respondent still continued, like an employer, exercising control over the petitioners’ work by
retaining the right to adjust the price rates of products and services; impose minimum processed tire
requirement (MPR); review and regulate credit applications; and retain the power to suspend the petitioners’
services for failure to meet service standards. The petitioner cannot use the revolving funds of the SFA as
evidence of their employer-employee relationship with Bandag. These funds do not represent wages. They are
more in the nature of capital advances for operations that Bandag conceptualized in their respective franchises.
The decisions of the Labor Arbiter, NLRC and The Court of Appeals must be considered with great weight and
respect in determining the facts on hand and thus should generally not be disturbed.
Page 33
18. Royale Homes Marketing Corp v Alcantara [GR No 195190, July 28, 2014]
Facts
In 1994, the petitioners engaged in marketing real estates, appointed the respondent as their Marketing
Director for a fixed period of one year. His work consisted mainly of marketing Petitioners’ real estate
inventories on an exclusive basis. Petitioners reappointed him for several consecutive years, the last of which
covered the period January 1 to December 31, 2003 where he held the position of Division 5 Vice-President-
Sales.
On December 17, 2013, respondent filed a Complaint for Illegal Dismissal against the Petitioners. He alleged
that he is a regular employee of the said petitioners since he is performing tasks that are necessary and
desirable to their business; that in 2003 the petitioners gave him 1.2 million pesos for the services he rendered
to them; that in the first of November 2013, however, the petitioners told him that they were wondering why
he still had the gail to come to office and sit at his table, and that the acts of the petitioners amounted to his
dismissal from work without any valid or just cause and in gross disregard of the proper procedure for
dismissing employees. Thus, he also impleaded the petitioners who, he averred, effected his dismissal in bad
faith and in an oppressive manner.
On the other hand, the petitioners vehemently denied that respondent is their employee. They argued that the
appointment paper of respondent is clear that they engaged his services as an independent sales contractor for
a fixed term of one year only. He never received any salary, 13th month pay, overtime pay or holiday pay from
them as he was paid purely on commission basis. In addition, petitioners had no control on how respondents
would accomplish his tasks and responsibilities as he was free to solicit sales at any time and by any manner
which he deem appropriate and necessary. He is even free to recruit his own sales personnel to assist him in
pursuance of his sales target.
According to the petitioners, respondent decided to leave the company after his wife, who was once connected
with them as a sales agent, had a formed a brokerage company that directly competed with their business, and
even recruited some of their sales agents. In a special management committee meeting on October 8, 20013,
respondent announced publicly and openly that he would leave the company by the end of October 2003 and
that he would no longer finish the unexpired term of his contract. He has decided to join his wife and pursue
their own brokerage business. Petitioners accepted respondent’s decision.
Issue
Whether or not Alcantara was an independent contractor
Held
Yes. The contract between the petitioners and the respondent conspicuously provides no employer-employee
relationship exists between them.One of the statements of the contract clearly leaves no doubt upon the
intention of the contracting parties: “It is understood, however, that no employer-employee relationship exists
between us, that of your sales personnel/agents.”
Although power to control is one of the four fold test to determine the existence of an employer-employee
relationship, not every form of control is indicative of such relationship. A person who performs work for
another and is subjected to its rules, regulations, and code of ethics does not necessarily become an employee.
As long as the level of control does not interfere with the means and methods of accomplishing the assigned
tasks, the rules imposed by the hiring party on the hired party do not amount to the labor law concept of control
that is indicative of employer-employee relationship.
The Court agrees with the petitioners that the rules, regulations, code of ethics, and periodic evaluation alluded
to by them do not involve control over the means and methods by which he was to perform his job.
The respondent has the burden of proof to prove the elements of petitioners’ power of control over the means
and methods of accomplishing the work but he failed to cite specific rules, regulations or code of ethics that
Page 34
supposedly imposed control on his means and methods of soliciting sales and dealing with prospective clients.
Notably, Alcantara was not required to observe definite working hours. Except for soliciting sales, petitioners
did not assign other tasks to him. He had full control over the means and methods of accomplishing his tasks
as he can “solicit sales at any time and by any manner which (he may) deem appropriate and necessary.” He
performed his tasks on his own account free from the control and direction of petitioners in all matters
connected therewith, except as to the results thereof.
The element of payment of wages is also absent in this case. As provided in the contract, respondent’s
remunerations consist only of commission override of 0.5%, budget allocation, sales incentive and other forms
of company support. There is no proof that he received fixed monthly salary. No payslip or payroll was ever
presented and there is no proof that petitioners deducted from his supposed salary withholding tax or that it
registered him with the Social Security System, Philippine Health Insurance Corporation, or Pag-Ibig Fund. In
fact, his Complaint merely states a ballpark figure of his alleged salary of P100,000.00, more or less. All of these
indicate an independent contractual relationship.
Page 35
19. Fuji Television Network Inc v Espiritu [GR 204944-45, Dec 3, 2014]
Facts
In 2005 Arlene S. Espiritu ("Arlene") was engaged by Fuji Television Network, Inc. ("Fuji") as a news
correspondent/producer with employment contract initially provided for a term of 1 year but was successively
renewed on a yearly basis with salary adjustment upon every renewal.
Sometime in January 2009, Arlene was diagnosed with lung cancer, and subsequently informed the company.
In turn, the Chief of News Agency of Fuji, Yoshiki Aoki, informed Arlene "that the company will have a problem
renewing her contract" since it would be difficult for her to perform her job. She "insisted that she was still fit
to work as certified by her attending physician." After several verbal and written communications, Arlene and
Fuji signed a non-renewal contract on May 5, 2009 where it was stipulated that her contract would no longer
be renewed after its expiration. The contract also provided that the parties release each other from liabilities
and responsibilities under the employment contract.
In consideration of the non-renewal contract, Arlene "acknowledged receipt of the total amount of
US$18,050.00 representing her monthly salary from March 2009 to May 2009, year-end bonus, mid-year
bonus, and separation pay." However, Arlene affixed her signature on the non-renewal contract with the initials
"U.P." for "under protest."
The day after Arlene signed the non-renewal contract, she filed a complaint for illegal
dismissal with the NCR Arbitration Branch of NLRC. Arlene claimed that she was left with no other recourse
but to sign the non-renewal contract.
Labor Arbiter Corazon C. Borbolla dismissed Arlene's complaint saying that she was an independent contractor.
The National Labor Relations Commission reversed the Labor Arbiter's decision. It held that Arlene was a
regular employee.
The CA, on appeal, affirmed the NLRC with the modification that Fuji immediately reinstate Arlene to her
position as News Producer without loss of seniority rights, and pay her backwages, 13th-month pay, mid-year
and year-end bonuses, sick leave and vacation leave with pay until reinstated, moral damages, exemplary
damages, attorney's fees, and legal interest of 12% per annum of the total monetary awards.
Issue
1) Whether Arlene was a regular employee.
2) Whether Arlene was illegally dismissed.
Held
1) Yes, Arlene was a regular employee with a fixed-term contract. The test for determining regular
employment is whether there is a reasonable connection between the employee's activities and the
usual business of the employer. Article 280 provides that the nature of work must be "necessary or
desirable in the usual business or trade of the employer" as the test for determining regular
employment. Arlene's contract indicating a fixed term did not automatically mean that she could never
be a regular employee. Another classification of employees, i.e.,employees with fixed-term contracts,
was recognized in Brent School, Inc. v. Zamora where this court discussed that:
Logically, the decisive determinant in the term employment should not be the activities that the
employee is called upon to perform, but the day certain agreed upon by the parties for the
commencement and termination of their employment relationship, a day certain being understood to
be "that which must necessarily come, although it may not be known when."
This court further discussed that there are employment contracts where "a fixed term is an essential
and natural appurtenance" such as overseas employment contracts and officers in educational
institutions.
This is precisely what Article 280 seeks to avoid. The ruling in Brent remains as the exception rather
than the general rule. Further, an employee can be a regular employee with a fixed-term contract. The
law does not preclude the possibility that a regular employee may opt to have a fixed-term contract
Page 36
for valid reasons. This was recognized in Brent: For as long as it was the employee who requested, or
bargained, that the contract have a "definite date of termination," or that the fixed-term contract be
freely entered into by the employer and the employee, then the validity of the fixed-term contract will
be upheld.
2) Yes, as a regular employee, Arlene was entitled to security of tenure and could be dismissed only for
just or authorized causes and after the observance of due process.
Article 279 of the Labor Code also provides for the right to security of tenure. Thus, on the right to
security of tenure, no employee shall be dismissed, unless there are just or authorized causes and only
after compliance with procedural and substantive due process is conducted.
Page 37
20. Cabaobas et al, v Pepsi Col [ GR No 176908, Mar 25 2015]
Facts
Pepsi-Cola Products Philippines, Inc.’s Tanauan Plant in Tanauan, Leyte incurred business losses in the total
amount of 29,167,390.00. To avert further losses, PCPPI implemented a company-wide retrenchment program
and retrenched 47 employees of its Tanauan Plant.
Petitioners, who are permanent and regular employees of the Tanauan Plant, received their respective letters,
informing them of the cessation of their employment. Petitioners then filed their respective complaints for
illegal dismissal before the National Labor Relations Commission Regional Arbitration Branch No. VIII in
Tacloban City.
Petitioners alleged that PCPPI was not facing serious financial losses because after their termination, it
regularized four (4) employees and hired replacements for the forty-seven (47) previously dismissed
employees. They also alleged that PCPPI's CRP was just designed to prevent their union, Leyte Pepsi-Cola
Employees Union-Associated Labor Union (LEPCEU-ALU), from becoming the certified bargaining agent of
PCPPI's rank-and-file employees.
PCPPI countered that petitioners were dismissed pursuant to its CRP to save the company from total
bankruptcy and collapse; thus, it sent notices of termination to them and to the Department of Labor and
Employment.
In support of its argument that its CRP is a valid exercise of management prerogative, PCPPI submitted audited
financial statements showing that it suffered financial reverses in 1998 in the total amount of SEVEN HUNDRED
MILLION (P700,000,000.00) PESOS, TWENTY- SEVEN MILLION (P27,000,000.00) PESOS of which was
allegedly incurred in the Tanauan Plant in 1999.
The Labor Arbiter ruled that the dismissal of the petitioners was illegal. On appeal of both parties, the Fourth
Division of the NLRC reversed the decision of the labor arbiter.
The petitioners’ appeal was dismissed and the CA affirmed the NLRC’s Fourth Division’s decision. However,
acting on the petition for certiorari filed by Molon, et al., the CA reversed its own decision and declaring that
the retrenchment was contrary to the prescribed rules and procedure and declaring that petitioners were
illegally terminated. Their reinstatement to their former positions or its equivalent is hereby ordered, without
loss of seniority rights and privileges and PEPSI-COLA is also ordered the payment of their backwages from the
time of their illegal dismissal up to the date of their actual reinstatement. If reinstatement is not feasible
because of strained relations or abolition of their respective positions, the payment of separation pay
equivalent to 1 month salary for every year of service, a fraction of at least 6 months shall be considered a
whole year. The monetary considerations received by some of the employees shall be deducted from the total
amount they ought to receive from the company.
Issue
Whether or not the dismissal was legal and valid.
Held
The petition has no merit.
Essentially, the prerogative of an employer to retrench its employees must be exercised only as a last resort,
considering that it will lead to the loss of the employees' livelihood. It is justified only when all other less drastic
means have been tried and found insufficient or inadequate. Corollary thereto, the employer must prove the
requirements for a valid retrenchment by clear and convincing evidence; otherwise, said ground for
termination would be susceptible to abuse by scheming employers who might be merely feigning losses or
reverses in their business ventures in order to ease out employees.
REQUISITES:
Page 38
(1) That retrenchment is reasonably necessary and likely to prevent business losses which, if already
incurred, are not merely de minimis, but substantial, serious, actual and real, or if only expected, are
reasonably imminent as perceived objectively and in good faith by the employer;
(2) That the employer served written notice both to the employees and to the Department of Labor and
Employment at least one month prior to the intended date of retrenchment;
(3) That the employer pays the retrenched employees separation pay equivalent to one (1) month pay or
at least one-half (½) month pay for every year of service, whichever is higher;
(4) That the employer exercises its prerogative to retrench employees in good faith for the advancement
of its interest and not to defeat or circumvent the employees’ right to security of tenure; and
(5) That the employer used fair and reasonable criteria in ascertaining who would be dismissed and who
would be retained among the employees, such as status, efficiency, seniority, physical fitness, age, and
financial hardship for certain workers.
In due regard of these requisites, the Court observes that Pepsi had validly implemented its retrenchment
program.
It is axiomatic that absent any clear showing of abuse, arbitrariness or capriciousness, the findings of fact by
the NLRC, especially when affirmed by the CA – as in this case – are binding and conclusive upon the Court.
Thus, given that there lies no discretionary abuse with respect to the foregoing findings, the Court sees no
reason to deviate from the same.
Moreover, it must be underscored that Pepsi’s management exerted conscious efforts to incorporate employee
participation during the implementation of its retrenchment program. Records indicate that Pepsi had initiated
sit-downs with its employees to review the criteria on which the selection of who to be retrenched would be
based.
Page 39
21. Begino, et al v ABS-CBN Corp [GR No 199166, Apr 20, 2015]
Facts
ABS-CBN Regional Network Group in Naga City employed Amalia Villafuerte as a manager. In 1996, ABS-CBN
employed then petitioners Begino and Del Valle as cameramen/Editors for TV broadcasting, ABS-CBN also
employed Sumayao and Monina. Petitioners engaged their services thru Talent Contracts which are regularly
renewed over three months to 1 year. Petitioners were also given Project Assignment forms which determined
the duration of a particular project as well as the budget and the technical requirements thereof. Petitioners
were then tasked to work on subsequent daily airings in respondent’s TV Patrol Bicol Program. The Talent
contracts specifically provided that there is no employee-employer (ER-EE) relationship between petitioners
and respondents, but it additionally provided for:
1. Creation and performance of work according to ABS-CBN’s standards, policies and guidelines;
2. The petitioners should not work for ABS-CBN’s competing companies or any of the same that had an
adverse interest to that of ABS-CBN;
3. The work they are doing is results oriented, which does not require them to have fixed or normal
hours of work;
4. Petitioner’s remunerations were denominated as talent fees.
Petitioners, claiming that they are employees of the respondent, filed a complaint against ABS-CBN in the NLRC
Sub-Regional Arbitration Brannch for regularization, underpayment of overtime pay, holiday pay, 13th month
pay, Service incentive leave pay, damages and atty’s fees, contending that:
1. They performed functions necessary and desirable in ABS-CBN business;
2. They are mandated to wear company ID’s;
3. They are provided all the equipment needed;
4. They worked under the direct control and supervision of respondent Villafuerte;
5. They were also bound on ABS-CBN’s policy on attendance and punctuality;
6. That ABS-CBN due to the Contracts, they earn less than what respondents usually pay their regular
rank-and-file employees.
Respondents refuted the petitioners claim saying that:
1. The petitioners are independent contractors, they employed them due to lack of manpower to man
the business;
2. They are known as talents and required to inform ABS-CBN of their availability through Talent
Information Forms to facilitate their appearance on designated project days;
3. They cannot afford employing regular workers due to unpredictable viewer preferences;
4. That through the talent contracts, petitioners were engaged because of their skills, knowledge and
expertise;
5. That the policies were general guidelines only and does not subject petitioners to control;
6. They were never subjected to control over the means and methods by which they do their tasks.
During the pendency of their case, petitioners were dismissed and they filed a second complaint, adding illegal
dismissal and unfair labor practice to their previous claims 2nd claim of petitioners were dismissed for
violation of rules against non-forum shopping because the issues in the 1st complaint must be resolved first
before resolving the 2nd complaint.
Labor Arbiter resolved the first complaint in favor of petitioners, ordering ABS-CBN to pay a total of P2,
440,908.36 representing salaries/wage differentials, holiday pay, SIL, 13th month pay and atty’s fees. LA also
Page 40
ordered respondents to admit back complainants under the same terms prevailing prior to their separation.
LA said that they are employees because:
1. Petitioners have worked for more than a year;
2. Petitioners are bound by exclusivity clause in the talent contracts;
3. There was substantial control over them;
Respondents appealed to the NLRC which affirmed the LA’s decision. Appealed to the CA, CA reversed,
Petitioners then appealed to SC
Issue
Whether or not there is an employer-employee relationship
Held
SC finds the petition impressed with merit. SC applied the four-fold test and the control test and found that
there is a presence of an EE-ER relationship. Based on article 280 of the Labor Code, petitioners are regular
employees of ABS-CBN due to the reasonable connection between the activity performed by the petitioners
and the business or trade of ABS-CBN. Also petitioners were continuously rehired over the years for its long
running news program which indicates that petitioners are regular employees. Even if the performance is not
continuous or merely intermittent, the law deems the repeated or continuing performance as sufficient
evidence of the necessity, if not indispensability of that activity in the business. Indeed, an employment stops
being co-terminous with specific projects where the employee is continuously re-hired due to the demands of
the employer’s business. Exclusivity clause and the provision on equipments essential for their functions shows
that petitioners were subject to control of the respondents. Even if the performance is not continuous or merely
intermittent, the law deems the repeated or continuing performance as sufficient evidence of the necessity, if
not indispensability of that activity in the business. Indeed, an employment stops being co-terminous with
specific projects where the employee is continuously re-hired due to the demands of the employer’s business.
SC Reversed the CA decision and reinstated NLRC decision
Page 41
22. SSS v Ubana [GR No 200114, Aug 25, 2015]
Facts
Respondent applied for employment with petitioner in 1995 but she has been referred to DBP Service
Corporation for transitory employment. She was then assigned to petitioner under a six-month Service
Contract Agreement as clerk with a daily wage of only P171.00. She was assigned as “Frontliner” (1999), Data
Encoder (2001) and as Processor until her resignation on August 26, 2002. As Processor, she was paid only
229.00 daily or 5,038.00 monthly, while a regular SSS Processor receives a monthly salary of 18,622.00 or
846.45 daily wage. Her May 28, 1996 Service Contract Agreement with DBP Service Corporation was never
renewed, but she was required to work for SSS continuously under different assignments with a maximum
daily salary of only 229.00; at the same time, she was constantly assured of being absorbed into the SSS
plantilla.
Because of the oppressive and prejudicial treatment by SSS, she was forced to resign on August 26, 2002 as she
could no longer stand being exploited, the agony of dissatisfaction, anxiety, demoralization, and injustice.
Respondent then filed for damages against petitioners before the RTC of Daet, Camarines Norte.
Petitioner and its co-defendants SSS Retirees Association and DBP Service Corporation filed their respective
motions to dismiss, arguing that the subject matter of the case and respondent’s claims arose out of employer-
employee relations, which are beyond the RTC’s jurisdiction and properly cognizable by the National Labor
Relations Commission (NLRC).
Issue
Whether or not RTC has jurisdiction to hear the case for damages filed by petitioner.
Held
Yes. In Home Development Mutual Fund v. Commission on Audit, it was held that while they performed the
work of regular government employees, DBP Service Corporation personnel are not government personnel,
but employees of DBP Service Corporation acting as an independent contractor. Applying the foregoing
pronouncement to the present case, it can be said that during respondent’s stint with petitioner, she never
became an SSS employee, as she remained an employee of DBP Service Corporation and SSS Retirees
Association – the two being independent contractors with legitimate service contracts with SSS.
For Article 217 of the Labor Code to apply, and in order for the Labor Arbiter to acquire jurisdiction over a
dispute, there must be an employer-employee relation between the parties thereto. Since there is no employer-
employee relationship between the parties herein, then there is no labor dispute cognizable by the Labor
Arbiters or the NLRC. There being no employer-employee relation or any other definite or direct contract
between respondent and petitioner, the latter being responsible to the former only for the proper payment of
wages, respondent is thus justified in filing a case against petitioner, based on Articles 19 and 20 of the Civil
Code, to recover the proper salary due her as SSS Processor.
Page 42
23. Century Properties Inc v Babiano, et al [GR No 220978, July 5, 2016]
Facts
Babiano was hired by CPI as Director of Sales, and was eventually appointed as Vice President for Sales. As CPFs
Vice President for Sales, Babiano was remunerated with, inter alia, the following benefits: (a) monthly salary
of P70,000.00; (b ) allowance of P50,000.00; and (c ) 0.5% override commission for completed sales. His
employment contract also contained a "Confidentiality of Documents and Non-Compete Clause" which barred
him from disclosing confidential information and from working in any business enterprise that is in direct
competition with CPI "while he is employed and for a period of one year from date of resignation or termination
from CPI." And if there is a breach on such terms, Babiano’s forms of compensation, including commissions and
incentives will be forfeited.
Concepcion on the other hand was hired by CPI as Sales Agent and was thereafter promoted as Project Director.
In her employment contract, it was provided therein that she would directly report to Babiano, and she would
receive a monthly subsidy of P60,000.00, 0.5% commission, and cash incentives. Another similar contract was
executed which provides that she would receive a monthly subsidy of P50,000.00, 0.5% commission, and cash
incentives. In both contracts, it was stated that no employee-employer relationship exist between Concepcion
and CPI.
CPI received reports that Babiano provided a competitor with information regarding its marketing strategies,
spread false information regarding CPI and its projects, recruited CPI's personnel to join the competitor, and
for being absent without official leave (AWOL) for five days. They then sent a Notice to Explain to Babiano.
However, Babiano submitted a resignation letter and revealed that he has been accepted as Vice-President in
the First Global BYO Development Corporation, a competitor of CPI. As such, CPI issued a Notice of Termination
to Babiano. Concepcion on the other hand resigned as Project Director.
Respondents then now filed a Complaint before the NLRC for non-payment of commissions and damages
against CPI.
CPI for its part contends that Babiano is a mere agent, his termination was with just causes and that he has
forfeited his commission due to a breach of the "Confidentiality of Documents and Non-Compete Clause" on his
contract. For Concepcion, NLRC has no jurisdiction because there was no employee-employer relationship and
thus it should be filed as an ordinary civil action.
The Labor Arbiter ruled in favor of CPI and dismissed the respondents’ petition. On appeal, NLRC reversed and
set aside LA’s ruling, and order CPI to pay Babiano and Concepcion their commissions, as well as 10% attorney’s
fees of the total monetary award. Moreover, it contends that the forfeiture of the commission under the contract
is confiscatory in nature and thus contrary to law and public policy. However, the NLRC limited the grant of the
money claims in light of Article 306 of the Labor Code which provides for a prescriptive period of three (3)
years. It also ruled that Concepcion is CPI’s employee considering that CPI: (a ) repeatedly hired and promoted
her since 2002; (b ) paid her wages despite referring to it as "subsidy"; and (c ) exercised the power of dismissal
and control over her. On certiorari, CA affirmed NLRC’s decision but modified it by increasing the amount of
the unpaid commissions.
Issue
WON CPI is liable for the unpaid commissions of the respondents despite the breach in the "Confidentiality of
Documents and Non-Compete Clause" in the employment contract and the stipulation in Concepcion’s contract
that no employer-employee relationship exist.
Held
Page 43
No, with respect to Babiano since his unpaid commissions were forfeited pursuant to the "Confidentiality of
Documents and Non-Compete Clause" in his employment contract. However, with respect to Concepcion, she
is thus entitled to her unpaid commissions granting that she is considered as an employee of CPI.
Where the language of a written contract is clear and unambiguous, the contract must be taken to mean that
which, on its face, it purports to mean, unless some good reason can be assigned to show that the words should
be understood in a different sense.
In the case at bar, CPI invoked the "Confidentiality of Documents and Non-Compete Clause" which is not only
clear but also unambiguous in stating that Babiano is not allowed to work in whatever capacity in any person
whose business is in direct competition with CPI while he is employed and for a period of one year after his
resignation or termination, and if there is a breach of any of its terms, forms of compensation including
commissions and incentives will be forfeited.
Babiano held a highly sensitive and confidential managerial position thus to allow him to freely move to direct
competitors during and soon after his employment with CPI would make the latter's trade secrets vulnerable
to exposure, especially in a highly competitive marketing environment. Thus such stipulation is reasonable.
Moreover, obligations arising from contracts, including employment contracts, have the force of law between
the contracting parties and should be complied with in good faith. Hence, they are bound by the stipulations
therein. In this case, CPI correctly invoked the same before the labor tribunals to resist Babiano’s claim for
unpaid commissions on account of the breach in the said stipulation while the employer-employee relationship
subsist. Records reveal that before Babiano’s resignation letter, he was already employed in the First Global.
Being a clear violation of the stipulation in his employment contract, it is just that his unpaid commissions were
forfeited.
Anent to Concepcion’s employment, the presence of the following elements evince the existence of an
employer-employee relationship: (a) the power to hire, i.e., the selection and engagement of the employee; (b)
the payment of wages; (c) the power of dismissal; and (d ) the employer's power to control the employee's
conduct, or the so called "control test."
Guided by these parameters, the Court finds that Concepcion was an employee of CPI considering that: (a) CPI
continuously hired and promoted Concepcion from October 2002 until her resignation on thus, showing that
CPI exercised the power of selection and engagement over her person and that she performed functions that
were necessary and desirable to the business of CPI; (b) the monthly "subsidy" and cash incentives that
Concepcion was receiving from CPI are actually remuneration in the concept of wages as it was regularly given
to her on a monthly basis. (c) CPI had the power to discipline or even dismiss Concepcion as her engagement
contract with CPI expressly conferred upon the latter "the right to discontinue her service anytime during the
period of engagement should she fail to meet the performance standards," and that CPI actually exercised such
power to dismiss when it accepted and approved Concepcion's resignation letter; and most importantly, (d)
CPI possessed the power of control over Concepcion because in the performance of her duties as Project
Director she did not exercise independent discretion thereon, but was still subject to the direct supervision of
CPI, acting through Babiano.
The existence of an employer-employee relationship cannot be negated by expressly repudiating it in the

management contract. For, the employment status of a person is defined and prescribed by law and not by what
the parties say it should be. In determining the status of the management contract, the "four-fold test" on
employment earlier mentioned has to be applied. Thus, Concepcion is entitled to her unpaid commissions.
Page 44
24. Lu v Enopia, GR No 197899, Mar 6, 2017

Facts
Respondents were hired from January 20, 1994 to March 20, 1996 as crew members of the fishing mother boat
F/B MG-28 owned by respondent Joaquin "Jake" Lu who is the sole proprietor of Mommy Gina Tuna Resources
[MGTR] based in General Santos City. Petitioners and Lu had an income-sharing arrangement wherein 55%
goes to Lu, 45% to the crew members, with an additional 4% as "backing incentive." They also equally share
the expenses for the maintenance and repair of the mother boat, and for the purchase of nets, ropes and payaos.
Sometime in August 1997, Lu proposed the signing of a Joint Venture Fishing Agreement between them, but
petitioners refused to sign the same as they opposed the one-year term provided in the agreement. According
to petitioners, during their dialogue on August 18, 1997, Lu terminated their services right there and then
because of their refusal to sign the agreement. On the other hand, Lu alleged that the master fisherman (piado)
Ruben Salili informed him that petitioners still refused to sign the agreement and have decided to return the
vessel F/B MG-28.
On August 25, 1997, petitioners filed their complaint for illegal dismissal, monetary claims and damages. In
their Position Paper, petitioners alleged that their refusal to sign the Joint Venture Fishing Agreement is not a
just cause for their termination. On the other hand, Lu denied having dismissed petitioners, claiming that their
relationship was one of joint venture where he provided the vessel and other fishing paraphernalia, while
petitioners, as industrial partners, provided labor by fishing in the high seas. Lu alleged that there was no
employer-employee relationship as its elements were not present: it was the piado who hired petitioners; they
were not paid wages but shares in the catch, which they themselves determine; they were not subject to his
discipline; and respondent had no control over the day-to-day fishing operations, although they stayed in
contact through respondent's radio operator or checker.
On June 30, 1998, the LA rendered a Decision dismissing the case for lack of merit finding that there was no
employer-employee relationship existing between petitioner and the respondents but a joint venture.
Respondents appealed to the National Labor Relations Commission (NLRC), which affirmed the LA Decision in
its Resolution dated March 12, 1999. On October 22, 2010, the CA rendered its assailed Decision reversing the
NLRC.
Issue
Whether or not there exists an employee-employer relationship between the petitioner and respondents.
Held
Yes. In determining the existence of an employer-employee relationship, the following elements are
considered: (1) the selection and engagement of the workers; (2) the power to control the worker's conduct;
(3) the payment of wages by whatever means; and (4) the power of dismissal. We find all these elements
present in this case.
In this case, petitioner contends that it was the piado who hired respondents, however, it was shown by the
latter's evidence that the employer stated in their Social Security System (SSS) online inquiry system printouts
was MGTR, which is owned by petitioner. Second, it was established that petitioner exercised control over
respondents. It should be remembered that the control test merely calls for the existence of the right to control,
and not necessarily the exercise thereof. It is not essential that the employer actually supervises the
performance of duties by the employee. It is enough that the former has a right to wield the power. Third, the
payment of respondents' wages based on the percentage share of the fish catch would not be sufficient to negate
the employer-employee relationship existing between them. Lastly, petitioner wielded the power of dismissal
over respondents when he dismissed them after they refused to sign the joint fishing venture agreement.
25. Apelanio vs. Arcanys, Inc., GR No. 227098, November 14, 2018
Facts: On April 10, 2012, Apelanio was hired by Arcanys, Inc. as a Usability/Web Design Expert. He was
placed on a "probationary status" for a period of six months. Due to low evaluation ratings, Arcanys served
Apelanio a letter, informing him that Arcanys would not convert his status into a regular employee. Apelanio
was given his final pay and he signed a Waiver, Release and Quitclaim" in favor of
Page 45
respondents. Apelanio averred that when this probationary contract was terminated, he was immediately
offered a retainership agreement lasting from October 10, 2012 until October 24, 2012, which involved a
similar scope of work and responsibilities but on a project basis, without security of tenure, with lesser pay,
and without any labor standard benefits. Apelanio was confused with the arrangement, but agreed since he had
a family to support. He believed that he was still undergoing Arcanys’ evaluation. On October 26, 2012, after
the lapse of the retainership agreement, Apelanio was offered another retainership agreement, from October
25, 2012 to November 12, 2012, again with an identical scope of work but at a reduced daily rate. As a result,
Apelanio became suspicious of Arcanys’ motives and consulted with a lawyer, who informed him that said
practice was illegal. He then refused to sign the second retainership agreement, and questioned why they
offered him another retainership agreement if he was deemed unqualified for the position. Apelanio filed a
complaint for illegal dismissal.
Issues: Whether or not Apelanio was illegally dismissed.
Ruling: NO. The SC cited the CA’s ruling:
The first agreement, which supposedly re-hired Apelanio for the same position, did not bear his signature. This
fact alone stirs doubt on whether the aforementioned agreement really got finalized. The NLRC gave full
credence to Apelanio's proposition that it is normal for an employee not to sign his copy and that if Apelanio
really wanted to, he could have signed his copy before submitting it as evidence.
Unfortunately, We cannot align our view with that of the NLRC considering that x x x the absence of Apelanio's
signature in the first agreement was also coupled with other indicators that sup support the conclusion that
such agreement was never really carried out.
The draft of the second agreement, which Apelanio claimed to be another extension of the first, indicated that
such agreement was entered into, and supposed to be signed by the parties on the 10th of October 2012 (the
date supposedly of the first agreement).
The Skype conversation between Apelanio and Arcanys’ representative on October 24, 2012 x x x showed that
they were discussing possible compensation at P18,000.00, which was the remuneration indicated in the first
agreement. If the first agreement got finalized and was already implemented, then why would the draft of
the second one still indicate the 10th October 2012 as the date of execution and signing of the first agreement?
Although it may be argued that the dates were merely clerical errors or unreplaced entries resulting to
oversight, the Skype conversation between Apelanio and Arcanys’ representative on October 24, 2012,
confirmed the non-conclusion of the first agreement; for it would be illogical for the parties to still discuss
the remuneration indicated in the first agreement if the same had already been implemented, and, in fact, was
about to end on the day that the conversation took place . Furthermore, a review of the retainership
agreements indicates that Apelanio was merely engaged as a consultant, in relation to the hacking incidents
endured by Arcanys. Apelanio merely alleged that he was hired as an employee under said retainership
agreements, but has yet to provide evidence to support such claim. "It is a basic rule in evidence that each party
must prove his affirmative allegations." Therefore, Article 281 of the Labor Code finds no application in this
case. Petition denied.
Doctrine: Although it may be argued that the dates were merely clerical errors or unreplaced entries resulting
to oversight, the Skype conversation between Apelanio and Arcanys’ representative on October 24,
2012, confirmed the non-conclusion of the first agreement. Apelanio merely alleged that he was hired as an
employee under said retainership agreements, but has yet to provide evidence to support such claim. "It is a
basic rule in evidence that each party must prove his affirmative allegations." Therefore, Article 281 of the
Labor Code finds no application in this case, absent any evidence to prove that Apelanio worked beyond his
probationary employment.
Page 46
26. Dr. Loreche-Amit vs. Cageyan De Oro Medical Center, GR No. 216635, June 3, 2019
Facts: Petitioner Dr. Mary Jean Loreche-Amit started working with respondent Cagayan De Oro Medical Center
Inc. (CDMC) sometime in May 1996 when she was engaged by the late Dr. Jose Gaerlan as associate pathologist
in the Department of Laboratories. Upon the demise of Dr. Gaerlan, CDMC’s board of directors formally
appointed her as chief pathologist for five years.
On June 13, 2007, CDMC’s board of directors passed a resolution recalling petitioner’s appointment as chief
pathologist. Petitioner filed a complaint for illegal dismissal against
In defense, respondents CDMC, Dr. Francisco Oh and Dr. Hernando Emano averred that petitioner was not hired
by them as she merely assisted Dr. Gaerlan in operating the hospital’s laboratory. They maintained that
petitioner worked at the same time as pathologist in Capitol College Hospital and J.R. Borja Memorial Hospital
as she was not prohibited to do so.
Issue: Whether or not there merit to this defense?
Ruling: Yes. The power to control the work of the employee is considered the most significant determinant of
the existence of an employer-employee relationship. This test is premised on whether the person for whom the
services are performed reserves the right to control both the end achieved and the manner and means used to
achieve that end.
As the labor arbiter, National Labor Relations Commission and the Court of Appeals aptly observed, petitioner
was working for two other hospitals aside from CDMC, not to mention those other hospitals which she caters
to when her services are needed. Such fact evinces that petitioner controls her working hours. On this note,
relevant is the economic reality test which this Court has adopted in determining the existence of employer-
Under this test, the economic realities prevailing within the activity or between the parties are examined, taking
into consideration the totality of circumstances surrounding the true nature of the relationship between the
parties.
Thus, the fact that petitioner continued to work for other hospitals strengthens the proposition that petitioner
was not wholly dependent on CDMC.
Petitioner likewise admitted that she receives in full her four percent share in the clinical section of the hospital
regardless of the number of hours she worked therein. Alternatively put, petitioner manages her method and
hours of work.
The rule is that where a person who works for another performs his job more or less at his own pleasure, in
the manner he sees fit, not subject to definite hours or conditions of work, and is compensated according to the
result of his efforts and not the amount thereof, no employer-employee relationship exists. (Dr. Mary Jean
Loreche-Amit vs. Cagayan De Oro Medical Center Inc. (CDMC) et al., G.R. 216635, June 3, 2019).
27. Fernandez vs. Kalookan SlaughterHouse Inc., GR No. 225075, June 19, 2019
Facts: Petitioner was hired in 1994 as a butcher by Kalookan Slughterhouse Inc., a single proprietorship owned
by respondent Ernesto Canunan. Petitioner worked from Monday to Sunday, from 6:30 P.M.-7:30 A.M., with a
Page 47
daily wage of P700.00 which was later on reduced to P500.00. He further claimed that he met an accident while
driving Kalookan Slaughterhouse’s truck in December 2013 and that deductions were made from his wage.
When questioned about the deductions in July 2014, he was thereafter treated unreasonably. On July 21, 2014,
petitioner suffered from a headache and did not report for work, the next day he was shocked when he only
received P200.00 due to his previous undertime and was informed that he could no longer report for work.
Kalookan Slaughterhouse, on the other hand, asserted that petitioner is an independent butcher
working under its Operation Supervisor, Cirilo Tablit. Petitioner received payment based on the number of
hogs he butchered and was only required to be in the Slaughterhouse when customers brought hogs to be
slaughtered. Kalookan Slaughterhouse alleged that it imposed policies on the entry to the premises, which
applied to employees, dealers, independent butchers, hog and meat dealers and trainees. According to
Kalookan Slaughterhouse, petitioner violated the policies and he misconstrued the disallowance to enter
the slaughterhouse as an act of dismissal.
Labor Arbiter: requisites of an employer-employee relationship were established as follows: petitioner was
hired by Kalookan Slaughterhouse through Tablit and petitioner was paid his daily wage for his butchering
services. Kalookan Slaughterhouse had authority to discipline petitioner as regards his work activities through
Kalookan Slaughterhouse's personnel named Noelberto De Guzman and also ruled that
Kalookan Slaughterhouse failed to prove its claim that petitioner was not its employee. The LA ruled that
Kalookan Slaughterhouse failed to prove that Tablit, who was its employee, was an independent or job
contractor. As its Operations Supervisor, Tablit was deemed to have acted in the interest of
Kalookan Slaughterhouse. And since Tablit engaged petitioner, petitioner is deemed an employee of
Kalookan Slaughterhouse.
National Labor Relation Commission: the facts and circumstances in this case showed that there was no
employer-employee relationship. Petitioner was an independent contractor and not an employee of
Kalookan Slaughterhouse because there was no regular payroll showing his name and the legal deductions
made from his salary. There were also no pay slips, and the money he received from Tablit showed that he was
an independent butcher and not an employee of Kalookan Slaughterhouse.
Court of Appeals: petitioner's claim of the existence of an employer-employee relationship is not supported by
substantial evidence as he failed to submit salary vouchers, pay slips, daily work schedule and even a certificate
of withholding tax on compensation income.
Issue: Whether or not petitioner Fernandez is an employee of Kalookan Slaughterhouse Inc.
Ruling: it is undisputed that petitioner rendered butchering services at Kalookan Slaughterhouse. The LA found
that petitioner was engaged by Kalookan Slaughterhouse itself since petitioner submitted log sheets and gate
passes. the totality of petitioner's evidence and the admissions of Kalookan Slaughterhouse convinces the Court
that petitioner was indeed an employee of Kalookan Slaughterhouse. Petitioner was able to present an I.D., gate
passes, log sheets, and a trip ticket. Kalookan Slaughterhouse even admitted through De Guzman that uniforms
were given to all personnel, including petitioner. Further, by denying that petitioner was its employee but
alleging that he rendered services as Tablit's employee, Kalookan Slaughterhouse effectively admitted the
substantial fact that petitioner has been rendering butchering services for 20 years from the filing of the
complaint on August 5, 2014.
Page 48
Topic 3: Hiring of Employee

1. PT&T vs. NLR [272 SCRA 596 [1997]]
Facts
Private respondent Grace de Guzman was initially hired by petitioner as a reliever for a fixed period, vice an
employee who went on maternity leave. Private respondent had made representations that she is single,
although she contracted marriage in May 1991, in the two successive reliever agreement. She was asked to join
the company as a probationary employee in September 1991 with the same representation that she is still
single.
Upon learning of such discrepancy, her Branch Supervisor sent her a memorandum requiring her to explain
such discrepancy. She was also reminded about the company’s policy of not accepting married women for
employment. She was thereafter dismissed in January 1992. She filed a complaint for illegal dismissal, coupled
with a claim for non-payment of cost of living allowance (COLA), before the Regional Arbitration Branch of the
National Labor Relations Commission in Baguio City. The Labor Arbiter declared such dismissal to be illegal.
This was affirmed by the NLRC upon appeal, with modification stating that De Guzman deserved to be
suspended for 3 months for her misrepresentation regarding her civil status. Thus, this writ of certiorari from
petitioner PT&T.
Issue
Whether or not the alleged concealment of civil status of private respondent De Guzman is a valid ground to
terminate her.
Held
NO. The alleged concealment of civil status by De Guzman was borne out of the discriminatory and prohibited
policy of PT&T of not accepting married women into the company. Thus, it is not a ground for her dismissal.
Article 136 of the Labor Code explicitly prohibits discrimination merely by reason of the marriage of a female
employee, to wit:
ART. 136. Stipulation against marriage. - It shall be unlawful for an employer to require as a condition
of employment or continuation of employment that a woman shall not get married, or to stipulate
expressly or tacitly that upon getting married, a woman employee shall be deemed resigned or
separated, or to actually dismiss, discharge, discriminate or otherwise prejudice a woman employee
merely by reason of marriage.
In the case at bar, petitioner’s policy of not accepting or considering as disqualified from work any woman
worker who contracts marriage runs afoul of the test of, and the right against, discrimination, afforded all
women workers by our labor laws and by no less than the Constitution. Contrary to petitioners assertion that
it dismissed private respondent from employment on account of her dishonesty, the record discloses clearly
that her ties with the company were dissolved principally because of the company’s policy that married women
are not qualified for employment in PT&T, and not merely because of her supposed acts of dishonesty.
WHEREFORE, the petition is hereby DISMISSED.
Page 49
2. Duncan Asso. Of Detailman-PTGWO vs. Glaxo Wellcome Phils., [G.R. No. 162994, Sept. 17, 2004]
Facts
Petitioner Pedro A. Tecson (Tecson) was hired by respondent Glaxo Wellcome Philippines, Inc. (Glaxo) as
medical representative. Among the company’s rules with which he subscribed to was for him 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, that her resign from the company.
Tecson was initially assigned to market Glaxos products in the Camarines Sur-Camarines Norte sales area. She
met and eventually married 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. Tecson was then transferred to the
Butuan City-Surigao City-Agusan del Sur sales area. He however defied the transfer order.
To settle their issues, Tecson and Glaxo submitted the matter for voluntary arbitration. The National
Conciliation and Mediation Board (NCMB) rendered its Decision declaring as valid Glaxo’s policy on
relationships between its employees and persons employed with competitor companies, and affirming Glaxos
right to transfer Tecson to another sales territory. The Court of Appeals upheld the decision of NCMB. Thus,
this petition from Tecson.
Issue
Whether or not Glaxo’s policy against its employees marrying employees from competitor companies is invalid,
and violated the equal protection clause of the Constitution.
Held
NO. Glaxo’s policy on relationships between its employees and persons employed with competitor companies
is valid as it is a valid exercise of management prerogative.
As held in a Georgia, U.S.A case, it is a legitimate business practice to guard business confidentiality and protect
a competitive position by even-handedly disqualifying from jobs male and female applicants or employees who
are married to a competitor. Consequently, the court ruled than an employer that discharged an employee who
was married to an employee of an active competitor did not violate Title VII of the Civil Rights Act of 1964.
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.
Further, the challenged company policy does not violate the equal protection clause as it can be addressed only
to the state or those acting under color of its authority. Such is clearly wanting in the case at bar.
Lastly, 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.
WHEREFORE, petition is DENIED.
Page 50
3. Star Paper Corp., vs. Simbol, G.R. No. 164774, April 12, 2006
Facts
Petitioner Star Paper Corporation (the company) is a corporation engaged in trading - principally of paper
products. Respondents Ronaldo D. Simbol (Simbol), Wilfreda N. Comia (Comia) and Lorna E. Estrella (Estrella)
were all regular employees of the company. The company promulgated a policy in 1995, to wit:
“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. 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.”
Due to aforesaid company policy, respondents were compelled to resign. They later filed a complaint for unfair
labor practice, constructive dismissal, separation pay and attorney's fees. They averred that the
aforementioned company policy is illegal and contravenes Article 136 of the Labor Code.
The Labor Arbiter dismissed their complaint as it was management prerogative to institute such policy. The
National Labor Relations Commission upheld such decision. The Court of Appeals, however, reversed the
decision. Aggrieved, petitioner now come to the Supreme Court.
Issue
Whether the policy of the employer banning spouses from working in the same company does not violate the
rights of the employee under the Constitution and the Labor Code and is a valid exercise of management
prerogative.
Held
NO. The policy of herein petitioner banning spouses from working in the same company contravenes Article
136 of the Labor Code, absent any bona fide occupational qualification.
The case at bar involves Art. 136 of the Labor Code which provides:
Art. 136. It shall be unlawful for an employer to require as a condition of employment or continuation
of employment that a woman employee shall not get married, or to stipulate expressly or tacitly that
upon getting married a woman employee shall be deemed resigned or separated, or to actually dismiss,
discharge, discriminate or otherwise prejudice a woman employee merely by reason of her marriage.
The Court notes that two types of employment policies involve spouses exist: policies banning only spouses
from working in the same company (no-spouse employment policies), and those banning all immediate family
members, including spouses, from working in the same company (anti-nepotism employment policies). In
challenging the anti-nepotism employment policies in the United States, complainants utilize two theories of
employment discrimination: the disparate treatment and the disparate impact analyses. In the disparate
treatment analysis, the plaintiff must prove that an employment policy is discriminatory on its face. On the
other hand, to establish disparate impact, the complainants must prove that a facially neutral policy has a
disproportionate effect on a particular class.
An employer’s no-spouse rule may only be justified upon finding of a bona fide occupational qualification. To
justify a BFOQ, the employer must prove two factors:
(1) that the employment qualification is reasonably related to the essential operation of the job involved;
and
(2) that there is a 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 the case at bar, there was no showing of a bona fide occupational qualification. There was no reasonable
business necessity to institute the no-spouse employment policy. 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. 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. The questioned policy may not facially violate Article 136 of the Labor Code but it creates a
Page 51
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.
Thus, for failure of petitioners to present undisputed proof of a reasonable business necessity, the Court ruled
that the questioned policy is an invalid exercise of management prerogative.
Page 52
4. Del Monte Phils vs. Velasco [G.R. No. 153477, March 6, 2007]
Facts
Lolita M. Velasco (respondent) started working with Del Monte Philippines (petitioner) on October 21, 1976
as a seasonal employee and was regularized on May 1, 1977. Her latest assignment was as Field Laborer.
On June 16, 1987, respondent was warned in writing due to her absences. On May 4, 1991, respondent, thru a
letter, was again warned in writing by petitioner about her absences without permission and a forfeiture of her
vacation leave entitlement for the year 1990-1991 was imposed against her. On January 10, 1995, after hearing,
the petitioner terminated the services of respondent effective January 16, 1994 due to excessive absences
without permission.
Feeling aggrieved, respondent filed a case for illegal dismissal against petitioner asserting that her dismissal
was illegal because she was on the family way suffering from urinary tract infection, a pregnancy-borne, at the
time she committed the alleged absences.
The Labor Arbiter, in dismissing the complaint, held that the respondent was an incorrigible absentee. The
NLRC reversed said decision and declared the dismissal of Velasco as illegal. The NLRC held that, under the
company rules, the employee may make a subsequent justification of her absenteeism, which she was able to
do in the instant case, and that petitioner is guilty of unlawfully discharging respondent on account of her
pregnancy under Article 137(2) of the Labor Code. The CA affirmed the NLRC Decision in toto. Thus, this instant
petition.
Issue
Whether the employment of respondent had been validly terminated on the ground of excessive absences due
to respondent’s pregnancy without permission.
Held
NO. The petitioner illegally dismissed respondent even if the former knew that respondent was suffering from
effects of her pregnancy, causing her to be commit absences in excess of what was allowable under company
policy.
In this jurisdiction tardiness and absenteeism, like abandonment, are recognized forms of neglect of duties, the
existence of which justify the dismissal of the erring employee. Respondent's rule penalizing with discharge
any employee who has incurred six (6) or more absences without permission or subsequent justification is
admittedly within the purview of the foregoing standard.
The Court agrees with the CA in concluding that respondent's sickness was pregnancy-related and, therefore,
the petitioner cannot terminate respondent's services because in doing so, petitioner will, in effect, be violating
the Labor Code which prohibits an employer to discharge an employee on account of the latter's pregnancy.
Article 137 of the Labor Code provides:
Art. 137. Prohibited acts. - It shall be unlawful for any employer:
xxxx
(2) To discharge such woman on account of her pregnancy, while on leave or in confinement
due to her pregnancy;
xxxx
The undeniable fact is that during her complained absences in 1994, respondent was pregnant and suffered
related illnesses. Again, it must be stressed that respondent's discharge by reason of absences caused by her
pregnancy is covered by the prohibition under the Labor Code. Since her last string of absences is justifiable
and had been subsequently explained, the petitioner had no legal basis in considering these absences together
with her prior infractions as gross and habitual neglect.
5. Yrasuegui vs. Phil Airlines, G.R. No. 168081, October 17, 2008
Fact
Page 53
Petitioner Armando G. Yrasuegui was a former international flight steward of Philippine Airlines, Inc. (PAL).
He stands five feet and eight inches (5'8") with a large body frame. The proper weight for a man of his height
and body structure is from 147 to 166 pounds, the ideal weight being 166 pounds, as mandated by the Cabin
and Crew Administration Manual of PAL.
On April 26, 1989, petitioner weighed 209 pounds, 43 pounds over his ideal weight. In line with company
policy, he was removed from flight duty effective May 6, 1989 to July 3, 1989. He was requested to trim down
to conform with company standard. After failed attempts at adhering to the ideal weight, on November 13,
1992, PAL finally served petitioner a Notice of Administrative Charge for violation of company standards on
weight requirements. On June 15, 1993, petitioner was formally informed by PAL that due to his inability to
attain his ideal weight, "and considering the utmost leniency" extended to him "which spanned a period
covering a total of almost five (5) years," his services were considered terminated "effective immediately”.
Petitioner thereafter filed a complaint for illegal dismissal against PAL.
The Labor Arbiter ruled in favor of Yrasuegui. The NLRC affirmed said ruling. The CA, in reversing the NLRC,
declared that the weight standards of PAL are meant to be a continuing qualification for an employee's position.
The failure to adhere to the weight standards is an analogous cause for the dismissal of an employee under
Article 282(e) of the Labor Code in relation to Article 282(a).
The CA further held that the weight standards of PAL are a bona fide occupational qualification which, in case
of violation, "justifies an employee's separation from the service”. Aggrieved, petitioner filed this instant
petition.
Issue
Whether the Court of Appeals erred in holding that the weight standards of PAL are a bona fide occupational
qualification justifying the dismissal of petitioner who violated such standards.
Held
NO. The Court of Appeals correctly held that PAL was justified in maintaining weight standards for its flight
stewards as a bona fide occupational qualification.
The weight standards of PAL constitute a continuing qualification of an employee in order to keep the job. The
failure to meet the employer's qualifying standards is in fact a ground that does not squarely fall under grounds
(a) to (d) and is therefore one that falls under Article 282(e) - the "other causes analogous to the foregoing." By
its nature, these "qualifying standards" are norms that apply prior to and after an employee is hired. They apply
prior to employment because these are the standards a job applicant must initially meet in order to be hired.
They apply after hiring because an employee must continue to meet these standards while on the job in order
to keep his job.
The dismissal of petitioner can be predicated on the bona fide occupational qualification defense. In Star Paper
Corporation v. Simbol, the Court held that in order to justify a BFOQ, the employer must prove that (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.
Anent the first element, the weight standards of PAL show its effort to comply with the exacting obligations
imposed upon it by law by virtue of being a common carrier. 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.
As to the second requirement, the primary objective of PAL in the imposition of the weight standards for cabin
crew is light safety. On board an aircraft, the body weight and size of a cabin attendant are important factors to
consider in case of emergency. Aircrafts have constricted cabin space, and narrow aisles and exit doors. Being
overweight necessarily impedes mobility. Evacuation might slow down just because a wide-bodied cabin
attendant is blocking the narrow aisles. These possibilities are not remote.
Page 54
Thus, there exists a bona fide occupational qualification for PAL to require its flight stewards to maintain
certain weight standards. Failure to comply with said standards is a valid ground for dismissal under Art 282(e)
in relation to Art 282(a) of the Labor Code.
Page 55
Topic 4: Wages & Wage Rationalization Act

Topic 4-A: Violation of Wage Order
1. S.I.P. Food House et al v Batolina, GR No 192473, Oct 11, 2010
Facts
The GSIS Multi-Purpose Cooperative (GMPC) is an entity organized by the employees of the Government
Service Insurance System (GSIS). It engaged the services of the petitioner S.I.P. Food House (SIP), owned by the
spouses Alejandro and Esther Pablo, to operate a canteen in the new GSIS Building, as concessionaire.
Respondents Restituto Batolina and nine (9) others (the respondents) worked as waiters and waitresses in the
canteen.
GMPC terminated SIP's "contract as GMPC concessionaire,". The termination of the concession contract caused
the termination of the respondents' employment, prompting them to file a complaint for illegal dismissal, with
money claims, against SIP and the spouses Pablo.
In the Compulsory Arbitration proceedings, respondents allege that SIP did not implement Wage Order Nos. 5
to 11 for the years 1997 to 2004. They did not receive overtime pay although they worked from 6:30 in the
morning until 5:30 in the afternoon, or other employee benefits such as service incentive leave, and maternity
benefit (for their co-employee Flordeliza Matias). Their employee contributions were also not remitted to the
Social Security System. SIP argued that it operated the canteen in behalf of GMPC since it had no authority by
itself to do so. The respondents were not its employees, but GMPC's, as shown by their Identification cards.
The Labor Arbiter dropped the complaint finding that respondents were employees of GMPC and not of SIP.
Although they were paid only P160.00 to PP220.00 daily, the employees were provided with free board and
lodging seven (7) days a week. NLRC found that SIP was the respondents' employer, but it sustained the labor
arbiter's ruling that the employees were not illegally dismissed. For failure of SIP to present proof of compliance
with the law on the minimum wage, 13th month pay, and service incentive leave, the NLRC awarded the
respondents a total of P952,865.53 in salary and 13th month pay differentials and service incentive leave pay.
The CA affirmed the award but modified as to the basis of computation, from 26 working days a month to 20.
It also sustained the NLRC's findings that SIP was the respondents' employer. Thus, this petition from SIP.
Issue
Whether respondents were not employees of petitioner SIP, and that they are not entitled with their respective
money claims.
Held
NO. The respondents were employees of SIP and were entitled with their respective money claims.
In a protest letter dated April 14, 2004 to GMPC no less than petitioners, thru their counsel, admitted that
respondents herein were their employees. That respondents were employees of petitioner is further bolstered
by the fact that petitioner do not deny that they were the ones who paid respondents’ salary. IDs issued to
complainants bear the signature of, petitioner Alejandro C. Pablo. Likewise, the memoranda issued to
complainants regarding their absences without leave were signed by respondent Alejandro C. Pablo. SIP
exercised the essential elements of an employment relationship with the respondents such as hiring, payment
of wages and the power of control, not to mention that SIP operated the canteen on its own account as it paid a
fee for the use of the building and for the privilege of running the canteen.
The CA ruling on monetary award are also affirmed. The free board and lodging SIP furnished the employees
cannot operate as a set-off for the underpayment of their wages. In Mabeza v. National Labor Relations
Commission, it was held that the employer cannot simply deduct from the employee's wages the value of the
board and lodging without satisfying the following requirements:
(1) proof that such facilities are customarily furnished by the trade;
(2) voluntary acceptance in writing by the employees of the deductible facilities; and
(3) proof of the fair and reasonable value of the facilities charged.
Page 56
SIP clearly failed to comply with these requirements.

Thus, its is verily held that respondents were employees of SIP and that they are entitled to their respective
money claims.
Page 57
2. SLL International Cables Specialist v NLRC, GR No 172161, Mar 2, 2011
Facts
Sometime in 1996 and 1997, private respondents Lopez, Canete and Zuniga were hired by petitioner Lagon as
apprentice or trainee cable/lineman. The three of them are paid the full minimum wage and other benefits but
since they were only trainees, they do not report for work regularly but came in as substitutes to the regular
workers or in undertakings that needed extra workers to expedite completion of work. After their training, the
three of them were engaged as project employees by the petitioners in their Islacom project in Bohol. Upon the
completion of their project, their employment was also terminated. They received the amount of P145.00 which
is the prescribed minimum daily wage for Region 7. In July 1997, the amount of P145 was increased to P150 by
the Regional Wage Board and in October of the same year, it was again increased to P155. In 1998, Canete and
Zuniga were again engaged by Lagon as project employees for a project in Rizal. After the project was done,
their employment was again terminated. Canete and Zuniga however, only received P145 pesos. The minimum
prescribed wage at that time in Rizal was P160.00. Canete and Zuniga were again reemployed for the third time
for another project in Bulacan but just the same, upon their termination, they are only given P145 as their wage.
In 1999, for the 4th time, the 3 private respondents worked for Lagon for a project in Caloocan. From May 1997-
December 1999, they received the wage of P145. At this time, the minimum prescribed rate for Manila was
P198. In January to February, the three received the wage of P165 but the existing rate at that time was P213.
Due to the delay on the delivery of imported materials, the Camarin project (4 th project) was not completed on
the scheduled date of completion. Facing with economic problem, Lagon was constrained to cut down the
overtime work of its workers including the private respondents. Lagon also refused the request of the three to
render overtime work. Lagon also told the respondents that if they insist, they would not anymore be given
time nor allowed to stay in the quarters. Because of this, private respondents leave their work, and
subsequently filed a complaint for illegal dismissal, non-payment of wages, holiday pay, 13th month pay for
1997 and 1998 and service incentive leave pay.
Petitioners on their part claimed that the private respondents were only project employees. They further
alleged that the allowances it gave that should be added to their basic pay makes their wage higher than that
prescribed in Rizal and Manila.
The Labor Arbiter opined as to the status of their employment, private respondents were regular employees
because they were repeatedly hired by the petitioners and they performed activities which were usual,
necessary and desirable in the business or trade of the employer. The labor arbiter also found that private
respondents were underpaid. The free board and lodging, electricity, water and food enjoyed by them could
not be included in the computation of their wages because these were given without their written consent. The
employers are however not liable for illegal dismissal. These findings by the Labor Arbiter are affirmed by the
NLRC. The case is now raised on the Court of Appeals. The CA affirmed the findings that the private respondents
were regular employees. CA also found that the private petitioners are underpaid. It further added that these
employees are entitled to 13th month pay. It also agrees with the CA that there is no illegal dismissal. Case is
then raised to the Supreme Court.
Issue
Whether or not the value of the facilities should be included in the computation of the wages received by private
respondents.
Held
No. the facilities are not included in the computation of wages.
There are requisites before the value of the facilities can be deducted. The following requisites are: (1) proof
must be shown that such facilities are customarily furnished by the trade, (2) the provision of deductible
facilities must be voluntarily accepted in writing by the employee, and (3) facilities must be charged at a
Page 58
reasonable value. The requisites are not met in this case. SLL failed to present any company policy or guideline
showing that provisions for meals and lodging were part of the employer’s written authorization, much less
show how they arrived at their valuations. It is not even clear whether private respondents actually enjoyed
such facilities. The court also noted that the food and lodging, or the electricity and water allegedly consumed
by private respondents are not facilities but supplements and therefore, not wage deductible.
Page 59
3. Vergara, Jr v Coca-Cola Bottlers Phils Inc, GR No 176985, Apr 1, 2013
Facts
Petitioner Ricardo E. Vergara, Jr. was an employee of respondent Coca-Cola Bottlers Philippines, Inc. from May
1968 until he retired on January 31, 2002 as a District Sales Supervisor (DSS) for Las Piñas City, Metro Manila.
As stipulated in respondent’s existing Retirement Plan Rules and Regulations at the time, the Annual
Performance Incentive Pay of RSMs, DSSs, and SSSs shall be considered in the computation of retirement
benefits, as follows: Basic Monthly Salary + Monthly Average Performance Incentive (which is the total
performance incentive earned during the year immediately preceding ÷ 12 months) × No. of Years in Service
Claiming his entitlement to an additional PhP474,600.00 as Sales Management Incentives (SMI) and to the
amount of PhP496,016.67 which respondent allegedly deducted illegally, representing the unpaid accounts of
two dealers within his jurisdiction, petitioner filed a complaint before the NLRC for the payment of his “Full
Retirement Benefits, Merit Increase, Commission/Incentives, Length of Service, Actual, Moral and Exemplary
Damages, and Attorney’s Fees.”
After a series of mandatory conference, both parties partially settled with regard the issue of merit increase
and length of service. Subsequently, they filed their respective Position Paper and Reply thereto dealing on the
two remaining issues of SMI entitlement and illegal deduction.
On September 30, 2003, the LA rendered a Decision in favor of petitioner, directing respondent to reimburse
the amount illegally deducted from petitioner’s retirement package and to integrate therein his SMI privilege.
Upon appeal of respondent, however, the NLRC modified the award and deleted the payment of SMI.
Petitioner then moved to partially execute the reimbursement of illegal deduction, which the LA granted. Later,
without prejudice to the pendency of petitioner’s petition for certiorari before the CA, the parties executed a
Compromise Agreement whereby petitioner acknowledged full payment by respondent of the amount of
PhP496,016.67 covering the amount illegally deducted.
The CA subsequently dismissed petitioner’s case. Petitioner insistently avers that many DSSs who retired
without achieving the sales and collection targets were given the average SMI in their retirement package.
Hence, this present petition.
Issue
Whether or not the SMI should be included in the computation of petitioner’s retirement benefits on the ground
of consistent company practice
Held
● NO, the inclusion of the SMI in the computation for retirement benefits does not constitute consistent
company practice.
Generally, employees have a vested right over existing benefits voluntarily granted to them by their employer.
Thus, any benefit and supplement being enjoyed by the employees cannot be reduced, diminished,
discontinued or eliminated by the employer for it would violate the principle of non-diminution of benefits.
There is diminution of benefits when the following requisites are present: (1) the grant or benefit is founded
on a policy or has ripened into a practice over a long period of time; (2) the practice is consistent and deliberate;
(3) the practice is not due to error in the construction or application of a doubtful or difficult question of law;
and (4) the diminution or discontinuance is done unilaterally by the employer.
To be considered as a regular company practice, the employee must prove by substantial evidence that the
giving of the benefit is done over a long period of time, and that it has been made consistently and deliberately.
Page 60
The common denominator in previously decided cases appears to be the regularity and deliberateness of the
grant of benefits over a significant period of time. It requires an indubitable showing that the employer agreed
to continue giving the benefit knowing fully well that the employees are not covered by any provision of the
law or agreement requiring payment thereof. In sum, the benefit must be characterized by regularity, voluntary
and deliberate intent of the employer to grant the benefit over a considerable period of time.
The Court found no substantial evidence to prove that the grant of SMI to all retired DSSs regardless of whether
or not they qualify to the same had ripened into company practice. Petitioner utterly failed to adduce proof to
establish his allegation that SMI has been consistently, deliberately and voluntarily granted to all retired DSSs
without any qualification or conditions whatsoever.
Petition is DENIED.
Page 61
4. Royal Plant Workers Union v Coca-Cola Bottlers Phils Inc - Cebu Plant, [GR No 198783, Apr 15, 2013]
Facts
This case involves a Coca-Cola bottling plant in Cebu wherein the bottling operators complained about the
removal of the chairs they used during their duty. They alleged that they have used chairs for 30 years and such
removal is not valid since diminution of benefits is not allowed under Article 100 of the Labor Code. The chairs
were removed when petitioner issued a national directive which reinforces the tasks of the bottling operators
to move about in the performance of their duties. Such removal of the chairs sought to avoid sleeping in the
workplace because such would affect the efficiency of the operations.
The bottling operators, represented by their union initiated the grievance machinery of the CBA, however the
respondent still insisted on the removal of chair. They availed the conciliation mediation proceedings but they
failed to arrive at an amicable settlement. The parties then submitted the issue of whether the removal of the
chairs is valid to arbitration. They appointed the chairperson and its members as outlined in their CBA and
submitted their position papers.
The respondent herein argued that the removal was valid since it is a legitimate exercise of management
prerogative and is not contrary to the CBA and the Labor Code. The petitioners argued that they have been
performing satisfactorily with the chairs for a long period, and the removal of would violate the Occupational
Health and Safety Standards which assure right of workers to just and humane conditions.
The Arbitration Committee favored the petitioners herein and decided that the removal of the chairs is invalid.
The Committee ordered the respondent to restore the chairs since it has been company practice for 30 years.
In accordance with Article 100 of the Labor Code, removing such benefit enjoyed by the workers is prohibited.
There was also no evidence of instances of sleeping, accident or injury when the operators used chairs.
The respondent appealed the decision to the CA which reversed the Arbitration Committee’s decision and
favored the respondent. The CA held that such removal is within the province of the management prerogative.
Chairs are not provided as benefit in the CBA, hence cannot be covered by the Article 100. The petitioners
elevated the case to the SC.
Issue: Whether or not the removal of the chairs is valid
Held
The removal of the chairs is valid because it is a legitimate exercise of management prerogative. Respondent is
free to regulate, according to its own discretion and judgment, all aspect 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 workers, and discipline,
dismissal and recall of workers. This is not absolute however as it must be exercised in good faith and in
accordance to the right of labor.
In the case at hand, the removal was not done indiscriminately instead it was done based on the study that
there is a health risk in prolonged sitting. Also, the removal was also compensated by a reduction of the
operating hours of the operators from 2 ½ hour rotation to 1 ½ hour rotation period and also there is an
increase of break period from 15 to 30 minutes between rotations. Such removal was done in good faith and
was designed to increase work efficiency. There is no violation the Occupational Health and Safety since the
removal is justly compensated and it does not expose the operators to safety and health hazards.
Furthermore, the removal is valid since the CBA between the union and the respondent does not require the
respondent to provide chairs to the operators while they are on duty. Since it is not expressly stated in the CBA
it is to be understood that it was purely voluntary on the part of the respondent and the long practice for several
years did not convert it into a vested right in favor of the union.
Lastly, the removal is also valid because chairs cannot be also considered as one of the benefits under Article
Page 62
100. The non-diminution rule refers to monetary benefits or privileges given to employee with monetary
equivalents. Equating the chairs as benefits under Article 100 would unduly stretched the coverage of law.
The Supreme Court, recognizing that the law must protect not only the welfare of the employees, but also the
right of the employers, denied the petition of the union.
Page 63
5. NWPC, et al v The Alliance of Progressive Labor, et al, GR No 150326, Mar 12, 2014
Overview: This case concerns the authority of the National Wages and Productivity Commission (NWPC) and
the Regional Tripartite Wages and Productivity Board (RTWPB) created under Republic Act No. 6727,
otherwise known as the Wage Rationalization Act, to issue wage orders, and to receive, process and act on
applications for exemption from the prescribed wage rates.
Facts
RTWPB-NCR issued Wage Order No. NCR-07 on October 14, 1999 imposing an increase of P25.50/day on the
wages of all private sector workers and employees in the NCR and pegging the minimum wage rate in the NCR
at P223.50/day. However, Section 2 and Section 9 of Wage Order No. NCR-07 exempted certain sectors and
industries from its coverage.
Feeling aggrieved by their non-coverage by the wage adjustment, the Alliance of Progressive Labor (APL) and
the Tunay na Nagkakaisang Manggagawa sa Royal (TNMR) filed an appeal with the NWPC assailing Section
2(A) and Section 9(2) of Wage Order No. NCR-07. They contended that neither the NWPC nor the RTWPB-NCR
had the authority to expand the non-coverage and exemptible categories under the wage order; hence, the
assailed sections of the wage order should be voided.
In its decision, the NWPC upheld the validity of Section 2(A) and Section 9(2) of Wage Order No. NCR-07. It
observed that the RTWPB’s power to determine exemptible categories was adjunct to its wage fixing function
conferred by Article 122(e) of the Labor Code, as amended by Republic Act No. 6727.
The APL and TNMR assailed the decision of the NWPC on certiorari in the CA which held that the powers and
functions of the NWPC and RTWPB-NCR as set forth in Republic Act No. 6727 did not include the power to grant
additional exemptions from the adjusted minimum wage. Thus, the CA granted the petition and declared the
assailed sections of Wage Order No. NCR-07 null and void. Hence, the present appeal by petition for review by
the NWPC and RTWPB-NCR.
Issue
Is the RTWPB authorized to provide additional exemptions in the minimum wage adjustments such as in Wage
Order No. NCR-07.
Held
Yes, the RTWPB has the authority to provide additional exemptions in minimum wage adjustments such as in
Wage Order No. NCR-07
The NWPC had the authority to prescribe the rules and guidelines for the determination of the minimum wage
and productivity measures, and the RTWPB-NCR had the power to issue wage orders.
Section 1 of Rule VIII of NWPC Guidelines No. 001-95 recognized the power of the RTWPBs to issue exemptions
from the application of the wage orders subject to the guidelines issued by the NWPC. Under Sec 2 of Rule VIII
of NWPC Guidelines No. 001-95, the RTWPBs could issue exemptions from the application of the wage orders
as long as the exemptions complied with the rules of the NWPC. In its rules, the NWPC enumerated four
exemptible establishments, but the list was not exclusive. The RTWPBs have the authority to include in the
wage orders establishments that belonged to, or to exclude from the four enumerated exemptible categories.
Such may be allowed only if they are in accord with the rationale for exemption reflected in the rules.
If the exempted category was one of the listed ones, the RTWPB issuing the wage order must see to it that the
requisites stated in Section 3 and Section 4 of the NWPC Guidelines No. 01, Series of 1996 were complied with
before granting fully or partially the application of an establishment seeking to avail of the exemption.
Page 64
On the other hand, if the exemption was outside of the four exemptible categories, like in the present case, the
exemptible category should be: (1) in accord with the rationale for exemption; (2) reviewed/approved by the
NWPC; and (3) upon review, the RTWPB issuing the wage order must submit a strong and justifiable reason or
reasons for the inclusion of such category which shall be subject to review/approval by the Commission. It is
the compliance with the second requisite that is at issue here.
In the case at bar, APL and TNMR appealed submitting to the NWPC precisely the issue of the validity of the
Section 2(A) and Section 9(2) of Wage Order No. NCR-07. The NWPC ruled that the RTWPB-NCR had justifiable
reasons in exempting the sectors and establishments enumerated in the assailed sections. Lastly, Wage Order
No. NCR-07 is presumed to be regularly issued in the absence of any strong showing of grave abuse of discretion
on the part of RTWPB-NCR. The presumption of validity is made stronger by the fact that its validity was upheld
by the NWPC upon review.
Page 65
6. David/Yiels Hog Dealer v Macasio, [GR No 195466, July 2, 2014]
Facts
In January 2009, Macasio filed before the LA a complaint against petitioner Ariel L. David, doing business under
the name and style "Yiels Hog Dealer," for non-payment of overtime pay, holiday pay and 13th month pay. He
also claimed payment for moral and exemplary damages and attorney’s fees. Macasio also claimed payment for
service incentive leave (SIL).
Macasio alleged before the LA that he had been working as a butcher for David since January 6, 1995. Macasio
claimed that David exercised effective control and supervision over his work, pointing out that David: (1) set
the work day, reporting time and hogs to be chopped, as well as the manner by which he was to perform his
work; (2) daily paid his salary of P700.00, which was increased from P600.00 in 2007, P500.00 in 2006 and
P400.00 in 2005; and (3) approved and disapproved his leaves. Macasio added that David owned the hogs
delivered for chopping, as well as the work tools and implements; the latter also rented the workplace. Macasio
further claimed that David employs about twenty-five (25) butchers and delivery drivers.
In his defense, David claimed that he started his hog dealer business in 2005 and that he only has ten employees.
He alleged that he hired Macasio as a butcher or chopper on "pakyaw" or task basis who is, therefore, not
entitled to overtime pay, holiday pay and 13th month pay pursuant to the provisions of the Implementing Rules
and Regulations (IRR) of the Labor Code. David pointed out that Macasio: (1) usually starts his work at 10:00
p.m. and ends at 2:00 a.m. of the following day or earlier, depending on the volume of the delivered hogs; (2)
received the fixed amount of P700.00 per engagement, regardless of the actual number of hours that he spent
chopping the delivered hogs; and (3) was not engaged to report for work and, accordingly, did not receive any
fee when no hogs were delivered.
David claims that Macasio was not his employee as he hired the latter on “pakyaw” or task basis. He also claimed
that he issued the Certiicate of Employment, upon Macasio’s request, only for overseas employment purposes.
He pointed to the “Pinagsamang Sinumpaang Salaysay,”[14] executed by Presbitero Solano and Christopher
(Antonio Macasio’s co-butchers), to corroborate his claims.
LA concluded that as Macasio was engaged on “pakyaw” or task basis, he is not entitled to overtime, holiday,
SIL and 13th month pay.
NLRC ruled that since Macasio was paid by result and not in terms of the time that he spent in the workplace,
Macasio is not covered by the Labor Standards laws on overtime, SIL and holiday pay, and 13th month pay
under the Rules and Regulations Implementing the 13th month pay law.
The CA awarded Macasio’s claim for holiday, SIL and 13th month pay for three years. It ruled that as defined
by the Labor Code, a “field personnel” is one who performs the work away from the office or place of work and
whose regular work hours cannot be determined with reasonable certainty. In Macasio’s case, the elements
that characterize a “field personnel” are evidently lacking as he had been working as a butcher at David’s “Yiels
Hog Dealer” business in Sta. Mesa, Manila under David’s supervision and control, and for a fixed working
schedule that starts at 10:00 p.m.
Issue
1) Whether or not Macasio, paid on pakyaw basis, is an employee of David
2) Whether the CA correctly found the NLRC in grave abuse of discretion in ruling that Macasio is entitled to
Holiday Pay, SIL and 13th month pay.
Held
Page 66
1) YES, Macasio is an employee of David because engagement on pakyaw or task basis does not characterize
the relationship that may exist between the parties, ie., whether one of employment or independent
contractorship.
Article 97 (6) of the Labor Code defines wages as ". . . the 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 services rendered or
to be rendered[.]" In relation to Article 97 (6), Article 101 of the Labor Code speaks of workers paid by results
or those whose pay is calculated in terms of the quantity or quality of their work output which includes
"pakyaw" work and other non-time work.
To determine the existence of an employer-employee relationship, four elements generally need to be
considered, namely: (1) the selection and engagement of the employee; (2) the payment of wages; (3) the
power of dismissal; and (4) the power to control the employee's conduct. These elements or indicator comprise
the so-called "four-fold" test of employment relationship. Macasio's relationship with David satisfies this test.
First, the petitioner engaged the services of respondent thus satisfying the element of “selection and
engagement of the employee.” Second, the petitioner paid Macasio’s wages. Third, the petitioner had been
setting the day and time when the respondent should report for work. And fourth, the petitioner had the right
and power to control and supervise respondent’s work as to the mans and methods of performing it. Therefore,
the employer-employee relationship is existing in this case.
The existence of employment relationship between the parties is determined by applying the “four- fold” test;
engagement on pakyaw or task basis does not determine the parties’ relationship as it is simply a method of
pay computation. Accordingly, respondent is petitioner’s employee, albeit engaged on pakyaw or task basis.
2) The CA is correct in holding that David is liable for Holiday Pay and SIL Pay but not with the 13th month
pay.
Art. 82. Coverage. — The provisions of [Title I] shall apply to employees in all establishments and undertakings
whether for profit or not, but not to government employees, managerial employees, field personnel,
members of the family of the employer who are dependent on him for support, domestic helpers, persons in
the personal service of another, and workers who are paid by results as determined by the Secretary of Labor
in appropriate regulations.
xxxx
“Field personnel” shall refer to non-agricultural employees who regularly perform their duties away from the
principal place of business or branch office of the employer and whose actual hours of work in the field cannot
be determined with reasonable certainty. [emphases and underscores ours]
Among the Title I provisions are the provisions on holiday pay (under Article 94 of the Labor Code) and SIL pay
(under Article 95 of the Labor Code). Under Article 82, “field personnel” on one hand and “workers who are
paid by results” on the other hand, are not covered by the Title I provisions. The wordings of Article 82 of the
Labor Code additionally categorize workers “paid by results” and “field personnel” as separate and distinct
types of employees who are exempted from the Title I provisions of the Labor Code.
On the other hand, the IRR provides that
Section 1. Coverage. – This rule shall apply to all employees except:
xxxx
Page 67
(e) Field personnel and other employees whose performance is unsupervised by the employer including those
who are engaged on task or contract basis, purely commission basis, or those who are paid a fixed amount for
performing work irrespective of the time consumed in the performance thereof.
Under these provisions, the general rule is that holiday and SIL pay provisions cover all employees. To be
excluded from their coverage, an employee must be one of those that these provisions expressly exempt,
strictly in accordance with the exemption.
Under the IRR, exemption from the coverage of holiday and SIL pay refer to “field personnel and other
employees whose time and performance is unsupervised by the employer including those who are engaged on
task or contract basis.
Unlike the IRR of the Labor Code on holiday and SIL pay, Section 3 (e) of the Rules and Regulations
Implementing PD No. 851 on 13th month pay exempts employees "paid on task basis" without any reference to
"field personnel." This could only mean that insofar as payment of the 13th month pay is concerned, the law
did not intend to qualify the exemption from its coverage with the requirement that the task worker be a "field
personnel" at the same time.
Therefore, Macasio as a paykaw basis employee not being a field personnel is entitled to holiday pay and SIL
Pay but not to 13th month pay.
Page 68
7. Our Haus Realty Development Corp v Parian et al, [GR No 204651, Aug 6, 2014]
Facts
Respondents Alexander Parian, Jay Erinco, Alexander Canlas, Jerry Sabulao and Bernardo Tenedero were all
laborers working for petitioner Our Haus Realty Development Corporation (Our Haus) , a company engaged in
the construction business.
After being asked to take vacation leaves due to financial distress, respondents were asked to report back to
work but instead of doing so, they file with the LA a complaint for underpayment of their daily wages. They also
alleged that Our Haus failed to pay them their holiday, service incentive leave (SIL), 13th month and overtime
pays.
Our Haus alleged that aside the monetary amount of respondents’ wages, it also subsidized their meals (3 times
a day), and gave them free lodging near the construction project they were assigned to. Thus, their wages were
actually higher than that of the minimum wage.
The LA ruled in favor of Our Haus. The NLRC however reversed the LA. The Court of Appeals affirmed the NLRC
in toto, ruling that it cannot consider the values of its meal and housing facilities in the computation of the
respondents’ total wages. Thus, this petition from Our Haus to the SC.
Issue
Whether or not the meals and lodging provided by Our Haus to respondents are facilities that are deemed
included in the latters’ wages.
Held
No. The meals and lodging provided by Our Haus to respondents are not facilities. Thus, the wages of
respondents were well below the minimum wage.
To test whether these benefits can be considered facilities, the requisites must be met, to wit:
a. proof must be shown that such facilities are customarily furnished by the trade;
b. the provision of deductible facilities must be voluntarily accepted in writing by the employee; and
c. The facilities must be charged at a fair and reasonable value.
Anent the first requisite, Our Haus failed to prove if other employees of Our Haus consistently enjoyed such
benefits. There was also no existence of an industry-wide practice of furnishing the benefits in question among
enterprises engaged in the same line of business. Further, as a construction business, Our Haus is mandated to
provide such benefits to its employees by virtue of Section 16 of DOLE Department Order (DO) No. 13, series
of 1998. Employers engaged in the construction business are required to provide the following welfare
amenities:
16.1 Adequate supply of safe drinking water;
16.2 Adequate sanitary and washing facilities;
16.3 Suitable living accommodation for workers, and as may be applicable, for their families;
16.4 Separate sanitary, washing and sleeping facilities for men and women workers.
Moreover, DOLE DO No. 56, series of 2005, which sets out the guidelines for the implementation of DOLE DO
No. 13, mandates that the cost of the implementation of the requirements for the construction safety and health
of workers, shall be integrated to the overall project cost. As part of the project cost that construction
companies already charge to their clients, the value of the housing of their workers cannot be charged again to
their employees’ salaries.
As to the purpose test, the benefits provided by the employer to his employee will be determined as to whether
they are facilities or supplements, depending on the purpose of such provision. The benefit or privilege given
to the employee which constitutes an extra remuneration above and over his basic or ordinary earning or wage
is supplement; and when said benefit or privilege is part of the laborers' basic wages, it is a facility. The real
difference lies not on the kind of the benefit but on the purpose why it was given by the employer. If it is
Page 69
primarily for the employee’s gain, then the benefit is a facility; if its provision is mainly for the employer’s
advantage, then it is a supplement. Under the purpose test, substantial consideration must be given to the
nature of the employer’s business in relation to the character or type of work performed by the employees
involved. Our Haus is in the construction business which requires its employees to be physically fit and well
fed in order to perform the strenuous tasks at hand. Thus, by ensuring that the workers are adequately and
well fed, the employer is actually investing on its business. Thus, the subsidized meals and free lodging
provided by Our Haus are actually supplements.
As to the second requisite, the belated presentation of the Kasunduans purportedly to prove authority from
respondents were at best self-serving and deserve scant consideration.
As to the third and last requisite, the valuation of a facility must be supported by relevant documents such as
receipts and company records for it to be considered as fair and reasonable. In the case at bench, the only
valuations relied upon by the labor arbiter in his decision were figures furnished by the private respondent's
own accountant, without corroborative evidence. Without any corroborative evidence, it cannot be said that
Our Haus complied with this third requisite.
In view of the foregoing, having failed to satisfactorily meet the requisites of a benefit to be considered a facility,
Our Haus provided the meals and lodging to respondents as supplements and not as facilities. Verily, the value
of such benefits may not be deducted from the employees’ wages.
WHEREFORE, petition is hereby DENIED.
Page 70
8. Milan et al v NLRC, GR No 202961, Feb 4, 2015
Facts
Petitioners Millan et. al. are respondent Solid Mills, Inc.’s employees. They and their families were allowed to
occupy SMI Village, a property owned by Solid Mills. The petitioners were then informed that Solid Mills would
cease its operations due to serious business losses.
Later, Solid Mills sent to petitioners individual notices to vacate SMI Village. They were required to sign a
memorandum of agreement with release and quitclaim before their vacation and sick leave benefits, 13th
month pay, and separation pay would be released. Employees who signed the memorandum of agreement were
considered to have agreed to vacate SMI Village, and to the demolition of the constructed houses inside as
condition for the release of their termination benefits and separation pay. Petitioners refused to sign the
documents and demanded to be paid their benefits and separation pay.
Petitioners filed complaints before the Labor Arbiter for alleged non-payment of separation pay, accrued sick
and vacation leaves, and 13th month pay. They argued that their accrued benefits and separation pay should
not be withheld because their payment is based on company policy and practice. On the other hand, Solid Mills
argued that petitioners’ complaint was premature because they had not vacated its property.
The Labor Arbiter ruled in favor of petitioners. It ruled that petitioners’ possession should not be construed as
petitioners’ “accountabilities” that must be cleared first before the release of benefits. Their possession “is not
by virtue of any employer-employee relationship.” It is a civil issue, which is outside the jurisdiction of the
Labor Arbiter.
Solid Mills appealed to the National Labor Relations Commission. The National Labor Relations Commission
modified the ruling of the Labor Arbiter.
Petitioners, thus, filed a petition for certiorari before the Court of Appeals. The Court of Appeals ruled that Solid
Mills’ act of allowing its employees to make temporary dwellings in its property was a liberality on its part and
may be revoked any time at its discretion.
Issue
Whether or not the National Labor Relations Commission (NLRC) may preliminarily determine an issue related
to rights or claims arising from an employer-employee relationship
Held
Yes. The National Labor Relations Commission has jurisdiction to determine, preliminarily, the parties’ rights
over a property, when it is necessary to determine an issue related to rights or claims arising from an employer-
ART. 217. JURISDICTION OF LABOR ARBITERS AND THE COMMISSION. – (1) Except as otherwise
provided under this Code, the Labor Arbiters shall have original and exclusive jurisdiction to hear and decide
within thirty (30) calendar days after the submission of the case by the parties for decision without extension,
even in the absence of stenographic notes, the following cases involving workers, whether agricultural or non-
agricultural:
Unfair labor practice cases;
Termination disputes;
If accompanied with a claim for reinstatement, those cases that workers may ile involving wages, rates of pay,
hours of work and other terms and conditions of employment;
Claims for actual, moral, exemplary and other forms of damages arising from the employer-employee relations;
Cases arising from any violation of Article 264 of this Code, including questions involving the legality of strikes
and lockouts; and
Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other claims,
arising from employer-employee relations including those of persons in domestic or household service,
Page 71
involving an amount exceeding five thousand pesos (P5,000.00), regardless of whether accompanied with a
claim for reinstatement. (emphasis supplied)
Petitioners’ claim that they have the right to the immediate release of their benefits as employees separated
from respondent Solid Mills is a question arising from the employer-employee relationship between the
parties.
Claims arising from an employer-employee relationship are not limited to claims by an employee. Employers
may also have claims against the employee, which arise from the same relationship. As a general rule, therefore,
a claim only needs to be sufficiently connected to the labor issue raised and must arise from an employer-
employee relationship for the labor tribunals to have jurisdiction.
In this case, respondent Solid Mills claims that its properties are in petitioners’ possession by virtue of their
status as its employees. Respondent Solid Mills allowed petitioners to use its property as an act of liberality.
Put in other words, it would not have allowed petitioners to use its property had they not been its employees.
The return of its properties in petitioners’ possession by virtue of their status as employees is an issue that
must be resolved to determine whether benefits can be released immediately. The issue raised by the employer
is, therefore, connected to petitioners’ claim for benefits and is sufficiently intertwined with the parties’
employer-employee relationship. Thus, it is properly within the labor tribunals’ jurisdiction.
Page 72
9. Toyota Pasig Inc v De Peralta, GR No 213488, Nov 7, 2016

Facts
Petitioner Peralta filed a complaint for illegal dismissal, illegal deduction, unpaid commission, annual profit
sharing, damages, and attorney's fees against Toyota Pasig. Toyota initially hired Peralta as a cashier and
eventually, she was promoted to the position of Insurance Sales Executive (ISE) where she received various
distinctions from petitioner, including "Best Insurance Sales Executive" for the years 2007 and 2011. Her
husband, Romulo Peralta, who was the President of the Toyota Shaw-Pasig Workers Union — Automotive
Industry Workers Alliance(TSPWU-AIWA), organized a collective bargaining unit through a certification
election.
Respondent argued that Toyota suddenly dismissed from service the officials/directors of TSPWU-AIWA,
including her husband and started harassing her for her husband's active involvement in TSPWU-AIWA, which
resulted to the issuance of a Notice to Explain which accused her of "having committed various acts" relative to
the processing of 3 units of "outside transactions" and claiming commissions, instead of considering the m as
"newbusinessaccounts" under the dealership's marketing department where preventively suspended. She
received a Notice of Termination, which prompted her to file the instant complaint, where she also prayed for
the payment of her earned substantial commissions, tax rebates, and other benefits dating back from July 2011
to January 2012, amounting to P617,248.08.
Petitioner argued that respondent was dismissed from service for just cause and with due process. They
explained that respondent was charged and proven to have committed acts of dishonesty and falsification by
claiming commissions for new business accounts which should have been duly credited to the dealership's
marketing department. They further averred that respondent's claims for commissions, tax rebates, and other
benefits were unfounded and without documentation and validation.
Issue
Whether or not the CA erred in awarding Peralta the unpaid commissions, tax rebate for achieved monthly
targets, salary deductions, salary for the month of January 2012, and success share/profit sharing should be
awarded
Held
Section 97(f) of the Labor Code reads: "Wage"paid to any employees hall mean the remuneration of 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 services
rendered or to be rendered and includes the fair and reasonable value, as determined by the Secretary of Labor
and Employment, of board, lodging, or other facilities customarily furnished by the employer to the employee.
"Fair and reasonable value" shall not include any profit to the employer,or to any person affiliated with the
employer. The provision explicitly includes commissions as part of wages. In Iran v. NLRC: While commissions
are incentives or forms of encouragement to inspire employees to put a little more industry on the jobs
particularly assigned to them, still these commissions are direct remunerations for services rendered. The
nature of the work of a salesman and the reason for such type of remuneration for services rendered
demonstrate clearly that commissions are part of a salesman's wage or salary.
Heirs of Ridad v. Gregorio Araneta University Foundations tates that “once the employee has set out with
particularity in his complaint and other documents the labor standard benefits he is entitled to, and which he
alleged that the employer failed to pay him, it becomes the employer's burden to prove that it has paid these
money claims. One who pleads payment has the burden of proving it, and even where the employees must
allege non-payment, the general rule isthatthe burdenrestsonthe employer to prove payment, rather than on
the employees to proven on-payment.”
Peralta’s monetary claims, such as commissions, tax rebates for achieved monthly targets, and success
share/profit sharing, are given to her as incentives or forms of encouragement in order for her to put extra
effort in performing her duties as an ISE. Clearly, such claims fall within the ambit of the general
term"commissions" which in turn, fall within the definition of wages.
Page 73
Toyota simply dismissed Peralta’s claims for being purely self-serving and unfounded, without even presenting
anything as proof showing that Peralta was already paid of such benefits or that she was not entitled thereto.
Even during the LA proceedings, Toyota was even given the opportunity to rebut Peralta’s claims but opted not
to do so. The failure of Toyota to submit the necessary documents that are in their possession gives
risetothepresumptionthatthepresentationthereofisprejudicialtoitscause. Conclusion: Indubitably, Toyota is
bound to pay the monetary benefits claimed by Peralta since Peralta already earned these monetary benefits,
she must promptly receive the same, notwithstanding the fact that she was legally terminated from
employment.
Page 74
10. Soriano et al v Secretary of Finance, GR Nos 184450, 184508, 184538, 185234, Jan 24, 2017, En Banc
Facts
On 19 May 2008, the Senate filed its Senate Committee Report No. 53 on Senate Bill No. (S.B.) 2293. On 21 May
2008, former President Gloria M. Arroyo certified the passage of the bill as urgent through a letter addressed
to then Senate President Manuel Villar. On the same day, the bill was passed on second reading IN the Senate
and, on 27 May 2008, on third reading. The following day, 28 May 2008, the Senate sent S.B. 2293 to the House
of Representatives for the latter's concurrence.
On 17 June 2008, R.A. 9504 entitled "An Act Amending Sections 22, 24, 34, 35, 51, and 79 of Republic Act No.
8424, as Amended, Otherwise Known as the National Internal Revenue Code of 1997," was approved and signed
into law by President Arroyo
The following are the salient features of the new law:It increased the basic personal exemption from P20,000
for a single individual, P25,000 for the head of the family, and P32,000 for a married individual to P50,000 for
each individual.It increased the additional exemption for each dependent not exceeding four from P8,000 to
P25,000.It raised the Optional Standard Deduction (OSD) for individual taxpayers from 10% of gross income
to 40% of the gross receipts or gross sales.It introduced the OSD to corporate taxpayers at no more than 40%
of their gross income.It granted MWEs exemption from payment of income tax on their minimum wage, holiday
pay, overtime pay, night shift differential pay and hazard pay.[1]
Accordingly, R.A. 9504 was published in the Manila Bulletin and Malaya on 21 June 2008. On 6 July 2008, the
end of the 15-day period, the law took effect.
Petitioners Jaime N. Soriano et al. primarily assail Section 3 of RR 10-2008 providing for the prorated
application of the personal and additional exemptions for taxable year 2008 to begin only effective 6 July 2008
for being contrary to Section 4 of Republic Act No. 9504.Petitioners argue that the prorated application of the
personal and additional exemptions under RR 10-2008 is not "the legislative intendment in this jurisdiction."
They stress that Congress has always maintained a policy of "full taxable year treatment" as regards the
application of tax exemption laws. They allege further that R.A. 9504 did not provide for a prorated application
of the new set of personal and additional exemptions.
Then Senator Manuel Roxas, as principal author of R.A. 9504, also argues for a full taxable year treatment of
the income tax benefits of the new law. He relies on what he says is clear legislative intent In his "Explanatory
Note of Senate Bill No. 103," he stresses "the very spirit of enacting the subject tax exemption law
Petitioner Trade Union Congress of the Philippine contends that the provisions of R.A. 9504 provide for the
application of the tax exemption for the full calendar year 2008. It also espouses the interpretation that R.A.
9504 provides for the unqualified tax exemption of the income of MWEs regardless of the other benefits they
receive. In conclusion, it says that RR 10-2008, which is only an implementing rule, amends the original intent
of R.A. 9504, which is the substantive law, and is thus null and void.
Petitioners Senator Francis Joseph Escudero, the Tax Management Association of the Philippines, Inc., and
Ernesto Ebro allege that R.A. 9504 unconditionally grants MWEs exemption from income tax on their taxable
income, as wel1 as increased personal and additional exemptions for other individual taxpayers, for the whole
year 2008. They note that the assailed RR 10-2008 restricts the start of the exemptions to 6 July 2008 and
provides that those MWEs who received "other benefits" in excess of P30,000 are not exempt from income
taxation. Petitioners believe this RR is a "patent nullity" and therefore voi
Page 75
The Office of the Solicitor General (OSG) filed a Consolidated Comment[16] and took the position that the
application of R.A. 9504 was intended to be prospective, and not retroactive. This was supposedly the general
rule under the rules of statutory construction: law will only be applied retroactively if it clearly provides for
retroactivity, which is not provided in this instance
The OSG further argues that the legislative intent of non-retroactivity was effectively confirmed by the
"Conforme" of Senator Escudero, Chairperson of the Senate Committee on Ways and Means, on the draft
revenue regulation that became RR 10-2008.
Issue
Whether Sections 1 and 3 of RR 10-2008 are consistent with the law in declaring that an MWE who receives
other benefits in excess of the statutory limit of P30,000 is no longer entitled to the exemption provided by R.A.
9504, is consistent with the law.
Held
Sections 1 and 3 of RR 10-2008 add a requirement not found in the law by effectively declaring that an MWE
who receives other benefits in excess of the statutory limit of P30,000 is no longer entitled to the exemption
provided by R.A. 9504.
"The amount of 'de minimis' benefits conforming to the ceiling herein prescribed shall not be considered in
determining the P30,000.00 ceiling of 'other benefits' excluded from gross income under Section 32(b)(7)(e)
of the Code. Provided that, the excess of the 'de minimis' benefits over their respective ceilings prescribed by
these regulations shall be considered as part of 'other benefits' and the employee receiving it will be subject to
tax only on the excess over the P30,000.00 ceiling. Provided, further, that MWEs rece1vmg 'other benefits'
exceeding the P30,000.00 limit shall be taxable on the excess benefits, as well as on his salaries, wages and
allowances, just like an employee receiving compensation income beyond the SMW."
(B) Exemptions from Withholding Tax on Compensation. - The following income payments are exempted from
the requirements of withholding tax on compensation:
xxxx
(13) Compensation income of MWEs who work in the private sector and being paid the Statutory Minimum
Wage (SMW), as fixed by Regional Tripartite Wage and Productivity Board (RTWPB)/National Wages and
Productivity Commission (NWPC), applicable to the place where he/she is assigned.
The aforesaid income shall likewise be exempted from income tax.
"Statutory Minimum Wage" (SMW) shall refer to the rate fixed by the Regional Tripartite Wage and Productivity
Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of the Department of
Labor and Employment (DOLE). The RTWPB of each region shall determine the wage rates in the different
regions based on established criteria and shall be the basis of exemption from income tax for this purpose.
Holiday pay, overtime pay, night shift differential pay and hazard pay earned by the aforementioned MWE shall
likewise be covered by the above exemption. Provided, however, that an employee who receives/earns
additional compensation such as commissions, honoraria, fringe benefits, benefits in excess of the allowable
statutory amount of P30,000.00, taxable allowances and other taxable income other than the SMW, holiday pay,
overtime pay, hazard pay and night shift differential pay shall not enjoy the privilege of being a MWE and,
therefore, his/her entire earnings are not exempt form income tax, and consequently, from withholding tax.
MWEs receiving other income, such as income from the conduct of trade, business, or practice of profession,
except income subject to final tax, in addition to compensation income are not exempted from income tax on
their entire income earned during the taxable year. This rule, notwithstanding, the [statutory minimum wage],
[h]oliday pay, overtime pay, night shift differential pay and hazard pay shall still be exempt from withholding
tax.
Page 76
For purposes of these regulations, hazard pay shall mean xxx.
In case of hazardous employment, xxx
The NWPC shall officially submit a Matrix of Wage Order by region xxx
Any reduction or diminution of wages for purposes of exemption from income tax shall constitute
misrepresentation and therefore, shall result to the automatic disallowance of expense, i.e. compensation and
benefits account, on the part of the employer. The offenders may be criminally prosecuted under existing laws.
Nowhere in the above provisions of R.A. 9504 would one find the qualifications prescribed by the assailed
provisions of RR 10-2008. The provisions of the law are clear and precise; they leave no room for interpretation
- they do not provide or require any other qualification as to who are MWEs.
To be exempt, one must be an MWE, a term that is clearly defined. Section 22(HH) says he/she must be one
who is paid the statutory minimum wage if he/she works in the private sector, or not more than the statutory
minimum wage in the non-agricultural sector where he/she is assigned, if he/she is a government employee.
Thus, one is either an MWE or he/she is not. Simply put, MWE is the status acquired upon passing the litmus
test - whether one receives wages not exceeding the prescribed minimum wage.
While the Labor Code's definition of "wage" appears to encompass any payments of any designation that an
employer pays his or her employees, the concept of minimum wage is distinct.63 "Minimum wage" is wage
mandated; one that employers may not freely choose on their own to designate in any which way.
In Article 99, minimum wage rates are to be prescribed by the Regional Tripartite Wages and Productivity
Boards. In Articles 102 to 105, specific instructions are given in relation to the payment of wages. They must
be paid in legal tender at least once every two weeks, or twice a month, at intervals not exceeding 16 days,
directly to the worker, except in case of force majeure or death of the worker.
These are the wages for which a minimum is prescribed. Thus, the minimum wage exempted by R.A. 9504 is
that which is referred to in the Labor Code. It is distinct and different from other payments including
allowances, honoraria, commissions, allowances or benefits that an employer may pay or provide an employee.
Likewise, the other compensation incomes an MWE receives that are also exempted by R.A. 9504 are all
mandated by law and are based on this minimum wage.
Additional compensation in the form of overtime pay is mandated for work beyond the normal hours based on
the employee's regular wage.64
Those working between ten o'clock in the evening and six o'clock in the morning are required to be paid a night
shift differential based on their regular wage.65 Holiday/premium pay is mandated whether one works on
regular holidays or on one's scheduled rest days and special holidays. In all of these cases, additional
compensation is mandated, and computed based on the employee's regular wage.66
R.A. 9504 is explicit as to the coverage of the exemption: the wages that are not in excess of the minimum wage
as determined by the wage boards, including the corresponding holiday, overtime, night differential and hazard
pays.
In other words, the law exempts from income taxation the most basic compensation an employee receives - the
amount afforded to the lowest paid employees by the mandate of law. In a way, the legislature grants to these
lowest paid employees additional income by no longer demanding from them a contribution for the operations
of government. This is the essence of R.A. 9504 as a social legislation. The government, by way of the tax
exemption, affords increased purchasing power to this sector of the working class.
Page 77
11. CCBPI vs. Iloilo Coca-Cola Plant Employees Union, GR No. 195297, December 5, 2018
Facts: The conflict between Petitioner Coca-Cola Bottlers Philippines, Inc. (CCBPI) and respondent Iloilo Coca-
Cola Plant Employees Labor Union (ICCPELU) arose due to the CCBPI’s policy involving Saturday work. In the
said policy, several of CCBPl’s employees were required to report for work on certain Saturdays to perform a
host of activities, usually involving maintenance of the facilities. This prerogative was supposedly consistent
with the pertinent provisions7 in the Collective Bargaining Agreement (CBA) between CCBPI and its employees,
which stated that management had the sole option to schedule. work on Saturdays on the basis of operational
necessity.
CCBPI later on informed the ICCPELU that, starting July 2, 2005, Saturday work would no longer be scheduled,
with CCBPI citing operational necessity as the reason for the decision. Specifically, the discontinuance was done
with the purpose of saving on operating expenses and compensating for the anticipated decreased revenues.
As Saturday work involved maintenance-related activities, CCBPI would then only schedule the day’s work as
the need arose for these particular undertakings, particularly on some Saturdays from September to December
2005. The parties met with CCBPI’s Manufacturing Manager setting forth the official proposal to stop the work
schedule during Saturdays. This proposal was opposed and rejected by the officers and members of the
ICCPELU who were present at the meeting. Despite this opposition, CCBPI pushed through with the non-
scheduling of work on the following Saturday.
As a result of the foregoing, the ICCPELU submitted to CCBPI its written grievance, stating therein that CCBPI’
s act of disallowing its employees to report during Saturday is a violation of the CBA provisions, specifically
Section 1, Article 10 thereof. Along with the submission of the written grievance, the ICCPELU also requested a
meeting with CCBPI to discuss the issue. CCBPI response to the request, however, was to merely send a letter
reiterating to the ICCPELU that under the set of facts, management has the option to schedule work on Saturday
on the basis of operational necessity. Further letters on the part of the ICCPELU were responded to in the same
way by CCBPI.
ICCPELU thus brought its grievances to the office of the NCMB and submitted the case for voluntary arbitration.
The panel comprised of three (3) voluntary arbitrators (the Panel of Arbitrators), was charged with resolving
two issues: First, whether or not members of the ICCPELU were entitled to receive their basic pay during
Saturdays under the CBA even if they would not report for work, and second, whether or not CCBPI could be
compelled by the ICCPELU to provide work to its members during Saturdays under the CBA.
After the presentation of evidence and the subsequent deliberations, the Panel of Arbitrators ruled in favor of
CCBPI. The PVA held that that the Complainant’s Union members are nary entitled to receive their Basic Pay
during Saturdays under the CBA if they are not reporting for work, under Section I Article 10, and Sections 1(c)
and 3(c) Article II of the CBA. On the second issue, it held that CCBPI cannot be compelled by the Complainant
Union to provide works to its members during Saturdays under the CBA, for lack of legal and factual basis.
ICCPELU’s Motion for Reconsideration to the Panel of Arbitrators’ ruling was denied for lack of merit. Unwilling
to accept the findings of the Panel of Arbitrators, the ICCPELU elevated its case to the CA via a Petition for
Review under Rule 43 of the Rules of Court. After a review of the same, the CA subsequently rendered a Decision
granting the ICCPELU’s Petition for Review and reversing the decision of the Panel of Arbitrators.
CCBPI’s Motion for Reconsideration was denied by the CA. Hence, the petition before the SC.
Issues: Whether or not grant of qualified Saturday work pertains to monetary benefit in the contemplation of
non-diminution of benefits rule.
Whether or not the removal of the qualified Saturday work violates the non-diminution of benefits rule under
Art. 100 of the Labor Code.
Whether or not the withdrawal of qualifiedly given Saturday work is a valid exercise of management
prerogative.
Ruling: The SC found merit in the petition.
Page 78
Application: The SC held that it is not Saturday work per se which constitutes a benefit to the company’s
employees. Rather, the benefit involved in this case is the premium which the company pays its employees
above and beyond the minimum requirements set by law. The CBA between CCBPI and the ICCPELU guarantees
the employees that they will be paid their regular wage plus an additional 50% thereof for the first eight (8)
hours of work performed on Saturdays. Therefore, the benefit, if ever there is one, is the premium pay given by
reason of Saturday work, and not the grant of Saturday work itself.
In Royal Workers Union vs. Coca-Cola Bottlers Philippines, Inc. -Cebu Plant, the Court had the occasion to rule
that the term “benefits” mentioned in the non-diminution rule refers to monetary benefits or privileges given
to the employee with monetary equivalents. Stated otherwise, the employee benefits contemplated by Article
100 are those which are capable of being measured in terms of money. Thus, it can be readily concluded from
past jurisprudential pronouncements that these privileges constituted money in themselves or were
convertible into monetary equivalents.
In order for there to be proscribed diminution of benefits that prejudiced the affected employees, CCBPI should
have unilaterally withdrawn the 50% premium pay without abolishing Saturday work. These are not the facts
of the case at bar. CCBPI withdrew the Saturday work itself, pursuant, as already held, to its management
prerogative. In fact, this management prerogative highlights the fact that the scheduling of the Saturday work
was actually made subject to a condition, i.e., the prerogative to provide the company’s employees with
Saturday work based on the existence of operational necessity. As compared to the factual milieu in the case of
Eastern Telecommunications Philippines, Inc. vs. Eastern Telecoms Employees Union, the CBA between CCBPI
and’ the ICCPELU has no analogous provision which grants that the 50% premium pay would have to be paid
regardless of the occurrence of Saturday work. Thus, the non-payment of the same would not constitute a
violation of the diminution of benefits rule.
Also, even assuming arguendo that the Saturday work involved in this case falls within the definition of a
“benefit” protected by law, the fact that it was made subject to a condition (i.e., the existence of operational
necessity) negates the application of Article 100 pursuant to the established doctrine that when the grant of a
benefit is made subject to a condition and such condition prevails, the rule on non-diminution finds no
application. Otherwise stated, if Saturday work and its corresponding premium pay were granted to CCBPI’s
employees without qualification, then the company’s policy of permitting its employees to suffer work on
Saturdays could have perhaps ripened into company practice protected by the non-diminution rule.
Lastly, the SC held that since the affected employees are daily-paid employees, they should be given their wages
and corresponding premiums for Saturday work only if they are permitted to suffer work. Invoking the time-
honored rule of “a fair day’s work ‘for a fair day’s pay,” the CCBPI argues that the CA’s ruling that such unworked
Saturdays should be compensated is contrary to law and the evidence on record. The age-old rule governing
the relation between labor and capital, or management and employee, of a “fair day’s, wage for a fair day’s
labor” remains the basic factor in determining employees’ wages. If there is no work performed by the
employee, there can be no wage. In cases where the employee’s failure to work was occasioned neither by his
abandonment nor by termination, the burden of economic loss is not rightfully shifted to the employer; each
party must bear his own loss.
In other words, where the employee is willing and able to work and is not illegally prevented from doing so, no
wage is due to him. To hold otherwise would be to grant to the employee that which he did not earn at the
prejudice of the employer. In the case at bar, CCBPI’s employees were not prevented from working on
Saturdays. The company was simply exercising its option not to schedule work pursuant to the CBA provision,
which gave it the prerogative to do so. It therefore follows that the principle of “no work, no pay” finds
application in the instant case.
Page 79
12. Pablico et al., vs. Cerro/Master Pab Resto Bar, GR No. 227200, June 10, 2019
Facts: Respondent Numeriano Cerro, Jr. (Cerro) works as a bartender in Master's Pab Resto Bar (MPRB). At the
former's suggestion, the petitioner purchased and took over the management of MPRB from its original owner,
the Feliciano family, on November 18, 2008.
On the same day, the petitioner took over, he promoted Cerro as Officer-in-Charge with a daily wage of P200.00,
and gave the latter the authority to hire additional employees. Pursuant to which, herein respondents were
employed to work at MPRB, viz.:
Sometime
DATE OF
in NAME POSITION DAILY WAGE
EMPLOYMENT
September
2011, due Michael Caliguiran November 18, 2008 Disk Jockey Php200.00
to several (Caliguiran)
infractions Efren Panganiban November 18, 2008 Cook Php200.00
that caused (Panganiban)
MPRB Gloria Napitan March 26, 2008 Accountant Php200.00
losses, the (Napitan)
petitioner
Reynalie Lim (Lim) January 23, 2011 Barmaid Php200.00
transferred
Cerro to Manny Baguno March 2, 2011 Utility Php133.33
another (Baguno)
Genius Pauig (Pauig) November 18, 2008 Waiter Php157.66
Richard Caronan March 2, 2011 Assistant Cook Php166.66
(Caronan)
establishment. On October 18, 2011, respondents Caliguiran, Panganiban, Pauig, Lim, Napitan, Caronan, and
Baguno received text messages, which they interpreted to mean that they have been terminated from work on
account of their close association to Cerro.
Acting on this, on October 24, 2011, the respondents then filed a Complaint for illegal dismissal, underpayment
of salaries and benefits, damages and attorney's fees before the National Labor Relations Commission (NLRC).
On March 30, 2012, Labor Arbiter (LA) Jaime M. Reyno rendered his Decision, dismissing the complaint for lack
of merit.
In his Decision, the LA dismissed the respondents' claim of illegal dismissal. Insofar as Cerro, the LA held that
his suspension is a valid exercise by the employer of disciplinary authority pursuant to the former's infractions.
Anent the other respondents on the other hand, the LA held that they failed to discharge the burden of proving
that they have been terminated. Finally, on account of the respondents' money claims, the LA found the payrolls
presented by the petitioner as sufficient proof of payment. HTE
The respondents appealed to the NLRC. On November 21, 2012, the NLRC promulgated its Decision, partially
granting the appeal. The Decision of the [LA] dated March 30, 2012 is affirmed with modification. The Decision
of the [LA] is sustained insofar as (1) the legality of complainant Cerro's suspension, (2) the dismissal of
complainants' claim of illegal dismissal and (3) dismissal of complainants' claim for moral and exemplary
damages are concerned. However, regarding complainants' monetary claims, the Commission finds that they
are entitled to the following, namely: (1) wage differentials for 3 years counted backwards from October 2011;
and (2) 13th month pay for a period of 3 years counted backwards from October 2011. Moreover, as a
consequence of the finding that complainants were not dismissed from employment, complainants are directed
to return to work and respondents are directed to reinstate complainants to their former positions, without
backwages. Considering, however, the apparent strained relations between the parties brought about by the
filing of this complaint, respondents are directed to grant separation pay, in lieu of reinstatement, to each of
complainants, reckoned from date of his/her employment up to the finality of this Decision.
Page 80
Unsatisfied with the decision of the NLRC, the respondents filed a partial motion for reconsideration, which the
NLRC denied in its Resolution dated May 20, 2013.
The petitioner elevated the case to the CA via a petition for certiorari under Rule 65 of the Rules of Court. The
CA ruled that the petition is dismissed for lack of merit, there being no grave abuse of discretion amounting to
lack or excess of jurisdiction committed by the NLRC. On motion for reconsideration, the CA issued an Amended
decision, partially granting the petition. The Decision dated October 27, 2015 is MODIFIED in that the NLRC's
Decision dated November 21, 2012 in NLRC NCR CASE NO. 10-16169-11/NLRC LAC NO. 05-001595-12 is
affirmed except for the award of Separation Pay which is hereby deleted.
Issue: 1. The NLRC committed a reversible error when it ruled that the petitioner is not exempt from
the minimum wage law as well is it granted the claim of the employees for wage differential without due regard
to the evidence presented by the petitioner anent the amount of salary being paid to his employees; and 2. The
NLRC committed grave abuse of discretion amounting to lack or excess of jurisdiction in arbitrarily computing
the alleged liability of the petitioner.
Ruling: The petition is not meritorious.
Application: As the Court sees it, the petitioner merely reiterates the same points he has raised in his petition
before the CA. The petitioner argues that he is exempted from the application of the "Minimum Wage Law" as
he is engaged in the service business that employs less than ten (10) employees. He asserts that the mere fact
that his business has not been granted exemption by the Department of Labor and Employment (DOLE) does
not disqualify him from availing the benefits of the said law, as a layman like him cannot be expected to be
knowledgeable of this requirement. Also, the petitioner faults the NLRC in not considering the "Pinagsamang
Sinumpaang Salaysay" issued by the Guest Relations Officers/Waitresses working at MPRB as proof that the
same individuals are not its employees.
Cerro admitted having appropriated the funds of the MPRB without the knowledge and consent of its owner,
for sure, this act justifies the exercise of management prerogative to place him under preventive suspension
particularly considering his position. Being an Officer-in-Charge of MPRB, Cerro is responsible for the
company's over-all operations and, as such in a position, cause damage to the property of the employer.
Similarly, the Court affirms that the rest of the respondents have not been terminated. It is a basic principle in
illegal dismissal cases that the employees must first establish by competent evidence the fact of their
termination from employment. In this regard, mere allegation does not suffice, evidence must be substantial
and the fact of dismissal must be clear, positive and convincing. In the case at bar, respondents Caliguiran,
Panganiban, Pauig, Lim, Napitan, Caronan, and Baguno failed to discharge this burden. The only evidence they
presented are text messages supposedly informing them that they have been terminated. However, as opined
by the tribunals below, nowhere from the language thereof can it be remotely inferred that they are being
terminated. It was also not shown that the respondents tried reporting for work, but were prevented to do so.
Jurisprudence settled that the claim of illegal dismissal cannot be sustained in the absence of any showing of
an overt or positive act proving that the employees have been dismissed, as the employees' claim in that
eventuality would be "self-serving, conjectural and of no probative value." In the same vein, the rule that the
employer bears the burden of proof in illegal dismissal cases finds no application in this case as the petitioner
denies having dismissed the respondents, and the latter failed to prove the fact of termination.
The petitioner argues that the respondents are not entitled to wage differentials as he is engaged in the service
business employing less than ten (10) employees. It is a basic principle in procedure that the burden is upon
the person who asserts the truth of the matter that he has alleged. The Court emphasized in C. Planas
Commercial v. NLRC (Second Division), that in order to be exempted under Republic Act (R.A.) No. 6727 or
the Wage Rationalization Act, two elements must concur — first, it must be shown that the establishment is
regularly employing not more than ten (10) workers, and second, that the establishment had applied for and
was granted exemption by the appropriate Regional Board in accordance with the applicable rules and
Page 81
regulations issued by the Commission. The conclusion proceeds from the unequivocal language of the law
itself:
Section 4. (c) Exempted from the provisions of this Act are :
Retail/service establishments regularly employing not more than ten (10) workers may be exempted from the
applicability of this Act upon application with and as determined by the appropriate Regional Board in
accordance with the applicable rules and regulations issued by the Commission. Whenever an application for
exemption has been duly filed with the appropriate Regional Board, action on any complaint for alleged non-
compliance with this Act shall be deferred pending resolution of the application for exemption by the
appropriate Regional Board.
In the event that applications for exemptions are not granted, employees shall receive the appropriate
compensation due them as provided for by this Act plus interest of one per cent (1%) per month retroactive to
the effectivity of this Act.
Herein, the petitioner himself admitted that he did not apply for such exemption, thus, it is clear that he cannot
claim benefits under the law. The petitioner cannot shield himself from complying with the law by the lone fact
that he is just a layman and cannot be expected to know of the law's requirements. Under our legal system,
ignorance of the law excuses no one from compliance therewith. Furthermore, the policy of the Labor Code,
under which R.A. 6727 is premised, is to include all establishments, except a few specific classes, under the
coverage of the law. As the petitioner failed to apply for an exemption, and it is undisputed that the respondents
are MPRB's employees and are paid less than the prescribed minimum wage, the petitioner's liability for wage
differential cannot be denied.
Although inconsequential, with the petitioner's liability already established, it is still useful to state that the
first element is also wanting in the case at bar. Herein, the LA, the NLRC, and the CA all found that the petitioner
is employing more than ten (10) employees in his establishment. The petitioner counters the foregoing
conclusion, raising in evidence the affidavit issued collectively by its guest relations officers/waitresses.
Employment status is not determined by contract or document. Neither is an employee's avowal of his or her
employment status — as regular, casual, contractual, seasonal — conclusive upon the Court. To be sure,
employment status is determined by the four-fold test, and the attendant circumstances of each case, as
supported by any competent and relevant evidence. The status of employment cannot be dictated by the
stipulation of contract or any document, because the same is contrary to public policy and heavily impressed
with public interest. The law relating to labor and employment is an area where the parties are not at liberty
to insulate themselves and their relationships from the impact of labor laws and regulations by means of
contract or waiver.
Still, the Court finds no reason to disturb the findings of the labor tribunals. Well-settled is the rule that factual
findings of labor officials, who are deemed to have acquired expertise in matters within their jurisdiction, are
generally accorded not only respect but even finality and bind this Court when supported by substantial
evidence, as in the case at bar. The mere existence of these guest relations officers/waitresses employed under
the same terms and conditions as the respondents is sufficient to disqualify petitioner and MPRB from the
exemption under R.A. No. 6727. Devoid of any unfairness or arbitrariness in the labor tribunals' decision-
making process, the Court is left with no recourse but to affirm the findings made by them.
Since there is a clear violation of R.A. No. 6727, the petitioner is also liable to pay interest on the appropriate
compensation due, not only by the express provision of the law but because the failure to pay constitutes a loan
or forbearance of money, at the rate of one percent (1%) per month or twelve percent (12%) per annum.The
Court must clarify that in keeping with the reason behind the law in imposing the same interest, and in light of
the Court's ruling in Nacar v. Gallery Frames, et al., the imposition of interest must be reconciled with Bangko
Sentral ng Pilipinas Monetary Board Resolution No. 796 dated May 16, 2013, which effectively amended the
rate of interest. Accordingly, the amount of wage differentials which the petitioner owed to the respondents
shall earn interest at the rate of twelve percent (12%) per annum from the time payment thereof has accrued
or their respective dates of employment until the date they last reported for work or July 1, 2013, whichever is
Page 82
earlier. Thereafter, it having been concluded that the respondents have not been illegally dismissed and as such
entitled to reinstatement, provided that they have rendered services within the period, the interest shall be six
percent (6%) per annum until their full satisfaction. Simple enough, the case presents no controversy on this
aspect as it appears that the respondents ceased to report to work prior to July 1, 2013 per Report of the
Computation Division of the NLRC. Fittingly, the foregoing dates should serve as basis not only of the amount
of wage differential but of the proper interest due. Having ruled out illegal dismissal, no wages are due for the
period they have not reported to work.
Finally, the petitioner raises as the final error on this appeal the award of the monetary benefits in favor of the
respondents. The petitioner posits that the NLRC and the CA erred in not relying on his documentary evidence.
He claims that had the payrolls been considered, they would be sufficient to prove that the respondents have
been paid of the benefits they now claim. The fact that the allegation of forgery has been dismissed by the Office
of the City Prosecutor of Quezon City should render the same sufficient for the purpose of this appeal.
The petitioner's arguments are not persuasive. The dismissal of the allegation of forgery only means, at most,
that the signatures therein are genuine. In fact, the Resolution issued by the Assistant City Prosecutor provides
that the basis of dismissal is not the absolute certainty that the signatures in the payroll belong to the
respondents; rather, it is because of the failure by the respondents to adduce evidence to establish the manner
in which the petitioner committed the alleged forgery. The dismissal notwithstanding, the fact remains that the
documents presented by the petitioner are plain photocopies and insufficient in this regard to support his
allegation of payment. While photocopied documents are generally admitted and given probative value in
administrative proceedings, allegations of forgery and fabrication prompt the petitioner to present the original
documents for inspection. Notably, the petitioner did not present the originals nor even attempted to explain
why he cannot present the same, when these should have been easily accounted for as the same were in his
possession. The non-presentation of the original without any explanation, that the photocopied documents do
not present a complete list of MPRB's employees, the absence of certification as to their authenticity, and the
allegation of forgery by the respondents raise legitimate doubts on the authenticity of the payrolls which
renders the same devoid of any rational probative value.
In the same vein, jurisprudence also recognizes the doctrine of strained relations as an exception to the general
rule of reinstatement. In which instance, separation pay is accepted as an alternative when reinstatement is no
longer desirable or viable. The doctrine, however, does not automatically apply nor can be inferred whenever
a case for illegal dismissal is filed. Strained relations between the parties cannot be based on impression alone.
It must be proven as a fact and supported by substantial evidence. There being no allegation, much more
evidence to prove that reinstatement is impossible because of the strained relations of the parties, the NLRC's
order for reinstatement is proper.
Page 83
Topic 5: Wage Enforcement and Recovery

1. Tiger Construction and Development Corp v Abay et al, [GR No 164141, Feb 26, 2010]
Facts
On the basis of a complaint filed by respondents Reynaldo Abay and fifty-nine (59) others before the Regional
Office of the Department of Labor and Employment (DOLE), an inspection was conducted by DOLE officials at
the premises of petitioner TCDC. Several labor standard violations were noted. The case was then set for
summary hearing.
Before the hearing could take place, the Director of Regional Office No. V, Ma. Glenda A. Manalo (Director
Manalo), issued an Order referring the case to the National Labor Relations Commission (NLRC) Sub-
Arbitration Branch V, Naga City. Before the NLRC could take any action, DOLE Secretary Patricia A. Sto. Tomas
(Secretary Sto. Tomas), in an apparent reversal of Director Manalo's endorsement, issued another inspection
authority on August 2, 2002 in the same case. DOLE officials issued a Notice of Inspection Results to petitioner
directing it to rectify the violations within five day from notice.
Director Manalo issued an Order directing TCDC to pay P2,123,235.90 to its employees. Upon appeal by
petitioner, Director Manalo again endorsed the case to the NLRC Regional Arbitration Branch V (Legaspi City).
On January 27, 2003, the NLRC returned the entire records of the case to Director Manalo on the ground that
the NLRC does not have jurisdiction over the complaint. A writ of execution was forthwith issued. TCDC filed a
belated appeal with the DOLE Secretary. Petitioner reiterated its argument that Director Manalo's actions
concerning the case are null and void for having been issued without jurisdiction. Secretary Sto. Tomas
dismissed the appeal. CA likewise dismissed the appeal. Thus this instant petition.
Issue
Whether petitioner can still assail the January 29, 2003 Order of Director Manalo allegedly on the ground of
lack of jurisdiction, after said Order has attained finality and is already in the execution stage.
Held
NO. Director Manalo acted within her jurisdiction. Verily, petitioner may not belatedly file an appeal on the
ground of lack of jurisdiction.
Under Article 128 (b) of the Labor Code, as amended by Republic Act (RA) No. 7730,[ 15] the DOLE Secretary
and her representatives, the regional directors, have jurisdiction over labor standards violations based on
findings made in the course of inspection of an employer's premises. The said jurisdiction is not affected by the
amount of claim involved, as RA 7730 had effectively removed the jurisdictional limitations found in Articles
129 and 217 of the Labor Code insofar as inspection cases, pursuant to the visitorial and enforcement powers
of the DOLE Secretary, are concerned.
Director Manalo's initial endorsement of the case to the NLRC did not serve as a dismissal of the case, which
prevented her from subsequently assuming jurisdiction over the same. The said endorsement was evidently
not meant as a final disposition of the case; it was a mere referral to another agency, the NLRC, on the mistaken
belief that jurisdiction was lodged with the latter.
Thus, the error committed by Director Manalo did not divest her of jurisdiction over the case.
Page 84
2. People’s Broadcasting (Bombo Radyo Phils) v Sec of DOLE et al, GR No 179652, Mar 6, 2012, Resolution on
the Main Decision of May 8, 2009
Facts
Private respondent Jandeleon Juezan filed a complaint against petitioner with the Department of Labor and
Employment (DOLE) Regional Office No. VII, Cebu City, for illegal deduction, nonpayment of service incentive
leave, 13th month pay, premium pay for holiday and rest day and illegal diminution of benefits, delayed
payment of wages and non-coverage of SSS, PAG-IBIG and Philhealth.
The DOLE Regional Director found that private respondent was an employee of petitioner, and was entitled to
his money claims. In dismissing petitioner’s appeal, the CA declared that the DOLE Secretary had jurisdiction
over the matter, as the jurisdictional limitation imposed by Article 129 of the Labor Code on the power of the
DOLE Secretary under Art. 128(b) of the Code had been repealed by Republic Act No. (RA) 7730.
The Court reversed the CA in its May 8, 2009 Decision, declaring that while DOLE may make a determination
of existence of 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 NLRC was held to
be the primary agency in determining the existence of employer-employee relationship. From this declaration,
the Public Attorney’s Office and DOLE sought for clarification.
Issue
Whether or not DOLE make a determination of existence of an employer-employee relationship, and if so, to
what extent.
Held
YES. There is a need to revisit the May 2009 Decision in so far as delineating the jurisdiction between DOLE
and NLRC as to the existence of an employer-employee relationship.
No limitation in the law was placed upon the power of the DOLE to determine the existence of an employer-
employee relationship. 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. If the DOLE makes a finding that there is an existing
employer-employee relationship, it takes cognizance of the matter, to the exclusion of the NLRC.
Verily, the following guideline is set:
1) If a complaint is brought before the DOLE to give effect to the labor standards provisions of the Labor
Code or other labor legislation, and there is a finding by the DOLE that there is an existing employer-
employee relationship, the DOLE exercises jurisdiction to the exclusion of the NLRC;
2) If the DOLE finds that there is no employer-employee relationship, the jurisdiction is properly with the
NLRC.
3) If a complaint is filed with the DOLE, and it is accompanied by a claim for reinstatement, the jurisdiction
is properly with the Labor Arbiter, under Art. 217(3) of the Labor Code.
4) If a complaint is filed with the NLRC, and there is still an existing employer-employee relationship, the
jurisdiction is properly with the DOLE.
5) The findings of the DOLE may still be questioned through a petition for certiorari under Rule 65 of the
Rules of Court.
WHEREFORE, the Decision of this Court in G.R. No. 179652 is hereby AFFIRMED, with the MODIFICATION that
in the exercise of the DOLE’s visitorial and enforcement power, the Labor Secretary or the latter’s authorized
representative shall have the power to determine the existence of an employer-employee relationship, to the
exclusion of the NLRC.
Page 85
3. Superior Packaging Corp v Balagsay et al, GR No 178909, October 10, 2012
Facts
Petitioner engaged the services of Lancer to provide reliever services to its business, which involves the
manufacture and sale of commercial and industrial corrugated boxes. Pursuant to a complaint filed by the
respondents against the petitioner, the Department of Labor and Employment (DOLE) conducted an inspection
of the petitioner’s premises and found several violations. An Order was issued on finding in favor of the
respondents.
Petitioner and its President, Luz, filed a motion for reconsideration on the ground that respondents are not its
employees but of Lancer and that they pay Lancer in lump sum for the services rendered. With their appeal
dismissed by the DOLE Secretary, they sought relief with the CA. The CA affirmed said Order with a modification
absolving Luz from any personal liability. Thus, this petition was lodged with the SC.
Issue
Whether or not petitioner Superior Packaging Corporation may be held solidarily liable with Lancer Staffing &
Services Network, Inc. (Lancer) for respondents’ unpaid money claims.
Held
YES. Lancer was not an independent contractor but was engaged in “labor-only contracting”; hence, the
petitioner was considered an indirect employer of respondents and liable to the latter for their unpaid money
claims.
The applicable regulation was DOLE Department Order No. 10, Series of 1997 which defined labor-only
contracting as:
Sec. 9. Labor-only contracting. – (a) Any person who undertakes to supply workers to an employer
shall be deemed to be engaged in labor-only contracting where such person:
(1) Does not have substantial capital or investment in the form of tools, equipment, machineries,
work premises and other materials; and
(2) The workers recruited and placed by such persons are performing activities which are directly
related to the principal business or operations of the employer in which workers are
habitually employed.
Labor-only contracting is prohibited and the person acting as contractor shall be considered merely as an agent
or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if
the latter were directly employed by him.
A finding that a contractor is a “labor-only” contractor is equivalent to declaring that there is an employer-
employee relationship between the principal and the employees of the supposed contractor, and the “labor-
only” contractor is considered as a mere agent of the principal, the real employer. The petitioner therefore,
being the principal employer and Lancer, being the labor-only contractor, are solidarily liable for respondents’
unpaid money claims.
WHEREFORE, the petition is DENIED.
Page 86
4. Department of Labor & Employment vs. Kentex Manufacturing Corp., GR No. 253781, July 8, 2019
Facts: On May 13, 2015, a fire broke out in the factory located in Valenzuela City owned by Kentex. The fire
claimed 72 lives and injured a number of workers. As part of its standard procedures,
personnel of the DOLE Caloocan, Malabon, Navotas and Valenzuela (DOLE-CAMANAVA) Field Office went
to Kentex's premises. DOLE-NCR also assessed Kentex's compliance with the occupational health and safety
standards. In the course of the investigation, it was discovered that Kentex had contracted with CJC Manpower
Services (CJC) for the deployment of workers. The DOLE-NCR directed Kentex and CJC to attend the mandatory
conference set on May 18 and 20, 2015 at the DOLE-NCR Office in Malate, Manila. Notably, Kentex, its
Chairman and Chief Executive Officer Beato Ang, and the corporation's Chief Finance Officer Ong, were made
parties to this case before the DOLE-NCR.
DOLE-RO III conducted its own Joint Assessment of CJC. The DOLE-RO III discovered that CJC, which deployed
workers to Kentex, was an unregistered private recruitment and placement agency. It noted that CJC was non-
compliant with the occupational health and safety standards as well as with labor standards, such as
underpayment of wages and nonpayment of statutory benefits. As a result of these findings, the DOLE-RO III
issued a Compliance Order which effectively declared CJC as a labor-only contractor with Kentex as its
principal. Meanwhile, during the mandatory conference set by the DOLE-NCR, CJC's representatives admitted
that there was no service contract between CJC and Kentex; that CJC had deployed 99
workers at the Kentex factory on the day of the unfortunate incident; that there were no employment contracts
between CJC and the workers; that a CJC representative was sent once a week to Kentex only to check on the
workers' daily time records; that Kentex remitted to CJC the wage of Php230.00/day for each of the deployed
workers from which amount CJC deducted administrative costs and other statutory contributions, leaving each
worker a mere wage of Php202.50 a day.
Kentex and its corporate officers, alleged that CJC's workers were originally engaged by Panday
Management and Labor Consultancy which CJC later absorbed; and that the workers' wages ranged from
Php250.00 to Php350.00/day on top of CJC's wage of, more or less, Php202/day. They contended that while
the corporate/business and employment records had all been gutted by fire, Kentex nevertheless complied
with the labor standards particularly on the minimum wage requirement and with the occupational
health and safety standards, as evidenced by a Certificate of Compliance (COC) signed by the DOLE-NCR
Regional Director Alex Avila.
In a June 26, 2015 Order, the DOLE-NCR rejected the aforementioned arguments of Kentex, declaring
that Kentex could not invoke the COC because this only attested to the findings of the compliance officer at the
time of the assessment/inspection, even as Kentex was duty-bound to observe continuing compliance with
the labor standards as well as the occupational health and safety standards. Like the June 8, 2015 Compliance
Order of the DOLE-RO III, the DOLE-NCR also found that CJC was a mere labor-only contractor considering that
it was unregistered with the DOLE Regional Office where it operated. The DOLE-NCR likewise found that the
workers were underpaid, and computed the monetary claims due them.
It concluded, Kentex Manufacturing Corporation and/or Beato C. Ang and/or Ong King Guan is/are ordered to
pay within ten (10) days from receipt hereof, Louie Andaya and 56 other similarly situated employees an
aggregate amount of One Million Four Hundred Forty Thousand Six Hundred Forty-One Pesos and Thirty-Nine
Centavos (P1,440,641,39). Failure to pay said workers within ten (10) days from receipt hereof shall cause the
imposition of the penalty of double indemnity pursuant to Republic Act No. 8188 otherwise known as 'An Act
Increasing the Penalty and Imposing Double Indemnity for Violation of the Prescribed Increase or Adjustment
in the Wage Rates.
On July 2015, only Ong moved for reconsideration of the foregoing order. However, in a letter dated July 7,
2015, DOLE-NCR Regional Director Avila explained that Ong's motion for reconsideration was not the proper
remedy. Instead, an appeal to the DOLE Secretary should have been made within 10 days from receipt of the
Order pursuant to Section 1, Rule 11 of Department Order No. 131, Series of 2013. Moreover, since Ong
Page 87
received the June 26, 2015 Order on the same day, he had only until July 6, 2015 within which to appeal to
the DOLE Secretary. However, Ong never did; thus, the Compliance Order had become final. After
this, Kentex and Ong filed with the CA a Rule 43 Petition assailing the (1) June 8, 2015 Compliance Order; (2)
the June 26, 2015 Order; and (3) the July 7, 2015 letter of the DOLE-NCR Regional Director. Among the
errors Kentex and Ong assigned was the DOLE-NCR's finding that Ong was solidarily liable with Kentex for the
monetary awards due the workers.
Although the CA ruled on the merits of the case and upheld the assailed Orders and letter of the DOLE-NCR
Regional Director, it observed at the outset that Kentex and Ong resorted to the wrong remedy in filing a Rule
43 Petition, when the proper remedy should have been a Rule 65 certiorari petition from the
decisions/resolutions of the DOLE Secretary. In fact, nothing from the assailed documents
indicative of acts of grave abuse of discretion amounting to lack or excess of jurisdiction on the
part of the DOLE Secretary was set forth or amply demonstrated. And given the fact that time had irretrievably
lapsed without any appeal being availed of by Kentex and Ong as prescribed by the procedural rules
on labor laws, the CA ruled that the assailed orders had become final and executory. As a company officer, he
could not be personally held liable for the debts of Kentex without a showing of bad faith or wrongdoing on his
part for the corporation's unlawful act. The CA opined that nothing from the DOLE-NCR's June 26, 2015 Order
discussed any act of Ong that showed his involvement in the wrongdoing of Kentex. Thus, the dispositive
portion of the CA judgment stating that the Order, dated June 26, 2015, is affirmed with the modification that
petitioner Ong King Guan is held not liable for the monetary awards specified in the Order. The Order, dated
June 8, 2015 of the DOLE-Regional Office No. III, San Fernando City, Pampanga, and the Order/Letter, dated
July 7, 2015, of DOLE-NCR Regional Director Alex V. Avila, are affirmed.
Petitioner filed a Motion for Partial Reconsideration but the CA denied the motion in its Resolution. Hence, this
Petition.
Ruling: The petition is granted.
Application: Both the DOLE-NCR and the CA correctly ruled that the June 26, 2015 Order had already become
final and executory in view of the failure ofrespondents Kentex and Ong to appeal therefrom to the
Secretary of Labor. Notice ought to be taken of the fact that, at the time the DOLE-NCR rendered its
ruling, Department Order No. 131-13 Series of 2013 was the applicable rule of procedure. The pertinent
provision states:
Rule 11, Section 1. Appeal. — The Compliance Order may be appealed to the Office of the
Secretary of Labor and Employment by filing a Memorandum of Appeal, furnishing the other party with a
copy of the same, within ten (10) days from receipt thereof. No further motion for extension oftime shall be
entertained.
A mere notice of appeal shall not stop the running of the period within which to file an appeal.
Here, instead of filing an appeal with the DOLE Secretary, Ong moved for a reconsideration of the subject
Order; needless to say, this did not halt or stop the running of the period to elevate the matter to
the DOLE Secretary. Indeed, the DOLE-NCR took no action at all on Ong's motion for reconsideration; in fact, it
categorically informed Ong that his resort to the filing of a motion for reconsideration was procedurally infirm.
The June 26, 2015 Order having become final, it could no longer be altered or modified by discharging or
releasing Ong from his accountability.
Anent respondents' allegation regarding the DOLE Secretary's partiality, this Court agrees with the CA, that —
[Kentex and Ong King Guan's] contention that the Secretary has already prejudged their liability in her
pronouncements before the media, such that an appeal to her would be an exercise in futility, is untenable. We
have the rules. And, as heretofore stated, failure to conform to the rules regarding appeal will render the
judgment final and executory. True, litigation is not a game of technicalities. It is equally true, however, that
every case must be presented in accordance with the prescribed procedure to ensure an orderly and speedy
Page 88
administration of justice. The failure, therefore, of petitioners to comply with the settled procedural rules
justifies the dismissal of the present petition.
Neither was there merit in respondents' claim that they had been denied or deprived of due process. The facts
clearly disclose that they had substantially participated in the proceedings before the DOLE-NCR from the
mandatory conference up to the filing of a position paper where their side was sufficiently heard. Thus, it is
self-evident that the CA committed serious error when it ordered the discharge or release of Ong from the
obligations of Kentex. The reason is elemental in its simplicity: contrary to settled, unrelenting jurisprudence,
it unconsciously and egregiously sought to alter and modify, as indeed it altered and modified, an already
final and executory verdict. We have already declared in Mocorro, Jr. v. Ramirez that:
x x x A definitive final judgment, however erroneous, is no longer subject to change or revision.
A decision that has acquired finality becomes immutable and unalterable. This quality of immutability
precludes the modification of a final judgment, even if the modification is meant to correct erroneous
conclusions of fact and law. And this postulate holds true whether the modification is made by the court that
rendered it or by the highest court in the land. The orderly administration of justice requires that, at the
risk of occasional errors, the judgments/resolutions of a court must reach a point of finality set by the law. The
noble purpose is to write finis to dispute once and for all. This is a fundamental principle in our justice system,
without which there would be no end to litigations. Utmost respect and adherence to this principle must always
be maintained by those who exercise the power of adjudication. Any act, which violates such principle, must
immediately be struck down. Indeed, the principle of conclusiveness of prior adjudications is not confined in
its operation to the judgments of what are ordinarily known as courts, but extends to all bodies upon which
judicial powers had been conferred.
The only exceptions to the rule on the immutability of final judgments are (1) the correction of clerical errors,
(2) the so-called nunc pro tunc entries which cause no prejudice to any party, and (3) void judgments. x x x
In the absence of any showing that the CA's modification or alteration of the subject Order falls within the
exceptions to the rule on the immutability offinal judgments, the DOLE-NCR's June 26, 2015 Order must be
upheld and respected.
Page 89
Topic 6: Wage Protection Provisions & Prohibitions Regarding Wages

1. SHS Perforated Materials, Inc. et al., vs. Diaz, GR No. 185814, Oct. 13, 2010
Facts
Petitioner SHS Perforated Materials, Inc. (SHS) is a start-up corporation organized and existing under the laws
of the Republic of the Philippines and registered with the Philippine Economic Zone Authority. Petitioner
Winfried Hartmannshenn (Hartmannshenn), a German national, is its president, in which capacity he
determines the administration and direction of the day-to-day business affairs of SHS. Petitioner Hinrich
Johann Schumacher (Schumacher), also a German national, is the treasurer and one of the board directors. As
such, he is authorized to pay all bills, payrolls, and other just debts of SHS of whatever nature upon maturity.
Schumacher is also the Executive Vice-President of the European Chamber of Commerce of the Philippines
(ECCP) which is a separate entity from SHS. Both entities have an arrangement where ECCP handles the payroll
requirements of SHS to simplify business operations and minimize operational expenses. Thus, the wages of
SHS employees are paid out by ECCP, through its Accounting Services Department headed by Juliet Taguiang
(Taguiang).
Manuel F. Diaz (respondent) was hired by petitioner SHS as Manager for Business Development on
probationary status Respondent was also instructed by Hartmannshenn to report to the SHS office and plant
at least two (2) days every work week to observe technical processes involved in the manufacturing of
perforated materials, and to learn about the products of the company, which respondent was hired to market
and sell.
During respondents employment, Hartmannshenn was often abroad and, because of business exigencies, his
instructions to respondent were either sent by electronic mail or relayed through telephone or mobile phone.
When he would be in the Philippines, he and the respondent held meetings. As to respondents work, there was
no close supervision by him. During meetings with the respondent, Hartmannshenn expressed his
dissatisfaction over respondents poor performance.
On November 29, 2005, Hartmannshenn instructed Taguiang not to release respondents salary. Later that
afternoon, respondent called and inquired about his salary. The next day, on November 30, 2005, respondent
served on SHS a demand letter and a resignation letter. Hartmannshenn then accepted respondents resignation
and informed him that his salary would be released upon explanation of his failure to report to work, and proof
that he did, in fact, work for the period in question. He demanded that respondent surrender all company
property and information in his possession. Respondent agreed to these "exit" conditions through electronic
mail. Instead of complying with the said conditions, however, respondent sent another electronic mail message
to Hartmannshenn and Schumacher on December 1, 2005, appealing for the release of his salary.
To settle the issue amicably, petitioners counsel advised respondents counsel by telephone that a check had
been prepared in the amount of P50,000.00, and was ready for pick-up on December 5, 2005. On the same date,
a copy of the formal reply letter relating to the prepared payment was sent to the respondents counsel by
facsimile transmission. Despite being informed of this, respondent never picked up the check. Respondent
countered that his counsel received petitioners formal reply letter only on December 20, 2005, stating that his
salary would be released subsequent to the turn-over of all materials owned by the company in his possession.
Respondent claimed that the only thing in his possession was a sample panels folder which he had already
returned and which was duly received by Taguiang on November 30, 2005.
On December 9, 2005, respondent filed a Complaint against the petitioners for illegal dismissal; non- payment
of salaries/wages and 13th month pay with prayer for reinstatement and full backwages; exemplary damages,
and attorneys fees, costs of suit, and legal interest.
Issue
Whether or not the temporary withholding of respondent’s salary/wages by petitioners was a valid exercise of
management prerogative.
Page 90
Held
Withholding respondent’s salary was not a valid exercise of management prerogative. Management
prerogative refers “to the right of an employer to regulate all aspects of employment, such as the freedom to
prescribe work assignments, working methods, processes to be followed, regulation regarding transfer of
employees, supervision of their work, lay- off and discipline, and dismissal and recall of work.” Although
management prerogative refers to “the right to regulate all aspects of employment,” it cannot be understood to
include the right to temporarily withhold salary/wages without the consent of the employee.
Any withholding of an employee’s wages by an employer may only be allowed in the form of wage deductions
under the circumstances provided in Article 113 of the Labor Code, as set forth below:
ART. 113. Wage Deduction. – No employer, in his own behalf or in behalf of any person, shall make any
deduction from the wages of his employees, except:
A. In cases where the worker is insured with his consent by the employer, and the deduction is to
recompense the employer for the amount paid by him as premium on the insurance;
B. For union dues, in cases where the right of the worker or his union to check-off has been recognized
by the employer or authorized in writing by the individual worker concerned; and
C. In cases where the employer is authorized by law or regulations issued by the Secretary of Labor.
There is constructive dismissal if an act of clear discrimination, insensibility, or disdain by an employer
becomes so unbearable on the part of the employee that it would foreclose any choice by him except to forego
his continued employment. It exists where there is cessation of work because continued employment is
rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and a diminution in
pay.
In this case, the withholding of respondent’s salary does not fall under any of the circumstances provided under
Article 113. Neither was it established with certainty that respondent did not work from November 16 to
November 30, 2005. Hence, the Court agrees with the LA and the CA that the unlawful withholding of
respondent’s salary amounts to constructive dismissal.
Page 91
2. Nina Jewelry Manufacturing of Metal Arts Inc. vs. Montecillo, G.R. No. 188169, November 28, 2011
Facts
In 1996 and 1994, respondents Madeline Montecillo (Madeline) and Liza Trinidad (Liza) were first employed
as goldsmiths by the petitioner Niña Jewelry Manufacturing of Metal Arts, Inc. (Niña Jewelry). Madeline's
weekly rate was P1,500.00 while Liza's was P2,500.00.
Incidents of theft involving goldsmiths caused Niña Jewelry to require the said employees to post cash bonds
or deposits in varying amounts but in no case exceeding 15% of their salaries per week. Purpose of which is to
answer for any loss or damage by reason of the goldsmith’s fault or negligence in handling the gold.
Niña Jewelry claims that the they were given the option to sign authorizations in lieu of the deposits allowing
allowing the company to deduct their salaries amounts not exceeding 15% of their take home pay should it be
found that they lost the gold entrusted to them.
However, respondents claimed that Niña Jewelry left them with no option but to post the deposits. They alleged
that they were constructively dismissed because their employments were made dependent on their readiness
to post the required deposits. Further claimed that they were made to sign blank trust receipts.
On the other hand, Niña Jewelry averred the respondents no longer reported for work and signified their
defiance against the new policy which at that point had not even been implemented yet.
On September 7, 2004, the respondents filed against Niña Jewelry complaints for illegal dismissal and for the
award of separation pay.
LA: dismissed the respondents' complaints but ordered Niña Jewelry to pay the respondent’s their 13 th month
pay for the year 2014. In dismissing the complaints, LA ratiocinated that; their claims that they were made to
sign blank trust receipts is self-serving and that they were not dismissed for respondents’ were only informed
to put up the cash bond before they could be allowed to return back to work.
NLRC: affirmed LA’s decision but deleted the 13th month pay for respondents had unpaid loans with the
petitioner.
CA: Reversed. NLRC was wrong in holding that there was abandonment of work if the employee fails to make
the required deposit for he will not be given gold to work on.
Issue
Whether or not the requirement of posting cash bond or have the same deducted from the worker’s salaries is
proper
Held
No. petitioners had failed to prove that their imposition of the new policy upon the goldsmiths falls under the
exceptions specified in articles 113 and 114 of the Labor Code.
While the petitioners are not absolutely precluded from imposing the new policy, they can only do so upon
compliance with the requirements of the law. In other words, the petitioners should first establish that the
making of deductions from the salaries is authorized by law, or regulations issued by the Secretary of Labor.
Further, the posting of cash bonds should be proven as a recognized practice in the jewelry manufacturing
business, or alternatively, the petitioners should seek for the determination by the Secretary of Labor through
the issuance of appropriate rules and regulations that the policy the former seeks to implement is necessary or
desirable in the conduct of business. The petitioners failed in this respect. It bears stressing that without proofs
that requiring deposits and effecting deductions are recognized practices, or without securing the Secretary of
Labor's determination of the necessity or desirability of the same, the imposition of new policies relative to
deductions and deposits can be made subject to abuse by the employers. This is not what the law intends.
Page 92
3. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013

Facts
The respondent offered the position of Regional Sales Manager to the petitioner contained in an Offer Sheet
which contained a car plan, under which one-half of the cost of the vehicle is to be paid by the company and the
other half to be deducted from petitioner’s salary.
The petitioner resigned two years later. By then, a total of P112,500.00 had been deducted from his monthly
salary and applied as part of the employee’s share in the car plan.
The petitioner made personal and written follow-ups regarding his unpaid salaries, commissions, benefits, and
offer to purchase his service vehicle.
The respondent replied that the company car plan benefit applied only to employees who have been in the
company for five years; for this reason, the balance that petitioner should pay on his service vehicle stood at
P116,380.00 if he opts to purchase the same.
The petitioner filed a complaint for the recovery of monetary claims consisting of unpaid salaries, commissions,
sick/vacation leave benefits, and recovery of monthly salary deductions which are earmarked for his cost-
sharing in the car plan.
The Labor Arbiter rendered a decision ordering the respondent to turn-over the subject vehicle upon payment
of the petitioner of the sum of P100,435.84.
The National Labor Relations Commission reversed and set aside the decision of the Labor Arbiter ordering the
respondent to pay the unpaid dues owing the petitioner further contending that the deduction paid by the
petitioner from the company car plan should be returned to him otherwise it would result to unjust enrichment
considering the vehicle remained in possession of the company.
The Court of Appeals upon a special civil action for certiorari initiated by the respondent reversed and set aside
the decision of the NLRC holding that as per agreement in company car plan should the remaining installments
not be paid by the employee the company would retain possession over the vehicle. The monthly payments the
petitioner made were to be treated as rentals for the use of his service vehicle for the duration of his
employment. And thus, the amounts already paid by him should not be returned to him. The Court of Appeals
affirmed the decision of the NLRC regarding the other matters involving unpaid benefits.
Issue
Whether or not the petitioner is entitled to a refund of all amounts applied to the cost of the service vehicle
under the car plan.
Held
The Supreme Court granted the petition in part holding that there was nothing in the terms and conditions of
the car plan that indicated that the unpaid installment plans would not be reimbursed to the petitioner upon
his failure to fully pay for the same. Thus, it is the appellate court’s patent error to presume that such should
be treated as rentals and not subsequently returned to the petitioner. The forfeiture of the installments already
paid was not indicated in the terms and conditions neither is it for the sole benefit of the petitioner considering
the same was a necessity for the continued operations of the company. The petitioner would’ve been unable to
cover the vast tract of area assigned to him lacking the necessary vehicle at his disposal, therefore, the same
had redounded fully to the benefit of the company. In accordance with Article 22 of the Civil Code there is unjust
enrichment when a person has benefit without justification at the expense of another. In this case that would
definitely occur should the installments paid be forfeited in favor of the respondent, however, the petitioner
cannot recover the amount paid on the part of the company.
Page 93
4. TH Shopfitters Corp., et al., vs. T&H Shopfitters Corp., Union, GR No. 191714, Feb 26, 2014
Facts
T&H Shopfitters Corporation/ Gin Queen Corporation workers union filed their Complaint for ULP by way of
union busting, and Illegal Lockout, with moral and exemplary damages and attorney’s fees, against T&H
Shopfitters and Gin Queen, before the Labor Arbiter. Respondents treated T&H Shopfitters and Gin Queen as a
single entity and their sole employer. In their desire to improve their working conditions, respondents and
other employees of petitioners held their first formal meeting to discuss the formation of a union. The following
day 17 employees were barred from entering petitioners’ factory premises located in Castillejos, Zambales, and
ordered to transfer to T&H Shopfitters’ warehouse at Subic Bay Freeport Zone purportedly because of its
expansion. Afterwards, the said 17 employees were repeatedly ordered to go on forced leave due to the
unavailability of work.
DOLE eventually issued a certificate of registration in favor of the THGQ Union. Respondents contended that
the affected employees were not given regular work assignments, while subcontractors were continuously
hired to perform their functions. With the assistance of the National Conciliation and Mediation Board, the
parties came to an agreement. Petitioners agreed to give priority to regular employees in the distribution of
work assignments. Respondents averred, however, that petitioners never complied with its commitment but
instead hired contractual workers.
When a certification election was finally scheduled, the president of Gin Queen through a memorandum
announced that it was relocating its office and workers in Cabangan, Zambales. The area in Cabangan was a
talahiban and the union officers and members were made to work as grass cutters according to the
respondents. When the workers did not report for work, the officers were made to explain and the other
employees were meted out with suspension. A day before the election, the petitioners sponsored a field trip
where the union officers and members were not included. Allegedly, a sales officer campaigned against the
union. Due to the heavy pressure exerted by petitioners, the votes for "no union" prevailed. Respondents
averred that the following week after the certification elections were held, petitioners retrenched THG-GQ
Union officers and members assigned at the Zambales plant. Respondents claimed that the work weeks of those
employees in the SBFZ plant were drastically reduced to only three (3) days in a month.
In its defense, Gin Queen, claiming that it is a corporation separate and distinct from T&H Shopfitters, stressed
that respondents were all employees. Gin Queen claimed that due to the decrease in orders from its customers,
they had to resort to cost cutting measures to avoid anticipated financial losses. Thus, it assigned work on a
rotational basis. It was of the impression that the employees, who opposed its economic measures, were merely
motivated by spite in filing the complaint for ULP against it. In addition, Gin Queen explained that its transfer
from Castillejos, Zambales to Cabangan, Zambales was a result of the expiration of its lease agreement with
Myra D. Lumibao (Myra), its lessor. Since the Cabangan site was bare and still required construction, Gin Queen
offered work, to employees who opted to stay, on rotation as well.
LA ruled against the union. The decision was appealed to the NLRC which reversed the decision of the LA and
also ruled against the MR.
“Furthermore, it is noteworthy that, based on their Articles of Incorporation, T & H Corporation and Gin Queen
Corporation are engaged in the same line of business. It should also be noted that respondents did not
controvert the allegations to the effect that Myra D. Lumibao, the supposed lessor of respondent corporations,
is the wife of respondent Stennis Huang, and that Gin Queen Corporation has been renamed ‘MDL’, but still
carries on the same business in the same premises using the same machines and facilities. These circumstances,
together with the supposed assignment of respondent Stennis Huang’s interest in Gin Queen Corporation to a
third party are badges of fraud that justify the piercing of the veil of corporate fiction. x x x
Thus, based on the foregoing, respondents T & H Shopfitters Corporation, Gin Queen Corporation (now known
as ‘MDL’) and Stennis Huang, as well as the presidents of the respondent corporations as of November 2003
and the date of execution of this decision may be held liable for unfair labor practice and the corresponding
award of moral and exemplary damages.”
CA affirmed the NLRC decision. (THE DECISIONS MAY BE READ FROM THE ORIGINAL CASE)
Page 94
Issue
W/N ULP acts were committed by petitioners against respondents in the case at bench
Held
YES. (BASICALLY THE SC AFFIRMS THE NLRC RULING ON THE PIERCING PART. The rest of the decision is
labor related na.) In support of their position, petitioners stress that T&H Shopfitters and Gin Queen are
corporations separate and distinct from each other. Consequently, T&H Shopfitters and Stinnes Huang, an
officer of T&H Shopfitters, cannot be held liable for ULP for the reason that there is no employer-employee
relationship between the former and respondents. Further, Gin Queen avers that its decision to implement an
enforced rotation of work assignments for respondents was a management prerogative permitted by law,
justified by the decrease in the orders it received from its customers. It explains that its failure to present
concrete proof of its decreasing orders was due to the impossibility of proving a negative assertion. It also
asserts that the transfer from Castillejos to Cabangan was made in good faith and solely because of the
expiration of its lease contract in Castillejos. The court disagrees and affirms the NLRC ruling on this issue.
The questioned acts of petitioners, namely: 1) sponsoring a field trip to Zambales for its employees, to the
exclusion of union members, before the scheduled certification election; 2) the active campaign by the sales
officer of petitioners against the union prevailing as a bargaining agent during the field trip; 3) escorting its
employees after the field trip to the polling center; 4) the continuous hiring of subcontractors performing
respondents’ functions; 5) assigning union members to the Cabangan site to work as grass cutters; and 6) the
enforcement of work on a rotational basis for union members, all reek of interference on the part of petitioners.
Indubitably, the various acts of petitioners, taken together, reasonably support an inference that, indeed, such
were all orchestrated to restrict respondents’ free exercise of their right to self-organization. The Court is of
the considered view that petitioners’ undisputed actions prior and immediately before the scheduled
certification election, while seemingly innocuous, unduly meddled in the affairs of its employees in selecting
their exclusive bargaining representative.
More importantly, petitioners' bare denial of some of the complained acts and unacceptable explanations, a
mere afterhought at best, cannot prevail over respondents' detailed narration of the events that transpired. At
this juncture, it bears to emphasize that in labor cases, the quantum of proof necessary is substantial
evidence,18 or that amount of relevant evidence as a reasonable mind might accept as adequate to support a
conclusion, even if other minds, equally reasonable, might conceivably opine otherwise.
Page 95
5. Wesleyan University-Phils., vs. Wesleyan University-Phils., Faculty & Staff Asso., GR No. 181806, March 12,
2014
Facts
Petitioner Wesleyan University-Philippines is a non-stock, non-profit educational institution duly organized
and existing under the laws of the Philippines. Respondent Wesleyan University-Philippines Faculty and Staff
Association, on the other hand, is a duly registered labor organization acting as the sole and exclusive
bargaining agent of all rank-and-file faculty and staff employees of petitioner. In 2003, the parties signed a 5-
year CBA effective June 1, 2003 until May 31, 2008.
On August 16, 2005, petitioner, through its President, Atty. Maglaya issued a Memorandum providing
guidelines on the implementation of vacation and sick leave credits as well as vacation leave commutation. On
August 25, 2005, respondent's President, De Lara wrote a letter to Atty. Maglaya informing him that respondent
is not amenable to the unilateral changes made by petitioner.
On February 8, 2006, a Labor Management Committee (LMC) Meeting was held during which petitioner advised
respondent to file a grievance complaint on the implementation of the vacation and sick leave policy. In the
same meeting, petitioner announced its plan of implementing a one-retirement policy, which was unacceptable
to respondent.
The parties referred the matter to a Voluntary Arbitrator who rendered a decision declaring the one-retirement
policy and the Memorandum dated August 16, 2005 as contrary to law. On appeal, the CA affirmed the decision
of the Voluntary Arbitrator supported by substantial evidence. Hence this petition.
Issue
Whether the petitioner's unilateral acts violated the rule on non-diminution of benefits.
Held
Yes, there is a violation on non-diminution of Benefits.
The Non-Diminution Rule found in Article 100 of the Labor Code explicitly prohibits employers from
eliminating or reducing the benefits received by their employees. This rule, however, applies only if the benefit
is based on an express policy, a written contract, or has ripened into a practice. To be considered a practice, it
must be consistently and deliberately made by the employer over a long period of time.
An exception to the rule is when "the practice is due to error in the construction or application of a doubtful or
difficult question of law." The error, however, must be corrected immediately after its discovery; otherwise,
the rule on Non-Diminution of Benefits would still apply.
Page 96
6. Bluer Than Blue Joint Ventures Co., vs. Esteban, GR No. 192582, April 7, 2014, citing 2011 Nina Jewelry
Manufacturing of Metal Arts Inc. vs. Montecillo
Facts
The respondent was employed as a sales clerk and assigned at the petitioner’s boutique. Her primary tasks
were attending to all customer needs, ensuring efficient inventory, coordinating orders from clients, cashiering
and reporting to the accounting department. The petitioner learned that some of their employees had access
to their POS system with the use of a universal password given to them by a certain Elmer Flores, who in turn
learned of the password from the respondent. The petitioner then conducted an investigation and asked the
petitioner to explain why she should not be disciplinarily dealt with.
During the investigation the respondent was placed under preventive suspension. After investigation the
petitioner terminated the respondent on the grounds of loss of trust or confidence. This respondent was given
her final wage and benefits less the inventory variance incurred by the store. This urged the respondent to file
a complaint for illegal dismissal, illegal suspension, holiday pay, rest day and separation pay.
The labor arbiter ruled in her favor awarding her backwages. The petitioner appealed the decision in the NLRC
and the decision was reversed. However, upon the respondent’s petition for certiorari in the court of appeals
the decision was reinstated. Hence, this petition.
Issue
Whether the negative sales variance could be validly deducted from the respondent’s wage.
Held
No, it cannot be deducted in this case.
Article 113 of the Labor Code provides that no employer, in his own behalf or in behalf of any person, shall
make any deduction from the wages of his employees, except in cases where the employer is authorized by law
or regulations issued by the Secretary of Labor and Employment, among others. The Omnibus Rules
Implementing the Labor Code, meanwhile, provides:
SECTION 14. Deduction for loss or damage. — Where the employer is engaged in a trade, occupation or business
where the practice of making deductions or requiring deposits is recognized to answer for the reimbursement
of loss or damage to tools, materials, or equipment supplied by the employer to the employee, the employer
may make wage deductions or require the employees to make deposits from which deductions shall be made,
subject to the following conditions:
1. That the employee concerned is clearly shown to be responsible for the loss or damage;
2. That the employee is given reasonable opportunity to show cause why deduction should not be made;
3. That the amount of such deduction is fair and reasonable and shall not exceed the actual loss or damage; and
4. That the deduction from the wages of the employee does not exceed 20 percent of the employee's wages in
a week.
In this case, the petitioner failed to sufficiently establish that Esteban was responsible for the negative variance
it had in its sales for the year 2005 to 2006 and that Esteban was given the opportunity to show cause the
deduction from her last salary should not be made.
Furthermore, the court ruled, in Nina Jewelry Marketing of Metal Arts, Inc. v. Montecillo, that:
The petitioners should first establish that the making of deductions from the salaries is authorized by law, or
regulations issued by the Secretary of Labor. Further, the posting of cash bonds should be proven as a
recognized practice in the jewelry manufacturing business, or alternatively, the petitioners should seek for the
determination by the Secretary of Labor through the issuance of appropriate rules and regulations that the
policy the former seeks to implement is necessary or desirable in the conduct of business. The petitioners failed
in this respect. It bears stressing that without proofs that requiring deposits and effecting deductions are
recognized practices, or without securing the Secretary of Labor's determination of the necessity or desirability
Page 97
of the same, the imposition of new policies relative to deductions and deposits can be made subject to abuse by
the employers. This is not what the law intends.
Page 98
7. Netlink Computer Inc. vs. Delmo, GR No. 160827, June 18, 2014
In the absence of a written agreement between the employer and the employee that sales commissions shall
be paid in a foreign currency, the latter has the right to be paid in such foreign currency once the same has
become an established practice of the former. The rate of exchange at the time of payment, not the rate of
exchange at the time of the sales, controls.
Facts
Netlink hired Delmo as account manager tasked to canvass and source clients and convince them to purchase
the products and services of Netlink. Delmo worked in the field most of the time. He and his fellow account
managers were not required to accomplish time cards to record their personal presence in the office of Netlink.
He was able to generate sales worth P35,000,000.00, more or less, from which he earned commissions
amounting to P993,558.89 and US$7,588.30. He then requested payment of his commissions, but Netlink
refused and only gave him partial cash advances chargeable to hisc ommissions. Later on, Netlink began to
nitpick and fault find, like stressing his supposed absences and tardiness. In order to force him to resign, Netlink
issued several memoranda detailing his supposed infractions of the company’s attendance policy. Despite the
memoranda, Delmo continued to generate huge sales for Netlink. On November 28, 1996, Delmo was shocked
when he was refused entry into the company premises by the security guard pursuant to a memorandum to
that effect. His personal belongings were still inside the company premises and he sought their return to him.
This incident prompted Delmo to filea complaint for illegal dismissal. In its answer to Delmo’s complaint,
Netlink countered that there were guidelines regarding company working time and its utilization and how the
employees’ time would be recorded. Allegedly, all personnel were required to use the bundy clock to punch in
and out in the morning, and in and out in the afternoon. Excepted from the rules were the company officers,
and the authorized personnel in the field project assignments. Netlink claimed that it would be losing on the
business transactions closed byDelmo due to the high costs of equipment, and in fact his biggest client had not
yet paid. Netlink pointed out that Delmo had become very lax in his obligations, with the other account
managers eventually having outperformed him. Netlink asserted that warning, reprimand, and suspension
memoranda were given to employees who violated company rules and regulations, but such actions were
considered as a necessary management tool to instill discipline.
LA: Delmo was illegally and unjustly dismissed. Respondents were ordered to reinstate complainant to
hisformer position without loss of seniority rights with full backwages and other benefits. The
reinstatementaspect is immediately executory even pending appeal. In case reinstatement is no longer
feasible,complainant shall be paid separation pay of one-month pay for every year of service.
NLRC: Modified the decision of the LA by setting aside the backwages and reinstatement decreed by the Labor
Arbiter due to the existence of valid and just causes for the termination of Delmo’s employment.
CA: Upholds NLRC’s ruling with modifications with the awarding of commission and 13 th month pay to the
respondent. Whole commission was not awarded since commission is made to depend on the future and
uncertain event. As regard to 13th month pay, petitioner was not made to pay because employment was
terminated based on valid and just cause although he was not given due process.
Issues
(1) WON the payment of the commissions should be in US dollars.
(2) WON the award of attorney’s fees was warranted.
Page 99
Held
1. YES. As a general rule, all obligations shall be paid in Philippine currency. However, the contracting parties
may stipulate that foreign currencies may be used for settling obligations. This is pursuant to Republic Act No.
8183 which provides as follows:
“Section 1. All monetary obligations shall be settled in the Philippine currency which is legal tender in the
Philippines. However, the parties may agree that the obligation or transaction shall be settled in any other
currency at the time of payment.”
There was no written contract between Netlink and Delmo stipulating that the latter’s commissions would be
paid in US dollars.
The absence of the contractual stipulation notwithstanding, Netlink was still liable to pay Delmo in US dollars
because the practice of paying its sales agents in US dollars for their US dollar-denominated sales had become
a company policy. This was impliedly admitted by Netlink when it did not refute the allegation that the
commissions earned by Delmo and its other sales agents had been paid in US dollars. Instead of denying the
allegation, Netlink only sought a declaration that the US dollar commissions be paid using the exchange rate at
the time of sale. The principle of non-diminution of benefits, which has been incorporated in Article 100 of the
Labor Code, forbade Netlink from unilaterally reducing, diminishing, discontinuing or eliminating the practice.
Verily, the phrase "supplements, or other employee benefits" in Article 100 is construed to mean the
compensation and privileges received by an employee aside from regular salaries or wages. With the payment
of US dollar commissions having ripened into a company practice, there is no way that the commissions due to
Delmo were to be paid in US dollars or their equivalent in Philippine currency determined at the time of the
sales. To rule otherwise would be to cause an unjust diminution of the commissions due and owing to Delmo.
2. YES. The award of attorney's fees must, likewise, be upheld in line of (sic) the decision of the Supreme Court
in the case of Consolidated Rural Bank (Cagayan Valley), Inc. vs. National Labor Relations Commission, 301
SCRA 223, 235, where it was held that "in actions for recovery of wages or where an employee was forced to
litigate and thus incur expenses to protect her rights and interests, even if not so claimed, an award of attorney's
fees equivalent to ten percent (10%) of the total award is legally and morally justifiable. There is no doubt that
in the present case, the private respondent has incurred expenses for the protection and enforcement of his
right to his commissions.
Page 100
8. PLDT vs. Estranero, GR No. 192518, October 15, 2014
Facts
PLDT employed Henry Estranero as an Auto-Mechanic/Electrician Helper with a monthly salary of P15,000.00.
PLDT adopted a company-wide Manpower Reduction Program (MRP) to reduce its work force. The company
offered an attractive redundancy pay consisting of 100% of their basic monthly salary for every year of service,
in addition to their retirement benefits, if entitled and for those who were not qualified to the said benefits,
they were offered separation or redundancy package of 200% of their basic monthly salary for every year of
service. Estranero’s position was declared as redundant. Estranero availed the program. The company
computed his redundancy/separation benefits which amounted to P267,028.37. However, PLDT deducted
from the said amount the outstanding liabilities of Estranero from various loans he obtained from different
entities such as the Home Development Mutual Fund, PLDT Employees Credit Cooperative, Inc., PLDT Service
Cooperative, Inc., Social Security System (SSS) and the Manggagawa ng Komunikasyon sa Pilipinas which
amounted to P267,028.37 also. As a result, Estranero will receive nothing from the program. This prompted
Estranero to retract. However, he was no longer allowed to report for work.
Estranero filed a complaint for illegal dismissal with reinstatement against PLDT before the NLRC. The LA
sustained the validity of PLDT's redundancy program but ruled that the office lacks jurisdiction to pass upon
the issue of PLDT's act in deducting the total outstanding loans which Estranero obtained from different
entities. The National Labor Relations Commission (NLRC) and, then, the Court of Appeals affirmed the LA
decision.
Issue
Can PLDT validly deduct Estranero’s outstanding loan obligation from his redundancy pay?
Held
No. Any withholding of an employee's wages by an employer may only be allowed in the form of wage
deductions under the circumstances provided in Article 113 of the Labor Code, as well as the Omnibus Rules
implementing it. Further, Article 116of the Labor Code clearly provides that it is unlawful for any person,
directly or indirectly, to withhold any amount from the wages of a worker without the worker's consent.
In this case, the deductions made to Estanero's redundancy pay do not fall under any of the circumstances
provided under Article 113, nor was it established with certainty that the he has consented to the said
deductions or that PLDT had authority to make such deductions. The matter would have been different if the
deductions refer to Estranero's contributions for his being a member of SSS, HDMF, or withholding taxes on
income, because if such was the case, the contributions are deductions already sanctioned by existing laws.
Here, it is evidently emphasized that the subject deductions pertain to hiss outstanding loans from various
entities.
Furthermore, PLDT may not offset the outstanding loans of Estranero against the latter's monetary benefits.
Accordingly, set-off or legal compensation cannot take place between PLDT and Estranero because they are not
mutually creditor and debtor of each other.
Page 101
9. Milan et al vs. NLRC, GR No. 202961, Feb. 4, 2015

Facts
Petitioners, as employees of Solid Mills Inc., together with their families were allowed by Solid Mills to occupy
SMI village which is owned by Solid Mills for the reason that according to Solid Mills it was out of liberality and
for the convenience of the employees subject to the condition that they would vacate the premises anytime the
Company deems fit.
The employees were informed that the Solid Mills will cease operation due to serious business losses. A
memorandum of agreement was executed wherein Solid Mills will pay for the separation pay less
accountabilities, accrued sick leaves benefits, vacation leave benefits and 13 th month pay to the dismissed
employees.
Later, Solid Mills sent to petitioners individual notices to vacate SMI Village. Petitioners were required to sign
a memorandum of agreement as a condition for their benefits be released to them. In the said Memorandum, it
was also stated that they will leave the premises and that the house built therein will be demolished. Petitioners
refused to vacate the premises and demanded for the payment of their benefits. Thus, they filed complaints
before the Labor Arbiter for the alleged non-payment of separation pay, accrued sick and vacation leaves, and
13th month pay. They contends that their accrued benefits and separation pay should not be withheld because
such was given based on a company policy. And that the payment of 13 th month pay is in accordance with PD
851. Moreover, their possession of Solid Mills property is not an accountability that is subject to clearance
procedures and that they had already turned over to Solid Mills their uniforms and equipment when Solid Mills
ceased operations.
On the other hand, Solid Mills argued that petitioners’ complaint was premature because they had not vacated
its property.
The Labor Arbiter ruled in favor of the petitioners, contending that Solid Mills illegally withheld petitioners’
benefits and separation pay since such benefits are vested by law and contract. And that petitioners’ possession
of the premises should not be considered as “accountabilities” that must be cleared first before such benefits
will be released. Their possession “is not by virtue of any employer-employee relationship.” It is a civil issue,
which is outside the jurisdiction of the Labor Arbiter. On appeal, NLRC partially affirmed LA’s decision. It ruled
that although they are entitled to such benefit, Solid Mills was justified to withhold them because of the
petitioners’ refusal to vacate the premises. CA then denied the petitioners’ motion for reconsideration.
Issue
WON Solid Mills is justified in withholding the petitioners’ accrued benefits and separation pay due to the
latter’s refusal to vacate the premises owned by Solid Mills.
Held
Yes. Solid Mills is justified in withholding the accrued benefits and separation pay to the petitioners because of
their refusal to vacate the premises of the company which is considered as a liability or debt on their part that
is due to Solid Mills.
1. The National Labor Relations Commission may preliminarily determine issues related to rights arising
from an employer-employee relationship.
The National Labor Relations Commission has jurisdiction to determine, preliminarily, the parties’ rights over
a property, when it is necessary to determine an issue related to rights or claims arising from an employer-
employee relationship in accordance with Article 217 of the Labor Code. In this case, Petitioners’ claim that
they have the right to the immediate release of their benefits as employees separated from respondent Solid
Mills is a question arising from the employer-employee relationship between the parties.
As a general rule, a claim only needs to be sufficiently connected to the labor issue raised and must arise from
an employer-employee relationship for the labor tribunals to have jurisdiction. In the case at bar, Solid Mills
Page 102
claims that its properties are in petitioners’ possession by virtue of their status as its employees. And the issue
raised by the employer is connected to petitioners’ claim for benefits and is sufficiently intertwined with the
parties’ employer-employee relationship. Hence, the Labor Arbiter has jurisdiction.
2. Institution of clearance procedures has legal bases
Requiring clearance before the release of last payments to the employee is a standard procedure among
employers, whether public or private. In order to ensure that the properties of the employer are returned
before the employee’s departure with the company.
As a general rule, employers are prohibited from withholding wages from employees in accordance with Article
116 of the Labor Code. Moreover, it also prohibits the elimination or diminution of benefits as stated in Article
100 of the Labor Code. However, as an exception, the Labor Code under Article 113 (c) allows the deduction of
wages “in cases where the employer is authorized by law or regulations issued by the Secretary of Labor and
Employment.” Under Article 1706 of the Civil Code, the employer is authorized to withhold the employee’s
wage for the debt due to the employer.
In this case, the premises which the petitioners refused to vacate is an accountability. The return of the
property’s possession became an obligation or liability on the part of the employees when the employer-
employee relationship ceased. Thus, respondent Solid Mills has the right to withhold petitioners’ wages and
benefits because of the existing debt or liability.
Page 103
10. Galang et al., vs. Boie Takeda Chemicals Inc. et al., GR No. 183934, July 20, 2016
Facts
Respondent pharmaceutical company Boie Takeda Chemicals, Inc. (BTCI) hired petitioners Ernesto Galang and
Ma. Olga Jasmin Chan in August 28, 1975 and July 20, 1983, respectively. Through the years, petitioners rose
from the ranks and were promoted to Regional Sales Managers in 2000. Petitioners held these positions until
their separation from BTCI on May 1, 2004.
In February 2003, the new General Manager, Kazuhiko Nomura (Nomura), asked petitioners to apply for the
position of National Sales Director. Simultaneously, Nomura also asked Edwin Villanueva (Villanueva) and
Mimi Escarte, both Group Product Managers in the marketing department, to apply for the position of
Marketing Director. All four employees submitted themselves to interviews with the management. In the end,
Nomura hired an outsider from Novartis Company as Marketing Director, while the position of National Sales
Director remained vacant. Later, however, petitioners were informed that BTCI promoted Villanueva as
National Sales Director effective May 1, 2004. BTCI explained that the appointment was pursuant to its
management prerogative, and that it arrived at such decision only "after careful assessment of the situation,
the needs of the position and the qualifications of the respective candidates." The promotion of Villanueva as
the National Sales Director caused ill-feelings on petitioners' part.
After Villanueva's promotion, petitioners claimed that Nomura threatened to dismiss them from office if they
failed to perform well under the newly appointed National Sales Director. This prompted petitioners to inquire
if they could avail of early retirement package due to health reasons. Specifically, they requested Nomura if
they could avail of the early retirement package of 150% plus 120% of monthly salary for every year of service
tax free, and full ownership of service vehicle tax free. They claimed that this is the same retirement package
given to previous retirees namely. However, Nomura claims that this retirement package does not exist.
On April 28, 2004, petitioners intimated their intention to retire in a joint written letter of resignation dated
April 28, 2002 to Nomura, effective on April 30, 2004. Thereafter, petitioners received their retirement package
and other monetary pay from BTCI.
Upon petitioners' retirement, the positions of Regional Sales Manager were abolished, and a new position of
Operations Manager was created. On October 20, 2004, petitioners filed the complaint for constructive
dismissal and money claims before the NLRC Regional Arbitration Branch.
In a Decision dated May 16, 2005, the Labor Arbiter ruled that petitioners were constructively dismissed. The
Labor Arbiter explained that petitioners were forced to retire because Villanueva's appointment constituted
an abuse of exercise of management prerogative; and that subsequent events, such as the abolition of the
positions of Regional Sales Managers and the creation of the position of the Operations Manager show that
petitioners' easing out from service were orchestrated. Upon appeal, the NLRC ruled that petitioners failed to
prove that they were constructively dismissed. The Court of Appeals affirmed the NLRC.
Issue
(1) Whether petitioners were constructively dismissed from service;
(2) Whether petitioners are entitled to a higher retirement package.
Held
(1) No. Petitioners voluntarily retired from the service, thus were not constructively dismissed.
Constructive dismissal has often been defined as a "dismissal in disguise" or "an act amounting to dismissal
but made to appear as if it were not." It exists where there is cessation of work because continued
employment is rendered impossible, unreasonable or unlikely, as an offer involving a demotion in rank and
a diminution in pay. In this case, petitioners were neither demoted nor did they receive a diminution in pay
and benefits. Petitioners also failed to show that employment is rendered impossible, unreasonable or
unlikely.
(2) No. Petitioners were not discriminated against in terms of their retirement package. The entitlement
of employees to retirement benefits must specifically be granted under existing laws, a collective
Page 104
bargaining agreement or employment contract, or an established employer policy. Based on both parties'
evidence, petitioners are not covered by any agreement. There is also no dispute that petitioners received
more than what is mandated by Article 287 of the Labor Code. However, they claim that they have been
discriminated, because BTCI has given better retirement packages to its other retired employees.
In Vergara v. Coca-Cola Bottlers Philippines, Inc., we explained that the burden of proof that the benefit has
ripened into company practice, i.e., giving of the benefit is done over a long period of time, and that it has been
made consistently and deliberately, rests with the employee. However, petitioners in this case have not
sufficiently proven the said company practice.
Page 105
11. Coca- Cola Bottlers Phils Inc., vs. CCBPI Sta Rosa Plant Employees Union, GR No. 197494, March 25, 2019
Facts: The petitioner CCBPI is engaged in the business of manufacturing, distributing, and marketing beverage
products while the respondent Union is a recognized labor union organized and registered with the
Department of Labor and Employment and the sole representative of all regular daily paid employees and
monthly paid non-commission earning employees within petitioner’s Sta. Rosa, Laguna plant. A dispute arose
when CCBPI implemented a policy limiting the total amount of loan which its employees may obtain from the
company and other sources such as the SSS, PAG-IBIG, and employees’ cooperative to 50% of their respective
monthly pay. The respondent Union interpreted this as a violation in the Collective Bargaining Agreement,
which states that petitioner CCBPI shall process all SSS loans of its employees, in spite of any outstanding
company loan of said employees, subject to SSS rules and regulations.
After conciliation efforts failed, the Union submitted the matter before the Voluntary Arbitrator. CCBPI argued
that the policy was in compliance with the Labor Code, considering that it ensures that the employees’ wages
are directly paid to them and not to third party creditors. The Voluntary Arbitrator ruled in favor of the Union,
maintaining that Section 2, Article 14 of the CBA is clear when it provided that CCBPI shall process all SSS loans,
subject only to SSS rules and regulations. As there was no modification of said stipulation, CCBPI was ordered
to implement said provision without restriction.
CCBPI appealed to the CA via Rule 43 of the Rules of Court, insisting it did not violate the CBA in enforcing the
policy as the limitation was aimed to protect and promote the welfare of the employees and prevent them from
becoming saddled with indebtedness. The CA however, affirmed the Voluntary Arbitrator’s decision, ruling that
the policy was indeed a violation to the CBA in the absence of any SSS regulation supporting the same.
Issue: Whether petitioner’s company policy which limits the availment of loans depending on the average take
home pay of its employees violates a provision in the CBA.
Ruling: The petition is denied.
Application: It is a familiar and fundamental doctrine in labor law, that the CBA is the law between the parties
and they are obliged to comply with its provisions. As in all contracts, the parties in a CBA may establish such
stipulations, clauses, terms and conditions as they may deem convenient provided these are not contrary to
law, morals, good customs, public order, or public policy. Thus, where the CBA is clear and unambiguous, it
becomes the law between the partied and compliance therewith is mandated by the express policy of the law.
The company policy puts a cap relative to the loan availment by the employees depending on the employees’
monthly basic net pay. In other words, petitioner shall disapprove the loan application of an employee whose
net take home pay falls below 50% of his average monthly basic pay. A plain reading of the CBA provision
provides for the commitment of the petitioner to process SSS salary loans, in particular, of its employees. The
only limitation is the application of SSS rules and regulations pertaining to the same. Undoubtedly, the company
policy is not an SSS rule or regulation. Hence, it is important to discuss whether said company policy is
sanctioned under SSS rules and regulations.
It appears that the qualification of a member-borrower is dependent on the amount of loan to be taken, updated
payment of his contributions and other loans, and age, which should be below 65 years. On the other hand, the
responsibility of an employer is limited to the collection and remittance of the employee's amortization to SSS
as it causes the deduction of said amortizations from the employee's salary. Based on said terms and conditions,
it does not appear that the employer has the prerogative to impose other conditions which does not involve its
duty to collect and remit amortizations. The 50% net take home pay requirement, in effect, further adds a
condition for an employee to obtain an SSS salary loan, on top of the requirements issued by the SSS. Hence,
when petitioner requires that the employee should have at least 50% net take home pay before it processes a
loan application, the same violates the CBA provision when a qualified employee chooses to apply for an SSS
loan.
With the implementation of the company policy, an employee, who is qualified to avail an SSS salary loan and
chooses to dispose of his salary through payment of monthly amortizations, may not be able to do so should
Page 106
such amortizations be over the 50% cap. In carrying out the 50% cap policy, petitioner effectively limits its
employees on the utilization of their salaries when it is apparent that as long as the employee is qualified to
avail the same, he/she may apply for an SSS loan.
Conclusion: With these, we rule that the company policy violated the provision of the CBA as it imposes a
restriction with respect to the right of the employees under the CBA to avail SSS salary loans. While petitioner's
cause for putting a limitation on the availment of loans, i.e., to promote the welfare of the employees and their
families by securing that the salary of the concerned employee shall be taken home to his family, is sympathetic,
we cannot subscribe to the same for being in contravention with the prohibition on interfering with the
disposal of wages under Article 112 of the Labor Code:
Art. 112. Non-interference in disposal of wages. No employer shall limit or otherwise interfere with the freedom
of any employee to dispose of his wages. He shall not in any manner force, compel, or oblige his employees to
purchase merchandise, commodities or other property from any other person, or otherwise make use of any
store or services of such employer or any other person.
Page 107
Topic 7: Payment of Wages

1. Congson vs. NLRC, 243 SCRA 260 [1995]
Facts
Congson is the registered owner of Southern Fishing Industry. Private respondents were hired on various dates
by petitioners as regular piece-rate workers. They were uniformly paid for P1.00 per tuna weighing 30-80 kg
per movement. They worked for 7 days a week. Sometime later, Congson notified his workers of his proposal
to reduce the rate-per-tuna movement due to the scarcity of tuna. Private respondents resisted the proposal.
When they reported for work the next day, they were informed that they had been replaced by a new set of
workers. Their request for dialogue was also unheeded.
Private respondents then filed a case against petitioner for underpayment of wages and non-payment of
overtime pay, 13th month pay, holiday pay, rest day pay, and five-day service incentive leave pay and
constructive dismissal. With respect to their monetary claims, private respondents charged petitioner with
violation of the minimum wage law alleging that with petitioner’s rates and the scarcity of tuna catches, private
respondents’ average monthly earnings each did not exceed P1,000.00.
The Labor Arbiter ruled for the employees. Southern Fishing Industry and Mr. Congson is directed to pay jointly
and severally the employees’ respective separation way and monetary claims for salary differentials. The
claims for overtime pay, holiday pay and rest day are dismissed for lack of factual basis. Petitioners are also
guilty for constructive dismissal. On the salary differentials, Congson failed to adduce any evidence or
document showing that under their peculiar arrangements, complainants were receiving compensation at par
or above the then existing minimum wage.
On appeal, respondent NLRC found petitioner guilty of illegal dismissal. It therefore affirmed the labor arbiter’s
findings and monetary awards. It likewise denied petitioner’s motion for reconsideration as well as the
supplemental motion for reconsideration. Petitioner takes issue with the manner the Labor Arbiter computed
private respondents’ wage differentials. They argued that complainants actually received the amount of P2.00.
(P1.00 for the movement and that there are 2 movements from the fishing boat to the cold storage hence,
complainants are actually receiving P2.00 per piece of tuna; for every tuna delivered, private respondents were
able to extract at least 3 kilos of intestine and liver, minimum price of which ranges from P15.00-P20.00).
Petitioner contends that notwithstanding the fact that private respondents’ actual cash wage fell below the
minimum wage fixed by law, respondent NLRC should have considered as forming a substantial part of private
respondents’ total wages the cash value of the tuna liver and intestines private respondents were entitled to
retrieve.
Issue
Whether or not there is grave abuse of discretion on the part of NLRC in upholding Labor Arbiter’s award of
salary differentials.
Held
No. There is no grave abuse of discretion on the part of NLRC in upholding Labor Arbiter’s award of salary
differentials.
Petitioner’s practice of paying the private respondents the minimum wage by means of legal tender combined
with tuna liver and intestines runs counter to the above cited provision of the labor code. The fact that said
method of paying the minimum wage was not only agreed upon by both parties in the employment agreement
but even expressly requested by private respondents does not shield petitioner. Article 102 of the Labor Code
is clear. Wages shall be paid only by means of legal tender. The only instance when an employer is permitted
Page 108
to pay wages in forms other than legal tender, that is, by checks or money order, is when the circumstances
prescribed in the 2nd paragraph of Article 102 are present.
Page 109
2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]

Facts
Petitioner, North Davao Mining Corporation (North Davao) was incorporated in 1974 as a 100% privately-
owned company. Later, the Philippine National Bank (PNB) became part owner thereof as a result of a
conversion into equity of a portion of loans obtained by North Davao from said bank. On June 30, 1986, PNB
transferred all its loans to and equity in North Davao in favor of the national government which, by virtue of
Proclamation No. 50 later turned them over to petitioner Asset Privatization Trust (APT). As of December 31,
1990 the national government held 81.8% of the common stock and 100% of the preferred stock of said
company.
On May 31, 1992, petitioner North Davao completely ceased operations due to serious business reverses. From
1988 until its closure in 1992, North Davao suffered net losses averaging three billion pesos
(P3,000,000,000.00) per year, for each of the five years prior to its closure.
When it ceased operations, its remaining employees were separated and given the equivalent of 12.5 days' pay
for every year of service, computed on their basic monthly pay, in addition to the commutation to cash of their
unused vacation and sick leaves. However, it appears that, during the life of the petitioner corporation, from
the beginning of its operations in 1981 until its closure in 1992, it had been giving separation pay equivalent
to thirty (30) days' pay for every year of service.
Moreover, inasmuch as the region where North Davao operated was plagued by insurgency and other peace
and order problems, the employees had to collect their salaries at a bank in Tagum, Davao Del Norte, some 58
kilometers from their workplace and about 2 1/2 hours' travel time by public transportation; this arrangement
lasted from 1981 up to 1990.
Respondent Wilfredo Guillema is one among several employees of North Davao who were separated by reason
of the company's closure, and one of the 272 complainants who filed cases before the labor arbiter, praying for:
(1) additional separation pay of 17.5 days for every year of service; (2) back wages equivalent to two days a
month; (3) transportation allowance; (4) hazard pay; (5) housing allowance; (6) food allowance; (7) post-
employment medical clearance; and (8) future medical allowance, all of which amounted to P58,022,878.31 as
computed by private respondent.
Respondent Labor Arbiter rendered a decision ordering petitioner North Davao to pay the complainants the
following:
"(a) Additional separation pay of 17.5 days for every year of service;
(b) Backwages equivalent to two (2) days a month times the number of years of service but not to
exceed three (3) years;
(c) Transportation allowance at P80 a month times the number of years of service but not to exceed
three (3) years."
Respondent NLRC affirmed the decision in toto.
Hence, this petition filed by North Davao Mining Corporation.
Issues
1. Whether or not an employer whose business operations ceased due to serious business losses or financial
reverses is obliged to pay separation pay to its employees separated by reason of such closure.
2. Whether or not time spent in collecting wages in a place other than the place of employment is compensable
notwithstanding that the same is done during official time.
3. Whether or not private respondents are entitled to transportation expenses in the absence of evidence that
these expenses were incurred.
Page 110
Held
1) NO, petitioner company is not obliged to pay separation pay to its employees separated by reason of
serious business losses or financial reverses.
Art. 283 of the Labor Code governs the grant of separation benefits "in case of closures or cessation of
operation" of business establishments "NOT due to serious business losses or financial reverses . . .". Where,
however, the closure was due to business losses — as in the instant case, in which the aggregate losses
amounted to over P20 billion — the Labor Code does not impose any obligation upon the employer to pay
separation benefits.
Respondents tenaciously insist on the award of separation pay, anchoring their claim solely on petitioner North
Davao's long-standing policy of giving separation pay benefits equivalent to 30-days' pay, which policy had
been in force in the years prior to its closure. Respondents contend that, by denying the same separation
benefits to private respondents and the others similarly situated, petitioners discriminated against them.
In the instant case, the company's practice of giving one month's pay for every year of service could no longer
be continued precisely because the company could not afford it anymore. It was forced to close down on
account of accumulated losses of over P20 billion. The fact that less separation benefits were granted when the
company finally met its business death cannot be characterized as discrimination. Such action was dictated not
by a discriminatory management option but by its complete inability to continue its business life due to
accumulated losses.
The grant of a lesser amount of separation pay to private respondent was done, not by reason of discrimination,
but rather, out of sheer financial bankruptcy — a fact that is not controlled by management prerogatives. The
total cessation of operation due to mind-boggling losses was a supervening fact that prevented the company
from continuing to grant the more generous amount of separation pay. The fact that North Davao at the point
of its forced closure voluntarily paid any separation benefits at all — although not required by law — and 12.5-
days' worth at that, should have elicited admiration instead of condemnation. But to require it to continue being
generous when it is no longer in a position to do so would certainly be unduly oppressive, unfair and most
revolting to the conscience.
2) YES, time spent in collecting wages in a place other than the place of employment is compensable and
private respondents are entitled to transportation expenses.
Anent the award of back wages and transportation allowance, the issues raised are factual, the determination
of which is best left to the respondent NLRC. It is well settled that the SC is bound by the findings of fact of the
NLRC, so long as said findings are supported by substantial evidence.
It is undisputed that because of security reasons, from the time of its operations, petitioner NDMC maintained
its policy of paying its workers at a bank in Tagum, Davao del Norte, which usually took the workers about two
and a half (2 1/2) hours of travel from the place of work and such travel time is not official.
Records also show that on February 12, 1992, when an inspection was conducted by the Department of Labor
and Employment at the premises of petitioner NDMC at Amacan, Maco, Davao del Norte, it was found out that
petitioners had violated labor standards law, one of which is the place of payment of wages.
Section 4, Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides that
(a) As a general rule, the place of payment shall be at or near the place of undertaking. Payment in a
place other than the workplace shall be permissible only under the following circumstances:
(1) When payment cannot be effected at or near the place of work by reason of the deterioration of
peace and order conditions, or by reason of actual or impending emergencies caused by fire, flood,
epidemic or other calamity rendering payment thereat impossible;
Page 111
(2) When the employer provides free transportation to the employees back and forth; and
(3) Under any analogous circumstances; provided that the time spent by the employees in collecting
their wages shall be considered as compensable hours worked.
Thus, public respondent Labor Arbiter Antonio M. Villanueva correctly held that:
'From the evidence on record, we find that the hours spend by complainants in collecting salaries at a
bank in Tagum, Davao del Norte shall be considered compensable hours worked. Considering further
the distance between Amacan, Maco to Tagum which is 2 1/2 hours by travel and the risks in
commuting all the time in collecting complainants' salaries, would justify the granting of backwages
equivalent to two (2) days in a month as prayed for.
'Corollary to the above findings, and for equitable reasons, we likewise hold respondents liable for the
transportation expenses incurred by complainants at P40.00 round trip fare during pay days.'
Wherefore, judgment is hereby rendered MODIFYING the assailed Resolution by SETTING ASIDE and deleting
the award for "additional separation pay of 17.5 days for every year of service," and AFFIRMING it in all other
aspects.
Page 112
3. House of Sara Lee vs. Rey, G.R. No. 149013, Aug. 31, 2006
Facts
Petitioner is a business of direct selling of a variety of product lines for men and women including cosmetics,
apparels, perfumes and other novelty items. Petitioner engaged the services of the respondent as the Credit
Administration Supervisors (CAS) who is tasked to strictly monitor each of deadlines and to supervise credit
collection of payments and outstanding accounts of the dealers and customers. Problem arose when it was
discovered that respondent had been extending credit terms beyond the periods allowed by company policy.
Subsequently, on the basis of voluntary admission of the respondent and the findings of the auditor’s report,
the respondent was formally dismissed for breach of trust and confidence.
The respondent filed a complaint for illegal dismissal, backwages and damages before the Labor Arbiter. LA
favored the respondent on the ground that petitioner failed to established that it was the respondent who
manipulated the credit terms since other employees have also access. In addition, the respondent was not also
informed of the possible sanctions for the said acts. The LA ordered the payment of the backwages, the 13 th
month pay, and separation pay.
The petitioner appealed to the NLRC which dismissed the complaint, affirming the LA’s decision. NLRC held
that since petitioner allowed respondent to manage the branch in CDO for three months after the branch
manager resigned, such negated the loss of trust and confidence claimed by the petitioner. The petitioner
appealed to the CA which once again dismissed the case; hence this petition.
Issues
1) Whether or not the dismissal of the respondent was valid.
2) Whether or not respondent is entitled to 13th month pay, 14th and 15th month pay, monthly salary
increase of 10% per year for two years based on her latest salary rate, and separation pay
Held
1) The dismissal is valid. The Supreme Court held that law and jurisprudence has long recognized the
right of employers to dismiss employees by reason of loss of trust and confidence. The Court
differentiated the treatment of managerial employees from that rank-and-file personnel in the
applying the doctrine of loss and trust confidence. In the case of managerial employees, proof beyond
reasonable doubt is not required. It is already enough that there is some basis for the loss of confidence
such that the employer has reasonable ground to believe that the employee is responsible for the
misconduct or the employee’s participation renders him unworthy of trust and confidence.
This requirement is present in this case. The Supreme Court held that respondent is indeed guilty of
the repeated acts of the fraudulent scheme. As a CAS she was aware of the consequences of her acts to
the company. Although, the respondent pending the final outcome of the investigation became the
branch manager, the employer may proceed to dismissed her after the due investigation. Taking her
back is oppressive and unjust on the petitioner.
2) The award of the 13th month pay must be deleted since respondent is not a rank-and-file employee.
The Supreme Court held that NLRC and CA correctly refused the 14 th and 15th month pay since the
respondent must prove that such are due to her as a matter of right. The monthly salary increase of
10% per year for two years based on her latest salary rate should not be granted unless she can prove
she has a vested right to the same. Lastly, separation pay must be deleted since such is allowed only in
instances where the employee is validly dismissed for causes other than serious misconduct or those
reflecting her moral character. Since the respondent was dismissed because of her lack of integrity as
a CAS, then she does not deserve a separation pay.
Page 113
Topic 8: Conditions of Employment
1. San Juan De Dios Hospital vs. NLRC, 282 SCRA 316 [1997]
Facts
Petitioners, the rank-and-file employee-union officers and members of San Juan De Dios Hospital Employees
Association, sent a written request for the expeditious implementation and payment by respondent, San Juan
de Dios Hospital, of the "40-Hours/5-Day workweek" with compensable weekly two days off as provided for
by Republic Act 5901 as clarified for enforcement by the Secretary of Labor's Policy Instructions No. 54 dated
April 12, 1988. Petitioners’ position is that “hospital employees” are entitled to a “full weekly salary with paid
two (2) days off if they have completed the 40-hour/5 day workweek. Respondent hospital failed to give a
favorable response; thus, petitioners filed a complaint regarding their "claims for statutory benefits under the
above-cited law and policy issuance."
The Labor Arbiter, however, dismissed the complaint. Petitioners appealed before public respondent National
Labor Relations Commission (NLRC), which affirmed the Labor Arbiter's decision. Hence, this petition,
ascribing grave abuse of discretion on the part of NLRC in concluding that Policy Instructions No. 54 "proceeds
from a wrong interpretation of RA 5901 " and Article 83 of the Labor Code.
Issue
Whether Policy Instructions No. 54 issued by then Labor Secretary Franklin M. Drilon is valid or not.
Held
Policy Instructions No. 54 is invalid. Republic Act 5901 was repealed with the passage of the Labor Code. Even
assuming that such was not the case, Policy Instructions No. 54 still erroneously applied Republic Act 5901 and,
the very rules and regulations promulgated by the Bureau of Labor Standards which implement Republic Act
5901
There is nothing in the law (Article 83 of the Labor Code) that supports then Secretary of Labor's assertion that
"personnel in subject hospitals and clinics are entitled to a full weekly wage for seven (7) days if they have
completed the 40-hour/5-day workweek in any given workweek". What Article 83 of the Labor Code merely
provides are: (1) the regular office hour of eight hours a day, five days per week for health personnel, and (2)
where the exigencies of service require that health personnel work for six days or forty-eight hours then such
health personnel shall be entitled to an additional compensation of at least thirty percent of their regular wage
for work on the sixth day. Needless to say, the Secretary of Labor exceeded his authority by including two days
off with pay in contravention of the clear mandate of the statute.
A perusal of Republic Act No. 5901 reveals nothing therein that gives two days off with pay for health personnel
who complete a 40-hour work or 5-day workweek. The Explanatory Note of House Bill No. 16630 (later passed
into law as Republic Act No. 5901 ) explicitly states that the bill's sole purpose is to shorten the working hours
of health personnel and not to dole out a two days off with pay.
Therefore, Policy Instructions No. 54 being inconsistent with and repugnant to the provision of Article 83 of
the Labor Code, as well as to Republic Act No. 5901 ,should be, as it is hereby, declared void.
Page 114
2. Sime Darby vs. NLRC, 289 SCRA 86 [1998]

Facts
Sime Darby Pilipinas, Inc., petitioner, is engaged in the manufacture of automotive tires, tubes and other rubber
products. Sime Darby Salaried Employees Association (ALU-TUCP), private respondent, is an association of
monthly salaried employees of petitioner at its Marikina factory. Prior to the present controversy, all company
factory workers in Marikina including members of private respondent union worked from 7:45 a.m. to 3:45
p.m. with a 30-minute paid "on call" lunch break.
On 14 August 1992 petitioner issued a memorandum to all factory-based employees advising all its monthly
salaried employees in its Marikina Tire Plant, except those in the Warehouse and Quality Assurance
Department working on shifts, a change in work schedule effective 14 September 1992.
The new prescribed schedule will be 7:45 A.M.-4:45 P.M. (Monday to Friday) and 7:45 A.M.-11:45 A.M.
(Saturday) and lunch break will be between: 12:00 NN — 1:00 P.M. Their Coffee Break time was shortened to
10 minutes only and the company discontinued the 30-minute paid "on call" lunch break.
Since private respondent felt affected adversely by the change in the work schedule and discontinuance of the
30-minute paid "on call" lunch break, it filed on behalf of its members a complaint with the Labor Arbiter for
unfair labor practice, discrimination and evasion of liability.
However, the Labor Arbiter dismissed the complaint. Private respondent appealed to respondent National
Labor Relations Commission (NLRC) which sustained the Labor Arbiter and dismissed the appeal. However,
upon motion for reconsideration by private respondent, the NLRC, this time with two (2) new commissioners
replacing those who earlier retired, reversed its earlier decision of 20 April 1994 as well as the decision of the
Labor Arbiter.
Issue
Whether or not the act of management in revising the work schedule of its employees and discarding their paid
lunch break is constitutive of unfair labor practice.
Held
No because it is clearly a management prerogative to fix the work schedules of company employees. Under the
old schedule, the employees are compensated during their 30-minute lunch break, but in essence it is still
working time since the workers could be called upon to work. Whereas in the new schedule, the employees are
given a longer break of 1 hour, though uncompensated, it is uninterrupted as workers on their break are no
longer “on call”. The change in schedule would improve company productivity as well as enhance the comfort
of workers who could enjoy an uninterrupted break. Now, since the employees are no longer required to work
during this one-hour lunch break, there is no more need for them to be compensated for this period. We agree
with the Labor Arbiter that the new work schedule fully complies with the daily work period of eight (8) hours
without violating the Labor Code. Besides, the new schedule applies to all employees in the factory similarly
situated whether they are union members or not.
The Supreme Court also reiterated the policy that while social justice and the protection of the working class is
ensured by the Constitution, the same fundamental law also protects the right of the management to regulate
all aspects of employment as well as to retain the prerogative of changing work schedules according to the
exigencies of the enterprise. So long as this prerogative is exercised in good faith, the Court will uphold such
exercise.
3. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]

Facts
Private respondent was employed as flight surgeon at petitioner company Philippine Air Lines (PAL). On
February 17, 1994, at around 7:00 in the evening, private respondent left the clinic to have his dinner at his
Page 115
residence, which was about a five minute-drive away. A few minutes later, the clinic received an emergency
call. The nurse on duty called private respondent at home to inform him of the emergency. When private
respondent reached the clinic around 7:50 in the evening, the nurse on duty had already left with the patient.
The patient died the following day.
As a result, the Chief Flight Surgeon required private respondent to explain why no disciplinary sanction should
be taken against him. The management charged private respondent with abandonment of post while on duty.
In his answer, private respondent denied the charge. After evaluating the charge, as well as the answer of
private respondent, petitioner company decided to suspend private respondent for three months. Management
averred that private respondent was required to stay in company premises for the entire eight-hour work
period. By spending his meal period at home, he effectively abandoned his post. Private respondent filed a
complaint for illegal suspension against petitioner. The Labor Arbiter found the suspension to be illegal. This
was affirmed by the NLRC.
Issue
Whether or not an employee is required to stay in the company premises for the entire eight-hour work period
including meal period.
Held
No. The employee may spend his meal period anywhere aside from within the company premises.
Petitioner argues that being a full-time employee, private respondent is obliged to stay in the company
premises for not less than eight (8) hours. Hence, he may not leave the company premises during such time,
even to take his meals. The eight-hour work period does not include the meal break. Nowhere in the law may
it be inferred that employees must take their meals within the company premises. Employees are not
prohibited from going out of the premises as long as they return to their posts on time. Private respondent's
act, therefore, of going home to take his dinner does not constitute abandonment. Thus, the suspension was
illegal.
WHEREFORE, petition as to declaring the LA and NLRC decision on the illegality of suspension void is hereby
DENIED.
Page 116
4. Linton Commercial Co., Inc., vs. Hellera et al., G.R. No. 163147, October 10, 2007
Facts
Linton Commercial Co., Inc. issued a memorandum addressed to its employees informing them of the
company's decision to suspend its operations due to the currency crisis that affected its business operations.
The company's operation was to resume on 6 January 1998. Linton issued another memorandum informing
them that it would implement a new compressed workweek of three (3) days on a rotation basis. In other
words, each worker would be working on a rotation basis for three working days only instead for six days a
week. Aggrieved, sixty-eight (68) workers (workers) filed a Complaint for illegal reduction of workdays with
the Arbitration Branch of the NLRC.
The Labor Arbiter rendered a Decision finding petitioners guilty of illegal reduction of work hours and directing
them to pay each of the workers their three (3) days/week's worth of work compensation. Petitioners appealed
to the National Labor Relations Commission (NLRC). In a Resolution, the NLRC reversed the decision of the
Labor Arbiter. The workers then filed before the Court of Appeals which reversed the decision of the NLRC. The
appellate court found Linton to have failed to adopt a more sensible means of cutting the costs of its operations
in less drastic measures not grossly unfavorable to labor. Hence, Linton failed to establish enough factual basis
to justify the necessity of a reduced workweek.
Issue
Whether or not there was an illegal reduction of work when Linton implemented a compressed workweek by
reducing from six to three the number of working days with the employees working on a rotation basis.
Held
Yes. There was an illegal reduction of work when Linton implemented a compressed workweek by reducing
from six to three the number of working days with the employees working on a rotation basis.
The Bureau of Working Conditions of the DOL released a bulletin providing for in determining when an
employer can validly reduce the regular number of working days. The said bulletin states that a reduction of
the number of regular working days is valid where the arrangement is resorted to by the employer to prevent
serious losses due to causes beyond his control, such as when there is a substantial slump in the demand for
his goods or services or when there is lack of raw materials.
Although the bulletin stands more as a set of directory guidelines than a binding set of implementing rules, it
has one main consideration, consistent with the ruling in Philippine Graphic Arts Inc., in determining the
validity of reduction of working hours — that the company was suffering from losses.
A close examination of petitioners' financial reports for 1997-1998 shows that, while the company suffered a
loss of P3,645,422.00 in 1997, it retained a considerable amount of earnings and operating income. Clearly
then, while Linton suffered from losses for that year, there remained enough earnings to sufficiently sustain its
operations. A year of financial losses would not warrant the immolation of the welfare of the employees, which
in this case was done through a reduced workweek that resulted in an unsettling diminution of the periodic
pay for a protracted period. Permitting reduction of work and pay at the slightest indication of losses would be
contrary to the State's policy to afford protection to labor and provide full employment.
To date, no definite guidelines have yet been set to determine whether the alleged losses are sufficient to justify
the reduction of work hours. If the standards set in determining the justifiability of financial losses under Article
283 (i.e., retrenchment) or Article 286 (i.e., suspension of work) of the Labor Code were to be considered,
petitioners would end up failing to meet the standards.
On the one hand, Article 286 applies only when there is a bona fide suspension of the employer's operation of
a business or undertaking for a period not exceeding six (6) months. Records show that Linton continued its
business operations during the effectivity of the compressed workweek, which spanned more than the
maximum period.
On the other hand, for retrenchment to be justified, any claim of actual or potential business losses must satisfy
the following standards: (1) the losses incurred are substantial and not de minimis; (2) the losses are actual or
reasonably imminent; (3) the retrenchment is reasonably necessary and is likely to be effective in preventing
Page 117
the expected losses; and (4) the alleged losses, if already incurred, or the expected imminent losses sought to
be forestalled, are proven by sufficient and convincing evidence. Linton failed to comply with these standards.
All taken into account, the compressed workweek arrangement was unjustified and illegal. Thus, petitioners
committed illegal reduction of work hours.
Page 118
5. Bisig Manggagawa sa Tryco vs. NLRC, G.R. No. 151309, Oct. 15, 2008
Facts
Petitioners Joselito Lariñ o, Vivencio Barte, Saturnino Egera and Simplicio Aya-ay are regular
employees of Tryco Pharma Corporation which is a manufacturer of veterinary medicine. They are members
of Bisig Manggagawa sa Tryco (BMT), the exclusive bargaining representative of the rank-and-file employees.
Tryco and the petitioners signed separate Memoranda of Agreement (MOA), providing for a
compressed workweek schedule to be implemented in the company. The MOA was entered into pursuant to
Department of Labor and Employment Department Order (D.O.) No. 21, Series of 1990,Guidelines on the
Implementation of Compressed Workweek.
Meantime, Tryco received the Letter from the Bureau of Animal Industry of the Department of
Agriculture reminding it that its production should be conducted in San Rafael, Bulacan.
Accordingly, Tryco issued a Memorandum which directed petitioner Aya-ay to report to the company's
plant site in Bulacan. When petitioner Aya-ay refused to obey, Tryco reiterated the order. Tryco also directed
petitioners Egera, Lariñ o and Barte to report to the company's plant site in Bulacan.
BMT opposed the transfer of its members to San Rafael, Bulacan, contending that it constitutes unfair
labor practice. The petitioners filed their separate complaints for illegal dismissal, underpayment of wages,
nonpayment of overtime pay and service incentive leave, and refusal to bargain against Tryco and its President,
Wilfredo C. Rivera. They prayed for the company to pay them their salaries, service incentive leave, and
overtime pay, and to implement Wage Order No. 4.
The Labor Arbiter denied the money claims, ratiocinating that the overtime pay is not due because of
the compressed workweek agreement between the union and management. Aggrieved the petitioners
appealed to the NLRC which denied the petitioners' motion for reconsideration for lack of merit. Left with no
recourse, petitioners filed a petition for certiorari with the CA. The CA dismissed the petition for certiorari and
ruled that the transfer order was a management prerogative not amounting to a constructive dismissal or an
unfair labor practice. The CA further sustained the enforceability of the MOA, particularly the waiver of
overtime pay in light of this Court's rulings upholding a waiver of benefits in exchange of other valuable
privileges.
Issue
Whether or not the Memorandum of Agreement which provides for a compressed workweek schedule is
enforceable as it is contrary to law
Held
Yes. the Memorandum of Agreement which provides for a compressed workweek schedule is enforceable as it
is contrary to law The MOA is enforceable and binding against the petitioners. Where it is shown that the person
making the waiver did so voluntarily, with full understanding of what he was doing, and the consideration for
the quitclaim is credible and reasonable, the transaction must be recognized as a valid and binding undertaking.
D.O. No. 21 sanctions the waiver of overtime pay in consideration of the benefits that the employees will derive
from the adoption of a compressed workweek scheme. Under this scheme, the generally observed workweek
of six (6) days is shortened to five (5) days but prolonging the working hours from Monday to Friday without
the employer being obliged for pay overtime premium compensation for work performed in excess of eight (8)
hours on weekdays, in exchange for the benefits above cited that will accrue to the employees.
Notably, the MOA complied with the following conditions set by the DOLE, under D.O. No. 21, to protect the
interest of the employees in the implementation compressed workweek scheme.
Considering that the MOA clearly states that the employee waives the payment of overtime pay in exchange of
a five-day workweek, there is no room for interpretation and its terms should be implemented as they are
written.
Page 119
6. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016
Facts
Petitioners are DRIVERS of respondent who drive buses 2-3 days per round trip. However, they were only paid
404.00 pesos per round trip without overtime pay and below minimum wage. This prompted petitioner to file
a complaint against respondent to claim for their overtime pay. Respondent contended that petitioners are not
entitled for overtime pay since they were bus drivers and thus can be considered field personnel.
Issue
WON Petitioners are entiled for overtime pay being bus drivers.
Held
Yes. Petitioners are entitled for overtime pay notwithstanding that they are bus driver who perform work
outside of the office or workplace of their employer. They are not considered as field personnel since they were
under control of the employer in which they are tasked to be at a specific place in a specific time. They were
also monitored by checkers and dispatchers. Further their actual work could be determined with reasonable
certainty. Thus they should be considered as regular employees and therefore entitled for Overtime Pay and
Service Incentive Leave.
Page 120
7. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016

Facts
HSY Marketing Ltd. hired respondent Virgilio Villastique as a field driver for Fabulous Jeans & Shirt & General
Merchandise (Fabulous Jeans), tasked to deliver ready-to-wear items and/or general merchandise for a daily
compensation of P370.00. Respondent figured in an accident when the service vehicle he was driving bumped
a pedestrian. Fabulous Jeans shouldered the hospitalization and medical expenses of the pedestrian and asked
Villastique to reimburse, but to no avail.
Respondent was allegedly required to sign a resignation letter, which he refused to do. A couple of days later,
he tried to collect his salary for that week but was told that it was withheld because of his refusal to resign.
Convinced that he was already terminated, he lost no time in filing a complaint for illegal dismissal with money
claims against petitioner. HSY Marketing Ltd. contended that respondent had committed several violations in
the course of his employment, and had been found by his superior and fellow employees to be a negligent and
reckless driver, which resulted in the vehicular mishap.
The Labor Arbiter dismissed the complaint for illegal dismissal, finding no evidence that the respondent was
illegally dismissed. The National Labor Relations Commission (NLRC) and, subsequently, the CA affirmed the
decision of the Labor Arbiter.
Issue
Whether or not respondent Villastique is a regular employee who is entitled to a service incentive leave pay
Held
Yes. Respondent Villastique is a regular employee who is entitled to a service incentive leave pay.
Respondent is not a field personnel as defined above because of the nature of his job as a company driver.
Expectedly, respondent is directed to deliver the goods at a specified time and place and he is not given the
discretion to solicit, select, and contact prospective clients. It has been held that The Court has already held
that company drivers who are under the control and supervision of management officers — like respondent
herein — are regular employees entitled to benefits including service incentive leave pay.
"Service incentive leave is a right which accrues to every employee who has served 'within 12 months, whether
continuous or broken reckoned from the date the employee started working, including authorized absences
and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said period shall be considered as
one [(1)] year.' It is also commutable to its money equivalent if not used or exhausted at the end of the year. In
other words, an employee who has served for one (1) year is entitled to it. He may use it as leave days or he
may collect its monetary value."
Petitioner, as the employer of respondent, and having complete control over the records of the company, could
have easily rebutted the said monetary claim against it by presenting the vouchers or payrolls showing
payment of the same. However, since petitioner opted not to lift a finger in providing the required documentary
evidence, the ineluctable conclusion that may be derived therefrom is that it never paid said benefit and must,
perforce, be ordered to settle its obligation to respondent.
8. A. Nate Casket Maker et al., vs. Arango, et al., GR No. 192282, October 5, 2016
Facts
Petitioners Armando and Anely Nate are the owners/proprietors of A. NateCasket Maker. They employed
respondents on various dates as carpenters, mascilladors and painters in their casket-making business from
1998 until their alleged termination on March 2007.
Petitioners alleged in that respondents are pakyaw workers who are paid per job order. On February 3, 2007,
they met with respondents in order to present a proposed employment agreement which would change the
Page 121
existing pakyaw system to "contractual basis" and would provide for vacation leave and sick leave pay and
other benefits given to regular employees.
On the other hand, respondents alleged that they worked from Monday to Saturday, from 7:00 a.m. to 10:00
p.m., with no overtime pay and any monetary benefits. On March 15, 2007, they were called by petitioners and
were made to sign a Contract of Employment with the
following terms and conditions: (1) they shall be working on contractual basis for a period of five months; (2)
renewal of employment contract after such period shall be on a case-to-case basis or subject to respondents'
efficiency and performance; (3) petitioners shall reserve the right to terminate their employment should their
performance fall below expectations or if the conditions under which they were employed no longer exist; (4)
their wages shall be on a piece-rate basis; (5) in the performance of their tasks, they shall be obliged to strictly
follow their work schedules; (6) they shall not be eligible to avail of sick leave or vacation leave, nor receive
13th month pay and/or bonuses, or any other benefits given to a regular employee. Respondents further
alleged that when they refused to sign the contract, petitioners told them to go home because their employment
has been terminated.
On February 8, 2007, respondents filed a Complaint for illegal dismissal and non-payment of separation pay
against petitioners.
LA: dismissed the complaint for lack of merit. It ruled that petitioners did not terminate the services of
respondents. On the issue of underpayment, the LA held that respondents were earning more than the
minimum wage per day; and as pakyaw workers, though they are deemed regular workers, they are not entitled
to overtime pay, holiday pay, service incentive leave pay and 13th month pay citing the case of field personnel
and those paid on purely commission basis.
NLRC: affirmed the Decision of the LA

CA: reversed and set aside the decision of the NLRC
Issue
Whether respondents who are pakyaw workers are considered regular workers and thus entitled to the
benefits provided for by the Labor Code.
Held
Yes, while respondents' mode of compensation was on a per-piece basis, the status and nature of their
employment was that of regular employees.
Art. 280. Regular and Casual Employment. — The provisions of written agreement to the contrary
notwithstanding and regardless of the oral agreement of the parties, an employment shall be deemed to be
regular where the employee has been engaged to perform activities which are usually necessary or desirable
in the usual business or 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 preceding paragraph; Provided, That,
any employee who has rendered at least one year of service, whether such service is continuous or broken,
shall be considered a regular employee with respect to the activity in which he is employed and his employment
shall continue while such activity exists.
A regular employment, whether it is one or not, is aptly gauged from the concurrence, or the non-concurrence,
of the following factors — (a) the manner of selection and engagement of the putative employee; (b) the mode
of payment of wages; (c) the presence or absence of the power of dismissal; and (d) the presence or absence of
Page 122
the power to control the conduct of the putative employee or the power to control the employee with respect
to the means or methods by which his work is to be accomplished. The "control test" assumes primacy in the
overall consideration. Under this test, an employment relation obtains where work is performed or services
are rendered under the control and supervision of the party contracting for the service, not only as to the result
of the work but also as to the manner and details of the performance desired.
There is no dispute that the tasks performed by respondents as carpenters, painters, and mascilladors were
necessary and desirable in the usual business of petitioners who are engaged in the manufacture and selling of
caskets. We have to also consider the length of time that respondents worked for petitioners, commencing on
various dates from 1998 to 2007. In addition, the power of control of petitioners over respondents is clearly
present in this case. Respondents follow the steps in making a casket, as instructed by the petitioners, like
carpentry, mascilla, rubbing and painting.
Page 123
Topic 9: Minimum Labor Standard Benefits

1. San Miguel Corp., vs. CA, G.R. No. 146775, Jan. 30, 2002
Facts
The Department of Labor and Employment (DOLE) after conducting a routine inspection in the premises of the
petitioner and discovered that the petitioner had neglected to pay the regular Muslim holiday pay to its
employees.
The petitioner contested the findings of the inspection and a summary hearing was conducted by the
Department of Labor and Employment.
The petitioner failed to submit proof that it was paying regular Muslim holiday pay to its employees. Hence, a
compliance order was issued directing the petitioner to pay both it Muslim and non-Muslim employees holiday
pay within 30 days from the receipt of the order.
The petitioner appealed the decision to the Court of Appeals, however, the same referred the case to the
Supreme Court pursuant to St. Martin Funeral Homes vs, NLRC.
The petitioner contends that Article 3(3) of PD 1083 only Muslims may avail of the Muslim holiday pay.
Issue
Whether or not only Muslims may avail of the Muslim holiday pay.
Held
The Supreme Court dismissed the petition holding that both Muslim and non- Muslim workers may avail of the
Muslim holiday pay pursuant to the 1999 Handbook on Workers’ Statutory Benefits, approved by the DOLE
Secretary Bienvenido E. Laguesma. If the court were to uphold the contentions of the petitioner then it would
necessarily imply that Muslim workers would not be entitled to Christian holiday pay. Thus, in accordance with
Article 94 of the Labor Code which does not expressly distinguish all those eligible for holiday pay regardless
of religious affiliation are entitled to the same.
Page 124
2. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002

Facts
Lagrama works for Tan as painter of billboards and murals for the motion pictures shown at the theaters
managed by Tan for more than 10 years. Lagrama was dismissed for having urinated in his working area.
Lagrama filed a complaint for illegal dismissal and non payment of benefits. Tan asserted that Lagrama was an
independent contractor as he was paid in piece-work basis
Issue
Whether or not Lagrama is an independent contractor or an employee of Tan.
Held
Lagrama is an employee, not an independent contractor.
Applying Four Fold Test
A. Power of Control - Evidence shows that the Lagrama performed his work as painter and under the
supervision and control of Tan.
a. Lagrama worked in a designated work area inside the theater of Tan for the use of which
petitioner prescribed rules, which rules included the observance of cleanliness and hygiene
and prohibition against urinating in the work area and any other place other than rest rooms
and
b. Tan's control over Lagrama's work extended not only the use of work area but also the result
of Lagrama;s work and the manner and means by which the work was to be accomplished
c. Lagrama is not an independent contractor because he did not enjoy independence and
freedom from the control and supervision of Tan and he was subjected to Tan's control over
the means and methods by which his work is to be performed and accomplished
B. Payment of Wages
a. Lagrama worked for Tan on a fixed piece work basis is of no moment. Payment by result is a
method of compensation and does not define the essence of the relation.
b. That Lagrama was not reported as an employee to the SSS is not conclusive, on the question
whether he was an employee, otherwise Tan would be rewarded for his failure or even neglect
to perform his obligation.
C. Power of Dismissal – by Tan stating that he had the right to fire Lagrama, Tan in effect acknowledged
Lagrama to be his employee
D. Power of Selection and Engagement of Employees – Tan engaged the services of Lagrama without the
intervention of third party
Compared to an employee, an independent contractor is one who carries on a distinct and independent
business and undertakes to perform the job, work, or service on its own account and under its own
responsibility according to its own manner and method, free from the control and direction of the principal in
all matters connected with the performance of the work except as to the results thereof. Hence, while an
independent contractor enjoys independence and freedom from the control and supervision of his principal,
an employee is subject to the employer’s power to control the means and methods by which the employee’s
work is to be performed and accomplished.
Page 125
3. Lambo vs. NLRC, 317 SCRA 420
Facts
Petitioners Avelino Lambo and Vicente Belocura were employed as tailors by private respondents J.C. Tailor
Shop and/or Johnny Co on September 10, 1985 and March 3, 1985, respectively. They worked from 8:00 a.m.
to 7:00 p.m. daily, including Sundays and holidays. As in the case of the other 100 employees of private
respondents, petitioners were paid on a piece-work basis, according to the style of suits they made. Regardless
of the number of pieces they finished in a day, they were each given a daily pay of at least P64.00.
On January 17, 1989, petitioners filed a complaint against private respondents for illegal dismissal and sought
recovery of overtime pay, holiday pay, premium pay on holiday and rest day, service incentive leave pay,
separation pay, 13th month pay, and attorney's fees.
After hearing, Labor Arbiter Jose G. Gutierrez found private respondents guilty of illegal dismissal and
accordingly ordered them to pay petitioners' claims. On appeal, the NLRC reversed the decision of the Labor
Arbiter and found that petitioners had not been dismissed from employment but merely threatened with a
closure of the business if they insisted on their demand for a "straight payment of their minimum wage," after
petitioners, on January 17, 1989, walked out of a meeting with private respondents and other employees.
According to the NLRC, during that meeting, the employees voted to maintain the company policy of paying
them according to the volume of work finished at the rate of P18.00 per dozen of tailored clothing materials.
Only petitioners allegedly insisted that they be paid the minimum wage and other benefits. NLRC held
petitioners guilty of abandonment of work, dismissed their claims except for 13th month pay. Hence this
petition.
Issue
Whether or not Petitioners are entitled to receive such benefits such as back wages, Overtime pay, Holiday pay,
13th month pay, and separation pay.
Held
Yes, Petitioners are entitled to such benefits.
Petitioners were employees of private respondents although they were paid not on the basis of time spent on
the job but according to the quantity and the quality of work produced by them. There are two categories of
employees paid by results: (1) those whose time and performance are supervised by the employer. (Here, there
is an element of control and supervision over the manner as to how the work is to be performed. A piece-rate
worker belongs to this category especially if he performs his work in the company premises.); and (2) those
whose time and performance are unsupervised. (Here, the employer's control is over the result of the work.
Workers on pakyao and takay basis belong to this group.) Both classes of workers are paid per unit
accomplished. Piece-rate payment is generally practiced in garment factories where work is done in the
company premises, while payment on pakyao and takay basis is commonly observed in the agricultural
industry, such as in sugar plantations where the work is performed in bulk or in volumes difficult to quantify.
Petitioners belong to the first category, i.e., supervised employees.
In determining the existence of an employer-employee relationship, the following elements must be

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.
Page 126
In this case, private respondents exercised control over the work of petitioners. As tailors, petitioners worked
in the company's premises from 8:00 a.m. to 7:00 p.m. daily, including Sundays and holidays. The mere fact that
they were paid on a piece-rate basis does not negate their status as regular employees of private respondents.
The term "wage" is broadly defined in Art. 97 of the Labor Code as remuneration or earnings, capable of being
expressed in terms of money whether fixed or ascertained on a time, task, piece or commission basis. Payment
by the piece is just a method of compensation and does not define the essence of the relations. Nor does the
fact that petitioners are not covered by the SSS affect the employer-employee relationship. Indeed, the
following factors show that petitioners, although piece-rate workers, were regular employees of private
respondents: (1) within the contemplation of Art. 280 of the Labor Code, their work as tailors was necessary
or desirable in the usual business of private respondents, which is engaged in the tailoring business; (2)
petitioners worked for private respondents throughout the year, their employment not being dependent on a
specific project or season; and, (3) petitioners worked for private respondents for more than one year.
As petitioners were illegally dismissed, they are entitled to reinstatement with backwages. Considering that
petitioners were dismissed from the service on January 17, 1989, i.e., prior to March 21, 1989, the Labor Arbiter
correctly applied the rule in the Mercury Drug case, according to which the recovery of backwages should be
limited to three years without qualifications or deductions. Any award in excess of three years is null and void
as to the excess. The Labor Arbiter correctly ordered private respondents to give separation pay. Considerable
time has lapsed since petitioners' dismissal, so that reinstatement would now be impractical and hardly in the
best interest of the parties. In lieu of reinstatement, separation pay should be awarded to petitioners at the rate
of one month salary for every year of service, with a fraction of at least six (6) months of service being
considered as one (1) year. The awards for overtime pay, holiday pay and 13th month pay are in accordance
with our finding that petitioners are regular employees, although paid on a piece-rate basis.
The decision of the National Labor Relations Commission is SET ASIDE and another one is RENDERED ordering
private respondents to pay petitioners the total amount of One Hundred Eighty-One Thousand One Hundred
Two Pesos and 40/100 (P181,102.40).
Page 127
4. R&E Transport vs. Latag, G.R. No. 155214, Feb. 13, 2004
Facts
Pedro Latag (Latag) was a regular employee of La Mallorca Taxi since 1961. When La Mallorca ceased from
business operations, Latag transferred to petitioner R&E Transport Inc where he was receiving an average
daily salary of five hundred peso (500.00) as a taxi driver.
Latag got sick in 1995 and was forced to apply for partial disability with the SSS, which was granted. When he
recovered, he reported for work in 1998 but was no longer allowed to continue on account of his old age. Latag
then asked the administrative officer of R&E for his retirement pay but was ignored. In 1999, Latag died.
Subsequently, his wife Avalina Latag substituted him.
The Labor Arbiter rendered a decision in favor of Latag. Based on the Labor Arbiter’s findings, the 23 years of
employment of Pedro with La Mallorca Taxi must be added to his 14 years with R&E Transport Inc., for a total
of 37 years. La Mallorca and R&E are ordered to pay Avelina Latag the sum of 277,500 by way of retirement
pay for her deceased husband’s 37 years of service. Thus, petitioners appealed to the NLRC.
Meanwhile, on January 2000, Avelina Latag with her then counsel was invited to the office of petitioners and
was offered the sum of 38,500 which she accepted. Avelina Latag was also asked to sign an already prepared
quitclaim and release and a joint motion to dismiss the case.
Based on the findings of the NLRC, Pedro must only be credited only with his service with R&E Transport Inc.
because the evidence shows that the La Mallorca and R&E Transport Inc. are two different entities.
According to the CA, the appeal before the NLRC was not accompanied with a cash or surety bond, thus the
appeal was not perfected. The CA held that the Labor Arbiter’s decision awarding Latag P277,500 as retirement
pay had already become final and executory. Hence, the present petition.
Issue
Did the CA act properly when it disregarded the factual findings of the NLRC and decided to affirm those of the
Labor Arbiter?
Held
Yes, the CA acted erroneously. The Supreme Court supports the NLRC’s findings.
Number of years of service
The labor arbiter's conclusion — that Mallorca Taxi and R & E Transport, Inc., are one and the same entity —
is negated by the documentary evidence presented by petitioners. Their evidence 22 sufficiently shows the
following facts: 1) R & E Transport, Inc., was established only in 1978; 2) Honorio Enriquez, its president, was
not a stockholder of La Mallorca Taxi; and 3) none of the stockholders of the latter company hold stocks in the
former. Respondent has not shown by competent evidence that one taxi company had stock control and
complete domination over the other or vice versa. In fact, no evidence was presented to show the alleged
renaming of "La Mallorca Taxi" to "R & E Transport, Inc."
Thus, Pedro M. Latag should be credited with 14 years of service with R & E Transport, Inc.
Computation of Retirement Pay

As provided under Art. 287 of the Labor Code, xxx xxx xxx "In the absence of a retirement plan or agreement
providing for retirement benefits of employees in the establishment, an employee upon reaching the age of
Page 128
sixty (60) years or more, but not beyond sixty-five (65) years which is hereby declared the compulsory
retirement age, who has served at least five (5) years in said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a fraction of at least
six (6) months being considered as one whole year. xx Unless the parties provide for broader inclusions, the
term one half-month salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the
cash equivalent of not more than five (5) days of service incentive leaves.” The rules implementing the New
Retirement Law similarly provide the above-mentioned formula for computing the one-half month salary.
Taxi drivers do not receive fixed wages, but retain only those sums in excess of the “boundary” or fee they pay
to the owners or operators of their vehicles. Since Pedro was paid according to the "boundary" system, he is
not entitled to the 13th month and the service incentive pay; hence, his retirement pay should be computed on
the sole basis of his salary.
In this case, Pedro was earning an average of five hundred pesos (P500) per day. Thus, his retirement pay
should be computed as follows P500 x 15 days x 14 years of service equals P105,000. Compared with this
amount, the P38,850 he received, which represented just over one third of what was legally due him, was
unconscionable. Thus, the quitclaim is likewise invalid.
In sum, Avelina Latag should be paid P105,000 as retirement pay for her deceased husband’s 14 years of service
with R&E Transportation Inc.
Page 129
5. Asian Transmission vs. CA, 425 SCRA 478 [2004]

Facts
The Department of Labor and Employment (DOLE), through Undersecretary Cresenciano B. Trajano, issued an
Explanatory Bulletin dated March 11, 1993 wherein it clarified, inter alia, that employees are entitled to 200%
of their basic wage on April 9, 1993, whether unworked, which[,] apart from being Good Friday [and, therefore,
a legal holiday], is also Araw ng Kagitingan [which is also a legal holiday].
Said bulletin was reproduced on January 23, 1998, when April 9, 1998 was both Maundy Thursday and Araw
ng Kagitingan.
Despite the explanatory bulletin, petitioner, Asian Transmission Corporation, opted to pay its daily paid
employees only 100% of their basic pay on April 9, 1998. Respondent Bisig ng Asian Transmission Labor Union
(BATLU) protested.
The Voluntary Arbitrator favored the Bisig ng Asian Transmission Labor Union (BATLU), and held that Article
94 of the Labor Code provides for holiday pay for every regular holiday, the computation of which is determined
by a legal formula which is not changed by the fact that there are two holidays falling on one day, like on April
9, 1998 when it was Araw ng Kagitingan and at the same time was Maundy Thursday.
In the assailed decision, the Court of Appeals upheld the findings of the Voluntary Arbitrator.
Issue
Whether or not daily-paid employees are entitled to be paid for two regular holidays which fall on the same
day.
Held
The Court dismissed the petition and ruled that petitioners should pay its employees “200% and not just 100%
of their regular daily wages for the unworked April 9, 1998 which covers two regular holidays, namely, Araw
ng Kagitingan and Maundy Thursday.”
Holiday pay is a legislated benefit enacted as part of the Constitutional imperative that the State shall afford
protection to labor. Its purpose is not merely "to prevent diminution of the monthly income of the workers on
account of work interruptions. In other words, although the worker is forced to take a rest, he earns what he
should earn, that is, his holiday pay."
The provision is mandatory, regardless of whether an employee is paid on a monthly or daily basis. Unlike a
bonus, which is a management prerogative, holiday pay is a statutory benefit demandable under the law.
Page 130
6. Autobus Transport System vs. Bautista, G.R. No. 156364, May 16, 2005
Facts
Respondent Antonio Bautista has been employed by petitioner Auto Bus Transport Systems, Inc., since May
1995, as driver-conductor with travel routes Manila-Tuguegarao via Baguio, Baguio-Tuguegarao via Manila and
Manila-Tabuk via Baguio. Respondent was paid on commission basis, seven percent (7%) of the total gross
income per travel, on a twice a month basis.
On January 2000, while respondent was driving Autobus No. 114 along Sta. Fe, Nueva Vizcaya, the bus he was
driving accidentally bumped the rear portion of Autobus No. 124, as the latter vehicle suddenly stopped at a
sharp curve without giving any warning. Respondent averred that the accident happened because he was
compelled by the management to go back to Roxas, Isabela, although he had not slept for almost twenty-four
(24) hours, as he had just arrived in Manila from Roxas, Isabela.
Respondent further alleged that he was not allowed to work until he fully paid the amount of P75,551.50,
representing thirty percent (30%) of the cost of repair of the damaged buses and that despite respondent's
pleas for reconsideration, the same was ignored by management. After a month, management sent him a letter
of termination. Thus, on 02 February 2000, respondent instituted a Complaint for Illegal Dismissal with Money
Claims for nonpayment of 13th month pay and service incentive leave pay against Autobus.
On 29 September 2000, based on the pleadings and supporting evidence presented by the parties, Labor Arbiter
decided that the complaint be dismissed where the respondent must pay to the complainant
Issue
Whether or not respondent is entitled to service incentive leave.
Held
Yes. Under Article 95 of the Labor Code, every employee who has rendered at least one year or service shall be
entitled to a yearly service incentive leave of five days with pay. In Section 1, Rule V, Book III of the
Implementing Rules and Regulations of the Labor Code, the rule shall apply to all, except… (d) Field personnel
and other employees whose performance is unsupervised by the employer including those who are engaged
on task or contract basis, purely commission basis, or those who are paid in a fixed amount for performing
work irrespective of the time consumed in the performance thereof.
Petitioner’s contention that Bautista is not entitled to service incentive leave because he is paid on a purely
commission basis must fail. The phrase following “Field personnel” should not be construed as a separate
classification of employees but is merely an amplification of the definition of field personnel defined under the
Labor Code.
Bautista neither falls under the category field personnel. As defined, field personnel are those whose
performance of service is unsupervised by the employer, the workplace being away from the principal place of
business and whose hours and days of work cannot be determined with reasonable certainty. Bus companies
have ways of determining the hours worked by their drivers and conductors with reasonable certainty. The
courts have taken judicial notice of the following:
1. Along the routes traveled, there are inspectors assigned at strategic places who board the bus to
inspect the passengers, the punched tickets, and the conductor’s reports;
2. There is a mandatory once-a week car barn or shop day, where the bus is regularly checked;
3. The drivers and conductors must be at specified place and time, as they observe prompt departure and
arrival;
4. At every depot, there is always a dispatcher whose function is to see to it that the bus and crew leaves
and arrives at the estimated proper time.
Page 131
By these reasons, drivers and conductors are therefore under constant supervision while in the performance
of their work. Therefore, drivers and conductors cannot be considered as field personnel.
Page 132
7. San Miguel Corp., vs. Del Rosario, G.R. No. 168194, Dec. 13, 2005
Facts
Del Rosario was employed by San Miguel Corp. as key account specialist. Petitiner informed respondent that
her probationary employment will be severed at the close of the business hours of March 12, 2001. On March
13, 2001, respondent was refused entry to petitioner's premises. Thus, respondent filed a complaint against
petitioner for illegal dismissal and underpayment/non-payment of monetary benefits. Respondent alleged that
petitioner feigned an excess of manpower for after she was dismissed petitioner hired new recruits and re-
employed two of her batch mates.
On the other hand, petitioner claimed that respondent was a probationary employee whose services were
terminated as a result of the excess manpower that could no longer be accommodated by the company.
The Labor Arbiter rendered a decision declaring respondent a regular employee because her employment
exceeded six months and holding that she was illegally dismissed as there was no authorized cause to terminate
her employment. And that petitioner's failure to rebut respondent's claim that it hired additional employees
after she was dismissed belie the company's alleged redundancy.
On appeal, NLRC modified LA’s decision and held that respondent is a regular employee whose termination
from employment was valid but ineffectual for petitioner's failure to comply with the 30-day notice to the
employee and the Department of Labor and Employment (DOLE). Both parties separate petitions before the
CA.
In CA-G.R. SP No. 84081, the First Division of the Court of Appeals granted the respondent's petition
and reinstated with modification the Labor Arbiter’s decision. In CA-G.R. SP No. 83725, the Third Division of
the Court of Appeals dismissed the company's petition and affirmed the NLRC’s decision. Hence this petition
filed by petitioner.
Issue
1. WON respondent is a regular employee of petitioner
2. WON respondent was illegally dismissed
3. if so, whether or not respondent is entitled to any monetary benefits
Held
1) In termination cases, like the present controversy, the burden of proving the circumstances that would
justify the employee's dismissal rests with the employer. The best proof that petitioner should have
presented to prove the probationary status of respondent is her employment contract. However, none
has been presented. The two (2) Payroll Authorities offered by petitioner showing that respondent
was hired as a replacement, and later, as a probationary employee do not constitute substantial
evidence.
And while it is true that by way of exception, the period of probationary employment may exceed six
months when the parties so agree, such as when the same is established by company policy, or when
it is required by the nature of the work, none of these exceptional circumstance were proven in the
present case. Hence, respondent whose employment exceeded six months is undoubtedly a regular
employee of petitioner. Moreover, even assuming that the employment of respondent is only
temporary, and that the reckoning period of her probationary employment is September 4, 2000, she
should still be declared a regular employee because by the time she was dismissed on March 12, 2001,
her alleged probationary employment already exceeded six months.
2) Having ruled that respondent is a regular employee, her termination from employment must be for a
just or authorized cause, otherwise, her dismissal would be illegal.
Petitioner tried to justify the dismissal of respondent under the authorized cause of redundancy, that
there are no more regular positions in the company. 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. In this case, what further militated against the alleged redundancy
Page 133
advanced by petitioner is their failure to refute respondent's assertion that after her dismissal, it hired
new recruits and re-employed two of her batch mates. Again, petitioner has in its possession the
documents that would disprove the fact of hiring new employees, but instead of presenting evidence
to belie respondent's contentions, it refrained from doing so and conveniently passed the burden to
respondent. In sum, the Court finds that petitioner was not able to discharge the burden of proving
that the dismissal of respondent was valid.
3) Considering that respondent was illegally dismissed, she is entitled not only to reinstatement but also
to payment of full backwages, computed from the time her compensation was actually withheld from
her on March 13, 2001, up to her actual reinstatement. As a regular employee of petitioner from the
date of her employment on April 17, 2000, she is likewise entitled to other benefits such as service
incentive leave pay and 13th month pay computed from such date also up to her actual reinstatement.
However, she is not entitled to holiday pay because the records reveal that she is a monthly paid
regular employee.
Page 134
8. Penaranda vs. Baganga Plywood Corp., G.R. No. 159577, May 3, 2006
Facts
Sometime in June 1999, Petitioner Charlito Peñaranda was hired as an employee of Baganga Plywood
Corporation (BPC) to take charge of the operations and maintenance of its steam plant boiler. In May 2001,
Peñaranda filed a Complaint for illegal dismissal with money claims against BPC and its general manager,
Hudson Chua, before the NLRC.
Petitioner alleges that his services were terminated without the benefit of due process and valid grounds in
accordance with law. Furthermore, he was not paid his overtime pay, premium pay for working during
holidays/rest days, and night shift differentials. Respondent claims that complainant's separation from service
was done pursuant to Art. 283 of the Labor Code. The respondent was on temporary closure due to repair and
general maintenance and it applied for clearance with the Department of Labor and Employment, Regional
Office No. XI to shut down and to dismiss employees. And due to the insistence of herein complainant he was
paid his separation benefits. Consequently, when respondent partially reopened in January 2001, Peñaranda
failed to reapply. Hence, he was, not terminated from employment much less illegally. He opted to severe
employment when he insisted payment of his separation benefits. Furthermore, being a managerial employee
he is not entitled to overtime pay and if ever he rendered services beyond the normal hours of work, there was
no office order/or authorization for him to do so.
The labor arbiter ruled that there was no illegal dismissal and that petitioner's Complaint was premature
because he was still employed by BPC. Nevertheless, the labor arbiter found petitioner entitled to overtime pay,
premium pay for working on rest days. Respondents filed an appeal to the NLRC, which deleted the award of
overtime pay and premium pay for working on rest days. According to the Commission, petitioner was not
entitled to these awards because he was a managerial employee. The Court of Appeals denied petitioner’s
appeal.
Issue
Whether or not petitioner is entitled to overtime pay, premium pay for working during holidays/rest days, and
night shift differentials.
Held
No. Article 82 of the Labor Code exempts managerial employees from the coverage of labor standards. Labor
standards provide the working conditions of employees, including entitlement to overtime pay and premium
pay for working on rest days. Under this provision, managerial employees are "those whose primary duty
consists of the management of the establishment in which they are employed or of a department or
subdivision."
The Court disagrees with the NLRC's finding that petitioner was a managerial employee. However, petitioner
was a member of the managerial staff, which also takes him out of the coverage of labor standards. Like
managerial employees, officers and member of the managerial staff are not entitled to the provisions of law on
labor standards.
Page 135
9. Leyte IV Electric Cooperative Inc vs. LEYECO IV Employees Union-ALU, G.R. No. 1577745, October 19, 2007,
citing Wellington Investment vs. Trajano, 245 SCRA 561 [1995], and Odango vs. NLRC, G.R. No. 147420, June
10, 2004
Facts
In 1998, Leyte IV Electric Cooperative, Inc (petitioner) and Leyeco IV Employees Union-ALU (respondent)
entered into a Collective Bargaining Agreement (CBA) covering petitioner rank-and-file employees, for a period
of five years. In 2000, respondent through its Regional Vice President sent a letter to petitioner demanding
holiday pay for all employees as provided for in the CBA. Petitioner through its legal counsel sent a letter-reply
to Casilan explain that after perusing all available pay slips, it found that it had paid all employees all the holiday
pays enumerated in the CBA. After exhausting the procedures of the grievance machinery, the parties agreed
to submit the issues of the interpretation and implementation of the CBA on the payment of holiday pay, for
arbitration of the National Conciliation and Mediation Board (NCMB). In 2001, Voluntary Arbitrator in a
Resolution favored the respondent. It held the petitioner liable for payment of unpaid holidays. Petitioner
miserably failed to show that it complied with the CBA mandate that holiday pay be “reflected during any
payroll period of occurrence” since the payroll slips did not reflect any payment of the paid holidays. Voluntary
Arbitrator also denied petitioner’s motion for reconsideration.
Petitioner then filed a petition for certiorari in the CA. CA dismissed outright the petitioner’s petition for
certiorari for adopting a wrong mode of appeal. The proper remedy should have been petition for review under
Rule 43 of the 1997 Rules of Civil Procedure. It likewise denied the petitioner’s motion for reconsideration.
They now raised the issue to the Supreme Court.
Issue
Whether or not certiorari is the right remedy in assailing the decision of the Voluntary Arbitrator.
Held
Yes. Certiorari is the right remedy. It qualifies the exception where an extraordinary remedy of certiorari is
resorted to that is, when the broader interests of justice so requires.
A voluntary arbitrator whether acting solely or in a panel enjoys in law the status of a quasi-judicial agency;
hence, his decisions and awards are appealable to the CA. This is so because the awards of voluntary arbitrators
become final and executory upon the lapse of the period to appeal; and since their awards determine the rights
of parties, their decisions have the same effect as judgements of a court. Therefore, the proper remedy from an
award of a voluntary arbitrator is a petition for review to the CA. The proper remedy is therefore a petition
under Rule 43 of the 1997 Rules of Civil Procedure. The general therefore is that the proper remedy from
decisions of voluntary arbitrators is a petition for review under Rule 43 of the Rules of Court. A special civil
action for certiorari under Rule 65 of the Rules of Court is the proper remedy for one who complains that the
tribunal, board or officer exercising judicial or quasi-judicial functions acted in total disregard of evidence
material to or decisive of the controversy. In addition, while the settled rule is that an independent action for
certiorari may be availed of only when there is no appeal or any plain, speedy, and adequate remedy in the
ordinary course of law and certiorari is not a substitute for the lapsed remedy of appeal, there are a few
significant exceptions when the extraordinary remedy of certiorari may be resorted to despite the availability
of an appeal, namely: (a) when public welfare and the advancement of public policy dictate; (b) when the
broader interests of justice so require; (c) when the writs issued are null; and (d) when the questioned order
amounts to an oppressive exercise of judicial authority.
In this case, while the petition was filed on July 27, 2002 which was 15 days after July 12, 2002, the expiration
of the 15-day reglementary period for filing an appeal under Rule 43, the broader interests of justice warrant
relaxation of the rules on procedure. Besides, petitioner alleges that the Voluntary Arbitrator’s conclusions
have no basis in fact and in law; hence the petition should not be dismissed on procedural grounds. The
voluntary Arbitrator gravely abused its discretion in giving a strict or literal interpretation of the CBA
Page 136
provisions that the holiday pay be reflected in the payroll slips. Such literal interpretation ignores the
admission of respondent in its position paper that the employees were paid all the days of the month even if
not worked. In light of such admission, petitioner’s submission of its 360 divisor in the computation of
employees’ salaries gains significance. In the case, the employees are required to work only from Monday to
Friday. Thus, the minimum allowable divisor is 263. Considering that petitioner used the 360-day divisor,
which is clearly above the minimum, indubitably, petitioner’s employees are being given their holiday pay. The
voluntary arbitrator should not have simply brushed aside petitioner’s divisor formula. While the Constitution
is committed to the policy of social justice and the protection of the working class, it should not be supposed
that every labor dispute would be automatically resolved in favour of labor. Management also has its own rights
which, as such, are entitled to respect and enforcement in the interest of simple fair play.
Page 137
10. Bahia Shipping Services vs. Chua, G.R. No. 162195, April 8, 2008, citing Cagampan vs. NLRC, 195 SCRA 533
[1998]
Facts
Private respondent Reynaldo Chua was hired by the petitioner shipping company, Bahia Shipping Services, Inc.,
as a restaurant waiter on board a luxury cruise ship liner M/S Black Watch pursuant to a Philippine Overseas
Employment Administration (POEA) approved employment contract dated October 9, 1996 for a period of nine
(9) months from October 18, 1996 to July 17, 1997. On October 18, 1996, the private respondent left Manila for
Heathrow, England to board the said sea vessel where he will be assigned to work.
On February 15, 1997, the private respondent reported for his working station one and one-half (1 1/2) hours
late. Two days later, the master of the vessel served to the private respondent an official warning-termination
form pertaining to the said incident. On March 8, 1997, the vessel's master, ship captain Thor Fleten conducted
an inquisitorial hearing to investigate the said incident. Thereafter, on March 9, 1997, private respondent was
dismissed from the service on the strength of an unsigned and undated notice of dismissal.
On March 24, 1997, the private respondent filed a complaint for illegal dismissal and other monetary claims,
which case was assigned to Labor Arbiter Manuel M. Manansala.
The private respondent alleged that he was paid only US$300.00 per month as monthly salary for five (5)
months instead of US$410.00 as stipulated in his employment contract. Thus, he claimed that he was underpaid
in the amount of US$110.00 per month for that same period of five (5) months. He further asserted that his
salaries were also deducted US$20.00 per month by the petitioner for alleged union dues. Private respondent
argued that it was his first offense committed on board the vessel. He averted further that the petitioner has no
proof of being a member of the AMOSUP or the ITF to justify its claim to deduct the said union dues from his
monthly salary.
The petitioner disputed the said allegations of the private respondent by arguing that it received a copy of an
addendum to the collective bargaining agreement (CBA) from the petitioner's principal, Blackfriars Shipping
Company, Ltd. Consequently, the petitioner requested permission from the POEA through a letter dated March
17, 1997 to amend the salary scale of the private respondent to US$300.00 per month. The petitioner justified
its monthly deduction made for union dues against the private respondent's salary in view of an alleged existing
CBA between the Norwegian Seaman's Union (NSU, for brevity) and the petitioner's principal, Blackfriars
Shipping Co., Ltd. The petitioner further asseverated that the private respondent has violated the terms and
conditions of his contract as manifested in the said official warning-termination form by always coming late
when reporting for duty even prior to the February 15, 1997 incident.
The Labor Arbiter rendered a Decision holding petitioner liable to respondent for illegal dismissal and
unauthorized deductions. Thus, petitioner appealed to the NLRC, which subsequently affirmed the decision of
the Labor Arbiter. Respondent did not question the NLRC decision.
Upon a petition for certiorari filed by petitioner, the CA rendered the decision assailed herein, modifying the
NLRC decision by deleting the monetary award representing the salary of the petitioner for the unexpired
portion of the contract which is limited to three (3) months.
Issues
1) Whether or not reporting for work one and one-half (1 1/2) hours late and abandoning his work are
valid grounds for dismissal.
2) Whether or not the Court of Appeals could grant additional affirmative relief by increasing the award
despite the fact that respondent did not appeal the decision of both the Labor Arbiter and the NLRC.
3) Whether or not respondent is entitled to overtime pay which was incorporated in his award for the
unexpired portion of the contract despite the fact that he did not render overtime work, and whether
or not, it is proper for the NLRC to award money claims despite the fact that the NLRC decision, and
affirmed by the Court of Appeals, did not state clearly the facts and the evidence upon which such
conclusions are based
Page 138
Held
1) NO, it is not a valid ground for dismissal.
Petitioner assails the ruling of the CA for being based on the faulty premise that respondent incurred tardiness
only once when in fact he had done so habitually. Whether respondent had been habitually tardy prior to
February 15, 1997 when he reported for work 1 1/2 hours late is purely factual in nature. As such, the Court
defers to the concurrent assessments of the LA and NLRC, as affirmed by the CA, for the evaluation of evidence
and the appreciation of the credibility of witnesses fall within their expertise.
Petitioner's claim that respondent's tardiness was habitual lacks evidentiary support as "no other documents
on record were attached to substantiate that the private respondent was forewarned for the first and second
time for any infraction or offense, work-related or not, vis-à-vis the performance of his regular duties and
functions."
Such empty claim of petitioner, therefore, cannot persuade the Court to simply disregard three layers of
thorough and in-depth assessments on the matter by the CA, NLRC and LA.
2) YES, the CA can grant additional affirmative relief even if respondent did not appeal the decisions of
the LA and NLRC.
It being settled that the dismissal of respondent was illegal, it follows that the latter is entitled to payment of
his salary for the unexpired portion of his contract, as provided under RA 8042, considering that his
employment was pre-terminated on March 9, 1997 or four months prior to the expiration of his employment
contract on July 17, 1997.
However, the LA limited the award to an amount equivalent to respondent's salary for three months. The NLRC
affirmed said award but deducted therefrom his salary for one day as penalty for the tardiness incurred. The
CA affirmed the one-day salary deduction imposed by the NLRC but removed the three months — salary cap *
imposed by the LA.
Petitioner questions the CA for lifting the three-month salary cap, pointing out that the LA and NLRC decisions
which imposed the cap can no longer be altered as said decisions where not questioned by respondent.
Indeed, a party who has failed to appeal from a judgment is deemed to have acquiesced to it and can no longer
obtain from the appellate court any affirmative relief other that what was already granted under said judgment.
However, when strict adherence to such technical rule will impair a substantive right, equity dictates that the
Court set aside the rule to pave the way for a full and just adjudication of the case.
The Court of Appeals is imbued with sufficient authority and discretion to review matters, not otherwise
assigned as errors on appeal, if it finds that their consideration is necessary in arriving at a complete and just
resolution of the case or to serve the interests of justice or to avoid dispensing piecemeal justice.
Section 10 of R.A. No. 8042, entitles an overseas worker who has been illegally dismissed to "his salaries for the
unexpired portion of the employment contract or for three (3) months for every year of the unexpired term,
whichever is less." The CA correctly applied the interpretation of the Court in Marsaman Manning Agency, Inc.
v. National Labor Relations Commission that the second option which imposes a three months — salary cap *
applies only when the term of the overseas contract is fixed at one year or longer; otherwise, the first option
applies in that the overseas worker shall be entitled payment of all his salaries for the entire unexpired period
of his contract.
3) NO, respondent is not entitled to overtime pay.
Page 139
Petitioner contends that there is no factual or legal basis for the inclusion of said amount because, after
respondent's repatriation, he could not have rendered any overtime work.
As ruled by the SC in Cagampan v. National Labor Relations Commission, although an overseas employment
contract may guarantee the right to overtime pay, entitlement to such benefit must first be established,
otherwise the same cannot be allowed.
Hence, it being improbable that respondent rendered overtime work during the unexpired term of his contract,
the inclusion of his "guaranteed overtime" pay into his monthly salary as basis in the computation of his salaries
for the entire unexpired period of his contract has no factual or legal basis and the same should have been
disallowed.
Petition is PARTLY GRANTED.
Page 140
11. PNCC Skyway Traffic Management and Security Division Workers Organization, GR No. 171231, Feb. 17,
2010
Facts
Petitioner is a labor union duly registered with the DOLE while the respondent is a corporation duly organized
and operating under the Philippines laws. Both parties entered into a CBA incorporating the terms and
conditions of their agreement including vacation leave and expenses for security license provisions. The CBA
provides that respondent may take into consideration the employees’ preferred schedule of vacation leave but
such is not controlling because it is the respondent who has the final say. The CBA also provides that all the
expenses in the renewal of licenses should be personally shouldered by the security guards
themselves.Respondent issued a memorandum unilaterally scheduling the vacation leave for the year 2004.
The petitioner then objected insisting that the individual union member has the right to schedule their vacation.
Petitioner alleged that the scheduling was done to avoid the monetization of their vacation leave in December.
Petitioner also demanded that the expenses for the renewal of their licenses should be shouldered by the
respondent and not by its member security guards.
Respondents neglected the said demands and asserted to schedule all the vacation leave. Petitioner then
elevated the matter to the DOLE-NCMB for preventive mediation but parties failed to reach amicable
settlement. Both then passed the issue to the voluntary arbitrator.
The VA favored the petitioners and declared that the scheduling of all vacation leaves should be left to the union
members and that utilized and paid vacation leaves should be converted to cash. The VA also ruled that
respondents should pay for the in-service-training. The VA denied respondent’s motion for reconsideration.
The respondent elevated the case to the CA which annulled the VA’s decision on the ground that the CBA of the
parties is clear with regard to vacation leave hence VA has no authority to interpret. CA denied petitioner’s
motion for reconsideration.
Issue
Whether or not the unilateral scheduling of the respondent of the vacation leave is valid
Held
The unilateral scheduling by the respondent is valid. The CBA is clear that scheduling of vacation leave shall be
under the employer or respondent’s option. Absence of ambiguity, the plain language should be applied. Hence,
respondent has the right to schedule the vacation leave and that the parties should comply. The unused
vacation leave must be converted to cash.
According to the SC, in granting vacation leave, the employers are given the leeway to impose conditions on the
entitlement to and commutation of the same as the grant of the vacation leave is not a standard of law but
management prerogative.
Citing the case of Cuajo v.. Chua Lo Tan, the Supreme Court highlighted the importance of vacation leave and
that is “to afford a laborer a chance to get a much-needed rest to replenish his worn-out energy and acquire a
new vitality to enable him to efficiently perform his duty, and not merely to give him additional salary and
bounty”.
With regard to the issue of who should shoulder the expenses of renewing the licenses, the SC held that it should
be by the respondent in pursuant to the 1994 Revised Rules and Regulations Implementing Republic Act No.
5487. The law imposes that operators of company security forces are primarily responsible to maintain and
upgrade the standards of efficiency, discipline, performance of their personnel. Hence, it follows that they
should shoulder the expenses.
Page 141
12. Radio Mindanao Network Inc. et al., vs. Ybarola, Jr. G.R. No. 198662, Sept. 12, 2012
Facts
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983,
respectively, by RMN. They eventually became account managers, soliciting advertisements and servicing
various clients of RMN.
The respondents’ services were terminated as a result of RMN’s reorganization/restructuring; they were given
their separation pay – P 631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002,
they executed release/quitclaim affidavits.
Dissatisfied with their separation pay, the respondents filed separate complaints (which were later
consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several money claims,
including attorney’s fees. They indicated that their monthly salary rates were P 60,000.00 for Ybarola and P
40,000.00 for Rivera.
The respondents argued that the release/quitclaim they executed should not be a bar to the recovery of the full
benefits due them; while they admitted that they signed release documents, they did so due to dire necessity.
The petitioners denied liability, contending that the amounts the respondents received represented a fair and
reasonable settlement of their claims, as attested to by the release/quitclaim affidavits which they executed
freely and voluntarily. They belied the respondents’ claimed salary rates, alleging that they each received a
monthly salary of P 9,177.00, as shown by the payrolls.
The Labor Arbiter Patricio Libo-on dismissed the illegal dismissal complaint, but ordered the payment of
additional separation pay to the respondents – P 490,066.00 for Ybarola and P 429,517.55 for Rivera.
On appeal by the petitioners to the National Labor Relations Commission (NLRC), the NLRC set aside the labor
arbiter’s decision and dismissed the complaint for lack of merit. It ruled that the withholding tax certificate
cannot be the basis of the computation of the respondents’ separation pay as the tax document included the
respondents’ cost-of-living allowance and commissions; as a general rule, commissions cannot be included in
the base figure for the computation of the separation pay.
The CA granted the petition and set aside the assailed NLRC dispositions. It reinstated the labor arbiter’s
separation pay award, rejecting the NLRC’s ruling that the respondents’ commissions are not included in the
computation of their separation pay. It pointed out that in the present case, the respondents earned their
commissions through actual market transactions attributable to them; these commissions, therefore, were part
of their salary.
The appellate court declared the release/quitclaim affidavits executed by the respondents invalid for being
against public policy, citing two reasons: (1) the terms of the settlement are unconscionable; the separation
pay the respondents received was deficient by at least P 400,000.00 for each of them; and (2) the absence of
voluntariness when the respondents signed the document, it was their dire circumstances and inability to
support their families that finally drove them to accept the amount the petitioners offered. Significantly, they
dallied and it took them three months to sign the release/quitclaim affidavits.
Issues
Whether or not the release/quitclaim affidavits are invalid for being against public policy.
Held
Release/Quitclaim; Separation pay. The release/quitclaim affidavits are invalid for being against public policy
for two reasons: (1) the terms of the settlement are unconscionable; the separation pay for termination due to
reorganization/restructuring was deficient by Php400,000.00 for each employee; they were given only half of
the amount they were legally entitled to; and (2) the absence of voluntariness when the employees signed the
document, it was their dire circumstances and inability to support their families that finally drove them to
accept the amount offered. Without jobs and with families to support, they dallied in executing the quitclaim
Page 142
instrument, but were eventually forced to sign given their circumstances. To be sure, a settlement under these
terms is not and cannot be a reasonable one, given especially the respondent’s length of service – 25 years for
Ybarola and 19 years for Rivera.
Page 143
13. Robina Farms Cebu vs. Villa, GR No. 175869, April 18, 2016
Facts
Respondent Elizabeth Villa brought against the petitioner her complaint for illegal suspension, illegal dismissal,
nonpayment of overtime pay, and nonpayment of service incentive leave pay in the Regional Arbitration Branch
No. VII of the NLRC in Cebu City
Villa averred that she had been employed by petitioner Robina Farms as sales clerk since August 1981; that in
the later part of 2001, the petitioner had enticed her to avail herself of the company's special retirement
program; that on March 2, 2002, she had received a memorandum from Lily Ngochua requiring her to explain
her failure to issue invoices for unhatched eggs in the months of January to February 2002; that she had
explained that the invoices were not delivered on time because the delivery receipts were delayed and
overlooked; that despite her explanation, she had been suspended for 10 days from March 8, 2012 until March
19, 2002; that upon reporting back to work, she had been advised to cease working because her application for
retirement had already been approved; that she had been subsequently informed that her application had been
disapproved, and had then been advised to tender her resignation with a request for financial assistance
The petitioner admitted that Villa had been its sales clerk at Robina Farms. It stated that on December 12, 2001,
she had applied for retirement under the special privilege program offered to its employees in Bulacan and
Antipolo who had served for at least 10 years; that in February 2002, her attention had been called by Anita
Gabatan of the accounting department to explain her failure to issue invoices for the unhatched eggs for the
month of February; that she had explained that she had been busy; that Gabatan had referred the matter to
Florabeth Zanoria who had in turn relayed the matter to Ngochua; and that the latter had then given Villa the
chance to explain, which she did.
The petitioner added that after the administrative hearing Villa was found to have violated the company rule
on the timely issuance of the invoices; that after serving the suspension, she had returned to work and had
followed up her application for retirement with Lucina de Guzman, who had then informed her that the
management did not approve the benefit equivalent to 86% of her salary rate applied for, but only 1/2 month
for every year of service; and that disappointed with the outcome, she had then brought her complaint against
the petitioners.
Issue
1. Whether or not Villa was illegally dismissed after her application for retirement plan
2. Whether or not the CA correctly affirmed the giving of overtime pay to Villa
3. Whether or not the CA correctly affirmed the giving of service incentive leave to Villa
Held
1. YES because Villa's application for early retirement did not manifest her intention to sever the employer-
employee relationship. Although she applied for early retirement, she did so upon the belief that she would
receive a higher benefit t based on the petitioner's offer. As such, her consent to be retired could not be fairly
deemed to have been knowingly and freely given. Retirement is the result of a bilateral act of both the employer
and the employee based on their voluntary agreement that upon reaching a certain age, the employee agrees
to sever his employment. In case of early retirement programs, the offer of benefits must be certain while
acceptance to be retired should be absolute.
It is undeniable that private respondent was suspended for ten (10) days beginning March 8, 2002 to March
19, 2002. Ordinarily, after an employee [has] served her suspension, she should be admitted back to work and
to continue to receive compensation for her services. In the case at bar, it is clear that private respondent was
not admitted immediately after her suspension. Records show that when private respondent reported back
after her suspension, she was advised by Lucy de Guzman not to report back anymore as her application was
approved, which was latter on disapproved.
Records show that when private respondent reported back after her suspension, she was advised by Lucy de
Guzman not to report back anymore as her application was approved, which was latter [sic] on disapproved. It
is at this point that, said Lucy de Guzman had advised private respondent to tender a resignation letter with
request for financial assistance. Not only Lucy De Guzman has advised her to tender her resignation letter. The
Page 144
letter of petitioner Lily Ngochua has also advised private respondent to the same. These acts are strong
indication that petitioners wanted to sever the employer-employee relationship between them and that of
private respondent. This is buttressed by the fact that when private respondent signified her intention to return
back to work after learning of the disapproval of her application, she was prevented to enter the petitioner's
premises by confiscating her ID and informing her that a new employee has already replaced her.
In case of early retirement programs, the offer of benefits must be certain while the acceptance to be retired
should be absolute. The acceptance by the employees contemplated herein must be explicit, voluntary, free and
uncompelled.
2. NO, Villa is not entitled to overtime pay because she did not adduce proof of her having rendered actual
overtime work and that she had not been authorized to render overtime work. The Court ruled that entitlement
to overtime pay must first be established by proof that the overtime work was actually performed before the
employee may properly claim the benefit. The burden of proving entitlement to overtime pay rests on the
employee because the benefit is not incurred in the normal course of business. Failure to prove such actual
performance transgresses the principles of fair play and equity. And, secondly, the NLRC's reliance on the daily
time records (DTRs) showing that Villa had stayed in the company's premises beyond eight hours was
misplaced.
Without the prior authorization, therefore, Villa could not validly claim having performed work beyond the
normal hours of work. Moreover, Section 4 (c), Rule I, Book III of the Omnibus Rules Implementing the Labor
Code relevantly states as follows:
Section 4. Principles in determining hours worked. — The following general principles shall govern in
determining whether the time spent by an employee is considered hours worked for purposes of this
Rule:
(a) . . . .
(b) . . . .
(c) If the work performed was necessary, or it benefited the employer, or the employee could not
abandon his work at the end of his normal working hours because he had no replacement, all time
spent for such work shall be considered as hours worked, if the work was with knowledge of his
employer or immediate supervisor.
3. YES, as to the grant of service incentive leave pay, although the grant of vacation or sick leave with pay of at
least five days could be credited as compliance with the duty to pay service incentive leave, the employer is still
obliged to prove that it fully paid the accrued service incentive leave pay to the employee. In this case, Petitioner
Robina did not present proof that Villa had been justly paid thus, award of Service Incentive Leave is proper.
Page 145
14. Dasco et al., vs. Philtranco Service Enterprise, GR No. 211141, June 29, 2016
Facts
Petitioners were employed by respondent bus company on various dates between 2006 and 2010 as either bus
driver or conductor. On July 4, 2011, they filed a complaint for regularization, underpayment of wages, non-
payment of service incentive leave (SIL) pay.
Petitioners alleged that they are qualified for regularization, they were only paid P404.00 per round trip which
lasts for 2 to 5 days, without overtime pay and below the minimum wage, they are not field personnels, and
that they have not been given their 5-day service incentive leaves.
Respondents averred that petitioners were paid a fixed rate of P0.49 per kilometer run, or minimum wage,
whichever is higher; that petitioners are seasonal employees; and that they are field personnels, and are not
entitled to overtime pay and SIL.
The Labor Arbiter found petitioners to be field personnels, thus not entitled to overtime pay and SIL. The NLRC
however reversed this, finding that petitioners are not field personnels as they are under strict supervision of
the bus company. The Court of Appeals reversed the NLRC and reinstated the LA decisions. Aggrieved,
petitioners now come to the Court on certiorari.
Issue
Whether or not petitioners bus drivers and conductors of respondent bus company are entitled to overtime
pay and SIL as they are not field personnel.
Held
Yes. As bus drivers and conductors of the bus company, petitioners are entitled to overtime pay and SIL. They
are not field personnel.
The determination of whether bus drivers and/or conductors are considered as field personnel was already
threshed out in the case of Auto Bus Transport Systems, Inc. v. Bautista. Field personnel are those who:
(1) regularly perform their duties away from the principal place of business of the employer; and
(2) whose actual hours of work in the field cannot be determined with reasonable certainty.
The NLRC properly concluded that the petitioners are not field personnel as supported by the established facts
of the case:
(1) they are directed to transport their passengers at a Specified time and place;
(2) they are not given the discretion to select and contract with prospective passengers;
(3) their actual work hours could be determined with reasonable certainty, as well as their average trips
per month; and
(4) the respondents supervised their time and performance of duties.
In view of the foregoing, petitioners are thus entitled to the benefits accorded to regular employees of the
respondent, including overtime pay and SIL pay.
WHEREFORE, petition is hereby GRANTED.
Page 146
15. HSY Marketing Ltd., vs. Villastique, GR No. 219569, Aug. 17, 2016
Facts
HSY Marketing Ltd. hired respondent Virgilio Villastique as a field driver for Fabulous Jeans & Shirt & General
Merchandise (Fabulous Jeans), tasked to deliver ready-to-wear items and/or general merchandise for a daily
compensation of P370.00. Respondent figured in an accident when the service vehicle he was driving bumped
a pedestrian. Fabulous Jeans shouldered the hospitalization and medical expenses of the pedestrian and asked
Villastique to reimburse, but to no avail.
Respondent was allegedly required to sign a resignation letter, which he refused to do. A couple of days later,
he tried to collect his salary for that week but was told that it was withheld because of his refusal to resign.
Convinced that he was already terminated, he lost no time in filing a complaint for illegal dismissal with money
claims against petitioner. HSY Marketing Ltd. contended that respondent had committed several violations in
the course of his employment, and had been found by his superior and fellow employees to be a negligent and
reckless driver, which resulted in the vehicular mishap.
The Labor Arbiter dismissed the complaint for illegal dismissal, finding no evidence that the respondent was
illegally dismissed. The National Labor Relations Commission (NLRC) and, subsequently, the CA affirmed the
decision of the Labor Arbiter.
Issue
Whether or not respondent Villastique is a regular employee who is entitled to a service incentive leave pay
Held
Yes. Respondent Villastique is a regular employee who is entitled to a service incentive leave pay.
Respondent is not a field personnel as defined above because of the nature of his job as a company driver.
Expectedly, respondent is directed to deliver the goods at a specified time and place and he is not given the
discretion to solicit, select, and contact prospective clients. It has been held that The Court has already held
that company drivers who are under the control and supervision of management officers — like respondent
herein — are regular employees entitled to benefits including service incentive leave pay.
"Service incentive leave is a right which accrues to every employee who has served 'within 12 months, whether
continuous or broken reckoned from the date the employee started working, including authorized absences
and paid regular holidays unless the working days in the establishment as a matter of practice or policy, or that
provided in the employment contracts, is less than 12 months, in which case said period shall be considered as
one [(1)] year.' It is also commutable to its money equivalent if not used or exhausted at the end of the year. In
other words, an employee who has served for one (1) year is entitled to it. He may use it as leave days or he
may collect its monetary value."
Petitioner, as the employer of respondent, and having complete control over the records of the company, could
have easily rebutted the said monetary claim against it by presenting the vouchers or payrolls showing
payment of the same. However, since petitioner opted not to lift a finger in providing the required documentary
evidence, the ineluctable conclusion that may be derived therefrom is that it never paid said benefit and must,
perforce, be ordered to settle its obligation to respondent.
Page 147
16. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017
Facts
Bernardo taught as a part-time professional lecturer at DLS-AU since 1974. On November 8, 2003, DLS-AU
informed him that he could not teach anymore due to the retirement age limit. Bernardo was 75 years old at
the time and was being paid P246.50 per hour. DOLE informed him that he was entitled to receive benefits
under RA 7641, also known as the" New Retirement Law.”
Petitioner DLS-AU argued that Bernardo was not covered by the law since he was a part-time employee and
that Bernardo was not entitled to any kind of separation pay or benefits. Dr. Bautista explained to Bernardo
that as mandated by the DLS-AU's policy and Collective Bargaining Agreement (CBA), only full-time permanent
faculty of DLS-AU for at least five years immediately preceeding the termination of their employment could
avail themselves of the post-employment benefits. As part-time faculty member, Bernardo did not acquire
permanent employment under the Manual of Regulations for Private Schools, in relation to the Labor Code,
regardless of his length of service.The school further averred that Bernardo’s employment bond was severed
when he reached the mandatory retirement age of 65. 10 years have passed since then. His claim for retirement
benefits should have prescribed, because under Article 291 of the Labor Code, all money claims shall be filed
within three years from the time the cause of action accrues.
Respondent Bernardo alleged that he started working as a part-time professional lecturer at DLS-AU on June
1, 1974 for an hourly rate of P20.00. Bernardo taught for two semesters and the summer for the school year
1974-1975. Bernardo then took a leave of absence from June 1, 1975 to October 31, 1977 when he was assigned
by the Philippine Government to work in Papua New Guinea. When Bernardo came back in 1977, he resumed
teaching at DLS-AU until October 12, 2003, the end of the first semester for school year 20032004. Bernardo's
teaching contract was renewed at the start of every semester and summer. However, on November 8, 2003,
DLS-AU informed Bernardo through a telephone call that he could not teach at the
schoolanymoreastheschoolwasimplementingthe retirementagelimit for its faculty members. As he was already
75 years old, Bernardo had no choice but to retire. At the time of his retirement, Bernardo was being paid
P246.50 per hour.
NLRC: The Labor Arbiter dismissed Bernardo’s complaint on the ground of prescription. This was reversed by
the NLRC. It held that the school is estopped from claiming prescription because it permitted Bernardo to work
beyond the mandatory retirement age. Furthermore, part-time employees are covered under RA 7641.
Under Republic Act No. 7641, part-time workers are entitled to retirement pay of one-half month salary for
every years of service, provided that the following conditions are present: (a) there is no retirement plan
between the employer and employees; (b) the employee has reached the age of 60 years old for optional
retirement or 65 years old for compulsory retirement; and (c) the employee should have rendered atleast five
yearsof service with the employer. Bernardo vowed that all these conditions were extant in his case. CA:
TheCA affirmed in toto the NLRC judgment.
Issue
W/N part-time employees receive retirement benefits despite a lack of CBA
Held
YES. Based on RA 7641, its Implementing Rules, and the October 24, 1996 Labor Advisory, the only employees
exempted from retirement pay are: (1) those of the National Government and its political subdivisions,
including government-owned and/or controlled corporations, if they are covered by the Civil Service Law and
its regulations; and (2) those of retail, service and agricultural establishments or operations regularly
employing not more than 10 employees. Under expressio unius est exclusio alterius, Since part-time employees
are not among those specifically exempted, Bernardo’s claim stands. Being 75 years old at the time of his
retirement, having served DLS-AU for a total of 27 years, and not being covered by the grant of retirement
benefits in the CBA - is unquestionably qualified to avail himself of retirement benefits under said statutory
provision, i.e., equivalent to one-half month salary for every year of service, a fraction of at least six months
being considered as one whole year.
Page 148
Topic 10: Other Special Benefit

1. Reyes vs. NLRC et al., G.R. No. 160233, August 8, 2007, citing Boie Takeda Chemicals vs. Dela Serna, 228 SCRA
329 [1993] & Phil. Duplicators vs. NLRC, 241 SCRA 380 [1995]
Facts
Petitioner was employed as a salesman at private respondent's Grocery Division in Davao City on August 12,
1977. He was eventually appointed as unit manager of Sales Department-South Mindanao District, a position
he held until his retirement on November 30, 1997. Thereafter, he received a letter regarding the computation
of his separation pay. Insisting that his retirement benefits and 13th month pay must be based on the average
monthly salary of P42,766.19, which consists of P10,919.22 basic salary and P31,846.97 average monthly
commission, petitioner refused to accept the check issued by private respondent in the amount of P200,322.21.
Instead, he filed a complaint before the arbitration branch of the NLRC for retirement benefits, 13th month pay,
tax refund, earned sick and vacation leaves, financial assistance, service incentive leave pay, damages and
attorney's fees.
Petitioner contends that the commissions form part of the basic salary, citing the case of Philippine Duplicators,
Inc. v. National Labor Relations Commission, wherein the Court held that commissions earned by salesmen
form part of their basic salary. Private respondent counters that petitioner knew that the overriding
commission is not included in the basic salary because it had not been considered as such for a long time in the
computation of the 13th month pay, leave commissions, absences and tardiness.
Issue
Whether or not the average monthly sales commission of thirty one thousand eight hundred forty six and
97/100 (Php31,846.97) should be included in the computation of his retirement benefits and 13th month pay.
Held
This Court has held, in Philippine Duplicators that, the salesmen's commissions, comprising a pre-determined
percentage of the selling price of the goods sold by each salesman, were properly included in the term basic
salary for purposes of computing the 13th month pay. The salesmen's commission are not overtime payments,
nor profit-sharing payments nor any other fringe benefit but a portion of the salary structure which represents
an automatic increment to the monetary value initially assigned to each unit of work rendered by a salesman.
Contrarily, in Boie-Takeda, the so-called commissions paid to or received by medical representatives of Boie-
Takeda Chemicals or by the rank and file employees of Philippine Fuji Xerox Co., were excluded from the term
basic salary because these were paid to the medical representatives and rank-and-file employees as
productivity bonuses, which are generally tied to the productivity, or capacity for revenue production, of a
corporation and such bonuses closely resemble profit-sharing payments and have no clear direct or necessary
relation to the amount of work actually done by each individual employee. Further, commissions paid by the
Boie-Takeda Company to its medical representatives could not have been sales commissions in the same sense
that Philippine Duplicators paid the salesmen their sales commissions. Medical representatives are not
salesmen; they do not effect any sale of any article at all.
In fine, whether or not a commission forms part of the basic salary depends upon the circumstances or
conditions for its payment, which indubitably are factual in nature for they will require a re-examination and
calibration of the evidence on record.
As to the main issue whether petitioner's commissions be considered in the computation of his retirement
benefits and 13th month pay, we rule in the negative. Article 287 of the Labor Code, as amended by Republic
Act No. 7641, otherwise known as The New Retirement Law, 22 provides: Retirement. — Any employee may
be retired upon reaching the retirement age established in the collective bargaining agreement or other
applicable employment contract… In the absence of a retirement plan or agreement providing for retirement
benefits of employees in the establishment, an employee upon reaching the age of sixty (60) years or more, but
not beyond sixty five (65) years which is hereby declared the compulsory retirement age, who has served at
least five (5) years in the said establishment, may retire and shall be entitled to retirement pay equivalent to at
least one half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered
Page 149
as one whole year. Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall
mean fifteen (15) days plus one twelfth (1/12) of the 13th month pay and the cash equivalent of not more than
five (5) days of service incentive leaves.
Petitioner filed for optional retirement upon reaching the age of 60. However, the basis in computing his
retirement benefits is his latest salary rate of P10,919.22 as the commissions he received are in the form of
profit-sharing payments specifically excluded by the foregoing rules. Case law has it that when these earnings
and remuneration are closely akin to fringe benefits, overtime pay or profit-sharing statements, they are
properly excluded in computing retirement pay. However, sales commissions which are effectively an integral
portion of the basic salary structure of an employee, shall be included in determining the retirement pay.
At bar, petitioner Rogelio J. Reyes was receiving a monthly sum of P10,919.22 as salary corresponding to his
position as Unit Manager. Thus, as correctly ruled by public respondent NLRC, the "overriding commissions"
paid to him by Universal Robina Corp. could not have been 'sales commissions' in the same sense that Philippine
Duplicators paid its salesmen sales commissions. Unit Managers are not salesmen; they do not effect any sale
of article at all. Therefore, any commission which they receive is certainly not the basic salary which measures
the standard or amount of work of complainant as Unit Manager. Accordingly, the additional payments made
to petitioner were not in fact sales commissions but rather partook of the nature of profit-sharing business.
Certainly, from the foregoing, the doctrine in Boie-Takeda Chemicals and Philippine Fuji Xerox Corporation,
which pronounced that commissions are additional pay that does not form part of the basic salary, applies to
the present case. Aside from the fact that as unit manager petitioner did not enter into actual sale transactions,
but merely supervised the salesmen under his control, the disputed commissions were not regularly received
by him. Only when the salesmen were able to collect from the sale transactions can petitioner receive the
commissions. Conversely, if no collections were made by the salesmen, then petitioner would receive no
commissions at all. In fine, the commissions which petitioner received were not part of his salary structure but
were profit-sharing payments and had no clear, direct or necessary relation to the amount of work he actually
performed. The collection made by the salesmen from the sale transactions was the profit of private respondent
from which petitioner had a share in the form of a commission. Hence, petition is denied.
Page 150
2. Arco Metal Products Co., Inc., et al., vs. Samahan ng Mga Manggagawa sa Arco Metal-NAFLU, G.R. No. 170734,
May 14, 2008
Facts
Petitioner is a company engaged in the manufacture of metal products, whereas respondent is the labor union
of petitioner’s rank and file employees. Sometime in December 2003, petitioner paid the 13th month pay,
bonus, and leave encashment of three union members in amounts proportional to the service they actually
rendered in a year, which is less than a full 12 months. Respondent protested the prorated scheme, claiming
that on several occasions petitioner did not prorate the payment of the same benefits to 7 employees who had
not served for the full 12 months. The payments were made in 1992, 1993, 1994, 1996, 1999, 2003, and 2004.
According to respondent, the prorated payment violates the rule against diminution of benefits under Article
100 of the Labor Code. Thus, they filed a complaint before the NCMB. The parties submitted the case for
voluntary arbitration.
The voluntary arbitrator, Mangabat, ruled in favor of petitioner and found that the giving of the contested
benefits in full, irrespective of the actual service rendered within one year has not ripened into a practice. He
noted the affidavit of Baingan, manufacturing group head of petitioner, which states that the giving in full of the
benefit was a mere error. He also interpreted the phrase “for each year of service” found in the pertinent CBA
provisions to mean that an employee must have rendered one year of service in order to be entitled to the full
benefits provided in the CBA.
The CA ruled that the CBA did not intend to foreclose the application of prorated payments of leave benefits to
covered employees. The appellate court found that petitioner, however, had an existing voluntary practice of
paying the aforesaid benefits in full to its employees, thereby rejecting the claim that petitioner erred in paying
full benefits to its seven employees. The appellate court noted that aside from the affidavit of petitioner’s officer,
it has not presented any evidence in support of its position that it has no voluntary practice of granting the
contested benefits in full and without regard to the service actually rendered within the year. It also questioned
why it took petitioner 11 years before it was able to discover the alleged error.
Issue
WON the grant of 13th month pay, bonus, and leave encashment in full regardless of actual service rendered
constitutes voluntary employer practice and, consequently, the prorated payment of the said benefits does not
constitute diminution of benefits under Article 100 of the Labor Code.
Held
Petitioner claims that its full payment of benefits regardless of the length of service to the company does not
constitute voluntary employer practice. It points out that the payments had been erroneously made and they
occurred in isolated cases in the years 1992, 1993, 1994, 1999, 2002 and 2003. According to petitioner, it was
only in 2003 that the accounting department discovered the error “when there were already 3 employees
involved with prolonged absences and the error was corrected by implementing the pro-rata payment of
benefits pursuant to law and their existing CBA.” It adds that the seven earlier cases of full payment of benefits
went unnoticed considering the proportion of one employee concerned (per year) vis à vis the 170 employees
of the company. Petitioner describes the situation as a “clear oversight” which should not be taken against it.
To further bolster its case, petitioner argues that for a grant of a benefit to be considered a practice, it should
have been practiced over a long period of time and must be shown to be consistent, deliberate and intentional,
which is not what happened in this case. Petitioner tries to make a case out of the fact that the CBA has not been
modified to incorporate the giving of full benefits regardless of the length of service, proof that the grant has
not ripened into company practice.
Any benefit and supplement being enjoyed by employees cannot be reduced, diminished, discontinued or
eliminated by the employer. The principle of non-diminution of benefits is founded on the Constitutional
mandate to “protect the rights of workers and promote their welfare,” and “to afford labor full protection.” Said
mandate in turn is the basis of Article 4 of the Labor Code which states that “all doubts in the implementation
and interpretation of this Code, including its implementing rules and regulations shall be rendered in favor of
Page 151
labor.” Jurisprudence is replete with cases which recognize the right of employees to benefits which were
voluntarily given by the employer and which ripened into company practice. Thus in Davao Fruits Corporation
v. Associated Labor Unions, et al. where an employer had freely and continuously included in the computation
of the 13th month pay those items that were expressly excluded by the law, we held that the act which was
favorable to the employees though not conforming to law had thus ripened into a practice and could not be
withdrawn, reduced, diminished, discontinued or eliminated.
In the years 1992, 1993, 1994, 1999, 2002 and 2003, petitioner had adopted a policy of freely, voluntarily and
consistently granting full benefits to its employees regardless of the length of service rendered. True, there
were only a total of seven employees who benefited from such a practice, but it was an established practice
nonetheless. Jurisprudence has not laid down any rule specifying a minimum number of years within which a
company practice must be exercised in order to constitute voluntary company practice. Thus, it can be 6 years,
3 years, or even as short as 2 years. Petitioner cannot shirk away from its responsibility by merely claiming
that it was a mistake or an error, supported only by an affidavit of its manufacturing group head.
In cases involving money claims of employees, the employer has the burden of proving that the employees did
receive the wages and benefits and that the same were paid in accordance with law.
Page 152
3. Universal Robina Sugar Milling Corp. vs. Caballeda, G.R. No. 156644, July 28, 2008
Facts
Petitioner Universal Robina Sugar Milling Corporation (URSUMCO) is a domestic corporation engaged in the
sugar milling business and petitioner Renato Cabati is URSUMCO’s manager.
Respondent Agripino Caballeda worked as welder for URSUMCO from March 1989 until June 23, 1997 with a
salary of P124.00 per day, while respondent Alejandro Cadalin worked for URSUMCO as crane operator from
1976 up to June 15, 1997 with a salary of P209.30 per day.
On April 24, 1991, John Gokongwei, Jr., President of URSUMCO, issued a Memorandum establishing the
company policy on “Compulsory Retirement” (Memorandum) of its employees. The memorandum provides:
All employees corporate-wide who attain 60 years of age on or before
30, 1991 shall be considered retired on May 31, 1991.
Henceforth, any employee shall be considered retired 30 days after he
attains age 60.
Subsequently, on December 9, 1992, Republic Act (RA) No. 7641 was enacted into law, and it took effect on
January 7, 1993, amending Article 287 of the Labor Code.
On April 29, 1993, URSUMCO and the National Federation of Labor (NFL), a legitimate labor organization and
the recognized sole and exclusive bargaining representative of all the monthly and daily paid employees of
URSUMCO, of which Alejandro was a member, entered into a Collective Bargaining Agreement (CBA). Article
XV of the said CBA particularly provided that the retirement benefits of the members of the collective
bargaining unit shall be in accordance with law.
Respondents, having reached the age of 60, were allegedly forced to retire by URSUMCO. Both filed respective
Complaints for illegal dismissal, damages and attorney’s fees. They alleged that his compulsory retirement was
in violation of the provisions of Republic Act (R.A.) 7641 and, was in effect, a form of illegal dismissal.
LA: declared URSUMCO guilty of illegal dismissal
NLRC: reversed and held that Alejandro voluntarily retired because he freely submitted his application for
retirement together with his birth and baptismal certificates. Moreover, he had his clearance processed and he
received the amount of P33,476.77 as retirement benefit. Nevertheless, the NLRC found that since Alejandro’s
retirement benefit was based merely on fifteen (15) days salary for every year of service, such benefit should
be recomputed to conform to the provisions of Art. 287 of the Labor Code as amended. With respect to Agripino,
the NLRC held that URSUMCO’s claim that Agripino was a mere casual employee was obviously designed to
avoid paying Agripino his retirement benefit.
CA: declared that URSUMCO illegally dismissed the respondents since the Memorandum unilaterally imposed
upon the respondent’s compulsory retirement at the age of 60 and found that there is no existing CBA or
employment contract between the parties that provides for early compulsory retirement.
Issue
Whether respondents were illegally terminated on account of compulsory retirement or the same voluntarily
retired.
Page 153
Held
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former. The age of retirement is primarily determined by the existing agreement between the employer and
the employees. However, in the absence of such agreement, the retirement age shall be fixed by law. Under Art.
287 of the Labor Code as amended, the legally mandated age for compulsory retirement is 65 years, while the
set minimum age for optional retirement is 60 years.
In this case, it may be stressed that the CBA does not per se specifically provide for the compulsory retirement
age nor does it provide for an optional retirement plan. It merely provides that the retirement benefits accorded
to an employee shall be in accordance with law.
Thus, we must apply Art. 287 of the Labor Code which provides for two types of retirement: (a) compulsory
and (b) optional. The first takes place at age 65, while the second is primarily determined by the collective
bargaining agreement or other employment contract or employer’s retirement plan. In the absence of any
provision on optional retirement in a collective bargaining agreement, other employment contract, or
employer’s retirement plan, an employee may optionally retire upon reaching the age of 60 years or more, but
not beyond 65 years, provided he has served at least five years in the establishment concerned. That
prerogative is exclusively lodged in the employee
Page 154
4. Cercado vs. Uniprom, Inc. G.R. No. 188154, October 13, 2010
Facts
Petitioner, Lourdes Cerdaco, was an employee of UNIPROM Inc. for 22 years since December 15, 1978.
When respondent came up with a retirement plan, sometime in 1980 and then amended in 2001, which
provides that any employee with a minimum of 20 years of service, regardless of age, may be retired at the
option of the employer.
In December 2000, UNIPROM implemented a company-wide retirement program, including herein petitioner.
She was offered an early retirement package amounting to P171, 982.90 but Cercado rejected the offer.
UNIPROM exercised its option under the retirement plan and decided to retire petitioner effective February
15, 2001 so she was no longer given any work assignment after the said date.
This prompted the petitioner to file a complaint for illegal dismissal before the Labor Arbiter, alleging that
UNIPROM did not have a bona fide retirement plan, and even if there was, she didn’t consent thereto.
Respondent averred that Cercado was automatically covered by the retirement plan when she agreed to the
company’s rules and regulations, and that her retirement was an exercise of management prerogative.
The Labor Arbiter ruled in favor of the petitioner holding that she was illegally dismissed ordering the
respondent to pay for the full back wages.
The NLRC affirmed the decision of the Labor Arbiter holding that there was no evidence that the petitioner
consented to the subject retirement plan.
The Court of Appeals upon a special civil action for certiorari revered and set aside the decision of the Labor
Arbiter and the NLRC ruling that the petitioner cannot feign ignorance to the retirement plan considering she
has been employed there for more than two decades. And the subject retirement plan was consistent with the
Labor Code.
Issue
1. Whether or not UNIPROM has a bona fide retirement plan.
2. Whether or not petitioner was validly retired pursuant thereto.
Held
The Supreme Court reversed and set aside the decision of the Court of Appeals holding that retirement is the
result of a bilateral act of the parties, a voluntary agreement between the employer and the employee whereby
the latter, after reaching a certain age, agrees to sever his or her employment with the former.
1. Yes, UNIPROM had a bona fide retirement plan. Article 287 of the Labor Code, as amended by R.A 7641, pegs
the age for compulsory retirement at 65 years old, while the minimum age for optional retirement is set at 60
years. However, an employer is free to impose a retirement age earlier than the foregoing mandates. This has
been upheld in numerous cases as a valid exercise of management prerogative.
In this case, petitioner was retired by UNIPROM at the age of 47, after having served the company for 22 years,
pursuant to the company’s retirement plan, which provides that employees who have rendered at least 20
years of service can be retired at the option of the company. Respondent’s retirement plan can be expediently
stamped with validity and justified under the all-encompassing phrase “management prerogative”.
2. No, petitioner was not validly retired. Jurisprudence has upheld that it is axiomatic that a retirement plan
giving the employer the option to retire its employees below the ages provided by law must be assented to and
accepted by the latter, otherwise its adhesive imposition will amount to a deprivation of property without due
process. In decided cases, the retirement plans were either embodied in the CBA, or established after
consultations and negotiations with the employees’ bargaining representative. The consent of the employees
to be retired even before the statutory retirement age of 65 years was thus clear and unequivocal. Acceptance
by the employees of an early retirement age must be explicit, voluntary, free and uncompelled.
Page 155
5. Radio Mindanao Network Inc, et al., vs. Ybarola, Jr. et al., G.R. No. 198662, September 12, 2012
Facts
Respondents Domingo Z. Ybarola, Jr. and Alfonso E. Rivera, Jr. were hired on June 15, 1977 and June 1, 1983,
respectively, by Radio Mindanao Network Inc. (RMN). They eventually became account managers, soliciting
advertisements and servicing various clients of RMN. On September 15, 2002, the respondents’ services were
terminated as a result of RMN’s reorganization/restructuring; they were given their separation pay – P
631,250.00 for Ybarola, and P 481,250.00 for Rivera. Sometime in December 2002, they executed
release/quitclaim affidavits. Dissatisfied with their separation pay, the respondents filed separate complaints
(which were later consolidated) against RMN and its President, Eric S. Canoy, for illegal dismissal with several
money claims, including attorney’s fees. The respondents argued that the release/quitclaim they executed
should not be a bar to the recovery of the full benefits due them; while they admitted that they signed release
documents, they did so due to dire necessity. On July 18, 2007, Labor Arbiter Patricio Libo-on dismissed the
illegal dismissal complaint, but ordered the payment of additional separation pay to the respondents. The labor
arbiter adjusted the separation pay award based on the respondents’ Certificates of Compensation
Payment/Tax Withheld. On appeal by the petitioners to the National Labor Relations Commission (NLRC), it
ruled that the withholding tax certificate cannot be the basis of the computation of the respondents’ separation
pay as the tax document included the respondents’ cost-of-living allowance and commissions; as a general rule,
commissions cannot be included in the base figure for the computation of the separation pay because they have
to be earned by actual market transactions attributable to the respondents, as held by the Court in Soriano v.
NLRC7 and San Miguel Jeepney Service v. NLRC. From the NLRC, the respondents sought relief from the CA
through a petition for certiorari under Rule 65 of the Rules of Court. In its decision of February 17, 2011, the
CA granted the petition and reinstated the labor arbiter’s separation pay award. Hence, this petition for motion
for reconsideration.
Issue
Whether or not the CA committed reversible error in : (1) failing to declare that Canoy is not personally liable
in the present case; (2) disregarding the rule laid down in Talam v. National Labor Relations Commission on
the proper appreciation of quitclaims; and (3) disregarding prevailing jurisprudence which places on the
respondents the burden of proving that their commissions were earned through actual market transactions
attributable to them.
Held
The motion for reconsideration is unmeritorious. The motion raises substantially the same arguments
presented in the petition. The petitioner’s contention that respondent’s commissions are profit-sharing
payments which do not form part of their salaries is untenable. That the salary structure of the respondents
was such that they only received a minimal amount as guaranteed wage; a greater part of their income was
derived from the commissions they get from soliciting advertisements; these advertisements are the
"products" they sell. As the CA aptly noted, this kind of salary structure does not detract from the character of
the commissions being part of the salary or wage paid to the employees for services rendered to the company.
The petitioners’ reliance on our ruling in Talam v. National Labor Relations Commission,17 regarding the
"proper appreciation of quitclaims," as they put it, is misplaced. In this case, as the CA noted, the separation pay
the respondents each received was deficient by at least P 400,000.00; thus, they were given only half of the
amount they were legally entitled to. To be sure, a settlement under these terms is not and cannot be a
reasonable one, given especially the respondents’ length of service – 25 years for Ybarola and 19 years for
Rivera.
Lastly, the petitioners are estopped from raising the issue of Canoy's personal liability. They did not raise it
before the NLRC in their appeal from the labor arbiter's decision, nor with the CA in their motion for
reconsideration of the appellate court's judgment.
Page 156
6. Padillo vs. Rural Bank of Nabunturan Inc. G.r. No. 199338, Jan. 21, 2013
Facts
Petitioner, the late Eleazar Padillo (Padillo), was employed by respondent Rural Bank of Nabunturan, Inc.
(Bank) as its SA Bookkeeper. Due to liquidity problems, the Bank took out retirement/insurance plans with
Philam Life for all its employees in anticipation of its possible closure and the concomitant severance of its
personnel. In this regard, the Bank procured Philam Life Plan in favor of Padillo for a benefit amount of
P100,000.00 and which was set to mature on July 11, 2009. However, on 2004, Bank's finances improved and
eventually, its liquidity was regained.
On 2007 Padillo suffered a mild stroke due to hypertension which consequently impaired his ability to
effectively pursue his work. Not having received his claimed retirement benefits, Padillo filed with the NLRC
Regional Arbitration of Davao City a complaint for the recovery of unpaid retirement benefits. He asserted,
among others, that the Bank had adopted a policy of granting its aging employees early retirement packages,
pointing out that one of his co-employees, Nenita Lusan (Lusan), was accorded retirement benefits in the
amount of P348,672.72 10 when she retired at the age of only fifty-three. The Bank and respondents countered
that the claim of Padillo for retirement benefits was not favorably acted upon for lack of any basis to grant the
same.
The Labor Arbiter dismissed Padillo's complaint but directed the Bank to pay him the amount of P100,000.00
as financial assistance, treated as an advance from the amounts receivable under the Philam Life Plan. NLRC's
Fifth Division reversed and set aside the LA's ruling and ordered respondents to pay Padillo the amount of
P164,903.70 as separation pay, on top of the P100,000.00 Philam Life Plan benefit. On appeal, the CA reinstated
the LA’s decision but with modification. Hence this petition.
Issue
Whether or not Padillo is entitled to receive any retirement benefits as provided for under the Labor Code.
Held
No, Padillo is not qualified for any retirement benefits.
In particular, Article 300 of the Labor Code as amended by Republic Act Nos. 7641 and 8558 partly provides:
Art. 300. Retirement. — Any employee may be retired upon reaching the retirement age established in
the collective bargaining agreement or other applicable employment contract.
In case of retirement, the employee shall be entitled to receive such retirement benefits as he may have
earned under existing laws and any collective bargaining agreement and other agreements: Provided,
however, that an employee's retirement benefits under any collective bargaining and other agreements
shall not be less than those provided herein.
In the absence of a retirement plan or agreement providing for retirement benefits of employees
in the establishment, an employee upon reaching the age of sixty (60) years or more, but not
beyond sixty-five (65) years which is hereby declared the compulsory retirement age, who has
served at least five (5) years in the said establishment, may retire and shall be entitled to
retirement pay equivalent to at least one-half (1/2) month salary for every year of service, a
fraction of at least six (6) months being considered as one whole year.
Page 157
Unless the parties provide for broader inclusions, the term one half (1/2) month salary shall mean
fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of not
more than five (5) days of service incentive leaves.
In this case, it is undisputed that there exists no retirement plan, collective bargaining agreement
or any other equivalent contract between the parties which set out the terms and condition for the
retirement of employees, with the sole exception of the Philam Life Plan which premiums had already
been paid by the Bank.
All told, in the absence of any applicable contract or any evolved company policy, Padillo should
have met the age and tenure requirements set forth under Article 300 of the Labor Code to be entitled
to the retirement benefits provided therein. Unfortunately, while Padillo was able to comply with the
five (5) year tenure requirement — as he served for twenty-nine (29) years — he, however, fell short
with respect to the sixty (60) year age requirement given that he was only fifty-five (55) years old
when he retired. Therefore, without prejudice to the proceeds due under the Philam Life Plan,
petitioners' claim for retirement benefits must be denied.
Page 158
7. Grace Christian High School vs. Lavandera, GR No. 177845, August 20, 2014
Facts
Filipinas was employed by petitioner Grace Christian High School (GCHS) as high school teacher since June
1977, with a monthly salary of 18,662.00 as of May 31, 2001.
On August 30, 2001, Filipinas filed a complaint for illegal (constructive) dismissal, non-payment of service
incentive leave (SIL) pay, separation pay, service allowance, damages, and attorney’s fees against GCHS and/or
its principal, Dr. James Tan. She alleged that on May 11, 2001, she was informed that her services were to be
terminated effective May 31, 2001, pursuant to GCHS’ retirement plan which gives the school the option to
retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement pay of one-
half (½) month for every year of service. At that time, Filipinas was only 58 years old and still physically fit to
work. She pleaded with GCHS to allow her to continue teaching but her services were terminated, contrary to
the provisions of Republic Act No. (RA) 7641, otherwise known as the “Retirement Pay Law.”
The Labor Arbiter dismissed the illegal dismissal case but found the retirement benefits payable under GCHS
plan to be deficient. NLRC reversed LA’s award and held that retirement pay should be computed based on her
monthly salary at the time of her retirement. CA modified NLRC’s decision and ruled that the computation of
“one-half month salary” by equating it to”22.5 days”.
Issue
Whether or not the multiplier “22.5 days” is to be used in computing the retirement pay differentials of
Filipinas.
Held
Yes. RA 7641, which was enacted on December 9, 1992, amended Article 287 of the Labor Code, providing for
the rules on retirement pay to qualified private sector employees in the absence of any retirement plan in the
establishment. The said law states that “an employee’s retirement benefits under any collective bargaining
agreement (CBA) and other agreements shall not be less than those provided” under the same – that is, at least
one-half (1/2) month salary for every year of service, a fraction of at least six (6) months being considered as
one whole year – and that “unless the parties provide for broader inclusions, the term one-half (1/2) month
salary shall mean fifteen (15) days plus one-twelfth (1/12) of the 13th month pay and the cash equivalent of
not more than five (5) days of service incentive leaves.”
Applicability of the 1/2 month salary provision
1. There is no CBA or other applicable agreement providing for retirement benefits to employees, or
2. There is a CBA or other applicable agreement providing for retirement benefits but it is below the
requirement set by law.
Verily, the determining factor in choosing which retirement scheme to apply is still superiority in terms of
benefits provided.
In the present case, GCHS has a retirement plan for its faculty and non-faculty members, which gives it the
option to retire a teacher who has rendered at least 20 years of service, regardless of age, with a retirement
pay of one-half (1/2) month for every year of service. Considering, however, that GCHS computed Filipinas’
retirement pay without including one-twelfth (1/12) of her 13th month pay and the cash equivalent of her five
(5) days SIL, both the NLRC and the CA correctly ruled that Filipinas’ retirement benefits should be computed
in accordance with Article 287 of the Labor Code, as amended by RA 7641, being the more beneficent
retirement scheme. They differ, however, in the resulting benefit differentials due to divergent interpretations
of the term “one-half (1/2) month salary” as used under the law.
Moreover, the Court held that the award of legal interest at the rate of 6% per annum on the amount of
P68,150.00 representing the retirement pay differentials due Filipinas should be reckoned from the rendition
of the LA’s Decision on March 26, 2002 and not from the filing of the illegal dismissal complaint.
Page 159
8. Goodyear Philippines Inc. vs. Angus, GR No. 185449, November 12, 2015
Facts
On November 19, 1966, Marina was employed by Goodyear on November 19, 1966 as the secretary to the
Manager of Quality and Technology.
Goodyear experienced economic reversals. To continue its operations, it resorted to retrenchment.
On September 18, 2001, Marina received a letter from Remegio Ramos, HR Director, stating that management
considered her position redundant and no longer necessary and is to be abolished on the same day, with her
services to be terminated after a month. Per company practice, the company only granted her an early
retirement benefit.
Marina claims that she is entitled to separation pay in addition to retirement benefits.
Goodyear points to a provision in their CBA stating that the availment of retirement benefits therein shall
exclude entitlement to any separation pay, termination pay, redundancy pay, retrenchment pay, or any other
severance pay.
The parties finally agreed that an employee shall be entitled to the higher of either benefit. However, Marina
later contested this.
Issue
Whether or not Marina is entitled to both retirement benefits and separation pay.
Held
Labor Law; Retirement Benefits; Separation Pay; Retirement benefits and separation pay are not mutually
exclusive.
—It is worthy to mention at this point that retirement benefits and separation pay are not mutually exclusive.
Retirement benefits are a form of reward for an employee’s loyalty and service to an employer and are earned
under existing laws, CBAs, employment contracts and company policies. On the other hand, separation pay is
that amount which an employee receives at the time of his severance from employment, designed to provide
the employee with the wherewithal during the period that he is looking for another employment and is
recoverable only in instances enumerated under Articles 283 and 284 of the Labor Code or in illegal dismissal
cases when reinstatement is not feasible. In the case at bar, Article 283 clearly entitles Angus to separation pay
apart from the retirement benefits she received from petitioners.
Page 160
9. Banco De Oro Unibank vs.Sagaysay,GR No. 214961, Sept 16, 2015
Facts
On May 16, 2006, Guillermo Sagasyay was hired by Banco De Oro (BDO) as Senior Accounting Assistant as a
result of a merger with united Overseas Bank with BDO as the surviving bank. Guillermo was employed in UOB
for two years and in Metrobank for twenty-eight (28) years. On January 8, 2010, BDO informed Sagaysay that
he will be formally retired on September 1, 2010 pursuant to the company’s retirement plan which mandates
its retirement age at sixty (60) years old. Since he had an outstanding loan and his children were still in college,
Sagaysay requested that his services be extended up to May 16, 2011 so that he could render at least five (5)
years of employment which would consequently entitle him to 50% of his basic pay for every year of service
upon his retirement.
BDO did not grant his wishes. As of his last day of work, he was earning a monthly salary of P28,048.00.
Sagaysay signed a Release, Waiver and Quitclaim for an in consideration of P98,376.14. The quitclaim stated
that in consideration of the amount given to him, he released and discharged the bank, its affiliates and
subsidiaries from any action, suit, claim, or demand in connection with his employment. Sagaysay filed a
complaint for illegal dismissal with reinstatement and payment of backwages, moral damages, exemplary
damages, and attorney’s fee against BDO before the Labor Arbiter. He claimed that his family suffered damages
amounting to P2,225,403.00, the amount which he would have received if he was made to retire at the age of
sixty-five (65). BDO on its part said that he was already paid the amount of P98,376.14 and stressed that
Sagaysay was not dismissed but retired from service. The Labor Arbiter (LA) stressed that Sagaysay was
illegally dismissed and that he was forced to avail of an optional retirement age of sixty (60) which was contrary
to the provisions of Article 287 of the Labor Code. In addition, the LA said that he did not freely assent to the
retirement plan and he was only made to sign a quitclaim in exchange for a small consideration. BDO appealed
to the NLRC arguing that Sagaysay freely assented to its retirement plan. The NLRC reversed the ruling of the
LA and explained that BDO ’s retirement plan was effective as early as June 1, 1994. When Sagaysay was
employed on May 16, 2006, the retirement plan was already in full force and effect. NLRC concluded that when
Sagaysay accepted his employment with BDO, he assented to the provisions of the retirement plan. NLRC found
it difficult to believe that Sagaysay did not familiarize the retirement policy of the bank, considering that he has
previously worked for two other banks. The Court of Appeals reversed the ruling of NLRC, saying that there
was no negotiation between BDO and Sagaysay and therefore there was no mutual agreement. It stated that
Sagaysay was forced to participate in the retirement plan.
Issue
Whether or not the June 1, 1994 retirement plan is valid and effective against Sagaysay.
Held
Yes. According to Article 287 of the Labor Code, The provisions will only be applied in absence of a retirement
plan or agreement providing for retirement benefits of employees in the establishment. The Labor Code
permits the employers and employees to fix applicable retirement age, provided that the benefits under the
Collective Bargaining Agreement or any other agreements shall not be less than those provided by the Code. In
the previous Cases decided by the Court, the retirement plans were adopted after the employees were hired by
their employer. Therefore they may contest to the validity of the same unless they consented to its
implementation. However, in the present case, the retirement plan came before the hiring of Sagaysay.
Sagaysay was sufficiently informed of the retirement plan. It has been twelve (12) years from the inception of
the retirement plan, which was prior to the hiring of Sagaysay, up to the present, no employee questioned the
retirement plan. Further, by accepting the employment offer of BDO, Sagaysay was deemed to have assented
to all existing rules, regulations and policy of the bank, including the retirement plan. BDO also issued a
memorandum on June 1, 2009 regarding the implementation of its retirement program, reiterating that the
normal retirement date was the first day of the month following the employees sixtieth (60th) birthday, this
memorandum was addressed to all employees and officers. Having knowledge of the retirement plant, he had
every opportunity to question the same, but he did not. Lastly, the most convincing detail that Sagaysay
assented to the retirement plan was his e-mails to the bank. In those e-mails, he did not contest to the validity
Page 161
of the retirement plan and even recognized its provisions, he even requested that his services be extended. The
Cercado Case, which was heavily relied upon by the Court of Appeals is inapplicable. In the Cercado case, the
petitioner was employed two years before the adoption of the employer ’s retirement plan, logically, her
employment contract did not include the retirement plan. The Court in the Cercado case held that because of
the automatic application of the retirement plan to the current employees without they voluntary consent, the
employee was forced to participate. Further, in the case relied upon by the CA, the employee refused the early
retirement package provided by the employer, from the beginning she was adamant that she did not consent
to the retirement plan of her employer. In the case at bar, Sagaysay signed a quitclaim and received at amount
of P98,376.14. Given that Sagaysay is a seasoned banker, spending 34 years of his life working in different
banking establishments, it cannot be said that he was naive in dealing with his employer and that he failed to
exercise his free and voluntary will when faced with the documents relating to his retirement.
Page 162
10. Perez vs. Camparts Industries Inc. GR No. 197557, October 5, 2016
Facts
Perez after many years of working with Comparts Industries Inc. (CII) was eventually appointed as Marketing
Manager and she held such position until the date of her resignation. CII has a retirement program for its
managerial employees or officers. Included therein are provisions relating to optional or early retirement and
optional retirement benefits. Prior to her resignation, she manifested to CII her intention to avail of the optional
retirement program since she was already qualified to retire under it. Her application was denied. She again
applied for such program but still it was denied. CII justified its denial that under the Retirement Plan, it has
the option to grant or deny her application for optional retirement and considering that it is experiencing
financial crisis hence it has no choice but to dismiss her application.
Perez then again asked for reconsideration and requested that she will be included in the retrenchment that
CII was planning to implement. Still, her application was denied and she was not included in the retrenchment.
When Perez needs to immediately go to abroad, she applied again for the optional retirement program and she
also claimed the benefits concomitant to it as provided by the Retirement Plan. In response, she was informed
by CII that it could only give her
Php100,000.00 as gratuity for her twenty years of service as this was the only amount it could afford. She
refused to accept it.
She thereafter received a letter of acceptance for her resignation letter and stated therein the denial of her
application for the optional retirement program on the reasons that: 1) CII has no policy or rules on optional
retirement benefits; 2) It has been so affected by the global crisis and has been suffering financial losses; 3)
there is no provision in the Labor Code which grants separation pay to voluntarily resigning employees; and 4)
she cannot invoke the provisions of the Collective Bargaining Agreement (CBA) on optional retirement benefits
because the CBA is for rank-and-file employees.
Perez then filed a complaint before NLRC Regional Arbitration Branch praying for payment of separation pay
under all circumstances of severance of employment, including separation pay due to a retrenchment. NLRC-
RAB favored her contending that she is entitled to the optional retirement benefits. On appeal, NLRC reverse
and set aside the said ruling, it held that CII has the option to allow or disallow the application of a member-
employee for optional retirement. On petition for certiorari, CA affirmed the NLRC’s decision.
Issue
WON Perez for having rendered service to CII is entitled to the benefits under the optional retirement program.
Held
No. She is not entitled to benefits under the optional retirement program of CII.
First, termination of employment by the employee, as in this instance, does not entitle the employee to
separation pay and that such benefit is recoverable only in the instances enumerated under Article 283 and
284 of the Labor Code or in illegal dismissal cases where reinstatement is not feasible.
Second, Perez being a managerial employee is covered by CII’s Retirement plan however being a contract
between the employer and employee, it is not enough that an employee of CII who wants to optionally retire
meets the conditions for optional retirement, CII has to give its consent for the optional retirement to operate.
In this case, CII had denied Perez’s application. Moreover, Perez's unilateral act of retiring without the consent
of CII does not bind the latter with the provisions of the Retirement Plan. Therefore, CII is not liable to give
[Perez] the optional retirement benefits provided therein.
Perez contends that as she had already completed the minimum number of years to avail of the optional
retirement, she has acquired a vested right to her optional retirement benefits. Such contention is misplaced.
She has not acquired a vested right to optional retirement benefits by the mere fact of her rendering at least
Page 163
fifteen (15) years of credited service for there is a provision in the herein subject Retirement Plan a condition
for the allowance and grant of optional retirement benefits that is the consent of the Company. And Perez
cannot disregard the stipulated condition.
Perez alternatively argues that she is entitled to payment of optional/early retirement benefits based on
company practice. She presented evidence that four (4) of the employees were approved optional retirement
benefits based on the CBA prior to the effectivity of the Retirement Plan in 1999, and four (4) other employees
actually received separation pay caused by their retrenchment. Such contention however defeats her claim,
hence, these isolated and random payments to managerial employees of either optional retirement benefits
under the CBA or separation pay due to retrenchment cannot be deemed as company practice that would
render the withholding of the benefit to Perez as a diminution of benefits.
As to her insistence that other managerial employees had received separation pay from a retrenchment
program of CII which were equivalent to retirement benefits. Retrenchment is to prevent losses is an
authorized cause for termination by the employer; it is a management prerogative to reduce personnel usually
due to poor financial returns so as to cut down on costs of operations in terms of salaries and wages to prevent
bankruptcy of the company. It is not an option of an employee in substitution for a disapproved early
retirement. Thus, she is not entitled to separation pay due to a retrenchment of personnel.
Page 164
11. Dela Salle Araneta University vs. Bernardo, GR No. 190809, February 13, 2017
Facts
On February 26, 2004, Bernardo filed a complaint against DLS-AU and its owner/manager, Dr. Oscar Bautista
(Dr. Bautista), for the payment of retirement benefits. Bernardo alleged that he started working as a part-time
professional lecturer at DLS-AU on June 1, 1974 for an hourly rate of P20.00. On November 8, 2003, DLS-AU
informed Bernardo through a telephone call that he could not teach at the school anymore as the school was
implementing the retirement age limit for its faculty members. As he was already 75 years old, Bernardo had
no choice but to retire. At the time of his retirement, Bernardo was being paid P246.50 per hour.
Bernardo immediately sought advice from the Department of Labor and Employment (DOLE) regarding his
entitlement to retirement benefits after 27 years of employment. In letters dated January 20, 2004 and
February 3, 2004, the DOLE, through its Public Assistance Center and Legal Service Office, opined that Bernardo
was entitled to receive benefits under Republic Act No. 7641, otherwise known as the "New Retirement Law,"
and its Implementing Rules and Regulations.
However, Dr. Bautista, in a letter dated February 12, 2004, stated that Bernardo was not entitled to any kind of
separation pay or benefits. Dr. Bautista explained to Bernardo that as mandated by the DLS-AU's policy and
Collective Bargaining Agreement (CBA), only full-time permanent faculty of DLS-AU for at least five years
immediately preceeding the termination of their employment could avail themselves of the postemployment
benefits. As part-time faculty member, Bernardo did not acquire permanent employment.
On December 13, 2004, the Labor Arbiter rendered its Decision dismissing Bernardo's complaint on the ground
of prescription. The Labor Arbiter stated that assuming Bernardo were indeed entitled to receive his retirement
pay/benefits, he should have claimed the same ten (10) years ago upon reaching the age of sixty-five (65).
Article 291 of the Labor Code states that money claims arising from employer-employee relationships shall be
brought within three (3) years from the time the cause of action accrued. The NLRC, in its Decision dated June
30, 2008, reversed the Labor Arbiter's ruling and found that Bernardo timely filed his complaint for retirement
benefits. Bernardo's cause of action for payment of his retirement benefits accrued only on November 8, 2003,
when he was informed by DLS-AU that his contract would no longer be renewed and he was deemed separated
from employment. Upon appeal, the Court of Appeals affirmed the NLRC decision.
Issue
(1) Whether or not part-time employees, such as petitioner, are entitled to retirement benefits.
(2) Whether or not the money claim has prescribed.
Held
(1) Yes. As a part-time employee with fixed-term employment, Bernardo is entitled to retirement benefits.
Through a Labor Advisory dated October 24, 1996, then Secretary of Labor, and later Supreme Court
Justice, Leonardo A. Quisumbing, provided Guidelines for the Effective Implementation of Republic Act
No. 7641, The Retirement Pay Law, addressed to all employers in the private sector.
A. COVERAGE
RA 7641 or the Retirement Pay Law shall apply to all employees in the private sector, regardless
of their position, designation or status and irrespective of the method by which their wages are
paid. They shall include part-time employees, employees of service and other job contractors and
domestic helpers or persons in the personal service of another.
(2) No. Bernardo's employment was extended beyond the compulsory retirement age and the cause of
action for his retirement benefits accrued only upon the termination of his extended employment with
DLSAU.
Page 165
12. Catotocan vs. Lourdes School of Quezon City, GR No. 213486, April 26, 2017, citing 1996 Pantranco North
Express
Facts
In 1971, Editha Catotocan started her employment in Lourdes School of Quezon City as music teacher with a
salary of P30,081. By school year 2005-2006, she had already served for 35 years. The school has a retirement
plan providing for retirement at 60 years old, or separation pay depending on the number of years of service.
In 2003, the school issued an administrative order for all employees which is an addendum on its retirement
policy. It is stipulated in the order that the employee may apply for retirement or be retired by the school when
he/she reaches the age of 60 years or when he/she completes 30 years of service whichever comes first.
Catotocan and 7 other co-employees wrote to the Provincial Minister, Provincial Council on Education of LSQC
and appealed for the deferment of the implementation of the addendum to the retirement plan particularly the
provision that normal retirement will commence after completing “30 years of service to the school”. They
likewise requested the priest of the Capuchin order who were running the school to allow them to retire when
they have reached 60 years of age instead so they can “fully enjoy the fruits” of their labor. In a reply, LSQC
Provincial Minister and Chairman of the Board of the Board of trustees Fr. De los Santos informed them that
the contested retirement age was the same as provided in the retirement plans of other schools. In another
answer for the second letter sent by Catotocan and company, Fr. De los Santos informed that it would be best
if they just wait for the final determination of a pending case before the arbitration branch of the NLRC.
Catotocan and her co-employees then sought the intervention of DOLE-NCR. There was a series of meetings
conducted but on the later scheduled meeting, school officials no longer attended. Subsequently, through a
letter, Fr. Acuin notified Catotocan that she will be retired by the end of the school year for having served at
least 30 years with accompanying computation of her retirement pay. Catotocan expressed her objections in
the dialogue with the school officials. She was however still retired. Catotocan was then rehired for two school
years as a guidance counselor. When she reapplied for the third time, the school however no longer considered
her application for the position.
Catotocan then filed before the labor arbiter a complaint for illegal dismissal and monetary claims. The labor
arbiter dismissed Catotocan’s complaint for lack of merit. On appeal, the NLRC affirmed the labor arbitrator’s
decision. Catotocan had performed all the acts that a retired employee would do after retirement under the
new school policy. These were voluntary acts and she cannot be considered to have been forced to retire or to
have been illegally dismissed. Her motion for reconsideration was likewise dismissed. Dissatisfied, she filed a
petition for certiorari before the CA. The CA dismissed the petition for lack of merit. The CA agreed with the
NLRC that while Catotocan was initially opposed to the idea of her retirement at an age below 60 years her
subsequent actions however, after retirement are tantamount to consent to the addendum. She then raised the
petition to the Supreme Court.
Issue
Whether or not Catotocan consented to the addendum of the retirement policy issued by LSQC.
Held
Yes. Catotocan consented to the addendum of the retirement policy issued by LSQC.
Retirement is the result of a bilateral act of the parties, a voluntary agreement between the employer and the
employee whereby the latter, after reaching a certain age, agrees to sever his or her employment with the
former. Under Article 287 of the Labor Code, the retirement age is primarily determined by the existing
agreement or employment contract. Only in the absence of such agreement shall the retirement age fixed by
law which provide for a compulsory retirement age at 65 years, while the minimum age for optional retirement
Page 166
is set at 60 years. Jurisprudence is replete with cases discussing the employer’s prerogative to lower the
compulsory retirement age subject to the consent of its employees. The court cited the case of Pantranco North
Express Inc. v. NLRC wherein the court upheld the retirement of the private respondent therein pursuant to a
CBA allowing the employer to compulsorily retire employees upon completing 25 years of service to the
company. Interpreting Article 287, the court held that the Labor Code permits the employers and employees to
fix the applicable retirement age lower than 60 years of age. Retirement plans, as in LSQC’s retirement plan,
allowing employers to retire employees who have not yet reached the compulsory retirement age of 65 years
are not per se repugnant to the constitutional guarantee of security of tenure. By its express language, the Labor
Code permits employers and employees to fix the applicable retirement age at 60 years or below, provided that
the employees’ employment benefits under any CBA and other agreements shall not be less than those provided
therein. Indeed, acceptance by the employee of an early retirement age option must be explicit, voluntary, free,
and uncompelled. The prerogative by the management however, must be exercised pursuant to a mutually
instituted early retirement plan. The requirement of due process only requires that notice of the employer’s
decision to retire an employee must be given to the employee. It is not required that the employer must first
consult the employee prior to retiring him.
While it may be true that Catotocan was initially opposed to the idea of her retirement at an age below 60 years,
it must be stressed that Catotocan’s subsequent actions after her “retirement” are actually tantamount to her
consent to the addendum to the LSQC’s retirement policy of retiring her from service upon serving the school
for at least 30 continuous years. To wit: (1) after being notified that she was being retired from service by the
school, she opened a savings account with BDO, the trustee bank; (2) she accepted all the proceeds of her
retirement package; (3) upon acceptance of the retirement benefits, there was no notation that she was
accepting the retirement benefits under protest or without prejudice to the finding of an illegal dismissal case.
Looking into the exchange of communications between the school administrators and Catotocan, although the
latter express her objection to the new retirement policy years earlier, Catotocan eventually assented thereto
when doing the abovementioned acts. The most telling detail indicative of Catotocan’s voluntary assent to
LSQC’s retirement policy was her correspondence with the latter following her “retirement”. In her letter,
Catotocan availed of the privilege of being rehired after retirement by virtue of the “Contractual Employment
of Retired Employees” provision of the LSQC’s retirement policy that rehiring was exclusive only for those
employees who have availed of the retirement benefits or who has been retired by the school but who has not
yet reached 65 years of age. Since Catotocan has availed of this contractual employment which is only available
to those qualified retirees for three consecutive years following her retirement, she can no longer dispute that
she has indeed legitimately retired from employment and was not illegally dismissed.
Page 167
13. Philippine Airlines vs. Hassaram, GR. No. 217730, June 5, 2017
Facts
Respondent Arjan T. Hassaram (Hassaram), a former pilot of respondent Philippine Airlines, filed a complaint
against the latter for illegal dismissal and the payment of retirement benefits, damages, and attorney's fees. He
claimed that he had applied for retirement from PAL in August 2000 after rendering 24 years of service, but
that his application was denied. Instead, PAL informed him that he had lost his employment in the company as
of 9 June 1998, in view of his failure to comply with the Return to Work Order issued by the Secretary of Labor
against members of the Airline Pilots Association of the Philippines (ALPAP) on 7 June 1998.
Hassaram argued before the Labor Arbiter that he was not covered by the Secretary's Return to Work Order;
hence, PAL had no valid ground for his dismissal. He asserted that on 9 June 1998, he was already on his way
to Taipei to report for work at Eva Air, pursuant to a four-year contract approved by PAL itself. Petitioner
further claimed that his arrangement with PAL allowed him to go on leave without pay while working for Eva
Air, with the right to accrue seniority and retire from PAL during the period of his leave.
Meanwhile, PAL contended that (a) the LA had no jurisdiction over the case, which was a mere off-shoot of
ALPAP's strike, a matter over which the Secretary of Labor had already assumed jurisdiction; (b) the Complaint
should be considered barred by res judicata, forum shopping, and prescription; (c) the case should be
suspended while PAL was under receivership; and (d) if at all, Hassaram was entitled only to retirement
benefits of P5,000 for every year of service pursuant to the Collective Bargaining Agreement (CBA) between
PAL and ALPAP.
The LA awarded retirement benefits and attorney's fees to Hassaram and explained that Hassaram did not defy
the Return to Work Order, as he was in fact already on leave when the order was implemented. As to the
computation of benefits, the LA ruled that Article 287 of the Labor Code should be applied, since the statute
provided better benefits than the PAL-ALPAP CBA. Hassaram's other claims, on the other hand, were dismissed.
PAL appealed the LA’s decision to the NLRC. It contended that Hassaram was not entitled to retirement benefits,
because he had earlier been terminated from employment for defying the Return to Work Order. The NLRC
initially affirmed the LA's Decision to award retirement benefits to Hassaram under Article 287 of the Labor
Code. However, in resolving PAL’s motion for reconsideration, it reversed its earlier Decision and set aside the
ruling of the LA on account of Hassaram's receipt of retirement benefits under the Plan. This was after PAL
cited for the first time Hassaram's purported receipt of retirement benefits in the amount of P4,456,817.75
pursuant to the Plan.
Respondent Hassaram then elevated the matter to the CA via a Petition for Certiorari. While admitting that he
received P4,456,817.75 under the Plan, he maintained that his receipt of that sum did not preclude him from
claiming retirement benefits from PAL, since that amount represented only a return of his share in a distinct
and separate provident fund established for PAL pilots. Consequently, the CA reversed the NLRC and reinstated
the decision of the LA. CA declared that the funds received under the Plan were not the retirement benefits
contemplated by law. Hence, it ruled that Hassaram was still entitled to receive retirement benefits in the
amount of P2,111,984.60 pursuant to Article 287 of the Labor Code.
Hence, this petition filed by PAL. PAL no longer questions the entitlement of Hassaram to retirement benefits.
Its only contention is that the CA erred in declaring that his benefits should be computed on the basis of Section
287 of the Labor Code. PAL asserts, instead, that its own company retirement plans — both the PAL Pilots'
Retirement Benefit Plan and the 1967 PAL-ALPAP Retirement Plan — should have been applied to determine
Hassaram's retirement benefits.
Issues
1. Whether the amount received by Hassaram under the Plan should be deemed part of his retirement pay
2. Whether Hassaram is entitled to receive retirement benefits under Article 287 of the Labor Code
Page 168
Held
1) YES, the amount received by Hassaram under the Plan should be deemed part of his retirement pay.
PAL avers that this amount formed part of Hassaram's retirement pay, because the Plan was a retirement fund
wholly financed by the company. Hassaram, on the other hand, insists that the amount he received from the
Plan represented only a return of his share in a distinct and separate provident fund established for PAL pilots.
It is clear from the provisions of the Plan that it is the company that contributes to a "retirement fund" for the
account of the pilots. These contributions comprise the benefits received by the latter upon retirement,
separation from service, or disability.
Pursuant to the Decisions of the SC in Elegir v. PAL and PAL v. ALPAP, the amount received by Hassaram under
the Plan must be considered part of his retirement pay. Combined with the retirement benefits under the CBA
between PAL and ALPAP, this scheme would allow Hassaram to receive superior retirement benefits, thereby
rendering Article 287 of the Labor Code inapplicable. The amount of P4,456,817.75 received by Hassaram from
the PAL Plan formed part of his retirement pay.
2) NO, respondent is not entitled to receive retirement benefits under Article 287 of the Labor Code.
Hassaram’s retirement pay should be computed on the basis of the retirement plans provided by PAL.
It can be clearly inferred from the language of the Article 287 that it is applicable only to a situation where (1)
there is no CBA or other applicable employment contract providing for retirement benefits for an employee, or
(2) there is a CBA or other applicable employment contract providing for retirement benefits for an employee,
but it is below the requirement set by law.
It is clear from the records that Hassaram is a member of ALPAP and as such, is entitled to benefits from both
the retirement plans under the 1967 PAL-ALPAP CBA and the Plan.
In view of the undisputed fact that Hassaram has received his benefits under the Plan, he is now entitled to
claim only his remaining benefits under the CBA,i.e., the amount of P120,000 (24 years x P5,000) for his 24
years of service to the company.
Petition is GRANTED.
Page 169
14. Laya vs. Court of Appeals, GR No. 205813, January 10, 2018, En Banc
Facts
Petitioner was appointed by the respondent Philippine Veterans Bank as the Chief Legal Counsel with a rank
of Vice President in 2001. The terms and conditions of his appointment include the early compulsory
retirement at the age of 60.
In 2007, respondent informed the petitioner of his retirement. The latter requested for an extension for two
more years but such was denied. Petitioner sought the reconsideration but the bank certified his retirement.
Petitioner filed a complaint for illegal dismissal against the respondent bank before the Labor Arbiter. LA
however dismissed the case for lack of merit. Petitioner appealed to the NLRC which affirmed LA’s dismissal.
The case was elevated to CA.
CA favored the respondent and held that petitioner’s acceptance of the appointment means that he conformed
to the retirement program. CA ruled that the retirement plan was a valid exercise of respondent’s management
prerogative. CA denied petitioner’s motion for reconsideration.
Issue
Whether or not the retirement plan is valid
Held
The retirement plan is invalid since retirement should be the result of the bilateral act of both parties based on
their voluntary agreement. Citing the case of Cercado v. Uniprom Inc, the SC reiterated that acceptance of an
early retirement age option must be explicit, voluntary, free and uncompelled.
In the case at hand, mere mention of the retirement plan in the appointment letter did not sufficiently inform
the petitioner about the details of the retirement program. His implied knowledge regardless of duration did
not equate that to his voluntary acceptance of the early retirement age.
Article 302 [287] of the Labor Code provides that any employee may retire upon reaching the retirement age
established in the CBA or other applicable contract. Absence of such agreement, an employee upon reaching
the age of 60 or more but not more than 65, which is declared as the compulsory age, and who has rendered at
least 5 years of service may retire and shall be entitled to retirement pay.
Since petitioner was dismissed because of the retirement provision that he had not knowingly and voluntarily
agreed thereto, respondent is guilty of illegal dismissal. Hence, petitioner is entitled to reinstatement without
loss of seniority rights and other privileges and to his full backwages under Article 279 of the Labor Code.
However, since the petitioner’s reinstatement is no longer feasible because he already reached the compulsory
age of 65 then he should be granted separation pay.
The SC granted the petition and reversed the CA’s decision. The respondent was ordered to pay the backwages,
separation pay, and the costs of the suit.
Page 170
15. Maria De Leon Transportation Inc., et al., vs. Macuray, GR No. 214940, June 6, 2018
Facts
Respondent Daniel Macuray filed a complaint for illegal dismissal against petitioner Maria De Leon
Transportation.
In his position paper, he claimed that in 1991, he was employed as a bus driver by petitioner Maria De Leon
Transportation - a company engaged in paid public transportation; that he received a monthly pay/commission
of P20,000; that, in November 2009, petitioner's dispatcher did not assign a bus to him, for no apparent reason;
that for a period of one month, he continually returned to follow up if a bus had already been assigned to him;
that when he returned to the company premises, the bus dispatcher informed him that he was already
considered AWOL (absent without leave); that he went back to follow up his status for about six months in
2010, but nobody attended to him; that he was not given any notice or explanation regarding his employment
status; that he served petitioner for 18 years; that he considered himself illegally dismissed; that during this
time, he was already 62 years old, but he received no benefits for his service; and that petitioner owed him
three months' salary for the year 2009. Thus, he prayed that he be awarded backwages, separation pay,
retirement pay, 13th month pay, damages, attorney's fees, and costs of suit.
Petitioner claimed that respondent was hired on commission basis, on a "no work, no pay" and "per travel, per
trip" basis; that respondent was paid an average of P10,000.00 commission per month without salary; that,
contrary to his claim of illegal dismissal, respondent permanently abandoned his employment effective March
31, 2009, after he failed to report for work; that it received information later on that respondent was already
engaged in driving his family truck and was seen doing so at public roads and highways; that respondent's
claim of illegal dismissal was not true, as there was no dismissal or termination of his services, and no
instructions to do so were given; that the bus dispatcher from whom respondent inquired about his status had
no power to terminate or declare him AWOL; that respondent had not actually approached management to
inquire about his employment status.
The Labor Arbiter dismissed the case for lack of merit. Macuray filed a Memorandum of Appeal to the NLRC.
The NLRC issued a resolution modifying the Labor Arbiter’s decision by awarding in favor of Macuray the
amount of P50,000 as financial assistance. The CA rendered the assailed decision stating that Macuray was
illegally dismissed by petitioner company.
Issue
1) Was respondent Macuray illegally dismissed?
2) Is Macuray entitled to monetary claims?
Held
1) No, Macuray was not not illegally dismissed.
Macuray left his work as a bus driver to work for his family's trucking business. There is no truth to the
allegation that Macuray was dismissed, actually or constructively. Macuray claims that the dispatcher informed
him that he was AWOL; however, a mere bus dispatcher does not possess the power to fire him from work —
this being a prerogative belonging to management.
However, it cannot be said that respondent abandoned his employment. Petitioner itself admitted that it
sanctioned the practice of allowing its drivers to take breaks from work in order to afford them the opportunity
to recover from the stresses of driving the same long and monotonous bus routes by accepting jobs elsewhere,
as some form of vacation or sabatical, without losing productivity and income and to safeguard the interests of
the company and its patrons, as well as to avoid fatal accidents were the drivers to be suffered to work under
continuous stressful conditions occasioned by driving on the same monotonous routes day in and day out.
Page 171
Respondent availed of petitioner's company practice and unwritten policy — of allowing its bus drivers to take
needed breaks to enable them to recover from the monotony of driving the same route for long periods — and
obtained work elsewhere.
2) Since Macuray was not dismissed from work, petitioner is not liable for monetary claims except those owed
to Macuray by way of unpaid salary/commission, and retirement benefits.
Unpaid Salaries/Commissions
Petitioner failed to pay respondent three months' worth, that is, for the period January to March, 2009 — which,
at P10,000.00 per month — amounts to P30,000.00. Indeed, this could be one of the reasons why respondent
stopped reporting after March 31, 2009, as he complained of petitioner's failure to pay his
salaries/commissions for the said period.
Retirement Benefits
Macuray is entitled to retirement benefits which are due to him for the reason that he reached the age of
retirement while under petitioner's employ. He is entitled to them considering that he was never dismissed
from work, either for cause or by resignation or abandonment. As far as petitioner is concerned, he merely
went on a company-sanctioned sabbatical. It just so happened that during this sabbatical, he reached the
retirement age of 60; by this time, he is already 67 years old.
Applying Article 287 of the Labor Code - In the absence of a retirement plan or agreement in Maria De Leon
Transportation, Inc., Macuray is entitled to one month's salary for every year of service, that is: P10,000
(monthly salary) x 18 years (years of service) = P180,000.
Retirement compensation equivalent to one month's salary for every year of service is more equitable and just
than the CA's pronouncement of one-half month's salary per year of service, which the Court finds insufficient.
This is considering that petitioner has been paying its drivers commission equivalent to less than the minimum
wage for the latter's work, and in Macuray’s case, it has delayed payment of the latter's compensation for three
months.
In sum, respondent Macuray was not illegally dismissed. However, he is entitled to (1) P30,000 as unpaid
salary/commissions for the period January to March 2009 (2) P180,000 as retirement pay for his 18 years of
service with the company.
Page 172
Topic 11: Jurisdiction of the Labor Arbiter

Topic 12: 2011 NLRC Rules of Procedure, amended
1. Lockheed Detective & Watchman Agency, G.R. No. 185918, April 18, 2012
Facts
Petitioner Lockheed entered into a contract for security services with the University of the Philippines. On
1998, several guards assigned to UP filed a complaint for payment of underpaid wages, 25% overtime pay,
premium pay for rest days and special holidays, holiday pay, service incentive leave pay, night shift
differentials, 13th month pay, refund of cash bond, refund of deductions for the Mutual Benefits Aids System
(MBAS), unpaid wages from December 16-31, 1998, and attorney's fees.
The Labor Arbiter declared UP, as job contractor, solidarily liable with Lockheed Detective and Watchman
Agency, Inc for underpaid wages/salaries, premium pay for work on rest day and special holiday, holiday pay,
5 days service incentive leave pay, 13th month pay for 1998, refund of cash bond (deducted at P50.00 per
month from January to May 1996, P100.00 per month from June 1996 and P200.00 from November 1997),
refund of deduction for MBAS at the rate of P50.00 a month, and attorney’s fees; in the total amount of
P1,184,763.12. The decision was appealed but sustained by the NLCR, albeit a few modifications to the effect
that premium pay for work on rest day and special holiday, and 5 days service incentive leave pay, are
dismissed but respondent UP is still solidarily liable with Lockheed in the payment of the rest of the claims
covering the period of their service contract. The parties did not appeal the NLRC decision and the same became
final and executory on October 26, 2002.
UP moved to reconsider the NLRC resolution. On December 28, 2004, the NLRC upheld its resolution but with
modification that the satisfaction of the judgment award in favor of Lockheed will be only against the funds of
UP which are not identified as public funds.
The NLRC order and resolution having become final, Lockheed filed a motion for the issuance of an alias writ
of execution. The same was granted on May 23, 2005.
On July 25, 2005, a Notice of Garnishment 10 was issued to Philippine National Bank (PNB) UP Diliman Branch
for the satisfaction of the award of P12,142,522.69 (inclusive of execution fee).
On August 16, 2005, UP filed an Urgent Motion to Quash Garnishment. UP contended that the funds being
subjected to garnishment at PNB are government/public funds. However, the execution of the garnishment was
carried out.
UP elevated their case to the court of appeals. On reconsideration, however, the CA issued the assailed Amended
Decision. It held that without departing from its findings that the funds covered in the savings account sought
to be garnished do not fall within the classification of public funds, it reconsiders the dismissal of the petition
in light of the ruling in the case of National Electrification Administration v. Morales (NEA Case) which
mandates that all money claims against the government must first be filed with the Commission on Audit (COA).
Lockheed appealed this decision to the Supreme Court. Arguing mainly that the NEA case should not apply and
that UP could be both sued and held liable. And that the quashal of garnishment sought was moot because it
had already become fait accompli.
Issue
1. Whether or not the NEA Case applies and the funds be garnished directly bypassing the COA.
2. Whether or not the previous garnishment and withdrawal of funds was fait accompli.
Held
1. YES because like NEA, UP is a juridical personality separate and distinct from the government and has the
capacity to sue and be sued. Thus, also like NEA, it cannot evade execution, and its funds may be subject to
garnishment or levy. However, before execution may be had, a claim for payment of the judgment award must
first be filed with the COA. (suability does not immediately mean liability). However, before execution may be
Page 173
had, a claim for payment of the judgment award must first be filed with the COA. Under Commonwealth Act No.
327, as amended by Section 26 of P.D. No. 1445, it is the COA which has primary jurisdiction to examine, audit
and settle “all debts and claims of any sort” due from or owing the Government or any of its subdivisions,
agencies and instrumentalities, including government-owned or controlled corporations and their
subsidiaries. With respect to money claims arising from the implementation of Republic Act No. 6758, their
allowance or disallowance is for COA to decide, subject only to the remedy of appeal by petition for certiorari
to this Court. A reading of the pertinent Commonwealth Act provision clearly shows that it does not make any
distinction as to which of the government subdivisions, agencies and instrumentalities, including government-
owned or controlled corporations and their subsidiaries whose debts should be filed before the COA
2. NO, the previous garnishment cannot be fait accompli since the garnishment was erroneously carried out
and did not go through the proper procedure (the filing of a claim with the COA), UP is entitled to
reimbursement of the garnished funds plus interest of 6% per annum, to be computed from the time of judicial
demand to be reckoned from the time UP filed a petition for certiorari before the CA which occurred right after
the withdrawal of the garnished funds from PNB.
Page 174
2. Portillo vs. Rudolf Lietz, Inc. et al., G.R. No. 196539, October 10, 2012
Facts
Petitioner Marietta Portillo was an employee of respondent Rudolf Lietz, Inc. On her tenth year, she was
promoted and thereafter signed a letter agreement with a Goodwill Clause. The Clause stipulated that upon
termination of employment, for a period of three (3) years thereafter, she shall not engage directly or indirectly
as employee, manager, proprietor, or solicitor for yourself or others in a similar or competitive business. Breach
of the clause will make her liable for liquidated damages in the amount of 100% of her gross compensation
over the last 12 months.
Portillo resigned three years thereafter. Lietz Inc. then learned that Portillo had been hired by Ed Keller
Philippines, Limited, which is purportedly a direct competitor. Meanwhile, Portillo’s demands from Lietz Inc.
for the payment of her remaining salaries and commissions went unheeded. Thus, on 14 September 2005,
Portillo filed a complaint with the National Labor Relations Commission (NLRC) for non-payment of 1½
months’ salary, two (2) months’ commission, 13th month pay, plus moral, exemplary and actual damages and
attorney’s fees.
Lietz Inc. admitted liability for Portillo’s money claims in the total amount of P110,662.16. It raised the defense
that Portillo’s money claims should be offset against her liability to Lietz Inc. for liquidated damages for
breaching the Goodwill Clause.
The Labor Arbiter, NLRC and CA all ruled in favor of petitioner. However, upon motion for reconsideration, the
CA modified its decision and allowed legal compensation or set-off of such award of monetary claims by
petitioner’s liability to respondents for liquidated damages arising from her violation of the “Goodwill Clause”.
Aggrieved, petitioner now comes to Court.
Issue
Whether or not the Court of Appeals erred in allowing the off-set of liquidated damages as the breach of the
Goodwill Clause is not a labor dispute cognizable by the labor tribunals.
Held
Yes. The Court of Appeals erred in allowing legal compensation. The labor tribunals did not have jurisdiction
over the supposed breach of the Goodwill Clause as it did not have a reasonable causal connection to the
employer-employee relations between the parties.
The claim for liquidated damages that emanated from the Goodwill Clause of the employment contract is not a
claim for damages arising from the employer-employee relations. As early as Singapore Airlines Limited v.
Paño, it is established that not all disputes between an employer and his employees fall within the jurisdiction
of the labor tribunals. The “money claims of workers" referred to in paragraph 3 of Article 217 embraces money
claims which arise out of or in connection with the employer-employee relationship, or some aspect or incident
of such relationship. Put a little differently, that money claims of workers which now fall within the original
and exclusive jurisdiction of Labor Arbiters are those money claims which have some reasonable causal
connection with the employer-employee relationship.
In Dai-Chi Electronics Manufacturing Corporation v. Villarama, Jr., which reiterated the San Miguel ruling and
allied jurisprudence, a non-compete clause, as in the “Goodwill Clause” referred to in the present case, with a
stipulation that a violation thereof makes the employee liable to his former employer for liquidated damages,
refers to post-employment relations of the parties.
The “Goodwill Clause” or the “Non-Compete Clause” is a contractual undertaking effective after the cessation
of the employment relationship between the parties. Breach of the undertaking is a civil law dispute, not a labor
law case. There is no causal connection between the petitioner employees’ claim for unpaid wages and the
respondent employers’ claim for damages for the alleged “Goodwill Clause” violation. The alleged contractual
violation did not arise during the existence of the employer-employee relationship. It was a post-employment
matter, a post-employment violation.
Thus, the alleged breach of the Goodwill Clause by the petitioner is akin to a post-employment matter which is
beyond the jurisdiction of labor tribunals to resolve. Such matter should be threshed out is the regular courts.
WHEREFORE, petition is hereby GRANTED.
Page 175
Page 176
3. Building Care Corp. vs. Macaraeg, G.R. No. 198357, December 10, 2012
Facts
Petitioners Building Care Corp./ Leopard Security & Investigation Agency which are in the business of
providing security services to their clients hired respondent, Myrna Macaraeg, as a security guard assigning
her at Genato Building in Caloocan City. However,, respondent was relieved of her post. She was re-assigned to
Bayview Park Hotel, but thereafter, she was allegedly no longer given any assignment.
Thus, respondent filed a complaint against petitioners for illegal dismissal, underpayment of salaries, non-
payment of separation pay and refund of cash bond. Respondent claimed that petitioners failed to give her an
assignment for more than nine months, amounting to constructive dismissal, and this compelled her to file the
complaint for illegal dismissal. Petitioners, however, alleged that respondent was relieved from her post
because of her habitual tardiness, persistent borrowing from employees and tenants of the client, and sleeping
on the job.
The Labor Arbiter dismissed the complaint for lack of merit. After the respondent filed an appeal to The
National Labor Relations Commission, the NLRC dismissed the appeal for having been filed out of time and
declared that the decision of the Labor Arbiter had become final and executory. Respondent Macaraeg then
appealed to the Court of Appeals which reversed and set aside the decision of the NLRC. The CA rationaciated
that the respondent’s appeal should be allowed and resolved on merits despite having been filed out of time.
Issue
Whether or not the Court of Appeals erred when it liberally applied the rules of procedure and ruled that the
respondent’s appeal should be allowed and resolved on the merits despite having been filed out of time.
Held
Yes. The Court of Appeals erred when it liberally applied the rules of procedure and ruled that the respondent’s
appeal should be allowed and resolved on the merits despite having been filed out of time.
It should be emphasized that the resort to a liberal application, or suspension of the application of procedural
rules, must remain as the exception to the well-settled principle that rules must be complied with for the
orderly administration of justice. Allowing an appeal, even if belatedly filed, should never be taken lightly. The
judgment attains finality by the lapse of the period for taking an appeal without such appeal or motion for
reconsideration being filed.
The Decision of the Labor Arbiter became final and executory as to respondent when she failed to file a timely
appeal therefrom. The importance of the concept of finality of judgment cannot be gainsaid.
It should also be borne in mind that the right of the winning party to enjoy the finality of the resolution of the
case is also an essential part of public policy and the orderly administration of justice. Hence, such right is just
as weighty or equally important as the right of the losing party to appeal or seek reconsideration within the
prescribed period. When the Labor Arbiter’s Decision became final, the petitioners’ attained a vested right to
said judgement. They had the right to fully rely on the immutability of said Decision.
In sum, the Court cannot countenance relaxation of the rules absent the showing of extraordinary
circumstances to justify the same. In this case, no compelling reasons can be found to convince this Court that
the CA acted correctly by according respondent such liberality.
Page 177
4. McBurnie vs. Ganzon, GR No. 178034/1718117, October 17, 2013, En Banc
Facts
McBurnie, instituted a complaint for illegal dismissal and other monetary claims against the respondents. The
Labor Arbiter (LA) declared McBurnie as having been illegally dismissed from employment. He is entitled to
receive from the respondents P54,083,910.00. The respondents appealed to the NLRC and filed a Motion to
Reduce Bond and posted an appeal bond in the amount of P100,000.00. The NLRC denied the Motion to Reduce
Bond. They elevate the matter to the CA. It directed the respondent to post bond in the amount of
P10,000,000.00.
Petitioner argues that in cases involving monetary award, an employer seeking to appeal the decision of the LA
to the Commission is unconditionally required by Art. 223 of the Labor Code to post bond in the amount
equivalent to the monetary award.
Respondent’s argue that the monetary awards of the LA were null and excessive. It has the intention of
rendering them incapable of posting the appeal bond. They lacked the capacity to pay the bond of almost P60
million because of their business losses that may be attributed to an economic crisis.
Issue
Whether or not an appeal bond to the NLRC may be reduced
Held
Yes, the appeal bond to the NLRC may be reduced
On the matter of the filing and acceptance of motions to reduce appeal bond,as provided in Section 6, Rule VI
of the 2011 NLRC Rules of Procedure, the following guidelines shall be observed:
(a)The filing of a motion to reduce appeal bond shall be entertained by the NLRC subject to the following
conditions: (1)there is meritorious ground; and (2) a bond in areasonable amount is posted;
(b) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10%) of the monetary award subject of the appeal,
exclusive of damages and attorney's fees;
(c)Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary
period to perfect an appeal from the labor arbiter's decision to the NLRC;
(d) The NLRC retains its authority and duty to resolve the motion to reduce bond and determine the final
amount of bond that shall be posted by the appellant, still in accordance with the standards of "meritorious
grounds "and" reasonable amount";and
(e) In the event that the NLRC denies the motion to reduce bond, or requires a bond that exceeds the amount
of the provisional bond, the appellant shall be given a fresh period of ten (10) days from notice of the NLRC
order within which to perfect the appeal by posting the required appeal bond.
In this case, a serious error of the NLRC was its outright denial of the motion to reduce the bond, without even
considering the respondent’s arguments and totally unmindful of the rules and jurisprudence that allow the
bond’s reduction. Instead of resolving the motion to reduce the bond on its merits, the NLRC insisted on an
amount that was equivalent to the monetary award. The NLRC should have considered the respondents’
arguments. By such haste, it effectively denied the respondents of their opportunity tos eek a reduction of the
bond even when the same is allowed under the rules and settled jurisprudence.
The Court finds the reduction of the appeal bond is justified by the substantial amount of the LA’s monetary
award. To require an appeal bond in such amount could only deprive them of the right to appeal,
evenforcethemoutofbusinessandaffectthelivelihoodoftheiremployees.
The CA’s rendition of its decision which allowed a reduced appeal bond, the respondents have posted a bond
in the amount of P10,000,000.00.In determining the reasonable amount of appeal bonds, the Court primarily
considers the merits of the motions and appeal.
Page 178
Thus, given the circumstances and merits in this case, the respondents had posted a bond in reasonable amount,
and complied with the requirements for the perfection of an appeal from the LA’s decision.
Page 179
5. Indophil Textile Mills Inc. vs. Engr. Adviento, GR No. 171212, August 4, 2014
Facts
On August 21, 1990, petitioner a domestic corporation hired respondent Engr. Salvador Adviento as Civil
Engineer to maintain its facilities in Bulacan. On August 7, 2002, respondent consulted a physician due to
recurring weakness and dizziness. A few days later, he was diagnosed with Chronic Poly Sinusitis, and
thereafter, with moderate, severe and persistent Allergic Rhinitis.
Distressed, respondent filed a complaint against petitioner with the National Labor Relations Commission
(NLRC), San Fernando, Pampanga, for alleged illegal dismissal and for the payment of backwages, separation
pay, actual damages and attorney's fees. The case was still pending before the NLRC when the instant petition
was filed. Subsequently, respondent filed another Complaint 9 with the Regional Trial Court (RTC) of Aparri,
Cagayan
a) Petitioner’s argument:
In his reply, petitioner filed a Motion to Dismiss on the ground that:
1) the RTC has no jurisdiction over the subject matter of the complaint because the same falls under
the original and exclusive jurisdiction of the Labor Arbiter (LA) under Article 217 (a) (4) of the
Labor Code; and
2) there is another action pending with the Regional Arbitration Branch III of the NLRC in Pampanga,
involving the same parties for the same cause.
b) Private respondent’s argument:

In his complaint, respondent alleged that he contracted such occupational disease by reason of the
gross negligence of petitioner to provide him with a safe, healthy and workable environment.
Issue
Whether or not the RTC has jurisdiction over the subject matter of respondent's complaint
Held
The Court in this case find that the jurisdiction rests on the regular courts because claims for damages under
Article 217 (a) (4) of the Labor Code,to be cognizable by the LA, must have a reasonable causal connection with
any of the claims provided for in that article.Only if there is such a connection with the other claims can a claim
for damages be considered as arising from employer-employee relations. It also bears stressing that
respondent is not praying for any relief under the Labor Code of the Philippines.
He neither claims for reinstatement nor backwages or separation pay resulting from an illegal termination. The
cause of action herein pertains to the consequence of petitioner's omission which led to a work-related disease
suffered by respondent, causing harm or damage to his person. Such cause of action is within the realm of Civil
Law, and jurisdiction over the controversy belongs to the regular courts.
Rule:
The jurisdiction of the LA and the NLRC is outlined in Article 217 of the Labor Code,as amended by Section 9 of
Republic Act (R.A.) No. 6715, to wit:
Page 180
ART. 217. Jurisdiction of Labor Arbiters and the Commission — (a) Except as otherwise provided under this
Code the Labor Arbiter shall have original and exclusive jurisdiction to hear and decide, within thirty (30)
calendar days after the submission of the case by the parties for decision without extension, even in the absence
of stenographic notes, the following cases involving all workers, whether agricultural or non-agricultural:
1. Unfair labor practice cases;
2. Termination disputes;
3. If accompanied with a claim for reinstatement, those cases that workers may filen involving wages, rates of
pay, hours of work and other terms and conditions of employment;
4. Claims for actual, moral, exemplary and other forms of damages arising from employer-employee relations;
5. Cases arising from any violation of Article 264 of this Code including questions involving the legality of strikes
and lockouts; and
6. Except claims for Employees Compensation, Social Security, Medicare and maternity benefits, all other
claims, arising from employer-employee relations, including those of persons in domestic or household service,
involving an amount exceeding five thousand pesos (P5,000.00) regardless of whether accompanied with a
claim for reinstatement.
While the Court have upheld the present trend to refer worker-employer controversies to labor courts in light
of the aforequoted provision, the Court have also recognized that not all claims involving employees can be
resolved solely by our labor courts, specifically when the law provides otherwise.
For this reason, we have formulated the "reasonable causal connection rule", wherein if there is a reasonable
causal connection between the claim asserted and the employer-employee relations, then the case is within the
jurisdiction of the labor courts; and in the absence thereof, it is the regular courts that have jurisdiction.
Conclusion:
Therefore, the RTC has jurisdiction over the subject matter of respondent's complaint praying for
moral damages, exemplary damages, compensatory damages, anchored on petitioner's alleged gross
negligence
in failing to provide a safe and healthy working environment for respondent.
Page 181
6. Manila Mining Corp., vs. Amor GR No. 182800, April 20, 2015, citing 2015 Mcburnie
Facts
Respondents Lowito Amor, et al. were regular employees of petitioner Manila Mining Corporation, a domestic
corporation which operated a mining claim in Placer, Surigao del Norte. In compliance with existing
environmental laws, petitioner maintained Tailing Pond (TP) No. 7, a tailings containment facility required for
the storage of waste materials generated by its mining operations. When the mine tailings being pumped into
TP No. 7 reached the maximum level in December 2000, petitioner temporarily shut down its mining
operations pending approval of its application to increase said facility's capacity by DENR-Environment
Management Bureau. Although the DENR-EMB issued a temporary authority for it to be able to continue
operating for another 6 months and to increase its capacity, petitioner failed to secure an extension permit
when the authority eventually lapsed. On 27 July 2001, petitioner served a notice, informing its employees and
DOLE of the temporary suspension of its operations for 6 months and the temporary lay-off of two-thirds of its
employees. Petitioner notified the DOLE on 11 December 2001 that it was extending the temporary shutdown.
Affected by petitioner's continued failure to resume its operations, respondents filed the complaint for
constructive dismissal and monetary claims before the Regional Arbitration Branch No. XIII of the NLRC.
Executive Labor Arbiter rendered a decision holding petitioner liable for constructive dismissal. Petitioner filed
its memorandum of appeal before the NLRC and moved for the reduction of the appeal bond to P100,000.00
due to its financial losses in the preceding years making it unable to put up one in cash and/or surety. The NLRC
reversed the decision. Respondents filed the Rule 65 petition for certiorari before the CA. The CA granted
respondents' petition and nullified the NLRC's resolution.
Issue
1. W/N petitioner’s appeal with the NLRC was fatally defective
2. W/N a bond is necessary to perfect an appeal from the LA’s decision involving monetary awards.
Held
1. The right to appeal is not a natural right or a part of due process; it is merely a statutory privilege, and
may be exercised only in the manner and in accordance with the provisions of law. The party must
comply with the requirements of the rules, failing which the right to appeal is invariably lost.
Article 223 of the Labor Code: "(d)ecisions, awards, or orders of the Labor Arbiter are final and
executory unless appealed to the [NLRC] by any or both parties within ten (10) calendar days from the
receipt of such decisions, awards or orders."
For judgments involving monetary award, the same provision mandates that, "an appeal by the
employer may be perfected only upon the posting of a cash or surety bond issued by a reputable
bonding company duly accredited by the [NLRC] in the amount equivalent to the monetary award in
the judgment appealed from." Appellant shall furnish a copy of the memorandum of appeal to the other
party. The same rules are reiterated under Sections 1, 4 and 6, Rule VI of the NLRC Rules of Procedure
in force at the time petitioner appealed the LA’s decision. Having received the Labor Arbiter's Decision
on 24 November 2004, petitioner had ten (10) calendar days or until 4 December 2004 within which
to perfect an appeal. Considering that the latter date fell on a Saturday, petitioner had until the next
working day, 6 December 2004.
The rule is settled that the burden of evidence lies with the party who asserts the affirmative of an
issue. The respondents claim the non-perfection of petitioner's appeal, they had the burden of proving
that said memorandum of appeal was, indeed, filed out of time. The fact that the copy of memorandum
of appeal intended for respondents was served upon them by registered mail only on 7 February 2005
does not necessarily mean that petitioner's appeal from the Labor Arbiter's decision was filed out of
time. Justice should not be sacrificed for technicality, it has been ruled that the failure of a party to
serve a copy of the memorandum to the opposing party is not a jurisdictional defect and does not bar
the NLRC from entertaining the appeal.
Page 182
2. The issue that has been clarified by the ruling in McBurnie v. Ganzon, et al. SC ruled that:
While it is true that reduction of the appeal bond has been allowed in meritorious cases on the principle that
substantial justice is better served by allowing appeals on the merits it has been ruled that the employer should
comply with the following conditions:
● The motion to reduce the bond shall be based on meritorious grounds; and
● A reasonable amount in relation to the monetary award is posted by the appellant, otherwise the filing
of the motion to reduce bond shall not stop the running of the period to perfect an appeal.
In that case, the Court also pronounced that:

a) For purposes of compliance with condition no. (2), a motion shall be accompanied by the posting of a
provisional cash or surety bond equivalent to ten percent (10%), of the monetary award subject of the appeal,
exclusive of damages and attorney's fees;
b) Compliance with the foregoing conditions shall suffice to suspend the running of the 10-day reglementary
period to perfect an appeal from the labor arbiter's decision to the NLRC;
In this case, the SC sees that with no proof to substantiate its claim, petitioner moved for a reduction of the
appeal bond on the preferred basis of serious losses and reverses it supposedly sustained. The SC considers
that the amount of P100,000.00 supposedly posted was provisional bond sufficient to suspend the running of
the 10-day period to perfect an appeal from LA’s decision. But the fact that the check submitted by petitioner
was also dishonored upon presentment for payment, thereby rendering the tender ineffectual.
The record shows that petitioner only manifested its deposit of the funds for the check 24 days before the
resolution of its appeal or 116 days after its right to appeal the Labor Arbiter's decision had expired. Having
filed its motion and memorandum on the very last day of the period to appeal, petitioner must blame itself for
failing to post the full amount pending the NLRC's action on its motion for reduction of the appeal bond. If
redundancy be risked, it must be emphasized that the posting of a bond is indispensable to the perfection of an
appeal in cases involving monetary awards from the decision of the Labor Arbiter. Since it is the posting of a
cash or surety bond which confers jurisdiction upon the NLRC, the rule is settled that non-compliance is fatal
and has the effect of rendering the award final and executory.
The perfection of an appeal in the manner and within the period prescribed by law is not only mandatory but
also jurisdictional and failure of a party to conform to the rules regarding appeal will render the judgment final
and executory. The basic rule of finality of judgment is grounded on the fundamental principle of public policy
and sound practice that, the judgment of courts and the award of quasi-judicial agencies must become final at
some definite date fixed by law.
Page 183
7. Toyota Alabang Inc vs. Games, GR No. 206612, Aug 17, 2015
Facts
Games worked as a foreman for Toyota Alabang. He was dismissed by the petitioner for allegedly stealing
vehicle lubricants and charged him with Qualified theft before the trial Court. Two years later, Games filed a
Complaint for illegal dismissal, non-payment of benefits, and damages against petitioner. Petitioner failed to
file its position paper alleging that the failure was due to the fact that their lawyer is no longer connected with
the company. Despite repeated rescheduling of the hearings, Toyota still failed to appear hence the case was
submitted for decision.
Labor Arbiter: ruled in favor of Games and Toyota did not file an MR so it became final and executory.
NLRC: denied due course because it had failed to show proof of its security deposit for the appeal bond under
Section 6, Rule VI of the 2005 NLRC Rules of Procedure. According to the it, the bonding company's mere
declaration in the Certification of Security Deposit that the bond was fully secured was not tantamount to a
faithful compliance with the rule, because there must first be an accompanying assignment of the employer's
bank deposit.
On the merits, it dismissed the case citing that the LA decision is now final and executory.
CA: dismissed due to their failure to comply with the bond requirements and that the decision is no longer
appealable.
Issue
WON posting a bond is required to perfect the appeal.
Held
Yes, bond is required to perfect an appeal.
Article 223 of the Labor Code and Section 6, Rule VI of the 2011 NLRC Rules of Procedure, uniformly state that
“In case the decision of the Labor Arbiter or the Regional Director involves a monetary award, an appeal by the
employer may be perfected only upon the posting of a bond, which shall either be in the form of cash deposit
or surety bond equivalent in amount to the monetary award, exclusive of damages and attorney's fees.” These
rules generally state that in case the ruling of the LA involves a monetary award, an employer's appeal may be
perfected only upon the posting of a bond. Therefore, absent any qualifying terms, so long as the decision of the
LA involves a monetary award, as in this case, that ruling can only be appealed after the employer posts a bond.
The purpose of the bond is to ensure that the employee has properties on which he or she can execute upon in
the event of a final, providential award
Page 184
8. Social Security System vs. Ubana, GR No. 200114, Aug 25, 2015
Facts
In July 1995, Debbie Ubrana applied for employment with SSS and passed all the tests and qualifications,
however she was referred to the DBP Service Corporation for “transitory employment”. In May 1996 she was
told to report for training to SSS Naga for immediate deployment to SSS Daet and made to sign a six-month
Service Contract Agreement on May 28, 1996 by the DBP Service Corp. assigning her as a clerk for SSS Daet
with a daily wage of only P171.00.
On May 27, 1996-December 15, 1999: She was assigned as “Frontliner” of the SSS Members Assistance Section.
On December 16, 1999-May 15, 2001: She was assigned as Data Encoder in the Membership Section.
On December 16, 2001 she was transferred to the SSS Retirees Association as Processor (salary P229.00/day)
at the Membership Section until her resignation on August 26, 2002 (Note: the regular SSS Processor wage was
P846.46/day).
Throughout her professional life her May 28, 1996 Service Contract Agreement with DBP Service Corporation
was never renewed, but she was required to work for SSS continuously under different assignments with a
maximum daily salary of only P229.00 and was consistently assured of being absorbed into the SSS plantilla.
She claimed she was qualified for the position of a regular Processor, having passed the requirements and
qualification tests but she was not given the proper salary. Due to the oppressive and prejudicial treatment of
SSS, she was forced to resign on August 26, 2002 after six years as she can no longer stand being exploited, and
the agony of dissatisfaction, anxiety, demoralization, and injustice.
She filed a civil case for damages against DBP Service Corp, SSS, and SSS Retirees Association. She claimed
petitioners violated civil service laws, and Civil Code Art. 19, 20 and 21. As a result, she suffered actual losses
by way of unrealized income, moral and exemplary damages, attorney’s fees and litigation expenses.
She prayed for an award of P572,682.67 actual damages representing the difference between the legal and
proper salary she should have received and the actual salary she received during her six-year stint with
petitioner; P300,000.00 moral damages; exemplary damages at the discretion of the court; P20,000.00
attorney’s fees and P1,000.00 appearance fees; and other just and equitable relief.
Petitioners and co-defendants filed Motions to Dismiss (MtD) arguing the subject matter of the case arose from
employer-employee relations, which are beyond the RTC’s jurisdiction and properly cognizable by the NLRC.
Ubana opposed the MtD saying that pursuant to civil service rules and regulations, service contracts such as
her Service Contract Agreement with DBP Service Corporation should cover only a) lump sum work or services
such as janitorial, security or consultancy services, and b) piece work or intermittent jobs of short duration not
exceeding six months on a daily basis.
She posited that her service contract involved the performance of sensitive work, and not merely janitorial,
security, consultancy services, or work of intermittent or short duration. In fact, she was made to work
continuously even after the lapse of her 6-month service contract.
Citing CSC Memorandum Circular No. 40, respondent contended that the performance of functions outside of
the nature provided in the appointment and receiving salary way below that received by regular SSS employees
Page 185
amount to an abuse of rights; and that her cause of action is anchored on the provisions of the Civil Code on
Human Relations.
The RTC dismissed the complaint for lack of jurisdiction. There is a reasonable causal connection with ER-EE
relations and is grounded on the alleged fraudulent manner defendants conspired to exploit her which is ULP.
Reversed on MR. Under Art. IX-B, 1987 Constitution, the civil service embraces all branches, subdivisions and
agencies of the government including GOCCs with original charters (those created by special laws and not
through the general corporation law). Labor law claims against GOCCs w/o original charters fall within the
jurisdiction of the DOLE and not the CSC. Since SSS has its original charter and was created by RA No. 1161 as
amended by RA 828 it is governed by the CSC. However, since SSS denied the existence of an ER-EE relationship
and the case is one for damages, it is not the CSC with the jurisdiction to try the case but the regular courts.
The Court of Appeals held that the petitioner complained that the TC does not have jurisdiction over claims for
unrealized salary income and other damages which is a labor dispute. It also argued there was gad in dismissing
the case against co-defenants DBP Service Corp. and SSS Retirees Assn. as these are legitimate independent job
contractors thus making the respondent an employee of these 2 entities and not of SSS.
CA denied. Petitioner filed certiorari
Issue
Whether or not the RTC has jurisdiction to hear and decide the case
Held
The Supreme Court ruled that the RTC had jurisdiction. The rule is that, the nature of an action, the subject
matter and which court or agency of the government has jurisdiction over the same are determined by the
material allegations of the complaint in relation to the law involved and the character of the reliefs prayed for,
whether or not the complainant/plaintiff is entitled to any or all of such reliefs. A prayer or demand for relief
is not part of the petition of the cause of action; nor does it enlarge the cause of action stated or change the legal
effect of what is alleged. In determining which body has jurisdiction over a case, the better policy is to consider
not only the status or relationship of the parties but also the nature of the action that is the subject of their
controversy. Not every dispute between an employer and employee involves matters that only labor arbiters
and the NLRC can resolve in the exercise of their adjudicatory or quasi-judicial powers. Where the principal
relief sought is to be resolved not by reference to the Labor Code or other labor relations statute or a CBA
agreement but by the general civil law, the jurisdiction over the dispute belongs to the regular courts of justice.
It is the character of the principal relief sought that is essential in this connection. If the principal relief is to be
granted under labor legislation or a CBA, the case should fall within the jurisdiction of the Labor Arbiter and
the NLRC, even though a claim for damages might be asserted as an incident to such claim. The question is
whether the Labor Code has any relevance to the principal relief sought in the complaint.
While it is true that labor arbiters and the NLRC have jurisdiction to award not only reliefs provided by labor
laws, but also damages governed by the Civil Code, these reliefs must still be based on an action that has a
reasonable causal connection with the Labor Code, other labor statutes, or collective bargaining agreements.
Claims for damages under paragraph 4 of Article 217 must have a reasonable causal connection with any of the
claims provided for in the article in order to be cognizable by the labor arbiter. Only if there is such a connection
with the other claims can the claim for damages be considered as arising from employer- employee relations.
CAB: Ubana’s complaint is rooted on the principle of abuse of right laid in the NCC. She was claiming damages
based on the alleged exploitation of defendants in depriving her of her rightful income. She never invoked
provisions of the Labor Code or labor laws but provisions of human relations under the NCC. In this case, the
Page 186
issues raised in the instant complaint do not require the expertise acquired by labor officials and it is the court
of general jurisdiction (RTC) with jurisdiction. It was the transgression of Art. 19 and 20 of the NCC she insisted
on this case as the primary relief sought is for moral and exemplary damages for the abuse of rights. The claims
for actual damages for unrealized income are the natural consequence for abuse of such rights.
Tolosa v. NLRC: “it is not the NLRC but the regular courts that have jurisdiction over action for damages, in
which the employer-employee relations is merely incidental, and in which the cause of action proceeds from a
different source of obligation such as tort. Since petitioner’s claim for damages is predicated on a quasi-delict
or tort that has no reasonable causal connection with any of the claims provided for in Article 217, other labor
statutes or collective bargaining agreements, jurisdiction over the action lies with the regular courts · not with
the NLRC or the labor arbiters.”
Page 187
9. ILaw Buklod ng Manggagawa Nestle Phils Chapter vs. Nestle Phils, GR No. 198675, Sept 23, 2015
Facts
On January 13, 1997, herein petitioner union staged a strike against herein respondent company's Ice Cream
and Chilled Products Division, citing, as grounds, respondent's alleged violation of the collective bargaining
agreement (CBA), dismissal of union officers and members, discrimination and other unfair labor practice
(ULP) acts.
However, after a series of conciliation meetings and discussions between the parties, they agreed to resolve
their differences and came up with a compromise which was embodied in a Memorandum of Agreement (MOA).
On August 6, 1998, the parties filed a Joint Motion to Dismiss stating that they are no longer interested in
pursuing the petition for injunction filed by respondent as a consequence of the settlement of their dispute. On
October 12, 1998, the NLRC issued its Decision approving the parties' compromise agreement and granting
their Joint Motion to Dismiss.
On January 25, 2010, or after a lapse of more than eleven (11) years from the time of execution of the subject
MOA, petitioners filed with the NLRC a Motion for Writ of Execution contending that they have not been paid
the amounts they are entitled to in accordance with the MOA.
Respondent filed its Opposition to the Motion for Writ of Execution contending that petitioners' remedy is
already barred by prescription because, under the 2005 Revised Rules of the NLRC, a decision or order may be
executed on motion within five (5) years from the date it becomes final and executory and that the same
decision or order may only be enforced by independent action within a period of ten (10) years from the date
of its finality.
On November 18, 2010, the NLRC promulgated its Resolution denying petitioners' application for the issuance
of a writ of execution on the ground of prescription. Motion for Reconsideration was dismissed. Petitioners
then filed a petition for certiorari with the CA questioning the above Resolutions of the NLRC.
Issue
Whether or not petitioners' claim for payment is barred by prescription.
Held
Yes, petitioners’ claim for payment is barred by prescription, due to the following reasons:
a. Petitioners failed to enforce their right under the subject MOA within the five-and ten-year periods
provided by law and the rules.
b. Petitioners failed to prove their allegation that they are vigilant in exercising their right to pursue payment
of the monetary awards in their favor.
It is settled that when a compromise agreement is given judicial approval, it becomes more than a contract
binding upon the parties. Having been sanctioned by the court, it is entered as a determination of a controversy
and has the force and effect of a judgment. It is immediately executory and not appealable, except for vices of
consent or forgery. The non-fulfillment of its terms and conditions justifies the issuance of a writ of execution;
in such an instance, execution becomes a ministerial duty of the court. Stated differently, a decision on a
compromise agreement is final and executory. Such agreement has the force of law and is conclusive between
the parties. It transcends its identity as a mere contract binding only upon the parties thereto, as it becomes a
judgment that is subject to execution in accordance with the Rules.
A judgment may be executed on motion within five years from the date of its entry or from the date it becomes
final and executory. After the lapse of such time, and before it is barred by the statute of limitations, a judgment
may be enforced by action. If the prevailing party fails to have the decision enforced by a mere motion after the
lapse of five years from the date of its entry (or from the date it becomes final and executory), the said judgment
is reduced to a mere right of action in favor of the person whom it favors and must be enforced, as are all
ordinary actions, by the institution of a complaint in a regular form. In the present case, the five-and ten-year
Page 188
periods provided by law and the rules are more than sufficient to enable petitioners to enforce their right under
the subject MOA.
In this case, it is clear that the judgment of the NLRC, having been based on a compromise embodied in a written
contract, was immediately executory upon its issuance on October 12, 1998. Thus, it could have been executed
by motion within five (5) years. It was not. Nonetheless, it could have been enforced by an independent action
within the next five (5) years, or within ten (10) years from the time the NLRC Decision was promulgated. It
was not. Therefore, petitioners' right to have the NLRC judgment executed by mere motion as well as their right
of action to enforce the same judgment had prescribed by the time they filed their Motion for Writ of Execution
on January 25, 2010.
Instances when this Court allowed execution by motion even after the lapse of five years—when the delay is
caused or occasioned by actions of the judgment debtor and/or is incurred for his benefit or advantage. In the
present case, there is no indication that the delay in the execution of the MOA, as claimed by petitioners, was
caused by respondent nor was it incurred at its instance or for its benefit or advantage. Moreover, no proof was
ever presented showing that petitioners did not sleep on their rights. Despite their claims to the contrary, the
records at hand are bereft of any evidence to establish that petitioners exerted any effort to enforce their rights
under the subject MOA, either individually, through their union or their counsel.
Even granting, for the sake of argument, that the records of the case were lost, as alleged by petitioners, leading
to the delay in the enforcement of petitioners' rights, such loss of the records cannot be regarded as having
interrupted the prescriptive periods for filing a motion or an action to enforce the NLRC Decision because such
alleged loss could not have prevented petitioners from attempting to reconstitute the records and, thereafter,
filing the required motion or action on time.
Page 189
10. Quantum Foods, Inc. vs. Esloyo, GR. No. 213696, December 9, 2015, citing 2015 Mcburnie
Facts
Petitioner Quantum Foods, Inc. is a domestic corporation engaged in the distribution and selling of food
products nationwide. It hired Esloyo as Major Accounts Representative and later on promoted to the position
of Regional Sales Manager for Visayas and Mindanao. On the other hand, it hired Magsila as Key Accounts
Representative for the Panay Area.
Quantum decided to reorganize its sales force nationwide following a drastic drop in its net income, and Magsila
was among those retrenched. However, Magsila’s final pay and other benefits were not release due to alleged
discovery of unauthorized/undocumented deductions, which he purportedly failed to explain. Esloyo was
terminated from work on the ground of loss of trust and confidence due to his numerous violations of the
company rules and regulations.
Aggrieved, Esloyo and Magsila filed separate complaints for illegal dismissal with money claims against
Quantum. They also impleaded Dole Philippines, Inc. as party to the case, claiming that said company required
them to perform additional tasks that were necessary and desirable for its operations, and that Dole, as well as
its Executive personnel had created and organized Quantum, and thus, should be held jointly and solidarily
liable with Quantum for respondent’s claims.
Quantum maintained that respondents’ dismissal were valid, hence, it is not liable for their money claims. On
the other hand, Dole denied any employer-employee relationship with respondents. The Labor Arbiter found
respondents to have been illegally dismissed and ordered Quantum to pay respondents a total monetary
judgment of P1,817,856.71 but DOLE was deleted as party to the case, upon a finding that it has no employer-
employee relationship with respondents. Dissatisfied, Quantum filed its Notice of Appeal and Memorandum of
Appeal before the NLRC accompanied by a Motion to Reduce Bond and a cash bond in the amount of P400,000
(partial bond).
Before the NLRC could act on the Motion to Reduce Bond, Quantum posted a surety bond from an accredited
insurance company fully covering the monetary judgment. The NLRC gave due course to Quantum’s appeal
holding that there was substantial compliance with the bond requirement and held that respondents were not
illegally dismissed. The Court of Appeals reversed and set aside the NLRC’s ruling and reinstated the LA’s
Decision. It ruled that Quantum’s failure to post the required bond in an amount equivalent to the monetary
judgment impeded the perfection of its appeal, and rendered the LA’s Decision final and executory. Thus, the
NLRC was bereft of jurisdiction and abused its discretion in entertaining the appeal.
Issue
Whether or not the appeal bond posted accompanied by a motion to reduce bond is reasonable in order to
suspend the period to perfect an appeal.
Held
Yes, the posting of a P400,000.00 cash bond equivalent to more than 20% of the monetary judgment, together
with the Motion to Reduce Bond within the reglementary period was sufficient to suspend the period to perfect
the appeal. The posting of the said partial bond coupled with the subsequent posting of a surety bond in an
amount equivalent to the monetary judgment also signified Quantum’s good faith and willingness to recognize
the final outcome of its appeal.
In this relation, Section 4, Rule VI of the 2005 Revised Rules of Procedure of the NLRC 55 (the Rules)
enumerates the requisites for the perfection of appeal, viz.:
Section 4. Requisites for Perfection of Appeal. — a) The appeal shall be: 1) filed within the reglementary period
provided in Section 1 of this Rule; 2) verified by the appellant himself in accordance with Section 4, Rule 7 of
the Rules of Court, as amended; 3) in the form of a memorandum of appeal which shall state the grounds relied
upon and the arguments in support thereof, the relief prayed for, and with a statement of the date the appellant
received the appealed decision, resolution or order; 4) in three (3) legibly typewritten or printed copies; and
Page 190
5) accompanied by i) proof of payment of the required appeal fee; ii) posting of a cash or surety bond as
provided in Section 6 of this Rule; iii) a certificate of non-forum shopping; and iv) proof of service upon the
other parties.
b) A mere notice of appeal without complying with the other requisites aforestated shall not stop the running
of the period for perfecting an appeal.
In the present case, it is apparent that the plausible merit of the case was the "special circumstance" or
"compelling reason" 61 that prompted the NLRC to relax the certification requirement and give due course to
Quantum’s appeal as it, in fact, arrived at a contrary ruling from that of the LA. It is well to emphasize that
technical rules are not binding in cases submitted before the NLRC. In fact, labor officials are enjoined to use
every and reasonable means to ascertain the facts in each case speedily and objectively, without regard to
technicalities of law or procedure, in the interest of due process. 62 Consequently, the NLRC cannot be faulted
for relaxing its own rules in the interest of substantial justice.
It should be emphasized that the NLRC has full discretion to grant or deny the motion to reduce bond, 77 and
its ruling will not be disturbed unless tainted with grave abuse of discretion. Verily, an act of a court or tribunal
can only be considered to be tainted with grave abuse of discretion when such act is done in a capricious or
whimsical exercise of judgment as is equivalent to lack of jurisdiction, which clearly is not extant with respect
to the NLRC's cognizance of Quantum’s appeal. Far from having gravely abused its discretion, the NLRC
correctly preferred substantial justice over the rigid and stringent application of procedural rules. This, by all
means, is not a case of grave abuse of discretion calling for the issuance of a writ of certiorari, warranting the
reversal of the CA's ruling granting the certiorari petition and the remand of the case to the CA for appropriate
action.
Page 191
11. Dela Rosa Liner Inc et vs. Borela et GR No. 207286, July 29, 2016
Facts
September 23, 2011, respondents Calixto Borela, a bus driver, & Estelo Amarille, conductor, filed complaints
against petitioners Dela Rosa Liner, a public transport company, Rosauro Dela Rosa Sr., and Nora Dela Rosa, for
underpayment/non-payment of salaries, holiday pay, overtime pay, service incentive leave, 13th month pay,
sick leave and vacation leave, night shift differential, illegal deductions, and violation of Wage Order Nos. 13,
14, 15 and 16.
In a motion dated Oct. 26, 2011, petitioners asked the LA to dismiss the case for forum shopping. They alleged
that on Sept. 28, 2011, the CA 13th Division disposed of a similar case between the parties after they entered
into a compromise agreement. Respondents opposed the motion, contending that the causes of action are
different.
Ruling on Compulsory Arbitration: Upheld the petitioners’ position and dismissed the complaint on the
grounds of forum shopping. Respondent appealed the LA’s ruling. On July 31 2012, the NLRC 1st Division
granted the appeal, reversed LA’s dismissal order, and reinstated the complaint.
NLRC held that the respondents could not have committed forum shopping because there was no identity of
causes of action between the two cases. The first complaint charged the petitioners with illegal dismissal and
unfair labor practice, while the second was based on non-payment/underpayment of salaries and monetary
benefits, and violation of wage orders. Petitioner moved for reconsideration, but NLRC denied.
CA Decision: CA denied the petitioner. It found no grave abuse of discretion in the NLRC ruling. The parties
resolved the first case through a compromise agreement, but it had a different cause of action.
Issue
Whether or not the CA erred in ruling that there was no forum shopping nor res judicata.
Held
Supreme Court ruled that the NLRC did not commit any grave abuse of discretion when it ruled that the second
complaint is not barred by the rule on forum shopping nor by the principle of res judicata.Contrary to
petitioners’ submission, respondents’ second complaint, a money claim, is not a similar case to the first
complaint. Thus, the filing of the second complaint did not constitute forum shopping and the judgment in the
first case is not a res judicata ruling that bars the second complaint.The CA established the elements of forum
shopping which are: (1) identity of parties; (2) identity of rights asserted and relief prayed for, and (3) identity
of the two preceding particulars such that any judgement in one would bar the other on the ground of res
judicata. Supreme Court said that there is no identity of rights asserted and reliefs prayed for, and the judgment
in the first case does not amount to res judicata.
There is also no identity of causes of action in the first and second complaint. In Yap v. Chua, it was held that
the test to ascertain whether there is an identity in causes of action is if the same evidence would support both
actions, or whether there is an identity in the facts essential to the two actions. Under the circumstances of the
case at bar, sufficient basis exists that there is no identity of causes of action between the 2 complaints. CA was
correct in holding that the same facts/evidence would not support both actions.The petitioners’ argument that
the Compromise Agreement covered all claims and causes of action cannot be accepted. The Compromise
Agreement expressly stated that no further actions shall be brought on the same grounds. The phrase same
grounds can only refer to the grounds raised in the first complaint. The coverage of “covered all claims and
causes of action” cannot be allowed because it is too sweeping and effectively excludes all other claims by the
respondents against petitioner, including those that cannot be waived without appropriate consideration.
Page 192
12. Fontana Development Corp., vs. Vukasinovic, GR No. 222424, September 21, 2016
Facts
In July 2009, respondent Sascha Vukasinovic was hired by petitioner Fontana Development Corporation (FDC)
as its Director for Business Development for one year.
Sometime in May 2010, he allegedly received a text message from one Jenny Mallari informing him that Nestor
Dischoso (Dischoso) and Chief Hotel Engineer Jaime Villareal (Engr. Villareal), both officers of petitioner FDC,
were receiving commissions from company transactions.
Sascha met with Mallari and offered her money in exchange for evidence that will support her allegations.
Mapari handed over to respondent a photocopy of a check issued to Engr. Villareal, as proof of receiving
commission. Respondent then paid Mallari the total amount of fourteen thousand pesos (P14,000) on different
occasions.
Mallari eventually gave respondent two invoices issued by one of the suppliers of petitioner FDC as proof of
her allegations. Further investigations were conducted on the alleged corruptions of Engr. Villareal.
Engr. Villareal and Mallari were brought to the NBI Office for questioning.
During the inquiry, Mallari denied that Engr. Villareal asked for commissions from her and revealed that she
merely fabricated the story against Engr. Villareal so that she can ask money from respondent.
Following this turn of events, FDC received a complaint from Engr. Villareal claiming that Sascha paid Mallari a
substantial amount of money to concoct a story depicting Engr. Villareal as a corrupt employee.chanrobleslaw
On October 2, 2010, respondent received a Show Cause/Preventive Suspension Order from petitioner FDC's
Human Resources Department, informing him of the complaint filed by Engr. Villareal and directing him to
explain why no disciplinary action should be taken against him for violating the provisions of the Company
Code of Conduct on Dishonesty.
Sascha did not deny the allegations against him and, instead, admitted that he gave money to Mallari because
"it is a common practice in Fontana to give money to informants for vital information."
FDC approved the recommendation of the Investigating Panel and terminated respondent's employment after
finding him guilty of acts of dishonesty in the form of "bribery in any form or manner."
Respondent, however, refused to acknowledge the receipt of the notice of dismissal and, instead, filed a
complaint for illegal dismissal, illegal suspension, regularization, non-payment of salaries, service incentive
leave, 13th month pay, actual, moral and exemplary damages, attorney's fees and demands for his reinstatement
with full backwages against petitioner FDC and its officers.
Labor Arbiter dismissed the complaint for lack of factual or legal basis, and ruled that respondent cannot be
regularized as he is an employee with a legal and valid fixed-term employment and that his dismissal was for a
just cause.
Respondent appealed the said Decision to the National Labor Relations Commission (NLRC).
NLRC dismissed and the noted that Sascha had previously filed another complaint before the same branch of
the NLRC in San Fernando, Pampanga, involving the same facts, issues, and prayer, entitled Sascha Vukasinovic
v. Jimei International Ltd., Suk Man Choi, as Group Financial Comptroller, and Chris Cheng, as Deputy Group
Financial Comptroller, and docketed as NLRC Case No. RAB III-09-18113-11. This previous case has been
dismissed 11 by Labor Arbiter on the ground of forum shopping. The dismissal was eventually sustained by
both the NLRC and the CA.
Respondent then filed a petition for certiorari with the CA. The CA agreed with the NLRC when it ruled that
herein respondent's employment had not ripened into regular employment and that he was validly dismissed.
Page 193
Respondent, being a managerial employee, can be terminated on the ground of loss of trust and confidence.
However, contrary to the Decision of the NLRC, the CA ordered the award of unpaid salaries to respondent. So
the case is REMANDED to the Labor Arbiter for the computation, with dispatch, of the amounts due.
Issue
Whether or not the CA gravely erred in not dismissing the petition for deliberate forum shopping.
Held
YES. Respondent is guilty of forum shopping.
What constitutes forum Shopping
There is forum shopping when a party repetitively avails of several judicial remedies in different courts,
simultaneously or successively, all substantially founded on the same transactions and the same essential facts
and circumstances, and all raising substantially the same issues either pending in or already resolved adversely
by some other court. Forum shopping is an act of malpractice that is prohibited and condemned because it
trifles with the courts and abuses their processes. It degrades the administration of justice and adds to the
already congested court dockets.nrobleslaw
What the prohibition on forum shopping seeks to prevent
The grave evil sought to be avoided by the rule against forum shopping is the rendition by two competent
tribunals of two separate and contradictory decisions. Unscrupulous party litigants, taking advantage of a
variety of competent tribunals, may repeatedly try their luck in several different fora until a favorable result is
reached. Test of Forum Shopping The test for determining the existence of forum shopping is whether a final
judgment in one case amounts to res judicata in another or whether the following elements of litis pendentia
are present: (a) identity of parties, or at least such parties as representing the same interests in both actions;
(b) identity of rights asserted and reliefs prayed for, the relief being founded on the same facts; and (c) the
identity of the two preceding particulars, such that any judgment rendered in the other action will, regardless
of which party is successful, amount to res judicata in the action under consideration. Said requisites are also
constitutive of the requisites for auter action pendant or lis pendens
In the instant case, there is no doubt that all the elements of litis pendentia have already been established.
It should be noted that in his Decision in NLRC Case, Labor Arbiter Abdon observed that there is an identity of
parties between the 2 cases. He pointed out that both complaints show that petitioners Chris Cheng and Man
Choi are similarly impleaded in their capacities as officers of petitioner FDC and that there is also an identity of
causes of action and reliefs prayed for by respondent. This was affirmed by the NLRC and the CA.
Page 194

Aca Labor Digests Midterms

Загружено:

Сведения о документе

Исходное описание:

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Aca Labor Digests Midterms

Загружено:

Авторское право:

Доступные форматы

School of Law and Governance

Topic 1: THE APPLICABLE LAWS

2. Lazaro v Social Security Commission [435 SCRA 472 (2004)]

3. Phil. Global Communication v De Vera [459 SCRA 260 (2005)]

4. ABS-CBN v Nazareno [GR No 164156 (Sep 26, 2006)]

5. Francisco v NLRC [500 SCRA 690 [2006]]

7. Coca-Cola Bottlers Phils v Dr Climaco [GR No 146881, Feb 15, 2007]

Hence, this petition filed by Coca-Cola Bottlers Phils., Inc.

2) NO. Respondent was not illegally dismissed.

8. Calamba Medical Center v NLRC et al [GR No 176484, Nov 25, 2008]

11. Semblante et al v CA, et al [GR No 196426, Aug 15, 2011]

12. Bernarte v PBA, et al [GR No 192084, Sep 14 2011]

13. Lirio v Genovia [GR No 169757, Nov 23 2011]

LA and NLRC: found that the respondent was illegally dismissed

20. Cabaobas et al, v Pepsi Col [ GR No 176908, Mar 25 2015]

21. Begino, et al v ABS-CBN Corp [GR No 199166, Apr 20, 2015]

22. SSS v Ubana [GR No 200114, Aug 25, 2015]

23. Century Properties Inc v Babiano, et al [GR No 220978, July 5, 2016]

The existence of an employer-employee relationship cannot be negated by expressly repudiating it in the

24. Lu v Enopia, GR No 197899, Mar 6, 2017

Issue: Whether or not there merit to this defense?

Topic 3: Hiring of Employee

Topic 4: Wages & Wage Rationalization Act

SIP clearly failed to comply with these requirements.

2. SLL International Cables Specialist v NLRC, GR No 172161, Mar 2, 2011

3. Vergara, Jr v Coca-Cola Bottlers Phils Inc, GR No 176985, Apr 1, 2013

Issue: Whether or not the removal of the chairs is valid

6. David/Yiels Hog Dealer v Macasio, [GR No 195466, July 2, 2014]

On the other hand, the IRR provides that

Section 1. Coverage. – This rule shall apply to all employees except:

8. Milan et al v NLRC, GR No 202961, Feb 4, 2015

9. Toyota Pasig Inc v De Peralta, GR No 213488, Nov 7, 2016

For purposes of these regulations, hazard pay shall mean xxx.

In case of hazardous employment, xxx

Topic 5: Wage Enforcement and Recovery

3. Superior Packaging Corp v Balagsay et al, GR No 178909, October 10, 2012

Ruling: The petition is granted.

Topic 6: Wage Protection Provisions & Prohibitions Regarding Wages

3. Locsin II vs. Mekeni Food Corp., GR No. 192105, December 9, 2013

(1) WON the payment of the commissions should be in US dollars.

(2) WON the award of attorney’s fees was warranted.

8. PLDT vs. Estranero, GR No. 192518, October 15, 2014

9. Milan et al vs. NLRC, GR No. 202961, Feb. 4, 2015

2. Institution of clearance procedures has legal bases

Topic 7: Payment of Wages

2. North Davao Mining vs. NLRC, 254 SCRA 721 [1996]

Hence, this petition filed by North Davao Mining Corporation.

Topic 8: Conditions of Employment

2. Sime Darby vs. NLRC, 289 SCRA 86 [1998]

3. Phil. Airlines vs. NLRC, 302 SCRA 582 [1999]

7. HSY Marketing Ltd., Villatique, GR No. 219569, August 17, 2016

NLRC: affirmed the Decision of the LA

Topic 9: Minimum Labor Standard Benefits

2. Tan vs. Lagrama, G.R. No. 151228, August 15, 2002

3. Lambo vs. NLRC, 317 SCRA 420

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

Computation of Retirement Pay

5. Asian Transmission vs. CA, 425 SCRA 478 [2004]

3) NO, respondent is not entitled to overtime pay.

Petition is PARTLY GRANTED.

Topic 10: Other Special Benefit

LA: declared URSUMCO guilty of illegal dismissal

Goodyear experienced economic reversals. To continue its operations, it resorted to retrenchment.